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D.Grabitske

Steven T. Miller, commissioner for tax exempt and government entities at the Internal Revenue Service spoke about why changes are proposed in reporting of nonprofit activity. Basically he said that nonprofits are under a microscope because citizens generally want to make sure a public service happens in lieu of foregone taxes. In a speech a few days later Miller provided some thoughts on trends the IRS sees in the nonprofit sector. He mentions several, but one notes being Ready for the Boom and the other is the troubling blurring of the line between for-profit and nonprofit activity. While nonprofits can benefit from business discipline, it seems that forgetting the mission blurs the line the fastest and the cause of being under the microscope. What’s your take on the commissioner’s comments?

 

5 Responses to Under a microscope

  1. Mary Warner says:

    Still digesting Steven Miller’s thoughts, but he mentioned 33 Principles of Good Governance that have been developed for nonprofit organizations. Here is a link to the website of the Panel on the Nonprofit Sector:

    http://www.nonprofitpanel.org/

    This was the group that put together the principles. Further, here is the link to the pdf version of the principles:

    http://www.nonprofitpanel.org/selfreg/Principles_Guide.pdf

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  2. Mary Warner says:

    I read both of Steven Miller’s talks last week and the one thing that sticks with me without looking back at the transcripts is that over 70,000 nonprofit organizations are formed every year. Holy smokes! 70,000! That’s a lot of nonprofits being added to the existing ones. I’ve got to wonder whether all of them are really necessary. If, perhaps, an informal, short-term structure wouldn’t be better for some of these groups.

    It takes a lot to run a nonprofit, especially with the continual addition of federal and state regulations. Each one of those nonprofits needs a board of directors. Each will be looking for volunteers and funding and possibly staff. Are there really enough people around with the energy and necessary knowledge to keep all of these nonprofits operating effectively, especially if the nonprofit sector continues to grow at this rate? Is there enough funding available to support them all adequately? In my estimation, this situation is a house of cards.

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  3. Mary Warner says:

    Btw, the Principles for Good Governance and Ethical Practice I mentioned above (33 principles) is one excellent publication. The group that put it together created a document that is succinct and easy to understand. It’s appropriate for a complete novice and a great reminder to those who’ve worked in nonprofits for years. You can order copies through the website I posted above and, best of all, they are free. Even the shipping is free. The Panel on the Nonprofit Sector, which created the principles, was the outgrowth of the Senate’s investigation into nonprofit activity, so the piece has been sanctioned by the Senate, as well as Steven Miller.

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  4. David Grabitske says:

    70,000 is a lot for one year, but fortunately not all of those are historical organizations, nor are they all in Minnesota. There are probably up to a half dozen new nonprofit historical organizations started in Minnesota each of the last 7 years. There seem to be many reasons cited, from a marketing tool for their city to a reaction to suburbanization pressures. Why do you suppose creating a nonprofit is so attractive that 70,000 are created in a year? Does the volume of new nonprofits also prompt all this attention?

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  5. Ben "ignoramous" Leonard says:

    I think the 70,000 figure was thrown out for shock value, because it’s well, shocking…. I don’t see a whole lot of difference between 70,000 non-profits and 70,000 new small businesses – which I would assume that number is actually a lot higher. It seems to me these comments and others are spurred by rather awful tax forecasts and a bunch of people wondering where the tax burden will fall. I’m not sure these nonprofits are really an issue there. I’m sure if the Minneapolis Institute of Arts or MHS had to pay taxes, they’d have to pay A LOT. But I’d be willing to bet the overwhelming majority of these new non-profits are tiny hobby operations that apply so they can feel "professional" and have a chance to apply for grant money. They don’t have spaces, or at least not great ones, and they don’t have staff. What’s to tax? Yeah you lose out on sales tax, but for most of them that would probably account to less than $100 a year. Most A LOT less.

    Whenever I encounter yahoos who complain about our "free ride" nonprofit status and how we don’t contribute financially to the community, I counter with the amount of money we actually spend in town. I’m not talking about salaries or money that goes out of county, but bills paid directly to local business. It’s substantial.

    I think it’s inevitable that lots of nonprofits will fail. They’ll fail because not enough people want their services and/or there is not enough public or grassroots support to keep them going. It’s sad if it’s your baby, but otherwise, big whup. How many small businesses came and went in our communities last year alone. It happens all the time.

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