Tag Archives: Taxes

IRS “Dirty 320,000” List Coming

GuideStar advised in an email yesterday that IRS will soon release its “Nonfiler Revocation List.”  The Service says the same in a February article.

According to GuideStar, the list contains “as many as 321,000 nonprofits.”  That’s one-quarter of all the public charities in the United States.  The New York Times had the same estimate in coverage last April, ahead of the May 15 filing deadline that caused the loss of tax-exempt status for so many.  Failure to file form 990 with IRS for three consecutive years lands you on the list.

From the IRS article: “Loss of exempt status means an organization must file income tax returns and pay income tax, and its contributors will not be able to deduct their donations.”

And from a July, 2010 IRS press release: “If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.”

You know I’m big on compliance issues.  CEOs and boards have got to step-up to their fiduciary duties to the charity and stop ignoring legal requirements.

The regulatory environment is only going to get more hostile to scofflaw nonprofits.  This applies to tax code requirements, governance issues, and state laws, like charity solicitation registration filings.  The days of mom-and-pop boards “doing good” are long over.

This filing requirement was heavily publicized by IRS last year ahead of the deadline, and the agency extended the deadline to October for small charities.  It was covered by mass media.  There’s just no excuse if your charity is an active organization.  File your delinquent returns.  If the organization has terminated activity–or merged with another nonprofit–you need to disclose that to IRS on a final form 990.

Nonprofit Radio for March 18, 2011: Legislative Lookout and APPrehensive

Big Nonprofit Ideas for the Other 95%

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

Me interviewing Emily Lam and Perry Wasserman
Legislative Lookout:
I’ll discuss the possible change in the charitable deduction with nonprofit lobbyist Perry Wasserman. Perry is managing director of 501(c) Strategies, a Washington, DC-based lobbying firm that works exclusively with nonprofit organizations.

We’ll examine what Congress is debating that hits home for you:

  • Is the charitable deduction at risk?
  • What’s the fate of the IRA charitable rollover?
  • What are continuing resolutions, and why are they killing important nonprofit programs?

 

APPrehensive:
Should you develop a smartphone app for your nonprofit? Scott Koegler is our regular tech contributor and editor of Nonprofit Technology News. He will explain what it takes and how you get started.
    

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

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Here is the link to the podcast: 033: Legislative Lookout & APPortunity

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Stop Squawking About Charitable Deduction Reduction

Puffin courtesy of AmySelleck.

Obama’s 2012 budget proposal is out and it revives the charitable deduction limitation for wealthy donors.

That means we’ll have to listen to the doomsayers, like Independent Sector’s Diana Aviv, exclaim how devastating this will be to the nonprofit community. From last December, here’s a preview of what we’ll hear very shortly. The only nonprofits she speaks for in that article, “Nonprofits Fear Losing Tax Benefit,” are the members of Independent Sector.

I’m thinking of the other 95%, the vast majority of nonprofits who don’t care because they don’t have donors, or many donors, who earn over $250,000 a year, the income at which the deduction reduction would kick in.

We know that tax incentives are not people’s primary motivation for giving. Altruism is. We know that giving always bounces back after depression, recession and tax changes that depress it. This will not destroy the nonprofit sector.

Can’t we trust our donors for Pete’s sake?

On the day the President’s proposal was released, here’s what Independent Sector had on its home page:

Link provided to the webcache of the Independent Sector website (click on the image).

I remember that. It was about two months ago, and it all sounded quite good for charities, including the 95% unheard “minority” that fundraise from low and middle income donors. Charities scored big in December. Do we have to score big again in 2012?

Why can’t the vocal nonprofits step-up this time and say, “Well, we don’t love it, but we’ll do our share to help reduce the deficit that, in small but noticeable part, the charitable deduction has contributed to for decades. Plus, we got these bennies in December 2010 so we’ll sit out this round.”

Doom-and-gloomers: stop squawking. Spend your lobbying money and strategy time visiting prospects, reminding them how critical your good work is, and soliciting and closing gifts.

The most foresighted charities will stand out from the crowd, and publicly proclaim, “We accept the charitable deduction reduction. We want to do our part to help America’s recovery.” I see a full-page ad in The Times with a hundred CEO signatures. Their donations will triple. Run it in The Journal and donations will quadruple.

I trust America’s altruism. I base my trust on history. (Should “God Bless America” be playing in the background? I hear “This Land Is Your Land.”)

As this gets posted the day after Obama’s proposal was released, I could be wrong about the doomsayers. Maybe they’ll come around and accept what’s fair. If they do, look here for my congratulations and apology.

What Does Your Charity’s Conscience Say?

19th century charity board in the north aisle of St. Mary (copyright Richard Croft and licensed for reuse under this Creative Commons Licence)
National Public Radio reporting confirms what I have believed for years: IRS does not have sufficient resources devoted to policing the nation’s charities. That means the community must keep itself clean.

In NPR’s coverage, I’m focusing on the blog page where the story is posted. Not the four minute story, but the blog post and its shorter audio interview. A former director of the Service’s Tax Exempt/Government Entities team explains nonprofit examinations and audits aren’t a priority because considerably more money can be recovered from taxpayers and businesses.

That makes all of us in the nonprofit community responsible for operating properly. The buzzwords like accountability, transparency and compliance are well known, nearly cliché, and most of us recognize donors increasingly demand clean operations. That in itself should provide sufficient motivation.

Fear also motivates. If you don’t fear an IRS review because you’re resting on favorable odds, recognize that other interests within government are looking over your shoulder. From your state attorney general and secretary of state to the Federal Trade Commission and Congress, there are ample institutions helping to make sure you do the right thing.

Do you honestly not know what’s right? Do you fear the things you don’t know or understand? Your employees probably know the way. (That’s what I’ve seen for 13 years.) Are you listening to them? (In my 13 years, probably not.) If you prefer, there are thousands of consultants, in all stripes, to help your charity find its course.

Ultimately, it’s a matter of conscience–your charity’s conscience. What does it tell you about the right way to conduct business, to keep its reputation, donors, employees and board out of trouble?

That message is stronger than any IRS can put out.

Gift Possibility Remains For 2010 IRA Rollovers

There’s still a chance for your charity to get a 2010 IRA rollover, even though re-contribution is not allowed.

When I posted about the revived IRA charitable rollover, a question arose among the comments. Advisors wondered if those over 70 1/2 who had already met their 2010 minimum required distribution (or MRD, which most taxpayers use as their maximum distribution) could re-contribute to their IRA, then make a charitable gift. The purpose would be to take advantage of a provision in the Tax Relief Act that allows January charitable rollovers to count toward 2010 MRD. The IRS says “no,” because Congress didn’t allow for it. Here’s coverage from The Chronicle of Philanthropy and The Wall Street Journal (if you’re allowed in).

Yet, a gift possibility remains. Your donors who’ve met their 2010 MRD still can do an IRA rollover to your nonprofit (more precisely, it’s a “qualified charitable distribution”) this month, and make the election for it to count in 2010. They would have to distribute more than their 2010 minimum, with the extra going to you. They could do it up to the $100,000 annual limit and it would not be taxable income.

That’s a tough sell, I know, because so many people count the minimum as their maximum–the floor as their ceiling. (They live in a building where I would not want to buy; strictly a rental property). But, it’s a possibility you should consider. Someone who loves your work–a board member, perhaps–might be game. A particularly good prospect for this is someone with a multi-year pledge, looking to accelerate their payments. Or a donor willing to help you overcome a 2010 shortfall.

Another possibility: I have a client with a donor who has pledged his entire IRA to the charity, including distributions, but still owns it. Someone who has made that commitment may also be willing to get cash to you sooner than later. (We’re talking to him.)

Hey, I’m opening up a possibility where you probably thought one did not exist. Exploit as you see fit.