D.C. Fraud and the ex-Councilman

Former Councilman Harry Thomas Jr. pleaded guilty in January of taking more than $350,000 in kickbacks and related tax evasion. Those funds were intended to help D.C. youth in Ward 5, northeast D.C. His method was through fundraising and non-existent events for his charity group Team Thomas. Thomas asked D.C. Children and Youth Investment Trust Corp to provide over $450K in grants for which no services were rendered but false documents and reports were submitted.

No allegations have been made against D.C. Children and Youth Investment Trust Corp. but the situation is in the news again, cited as an example of lack of oversight of D.C. agencies. The D.C. Council Committee on Government Operations lacks the authority to enforce any correction of problems found by its inspectors and auditors although they do conduct follow-ups on recommendations made.

A fellow Council member, Tommy Wells, spoke out that disbanding D.C. Children and Youth Investment Trust Corp. would be losing a valuable D.C. institution. His suggestion is that a leadership change is in order with mayoral oversight of future appointees to the board. The political pressure on the board is going to be intense and constant and having stringent reporting and competitive bidding  requirements as well as increased oversight is called for in order for the organization to function responsibly.

Thomas’s sentencing will take place in May.

Read more about the case here, Councilman Well’s statement here and oversight here.

Nonprofit Fundraising Survey Results

The Nonprofit Research Collaborative (NRC) has published its report, Late Fall 2011 Nonprofit Fundraising Survey, which examines survey results and discusses their implications as well as survey respondents’ plans for 2012. The survey included organizations of many sizes and types and provides comparative results. We may all be aware of the economic stress occurring in the nonprofit community but this report provides helpful perspectives with easy to understand graphics that help translate what is going on. It’s always helpful to realize it isn’t just you in the struggles you might be experiencing. Click here for the full report.

MissionFish and What It Can Do For You

MissionFish is a fundraising tool for non-profits to use via eBay and PayPal.  MissionFish (www.missionfish.org) partnered with eBay in 2003 to become their exclusive charitable partner, helping to raise over a quarter of a billion dollars via the eBay Giving Works program.  The mission, according to their website, is to help nonprofits find new sources of unrestricted funding through online commerce. In 2011, the PayPal Charitable Giving Fund was established by eBay as a 501(c)(3) to operate MissionFish and further the charitable purpose.  MissionFish raises money in three ways. The seller can designate a portion of their proceeds, buyers can also add a donation to their purchase during checkout, and anyone with a PayPal account can donate at any time with no purchase or sale required.  For more information about MissionFish and to see if it would be a good fit for your organization please visit www.missionfish.org.

Year End Fundraising Tips

As the year end approaches, nonprofit charities could remind potential donors that they can:

1.  Contribute certain appreciated capital assets, like stock, take a deduction for the fair market value, but not pay tax on the capital gain;  http://www.fool.com/taxes/2000/taxes000714.htm ;
2. Also certain taxpayers can benefit by making up to $100,000 tax-free IRA distribution gift directly to a charity.  The distribution is not deductible, but there is a benefit by not having to include the amount in taxable income, thereby lowering AGI.  This provision has been extended through 2011 only so far;  http://www.intervarsity.org/page/rollover-extension; 

These tax savings could be the incentive taxpayers need to donate to your worthy organization.  Charities should always remind potential donors to consult their tax advisor when giving tax information in fundraising appeals.

TODAY: Give to the Max Day: Nov 9th

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.

Nonprofits Could Lose Discounted Postage

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/

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.

Capital Campaign or Bond Issue?

It can be a daunting task to raise millions of dollars to expand an organization’s facilities.  Contributing to the stress is deciding between running a capital campaign or issuing bonds.  John Mrazek wrote in the May 2011 issue of Church Executive about his experience deciding between the two options.  He believes that capital campaigns work best when the economy is growing and bonds work best in a contracting economy.  Click here to see the other advantages of each funding source.

New Report Shows Giving Increased 4% in 2010

Giving USA Foundation has released their study results of 2010 charitable giving which notes that overall giving increased from the previous year. Experts are hopeful that after two years of steep declines, this could be a sign that the economy is slowly rebounding, according to the Washington Post. The increase chalks up to a hefty $10 billion in additional funds given over prior year, capping out at an estimated $290 billion that went to education, health institutions, arts and humanities and other charitable missions. Overall corporate donations rose 11%. This giving indicates that donors are more comfortable with the current economy.

Giving was also driven by extreme need, with disaster relief figuring prominently and people wanting to help in the wake of Haiti. However, outside of the amounts going to Haitian relief, human services organizations experienced a 4% decrease. It’s impossible to say that those organizations wouldn’t also have experienced an increase if it hadn’t been for donors redirecting what might have otherwise been gone to local support.

The idea of the crisis having passed is not shared by everyone. The Post quotes Kim Damion, executive director of the Manna Food Center in Gaithersburg, “I think the community has been very responsive when they feel it’s a crisis…but they are starting to think this is the ‘new normal’ and to retreat back to old giving patterns. For us that can be problematic. The lines have not become shorter at the food bank.”