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Patrick Ferraro

Recent Posts by Patrick Ferraro:

IRS Updates, December 2007: Final E-Filing Regulations and Temporary E-Postcard Regulations Issued

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 e-filing and Form 990-N, consult your attorney or tax adviser.

Final E-Filing Regulations

Large nonprofits, take notice: the IRS has issued finalized regulations regarding the e-filing requirements of tax-exempt organizations. The final ruling doesn't differ significantly from the temporary regulations that were issued in 2006 and only affects the following types of organizations:

  • public charities that are required to file at least 250 returns a year and have $10 million or more in assets at year end
  • private foundations that are required to file 250 returns a year regardless of their year-end assets
The 250 return minimum refers to all income, excise, employment tax, and information returns that an organization is required to file. The ruling requires that these organizations file their Forms 990 and 990-PF electronically.

See more information on e-filing >

Temporary E-Postcard Regulations

If you're associated with a small nonprofit, this one is for you. The IRS has issued temporary regulations for the new Form 990-N. This form, also known as the e-Postcard, was introduced as part of the Pension Protection Act of 2006. Smaller tax-exempt organizations with gross receipts of $25,000 or less that don't file a Form 990 or 990-EZ will now be required to file a Form 990-N, with the following exceptions:

  • churches, their integrated auxiliaries, and conventions or associations of churches
  • nonprofits included in a group return
  • private foundations required to file Form 990-PF
  • section 509(a)(3) supporting organizations required to file Form 990 or 990-EZ
The e-Postcard asks for basic organizational information, including address, EIN, and the name of the principal officer. It must be submitted to the IRS on-line, as there is no plan for a paper version of the form. Failure to file the e-Postcard for three consecutive years could lead to the loss of an organization's tax-exempt status.

More information on Form 990-N >
More information on the Pension Protection Act of 2006 >

Patrick Ferraro, December 2007
© 2007, Philanthropic Research, Inc. (GuideStar)

Patrick Ferraro is a freelance writer in Seattle and a former editor of the Newsletter.

New Survey Looks at Giving from a Different Angle

A new survey by American Express and conducted in September 2007 has taken a different approach to examining the philanthropic habits of American donors. By looking at individual gifts on a national scale rather than annual donation amounts, the American Express Charitable Gift Survey—conducted in partnership with the Center on Philanthropy at Indiana University—offers an intriguing look at how much is given in a single transaction, the differences between on-line and off-line gifts, and the motivations that lead donors to choose one method of giving over the other.

Little Things Mean a Lot

Although the survey did not find any significant differences between the average amounts of donations made on-line and off-line, it did reveal that a large number of these charitable transactions involved small amounts of money. Of the more than 900 gifts reported in the survey, more than two-thirds represented donations of $100 or less. In fact, the study found that the median charitable donation is $50.

In 2001, a report by Independent Sector showed the average annual charitable contribution per American household to be $1,620. When examined against the backdrop of this figure, the American Express Charitable Gift Survey presents a view of the way in which charities receive their money that might be at odds with the expectations of the average person, illustrating how every dollar counts and even the smallest donation makes a difference. These figures also serve to emphasize the importance of donor stewardship for nonprofit organizations, as individuals who tend to break up their annual giving into a large number of smaller transactions must be kept continually engaged and informed.

"Nonprofit organizations rely on many low dollar donations to fund their vital work," said Dr. Patrick Rooney, director of research for the Center on Philanthropy. "Even though high-profile, multi-million dollar donations receive the most recognition, the American Express Charitable Gift Survey demonstrates that most Americans are giving small donations—and that they can add up for charities."

If You Build It, Will They Come? Only if They Know It's There

On-line donations have been a hot topic in the nonprofit sector for some time now. Many charitable organizations have incorporated an on-line giving function into their Internet strategies in order to offer their supporters an alternative means of making a contribution. But are these "donate now" buttons being clicked? Nearly two-thirds of the individuals participating in the American Express Charitable Gift Survey reported that they had made a charitable donation in the past year. Of these donors, 1 in 10 made their contribution on-line, representing about 6 percent of the total survey participants.

So of those who are giving on-line, what are the motivations that drive them to do so? Part of the answer can be found in the fast pace of today's society: 64 percent of on-line donors indicated it was because of the speed or convenience of the process. Not surprisingly, one of the most common reasons offered for not giving on-line was that the individual didn't own a computer. Despite technology's seeming ubiquity, only 54 percent of American households reported owning a computer with Internet access in 2003, according to the U.S. Census Bureau's latest Current Population Report. The most common reason—after not having a computer—chosen by 28 percent of donors who only gave off-line, was that they either could not find an on-line giving site, they didn't know they could make a gift on-line, or they simply did not think of giving on-line.

Although it is apparent that the "click to give" message isn't reaching everyone, there are some potential supporters who have already been moved to action on-line. The second most common reason for making a donation on the Internet was a direct appeal from the organization itself, such as an e-mail that included a link or a Web site that prominently featured an on-line giving function.

"The American Express Charitable Gift Survey serves as a call-to-action for charities to boost their on-line initiatives," said Bradlee Benn, vice president, Business Development, American Express Merchant Services. "This survey indicates there is an untapped pool of donors who are influenced by a charity's on-line presence, and charities could benefit by proactively reaching out to them."

About the Survey

American Express sponsored the research for the Charitable Gift Survey, while the Center on Philanthropy at Indiana University completed the analysis and the report. The project was managed by the Hart Philanthropic Services Group/ and the Innovative Research Group fielded the telephone survey. Download the American Express Charitable Gift Survey >

Patrick Ferraro, November 2007
© 2007, American Express

Patrick Ferraro is a freelance writer in Seattle, a former editor of the Newsletter, and the guest editor of the 2007 giving season issue.

IRS Update, November 2007: Updated Compliance Guidelines for Public Charities and Private Foundations

It's not always easy being part of a 501(c)(3) organization; keeping track of all the rules and regulations involved can be a daunting task. The IRS, however, has recently made things a bit easier by issuing updated versions of two useful brochures for public charities and private foundations.

Publications 4221-PC and 4221-PF are designed to aid organizations in understanding the requirements involved in retaining their tax-exempt status. Even if you already have a firm grasp of the rules, it's important to remember that the sector has undergone some significant changes in recent years, most notably those involving the Pension Protection Act of 2006. If you or someone at your organization hasn't already taken a look at one of these updated guides, it's probably time that you did.

Compliance Guide for Public Charities

Publication 4221-PC offers an overview of the reporting, record-keeping, and disclosure requirements for 501(c)(3) public charities as well as some specific activities that could lead to penalties or loss of exempt status. The publication also includes information on:

  • Filing a Form 990-N
  • Reporting changes of information
  • Obtaining assistance from the IRS

Compliance Guide for Private Foundations

Publication 4221-PF features the same type of information as it pertains to private foundations. Other topics covered include:

  • Filing a Form 990-PF
  • The different types of foundations
  • Requesting determination letters

Where to Get Copies

Hard copies of these publications can be ordered by calling the IRS toll-free at 1-800-829-3676. They can also be downloaded in PDF format from the IRS Web site.

Patrick Ferraro, November 2007
© 2007, Philanthropic Research, Inc. (GuideStar)

Patrick Ferraro is a freelance writer in Seattle and a former editor of the Newsletter.

CDFIs: Banking on the Future

Call it socially responsible investing. Call it compassionate capitalism. Call it what you will, but don't write it off as lip service. It's a conviction that's being put into action worldwide, as individuals and financial institutions make a difference by investing in low-income communities.

Charities Benefit When Wedding Bells Ring

Imagine the following scenario, if you will. After months of planning, anxiety, and anticipation, the big day has come and gone without a hitch. Everything went beautifully. Uncle Bob made a donation to support a local cancer clinic. Grandma wrote a generous check to help promote adult literacy. Hundreds of dollars were raised by friends and family for several different charitable causes. Oh yeah, and John and Jane got married.

Give the Gift of Giving

You drive to the mall and wander from shop to shop. You turn on your computer and surf aimlessly. Nothing. No answers, no inspiration. If you've ever found yourself searching for that perfect gift for a person who has everything, why not take a moment to consider all the people who need so much?

Does Your Web Site Give People What They Want?


There was a time, not so long ago, when having a Web site was a luxury.

Those days are over. In a recent GuideStar/Network for Good survey, an overwhelming majority (89 percent) of nonprofit respondents said their organizations had a Web site. Another 8 percent reported that their organizations planned to launch a Web site this year.

Online Fundraising: Some Do's and Don'ts


So you want to raise some money on-line. The Internet is the new fundraising frontier for nonprofits, a largely unmapped country full of untapped resources and legendary stories of success. There are some tall tales out there and a few lurking dangers, too, but with hard work and a little common sense the results can be quite gratifying.

Looking for Grants in All the Wrong Places?


If you have ever been involved with a nonprofit organization at any level, you know that competition for grants is intense. Although there are many factors involved in securing funding, the first step is identifying opportunities.

Community Foundations: Cornerstones of Local Giving

They manage more than $30 billion in assets and were responsible for more than $2 billion in charitable giving in 2000. More than 550 of them are located in the United States alone, representing both major metropolitan areas and rural neighborhoods. They're community foundations, and they play a key role in the nation's philanthropic process. But what exactly do they do?