How Will the New Tax Law Affect Your Nonprofit, Your Employees, and the People You Serve?

Yesterday Congress passed the $857 billion tax package negotiated by President Obama and congressional Republicans. President Obama is expected to sign the legislation today.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (H.R. 4853) has numerous components of interest and concern to nonprofits – as employers and as mission-based organizations involved in local communities. This list presents portions of interest to most nonprofits, nonprofit employees, and the people they serve:

• Tax Rates Maintained: All of the individual tax rates put in effect in 2001 and 2003 are maintained through 2012, including those for upper-income tax brackets. Most immediately, this means that nonprofit and other employers will not have to adjust employee withholdings for income taxes.
• Individual Payroll Taxes Reduced: Employees receive a two percent reduction in the Social Security tax they pay. For 2011, nonprofit and other employers will need to reduce the individual's share of payroll withholding from 6.2 percent to 4.2 percent. To illustrate what this change means, an individual earning $50,000 will see $1,000 in tax savings.
• Estate Tax: The bill restores and reduces the federal estate tax at a rate of 35 percent and increases the exemption level to $5 million, two changes that many fear will eliminate previous incentives for the wealthy to give.
• Charitable Giving Incentives: The IRA rollover and other expired charitable giving incentives (promoting donations of food, land, computers, and books) are restored for the remainder of 2010 and through the end of 2011, which should help promote giving.
• Unemployment Benefits: The legislation extends the enhanced program of 99-weeks of unemployment benefits through 2011. This allowance may prevent additional strain that would have hit many nonprofits that provide services to those with no income.
• Alternative Minimum Tax: Middle-income taxpayers will not be subject to the alternative minimum tax in 2010 and 2011 because the bill renews a "patch" that limits the application of the AMT to approximately four million upper-income individuals. Without this patch, many taxpayers would have seen an automatic increase in their tax rates.

The following link will take readers to a 12-page summary that provides greater detail about the bill, including provisions that might be of interest to particular nonprofits (e.g., those providing child care, adoption assistance, certain education): Summary of the Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

Also, the IRS just released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011. See Notice 1036.

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OFO Head Named to State Advisory Council

Daniel Maskin, Chief Executive Officer of Opportunities for Otsego, was recently appointed to the New York State Department of State Community Services Block Grant Advisory Council.

The Community Service Block Grant funds 52 community-action agencies in the state. Council members from local government, private nonprofit providers, and the public are appointed by the governor, Senate and Assembly. Maskin was appointed by Assembly Speaker Sheldon Silver.

In addition to his work with OFO, Maskin has served as the Chief Executive Officer to the New York State Community Action Association. He is a member of the Friends of the Oneonta Community Health Center Board of Directors and the Oneonta Rotary Club.

Council of nonprofits accepting grant applications

The New York Council of Nonprofits will accept applications for grants from the Otsego County Mini-Grant program starting Jan. 1 and continuing through March 1.

The program is "intended to measurably improve the governance and management operations of qualifying 501(c)3 charitable nonprofits located in or providing a majority of services to Otsego County," according to a media release.

Launched in 2004, this program has been made possible with support from the Scriven Foundation.

The program offers $40,000 in grant funds, with individual awards ranging from $500 for scholarships to $2,000 for merger, consolidation or crisis management services.

Grants will be awarded competitively to qualifying nonprofits with approved project activities.

Grant criteria are available at www.tinyurl.com/MiniGrantCriteria2011.

It is recommended that any applicant review the 2011 criteria before applying.

To fill out a grant application, visit http://tinyurl.com/OtsegoMinigrantApp. Grant award announcements will be made by April 15, 2011.

To learn more about NYCON, visit www.nycon.org.

SBA, Microsoft create technology guide, online course

The U.S. Small Business Administration (SBA) today announced a new technology resource is available for small business owners.

The SBA and Redmond, Wash.-based Microsoft Corp. have teamed up to create "Business Technology Simplified," a free guidebook that offers tips on how to use technology and innovation to make businesses work more efficiently, the SBA said in a news release.

The guidebook includes material on simplifying work tasks, do-it-yourself marketing, time management, and finding and cultivating customers.

"Business Technology Simplified" is available in a printed format at the SBA Syracuse district office. Computer users can also access the guidebook online at the Microsoft website.

It's also available as a free distance-learning course, according to the SBA.

The course is available at www.sba.gov/training.

Shake-up at Foothills: Miller to head board

by Denise Richardson of the Daily Star

Some characters and roles have changed as the Foothills Performing Arts and Civic Center enters the next scene of its play to survive.

Oneonta Mayor Dick Miller started a project in October to raise $1.25 million to finish the theater. But the effort highlighted concerns that meeting monthly operating expenses had to be the primary focus, he said Monday night, and as viable short- and long-term plans develop, funding to complete the theater will follow.

"We have to do both, this is a redirection of effort," Miller, who is interim Foothills board chairman, said. "We know what the task is ahead." Miller said he continues to focus on a small group to support Foothills and its theater complex on Market Street in Oneonta.

Current cash shortfalls may require that Foothills curtail operations during the first quarter of 2011, a media release issued Monday said. However, scheduled activities in the first few months of the New Year will take place, officials said, and bookings of theater groups, concerts, civic events, and weddings extend into 2013.

Miller said as mayor he would convene a summit of all visual arts, music and theatre organizations and venues in January. "Oneonta has much to offer the region," he said, "and we need to come together along with the business community to market our activities more effectively."

Meanwhile, seven new members have been named to the Foothills board of directors and committee assignments have been adjusted, Miller said in discussing the media release.

The new board members are Cailin George, Bassett Healthcare; Carol Blazina, former vice president of public affairs at SUNY Oneonta; Armand Nardi, publisher of The Daily Star; Rob Robinson, president and chief executive officer of the Otsego County Chamber; Robert Hanft, a retired JP Morgan executive on Hartwick College, Pathfinder Village and Otsego County Industrial Development Agency boards; Rick Weinberg, local businessman; and Miller.

"Having so many new and well-qualified directors to work with as colleagues, energizes all of us who have been involved with Foothills for more than a decade," Drogen said in the release. "We will be able to focus our energies on the most critical issues _ program development, financial stability, facility completion and fundraising."

Read the rest of the article at the DailyStar.com

How to Donate like a Pro

In a Time of Tighter Budgets—For Benefactors and Charities Alike—It's More Important Than Ever to Make Your Gifts Count. Here's How

Investors demand a good return from their assets. Now donors are increasingly seeking the same for their charitable dollars.

Many philanthropists, large and small, are anxious about writing checks—and many endowments have yet to recover fully from the bruising they took during the financial crisis. Finding the worthiest, most-efficient organizations to maximize the impact of your donations couldn't be more pressing.

Yet identifying the best charity can be as difficult as picking a good money manager, with philanthropists left to navigate a world of tax forms, ratings systems and often misleading jargon. It's easy just to write a check and hope for the best—but you stand the risk of getting a poor return on your charitable investments.

Making matters more complicated: Many long-cherished tax breaks are coming under fire. Next year could bring the return of limits on itemized deductions, including those for donations, if Congress doesn't extend the Bush-era tax cuts for couples earning more than $250,000 ($200,000 for individuals). Even if Congress extends the cuts for all, the idea of cutting back charitable tax breaks is still in play: President Obama's deficit commission this week proposed limiting the deductions for large gifts to amounts above 2% of adjusted gross income.

All this is making donors rethink their giving strategies, says Patrick Rooney, executive director of the Center on Philanthropy at Indiana University. "They want to make sure now more than ever that they're using their money wisely."

Overall giving is down sharply from its recent highs. Among high-net-worth households—who account for the bulk of individual charitable dollars—average giving dropped 34.9% to $54,016 in 2009, from $83,034 in 2007, according to a survey conducted by the center and sponsored by Bank of America Merrill Lynch.

The downward trend appears to be continuing. One in five people say they are giving to fewer organizations than in the past, according to a November poll from Harris Interactive. A third are giving in smaller amounts this year than last. And the percentage of people not giving at all has doubled to 12% in 2010 from last year.

There are a host of charity-rating agencies to consult, but to get a more-accurate picture, consider volunteering your time before giving money. Do your own research: Talk to beneficiaries, visit work sites and study a group's finances yourself to judge the effectiveness of its programs.

That's what Denise Winston did. The former business banker "always just wrote a check," she says. But after leaving her job and starting her own financial-education business in 2009, the Bakersfield, Calif., resident became more frustrated over how little of her donations were going to beneficiaries. She decided she would spend time volunteering with different organizations before giving, partly to get a better sense of her time and money's impact.

"I'm closer to the person receiving support," she says. "Anyone can write a check. But I like to give things you can't buy."

Here's how to navigate the system and make sure the dollars you donate are making the biggest impact possible.

Article continued at Wall Street Journal.com, includes ways of gauging donor's impact and red flags that donors should watch out for.