When Non-Cash Gifts Are Worth Cash

When you give a friend money as a birthday gift it's appreciated, but there's always the thought that you could have been a little more creative. That's not really the case with nonprofits; money is one of the best gifts you can give.

But that doesn't mean it's the only gift.

Non-cash gifts, such as computer equipment or office supplies, can be very useful for nonprofits. Yet even though these items are not money, they still have cash value in the eyes of the Internal Revenue Service (IRS). IF that value is great enough, an organization might be required to substantiate the gift to the IRS.

In their book “Conducting a Successful Major Gifts and Planned Giving Program,” Kent E. Dove, Alan M. Spears, and Thomas W. Herbert explained that the need to file federal form 8283 also depends on the status of the taxpayer. They explained four instances that qualify, as well as which part of the form must be completed:

• Non-cash gifts valued at $500 or less. The donor only has to complete federal Form 8283 for this type of gift if the person has made a series of gifts in a given year, each of which is valued at $500 or less but with a total value exceeding $500;
• Non-cash gifts valued between $501 and $5,000. Gifts in this range must be reported on Part A of IRS Form 8283, which is then attached to the donor’s federal income tax return;
• Non-cash gifts valued at more than $5,000. If the amount claimed as a charitable income tax deduction is in excess of this amount, the IRS requires the donor to complete Part B of Form 8283; and,
• Gifts of non-publicly traded stock. If the donor makes this type of gift, Part B of Form 8283 must be completed. This is true regardless of the value of the stock. A qualified appraisal is required if the value of the stock exceeds $10,000.

So remember: Just because your organization is getting a donation of something other than cash doesn't mean that there is no accounting work to be done.

The Roles Of The Employee Conduct Policy

Nonprofit employees that thoroughly look through the Human Resources handbook they receive when hired probably know all about the organization's employee conduct policy. These guidelines are set so that people know what they can and cannot do in the workplace. If we lived in an ideal world these kinds of rules probably wouldn't be needed.

Unfortunately, we don't live in an ideal world.

Governing behavior is not the only role conduct policy needs to play. In "The Big Book of HR," Barbara Mitchell and Cornelia Gamlem wrote that HR managers need to make sure that the rules accomplish six other goals to ensure stability in the office place. The policies should:

• Establish and define professional standards of conduct that are not acceptable, while stressing that the list is not all-inclusive and that there can be other infractions.
• Provide assistance to employees to change inappropriate behavior.
• Provide managers a means to address issues.
• Provide management responses if behavior does not change.
• Provide a flexible approach (progressive or corrective discipline) process to address conduct.
• Provide a communication mechanism for employees and managers.

So what happens when an employee breaks some of the rules? Discipline should follow, according to Mitchell and Cornelia, but that doesn't mean instant termination. Instead, it should follow these steps:

• Open dialogue/verbal counseling.
• Written counseling/letter of caution.
• Final written notice.
• Suspension.
• Termination.

NY Gov. Proposes Salary Cap For Nonprofit Execs

N.Y. Governor Andrew Cuomo yesterday proposed new regulation that would place caps on the salaries that nonprofit executives receive.

As reported by The Daily News, the new rule would cap the amount of money towards an executive's compensation package at $199,000. The actual pay package could be higher, but the nonprofit would have to find new funding sources to make up the difference and get special permission. Salaries could also fall no higher than the 75th percentile for the field in which the organization works.

The new rule would only impact nonprofits that receive 30 percent of their total funding from the state. The Daily News reported that the Bronx-based Soundview health clinics -- run by recently convicted ex-state Sen. Pedro Espada -- would have been in real danger of losing state funding. Nearly half of the organization's funding came from the state, and Espada's $612,000 salary placed him above the 75th percentile in that field ($380,000).

Gov. Cuomo's announcement shouldn't come as a surprise. He vowed to crack down on excessive pay for executives during his State of the State address in January. Before that, he created a task force to investigate pay at nonprofits that receive taxpayer money. This stemmed from a New York Times article that reported high salaries and perks at the Young Adult Institute. Executives at that organization reportedly received $1 million a year, in addition to ethically questionable perks, such as billing the nonprofit to cover their children's college tuition.

You can read the full article on Cuomo's announcement on The Daily News' website.

Nonprofit Sues California Over Teacher Tenure Laws

A nonprofit education group is suing the state of California over five laws they say protect ineffective teachers and lower school quality for poor children.

Los Angeles-based Student Matters filed the lawsuit today with the goal of getting the laws overturned, according to a report on KQED News. The laws in question set up a seniority system for public schools in the state.

According to the organization's website, Student Matters is "committed to ensuring that all of California’s children receive a quality education." It is run by David F. Welch, an executive at a Silicon Valley fiber-optic communications firm.

Josh Pechtalt, president of the California Federation of Teachers, said in a statement that the lawsuit is "misguided," and that the real problems of public education stem not from teachers, but from money.

"The real problems of public education really are not about teachers having due process rights," he said, "the problems have to do with massive cuts to the classroom, and frankly defunding of public schools now for a number of years."

You can read the full story on KQED's website.

Build Your Social Media Audience

Social media plays an important role in today's world, especially in business. It's almost unfathomable to find a business that doesn't have a Facebook or Twitter account. It's easy enough to set up your online presence, but it's a little bit harder to get people to listen.

Thankfully, "a little bit harder" doesn't mean "impossible." The nature of social networks means that every follower you get can potentially lead to many more. This is because each person "liking" your page will conceivably tell his/her friends to also follow you. Sounds great, but this is all moot if you can't get many people to care about your page in the first place.

A lot of people using social networking sites tend to over-think it. They try to get too fancy and end up with few followers. In truth, the key to building an audience is to post things that are relevant and useful. What's interesting to your followers? Why not ask them? Before making the first post on your new blog, engage your supporters on what kind of stories they want to read. When you get a good enough sample of answers, start writing about those topics.

Even with brilliant content, it’s difficult to attract supporters to a site that no one else is following. Reach out to your staff and other core supporters of your organization and ask them to follow your tweets, or “like” your Facebook page --and to invite their personal friends.

Having an active community is another good way to get people to show interest. Let's face it -- nobody wants to be a part of a page that has no interaction. Try asking questions to your supporters in addition to sharing links. The whole point of social media is interaction with the audience, and there's no better way to do this than starting a discussion.

The most important thing to remember is to be honest when participating in any of these discussions. There will be things you just can't say, of course, but don't be robotic. People like to know that the individual they are talking to is an actual human being.

State Senator Convicted Of Stealing From Nonprofit

Former N.Y. State Senator Pedro Espada was convicted yesterday of stealing more than $500,000 from the nonprofit health network that he founded. He faces up to 10 years in prison on four counts of theft.

Espada, 58, was convicted after 11 days of deliberation, according to a report in Newsday. He has often been described as the poster child of corruption in Albany by good government groups, serving as a major power broker as the former Senate majority leader in New York.

Espada is convicted of using the funds from Bronx-based Soundview for personal expenses, such as personal meals, home improvements, and vacations from 2005 to 2008. His son, Pedro Gautier Espada, was also charged. They used a for-profit janitorial company to siphon money from the organization.

Deliberations for the case took longer than expected. Jurors deadlocked on all counts against Pedro Gautier, as well as one theft charge and three conspiracy charges against Espada. Two jurors speaking outside the court said the panel was divided 9-3 for two weeks. Holdouts were apparently worried about an anti-Espada agenda. They were eventually convinced after further review of the evidence.

The case against Espada was first brought to light by now Gov. Andrew Cuomo when he was still serving as attorney general. He said in a statement that the state was working to ensure that patients at Soundview would receive proper care despite the loss of funds.

You can read the full story in Newsday.

The Top 10 Nonprofit Risks

Every nonprofit would love to avoid risk all together. Unfortunately, that is not the world in which we live. Risk is everywhere and, in order to survive it, you must be prepared.

The first step to developing a good risk management plan is to understand the kind of dangers you will be facing. At a recent Risk Management and Finance Summit for nonprofits, Melanie Lockwood Herman of the Nonprofit Risk Management Center discussed the top 10 risks that are faces by nonprofits. They are:

• Financial loss. To prevent this, it helps to have a well-trained, well-informed board.
• Exposures from social media use, misuse and naivete. Risk-management strategies include written guidelines for employees, volunteers and members and a point person to monitor social media.
• Incivility. Investigate complaints without delay and hold staff and volunteers accountable.
• IRS Form 990 and federal tax-exempt status. Losing that status is really easy.
• Copyrights and trademarks. Use the copyright symbol. Use work-for-hire agreements with contractors. Respect the work of others.
• Failure to limit a contracting authority and other common mistakes in contracting. Develop a simple policy, clarify who has authority to enter one and obtain legal review, before signing.
• Lack of synchronicity in board policy and practice. Look at policies. Do they need changing?
• Failure to understand and manage conflicts of interest. Make sure the policy is easily understood.
• Fraud. Understand the inherent risks and fraud schemes.
• Harm to reputation. Remember humility (admit mistakes) and speed (without delay).

Study: D.C. Nonprofits Could See Better Days This Year

Washington, D.C.-area nonprofits, which received fewer dollars in 2011, are bracing for better times this year, according to a new study by the Center for Nonprofit Advancement (CNA).

The study, as reported on by The Washington Post, showed that nearly half of the organizations surveyed report that their donors plan to maintain or increase contributions in 2012. This is in contrast to only 27 percent last year, and 15 percent in 2009. The CNA study canvassed nonprofits in D.C., Northern Virginia, and Montgomery and Prince George's counties in Maryland.

Another huge problem for D.C.-area organizations in 2011 was the amount of "rainy-day" reserves they had to use up as a result of the declined contributions. This practice appears to be fading in 2012, ad the CNA study found that the number of nonprofits dipping into reserves fell from 46 percent to 31 percent. In addition, organizations reporting a decline in revenue dropped from 48 percent to 40 percent.

Glen O'Glvie, CNA's chief executive, told The Washington Post that the reason for this comeback in giving appears to come from individual donors. He noted that it's much easier for one person to donate than for foundations and corporations. This notion appears to be validated because, as was reported in The NonProfit Times, corporate philanthropy is experiencing a sharp decline, according to a new study from the Council on Foundations.

Although the decline in donations seems to be slowing, CNA warns that it's not enough to quell the increasing demand for nonprofit services. 53 percent of respondents reported a higher demand for their services last year as a direct result of the economic downturn.

You can read the full story in The Washington Post.