Non-Profit Legal Matters

The Blog of the Law Firm for Non-Profits®

IRS Top Tips for Year-End Charitable Donations

IRS tipsAs individuals and businesses get ready to make their year-end charitable donations, the IRS provides its top tips about giving:

1. If you are making a charitable contribution of clothing and household items (e.g., furniture, furnishings, electronics), they must generally be in good used condition or better to be tax-deductible. Donors must get written acknowledgments from charities for all gifts worth $250 or more, which must include a description of the items contributed.

2. A donor must have a bank record or a written statement from the charity to which it is contributing in order to deduct any monetary donation, no matter the amount. A written statement or acknowledgment must include the name of the charity, the date of the contribution, and the amount of the contribution.

3. Contributions are deductible in the year they are made. Donations by credit card are deductible in the year charged, not necessarily in the year paid. Checks are deductible in the year mailed.

4. Always check that a charity is eligible. Only donations to eligible organizations are tax-deductible. The IRS Select Check is a great place to start your search.

The IRS provides more year-end tax tips here. Happy donating!


Tagged , , ,

One Week Until Giving Tuesday!

Giving TuesdayRemember when we told you about Giving Tuesday last year? By now the familiar #GivingTuesday hashtag has probably started reemerging on all your favorite social media sites as it is being held on December 2, 2014. Over the Thanksgiving holiday, Giving Tuesday wants you to remember the event as an alternative to shopping events such as Black Friday and Cyber Monday.

According to Kathy Calvin, President and CEO of United Nations Foundation, one of the founders of the event, in just three years, “it has become one of the largest initiatives dedicated to giving back.” It has more than 13,000 partners around the world organizing campaigns to “get out the give.” The event encourages each person to “find a way for your family, your community, your company or your organization to come together to give something more.”

With just one week to go, Giving Tuesday is providing a free webinar on best practices to measure the impact of your Giving Tuesday campaign and a twitter conversation with the Family Dinner Project, a nonprofit focused on educating the public about the benefits of family dinners. Forbes is also broadcasting a live discussion with Kathy Calvin about Giving Tuesday.

Do you have a campaign planned for Giving Tuesday? If so, let us know what it is in the comments section below!

Have a happy and healthy Thanksgiving!

Tagged , ,

GuideStar Looks Toward Second Revolution

GuideStarAfter 20 years in business, GuideStar wants a facelift. The nonprofit information database (which you probably know as the place to find an organization’s Form 990) wants to execute a new strategic plan that it calls Guidestar 2020. GuideStar calls it the organization’s second revolution: “nonprofit transparency that drives nonprofit effectiveness.”

The new plan includes the development of new data innovation, collection, and distribution tools. The tools are aimed at making the website more effective for both nonprofits and for users of the site. One tool would enable nonprofits to create one profile to use across multiple online-giving platforms. Another would enable users of GuideStar to search nonprofits by their causes.

GuideStar also hopes to create a tool that will allow nonprofits to report program outcomes so that users could get a better picture of each nonprofit’s effectiveness.

GuideStar currently has almost 3 million registered users and information on 1.5 million 501(c)(3) organizations. 98% of its website visitors access basic information on nonprofits for free.

GuideStar chief executive Jacob Harold says the organization wants to raise $10 million to implement its strategic plan. The Bill and Melinda Gates Foundation has pledged $3 million over three years to get the revolution started. The foundation’s senior program officer, Victoria Vrana, describes GuideStar as one of the few central sources of information on nonprofits and acknowledges that updating the information on the site will be an enormous task.

How often do you use GuideStar?

Tagged , ,

UnKoch My Campus

Students at almost 30 colleges are holding protests, demanding: “UnKoch My Campus!” They want more transparency from their colleges about the academic influence they feel billionaire brothers Charles and David Koch have “bought” with their sizable donations to the schools. Since 2005, the brothers have donated nearly $50 million to 254 colleges nationwide according to an interactive database published by Greenpeace.

The largest college recipient so far is George Mason University, which has received $24 million from Koch organizations since 2005. Student protestors at the university are demanding to know what departments and programs have received that funding.

The university’s president maintains that donors are not allowed to sway academic decisions.

Students at schools supported by the Koch brothers have a reason to be suspicious. There is a history of Koch-backed colleges accepting requirements of academic influence that come along with the money. In 2011, Florida State University revealed that a donation to the university’s economics department came with a donor-approved advisory board that could veto hiring decisions.

Most of the Koch brother’s donations to colleges are for hiring professors, building economic research centers, or supporting research about libertarian politics. Although college officials could certainly reject a donation if it doesn’t further the educational purposes of the school, according to Forbes, no school has yet publicly turned down a Koch gift.

Has your organization been offered a donation from the Koch brothers? Did it come without explicit or implicit requirements? If your organization was offered a donation with requirements such as these – whether from the Koch brothers or otherwise – would it accept it?

Tagged , ,

British Officials Fear Terrorists Hijacking Charities

The Charity Commission, a British government watchdog for charities, is formally investigating 86 British aid organizations to determine whether their charitable funds have been hijacked by terrorists in Iraq and Syria to finance military operations. The Commission fears that extremists are smuggling from the aid groups when the groups are distributing donated cash and equipment in the region.

The number of terrorism-related investigations has almost doubled since February amid growing concerns that charities operating in Iraq and Syria are potential targets for extremists included ISIS. William Shawcross, the chair of the Commission, explained: “Even if extremist and terrorist abuse is rare, which it is, when it happens it does huge damage to public trust in charities. That’s why I take it very seriously.”

The investigations also come at a time when calls for action to cut off terrorist financing are increasingly popular, including The Telegraph’s Stop the Funding of Terror campaign. Globally, experts fear that millions of dollars of charitable donations have already been used to buy weapons and supplies for terrorists in Iraq and Syria.

The Charity Commission has already taken action against charities linked to extremists, with the most serious facing terrorism prosecutions in court. 8 million pounds (about $12,642,000) has recently been given to the Commission to strengthen its ability to tackle abuse of charities. Shawcross is especially concerned about newer charities that are less experienced and often more vulnerable to exploitation.

U.S. charitable organizations are required to determine whether potential international grantees are on terrorist watch lists, among other safeguards. Breaking these rules can lead to criminal charges. If your organization makes grants overseas, do you check grantees and their principles against known terrorist lists?

Tagged , ,

Nonprofits Subject to Email Phishing Attacks

phishingOn October 29, many received an email from Christopher Oechsli, president of Atlantic Philanthropies, saying the New York foundation was planning on randomly giving away $1 million. The email stated that recipients should consider themselves to be “lucky individuals.”

Unfortunately for these email recipients, the foundation, which announced plans to stop its operations by 2020, was not just blindly getting rid of its assets. Instead, the foundation was the victim of an email phishing attack, which uses well-known names to trick email recipients into providing personal information such as their social security or bank account numbers. The foundation has been attacked seven times in the past 18 months.

Luckily the foundation was tipped off by some email recipients who contacted the foundation to ask whether the emails were legitimate. The foundation immediately posted a warning on its website regarding the fake emails. The foundation also asked recipients of the phishing emails to report them.

The Anti-Phishing Working Group, a worldwide coalition that aims to unify the global response to cybercrime, reports that 6,271 phishing attacks in the first half of 2014 targeted the “.org” Internet domain name used by nonprofits. World Vision, a nonprofit organization dedicated to tackling the causes of poverty and injustice, has been a consistent victim of phishing attacks. The organization has been attacked at least monthly with attacks spiking during high-profile disasters. The emails have varied, including offering employment or soliciting donations. World Vision recommends that potential donors type the organization’s URL into their web browser to ensure that donations end up in the right place.

Has your organization been the victim of a phishing attack? If so, share with us how it occurred and what steps were taken to combat future phishing attacks.

Tagged , ,

Red Cross Responds to Mismanagement Reports

We told you earlier this week about a joint investigation by NPR and ProPublica into the mismanagement of the American Red Cross’ responses to Hurricanes Isaac and Sandy in 2012. In an interview with PBS NewsHour, Suzy DeFrancis, Chief Public Affairs Officer for the Red Cross, responded to that investigation.

DeFrancis explained that the investigation was one-sided, failing to show the good that the Red Cross did during the hurricane responses. She noted that the organization distributed 17.5 million meals and snacks and 7 million relief items such as gloves and hats. DeFrancis also stated that the Red Cross deployed 17,000 people for the response, most of them being volunteers.

In response to the allegations that Red Cross vehicles were driven around empty for show or were otherwise utilized for media purposes, DeFrancis explained that only disaster responders directed the trucks and that all trucks were full of food. As the Chief Public Affairs Officer she explained that she had firsthand knowledge that public relations staff could not tell any emergency response vehicles where to go.

DeFrancis also responded to allegations of wasted food. She said that although some food did go to waste, there was nowhere near the amount of waste cited in the investigative report.

DeFrancis admitted that the organization learned some lessons from the responses, noting that the Red Cross hasn’t been a response organization for 130 years without making changes to get better.

Tagged , , ,

Media Declares Botched Red Cross Responses

After two major hurricanes hit the east coast in 2012, many responded in a typical fashion – by donating to the American Red Cross. Indeed, the Red Cross received hundreds of millions of dollars in donations to assist with the storm relief. Did the donations go to waste?

According to a joint investigation by ProPublica and NPR, the Red Cross botched its emergency responses to both hurricanes — first to Hurricane Isaac and then to Superstorm Sandy two months later. The investigative reports cite internal Red Cross documents, emails, and interviews with two Red Cross staff members on the ground during the hurricane and reveal mismanaged volunteers and vehicles and supplies diverted for public relations purposes. One Red Cross driver admitted to the investigators that the organization’s supervisors ordered dozens of trucks usually used to deliver aid to be driven around nearly empty just for show.

The reports also show that the Red Cross lacked basic supplies to distribute to victims after the storms. Even when they did have the supplies, they had trouble connecting the supplies to the victims, in one case being forced to throw away tens of thousands of meals.

The Red Cross has denied allocating resources for public relations purposes and defended the charity’s overall responses to the storms. In an official statement to ProPublica and NPR the organization wrote: “While it’s impossible to meet every need in the first chaotic hours and days of a disaster, we are proud that we were able to provide millions of people with hot meals, shelter, relief supplies, and financial support during the 2012 hurricanes.”

These botched jobs follow closely on the heels of the financial mismanagement allegations the organization endured after September 11 and Hurricane Katrina. In that instance a series of the Red Cross’ chief executives were forced to resign and Congress forced an overhaul of the organization.

Will you still donate to the Red Cross? Do you think the Red Cross would improve if there was a competitor charity providing effective disaster relief?

Tagged , , ,

Court Dismisses Tea Party Suits Against IRS

tea partyHow do you solve a problem like a tea party group lawsuit? The IRS may have just found the answer: give the group tax-exempt status.

In the wake of the Treasury Inspector General report that called out the IRS for using discriminatory labels to sort through exemption applications, such as the term “tea party,” more than 40 conservative groups brought two lawsuits against the IRS for allegedly being singled out for perceived tea party affiliation. Last week U.S. District Court Judge Reggie Walton (who was appointed by President George W. Bush) dismissed almost all of the counts, finding them to be essentially moot as the IRS has now granted almost all of the groups exempt status.

Judge Walton also found that the individual IRS officials named in the suits could not be fined in their individual capacity because it could hurt future tax enforcement.

Finally, Judge Walton denied injunctive relief that would have prevented the IRS from targeting tea party groups in the future. He believed it to be unnecessary, explaining that “there is no reasonable expectation that the alleged conduct will recur, as the defendants have not only suspended the conduct, but have also taken remedial measures to ensure the conduct is not repeated.”

There were mixed reactions to the verdict. Rep. Jim Jordan (R-Ohio), who is heading an investigation into the tea party scandal asked, “You get targeted and harassed for three years but, oh, because you finally get [tax-exempt status], the three years of harassment doesn’t mean anything?”

Paul Ryan, senior counsel at The Campaign Legal Center, a nonpartisan, nonprofit organization that works in the areas of campaign finance and elections, political communication and government ethics, countered: “Judge Walton got it right — there is no ongoing injury to these groups . . . The IRS needs to enforce tax law with respect to nonprofit political groups more aggressively.”

Unsurprisingly, many of the tea party groups are planning to appeal the decision.

Tagged , , ,

IRS Catches Up on Exemption Application Processing

exemptionHas your organization been waiting a long time for its IRS exemption? If so, you may be hearing back soon. Last week Matthew Weir, director for the IRS Tax-Exempt and Government Entities Division, reported that this year the unit has closed 117,000 exemption applications, a 121% increase from last year. Weir pointed out that everyone should be especially impressed given that the IRS’s budget for 2014 was $1 billion less than it was in fiscal year 2012.

Weir also stated that the IRS believes that the new streamlined exemption application (Form 1023-EZ) has been a success. He reported that the IRS has closed most of the streamlined applications in about 11 days with 95% of the applications being approved.

It’s unclear though whether or not this should actually be considered a success. There are ongoing concerns in the exempt organizations sector that the streamlined application may be allowing undeserving organizations to obtain recognition of exemption. Acknowledging these concerns, Weir said that the IRS is planning to use a “pre- and post-determination process” involving correspondence exams to more closely review a sample of applications.

Did your organization file a Form 1023-EZ? What do you think of the new form?

Tagged , , ,

Contact The Law Firm for Non-Profits to learn more about how we can help in
launching, guiding or advising your tax-exempt, non-profit organization.