What Nonprofits Need to Know About Internet Domains

Venable LLP has a good article this week on the newest changes to the Internet domain registery. “Earlier this week, the organization that governs the Internet’s domain name registry system, ICANN, approved a plan to dramatically increase the number of Internet domain name endings – called generic toplevel domains. The .org ending, with which most nonprofits are familiar, is likely to be joined by hundreds of new top-level domains. Some domains will be brands, such as .canon. Others will be geography-based, such as .berlin, .africa or .london; cultural or linguistic, such as .zulu; demographic, such as .gay or .fam; or thematic or commercial, such as .eco, .sport, .ski, or .hotel. Community domains designed to operate for the benefit of a specific community also are permitted.”

The article continues on to explain the benefits of top level domain registry, registering your organization as a brand and protecting your brand.

Pastoral Housing Allowance Compensation Suit

The Federal lawsuit challenging the legality of the pastoral housing allowance exclusion has been dropped.  Since the 1950’s the housing allowance provision of the IRS code section 107 has allowed the exclusion of some or all of a pastor’s income from Federal income tax.  This provision has been a key benefit in pastoral compensation.  To learn more about the lawsuit read article published by the Christian Examiner.

IRS halts examination of gift tax on contributions to 501(c)(4) until further investigation

In December of 2010, the IRS indicated it would be paying closer attention to contributions made to politically active 501(c)(4) organizations, with an emphasis on contributions made in excess of exemptions.  This focus is mainly due to large contributions received during the 2010 elections. Back in 1982 the IRS declared theses gifts taxable but has not been enforcing it. The current individual gift tax exemption is $13,000 in a year, $26,000 for couples, and any amount over will be taxed at 35%. The lifetime exemption currently covers up to $5 million in gifts. Earlier this year in an effort to increase gift and estate tax return filings the IRS sent out letters to large donors informing them that investigations had been opened to determine why they had not filed a return. On July 7, 2011 the IRS released a letter halting all current and former investigations until all implications of the issue have been reviewed.

Unhappy Donor Asks for $250,000 Back

The Chronicle of Philanthropy is bringing attention to an article in the Cape Cod Times regarding the Cape Cod Museum of Art and a donor asking for $250,000 to be returned. The donor is unhappy with governance over the organization and commented that “poor board governance and dissension” must be resolved before any future donations would be considered.

This raises a number of issues and the museum is waiting on a legal opinion on whether it must return the funds or not. Returning the funding could place the museum in legal jeopardy, according to the Times, but not returning it could be equally costly in the loss of goodwill from future donors.

It’s not an easy decision since the museum is already $400,000 in debt and experiencing some staff lay-offs. It might come down to what conditions or restrictions were placed on the contribution when it was made. If it was unrestricted, then a disagreement over management might not be enough for the museum to be legally obligated to repay. However, if it was restricted and the donor could establish that the funds were misused, a repayment would be in order.

The Chronicle goes on to state that the donor’s move to get the funding returned is “really a public relations and image issue…you don’t want a donor to be that unhappy…they (museum officials) need to find some way to make the donor happy and show people that they’re trustworthy.”

Pitfalls to Avoid When Starting a Planned Giving Program

Every organization makes mistakes starting new programs.  Most of these mistakes can be overcome but cost time and resources.  When starting a planned giving program these mistakes are often very public and could reduce a donors confidence in the organization.  However, learning from the mistakes of others can help ensure a strong foundation.  Lorri Greif in her article ” The Three Biggest Mistakes to Avoid When Starting a Planned Giving & Endowment Program” offers good suggestions.  The article is well worth the read.

Planned Giving

It has been estimated that Americans collectively give away more that $200 billion annually (Giving USA).   Many nonprofit organizations are establishing or refining a planned giving program to help donors effetely direct resources to their favorite charities.  Dean Regenovich in his article “Establishing A Planned Giving Program” developed the following list of items nonprofit organizations should consider in its planned giving policies and guidelines:

• Will the organization offer charitable gift annuities to its donors?
• Will the organization serve as trustee of charitable remainder trusts and charitable lead trusts? If not, is it the donor’s responsibility to secure a trustee?
• Will the organization administer charitable trusts or charitable gift annuities? If not, who will serve as the third-party administrator?
• What minimum amounts and other limitations should be established for each of the planned giving instruments? What is the minimum gift amount the organization is willing to accept for a charitable gift annuity? What is the minimum gift amount the organization is willing to accept for it to serve as the trustee of a charitable remainder trust? Are there minimum age requirements the donor must meet before the organization will enter into a charitable gift annuity contract? Are there maximum payout percentages the organization is willing to offer for charitable gift annuities and charitable remainder trusts?
• Who in the organization has the authority to accept gifts of appreciated property, particularly real estate and closely held stock? Is board approval required before such assets are accepted?
• Who in the organization is authorized to negotiate the terms of a planned giving instrument, such as a charitable gift annuity or charitable remainder trust, with a donor? Is board approval required before the document may be executed?
• Who in the organization has the authority to sign the planned giving document on behalf of the organization?

Symposium on Government Contracting in the Current Federal Landscape

With the continuing resolution regarding government spending causing great pain to many contractors, turning a profit can seem like an unreachable goal.  However, savvy business owners can buck the trend by being better informed and more agile than their competitors. 

Join Aronson LLC, John Marshall Bank, and PilieroMazza PLLC on July 26th for a breakfast briefing at Congressional Country Club designed to help government contractors navigate these unfamiliar waters and come out on top.  Our expert panel will explore the current federal landscape from a variety of angles, including business strategies, legal implications, financial approaches, and banking issues. 

Topics to be discussed will include:

• Pricing Pressures, Increased Competition, and Continuing Resolution
• Business Fundamentals and Agility
• Commitment to Transparency and Oversight
• Terminations for Convenience vs. Terminations for Performance
• Recent Protests and Litigation
• Competitive In-Fighting
• Financial Challenges
• Working with Companies Facing Delays in Funding
• Communicating with Your Bank
• How Competition Will Drive Behavior

Learn from our panelists’ extensive government contracting experience!  Register today to reserve your spot at what is sure to be a popular event!

Moderator:
Mark Moore
Chief Lending Officer and Executive Vice President, John Marshall Bank

Panelists:
Lexy Kessler
Lead Partner, Government Contract Services Group, Aronson LLC

Pamela Mazza
Managing Partner, PilieroMazza PLLC

Harry Katrivanos
VP Finance & Administration, Avenge, Inc.

REGISTER HERE!

Fiesta Bowl Fighting for Tax Exempt Status

The Tostitos Fiesta Bowl is organized as a public charity – with 501(c)(3) status.  The bowl sent letters June 30 to 31 state politicians explaining that providing tickets and luxury travel to bowl games all over the country may not have been within the tax exempt purpose of the Fiesta Bowl.  In its fight to retain its tax exempt status, the Fiesta Bowl has put every politician they worked with in a very awkward position.  The Bowl is asking them to explain how their acceptance of the benefits contributed to the mission of the organization.  The letter sent out included a list of politicians and the estimated amount of benefits received.  Topping the list was Republican Russell Pearce, the Arizona Senate President, claimed as $39,347.  One of the other irregularities pointed out in an investigation by a committee of the Bowl’s board, was reimbursing employees for political campaign contributions.   Read the article on ESPN.

New Mileage Rate!

The IRS reported that it has raised the mileage rate for reimburseable trip expenses. The rate was previously 51 cents per mile but the agency appears to have taken into account the rise in gas prices and has increased the rate to 55.5 cents per mile for business travel. Medical and moving travel rates are at 23.5 cents per mile. The mileage rate that applies to the deduction for charitable contributions is fixed at 14 cents per mile. The new rate is effective today, July 1, 2011.

How Not to Do Things

The Chronicle of Philanthropy brought attention today to a certain twitter account: @npnonadvice. The posts count off humorous tongue-in-cheek tips for doing things at a nonprofit organization. Example: “TIP: Hire a part-time executive director. They’re more of a symbolic figurehead anyway.” The twitterer boasts in the subheader that this is the “complete guide to how nonprofits shouldn’t do things.” Tweets can be found under #nonadvice. The author is remaining anonymous and told the Chronicle that he or she was just ending their job with a nonprofit. From the sounds of it, this person has some real insight that is really funny. A number of readers are responding with humorous tweets of their own, such as @ryanlwilliams: “Wear a suit to every meeting to distance yourself as far as possible from those poor people in your program.” It’s a case of it’s-funny-because-it’s-true and you hope it isn’t about you.