What is Fundraising Agreement Drafting?
A fundraising agreement is a legally-binding contract between a nonprofit organization and a company or individual. It specifies how they can raise funds by providing clarity on terms such as the work scope, payments, and termination.
If you need to draft a fundraising agreement, read the rest of this article for information to include in it. We’ll also feature advice on why you should hire a qualified lawyer to help you with the drafting process.
What are Key Terms in a Fundraising Agreement?
A fundraising agreement should contain the following core components for clarity between parties:
- Parties. Identify both parties clearly by their full legal names.
- Work scope. Explain the fundraising strategies and goals.
- Compensation. State if the role involves volunteers or payments for work completed.
- Fund handling. Specify how donations are held and disbursed.
- Confidentiality. Protect personal data with confidentiality measures.
- Term and termination. State the agreement duration and explain how parties can terminate it early, such as with notice periods.
- Dispute resolution. To protect your financial and legal interests, you should include a dispute-resolution method, such as arbitration, to settle disputes.
How Do You Draft a Fundraising Agreement?
Make sure that you provide details about the arrangement between the organization and investor to prevent disputes. Here are some tips to consider once you’ve established your key terms.
Provide Service Details
Your agreement should provide details about the scope of work that will be completed. This can include event coordination or writing grants. For clarity, you can specify any tasks that won’t be included.
Specify How Payments Work
If volunteers are included in the agreement, you should specify that they won’t receive compensation. If compensation is provided, however, specify if payments will be a fixed-fee or milestone-based structure.
Outline Clear Goals
Your agreement should include clear targets for the fundraising efforts so that there’s no confusion between parties. This should be aligned with the agreement duration.
Maintain Legal Compliance
Don’t forget to check all local, state, and national fundraising laws to prevent legal challenges or disputes. If you’re unsure of what legal requirements there are, you should consult a lawyer for assistance.
Include Confidentiality Clauses
Make sure that the donor lists, financial records, and other sensitive data is protected in the agreement. This minimizes your risk of unauthorized sharing or violations.
Mention an Agreement Purpose
For clarity, it can be good to specify why the fundraising agreement is being drafted. Outline both parties’ roles and responsibilities so that they can align their expectations and avoid misunderstandings in the future.
Confirm Liability
Make it clear what parties are responsible for, such as if they commit negligence or wilful misconduct, to ensure accountability. However, to make the agreement fair and balanced, you might want to state that parties won’t be liable for incidental or indirect damages.
Should You Hire a Lawyer for Fundraising Agreement Drafting?
Hiring a lawyer for help with drafting a fundraising agreement is advisable, especially if you’re trying to raise a significant amount of capital. A lawyer will help you minimize your risks, such as regarding business ownership or legal risks.
Here are some things that a lawyer will do when drafting your fundraising agreement:
- Defining parties’ rights and obligations. This will help to reduce the risk of future disputes.
- Complying with relevant laws and regulations. This will protect you against legal challenges.
- Clarifying fundraising terms and payments. They’ll establish payment schedules, investment structures, and funding conditions.
- Identifying unfavorable arrangements. They can negotiate terms in the agreement with the other party should this be required to provide a mutually-beneficial contract.
- Outlining conditions. They’ll specify what must happen for funds to be released.
- Protecting your private information. They’ll identify sensitive information and what intellectual property (IP) should be protected.
- Customizing the agreement. A lawyer will draft clear terms based on your specific situation, such as your business’s funding requirements.
- Preparing your supporting documents. They’ll ensure that all company documents are aligned, such as your disclosure documents and other paperwork, to prevent ambiguity.
- Reviewing the agreement. If you’ve drafted a fundraising agreement, you should hire a lawyer to review it for you so that you feel confident about all its terms before agreeing to them.
Where to Find a Lawyer for Fundraising Agreement Drafting
If you need to hire a lawyer to draft your fundraising agreement, you don’t need to contact people in your networks to find a suitable one or drive to traditional law firms in your area, which can be time consuming.
From the comfort of your home, you can use an online legal platform to connect with lawyers who are reputable and reliable.
ContractsCounsel is one of the largest online legal marketplaces that gives you access to a curated network of lawyers on the platform who have been vetted.
ContractsCounsel makes it easy to hire a lawyer to draft your fundraising agreement. Here are the steps to follow:
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project’ and ‘Create or update contract.’ If you’d prefer to hire a lawyer to review your document, choose ‘Contract review.’
- Post your project for free. Include details about your project so you’ll match with the most suitable lawyers.
- Wait for bids. Instead of searching for a lawyer to hire, lawyers directly on the platform will send you multiple bids.
- Review the platform’s lawyer data. The lawyer information includes their location, expertise, years of experience, credentials, and client ratings for previous projects completed on the platform.
- Hire a lawyer to draft or review your fundraising agreement for a flat fee.
