Posted By Guest Blog: Alan Canter,
Monday, February 1, 2016
I’m often approached by people asking for advice on creating a new nonprofit.
My response, inevitably: Don’t do it!
I say this not because I question the power of nonprofits to change the world for the better. Nor do I doubt the sincerity of the person hoping to create that new charitable institution. But there is an awfully good probability – I’d say, 99% – that there’s no rational justification for creating a whole new entity.
There are currently 1.4 million nonprofits in the United States. That’s one-point-four-million organizations that need to recruit board members, raise money, keep minutes, file financial returns, hire staff, pay staff, develop logos, maintain Facebook pages, buy copy paper, apply for grants, update websites, design strategic planning retreats, and – assuming there’s time – do a little bit of good in the process.
As a consultant over the last few years, I’ve seen time and again how nonprofit organizations, many of which provide critically important services, have been dealing with chronic budget deficits, high staff turnover, and uncertainty. I find myself involved in conversations to help these nonprofits merge or shut down or reconfigure their missions to survive.
And yet each year there are more and more nonprofits competing for the same limited resources. It makes no sense.
So who are these people who are so hell-bent on creating new nonprofits?
The first group is The Emotionally Motivated. For example, there’s the retired executive who credits learning to rock climbing as a boy with much of his success in life. He tears up talking about it. So in his retirement he starts a rock climbing school for kids from less advantaged backgrounds. Or take the group of people who grew up attending a small rural synagogue. They’re distraught because, with shifts of population, the temple has gone out of business and the building has been abandoned. So they raise funds to preserve the synagogue, even though it no longer functions as a regular house of worship.
The most common among the emotionally motivated are people who want to commemorate the death of a family member or a publicly prominent person. A family creates a nonprofit to fight the particular disease that killed their loved one – even though there are undoubtedly organizations already doing just that. Or there’s a police officer who is shot in the line of duty, or a journalist who is killed while on assignment in a war zone. These are lives that are absolutely worth commemorating, and the emotions of those involved are very real, and very raw. But there are lots of ways to accomplish this commemoration short of creating a nonprofit organization. Supporters could make memorial gifts to the deceased’s favorite cause, or they could create a special scholarship fund to be managed by the local community foundation. They could start an annual 5K charity race in the person’s name. There are dozens of viable, meaningful, and relatively efficient ways of remembering the person short of creating a new organization.
But instead many people reflexively have an urge to start a new nonprofit. They’ll file for tax-exempt status, recruit a board, and launch their effort. They are moved by emotions, and they overlook the fact that the new organization will be ineffective at best, may not be viable at all, and likely will be cannibalizing support from more established and effective agencies.
I’ll call the second set of nonprofit establishers The Splinter Groupers. These are staff and board members of an organization that has gone in a direction that they don’t approve, or that has little interest in their particular passions. For example, a land conservation trust may acquire a parcel of land that includes a historic house, but the land trust has no interest in managing the house as a tourist destination. So a new group forms to oversee the historic building. In many ways that makes sense, but it’s another 501(c)(3) that needs to be cared for and fed, often drawing from the same donors and board members as the original organization.
Or take the example of parents of students at a private middle school who are frustrated that the administrators won’t consider extending the school beyond eighth grade. They lead an effort to spin off a new high school. Once the high school is established, different Splinter Groupers then start a separate nonprofit booster club to support that school’s sports teams because they feel the school is inadequately funding athletics. (Splinters beget splinters.)
And then there is, frankly, a third group: The Scam Artists. These crooks throw together a putative nonprofit for the sake of stealing money from naïve donors. As I have written before, these scoundrels prey on donors (particularly the elderly) by creating organizations whose names inevitably include some combination of the words “children,” “cancer,” “veterans,” “police,” and “firefighters.” These are the scourge of the nonprofit world, ruining the reputation of the field and bilking innocent donors out of millions.
One would think that it’s fairly hard to start a new nonprofit, but that’s not the case. The Internal Revenue Service’s Exempt Organization Division is the traffic cop on this beat, and one of its concerns should be on keeping unqualified nonprofits from getting 501(c)(3) status. But that’s simply not happening. The IRS Exempt Organization Division by most accounts is woefully understaffed, so a significant backlog of nonprofit applications built up in recent years. You’d think that the solution for eliminating the backlog would have been to add staff members and capacity, but (responding to budget restraints and political pressure) the IRS instead instituted a new, speedier process of granting tax-exempt status through something called the 1023-EZ form – a three-page electronic application that for smaller nonprofits has replaced what had been a 26-page paper application.
The highly predictable result? Last year the IRS approved more than double the usual number of new nonprofits, accepting over 94,000 new organizations in 2014, while rejecting only 67. (No, that’s not a typo. Put another way, for every 10,000 nonprofit applications that spill over the transom, the IRS rejected only seven.)
Not surprisingly, there are some problems with these new nonprofits. A study by the Taxpayer Advocate Service (an independent watchdog group within the IRS) suggests that over one-third of the new applicants could and should have been quickly dismissed up front for their failure to present an acceptable purpose clause. How many of these newly minted nonprofits are pure scams is anyone’s guess.
It’s a mess. As Tim Delaney, the president of the National Council on Nonprofits, put it, “The IRS is handing out tax-exempt statuses like Halloween candy.”
So can you create a new nonprofit? Yes, and, unfortunately, more easily than ever. Should you? Almost certainly, no. And should we be concerned about what’s going on? Absolutely.
About the author: Alan Cantor spent nearly three decades in the nonprofit sector before founding Alan Cantor Consulting LLC in January 2012. He focuses on helping community-based nonprofits be more effective. He has facilitated strategic retreats, conducted development and strategic assessments, trained staff and board members, conducted campaign feasibility studies, mentored CEOs, presented at conferences, and written widely on the challenges facing the nonprofit sector. Learn more about Alan.
Posted By Madeleine McGee,
Monday, January 25, 2016
Updated: Monday, January 25, 2016
2015 - what a year for our country, our state, even for SCANPO. Before we head into February and the mad rush of SC's Nonprofit Summit activity, let's indulge in a quick look back.
Most importantly, so many of SC's nonprofit leaders were front and center as...
The Confederate Flag Came Down - In July, we watched with the our nation as the Confederate Flag was removed from the SC statehouse grounds after thousands, myself included, advocated for this historical change following the tragic Mother Emanuel shooting.
Communities Provided Flood Recovery Support - In October, after witnessing historic flooding in South Carolina, nonprofits everywhere sprang into action to support rebuilding recovery efforts for individuals and businesses.
Here at SCANPO, 2015 saw:
New Staff and Expanded Services - In January 2015, Debbie Nelson, founder of DNA Communications, joined our team to lead our Knowledge Network programming, and Sharon Thomas, former nonprofit executive and recipient of the FMU Award for Nonprofit Leadership came on board expanding our member benefits by offering board engagement services.
Hundreds Furthering Their Exemplary Leadership Skills - With a sold-out house at Wild Dunes Resort, we welcomed more than 500 nonprofit leaders to celebrate our nonprofit community and cultivate leadership skills during our 2015 Nonprofit Summit.
Recognition of Habitat for Humanity of Greenville - During the Summit, we lauded Habitat for Humanity of Greenville County for their exemplary governance and management and excellence in implementing SCANPO’s Guiding Principles & Best Practices.
Charity Raffles Made Legal - In April, charitable raffles finally became legal after years of hard work by nonprofits from across the state.
Celebration of the Sector - Our Giving Day training helped more than 400 nonprofits prepare for Giving Day 2015 hosted by community foundations around the state. The Day resulted in national record giving levels and community-wide celebrations of all things nonprofit.
Moving Nonprofit Gathering Following Mother Emanuel Shooting - In June, just days after the horrific shooting at Mother Emanuel AME Church in downtown Charleston, our membership reception became a venue for healing, fellowship and unity.
New Board Leadership - July was the beginning of a new fiscal year and Ted Hendry from United Way of Greenville County took the helm of our association's board of directors providing important board leadership.
Increased Fellowship Among Colleagues - With photo booths, jazz bands, and great support from our business partners, local hosts and membership committee members, SCANPO hosted 10 gatherings around the state attended by nearly 1,000 nonprofit leaders.
New and Improved Communication Tools - With the help of our partner, Trio Solutions Inc. (TRIO), SCANPO launched our weekly enewsletter, Nonprofit News; improved our social media efforts; and completely redesigned our website to integrate better with our association member software.
Career ConnectionUsage Grow - SCANPO's job site exceeded 100 job posts for the first time in July, resulting in $121,000 total savings for the 813 members who posted jobs in 2015.
A huge thanks to all who took time to help build our state's nonprofit community through your work with SCANPO in 2015. Together, we make South Carolina a remarkable state, doing incredible work.
Now on to 2016. See you in Spartanburg for the Nonprofit Summit in just a few short weeks!
Posted By Tim Delaney, National Council of Nonprofits,
Monday, January 18, 2016
In the minds of most Americans, the image of the Rev. Martin Luther King, Jr., is of a man standing in front of the Lincoln Memorial delivering one of the finest speeches the world has ever heard.
While we normally focus on his mesmerizing cadence and inspiring words, we neglect to consider that he stood there not as just a great orator, but as the president of the nonprofit Southern Christian Leadership Conference and minister of a nonprofit Baptist church, surrounded by leaders of hundreds of nonprofits who had successfully rallied more than a quarter million Americans to participate peacefully in the 1963 March on Washington to advocate for people.
Dr. King’s astounding rhetorical gifts will continue to inspire generations to come. But equally important to the event’s success that particular day was how Dr. King and other nonprofit leaders advanced their nonprofits’ missions of helping people by flooding the streets of D.C. with a then-unprecedented number of individuals, forcing federal officials to begin paying attention to the power of the convictions of the American people.
This week, as we listen to Dr. King’s immortal “I Have a Dream” speech, I urge us all to reflect on the power that nonprofits can yield when advocating to advance their missions to help people.
When doing so, let’s also reflect on the power of a network, as seen by those working closely with Dr. King and the Southern Christian Leadership Conference to make the March on Washington a success, particularly these luminaries of the civil rights movement: James L. Farmer, Jr., of the Congress of Racial Equality,(now Congressman) John Lewis of the Student Nonviolent Coordinating Committee, A. Philip Randolph of the Brotherhood of Sleeping Car Porters, Roy Wilkins of the National Association for the Advancement of Colored People, and Whitney Young of the National Urban League.
Their courageous leadership demonstrated that when ignored individuals come together through nonprofits, they can be heard, and when separate nonprofits come together through nonprofit networks, they and those they serve can be heard even better. Thanks to these and other nonprofit leaders, we know that advocating to advance our missions works, and that working through networks works. In sum: Together, we can!
With nearly 80 openings currently in the SCANPO Career Connection Center, "Best Resumes for 2015-2016" can help you sweep the dust off of your old resume and make it competitive with employers. Are you using adjectives and power words? Are you familiar with Functional/Skills-Based Resumes? These and other topics are covered in this informative article.
We've heard much about Student Loan debt in the media in the last year. Collectively, Americans owe more than $1 Trillion in Student Loans! In 2010, Student Loan debt eclipsed credit card debt.
If you're like me, you might ask yourself, "I work in the nonprofit sector! I'm not paid as handsomely as my peers in the for-profit world, and my work impacts people's lives! Surely I should get some credit for that!"
Well, guess what? If you have federal student loans, then you do! With the under-utilized and under-publicized Public Service Loan Forgiveness Program, you may qualify to have your student loan debt erased after 10 years of service in the nonprofit sector. Here's how it works:
You must be employed (at least 30 hours/week) by a government agency or a 501(c)(3) nonprofit.
Your Federal Student Loans (Ford Federal Direct Loans) will be transferred to FedLoan Servicing (The Pennsylvania Higher Education Assistance Agency).
You will need to enroll in an "Income-Based Repayment Plan", or another qualified repayment plan, to determine your monthly payment. You will have to re-certify your income every year.
After you make 120 regular monthly payments (the amount of the payment does not matter, as long as it is the minimum required, multiple payments won't count), the remaining balance will be written off.
The 'qualified payments' do not need to be consecutive. If you leave employment at a nonprofit for a period of time, and then come back, your qualified payments will pick up where you left off, until you reach 120.
I'm enrolled in the program myself, and I look forward to having no student loan debt in.... November 2022!
Today, the IRS announced that it had withdrawn its proposed regulations on gift substantiation which would have encouraged nonprofits to collect, store, and report donors' Social Security Numbers, placing a tremendous liability and burden on the nonprofit sector.
The IRS received 37,977 comments during the comment period, with the overwhelming majority fervently against the proposed rules. Many networks, from the United Way, Independent Sector, and the National Council of Nonprofits, rallied their members and stakeholders in opposition to the rulemaking.
The IRS issued the following statement:
“The Treasury Department and the IRS received a substantial number of public comments in response to the notice of proposed rulemaking. Many of these public comments questioned the need for donee reporting, and many comments expressed significant concerns about donee organizations collecting and maintaining taxpayer identification numbers for purposes of the specific-use information return. In response to those comments, the Treasury Department and the IRS have decided against implementing the statutory exception to the CWA requirement, and therefore that exception remains unavailable unless and until final regulations are issued prescribing the method for donee reporting. Accordingly, the notice of proposed rulemaking is being withdrawn.”
1) SCANPO Public Policy Partners Meeting - Come ready to network and share regarding national and statewide legislative issues impacting nonprofits. Additionally, SCANPO aims to strengthen its public policy work. We seek your input in expanding our services. Look for a detailed agenda in January.
WHEN: 9:30–11:30 a.m. on Wednesday - January 20, 2016
WHERE:Edens Conference Room, 1221 Main Street, 10th Floor, Columbia (Expect a lovely view of our State House from Columbia’s newest skyscraper!) Park in the 1st level of the garage, parking will be validated.
2) UWASC / SCANPO Legislative Luncheon - SCANPO is proud to join the United Way Association in sponsoring this gathering. Two years ago when we co-sponsored, we saw nearly 47% of the House members and 28% of the Senate attend this luncheon. This is great time to show the strength of the broader nonprofit community.
WHEN: Noon-2 p.m. on Wednesday - January 20, 2016
WHERE: Blatt Building Rm 112, State Capital, Columbia
3) PLUS, we invite your help preparing a 2015 - 2016 Nonprofit Legislative Overview. Jamie Moon and Sue Williams helped us brainstorm this idea.
Please use this link to share with us bills your organization is working on, including those that passed during the 2015 session and those that you will be working on in 2016.
Your responses will be compiled into a comprehensive list of all bills that our members support.
We will include: Bill number/name, status, subject area, nonprofit advocates, legislative sponsors, and what they aim to accomplish. We hope this comprehensive list will encourage your coordination and collaboration.
If the message is meaningful, we may even choose to share with the legislators. We need your responses by Friday, January 8.
Posted By Sharon Thomas,
Wednesday, December 30, 2015
What do I need to know about classifying employees? What is the difference between an independent contractor and an employee? That is the question presented by Nonprofit Answer Guide, a project of the Center for Nonprofit Management. It's a good question and one that comes up often in the nonprofit world.
According to Nonprofit Answer Guide, more and more nonprofits are hiring a mix of employees and independent contractors to fulfill their missions and make the most out of limited resources. But classifying employees and determining who is and is not an independent contractor isn’t always an easy task. If a hire is misclassified, an organization can face hefty fines and even lawsuits. So understanding the determining factors to classification is key.
More than 37,000 concerned individuals and organizations submitted comments on the proposed gift substantiation regulation, and virtually all that are viewable expressed a common theme: it is a very bad idea for nonprofits to be asking for donors’ Social Security numbers, maintaining that personal information in their files, and submitting it to the IRS. In the view of many, “never is the better answer” when the question is whether individuals should give their Social Security numbers to people claiming to be soliciting on behalf of a charity.
The United States Congress has finally made permanent three tax incentives for charitable giving!
These incentives strengthen the charitable community’s ability to improve American lives and our communities, and ends the sector’s nearly 10-year long struggle to make these incentives a permanent part of the tax code.
The incentives include the IRA charitable rollover and enhanced deductions for the donation of food inventory and land conservation easements. After years of renewal and expiration, including the most recent expiration on January 1, 2015, the permanent extension of these three charitable giving incentives is now headed to the president’s desk for his signature.
In addition to these critical incentives, Congress included important provisions to make the child tax credit and the earned income tax credit permanent.
This tax deal, known as the Protecting Americans from Tax Hikes (PATH) Act of 2015, shows true leadership in understanding the value of the charitable community and the role it plays in American society. This law ends the uncertainty caused by the repeated expiration and subsequent reinstatement of these three charitable giving incentives.