Nonprofits Resist Proposed IRS Rule

A proposed rule from the IRS has stirred up controversy in the world of philanthropy, raising concerns over an absence of donor privacy that could ultimately discourage major gifts.

The proposed rule would create an optional form for charities to report major gifts to the IRS, with the intention of shifting liability to nonprofits for full gift reporting for tax purposes. This – in theory – would lower the risk that individuals would miss out on tax deductions due to incomplete or improper tax filings.

During the official comment period, which ended on December 16, the nonprofit sector voiced strong opposition, particularly with regard to the provision requiring donors’ social security numbers.

This method of gift reporting, however, would be optional, a point reenforced by the IRS’ official explanation to the public, which stated that

any burden associated with the collection of information under the proposed regulations is minimized by the fact that donee reporting under the proposed regulations is optional on the part of any donee, including small entities. Donees need not use this donee reporting process and donors can continue to use the current CWA process…it is expected that donee reporting will be used in an extremely low percentage of cases.

Essentially, the proposed rule is meant to make things easier for lax donors. Up until now, the IRS has required that donors submit a “contemporaneous written acknowledgement” (CWA) – a gift receipt prepared by the receiving charity. Donors have, on occasion, missed out on tax deductions due to improper filings of CWAs or because they simply lost the receipt for their gift.

Critics of the proposed rule expressed concern over the increased legal liability thrown unto nonprofits, as well as the potential for the optional rule becoming the de facto standard for reporting. If this were to happen, higher volumes of official correspondence between nonprofit charities and the IRS would include donors’ social security numbers, consequently increasing the risk of identity theft – a potential deterrent for donors making gifts.

The likelihood of implementation is minimal. There is virtually no public demand for the option – meant to provide alternate means of reporting to tax payers. Furthermore, the opposition has gained momentum, most clearly evidenced by proposed legislation from Sen. Pat Roberts (R-Kansas) that would block the proposed rule.

Key Elements Group LLC will report on the final outcome of the debate.

Changing Business Climate Favors Philanthropy

(A new trend in pre-IPO charity could be a game changer)

This year, Key Elements Group LLC looked at a new style of corporate culture sweeping the business world that may change how we define for- and non-profit organizations.

Kickstarter – the popular crowdfunding website that has catapulted to world renown over the past five years – announced in September that it was registering as a “Public Benefit Corporation,” a unique and relatively new category of business charter that requires companies to allocate large percentages of their profits to support social causes and to adhere to pro-social standards of business, including rigorous environmental standards.

The company’s CEOs follow the footsteps of institutions including Patagonia and Rasmussen Colleges, which trailblazed the field of Public Benefit Corporations. B-Lab, an independent third-party organization based outside of Philadelphia, PA, has helped set standards for these next-gen businesses dedicated to the pursuit of the social good.

As research emerges showing the philanthropic spirit of millennials and their desire to contribute their skills and work time to the public good, it has become increasingly evident that philanthropy in the workplace is taking on greater importance.

A recent development further confirms this trend. Venture capital companies – long reluctant to embrace philanthropy in the nascent stages of business development – are now directing funds pre-Initial Public Offering (IPO) to philanthropic and nonprofit initiatives. In what may be a first for businesses of its kind, venture-capital firm Fyrfly announced that it would start a foundation.

On its website, the company acknowledges the unique landscape facing business leaders going into 2016, as well as the pro-social spirit guiding millennial employees:

Corporate philanthropy is not an outlandish concept anymore. The Millennial generation has brought about a shift in economic values. They buy from brands they respect; they want to work for companies that put people over profit; they think deeply about the ethical ramifications of their lifestyle choices. Millennials are reshaping the purpose and responsibilities of corporations.

This is bold language for a budding firm, yet – in this day and age – it may give the company a competitive advantage. Millennial talent will go toward institutions that reflect and foster their values and passions. Furthermore, costumers increasingly care about the impact their spending has on the world. If businesses position themselves as social good leaders from the get-go, consumers will place greater trust in their brand identity. By diving headfirst into philanthropy pre-IPO, soon-to-be successful businesses may very well set the new standard for how companies are organized.

And, if Fyrfly’s move becomes the new normal, the potential effects on philanthropy are gargantuan. The foundation commitment will only pay off if the venture firm succeeds, but the windfall could herald unseen amounts of money going toward nonprofit groups. In the first three-quarters of 2015, venture capital amounted to $47.2 billion. In a business climate in which vast quantities of these funds are allocated for the social good, just a small portion of these monies would make a profound impact on the resource pool available for philanthropic organizations.

These are exciting times for both nonprofits and private companies in which it is never too early to give back. Now, it’s also never too early to start forging relationships that will lead to mutual success in the long-run.

UN Reps. Decry State of Gender Equality in US

A visit to the United States by three UN representatives has cast a gloomy picture of gender equality in the wealthy nation, highlighting a number of issues in which the global super power lags behind the rest of the world with regard to women’s rights.

Featuring human rights experts from Poland, the United Kingdom, and Costa Rica, the delegation visited three U.S. states in the lead up to a larger report. The team was not impressed, citing a number of economic and health issues that need urgent attention.

Looking at cultural attitudes and government policies, the UN representatives visited Alabama, Texas, and Oregon in order to assess a variety areas vital for women’s equality. According to Frances Raday – the representative from the United Kingdom – there is a widespread misconception of just how advanced the United States is in terms of human rights:  “So many people really believe that U.S. women are way better off with respect to rights than any woman in the world.”

She said they would exclaim, “What do you mean other people have paid maternity leave?”

Indeed, the absence of paid maternity leave is a hot-button issue, highlighted this year by the popular HBO comedian and cultural commentator John Oliver.

The United States embarrassingly joins only two other nations in the world in not guaranteeing workplace accommodation for women before, during, and after pregnancy.

But the delegates found a number of other problems as well, including women’s access to quality and essential healthcare services. In Alabama, the three were targeted when they visited an abortion clinic: “We were harassed. There were two vigilante men waiting to insult us,” said Raday, discussing verbal abuse dispensed by protesters at the clinic.

“It’s a kind of terrorism. To us, it was shocking,” added the Polish delegate Eleonora Zielinska.

Gender Pay Gap

Other areas of concern included the 23 percent pay gap between men and women, the treatment of female migrants in detention, and gun violence.

In the United States, women are 11 times more likely to die from gun violence than any other high-income nation.

They also remarked on the underrepresentation of women in government. In order to more equitably represent gender in government, the team suggested campaign finance reform, commenting on how the mega donors that dominate politics are primarily men funding other men.

In a separate move earlier this month, the UN working group on the discrimination of women lamented that the polarization of U.S. politics has prevented the nation from signing the International Convention on the Elimination of All Forms of Discrimination against Women.

These news stories are concerning. As the United States verbally supports women’s rights internationally, there are basic protections for the country’s female citizens missing.

Where political polarization and discord leave women exposed, nonprofits can fill the void. Passionate nonprofit professionals fight for women’s health care and representation in society every day, and require ongoing support until a more equitable society is secured that entitles all genders to just treatment.

Women’s Rights in Saudi Arabia

This month heralded a historic moment for women in Saudi Arabia. On December 12, women voted in municipal elections for the first time, and were permitted to run for office as well. Any sign of lessening restrictions is an absolute positive for social justice and equality, but the primary value is largely symbolic. Women won a mere 1 percent of municipal seats, which hold virtually no power within the dictatorial monarchist system in Saudi Arabia.

The gulf nation’s repressiveness extends to all corners of society. A 19-year old boy, arrested at the age of 15 for “being in the area of a protest,” is currently on death row. Due to be beheaded any day, his parents made an emotional plea to The Guardian for international intervention. According to a spokesperson from Reprieve, a nonprofit group working to prevent such gross instances of state violence, authorities often follow through with beheadings without informing family or lawyers.

Consider, too, that homosexuality is punishable by death, and the bigger obstacles for a freer and more just society emerge in full view.

Saudi women face some of the toughest restrictions in the world, subject to rigidly enforced social codes and the patriarchal control of husbands and fathers. They are not allowed to use swimming pools, interact with unrelated men without permission, or wear even modestly revealing clothes (many are forced to where an abaya and a head scarf). Only men have the right to unilaterally divorce their partner. And – while permitted to vote in this month’s elections – many women simply could not register to vote or participate on election day because they required a man to drive them (women still cannot legally drive) or their husbands and fathers simply disallowed them under the restrictive male guardianship system.

The last two decades have seen greater liberalization for women’s rights. Former Saudi King Abdullah carried out a number of measures designed to heighten women’s place in society, including key appointments of women to top government posts and the criminalization of domestic violence.

Some prominent voices in Saudi society are notably pro-equality, at least in comparison to the nation’s social norms. Saudi Prince Al-Waleed bin Talal – among the richest individuals in the world who also recently announced that he was giving away his $32 billion fortune to charity – employs more women then men and does not require female staffers to wear concealing clothing. Saudi NGO groups, such as the Association for the Protection and Defense of Women’s Rights, organizes on behalf of women’s rights.

But political dissent is exceedingly difficult in Saudi Arabia, apparent in the abundance of executions and arrests on flimsy and often dubious charges. Bottom up organizing for women’s rights organizations is thus hindered.

There are number of different causes that nonprofits can focus on in order to improve women’s standing in the world. While the Triangle Shirtwaist Factory Fire may seem like distant history in the United States, unsafe and lethal working conditions continue to exist around the world in workshops that produce items for the US market. More than 1,800 women have died, for example, in Bangladeshi factory fires since 2005.

Even in the developed West, women receive less pay on average then men. This injustice perpetuates precarious financial existences for women while further engendering a lesser valuation of their essential contributions to society. Additionally, women’s rights to family planning and the right to control their own bodies are virtually nonexistent in many parts of the globe, and often face unwarranted scrutiny and attack here in the United States.

Generally speaking, the world has come a long way. But as 2016 approaches, it would do well to reflect on these areas of neglect, and to support nonprofit organizations and philanthropies that work toward a greater gender equality. 

COP21: A Historic Deal With Imperfections

Following the conclusion of the Paris climate talks – also known as COP21 – one word in particular has been used to describe the final agreement: “historic.”

Delegates from 196 nations agreed upon a final draft this past Saturday, following marathon talks that lasted two weeks. The primary goal was to construct a united plan of action to prevent global temperatures from rising by 2° Celsius, and to lower the amount of greenhouse emissions to levels that the earth’s oceans and forests can absorb by 2050.

As part of the agreement, signatories must rollback fossil fuel emissions and promote clean energy. They must also report United Nations commission every 5 years regarding their progress. Ban Ki-moon – the secretary general for the United Nations – described the agreement as a “monumental success for the planet and its people.” 

A number of issues, however, remain.

In a concession that may hamper the plan’s long-term success – the actual reduction targets are voluntary, as the UN lacks the authority to guarantee compliance. In order to meet goals, nations will have to make scores of difficult choices. While many businesses have been enthusiastic about the deal and have expressed a desire to be a part of the solution, the fossil fuel industry will not disappear overnight. Indeed, the United States still offers generous tax subsidies for fossil fuels. At the end of the day, governments are going to have to step up redirect these resources for investment in renewable sources of energy. This will in part require the assistance and work of NGOs and other nonprofit institutions.

Bill Gates has proposed a public-private research and development program that would address this problem head-on, hastening the construction of new, efficient, and clean energy sources. By banding together global health organizations, NGOs, private businesses, and governments, such a program would pool together the activism, knowledge, and wherewithal necessary to accomplish this hefty task.

Another problem is the gulf between the capacities of rich nations and developing nations. For many countries in the West, fossil fuels were foundational for their current state of development. There is a distinct disadvantage for developing nations foregoing dirty energy sources. In a highly-touted victory for poorer nations, the climate deal in Paris included a $100 billion aid package from wealthier nations designed to boost developing nations’ ability to pursue reduction targets. The deal also included the promise of more funds in the future.

Despite this concession, the final deal was a disappointment to those baring the brunt of climate change’s immediate effects. According to Leisha Beardmore, the chief negotiator from Seychelles, the United States prevented representatives from vulnerable island nations from recognizing the irreparable damage already wrought by global warming. “The idea of even discussing loss and damage now or in the future was off limits. The Americans told us it would kill the COP,” Beardmore told The Guardian. This, in effect, sweeps the moral and financial responsibility for land degradation under the rug. The United States, coincidently, is one of the two top emitters of the green house gases that have imperiled these nations.

Evidently, there are loose-ends and imperfections. But for the first time, the world collectively acknowledged the threat of climate change, an immensely important step in the right direction. This will ultimately make it more difficult for critics outside of the mainstream who still decry global warming as a hoax. It also means that nonprofits, public health workers, and NGOs fighting for a more secure, greener future will have a lot more work on their hands.

Hanukkah, Nonprofits, and Year-End Giving,

Hanukkah kicked off on Sunday, December 6, presenting Jewish organizations the opportunity to fundraise for their important work during this festival of rededication and renewal.

Lasting through December 14, the festival comes on the heels of the most successful #GivingTuesday to date. On December 1, tens of thousands of nonprofits raised more than $115 million. Many of those organizations were faith-based nonprofits, including Jewish groups such as the The Associated: Jewish Community Federation of Baltimore, which raised $1 million with 150 callers on #GivingTuesday.

The very foundations of #GivingTuesday stem from the ingenious fundraising efforts of the 92nd Street Y in New York City, a Jewish community organization. The group founded #GivingTuesday in 2012, planting the seed that has grown into the wildly successful day of giving that now exists.

Some Jewish community leaders are using the start of Hanukkah to give back. Jewish Family Service in Seattle has provided basic need assistance for disadvantaged families and announced its charitable support for resettling Syrian refugees.

Leaders of Jewish nonprofits can help secure year-end gifts by using Hanukkah-themed communications, and in doing so reestablishing the strong cultural ties between donors, prospects, and the nonprofit institution in question.

#GivingTuesday 2015: A Roaring Success

For the fourth consecutive year, #GivingTuesday grew big-time. On December 1, donors from 71 countries stepped up and gave generously to tens of thousands of nonprofit organizations in what has certainly become an established annual day of charitable action during the holiday season.

Based on aggregate numbers from dozens of digital donation processors, participating nonprofits raised more than $115 million. The previous year’s total was around $46 million.

Blackbaud – the largest processor of online donations – waived regular administrative fees for the day, helping to optimize the impact of dollars raised. Nonprofits deployed a number of strategies to raise funds. Matching gifts – a very traditional strategy – have proven efficient in encouraging large volumes of small contributions on #GivingTuesday.

Although they did not attribute their announcement to #GivingTuesday 2015, Facebook Founder and CEO Mark Zuckerberg and his wife Priscilla Chan announced on December 1 that they would give away 99 percent of their Facebook company stock over their lifetime, amounting to $45 billion in charity. While the couple’s gargantuan gift has raised some concerns, some analysts credit the move as taking #GivingTuesday to the next level.

Success stories for this year abound. For the second year in a row, Seton Hall University has proven adept on this ascendent day of giving. Raising $34,000 during its inaugural year of #GivingTuesday participation in 2014, the school attracted more than $450,000 this year. Maryland nonprofits collectively raised more than $6 million.

In a truly astonishing display of fundraising prowess, the Sikh Coalition leveraged matching gifts to raise more than $127,000 to fuel its volunteer programs.

There are a number of fascinating details from this year’s #GivingTuesday that provide clues that will not only help nonprofits succeed next year, but will also help organizations take advantage of online donor trends anytime. The average gift for 2015 was $174.83, a 29 percent increase from the preceding year. Underscoring the importance of responsive website designs and cross-platform digital infrastructure, mobile giving accounted for 35 percent of this year’s donations, compared to 30 percent in 2015 and 24 percent in 2013. Additionally, in keeping with ongoing research on the philanthropic spirit of Generation Y, one-third of millennials were projected to participate in #GivingTuesday 2015.

Over the coming months, Key Elements Group LLC will provide ongoing coverage on the results and successes of #GivingTuesday 2015 as they emerge. Fundraising professionals would do well to follow these stories in order to begin constructing strategies for next year. If there is one thing that these early statistics and trends show, it is that #GivingTuesday is not only here to stay, but is also likely to become a foundational component to any successful year-end giving campaign.

Nonprofits, Sites of Gun Violence

The past week has been rough. Two mass shootings have left communities in Colorado and California torn asunder, and debate concerning gun violence the cause of these heinous acts has reached a new fever pitch.

In Colorado Springs, the single shooter involved in the incident expressed anger over the widely discredited anti-Planned Parenthood videos upon his arrest. “No more baby parts,” Robert Dear – the alleged shooter – told the arresting officers.

Reports out today indicate that Tashfeen Malik – one of the two suspects in the San Bernardino shooting – had pledged loyalty to ISIS, the murderous terror group responsible for the recent attacks in Paris and the bombing of a Russian commercial jet in Egypt.

Whatever the differences, there is one thing in common between the two shootings: both occurred at nonprofit centers that offer social services. While the target of the San Bernardino shooting was a holiday party for county officials, the building it took place in also houses welfare offices that assist people with disabilities. The target in Colorado was Planned Parenthood, which offers a variety of medical services to disadvantaged women.

Following the Colorado shooting, people rallied around Planned Parenthood on social media and reaffirmed their support for women’s health. But there could be other unforeseen consequences from these events. As mass public shootings enter various spheres of our nation’s rich social life, feelings of insecurity may grow. Nonprofit professionals and and the beneficiaries of basic needs assistance don’t need this fear. What they need is more support.

Acts of terror cannot win out over the philanthropy inherent to the human spirit. The boldest way to stand-up against this violence is to stand in the name of humanity, equality, and good will.

Zuckerberg’s Big Gift

In an astonishing philanthropic gesture, Facebook Founder and CEO Mark Zuckerberg announced – along with his wife Priscilla Chan – that the two billionaires will give away 99 percent of their company stocks over their lifetimes. This amounts to $45 billion in charity.

The tech leader had already contributed significant sums of his vast wealth to issues ranging from education to combatting the ebola outbreak in Africa. Socially minded CEOs and business leaders have forged a new identity, pressuring other successful and well-off individuals to follow their philanthropic paths. As Bill Gates stated in a speech at Harvard, “From those to whom much is given, much is expected.”

Billionaires such as Gates, Warren Buffett, and George Soros have donated large sums to a variety of causes and nonprofit enterprises. This generosity is essential for the day-to-day operations of a number of institutions working to close the achievement gaps in US schools, protect the civil liberties of disenfranchised people, and improve health conditions around the globe. Now, Zuckerberg has raised the bar even higher, opting to dedicate his immense wealth in the name of his newly born daughter rather than retain it for her inheritance. This generosity is real and should be applauded.

But there are concerns about the nature of these massive gifts, and what they mean for democracy, philanthropy, and the prioritization of social causes over others.

Massive gifts such as Zuckerberg’s deprive the government of a vast pool of taxable resources. The money will go into a newly formed entity known as The Chan Zuckerberg Initiative, which will be able to invest and grow its endowment without the application of the capital gains tax that Zuckerberg’s wealth would have otherwise received.

Ultimately, this sequesters an incredible sum of money permanently from government taxation, contributing further to the government’s debt and inability to secure stable sources of revenue. Factor in the tax credits that the couple will receive on future earnings, and the US taxpayer is left subsidizing Zuckerberg’s philanthropic priorities. And, as we’ve seen in the past, a single billionaire’s priorities do not necessarily entail successful philanthropy. Zuckerberg, for example, contributed $100 million to a controversial attempt to reform the Newark, New Jersey public school system. While still ongoing, the program is considered a failure.

Furthermore, The Chan Zuckerberg Initiative will not be set up as a charity, but as a Limited Liability Corporation. This increasingly common practice is fully legal, as long as the entity in question is dedicated to charity. But unlike nonprofit filings, this status permits an unparalleled degree of secrecy and greater leeway for making endowment investments, leading critics to decry the lack of disclosure behind such organizations. Additionally, these organizations can legally pay for political advertisements, consequently increasing the individual policy sway that Zuckerberg commands.

These criticisms aside, Chan and Zuckerberg’s largesse provides a powerful example to other successful individuals. Rather than ostentatious expenditures and limitless luxury, the two have instead chosen a pro-social application of their wealth. To whatever ultimate degree, this charity will certainly change lives.

Philanthropy and COP21

Labeled an “act of defiance” by U.S. President Barack Obama, the UN climate change talks in Paris commenced November 30 despite ongoing security concerns in the wake of the recent terrorist attacks in France’s capital. While proceeding with the conference certainly displays a degree of fortitude in the face of extremist terror, the import of the talks stems from another dangerous security threat – that of irreversible climate change.

Leaders from 190 nations are gathered for the two week conference – also known as COP21 – which aims to nail down pledges from each participating country to cut carbon emissions in order to avert the global catastrophe of temperatures rising by more than 2°C. Some scientists, however, remain skeptical that any action emerging from COP21 will be enough.

A U.K.-based organization called Carbon Brief offers a helpful list of known pledges. To name a few:

  • The EU pledges to cut emissions by 40 percent compared to the 1990 level by 2030
  • The United States pledges to cut emissions by 28 percent compared to the 2005 level by 2025
  • Russia pledges to cut emissions by 25 to 30 percent relative to its 1990 baseline by an undisclosed benchmark

Whatever the finalized pledges may be at the end of the summit, there will be no enforcement apparatus to ensure that nations follow through with their commitments. A UN panel will monitor nations’ progress, but will possess little power to discipline or alter the course of nations acting in bad faith.

Environmental nonprofits will be on scene in Paris to make their case for bold action on behalf of climate justice. is sponsoring an event lobbying for divestment from fossil fuels – a hot topic in the world of philanthropy. Proponents of the strategy hold that by removing valuable foundation assets and other institutional investments from polluting industries, philanthropists and everyday professionals can hasten the elimination of dirty energy – an end that economists say is ultimately inevitable anyway.

In a previous piece, Key Elements Group LLC explored the ongoing campaign cosponsored by and The Guardian to encourage The Gates Foundation and The Wellcome Trust to divest from fossil fuels. In response to the campaign, Bill Gates dismissed the merits of divestment, a stance he has since reiterated in the lead-up to the summit in France. Instead, Gates champions a carbon tax.

According to proponents, a carbon tax – long favored by economists – would simultaneously deincentivize burning fossil fuels while generating the resources necessary to develop alternative forms of energy. Marrying government, the private sector, and nonprofit intermediaries, this strategy would also involve contributions to nations that face a disadvantage further developing without the fossil fuel expenditure that enabled developed nations to reach their advanced state.

The debate may present a false binary; the two strategies together would probably be more effective than either one in isolation.

The fact that all major players – including the United States and China – are at the table is a step in the right direction. The consensus on the risks of climate change is now more established than ever, and the governmental will on display in Paris is welcome. Nonprofit professionals and advocates for the social good, however, still need to keep pushing the envelope in order to win a more secure future for the earth’s inhabitants.

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