Charities seek out digital donors – Article

An article from the Detroit News notes: “An increasing number of charity groups are launching online campaigns to attract donors and volunteers through social-networking sites. Charity workers say online giving is increasing even as conventional donations dry up thanks to efforts such as the Salvation Army’s new Facebook widget and social-gaming program and Forgotten Harvest’s Twitter-based publicity drives. ‘If you capture the attention of two or three, they can get the message out to their group, and they can get to their group,’ says Russ Russell, chief development officer for Forgotten Harvest. ‘It’s like a domino effect.’” The Detroit News (12/28)

Update on the Gates Foundation

Founded in 1996,  The Bill and Melinda Gates Foundation (“the Foundation”) was created to improve welfare and healthcare systems worldwide.  The Foundation is controlled by a Board of 13 Directors, including Bill Gates, Melinda Gates, and Warren Buffet.  Since inception, the Foundation has given over $21 billion in grants.  Some problems that the Foundation strives to improve are: global health issues, which include HIV/AIDS, nutrition and vaccines; poverty development issues, which includes agricultural development; and education. Continue reading »

IRS Renewed Interest in Compensation and Benefits Paid by Nonprofits: A Visit to the Private Inurement and Excess Benefit Transaction Topic in Today’s Environment

The new and expanded Federal Form 990 (return for exempt organizations) is an indication that the Internal Revenue Service (IRS) is scrutinizing the policies and procedures of exempt organizations more closely.  The instructions to the new form include a discussion that while certain policies and procedures are not required by the Internal Revenue Code (IRC) for organizations to adopt, the IRS considers them important to generally provide good tax compliance.  It goes on to discuss how the size and structure of each organization is a factor in considering exactly which policies and procedures should be adopted, but the point is the IRS is making it clear that they expect tax exempt organizations to have enough and appropriate policies and procedures in place to provide assurance that tax compliance, in all its meaning, is complied with. The form 990, Part VI, is a page of questions in regard to “Governance, Management and Disclosure”.

The instructions to the 990 also state “The absence of appropriate policies and procedures may lead to opportunities for excess benefit transactions, inurement, operation for non-exempt purposes, or other activities inconsistent with exempt status” (instructions to 990, page 15).  The assumption currently is that the IRS will have a helpful tool with the new form 990 in identifying organizations at risk of having excess benefit transactions, and possibly organization they will want to look more closely at. Continue reading »

Review of Website Capitalization Rules

Accounting for website development costs depends on the stage in which they are incurred.  There are 4 stages:

1)    Planning the website

2)    Developing the applications and infrastructure

3)    Developing graphics and content

4)    Operating the site

  Continue reading »

Accounting for Leases –A Problem Area

Accounting for Leases

 Lease accounting has historically been a troublesome area of accounting for companies.  In early 2005, partly in response to a letter by the then-Chief Accountant of the SEC, Donald Nicolaisen, over 200 companies have restated or amended their financial statements due to improper lease accounting, including Starbucks, Wendy’s, Cingular Wireless and others.  As recent as 2007, other companies have had to restate their financial statements due to lease accounting issues. Continue reading »

Useful Tool for Federal Grantees: The Excluded Parties Lists System (EPLS)

Recipients of Federal grants are aware that they cannot pass Federal money on to excluded parties. Ways of ensuring that the vendors, subcontracts, and subgrantees are eligible include getting them to provide certification and checking them against known excluded parties.  There is a searchable database available to the public of known people and companies that are ineligible to receive Federal funding called the Excluded Parties List System or EPLS.

 The EPLS is located at https://www.epls.gov/ and allows people and business to search by name to find out who is on the excluded party list.  Excluded parties are not allowed to receive federal contracts or subgrants due to being a felon, a known terrorist, or other reasons.  EPLS provides a single searchable list of all excluded parties.  This is an important and easy tool for any organization that receives federal funds or gives out subgrants.  Continue reading »

GuideStar’s Nonprofit Economic Survey

GuideStar is an information service specializing in U.S. Nonprofit companies.  In December 2009 they published the results of their Eighth Annual Nonprofit Economic Survey.  The purpose of this survey was “to compare how charitable organizations fared during the first nine months of 2009 to previous years and to try and gauge the effect of the downturn in the economy on the American nonprofit sector.”     Overall, the economy has not yet completely rebounded and nonprofits are still struggling, however there were better indications for increased contributions.    Although organizations are not reporting the same levels of contributions they were seeing in 2007, they were up from 2008.  Click here to read a letter from the President and CEO of GuideStar and to review the results of the survey:

Letter from President and CEO:

http://www2.guidestar.org/rxa/news/articles/2009/from-the-presidents-office-december-2009.aspx?source=dec09nwsltr

 Results of survey:

http://www2.guidestar.org/rxa/news/articles/2009/down-but-not-defeated-results-of-guidestars-eighth-annual-nonprofit-economic-survey.aspx

Congress Agrees to $50 Million for Social Innovation Fund

On December 9, 2009, a congressional budget committee approved an allocation of $50 million to a new social innovation fund geared towards helping nonprofits expand effective programs. Even with the budget cuts included to cut spending in support of the Volunteer Generation Fund and the Nonprofit Capacity Building Program, there would be a net positive effect for the nonprofit community. The budget agreement is now awaiting full House and Senate voting.  Read more here: http://philanthropy.com/news/government/index.php?id=10380

A Hit Below the Belt – MD Unemployment Tax to Triple

The current national economic downturn has been the cause of changes to the Maryland Unemployment tax structure for 2010 according to the Maryland Unemployment Insurance Trust Fund – October 2009 Update. The Maryland Department of Labor has announced that effective January 1, 2010, the Maryland unemployment insurance tax will more than triple – at a minimum – for Maryland businesses. Continue reading »

ADVERTISING OR SPONSORSHIP…THE DIFFERENCE CAN BE A LOT OF $$$

Advertising revenue is considered “unrelated business income” (UBI) by the Internal Revenue Code (IRC) Section 513.  But how do you know the revenue your organization is receiving is REALLY considered advertising?  This is where a closer look can save you big tax dollars! 

To make it simple, you have advertising revenue subject to the UBI rules if the “advertising” promotes or markets any trade or business, or the advertiser otherwise expects more than a negligible commercial benefit in return.  If merely the name, logo, or product line of the advertiser is listed on a banner or appears in a publication, such as a conference agenda, it is more aptly described as “sponsorship revenue” and is not subject to the UBI taxation.  

Real life situations can appear to be somewhere in between the definition of advertising and sponsorship, and (of course) the guidance as written in the IRC is copious and confusing, so consult your tax practitioner if you are not sure whether you have advertising (taxable) or sponsorship revenue (not taxable).