MANDATORY Compliance with the I.R.S.’ VOLUNTARY Best Practices

"Rise Above" by KaleCraneA charitable foundation’s worst fear is that its grant will be used for non-charitable purposes. The U.S. Internal Revenue Service (IRS) stresses that this risk increases drastically when dealing with foreign grant making and expenditures.[1] The U.S. Department of the Treasury released its third and final version of its “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S. Based Charities” (VBP) in September of 2006 to help charities implement procedures that will reduce the risk of unintended diversions of funds to terrorist causes.

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Insight Not Accuracy: Why The New York Times is Important

"Magnifying Glass" by deejaynyeA recent New York Times’ article attacked American charities that help build communities in  Israel’s West Bank and IRS policy that enables donations to these organizations to be tax-deductable.  As with any piece about the Palestinian-Israeli conflict, many people have been quick to attack or defend the veracity of the article.

To nonprofit organizations, the value of the article is not the accuracy of the authors’ claims, but rather the article’s insight into current concerns and trends influencing the nonprofit sector.  These can serve as warnings and guidelines to US charities that operate internationally. Continue reading

Homeland Security Scrutinizing New Nonprofits: What Can We Expect & How Can We Adjust

You Are Not Allowed To Take Photos Here!! by TroyHoldenAnd the hits just keep on coming…

Nonprofit organizations have yet another hurdle to cross when applying for tax-exempt status.

A while back, a colleague of mine, a director of a nonprofit organization, applied for tax-exempt status in the United States. The IRS had questions for him, which was to be expected. What was not expected, however, was that after answering the IRS’ questions, his file was then forwarded to the Department of Homeland Security [DHS].

That’s right, the U.S. Government Department that oversees (no pun intended) counter-terrorism, border security, disaster response, and immigration is also an integral part of the tax-exempt approval process. Continue reading

4 Reasons Why NOT to Establish an “American Friends of” Organization

Israeli charities (amutot in Hebrew) rely on donations from overseas – no secret there.  Many foreign-based charities choose to create an American based nonprofit, more commonly referred to as a “Friends of” organization so donations can be tax-deductible vis-a-vis the American Federal Government. (In a previous post, I spoke about IRS trends when a “Friends of Organization” is applying for tax-exempt status.)

However, it could be that establishing a “Friends of” organization is not in your charity’s best interest. The following are some considerations that elaborate on:

Why not to establish a U.S. registered “Friends of” Organization to help fundraise? Continue reading

4 Reasons Why the I.R.S. Interim Report “Exempt Organizations – Universities Compliance Project” is an Important Read

Too many times the IRS has hinted at the direction to which it is heading, with people taking little notice.  Well, in quiet screams, the IRS is doing it again, with the release of their interim report last week: “IRS Exempt Organizations – Colleges and Universities Compliance Project.”

I preface that I have not yet read the report, but I will. And here’s why I think you should too: Continue reading

Are “American Friends of” Organizations a Thing of the Past?

International organizations have been highly successful in raising funds from the United States through U.S. based charities commonly referred to as “Friends of” organizations. These charities are registered in the States and have 501(c)3 tax-exempt status, allowing donations to these essentially foreign organizations to be tax-deductible.

As you can imagine, many charities registered outside of the United States consider an “American Friends of” organization as a vital part of their fundraising strategy.

Jewish causes, especially those based in Israel, are no exception to this rule. A recent report compiled by Dr. Nissan Limor estimated that foreign donations to Israeli charities from sources outside of Israel stood at 2.165 billion dollars in 2007, with much of that coming from the United States (although, he didn’t stipulate how much). There are about 1,000 new Israeli charities [amutot] created every year and it would hold that many of these organizations will seek to create an “American Friends of” supporting charity.

Hence, recent conversations I have had are causing me to worry. Continue reading

Rise, Knight of the Nonprofit Round-Table

“The Office of the Prime Minister invites nonprofit organizations, companies from the business sector that donate to the public or the third sector, and businessmen that work in the fields of philanthropy, to apply for participation in the roundtable.”

No, King Arthur hasn’t been reborn nor are we in Camelot. Heck, we’re not even in Kansas.  What this is, though, is a serious attempt by the Israel Government and a number of foundations that operate in Israel to increase the cooperation, strength, and transparency of Israel’s nonprofit sector. Continue reading