'Ethical,' 'Maybe,' or 'Kinda Shady'? Jeopardy Template

COMPLIANCE CORNER

1-990-HOT TAX

BETTER RECOGNIZE!

STEWARDSHIP OR DOMINION?

100

Your development director secured a significant contribution from a major donor after, and submitted an expense report for a pretty hefty bar tab to boot (including the donor's cab fare home). But hey, this is a major donor we're talking about, right? a) Ethical b) Maybe c) Kinda Shady

b) Maybe Depends on organizational policies and procedures, however, in terms of public perception, this could be construed as contrary to 'public benefit.' Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

100

Your organization received an overwhelming amount of support from skills-based volunteers in 2014, and boasts over $150,000.0 in salaries in-kind for the last FY. Your staff accountant is almost 'giddy' as s/he prepares annual filings. I mean, that spike in Annual Gross Receipts is gonna look great to grantors, right? a) Ethical b) Maybe c) Kinda Shady

'Kinda Shady' is perhaps a little too harsh, as is it implies intent. However, this is NOT a 'maybe,' and suggests it's definitely time to have the 'professional development' conversation...... Salaries in-kind are a great way to demonstrate community engagement, but they don't get reported on 990s. c) Kinda Shady Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

100

The holiday's are approaching, that means the trifecta of engagement of donors. With Thanksgiving and Christmas only a month apart, the best strategy to take is really saturation. Your communication's strategy for the last calendar year quarter: Daily email blasts to every person in your database Semi-daily blasts on LinkedIn, Facebook, Pinterest, Twitter, Instagram, etc. Daily blog posts on your annual campaign If they see nothing BUT solicitation, they'll have to give in eventually, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Frequent bombardment of content is a HUGE turn off. (Just ask an MNA student that is still getting emails to, "complete your application.") Moreover, it's not donor-centric, and illustrates where your organization's focus is - getting 'warm bodies,' not building relationships. Varying posts, aligning communication strategy with donor preferences, and working with community partners to offer incentives are all great alternatives. Source: AFP Code of Ethical Standards

100

This lady keeps calling my office requesting to see our 990s. The general public can't just 'demand' our financials whenever they want! Especially if they're not existing donors, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady The nonprofit sectors relationship to the public is based on trust, amongst other important principles. Transparency is a must. The public has a right to request the organization's most recent financials, regardless of donor status. Source: AFP Code of Ethical Standards; and CASE Donor Bill of Rights

200

Your 501c3 organization interprets 'health care as a human right,' and supports Universal Single Payer Health. Following the affordable care act's ACA implementation of 'individual mandate,' your communications department launched an awareness campaign via social media educating around the implications - including a large demographic of Americans still unable to afford coverage. a) Ethical b) Maybe c) Kinda Shady

a) Ethical Why? Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

200

BONUS QUESTION | 2 POINTS A generous corporate donor just informed your organization of his/her contribution of a pretty hefty securities stock certificate. Your staff accountant enters a cash transaction for the total value of the stock certificate (minus the brokerage fee). a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Stock certificates are 'in-kind' donations. If the donor sold the stock, and donated cash, the total amount minus the brokerage fee would be reported as cash. Additionally, encouraging donors interested in contributing stock to donate, rather than sell and contribute cash, will prevent the creation of a taxable capital gain for the donor. Source: IRS Publication 561: Valuation of Donated Property; and IRS Compliance Guide for Public Charities

200

Three day weekend is coming up, you're taking off Thursday after lunch, pending your supervisor's approval. Guess those acknowledgment letters from last week are just going to have to wait..... a) Ethical b) Maybe c) Kinda Shady

c) Maybe "The IRS requires that a charity send a formal acknowledgement letter for any donation that is more than $250." If you've got a stack of letters acknowledging donors' $249.00 gifts, you're in the clear and can call it a day. (Might be time to have the 'cultural fit' conversation though....) Source: AFP Code of Ethical Standards

200

300

A partner organization's raffle to raise funds for 'Students without Twitter Accounts," was so successful, your 501c3 has decided to organize a raffle as well to raise funds for one of your summer programs. According to the Office of Attorney General for California, the registration period for conducting raffles is September 1 through August 31, but it would be great to raise funds BEFORE the summer, given the cause. We'll just make a quickie, two week long campaign, just long enough to meet the organization's goal, but brief enough to stay under the radar. The public sector is solely lacking in personnel anyway, it's not like they have to staff to enforce registration, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady "Unless specifically exempted, a nonprofit organization must register with the Attorney General's Registry of Charitable Trusts prior to conducting the raffle and file an aggregate financial disclosure report for all raffles held during the reporting year." Source: State of California Department of Justice Office of the Attorney General

300

One of your board member's is going through some financial difficulties. Divorce, followed by foreclosure on the house, heck.. the dog even ran off - it's like a bad country song. Given your close personal relationship, and their years of loyal service to the 'cause,' you decide to extend a loan. Just until s/he is able to get their head above water. Staying in federal compliance is a must though, and you know the law, so you've made sure to instruct the staff accountant to report it as income. (After all, there's a reason they put you in charge, gotta know your stuff!) a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Problematic in the context of good governance and ethical practices, BUT reporting income paid to a board member IS a great way to get rid of that burdensome tax exempt status! Source: AFP Code of Ethical Standards

300

From a purely financial perspective, donors whose gifts are less than the cost of mailing a letter of thanks don't really need to get acknowledgement letters. I mean, ROI is Business 101! a) Ethical b) Maybe c) Kinda Shady

Seriously......... c) Kinda Shady All donors, whether giving cash or in-kind, ought to receive a thank you letter. Acknowledge the donor, not the gift. Source: AFP Code of Ethical Standards

300

We just finished a fundraising event in support of Arizona's growing population of underrepresented 'Left-handed Veterans." Our stewardship campaign included messaging that was vague, which left us with a little wiggle room, and enabled me to pay our staff this month! As long as messaging isn't 'super specific' it's totally fine that I used the funds for payroll, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Come on now, you know this one.......... Source: CASE; and AFP Code of Ethical Standards

400

'Raybans for Humanity's' annual gala this year was a huge success! Exceeding the goal and triple the turn out and exposure, your board secretary is also beaming after securing a record breaking gift from major donor whose umbrella repair business was featured in a full-page ad for two weeks following the event. a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Unrelated business activities. Elaborate..... Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

400

'Save the Tape Worms,' a recognized benefit corporation just received their tax designation. As a start-up with an annual budget of less than 25k, the organization is 'off the grid' as far as charity watchdog sites are concerned. Keeping track of expenses and gifts is futile at this stage of development, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady All tax exempt benefit corporations, regardless of annual income, are required by law to file a 990. For organization's with Annual Gross Receipts of less than 25k a year, a 990-N is filed. Not doing so for 3 years will land your 501 on the 'got ur' tax designation yanked' list. That's right, there's a list! Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

400

One of your generous corporate supporters has received an increase in public attention after the publication of the organization's annual report, listing their major gift. Seem's philanthropy is attractive to for-profit consumers. Better to return the gift to the donor, and avoid any perception of conflict of interest right? a) Ethical b) Maybe c) Kinda Shady

a) Ethical Acknowledgment of donors and supporters (for-profit and otherwise) is an important part of recognition, and a great way to increase visibility of your supporters. Source: AFP Code of Ethical Standards

400

One of our (pretty big) donors makes regular gifts in support of our Literacy Program, making it possible for lower income students to receive tablets and laptop commuters. Our donor thinks technology "makes people lazy," and demanded that we direct the gift towards the purchase of typewriters "if the really need a crutch." Considering the size of the gift, our thinking is we better just do what s/he says with the money. I mean, we don't want to lose their financial support right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady "Developing a gift acceptance policy is a chance for an organisation to discuss how to handle [these kinds of] practical issues.....The process is closely related to ethics, and it is often useful to have input from independent advisers who can bring an objective perspective.: Source: CASE, 'Fundraising Fundamentals,' Section 10.6

500

Tracking overtime and comp time is far too onious a task for your six person office. Besides, everyone pretty much knows that they're expected to work weekends and evenings, especially before a big event. Anyway, as the executive director, it's your call to determine who's exempt or not, right? I mean, what does exempt even mean in the nonprofit world......... a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Bottom line: it is the state not the employee, not even the executive director, that determines the employment status of paid staff. While there are specific criteria, guiding each classification, 'it's just easier,' isn't one of them. Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

500

Your organization was recently the recipient of the coveted 'unrestricted funds grant.' When the grantor announced, "use it for what ya'll need, I couldn't care less about reporting," your ED shook with joy and nearly fainted. Your program manager is ecstatic, "awesome, no need to measure outcomes then!" Right? a) Ethical b) Maybe c) Kinda Shady

b) Maybe yes, maybe no. Here's why: In terms of accountability, the onus of demonstrating (some degree) of impact [at every level of the value chain] lays with the organization. While technically, the no reporting is submitted to this grantor, best practices dictate that an organization tasked with 'the public good,' demonstrate just that. Source: AFP Code of Ethical Standards

500

One of our community businesses just donated a stack of 'Star Struck Coffee' cards! Our board chair LOVEs Star Struck, and just made a cash donation yesterday to the organization's 'Hipster's without Skinny Jeans' fund. I'm totally sending our the coffee cards, in place of a letter of acknowledgment. S/he'll appreciate that so much more, and it's all about the donor, right? a) Ethical b) Maybe c) Kinda Shady

Again, 'shady' may be too harsh. Your development associate's heart is in the right place; it IS all about the donors. AFP has clearly defined codes around donor acknowledgements. As does the IRS, your organization's Operations Manual, Bylaws, etc. Source: AFP Code of Ethical Standards; and IRS Compliance Guide for Public Charities

500

A good number of our annual donors have been making gifts for over 20 years. Chances are, they'll continue to be supporters, with or without our intervention. Every year, like clock work, 20 or so checks come in. We haven't had to do much in the way of engagement with this group. Our thinking is, attention should really be given to the newer, major donors, right? a) Ethical b) Maybe c) Kinda Shady

c) Kinda Shady Again, its about the donor, not the size of the gift. Moreover, major donor cultivation often starts with annual donors. "If an organization neglects its annual donors in fundraising efforts, it will fail to cultivate major donors for the future." Source: BenefactorGroup.com; AFP Code of Ethical Standards; CASE Donor Bill of Rights