Laura Solomon is a nonprofit attorney extraordinaire based on the East Coast (read more about her after the post).  The topic addressed is especially relevant with today’s focus on the IRS’ increased scrutiny of Americans’ activity abroad and Israeli charaties’ reliance in general on foreign charity.

Every year the IRS Exempt Organizations Division (“EO”) releases a Work Plan that shows where it plans to deploy its resources. The Work Plan is essentially a roadmap for EO activity in the coming year and, this year, the Plan includes a renewed focus on international activities by American charities.

The EO’s goal is to assure that, in keeping with US tax laws and regulations, charitable assets used internationally are not being diverted for non-charitable purposes. The Work Plan announces that “we will continue to examine exempt organizations that operate overseas to ensure that those activities are consistent with their charitable purpose. “ In addition, the EO has signaled that it plans to examine large private foundations and organizations that report ownership of a foreign bank account.

Nonprofit professionals interested in learning more may want to look at the Work Plan itself or watch the IRS August 2011 Webinar on International Activities.

This renewed focus may make Israeli charities that get funding from the US a little jittery – particularly following the IRS’s release of two private letter rulings (2010 and 2012) that denied exemption to new organizations seeking exemption for American charities that planned to do fundraising for Israeli charities. In any case, it should serve as a wakeup call to all American charities that conduct activities internationally that they need to strictly comply with the law and must avoid serving as a mere “conduit” to their foreign grantees.

Further evidence of the EO’s focus on international activities is evident in the newly proposed regulations that illustrate permissible PRI’s or “program related investments” by private foundations (Issued April 19, 2012). The regulations include helpful examples that demonstrate that a private foundation can use a broad range of programs (including investments, grants, and loans to foreign individuals, business enterprises and charities) to support their purposes through PRI’s. Perhaps the most important clarification that the proposed regs provide is confirmation that an activity in a foreign country is charitable if it would be considered charitable when conducted in the US. Interestingly, they don’t address L3C entities. For more information about low-profit limited liability companies, you can access this information on the Community Wealth Ventures site.

Laura N. Solomon, Esq. is the founder of Laura Solomon Esq. & Associates, a law firm devoted to the representation of nonprofit, charitable, and other tax-exempt organizations. She and her associates provide a full range of corporate and tax legal services, including representation for mergers, joint ventures, and complex financings.

Ms. Solomon is on the Faculty of the Nonprofit Institute and Animal Law Institute of the Philadelphia Bar Institute, and currently serves on the Charitable Organizations Committee of the Pennsylvania Bar Association, the Tax-Exempt Organizations Subcommittee of the American Bar Association, the Standards for Excellence Committee of the Pennsylvania Association of Nonprofit Organizations, and the Advisory Committee for the Pennsylvania Volunteer Lawyers for the Arts. She is a columnist for the Pennsylvania Nonprofit Report who is quoted frequently in the media, and lectures often for lawyers, accountants, and other professional and community groups on nonprofit, corporate, and tax issues. Ms. Solomon also lectures at the La Salle University Nonprofit Center, the University of Pennsylvania, and Villanova, Drexel, and Temple Universities.

You can find more information about her practice along with links to helpful information on nonprofits at her website: www.LauraSolomonEsq.com.

Once again, the Israeli nonprofit organization Magan David Adom (MDA) and it’s American supporting charity, American Friends of Magen David Adom (AFMDA), are in the news after all five members of AFMDA’s executive board resigned, stating that they “refuse to abdicate or compromise in any way our fiduciary duty to AFMDA and its donors.”

Second, which side is right or wrong is of secondary importance.  Regardless how the situation plays out in the near or distant future, organizations can learn RIGHT NOW from the very public debates raging between the American and Israeli arms.

Specifically, the core issues — defining roles, trust, and independence — are the same faced by all international organizations, and, as such, can provide a constructive case-study for nonprofits, their board members, and their donors.

(While I generally refrain from talking about specific groups so as to avoid accidentally tarnishing an organization’s reputation, in this case, after articles in the Forward, The Jewish Week and eJewish Philanthropy, I think it’s safe to say that the cat is out of the bag.)

1. DEFINING ROLES

The resigning board members argue that Israel’s MDA views AFMDA as purely a fundraising arm. – Forward

Let’s be very clear: establishing a “Friends of” Charity is not just about creating a PO Box in the United States. Rather, a “Friends of” Organization is about finding like-minded individuals that share a similar passion for a charity’s mission and believe that Charity X is the best way to address this particular issue.

Said somewhat differently, creating a supporting charity abroad is about empowering individuals outside of the organizational framework and arming them with the appropriate tools so they can promote your cause; hopefully, raising a heck-of-a-lot of money in the process.

The relationship a foreign charity has with its American Friends is similar to the relationship any nonprofit has with its Board Members.  This point is addressed most excellently in an articleby Hildy Gottlieb. The following short excerpt doesn’t do it justice:

Board Members and FriendRaising:

The point of engaging the community (which is really what FriendRaising is all about) is an engaged community…Friends will not let anything bad happen to your work. They will help in ways you never dreamed possible. They will want to see good things happen, and will work like the devil to be sure nothing bad happens.

Friends share all their gifts with the organization, and are thrilled that the organization sees value in those gifts! They give what they have, whatever that is – and yes, quite often, it is even money. But it is not only money. It is usually far more.

The only road to sustainability is to engage the community in your work, to turn that community into an army of friends achieving something amazing together, spreading the roots of ownership of your mission and vision throughout the community, so the community would not dream of letting that mission die.

When two sides do not agree on their particular roles there will undoubtedly be tension. It is best to address these issues early on so as to avoid them becoming a much larger issue in the future.

2. TRUST

The Israeli group has argued that AFMDA is holding a huge cache of money that donors believe is going directly and immediately to Israel, while in actuality is it waiting — at times, for years — for approval by the American body…Another factor contributing to the mistrust that some AFMDA officials harbored toward their Israeli counterparts is an ongoing criminal investigation in Israel against the CEO of MDA. – Forward

And, of course, a cornerstone for a good friendship is trust.  And the trust should flow in two directions:

• The American Friends should trust that the beneficiary (a.k.a. the foreign charity) is using the money wisely and responsibly to forward the common mission in the best way possible.
• The Foreign Charity should trust that its American Friends are supporting it — especially monetarily — in the best way possible.  This means that the foreign nonprofit trusts the methods used by the American charity to fundraise, hire staff, and publicize/market the organization etc.

If either of these trusts breakdown, a situation like what MDA is experiencing now is the inevitable result.

3. INDEPENDENCE (AND COMPLIANCE)

But on January 19, all five members of AFMDA’s executive committee resigned, warning that the renewed partnership could come at the heavy price of lost independence and possible abdication of the American group’s legal responsibilities as a charity certified in the United States. - Forward

…The leadership of Magen David Adom (MDA), and some of the members of AFMDA’s Board of Directors, do not appear to share our commitment to our roles as responsible and independent fiduciaries, exercising sound judgment in full compliance with the letter and spirit of American laws and donor expectations. – eJewishPhilanthropy

An American nonprofit’s need to be independent stems primarily from the I.R.S..

As such, foreign organizations looking to establish an American Friends of Organization in the States need to understand that the American charity must demonstrate control and financial accountability. If the U.S. nonprofit is thought to be a simple puppet of the foreign organization, the I.R.S. can remove tax-exempt status and/or levy fines.

Two key points from a previous post exemplify the level of control the U.S. Government is expecting:

• Grants should be reduced to a written agreement signed by both the charity and the grantee. In addition to requiring periodic reports, charities should perform routine, on-site audits of grantees.
• The I.R.S. insists that charities must demonstrate that it exercised an independent decision about the use of its donations and that the funds sent abroad further the charities’ own purposes.

It is important to note that the due diligence done by a “Friends Of” is not a reflection of distrust as mentioned above, rather its inherent responsibility to the government scrutinizing the charity and to its donors.

A foreign nonprofit looking to establish a “Friends of” charity in America must realize that it is not opening a branch or satellite, rather a separate entity.  If the parent organization cannot appreciate this distinction, a “Friends of” Organization  might not be the best solution for the charity; there are, after all, other types of entities that can help transfer donations abroad.

IN CONCLUSION

Let us not be naive and think that Magen David Adom is the only organization to have problems of control, independence, and fiduciary responsibility. Just the opposite, many international nonprofits have similar issues but will continue to avoid addressing them because they are “fortunate” enough not to be in the limelight. (And this, by the way, is the real danger, though, not the subject of this post.)

As I mentioned above, this piece isn’t about blame or deciding which side is right. As far as I’m concerned, both sides — and especially the charity’s beneficiaries — come out behind.

I heard Martin Brookes, CEO of New Philanthropy Capital in the UK, explain at a recent conference that he can only offer people the lessons he’s learned from the mistakes he has made.  It is my sincere hope — and perhaps the only silver lining in this whole mess — that other organizations take note of MDA’s recent struggles and learn from them.  (From my mouth to God’s ears.)

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

The fiscal responsibilities of an American charity have become more complicated in recent years. Increased scrutiny from the IRS, more intricate tax documentation, the recent economic crisis, and donors’ need for transparency, are just a few of the challenges facing the sector. When a charity operates internationally these difficulties are only exacerbated. These global organizations are expected to be familiar with regional and global charity regulations, comfortable working in foreign languages and cultures, able to cope with inherent increased expenses, and capable of forging new relationships – all while maintaining a high level of accountability.

A powerful tool in helping a “Friends of” organization cope is an additional account abroad in the country in which it operates. When used to its potential, this kind of account is invaluable.

(For this purposes of this article, I’ll be using Israel as my example, as American fiscal support for Israel is wide-spread and well documented.)

The Benefits of Maintaining an Account in Israel

1. Deposit Checks in Israel

Checks designated for the U.S. charity that are received in Israel can be deposited locally. Because the account in Israel is owned by the American charitable organization any check deposited in the account can receive an IRS tax-deductible receipt. Donors can write the check while the feeling is hot, as opposed to waiting until they return back home to the United States. The organization can save: (1) money by not using postal or delivery companies; (2) time as checks can be deposited immediately in the Israel account, and; (3) hassle as there is no need to hold on to checks to mail them in bulk, photocopy and catalog mailed checks, worry about lost mail, etc.

2. Wire Monies to Israel when Convenient for the U.S. Charity

Similarly, because the account is owned by the American entity, money sitting in the account in Israel still shows in the American organization’s books. This allows the nonprofit to transfer funds according to their own schedule and not just when Israel charities need support. With this flexibility, the U.S. nonprofit can cut costs by transferring funds in bulk and increase feelings of control, while at the same time reducing the hassles of constantly operating on someone else’s timetable.

3. Transfer Funds Immediately to Israeli Nonprofits

As money can, theoretically, already be in the U.S. charity’s account in Israel, when support is approved, money (converted and) transferred the same day. No longer are groups on both sides of the ocean dependent on anonymous, ambiguous banks to make sure that money is transferred in a timely manner.

4. U.S. Nonprofit’s Israel Account can Act as Collateral

Should an Israeli organization connected to or supported by the U.S. charity need credit – whether in the form or a loan or line of credit – the American account can act as collateral. This allows money that the “Friends of” organization prefers stay under its ownership do so while still providing the necessary credit to a worthy Israeli nonprofit. (ex: This can prevent the undesirable situation when an American organization would have to “loan” funds.)

5. Pay Expenses Directly from Israel

Any type of expense can be paid locally – whether flights, hotels, or travel expenses – from the “Friends of” account in Israel. This allows for payment in local currency (i.e. shekel), as opposed to dollar, which can be cheaper both in terms of actual cost and associated fees. Additionally, an account abroad provides a variety of payment options to the American charity; such as check, wire transfer or credit card. Furthermore, the American entity can opt to pay for certain expenses directly instead of the Israeli recipients to minimize Israeli tax or charity regulatory complications that might occasionally surface.

6. Greater Oversight in the Eyes of the IRS

While the United States Government acknowledges the need for international charity, it is concerned that US based nonprofits might not exercise adequate control over its funds or be subservient to foreign organizations. Maintaining an account overseas where the American entity operates – providing that the Foundation and the Keren avoid overlaps in its board membership and authorized account signatories, among other things – is a hands-on management approach that demonstrates to the IRS a high level of budgetary control and transparency.

Closing Words…

Please note that, as said before, an account managed in Israel by the American tax-exempt organization is still considered under the ownership of the “Friends of” charity and should be treated as such. Additionally, many of the tips raised in this article are not simply about banking and require the consultation of a charity’s Board of Director and its accountant/lawyer.

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professional. Read the full disclaimer.

And the hits just keep on coming…

Nonprofit organizations have yet another hurdle to cross when applying for tax-exempt status.

A while back, a colleague of mine, a director of a nonprofit organization, applied for tax-exempt status in the United States. The IRS had questions for him, which was to be expected. What was not expected, however, was that after answering the IRS’ questions, his file was then forwarded to the Department of Homeland Security [DHS].

That’s right, the U.S. Government Department that oversees (no pun intended) counter-terrorism, border security, disaster response, and immigration is also an integral part of the tax-exempt approval process.

Why is the Department of Homeland Security Scrutinizing Charities?

The DHS investigating is no random act. As explained in a previous post:

The U.S. Internal Revenue Service (IRS) stresses that the risk that a grant will be used for non-charitable purposes increases drastically when dealing with foreign grant making and expenditures…intelligence information hinting “to the effect that international charities are the second principal source of money that underwrites terrorist activity”

Questions asked by Homeland Security

1. IRS Type Questions

Similar, if not exact repeats, of questions asked by the IRS.

2. Nature of Activities – Lobbying/Advocacy

The nature of the activities of the charities abroad that would be receiving the money. Specifically, if the receiving charity participates in lobbying and/or advocacy. In the United States, certain types of lobbying/advocacy label the organization 501(c)4 tax-exempt charity. Donations to (c)4 charities are not tax-deductible. If an organization is worried if they fit this category, they might want to look into the 501(h) test.

3. Control Measures

Control measures in place to ensure that the money will be used strictly for charitable purposes.

4. Legal Status of the Recipient Organizations

The DHS asked if the recipient charity is considered a 501(c)3 charity in its respective country. This question is a little tricky because countries have different definitions of what it means to be a nonprofit organization.

In Israel, for example, is the DHS referring to the Nihul Takin [Certificate of Proper Management] given out by the Registrar of Charities [Rasham Ha'amutot] or Seif 46a [Paragraph 46a] certification given out by the Tax Authorities [Mas Hachnasah]?

5. Independence

My colleague stressed that the DHS was very interested to know that the funds sent abroad were not limited to only one recipient. It is crucial for the IRS that the American entity be an independent, self-governing body that is not subservient to any other foreign or local individuals/organizations. And yes, this is a running theme in my blog posts. (A previous post, “Reasons Why Not to Establish an ‘American Friends Of’ elaborates on this Independence.)

Conclusion

What lessons can we learn from this organization’s experience?

1. Longer Process

US registered nonprofits who are applying for tax-exempt status can expect the process to take longer. This is not necessarily a must – maybe no red flags will be raised and it will be smooth sailing. However, I wouldn’t count on it.

2. Treat the DHS Seriously

Even though it might seem that the DHS shouldn’t be in the picture or that their questions are repetitive (maybe even ludicrous and pointless), don’t belittle their role. Whereas the IRS has control only over your tax-exempt status, the DHS can freeze your assets. The Patriot Act allows the U.S. Government to freeze assets first and ask questions second, if they should think that the accounts are connected to terrorism. As of today, the DHS has a big mandate. Don’t mess with them.

3. Adjust Accordingly

The right experts can help you write your By-Laws (including mission and mandate) in a way that raises less flags. I am not advocating lying, fibbing or stretching the truth. Just the opposite: Good charities shouldn’t suffer simply because they wrote their By-Laws in a way that doesn’t accurately describe the activities of the organization.

4. Plan in Advance

If you can theorize the types of questions that your organization’s application will elicit, then you should also being able to prepare answers in advance.

When fundraising, acquiring 501(c)3 tax-exempt status quickly can make-or-break attracting that big, elusive donor. Why unnecessarily lengthen the process?

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only – not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

A list of great articles I’ve read and posted to Twitter between May 23 – June 5, 2010.  This week’s topics include: I.R.S.; Sector Trends; Social Media & Internet; Finance & Economy; and Potpourri.

While it has been two weeks since my last Must-Read, don’t worry about overload. Between my daughter running into a door and needing stitches and my internet being on the fritz for four days, its been a slow couple of weeks.  Well, here’s hoping for a better week that last…

Tizku Lemitzvot,

Shuey

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I.R.S.

New online tax form for small US charities: Good. IRS deadline-extension of new form: Bad.http://ow.ly/1ODte via @philanthropy

The misleading reality created by the IRS 990 & 2 ways to change it (Harvard Business Review)http://ow.ly/1SGhi via @bethsteinberg

Which lines in IRS 990 give snapshot of org’s financial health? http://ow.ly/1SFDt via@NAFund @FollowMCF // G8 resources 4 NPOs/Foundations

Dangerous assumptions of volunteerism by US Gov’ harm volunteers & paid staff of #nonprofitsector http://ow.ly/1Ti4V via @NonprofitSRQ

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Sector Trends

Study shows widespread innovation among NPOs & efforts to measure programs effectiveness, on @eJPhil http://ow.ly/1STDm

RT @Philanthropy: British charities are getting hurt by a real-estate slump: 

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Social Media & Internet

RT @avinashkaushik: [For Bloggers, Twitterers] 5 Ways To Manage Your Critics http://zqi.me/d5oFu6 >> Great advice 4 online & offline critics

Cute (& true) >> RT @bkmacdaddy: Everything You Need to Know About Social Media You Should Have Learned in Pre-school http://bit.ly/cLvHz0

RT @nptechblogs: Six tips for managing an international workforce, on @wiserearthhttp://bit.ly/aVAZyg // Crucial for NPOs operating abroad

RT @GuyKawasaki: 7 tools to back up your social media content http://ow.ly/1Tige

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Finance & Economy

Bank of Israel Governor: #Israel dodged property bubble when government intervened in mortgage sector http://ow.ly/1TETK

#Israel Banks using new rules as excuse to raise mortgage rates http://ow.ly/1RXAs

Good summary of influences on the Shekel with predictions for the future. http://ow.ly/1TfrF#israel #currency

4 accurate ways to quantify the state of jitters in financial markets. http://ow.ly/1RXJ8 // Interesting, fear is quantifable

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Potpourri

RT @davidcorman: Headline of the day: Woman Follows Google Maps “Walking” Directions, Gets Hit, Sues http://selnd.com/92ipOH

Israeli charities (amutot in Hebrew) rely on donations from overseas – no secret there.  Many foreign-based charities choose to create an American based nonprofit, more commonly referred to as a “Friends of” organization so donations can be tax-deductible vis-a-vis the American Federal Government. (In a previous post, I spoke about IRS trends when a “Friends of Organization” is applying for tax-exempt status.)

However, it could be that establishing a “Friends of” organization is not in your charity’s best interest. The following are some considerations that elaborate on:

Why not to establish a U.S. registered “Friends of” Organization to help fundraise?

1. Fees and Costs

Setup Costs: Experts estimate the fees associated with opening and registering a nonprofit organization in the United States at $5,000. With a complicated request, this number could increase. The organization has to answer to itself and to its donors if this cost is worth it. (More on startup fees can be found on the Social Citizen, “Want to Start a Nonprofit — Think Again.”)

Ongoing Administrative Costs: An American charity requires a presence in America. The government and private donors will expect a local address to handle their needs. Office space, supplies, travel, and salary are just a few of the ongoing expenses that can be expected for an American-based charity to support its ongoing costs.

2. Double the Regulatory Headache

On both sides of the ocean, international charity has become more complex in the last decade. A nonprofit that wishes to operate in two countries must, therefore, also adhere to two separate sets of relevant regulations, on issues ranging from philanthropy, tax, and law (too name but a few). Operating in accordance with one country’s regulations can be trying, let alone two countries (which by the way, can sometimes contradict one another). This is not to say that it is impossible. But an organization needs to understand from the outset that additional paperwork, manpower, and money might be required to ensure that both organizations are operating as they should.

3. Independence

Charities that want to register abroad (in this case the United States) need to understand and appreciate that for all intents and purposes, they are creating a new, separate entity there. The attempt by an Israeli institution to control, force, or participate in the American “Friends of” organization is not looked upon favorably by the I.R.S. (to put it mildly). The US government has hinted – and sometimes stated outright – that no charity shall be subservient to the control of another party; including but not limited to, donors, foundations, and other charities (local or abroad).  (For more, see my article on international charity.)

An Israeli charity might not by ready or willing to relinquish control over its fundraising efforts and branding to a separate entity – even one committed to helping raise funds. One only needs to examine the recent cases of American Friends of Magen David Adom and others to understand the potential clashes that can occur.

4. No Monopoly on Raising Money

Nowadays it is possible to issue US tax-deductible receipts to donors without actually being registered in America, namely through a Middleman Organization. Also known as Conduit Organizations, these charities’ by-laws allow them to give financial support to other worthy charities that forward similar goals. While the PEF is the most famous, many other 501(c)3 tax-exempt organizations offer similar services. Recently, some online donation portals have also joined the ranks. This is even assuming that all donors want a tax-deductible receipt, which not all donors do.

What should my organization do? Register as “Friends of” or not bother?

Only the organization – through its staff and board – can know the answer to this question; it shouldn’t hire a consulting firm or be pushed around by a big donor. Like everything else, it is about strategy and purpose.

However, there are some universal factors. The following are some considerations that might influence a decision:

Cost – It takes a buck to make a buck. Do the setup and ongoing expenses outweigh the benefits?

Volunteers – Does the organization have supporters living in the States that are willing (or unwilling) to take on the responsibilities for running a nonprofit?

Board Members – The IRS, among others, has frowned upon overlapping board members between American organizations and the foreign charities they support (see same post on international charity mentioned above). Does the organization have the fresh faces to help found an independent American charity?

Ongoing Fundraising Efforts – Will the organization be engaged in ongoing fundraising efforts in the United States throughout the year or just infrequent fundraising campaigns?

Donor Relations – One of the main reasons for creating a “Friends of” organization is to communicate, recruit, and retain donors. Can the organization accomplish these goals from Israel? (Remember that for the same job, an Israeli’s salaried employee will cost less than an American’s salary.) Will an American living in America but employed by the Israeli charity suffice?

Control – Never forget that an American charity (whether its actual called a “Friends of” or not) must be independent. Is the foreign-based charity willing and able to give up control to a group of supporters and like-minded individuals? (And yes, this consideration is so important that I mentioned it twice.)

Conclusion

I want to stress that I am not advocating one over the other – there is no objectively better option. However, I will say this: the instinctive, gut-reaction for an Israeli charity to automatically setup a “Friends of” organization, regardless of whether or not it fits into the strategy of the organization is, in my opinion, premature and incorrect. Simply put, money and time might be better spent elsewhere.

What’s your experience? Why not share a story that might help another organization out…

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only – not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

A list of great articles from around the web that I posted to Twitter from May 16 – May 22, 2010.  This week’s topics include: Strategy & Governance; US Tax Tidbits; Social Media & Fundraising; Economy & Finance; and Potpourri.

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

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Strategy & Governance

Guidestar CEO stresses that good metrics help nonprofits attract (strategic) deep-pocket donors http://ow.ly/1LFba #philanthropy

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US Tax Tidbits

RT @NAFund & @aznonprofits: 6 Important Facts about Tax-Exempt Organizations http://bit.ly/9n8Qcz // The ABCs of donating money to US NPOs

New online tax form for small US charities: Good. IRS deadline-extension of new form: Bad. http://ow.ly/1ODte via @philanthropy

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Social Media & Fundraising

6 Ways Board Members can fundraise w/out having them solicit peers, by @GailPerrync http://ow.ly/1LDdY via @npmaven @PamelaGrow

Engaging consumers about their social/environmental concerns? 75% believe you should (by @andrealearned) http://ow.ly/1NQkP via @elainecohen

Real-Life stories from nonprofits on incorporating social media into marketing strategy http://ow.ly/1OAyg via @nptechblogs @reedstockman

The mantra for all who work with social media >> The Cornerstone of Social Media Strategy is Clarity, by @askdebra http://ow.ly/1OD3d

Intro in “What the Hastag,” a wiki hash directory & metric analyzer, by @jewishagency http://bit.ly/bskHmx via @eJPhil

<br>

Economy & Finance

Rethinking the metric of a good economy, maybe the G.D.P. isn’t the best judge. On @nytimes http://ow.ly/1LFvj

Haaretz: European crisis could cause #Israel exports to fall by $1 billion http://ow.ly/1LWi7

Haaretz: Why gold is spiking & why it matters to the Bank of #Israel http://ow.ly/1LWoM // Good summary of currency fluctuations & inflation

<br>

Potpourri

ATM-style vending machine that dispenses GOLD! http://ow.ly/1LSTh Not to be confused with ATM-style vending machine that dispenses French Fries http://ow.ly/1LSXX

Who says Britons don’t have a sense of humor? >> RT @johnhaydon: Man loses licence after drunk driving in toy Barbie car http://ow.ly/1NQxP

A list of great articles from around the web that I posted to Twitter from May 2 – May 15, 2010.  This week’s topics include: Strategy & Governance; Social Media & Internet >> Fundraising; Social Media & Internet >> Recreation; Israel; Banking & Economy; and Potpourri.

I didn’t have so much time last week, forcing me to combine 2 weeks worth of links. Man, oh man. I hope you’ve got some time, there are some great articles below.  Not to mention some really funny ones, as well. Enjoy them both.

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

<br>

Strategy & Governance

Protect your #Nonprofit: 3 critical manuals all NPOs should create http://ow.ly/1JQRl via @NonprofitSRQ @npa_online @PamelaGrow

IRS interim report “Exempt Organizations – Universities Compliance Project” http://ow.ly/1Jdeq – focus on unrelated income & executive comp

4 Reasons Why IRS Interim Report “Exempt Orgs – Universities Compliance Project” is an Important Read http://ow.ly/1JheM

RT @socialcitizen: Is the $5 Donor a Philanthropist? http://ow.ly/1Grmq >> Great question raised. I weighed in, interested in your feedback

Koret CEO Jeff Farber shares: “It’s time #Jewish #philanthropy stop operating like a charity” http://ow.ly/1GN3Z

Well said! >> RT @nptechblogs: With great market share comes great responsibilityhttp://bit.ly/c5QwgE (via @socialsignal)

How to tell if your brand is useless (2 min VIDEO) on @jeffbrooks http://ow.ly/1KJmA // @CharlieKalech reminds me of speech you gave @ GBN

Great resource for boards >> RT @HeidiEKMassey: RT @npmaven: Creating online ‘readings’ handout 4 #nonprofit boards.http://is.gd/c2Lsh

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Social Media & Internet >> Fundraising

Dan Brown of @eJPhil gives highlights from 2010 eNonprofit Benchmarks Study.http://bit.ly/94DYxy >> important numbers for email campaigns

NPTimes: Charity apps combine education & fun & translate into $ w/o limits of text-2-give-campaigns http://ow.ly/1GNor

To Mama With Love: Social Network Fundraising succeeding in Engagement & Conversation, by @askdebra http://bit.ly/cqNwuz via @shoshanak

Social Media is NOT about jumping on the bandwagon >> 10 Trends in SUSTAINABLE Social Media, by @askdebra http://ow.ly/1Lxm8 via @lblumenthal

Crucial Message! >> RT @PaulDunay: Social media is not a campaign: It’s your customerhttp://ff.im/-k6khS by @travismurdock

RT @nonprofitorgs & @askdebra How@EnvDefenseFund created its social media guidelines, by @kiramarch http://is.gd/c4D6v

RT @PaulDunay: 7 Things Your Organization/Company Must Do Because Of Social Media, by @augieray http://ff.im/-kif9L

Holy smart-bomb Batman! US Airforce has awesome Social Media Response Plan flowchart! http://ow.ly/1JQiP via @nptechblogs @wildapricot

It’s all about making it personal! >> RT@askdebra @bfholmes: NGO thinks outside-the-box to give homeless a voice (VIDEO) http://ow.ly/1Jidw

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Social Media & Internet >> Recreation

RT @GuyKawasaki: How to make your Facebook profile more private [2 min VIDEO]http://is.gd/c8eNj // Facebook privacy settings are in 5 dif places!

RT @HilzFuld @Minervity: Top 5 Social Blogging Tools http://su.pr/2QpKQd by @RuhaniRabin

RT @askdebra: Very interesting – FB backlash. Diaspora: an antidote 2 FB? Http://bit.ly/aoubb0 via @pampelmoose

RT @lblumenthal: 8 kinds of websites we need to stop building, by @oatmeal http://ow.ly/1KQj7 // Funny. Hard 2 agree w #6, need of more secure FB

RT @mayerreich: This is funny and why I hate Facebook. http://bit.ly/dbSyHs // Facebook intrudes just a tad, doesn’t it

Are social networks hurting or helping children develop emotionally/socially? http://ow.ly/1GnIg via @power2b @dovemerson @rabbigreen

RT @GuyKawasaki: “How do I delete my Facebook” query growing http://is.gd/c4Iif

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Israel

RT @inwnews: Globes: CITI mulls retail banking in #Israel http://ow.ly/1GnlC >> more competition & lower fees? I hope so

RT @ISRAEL21C: OECD accepts Israel as member http://su.pr/2Joo35 #Israel#economy #business

RT @Israel_News: Euro drops sharply vs Shekel as IMF judged EU’s emergency fund as a temp solution. http://ow.ly/1Js4A

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Banking & Economy

The New Poor: Even w/ rebounding economy, many jobs – tnx to tech advances – won’t be coming back ever http://s.nyt.com/u/wuwm

US Crisis Panel to probe how big banks routinely – and legally – fudge their quarterly books. http://ow.ly/1Hb8q

US Treasury Sec urged Congress 2 impose 10-yr $90 billion bank-tax 2 recoup 2008 bailout-costs http://ow.ly/1Hbbr

As stimulus $ dwindles down, expect States to make deep cuts http://ow.ly/1IQwd via @NAFund @PANONonprofit @robertegger

RT @askdebra: Social media and the banking industry, by @davidfinch http://is.gd/c6YkI // Essential services made easier, free advice & more

Thanks for the referral Debra >> RT @askdebra: Mobile banking set to soar, courtesy of @emarketer http://is.gd/c5ZPJ

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Potpourri

RT @Neil_Hamburger: Another “world’s oldest person” died today. Clearly, a dangerous competition that should be stopped. http://ow.ly/1GUIC

Too many times the IRS has hinted at the direction to which it is heading, with people taking little notice.  Well, in quiet screams, the IRS is doing it again, with the release of their interim report last week: “IRS Exempt Organizations – Colleges and Universities Compliance Project.”

I preface that I have not yet read the report, but I will. And here’s why I think you should too:

1. The I.R.S. is Cracking Down

The interim report summarized responses to “compliance questionnaires sent to 400 public and private colleges and universities in October 2008″ (IRS press release).  This is not the first report (the IRS did a similar report on nonprofit hospitals) that the IRS has sponsored nor will it be the last.

2. Knowing is Half the Battle

Reading the report can give a nonprofit – especially schools — a sense of what to expect:

The interim report contains preliminary information on the respondents’ organizational structures, demographics, exempt and unrelated business activities, endowments, executive compensation as well as governance practices. (IRS Newswire IR-2010-058)

3. The IRS has Teeth

The report was not just some intellectual study.

The IRS has opened examinations of more than 30 organizations that were selected based on responses to the questionnaire. These examinations focus primarily on unrelated business income and executive compensation issues.  A summary of findings and information learned from the examinations will also be included in the final report. (IRS Newswire IR-2010-058)

Last time I checked, examinations were not a good thing.

4. The IRS is Learning

“This compliance project, like our previous one on nonprofit hospitals, gives us a lot of valuable information on activities conducted by those organizations that will help us in our enforcement and services efforts,” said Lois Lerner, Director of the IRS Exempt Organizations.  “Our findings will be reported in a final report after we have completed our analysis of all of the data.” (IRS Newswire IR-2010-058)

In other words, the IRS is learning more and understanding better how organizations work; the IRS sees itself as better equipped to oversee tax-exempt charities and judge their activities.  In my opinion, this feeling will lead to an increased desire by the IRS to put their newfound understanding to use and create more pinpointed inspections — performed both before and after a 501(c)3 tax-exemption has been issued.

Conclusion

I only happened to come across this announcement by accident (I can’t seem to unsubscribe from the IRS Newswire email list), but I am glad that I did.  We are seeing the IRS on an almost consistent basis increase its oversight of charities.  The old ways of running a nonprofit — little transparency, fiscal responsibility, and strategy — are quickly and quietly becoming extinct.  Or they should, if you want your organization to survive the IRS’ version of natural selection.

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only – not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.