Blogging for Change: Congressman Pushes for Foreign Aid Reform

(MFAN) In an attempt to address the age-old deficiencies in the US government’s record of foreign aid, Congressman Howard Berman (D-CA) has called on his fellow representatives to look past their political differences to rewrite the Foreign Assistance Act of 1961. Berman, who is a Ranking Member in the House Foreign Affairs Committee, revealed such sentiments in a post to the Modernizing Foreign Assistance Network blog on July 25.

“In this tight budget environment, one thing that can unite Democrats and Republicans is a commitment to make our foreign assistance programs more efficient and more effective” he notes in the entry.  “We may have differing views on how much aid to provide and to which countries, but we should all agree to deliver aid in a way that reaches the intended beneficiaries and achieves its desired objectives,” he continues. While Berman admits that certain steps to improve the system have taken place including President Obama’s recent issuance of the Policy Directive on Global Development and the implementation of the Administrator Shah’s “USAID Forward” reform agenda, he emphasizes that the current act is outdated and unfitting for the country’s current political situation.

Berman explains, “It’s an architecture developed during the Cold War to address the problems of the 20^th century. Furthermore, “All too often, new laws have been written to circumvent it entirely, exacerbating the problems of fragmentation, duplication, and lack of coordination.”

In light of this, the Congressman revealed in the post that he plans to release a discussion draft of his rewrite in September that should serve as a catalyst for change to the Act. “Although foreign assistance accounts for less than 1 percent of our national budget, we must insist that every penny is used wisely,” he concludes.

 

The Politics of Giving: IRS Drops Investigation of Gifts to Non-Profit Political Advocacy Groups

(Bloomberg) In an unforeseen announcement last week, the Internal Revenue Service stated that it has officially halted any consideration of enforcing gift taxes on large contributions made to nonprofit political advocacy groups. The decision came as a shock to many as reports of an initial probe surfaced just last May when IRS officials sent letters to five specific donors notifying them that their contributions to such groups were subject to federal gift taxes of up to 35%.

News of the potential tax had set off a flurry of speculation that the IRS might be cracking down on what has become an increasingly popular form of campaign advertisement funding.  In fact, according to data compiled by the Center for Responsive Politics, nonprofit groups, many of them 501(c)4s, disclosed nearly $300 million in spending on the 2010 midterm election campaigns.

Although advocacy nonprofits have existed for years, Derek Willis explains in his blog for the New York Times that they have been greater investigated since the Supreme Court decided in 2010 to lower barriers to corporate spending on political campaigns following the Citizens United case. In fact, “The I.R.S. clarified the applicability of the gift tax to contributions to such groups in a 1982 ruling, but media reports and tax experts have noted that enforcement has been rare,” and after the case in late 2010, the agency announced that it would give 501(c)(4) groups greater scrutiny in the future,” he continues.

Some have questioned the timing of the gift tax proposition as the 2012 presidential election looms and speculated whether its sudden consideration is due to pressure from the White House. Kelly Philip Erb for Forbes importantly emphasizes in her blog, “It doesn’t take a genius to figure out that the majority of those dollars appear to have been directed to organizations supporting candidates who ultimately won seats in 2010.”  She continues, “And that makes a number of folks, including key Congressional officials, wonder whether the investigation into those contributions was politically motivated.”

While entirely denying such accusations, IRS Deputy Commissioner for Services and Enforcement, Steven T. Miller, hinted in a memo on the agency’s website that while suspended, the investigation has not been fully terminated and may continue at a later time. He cautions, however, that “this is a difficult area with significant legal, administrative and policy implications with respect to which we have little enforcement history.”

 

Surge in Donations to Congress-Linked Charities

(Associated Press) Companies seeking to influence lawmakers have found that it often pays to donate to nonprofits and charities (that are directly supported by government officials, that is). It has been revealed that in 2009 and 2010, corporations and their lobbyists contributed tens of millions of dollars to organizations that have been linked to congressional and executive-branch members, likely with the hopeful intention of gaining legislative influence.

Bill Allison, Editorial Director of the Sunlight Foundation that provided such statistics, emphasizes in the Associated Press the benefit for companies to make such donations. “By giving millions to nonprofits and charities that lawmakers have a connection to, lobbyists and special interests have a very discreet way of currying favor with the members of Congress they’re trying to influence, one that the public is rarely aware of.”

Boeing provides a prime example of such a situation. While lobbying against a rival aerospace company to win a $35 billion government contract, it was revealed that the company simultaneously made a $10,000 donation to the Symphony Orchestra in Johnstown, Pennsylvania. Likely non-coincidental, the organization was a favorite of Rep. John Murtha, “the late Pennsylvania Democrat who, as a gatekeeper for the Defense Department’s budget, held a lot of influence over Pentagon contracting,” notes the AP article, and the donation to it significantly aided in the company’s eventual success in winning the contract.

Despite perhaps a questionable ethical dilemma, the scenario is undoubtedly a “win-win.”

 

IRS Offers a Path Back to Tax-Exempt Status

(Sacramento Business Journal) Following last week’s news that 275,000 nonprofits lost their tax-exempt status because they failed to file the necessary paperwork, the IRS announced that it will assist nonprofits in once again gaining 501(c)(3) status.  In 2006, the IRS issued a regulation mandating that nonprofits had to file annual reports each year—and those organizations which failed to do so would lose their tax exempt status.

While many of those 275,000 organizations are now defunct, some smaller nonprofits who had not taken notice of the 2006 regulations will now need to re-apply for tax-exempt status.  Nonprofits wishing to enter the IRS’s program must fill out an application and pay a fee of between $100 and $850, depending on the amount of the organization’s annual gross receipts.  Applications for tax-exempt status will be followed by an IRS determination letter, and re-granting the organization’s status may be applied retroactively.

The list of organizations that lost tax-exempt status is available on www.IRS.gov.

 

NPR Fundraiser Speaks Out About James O’Keefe Setup

(Chronicle of Philanthropy) Despite having lost his job as a senior fundraiser for NPR, Ron Schiller is cautioning nonprofits not to shy away from discussing controversial topics with potential donors, including religion and politics.  Schiller was fired from NPR after he claimed that most members of the Tea Party were “racist” to someone who he thought could be a big donor to NPR.  Unbeknownst to Schiller, the person he was speaking with so candidly was recording the conversation using a hidden camera.  James O’Keefe, who is also responsible for similar targeted publicity campaigns against ACORN and Planned Parenthood, later went public with the video.

Speaking in Tampa this week, Schiller urged other fundraisers that donors want to connect with someone real, with real opinions on important issues—not generic “institution speak.”  Schiller urged nonprofit staff to be honest and authentic, despite the fact that such candor may create awkward situations.  Despite the public fallout after his meeting with O’Keefe, Schiller remains optimistic and asserts that he wouldn’t want to change his behavior with donors based on this incident.

Schiller has since gotten a job at a Boston company that recruits staff for nonprofit fundraising.

 

Wall Street’s Rebound Means Good News for Nonprofits

(Huffington Post) A financial advisor to nonprofits, Commonfund, has released a study of the investment portfolios of 175 nonprofits, concluding that investment returns were about 12 percent in FY2010.  Generally, foundations disburse the interest or return on investment to their grantees.  This signals a second year of growth after a devastating 26 percent decline in FY 2008.

While giving is still not as high as many nonprofits and foundations would like, donations appear to be trending up.  Commonfund’s Executive Director John Griswold, explains:

“Among operating charities, giving was stronger in FY2010, but far from robust. Among responding institutions, 17 percent reported decreased giving in FY2010, a marked improvement over the 38 percent that reported decreased giving in FY2009.”

Last in the chain reaction of economic recovery, nonprofits may still have to wait a while before donations return to pre-recession levels.

 

Innovative New Companies Connect Nonprofits with Volunteers

(CNET) Called “micro-volunteering,” a new San Francisco-based company called Sparked is connecting corporate employees with nonprofit volunteer opportunities around the world.  Using a volunteering software platform, employees can sign on during their lunch break and complete critical tasks such as language translation, editing, IT assistance, marketing, social media strategy, and more.

Sparked works with 2,500 nonprofits and instantly links them with volunteers, cutting out the tedious process of posting a volunteer ad, vetting candidates, and interviewing.  Instead, individuals can log on to the platform at their desktops, at home, or even on their mobile devices as they commute—and choose from various projects that match their skill sets and interests.

Another company, Catchafire, offers a similar service, requiring a 5 hour per week commitment over three months, and places a greater emphasis on individual participation over corporate employees.

These new companies offer a fast, efficient way for nonprofits to complete vital tasks, while also giving individuals a chance to expand their professional networks, add more experience to their resumes, and give back to their communities—a win-win for everyone involved.

 

Amid Budget Crisis, California’s Parks Reach Out to Nonprofits for Help

(Wall Street Journal) It’s no secret that California suffers from chronic budget problems.  The most recent item on the budget chopping block is state parks.  On May 13, the legislature voted to cut $22 million from the parks budget, potentially causing eighteen state park closures in the San Francisco Bay Area alone.

A representative from Marin County, one of the areas affected by the cuts, has introduced legislation allowing nonprofits to form partnerships to help fund and run state parks in danger of closure.  One such organization, Friends of Santa Cruz, has already raised $60,000 in 2010 to save the jobs of lifeguards at three state beaches.  Angel Island Immigration Station has raised $11 million to restore buildings that detained Chinese immigrants in the early 1900s—buildings that hold a strong cultural and historical significance for Bay Area communities.  Etched into stone walls during their often long detainment on Angel Island, immigrants’ writings in Chinese characters are still visible today.  The structures on Angel Island form a uniquely important aspect of Californian history, and it would be a shame to lose them because lawmakers in Sacramento can’t find a better way to balance the budget.

Even with the hurried, determined fundraising of these nonprofits, many worry that their actions won’t be enough to save California’s state parks.  Many nonprofits simply do not have sufficient volunteer manpower to run a state park, and all organizations are working to raise funds against a deadline of July 1, when the budget cuts go into effect.

 

Trademark Law Creates a Potential Pitfall for Many Nonprofits

(Nonprofit Quarterly) Smaller nonprofits would be well advised to avoid logos, taglines and slogans that resemble those of larger, established nonprofits—many of whom are resorting to legal action to protect what they call “historic investments in brand and reputation.”

A small group of local volunteers called Mush for a Cure organized a dog sledding event in 2007 to raise money for breast cancer research.  Last year, the group raised $30,000 for the National Breast Cancer Foundation.  They were surprised to receive a letter from an attorney at the Susan G. Komen Foundation, one of many sent out by the leader in breast cancer fundraising for supposed trademark violations.  Komen opposed Mush for a Cure’s trademark application for use of the phrase “for a cure,” commonly used by many smaller cancer-focused nonprofits and grassroots fundraising events.  Komen dropped their opposition to Mush for a Cure’s application after increased media scrutiny, but the story is an important warning for smaller nonprofits.

Mush for a Cure argues that at the end of the day, their small organization shares the same ultimate goal as Komen—finding a cure for breast cancer.  The two organizations should not be wasting their resources fighting each other in court, but instead devoting all their time, energy and money toward that shared goal.  This may be especially true when one side has deep pockets and the other can barely afford to be in court—and donors likely won’t be happy that their money is going toward a lawsuit instead of their chosen cause.

On the other hand, nonprofits often lose brand recognition when another organization appears with a similar name, logo and mission—and such brand recognition is valuable because it directs donors to the right charity.  Additionally, if a nonprofit that shares similarities with another nonprofit violates the law or gets into other trouble, it can tarnish the reputation of the other nonprofit.

 

Earth Day 2011

Sandhill cranes in Nebraska, United States.  Photograph by Joel Sartore, National Geographic.

(ABC News)  Earth Day has been an American tradition for over 40 years now, and as we wrote last year, it has become a little less nonprofit and a little more corporate, much to the chagrin of some die-hard environmentalists.   Starbucks, for instance, is offering to fill up tumblers and washable mugs for free if you bring it in the store today, and last year’s Peat the Penguin plush toys caused mild outrage.  What happened to simply planting trees and raising awareness?  Why are we making ‘going green’ a commercialized trend instead of a noble goal? 

But alas, at the end of the day, if the news about our suffering earth is being spread, it’s being spread, nevermind in what mode.  So take heed and turn off the lights; recycle whatever you can, and switch off the tap as you brush your teeth–every little action helps.  And if you’re still scratching your head for ways to ‘go green,’ Earth Day Network , the nonprofit behind Earth Day festivities, is promoting A Billion Acts of Green–published pledges to keep the planet healthy. 

Happy Earth Day!