Nonprofit Board Crisis

Nonprofit Board Members: Worried Your Nonprofit Will Be Taxed?

It feels a bit oxymoronish to be offering advice to nonprofit boards about how to protect your nonprofit from being taxed but these are times when taxation of tax-exempts is actually becoming a serious worry. The basic premise by some of the public and policy-makers: we need revenue and tax-exempts take more than they give.   Note too, taxation will not necessarily come directly but indirectly through fees or sur-charges or negotiations for UBIT. 

With this reality in mind, the Alliance for Children and Families (Issue 4-2010) offered the following advice.

1. Nonprofit Boards must be aware that "tax exemption is a privalege, not a right" and that there will be efforts, by municipalities in particular, to find ways to gaining revenue from nonprofits.

2. Nonprofit Board members should be active ambassadors telling the nonprofit's story and ensuring that as many as possible, particularly policy makers, know and understand the benefits the nonprofit provides the community.  Nonprofit execs should ensure that Guidestar and other charity rating groups have the correct information about the nonprofit on-file.

3. Nonprofits should emphsize the impact they are having, both anecdotally but also in terms of numerical results, financial results and even numbers of volunteers & employees.

4. Nonprofit Boards should look to individually engage policy makers and influencers in task forces, committees, etc, as another means for ensuring that there is strong community understanding and support, so that in the end, the nonprofit is viewed as a contributor to, not a drain of community resources.

Nonprofits Forced To Compete Curbside

Who would have guessed that the ever-stalwart seasonal curbside charitable solicitor, the Salvation Army, would be forced to compete for its space, especially during the December holidays? 

Well, the economy and actually what I might call, thoughtful corporate managers, have put the Salvation Army on a less competitive edge.  The story begins with Giant Food stores which has put limits on the Salvation Army's bell ringing in order to accomodate other nonprofit requests for the same space according to the New York Times.  The argument for limiting the Army's time in front of their stores: there are many charities wanting similar space.

So, has the Salvation Army lost its cache?  Have other nonprofits made a better case.  Do the owner-operators of Giant Food stores have some issues with the Salvation Army?  Have customers complained?

Perhaps we will not fully learn what has gone on behind the decision but I think the Army's experience should be thought of as a clear indicator to all nonprofits that nothing, certainly in this economy, can be certain and that every past practice is worth an examination to ensure the successful pursuit of mission.

Nonprofits and Charitable Deductions

There's this saying that tax deductions are a primary motivator for a donor's charitable gift.  Personally I think the role the tax deduction plays is overstated, particularly when talking about giving things like clothes and cars.

But whatever its role, donors do need to be conscious of exactly how they make tax claims about their donations.  Stepping-in to be helpful on this and a number of charitable-related matters is the Wall Street Journal in this article.

I found two items particularly noteworthy.  One item, basically focused on "judging a book by its cover" reminds prospective donors to not singularly rely on the charity graders (like Guidestar or Charity Navigator) as their only source of information (positively or negatively) and with that, not to singularly judge a nonprofit based on the pay its exec receives.  There's more to a nonprofit than these two items.

The other, a question I find frequently asked by nonprofit boards, is whether they, the organization, should be carrying Directors & Officers insurance.  Check-out the answer.

Nonprofits and Celebrity Endorsements

It's a marketing-proven fact that a celebrity's endorsement of a product helps improve sales of that product.  It's also been documented that a celebrity's endorsement of a product for charity can also help sell that product.  Paul Newman is probably the best example of success in this vein.

NPR provided a good example of what goes on behind the scenes when a celebrity and business want to put out a new product linked to charity with a story on Pat Boone and his getting behind a new meat company.  Check out the article for some good lessons for those considering the same.

Nonprofit Social Enterprise by Public Sector

A new social enterprise concept is being tested around New York City.  The Fire Department wants to assess a fee for responding to automobile crashes and fires.  The fees may seem relatively minor, but that depends on your income level.  According to the New York Times:

The highest fee, $490, would apply when fire units respond to the locations of crashes or car fires that include injuries. For car fires with no injuries, the fee would be $415, Mr. Gribbon said. And for crashes in which no one is hurt, the fee would be $365, he said.

So why do I care you might ask?  I care because it's one thing for a nonprofit to establish fees for certain services as a vehicle to offset its dependency on grants.  It's another for a public sector entity to do the same.  As I understand the purpose of police and fire departments in particular, it's to have these resources available for those occasions when disaster strikes.  Homeowners and renters (via their rents) contribute to the tax pool so that when the unexpected occurs, someone will respond. 

Yes, I know that municipalities like businesses and individuals are all experiencing economic challenges.  But, charging fees for what taxpayers are already paying for?  It's just not right.

Nonprofit Teaches Intolerance

The Westboro Baptist Church has one message: intolerance for gays and all that do not oppose gays.

I recognize that the US is theoretically a place where all things go and where a group generating no personal financial gain and professing a clear mission can attain nonprofit status.  But are we in a place where tolerance, particularly for the intolerant, can go too far?  And, isn't the Westboro Baptist Church, a group that will picket Mrs. Edwards' funeral, an example of what might be going too far from a group that maybe doesn't really merit its nonprofit status?  Does it say in the Constitution -- make way for those whose fundamental mission is intolerance?  I do wonder.

In the meantime, nonprofits are market-driven entities.  If there are folks willing to make their financial commitments to an organization with a clear mission, like the Westboro Baptist Church, then that institution has a right to cosexist with the tolerant.  I guess...

Nonprofits will get some of their money back

A settlement (see a part of the story in the Chicago Tribune) has been reached to help a number of the nonprofits who were financially injured recoup some of the money lost from the Madoff scheme.  This is likely news most will be aware of by the end of the weekend.

I think many recognize that schemes like Madoff's result from greed.  The promised results are usually too good to be possible but early "investors" usually do realize unbelievable gains.  Of course there are those who do not gain because such returns really are, for the majority, "too good to be true".  These investors are perhaps just unrealistic or unwise while definitely being hopeful.

Now, what about all those nonprofits who invested with Madoff?  Mostly smart people who just had really big trust in Madoff?  Well, as it turns out, some nonprofits also made significant and unreasonable gains and they too are now part of the conversation of having to give some back to help offset the losses of the many.  While I should have guessed otherwise, I've got to admit a bit of a surprise in thinking that nonprofit boards also played along with what, if anyone admitted aloud, could only have been an illegal venture.

I hope that future boards will add to their investment committees one more question: can the promises being made by the offerors be legal versus "too good to be true"?

Nonprofit Under Attack: Will no one come to its aid?

WikiLeaks is under serious attack.  True, it's subversive and conspiritorial in its effort to achieve its mission of holding governments accountable.  Also true the items its disclosures have proven quite embarrassing and potentially, in some cases, harmful.  Of course there's that "if it's that embarrassing, should a government be doing it" question, but nevertheless, Wikileaks pulls no punches.

Governments do not like being embarrassed.  That's why they are so quick to lobby the public to focus on the wikileaks "betrayl" rather than the information disclosed like the lack of respect by diplomats or failures to observe the Geneva Convention or any number of other issues which WikiLeaks uncovered.

But a bigger concern to me, and what I think should be of concern to all those in the nonprofit sector, is the willingness of governments and businesses (like Visa or Mastercard or big Banks who were vehicles for WikiLeaks' donations) to just turn off the water at the say-so of embarrassed governments. 

I believe the sector needs to rethink why it exists -- to fill the void left by the percieved lack of profit potential for businesses and the lack of demand by the public.  I believe  nonprofit boards and execs need to come together and say "hey", they have a mission which is about improving the world (not always in the best form, but...).  And with a mission and volunteers and even donors, WikiLeaks and any others who dare to challenge the status quo must be defended at least for their right to challenge the status quo.  Come-on nonprofit leaders -- stand-up and shout-out!

Nonprofit Merger: Another

Nonprofit board members everywhere: listen up!  There are other options besides ringing your hands when it comes to thinking about hard times.

Yesterday I wrote about two nonprofits merging (arts organizations in New York City) and today I learn of another story about two nonprofits merging (educational scholarships in Philadelphia).  Given the recent and ongoing economic troubles, I've been hoping to see more creative collaborations like these two sets of organizations, instead of nonprofits biting the dust one-at-a-time.

But the Philadelphia merger appears to be mission rather then economically motivated, even better I say!  The details have not been worked out (and I'm guessing there will be quite a few) but the Philadelphia Inquirer tells a very promising story. 

Let's hope that this is a positive trend, one that nonprofit board members will pay attention to and subsequently begin action.

Nonprofit Merger

During severe economic challenges, nonprofits explore all possibilities for survival.  Options include collaborations, partnerships and sometimes, the "m" word, merger.  Mergers are usually the last choice when two organizations must consider shedding some part of their history and identities to become a new organization.  And, mergers often work best when at least one of the executives is planning to or already has left their organization (it's a lot less messy).

The New York Times profiled the recently board-approved merger of the Dance Theater Workshop and the Bill T. Jonew/Arnie Zane Dance Company.  A lot of details are provided in the article which makes this case particularly illustrative.   The article notes that "Exactly how those two groups with different missions will mesh remains a question..."  Plus, there's an added twist: both execs will continue with the new organization.  Should be interesting to watch...