Many businesses and individuals are experiencing cash flow difficulties in today’s economy. To ease the cash crunch, it may be tempting to delay payment of taxes in the hope that finances will improve soon. Unlike other creditors, the IRS moves relatively slowly, lulling the taxpayer into complacency. During this time, interest and penalties accrue which, in some situations, can even exceed the original tax due. When the IRS decides to act, they often file liens, levies, and other garnishments that can cause significant and sometimes permanent economic damage. In addition to these civil penalties and collection actions, the IRS can pursue criminal charges. The failure to truthfully account for or turn over taxes is a felony, with the potential of up to five years of jail time. This applies to all taxes under the Internal Revenue Code – income tax, payroll tax, gift tax, and excise tax, to name a few. Continue reading »
TODAY: With federal spending cuts and the economy in a pinch, Razoo.com has gone grassroots and organized a one-day fundraising event, Give to the Max, for the Greater Washington area. The goal is to raise awareness and get tens of thousands of individuals to support the nonprofit or cause of their choice with the hope of raising over $3 million within 24 hrs on November 9th.
Hundreds of regional nonprofits will compete for cash awards and matching grants offered throughout the day so that every donation made helps the organization’s chance to win even more money. Register your organization here: http://give2max.razoo.com/p/get-registered
Help spread the word and do some fundraising for your favorite participating nonprofit on November 9th! Go to Give to the Max or call 866-437-1952 to learn more.
The National Council of Nonprofits issued an email alert on advocacy matters that reports that Massachusetts Governor Duval Patrick signed a budget bill on October 27 that includes a $10 million salary reserve earmarked for nonprofit human service providers. As Forbes reports, this reserve will help some of the lowest paid direct-care providers that haven’t received any cost of living adjustments over the past three years.
And Massachusetts isn’t stopping there. On October 26, the state House voted 143 to 7 in favor of a bill that would allow nonprofit employees to participate in the state’s retirement savings plan. The National Council of Nonprofits points to the state’s own study showing that more than half of the nonprofits with budgets of $250,000 or less do not (and I suspect can’t) offer their employees any retirement benefits.
Coming on the heels of the survey results about current dissatisfaction of employees in the nonprofit sector and the high cost of low employee satisfaction, Massachusetts may be making a powerful and progressive step forward.
Reuters is reporting that Freddie Mac’s CEO, Charles Haldeman Jr, will step down by the end of the year. He will remain at Freddie Mac until a new CEO is hired. Haldeman was hired in July 2009 in the hopes that new leadership would help usher in stability to the housing market and the company.
The Nonprofit Quarterly has been exploring both sides of the issue currently before congress regarding whether or not to cut the charitable deduction. In a post yesterday, they sent out what is essentially a rallying cry for the nonprofit community to join together and raise a collective voice against cutting the charitable tax deduction.
The article does a good job of cutting through what it calls “distracting clutter” around the bill and its potential effects and provides “boots-on-the-ground” examples of how local community based organizations would suffer if congress does away with the deduction. The best solution, the article posits, is a collective voice in the form of a nonprofit community letter to congress available through the National Council of Nonprofits’ website. As of Monday, more than a dozen national nonprofits and over 2,700 community-based nonprofits have signed on.
The article ends with this statement: “We encourage other nonprofits to quickly join this time-sensitive, growing grassroots campaign to remind Congress that the nonprofit community is relevant and that governments at all levels and people across America are relying on nonprofits—human services as well as arts, cultural, education, environmental, faith-based, and health care organizations, etc.—to improve lives in local communities.”
The Chronicle of Philanthropy has an article posted yesterday that reveals survey results indicating the nonprofit workforce is unsatisfied. 70% of the workers surveyed in the New York and Washington metro regions reported being disappointed or only somewhat fulfilled with their work.
The employees are giving a lack of “respect, trust and support by management” and lack of recognition for their efforts as the reason behind their dissatisfaction. In addition, due to ongoing economic hardships, many of the employees have suffered pay-cuts and watched their budgets dwindle. Internal office politics also showed up as a problem in survey results.
The president of Professionals for NonProfits, Gayle Brandel, was quoted as saying “the cost of employee disengagement and poor performance is very high, as is the cost of turnover. ..the price an organization pays for disengaged staff can be staggering.” The survey results are available on the Professionals for NonProfit website.
Not all of it is bad news: the article ends on a high note saying 60% of the participants in the survey say they are optimistic for the future.
*The title of this post is a lyric from The Replacements – Unsatisfied.
According to the Washington Post, Fannie Mae and Freddie Mac Foundation will be discontinuing their philanthropy by the year 2015. Established as quasi-governmental housing financiers, the foundations gave away nearly $100 million just in the last four years. Fannie Mae also plans to discontinue the Help the Homeless walkathon on the Mall, ending the long-standing tradition after this year’s Nov. 19th event.
The Nonprofit Roundtable of Greater Washington is predicting tough times ahead and starting the drive to get individuals and corporations to help fill the void. Its executive director, Chuck Bean, was quoted as saying, “it is going to hurt, and at some point we’re going to need to stop wringing our hands and figure out what we’re going to do.” The impact on the greater Washington area will no doubt be significant although Bean is taking an optimistic approach and believes it’s an opportunity for other nonprofits to step up and really shine. Read the roundtable’s report and analysis on the regional impact here.
The Chronicle of Philanthropy and the Press Democrat are reporting that a federal grand jury has charged a California man with 9 counts of wire fraud relating to the alleged theft of over $2 million from the National Education Foundation in Alexandria, VA. The organization offers grants and online classes to disadvantaged students around the world.
The scheme was to invest $2.35 million promising profitable returns in the form of high monthly interest rate payments. The organization collected an initial $274K but the remainder of the money was allegedly used for personal expenses from a private account.
The president of the organization, Appu Kattan, was quoted as saying,”To me it’s like stealing from kids, it’s horrible.”
Representative Darrell Issa has introduced bill H.R. 2309 into congress as a way to help the US Post Office reorganize and stop losing money. As part of this bill, he proposes a reduction of the discount received by non-profits. The discount is currently set at 40% or 17.6 cents off of a first class mailer. This adds up to big savings for a non-profit who raises most of their money through direct mail drives. The proposed plan would decrease the discount by 5% a year until it hits 10% after six years. What does this mean for a non-profit in terms of cost? Under the current discount, it costs a non-profit $2,640 to send out 10,000 first class mailings, not including any response envelopes, which is a savings of $1,760. In six years, that same mailing will cost the non-profit organization $3,960, with a savings of $440 (keeping stamp prices static), which is an increase of $1,320 per drive for the organization.
Most non-profit organizations already operate on a shoe-string budget, putting all available funds into program expenses and will not be able to spare the extra expense for postage. This could lead to decreases in the size of the mailings to keep the cost down. That means in 2017 instead of sending out 10,000 pieces, the organization might send out 6,667 pieces for a cost of $2,640. Decreasing the size of the mailings could reduce their effectiveness. In 2009, the 1.9 million non-profits located in the US received approximately $234 billion in contributions via direct mail. If the amount received from a direct mail campaign is directly proportionate to the amount of mailings sent, and the non-profit cuts the mailing by 33% to save money; they could expect to receive 33% less in contributions (approximately $77,220,000,000 nation-wide). This could lead to a vicious cycle. The discount the non-profits receive may seem immaterial for smaller organizations, but when an organization depends on the money received from a direct mail campaign the loss of the discount could be devastating to the organization.
In the short run, decreasing the discount non-profits receive could help the post office: in the long run, it could really hurt them due to the decreasing volume of mail sent by non-profits. While non-profits still depend on direct mail solicitations to raise money, they are slowly increasing internet fundraising campaigns. The loss of the discount could be just what the non-profits need to focus on using the internet to raise funds.
For more information on the bill and the effect on non-profits see http://www.foxnews.com/politics/2011/08/17/nonprofits-oppose-measure-wiping-out-their-mail-discounts/
The book that Aronson’s Nonprofit group has been hard at work on has finally hit the (virtual) shelves! The Financial Management Handbook for Associations and Nonprofits (2nd ed.), written by Craig Stevens, Carol Barnard, Dawn Brown, Kathy Cuddapah, Laila Mitchell, and Rob Eby, is now available for purchase through ASAE, the Center for Association Leadership.
The book covers the following topics in detail and provides real-life examples and solutions:
- GAAP for Nonprofits – All the quirks and oddities that make us special
- Accounting Systems – How to set up your accounting to provide useful information
- Budgeting – Including what not to forget and how to plan
- Financial Reporting – Including current (as of press time) requirements, examples of disclosures and sample A-133 compliance reports
- Internal Control – Including fraud scams and how to develop controls to counter-act each threat
- Relationship with Auditors – Sometimes it is confusing what is our responsibility and what is yours and what you can do to help an audit go smoother
- Tax Reporting – What all the schedules are really for and how to translate IRS speak into English
Click HERE to get your copy!
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