Amid cutbacks, efficiency is priority

The Poughkeepsie Journal reported on the impact of the proposed NYS budget, which includes reactions from the arts, public universities, and local cities:

Issue: Gov. Andrew Cuomo has proposed cutting grant funding for New York State Council on the Arts by about 10 percent, from $35.2 million to $31.6 million.

Impact: Many community arts programs in Ulster and Dutchess counties are funded with NYSCA grants, said Benjamin Krevolin, president of the Dutchess County Arts Council. The Dutchess County Arts Council under the 2010-11 state budget distributed $20,250 in NYSCA grants to arts organizations in Dutchess and the same amount to those in Ulster. The funding went to such projects as a street painting festival in Tivoli, free concerts at Locust Grove in Poughkeepsie and the Wassaic Project in Amenia, which converted a former agricultural facility into space for artists.

NYSCA funding allocated under the 2010-11 state budget and distributed by the Dutchess County Arts Council also accounted for $13,945 more in Arts in Education grants, split among Dutchess and Ulster groups, Krevolin said. The money funded a mural project in Dover Elementary School and a rock opera at Onteora High School, among other projects.

"Someone is going to get left out," Krevolin said of Cuomo's proposed funding cuts. "Someone's not going to have the opportunity to build their community, to bring in a festival or an event or a program that's going to spur economic development or improve education."

Eve Biddle, co-director of the Wassaic Project, said the $2,000 her organization received each of the past two years was used for outreach and artists honorariums.
"A small cut," she said, "can have a big effect."

Higher education
Issue: Reductions in aid to the State University and City University systems would be 10 percent. Benefits under the Tuition Assistance Program would be kept at the same levels. Proposed legislation would enable SUNY to streamline its procurement processes and establish public-private partnerships.

Impact: Donald Katt, president of Ulster County Community College, said the 10 percent cut would represent a $500,000 cut in funding to the college. The figure, he said, would compound the effects of a $1 million budget cut from the prior fiscal year.

READ MORE HERE.

Spending Cuts, Filing Information, and More from Nonprofit Advocacy Matters

Cuts, Cuts and more Cuts
The National Council of Nonprofits reported in their newsletter, "Nonprofit Advocacy Matters", that Spending cuts were the consistent theme throughout Washington last week as the President, during his State of the Union address Tuesday night, called for a five-year freeze in non-defense discretionary spending. Also on Tuesday, the House adopted a resolution capping spending for the current fiscal year at or below the levels provided in fiscal 2008. This limit is expected to produce budget cuts this year of $55 billion to $60 billion. In addition, the recommendations of the Republican Study Committee to cut $2.5 trillion in spending over the next 10 years were incorporated in the proposed Spending Reduction Act. Among many items, that bill would block spending for the Corporation for Public Broadcasting, the National Endowment for the Arts, National Endowment for the Humanities, and for national service programs. The legislation is not expected to be brought up in the House, but it does provide a roadmap for the areas that are being targeted for reductions in the future.

Federal Regulations and Job Creation
Federal regulations are frequently criticized for frustrating job creation, and the President and House Republicans are taking steps to identify key problem areas. On January 18, President Obama signed an executive order on Improving Regulation and Regulatory Review calling for "a government wide review" of federal rules and regulations to remove those "that stifle job creation and make our economy less competitive." The order was accompanied by an op-ed by the President published in the Wall Street Journal. In the House, Oversight and Government Reform Chairman Darrell Issa (R-CA) has created a website asking employers to identify government regulations and practices that either help or inhibit job creation. The website asks for responses to the questions: "Where does Washington help, and where does it hurt?" The National Council wants to know your ideas about particular rules or regulations that need improving.

Form 1099 Filing Requirements
There is strong momentum for repeal of the new tax-reporting requirement in the health care law that, starting in 2012, will require nonprofits and for-profit businesses to report aggregate payments to vendors in excess of $600 for goods and other property. A bill introduced last week by Sen. Mike Johanns (R-NE), S.18, has bipartisan support and is paid for by rescinding prior appropriations. A second proposal introduced by Finance Committee Chairman Max Baucus (D-MT) and Majority Leader Harry Reid (D-NV), S.72, has no offsets. A House bill, H.R.4, has broad bipartisan support. President Obama expressed support for repeal of the requirement during his State of the Union address.

Don’t get burned. File the 501(h) election!

With much of America gripped by below-freezing weather this winter, it’s nice to imagine being on a sunny beach, with white sand all around, gentle island breezes playing in your hair, and nothing for miles but a cloudless blue sky.

Did you bring your sunscreen?

Reality check – whether freezing or on a beach – you still want to protect your nonprofit from getting burned.

Filing the 501(h) election protects nonprofits from being burned.
By filing one simple form, IRS Form 5768, a charitable nonprofit can protect itself from penalties for engaging in "too much" lobbying. (Charitable nonprofits can lobby; read why lobbying is legal.) A charitable nonprofit can only spend an insubstantial amount of its activities on lobbying. But there is a hazy ill-defined line between what "activities" are considered "substantial" and which are "insubstantial." Here’s where the sunscreen comes in. By filing IRS Form 5768 (also referred to as "taking the 501(h) election") instead of being judged by the uncertain “substantial part” test that evaluates undefined "activities" -- your nonprofit will have the added protection of being evaluated with a more specific test called the “expenditure” test that offers a bright line based on how much money the nonprofit spends on its lobbying activities. If you don’t take the 501(h) election, it’s li! ke guessing how long to stay in the sun before you’ll get a sun burn.

Read all about the advantages of taking the 501(h) election on the National Council’s website. (Note: Private foundations, churches, and integrated auxiliaries of churches are not permitted to file the 501(h) election.)

It’s so simple and effective that some nonprofit practitioners have called it the "cheapest and best insurance on the planet." Indeed, we wonder why more nonprofits don’t use this easy process. Once a nonprofit files the 501(h) election by completing Form 5768, it simply reports annually how much money it spent during the year on lobbying activities on Form 990, Schedule C. As long as the nonprofit’s expenditures are within the acceptable (and generous limits) established by law, the nonprofit is protected. However, if it does not file Form 5768, not only is the reporting to the IRS more detailed, but the IRS will decide, based on uncertain criteria, whether the charitable nonprofit’s lobbying activities are “substantial” or not. Because the IRS has never defined how much is “too much,” the results of this analysis are uncertain. Why not file the! 501(h) election and be sure?

Start off the New Year by protecting your nonprofit with the 501(h) election – it’s easier than putting on sunscreen. (You only have to do it once!)

Many nonprofits see year-end gains

Crain's NY Business reported that more than half of 181 nonprofits surveyed by the Chronicle of Philanthropy said they've raised more this November and December than the same time a year ago.

Although they aren’t raising as much money as they did before the recession, many nonprofits report that donations are up from last year. More than half, 53%, of 181 nonprofits surveyed by the Chronicle of Philanthropy say they have raised more so far this November and December than the same time a year ago. One in five said their donations had jumped by at least 20%.

The NYC Chapter of the Alzheimer’s Association raised $1.1 million for its Memory Walk this year, up 7% from the previous year. And revenue from its Forget-Me-Not gala jumped 17%.

UJA-Federation of New York’s Wall Street & Financial Services Division raised a whopping $19.5 million at its gala dinner earlier this month, more than it has in the last three years and close to the event’s record of $21 million from before the financial crisis.

And Gods Love We Deliver, which like many charities raises more than 25% of its annual revenue in December, has seen the size of its average direct-mail gift increase to $57 this holiday season, from $51 last year.

“We’re very encouraged by the early results,” said David Ludwigson, chief development officer for Gods Love. “We were more targeted in our mailing so we mailed 20% fewer pieces, but we’ve gotten more gifts in.”

Not everyone is enjoying the holiday cheer however, and in some cases it’s lacking for those who need it most.

City Meals on Wheels, which delivers meals to the homebound elderly, is down $132,000, or 5%, so far in its direct-mail campaign. That loss translates into about 20,000 fewer meals that the charity can serve.

“This is the first year in my 29-year history here that this has happened,” said Marcia Stein, executive director of City Meals.

Ms. Stein said she doesn’t have a reason for the decline, but that perhaps people have donor fatigue.

“In the depth of the recession, I was astounded by how many people gave us eye-popping amounts,” she said. “It could be that people are now spending their money on personal purchases that they had delayed, and less on helping those who are more needy."

Dyson Foundation buys Children's Museum building for $1.4 million

The Poughkeepsie Journal reported that The Mid-Hudson Children’s Museum sold its North Water Street property to the Dyson Foundation for $1.4 million and has entered into a long-term lease that enables the family-centered nonprofit to maintain its base of operations at the waterfront location.

Leaders from the Mid-Hudson Children’s Museum and the Dyson Foundation described the transaction as an innovative partnership that will benefit the Children’s Museum while helping to secure the stability of the Poughkeepsie waterfront, which is facing increased development pressures following the success of the Walkway Over the Hudson and new projects slated for the area. All proceeds from the sale went to retire the Mid-Hudson Children’s Museum’s entire mortgage debt on the property.

“We believe this partnership is in the best interests of the Mid-Hudson Children’s Museum, our many members, and the nearly 60,000 children and parents that are enlightened by our work each year,” said Tracy Cass MacKenzie, President of the Museum’s Board of Directors. “We anticipate continuing operations at the 75 North Water Street property for a long time.”

How Will the New Tax Law Affect Your Nonprofit, Your Employees, and the People You Serve?

Yesterday Congress passed the $857 billion tax package negotiated by President Obama and congressional Republicans. President Obama is expected to sign the legislation today.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (H.R. 4853) has numerous components of interest and concern to nonprofits – as employers and as mission-based organizations involved in local communities. This list presents portions of interest to most nonprofits, nonprofit employees, and the people they serve:

• Tax Rates Maintained: All of the individual tax rates put in effect in 2001 and 2003 are maintained through 2012, including those for upper-income tax brackets. Most immediately, this means that nonprofit and other employers will not have to adjust employee withholdings for income taxes.
• Individual Payroll Taxes Reduced: Employees receive a two percent reduction in the Social Security tax they pay. For 2011, nonprofit and other employers will need to reduce the individual's share of payroll withholding from 6.2 percent to 4.2 percent. To illustrate what this change means, an individual earning $50,000 will see $1,000 in tax savings.
• Estate Tax: The bill restores and reduces the federal estate tax at a rate of 35 percent and increases the exemption level to $5 million, two changes that many fear will eliminate previous incentives for the wealthy to give.
• Charitable Giving Incentives: The IRA rollover and other expired charitable giving incentives (promoting donations of food, land, computers, and books) are restored for the remainder of 2010 and through the end of 2011, which should help promote giving.
• Unemployment Benefits: The legislation extends the enhanced program of 99-weeks of unemployment benefits through 2011. This allowance may prevent additional strain that would have hit many nonprofits that provide services to those with no income.
• Alternative Minimum Tax: Middle-income taxpayers will not be subject to the alternative minimum tax in 2010 and 2011 because the bill renews a "patch" that limits the application of the AMT to approximately four million upper-income individuals. Without this patch, many taxpayers would have seen an automatic increase in their tax rates.

The following link will take readers to a 12-page summary that provides greater detail about the bill, including provisions that might be of interest to particular nonprofits (e.g., those providing child care, adoption assistance, certain education): Summary of the Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

Also, the IRS just released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011. See Notice 1036.

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How to Change the World…

…Whatever the size of your wallet. These ideas, with budgets from $20 to $20,000, can help better the lives of others—and your own.

Got any plans for next week? Perhaps you could begin changing the world.

Yes, household budgets remain tight. But you don't have to be a lottery winner to make a difference in your community or halfway around the globe. People who are winding down first or primary careers and looking for new directions are discovering that for the cost of a weekend getaway, they can help change the world. Or start to.

Bob and Jo Link, for instance, retirees in Portland, Ore., serve on a nonprofit board that awards scholarships in Belize. Mr. Link, age 69, also troubleshoots computer problems for African refugees. This after the couple spent two years in the Peace Corps, helped with Hurricane Katrina cleanup, assembled computers for schools in Guatemala and worked with deaf orphans in Peru.

The cost to them? A few plane tickets, some scholarship donations and sweat equity.

"When you do this kind of stuff, you get back more than you really expect," Mr. Link says. "A lot of people wouldn't, or couldn't, put two years into the Peace Corps, but they could afford to spend a week in Peru."

We decided to look for ways that people, whatever the size of their savings, can change the lives of others—and their own. So go ahead: Pick one of the following budgets and write it on your calendar: "CTW."

$100 and Under

SERVICE PROGRAMS: In some cases, you actually can get paid while you're helping to make a difference.

The Links, for instance, earned $300 apiece each month in the Peace Corps, where about 7% of the organization's volunteers last year were age 50-plus. Closer to home, AmeriCorps, one of the largest national-service programs, is aiming for 10% of its 85,000 participants to be at least 55 years old—up from 4% in fiscal 2009.

AmeriCorps volunteers receive federal stipends averaging $11,800 for a commitment of 10 months to a year. They can also receive education grants of as much as $5,350, which, starting this year, they can transfer to their grandchildren, says Patrick Corvington, chief executive of the Corporation for National and Community Service, the agency that runs AmeriCorps. Work varies from part-time service in a volunteer's own community to full-time opportunities across the country. Options include helping to rebuild communities on the Gulf Coast and installing solar-electric systems in low-income California neighborhoods.

BECOME A LENDER: For what you spend today on lunch, "microfinance" allows you to play a big role in jump-starting modest entrepreneurial undertakings around the world—whether it's boosting inventory at a produce stand in Dar Es Salaam, Tanzania, or providing additional nets to fishermen in Cambodia.

f you're interested in lending to an individual entrepreneur overseas, Kiva.org lets you choose the borrower on its website. If the loans are paid back, you can fund another loan, donate the proceeds to Kiva or get your money back. DonorsChoose.org, where you can pick a classroom project to fund with as little as $1, sifts proposals by cost, school poverty level and subject. Requests might include $140 for dry-erase markers or $2,000 for camcorders and laptops for budding filmmakers.

Heifer International, through which $20 buys a flock of chickens or $5,000 delivers an "ark" of animals to a family or village in Asia or Africa, finds that many people age 50-plus seek out the cause around holidays. Then, as they learn more about it, many wind up joining study tours to the communities raising the animals, coordinating fund-raising efforts in the U.S., or working at several Heifer learning centers, says Steve Stirling, executive vice president for marketing in Little Rock, Ark.

$300 to $4,000

GIVING CIRCLES: One way to get more bang for your charity buck is to join a so-called giving circle, a group with a common interest that pools its resources and collectively decides where to put its combined money to work.

In the 1960s, Sally Bookman studied social anthropology at the University of California, Berkeley. Now she leads a Dining for Women chapter with two dozen women, many of them retirees, attending monthly dinners in Santa Cruz, Calif. At each meeting, they eat a potluck dinner and chip in about $30 each to support women entrepreneurs in developing countries.

The national Dining for Women group, based in Greenville, S.C., picks the cause du jour and sends educational materials to local chapters. But the members' life experience gives the gatherings their flavor, says Ms. Bookman, 67. "At one meeting we were learning about women in a remote village in the jungle in Peru, and one of our members had been to that village for three days with her husband," she says.

If you join a giving circle, you can choose simply to write checks, or take a more active role researching where the circle's money might have the most impact.

"VOLUNTOURISM": Trips on which people do volunteer work, typically overseas, have exploded in number and type in recent years.

How do you choose among the estimated 10,000 trips out there? Ask how the work you do will fit into the overall scope of the on-the-ground project, says Alexia Nestora, founder of VoluntourismGal.com, an industry blog. If you're working with children, ask how what you do will build on what the previous volunteer did. (You don't want to be the 20th volunteer to teach them to sing "Itsy Bitsy Spider" in English, for example.) Also make sure the operator provides emergency medical insurance and has an employee living in the country who speaks English in case of political upheaval or a natural disaster.

Mark Sanger, a 58-year-old retired transportation engineer in La Grande, Ore., has taken several weeklong trips with Globe Aware, a Dallas nonprofit that coordinates volunteer travel work. In a tiny Costa Rican village, his crew slept in A-frame cabins and helped villagers build housing in hopes of drawing national-park tourists and generating additional income. He also spent time eating meals in local families' homes, where you could "see how they interact with their kids, what pictures they have on their walls." He enjoyed his next trip even more, teaching English to children in Cambodia.

"It was like a whole other world opened up to me," he says. "There's a sense of adventure…without your life in danger every day. It's a nice balance of doing something interesting, exciting, different and incredibly rewarding."

Your room, board and airfare in some cases are tax-deductible if you travel with a nonprofit. Vincent Mirrione, 69, of Newman, Calif., has taken seven trips with Cross-Cultural Solutions, a nonprofit operator in New Rochelle, N.Y., for six to eight weeks at a time. His work at a Guatemala soup kitchen and orphanage, Russian senior centers and a project that Mother Teresa started in India have wound up costing about $300 a week after the tax break, he says.

BACK TO SCHOOL: Retraining, as a classroom teacher, for instance, can jump-start a second career as well as benefit others.

"Green," of course, is hot. Clover Park Technical College, Lakewood, Wash., offers a number of environmental-sustainability programs, which include classroom study and hands-on field work. The programs last 12 weeks to two years, depending on an individual's goals.

Pam Kirchhofer, 49, enrolled there in a 15-month sustainable-building program after she was laid off as a personal-finance counselor. The attraction: "You're helping people save money by conserving energy and resources, and…you're being a good steward of the Earth," she says. The tough part: "I haven't had a math class in 28 years, and we just did an energy audit of this woman's house using algebraic equations."

$5,000 to $10,000

JOIN A BOARD: A director on a board? You? Why not?

"Almost half of all nonprofit board seats never get filled. Nonprofits would love to have more qualified candidates, but they don't know how to tap into really talented people in the community," says David Simms, a partner with Bridgespan Group in Boston, which advises nonprofits. (One new resource for a board-seat search: The websites where nonprofits place want-ads for volunteers also are starting to post vacant board seats.)

Bonnie R. Harrison, 61, a retired Corning Inc. executive, became involved with Southern Tier Hospice in Corning, N.Y., after serving as her father's caregiver while he was also receiving hospice services. To join the board, Ms. Harrison asked her father's hospice nurse to write a recommendation. Shortly after Ms. Harrison retired last year, the hospice board's chairwoman stepped down, and Ms. Harrison was asked to take her place.

"The challenge of working along with the board, the staff and different organizations has been a great help in making the transition away from a high-pressured job," she says.

BECOME A BENEFACTOR: So, you like the idea of having a charitable vehicle to help others, but you aren't Bill Gates. Consider a donor-advised fund, a good tool for people who want to give away amounts starting at about $5,000 a year.

Such funds can be set up through big financial-service companies, like Fidelity Investments, as well as university, religious and community foundations. The fund will invest your assets and make grants based on your guidance. Typically, you become eligible for an immediate tax deduction.

"It might be a little more than you can handle doing on your own, yet you don't want to set up the superstructure of a foundation," says John Gomperts, the recently named director of AmeriCorps. "You might go to a community foundation and say, 'I want to give this money away, and I care about the humane care of animals, so please give me some suggestions and administer this for me.' "

$20,000 and Up

START A NONPROFIT: You have a cause you're passionate about, and nobody seems to be tackling it. So you dream of starting a nonprofit to that end. Expect to spend at least $10,000 to $20,000 on start-up costs, including the legal expenses involved in creating an organization and asking the government to grant you a tax exemption, called 501(c)3 status.

First question: Are you sure there are no similar efforts? The U.S. has about 1.5 million nonprofits, and "many of them are doing phenomenal work," says Mr. Simms in Boston.

If your idea truly is unique, try to find a community foundation to "incubate your effort so that you can worry about the service you want to provide" instead of setting up the business end, says Christopher Stone, faculty director of the Hauser Center for Nonprofit Organizations at Harvard University in Cambridge, Mass.

Elaine Santore is the 59-year-old co-founder of Umbrella of the Capital District, a Schenectady, N.Y., organization that helps older adults, in part by matching them with retirees-turned-handymen. She and her partner jump-started the program before receiving their not-for-profit status. "I would clean houses if need be, and he would mow yards," she says. "It's good to be hands-on at first so you know what it's like."

ENDOW A SCHOLARSHIP: What if you win the lottery, or your stock options go through the roof? The sky's the limit: You could fund scientists trying to cure cancer, build a new stage for your local symphony, or even start your own university and town, as did Domino's Pizza founder and philanthropist Tom Monaghan.

One of the more popular big-ticket items, though, is creating your own college scholarship. With $1 million, you could set up an endowment that should last for decades, says Becky Sharpe, president of International Scholarship & Tuition Services Inc., Nashville, Tenn., which administers privately and publicly funded scholarships.

Joe Scarlett, retired chairman and chief executive of Tractor Supply Co., Brentwood, Tenn., started a family foundation in 2005 with $2.5 million to provide college scholarships to business students from middle Tennessee, and he hired Ms. Sharpe's company to run the award program.

"We generate way too few business leaders in our country, so we wanted to focus our scholarship money on business," says Mr. Scarlett, 67. The foundation now has a balance of approximately $24 million, thanks to additional gifts from the Scarletts and growth in its value, and is expanding its efforts, supporting students in high schools and even preschools.

Original Article by Kelly Greene from WallStreetJournal.com