Two weeks from today, May 15th, is the deadline by which most U.S.-based nonprofits need to turn in their Form 990 to the IRS. (The deadline is four months and 15 days after the end of an organization’s fiscal year.)

Larger organizations have procedures in place to get this done, and can get an automatic six-month extension just by filing Form 8868. Smaller organizations have an easier form to file: the “e-postcard” Form 990-N. But they often have a harder time remembering to do it. Do you know who’s taking care of this at your favorite organization?

The stakes

As I wrote a few weeks ago, the consequence of not filing for three years in a row is automatic loss of tax-exempt status. Without tax-exempt status, supporters can’t take a tax deduction for their donations. If you miss three 990s, say goodbye to your nonprofit.

And this happens more than you might think: This year over 435,000 organizations appear on the IRS list as no longer exempt. Only 16,000 have asked the IRS to have tax-exempt status restored, which suggests that most of the revocations involve organizations that had already ceased operation. But if you’re connected to a small organization that is hard at work taking care of its mission, you might want to check in to see whether someone is on top of the filing this year.

What to do

For groups with less than $50,000 in annual revenues, here’s how to file online. Larger organizations can file a 990-EZ or full 990 online at the Urban Institute’s website Form990.org. Using the site is free for smaller organizations and inexpensive for larger ones. Filing online results in fewer errors (saving both the filer and the IRS time and trouble) and is much less expensive for the government. Form990.org also offers a way to file Form 8868 when organizations need an extension on their due date. There is no option for an extension for organizations that file Form 990-N.

Here’s hoping we all make it through tax time with ease. Don’t end up “in the soup”!

Photo by Alan Cleaver (Flickr/Creative Commons)

If you hurried to the Post Office today to pay your taxes or claim your refund, you’re in good company. Estimates are that 25% of U.S. taxpayers file on the last day each year. But don’t expect long lines at the post office; the IRS is hoping 80% of returns will be filed online, up from 77% last year. The deadline (technically tomorrow this year because of a holiday in Washington, DC) is critical for individual taxpayers – filing late results in penalties and interest for everyone.

Nonprofits get a break on their filing deadline in two ways: First, the due date for organizations with a December 31 fiscal year end is not until May 15th. And second, larger organizations can get an automatic six-months extension to pull their records together just by filing Form 4868.

But the risks for nonprofits of not filing at all are pretty dire. More than 400,000 entries have been removed from the roster of tax-exempt organizations since a 2006 law took effect. The IRS is now required to cull out of the list recognized organizations that don’t file the required reports for three consecutive years. When that happens, donors can’t take deductions from their personal taxes (and may have to file amended personal tax returns – a double whammy) and the organization will probably have to start all over again—filing a new application for recognition and paying the fees—if it wants to continue to operate. Not a good thing.

The “information return” that nonprofits file is called IRS Form 990. It comes in several versions. Time and trouble can be saved by picking the right one.

• Use Form 990-N (the “e-postcard”) if total revenue from all sources is normally less than $50,000 per year. Note that Form 990-N is only available online (there is no paper verson) and, though there’s no penalty for filing late, there’s also no way to get an extension. So that three-times-you’re-out rule applies to an organization that missed the last couple of years and then files late this year.
• Use Form 990-EZ if total revenues (the IRS calls it “gross receipts”) are less than $200,000 and total assets are less than $500,000.
• Bigger organizations use the full Form 990. And private foundations have their own different version called Form 990-PF.

The Urban Institute offers an electronic filing service for groups that need to do a 990-EZ or a full 990 and don’t have anyone else to do it. Information about how that works is online at efile.form990.org. The service is free for organizations with less than $100,000 in revenue and carries a small fee for groups with larger annual budgets.

Larger organizations will usually have staff or outside help with accounting and bookkeeping to keep them on track with these requirements and deadline. Smaller organizations need to be sure they have clear answers to a short, but important, list of questions:

• When is our filing deadline? It’s always four months and fifteen days after the end of the last fiscal year.
• What do we need to know to be sure we stay current with all these rules and regs? The IRS website is a good place to start – a list of frequently asked questions is here.
• Who is going to file our Form 990-N? It takes a few minutes, access to a computer, and knowing the answers to a few simple questions. But somebody has to do it.

If you’re not sure all three questions have been answered for an organization you care about, then tomorrow—after your personal tax return is safely on its way—would be a good time to start getting things sorted out to be sure everything goes smoothly this year.

2012: A leap year. The year the world might end. And of course, an election year, with something on the ballot in every city and state in the U.S. I’ve found that folks who work for social change tend to pay close attention to politics and elections – which makes it extra important that nonprofit professionals know what the rules are about how agencies, staffs, and volunteers can be engaged in politics.

How do the rules apply to you?

First of all, it matters what kind of a nonprofit you work or volunteer with.

• For 501(c)(3)s in the U.S., the election rules are pretty simple: such organizations must not do anything that furthers, or hinders, the chances of election of any candidate for any public office. Charitable resources must not be used for political contributions of any sort.

• Other sorts of organizations have many more opportunities to get involved in the political process than c3s, but even they must be careful not to step over the lines in federal, state and local rules. Section 501(c)(3) of the Internal Revenue Code is the reference point for foundations and other public charities. State and local laws may make further, different distinctions, so any organization which might get involved in politics in any way will need to check those too.

What makes this complicated?

Nothing about that flat prohibition on “electioneering” says that nonprofits cannot work to improve democracy. They can encourage people to vote, help to clarify issues, and make known their own views on policy goals. They just have to do these things in a way that is impartial among the candidates who are running for office.

What you can and can’t do

NonprofitVOTE.org published Nonprofits, Voting & Elections: An online guide to nonpartisan voter participation activities for 501(c)(3) organizations, which can help your nonprofit’s board and executives understand the ins and outs of doing business in an election year.

But what about volunteers and staff members? Does any of this apply to them as they go about their daily routines? Yes and no:

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  Photo: Sonya Green, Flickr/Creative Commons

  Whenever people are representing a nonprofit in any official capacity, they have to make sure that they steer clear of that prohibition on electioneering. That certainly means avoiding doing anything that might be seen as the nonprofit itself endorsing one candidate, or dissing another…

• But employees and volunteers don’t give up their rights as citizens. They can do things—on the job and off—that indicate their personal support for a candidate, like having a campaign sign in the window of their own car in the front yard of their house. They can sign petitions, contribute money, and go door-knocking. It’s just that they have to mute their connections to the nonprofit where they work while doing those things.

To learn more, check out these resources from NonprofitVOTE and the Alliance for Justice: What Staff Can Do and Election Activities of Individuals Associated with 501(c)(3) Organizations (PDF).

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P.S. Idealist can help!

Want to promote election year events? Recruit Get Out the Vote (GOTV) volunteers? Announce a nonpartisan voter guide? You can use your organization page on Idealist to do all of these things. Get started here.

And comment below to tell us, and others, about your organization’s plans to participate in the democratic process this year.

Another day, another dollar, another survey

Each year, the Nonprofit Finance Fund surveys U.S. nonprofits. The goals are to document the issues being faced by community-serving organizations and to identify ways the fund itself, and other supporters of the work of nonprofits, can be most useful.

It takes maybe 15 minutes to complete the survey, which requires a pretty broad knowledge of an organization’s activities – from the state of the finances to relationships with funders to the board of directors.

Do you have that knowledge? Take the survey today! And if that’s not you, consider passing the request along to someone who has a good handle on how things are going. The survey closes on February 15.

Why take the survey?
Accurate information about what nonprofits can and can’t do is really important now as governments at every level struggle to meet community needs. Many foundations are cutting back on grants; others are shifting their priorities to meet new challenges; and individuals—whether donors, patrons, visitors, or clients—are feeling the pinch and watching their wallets with new caution. Accurate and up-to-date information about the state of nonprofits and their finances will help policy-makers, philanthropists, and program managers avoid mistakes that could make a bad situation worse.

Want to learn more about nonprofit finances?

Here are more resources:

• The Urban Institute’s annual fundraising survey, conducted with the Center on Philanthropy at Indiana University and other collaborators.
• From the IRS, a new search tool that allows you to check on the exempt status of an organization directly on the web.
• The final version of the Form 990 for 2011 (the one larger organizations will need to file by May 15, 2012) is now available for download (PDF). The form 990-EZ will be published soon. There is no change in the Form 990-N (“e-postcard”) used by small organizations to maintain exempt status.

We’re 10 days into the new year, which means it’s a great time for some of us to reflect on our organizations’ year-end fundraising efforts, our personal giving decisions, or both. Here’s a report (a PDF) from the Fundraising Effectiveness Project that affirms:

• Nonprofits of every size and description make a special effort to identify supporters and secure additional support in the closing weeks, days, and even hours of the year. (Network for Good has an entire year-end fundraising guide if you’re already looking ahead to 2012 holiday season.)
• Sadly, a large number of those donors won’t be found in the roster of supporters during the following year.
• And, if you look closely, there’s an amazing range from the most to the least successful organizations when it comes to maintaining a strong group of supporters who renew their gifts year after year.

Finding new donors is much more difficult (and expensive) than staying in touch with people who already know about the organization and have shown their interest through making a donation. So why do so many organizations spend so much time trying to reach new donors, rather than building relationships with the old ones?

Why don’t donors continue to give?

Of course, there are some perfectly good reasons why a donor might give once and never again – such as gifts that celebrate a milestone or great accomplishment, or a memorial gift that honors a person who has passed on.

But the most common reason donors offer for not continuing to support an organization is lack of information about what has been accomplished with the money given so far before there’s a request for more. Finding out what donors want to know and making sure to tell them during the year is just as important—maybe even more important—than getting the year-end appeal in the mail on time.

What savvy development professionals can do

Looking ahead to the 2012 fundraising program, you’re probably already thinking about your communications with donors and prospective donors. How will you tell them—clearly, accurately, and persuasively—what the work they have supported is accomplishing and how important this support is to the morale of the people who do it? The books listed toward the end of the 2011 Donor Retention Supplement (the first link on that page) are full of ideas on how to do this well.

What savvy donors can do

If you’re looking ahead to the contributions you might make in 2012, consider your own priorities. What kind of community do you want to live in? What kind of world do you hope to see? Then find out which organizations are most likely to bring those visions to life.

If you have lingering questions about organizations you’ve supported in the past, you’ll do them a favor by asking. The request doesn’t need to be a demand, and the response doesn’t need to be a burden. If you can spark better communication between an organization and the donors who support it, that will be good for organization and donor alike.

How do you plan to communicate with your supporters (or learn more about the organizations you support) this year?

Is your community's "happiness flag" showing signs of wear and tear? (Photo: Rachel Kramer, Flickr/Creative Commons)

How happy are we?

Most everyone would agree that being happy is a good thing—along with the coming of spring, a robust economy, and clean air to breathe. For most nations, there are detailed, current statistics about the weather, the state of the economy, and the atmosphere (not to mention many other things). Statistics about happiness are a little harder to come by.

The government of the Himalayan Kingdom of Bhutan has made it a priority to measure “Gross National Happiness” as a summary of national wellbeing. Since 2005 a national effort has been underway to assess not just economic activity in the nation (“Gross National Product” in economist-speak), but to attend to data from eight other “domains” that impact people’s lives, such as health, education, community vitality, and cultural resilience. The website GrossNationalHappiness.com provides the official explanation of the project and reports on the results of the calculation of Bhutan’s Gross National Happiness Index for 2010.

There is no such national index for the USA so far. In my hometown, Sustainable Seattle is using the concept to develop a happiness index for communities. The idea is to supplement its other initiatives and build a long-term future of health and well-being. The project has two components: a set of objective statistics that create a profile of a region’s progress toward meeting goals related to sustainability, and a personal happiness survey that anyone can take. At the end of the survey, each respondent’s answers are compared to the overall response from all survey-takers. Food for thought as a new year begins.

No such thing as personal happiness?

For his 2008 book The Geography of Bliss, reporter Eric Weiner visited nine varied countries, looking for the happiest place on earth. He found some very disappointing spots, including one place where people “derive more pleasure from their neighbor’s failure than their own success. I can’t imagine anything less happy.”

In contrast, when he talked with Bhutanese scholar Karma Ura, he heard “There is no such thing as personal happiness. Happiness is one hundred percent relational.” Weiner reflected: “At the time I didn’t take him literally. I thought he was exaggerating to make his point…But now I realize Karma meant exactly what he said. Our happiness is completely and utterly intertwined with other people: family and friends and neighbors and…people you hardly notice. Happiness is not a noun or verb. It’s a conjunction. Connective tissue.”

This general point is repeated over and over again in the literature. Arthur Brooks, President of the Heritage Foundation, concludes his book “Gross National Happiness” with a quick review of social scientists’ results demonstrating that all sorts of activities that benefit others—from the most direct sorts of help to family and friends to the abstractions of making donations to help people in far-away lands—are closely related to general feelings of happiness and well-being.

Five steps to happiness

In the UK, a study for the National Health Service called Five Ways to Well-Being concluded that these simple steps would improve people’s lives in measurable ways (and sharply reduce the risks of mental illness too!):

• Connect with the people around you
• Be active
• Take notice of what’s around you
• Keep learning
• Give

How will you do these things in the coming year?

Not to toot our own horn too loudly, it still bears saying that Idealist.org offers lots of opportunities for doing all five. Just a few minutes clicking through listings in your community, or in your area of interest, or for the sorts of things you want to do will turn up things to do and places to go.

With your personal profile from Sustainable Seattle’s survey in front of you, and some reflection about the Five Ways to Well-Being, Idealist’s listings are one way to make sure you have a happy Happy New Year.

Best wishes for 2012 from all of us!

From Flickr user AForestFrolic (Creative Commons)

No matter how you look at it, the next couple of weeks are sure to be full of a special seasonal energy. For some, that energy can verge on manic, which kind of takes the fun out of it.

For example, gift buying can get expensive. PNC Wealth Management calculates the 2011 cost of the gifts listed in the familiar “12 Days of Christmas” song at $24,263 – or over $100,000 if you decided to give a partridge in a pear tree twelve times, two turtle doves eleven times, and so forth ’til your true love’s tree would be surrounded by a jumble of 364 amazing gifts.

Here are twelve things you might do to brighten the season for yourself and others that don’t involve so many visits to the ATM.

Give time:

• Look close to home and find a holiday project where you can pitch in as a volunteer via the search tools at the top of Idealist.org. Just using the word “holiday” in the box marked “What?” and “Seattle” in the box marked “Where?” turned up 11 different and interesting things to do in my hometown.

• …And resolve to volunteer in 2012. Sure, a soup kitchen is an obvious choice at Thanksgiving and sorting toys is popular come Christmas. But can you commit to things after the holiday rush, fight the winter doldrums and get to know your community better? Set up Idealist Email Alerts to stay informed about volunteer opportunities.

Give attention:

• Reminisce with family, friends, or neighbors. Look at snapshots from holidays past, talk about the times when things went right (or wrong – hopefully with only comic consequence), and record stories of holidays past. Storycorps has DIY tips.

• Say ‘thanks’ to someone who works in community service. Look online for the name of the board chair or ED of an organization you admire and write a brief note of appreciation for what the organization contributes to the community.

• Surprise a neighbor with a homemade treat or hand-picked seasonal bouquet. Best of all, do it anonymously, so there’s a bit of happy mystery about how it happened.

• Experience your holiday in a new way. Attend a community group’s concert, dance performance, or play that you’ve never been to before. Even better: Take a kid or two along with you!

Give your voice:

• Read aloud from a favorite holiday story-book. For those who celebrate Christmas, Google Books has an 1849 edition of A Visit from St. Nicholas (or “‘Twas the Night Before Christmas”) with fabulous illustrations online for free.

• Sing! In the shower, with a group caroling in the neighborhood, in your place of worship…

If you can, give money.

• Give cash. Times are tough for many of us, but for those who can spare even a few dollars, see my 2010 post full of tips for year-end donations.

• Find a “Giving Tree” (or other community gift exchange for kids) and add your contribution to someone’s holiday cheer. The Marine Corps Reserve’s Toys for Tots is active in many communities.

• Look abroad to places that need our help even once they’re out of the spotlight. Japan is still recovering from the earthquake, tsunami, and related damage to nuclear power plants and tens of thousands of houses. Haiti still struggles with the effects of the terrible earthquake there two years ago. Google Disaster Relief offers links to reliable ways to help out in many parts of the world, as do familiar newspapers and magazines; try a quick online search.

And, since I doubt your shopping list will disappear entirely…

• Give experiences or contributions instead of objects. For theater-goers, a gift certificate for a pair of tickets. For mountain bikers, a membership in the local single-trackers club. Whatever your friends and family love to do, nudge them in that direction and you’ll get the vicarious pleasure of imagining them doing what they like best with your help. Alternatively, spread the warm glow by supporting a favorite organization in someone’s name.

Warm wishes from all of us at Idealist.org!

It’s that time of year! While many of us have been gathering treats for the goblins and ghouls who will appear at our doors tonight, fundraising and communications professionals at nonprofits across the country have been anxiously preparing their year-end fundraising appeals.

Why “anxiously”? Because the year-end appeal often makes the difference between a strong program next year and a struggle to achieve the mission. And because the sorry state and uncertain future of the economy is having an effect on public support for the work of nonprofits.

Freaky: the fact that every store is about to begin blaring holiday tunes. Not freaky: deciding which organizations to support with any year-end donations you make! (Photo: Micah Sittig, Flickr/Creative Commons)

Year-end giving is a tradition that brings satisfaction to many families year after year. But sometimes the number of requests can be overwhelming. If you receive envelopes or emails day after day, you might wonder, “Is this much fundraising really necessary?” or “How could this possibly be efficient?”

It is necessary. Donations are an important way for organizations to get the money they need for all the things that contribute to valuable programs – from the vegetables at the soup kitchen to research on the root causes of problems.

But it’s true that fundraising could be a lot more efficient. And often, attentive donors can help on that front. If you’re planning to donate this year, here are some tips to help make sure your year-end contributions do the most good.

• Have a plan. Decide in advance how much you can afford to give this year and what causes or groups you want to help.
  
• Take the initiative. If you already know the groups you want to support, make your gifts without waiting to be asked. You can send along a request that the groups you support not solicit you further; that’s a good idea at any time of year. But if you do get a year-end appeal anyway you can recycle it with a clear conscience…or pass it along to a friend who might share your interest.
• Be clear. If you get a year-end appeal from an organization that’s not in your plan, let them know and ask that they not send you fundraising appeals. When you do send a gift, suggest that the recipient limit any future appeals to you. Helping an organization avoid the costs of making a pointless request is a small but real contribution to their work.
• Consider volunteering. Many organizations offer special, expanded services at this time of year. Joining such a project adds a new dimension to the celebrations of the season.
• And this year, if you can, maybe stretch a little. Nonprofits in every community are helping people cope with the effects of the bad economy. If you’re doing ok, do a little bit more so they can do their jobs better.

Let us know if you have tips to add – either from the nonprofit fundraising perspective, or the individual donor point of view (maybe both!). And happy Halloween!

Put Barber translated this post, originally written in Spanish by Elena Martin for Idealistas.org.

Image via The Global Soap Project. Click to learn more.

Two million children die every year just from a lack of basic sanitation. Meanwhile, in the United States alone, more than 800 million bars of soap are discarded annually after they have been partially used in hotels. Derreck Kayongo, an Atlanta resident—who happens to be a Ugandan refugee and the son of a soapmaker—recognized in these two extremes an opportunity. So he founded the Global Soap Project.

Derreck’s parents were displaced by the tyranny of Idi Amin in Uganda, so he knows about the extreme conditions faced by the millions of people in IDP and refugee camps around the world. When Derreck came to the U.S. and first saw how much soap went into the trash after just one use, he asked “Is it like this in every hotel?” The answer changed his life.

In the U.S. today, volunteers in every part of the country assist by collecting bars of used soap and getting them to Atlanta, where they are cleaned, melted, and made into long rolls of soap. These are then cut, packaged in boxes, and distributed in many new countries with the support of other organizations. And now, more than 100,000 bars of reclaimed soap have been distributed to different parts of the world. Learn more about Derreck’s story via CNN Heroes.

Bubbling over with excitement? Visit the Global Soap Project to find out how you can get involved. Or search Idealist.org for keywords like sanitation, refugees, and hygiene.

What are your favorite examples of everyday people who, like Derreck, spotted a need and an opportunity, and found a way to do much more with the resources around us?

How one man’s idea to rescue books from the trash contributed to everyday life in Bogotá.

José Alberto in one of his many libraries

Recently my colleague Elena interviewed José Alberto about his success in recycling books for schoolkids in Bogotá, Colombia. (You can read her original post in Spanish at Idealistas.org.)

In his work as a trash hauler, José Alberto observed usable books discarded by households throughout the city.

He knew that children in the low-income neighborhood near his home had difficulty getting the books they needed for their school work, there was no bookstore nearby, and the nearest library was a long way away.

So fifteen years ago, he decided to rescue them and make them available to the kids in his neighborhood. Starting in the ground floor of his own home, he has expanded the network of bibliotecas into eight neighborhoods of the city. As word of his project has spread, more and more Bogotános donate used books directly to him, avoiding the detour into a waste bin.

Elena says that José’s entire family has been involved in this never-ending project for 15 years now: “They don’t have a car or even a little motorbike, and frequently they cross the city after somebody’s call to pick up boxes of books that then they carry in buses all across the city.” By opening his own home as a place to find books, José Alberto started something that has changed the lives of thousands of children (and their parents) in Bogotá.

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Did you know we have a Spanish site? Idealistas.org parallels the offerings of Idealist with jobs, volunteer opportunities, and frequent updates on its blog. If you can point out a project or activity that should be highlighted for visitors to Idealistas, please let us know.