Serving as a fiscal agent is an appropriate and creative method for a public charity to deal with charitable needs in its community. But it is fraught with problems and can create damage to all if the rules are not properly followed.
U.S. taxpayers and domestic charities often seek to support charitable activities abroad. But making grants for charitable activities in foreign countries subjects both U.S. taxpayers and U.S. charities to additional rules.
Contributions by U.S. donors are deductible if made to U.S. charities that conduct activities abroad, but are usually not deductible if made directly to foreign charities. Tax treaties with Canada, Mexico and Israel allow deductions for gifts to certain charitable organizations in those countries, but generally deductions are available only for gifts to U.S. charities.
By Virginia P. Sikes and Don Kramer
Even before 9/11, federal statutes and regulations prohibited support for terrorist organizations, but after the World Trade Center attack, the regulation and potential penalties have become even more severe.
Charities providing grants at home or abroad should familiarize themselves with the basic rules and take reasonable steps to try to avoid violations that can cost their exempt status or even send someone to jail.
The National Conference of Commissioners on Uniform State Laws (“NCCUSL”) has approved some major revisions to the Uniform Management of institutional Funds Act (See Ready Reference Page: “UMIFA Sets Rules for Charitable Endowments.”) to adopt more modern standards for prudent investing and to allow more flexibility in spending endowment funds.
UMIFA was originally approved in 1972 and was considered highly successful in providing standards for charities to use in managing their investments and spending from endowments. It has been adopted, with some variations, in 48 states.
The new Act is the result of four years of work and debate by...
Many businesses, including nonprofit businesses, face the dilemma associated with receiving or sending a check marked “In Full Satisfaction” in the midst of a disagreement with a vendor. The situation usually starts out with a dispute between a buyer and a seller of goods that ends up with the buyer sending the seller a check for less than the entire amount that the seller claims is due. The check or the accompanying letter ordinarily includes language to the effect that deposit of the check constitutes full satisfaction of the disputed amount. Cash the check and forever hold your peace.
In his inaugural address, President Barack Obama stated that “…[w]e know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus – and nonbelievers.”
It is this patchwork of different faiths, beliefs and non-beliefs that the Equal Employment Opportunity Commission (“EEOC”) calls America’s “rich tapestry of religious beliefs and practices.” It is, however, this very tapestry of differences that has seeded conflict and increased litigation about religious discrimination in the workplace.
Unitrusts are among of the most flexible tools available to the planned giving officer. The final regulations permitting a "flip" from an income only payout to a fixed percentage payout in the case of sale of unmarketable assets are a significant advantage for both donors and charities. They should be studied carefully to see if they can be used with preexisting trusts.
Donors who hold non-qualified stock options or other forms of non-qualified deferred compensation should consider an absolutely no risk planned giving technique that could result in both a substantial gift to charity and more income for a surviving spouse.
It is not necessarily easy to strike the right balance in accepting gifts with strings attached. If there are restrictions on any gift, be sure that both the donor and the charity fully understand what they are and that both can live with the limitations. You will be more likely to avoid both legal and public relations problems.
Travel tours have been one of the primary points of contention between small business and charities in the battle over unrelated business income. The IRS and Congress have regularly looked for abuses. Unless a tour program can contribute very significantly to your mission, it may not be worth the hassle to set one up and claim that it is not subject to unrelated business income tax.