The NonProfit Times - February 1, 2009 - (Page 7) ‘‘ Honestly, when you have a limited staff and 94,000 charities in your state, without an automated registry, it sometimes feels like we just have a few fingers in the dike. --Belinda Johns enforcement activities to state agencies, including terminations and revocations, and state officials made 83 referrals to EO, including political activities, employment tax and failures in operating within designated exemption status. The EO Examinations office, with the Exempt Organization Compliance Unit (EOCU) that conducts compliance checks and Review of Operations (ROO) that manages follow-up reviews of organizations, has increased its compliance checks steadily during the past few years. EO examined 7,861 returns in FY 2008, a slight increase from 7,580 in FY 2007 and 7,079 in FY 2006. Compliance contacts, made to ensure nonprofits are consistent with taxexemption and reporting responsibilities, jumped from 1,475 in FY 2004 to 7,466 in FY 2008. EO has improved its compliance check percentage by using modeling to target nonprofits that would be at a higher risk for noncompliance, which increased its corrective action cases from 63 percent of its examinations in FY 2004 to 80 percent in FY 2008. The EO also plans to launch a longrange study this year about funds and charities as part of its new Fiscal Year 2009 compliance initiatives, which should provide more information about nonprofit spending. Some nonprofits are seeing increased fundraising costs trying to chase discretionary donor dollars, which regulators are keeping on their radar screens. U.S. Supreme Court cases, such as Schaumburg v. Citizens for a Better Environment decided in 1980, have upheld that high fundraising costs alone do not prove fraud, yet regulators are keeping watch for other red flags.“The charitable watchdogs are going to have an issue here because they have percentage-based accountability standards and nonprofits are going to have a harder time meeting that kind of standard as their fundraising percentages increase due to the collapsing economy,” said Seth Perlman, senior partner at Perlman & Perlman in New York City, who advises in nonprofit legal matters. “This year we’re really focusing on organizations that have unusual fundraising levels and on organizations that report that they have unrelated trade or business activities but have pretty low levels of program service expenditures. We just want to know what that means and I want to caution here – my world is never black and white. It’s always grey,” said Lerner. “Some things may raise questions for us. But when you look behind them, oftentimes things are perfectly fine. But we think when you see those kinds of disconnects, it’s important for us to go in and take a look and report out to the public about what we’re finding because it’s important for the public to understand that even if we find there is no problem -- or if we do see there is a problem, we think that’s important for the public to know as well,” said Lerner. “At the end of the day, what I’m hoping the new form does is to leave us with fewer noncompliant organizations and give us a better tool to pursue those who are not compliant and I think the states are looking at it the same way,”said Lerner. And some state regulators say that some nonprofits are already asking questions about the form and if they will be penalized for their answers, which includes information about an organization’s governing body, conflict of interest policies and compensation reviews for top officials. “We often find nonprofit organizations don’t want to call the regulator because they are afraid that the regulator will then take action against their organization, and in our case nothing could be further from the truth.We try to be as proactive as possible and deal with things before they become a real problem,” said Knowles. “[The new 990] will change internal procedures for the nonprofits in respect to their financial reporting,” said Perlman. He thought the changes could be relatively positive and explained that regulators and nonprofits alike were “holding their breath” about it and how the results will shape the sector. “Public charities need to be very aware of what their obligations will be under this new 990, which will include ensuring that they have the appropriate policies in place to respond affirmatively to those best practices questions because it can be embarrassing to an organization to have to answer ‘no’ to a question about whether they have appropriate policies in place when that document will be a public document reviewed Responsibilities, page 8 FEBRUARY 1, 2009 THE NONPROFIT TIMES www.nptimes.com 7 http://www.mitchstuart.com/destinations http://www.mitchstuart.com/destinations http://www.nptimes.com
Table of Contents Feed for the Digital Edition of The NonProfit Times - February 1, 2009 The NonProfit Times - February 1, 2009 Attorneys General Focusing On Fiduciary Responsibilities The Urge To Merge Taking Cancer To Court Contents Indefensible Calendar Special Report The Holidays Are Over Health Care Guide NPT Jobs Advertiser Index Resource Directory The NonProfit Times - February 1, 2009 The NonProfit Times - February 1, 2009 - Taking Cancer To Court (Page 1) The NonProfit Times - February 1, 2009 - Taking Cancer To Court (Page 2) The NonProfit Times - February 1, 2009 - Contents (Page 3) The NonProfit Times - February 1, 2009 - Contents (Page 4) The NonProfit Times - February 1, 2009 - Contents (Page 5) The NonProfit Times - February 1, 2009 - Contents (Page 6) The NonProfit Times - February 1, 2009 - Contents (Page 7) The NonProfit Times - February 1, 2009 - Contents (Page 8) The NonProfit Times - February 1, 2009 - Contents (Page 9) The NonProfit Times - February 1, 2009 - Calendar (Page 10) The NonProfit Times - February 1, 2009 - Special Report (Page 11) The NonProfit Times - February 1, 2009 - Special Report (Page 12) The NonProfit Times - February 1, 2009 - Special Report (Page 13) The NonProfit Times - February 1, 2009 - Special Report (Page 14) The NonProfit Times - February 1, 2009 - Special Report (Page 15) The NonProfit Times - February 1, 2009 - Special Report (Page 16) The NonProfit Times - February 1, 2009 - The Holidays Are Over (Page 17) The NonProfit Times - February 1, 2009 - The Holidays Are Over (Page 18) The NonProfit Times - February 1, 2009 - NPT Jobs (Page 19) The NonProfit Times - February 1, 2009 - Resource Directory (Page 20) The NonProfit Times - February 1, 2009 - Resource Directory (Page 21) The NonProfit Times - February 1, 2009 - Resource Directory (Page 22) The NonProfit Times - February 1, 2009 - Resource Directory (Page 23) The NonProfit Times - February 1, 2009 - Resource Directory (Page 24)
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