Charity Overstated Revenue by $222-Million and You Thought Your Restatement Was Bad

A Christian relief charity, World Help, grew rapidly in recent years but not as rapidly as originally reported. The organization’s Form 990 reported $239-million in revenue for 2011. The audited figure came in at $17-million. That’s 1400% off-base for those of you punching your 5-key along.

Once again, we have an issue of claiming value for donated medicine which is an ongoing blight in the nonprofit community, but in this case, the donors say they never gave any donation. The finger-pointing is heated and people are no longer cooperating with the press.

A significant impact is to the recipients of the donated medicine. The restatement has caused organizations that received goods from World Help to go scrambling to ensure their valuation is accurate and supportable.

Restatements are never fun but just think of World Help to help you keep perspective when you feel scandalized by one. Read more about the story here.

Man Admits to Embezzling $1.1Mil from Atlanta Non-profit

Ralph Clark was the Director of Facilities at the Woodruff Arts Center in Atlanta, GA, comprised of the Atlanta Symphony Orchestra, Alliance Theatre,  High Museum of Art, and Young Audiences. He plead guilty to charges of embezzling over $1.1 million from the organization over approximately 8 years.

A few different schemes were in place. As part of his leadership position, he was allowed to authorize any vendor contracts up to $50,000.  He arranged for kickbacks  from vendors that totaled $168,000. He signed off on $780,000 worth of invoices for services that were not performed by his wife’s cleaning company. He billed $41,000 for services supposedly performed by students and $153,000 for services supposedly performed by himself after hours. It is unlikely much of any of that will get repaid.

According to the Atlanta Journal-Constitution, “some observers in the city questioned [the organization's] management oversight.”

Read more about the case here.

Your Sales Tax Collection Obligations May Soon be Expanding

Federal courts have consistently ruled that retailers must have a physical presence in a state to be required to collect sales taxes. That has allowed online retailers to offer many customers tax-free shopping.  Equally important, the physical presence requirement has allowed smaller businesses using common carriers to expand their customer base without the administrative burden of collecting sales tax.  But, with Congress making headway on federal legislation that would eliminate the physical presence rule for many retailers and a recent New York State Court of Appeals decision going against Amazon and Overstock.com, the sales tax collection obligations for retailers may soon become more burdensome.

On March 19^th, 75 U.S. Senators supported a non-binding vote of approval for the Marketplace Fairness Act of 2013, a heavily-debated bill that is backed by a coalition of brick-and-mortar retailers such as Wal-Mart and Best Buy and vehemently opposed by certain online retailers such as eBay.  Although the vote was only a preliminary approval of a vague summary of the bill that was an amendment to a budget bill, the bipartisan nature of the vote suggests that remote seller legislation could be voted into law this year.

If enacted as is, the bill would allow states to require remote sellers with over Continue reading »

Obama’s FY14 Budget Proposal NOT Retirement Plan Friendly!

The Obama Administration’s recently released fiscal year 2014 budget contains several provisions that are less than advantageous as they relate to retirement plans. These provisions are by no means final, however, as Congress has yet to work its way through them. The proposed budget contains two specific provisions that would greatly reduce the attractiveness of retirement plans to small businesses: Continue reading »

One College Student’s Personal Take on the Sequester

Sequestration has been a confusing topic lately with the top questions being: ‘Do I even need to pay attention to this?’ and ‘Is there going to be any real impact to me?’.  With all of the talk of the fiscal cliff fizzling out, people are suggesting this is all political hype and that Congress is shouting ‘Wolf!’ one too many times. However, some of the very real impact of the sequestration is starting to hit home, particularly on state funded education programs. One of our interns, Jasmine Cook, is a student at the University of Maryland and we invited her to write about her personal experience with how the sequestration is affecting her.

Growing up in the Prince George’s County Public School System, the topic of budget cuts is by no means foreign. At the prime age of nine, I attended a school board meeting to defend against the disbandment of the Talented and Gifted Program (TAG), of which I was currently enrolled. My view was limited at the time, but it was only my first of many tense encounters of financial stalemate. In eighth grade, the orchestra was cut and I traded in my violin for a French horn; the façade of any influence over the system disappeared and adaptation became crucial. In high school, two out of the three academic programs stopped allowing students to enroll from neighboring districts, in order to cut transportation costs. Students feared displacement and teachers experienced layoffs; the Russian program was diminished to what was assumed to be eventual termination. However, it was public school. No tuition fees meant little to no say, and the realization both angered and jaded my fellow students. Continue reading »

Coping with the Change in Mailing Rates

Non-profits may lose the discount for postage rates but could that be just the push they need to focus on using the internet to raise funds? In early October 2012, the United States Postal Service (USPS) announced their proposal for postage increases to take effect on January 27, 2013 and which has since passed the Postal Regulatory Commission (PRC) review.

Opposition to the new rates includes among its leaders Jason Lee, General Counselor for the Association of Fundraising Professionals, and the Alliance of Nonprofit Mailers, a US national coalition of nonprofit organizations. Opposition retorts that nonprofits are besieged from a budget standpoint as our nation’s leaders attempt to rein in federal spending and this assault will impede the efforts of nonprofits to fill in the gaps for state and local government aid programs for the poor. The argument is that the legislation will punish nonprofits and the people they serve, and the USPS should not punish nonprofits for its own inability to control its own costs. Ultimately, in the long run, nonprofits will end up using less mail as a response to the change in rates, which will in the end hurt the USPS. Continue reading »

New Markets Tax Credit Benefits Nonprofits

The New Markets Tax Credit (“NMTC”), under IRC §45D, was created as part of the Community Renewal Tax Relief Act of 2000. This act encouraged qualified equity investments (“QEIs”) in community development entities (“CDEs”) directed towards low-income communities. President Obama recently extended the NMTC in January of 2013 as a part of the American Taxpayer Relief Act of 2012. The NMTC rewards investors with a 39% tax credit of the total QEI, which is split over a seven year period. There is also additional return to investors who make a low-return project viable.

The CDEs also benefit with a 25% reduced cost of borrowing and lower interest rates than could otherwise be attained. Programs must apply to become CDEs; awards totaling up to 3.5 billion are announced annually. The stimulated investments lead to job and material improvement in the residents of struggling communities. Many CDEs serve as intermediaries for providing loans and investments in low income areas, which lead to increased economic activity.

To qualify as a CDE, the program must be located in a distressed community which displays at least one of the following characteristics:

• The poverty level is above 20%.
• The median family income less than 80% of the average family.
• The community is composed of a specified targeted population.
• The population is less than 2000 people.
• It is a rural county with high migration.

The Aronson Foundation Donates $5K to So Others Might Eat (SOME)

Aronson LLC and the Aronson Foundation were pleased to announce that they have made a $5,000 donation to So Others Might Eat (SOME), a DC nonprofit that has “helped thousands of people get off the streets, transform their lives, and live independently.”  The donation was made as part of Aronson’s holiday party and 50^th Anniversary celebration. 

“Our work wouldn’t be possible without generous support such as this gift from Aronson LLC and the Aronson Foundation.  With nearly 7,000 homeless men, women and children living in the District, there is a great need that they are helping to fulfill.”  -Fr. John Adams, President of SOME.

SOME is an interfaith, community-based organization that exists to help the poor and homeless of our nation’s capital. They meet the immediate daily needs of the people they serve with food, clothing, and health care. SOME helps break the cycle of homelessness by offering services, such as affordable housing, job training, addiction treatment, and counseling, to the poor, the elderly and individuals with mental illness.

Jeff Capron, Aronson LLC’s Managing Partner and President of the Aronson Foundation, commented, “SOME is an amazing group of people who for years have been a steady, committed and transforming influence on the community.  We are happy to be able to support their efforts as part of our mission of providing assistance to organizations that help make the Washington Metro area such a great place to live and work.”

The Aronson Foundation, established in 2004, is a public charity that grants charitable contributions to organizations like SOME that have dedicated themselves to providing services that enhance our community and help the people in it thrive and succeed. All of this is made possible through the generosity and enthusiasm of the partners and employees of Aronson LLC.

Affordable Care Act (ACA) Guidance Has Finally Begun

On November 20, 2012, Affordable Care Act guidance was issued in the form of over 300 pages of proposed regulations. The guidance is broken into three parts: 1) requirements for essential health benefits, actuarial value, and other exchange related requirements; 2) various market reform initiatives; and 3) regulations related to employee wellness programs.

At this time, the proposed regulations related to the exchange requirements, as well as the market reform initiatives, will be more meaningful to industry practitioners. The proposed regulations related to wellness programs will be of greatest interest to employers.

In general, as of January 1, 2014, health plans will not be able to underwrite based on health status. Wellness programs have been granted a limited exemption. The maximum allowable reward under a wellness program as part of a group health plan has increased from twenty to Continue reading »

Form 5500 Filing Relief for Plan Sponsors Impacted by Hurricane Sandy

The IRS announced it is granting relief to benefit plan sponsors affected by Hurricane Sandy. This relief also includes plan providers whose services impact the filing of Form 5500. In general, plans in the affected areas will have until November 7, 2012 to file returns that otherwise would have been due October 31, 2012.

Relief is automatic, with no action required by plan sponsors. In the event a notice for delinquent filing is received, then the impact of Hurricane Sandy should be referenced in the plan sponsor’s reasonable cause statement.  As additional details emerge regarding the storm’s impact, additional filing relief Continue reading »