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When Non-Cash Gifts Are Worth Cash
May 18th
When you give a friend money as a birthday gift it's appreciated, but there's always the thought that you could have been a little more creative. That's not really the case with nonprofits; money is one of the best gifts you can give.
But that doesn't mean it's the only gift.
Non-cash gifts, such as computer equipment or office supplies, can be very useful for nonprofits. Yet even though these items are not money, they still have cash value in the eyes of the Internal Revenue Service (IRS). IF that value is great enough, an organization might be required to substantiate the gift to the IRS.
In their book “Conducting a Successful Major Gifts and Planned Giving Program,” Kent E. Dove, Alan M. Spears, and Thomas W. Herbert explained that the need to file federal form 8283 also depends on the status of the taxpayer. They explained four instances that qualify, as well as which part of the form must be completed:
But that doesn't mean it's the only gift.
Non-cash gifts, such as computer equipment or office supplies, can be very useful for nonprofits. Yet even though these items are not money, they still have cash value in the eyes of the Internal Revenue Service (IRS). IF that value is great enough, an organization might be required to substantiate the gift to the IRS.
In their book “Conducting a Successful Major Gifts and Planned Giving Program,” Kent E. Dove, Alan M. Spears, and Thomas W. Herbert explained that the need to file federal form 8283 also depends on the status of the taxpayer. They explained four instances that qualify, as well as which part of the form must be completed:
- Non-cash gifts valued at $500 or less. The donor only has to complete federal Form 8283 for this type of gift if the person has made a series of gifts in a given year, each of which is valued at $500 or less but with a total value exceeding $500;
- Non-cash gifts valued between $501 and $5,000. Gifts in this range must be reported on Part A of IRS Form 8283, which is then attached to the donor’s federal income tax return;
- Non-cash gifts valued at more than $5,000. If the amount claimed as a charitable income tax deduction is in excess of this amount, the IRS requires the donor to complete Part B of Form 8283; and,
- Gifts of non-publicly traded stock. If the donor makes this type of gift, Part B of Form 8283 must be completed. This is true regardless of the value of the stock. A qualified appraisal is required if the value of the stock exceeds $10,000.
So remember: Just because your organization is getting a donation of something other than cash doesn't mean that there is no accounting work to be done.
The Roles Of The Employee Conduct Policy
May 17th
Nonprofit employees that thoroughly look through the Human Resources handbook they receive when hired probably know all about the organization's employee conduct policy. These guidelines are set so that people know what they can and cannot do in the workplace. If we lived in an ideal world these kinds of rules probably wouldn't be needed.
Unfortunately, we don't live in an ideal world.
Governing behavior is not the only role conduct policy needs to play. In "The Big Book of HR," Barbara Mitchell and Cornelia Gamlem wrote that HR managers need to make sure that the rules accomplish six other goals to ensure stability in the office place. The policies should:
Unfortunately, we don't live in an ideal world.
Governing behavior is not the only role conduct policy needs to play. In "The Big Book of HR," Barbara Mitchell and Cornelia Gamlem wrote that HR managers need to make sure that the rules accomplish six other goals to ensure stability in the office place. The policies should:
- Establish and define professional standards of conduct that are not acceptable, while stressing that the list is not all-inclusive and that there can be other infractions.
- Provide assistance to employees to change inappropriate behavior.
- Provide managers a means to address issues.
- Provide management responses if behavior does not change.
- Provide a flexible approach (progressive or corrective discipline) process to address conduct.
- Provide a communication mechanism for employees and managers.
So what happens when an employee breaks some of the rules? Discipline should follow, according to Mitchell and Cornelia, but that doesn't mean instant termination. Instead, it should follow these steps:
- Open dialogue/verbal counseling.
- Written counseling/letter of caution.
- Final written notice.
- Suspension.
- Termination.
NY Gov. Proposes Salary Cap For Nonprofit Execs
May 17th
As reported by The Daily News, the new rule would cap the amount of money towards an executive's compensation package at $199,000. The actual pay package could be higher, but the nonprofit would have to find new funding sources to make up the difference and get special permission. Salaries could also fall no higher than the 75th percentile for the field in which the organization works.
The new rule would only impact nonprofits that receive 30 percent of their total funding from the state. The Daily News reported that the Bronx-based Soundview health clinics -- run by recently convicted ex-state Sen. Pedro Espada -- would have been in real danger of losing state funding. Nearly half of the organization's funding came from the state, and Espada's $612,000 salary placed him above the 75th percentile in that field ($380,000).
Gov. Cuomo's announcement shouldn't come as a surprise. He vowed to crack down on excessive pay for executives during his State of the State address in January. Before that, he created a task force to investigate pay at nonprofits that receive taxpayer money. This stemmed from a New York Times article that reported high salaries and perks at the Young Adult Institute. Executives at that organization reportedly received $1 million a year, in addition to ethically questionable perks, such as billing the nonprofit to cover their children's college tuition.
You can read the full article on Cuomo's announcement on The Daily News' website.
Nonprofit Sues California Over Teacher Tenure Laws
May 16th
A nonprofit education group is suing the state of California over five laws they say protect ineffective teachers and lower school quality for poor children.
Los Angeles-based Student Matters filed the lawsuit today with the goal of getting the laws overturned, according to a report on KQED News. The laws in question set up a seniority system for public schools in the state.
According to the organization's website, Student Matters is "committed to ensuring that all of California’s children receive a quality education." It is run by David F. Welch, an executive at a Silicon Valley fiber-optic communications firm.
Josh Pechtalt, president of the California Federation of Teachers, said in a statement that the lawsuit is "misguided," and that the real problems of public education stem not from teachers, but from money.
"The real problems of public education really are not about teachers having due process rights," he said, "the problems have to do with massive cuts to the classroom, and frankly defunding of public schools now for a number of years."
You can read the full story on KQED's website.
Los Angeles-based Student Matters filed the lawsuit today with the goal of getting the laws overturned, according to a report on KQED News. The laws in question set up a seniority system for public schools in the state.
According to the organization's website, Student Matters is "committed to ensuring that all of California’s children receive a quality education." It is run by David F. Welch, an executive at a Silicon Valley fiber-optic communications firm.
Josh Pechtalt, president of the California Federation of Teachers, said in a statement that the lawsuit is "misguided," and that the real problems of public education stem not from teachers, but from money.
"The real problems of public education really are not about teachers having due process rights," he said, "the problems have to do with massive cuts to the classroom, and frankly defunding of public schools now for a number of years."
You can read the full story on KQED's website.
Build Your Social Media Audience
May 15th
Thankfully, "a little bit harder" doesn't mean "impossible." The nature of social networks means that every follower you get can potentially lead to many more. This is because each person "liking" your page will conceivably tell his/her friends to also follow you. Sounds great, but this is all moot if you can't get many people to care about your page in the first place.
A lot of people using social networking sites tend to over-think it. They try to get too fancy and end up with few followers. In truth, the key to building an audience is to post things that are relevant and useful. What's interesting to your followers? Why not ask them? Before making the first post on your new blog, engage your supporters on what kind of stories they want to read. When you get a good enough sample of answers, start writing about those topics.
Even with brilliant content, it’s difficult to attract supporters to a site that no one else is following. Reach out to your staff and other core supporters of your organization and ask them to follow your tweets, or “like” your Facebook page --and to invite their personal friends.
Having an active community is another good way to get people to show interest. Let's face it -- nobody wants to be a part of a page that has no interaction. Try asking questions to your supporters in addition to sharing links. The whole point of social media is interaction with the audience, and there's no better way to do this than starting a discussion.
The most important thing to remember is to be honest when participating in any of these discussions. There will be things you just can't say, of course, but don't be robotic. People like to know that the individual they are talking to is an actual human being.
State Senator Convicted Of Stealing From Nonprofit
May 15th
Former N.Y. State Senator Pedro Espada was convicted yesterday of stealing more than $500,000 from the nonprofit health network that he founded. He faces up to 10 years in prison on four counts of theft.
Espada, 58, was convicted after 11 days of deliberation, according to a report in Newsday. He has often been described as the poster child of corruption in Albany by good government groups, serving as a major power broker as the former Senate majority leader in New York.
Espada is convicted of using the funds from Bronx-based Soundview for personal expenses, such as personal meals, home improvements, and vacations from 2005 to 2008. His son, Pedro Gautier Espada, was also charged. They used a for-profit janitorial company to siphon money from the organization.
Deliberations for the case took longer than expected. Jurors deadlocked on all counts against Pedro Gautier, as well as one theft charge and three conspiracy charges against Espada. Two jurors speaking outside the court said the panel was divided 9-3 for two weeks. Holdouts were apparently worried about an anti-Espada agenda. They were eventually convinced after further review of the evidence.
The case against Espada was first brought to light by now Gov. Andrew Cuomo when he was still serving as attorney general. He said in a statement that the state was working to ensure that patients at Soundview would receive proper care despite the loss of funds.
You can read the full story in Newsday.
Espada, 58, was convicted after 11 days of deliberation, according to a report in Newsday. He has often been described as the poster child of corruption in Albany by good government groups, serving as a major power broker as the former Senate majority leader in New York.
Espada is convicted of using the funds from Bronx-based Soundview for personal expenses, such as personal meals, home improvements, and vacations from 2005 to 2008. His son, Pedro Gautier Espada, was also charged. They used a for-profit janitorial company to siphon money from the organization.
Deliberations for the case took longer than expected. Jurors deadlocked on all counts against Pedro Gautier, as well as one theft charge and three conspiracy charges against Espada. Two jurors speaking outside the court said the panel was divided 9-3 for two weeks. Holdouts were apparently worried about an anti-Espada agenda. They were eventually convinced after further review of the evidence.
The case against Espada was first brought to light by now Gov. Andrew Cuomo when he was still serving as attorney general. He said in a statement that the state was working to ensure that patients at Soundview would receive proper care despite the loss of funds.
You can read the full story in Newsday.
The Top 10 Nonprofit Risks
May 14th
Every nonprofit would love to avoid risk all together. Unfortunately, that is not the world in which we live. Risk is everywhere and, in order to survive it, you must be prepared.
The first step to developing a good risk management plan is to understand the kind of dangers you will be facing. At a recent Risk Management and Finance Summit for nonprofits, Melanie Lockwood Herman of the Nonprofit Risk Management Center discussed the top 10 risks that are faces by nonprofits. They are:
The first step to developing a good risk management plan is to understand the kind of dangers you will be facing. At a recent Risk Management and Finance Summit for nonprofits, Melanie Lockwood Herman of the Nonprofit Risk Management Center discussed the top 10 risks that are faces by nonprofits. They are:
- Financial loss. To prevent this, it helps to have a well-trained, well-informed board.
- Exposures from social media use, misuse and naivete. Risk-management strategies include written guidelines for employees, volunteers and members and a point person to monitor social media.
- Incivility. Investigate complaints without delay and hold staff and volunteers accountable.
- IRS Form 990 and federal tax-exempt status. Losing that status is really easy.
- Copyrights and trademarks. Use the copyright symbol. Use work-for-hire agreements with contractors. Respect the work of others.
- Failure to limit a contracting authority and other common mistakes in contracting. Develop a simple policy, clarify who has authority to enter one and obtain legal review, before signing.
- Lack of synchronicity in board policy and practice. Look at policies. Do they need changing?
- Failure to understand and manage conflicts of interest. Make sure the policy is easily understood.
- Fraud. Understand the inherent risks and fraud schemes.
- Harm to reputation. Remember humility (admit mistakes) and speed (without delay).
Study: D.C. Nonprofits Could See Better Days This Year
May 14th
Washington, D.C.-area nonprofits, which received fewer dollars in 2011, are bracing for better times this year, according to a new study by the Center for Nonprofit Advancement (CNA).
The study, as reported on by The Washington Post, showed that nearly half of the organizations surveyed report that their donors plan to maintain or increase contributions in 2012. This is in contrast to only 27 percent last year, and 15 percent in 2009. The CNA study canvassed nonprofits in D.C., Northern Virginia, and Montgomery and Prince George's counties in Maryland.
Another huge problem for D.C.-area organizations in 2011 was the amount of "rainy-day" reserves they had to use up as a result of the declined contributions. This practice appears to be fading in 2012, ad the CNA study found that the number of nonprofits dipping into reserves fell from 46 percent to 31 percent. In addition, organizations reporting a decline in revenue dropped from 48 percent to 40 percent.
Glen O'Glvie, CNA's chief executive, told The Washington Post that the reason for this comeback in giving appears to come from individual donors. He noted that it's much easier for one person to donate than for foundations and corporations. This notion appears to be validated because, as was reported in The NonProfit Times, corporate philanthropy is experiencing a sharp decline, according to a new study from the Council on Foundations.
Although the decline in donations seems to be slowing, CNA warns that it's not enough to quell the increasing demand for nonprofit services. 53 percent of respondents reported a higher demand for their services last year as a direct result of the economic downturn.
You can read the full story in The Washington Post.
The study, as reported on by The Washington Post, showed that nearly half of the organizations surveyed report that their donors plan to maintain or increase contributions in 2012. This is in contrast to only 27 percent last year, and 15 percent in 2009. The CNA study canvassed nonprofits in D.C., Northern Virginia, and Montgomery and Prince George's counties in Maryland.
Another huge problem for D.C.-area organizations in 2011 was the amount of "rainy-day" reserves they had to use up as a result of the declined contributions. This practice appears to be fading in 2012, ad the CNA study found that the number of nonprofits dipping into reserves fell from 46 percent to 31 percent. In addition, organizations reporting a decline in revenue dropped from 48 percent to 40 percent.
Glen O'Glvie, CNA's chief executive, told The Washington Post that the reason for this comeback in giving appears to come from individual donors. He noted that it's much easier for one person to donate than for foundations and corporations. This notion appears to be validated because, as was reported in The NonProfit Times, corporate philanthropy is experiencing a sharp decline, according to a new study from the Council on Foundations.
Although the decline in donations seems to be slowing, CNA warns that it's not enough to quell the increasing demand for nonprofit services. 53 percent of respondents reported a higher demand for their services last year as a direct result of the economic downturn.
You can read the full story in The Washington Post.
Nonprofit Director Pleads Guilty
May 11th
The head of a Washington, D.C.-based nonprofit pleaded guilty to lying about her 2009 tax returns and is cooperating with prosecutors in their investigation of former D.C. councilman Harry Thomas Jr.
Danita Doleman, who is the executive director of Youth Tech, received $110,000 from the D.C. Children & Youth Investment Trust in 2009, according to a report in The Washington Post. Doleman admitted to funneling $100,000 of that money, which was supposed to be used for drug prevention programs, to the D.C. Young Democrats.
Ayawana Chase Webster, a staffer for Thomas Jr. and head of the D.C. Young Democrats in 2009, used the money from Youth Tech to fund a ball at the John A. Wilson Building. Thomas Jr., who was sentenced to 38 months in prison last week for theft of public funds from the trust, admitted to steering the $100,000 to the ball.
The executive director of the D.C. Youth Investment Trust at the time, Millicent D. West, told prosecutors that she worked with Thomas Jr. and his staff to find a way to pay for the ball. She told them that a non-political group would have to pay for it. That's where Youth Tech came into play.
Doleman's role in the scandal had not been mentioned in the original court documents. A two-page charge filed Wednesday accused her of failing to report $20,000 in income she received from Youth Tech in 2009. Her lawyer, Michelle Peterson, said her client filed an amendment to reflect the $4,000 she owed in taxes and, as part of her plea agreement, would provide information for the government's investigation of Thomas Jr.
You can read the full story in The Washington Post.
Danita Doleman, who is the executive director of Youth Tech, received $110,000 from the D.C. Children & Youth Investment Trust in 2009, according to a report in The Washington Post. Doleman admitted to funneling $100,000 of that money, which was supposed to be used for drug prevention programs, to the D.C. Young Democrats.
Ayawana Chase Webster, a staffer for Thomas Jr. and head of the D.C. Young Democrats in 2009, used the money from Youth Tech to fund a ball at the John A. Wilson Building. Thomas Jr., who was sentenced to 38 months in prison last week for theft of public funds from the trust, admitted to steering the $100,000 to the ball.
The executive director of the D.C. Youth Investment Trust at the time, Millicent D. West, told prosecutors that she worked with Thomas Jr. and his staff to find a way to pay for the ball. She told them that a non-political group would have to pay for it. That's where Youth Tech came into play.
Doleman's role in the scandal had not been mentioned in the original court documents. A two-page charge filed Wednesday accused her of failing to report $20,000 in income she received from Youth Tech in 2009. Her lawyer, Michelle Peterson, said her client filed an amendment to reflect the $4,000 she owed in taxes and, as part of her plea agreement, would provide information for the government's investigation of Thomas Jr.
You can read the full story in The Washington Post.
Why Do Donors Give?
May 11th
For years, fundraisers have been searching for the answer to a question that is the nonprofit equivalent of the Holy Grail: Why do donors give?
This is one of those questions that truly doesn't have a single right answer. Every donor who you talk to will likely give you a different reason for they decided to give money or other gifts to an organization. That doesn't mean people have given up trying to come up with a concrete answer to the question. Larry C. Johnson, author of "The Eight Principles of Sustainable Fundraising," thinks he has the answer: People give because they want to.
It may not be the profound answer that some in fundraising are looking for, but it does have some weight behind it. There is no denying that you can't force someone to give if they don't want to.
In a study by the Center on Philanthropy at Indiana University,
“Understanding Donors' Motivations,” the five most frequently occurring
motivations for philanthropy were listed. They are:
- To meet critical, basic needs;
- To give back to society by making the community a better place;
- A belief that those with more should help those with less;
- To bring about a desired impact or result; and,
- A request for money was made.
These reasons are sure to spark debate among fundraisers. Let us know what your thoughts are, and whether you have found a different answer to this intriguing question.
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