Nonprofit Newswire | December 28, 2009

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The Nonprofit QuarterlyLate Payments Continue to Plague Illinois Nonprofits
Dec 24, 2009; The Register-Mail | As cash flow problems worsen in many states, this article from the Register Mail in Western Illinois reports that the state of Illinois is behind in its payments to two local organizations providing services to people with disabilities to the tune of more than $5 million total. This has forced both nonprofits to depend more and more heavily on lines of credit. The article emphasizes that the story is a very common one in Illinois. Some states treat their nonprofit contractors like private banks, delaying payments and contracting over months while the nonprofits are forced to take out loans on the state’s behalf. Illinois has, long before the recession hit, had a particularly bad reputation for this behavior. It’s time for reform where state contracting practices are concerned.—Ruth McCambridge

The Nonprofit QuarterlyRenovation Project Badly Timed for Fresno Museum
Dec 24; The Mercury News | Some nonprofits that started capital campaigns at the wrong time have been made fragile by fundraising and building processes that might have previously been considered somewhat standard. The Metropolitan Museum in Fresno, for instance, has now been given a “drop dead” date of January 31st by the City of Fresno to which it owes $15 million. A $28 million renovation campaign that started in 2005 stalled as the recession took hold in the psyches of donors. The state of the museum’s finances have attracted visitors—most are families wanting to visit with their children before a possible closure but one was a panicked owner of a number of Chagal prints on display at the museum who was anxious to reclaim his pieces. All involved are hoping that additional large donors will come forward to ensure the museum’s future.—Ruth McCambridge

The Nonprofit QuarterlyDoes Big-Time College Football Deserve Big Tax Breaks?
Dec 26, 2009; American-Statesman
| There is plenty of organizational diversity in the nonprofit sector.  Consider the $5.7 million in salary paid to Mack Brown at the University of Texas? Brown coaches the University of Texas “Longhorns.” Like many football and basketball coaches. Brown’s implicit defense of his compensation package is how much money the football team generates for the university—purportedly $87.6 million last year. Forbes magazine ranks Texas as the nation’s most valuable college football franchise for how much money it generates for the university and the community. But calculating how much of college athletics really is nonprofit is difficult. There is a lot of implicit subsidy by the taxpayers of college stadiums and other functions that don’t get subtracted from the amounts coaches calculate as what their teams “plow back” into education. The tax exempt purpose of the University of Texas is education, but, as John Colombo of the University of Illinois College of Law asks, “Is Texas paying Mack Brown $5 million for his contribution to the educational environment at the university, or because it wants to win football games?” Some might say that a good chunk of the Longhorns’ athletic income is plowed back into athletics, not education. According to the American-Statesman, “Eighty-five percent of college presidents in the Knight survey labeled football and basketball coaching salaries ‘excessive.’” Is UT football part of the educational function of the university? With only 49 percent of UT football players earning their 4-year degrees, 47 percent of UT basketball players, and 37 percent of UT baseball players,  there is some question as to whether the University is delivering on its charitable/educational function for its high profile athletes.—Rick Cohen

The Nonprofit QuarterlyNonprofits Group Backs a Tax Exemption Fight in Georgia
Dec 26, 2009; Athens Banner-Herald
| Give credit to the Georgia Center for Nonprofits doing exactly what it is supposed to be doing—weighing in on legal and legislative matters regarding the taxation, or improper taxation, of nonprofit entities. The Georgia Appeals Court in November ruled that the facility of Nuci’s Space, a nonprofit musicians’ resource center, should be subject to property taxes. The reasoning of the court was that because the Nuci’s Space building is sometimes rented out for functions not explicitly related to its charitable purpose, such as weddings and band rehearsals, it should be treated, we presume, like a commercial property. That’s a pretty silly opinion. A nonprofit can earn unrelated business income without suddenly transforming overnight into a for-profit enterprise. Unless these non-charitable functions of Nuci’s Space constituted the overwhelming bulk of what the organization did, it seems like the extra income earned from those activities could be subject to UBIT, but that wouldn’t make the property suddenly no longer exempt from property taxes. In this case, the income from those non-charitable activities actually help support Nuci’s Space’s charitable functions such as mental health care and other services for uninsured musicians. Let’s hope GCN wins, else the Nuci’s Space case becomes a statewide Georgia green light for municipalities to go after tax exempt properties that aren’t exclusively used for charitable purposes.—Rick Cohen

The Nonprofit QuarterlyKeep IRS Auditors Away: Earn Less than $200,000
Dec 26, 2009; The Star Press
| The news for the nonprofit sector is that the IRS has increased its examinations of tax exempt organizations from 7,800 last year to 10,000 in 2009. That’s only 0.55 percent of all tax exempt organizations in the U.S. However, although the number of tax exempt audits will increase over 28 percent this year, the number of business returns so audited will proportionally decline. Interesting, isn’t it, that in the midst of the Great Recession caused by the misbehavior of speculators and investors, the IRS would increase its attention toward nonprofits and reduce its scrutiny of businesses? Something odd about that . . .—Rick Cohen 

The Nonprofit QuarterlyNonprofit to Administer Stimulus Broadband Initiative
Dec 27, 2009; Duluth News Tribune
| Minnesota is getting $1.7 million from the federal stimulus to map broadband Internet access and plan for service improvements in the region, reports the Associated Press. According to the Federal Communications Commission, the broadband initiatives funded in the American Recovery and Reinvestment Act are intended to accelerate broadband deployment in unserved, underserved, and rural areas and to strategic institutions that are likely to create jobs or provide significant public benefits. The money will go to Connect Minnesota, a nonprofit collaboration between the state Department of Commerce and Connected Nation, a national nonprofit that promotes increased broadband access. Connect Minnesota will use $1.2 million for mapping and data collection and another $500,000 for planning over five years. The group will feed the state mapping data into a national broadband map, set for release in 2011. Increasing broadband’s reach and quality to underserved communities is a laudable goal and let’s hope these funds can serve as stimulus to the economy as well.—Aaron Lester


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  • ChrisScott

    In response to the late payment article: we need to rethink sources of funding. Perhaps if more businesses were more socially responsible, dedicating monies to nonprofits