Tag Archives: In-Kind Gifts

Nonprofit Radio for November 3, 2017: Labor Law & In-Kind Gifts

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Thomas Wassel: Labor Law

Tom Wassel

Attorney Thomas Wassel says nonprofits often make mistakes around employee versus independent contractor (it’s not enough to pay them by invoice!) and when bringing in volunteers and interns. We’ll keep you on the right side of the law. (Originally aired June 4, 2014.)

 

 

Maria Semple: In-Kind Gifts

Maria Semple

Maria Semple, our prospect research contributor and The Prospect Finder, returns to share her advice about in-kind gifts. How do you find these non-cash gifts, their value and the right appraiser? When do you need an appraiser? Maria answers all. (Originally aired October 10, 2014.)

 

 


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Duitz hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent, i’m your aptly named host oh, i’m glad you’re with me. I’d suffer the embarrassment of gigantic nastya if you inflated me with the idea that you missed today’s show labor law attorney thomas l says non-profits often make mistakes around employee versus independent contractor that is, you should know it’s not enough to pay them buy-in voice and when bringing in volunteers and interns, we’ll keep you on the right side of the law that originally aired on june fourth, twenty fourteen and in-kind gif ts maria simple, our prospect research contributor and the prospect finder returns to share her advice about in-kind gif ts how do you find these non-cash kinds of gif ts what’s their value and how do you find the right appraiser? When do you need an appraiser? Maria answers it all that originally aired october tenth, twenty fourteen tony, take two, show the love responsive by pursuant full service fund-raising data driven and technology enabled pursuant dot com and by wagner, cpas guiding you beyond the numbers. Wagner, cps, dot com you’re not a business, you were non-profit appaloosa accounting software designed for non-profits non-profit wizard dot com tell us they’re turning payment processing into passive revenue streams for non-profits tell us processing dot com here is tom russell with labor law. I’m very glad that subject of labor law for non-profit springs tom will sell to the studio. He’s, a partner in the law firm cullen and dyckman in garden city, new york, and in new york city, he’s been advising employers on a wide range of labor and employment law matters since nineteen eighty three he is president elect of the long island, new york chapter of the labor and employment relations association. Thomas l welcome to the studio. Nice to nice to be in your studio, tony. Pleasure to see you here. I’m glad we could do it face to face. So employees versus independent contractor, it turns out, is not enough to just pay somebody buy-in voice. And then, while love they’re they’re an independent contractor. That’s absolutely enough if you want to get into trouble. But it’s not enough if you want to do it right. Okay. Basically, whenever one person is performing services for another person or another company, the presumption is that there are an employee and that with everything that that entails, including federal taxes, state taxes, worker’s compensation benefits, unemployment insurance benefits, employee health benefits, things like that in order for them to be classified properly as an independent contract that there’s a number of tests that they need to meet. And if they don’t meet those tests and accompany miss classifies employees big trouble with the department of labor. Okay, we’ll talk about the misclassification ramifications. And so now we’re talking about federal and state, the the where where is this test? This test is from the i r s and then and then. Well, is that the eleven points is that from the irs? Absolutely. The irs. The internal revenue service has an eleven point test which is used for determining whether or not you have to take out taxes from people’s wages. Okay, but every state also has its own version of the test there there. Pretty similar, but in terms of whether or not you need to contribute for worker’s compensation benefits or unemployment insurance benefits and they all apply pretty much the same type of test to determine the employee status. Okay. So it sounds like you’re in pretty good shape if you’re following the irs test, which we’re going to talk about, but you still need to enquire at the state level or or you’re not, because you’re not a hundred percent safe if you’re doing following just the irs. That’s, that’s absolutely true in other words, each state can have its own rules and merely complying with the federal law that that’s fine in terms of federal taxation. But certain states have have stricter rules with regard to treating people as independent contractors versus employees. So you need to see counsel in the state in which you practice. I practice in new york, so you know, my comments about any law would be limited to anything in new york state and federal law. Okay, we’ll stick with the federal with the caveat that you should check the state level, but you’re on your you’re well, on your way if you’re if you’re complying with the irs regs, i imagine, absolutely. Okay. Okay, so are we these these eleven items? Eyes is basically around the relationship between the employed, the non-profit and the person doing the work. Absolutely the key elements. In the test, without without trying to go over check checklist abila talk on some of them, we’ll get to something it’s a degree of control that thie and i’m going to go. I’m going to use the term employer here, even though we may say it’s a contractual relationship, okay, but no, we’ll say, or the employer of the company, the relationship between the company and the person performing the service is in an employment relationship. For example, the company tells the employees where to work, what time to show up what their duties are? Ah, and what do they report to who they’re going to supervise if they’re going to supervise anybody, things like that in a relationship like that that that tends towards the employer employee relationship as opposed to an independent contractor for an independent contractor, you basically say here’s the job, here’s here’s, what i want you to accomplish, maybe cem general guidelines do it when you think it’s appropriate, although there may be deadlines set, but i’m not going to tell you how to do it. I’m not going to supervise you on a day to day basis i’m not going to provide you. With the materials to do it, you do it on your own and i’m simply going to pay you a fee, which is another important distinction there the fee basis versus an hourly or salary type basis? Okay, we’ll get to that. You you touched on something that i want to explore a little bit, the place where the work is done. So you you can’t have the person always coming to your office to perform the work know that you can’t have the person doing the work in your office, but it really that would depend on the nature of the work. For example, if if you if you have employees doing the same work and now you’re going to bring in somebody else from the outside to sit alongside your employees and do the same work? Well, that’s an indicator not not it’s, not a single point test, but it’s, an indicator of an employer employee relationship. Now, if this person has his or her own business on the outside, has business cards may work from more than one company at the same time or one after another on it, since you’re simply hiring that outside company to perform services for a limited period of time. Well, that it tends to lean more towards the independent contractor relationship. How do we balance these eleven? Which we’ll get into some detail about some of the others too? But is it ah, like majority, if you have, if you have six out of the eleven year okay, andi it’s going to go one way or the other based on a majority? Or how does it work? Well, there is no bright line test. Those lawyers like to say, i think to some extent you apply the duck test if it looks like a duck and walks like a duck, and quacks like a duck, it’s a duck it’s very fact specific and a trier of fact, whether it would be a through the department of labor or worker’s compensation board or in a court of law would look at all of these factors and say, well, okay, the control factor tends to lean towards employees, but the independent company factor tends to lean towards independent contractor and way all of these factors together, and then come up with an answer. Okay, so these eleven points are are the things that iris is going to consider? This is what they’re going to look at, and they’re going to put it all. Together, and they’re going to make a decision. Absolutely. Okay. And i guess it would work similarly at the state level. Like when you mention department of labor. We’re talking about the state department of labor could be state of the state or the united states department of labor. There’s both and and they’re very interested because independent contractors aren’t entitled to overtime or minimum wage or anything like that. You you pay them a fee or you pay them. You pay a company a fee to do something and that’s. Fine. But if their employees and they work more than forty hours in a week, they’re entitled to overtime. Yeah, we may have time to get more into that. Okay. I think we will. Actually. What are some of the other side? The other factors in these in these eleven points. But as i mentioned it’s the ah it’s. How people are paid. Yeah. That’s a good one. Sorry, let’s. Talk about that one. The fee versus fee versus salary. Right. Well, typically, an employee may get an hourly wage. May get a weekly salary. It’s generally, the relationship is often not always but often sort of open ended. That is to say, we’re going to hire you not necessarily for a two week barrier or until you finish this job, but we’re going to hire you as an employee and keep you on. But we pay you on a pay check, a supposed to an independent contractor who would normally be paid through some voucher system or through through ah, obviously issuing a ten, ninety nine, which is the tax form for independent contractors and might be in a lump sum. It might be in regular payments, but it’s not based on number of hours worked or anything like that that again, depending on how you structure the deal, that would tend to lean more towards employees or more towards independent contractor. What about? I think you mentioned giving someone the tools to do the work so you shouldn’t be giving them ah, laptop tto do the work or or other things or certainly office space dedicated in the office? I mean, that’s tending to look like employment, right? When you’re giving them that stuff? Absolutely. If i say, come into my place of business and i’m going to give you everything you need to do the job. And you don’t have toe put anything on the table other than what i give you that’s the hallmark of an employee, as opposed to an independent contractor who brings their own knowledge, skills and tools to the table and does the job that you’re paying them to do. We’ll go out for a short break, and when we come back, tell marcel and i’m going to keep talking about this and then we’ll get into volunteers and interns, and then i believe we will have time to for overtime for employees you’re supposed be paying your employees overtime. Do you maybe want to turn this off? If you’re listening in the office on, remember only the bosses want to hear this, we’ll get into all that stay with us. You’re tuned to non-profit radio tony martignetti also hosts a podcast for the chronicle of philanthropy fund-raising fundamentals is a quick ten minute burst of fund-raising insights published once a month. Tony’s guests are expert in crowdfunding, mobile giving event fund-raising direct mail and donor cultivation. Really, all the fund-raising issues that make you wonder am i doing this right? Is there a better way there is? Find the fund-raising fundamentals archive it. Tony martignetti dot com that’s marketmesuite n e t t i remember there’s, a g before the end, thousands of listeners have subscribed on itunes. You can also learn maura, the chronicle website, philanthropy dot com fund-raising fundamentals the better way. Dahna let’s, send some live listener love arco, idaho and orlando, florida live listener love to you very glad you with us let’s, go abroad. Seoul, korea man yo haserot, islamabad, pakistan i’m sorry. I don’t know how to greet you in, uh in is it pasha pashtun? Passion is that i’m not sure what, but live listener love to you in islamabad, irrespective of how i would say it in your in your tongue, in your language bonem changing china, always welcoming the chinese lots of listeners, ni hao, nagoya and tokyo, japan sending you konnichi wa and there are others will get to them kuwait also, i wanted to get to kuwait. Um attorney thomas l let’s see if you’re if you’re the person who’s doing the work is getting their income from a bunch of different places. Is that that’s that’s? One of the factors, isn’t it that’s, clearly one of the factors, and and that would certainly militate or tend towards a finding of an independent contractor relationship? If you hire a company, the company may have its own letterhead may have its own invoices, may have its own business cards, may have an ad in the yellow pages for those of us who still actually use paper yellow pages or maybe a gn internet listening nowadays. So if you hold yourself out as an independent company and maybe even filed company tax returns on have a company workers compensation policy, things like that that again would lean towards the independent contractor relationship rather than employees. If you are ah found by the irs to have misclassified people doing the work, would you expect that the irs is going to report to your state department of labor that that they’ve found a misclassification? That’s, that’s a really good question? And i get asked that those kinds of questions a lot from lots of different employers, i tend to represent employers, and my understanding is no, they don’t necessarily do that that. Ah, particularly if you settle the case, the words that come to you and say you messed up, you need to pay x amount, and if you settle it voluntarily, they’re not going to go broadcasting it to the world so that there could be more agencies to come and knock on your door, because that would discourage you from settling in the first place that’s not to say that other agencies won’t find out about it, and certainly if a case republic, if you would have to go to court, which is a public record and other agencies saw that they could be knocking on your door as well. Where do you see employers messing up? Well, it’s again, it’s the any of any of these factors will any or any role these factors? I have clients, and obviously i’m not going to mention names. Uh, i brought you for so it’s um, provocative name dropping, i thought i’d like to keep practising law for a few more. Alright, alright, you’re not retired, they you know i have i have clients that have they’ll bring people in and they treat them as independent contractors and they say, well, they’re only going to be here for two months. I’m hiring them for a special project and i say yes, hiring see, that was the key word there on it doesn’t matter if you’re hyre it is a temporary employee or a permanent employee that’s one factor, but not not controlling you temporary employees, their employees, so you have to treat them as contractors, and i’ve had a number of audits fromthe state workers compensation, border unemployment insurance division that come in and say you’re not paying premiums to these people because you’re not treating them as employees. Pay up. What? What are the penalties let’s talk about the federal level? What would you expect from the irs if ur misclassifying? Well again? In most cases, if if you own up to the to the mistake, you’ll certainly have to pay what’s owed but safe for the i r s not only will you have to pay what the employers share of the taxes wouldn’t really be, and they also have to pay the employees share of the tactics so security taxes that should have been paid exactly pay both the employer and the employee because the employer messes up. The irs isn’t going to go to the employees and say, by the way, some of that money you got, we want you to give some of it back. It’s, the employer’s responsibility to properly pay the employees. Okay, so the back taxes that were owed, what else? What else might be expect? Well there there could be civil penalties involved to or if it was done. Knowingly, over a long period of time, with no knowing that you were violating the law usually second or third offenders, there could be some more severe penalties involved as well. You’re always welcome teo disagree with the onerous right on contest there, their belief that you’re misclassifying absolutely, you know, just just cause the irs says so doesn’t make it so. But the presumption is that these people are employees, right, and it’s up to the employer to prove based on the law that these people are actually independent contractors. So if you if you want to fight them, you better have a pretty good case. Let’s move teo volunteers and interns what? What are what are non-profits often getting wrong around these? Well, the good news for not for not-for-profits we call them not-for-profits in new york, but non-profits same, the good news for non-profits is that you’re allowed to have volunteers in the in the in the in the for-profit sector, you basically can’t have volunteers. Anybody who does work for you has to be paid, but in the in the nonprofit sector, you can’t have volunteers, but there are some rules about that as well the work that’s being volunteered for can’t be the same kind of work that’s otherwise being done. In other words, you can’t have a paid clerical person sitting at a desk and then have somebody else come in and say, well, i’m going to volunteer and i’m going to do the same work sitting side by side, the paid girl really? All right, so it’s like an example of that? Suppose closed, you have employees that are preparing mailings. You’ve got a five thousand piece mailing going out and you don’t hyre ah, male house, you’re doing it inside and you’ve got people stuffing in printing, stuffing envelopes, putting stamps on, and then you bring some volunteers in to do that same work side by side with employees. That’s, that’s, not a volunteer. I’d be very concerned about that if i was the employer and i would if i was their attorney, i would be tell saying we need to take a long, hard look at this because again, people sitting side by side, some people are being paid. Some people are, quote, unquote, volunteering very dangerous situation, even if the volunteers volunteered. I mean, even if they walked in and they love the mission, they’ve said, i want to help you. How can i help? And you said, well, we could use ten hours on, you know, over the weekend to put this mailing together well not-for-profits tend to be generally charitable, religious or religious organizations and the servant public purpose and that’s why they’re allowed tohave volunteers to some extent, but to the extent that you’re basically just doing the same work as other employees and saying, i don’t want to get paid for it, the law doesn’t really sanction such things. Oh, my okay, i gotta take a little tangent because you mentioned for-profit companies, and i’m interested in that on the intern side. What about all the unpaid internships that are coming right now? It’s, it’s, summertime, what about those? Well, and you read about them all the time in the paper about the irs or the part you read about them in the new york journal? I don’t not seeing it in the where i’m seeing in popular more maur, general press well, you get for-profit sar allowed tohave interns, but not that you can’t just but but i had on somebody and say, hi, you’re an intern, you’re gonna work for me and you’re not going to get paid. That would be violating the minimum wage laws for, among other things, but somebody can provide an internship if under certain circumstances, if they’re getting some sort of academic credit from an outside institution, if they are getting some sort of actual training from you that’s not specifically tailored to your organisation, but but taylor to their field of study, if they understand from the outset that they’re not going to get paid and that’s an internship also, it has to be a relationship where i understand from the outset otherwise it’s indentured servitude you tell them you’re getting gonna get paid, then they don’t. They don’t see a paycheck. That’s ah there’s got okay. That’s clearly got to be rolled believe it or not, that’s that’s when i passed that spelled out there, they have to understand that somebody’s done it alright on and also they’re supposed to actually because they’re an intern and learning from you they’re supposed to be, if if anything, and impediments to the business not ah bonus to the business. In other words, if the business says we’re going to hyre fifty interns to do all sorts of work for us and make money for us that’s not really a bona fide internship, the purpose of the internship, the primary purpose is to give training to the intern, not to make money for the company. And if it’s really a benefit to the company that’s one of the factors that will be looked at to say these air, not truly interns. Okay, thank you for taking little digression in tow. For-profit i love it, you know, you have these answers on top, your head man. Xero no notes, which i admire, i don’t like i don’t like notes, really? I have notes, but it is just off the top percent wonderful. I’ve been doing it for thirty plus years. I know you start to learn it if that helps. Yeah, yeah, so let’s, go back to the non-profit side there are so the general rule is that you can’t have unpaid work as volunteers, but then there are these exceptions that we were starting to get into right if it’s a bona fide organization charitable organization and people are truly coming and say, i want to lend a hand to do you were having were having a blood drive? Or we’re having a a special event and i’m a community member. I’m going to come in and volunteer to give some of my time to help you that’s a true volunteer, but again, if if they’re volunteering simply to do work that the company not-for-profits would otherwise be paying for that’s a problem, employees of the not-for-profits basically can’t volunteer to give away free work. That’s interesting. I wonder if that comes up much. I don’t know. Well, if you see it well, i haven’t seen it, but it’s addressed in a number of decisions or regulations where somebody’s tried it. Yeah, obviously what’s in there? Yeah, right. That’s. Interesting. Okay, if you haven’t, i’d say you have an employee working for enough for-profit and and and there’s some child care, you’re going to sit with some child kind of symbols. I don’t want to use the term baby sitting because that sounds jargon, but some sort of ah monitoring situation, which is not within the normal scope of that employees work. That might be okay for a volunteer for the employees, but certainly the employees can volunteer to do. Additional work that employees already getting paid for and where do you see non-profits making mistakes around the volunteer and in turn, well, i get calls from from some of my not non-profits and so, you know, we’ve got we’ve got all these people are in here and, you know, they’re here for, you know, ten or fifteen hours a week doing all this stuff, and i say, really what’s your first question, what were some? Of course? Well, i say, well, what are they doing? Do you have other people that you’re paying to do the same work? And they’re working side by side? Are there are these people already employed by you? Because if they are that’s major red flag onda geun, if they’re duplicating or substituting their substituting for paid employees, that’s, that’s a problem? We’ve got somebody who’s out on a totally leave elearning leave a family medical leave act type of leave, so they’re gonna be out for twelve weeks, so we’re gonna have a volunteer filling for twelve weeks, okay? Do you have a sound of a klaxon in here or, you know piela only like that, but that’s just my voice is all. We have is scary enough thrill enough weak enough as it is that’s very bad. So paternity leave maternity leave. You can’t have a volunteer filling in you’re basically saying, i’m going to have somebody do the same work as a paid employee, but i’m not going to pay them no lost don’t let you do that. All right? I think that’s very interesting. All right, so what do we do, teo, to remedy this. So when your clients are then calling and there, then finding out in this call that they’re they’re running afoul, what do we do next? Well, i tell them aside, i’m obligated to do as an attorney. You should change this, and you should start treating people correctly going forward because every day that you’re in violation of the labor laws or the or the tax code is a new problem. If you change things today or tomorrow and start treating people properly, pay them, then you don’t really have a problem. And by the way, all you have to do to comply with most laws is pay minimum wage and you know you don’t. You could have people have clerical people making fifteen dollars. An hour? I need somebody to fill in, and i’m just going to pay the minimum wage. You can do that, you just can’t pay him nothing. You can’t have them volunteer if they’re not truly bona fide volunteers, can you work out some alternate form of compensation besides, besides money? Like maybe they get some benefits of services from the organization i get sort of a barter arrangements. What i’m thinking of is that is that possible barter arrangements are legal, but their taxable i don’t represent any barter companies, but i happen to have a close friend who’s involved in a bartering company, and i know that when party a’s trading goods or services with party be, both sides are issued ten, ninety nines and and the company, the bartering company, will report that to the irs. So if you just say instead of paying you seven twenty five an hour, which is the federal minimum wage, it’s hyre in new york state and a lot of other states, but instead of paying you seven twenty five an hour for forty hours, which is with two, two hundred ninety eight dollars a week, i’m going to give you two hundred ninety dollars worth of free food that’s that’s a taxable event and frankly, it doesn’t comply with the law. The fair labor standards act, which is the federal law that requires people get paid, requires that you get paid in cash or the equivalent of cash, not in goods and services they’re certain deductions allowed, but not completely excellent. Now we’re talking about federal and state law here, a cz well around the volunteers and interns. Absolutely okay, so we’re talking mostly federal, but with the same qualification you need to check about check what the standards are in in your state are you? Are you still pretty well on your way to compliance? If you’re if you’re complying with what the irs requires, like like we said over on the independent contractor side e, i would say, you know, qualified lee, if that’s a word, if you’re complying with the federal rules, you are more than likely quality complying with state rules, but i certainly can’t give that as a guarantee without taking a look at the state rules. Understand? Okay, let’s, spend a little a little time. We’re just a couple more minutes on overtime for employees, what is the problem here that you see? Big problem is that certain employees aren’t being paid overtime because employers think they don’t have to. And the biggest fallacy, the biggest myth that i see is and and employers and employees both believed this is that if you paid a salary, you don’t get overtime that’s not true, you need to be paid a salary in order to be considered exempt from overtime. But on lee, certain employees performing certain duties are exempt from overtime. The main ones are talking about those one of those executives, administrators or administrative zone and professionals. So if you’re ah not for-profit ifyou’re ah, counselor, a psychologist, psychiatrist, a professional you’re not in your pay and you’re paid on a salary you’re not entitled to overtime, but you may be a highly highly paid administrative person who works closely with management. You may be exempt from overtime, but if you are a lower levels let’s, say, a clerical person lower simply on the orc chart. Not in terms of your worth, but and you’re you don’t have it, a lot of discretion and control doesn’t matter if you paid on a salary you’re entitled to overtime if you work more than forty hours in a work week and that’s not waivable, you can’t agree not to take it. You can’t enter into a contract dipped in blood notarized doesn’t matter. You have to get paid for all hours. Worked at time and a half and not less than time and a half. Pay attention to the labor law. Thomas l, a partner in the law firm of cullen c u l l e n and die kayman d y k m a n in garden city, new york and also in new york city. Thomas l thank you very, very much in my pleasure, mine as well. In-kind gift with maria simple coming up first. Pursuant i hope you find your existing donors who are hiding in your file the ones who are prime and ready to upgrade. 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So we got that we get the live love going out to somewhere, maybe multiple burrows in the five boroughs and then beyond that it’s a wide open country from left costa right coast? I don’t know, but wherever you are listening live, the love goes out and on the heels of that it’s, the podcast pleasantries that has to go as well, so grateful to our over twelve thousand podcast listeners know for pushing thirteenth out. You know, i don’t look every week, so i don’t really know. I just know that the trend is upward, but i only look at the raw numbers every week, but you know, we’re we’re we’re over twelve thousand there’s a stick with that so grateful that the podcast listeners are with us pleasantries to you and our affiliate. Am and fm listeners throughout the country. Thank you for being with us on your am and fm stations, wherever you are. Affections to the affiliate listening audience, the affiliate affection, the affiliate, audience affections. I could do triple a if i felt so inclined. But i think that is enough affections to our affiliate listeners. Here’s maria simple with in-kind gif ts marie sample is back. She’s, our monthly prospect research contributor and the prospect finder she’s, a trainer and speaker on prospect research. Her website is the prospect finder dot com. Her book is panning for gold. Find your best donorsearch prospects now she’s our doi n of dirt cheap and free. You can follow her on twitter at maria simple. Welcome back, maria. Hey there, tony. How are you? I’m doing very well. How are you today? Just fine. Thank you. Go that’s. Good. We’re here to talk about gifts in-kind on this fall afternoon what way are we are? But i first need to just quickly mention to you that apparently i am having a three year anniversary with your show this week. Really? You’ve been tracking your well, you know, who’s been tracking it is lincoln oh, really? You saw an anniversary notice on lengthen. This is this is your third year yet it sent out an anniversary notice. Tio my connections and i all of a sudden started getting all these congratulatory notes this week. So i thought, well, that isn’t that appropriate that here is my my weak. Teo, reconvene with you. So it’s been three wonderful years. Wow, that’s really something i would if you had asked me, i would have thought it was i would’ve said it was more like two holy cow that’s. Terrific. I get those notices, i but i don’t always read all of them. Usually i just read the birthday notices. I don’t always read all the work anniversary notices, but i also noticed they send them out throughout the month, so they don’t. They don’t only come in the beginning. So maybe i just maybe i haven’t gotten yours yet. You’re three three year anniversary, but happy anniversary. I’m glad you’ve been with me for three years. Thank you for having me for three years. Wonderful. Oh, thank you. My pleasure. Gifts, in-kind let’s. Make sure everybody understands what a gift in-kind is. Yes, that’s, right? Let’s do that first before i get thrown off into jargon jail first, first out of the gate here, so gets in-kind we’d really be anything other than monetary donations, so typically they would be considered donations of food, clothing, medicines, furnishings, office equipment, building materials and, you know, even sometimes services that air provided by somebody could be considered ah, gift in-kind as opposed to a gift in cash that they might give to your organization. So if they’re providing some sort of a specific service and then not charging you for it, i know that, you know, sometimes consultants will do that on on a pro bono basis, so that would be considered a gift in-kind as well, i could throw out another example that i’ve worked on a few times gifts of artwork, art collections are also gif ts in-kind i worked on a really interesting one once. Ah, it was a presidential memorabilia collection, and it ah, included a picture. It included the resin, the one of the nixon resignation letters original signed i think there were five or six that he signed, and it also had a picture of that famous picture of jimmy carter. Menachem begin and anwar sadat. You know, the three of them are shaking hands well, thiss was a deep into six figure art collection, but so they can be really interesting on dh cars. I’ve worked on a couple of classic car donations also, which can be quite valuable. I know you mentioned automobiles. I was just thinking of classic automobiles, but yeah, they they could be they could be kind of fun to work on. Well, so, you know, it must have been interesting. I’ve never had the opportunity myself to be working directly with, uh non-profit while they’ve been, you know, fortunate enough to receive something, you know, of that type of value on also, you know, it got me to thinking about, you know, well, what if i were a small, timid size non-profit and have the millionaire next store living in our community? And maybe people didn’t even realize they were housing any type of art collection or one or two even significant pieces in their home. And you know what? You know? What do you do? What is the next step that you do if you find out that perhaps somebody’s left it to you? And their will, or they could be making the gift while they’re still alive. When then, you know, it got to be really complicated as i started to research this a little bit to try and figure out. Well, what is the non-profit need to do first, in terms of valuing the artwork? So what did you do? I’ll tell you what organizations i kind of came up with that are reputable in terms of places you would turn to, but i’m curious to know how it worked out. How did you appraise the artwork? Yeah, well, let’s, um, let’s, take a step back and make sure he understands the for a gift that’s valued over five thousand dollars and again, like maria said, this is we’re talking about non-cash gifts, so not this is not cash or stock, but something other than that. Over five thousand dollars, the irs requires what’s called a qualified appraisal and that’s a term of art and the qualified appraisal has certain requirements, and a qualified appraisal has to be done by a qualified appraiser and that’s also a term of art, and they’re certain credentials that the irs requires the place that i turned for the presidential art collection anyway was thie the american association of appraisers? I think i’m pretty sure they’re based here in new york, and i believe i contacted them first for some recommendations specific, too presidential memorabilia, was it perhaps the american society of appraisers? Because my research shows that they’re the oldest organization founded in nineteen thirty six, and they think they are in the new york area, okay, could have been, but i think there’s another one, too, which i think is triple a american association of appraisers or american appraisal association, so we could try either one of those years is years more bonified because you actually research that i’m remember i’m living off the top of my head. Yeah, i actually am. I can actually post a list, uh, post show onto your facebook page, but there were actually sort of six top societies or associations, if you will that that my research turned up one was that one i just mentioned the american society of appraisers which according to this particular web site that lists them, says that this one is the oldest and then there’s the art dealers association of america uh the appraisers association of america there’s a triple a? Yeah, there’s. That could’ve been it. Okay. Thie appraisal foundation, thie international society of appraisers and the private art dealers association. So i thought that was all interesting. Then i got to wondering if you can actually turn to any of the major houses that actually, you know, the auction houses like those that you might be seeing featured on something like antiques roadshow. Ah, but i didn’t know if that was, uh, if people turned to those types of auction houses to help, you know, evaluate the worst oven item. Certainly an auction house, i suppose, would get involved once there it actually want to, you know, offload that particular items so that they will end up having the cash. I would imagine that would be the case for any non-profit other than a museum who would want to that gift, perhaps as part of their dahna display? Yeah. It’s it’s ah, it could go broader than that. You know, there are ways that non-profits khun use gifts in-kind in their mission that that are permissible and are not so obvious, like hospitals can use artwork because they can decorate. Waiting rooms and hallways and things. One of the classic car donations that i worked on was for a university, and we were anticipating using the classic convertible in there athletic recruiting because they thought that seventeen eighteen year olds, when they’re thinking about what college to go to to play sports, might love driving around in a being driven around in a fifty seven chevy. I’m pretty sure that’s what it was convertible, so there are different charitable uses that they’re not as obvious as like you said, you know, the museum, there can be other charitable purposes for for these types of gift now, yeah, i hadn’t thought of that. That sounds great, actually, i can i can really see how an organization might want to step back and think about how it could fit in, as you said to their overall mission or two attraction, like in the case of the college or university there with their son sports department, really? And of course, there’s also the other examples you gave you no services could be gift in-kind so that’s, obviously being used used up immediately a point that i want to make, too is sort of subsumed in what we’re saying, we’ll make it listen. You have to find the right kind of appraiser. There are like i mentioned presidential memorabilia there. Our appraisers are specialising just that. So if you had a ah, a fine art photograph that was being donated to you you need to find someone who specializes in not only find our photography but they may even specialize in the particular photographer the artist or the era if it’s ah it’s ah it’s! Not a contemporary piece of art so you have to find and this goes into the irs requirements. Do you have to find someone who specializes in precisely what it is you’re being given? If it’s an automobile automobile appraisers it’s just like a medical specialist, you have to find the right kind of person. Maria, let me ask you about trying to find gifts in-kind i mean, these don’t only come from wealthy people. I don’t want people to be left with that idea. They’d only come from people of wealth. What about ways of finding gifts in-kind in your community? Well, that got me to thinking about not not just the individuals in your community. Who, um i might be capable of doing this, but then i started thinking about all of the corporate programs that are in place, for example, that have gifts in-kind as part of their overall corporate social responsibility so they may have a corporate giving program, a corporate foundation, then they may have a separate set of programming related to in-kind um, and then i was wondering, well, how could a non-profit potentially find who are the corporations in my area or, you know, i’m a non-profit in need of, um, you know, whatever women’s closing to help the women in our shelter be closed in the winter months or something like that, you know, where could i find that actually found? Sure, there’s multiple websites, but i found a non-profit website that that looked like it would really be helpful front for your listeners to know about and it’s a good three sixty have you heard about that one? Oh, i don’t know it is what is a good three sixty dot or ge? Yeah, good three, sixty dot or ge and so you can go into this if you are a non-profit and you’re you’re in search of product donations. And you cannot go. You can see the companies that are there. And then, if you’re a company that wants to list your product donations, you can list what you have available on dh. Of course, if you’re an individual that would just like to donate to this particular or a good three sixty dot org’s, you can do that as well. They’re looking for monetary donations. Always. So i just thought it was a pretty interesting, almost like a clearinghouse. It looks like to me. Yeah. Okay. Well, that’s, why you’re are dyin of dirt cheap and free. Anything else you found out there about trying to find these types of gif ts? Um uh, i was thinking about this might be more suitable for organizations that are, you know, related to being near the water or maritime or marine environment organizations. But you and i have touched upon yacht’s in the past and trying to figure out, you know, yacht owners and so forth. But, you know, sometimes there will be people who would like to actually donate their yacht, just like people would want to donate a car supposed to try to sell it on their own. So boatinfoworld dot com would allow you to search by stay or county or zip code for a list of boat owners near you. So, you know, if we have anybody in the, you know, marine related industry listening to the call, they might want to check out boatinfoworld dot com to get a list of boat owners. Um, and it could be something that they would want to start cultivating relationships with those individuals getting them and involved in cultivation events, etcetera. You always go the marine way because you have a sailboat. I know you don’t and in-kind wave that in dahna that’s. Ok, you are you donating your sailboat? No, not any time soon, not okay, so you were quick to answer that, too. Okay, okay, where l should we go with this? What if, in terms of, well, i’m sorry? Was there anything more about finding potential gifts? In-kind or is we exhausted that um then i start thinking about real estate, and i was wondering, well, how would you find out if you want it to proactively find if there is real estate, that could be potential for donation? And i was thinking, well, i guess if you got involved in developing a solid relationships with realtors in your area or, you know, even the banks that you know, unfortunately, these last few years, we’ve seen such high foreclosure rates and so forth, there might be some opportunity there if you have conversations with bankers in your community or realtors to find out about some potential properties that could become available, you know, before as a donation. All right, we have to go out for a couple minutes. We come back. I have a couple of tips about real estate gifts that marie is talking about, and we’ll keep going on gif ts in-kind stay with us. Like what you’re hearing a non-profit radio tony’s got more on youtube, you’ll find clips from stand up comedy tv spots and exclusive interviews catch guests like seth gordon. Craig newmark, the founder of craigslist marquis of eco enterprises, charles best from donors choose dot org’s, aria finger do something that and naomi levine from new york universities heimans center on philantech tony tweets to, he finds the best content from the most knowledgeable, interesting people in and around non-profits to share on his stream. If you have valuable info, he wants to re tweet you during the show. You can join the conversation on twitter using hashtag non-profit radio twitter is an easy way to reach tony he’s at tony martignetti narasimhan t i g e n e t t i remember there’s a g before the end he hosts a podcast for the chronicle of philanthropy fund-raising fundamentals is a short monthly show devoted to getting over your fund-raising hartals just like non-profit radio, toni talks to leading thinkers, experts and cool people with great ideas. As one fan said, tony picks their brains and i don’t have to leave my office fund-raising fundamentals was recently dubbed the most helpful non-profit podcast you have ever heard. You can also join the conversation on facebook, where you can ask questions before or after the show. The guests were there, too. Get insider show alerts by email, tony tells you who’s on each week and always includes link so that you can contact guests directly. To sign up, visit the facebook page for tony martignetti dot com. Dahna more listeners have joined us from south korea on your haserot and also taipei. Taiwan has joined us. Ni hao. Maria simple. Hey, there. What would i say in jersey? What up? How you doing? Yeah, i doing that’s just yeah, i was born in jersey and i was raised there, so i don’t like that that kind of organized crime overtone around new jersey, but sopranos obviously hit that home. A couple of things that i wanted to reinforce about real estate that that you have brought up real estate can be a very, very good gift for non-profits it can also be a really lousy gift. You have to do your due diligence around real estate and basically it’s the same as if you were buying a home or a condor coop. Do the same too diligence before you put that charity name in the the the chain of title. So you want to do an environmental assessment phase one. If that raises any issues, then you have to go to a face to assessment. If the land has buildings on it or a home, whatever you want to make sure that the building is all in code. So there’s there’s, that kind of an inspection, a building inspection title search to make sure that there wasn’t there isn’t some defect in the title, basically all the things you would do as i said that you, if you were, if you were buying the place to yourself, whether it’s got dahna buildings on it or not before you took ownership of a piece of property, you want to make sure that it’s clean in all those ways environmentally title code and building inspection wise. Oh, and if you do all that, then you can end up with a really valuable gift of real estate. So you you bring up an interesting point. I hadn’t really thought about that chain of title that you just mentioned hyre so if i’m understanding you correctly, does that mean if if somebody were to approach an organization let’s say while they’re alive and they say, you know, i’ve got this undeveloped piece of land we want to leave, too. I would like to donate to your non-profit organization, and if you decide to say, pay well, great and take that piece of wind and then immediately sell it and let say it’s. Sold within, you know, three months time. And if you didn’t go through maybe something in the environmental assessment and then somebody down the line says, wow, i can’t believe x y z non-profit, uh, ever owned this piece of land it happens to have had, you know, contamination on it or whatever. So you’re saying you could end up coming to bite you in from almost like a pr perspective if your name’s somehow attached to it. This’s like a law school exam there’s a bunch of things in the inn. That hypothetical you just gave me? Yep. P r yes, but i think even potentially worse than that. Although pr can be pretty bad. There’s a potential for legal liability. If it’s if it’s an environmental mess, then all the owners in the past and i’m not environment the lawyer, but i know a little bit a very little about it all. The all the owners in the past are potentially liable for not having cleaned it up or possibly for having contributed to the mess. So and that applies to individuals to so yeah, that’s. This is why we do environmental assessments. You can you can get in some really sticky legal trouble, if they’re turns out later on a couple of owners later or something to be an environmental problem and, you know, you didn’t know about it, you didn’t insure against it, things like that. Go ahead. I was just wondering, what about in the case of somebody who is willed, a piece of land or a property that had some sort of an environmental issue from years ago? Let’s let’s, you know, think about somebody who may be owned. Ah ah, a family run gas station for a number of years or something like that or on oil related business oil tanks or something, and then the spouse dies. The person continues to all the remaining spouse, continues to own the property, has no heirs and decides to leave it at her will to a non-profit so then i’m wondering what the impact is mean in this case kayman non-profit just say no, we don’t want it no, thank you. Yeah, again. Sounds like a law school, hypothetical, by the way, i do recognize you turning the tables on me, asking me questions on i and i and i don’t appreciate it so you may not reaching your four with me. Yes, thie through the amount of time that you have to renounce a gift, i’m pretty sure that’s what it’s called in a will varies from state to state it’s typically ninety days or, you know, maybe longer for any beneficiary of a gift by will to turn it down. You don’t have to accept something that’s in a will. So if in your hypothetical the non-profit would want to do its due diligence around that real estate before it accepted the gift and within the time period that it can still turn it down, if it doesn’t want it. The only thing that came out of your earlier one was you said the the charity sells the real estate that’s a whole other issue. If it’s sold within three years of the time of the date of the donation, then that has implications for the donor’s charitable deduction. The donor’s charitable deduction gets reduced because if the charity unloads, i’m using an unkind word, but i’m not using a loaded word but gets rid of that gift within three years of the data donation that it’s presumed that the donation was not part of their charitable mission, not within their charitable mission and therefore that the irs goes back to the donor who claimed the donation and that and the deduction associated with it possibly years earlier, and reduces it from a fair market value to a cost basis dahna deduction. And that could be a huge difference between what it costs the donor to get something and what the market value of it was when they made the gift so big implications if charity does not use a gift if does not use a gift for at least three years, i have to go out in about a minute. Maria so i kind of took over your segment, but but you were asking me questions. So it’s your fault? Um, well, no, i mean, you know, you’ve given us so much food for thought, really? And i think, you know, the bottom line is you really have to be able to, you know, seek out the right appraisers, seek the advice of financial and law professionals when you’re going to be getting any sort of a significant gift. Ah, oven in-kind gift any non-cash related gift that you really do need. Todo your homework and and ah, and know what what to look for here, i think it’s, good stuff. There are a couple of irs publications that will help you publication five twenty six, which is called charitable contributions and also publication five sixty one, which is about gifts in-kind and those qualified appraisals and qualified appraisers i was talking about. Okay, maria, we got to leave it there. Thank you very much. Thank you so much, tony maria simple are doi n of dirt cheap you’ll find her at the prospect finder dot com and on twitter she’s at maria simple next week let’s wait and see i’ve never let you down. If you missed any part of today’s show, i beseech you, find it on tony martignetti dot com were supported by pursuing online tools for small and midsize non-profits data driven and technology enabled pursuant dot com weinger cps guiding you beyond the numbers wagner, cps dot com stoploss accounting software designed for non-profits non-profit wizard dot com and tell us credit card and payment processors. Passive revenue streams for non-profits tell us processing dot com creative producer is claire meyerhoff. Sam liebowitz is the line producer. Show social media is by susan chavez, and this music is by scott stein. Do with me next week for non-profit radio. Big non-profit ideas for the odd, they’re ninety five percent go out and be great duitz what’s not to love about non-profit radio tony gets the best guests check this out from seth godin this’s the first revolution since tv nineteen fifty and henry ford nineteen twenty it’s the revolution of our lifetime here’s a smart, simple idea from craigslist founder craig newmark insights orn presentation or anything? People don’t really need the fancy stuff they need something which is simple and fast. When’s the best time to post on facebook facebook’s andrew noise nose at traffic is at an all time hyre on nine a, m or p m so that’s when you should be posting your most meaningful post here’s aria finger ceo of do something dot or ge young people are not going to be involved in social change if it’s boring and they don’t see the impact of what they’re doing so you got to make it fun and applicable to these young people look so otherwise a fifteen and sixteen year old they have better things to dio they have xbox, they have tv, they have their cell phones. Me dar is the founder of idealist took two or three years for foundation staff to sort of dane toe add an email address card. It was like it was phone. This email thing is right and that’s why should i give it away? Charles best founded donors choose dot or ge somehow they’ve gotten in touch kind of off line as it were on dh and no two exchanges of brownies and visits and physical gift. Mark echo is the founder and ceo of eco enterprises. You may be wearing his hoodies and shirts. Tony talked to him. Yeah, you know, i just i i’m a big believer that’s not what you make in life. It zoho, you know, tell you make people feel this is public radio host majora carter. Innovation is in the power of understanding that you don’t just put money on a situation expected to hell. You put money in a situation and invested and expect it to grow and savvy advice for success from eric sacristan. What separates those who achieve from those who do not is in direct proportion to one’s ability to ask others for help. The smartest experts and leading thinkers air on tony martignetti non-profit radio big non-profit ideas for the other ninety five percent.

Nonprofit Radio for November 13, 2015: Your Engaged Board & In-Kind Gifts

Big Nonprofit Ideas for the Other 95%

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Michael Davidson: Your Engaged Board

Michael Davidson

Michael Davidson says your board members are happiest when you ask them to do more–not less. He tackles how to recruit and maintain an engaged board. He’s a consultant and board coach and former chair of Governance Matters.

 

 

Maria Semple: In-Kind Gifts

Maria Semple

Maria Semple, our prospect research contributor and The Prospect Finder, returns to share her advice about in-kind gifts. How do you find these non-cash gifts, their value and the right appraiser? When do you need an appraiser? Maria answers all. (Originally aired on October 10, 2014.)

 

 

 


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You’re on the air and on target as I delve into the big issues facing your nonprofit—and your career.

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Nonprofit Radio for October 10, 2014: Online Testing & In-Kind Gifts

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Cam Robbins & Matt Burghdoff: Online Testing

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What do you test online and how do you get started? The experts take on my hypothetical of a $500,000 fundraising campaign. They are Cam Robbins from Easter Seals and Matt Burghdoff with Donordigital. (Recorded at NTC 2014, the Nonprofit Technology Conference.)

 

 

 

Maria Semple: In-Kind Gifts

Maria SempleMaria Semple, our prospect research contributor and The Prospect Finder, returns to talk about in-kind gifts. How do you find these non-cash gifts, their value and the right appraiser? When do you need an appraiser? We’ll answer all.

 

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If you have big dreams but an average budget, tune in to Tony Martignetti Nonprofit Radio.

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