In the nonprofit sector, we're encouraged to punch the time clock with our hearts. Of course, there is rarely a time clock, so often our hearts work around the clock in frenzied pursuit of our agency mission. We love our work but can become consumed by its bottomlessness. Perspective begins to wane, personal lives suffer, balance is lost and so goes the denouement from zealot to burnout. IMBALANCE IS INTRINSIC IN OUR SECTOR'S DNA.
The nonprofit movement in America was birthed out of the same religious fervor which esteems martyrs and saints. In the 1800s, Tocqueville internationally esteemed our uniquely American ability to self-sacrifice and organize to create a more civil society. Our roots are steeped in self-denial for the good of the cause. We often throw our personal lives 'under the bus' for the betterment of the organization. Honestly, is it any wonder people burn out?
IMBALANCE AS A SIGN OF THE TIMES.
Technology has inextricably enmeshed our work and personal lives. We find it difficult to compartmentalize when one piece of our world goes awry. Operating in this fiscally austere economy is also extraordinarily discouraging with the reality of budget cuts, program eliminations and lay-offs. If the wrong stars are aligned for long enough, one begins to relate to Sisyphus, the character in Greek mythology who was destined to push a massive boulder up a hill only for it to roll back down again and again - for all eternity. Ugh!
There is a lesson to be learned from David and Veronda Durden. The couple was denied a $25,000+ deduction on their tax return for a charitable donation they made to their church because of a simple technicality. The IRS disallowed the deduction, increasing their tax liability by thousands of dollars because the proof they had confirming the donation didn’t meet all of the IRS’ strict requirements. The most shocking part is the Tax Court recently ruled in favor of the IRS, leaving no recourse for the generous couple.
The Durdens made the contributions over the course of one year by writing checks—all more than $250 each. At the end of the year, the church sent them an annualized summary of the donations, which the Durdens kept as proof. The IRS argued that the annualized summary failed to meet the four requirements needed for proof of a cash donation more than $250 and therefore was not valid. The four requirements include:
1. It must be in written form and contemporaneous, meaning you must receive the proof by the tax return’s due date or by the date you actually file the tax return—whichever is earlier.
2. The proof must include the amount donated.
3. The proof must state whether the recipient organization provided any goods or services in consideration for the donation.
4. If any goods or services were received, the proof must include a good faith estimate of their value. If the donors only received “intangible religious benefits,” then it must explicitly state that.
The summary that the Durdens received did not meet the fourth requirement. They argued that they “substantively” complied and that it was just a technicality that the proper language wasn’t on the annualized summary. The IRS and the Tax Court did not care. Don’t expect the IRS to be reasonable when it comes to getting more of your money, whether it comes to your charitable donations or just general business deductions. Take every precaution and follow every regulation to the letter. The church already qualifies as a nonprofit charity, and almost all church members regularly contribute their monies through the collection plate, which seems to meet the “intangible religious benefit.” This seems like a good chance for reversal, but that takes time, effort and money to challenge the IRS. A simple solution is for all nonprofits, including churches, to include this additional language on summaries on a regular basis.
FMI, contact By Steven K. Stucky, CPA; Partner, Sikich LLP. Steven can be reached at 317-842-4466 firstname.lastname@example.org.
We are very excited to welcome the Planned Giving Group of Indiana(PGGI) as a sponsor. Beginning with today’s edition, PGGI will be providing weekly information and updates to keep you better informed about the latest in planned giving and fund development. PGGI is a great complement to both your professional development and networks and we encourage you to explore membership in both PGGI and AFP.
I want to quickly introduce you to a few key components of the PGGI website:
Don’t miss the Sept 5 kick-off for the new year of programming. Come as a visitor or find a current member and come along for free. Go to their website www.plannedgivingindiana.org to register. Members $25, non members, $40.