6,000 Hoosier Non-Profits No Longer Tax Exempt

Our friends at Inside INdiana Business ran this release Tuesday, explaining how legislation passed in 2006 is now having a major impact on non-profits across the country:

The Internal Revenue Service today announced that approximately 275,000 organizations under the law have automatically lost their tax-exempt status because they did not file legally required annual reports for three consecutive years. The IRS believes the vast majority of these organizations are defunct, but it also announced special steps to help any existing organizations to apply for reinstatement of their tax-exempt status.

Congress passed the Pension Protection Act (PPA) in 2006, requiring most tax-exempt organizations to file an annual information return or notice with the IRS. For small organizations, the law imposed a filing requirement for the first time in 2007. In addition, the law automatically revokes the tax-exempt status of any organization that does not file required returns or notices for three consecutive years.

For several years, the IRS has made an extensive effort to inform organizations of the changes in the law through multiple outreach and education avenues, including mailing more than 1 million notices to organizations that had not filed. In addition, last year the IRS published a list of at-risk groups and gave smaller organizations an additional five months to file required notices and come into compliance. About 50,000 organizations filed during this extension period. Overall, the IRS believes the vast majority of small tax-exempt organizations are now in compliance with the 2006 law.

“During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file,” IRS Commissioner Doug Shulman said. “Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement. We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors.”

As part of this, the IRS issued guidance today on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. In addition, the IRS announced transition relief for certain small tax-exempt organizations – those with annual gross receipts of $50,000 or less for 2010 – that were made subject to the new "postcard" filing under the PPA. The relief allows eligible small organizations to regain their tax-exempt status retroactive to the date of revocation and pay a reduced application fee of $100 rather than the typical $400 or $850 fee. Full details are available in Notice 2011-43, Notice 2011-44 and Revenue Procedure 2011-36, issued today.

PR Pros to Offer Services Pro Bono

It’s refreshing to be able to slow down (that’s me, not the Indianapolis area firms doing a good deed in a 24-hour creative marathon) and recognize something positive taking place. Read below. Kudos to the communications pros and congrats to the nonprofits that will be the beneficiaries.

Top creative and account management teams from four of the best communication companies in Indianapolis will develop new creative campaigns on behalf of four deserving nonprofits during the first annual 24 Hours of Pro Bono creative marathon.

Designed to elevate the profile of creative agencies in Indianapolis while showcasing the amazing causes of central Indiana nonprofit organizations, 24 Hours of Pro Bono will put four AAF – Indianapolis firms to the test by challenging them to cultivate a creative concept in 24 hours.

The event will begin on Wednesday, Oct. 21 with a luncheon at the Indianapolis Central Library, where four nonprofit organizations will be revealed and randomly paired with four AAF – Indianapolis member firms.  Following the luncheon, each firm will commit its time and talent for the next 24 hours to develop a creative concept on behalf of its selected nonprofit.  The firms will present their creative materials in the auditorium of the Central Library at 6 p.m. on Oct. 22. Participating member firms are Caldwell VanRiper, Hirons & Company, Publicis and Westlake Design.

“Many worthy nonprofit organizations desperately need professional communications assistance to compete for local dollars to fulfill their missions,” said Tom Hirons, president of AAF Indianapolis. “AAF creative firms will assist these underserved and budget-challenged nonprofit organizations to more effectively increase awareness and communication.”

The cost to attend the presentations and the cocktail reception is $10 for AAF members and $35 for nonmembers. Members of the news media are invited to watch the agencies in action on Wednesday and Thursday, and are welcome to attend the presentations free of charge.

Learn more here.

CEO: What Poker Taught Me About Non-Profits

Nancy Lublin, CEO of Do Something, wrote an interesting piece recently for Fast Company magazine about what she learned years ago in poker rooms, and how it’s helped her run a not-for-profit:

You’ve got to know when to hold ’em … Every poker hand is like a fund-raising pitch. Your first bet needs to be high enough to garner respect from the other players, but not so high that you scare them all away. It also can’t be so low that you make them think you’re desperate. And that first bet has less to do with your cards than with who’s at the table, where you’re seated (are you the first to bet? the last?), your reputation, and chutzpah. I’ve heard foundations say they ignore requests for under $100,000, but a first-time ask for $5 million won’t get a second look either. Every entrepreneur knows that chasing early funding is similar: What can you request with a straight face and still get a "yes"?

Know when to fold ’em … You should fold about 80% of the hands you’re dealt. That’s hard to do — you get itchy to play or you’re tempted to see if you can string something together. Dress for Success was once asked to provide suits for women seeking restraining orders in court. We wanted to help. We had the inventory. But our purpose was to support women looking for work. Our board debated it passionately and decided that we shouldn’t muddy our mission by getting involved in something complex that we didn’t fully understand. That slope would have been too slippery — we wanted to say yes, but we had to say no.

Know when to walk away. And know when to run. Sometimes you suffer a bad beat and you have to move on. In the office context, this is especially relevant to personnel. Firing an employee is never fun, especially if you hired the person. It’s like starting out with a nice pair in the hole. You’re starting strong, but it never gets better. The best thing is to just cut your losses quickly. If that new employee turns out to be a loser, better to fail fast.

This has been the hardest lesson for me: I fall in love with cards, and I fall in love with potential in employees. Do Something, my current not-for-profit, once hired a successful tech entrepreneur to be our CTO. He took a huge pay cut, which made us feel lucky to have him. He wanted to redesign our site. This was a bad use of our time and resources, but he kept arguing for it. I’d be crazy to ditch the genius, right? Wrong. He didn’t understand our priorities or our agenda. Delaying a decision to cut bait is expensive and affects your head. We finally let the guy go.

You never count your money when you’re sitting at the table. There’ll be time enough for counting when the deal is done. Don’t gloat. Even when you win a gigantic pot, you don’t want your benefactor to feel cheated — or stupid — because you want to play with her again. And counting your chips is distracting. Every second spent examining your own stack is a second you’re not using to suss out others’ cards and nerves. In the not-for-profit context, droning on about how much money you’ve brought in doesn’t help bring in more. Plus, it’s off-topic. Your goal is to build a more effective organization and reach your group’s goals, right? So communicate your strategy for change, not how much change you’ve got.