Deduction Extension for Disaster Relief Introduced

The tsunami that occurred on Dec. 26, 2004 is creating some interesting legislation. If a donor currently gives to a charity for the relief efforts, he or she cannot take a for the gift until next year when completing his/her 2005 tax return. However, the government indicated that they want to encourage gifts for tsunami relief efforts by allowing donors to apply gifts made in 2005 for tsunami relief to 2004 tax returns.

A bill has been introduced in Congress that would allow taxpayers to apply tax deductions for tsunami relief contributions to their 2004 tax returns. The proposal would only apply to cash gifts made specifically for disaster relief, and only for gifts made before Jan. 31, 2005. Congress is expected to pass the bill unanimously on Jan. 6.

AFP supports an even playing field for charities (that is, all charities should have equal access to tax incentives for charitable giving). However, certain events, such as 9/11 and the tsunami relief efforts, are so far-reaching and have such emotional pull that additional incentives to encourage giving for relief is warranted.

The Effect of Disasters on Unrelated Nonprofits

A popular question has been the potential impact that fundraising efforts
for tsunami relief will have on other charities. In this case, 9/11 is a
good historical guide. It is quite probable that charities working on issues
unrelated to tsunami relief will see a decrease in their fundraising in the
short-term (three to four week, perhaps longer in some cases).
However, most charities will not see any long-term impact from the tsunami
relief efforts, as has been the case historically, including 9/11 and other
major national and international tragedies.

Nonprofits must comply with CAN-SPAM regulations

As expected, nonprofit organizations are not automatically exempt from the final regulations recently published by the Federal Trade Commission (FTC) regarding the CAN-SPAM Act. Instead, the final rules closely mirror the FTC’s original proposal that created a three-prong test to determine if the primary purpose of an email is considered “commercial” or “transactional or relationship” in nature. If the purpose of the email is determined to be “transactional or relationship” in nature, then the email is exempt from the requirements of the CAN-SPAM Act.

Despite the decision by the FTC, the final rules should have little impact on charities unless they traditionally distribute numerous emails that contain only marketing or advertising content, although a few concerns still exist. The final regulations were not a surprise, as the FTC had indicated it would probably take this approach in earlier comments.
The CAN-SPAM Act was passed by Congress in 2003 to crack down on unsolicited commercial emails. Most of the legislative history of the bill, as well as comments by congressional staff, indicate that the congressional intent of the legislation was to exempt emails from nonprofit organizations.

Nevertheless, and despite comments from AFP and other organizations, the FTC has decided to include such emails. In the final regulations, the FTC noted that “it is possible – or even likely – that emails between a nonprofit and its members would constitute ‘transactional or relationship messages,” but refused to create an actual exemption.

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