What's the Buzz?
Reform was the keyword in this year’s regulation of charities
December 2006 By Senny Boone
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Not surprisingly, the post-election view for the nonprofit community signals more regulation. Here’s a look ahead at the two areas of most concern to our members that are active in raising funds and building awareness for their missions.
In 2006, the regulatory buzzword has been “reform,” including charity reforms and postal reform. By choosing the word “reform,” lawmakers might have sought to inoculate the results from charges of regulatory overkill. What were the effects on your organization?
First, for the lawmakers charged with overseeing the tax-exempt community, it became increasingly difficult to pass sweeping reforms as was desired. At the start of such legislation, the zeal to capture every imagined wrongdoing was great as the legislators heard testimony from the charitable community. However, the reality of the legislative calendar and priorities resulted in charity “reforms” being broken into several parts, only some of which survived and passed into law through H.R. 4., the Pension Protection Act of 2006. Not to mention that one of the umbrella organizations for nonprofits and foundations, Independent Sector, spent many months putting together a broad range of issues and proposed solutions, which further slowed the regulatory train that was barreling down at the community, regardless of whether particular organizations were in favor of one proposal vs. another.
H.R. 4 includes four areas that need further correction by regulators and scrutiny by organizations:
1. IRA rollover provision. This is a good provision allowing individuals that are 70.5 years old to make contributions to charitable organizations tax free up to $100,000. The shelf life is very short — two years — so if you have not started to alert your potential donors to this, do it now.
2. Confidential information. We at the DMA Nonprofit Federation are concerned that the implementation of one of the provisions dealing with the exchange of information by the IRS to state charity regulators could lead to instances of confidential/sensitive/incomplete information being shared with the media and politicians seeking to gain from such information.
3. Non-cash donations. If you are receiving in-kind donations of clothing, household goods and the like, there is a new requirement that the donor must receive an acknowledgement from the charity that the material was received in “good used condition, or better” which shall inject further subjectivity to the process but should discourage the donation of old socks and hole-y T-shirts. This has received a high mark from some organizations, but since the IRS has not promulgated regulations, the impact is difficult to predict.
In 2006, the regulatory buzzword has been “reform,” including charity reforms and postal reform. By choosing the word “reform,” lawmakers might have sought to inoculate the results from charges of regulatory overkill. What were the effects on your organization?
First, for the lawmakers charged with overseeing the tax-exempt community, it became increasingly difficult to pass sweeping reforms as was desired. At the start of such legislation, the zeal to capture every imagined wrongdoing was great as the legislators heard testimony from the charitable community. However, the reality of the legislative calendar and priorities resulted in charity “reforms” being broken into several parts, only some of which survived and passed into law through H.R. 4., the Pension Protection Act of 2006. Not to mention that one of the umbrella organizations for nonprofits and foundations, Independent Sector, spent many months putting together a broad range of issues and proposed solutions, which further slowed the regulatory train that was barreling down at the community, regardless of whether particular organizations were in favor of one proposal vs. another.
H.R. 4 includes four areas that need further correction by regulators and scrutiny by organizations:
1. IRA rollover provision. This is a good provision allowing individuals that are 70.5 years old to make contributions to charitable organizations tax free up to $100,000. The shelf life is very short — two years — so if you have not started to alert your potential donors to this, do it now.
2. Confidential information. We at the DMA Nonprofit Federation are concerned that the implementation of one of the provisions dealing with the exchange of information by the IRS to state charity regulators could lead to instances of confidential/sensitive/incomplete information being shared with the media and politicians seeking to gain from such information.
3. Non-cash donations. If you are receiving in-kind donations of clothing, household goods and the like, there is a new requirement that the donor must receive an acknowledgement from the charity that the material was received in “good used condition, or better” which shall inject further subjectivity to the process but should discourage the donation of old socks and hole-y T-shirts. This has received a high mark from some organizations, but since the IRS has not promulgated regulations, the impact is difficult to predict.
Companies Mentioned:
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