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Trusting in the Opinions of Others

“Don’t you have a mind of your own?” Growing up, that question usually followed some decision (usually bad, from my parents’ perspective) I made after following the advice of my peers. Not much has changed since then. Sure, as the mother of three, I changed the question a bit—“Why do your friends’ opinions count so much?” It was certainly my way of adding a bit of introspection to the discussion, but the outcome is really the same. For most of us, trusting the wisdom of people we know and respect plays a role in making a decision.


Why I Love the IRS Web Site

OK, I know it’s un-American to say anything nice about the IRS. And in the interest of full disclosure, I should probably note that I’m a former Fed (U.S. Department of State for 10 years) who grew up in a civil servant household (Dad worked for 30 years for the GAO, back when it was still the General Accounting Office). So I’m inclined to see your basic G-person as the underdog. But I really do appreciate the resources the IRS makes available to one and all on www.irs.gov.


Using a Dashboard to Bring Focus and Alignment

GuideStar’s mission is to help donors make better and more informed decisions and—just as important—help nonprofit organizations become more effective and efficient.


Nonprofit Cooperatives and the Health Care Debate

This week’s debate about the Obama administration’s health plan has focused on a “nonprofit co-op” alternative to a government-owned insurance plan.


Rebuilding Trust: The Michael Vick Story

Michael Vick is getting a second chance to play football in the NFL. I’m glad. We all deserve a second chance.


The Persistent Demands of Trust

The United Way of Central Carolinas last week named a new CEO, Jane McIntyre, to restore the organization to its former prominence in the Charlotte nonprofit community. The UWCC was rocked by outrage over the extravagant compensation paid to the former CEO, her subsequent firing, and the perceived lack of transparency and accountability exercised by the board. In these difficult economic times, the organization faces an uphill battle now as it tries to reclaim its reputation. Ms. McIntyre told the Charlotte Observer that she believes it will take “a good five-plus years” for the organization to recover from the year of controversy that has kept the UWCC in the news (and yes, the blogs).


Keeping Nonprofits on Course

I’ve been asked by several readers to describe “theory of change.” So I decided to go to one of the experts, Jacob Harold, program officer at the Hewlett Foundation. Jacob is a frequent writer and speaker on the subject and recently conducted a free Webinar for GuideStar. Jacob has also been very helpful to me personally in thinking through GuideStar’s long-range strategy.


Our vision: A Trusted Source of Nonprofit Information

 


From the President's Office, August 2009

Dear Friend:


Making History with the Foundation Center

On July 22, I joined Brad Smith, president of the Foundation Center, on a teleconference to talk about the future of the nonprofit sector. It was the first time GuideStar and the Foundation Center have collaborated on such an event and only one of a few things our organizations have ever done together. It was great fun, and I really enjoyed working with Brad and his staff. After many years working for foundations, Brad brought interesting insight into the world of how foundations think and work. After such a great start, we are pursuing other activities to do together.


Applying for Funding from Family Foundations: Results of a New Survey

When we think of private foundations, names such as Gates, Ford, and Rockefeller come first to mind. But those billion-dollar foundations represent a very small segment of the philanthropic sector. Of the 72,000 foundations in the United States, fewer than 50 have endowments of more than $1 billion. The vast majority, more than 90 percent, have endowments of less than $10 million. Most of these organizations are family foundations.


IRS Miscellanea, August 2009: Final Form 990-N Regulations, Workshops for Charitable Organizations, and TE/GE Training Materials

The IRS has issued final regulations related to ePostcard filing, announced the dates and locations for its workshops for small and mid-sized charitable organizations, and posted the materials it uses to train employees about nonprofit governance.


Pride Choice Awards Announced

Last June, our partner GreatNonprofits commemorated Gay and Lesbian Pride Month with the Pride Choice campaign, in which they asked the public to submit reviews and ratings about LGBTQ (lesbian, gay, bisexual, transgendered, and queer or questioning) nonprofits. During the course of the campaign, more than 32,000 people submitted 736 reviews for more than 60 nonprofits. The reviews can be seen in the organizations' reports on both GreatNonprofits and GuideStar.


Glass Half Full or Half Empty? Results of GuideStar's Latest Nonprofit Economic Survey

"We’ve got good news and bad news." The old joke fits the findings from our latest nonprofit economic survey, which looked at how charitable organizations fared financially between March and May 2009. The good news is that the proportion of nonprofits reporting decreased contributions, 52 percent, remained unchanged from our previous survey, which covered October 2008 through February 2009. So things apparently didn't worsen dramatically for charitable organizations between March and May.


New GuideStar Service for Researching Fair and Reasonable CEO Compensation

GuideStar CEO Compensation Checkpoint takes the labor and stress out of setting fair and reasonable compensation for your organization's CEO.


IRS Issues Revenue Procedure for Grantmakers

Note: The following discussion is provided for informational purposes only and is not intended to serve as legal or tax advice. For specific information about the IRS Revenue Procedure 2009-32, consult your attorney or tax advisor.

The IRS has formalized guidelines permitting grantmakers to rely on third parties to comply with new requirements in the Pension Protection Act of 2006. The act requires private foundations and sponsors of donor-advised funds to exercise expenditure responsibility (i.e., additional due diligence and monitoring) if they make grants or distributions to certain types of supporting organizations in certain situations. In addition, these grants do not count toward a private non-operating foundation's payout requirement. Grantors who fail to exercise required expenditure responsibility or who miscalculate grants counting toward a private foundation's payout requirement are subject to excise taxes. To avoid these taxes, funders must determine whether a grantee is a supporting organization before making a grant.

Issued June 30, 2009, Revenue Procedure 2009-32, "Reliance Criteria for Private Foundations and Sponsoring Organizations," outlines the resources private foundations and sponsoring organizations of donor-advised funds may rely on to determine if a potential grantee is a supporting organization. A charity's classification under section 509(a) of the U.S. tax code indicates whether or not it is a supporting organization. Charities classified under section 509(a)(1) or 509(a)(2) are not supporting organizations, and grantmakers can make payouts to them without concern about incurring excise taxes. Charities classified under section 509(a)(3) are supporting organizations. To avoid potential excise taxes on payouts to a 509(a)(3) organization, a grantmaker must do additional research to determine whether its grant to a supporting organization requires exercise expenditure responsibility and, in the case of a private non-operating foundation, whether its grant counts toward its payout requirement.

Revenue Procedure 2009-32 formalizes interim guidance previously published on the IRS Web site and in IRS Notice 2006-109. It allows private foundations and sponsors of donor advised funds to confirm a charity's 509(a) classification in any one of the following three sources:

  1. the IRS Business Master File (BMF);
  2. the charity's IRS letter of determination (the document in which the IRS granted the charity's application for tax-exempt status as a public charity); or
  3. a third-party provider of BMF information, as long as the provider meets certain criteria.

A third-party source of BMF data must provide the information in a report that shows:

  1. "the grantee's name, Employer Identification Number, and public charity classification under § 509(a)(1), (2), or (3)";
  2. "a statement that the information is from the most current update of the BMF and the BMF revision date"; and
  3. "the date and time the information was provided to the grantor."

For full compliance, the report must also be "in a form that the grantor can store in hard copy or electronically."

Revenue Procedure 2009-32 is good news for grantmakers who have hesitated to rely on third-party sources of BMF data. "IRS website guidance on the use of third-parties to access BMF data to determine supporting organization status was hard to find and its precedential value was uncertain," noted Suzanne Ross McDowell, a partner with Steptoe & Johnson in Washington, D.C. "Some grantmakers shied away from using third-party data at all. Revenue Procedure 2009-32 formalizes the IRS website guidance, making it clear to grantmakers that it is safe to rely on third-party sources of BMF information to comply with the Pension Protection Act of 2006."

Postscript

GuideStar Charity Check is 100 percent compliant with Revenue Procedure 2009-32 criteria for third-party providers of BMF data. GuideStar Charity Check also enables grantmakers to verify a grantee's charitable status as required by Revenue Procedure 82-39 because it shows whether an organization is listed in IRS Publication 78. With GuideStar Charity Check, private foundations and sponsoring organizations can determine grantees' charitable status and supporting organization status in one easy step.

Learn more about GuideStar Charity Check

Suzanne E. Coffman, August 2009
© 2009, GuideStar USA, Inc.

Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.


A-B-Cs of the Youth Thrive Awards

Which nonprofits are making a difference for youth in your community? Tell us.

GuideStar's partner GreatNonprofits is kicking off the school year with the Youth Thrive campaign. Between now and September 30, 2009, people with firsthand experiences with youth-focused nonprofits are invited to write reviews about those organizations. Reviews will appear on both GuideStar and GreatNonprofits.org.

The nonprofits that receive the most positive reviews in their respective categories (three budget categories and five geographic ones) will be named Youth Thrive Award winners. Plus, every person who writes a review will be eligible to win a Birkenstock certificate, Cliff Bars, Greystone Bakery goods, or other prize.

How to Write a Review

  1. Search the database for the organization you want to review. If you are a GuideStar Premium subscriber, you'll need to log out first.
  2. Click the Write a Review link in that organization's listing in the search results.

    OR

    Click the Write Reviews tab that appears in the left column of every page of the organization's report.
  3. Fill in and submit the review form.

It's that easy.

What Nonprofits Can Do

Ask your stakeholders to write reviews. A stakeholder is any non-compensated individual who has firsthand experience with your organization, including clients, volunteers, board members, and donors. Your organization can use the reviews in your marketing materials, on your Web site, in grant proposals ... wherever you want to demonstrate the difference you're making and the lives you've touched.

Learn more


What's Your Donor Value Proposition?

Have you noticed: not everyone is hurting these days? The discount places are doing great. Wal-Mart's, the "dollar" shops, and thrift shops are booming. It's "in" to be thrifty—to get as much "bang for your buck" as possible.