With political squabbling on Capital Hill and a wildly fluctuating consumer confidence, 2014 brings some new challenges to nonprofit leaders. Recent legislature passed by Congress and more in talks may make it difficult to gain donor support, and smart nonprofit leaders need to stay on top of these changes.
Dark Money Rules
The Internal Revenue Service recently put out new guidelines for political activities of a nonprofit, coming off the 2010 Supreme Court ruling on the Citizens United case. Since the ruling, nonprofits have reported significantly higher political spending associated with social welfare. Part of the reason is that the IRS did not have updated guidelines for political spending. That changed in November, with the new rules clarifying the term “primarily.” Up until then, it had been synonymous with “exclusively.”
Nonprofit leaders needs to understand the new rules, because some social welfare activities will fall under political activity and need to be reported. Common undertakings for nonprofits that work with indigent and transient populations, like voter registration drives and "get out the vote" events, will now be considered political activities if falling within 60 days of an election. Nonprofits need to directly match its events to the IRS guidelines, making certain that they fall outside of the two-month time frame.
The National Counsel of Nonprofits reports that many federal policymakers are looking for ways to decrease the federal debt by reducing or eliminating charitable contribution incentives. Donations to nonprofits are tax-deductible, so they lower the tax base paid by individuals and businesses. This is huge encouragement to donate money—but some government officials are looking at this as money out of the federal government's pocket. Some officials are proposing to cap donations or to remove the tax-deductible standards. This would effectively make donations to a church, school or welfare agency no different than tipping a restaurant server.
The Counsel continually updates the status of these proposed changes. They recommend writing your congressperson with details about how the changing incentives would impact your nonprofit. Many government officials do not understand the far-reaching consequences these types of decisions have. Take care to couch these campaigns as education, so you do not get labeled a political activist.
Look to Women
According to the National Association of Baby Boomer Women, baby boomers hold 90 percent of the country’s wealth and, by 2030, women will account for more than half of that money. Fundraising strategies for nonprofit organizations need to expand to encompass a larger cross-section of women. Business cloud services and social media networks have become a must for good market penetration. Cloud systems allow an organization the ability to put people on the ground anywhere in the nation to meet and greet potential donors.
Social media is a cost-effective strategy to not only create buzz about your organization, but to connect with women. Women account for the majority of all social media interactions, according to a Pew Internet poll. Use social media networks like Facebook and LinkedIn for market penetration into female demographics and then cloud-based donor management systems to seal the donation and manage these relationships.
Typically the bane of nonprofit management, financial reporting standards are changing in 2014. Last September, the Financial Accounting Standards Board (FASB), which sets the standards for generally accepted accounting practices in the U.S., proposed changing the nonprofit reporting standards. One of these changes includes adding identification of donor-imposed restrictions on funds. These would be itemized as separate assets.
To stay current with the new generally accepted accounting practices, education is in order for 2014. FASB recommends nonprofit leaders download a copy of the Exposure Draft and Final Standard off its website once it's released, which is expected to be in the first half of 2014. Ask for help if you don't understand them—various funding sources, especially municipal funders, will be giving seminars on the new requirements. Finally, make sure to educate your board members on the new standards, too.