State and Federal Authorities Draft New Rules for Nonprofits

Alarmed by reports of fraud, conflicts of interest, and bloated overhead, state and federal legislators are working to create new rules for charitable organizations,the New York Times reports.

On the federal level, the Internal Revenue Service has stepped up its enforcement of existing regulations, while recent corporate tax legislation has limited deductions on vehicles and intellectual property. The Senate Finance Committee also is exploring a number of regulatory reforms for the sector but is waiting for input from a panel of experts convened by Independent Sector, a coalition of nonprofits, foundations, and corporate philanthropy programs, before making any final decisions. The panel's report will be presented to the committee in early 2005.

Measures being considered by the committee include the introduction of periodic reviews of nonprofit organizations' tax-exempt status; including charities within the scope of the self-dealing rules that currently apply to foundations only; broadening the scope of the financial documents available to the public and requiring independent audits of financial statements for organizations with more than $250,000 in annual receipts; and changing Form 990, which nonprofits must file annually with the IRS. The proposed legislation's most far-reaching provisions, however, would impose specific fiduciary duties on board members and give the IRS authority to seek the removal of board members or officers who violate the rules.
According to William Josephson, former assistant attorney general at the New York State Charities Bureau, the legislation being considered "addresses a very comprehensive catalog of concerns about deficiencies in the philanthropic regulatory scheme at the federal level." But Florence Green, executive director of the California Association of Nonprofits, told the Times that the public would best be served by enforcement of current laws and regulations. "Attorneys general and the IRS already have broad powers to investigate, prosecute, and sue nonprofits," added Green.

Stamler, Bernard. "After a Spate of Scandals, a Debate
on New Rules." New York Times 11/15/04

Update:
The new IRS rules for property donations that were reported by the MountainCryer last month have been signed into law and will take effect on January 1, 2005. These rules apply to the type of deductions that can be taken for tangible personal property, most especially relating to the donation of automobiles. To safeguard your donors, make sure that their take the following items into consideration.
* Calculate Fair Market Value for the donation.
* Itemize their deductions.
* Deduct only the fair market value.
* Complete IRS documentation.
Contact the IRS at 1-800-829-1040 or online at www.irs.gov/bus_info/eo/index.html.

Thank you for a great year
The staff of the Mountain Cryer and the AFP of WNC would like to share our deep appreciation for all the hard work, support and care that all of you demonstrate everyday. It is these qualities that we all work for, they are the reasons we work in philanthropy, and the reasons we get so much satisfaction from the Western North Carolina Chapter of the Association of Fundraising Professionals. We wish you the most joyful of holidays, and a very happy New Year.

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