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Beyond “Will not!” “Will so!”

October 27, 2011

Kudos to the Nonprofiteer’s nonprofit consulting colleagues Campbell and Co. for sponsoring a study by the Indiana University Center on Philanthropy to determine the impact on giving of increased marginal tax rates and a cap the charitable-giving deduction.  While some of us have been arguing that both of these moves toward social justice should be supported by the nonprofit community, and others have been arguing that the world will come to an end if every penny of tax savings isn’t afforded to the generous rich, these institutions decided to look for the facts.

The facts–as elegantly stated in a Congressional Research Service study that came to the same conclusion–are these:

The estimated effects of the cap and other elements of the budget package depend on whether the proposals are compared with the current tax rates of 33% and 35% or the rates scheduled for 2011, 36% and 39.6%. Compared with current rules, estimated effects are between one-half a percent and 1% decline in charitable giving . . . . When compared with tax rate provisions in 2011, charitable deductions are estimated to fall by about 1.5% if only the cap is considered, but if income effects from the entire budget package are included contributions actually rise 2.5%.  The relatively modest effects of the proposal arise because (1) the effect of caps on the subsidy value is limited, (2) only a fraction (about 16%) of charitable giving is affected, and (3) because evidence suggests that behavioral responses to changes in subsidies are relatively small.

(Emphasis the Nonprofiteer’s.)  To paraphrase: the tax subsidy isn’t much reduced; that small reduction doesn’t affect 84% of charitable giving; and, in fact, charitable giving isn’t all that tied to tax benefit.

So whether we take the IUPUI findings that charitable giving is likely to decline modestly if these tax reforms are enacted, or the CRS findings that it might actually go up, we should realize that everyone who’s hyperventilating about the impact of these changes on their poor struggling private school, museum or hospital should just take a deep breath.   Given that the reforms will support many of the social programs, environmental protections, educational institutions and health care options the nonprofits themselves seek to provide, it’s about time for the community to stop whining and agree to pony up.

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Posted in Advocacy, Arts Organizations, Coverage of nonprofits, Current Affairs, Disease charities, Education, Environmental, Finances, Fundraising, Health care, Higher education, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Social Service Agencies | Leave a Comment »

On Wisconsin! Part II*

August 9, 2011

Boy, this guy is the gift that just keeps on giving:  Wisconsin Governor Scott Walker, not content to interfere with the provision of public services by destroying public-sector unions, has now decided to refuse to sign off on nonprofit grant applications to the Federal government that might “lead to ongoing programs that would need money from state taxpayers later.”   The first wave of grant applications deprived of the state’s endorsement would have supported health services, including programs to reduce binge drinking, an unhealthy activity in which Wisconsin leads the nation.

The hard Right has long argued that government services were unnecessary because nonprofits could step into the breach.  This claim was always nonsense; but at least its exponents didn’t also take on themselves the task of interfering with the charities’ overwhelmed attempts to do so.  Wisconsinites will pay the same Federal taxes whether or not the state receives Federal grants to support its nonprofit sector.  So clearly the point is not to shelter the state’s citizens from confiscatory taxes but to punish people who need help.   Governor Walker’s ideology apparently requires not just that people in need of assistance seek private charity but that private charity be deprived of the means of assisting them.

And let’s be clear about the legal antecedents of what’s going on here.  Groups of citizens of a single state are being deprived of access to something available to all other citizens of the United States—just as groups of citizens of the states of the Old Confederacy were once deprived of the vote.   Then, “states’ rights” was a buzz-phrase meaning “the opportunity to mistreat black people without interference from those durned Feds.”   Now, in Governor Walker’s view, the phrase is even more expansive, meaning “the opportunity to mistreat unhealthy and/or poor  people of every color to make the point that those durned Feds have no right to interfere.”   Anyone who’s enthusiastic about the states’ rights claims in the governors’ lawsuit against the Affordable Care Act should check out Wisconsin for a foretaste of what states’ rights really mean to the rights of states’ citizens.

The good news is, the Voting Rights Act of 1965 made clear that states’ rights are trumped by citizens’ right to vote.  Thus—and despite many recent efforts to enact barriers to that right–-there’s a reasonable chance that Governor Walker will lose his legislative majority in the next few weeks, whereupon the appropriate state-federal balance can be restored.

Or, should I say, the Constitution can be restored.

——————

On Wisconsin! Part I appears here.

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Posted in Current Affairs, Disease charities, Finances, Fundraising, Government grants, Health care, Mission, Nonprofit management, Nonprofits--General, Poverty, Public private partnerships, Racism, Social Service Agencies | 2 Comments »

Charity begins at home—and that means taxes

July 13, 2011

About a month ago the Nonprofiteer received a note from a public relations officer at the Jewish Federations of North America describing the Federations’ opposition to placing caps on tax deductions.  Being well aware that the debt ceiling negotiations are completely out of her control (and probably out of anyone’s control at this point), this letter failed to move the Nonprofiteer to leap to her telephone and urge her Congressbeing to beat back this latest assault on the nonprofit sector.

But it wasn’t mere laziness that kept her from the front lines in this particular battle; it was actual disagreement, based on the letter’s own summary of the horrifying proposal:

Specifically, the Administration has proposed limiting tax benefits for charitable contributions for those earning over $250,000 (married) or $200,000 (single). The tax benefit of all itemized deductions, including charitable contributions, would be capped at 28 percent and the Jewish Federations want the charitable portion to be exempted.

Thus, an extremely modest proposal for assuring that the wealthiest citizens pay some additional portion of our shared tax burden is considered a threat to the health and well-being of the hundreds of thousands of people served by the Jewish Federations.  This, despite the fact that deductibility’s impact on giving is far from clear.

Listen up, gang.   You want to see a threat to health and well-being?  How about cuts in Medicaid, in Medicare, in the Affordable Care Act, in Social Security, in food stamps, in child care, in education?  The fundamental problem of the American economy is that we don’t pay enough in taxes to support the services we very reasonably demand.  We don’t pay nearly as much in taxes as our quite conservative neighbors to the north, or our counterparts in Europe or Japan.  So we don’t have the health care, the educational system or the family support services we need.

Even complete abolition of the charitable deduction wouldn’t make much of a dent in the shortfall we’ve created out of pure political cowardice and foolishness.  The deficit is not the result of social spending but of three simultaneous wars piled on multiple tax cuts.  So the hideous notion of a cap on deductions fails on the Willie Sutton basis: you don’t rob nonprofits because that’s not where the money is.

But.   If there were what Everett Dirksen called “real money” hidden in the charitable deduction for wealthy families, it absolutely should be subject to revision, for the same reason every other deduction and credit and tax dodge should: because those dodges enable the wealthy to pay less than their share, and because this society needs more money than poor people’s taxes provide to continue those services necessary for us to remain a member in good standing of the developed world.

The Jewish Federations’ objection to this proposal—while completely understandable from their perspective—suggests that even the nonprofit sector has become infected with the shortsighted quarter-to-quarter thinking which addles Wall Street.  Rather than consider the long-term good of the society they serve, the Federations are concerned about balancing next year’s budget.  And while the Nonprofiteer doesn’t blame them for that—that’s their job—you’ll pardon her if she sides with (and cites) a different giant of the American Jewish community, Samuel Goldwyn*:

“Include me out.”

———————–

*Per Wikipedia: “In 1916, Goldfish partnered with Broadway producers Edgar and Archibald Selwyn, using a combination of both names to call their movie-making enterprise the Goldwyn Pictures Corporation. Seeing an opportunity, Samuel Gelbfisz then had his name legally changed to Samuel Goldwyn, which he used for the rest of his life. “

Could this possibly be because the alternative combination of their names is Selfish?

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Posted in Advocacy, Coverage of nonprofits, Current Affairs, Finances, Fundraising, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Social Service Agencies | 5 Comments »

Tom Sawyer was wrong

June 2, 2011

This branch of Habitat for Humanity has chosen to charge volunteers for the privilege of helping out.

When the Nonprofiteer pointed out that volunteers give more readily to the agencies they serve than non-volunteers, she wasn’t advocating admission fees.   Volunteers may have paid to paint Tom Sawyer’s fence, but Twain’s point was that they were stupid.  Your volunteers aren’t.

Even if mandatory “contributions” (oxymoron watch!) weren’t offensive in suggesting that volunteers’ time has less than no value, they’re practically the definition of penny-wise and pound-foolish: people will pay what you require (or not) and then regard their giving to the agency as being done for the year.

Or forever.  Please stop this idea before it kills again.

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Posted in Benefit events, Charity scandals, Coverage of nonprofits, Current Affairs, Earned income, Finances, Fundraising, Housing, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Relations with funders, Social Service Agencies, Volunteers/Volunteerism | 4 Comments »

Dear Nonprofiteer, Victory on points?

April 22, 2011

Dear Nonprofiteer,

I recently saw an offer to serve on a non-profit board where there was a monetary donation requirement each year, but the amount could be substituted by service or other activities through the scale pasted below. Here’s the way they phrased it:

To ensure active participation, members earn points for financial contributions and volunteer service. We ask that a contribution of $250 be made in order to remain as an Associate Board member. You can, however, combine a cash donation of $100 with your fundraising and volunteer efforts by earning these points:

Sample Opportunities to Earn Points
Opportunity Points
Additional cash contribution of $50 50
Plan a Board Social or Fundraising Event 50
Serve in a leadership role 50
Secure $100 event sponsorship 15*
Represent [agency] at a public fair or presentation 15*
Sell a ticket to a fundraiser 10*

I was wondering, is this a common practice? I’m actually thinking about recommending it for another board where I’ve been asked to donate money.

Signed, Victor on Points or Technical Knock-Out?

Dear Knock-Out:

The Nonprofiteer knows that some larger organizations use this point system, but for smaller organizations she thinks the record-keeping and arguments about “what counts” are more trouble than they’re worth.  Obviously it depends on the size of the required contribution, but in general everyone on a Board should be expected to give AND participate, and in roughly equal measure.

This is expressed in a number of different formulations: Board members offer the three Ws (Work, Wealth and Wisdom) or are expected to provide the three Gs (Give, Get and Govern). Whichever initials you use, the point is the same: Board membership is not an either-or proposition but a yes-and one. The best way to assure fulfillment of these expectations is to adopt a clear statement of them for Board members, and go over that statement with every Board recruit. “Every Board member is expected to make a $500 contribution, and buy a ticket to the annual gala, and attend monthly Board meetings, and serve on a committee . . .”. That way, no one agrees to join the Board who isn’t prepared to do all those things.

People are fond of making exceptions to this in two cases: for Board members perceived to be significantly poorer than the rest of the group, and for those perceived to be significantly wealthier or better-connected than the rest.

In the first case, the Nonprofiteer’s advice is: don’t count the money in other people’s pockets. Poor people are more generous than rich people generally, and thus are often less upset by minimum Board gifts than their wealthier counterparts. If a rich Board member can just write a $500 check while a poorer one has to ask 10 friends for $50, well, that’s just another example of ways in which poor people have to work harder than rich people. And, as $500 per year is less than $10 per week, most working people—regardless of their assets—can afford it.

In the second case: if someone tells you s/he’s too busy to actually do anything but s/he’ll be glad to be on your Board, remember this motto: if they can’t do the time, they can’t do the crime. Someone willing only to lend his/her name and write a check should be placed on an Advisory Board (create one if you have to, or dub the person a “Special Advisor” and put him/her on the stationery), not on the Board of Directors. If you do put such a person on the Board proper, s/he will have all the legal responsibilities of Board members without being there to discharge them—a recipe for disaster and hard feelings, should the agency be socked with a bill for unpaid withholding taxes or a lawsuit from an injured client.

In short: the Board is a governance institution, and governance includes assuring that the agency has the resources it needs to fulfill its mission You shouldn’t have to negotiate with your governors about their tasks, which is what a point system suggests. Rather, they should be the ones setting their own goals and meeting them, and attracting others who will do the same.

And that’s the final reason not to use this point system: no one wants to serve on a Board of lazy people. Your group is more attractive to prospects if everyone’s revved up and ready to go on every possible front. You can find such people, provided you don’t declare defeat and stop looking.

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Posted in Benefit events, Boards of Directors, Finances, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Volunteers/Volunteerism | Leave a Comment »

“L3C” spells “caveat emptor”

March 17, 2011

Here’s something strange: a concept thrown around routinely and casually in conversations among nonprofits and philanthropies is simultaneously the subject of fierce debate and sometime disapproval by the Internal Revenue Service, a committee of the American Bar Association, and other experts. What is going on?

The notion of Low Profit Limited Liability Corporations (L3Cs, for short) is that they’re a vehicle for doing well by doing good and therefore an improvement over the typical nonprofit structure. L3Cs are permitted to earn profits but proponents claim that their praiseworthy intentions—to end hunger or provide clean water or whatever—make those who lend to them eligible for the special tax benefits attached to program-related investments. In other words, this is a legal structure presented as a technique for gaining access to capital (always a struggle for nonprofits) by providing a tax benefit to lenders.

Of course, foundations already get a tax benefit for program-related investments in regular nonprofits, so what, exactly, is the appeal? In theory, foundations might be more interested in program-related investments that generate a reliable flow of capital (in the form of profit) than in program-related investments that generate nothing but additional nonprofit programs and services. Likewise in theory, regular venture capitalists outside of foundations will be more interested in making investments in profit-making entities than in pure nonprofits. This—the notion goes—will increase the amount of capital available to support general good-guy behavior.

However, a number of scholars and lawyers (Daniel Kleinberger of William Mitchell College of Law prominent among them) see the L3C as, at best, redundant and, at worst, an invitation to fraud. They point out that regular limited liability corporations can be organized for any purpose, including public-spirited and low-profit ones. They point out that the IRS has not yet issued (and does not seemed inclined to create) a rule awarding automatic program-related investment status to any investment in an L3C. So anyone who invests in an L3C on the basis that it provides a higher return than a regular nonprofit with the same tax benefits will find out to his/her sorrow that this is not the case.

What strikes the Nonprofiteer as peculiar, though, is that in the many discussions she’s heard and read about L3Cs, only one mention (specifically, Professor Kleinberger’s Nonprofit Quarterly article) has ever surfaced of this opposition from the bar and Federal regulators.  Not until her tax lawyer Stuart Levine asked about the [successful] efforts in Illinois to create L3Cs did she realize there was anything controversial about the phenomenon.  After bringing her up to speed Levine wisely said,

L3C’s don’t work unless there is a change in federal tax law.  In other words, L3C’s are a little like Oreo-Tycin-Myacin—the wonder drug for which there is no known disease.

L3C’s raise difficult issues of fiduciary duty and the inherent conflict between “charitable” purposes and “business” purposes.  At the least, these conflicts cannot be dealt with via a quick-fix state statute.

Doubtless the Nonprofiteer spaces out on frequent occasions and misses aspects of what’s said or done in the sector.  But she suspects there’s also a disconnect between what nonprofit executives and L3C promoters expect and describe and what lawyers and regulators understand.

So if you’re considering investment in an L3C, be the aware buyer of whom you’ve heard.

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Posted in Coverage of nonprofits, Current Affairs, Earned income, Executive Directors, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Investment, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders, Social enterprise | 8 Comments »

Dear Nonprofiteer, For whose benefit, exactly?

February 9, 2011

Dear Nonprofiteer,

I have an ethical dilemma that I need help sorting out. I’m really bothered by this and I want to know 1. if I am seeing this from the wrong perspective and 2. what you would advise doing.

I am a wardrobe stylist and I make custom dress shirts & suits. Fairly often, when approached, I donate gift certificates for custom shirts to silent auctions, which raise a nice amount of money for fund-raising organizations.

Here is the issue: In the Fall of 2009, I donated a gift certificate to a well-known organization that runs after-school and extra-curricular programs for children. I was told that the gift certificate was for the silent auction that coincided with an annual fund-raising event. Obviously, I was told proceeds from this event & auction would go to support the local children’s organization.

Last week, I got a call from the former President of the Board of Directors of this organization. He was really excited to finally have his custom shirts made. The organization had given a gift certificate to him while he was on the board, as a thank you gift for his service.

I was a little fuzzy on the gift certificate details, had completely forgotten that I had donated a certificate to the auction, and couldn’t remember anyone buying a gift certificate as a gift…but went the next day to fit him and thought it would all be clear once I saw the certificate.

I only realized at the end of the 60 minute appointment that HIS gift certificate was the one I had DONATED to raise money for THE KIDS and the facility. It apparently was not auctioned off at all, but was given to a Board member as a gift! (Now, it might not have had any bidders in the auction, but this is sort of unlikely, has never happened yet.)

So now I am out-of-pocket, a lot, for a board member’s gift, as opposed to the organization buying something for him (which is tax-deductible for them!) This is a $700 retail value gift. I feel deceived—this money was for kids, not the board president.

Thoughts? Advice? I’ve heard both sides. Someone from non-profit told me I was stuck, that it was perfectly legal & someone else said that I am not accountable to fulfill this certificate.

I would really appreciate your experience/thoughts on this matter.

Signed, Tailor-Made

Dear Tailor:

1) You are not seeing this from the wrong perspective.
2) But it’s hard to know what to do.

There’s no question about it: if you donated a gift certificate to be auctioned off for the benefit of the agency, you wuz robbed if instead it was used instead as a personal gift to an agency Board member. Nonprofit Board members aren’t supposed to be compensated for their services, though they may be recognized: I would argue that a $700 gift starts to sound more like the former than the latter. (I’m presuming the agency knows the value of the certificate.)

You’re not actually stuck: no one can make you make these shirts, and neither agency nor Board member would be likely to sue you to secure them (or equivalent reimbursement). But you have a business reputation to protect, and so the question is which will cost the least to you: telling the Board member you can’t honor the certificate because it’s not being redeemed according to its terms, or telling the agency you want to be reimbursed for their misuse of your gift.

It’s a matter of strategy: if the Board member is likely to become a regular customer, you’d rather not piss him off by refusing to honor the certificate. (Obviously you can only guess about that, but you’re a savvy person: your guess is probably correct.) If you’re likely never to see him again, then say you CAN’T (not you won’t) honor the certificate because its terms called for it to be auctioned, not given away. If he protests that no such “terms” appear on the face of the certificate, explain that those were your arrangements with the agency, and advise him to return to the agency and explain that its gift is unredeemable. You can say or merely imply that what the agency did was exactly like passing counterfeit money: giving him something valueless while pretending it was valuable. Smile when you say all this, but say it and repeat it as often as necessary to get the guy out of your shop.

If, however, he’s a likely future customer, then your only choice is to go to the agency and tell them what you’ve told the Nonprofiteer: that you were told the certificate was to be auctioned off for the benefit of the agency and it wasn’t; that you were willing to donate to the agency but not to its individual Board members; and that you’d like to be reimbursed for the $700 value of your misused gift. If you want to sound lawyerly (which is all the Nonprofiteer got out of her three years in law school), say that you won’t take the $700 out of the hide of the Board member because he’s an innocent “holder in due course,” that is, someone who was given something worthless while believing in good faith that it had worth. Do all this in person with the Executive Director, and then (unless s/he hands you $700 on the spot) reiterate it in a letter to the entire Board.

Getting the $700 out of the agency won’t be easy: they know you’re as unlikely to sue them as they are to sue you. But if they fail to cooperate, do two things: include in the aforementioned letter a statement that you will never donate goods, services or money to the agency again; and include an express or implied intention to make the agency’s misdeed public. You can say, “and I intend to post this on my Facebook page,” or “and I intend to tell alll my business colleagues to do likewise [withhold support] or “I intend to mention this to my friend the New York Times reporter;” or you can simply say, “I know the agency’s reputation for uprightness and am sure you would not wish to have it stained by any accidental misuse of a donation,” and let them infer that the stain on its reputation will come from you.

If the agency offers you refund of half the price or more, take it and walk away. If not, make the shirts for the Board member and do them so brilliantly that he’ll be on your doorstep demanding more–for which you can overcharge him with a clear conscience.

What a shame you’ve had this experience–it seems to validate the old saying, “No good deed goes unpunished.” But plenty of other charities will use your gift correctly, so please try not to be embittered.

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Posted in Benefit events, Boards of Directors, Charity scandals, Fundraising, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders, Social Service Agencies | 10 Comments »

A delicate balance

January 27, 2011

If fundraising is concentric circles, as consultants often say (you ask your friends and then their friends and then their friends’ friends), then it seems to make the most sense to start asking right in the bosom of the family: from your staff and volunteers.  Indeed, this is what most nonprofit executives think of when they hear the phrase “Charity begins at home”!

But staff and volunteers are in quite different positions with respect to your organization, and so they can’t be treated alike in terms of asking for money.

Often agencies are afraid to ask their volunteers for money on the grounds that they’re already getting the volunteers’ time, and it would be greedy to ask for more.  But in fact no one is in a better position to appreciate the value of the work you do, or the scarcity of resources under which you labor, than a volunteer.  Further, though not all volunteers are privileged, they are at least people who have leisure time to donate, which suggests they’re not grindingly poor.  If your volunteers show up at the office with a cup of Starbuck’s in hand, consider what that represents: 1 Venti/day@$2.50 x 5 days/week x 52 weeks/year = $650.  So they’re probably spending more on coffee than you’d think of mentioning in an initial ask.

Will any volunteers take umbrage at being asked to give money as well as time?  Sure; a certain percentage of the population finds discussion of money distasteful and crude, and such people may well be represented in your volunteer corps.  But you’re not any poorer for asking them, and there’s very little reason to think they’d stop volunteering at an activity they enjoy because you asked them a question to which the answer was “no.”

Don’t extend this blithe attitude, though, to asking your volunteers to ask for money.  Direct-service volunteers are apt to be offended if they’re asked to do other kinds of volunteer work, such as fundraising, because the request suggests that they’re not already working hard enough.  You understand the difference between time and money, and your need for both; your volunteers are equally sophisticated.  So ask them for money, not for more time.

Staff members are a different issue.  People who work in nonprofit agencies are already donating enormous sums to the agency, in the form of foregone income–-the money they could be making working in the for-profit sector.  In this sense they are almost certainly the top donors to the agencies at which they work.

The Nonprofiteer took a nonprofit executive job for half the salary she had been earning as a practicing lawyer—a not inconsiderable sacrifice, though one she was glad to make.  But when members of the Board suggested that she also write a check to the agency, her attitude was, “The very second the Board gives $25,000 a year to the agency–-collectively, let alone individually!—it will have the right to come back and ask for something more than the $25,000 worth of lost wages I’m already giving.”

To be fair, hers is a minority view.  Many agencies regard staff donations as some sort of measure of staff commitment to the agency.   But staff members indicate commitment every day through the work they do, the salaries they accept, the health insurance they lack.  At some agencies they even demonstrate their commitment by working overtime for which they don’t get paid—and by not ratting out their employers to the U.S. Department of Labor or the state agency charged with regulating wages, hours and working conditions.  The fact that our agencies do socially valuable work doesn’t entitle us to exploit our laborers, though of course for many years nonprofits have survived their lack of financial capital by consuming human capital instead.

So don’t ask your staff for money, and do ask your volunteers.  Maybe they’ll donate enough to make it possible for you to offer the staff health insurance, or paid sick leave, or even a raise.

Well, one can dream, anyway.

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Posted in Boards of Directors, Executive Directors, Fundraising, Management Advice Day tip, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Relations with funders, Social Service Agencies, Volunteers/Volunteerism | 7 Comments »

The rich get richer, once more

January 19, 2011

Take a look at this piece from the Chronicle of Higher Education documenting the important role of legacy preferences—admissions boosts to the children of alumni—in college acceptance rates.  It raises the question, as our colleague Rick Cohen puts it at the Nonprofit Quarterly, “why tax preferred institutions of higher education in many cases get to use their tax-exempt status to serve children of immense wealth and privilege.”

This is the real issue embedded in another question frequently asked: “Why do well-endowed universities get tax breaks?”   The answer to that can easily be “because education is a public good,” but if that good is available disproportionately to a tiny subset of the public then the entire edifice of tax protection for elite institutions starts to crumble.

Legacy preferences are regularly justified on the grounds that they’re necessary to assure alumni loyalty and therefore alumni financial support.  As the Chronicle article documents, the evidence for this is ambiguous at best.  But even if it were true, it’s not clear why the convenience of fundraising officers should trump society’s legitimate questions about how it’s allocating scarce benefits among competing groups of beneficiaries.  And as long as universities receive tax breaks, it is the broader society that’s doing the allocating and has the right to ask the question.

And here’s another question we have a right to ask: why is affirmative action a problem when it benefits poor people and minorities but not when it benefits wealthy white people?  “Legacy preferences” is, after all, a euphemism for making sure that thems that has, gits—and gits more.

Most colleges and universities these days would regard it as an ethical violation to accept tobacco money, or porn money.   Why should their ethical standards tolerate accepting privilege money—which means, essentially, accepting a bribe?  It makes little sense for the source of money to be evaluated for purity while its purpose goes unquestioned.

As an ex-admissions officer, the Nonprofiteer is more familiar with legacy preferences than she ever wanted to be, and she can assure her readers that merely being the child of an alumnus is not a bona fide occupational qualification.   Plenty of successful alumni have no-’count kids—hence the old saw about “shirtsleeves to shirtsleeves in three generations.”  Nor does it matter that the practice is long-established.  Ivy League colleges had a long-established practice of coordinating their scholarship packages (to keep students from choosing among them on the basis of cost), until someone read and implemented the antitrust laws.  The sky didn’t fall as a result of that change, and it won’t as a result of this one.

Of all the ways in which universities violate the spirit if not the letter of the laws granting them tax advantages (from running semi-professional sports teams to serving as research arms of the military), legacy preferences are perhaps the most damaging.  Every legacy preference helps perpetuate a system of inequality.  Every legacy preference deprives someone better-qualified of an opportunity s/he’s earned.  What’s more, the howls of protest that go up when that accusation is leveled at some other system of preference are nowhere to be heard.

If institutions of higher learning want to maintain their tax-favored status, they should abolish legacy preferences.  If they don’t—if they go on practicing white people’s affirmative action—they deserve to be knocked off the comfortable perch on which they now sit.

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Posted in Coverage of nonprofits, Current Affairs, Education, Fundraising, Higher education, Mission, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy, Racism | 7 Comments »

Dear Nonprofiteer, How can we reduce the effort of acknowledging event-based donations?

January 6, 2011

Dear Nonprofiteer,

I have been a long time reader, and appreciate your blog tremendously!

I have a question, and if you choose to publish it, I would prefer to remain anonymous.

My organization is the fundraising agent for a couple of state funded organizations (the state only funds salaries & utilities—and the foundation I work for was founded a long time ago to raise funds for educational programs, content, etc.).  Recently, as a means to save ourselves ample amounts of time, energy, and overhead in administration, we began contracting with another local NPO that is first and foremost a performing arts space, but also the most comprehensive ticketing agent in our town.  This has become vastly beneficial because our own staff is so limited that we just don’t have the time and support staff to administer ticketing for ALL of the events for ALL of the organizations we support.  This saves us a great amount of time prior to these events, but we still have to process funds transferred to us from the ticketing agent post-event, and then send letters for any tax deductible value to the patrons.

So, here’s the question that has arisen in our office—can we just put something on the ticket itself that states the tax deductible value of the ticket to save ourselves from having to also send letters? Or, is it just best practice to send those letters post event to the event patrons?

Signed, Overwhelmed and Understaffed

Dear Overwhelmed:

Without being sure of the details, the Nonprofiteer recalls that actually tearing tickets is considered best practice in the management of for-profit events as a protection against employee theft of proceeds: the stubs are compared to the sales numbers and everything has to balance out at the event’s conclusion.  So it seems like a mistake to put the tax receipt or other acknowledgment on the ticket itself, when you’re going to want to physically retrieve at least part of it.

Of course, it’s possible to print a detachable ticket stub and leave that in the hands of the donor, and that stub could contain the necessary language for tax purposes.  (“Ticket price: X.  Tax-deductible value: X minus value of event’s benefit to patron.  Helping [nonprofit's] clients: Priceless.”)  And if you’re using electronic tickets, which can be scanned and then returned in full to the patron, that same language can appear anywhere on the ticket’s face.

But the Nonprofiteer is a little puzzled about your role in the process.  Given that you’ve transferred ticket-processing to another nonprofit, why not transfer the entire fiscal agency to that nonprofit?  Does being the fiscal agent confer some other benefit on your foundation?  If not, it may be that a relationship that once made sense no longer does, now that the agencies you’re shepherding have become so active in their event-based fundraising.

Even if your foundation needs to remain fiscal agent for the purposes of state contracts, it should be possible to transfer fiscal agency for events to the ticketing nonprofit.  In that case, the task of sending tax-receipt acknowledgment to the patrons would fall to it.

In either case, of course, the task of actually thanking the patrons falls to the nonprofit whose event it is.  If the Nonprofiteer understands the situation correctly, donors have no particular interest in you: by their attendance at events, they intend to benefit the nonprofits for which you’re the agent.  Therefore, they don’t want to hear acknowledgment from you—they want to hear it from the benefited agency.  That’s what’s priceless!

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Posted in Benefit events, Finances, Fundraising, Government grants, Management Advice Day tip, Nonprofit management, Nonprofits--General, Public private partnerships, Social Service Agencies | 3 Comments »

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