Fundraising Irony: Small Nonprofits Rely on Low-ROI Events for Fundraising

Processed by: Helicon Filter;Small or volunteer-led nonprofits can’t, in most cases, go after large grants or major donors. Lacking such resources as a well-staffed development department and influential board members, they have good reason to turn to fundraising events.

Bake sales, walk-a-thons, auctions, gala dinners, and concerts all offer opportunities to mobilize a lot of volunteers, in some cases on short notice. Hey, events are practically parties, and might raise money, too!

But not much money. According to the research group Software Advice, events-based fundraising can be harder for small nonprofits than large ones. They “are at a disadvantage,” because “the upfront investment for an event is a strain on resources.”

As explained in the report, this strain is caused by the groups’ tight budgets, as well as the fact that their largely volunteer-based staff may not have significant event planning experience.

That doesn’t mean smaller groups should despair with regard to events-based fundraising, however. Software Advice’s Report helpfully analyzed which events are most and least efficient in producing profits.

And now for the spoiler. The report’s major findings included that:

  • fun runs and walks are the easiest events to plan, producing moderate to high financial reward for nonprofits of all sizes
  • on average, a-thon events have the lowest cost per dollar raised (CPDR), and thus are suitable for all nonprofits, and
  • concerts have the highest CPDR, best taken on by groups with a larger budget.

No matter what type of event your group takes on, learning from other groups that have done them before can be enormously helpful. For tips, stories, checklists and more, see The Volunteers’ Guide to Fundraising: Raise Money for Your School, Team, Library or Community Group, by Ilona Bray, J.D. (Nolo).

IRS PARTNERS WITH TAX PROS TO FIGHT IDENTITY THEFT

IRS recently announced “a sweeping new collaborative effort” in joining forces with tax preparation and software firms, payroll and tax financial processors and state income tax administrators with a view toward combating identity theft refund fraud.

Commissioner Koskinen says, “We’ve made tremendous progress, and we will continue these efforts. Taxpayers filing their tax returns next filing season should have a safer and more secure experience.”

Check out IR 2015-87 for more of the details on how IRS plans to work with the tax industry for improved:

~Taxpayer authentication
~Fraud identification
~Information sharing
~Cybersecurity framework
~Taxpayer awareness and communication

NEW PROPOSED REGULATIONS FOR “ABLE” ACCOUNTS

IRS recently issued proposed regs which implement a new Federal law authorizing states to offer tax efficient “ABLE” accounts to folks with disabilities who became disabled before age 26.

The Achieving a Better Life Experience (ABLE) account provision was designed to enable people with disabilities and their families to save for and pay for disability-related expenses.

Contributions in a total amount up the annual gift tax exclusion can be deposited to an ABLE account annually, and distributions are tax free if used to pay qualified disability expenses.

Check out IRC Section 529A for the details.

In Child Abuse Case, Supreme Court Narrows Right to Confront Witnesses

iStock_000042944894_SmallIn the preschool lunchroom, a teacher notices that a three-year-old pupil has an eye that looks bloodshot. She asks him what happened; he says nothing, then claims that he fell. Shortly after, in a better-lit classroom, the teacher notices a series of marks on the boy. She gets other teachers involved, and they discover even more injuries. They ask the boy who hurt him. He mentions his mother’s boyfriend. The teachers, legally obligated to report suspected abuse, notify the authorities.

The boy cannot testify at the boyfriend’s trial for felony child abuse because of a state law about children younger than ten taking the stand. But state law allows prosecutors to introduce reliable hearsay by child abuse victims. The question is whether, despite the hearsay law, a teacher testifying to what the boy said violates the defendant’s right to confront the witnesses against him.

On June 18, in a case involving essentially the facts above, the U.S. Supreme Court answered this query in the negative. The Ohio v. Clark majority held that this kind of hearsay evidence doesn’t violate the Sixth Amendment’s Confrontation Clause. (576 U. S. ____ (2015).)

The Confrontation Right

In a 2004 decision, Crawford v. Washington, the U.S. Supreme Court limited the opportunities for prosecutors to use out-of-court statements to get convictions. (541 U. S. 36 (2004).) That case rested on the Confrontation Clause, which says, “In all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witnesses against him.”

Specifically, Crawford established that prosecutors can’t introduce a witness’s “testimonial” out-of-court statements unless:

  • the witness isn’t available to testify and
  • the defendant had an earlier chance to cross-examine the witness.

The Court explained that a statement gets the “testimonial” tag if the main purpose of the conversation that produced it was to create evidence that could be used in lieu of the witness testifying at trial. Think of a police officer interviewing a witness at the stationhouse.

Not Testimony, but “Testimonial”?

In the Clark case, like so many others involving Crawford issues, the defendant hadn’t had a prior opportunity to cross-examine the now-unavailable witness. So, the admissibility of the child’s statements turned on whether they were testimonial.

The Clark Court decided that they weren’t, that their primary purpose wasn’t to create evidence to use against the defendant. The majority reasoned that the statements came about because of an “ongoing emergency” of potential child abuse. The teachers’ questions and the boy’s answers “were primarily aimed at identifying and ending the threat.”

The Court also cited the fact that:

  • the teachers didn’t tell the boy that his answers would be used to either arrest or prosecute the defendant
  • the boy never indicated that he intended for police or prosecutors to use his statements
  • the conversation was “informal and spontaneous,” and
  • the teachers asked about the injuries as soon as they discovered them, in an informal school setting (rather than, for instance, the setting of a police station).

The Court additionally noted the relevance of the boy’s youth: Because they don’t “understand the details of our criminal justice system,” very young children will “rarely, if ever” give “testimonial” statements. They simply don’t know enough to form intent that their statements be used as substitutes for trial testimony.

Another key point of the Clark decision was the role of the teachers—not police officers—as interviewers. The Court didn’t go as far as saying that statements to people other than law enforcement officers are never testimonial. But it came close: “Statements made to someone who is not principally charged with uncovering and prosecuting criminal behavior are significantly less likely to be testimonial than statements given to law enforcement officers.”

The Downside of Watching Your House Rise in Value: Capital Gains Tax

buying-home-selling-your-house“Did you hear how much that house down the street just sold far?!” If you live in a place like the Bay Area of California, that’s a sentence you’ll hear repeated at every neighborhood gathering — usually followed by details about what a fixer-upper the place was, how many offers came in, and how many tens of thousands over asking price it actually sold for.

Then everyone goes a bit quiet, secretly calculating, “If that dump went for over a million, then my place must be worth . . . WOW!”

Yes, it’s fun to be back in a time of home appreciation. Such rises in value haven’t happened in every part of the U.S., but in the places where they are happening — such as in the cities of New York, Los Angeles, San Francisco, Boston, and San Diego — the numbers are truly eye-popping.

As soon as your home appreciation goes over $250,000 (for individual homeowners) or $500,000 (for married homeowners filing jointly), however, the fun is tempered by a look down the road, as you remember capital gains taxes. Real estate gains like these catapult you right over the IRS exclusion, into a world where you might actually owe a chunk of change when you sell.

This issue was recently pointed out by Ron Lieber of The New York Times, in an article whose title offers the best advice around: “House Value Jumping? Save Your Home Improvement Receipts.” According to Lieber’s research, 3.8% of single homeowners and 1.2% of married homeowners already need to worry about paying capital gains tax upon sale, based on their home’s appreciation since they purchased.

But, as Lieber also reminds us, home appreciation isn’t as simple as merely subtracting your purchase price from your sale price. You can reduce your “profit” by factoring in (among other things) the money you poured into improving your home along the way. As Nolo’s Stephen Fishman further explains, “The cost of home improvements are added to the tax basis of your home. “Basis” means the amount of your investment in your home for tax purposes. The greater your basis, the less profit you’ll receive when you sell your home.”

But you’ve got to be able to prove the amount you spent on improvements. The IRS auditor isn’t going to be impressed by you pointing to your lovely new kitchen countertops if you don’t have the receipts to back it up. See “Tax Reasons to Keep Good Records of Home Improvements” for details on what records to keep.