Category Archives: Capacity Building

Recent IRS Changes Increase Transparency

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Recent IRS Changes Increase Transparency

judy Keller web picBy Judy Keller
Senior Vice President

Changes at the Internal Revenue Service will make financial data about the nonprofit world more broadly accessible to the public—and that’s a good thing.

According to the Chronicle of Philanthropy, the tax agency has come under pressure in recent years by open-government advocates who wanted the information available in a format that is easy to put in a spreadsheet and analyze. Until now, the IRS has released this kind of data only to a few research groups; everybody else could obtain only a set of DVDs that allowed readers to look one by one at each charity’s informational tax return, but made large-scale analysis tough to do.

The data released by the IRS doesn’t include everything on the informational returns filed by charities and foundations. Mostly it includes figures on sources of financial support, total assets and revenue, spending on overhead and programs, and compensation paid to a group’s top-paid officials. It also lacks the names and locations of the organizations, instead just offering a federal employee identification number for each group’s form.

So while the changes aren’t as user friendly as they might be, they are an improvement and will allow for wider use of information.

Nonprofits should welcome this change, take advantage of it, and encourage their donors to do the same.

As our donors become more sophisticated in analyzing how their charitable dollars are spent, the nonprofit community is under increased pressure to be not only more efficient and effective with each dollar, but more transparent as well. A well-managed organization has nothing to fear with the increased potential for scrutiny and should encourage efforts to educate and evaluate, whether by donors or peer organizations.

To encourage this drive for efficiency, The Bill & Melinda Gates Foundation is holding a competition that will offer $100,000 grants to projects that help nonprofits and donors pull together information on a wide variety of sources, such as data that would show a nonprofit program’s results, what beneficiaries and grant makers thought about the project, and what other experts say about its value.

The competition, which could finance as many as 80 projects, expects to receive at least 1,000 applications. Details about how to apply are available at www.grandchallenges.org.

Everyone in the philanthropic community grows stronger when we raise the standards of accountability by which we are all measured.

For more information on how to help your organization meet transparency standards, reach out to me directly through Jeffrey Byrne + Associates, Inc. at jkeller@fundraisingjba.com.

Insights for Strategic and Tax Changes for 2013

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Jeffrey D. Byrne    

by Jeffrey D. Byrne
President & CEO

As Congress passed legislation in the early hours of the New Year, much changes for tax and fiscal issues for 2013. The two things we know about life is: sooner or later we all pay taxes and we can’t take our money with us when we die. So, let me tackle what I know about the fiscal and tax changes that were enacted earlier this month.

Two-Year Retroactive IRA Charitable Rollover Extension: H.R. 8 includes a two-year retroactive extension of the IRA Charitable Rollover provision that lapsed on December 31, 2011. Specifically, the new law retroactively reinstates the Rollover for 2012 and allows any otherwise eligible gifts made after December 31, 2012 and before February 1, 2013 to be treated as a 2012 donation. The new law also specifies that any portion of a distribution from an IRA to a taxpayer made after November 30, 2012 and before January 1, 2013 may be treated as a qualified charitable distribution for purposes of the IRA Charitable Rollover. Finally, the IRA Charitable Rollover has been reinstated for all of 2013 and will now expire at the end of this year, on December 31, 2013. (The Chronicle of Philanthropy, 7 Jan. 2013)

Core of the Fiscal Cliff Legislation & Tax Changes: According to an article I read in a U. S. Trust Investment Strategy Strategic Insights Advisory recently: The core of the 2012 tax Act once again extends “most” of the so-called Bush tax cuts, but not all. The 2012 Tax Act will permanently extend taxable income tax rates for all single taxpayers with taxable incomes below $400,000 and married couples with incomes below $450,000. The top marginal income tax rate increases to 39.6% from 35% and the top marginal dividend and capital gain tax rates rise to 20% from 15% on investments held for more than one year. Adding in the 3.8% health care tax results in an even higher effective tax rate. Additionally, various tax deduction and credits phase out for individuals earning more than $250,000 and couples making more than $300,000. The agreement also extends unemployment benefits for one year, delays automatic spending cuts for two months, raises the estate tax rate to 40% from 35% with a $5 million exemption, indexes the Alternative Minimum Tax (AMT), extends accelerated depreciation allowances for businesses for another year, renews the research and development (R&D) tax credit and extends the “Doc Fix” (cuts in Medicare payments to doctors).

Finally, the Estate Tax Exemption beginning January 1, 2013 is $5,250,000. This exemption is permanent. It is subject to an inflation adjustment annually.

The bottom line is it’s all generally good news for your organization and the donors who care for it. While there are still discussion of further limits on charitable deductions, we will keep you informed of major changes in legislation that impact your donors. In the meantime, I recommend letting your donors know about the opportunities presented to them by the changes in the IRA Charitable Rollover. They may find that NOW is the time to make a gift to your organization.

Clear Expectations: For the Board and for Organizational Leadership

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By John F. Marshall
Senior Vice President 

Over the years, I have had the opportunity to work with many boards of directors both as a senior staffer as well as a consultant. I have been involved with boards from a number of different organizations and in all shapes and sizes. I have seen the good, the bad and the ugly in boards and when asked to assist in strengthening a poor board, I have found there to be one absolute consistency from one to the next: a lack of clarity in EXPECTATIONS… of the board and of organizational leadership.

Those organizations with successful boards are those whose leadership has gone out of its way to ensure that EXPECTATIONS were clearly stated, agreed to and practiced. And when I say EXPECTATIONS, I mean that there is absolute clarity about EXPECTATIONS of board members as well as those of leadership by the board.

If you are struggling with your board’s effectiveness, perhaps you might wish to consider sharing the following EXPECTATIONS with the board and with the staff:

Expectations of board members by the organization: 

  1. Take attendance at board and committee meetings seriously… SHOW UP!
  2. Be informed about the organization and committed to its mission
  3. Help ensure effective planning
  4. See that the organization’s resources are being effectively managed
  5. Enhance the organization’s public image
  6. Serve as an enthusiastic ambassador of the organization within the community
  7. Utilize professional and personal skills for the betterment of the organization
  8. Give to the best of your ability and assist in identifying, cultivating and soliciting prospective donors
  9. Self-assessment of one’s performance as a board member
  10. Recruit quality new members to the board

Expectations of the organization by board members:

  1. A clear Job Description
  2. Frequent communication to the board on programs, developments and issues
  3. Provide meaningful opportunities to serve
  4. That board members’ time will be used appropriately and not wasted
  5. Provide ongoing education and training
  6. That organizational leadership will be active participants with the board in raising funds
  7. Serve as responsible stewards of the organization’s resources
  8. Ensure that board meetings are substantive and that board members are given every opportunity for meaningful input and participation
  9. Assign adequate staff to assist the board in carrying out its mission
  10. Actively participate in the orientation of new advisory board members

The last point in each of the above lists is in my estimation extremely important in building the right board. The very best time to ensure that a board member fully understands what is expected of them is when they are being recruited. And, once a new member has been enrolled, EXPECTATIONS should be reinforced during the formal orientation process. The last thing an exec wants to hear from a board member is “they never told me I was expected to do that.”

JB&A offers a comprehensive array of board training and educational programs and would be thrilled to have the opportunity to partner with you and your organization in making your board the most effective governance body it can be. Let us know how we can help – call us at 816.237.1999 or email info@FundraisingJBA.com.

Life aside, art imitates our economy

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By JEFFREY BYRNE

Only a handful of performing arts centers have opened in recent years across the country. Last fall the $366 million Kauffman Center for the Performing Arts debuted in Kansas City, Missouri with back-to-back sold out performances.  An early pledge over $100 million through Julia Kauffman contributed to fulfill her mother Muriel’s original vision.

Two months later Crystal Bridges Museum of American Art opened in Bentonville, Arkansas. The last time a museum opened with this caliber of an American art collection was a half century ago. Once again the money came from private sources, namely Alice Walton, heiress to the Walmart fortune, who funded the museum and its acquisitions, Walmart, which is sponsoring free admission for the foreseeable future and the Walton Family Foundation, which endowed $800 million—the largest cash donation on record to a U.S. art museum.

What is even more remarkable than the theater and museum being constructed during a recession and opening in cities many in the art circle consider the most unlikely of places is the fact that the arts are being funded again. Life aside, art imitates our economy.

According to the Giving USA™’s report on 2011 charitable donations, overall giving increased for a second year in a row. Giving USA estimates total donations at $298.42 billion in 2011, reflecting similar gains across the economy. The numbers represent a 4 percent growth in current dollars and .9% in inflation-adjusted dollars. Giving USA categorizes charities into 10 sectors. All but two sectors, religion and foundations, experienced gains.

“America’s charities have been traveling down a very rocky road in recent years, as evidenced by the data in our annual estimates and reports from those working in the field,” said Jim Yunker, Ed.D., chair of Giving USA Foundation™. “Our Board members are cognizant of that reality but also see a bright spot–charitable giving, like other spending categories in the average American household budget, seems to be climbing out of the trough that resulted from the Great Recession, much like some other indicators measuring the state of the economy.”

Traditionally patrons of the arts are high net worth individuals and Kauffman and Walton could arguably epitomize the definition of high net worth. Granted the Kauffman Center and Crystal Bridges are extreme examples. Of course economic hardships do not impact the wealthy’s daily lives like they affect most of us, not even close. However, a recent study shows we regular folk have something in common with high net worth families when it comes to charitable giving.

The 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy, which tracks shifts and trends in the giving behaviors of our nation’s wealthiest donors, revealed that economic uncertainty affects their financial decisions too. The study found 71.2 percent of wealthy households report they give when they feel financially secure.

Charitable donations overall took a double digit hit from 2007 to 2009. Service-based organizations were stretched to the breaking point just to provide basic essentials as demand skyrocketed. Funding the arts seems frivolous when people are losing their homes and livelihoods in record numbers.

Giving to arts, culture and humanities, the least funded philanthropic sector during a recession, increased 4.1 percent in 2011. Research at the Center of Philanthropy at Indiana University also suggests a correlation between charitable giving and the economy. In an abstract way the Kauffman Center, Crystal Bridges and the estimated $13.12 billion donated to the arts last year signals a stabilizing economy and better times right around the corner for the 99% living on Main Street.

Jeffrey Byrne is Founder & CEO of Jeffrey Byrne & Associates. Since 2000 his firm has assisted nonprofits across the U.S. in raising nearly one billion dollars. Jeffrey is a thought leader in philanthropy and his firm is a member of Giving USA, the fundraising and philanthropic arm of the Giving Institute:  Leading Consultants to Nonprofits where he is Second Vice Chair. 

 

 

Thoughts from Jeffrey

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As you know, I’m a fundraising “nerd” and I just love numbers. This morning when I couldn’t sleep, I turned on CNN, Fox News, MSNBC and watched these news programs starting around 3 am. What I found was fascinating.

First, we’ve had the best first quarter of any year since 1998. First quarter of 2012 is the best we’ve had in 14 years with the Dow over 13,000.

Second, gas continues to inch up and is nearly $4.00 per gallon.

Third, market capitalization of Apple was $648,000,000,000 (that’s $640 billion) making it the most valued company in the world.

Fourth, Wisconsin’s primary is next Tuesday, the Republican’s are narrowing down their nominee, and this year political actions committee’s and candidate committee’s will spend $6,000,000,000 (that’s $6 billion).

Finally, nonprofits are doing more with fewer nonprofits according to the Chronicle on Philanthropy. Looks like the recession’s taken a hit for a couple hundred thousand nonprofits. See the link below.

LINK
If I can help you with your fundraising numbers, let me know. Have a great weekend!

JByrne@FundraisingJBA.com
cell: 816.678.9655,
800.222.9233
www.FundraisingJBA.com