Tag Archives: philanthropy

IRS Tells Us What ‘Good Governance’ Means, Part Uno

Photo courtesy of alykat on Flickr.

We hear this language all the time in charity circles:

 

  • governance
  • accountability
  • transparency
  • board responsibilities
  • conflict of interest
  • whistleblower protection
  • executive compensation
  • document retention

… and other words and phrases in the nonprofit lexicon. What do they mean to the federal agency that reviews public charities when they apply for tax-exempt designation and again every year when most file an information return?

The most comprehensive (read “burdensome”) of the returns, form 990, asks lots of questions about whether policies are in place, but doesn’t (and shouldn’t) provide any detail as to what the expectations are around these arcane concepts.

If only we could agree on what the practices mean.

I found this gem on the IRS website, “Governance and Related Topics – 501(c)(3) Organizations,” that makes it pretty clear what the agency is looking for. (It’s from February 2008, but these definitions don’t change much.) The Internal Revenue Code does not require documentation or detailed policies in these areas.

But–big but–IRS believes, “A charity that has . . .a knowledgeable and committed governing body and management team, and sound management practices is more likely to operate effectively and consistent with tax law requirements.”(page 1)

That explains the Service’s opinion of the relationship between good governance and tax code compliance, and their interest in the former. So what do these things mean?

Good Governance. This is the broad category. It means having in place “policies relating to executive compensation, conflicts of interest, investments, fundraising, documenting governance decisions, document retention and destruction, and whistleblower claims.” (page 3)

Executive Compensation. You pay reasonable compensation for services rendered. Pay is determined by people knowledgeable about compensation practices and financially uninterested in the levels set. (page 3)

Conflicts of Interest. The Service “encourages a charity’s board of directors to adopt and regularly evaluate a written conflict of interest policy that requires directors and staff to act solely in the interests of the charity without regard for personal interests . . .” You set up the policy and monitor compliance. (page 4)

There is considerably more detail at the page references I’ve given you. Read the document and consult your legal counsel. Do not construe this post as legal advice. It isn’t.

Over the next few weeks I’ll take on additional governance topics from this informative IRS paper.

There are expert attorneys much more knowledgeable than me in the legal requirements for running your nonprofit. I suggest you pay attention to Carter Ellis and Gene Takagi. Gene and his colleague Emily Chan will be regular legal contributors to Tony Martignetti Nonprofit Radio starting in July. I’m sure we’ll talk a lot about governance.

Nonprofit Radio for May 20, 2011: Pay Attention to People & Have People Pay Attention to Your Website

Big Nonprofit Ideas for the Other 95%

You can subscribe on iTunes and listen anytime, anyplace on the device of your choice.

Tony’s Guests:

Alice Aspen March

Alice Aspen March, founder of The Attention Factor, she has studied how to be present and give attention to others. Her work will help your relationships with donors, co-workers, board members and volunteers.

 

 

 

Scott Koegler

Scott Koegler, our tech contributor and the editor of Nonprofit Technology News discloses how to make the perfect website for your nonprofit.

 

 

 


Top Trends. Sound Advice. Lively Conversation.

 

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

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

I interview the best in the business on every topic from board relations, fundraising, social media and compliance, to technology, accounting, volunteer management, finance, marketing and beyond. Always with you in mind.

When and where: Talking Alternative Radio, Fridays, 1-2PM Eastern

Sign-up for show alerts!

“Like” the show’s Facebook page.

Don’t forget to subscribe to the show’s podcast on iTunes. Download and listen whenever and wherever you want.

Here is the link to the podcast: 042: Pay Attention to People & Have People Pay Attention to Your Website.
View Full Transcript

Nonprofit Radio for May 13, 2011: Event Sponsorships & Email Security

Big Nonprofit Ideas for the Other 95%

You can subscribe on iTunes and listen anytime, anyplace on the device of your choice.

Tony’s Guests:

Karen Perry

Karen Perry, president of EventJournal, shares her ideas about how to cultivate, solicit and steward corporate sponsors to raise big money for your events.

 

I have a couple of questions for this segment. You can answer them here or on the show’s Facebook page.

Q1: Who solicits companies for your event sponsorships?

  • Staff
  • Committee volunteer
  • Board member
  • A combination of those above

Q2: In your largest event, what percentage of revenue is from corporate sponsorships?

  • 0-25
  • 26-50
  • 51-75
  • 76-100
Definitely NOT Howard Globus

Howard Globus, president of IT On Demand and guest contributor on this blog, reveals his strategies to keep your email safe and sound and away from snoopers.

 

He’s got some great nonprofit discount sites for major league security!

Here is a question for this segment.

Q3: Do you feel you have strong security protecting your sensitive donor data?

  • Yes
  • No
  • Not sure

Top Trends. Sound Advice. Lively Conversation.

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

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

I interview the best in the business on every topic from board relations, fundraising, social media and compliance, to technology, accounting, volunteer management, finance, marketing and beyond. Always with you in mind.

When and where: Talking Alternative Radio, Fridays, 1-2PM Eastern

Sign-up for show alerts!

“Like” the show’s Facebook page.

Don’t forget to subscribe to the show’s podcast on iTunes. Download and listen whenever and wherever you want.

Here is a link to the podcast: 041: Event Sponsorships and Email Security.
View Full Transcript

Nonprofit Radio for April 29, 2011: Planned Giving Fundraising & A Gift Planning Conference

Big Nonprofit Ideas for the Other 95%

You can subscribe on iTunes and listen anytime, anyplace on the device of your choice.

Tony’s Guests:
Richard Slutzky, co-author of Thriving in the Comet’s Tail, explains his ideas for fundraising as the U.S. emerges from recession. His insights apply to your long-term and immediate fundraising work. (If you’d like to buy the book contact WordsMaplewood. Call of email the store to buy the book.)

The “comet” in his title is our recession.

Putting aside economists’ definitions, do you believe we’re in the tail end of the U.S. recession?

  • a) Yes, the end is in sight, within 3-9 months
  • b) No, we’ve got at least another year
  • c) I really don’t know when the end will come

John Bacon and Alex Brovey are officers of the Philanthropic Planning Group of Greater New York (PPGGNY).

They’re coming to talk about the group’s May conference, the New York Philanthropic Planning Symposium. This is the PPGGNY’s premier annual event.

The event will:

  1. spotlight the nuts and bolts for new philanthropic planners
  2. illuminate the techniques and tools used by experienced planners
  3. focus a laser-sharp spotlight on those practical topics specifically requested by our members — subjects that have direct practical application to their work

Top Trends. Sound Advice. Lively Conversation.

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

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

I interview the best in the business on every topic from board relations, fundraising, social media and compliance, to technology, accounting, volunteer management, finance, marketing and beyond. Always with you in mind.

When and where: Talking Alternative Radio, Fridays, 1-2PM Eastern

Sign-up for show alerts!

“Like” the show’s Facebook page.

Don’t forget to subscribe to the show’s podcast on iTunes. Download and listen whenever and wherever you want.

Here is a link to the podcast: 039: Planned Giving Fundraising & A Gift Planning Conference.
View Full Transcript

4 Reasons Planned Giving Is A Jealous Mistress

Bambulka courtesy of M.A.R.I.O.N, on Flickr
Planned Giving does not like to share its affection with other fundraising work. This job post from Twitter reminds me it troubles me to see Planned Giving as part of a split-job responsibility:

NEW JOB!! Development Assoc-Corp/Fdn Rltns & Planned Giving, XXXXX University, Somewhere, USA (bit.ly link omitted)

I’ve got 4 reasons why pairing Planned Giving with other fundraising responsibilities hurts your PG program:

  1. The “other” has shorter deadlines. Whatever it’s paired with, the other fundraising responsibility will have more immediate deadlines, like in the example above. That means PG doesn’t get the attention it needs. Promotion is ignored and relationships aren’t cultivated. The worst combination I’ve seen is with annual fund. In the fourth quarter, the goals are weekly. How much PG do you think gets done in those three months–and the hectic planning leading up to them?
  2. The “other” yields cash sooner. A planned gift nearly always means cash to your nonprofit at the death of the donor. The exceptions are IRA rollovers and the rare charitable lead trust. Take the annual fund pairing. Cash comes in the door often within weeks of a solicitation, and certainly that year. You can wait decades for money to come from the planned gift. If the fundraiser is evaluated on money raised in the year, will PG get much attention? The answer to this is balanced and sophisticated performance evaluation criteria. I haven’t seen it for split-job fundraisers.
  3. The administration deceives itself. Having declared Planned Giving to be in someone’s title, the administration and board are satisfied they’ve “got Planned Giving covered.” But because it gets short shrift (see 1 and 2 above), PG isn’t covered. It’s largely ignored.
  4. PG never gets its equivalent share of the title. If it’s half the title, as in Director of Major and Planned Gifts, it won’t get 50% of the fundraiser’s attention and time. I once saw “Director of Annual Fund, Foundation Relations and Planned Giving” at a college. That’s silly, for the reasons above.

I don’t presume every organization can afford an employee devoted to Planned Giving. Such a presumption would also be silly. But expectations must align with reality. I see gross misalignment, because administrators and boards don’t recognize the jealous side of Planned Giving.