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From the President's Office, March 2006

Dear Friend:

My February column on Jack Abramoff and the definition of a nonprofit seemed to hit a nerve, generating more response than any article I've ever written for GuideStar. In fact, as I write this piece at the end of February, I am still receiving comments from you.

Many of you wrote to say, "Great article" or "I couldn't agree more." Others went further: "I agree with you that it is time to raise our voices in concern." "You are so correct to speak up about this alarming misuse of [the] nonprofit designation."

One correspondent spoke for many when she reflected on the impact the actions of a few can have on other organizations: "The non-profits being formed as tax loopholes and as a means of raising funds have been getting more and more questionable. As always, it's the little guys who get hurt." Another writer suggested, "We legitimate non-profit organizations need to do some massive PR to reassure the public that most of us are indeed operating to help as many people as we can with the donations we receive."

Several people pointed to the number of nonprofit organizations and the apparent ease with which they receive tax exemption as problems. "There are too many non-profits and the real function of them is being diluted." "Wish there was a strategy with the IRS on redefining non-profit charitable organizations." "My thoughts are that the IRS too easily [gives] the nonprofit designation." "The IRS could spend more time examining start-ups with flimsy pre-text and less time worrying about sturdy little agencies trying to get the job done."

There were some interesting ideas about what the future holds for the sector. A CPA predicted, "The nonprofit world is going to wind up with more restraints via State's AG offices and/or the IRS or it needs to set up its own independent IG office with a clean audit being a 'Seal of Good Housekeeping.' Either of these alternatives will be costly but public confidence needs to be regained." Along the same lines, another writer suggested, "Refrigerators come with an EPA endorsement; why can't non-profits have a catchy IRS endorsement? Spend 80% of your revenue on program costs and you earn an 'energy star.'"

A grantraising consultant cautioned against going overboard, however. "A high level of accountability from our end is of course critical. While this might mean that we should expect to invest somewhat more in the way of disclosure and reporting, I wouldn't want to see undue burdens thereof sapping the strength of service organizations, especially smaller ones." Another writer asked, "Would you require legitimate (however defined) charities to tell PACs and politicians, 'We're sorry, we can't accept the funds you want to give us, so we can't help more poor people'?"

Of course, some people thought I'd missed the boat entirely. "While your letter makes interesting reading," wrote one, "I would prefer to read about action, rather than questions about what non-profits think should be done."

I always enjoy receiving feedback—good, bad, or indifferent—on my articles, but I particularly appreciated the response to February's column. Your messages demonstrated how deeply people care about the sector, and how important the issues of trust, accountability, and ethics are to so many.

So where do we go from here? The first tendency in Washington is always to add more regulations and laws, and there probably are a few places where this could have some benefit. But here at GuideStar we believe the best answer is more sunshine. Full voluntary disclosure, more transparency, better accountability—ultimately these are the things that will give donors confidence and expose those who would take advantage of the nonprofit sector.


Bob Ottenhoff
President and CEO

Grant Writing 101: Resources for Grant Writers

Several of you have told us that you want to know more about grant writing. How do you learn to write compelling (i.e., successful) grant requests? How can you improve on the applications you're already writing?

As we researched this topic, we found that there is a lot of information on it, much of it easy to find. Determining what would be most useful to you was more difficult, however. To make sure we pointed you in the right direction, we turned to the experts—your fellow Newsletter readers. February's Question of the Month asked, "What is the most valuable resource you have found for learning grant writing basics?" Here is what several readers recommended, along with some resources we found during our research.

Branding Myths

Reprinted from Branding Bytes

Myth #1: Marketing and branding are one and the same.

Reality: Branding is less about marketing, advertising, and public relations and more about good leadership, appropriate and ethical behavior, and an organization's commitment and ability to fulfill the covenant, or promises, its brand represents. A brand reflects everything associated with an organization, including, but not limited to, the quality of its:

  • Work
  • Reputation
  • Leadership
  • Staff
  • Culture and core values
  • Programs, services, and products
Think of it this way: The brand characteristics you appreciate and admire most in the companies and organizations you like doing business with should be the same brand characteristics to model and nurture in your own organization.

Electronic Initiatives in 2006

There is a fundamental reshaping of how IRS and state charity offices regulate nonprofits. The transformation of a paper-based reporting system to an electronic one is underway. Key milestones for this transformation will be achieved in 2006.

"The future is certain," says Bob Ottenhoff, president and CEO of GuideStar. "Electronic filing of Forms 990 and other regulatory compliance documents will be the way nonprofits interact with charity regulators."

Beginning in 2006, the IRS is requiring that nonprofits with $100 million or more in end-of-year (EOY) assets file their Forms 990 electronically. Next year, the electronic filing requirement will be imposed on nonprofits with $10 million or more in EOY assets and on private foundations.

How to "Missionize" Your Events

In the final episode of The Apprentice last year, you saw a perfect example of how not to raise money. In case you missed it, the two finalists each received a designated nonprofit to raise money for.

The runner-up, Rebecca, raised nothing for her cause—the Elizabeth Glaser Pediatric AIDS Foundation. Rebecca's task was to put on the Yahoo! All-Star Comedy Benefit. She lined up comedians, served Yahoo-tinis, and paid a lot of attention to conveying the Yahoo! brand and entertaining her guests (Yahoo! VIPs).

What Matters®. about United eWay

United eWay has partnered with GuideStar to process workplace donations faster and more efficiently.

Every fall, hundreds of United Way affiliates conduct workplace-giving campaigns. United eWay, a wholly owned subsidiary of the United Way of America, offers a suite of tools to make that job easier for the local affiliates conducting the campaigns.

Unfortunately, until recently, making things easier for local United Ways was making things harder for United eWay. Every autumn, United eWay staff members had to devote hours to screening and researching the organizations designated to receive contributions. Now, though, by relying on GuideStar (a) to verify the 501(c)(3) public charity status of each nonprofit and (b) to ensure that the correct charity is identified to receive each pledge, United eWay has freed up vital staff time.

It's a win-win situation. United Way affiliates receive even faster pledge processing, United eWay employees get to concentrate on their primary responsibilities, and GuideStar obtains updated contact information for charities in the GuideStar database.