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Three Cups of Tea – Part II

 

In my last blog post, I talked about the current controversy surrounding Three Cups of Tea author Greg Mortenson and his organization, the Central Asia Institute (CAI). Is this a classic case of a charismatic founder engaging in hyperbole and not paying attention to the details of the organization or is there something worse going on? How do we as donors make judgments about nonprofit organizations?


Lessons to be Learned from Three Cups of Tea – Part I

 

I for one am going to hold off on making any judgment on Greg Mortensen and his nonprofit organization Central Asia Institute (CAI). There are too many facts that I don’t know about. As Nicholas Kristof pointed out in his column yesterday, “let’s not forget that even if all the allegations turn out to be true, Greg has still built more schools and transformed more children’s lives than you or I ever will.” http://www.nytimes.com/2011/04/21/opinion/21kristof.html


Engaging the Board in the Development and Sponsorship Process – Q & A

 

Comments by Kevin Strickland, President of the Not for Profit Group (www.notforprofitgroupvt.com)

In our work with nonprofit organizations, board involvement in the development process has never been more critical. Changing economic times have driven many nonprofits to examine the board’s role as it comes to securing new donors and sponsorships. Below are some key questions we receive on this important topic.


Acting in a world of unknowns

 

I’ll admit up front that I’m not a big fan of Donald Rumsfeld. I think his stubbornness and arrogance made the U.S. incursion into Iraq even worse than it needed to be. And I’ve been frustrated that on the talk circuit promoting his new book, Known and Unknown, he refuses to acknowledge he made any mistakes or has second thoughts, while at the same time blaming others for whatever went wrong. Colin Powell said the book is “somewhere between deceptive and delusional”; Bob Woodward wrote “it is a travesty, and I think the rewrite job won’t wash.” (As an aside: I’m intrigued with Rumsfeld’s book-related website that includes over 20,000 memos and documents designed to back up his point of view.)


Connecting with Donors: An Interview with Dr. Thomas Wolf

Thomas Wolf recently spoke with his publisher about the topic of his new book, How to Connect with Donors and Double the Money You Raise. GuideStar has published two excerpts from the book (see the links on the right), and we're pleased to be able to share Dr. Wolf's additional thoughts with you.

Many in fundraising aren't extroverts. Can they be successful in connecting with donors as you prescribe?


Measuring Nonprofit Impact, Part I: Spotlight on Philanthropedia

With GuideStar's recent acquisition of Philanthropedia, some of you may be wondering what exactly Philanthropedia does. We'd like to take this opportunity to introduce ourselves and tell you more about our work.


The Path to Sustainability

 

Joshua Tripp is a man who thinks a lot about what it means for an organization to be sustainable. He is the chief financial officer of Grameen Foundation USA, a nonprofit organization founded in 1997 by friends of Grameen Bank to help microfinance practitioners and spread the Grameen philosophy worldwide, sharing the ideas of 2006 Nobel Peace Laureate Muhammad Yunus. Its mission is to help the world’s poorest people lift themselves out of poverty through access to information, small loans, and viable business opportunities. In other words: helping them achieve self-sufficiency or sustainability. http://www.grameenfoundation.org/who-we-are. (A transparency note: I serve on the Grameen Foundation USA board of directors.)


The Era of Trust but Verify

 

There are over a million nonprofits in the United States and there may be well over a million interesting stories to tell. Listen to this one: our curious Vice President of Research, Chuck McLean, was roaming through the GuideStar database and discovered there are 2,267 records with an “in care of name” of William Alexander, and an address of “Nonprofit Accounting Services, Las Vegas,NV, 89107”. He noticed that they all had very small incomes, and on a whim, he matched them again the list the IRS published of organizations at-risk of revocation due to failure to file, and found that of the 2267 records, 2029 were on the at-risk list, but are shown on the BMF with a tax year of 2009 and also have a 2009 990-N filing and all with the same Las Vegas address –even though the organizations are located all over the country. Well, as Chuck puts it, “there are probably some benign explanations for this, but if it swims like a fish, and smells like a fish… “ At that point he notified the IRS and we were told they were already aware of this issue.


Losing a sense of control

 

I received some interesting comments from readers about my blog on Black Swans and I’ve been thinking about this subject over the past week as we continue to see events in Congress, the middle east and Japan unfold in surprising ways. In her blog http://sophiaassociates.wordpress.com/2011/04/12/the-illusion-of-control/ Alicia Rodriguez points out that one of the problems CEOs have with black swans is that they challenge the notion that we are in control. We like to feel that we run a tight ship and we all too often rely on hindsight – or our many years of experience – as a predictor of the future. But in a ever-changing world, it’s really not possible to know how the world will evolve. Just think of how the computer, the internet, Google, and Facebook, to name only a few, have transformed our organizations, to say nothing of our lives.


Technology Audit

 

Most of the huge snowstorms this past winter that dumped piles of snow on Philadelphia, New York and Boston amazingly bypassed Washington DC. I’m not complaining – last year we were hit with three 20-inch snowstorm, totally paralyzing a region which panics at the very hint of snow. Still my backyard in suburban Virginia was left littered with huge tree limbs that had fallen in one storm or another over the winter. So Saturday I took out my trusty chain-saw and plunged into the debris pile. It was a hard but satisfying challenge. First I had to pull the limbs out of the pile and into position, then I had to cut them into 2-3 foot sections, and then carefully stack them into piles, while tying up the leaves and brush into big bundles. When it was over, the yard was looking considerably more orderly. I could see the results of my work and after a day’s effort, measure my progress. How often does this happen when running an organization I wondered, where you can be confronted with a tangled web of a mess and turn it into something clean and orderly?


New Online Development Training Focuses on Donor Relationships

How consistent is your organization at building long-term relationships with key donors? On a daily basis, what types of donors are you calling on to gain support for your organization? How consistent are you at following a relationship development plan to achieve your organization's fundraising objectives?


What's in a Name? Just about Everything!

"The name of our organization is too long, too hard to remember and doesn't reflect what we do." Or ...


The Dirty Secret about Verifying Charities

How do you verify a nonprofit's charitable status? This isn't a rhetorical question; we have a serious reason for asking.

Do you look up the nonprofit on GuideStar using our no-fee search and, when you find it, say, "Aha! It's on GuideStar, so I know it's OK to make a distribution to it"?

If you do and you're with a private foundation, community foundation, or other organization that sponsors donor-advised funds, you're putting your organization at risk, because:

Our nonprofit profiles do not meet IRS requirements for determining if an organization is eligible to receive a charitable distribution (grant).

What the IRS Requires

At this time, the IRS requires that grantmakers do two things before making a charitable distribution:

  1. Verify the grantee's charitable status in IRS Publication 78 and
  2. Determine whether the grantee is a supporting organization using:
    • the nonprofit's current IRS letter of determination or
    • the IRS Business Master File (BMF) or
    • a third-party source of BMF data that meets certain criteria.

These are the only resources the IRS allows grantmakers to use to qualify grantees. If you don't do this research, or you do it using the wrong resources, and the IRS disallows the distribution, or if you're required to exercise expenditure responsibility and fail to do so, your organization will be subject to excise taxes. (Expenditure responsibility basically means ensuring that a payout is used for charitable purposes.) In other words, failing to follow IRS procedures could cost your organization money.

FYI, we expect that once the IRS publishes the Nonfiler Revocation List, it will also require funders to determine that grantees are not included on that list, but right now, that requirement doesn't exist. Learn more about the Nonfiler Revocation List

Who Needs to Be Concerned

Funders Required to Use the Resources Identified Above

  • Private foundations
  • Organizations that sponsor donor-advised funds, including community foundations

Funders Who Can Also Benefit from Using These Resources

  • Corporate giving programs
  • Companies that give a high volume of nonprofit discounts
  • Wealth advisors

The Solution

GuideStar Charity Check does this research for you, presenting Publication 78 and BMF data in a single date- and time-stamped report you can use to document your due diligence. GuideStar Charity Check is 100 percent compliant with IRS requirements for verifying charitable status and identifying supporting organizations. It also checks organizations against the OFAC list (the list of entities that may be associated with terrorism published by the Office of Foreign Assets Control at the U.S. Department of the Treasury) and will flag nonprofits named on the Nonfiler Revocation List when that information becomes available.

GuideStar Charity Check will keep your grantmaking in compliance with IRS requirements. With just a couple of clicks, you'll get a report that:

  • verifies charitable status in IRS Publication 78;
  • uses BMF data to identify supporting organizations;
  • confirms whether a grantee has been named on the OFAC list;
  • will confirm whether a grantee has been named on the Nonfiler Revocation List when that information becomes available;
  • is date- and time-stamped; and
  • can be printed or saved in PDF to document your due diligence.

View a sample GuideStar Charity Check report

Suzanne E. Coffman, April 2011
© 2011, GuideStar USA, Inc.

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


GuideStar’s New Strategy

 


GuideStar Acquisition

 

Over the years, GuideStar has undertaken the monumental task of providing transparency into the nonprofit sector, with care to maintain a sense of neutrality, providing tools and data users can access to guide their decisions.


Make 2010 the Year YOU Start Planned Giving, Part II

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