Nonprofit Sector Reduced by 17% This Week

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June 9, 2011; Source: New York Times | This week, after extending the deadline and engaging in a national information campaign to raise awareness, the IRS finally made good on its promise to drop nonresponsive nonprofits from its rolls. The number of groups that were excommunicated per the 2006 Pension Protection Act was 275,000 – roughly 17 percent of the sector.

If, by the way, the IRS had stuck to its original deadline it would have been 25 percent. Most believe that the majority of the 275,000 do not exist, having gone out of business without letting the IRS know, but there will inevitably be some for whom the change in status will come as an unwelcome surprise. A list of those groups affected can be found here so you can all check for friends and colleagues.

The IRS intends to make re-filing for status as easy as possible, even reducing the filing fee to $100. All across the country on Thursday, local newspapers – just in case – were announcing the numbers and names of local groups that were dropped as here where it was announced that there were 1,500 in Hawaii alone and here where it was announced that the number is more than 3,000 in Kentucky.

Visit the Council of Nonprofits website for more information and guidance.—Ruth McCambridge