February 2008
February 26, 2008
IRS Posts Data About Small Charities
The Internal Revenue Service has posted a searchable database of organizations that have filed the new Form 990-N informational tax form.
The Form 990-N, also known as an “e-postcard,” is a new tax document required of groups with annual gross receipts of less than $25,000.
Previously only groups that earned $25,000 or more yearly had to file with the IRS, but the Pension Protection Act of 2006 requires all groups to file. The new filings should help the agency get an accurate count of how many nonprofit groups exist. (Churches and charities that file as part of a group do not have to fill out a 990-N.)
Organizations are required to file the form starting this calendar year for fiscal years ending on or after December 31, 2007. The form is due by the 15th day of the fifth month after the end of a fiscal year.
February 19, 2008
Christian Charities Resist Changes to AIDS Program
As President Bush tours Africa to tout his efforts to fight deadly diseases, several Christian advocacy groups are fighting possible changes to his AIDS program.
According to the Religion News Service, Concerned Women for America, the Family Research Council, and others object to Democratic lawmakers’ efforts to remove rules that steer part of federal AIDS funds to abstinence education and that require charities to sign a pledge to fight prostitution to receive government grants.
The changes are part of legislation to renew the program, the President’s Emergency Plan for AIDS Relief, or Pepfar. The House Foreign Affairs Committee is expected to debate the bill soon.
The antiprostitution clause has been a divisive issue among international-aid groups. Some, like the Salvation Army, support it, while DKT International and other charities have sued the federal government, arguing it hampers their efforts to prevent the spread of HIV/AIDS among sex workers.
Last year, a federal appeals court ruled that the government can require nonprofit groups to sign the pledge.
Read The Chronicle article about the decision.
— Ian Wilhelm
Tax Scandal Raises Questions About European Foundations
A headline-grabbing tax scandal in Germany is raising questions about how European countries regulate foundations.
According to The New York Times, German authorities are investigating hundreds of people for possibly evading taxes. The investigation’s most prominent target has been Klaus Zumwinkel, who resigned last week as the chief executive of the German postal service after the police charged him with evading $1.46-million in taxes by forming a foundation in Liechtenstein.
According to news reports, Mr. Zumwinkel’s foundation, with assets of $17.5-million, had the mailing address of his vacation home in Italy.
Mr. Zumwinkel and his lawyers have not commented publicly on the allegations. However, the German news media said that shifting assets to foundations abroad is a well-known method of dodging Germany’s high tax rate.
In Liechtenstein, foundations are not required to serve a charitable purpose and are allowed to give money to founders or their family members. The country has one of the largest number of foundations in Europe — at least 40,000 — and attempts to impose laws that would require them to be more like American grant makers have failed.
— Ian Wilhelm
February 14, 2008
Charity Rebate Messages Are a Scam, IRS Warns
Tax rebates recently approved by the federal government to stimulate the economy have also stimulated a host of tax-rebate scams, some of which are aimed at nonprofit groups.
The Internal Revenue Service is warning charities to watch out for a fraudulent e-mail that promises a quick rebate. The message asks people to click on a link to a “refund claim form” and enter personal information that could be used to gain access to bank or other financial accounts.
The message is signed, or appears to be signed, by the head of the IRS’s tax-exempt division. It is the first rebate scam the agency has seen that seeks to ensnare nonprofit organizations.
The agency expects rebate scams to continue through at least May, when the government will begin issuing rebate checks up to $600 per individual. The IRS reminds people that it never sends out unsolicited e-mail about tax matters to anyone or any group.
IRS Seeks to Investigate Charges That Church Endorsed a Presidential Candidate
The Internal Revenue Service has opened a formal investigation into the political activities of a pastor in a church in California.
Wiley Drake, pastor of the First Southern Baptist Church in Buena Park, confirmed that the IRS sent his church a letter last week. The letter inquired about a press release he sent out in August endorsing Mike Huckabee, a Republican presidential candidate viewed as the most favorable to evangelical Christians.
Mr. Wiley also hosts a Christian radio show and endorsed Mr. Huckabee on the air. However, according to his lawyer, Erik Stanley, Mr. Wiley made it clear in both cases that he endorsed Mr. Huckabee personally, not as a representative of his church, which would make his actions legal and would not jeopardize the church’s tax-exempt status.
Mr. Stanley — senior counsel at the Alliance Defense Fund, a nonprofit group with a Christian focus that will help Mr. Wiley prepare his defense — says the church will respond to the IRS by mid-March. The IRS declined to comment, citing its policy of refraining from public discussion of whether organizations are under investigation.
The investigation comes after Americans United for the Separation of Church and State, a watchdog group, alerted the IRS to Mr. Wiley’s endorsement (as it has with other churches). The Los Angeles Times reports that, in response, Mr. Drake has urged followers to pray for officials at American United to die.
February 07, 2008
IRS Issues Updates on Compliance and Complaints
The Internal Revenue Service has issued two memos to clarify how it informally investigates organizations after receiving complaints.
The first describes how the agency checks nonprofit groups to make sure they deserve tax-exempt status and have not violated any laws or regulations that would endanger that status.
The second describes how the IRS handles complaints from the public or from other branches of government.
Both memos also explain the review process, which differs from a formal investigation. The fact sheets do not outline or describe any new procedures or regulations, only clarify those already in place.
—Sam Kean
Google CEO Named Chairman of Washington Think Tank
Eric Schmidt, chief executive of Google, will become the chairman of the New America Foundation’s Board of Directors on June 1, the group announced. He plans to mark his new role by making an an unrestricted $1-million donation ti the group.
Mr. Schmidt has served on the foundation’s board since its founding in 1999, but he has not been as actively involved in philanthropy as many of his fellow billionaires.
He says he was attracted to the group from the beginning because “they would try to do things that were unconventional. They were like Google, but before Google existed.”
Even when he disagreed with work produced by the scholars and journalist at the foundation, he says, he still found the work worthwhile and provocative.
Mr. Schmidt adds that he plans to work more with nonprofit groups over time, though he declined to say how. “My number one and really only goal is Google,” he says. “If I said anything else that would be major news.”
The $1-million gift is a boon for the relatively small organization, which operates on $13.5-million yearly. Mr. Schmidt will succeed James Fallows, a journalist at The Atlantic, who has been the foundation’s board chairman since the group began in 1999.
Steve Coll, a New Yorker staff writer, former managing editor of The Washington Post, and two-time Pulitzer-Prize winner, took over as president of New America in September. He says he had his eye on Mr. Schmidt even before he himself joined the organization and had approached Mr. Schmidt about leading the board very early in his tenure.
“[Mr. Schmidt’s] presence on the board was certainly one of the attractions,” he says. Google has grown immensely since Mr. Schmidt joined the company in 2001, and Mr. Coll says, “He managed their extraordinary success without sacrificing the culture of innovation, and that’s a hard trick to pull off.”
Mr. Coll hopes he can pull that trick at New America, too. In its history, Mr. Coll says the journalists and scholars at the New America Foundation have often emphasized innovation in their writings, but the group itself hasn’t been as innovative in adopting new technologies.
Mr. Coll hopes his group can evolve into “a digital think tank” that incorporates social networking and wikis and relies much less on published print op-eds and magazine stories, and he believes that Mr. Schmidt can help the group make that transition.
Still, Mr. Schmidt made it clear that he sees his role as a supporting one, “to help and not to push.” In his mind, boards and management have complementary but different roles, whether nonprofit or corporate. “The CEO runs the institution, and the board inspects the management.”
Nevertheless, Mr. Schmidt can help the foundation in other ways, Mr. Coll says, especially through widespread contacts in Silicon Valley. “Outside of his leadership,” Mr. Coll says, “I was anxious to enhance New America Foundation’s connections to California and the culture of innovation there.”
If and when Mr. Schmidt does expand his philanthropy work, he says that education and the environment would probably be his major focus. He already serves on Princeton University’s Board of Trustees, and Google.org, his company’s philanthropic arm, has promoted a number of environmental projects, including electric cars.
He declined to say much about the current state of philanthropy, calling it “arrogant” for a newcomer to make such pronouncements. But he did say that he saw strengths in “the new style of philanthropy [that] is much more outcome-based.”
In the end, he says his reason for assuming a leadership role at the New America Foundation was simple: “I think this is a pretty neat group, so I’m trying to figure out a way to help them.”
— Sam Kean
February 06, 2008
How Would You Balance the Budget?
President Bush, in his budget proposal for fiscal year 2009, this week proposed making permanent several tax breaks for charitable contributions.
At the same time, he proposed cutting spending on numerous social-services, arts, and health programs (including Medicaid and Medicare) as a way to help balance the budget by 2012.
What do you think about the president’s plan? If enacted, how would it affect your organization or the people it helps? Would you propose an alternative way to rein in the federal budget’s large deficits?
Share your ideas by clicking on the comment link below.
IRS Releases 'E-Postcard' for Small Charities
The Internal Revenue Service has released its Form 990-N, also known as an “e-Postcard,” a new tax document required of all groups whose gross receipts normally total less than $25,000 per year.
Previously only groups that earned more than $25,000 yearly had to file with the IRS, but the agency stated it wanted to get an accurate count of how many nonprofit groups exist and to provide more and better information about small groups. (Churches and organizations that file as part of a group do not have to fill out a 990-N.)
Groups must file the form starting this calendar year for fiscal years ending on or after December 31, 2007. The e-Postcard is due by the fifteenth day of the fifth month after the end of a fiscal year.
Among other items, groups must provide their employee identification number, the name of a principal officer, a mailing address, and confirmation that their gross receipts total less than $25,000.
— Sam Kean