Non-Profit Tax Quiz

There are always questions and opinions about taxes and non-profits, but do you think you really know your stuff?  Blue Avocado put together a 17-question quiz about non-profit taxes.  Don’t worry, they keep the questions light and interesting and use jargon only when necessary.  Here is a sampling of the questions:

Q – If you give a non-profit 501(c)(3) $10,000, how much less will you pay in federal taxes (assuming you itemize and are in the highest tax bracket?)

a.  $10,000
b.  $3,500
c.  $1,500
d.  $10,000, but only if you get a receipt within 60 days of the donation.

Q – A “progressive tax structure” means:

a. It is supported by “progressive” people.
b.  It is part of Obamacare.
c. People with higher incomes pay a higher percentage in taxes than people with lower incomes.
d. Taxes increase with inflation.

Q – Which of the following is legally a restriction on 501(c)(3) non-profits:

a.  Non-profit staff cannot donate blood.
b.  Non-profits cannot borrow money, except from board members and staff.
c.  Non-profit board meetings must be open to the public.
d.  Non-profits cannot divvy up the surplus at year-end and distribute it to staff.
e.  b and c

Q – To be officially poor according to the federal government, a family of four can have a total annual income of no higher than:

a.  $22,350
b.  $31,700
c.  $42,000
d.  the salary of the governor of Wyoming.

You can find the rest of the questions and an answer sheet by going here: Blue Avocado Non-Profit Tax Quiz

Don’t forget that CDP is holding a Professional Development Series the morning of November 10, 2011.  One of the speakers is Jim Clark, a CPA with Lloyd, Darner, Guenther & Ellis and will be talking about accounting for non-profits.  Be sure to register for this training here.


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How Do Non-Profits Meet Greater Demand for Services?

The Chronicle of Philanthropy recently held an online discussion about the challenges non-profits face when trying to meet greater demand for service when the economy is still struggling.  75% of the people polled said their organizations have faced a cutback in government funding in 2011.  Contrast this with the 70% who saw an increased demand of service during the same year.  How do organizations keep up with the needs while still keeping their costs and budgets under control?

The experts brought in for the discussion were Anne Dyjak of Nonprofit Finance Fund, Joe Harrington of California Charter Schools Association and Jay Laudato of Callen-Lorde Community Health Center. These professionals came together to answer questions put forward by the participants. We’re going to highlight a couple of questions and summarize their responses, but you can see the full discussion by following the link at the end of this article.

Question #1 – How do you meet immediate urgent needs without missing opportunities to address the chronic as well?

This problem can be approached by a couple of ways.  One would be by seeking a coalition, or a collaboration with other organizations doing similar work as yours.  Pool resources and focus on the strengths of your organization to meet needs in the most strategic way possible.   Another
approach would be to re-examine your mission and identify what need/service is really critical to your community.  Take a look at the programs you offer and prioritize them based on what you find to avoid being pulled in too many directions.  Also, be sure to include staff, board and other stakeholders in your decision-making process to ensure transparency and communication.

Question #2 –  In today’s market, funders want to see more collaboration among agencies, while agencies, particularly non-profits struggle to keep the doors open.  How do you work through those issues?

Collaboration is vital and yet difficult to do.  Organizations in a community could find themselves competing for the same funds.  If those organizations could find a way to work together to meet a need, the competition within the community would be diminished and the emphasis would be back on the community needs.  There may be areas where the organizations are overlapping service and programs could be streamlined through a partnership.  This is especially helpful and useful if the organizations have similar business models as well as a shared mission.

Question #3 – We still find turf issues among some organizations.  Are there any suggestions for getting people to move in the direction of collaboration which includes sharing of resources? What are some examples?

When getting people to move in the same direction, it’s important to identify key areas where you all agree and mobilize behind it.  This can be accomplished through a facilitator, or an external organization, to get people involved.  CDP has served as a facilitator on certain community-wide coalitions to help bring an overall focus to the need and direct resources in a strategic manner.  Often the organizations just need a well-respected member to step forward and inspire  people to think beyond themselves and their way of doing things.

For the full discussion, visit here.

This article was featured in the September 2011 issue of our monthly newsletter, CDP Press.
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Elimination of Federal Tax Deposit Coupons

Effective January 1, 2011, banks will no longer accept federal tax deposit coupons. You will be required to make the payments at the IRS Electronic Federal Tax Payment System website:

Enrollment to the site is free and can be used by businesses, individuals, federal agencies, tax professionals, payroll services, and financial institutions. You must enroll to the site in order to make payments, but payments can be phoned in or entered on the site itself. Payments can be made 24 hours a day, 7 days a week, and can be scheduled up to 120 days in advance. You can find Frequently Asked Questions for the EFTPS site here.


IRS – “One Time Relief Program” – Filing the 990.

People filing tax forms in 1920

Image via Wikipedia

Mid-spring of this year, the IRS published a list of non-profit organizations who were at risk of losing their tax-exempt status due to not filing Form 990-N or Form 990-EZ for years 2007, 2008, and 2009.  The list was first published with a deadline of May 17th, 2010, but the IRS has decided to extend the deadline to October 15th, 2010

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” said Douglas Shulman, the Commissioner of Internal Revenue.

This extension is only for small organizations with annual revenues of $25,000 or less.  Each year, these organizations will be required to file a new online form, the 990-N.  For somewhat larger organizations (less than $500,000 total receipts), the Form 990-EZ should be filed along with a “compliance fee.” These forms are available on the IRS website:  When checking the page, you will find links to the forms, but also a list of the at-risk organizations on record, broken down by state, in both PDF and Excel.  Check and see if your organization is on the list and then take the appropriate steps.

Article: Child and Youth Homelessness in Our Nation’s Schools

WASHINGTON  – Federal data was just released regarding homelessness among children and youth.  The National Association for the Education of Homeless Children and Youth (NAEHCY) and First Focus compiled and analyzed the data into an article of the current condition of child and youth homelessness.

Homelessness as a whole has increased across the nation with the continuation of economic troubles.  Many families find themselves suddenly without a car, home, job or all three and struggle knowing how to pull through.  These families often have children in tow and face the challenge of getting them fed, clothed and educated.  Schools have been able to step in and provide assistance for children at risk or currently homeless, but many budget cuts are limiting the amount of money available for such services. 

The number of homeless children and youth has increased nationwide by 41% in the last 2 years.  62% of cases cited the economic downturn as the reason for becoming homeless.  $70 million from the American Recovery and Reinvestment Act (ARRA) will go to the McKinney-Vento Education for Homeless Children and Youth (EHCY) to assist public schools in doing more to bring these numbers down.  Even so, only one in five school districts will receive any support through ARRA homeless education funds or the regular McKinney-Vento funding.

This money is used by the districts in many different ways such as to increase support, transportation assistance, expanding outreach and identification efforts, strengthening support for specific subpopulations of homeless children and youth and many more.  One school used the funds to hire staff for the sole purpose of checking local motels.  The year prior, they had 191 identified homeless students, but at the end of that year of targeted searching, that number rose to 2,197.

The ARRA surveyed the participating school districts asking what the greatest challenges were for them.  Lack of affordable housing topped the chart at 47% and was closely followed by “identification of homeless students” at 44%.  Other challenges include “transportation to school of origin” (32%), “basic needs (clothing, health, etc)” (29%) and “lack of community collaboration” (10%).  The report also shows a breakdown of the increase in homeless students from the year 2006-2008 by state.  Ohio came in at 18% increase during those two years.

For the full report, please visit the NAEHCY website:

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