… and reduce the negative impact of the new tax law.

With the increase in the standard deduction and the new limitation on state and local tax deductions, fewer people itemized on their 2018 returns, thus decreasing the tax incentive to make charitable gifts. In addition, the estate and gift tax exclusions were also doubled, which may lessen the incentive to make bequests to charities. According to the Tax Policy Center, these changes led to an estimated 12 to 20 billion dollar decline in overall charitable giving, or roughly a 5% decline in contributions.

So, what should your nonprofit do?

Focus on developing high net worth donors now and educating individuals on maximizing their way of giving, recommends Javier Goldin, managing partner of Goldin Group CPAs. Further he offers four suggestions to give potential donors.

1. Group gifts

One way to join the 1 in 10 tax filers expected to itemize this year is to do something called bunching. With this strategy, as many deductible expenses as possible (for example, medical expenses) are shifted into one year, so that itemizing becomes advantageous. Then the standard deduction is taken the next year or two.

In the case of charitable gifts, that would mean donating two or three years’ worth of gifts in one year. This may be tough for those who may not have extra cash accessible, but there’s a solution to that issue. By making a substantial gift—typically a minimum of $5,000—to a donor-advised fund, the donor can deduct the full gift now and then direct the money to charity over time. Fidelity, Schwab and Vanguard are among the financial firms offering these planned giving accounts.

2. Use IRA distributions

People who are 70½ or older and are taking required minimum distributions from an individual retirement account can funnel those withdrawals directly to charity (up to a max of $100,000 a year). With what’s called a qualified charitable distribution (QCD), donors can’t write off the gift, but they won’t owe income taxes on the withdrawal. So in the 22 percent federal tax bracket, a $10,000 QCD saves $2,200 in taxes. (A QCD is not an option with 401(k) savings plans or, in virtually all cases, from Roth IRAs.)

3. Donate stock winners

Another way to come up with a big gift is to tap into investment portfolios. More than nine years into this bull market, donors may be sitting on highly appreciated stocks or mutual funds. By donating that stock instead of selling it, donors may be able to deduct the full market value. They also avoid the big tax bill they would face if they cashed out and kept the profits.

Another option is to keep the stocks or funds in their portfolio and donate the shares. Then using the cash that they would have donated to your nonprofit, they can buy more shares in the same investments.

4. Save more in high-tax states

Charitable giving can be particularly beneficial for those who live in states with high income taxes. If the limits on state and local tax deductions push their overall tax rate higher, the value of their donations is higher too. That’s because every dollar donated (assuming itemizing is worthwhile) saves a higher amount in taxes. Capital gains also fall into the new federal law limiting state tax deductions to $10,000. For donors who live in states with capital gains taxes, their effective tax rate on those gains has gone “way up,” making it even more advantageous to donate winning stocks to your nonprofit before December 31.

Finally, it’s essential to make your nonprofit stand out to donors by providing accurate and complete information. Dazzle them with your infrastructure and financial efficiencies. These items will go a long way in persuading your donors that their dollars go further with you.

Article contributed by Javier Goldin, the Center’s CPA Partner. Javier is also a Founding and Managing Partner with Goldin Group CPAs in Bethesda, MD, chosen nationally as an Innovator Firm for the profession.

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Guidelines for setting up an unpaid internship program:

Internships provide an excellent way to prepare students for the workforce, provide hands-on training and launch careers. For nonprofits, it’s an opportunity to help shape the emerging workforce, nurture an interest in the nonprofit sector and discover potential new employees.

For many of us, an intern also provides some much needed free assistance. This view, however, could lead to trouble. There have been several cases where an employer has been forced to pay back-wages to someone who completed an unpaid internship. While for-profit companies have been looked at closer than nonprofits, it is still a good idea to understand the guidelines.

Below, we’ve provided a summary of the criteria for an unpaid intern position. Plus, with input from Center member Miriam’s Kitchen, we’ve also provided a helpful checklist for setting up an internship program.

Criteria for an unpaid internship

In the Department of Labor’s internship programs under the Fair Labor Standards Act, it explains how courts have used the “primary beneficiary test” to determine whether an intern is in fact an employee. A summary of the test criteria that the internship must meet includes:

  • Be similar to training that the student would receive in an educational environment. If a college provides credit or if the intern gains experience that could be used elsewhere, this would fit the criteria.
  • Be a benefit to the intern, not the organization.
  • Not replace a paid employee, and work under close supervision of a staff member.
  • The employer gets no real advantage from the intern, and sometimes may be impeded by having the intern.
  • The intern is not entitled to a job at the end of the training.
  • The employer and intern agree that the intern is not entitled to wages at the end of the internship.

When considering offering a stipend, understand that it may send mixed signals to the DOL. Either the wages are earned, or this is a training program that benefits the intern.

Internship Program Checklist

  1. Define the need. Determine what department or team could use an intern in a way that benefits the student as well as the organization.
  2. Determine the time and duration. Will it be a semester long, over winter break or during the summer? Knowing the duration will guide setting the number of hours per week and what duties to include in the program. Students may have less time during the academic semester than over the summer. Every internship should have an end date. The DOL does not let you keep an intern indefinitely.
  3. Specify the roles and responsibilities of the intern. Create a description of tasks and a timeline with check-ins to monitor progress. Include rules, policies and expectations so the intern, and your team, understands what is required right from the start. Make sure tasks/projects are reasonable and realistic.
  4. Decide if the intern will be paid, receive a stipend or be unpaid. Obtain approval from President/CEO for any payments. For unpaid internships, answer the following questions:
  • Will the intern receive course credit?
  • Are there written goals and objectives associated with the internship?
  • Is the student’s on-the-job learning beneficial to his/her future career?
  • Does the intern understand that the internship is unpaid?
  • Does the program pass the “primary beneficiary test?”
  1. Advertise the internship opportunity. Post online, on your website, circulate with colleges and universities.
  2. Collect and review applications, sharing best candidates with the hiring department.
  3. Conduct interviews either in person or via Skype.
  4. Once a candidate is selected and has accepted, complete an intern information sheet with details about criteria, school requirements and credits, etc., as well as any HR forms and return to HR.
  5. Make sure interns have an opportunity to engage with staff at multiple levels and get the most out of their experience. Consider including a rotation through several departments.
  6. Ask for feedback. At the end of the internship, ask for the intern’s perspective and input about the experience. Re-evaluate your program and adapt if needed. This is also the time to share feedback with interns about their performance.

If you have other suggestions, please share them!

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When setting up a 457(b) plan makes sense:

In 2019, the government allows taxpayers to contribute up to $19,000 annually to their 401(k) or 403(b) plans ($25,000 if over age 50). However, executives at nonprofit organizations tend to max out these qualified retirement plans early and are looking for a deeper tax shelter beyond these limits. Also, receiving additional employer contributions into their 401(k) or 403(b) plan is difficult because of anti-discrimination testing restrictions.

Thus, two crucial questions arise:

  1. How can executives defer income beyond the limits imposed on qualified retirement plans?
  2. How can they receive a higher employer contribution on top of their 401(k)/403(b) plans without having to give it to the entire staff and strain the organization’s budget?

For these executives, a nonqualified 457(b) plan, also known as a top hat plan, may be a great solution for the following reasons:

  1. A 457(b) plan allows executives to shelter an additional $19,000 of income from federal and state taxes each year on top of the amount contributed to their 401(k) or 403(b) plans. When you factor in the 401(k) and 403(b) limits, it amounts to a huge potential tax savings—as much as $38,000 ($44,000 for those over 50) of income per year!
  2. Executives can also receive employer contributions in addition to the match they receive in their retirement plan without running into problems with anti-discrimination testing. Any employer contribution into a 457(b) plan is considered ordinary income to the employee; therefore, the organization and the executive must pay their share of FICA taxes on the amount contributed, however, that contribution is sheltered from federal and state income taxes.
  3. Execs can opt for some combination of the two. For instance, if the Board approves $10,000 in extra employer contribution, they still have $9,000 to shelter from taxes should they choose to do so.

Let’s see how such a plan might work in action:

Jane Doe is an executive at Nonprofit X. She is fifty one years old and contributes $25,000 from her paycheck to max out her 403(b) plan each year. Seeing a need to reduce her taxes, Nonprofit X establishes a 457(b) plan to bonus execs like Jane Doe up to $19,000 per year.

Jane Doe sees the following tax advantages from this strategy: Supposing she pays at a 37% federal income tax rate, with her 457(b) plan, Jane Doe will save a little over $7,000 per year in federal taxes alone ($19,000 x 0.37 = $7,030)—in addition to the savings she already sees in her 403(b) plan.

Ultimately, a 457(b) plan presents an attractive option for nonprofit organization executives who are looking to defer more of their income past the $19,000 limit on qualified (i.e., 401(k) or 403(b)) retirement plans. Therefore, setting up a 457(b) plan may help your organization strengthen recruitment and retention of top performing executives by offering a more attractive retirement benefit.

Of note, a 457(b) is not appropriate for all organizations and is subject to requirements and restrictions. Ensure a qualified tax professional is consulted.

 

Article contributed by: Amir B. Eyal, JD, CFP®, AIF®, Employee and Executive Benefits Specialist at the Center for Nonprofit Advancement. Amir is also the CEO of Mylestone Plans – a national leader that educates the members of the nonprofit community on how to achieve their financial goals. Mylestone provides a comprehensive range of institutional services to hundreds of non-profit organizations, as well as private financial and investment planning to their leadership and employees.

 

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The Center is turning 40! Join us in celebrating our past as we look toward the future.

Share your story: #Rocking40withtheCenter

What has Center membership meant to your nonprofit? What benefits have made a difference? How has the Center helped you expand your capacity and impact? Post your thoughts and stories using #Rocking40withtheCenter, and we’ll share your message with our entire network.

Spread the word: Rocking40 Membership Drive

Our membership has grown considerably over the years, and as nonprofits face new challenges, we plan to broaden our outreach and support even more. If you know of organizations that would benefit from Center membership, please encourage them to join!* For every nonprofit you refer that becomes a member, the Center will thank you with a $40 gift card to Starbucks.

*To refer a nonprofit, send the organization name, contact name and email address to Sean Sweeney. Or tell the nonprofit to join online and include your name and email on the application where it asks, “How did you hear about the Center.”

 

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Thank you to all who responded to our recent survey on the effects of the federal government shutdown. We heard from nonprofit organizations of varying types, budget sizes and locations throughout the District of Columbia, Maryland and Virginia.

Here’s what we learned

~ Although just a little over 50% of survey respondents receive federal funding, the shutdown had an impact across the board.

~ It was encouraging to see almost 90% of respondents had operating funds in reserve, although only 40% of those had three months or more.

~ 50% of all respondents saw an increase in service needs during the shutdown, but only 30% had program supplies in reserve. Of those, 60% had to tap into their reserves.

~ Even more significant than the quantifiable stats was the immeasurable impact on nonprofits, families and the community.

“It is clear that a strong nonprofit sector is critical when our residents and communities are in crisis,” observes Glen O’Gilvie, CEO, Center for Nonprofit Advancement. “We are proud of the support our network provided and encourage a replenishment of reserves and greater coordination in preparation for any future challenges.”

Some of the impact stories shared:

“We provided a 5-day supply of groceries to over 400 furloughed government workers and contractors.”

“We saw a 10% increase in call volume to our 24/7 hotline; an increase in anxiety and stress for clients across all of our programs and services, especially those seeking federal assistance for basic needs like food and shelter.”

“Donors became clients. Donors terminated recurring monthly donations.”

“We have been providing additional food support for guests, including bags of full and frozen meals. And with the cold weather and ‘life threatening wind-chills,’ guests are requesting gloves, hand warmers and other essentials. The government shutdown is a reminder that many members of our community could be just a few paychecks from experiencing homelessness.”

“As an environmental organization headquartered in the DC region, we provide a lot of programming and stewardship of public lands. During the shutdown, we were unable to access Kenilworth Aquatic Gardens, where we keep freshwater mussels for an education program. We have also responded to calls about trash and illegal dumping at federally-managed sites and worked with the city to remove more than 400 tires that were illegally dumped during the shutdown on National Park Service land.”

“… a sense of demoralization. Our constituency assumed/believed that the government was solid, an institution that could be trusted, relied on. There has been a definite sense of loss, hope and trust.”

These narratives deliver a clear reminder of the valuable and vital support nonprofits provide our communities.

Resources to share with your clients and those in need:

•  Metropolitan Washington Council of Government 
•  United Way National Capital Area
•  Helpline 2-1-1: This free and confidential helpline provides information about social, health and government resources, and connects callers to community resources in their local community. 2-1-1 is available in multiple languages 24 hours a day, 365 days a year and is available to callers in the District of Columbia, Maryland and Virginia.

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Every member of a nonprofit’s team has an important role in advocacy, even if it’s not included in their assigned responsibilities. If you work or volunteer for a nonprofit, then you are most likely passionate about its cause and in a prime position to advocate on its behalf. Whether you’re a regular at legislative hearings, or you just want to tell your friends why your nonprofit’s services are so valuable, having the right tools will help you deliver your message successfully.

Five key skills for excellence in advocacy:

Show your passion – How often have you been in a situation where someone is trying to pitch you on a product or idea and it’s obvious they don’t really believe in it themselves? The first thing you do is question their real motive. Next, you tune them out. As an advocate for your organization’s mission you’ll be effective when you let your passion for the cause shine through. This is one time when it’s great to wear your heart on your sleeve!

Know your subject – You need to make a case for your issue or cause, and you need to be able to respond to questions and objections. Know everything about what your nonprofit does, who it serves, how it makes an impact, so you can speak with authority. Not only will you be more effective, you’ll position yourself as an expert that your audience can rely on for the future.

Practice diplomacy – This one can sometimes be the hardest. When you are trying to win someone over, avoid getting angry and steer away from insults. As an advocate you want to build support for your cause. Skilled advocates understand the difference between stating a case and starting an argument. You’ll make more progress by practicing the art of patience and showing respect for differing opinions.

Be persistent – If diplomacy is the art of patience, persistence is the art of stamina. It doesn’t always come naturally – most of us are uncomfortable with confrontation. As an effective advocate, you’ll want to demonstrate an ability to overcome obstacles, avoid showing frustration, don’t be discouraged when success does not come easily and don’t give up.

Communicate well – Advocates often need to make their case around complex issues that may stir up strong reactions. Perhaps the most critical skill for excellence in advocacy is to be an effective communicator. Here is where practice is most important. If you need to speak in public, try stating your case in front of a friendly audience first and ask for constructive feedback. With written communications, get started early, organize your thoughts and make sure a fresh set of eyes reads what you’ve written before it goes out. Typos are not an advocate’s friend!

These key skills are ones we can all develop with a bit of practice. The more tools in your toolbox and the more you use them, the better you’ll be at doing a great job. Keep at it and you can help change the world!

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Two new positions are now open!

As we head into our 40th year, the Center plans to deepen our commitment and support of nonprofits in our region. To expand our outreach and advance our member services to the next level, the Center is adding two new staff members to our internal team.

Membership Associate
Communications Associate*

 

To apply: Send cover letter (REQUIRED) and resume to Taylor Strange.
*Communications Associate application also REQUIRES three (3) writing samples.

Application DEADLINE: 5:00pm on Monday, February 11, 2019.

Please help us spread the word. We encourage all qualified individuals to apply!

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We are happy to announce his recent promotion to Education and Special Programs Director.

In his new role, Sean will serve as Program Director of the Center’s AIM, EXCEL and Board Leadership Award competitions, as well as continue to develop goals for and manage the Center’s Training Hub. He will also work with the COO on special programs providing best practices and capacity building to nonprofits.

Sean joined the Center in August 2014 as an Education Associate and then advanced to Education and Programs Manager. He has been integral in coordinating, implementing and expanding the multiple training options available through the Center. He is considered by all to be a valuable asset to our team and to our members. Please join us in congratulating Sean on his promotion.

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In December 2018, the Center hosted a panel discussion in Prince William County entitled An Insider’s Perspective: Advocacy Efforts That Work!” The panelists included three individuals with extensive experience as staff to legislators. They shared some of their insider tips about how to make the most effective use of your time meeting with legislators to advocate for your mission and issues important to your organization.

The panelists were:

  • Philip Scranage, current Legislative Aide to Virginia State Senator Scott Surovell
  • Devon Cabot, current Vice President at Two Capitols Consulting, former Legislative Aide to Virginia State Senator Jeremy McPike and former Chief of Staff to Woodbridge District Supervisor Frank Principi (Prince William County Board of Supervisors)
  • Ross Snare, current Director of Government Affairs, Prince William Chamber of Commerce and former Legislative Aide to Prince William County Board of Supervisors Chairman Corey Stewart, former Legislative Aide to Fairfax County Supervisor Pat Herrity and former Session Aide to Majority Caucus Chairman Delegate Tim Hugo.

Strategically timed to take place in advance of the Virginia legislative session convening in January, the event drew nonprofits from the Prince William County area. However, the information shared is relevant for all nonprofits looking to advocate with elected officials. So we wanted to share some of these key tips and advice from legislative “insiders”.

8 tips to strengthen your impact when meeting with elected officials:

  1. Most important – Come Informed! Before meeting with your legislator know where he/she stands on the issue you want to discuss. If it’s a specific bill, know the status of that bill and whether your legislator agrees or disagrees with your position. Know what committees the legislator sits on and whether or not the committee has already voted on that bill. (Don’t waste the legislator’s time or yours by advocating for a bill that has already died in committee!)
  2. Be a constituent of that legislator or have a constituent with you. Legislators want most of all to hear from constituents in their own district.
  3. Build coalitions: If your organization does not have constituents in a particular legislator’s district, consider partnering with another organization that does. Note: the panelists agreed this is an effective tactic that nonprofits often fail to utilize.
  4. Quantify the impact. Effective advocates will be able to combine personal stories with quantifiable evidence of how the issue they are discussing will impact lives.
  5. Bring a “one-pager” about your organization—what you do, who you serve and why it matters. Be sure the legislator’s staff knows how to follow up with you with any questions. Offer to provide testimony if relevant.
  6. Bring an appropriate number of people. Among topics discussed was whether or not it is effective to bring large groups of people served to an advocacy meeting. Since time is so limited (and offices are so small), large groups were seen as less effective in educating a legislator about the specifics of an issue. The panelists viewed this tactic as most effective in a) relationship building with the legislator and b) engaging the people you serve. They suggested that town halls are a great opportunity to bring a large group. Panelists also felt that calls and emails stating your position on an issue are more effective than petitions.
  7. Make sure you get the Legislative Aide’s business card before you leave!
  8. Build a relationship. Most of all, our insiders emphasized the importance of building a relationship with your legislator over time. Invite them to visit your organization. Show up at their town halls, follow them on social media and send them your announcements. As one panelist put it, “If the first time you’re talking to your legislator is in Richmond, you’re doing it wrong”.

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The Center is pleased to announce the creation of South Dakota Avenue/Riggs Road Main Street.

 

Funded through a grant awarded by the District Department of Small and Local Business Development (DSLBD), this new Main Street organization will utilize public-private partnerships and community volunteers to build on neighborhood assets and implement strategies to support and improve the business corridors in this area.

Targeted Riggs Park and Manor Park neighborhoods include:

  • South Dakota Avenue NE between Galloway Street and Riggs Road NE
  • Riggs Road NE between Chillum Place NE and the Metro tracks
  • 5600 Block 3rd Street NE and 5700 Block 2nd Street NE between Riggs Road and New Hampshire Avenue NE
  • 3rd Street NW between Rittenhouse Street and Sheridan Street NW

The founding Main Street Board of Directors includes leadership from the Lamond-Riggs and Manor Park communities:

Board Chair: Barbara Rogers, 2nd Vice President, Lamond-Riggs Citizens Association
Treasurer: Alison Brooks, Acting President, South Manor Neighborhood Association
Secretary: Rhonda Henderson, President, Manor Park Citizens Association

The Center will provide fiscal and organizational management, leadership and technical assistance for South Dakota Avenue/Riggs Road Main Street.

The DC Main Streets Program is administered by DSLBD and the South Dakota Avenue/Riggs Road Main Street is proud to be located in Wards 4 and 5. The Main Street Leaders, Board of Directors and all at the Center are especially grateful to District of Columbia Mayor Muriel Bowser, Ward 5 Council member Kenyan McDuffie and DSLBD Director Kristi Whitfield for the opportunity.

For more information, please email Glen O’Gilvie, CEO, Center for Nonprofit Advancement or call 202.457.0540

 

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