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Are All Nonprofits the Same?

 

It’s not every day I have the opportunity to write about two pet peeves in one blog.

Pet peeve number one is the college football Bowl Champion Series (BCS). As every college football fan knows this is the complicated process using dubious assumptions to select bowl opponents at the end of the college football season. As a substitute for a playoff system used by every other sport, the BCS seems more designed to generate money than resolve the burning question of which is the best college football team in America.

Pet peeve number two is the frequent use of nonprofit status for non-charitable activities. Not only is this often merely a way to avoid taxes, it further confuses the American public about what activities are legitimate for a charity, thereby increasing skepticism and compromising trust for the entire sector.

Politico reported that a complaint has been filed with the IRS by attorney Marcus Owens of the prominent DC law firm Caplin and Drysdale on behalf of Playoff PAC, which Politico identifies as “the principal opposition group to college football’s Bowl Championship Series.” The complaint cites “evidence that the BCS’s Orange Bowl, which is organized as a public charity, used its charitable funds to treat Orange Bowl executives and college athletic directors to a four-day ‘complimentary getaway’ aboard Royal Caribbean’s Majesty of the Seas earlier this year.” You can read more about it here: http://bit.ly/hZEHXx.

I did some checking and learned some more about Playoff PAC. According to their website:

Playoff PAC is a federal political committee dedicated to establishing a competitive post-season championship for college football. The Bowl Championship Series is inherently flawed. It crowns champions arbitrarily and stifles inter-conference competition. Fans, players, schools, and corporate sponsors will be better served when the BCS is replaced with an accessible playoff system that recognizes and rewards on-the-field accomplishment. To that end, Playoff PAC helps elect pro-reform political candidates, mobilizes public support, and provides a centralized source of pro-reform news, thought, and scholarship.

Who knew? A well-financed organization with a high-powered DC law firm is fighting the BCS! By the way, I wonder where there money is coming from? They solicit contributions on their site, but note that they are not tax-deductible. Bowl games, on the other hand, are nonprofits and are required to file Form 990s.

Friday’s Washington Post has another interesting story about big-time college sports reporting that tax-deductible donations to sports booster programs are for many the largest source of income – collectively well over a billion dollars – bigger than ticket sales, advertising and royalties and bigger than TV and bowl revenues. Donors receive discounted tickets, access to special receptions and other benefits in return for their tax-deductible contributions. The article points out that “all these donations are subject to the same tax subsidy we reserve for charitable and educational institutions like hospitals, food pantries arts organizations and universities. The savings to the taxpayer amounts to reduced tax collections by the Treasury.”

The bottom line: with Congress already beginning to look at making changes in tax deductibility as a way to help lower the federal government deficit, stories like this will add fuel to the fire. And it adds to the confusion and skepticism the American public already has about the nature and purpose of being a nonprofit organization. It may be time to look at whether lumping 1.9 million organizations into one big bucket called “nonprofit” is a good idea.

Bob.jpgThe preceding is a guest post by Bob Ottenhoff,  Chief Executive of the Center for Disaster Philanthropy. With an entrepreneurial spirit, strong technology focus, and a quest to make an impact in the world, Bob has the ability to take an organization and lead it into strong performance, sustainability, and industry leadership.

Topics: Nonprofit Leadership and Practice