February 9, 2011

Statute Of Limitation Sought For Revocations

TIPS

Branding …
6 things to remember about for-profit partners

Donors …
Deciding if donors have the means to give

Planned Giving …
Developing a family philanthropy weekend

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Statute Of Limitation Sought For Revocations

Congress should enact a statute of limitation on the revocation of a charity’s tax-exempt status, according to analysis by the National Taxpayer Advocate. The limitation should run concurrently with the existing period of limitation on assessment in general, Nina Olsen recommended in her annual report.

“Exempt status generates numerous consequences, such as qualification for certain bond financing or participation in certain programs, which potentially could affect third parties. Given the far-reaching impact of revocation, procedural safeguards should apply,” she wrote.

Under initial and annual filing requirements, the IRS receives timely notice of a charity’s claim to exempt status and honors deductions claimed by donors until announcement of a revocation, so it’s unclear whose interests could be protected by an indefinite period for revocation.

Revocation could occur for up to three years, or even up to six years after filing a return in the case of substantial omission of items from a return. In cases of fraud, tax evasion, or non-filing, there would be no limitation on revocation. The timeline would apply not only to the effective date but also to past facts as a reason for revocation.

No statute of limitation currently exists for revoking an organization’s of tax-exempt status, creating a “a procedural loophole through which the IRS can revoke exempt status even for past years when assessment of tax is already time-barred.” An organization potentially could face revocation and assessment in current years based on audited activities of closed years.

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TIPS Section

Branding …
6 things to remember about for-profit partners

Branding, partnerships, socially responsible consumption or business are all terms that catch people’s attention and even engender arm and fuzzy thoughts about things like “niceness.”

Simon Mainwaring has all of these in mind in his book We First.
He cautions that corporate social responsibility (CSR) is all very well and good, but depending on such responsibility or being swayed by lip service can be dangerous.

He writes that charitable giving is still a second thought in most companies. The following should be kept in mind about the for-profit sector:

• Giving is disproportionate to profits and salaries. Corporations can make big headlines for big donations, but those are still small compared to money paid to investors and executives.
• Top executives are uninvolved or insincere. Mainwaring cites a report that although many executives call sustainability “very” or “extremely” important, only one-quarter said it is a priority for their CEOs.
• Companies fail to understand CSR. They think sustainability has to do with management of environmental issues, for example.
• CSR efforts are just “window dressing.” Most companies use it only to enhance their corporate reputations.
• Companies spin their CSR. Many companies have been exposed for using CSR as just a marketing scheme.
• CSR results and measurements are scattershot. Relatively few corporations measure results, leaving it to watchdog agencies to observe and rank them.

Donors …
Deciding if donors have the means to give

It was the ghosts of Christmas past, present and future that converted Ebenezer Scrooge into a smiling philanthropist who couldn’t do enough for the disadvantaged

Nowadays, those ghosts have given way to sophisticated fundraising strategies employed by not only nonprofits but also consultants and advisors.

Speaking at the Association for Healthcare Philanthropy (AHP) International Conference, Holly H. Duncan of the Morton Plant Mease Foundation, Peter W. Ghiorsi of Ghiorsi & Sorrenti, Inc. and Mary Jane Crist of Catholic Healthcare West discussed fundraising strategy and Philanthropic Capacity Assessment (PCA).

PCA is a fundraising methodology that determines:
1. The philanthropic capacity of a fundraising enterprise over a specific timeframe and in aggregate and at what cost, and
2. Where new sources of support can be found, how many bona fide new prospects are available and what new programs are required to secure them.

The PCA utilizes a community giving profile that defines the community as the people and organizations in a nonprofit’s service area that are apt to utilize or otherwise have a relationship with that organization. It is a snapshot of the nature and level of giving in a geographic area.

The community giving profile has four components:
• Macro Giving: By state, county, service area.
• Micro Giving: By source and method: i.e., Individuals, cash, pledges, bequests, in kind.
• Giving by Sector, macro to micro: i.e., Giving to health, to healthcare providers, to hospitals.
• Giving by type (program) macro to micro: i.e., Annual, capital, events, grants, planned.

Planned Giving …
Developing a family philanthropy weekend

Many potential donors have done significant estate planning. But, Jerry Nuerge, founder and owner of Financial Independence Group, discusses strategies and how to move clients to create a family legacy. His ideas appear in the “Journal of Practical Estate Planning.”

A big concern is getting three or four generations of a family to really around a giving principle that will bond them together for 100 years or longer. Just showing clients the features and benefits of his solutions worked less well as the net worth of clients increased over the years.

Nuerge utilizes a Family Focus Retreat Weekend, using a variety of exercises. He asks himself the following questions for the retreat:

• How do I get them focused right from the start?
• How can you get everyone on the same page so that communication is improved?
• How do we find common ground and how do we get them to articulate their differences?
• How do you get clients to let their guard down and to talk openly about their wealth and how it has affected family members?
• What does it cost to give someone “a priceless gift”?
• Can a family foundation play a key role in leveraging philanthropic gifts?
• How can a family foundation become a key teaching tool?
• How do we close the gap between what family members perceive versus what is reality?
• Can we learn from the efforts of others?