Dutchess County Coalition of Nonprofits Event: "Strengthening Government & Nonprofit Relationships in New York State"

As State and County governments are forced to make cuts in staffing and services, our citizens and our public officials are turning increasingly to non-profit organizations to fill the gap. To do so efficiently and effectively, government and the non-profit sector must communicate and collaborate as much as possible. However, in NY State and Dutchess County, there is little or no mechanism for this two-way dialog and cooperation. This presentation will present one possible model to bring government and the non-profits together to benefit our common constituency.

Together, we are going to tackle some important issues facing our sector and hopefully gain some important insight as to how we can encourage our State and Local leaders to make a strong statement about the nonprofit sector as they have in Connecticut.

Event Details:

May 13, 2011
10:00 am - 12:00 pm
Register Now

RSVP by May 6, 2011

The Dutchess County Coalition of Nonprofits and the Locust Grove Estate are pleased to sponsor this event. Ms. Heinrich will be asked various questions about her role and the nonprofit community including:

• What led the Governor to create such a position in his cabinet?
• Why is it in the best interests of states, counties, communities, to be concerned about the nonprofit sector?
• How have the current economic conditions impacted the nonprofit sector?
• What role do nonprofits play in the delivery of services and in the economy of Connecticut?
• In what ways can the interests of nonprofits be promoted?

Thanks to a generous donation of space from Locust Grove we will be hosted at the Locust Grove Estate. See below for details.

Light refreshments provided by Appraisal One, Inc

About Our Speaker

Deb Heinrich is a scientist by training with a PhD in Microbiology and Molecular Genetics. She served as the State Representative for Madison and North Guilford prior to being appointed to this position.

As a state representative, Deb worked very closely with the nonprofit providers, advocating on their behalf in the legislature. For her work in this area, Deb has been recognized for distinction by the Connecticut Association of Nonprofits and the Connecticut Community Providers Association.

Ms. Heinrich was appointed by Governor Daniel Malloy to interact and communicate with nonprofit providers and to advise the Governor on policy reforms and other measures to benefit the partnership of state agencies and private providers.

Governor Malloy established this important position in recognition that this partnership is integral for the delivery of services to the citizens of Connecticut who require assistance in their lives. Governor Malloy stated that in closing a 20% budget deficit in his State, he is committed to finding ways to spare the most vulnerable among the State's citizens.

Nonprofit Compensation: What is too much? …and who decides?

Are you tired of hearing, "That nonprofit pays its employees too much!" If every nonprofit board followed IRS guidance on setting the compensation of its key staff leaders, perhaps we wouldn’t hear that refrain as often. So board members, please do your part by embracing your role as defenders of the nonprofit sector’s right to pay its employees reasonably and fairly. Help us change the conversation from, "What compensation is excessive?" to "What compensation levels will help our organization build its capacity by hiring and retaining terrific staff?"

First, know the process for reviewing the annual compensation of the executive director. Second, be aware of the downside of NOT engaging in an annual compensation review. (Bad press, lack of donor confidence, and potentially IRS penalties….need we say more?)

Background: Under federal law, a charity may not pay more than "reasonable" compensation for services rendered. Although the Internal Revenue Code does not require charities to follow a particular process for determining the appropriate level of salary and benefits, it is clear that compensation for board members, officers, key employees (and others in a position to exercise substantial influence over the affairs of the nonprofit) should be determined by persons who are informed about what comparable nonprofits pay their employees, and who have no financial interest themselves in approving the compensation. (Source: IRS, Governance and Related Topics - 501(c)(3) Organizations 3-4 (2008)). These are the general guidelines offered by the IRS – but the IRS Form 990 offers specifics.

The IRS Form 990 asks nonprofits about the three-step process used to approve the compensation of the executive director/CEO (and certain other key employees): Did the process for determining compensation of the following persons include a (1) review and approval by independent persons, (2) comparability data, and (3) contemporaneous substantiation of the deliberation and decision?(See Section VI, Part B, line 15, of the Form 990.) Nonprofits that follow this three-step process are generally able to take advantage of what the IRS refers to as a "rebuttable presumption" that the compensation is reasonable, thereby protecting the nonprofit and the board members from sanctions that can be imposed by the IRS if it finds that the compensation was not reasonable.

Visit the National Council’s website for more information on how to measure comparability of compensation, and visit the IRS website for background on what can happen if a board fails to demonstrate it followed this 3-step rebuttable presumption process [hint: intermediate sanctions].

Demonstrating that your nonprofit has approved the compensation of the executive director/CEO in a thoughtful, deliberative process is a basic fiduciary responsibility of every nonprofit board. Here are some pointers:

• The process of reviewing executive compensation should recur whenever there is an adjustment to the executive director/CEO’s compensation.

• Having a written policy can help keep the process on track. ( See sample policy).

• The "executive compensation review" should be conducted by persons who are "independent" (not paid by the nonprofit). Many nonprofits use a sub-committee, such as a "compensation committee" made up of board members and volunteers, or the executive committee, to conduct the initial review and then make a recommendation to the full board.

• Having the full board approve the compensation of the executive director/CEO is consistent with being a transparent and accountable organization.

• Documentation of what the board’s decision was based on (such as comparability data) and of the fact that the board carefully deliberated and approved the CEO’s compensation is critical. Minutes of the meeting should include enough details so that if the board’s decision is questioned, the process the board used to determine that compensation is "reasonable" will be clear.

• "Compensation" means both salary and benefits, so if an executive director receives a salary but also other fringe benefits such as insurance, or a car or housing allowance, all those elements must be totaled together to determine the annual compensation.

There are many more resources on the National Council’s website, including a sample Policy for Review of Executive Compensation and a link to a virtual seminar on this topic presented at a symposium at Columbia Law School for state charity regulators by legal experts on executive compensation for tax-exempt organizations.

Read about additional governance policies that your nonprofit’s board should be aware of.

Nonprofits Discuss Collaboration

More than 140 people representing over 70 nonprofit organizations converged on Bethel Woods Center for the Arts for a watershed summit that organizers hope will translate into more efficient and less costly organizations.

The day-long schedule of panel discussions and group brainstorming sessions drew executive directors, board members and representatives from organizations providing services ranging from arts education to support for people with developmental disabilities.

If nothing else, they heard one clear message: that collaboration could help nonprofits not only survive but thrive amid a retreat in giving by private donors and governments that is likely to endure.

"If we're all going to survive, we have to find new ways to collaborate and work together," said Sullivan County Legislature Chairman Jonathan Rouis, who has been pushing for a summit since 2009.

Summit organizers hope the face time and brainstorming will eventually spur collaborations or resource-sharing that could prevent the duplication of services and save money.

"The goal really was to take nonprofits off their islands," said Amanda Speer, Cornell Cooperative Extension's family and youth development team coordinator and chair of the summit's organizing committee.

"Before any of the ships start sinking, how do we work together to keep each other afloat," she said.

Jonathan Drapkin, Pattern for Progress president and chief executive officer and former Gerry Foundation executive director, laid out the challenges facing nonprofits as private and public funding shrinks.

He cited Greene and Columbia counties, which share a community college, and the merger of three school districts into the Sullivan West School District as examples of successful collaborations.

"Either you try to be the masters of your own fate or you wake up and find that fate has taken its own course," said Drapkin.

Darrin Raynor, assistant executive director for New Hope Community Inc., said he attended in hopes of sharing ideas and finding out about different organizations. "The opportunity to see the other organizations and hear what they have to say is priceless," he said.

Elena Goyanes, a board member for Catskill Arts Society, said, as she ate lunch, that she was already thinking of ways she could work with some of the groups represented at the summit.

"It's stirring thoughts of how we can further reach out into the community," she said.

From the Times Herald-Record online.

Building Opportunities 2011: The Nonprofit Shared Space and Services Conference

Join us for three days of practical tools to create successful nonprofit shared space and services.

Building Opportunities 2011 is the largest event in North America dedicated to creating and managing shared nonprofit workspace, administrative services, technology, and programs. Learn from The NonprofitCenters Network's ten years of collected best practices. Join leaders from the nonprofit, philanthropic, business, and public sectors as we discuss WHAT WORKS in shared space and services.

Gather comprehensive information on:

• Nuts and bolts of creating and operating multi-tenant nonprofit facilities
• Proven models of success for sharing administrative services, technology, and programs
• Commercial and nonprofit financing options
• Cost-saving solutions for quality, efficient operations
• Tools to evaluate and amplify the impact of your collaborative space project
• Successful strategies for community-building, ownership and governance, and cross-sector partnerships

View the Conference Agenda

What to expect:

• Significant networking opportunities
• Over 20 new workshops and discussions covering diverse topics, incuding community-building and facility operations
• Dynamic speakers from across the design, real estate, and financial sectors, as well as nonprofit sector leaders
• New conference ambassador program to foster peer-to-peer learning
• Thought-provoking plenaries exploring proven impact and future directions for the shared space and services movement
• Tours of nonprofit center facilities in the Los Angeles area
• Valuable resource materials to take home

Learn more and register today.

DATES:
May 9 - 11, 2011

LOCATION:
Center for Healthy Communities at
The California Endowment
1000 North Alameda Street
Los Angeles, CA 90012

COST:
Early Bird through April 1
NCN Members: $295
Non-Members: $495

After April 1
NCN Members: $375
Non-Members: $575

Group Discount:
10% off total amount with 2+ registrants from an organization

Fiscal Sponsorship = Sharing Tax-Exempt Status

How can a nonprofit raise money if it is not tax-exempt?

An organization that is not tax-exempt (either because it has not yet been recognized as tax-exempt by the IRS or has had its exemption revoked) can arrange with another organization that is tax-exempt to serve as its "fiscal sponsor." The role of the fiscal sponsor typically includes handling the administrative responsibilities of receiving and administering charitable contributions on behalf of the sponsored organization. (The fiscal sponsor may be paid a reasonable fee for this administrative service.)

In essence, fiscal sponsorship is a relationship in which the tax-exempt status of one organization is effectively shared with a sponsored organization/program. The sponsored organization benefits because contributions are made to the fiscal sponsor (which is tax-exempt). This allows donors to receive a deduction for their contribution, which generally smooths the way for financial support.

• Because of the administrative responsibilities involved, it is best to memorialize fiscal sponsorship arrangements in a formal written agreement.
• There are other reasons to consider a fiscal sponsorship relationship in addition to fundraising. Many organizations rely on their fiscal sponsor for other functions, such as bookkeeping, human resources, and various administrative roles.

Did you know?
The IRS will soon release a list of nonprofits that have had their tax-exempt status automatically revoked for failure to file 990s with the IRS for three consecutive years. If a nonprofit loses its tax-exempt status but still wants to fund its operations on a temporary basis while it reapplies for tax-exempt status with the IRS, it will need a way to continue to attract deductible contributions in order to deliver its mission in the community. Fiscal sponsorship may be one answer.

Read all about fiscal sponsorships from the Resources section on the National Council’s website: what they are, why an organization might consider using a fiscal sponsor, and what risks and advantages they provide to the nonprofit serving as a fiscal sponsor.

• Looking for a fiscal sponsor or willing to serve as one? Search or sign up using the Fiscal Sponsor Directory. Local community foundations and State Associations may also be helpful resources for finding fiscal sponsors. Some organizations that serve as incubators/fiscal sponsors are listed on our website.
• Stay out of trouble with this post by NonprofitLaw Blog author Gene Tagaki, Esq., that offers advice about what to avoid when engaging in fiscal sponsor relationships: Fiscal Sponsorship – Six Ways to Do it Wrong.
• If your organization is considering becoming a fiscal sponsor, or using one, read about recommended best practices for fiscal sponsors developed by the National Network of Fiscal Sponsors.
• Put it in writing! Suggestions for what to include in a written agreement or memorandum of understanding between a fiscal sponsor and the sponsored organization are set forth on page 5 of this monograph: On Comprehensive Fiscal Sponsorship, by Joshua Sattely, Third Sector New England (2009).
• Debunk the myths and learn about the untapped potential of fiscal sponsorships from this report, More than Money- Fiscal Sponsorship’s Unrealized Potential, BTW Consultants, (May 2007).
• Before you take the plunge, learn from others: The experiences of 200 fiscal sponsors are described in the Fiscal Sponsorship Field Scan, a report based on the first-ever survey of fiscal sponsors conducted by the Tides Foundation (2006).
• More fiscal sponsorship resources from CompassPoint.

How could a nonprofit lose its tax-exempt status?

A nonprofit could lose its tax-exempt status in a number of ways.

• Read about risky activities that – when engaged in by a nonprofit – could jeopardize tax-exemption.
• Most tax-exempt organizations, other than churches, must file an annual return (Form 990) with the IRS – if they do not, they face automatic revocation if they fail to file annual reports for three consecutive years.
• Check the at-risk list. The IRS website provides a state-by-state list of organizations at-risk of losing their tax-exempt status. In some states there are over 12,000 organizations (just in that state) listed!

Guidance for donors to section 501(c)(3) organizations: You may rely on the organization’s determination letter or listing in Publication 78 to deduct contributions until the IRS publishes a notice on IRS.gov that the organization’s 501(c)(3) exempt status has been automatically revoked.

NYCON CEO Doug Sauer Comments on Obama’s Proposed Budget Impact

WNYC featured an article on the proposed cuts from the Federal government and how they will impact nonprofits. NYCON's CEO Doug Sauer comments:

President Barack Obama's plans for cuts to domestic spending, as part of his $3.73 trillion budget for 2012, would directly impact local nonprofits that provide an array of social services. There would be less federal money to go around, and stiffer competition for a smaller pot of funds.

The proposed budget aims to slash $300 million, or 27 percent, from Community Block Grants, which fund affordable housing programs, infrastructure improvements and economic development projects.

“Nobody likes any cuts. The world we live in, it is clear, the federal government is going to spend less, state government is going to spend less and we have to find ways to live within that,” Mayor Michael Bloomberg said.

Bloomberg said the White House called him several days ago to give him advance notice about the president's budget. A mayoral spokesman said officials are also looking at the effect the president's budget would have on mass transit and education.

Bloomberg presents his budget proposal on Thursday.

The National Endowments for the Arts and Humanities were hit with more than 10 percent in cuts, leaving both with $146 million each.

"If you looked at the arts situation, added to what’s going on in New York state and what the governor proposed, government involvement in the arts and funding the arts has just been dramatically reduced, and this just kind of adds to that," said Doug Sauer of the New York Council of Nonprofits. He said the Obama budget would also make it more expensive for nonprofits to hire workers.

Arts administrators said nonprofits tend to be more reliant on their National Endowment grants as a way of building credibility with foundations and donors. Loss of those federal grants will make it tougher to get other money.

Sauer said the president's budget also cracks down on how businesses, including nonprofits, use independent contractors to fill out their workforce. “There’s an increase in the unemployment tax that you’ll have to pay, which is part of the extension of unemployment benefits," Sauer said. "And that’s hurting nonprofits or small employers just as much as it’s hurting the small businesses."

He predicted that a tighter federal budget, along with austere state and city budgets, will force some nonprofits to go out of business or to merge.

Obama’s budget includes $451 million for the Corporation for Public Broadcasting, but House Republicans want to cut funding to CPB entirely (Note: The Corporation for Public Broadcasting contributes more than $3 million to WNYC’s annual operating funds).

New Arts Advocacy Group Announced: ARTS NYS Coalition

Times Square Chronicles featured the following post on a new arts advocacy group:


New York City is the heartland of arts and entertainment including commercial and non-profit theatre. In fact, it is the cultural center throughout the country. However, the NY State Council on the Arts (NYSCA) is proposing the largest cuts of any State agency. It seems like a small part of the budget, .0003%, but in reality, with current economic times as they are, perhaps it represents a good portion. Without having a complete budget at hand and someone competent to explain it, I’m like most New Yorkers . . . trying to figure it all out. What is known, however, is that funding for the State Council on the Arts has been consistently reduced by nearly 30% over the past 4 years, representing the largest cut to any state agency. If we’re to continue our place as a major cultural arts center, we must have the funds necessary.

As a state, we have many attributes of which to be proud, but the arts are the soul of New York. Everyday, artists and arts groups throughout the state provide New Yorkers and the multitude of national and international visitors with pleasure, education, new ways of seeing the world, and enormous economic benefits.

Nonprofit cultural organizations in New York City are major contributors to the city’s economy. This sector is the second-largest component of the arts industry and is closely tied to the commercial sector. These organizations also share a labor pool of artists and other creative workers with the commercial sector and often develop artistic products that transfer to Broadway or is otherwise utilized commercially. A similarly complex interaction occurs between museums and commercial galleries and auction houses.

The nonprofit arts industry is labor-intensive. Half of the direct spending by all nonprofit cultural organizations goes to wages and benefits, and about 11 percent is for fees and services, including outside artistic fees. The majority of the employees are city residents, and many of the vendors and workers who supply goods and services to these institutions are located either within the city or in nearby suburban counties.

New York City is also a mecca for those who work in commercial theaters also apply their artistic talent and technical expertise in nonprofit theater and in the motion picture and television industry.

Who is ARTS NYS Coalition?They are a group of colleagues who joined together to ensure that the public has access to information on the state of the arts in New York State. Currently, the coalition includes the New York City Arts Coalition and the Arts Councils of Dutchess, Greene, Onondaga (Syracuse) and Westchester Counties, Huntington, Northern Adirondacks, Saint Lawrence and Southern Finger Lakes regions, Arts Alliances of Harlem and Buffalo, New York Folklore Society, NYS Alliance for Arts Education, and Museum Association of New York.

Thus far, the coalition has established this website, http://www.artsnys.org/, which will be a resource for data on the arts in New York State as well as information on pending legislation at the state and federal level. This website, in partnership with Americans for the Arts, will provide contact level providing information for elected representatives and will allow individuals to send their representatives customized messages.

ARTS New York State Coalition will also plan and coordinate state-wide advocacy events for 2011 which will provide the arts community with opportunities to meet with elected officials to discuss arts funding in the 2011/12 New York State Budget as well as other issues. A designated Arts Day in Albany is scheduled for Tuesday, February 8, 2011 in addition to many arts advocacy events planned in local districts during the week of February 7 – 13, 2011. Today we have a new governor, who is facing serious budget deficits, and we need him and his administration to be aware of the extent of the past cuts and the need for thoughtful care as they develop the budget for 2012.

It is very urgent that the Governor of our state hear from those who enjoy and treasure the arts in New York State. Send your message to Gov. Andrew Cuomo today.

Lest we forget, cuts to the arts is not only state wide, but on a Federal level as well. In addition to contacting your local representatives, do the same with State Senators and Congressional reps.