Friday, February 6, 2015

Most Recent Nonprofit Advocacy Matters

The most recent edition of Nonprofit Advocacy Matters, published by the National Council of Nonprofits, contains a number of entries that may interest readers.  Headlines include the following:

 

Federal Budget 101 (discussing the significance of the President’s Budget, the Budget Resolution prepared by the House and Senate Budget Committees, the Appropriations process and the process of Budget Reconciliation)

 

Got Influence? (opining that “nonprofits from eleven states have the inside track on delivering the message on how tax exemptions, giving incentives, and regulations” affect the charitable sector because leadership assignments in the Senate Finance Committee “will affect the policy debates and legislation for the next two years”)

 

Maine Governor Proposes Taxes on Nonprofits (reporting that the budget plan of the Governor of Maine “would remove the full exemption from property taxation on properties owned by nonprofit organizations with an assessed value in excess of $500,000, and reduce the exemption to 50 percent on the portion of the value in excess of $500,000”)

 

Court Orders Massachusetts to Update Rates Paid to Nonprofits (reporting that a state judge has ordered the Massachusetts Secretary of the Executive Office of Health and Human Services to “update the rates paid to nonprofits for human services provided on behalf of the Commonwealth”)

 

Nonprofit Independence Challenged, Preserved in the Northeast (citing recent examples of how “public and government officials often misunderstand the relationship between governments and charitable nonprofits and mistakenly presume that rules and mandates by government ought to automatically apply to these independent organizations”) 

 

Taxes, Fees, PILOTs (noting developments in Alaska and Pennsylvania)

 

New State Offices for Faith-Based Nonprofits (discussing the creation in New York of an Officeto assist and leverage community and faith-based organizations in the delivery of education, health, workforce training, food programs, and social services to communities, particularly those most in need” and proposed legislation in Pennsylvania to establish an Office “that would do much of the same work contemplated for the new New York Office”)

  

JRB

February 6, 2015 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Thursday, February 5, 2015

NY Governor Cuomo Proposes Tax Credit for Gifts to Educational Nonprofits

As reported in The Buffalo News, New York Governor Andrew Cuomo is proposing that those who donate to organizations “that give scholarships to low- and middle-income families to attend private schools would get a tax break,” as would those who donate “to education foundations and other groups that help public schools.”  The form of the proposed tax incentive is reported to be a state income tax credit that “would take up to 75 cents off the tax bill for every dollar donated, up to a $1 million.”

Enacting the proposal into law may require some political maneuvering.  The story continues:

In Albany, debate over the tax credit has been framed as a fight between private school supporters and public school advocates. But Cuomo last month linked it to another education proposal, the DREAM Act, short for Development, Relief and Education for Alien Minors, which would let children of undocumented immigrants get college tuition assistance.

 

Cuomo told lawmakers last month that he would only approve the two together.

The article states that opponents fear the proposal will lead to less support for public schools, whereas others see benefits to public education in that donors to charities “that raise money for school improvements or academic programs at public schools would be eligible for the tax credit under Cuomo’s plans.” 

 

JRB

February 5, 2015 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 4, 2015

Tax and Spending Proposals Affecting Charities and Charitable Gifts

The Chronicle of Philanthropy is running three stories discussing certain of the provisions affecting the charitable sector in President Obama’s proposed budget, one of which stories also notes efforts in the House of Representatives to make permanent several temporary charitable giving incentives. 

 

One article observes the “mix of praise and criticism for a nearly $4-trillion budget package for fiscal year 2016 that was formally released by the White House on Monday.”  The sense of the article is that the nonprofit sector is (unsurprisingly) embracing many of the President’s funding initiatives, while (also unsurprisingly) expressing some disappointment with his perennial proposal to limit the value of the charitable contributions deduction to higher income taxpayers.  One of the fairest assessments comes from a YMCA leader:

              

Regardless of what is ultimately passed by Congress, the proposal is a good reflection of the President’s priorities, said Neal Denton, senior vice president and chief government affairs officer for the YMCA of the USA. “We’re especially happy to see his focus on ensuring opportunities for children and families to learn, grow, and thrive,” he said, noting line items that would increase access to child care and early education, among other things.

  

Key excerpts from another article, which focuses on tax matters:

 

Part of a massive $4-trillion proposal, President Obama’s plan would limit the value of all itemized deductions, including one for charitable gifts, to 28 percent for individuals who earn more than $200,000 and couples who earn more than $250,000. …

 

The budget plan follows a tax proposal President Obama made in January that would raise the capital-gains tax rate and close what the White House called the "trust-fund loophole," which limits heirs’ exposure to gains in the value of the assets they inherit. The president’s plan would subject appreciated value to the capital-gains tax but would provide an exemption if the assets are donated to charity.

 

Joanne Florino, senior vice president for public policy at the Philanthropy Roundtable, an organization that represents donors, said it was curious that President Obama exempted charitable gifts on those inheritances, yet is still pushing to limit the deduction over all. …

 

Meanwhile, House Republicans are pushing to make a set of temporary tax breaks for charitable giving permanent. The tax benefits, for gifts of land for conservation purposes, gifts of food to food banks and other charities, and gifts made by retirees straight from individual retirement accounts, are part of a slate of about 50 temporary tax provisions called "extenders" that are usually renewed each year.

 

And yet another piece explains why the President’s proposal to raise the estate tax rate – while simultaneously not subjecting appreciation on assets to federal income taxation when the assets are donated to charitable entities – is a significant tax incentive for charitable giving:

 

An estate-tax increase would provide a huge benefit to charities because donations to these groups would become the only easy way to legally avoid capital-gains taxes, according to Len Burman, director of the Tax Policy Center.
 
Rather than pass assets down to heirs and incur a higher tax levy, more wealthy tax filers will chose to bequeath their assets to charities upon their death, Mr. Burman said.
 
“The president has locked up the philanthropic sector vote,” he wrote in TaxVox, a blog maintained by the center. “Except, of course, he isn’t running again.”

 

For an opinion-free survey of the President’s tax-related proposals affecting charities, see this previous entry on the blog.

 

JRB

February 4, 2015 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Monday, February 2, 2015

BC Center on Wealth and Philanthropy Expected to Close

The Boston Globe reports that Boston College’s Center on Wealth and Philanthropy, established in 1970, will cease operating when its leaders step down.  The Center’s director, Paul Schervish, a former Jesuit priest, and associate director John Havens, reportedly plan to retire soon, perhaps by this summer (barring the Center’s receipt of an unforeseen grant that would prolong their interest in operating the Center).  The Center’s work apparently has been tied closely to the unique, complementary backgrounds and personalities of its leaders: 

[B]oth [leaders] say their distinctive blend of expertise — Schervish’s background is in literature, sociology, and theology, while Havens’s training is in economics, mathematics, and physics — has created an academic partnership that would be difficult to replicate.

“We have a special chemistry, and that’s led to a unique working relationship,” Havens said.

The story features an interesting discussion on misconceptions about the relationship between estate taxation and philanthropy:

In 2006, the center published a paper refuting the long-held belief that the main reason wealthy people leave money to charity is to avoid estate taxes, and that charitable bequests would plummet if estate taxes were eliminated.

On the contrary, Schervish and Havens found, the wealthiest Americans tend to give to charity for more altruistic reasons once they reach financial security.

“We always focused on spiritual context,” Schervish said, “and our statistical work was always the foundation for a moral question: How can you use your wealth for deeper purposes when you no longer need to achieve a higher standard of living?”

The Globe reports that Schervish was recently appointed a visiting research fellow at Duke University and intends to serve on the faculty of Boston College until the end of the year.

 

JRB

February 2, 2015 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Monday, January 12, 2015

More on the New Nonprofit Hospital Final Regs

As reported here on your faithful Nonprofit Law Prof Blog by Roger Colinvaux, the IRS issued final regulations under Section 501(r) on the requirements for nonprofit hospitals at the very end of last year.

Over the weekend, The New York Times did a report on these regulations, focusing on efforts to stop "aggressive tactics to collect payments from low-income patients."   To me, the most interesting part of the article isn't the summary of the regs with regard to collections - it's the quote (and accompanying picture) from Senator Grassley:  "Nonprofit hospitals and for-profit hospitals have often been indistinguishable... The rules make clear that tax-exempt hospitals have to earn their tax exemption."

It seems to me that Senator Grassley has been some what low key on charitable issues in the past few years - I'm guessing we will be hearing more from him with the resurgence of Republicans in Congress.

For other coverage of the final regulations:

- The Chronicle of Philanthropy

-briefly, at Independent Sector

-PriceWaterhouse Coopers

I'm happy to add any other links that people have found useful.

 

EWW

 

January 12, 2015 in Current Affairs, Federal – Executive, In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 6, 2015

NonProfit Times: 5 Fundraising Predictions for 2015

With the New Year just six days old, The Nonprofit Times has published its top five fundraising trends for 2015: conversion optimization, or improving donation flow to raise more money; the ability to engage with Millennials; donor retention and treating all donors as if they are major donors; online fundraising and mobile; and the ability to share stories in a very visual way.

The Times quotes Rich Dietz, senior product manager for digital fundraising for Abila Software in Austin, Texas, as saying that “2015 will be a big year and a transitional year for the nonprofit sector as business-minded tactics slowly gain ground and organizations think about increased growth versus simply being sustainable.  Engagement strategies will reach new levels as Millennials continue to emerge in importance and nonprofits think about the best way to interact with their supporters.” 

Dietz's predictions for 2015 fundraising include:

  • Conversion Optimization: Organizations will begin to think about how to better convert existing website visitors versus simply attracting new visitors. This is a business practice that many small businesses have adopted recently and will work well for nonprofits. Conversion optimization revolves around measuring, testing and optimizing the donation flow to raise more money.
  • Millennial Engagement: According to The Brookings Institute, Millennials will make up 75 percent of the workforce by 2025. As Millennials enter the workforce and have money to spend, organizations will need to put strategies in place to best engage this demographic. Many follow a different path to becoming a donor than is traditionally done and nonprofits will need to adapt to these differences.
  • Donor Loyalty and Lifetime Value: Tracking donor engagement will be crucial. Organizations will spend more time analyzing characteristics and behaviors of all of their constituents — not just major donors — to better understand what drives their giving behavior. By tracking donor engagement, organizations will be able to further segment their appeals, personalize their outreach to donors, significantly increase donor loyalty, improve lifetime value, and treat all donors like major donors.
  • Online and Mobile: Online and mobile have played an increasingly key role for organizations the past few years, and that will continue in 2015. Social will play a key role in the “attention economy,” and responsive design will be necessary to allow supporters to access an organization’s website at any time from any device. 2014 was the tipping point for more web traffic coming from mobile devices than desktop computers. According to Pew Research Center, more than 90 percent of all Americans own a cell phone.
  • Storytelling Becomes Visual: Creating a narrative and sharing a story has always been important for nonprofits to successfully engage donors, but doing so in a visual way is becoming essential. Organizations will have to find creative and innovative ways to engage supporters in a world full of distractions, and visual components are key. Web posts with visuals drive up to 180 percent more engagement and research indicates people process visuals 60,000 times faster than text.

 

Vaughn E. James

  

January 6, 2015 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Friday, December 19, 2014

On the Road to Nonprofit Collaboration

        Nonprofits today are turning to creative collaboration to accomplish their goals. For-profits have long utilized various forms of collaboration to capture market share. With a foray into collaboration, nonprofits now must determine the extent to which collaboration will be legal versus non-legal. The Stanford Social Innovation Review recently featured an article entitled “Collaboration-palooza” that shows the four main types of collaboration nonprofits are using and where they fall along the spectrum of legal forms. The article also deals with the impediments to collaboration. Specifically, the article details the following three:

        “Along with strong momentum across the collaboration spectrum, we found three inconsistencies between funders and nonprofit leaders that are creating barriers to collaboration done right.

        1. Struggling to find philanthropic support A significant barrier is nonprofit leaders’ perceptions of low philanthropic support across the collaboration spectrum. Fewer than 20 percent of nonprofit leaders said they received support from their funders during the process, and more than 50 percent reported no support whatsoever for any form of collaboration. Leaders pointed to especially low levels of funder backing for sharing support functions, which are usually intended to lower operating costs and free up funds to expand programs. This foots with survey data from Grantmakers for Effective Organizations 2014 report Is Grantmaking Getting Smarter, which found that 53 percent of funders never or rarely funded collaborations and only two percent did so consistently. Yet, strikingly, the reason funders most frequently cited for failing to support collaborations was that their grantees didn’t ask. Further, they told us in follow-up interviews that they worried they would inject bias if they initiated the conversation. A program officer in Pennsylvania said, “We have to be careful. Whenever I speak up at a meeting, I get a proposal about the idea!” But the same funder told us that when grantees came forward with a plan to collaborate, he was eager to support it.

        2. Difficult match-making A second barrier to collaboration lies in finding the right partners and negotiating respective roles. Nonprofits and foundations both cite defining relationships and roles as a top challenge to collaboration. But nonprofits rated finding the right partner as the biggest barrier, while foundations rated it the smallest one. In our study, helping nonprofits find partners was the most common way that funders supported collaboration, but they said they needed to tread cautiously: “I don’t feel comfortable recommending partners,” said a Chicago grantmaker. “In part I worry that nonprofits might take my word as dictate, but also I feel that they need to be committed enough to do their own homework.”

        3. Unsuccessful joint programs A third challenge is the disparity between funder and CEO perceptions about which forms of collaboration fail more often. Funders see joint programming as the most successful form of collaboration. Nonprofit CEOs, on the other hand, found that the more integrated forms (shared support functions and mergers) were most likely to succeed and cited joint programs as having the highest failure rate (20 percent).”

If collaboration nonprofits are able to show overall better returns, i.e., social impact, the first barrier will be largely resolved.  Donors could play a role in the second barrier if they have enough information about the social impact various charities are having.  A push in the sector toward using legal forms, such as mergers, would assist with the overall success rate.

The full article is available here.

 

Khrista Johnson

December 19, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 17, 2014

Unfriendly Competition?: For-Profits and Nonprofits

    As nonprofits and for-profits increasingly compete in the same fields, several legal issues are emerging.  Two of the main issues are the following: (1) UBIT and (2) for-profit attempts to limit the market nonprofits can attract.  Nonprofit Quaterly featured an article highlighing this tension, which explored Alabama Dental Association's (ALDA's) opposition to the expansion of Sarrell Center, a nonprofit that provides dental treatment to poor children.  ALDA has considered advancing state legislation to "control" the nonprofit, and Sarrell brought a suit against the University of Alabama at Birmingham when it announced its students were no longer available to volunteer at Sarrell clinics.  Even the YMCA has been under attack from for-profit exercise clubs in Idaho.  Ultimately the Board of Equalization decided to impose a 19% tax on YMCA profits.  The issue has arisen in numerous areas, including day care centers, theaters, etc.  The line between nonprofits and for-profits has been overlapping tremendously, and unfair competition appears to be an issue that will persist.  Read more about this issue here.

 

Khrista Johnson

December 17, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 16, 2014

Donor Refund Policy?

        Although charitable contributions traditionally have been perceived as a contract between the donor and the charity, donors who are displeased with how their funds have been used are asking for refunds according to a recent WSJ article. In fact, some courts are starting to recognize donors’ rights over gifts after they have been given. This highlights the need for greater transparency and accountability in terms of charitable giving. The tools used in impact investing could prevent such drastic donor disappointment. It is really the result of the larger problem of uninformed giving. In an upcoming article, I examine how the tools used in impact investing can solve it. First, we must provide donors with a way to measure “return” on their investment, i.e., social impact. An impact investing tool that provides a standardized set of metrics for measuring social impact is the solution. However, not all charities merit review under this tool, and we must limit the group of charities that will undergo this review by conducting an initial qualitative analysis. Second, we must enable donors to select charities based upon a comparison of their level of social impact. The current rating system used in impact investing will achieve this end in the charitable sector as well. The article proposes a system for evaluating and rating charities by applying the tools of impact investing in order to establish what I have termed an efficient charitable market. It shows the end result will enable U.S. charitable investors to make even smarter decisions that dramatically better our world. In terms of a side note, it will also help prevent donors from seeking refunds.

 

Khrista Johnson

December 16, 2014 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, December 15, 2014

New Report on the Impact of Impact Investing

A few days ago, the Aspen Institute issued a report entitled The Bottom Line: Investing for Impact on Economic Mobility in the US. The report shows how impact investing is increasing economic mobility for low-income families. The report is another example of how the nonprofit sector may have serious lessons to learn from the impact investing sector.
The report is available here.

 

Khrista Johnson

December 15, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Friday, November 21, 2014

Most Recent Nonprofit Advocacy Matters

The most recent issue of Nonprofit Advocacy Matters, published by the National Council of Nonprofits, is out. Stories include discussions of what is on the table in the lame duck session of Congress, the spending reduction pressures facing several state and local governments, statewide ballot measures and constitutional amendments that were passed by voters earlier this month and that affect nonprofits, and tax & fee proposals in Oregon and Hawaii of relevance to nonprofits.

 

In addition, in its “Worth Quoting” section, the issue highlights an interesting observation of Ann Goggins Gregory, COO of the Greater San Francisco Habitat for Humanity:

Overhead in the for-profit world—sales, general and administrative costs as a percentage of total sales—is 25% across all industries and 34% for service industries. The cruel irony of holding nonprofits to a much tougher standard is that donors often say that they do this because nonprofits ought to ‘run more efficiently, like a business.’ Most people don’t know the overhead of businesses because profitability matters more.

 

The point is rather thought-provoking, and prompts some questions.  The following come quickly to mind: At what point does too much emphasis on reducing overhead lead to work environments that hinder the productivity of nonprofits’ employees?  How much of for-profit firms’ overhead is better viewed as a form of disguised compensation to employees?  Can we devise better metrics of social value produced by nonprofits and examine correlations between social output and overhead?  Who receives the primary, direct benefit of various types of overhead?  Is there a way to analyze whether nonprofits in certain fields should have higher overhead than others by studying differences in overhead incurred by for-profit firms in different industries?

 

JRB

November 21, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 19, 2014

Former Controller of the Hereditary Disease Foundation Charged with Embezzlement

In Former Controller of Medical Nonprofit Is Charged With Embezzling $1.8 Million, the New York Times reports that Karen Alameddine, who served as the controller of the New York-based Hereditary Disease Foundation from September 2005 through January 2014, has been charged with embezzling more than $1.8 million of the nonprofit’s funds.  Further details appear in the story: 

Federal prosecutors in Manhattan said in a criminal complaint unsealed on Tuesday that Ms. Alameddine began diverting money by disguising entries in the foundation’s accounting software “to make what in reality were transfers to her personal bank account appear as if they were wire or bank transfers” to grant recipients.

 

The government said Ms. Alameddine, who also went by Karen Dean, worked for the organization in recent years from her residence in Perris, Calif. The funds she diverted went into accounts she controlled with names like Abacus Accounting, Chez Cheval Ranch, Dean & Co. and Karen Dean Exports, the complaint said.

The alleged scheme reportedly came to light after Alameddine’s departure, when the foundation investigated a complaint from a grant recipient that he had not yet received his check from the foundation.

JRB

November 19, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Monday, November 17, 2014

Philadelphia-Area Nonprofit Illustrates the Changing State of International Adoption

In Era Ending in International Adoption, The Philadelphia Inquirer reports that Pearl S. Buck International, a nonprofit that for years has worked to find homes for children unlikely to be placed in families through typical adoption agencies, has terminated its international adoption operations.  The change is portrayed as a sign of the times – a perfect storm of legal, economic, and cultural factors now stifling international adoptions.  According to the story,

A paradigm shift is taking place in countries across the globe, including the United States, that have enacted more restrictive adoption policies. As a result, the international adoption rate has plummeted by 70 percent since 2004 and squeezed out some long-established programs, such as the one founded by Buck.

"What we're seeing is the end of an era," said Adam Pertman, president of the Massachusetts-based National Center on Adoption and Permanency and author of the book Adoption Nation. "International adoption as we've come to know it is morphing into something new and something different and something that involves far fewer children."

Factors reportedly contributing to the legal restrictions that are reducing international adoptions include nationalism, economic improvement in some countries that historically have welcomed international adoptions, and concern over past illegal trafficking in babies and profit-motivated corruption.

Also mentioned is the United States’ ratification of the Hague Convention on Intercountry Adoption.  The story continues:

The new regulations, which advocates support, have added extra financial burdens in the way of more social workers as well as more costly insurance and fees. For Pearl S. Buck International, the confluence of higher costs and fewer children led to the program's demise, CEO Janet Mintzer said.

"You can't really support an adoption program when you have seven adoptions," she said. "It just doesn't make sense for us as an organization."

For Pearl S. Buck International, the new reality means that it “will continue its mission of serving children through child sponsorship and running cultural exchange programs” with foreign countries.

JRB

November 17, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Thursday, November 6, 2014

Privacy Debate Returns To Harvard

 

Last year a privacy debate erupted at Harvard when it was revealed that the university had searched the email accounts of 16 junior faculty members.  The debate prompted a major self-examination and promises by the administration to do better.

Today's New York Times is reporting that the prickly topic is back.  This time, the university has acknowledged that as part iof a study of attendance at lectures, it had used hidden cameras to photograph classes without telling the professors or the students.

While students and faculty members did not view the secret photography as serious as looking through people's email, it struck them as out of bounds -- or, at least, "a little creepy."  It also set off more argument about the limits of privacy expectations. 

The Times reports Jerry R. Green, a professoir of economics and former university provost, as saying, "I wouldn't call it spying, but I don't think it's a good thing."

The Times continues:    

Some students called the secret photography a violation of trust, while others shrugged it off because cameras are already ubiquitous, said Sietse Goffard, a junior who is vice president of the Harvard Undergraduate Council. “It’s a question I’m still really conflicted about,” he said.

The episode comes as the university is getting familiar with a new honor code that will go into effect next year. That code, Mr. Goffard said, “stresses the importance of transparency and community trust.”

Carolyn O’Connor, a first-year student, said she would be concerned if the pictures were made public. But “if it’s for academic reasons, I don’t have a problem with that,” she said.

Researchers at the Harvard Initiative for Learning and Teaching set up the cameras to investigate professors’ complaints that many students skipped lectures, and that attendance dropped as a semester wore on. (The photos confirmed both points.) The researchers were concerned that letting professors or students know could skew the results.

They received clearance from Peter K. Bol, a vice provost, and took still images in the spring in 10 classes, which have not been identified, with a total of about 2,000 students. Administrators said that students were not tracked, that professors were not judged on the results, and that after attendance figures had been compiled, the pictures were destroyed.

Harvard's respect for privacy is a touchy subject because of the email search of last year.  When word broke of those searches, many professors were furious, arguing that although the university owned the email system, the professors had an expectation of privacy.  In response, the administration adopted a policy on electronic privacy.

This time around, the photography has not drawn the same kind of reactions.  "This should have been done better," the Times quotes Wilfried Schmid, a mathematics professor, as saying.  "This is not in the same league as the email searches.  It's more like a lack of courtesy."

Vaughn E. James

 

November 6, 2014 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Prospects for Nonprofits Under GOP-Controlled Senate

With Republicans poised to take control of the Senate following Tuesday's elections, Alex Daniels writes in the Chronicle of Philanthropy that it is likely that lawmakers will dig deep into the Internal Revenue Code soon after a new Congress is sworn in next year.  Daniels continues:

While that means added scrutiny on the charitable deduction and the tax treatment of nonprofits, charity leaders are confident a solidly Republican Congress will keep their cherished provisions intact.

Before the current Congress wraps up its business, however, charity officials expect lawmakers to consider certain items in the tax code, including moving the deadline for claiming the charitable deduction from the end of the year until April 15 as well as a set of tax preferences that are usually renewed each year.

Also, Congress has yet to take action this year on the "tax extenders," expiring provisions of the tax code that include benefits for land conservation, donations to food banks, and contributions to charity made from certain retirement accounts.

Republicans strengthened their hold on the House of Representatives, and will hold at least 52 seats in the Senate. Michelle Nunn, a nonprofit executive who ran for the Senate in Georgia, was among the candidates Democrats were counting on to help them keep control of that chamber, but she was defeated handily by Republican David Perdue.

Next year, when Republicans control the Senate and operate with an even stronger hand in the House, they are likely to consider a much more comprehensive tax overhaul. While the chances of enacting the first major changes to the tax code since 1986 are slim, some say, any legislative action during the next session of Congress will set the stage for future tax debates during the 2016 presidential campaign.

Daniels lists five top issues he says nonprofit organizations are watching for legislation and executive action:

  • Internal Revenue Service rules governing 501c(4) social-welfare organizations. The IRS is considering what constitutes political activity by these groups and whether their donors can remain anonymous.
  • Foundation excise taxes. The House has passed a measure to simplify and lower this tax to 1 percent.
  • A proposal to require donor-advised funds to pay out at least 5 percent of their assets each year.
  • The provision of federal support for social-impact bonds that fund "pay for success" efforts at the state and local levels.
  • Pending rules that limit how to conduct federated campaigns. The United Way hopes a Republican Congress will remove recently added federal regulations.

Time will tell whether Alex Daniels is correct. 

Vaughn E. James

   

November 6, 2014 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 5, 2014

As Economy Improves, Large Corporations Increase Charitable Giving

Yesterday's NonProfitTimes had some pretty good news: as the economy continues to recover from what the Times labels "the Great Recession," the nation's largest corporations have increased their charitable giving.  Between 2010 and 2013, says the Times, nearly two-thirds of these corporations increased their giving.  This increase in giving is often driven by performance: "revenue increased a median of 11 percent among companies giving 10 percent or more between 2010 and 2013."     

The Times explains that

Those were some results from Giving In Numbers, an analysis of corporate giving by the Committee Encouraging Corporate Philanthropy (CECP) and The Conference Board, both based in New York City.  Data comes from 261 corporations representing more than $25 billion worth of giving in 2013.  Median total giving was $18.46 million per company.

Central to the study was a matched subset of 144 companies that provided giving data in all four years, 2010 through 2013.  More than half of the 64 percent of those companies in the matched set that increased giving increased by 10 percent or more.  In that matched set, aggregate giving went up 15 percent, from $15.22 billion in 2010 to $17.55 billion in 2013.  Non-cash contributions — product donations and pro bono services — accounted for 90 percent of that increase.

Pro-bono service is the fastest growing employee engagement program.  Companies offering pro-bono service jumped from 35 percent in 2010 to 50 percent in 2013. However, pro-bono was only 19 percent of all noncash giving.  Product donations were king in 2013, making up an average of 60 percent of noncash giving.  Other noncash contributions clocked in at 21 percent of noncash gifts.

Growth, however, slowed last year compared to prior years analyzed in the study.  Among companies that increased their giving, their change in median giving was 6 percent, down from 17 percent in 2012 and 21 percent in 2011.  Companies that decreased their giving did so by 6 percent in 2013, compared to 1 percent in 2012 and 5 percent in 2011.

For the 10 percent of organizations in the matched set that reported a slight decrease (less than 10 percent), many cited a one-time spike in giving in response to Hurricane Sandy in 2012 as the reason for a slowdown in 2013.  Those companies giving significantly less (10 percent or more) reported company-wide cost reductions, corporate divestitures and transitioning away from cause areas previously supported.

While respondents classed as Fortune 100 companies (of which there were 52) gave much higher than average, giving fell for those companies between 2012 and 2013, from a median $66.29 million in 2013 to $62.94 million in 2013.  “Several (Fortune 100) companies have begun better aligning their corporate giving focus with their business strategy, resulting in a transition away from unaligned partnerships.  Several survey respondents cited this as a reason for the decrease in giving,” wrote report author Michael Stroik, manager of research and analytics at CECP.

As giving climbed, the number of corporate grants dropped from a median of 1,000 in 2010 to 701 in 2013.  Grantmaking expenses also fell: median $2.2 million in 2010 to $1.8 million in 2013.  “Companies are clearly making fewer grants and contributions staff likely have greater bandwidth to monitor and evaluate grants on an ongoing basis.”  More than three-quarters of corporate giving departments measured the outcomes or impacts of the grants they made in 2013.

More than one in three survey respondents (38 percent) expect their giving levels to increase for 2014.  About half, or 48 percent, expect no change, and only 13 percent expect a decrease.  “Two cause areas, Higher Education and Health and Social Services, could have a strong year in 2014, based on the fact that these two areas were supported more in 2013 by companies that expect to increase their giving than by companies that expect to decrease their giving,” wrote Stroik.

Stroik sees the trends found in the Giving In Numbers report as a continuation of business practices established during the recession.  “Companies implemented more strategic and business-aligned community investment strategies during the recession, which continue today,” he said via a statement.  “They continue to see the win-win of their more strategic — and in many cases increased — community investments as their revenues rise with their societal engagement.”

 

Vaughn E. James

 

November 5, 2014 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, November 3, 2014

Nonprofit CEOs Say Board Members Need to be Better Fundraisers

 

The Chronicle of Philanthropy is reporting that a recent "Living with Intent" survey conducted by the nonprofit watchdog group BoardSource found that nonprofit leaders gave their boards an average grade of B minus, and judged trustees to be better at technical tasks like financial oversight than at setting strategy or reaching out to the community.

As in years past, the CEOs cited fundraising as a significant concern: 60 percent of them said it was the area their boards most needed to improve.

BoardSource works to improve nonprofit governance.

According to the Chronicle:

In 1994, chief executives said that 60 percent of their board members gave money to the organization, a figure that grew to 85 percent in this year’s survey. But giving by 100 percent of all board members—the gold standard espoused by BoardSource and other nonprofit experts—was reported by only 60 percent of the respondents in this year’s survey.

Many nonprofit organizations set minimum donations expected by trustees and encourage them to contribute at least that amount and ask others to follow their example. But trustees remain challenged when it comes to asking family members, friends, and colleagues for donations; 43 percent of board members in this year’s survey, about the same as in previous years, said they are uncomfortable asking for money.

The survey also found some signs of improvement in boards’ racial and ethnic diversity, which was rated as more important for boards than including equal numbers of male and female trustees or making sure that organizations recruit trustees of different ages. Respondents reported that 20 percent of their board members, on average, are people of color, up from 16 percent in 2010, but a quarter of the respondents said their boards are all white and nearly 70 percent of respondents indicated they are dissatisfied with the racial and ethnic composition of their boards.

Gender representation among the executive ranks of nonprofit organizations in the survey has improved over the years, but women remain underrepresented as chief executives in large organizations. Women accounted for 65 percent of chief executives in groups with budgets under $1-million; 75 percent among nonprofits with budgets of $1-million to $9.9-million. But among groups with budgets of $10-million or more, only 37 percent of chief executives were women.

Nonprofits appear to be recruiting more board members under 40 years old, with 17 percent of respondents in this year’s survey reporting trustees in that age group, up from 14 percent in 2010.

Nonprofits also are recruiting smaller boards, the survey found. In 1994, the first year of the survey, respondents reported 19 trustees, on average. In this year’s survey, that number dropped to 15.

According to the Chronicle, 850 chief executives and 246 board chairs responded to questions posed by the survey.  A free coipy of the findings are available online.  BoardSource says it will publish a more complete report on its website in December. 

 

Vaughn E. James

November 3, 2014 in Current Affairs, In the News, Other | Permalink | Comments (0) | TrackBack (0)

Friday, October 17, 2014

Low-Income Housing Coop: Different Board, Different Result?

    A low-income housing cooperative that sought reconsideration of the IRS’s determination that it did not qualify as a 501(c)(3) received a final determination earlier this month that it indeed fail to meet the requirements of 501(c)(3). The IRS found that it did not operate exclusively for exempt purposes, did not meet the operational test, and possibly allowed its net earnings to inure to private individuals. The membership requirements of the housing cooperative appear to reflect the safe harbor provisions detailed in Revenue Procedure 96-32; however, the IRS’s ruling pointed out that the low income housing in question benefited the individuals who controlled the cooperative. This seems to have been the straw that broke the 501(c)(3) status’ back. One cannot help but ask whether the outcome would have been different if the housing cooperative simply had elected a board that was independent from those residing in the housing.

Download Low Income Housing Coop Educational Center Not Qualified as Nonprofit

 

Khrista Johnson

October 17, 2014 in Current Affairs | Permalink | Comments (0) | TrackBack (0)

Thursday, October 16, 2014

IRA Charitable Rollover Provision: Will Congress Extend or Not Extend?

        An insightful Wall Street Journal commentary addresses the likely outcome for the IRA Charitable Rollover Provision. This provision allows taxpayers aged 70.5 and older to make deductible charitable contributions (up to $100,000) from their IRAs without having to include such charitable contributions in their income. In addition, the charitable contributions count against minimum IRA distribution requirements. The Wall Street Journal concludes that while Congress is likely to extend the provision this year, it is unlikely to do so before the November election. At the same time, it is possible that Congress will restore this break retroactively. The commentary provides a good balance of the implications should Congress choose to extend or not to extend.

 

Khrista Johnson

October 16, 2014 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 15, 2014

On the March to Efficiency: Millennials & Charity: Water

        A concept that I have introduced through scholarly writing and blogged about here is the need for a more efficient charitable market. In August, I commented upon a Vanguard Charitable study that found millennials are more likely to see their charitable giving as a form of investment and thus promote a culture of giving that demands more transparency and accountability, two hallmarks of a more efficient charitable market. A recent NPR broadcast that examined the work of Scott Harrison’s nonprofit, Charity: Water, confirmed just that.

        In the segment, Harrison spoke about his dual purpose in forming Charity: Water. First, he wanted to provide clean water to the almost 800 million people globally who lack access to it by building wells. Second, he sought to make an example of how a nonprofit could do its work in a way that would resonate with the next generation of givers. He recounted his own experience of being hesitant to give to charities prior to starting Charity: Water, which stemmed from the absence of information on how a charity would use the funds. Today the nonprofit world is concerned with how approximately 80 millennials make their decisions about giving, and not surprisingly, it is different from the prior generation(s). As stated in my prior post, it is widely accepted that millennials want to view their “donation” as “investment,” and at least one commentator recommends that nonprofits refer to the latter. Another salient point is how technology intersects with millennial giving. Millennials value their time, and as a result, any form of technology that makes it easier for them to invest is preferable. Moreover, the Ice Bucket Challenge that swept through social networks over the summer shows that the desire of millennials to share the details of their lives extends to their giving. In response, Charity: Water is utilizing a birthday campaign where donors can ask their network to donate one dollar for each year celebrated, i.e., $25 dollars to celebrate a 25th birthday. Charity: Water is also placing sensors on its wells, so donors may interact with the impact of their investment in a novel manner. Charity: Water’s innovative approaches are proving successful. They have helped over 4 million more people in twenty-two countries gain access to clean water. Millennials and nonprofits like Charity: Water may just help move giving into the next century and towards a more efficient charitable market.

 

Khrista Johnson

October 15, 2014 in Current Affairs, In the News, International, Web/Tech | Permalink | Comments (1) | TrackBack (0)