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Herbert: State Budgets a Train Wreck
January 8, 2010; New York Times | New York Times op-ed columnist Bob Herbert just published a column on Friday that says exactly what the Nonprofit Quarterly will say in this week’s special NPQ series on the disastrous state of state government budgets. Herbert’s point is that as a nation, “we’re all but ignoring the fiscal train wreck that is coming from states with budget crises big enough to boggle the mind.” Citing California and New York as the avatars for the field, Herbert says that “states are in the worst shape since the Depression . . . facing prolonged budget nightmares.” Importantly for nonprofits, Herbert cites examples of where the impacts are really being felt—California’s cuts in public education leading to layoffs of tens of thousands of teachers and Michigan’s cuts in healthcare for severely disabled children, just to name two. He also acknowledges that the states have done little to clean up their budget acts, suggesting that “very few have been paragons of fiscal responsibility over the years, calling California “a well-known basket case” and New York “a laughingstock.” With little corrective action on the parts of governors and legislatures and less and less likelihood of a state-budget stimulus infusion from the federal government, the states, according to New York’s lieutenant governor, Richard Ravitch, “will have no choice but to impose extreme budget cuts, or raise taxes, or—most likely—do both.” Do look at NPQ’s new series on the conditions of state government budgets and state economies. This issue should be a rallying cry for the nonprofit sector.—Rick Cohen
But is it Charity?
January 10, 2010; New York Times | Goldman Sachs might require its top executives to pay a percentage of earnings to charity according to the New York Times yesterday. Bear Stearns tried a similar tactic, requiring their top executives to donate 4% of their salaries to charity. While Goldman Sachs is still working on the details, if their top executives have the large bonuses many are anticipating, this could infuse hundreds of millions of dollars into the nonprofit sector. We’ve written before about Goldman Sachs and the history of philanthropy as a public image booster. While nonprofits sure could use more money, it begs the question, is required giving voluntary giving? Is this what the IRS had in mind when it defined charitable giving? Either way, we’ll keep watching to see just how big those Goldman Sachs bonuses are and how their latest philanthropic endeavor takes shape. As my favorite news commentators Seth Meyer and Amy Polar said, “Also if you are trying to convince people that care about things other than money, may I suggest you remove the words “gold” and “sacks” from your name?”—Kristin Barrali
Harvard University Audited as Part of IRS Probe of Nonprofits
January 11, 2010; BusinessWeek | The hot topic of executive pay moves into legal waters this week, as forty colleges will be audited this year as the IRS conducts its annual reviews, and among them is the world’s richest, Harvard University. At stake is the tax-exempt status of activities not directly related to the school’s educational mission. Between the executive compensation review and examinations of endowment investments, surely Senator Charles Grassley is as pleased as he was in 2008 when the probe was announced. If the weakened nonprofit arm of the IRS is looking to show a little muscle on executive pay issues, they’ve chosen a highly visible target.—James David Morgan
Community Foundation Thrives in Charlottesville
January 9, 2010; Charlottesville Daily Progress | Amidst all the news of foundations—both private foundations and public foundations like community foundations—bemoaning their declining assets and grant distributions, the Charlottesville Area Community Foundation has a different story to tell. According to a foundation report, “Most foundations saw as much as a 10 percent drop in funding and we were the opposite. In fact, the money we gave in grants is the most we’ve ever been able to give.” Donations to the foundation increased one-third over 2008 to $8.9 million, contrary to what the community foundation anticipated. The bulk of the grant distributions and income growth appears to have been in donor-advised funds. The Progress reports new funds established by donors in 2009 including the “Gateway Fund” of Jay and Barbara Kessler to support patients and families at the University of Virginia’s liver transplant center. Of the $5.7 million in foundation grant distributions, the Progress says that $280,000 came from the foundation’s own unrestricted funds. That means that the growth in this community foundation, perhaps in many, is in the donor-advised fund area, which is not surprising. Other named and visible funds at the community foundation include Bama Works identified with the Dave Matthews Band (which gave away $468,000 in 2009) and DAFs established to benefit the Martha Jefferson Hospital and scholarships for students at the Fluvanna County High School. Of course, other community foundations depending on the same DAF model have not fared nearly as well as the Charlottesville community foundation.—Rick Cohen
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