December 2007
December 21, 2007
Accountant Offers Glowing Reviews of New 990
The Internal Revenue Service on Thursday released its final draft of the redesigned Form 990.
Jack Siegel, an expert on nonprofit accounting, says the new form is a big step forward.
Mr. Siegel has devoted three posts on his blog, Charity Governance, to breaking down the pros and cons of the revamped form, which many groups will have to file starting with the 2008 tax year.
His major gripe: The form fails to present financial information in a format similar to what is found on most standard nonprofit balance sheets.
But, over all, Mr. Siegel — who has provided the IRS with scores of suggestions about the form since the tax agency released its first draft in June — said he is pleased with the final results.
“Everybody will have their gripes, but on the whole, the IRS did a marvelous job of integrating the sector’s comments into final product,” Mr. Siegel writes. “To some extent, the devil will be in the instructions. That is where terms used on the form will be defined.”
The IRS plans to release the instructions in early 2008.
What do you think? Did the IRS hit the mark with the new Form 990? Or does the new form have flaws? Click on the comments link below this post to share your thoughts.
December 19, 2007
IRS Set to Release Final Version of New Form 990
The Internal Revenue Service on Thursday will make public the final version of its redesigned Form 990 informational tax form, officials said today.
The IRS is revamping the document, which charities with more than $25,000 in annual revenue must file with the tax agency.
An initial draft of the form was released in June.
The tax agency made several changes to the draft in October after it received more than 650 public comments about the proposed form.
The final version of the form will incorporate other suggestions from the public — and IRS officials have said that the agency will probably outline plans to delay the date when some of the proposed changes would take effect.
The Chronicle will post details about the IRS’s actions as soon as the agency has announced its plan.
December 18, 2007
British Prime Minister Calls For More Work On Relieving Global Poverty
Gordon Brown, the British prime minister, is asking charities, churches, and corporations to do more to help the world’s poor.
Mr. Brown told The Guardian newspaper, that more needs to be done to meet the United Nations Millennium Development Goals by 2015. “2008 should be a development year and mark a call to action from everyone — not just rich and poor governments but civil society, faith groups, trade unions, and even the private sector,” he said.
The Millennium Development Goals are seven antipoverty and health goals, such as reducing by half the number of people who are suffering from hunger. Last week, Unicef released a report on the world’s progress toward meeting the goals, which were set in 2000.
According to the report, several strides have been made. But serious problems remain. For example, treatment of pneumonia and malaria, which together each year account for more than a quarter of the deaths of children under five years old, has been slow to expand.
Given the report’s findings, it is unlikely the world will meet the development goals, The Guardian reports.
What do you think? What can nonprofit groups and companies do to help countries reach the development goals?
— Ian Wilhelm
December 17, 2007
Federal Government Offers New Grants for Overseas Volunteers
The U.S. Agency for International Development is providing $100,000 for a new program designed to help American professionals afford the costs of overseas volunteerism.
Individuals can apply for grants of up to $1,000 through the program, which is run by the Office of Volunteers for Prosperity, a branch of USAID that encourages highly skilled Americans to give their time.
The grants can be used to pay for travel, insurance, and living expenses overseas. People must be able to raise a matching amount of money on their own to qualify for the grant.
“Some professionals are quite capable of paying their own way, but many others are not,” said Jack Hawkins, director of the Office of Volunteers for Prosperity.
“There may be an inner-city teacher who wants to teach English for a short-term assignment in Africa and doesn’t have the wherewithal to get over there,” he said. “This program is designed to help cover at least some of the costs involved with doing that volunteer assignment.”
USAID is also reaching out to corporate foundations and individual donors in hopes that they will provide extra money for the program. The first grants will likely be awarded in early 2008, Mr. Hawkins said.
The Office of Volunteers for Prosperity was created in 2003 as part of a push by the Bush administration to increase volunteerism and civic engagement. Mr. Hawkins said he’s seen the positive impact that volunteers can have in reminding people overseas of the generosity of Americans.
“We hear from volunteers all the time that people they work with in developing countries may have criticisms or concerns about U.S. foreign policy, but they also feel great knowing that Americans are very caring and concerned and will work side by side with them to help them deal with the problems they face on a daily basis,” he said. “From a public-diplomacy standpoint, it’s very important.”
— Caroline Preston
December 14, 2007
Should Congress Act to Curb Fund-Raising Abuses?
Lawmakers at a Congressional hearing yesterday said they wanted to explore ways the federal government could crack down on veterans charities that spend most of their donations on fund-raising activities.
Paulette V. Maehara, president of the Association of Fundraising Professionals, said she would welcome a federal ban on contracts that promise outside fund-raising companies a certain percentage of the donations they take in.
Jack Siegel, a Chicago lawyer and accountant, said in his blog that Congress should not mess with “fund-raising metrics.” But it should consider giving more money to the Internal Revenue Service division that oversees tax-exempt organizations or including charities in the ban on telemarketing to people who have signed up for the federal “do not call” registry.
What do you think? Should Congress act to curb the abuses highlighted at the hearing on veterans charities? If so, what should it do?
December 10, 2007
New York to Change Measure of Poverty
New York is attempting to change how it — and possibly the rest of
America — defines poverty.
The formula that is commonly used to measure poverty and determines who has access to government health care and other services, has long been regarded as the social-science version of the Edsel — an idea that was flawed when it was created.
In New York, Mark Levitan, director of poverty research for the city’s Center for Economic Opportunity, is trying to rework the formula using recommendations from the National Academy of Sciences.
According to an interview with City Limits, an urban-affairs magazine in New York, Mr. Levitan said that the current way to measure poverty, which was created in the 1960s, focuses on whether a family can pay for basic needs, such as food, shelter, and clothes. But this fails to capture all of what people need, such as access to information.
“Now you may have enough food to eat, you may be able to keep a roof over your head, but your ability to participate in your community, in the political life of your city, of your country, to understand what’s happening in your child’s school, because that information is being posted on the Internet, all these things are closed to you,” he said. “And so the poverty threshold needs to reflect the rising standard of living in the society as well.”
Mr. Levitan declined to speculate on whether the new measurement will lead to more people being considered poor in New York.
Mr. Levitan said that in six months the city expects to release its
revised version of the poverty rate and he hopes that the federal
government adopts it.
What do you think? How should poverty be measured? How will it affect charities if the poverty rate is redefined, which will likely lead to a larger number of Americans being considered impoverished? Click on the comments link below to share your thoughts.
— Ian Wilhelm
Minnesota Supreme Court Property-Tax Ruling Worries Charities
The Minnesota Supreme Court last week denied a property-tax exemption to a day-care center in a decision that has alarmed many charities in the state.
In a 4-3 decision, the court ruled that the Rainbow Child Care Center, in Red Wing, did not qualify for the tax exemption because it charged full price for all of its services.
“There must be a substantial charitable, or gift, component to an organization’s operation in order to qualify as an institution of purely public charity,” the court said. “That means the organization must provide a substantial proportion of its goods or services free or at considerably reduced rates.”
Jon Pratt, executive director of the Minnesota Council of Nonprofits, said the decision could hurt many community organizations, and the people who depend on their programs, in Minnesota
“Donations intended for charitable purposes will be diverted to tax payments, based on the ruling on this case,” he said in a statement.
He said his organization would probably ask the state Legislature to take up the issue.
The court said the Rainbow center offered no scholarships, retained the right to dismiss children if their parents were unable to pay the fees, and offered no discounts for participants whose fees were paid by county or tribal governments. It added that most of the center’s weekly fees were above market rates.
“There is no evidence that Rainbow’s intended purpose was to provide day care to the economically disadvantaged; rather, Rainbow’s purpose was to provide day care to those who could pay, either on their own or through government subsidy,” it said.
December 07, 2007
Evangelist Group Meets With Senate Aides Over Financial Records
Lawyers representing the World Healing Center Church met this morning with members of Sen. Charles Grassley’s staff to discuss a Senate request for the church to turn over its internal financial documents.
The Grapevine, Tex., church, which oversees the affiliated Benny Hinn Ministries, is one of six evangelical groups that Mr. Grassley has asked for information as part of an informal investigation into the groups’ spending and compensation practices.
Two other groups, Joyce Meyer Ministries in Fenton, Mo., and Kenneth Copeland Ministries, in Newark, Tex., have sent financial information to Mr. Grassley’s staff in response to the request.
The World Healing Center Church has been given until Wednesday to file its forms with Senator Grassley, though it was uncertain today whether the organization will comply with that request.
The six groups had been given until Thursday, December 6, to comply with Mr. Grassley’s request, which comes in response to news coverage and complaints from the public about the ministries’ spending habits.
At least one of the organizations, World Changers Church International in College Park, Ga., is refusing to turn over its documents, saying that Mr. Grassley’s request oversteps federal tax rules that allow churches to operate without fear of “unwarranted government interference.”
Marc Owens, a Washington lawyer representing the church, said the law stipulates that it is the Internal Revenue Service — not a member of the Senate Finance Committee — that should be making such requests.
“Congress has wisely determined that religious organizations should not be subject to the same public filing requirements as other charitable organizations and, likewise, we believe that the religious doctrine and practices of a church should not be held out for the world to evaluate as a result of responding to Congressional inquiries,” Mr. Owens wrote in a November 27 letter to Mr. Grassley.
In an interview, Mr. Owens said the request — if unchecked — could have “profound First Amendment implications”.
“He’s doing so apparently because he doesn’t like the way the six churches have organized themselves, their compensation practices, the way their members support the institution,” Mr. Owens said. “It’s dangerous ground. If there’s a real tax question, the IRS can investigate as it does in other situations.”
December 06, 2007
Obama Promises Government Help for Nonprofit Groups
Sen. Barack Obama, the Democratic presidential contender, won headlines on Wednesday for vowing in a speech in Iowa to expand existing national-service programs like the Peace Corps and AmeriCorps and to create new ones.
But he also made a couple of promises to increase federal government help for nonprofit groups that won less attention. The Illinois senator said that if elected president he would create a Social Investment Fund Network to provide money to encourage innovative nonprofit projects and a Social Entrepreneurship Agency to give small nonprofit groups “the same kind of support that we give small businesses.”
“The nonprofit sector employs one in 12 Americans and 115 nonprofits are launched every day,” he said. “Yet, while the federal government invests $7-billion in research and development for the private sector, there is no similar effort to support nonprofit innovation.”
In a policy paper, Senator Obama said the Social Investment Fund Network would be set up as a government-supported nonprofit corporation, similar to the Corporation for Public Broadcasting. The corporation would receive both government and private money to distribute to charities working on innovative projects dealing with issues that have been identified by their cities as priorities—crime prevention or education, for example—and help expand successful ones to other regions.
In his speech, the senator named the Harlem Children’s Zone, which provides after-school activities and mentors to children in New York, as an example of a program that should be duplicated. “We need to make that model work in different cities around the country,” he said.
The Social Entrepreneurship Agency would be created within the Corporation for National and Community Service, with a mission to improve coordination of federal programs that support nonprofit organizations, foster nonprofit accountability, streamline processes for getting federal grants and contracts, and remove barriers that hinder smaller groups from participating in government programs.
The agency would also make grants to help nonprofit organizations strengthen their operations in areas like accountability, managing volunteers, and improving effectiveness, according to the policy paper.
Senator Obama said he wanted to “invest in ideas that can help us meet our common challenges, because more often than not the next great social innovation won’t be generated by the government.”
What do you think about these ideas? Add your comments below.
Evangelist Group Stands Alone In Turning Over Records to Senator
Only one of the six Christian ministry groups under examination by Sen. Charles E. Grassley has turned over financial records as part of an informal investigation into their spending and compensation practices.
Iowa’s Mr. Grassley said his office has received financial statements from Joyce Meyer Ministries, in Fenton, Mo., and that his staff will review the materials.
The organization, in a statement, said it planned to submit the information even through it was not “under obligation by law.”
The six groups have been given until today to comply with Mr. Grassley’s request, which comes in response to news coverage and complaints from the public about the ministries’ spending habits.
Mr. Grassley, the senior Republican on the Senate Finance Committee, said in a statement that he is holding out hope that the other five groups will submit information to his office by the end of today.
At least one of the organizations, World Changers Church International in College Park, Ga., has said publicly that it does not plan to comply.
The organization said in a letter to Mr. Grassley that inquiries should be made through the Internal Revenue Service rather than through a Senate office, according to a report by the Associated Press.
Citing the “possible misuse of donations made to religious organizations,” Mr. Grassley’s office in November sent letters to the Meyer Ministries and World Changers as well as to Kenneth Copeland Ministries, in Newark, Tex.; New Birth Missionary Baptist Church, in Lithonia, Ga.; and Without Walls International Church (and affiliated Paula White Ministries), in Tampa, Fla.
Mr. Grassley said the investigation is an effort to determine “whether groups are using their tax-exempt status in compliance with the spirit and letter of the law.”
Classified as religious organizations, none of those groups are required to submit to the Internal Revenue Service a Form 990 detailing financial activities. The ministries are also under no legal obligation to provide information to the senator, as the letters are not formal subpoenas.
December 05, 2007
College Leader's Presidential Endorsement Sparks Call for IRS Inquiry
Liberty University is facing criticism following comments made by its chancellor in support of Mike Huckabee’s presidential campaign.
Jerry Falwell Jr., the university’s chancellor and the son of the noted evangelist Jerry Falwell, held a forum last month for the former Republican governor of Arkansas at the university, in Lynchburg, Va. Mr. Falwell also endorsed the candidate on the university’s Web site.
A news alert posted on the college’s Web site reported that “Falwell gave his personal endorsement in a news conference after the service.” It quoted Mr. Falwell as saying Mr. Huckabee is “my top choice.”
“He’s one of us,” Mr. Falwell said in the article on Liberty’s Web site. “A lot of the other candidates try to talk like evangelicals, but he’s actually one of us. He believes like we do on all the issues. He’s really, I think, got a good chance at being the next president of the United States.”
Liberty University’s spokesman did not return a call from The Chronicle seeking comment.
Americans United for Separation of Church and State, in Washington, has filed a complaint with the IRS calling for an investigation into the statements.
Leaders of nonprofit organizations are allowed to endorse candidates as private individuals but are prohibited from using their institution’s resources to support or oppose candidates.
“These types of political endorsements are illegal,” said Barry W. Lynn, executive director of Americans United. “Tax-exempt religious institutions may not be used to support or oppose candidates for public office.”
The Internal Revenue Service does not comment on what organizations or people it is investigating. But the tax agency said last month it will monitor political activities by nonprofit organizations.
The IRS received 237 public complaints alleging illegal campaign activities by nonprofit groups during the 2006 election cycle. Those complaints prompted 100 formal investigations.
And the IRS has already been receiving complaints related to the 2008 election.
Mr. Lynn’s organization this spring complained to the IRS about statements made by the evangelist Bill Keller, president of Bill Keller Ministries, in St. Petersburg, Fla., regarding the Republican presidential candidate Mitt Romney.
December 03, 2007
Charity Loses Tax-Exempt Status for Campaign Contributions
The Internal Revenue Service has revoked the tax-exempt status of a California charity after the agency determined that the charity was funneling money to the campaign fund of a former state official.
The decision follows a 2004 investigation by the California Attorney General’s office, which determined that the charity — the San Francisco Neighbors Resource Center — had used intermediaries to donate money to the 2002 campaign fund of former California Secretary of State Kevin Shelley.
According to court records, the charity had been formed in August 1999 to provide bilingual education, housing and health care to the elderly, and youth education in San Francisco.
As part of its initial efforts, the organization had received a $492,500 state grant in 2001 to build a community center. But the facility was never built.
Instead, the California Attorney General’s office determined that the organization had used the community-center project as a way to divert money to Mr. Shelley’s campaign.
Court records show the San Francisco Neighbors Resource Center paid two companies and two individuals who it said had provided construction and consulting work for the project, even though none of them had done any work. The four recipients then donated money in similar amounts to Mr. Shelley’s campaign.
The charity was dissolved in 2004 under supervision from the California Attorney General’s office and Mr. Shelley resigned as secretary of state in 2005.
The IRS, meanwhile, conducted its own investigation and decided in January to revoke the organization’s tax-exempt status. The ruling was not made public until November 30.