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Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
Nonprofit Information for Business Solutions
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Nonprofit Information for Business Solutions

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How GuideStar can help turn nonprofit information into new business opportunities. Designed for attorneys, accountants, asset managers, financial planners, consultants, and other professionals who …

How GuideStar can help turn nonprofit information into new business opportunities. Designed for attorneys, accountants, asset managers, financial planners, consultants, and other professionals who work with nonprofits, and discusses industry best practices for analysis, benchmarking, prospecting, and setting compensation levels, as well as recent tax code changes that may affect your pre-grant due diligence process.

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  • 1. GuideStar Professional Solutions: Non-Profit Tools and Intelligence to Fuel Your Research, Analysis and Pre-grant Due Diligence © 2010, GuideStar USA, Inc. All Rights Reserved. This information is copyrighted subject matter owned by GuideStar USA and is protected by United States and international copyright law.
  • 2. Scott Menzel Manager, Product and Customer Experience Pamela Jowdy Senior Product Manager Today’s Facilitators
  • 3. <ul><li>GuideStar Premium: Primer and Demonstration </li></ul><ul><ul><li>Search and Refinement Tools </li></ul></ul><ul><ul><li>Research Tools </li></ul></ul><ul><ul><li>Analysis Tools </li></ul></ul><ul><ul><li>Perspective: Client Persona </li></ul></ul><ul><li>GuideStar Charity Check: Primer and Demonstration </li></ul><ul><ul><li>How it works </li></ul></ul><ul><ul><li>What it delivers </li></ul></ul><ul><ul><li>Perspective: Client Persona </li></ul></ul><ul><li>Common Participant Questions </li></ul><ul><li>Q&A </li></ul>Today’s Objectives
  • 4. Key Metrics and Milestones GuideStar 101
  • 5. Key Considerations Exempt Sector 101 <ul><li>There is one exempt organization for every 169 Americans </li></ul><ul><li>The sector employs about 9.4 million workers </li></ul><ul><li>The sector represents over 7 percent of the total U.S workforce </li></ul><ul><li>There are 175 new tax-exempt organizations recognized by the IRS every day </li></ul><ul><li>Higher education, hospitals, and primary care facilities: </li></ul><ul><ul><li>represent 2 percent of the total number of public charities </li></ul></ul><ul><ul><li>hold more than half of all assets and represent well over half of all expenses </li></ul></ul><ul><li>Roughly half of all exempt organizations are staffed entirely by volunteers </li></ul><ul><li>Roughly one third of all exempt organizations have fewer than 10 employees </li></ul>Source: National Taxpayer Advocate 2009 Annual Report to Congress http://www.irs.gov/pub/irs-utl/1_09_tas_arc_vol_1_preface_toc_msp.pdf
  • 6. Key Terms and Definitions Non-Profit Vernacular 101 <ul><li>MSA: Metropolitan Statistical Area </li></ul><ul><ul><li>Urbanized areas of high population density </li></ul></ul><ul><ul><li>Based on counties and county-equivalents </li></ul></ul><ul><ul><li>369 Metropolitan Areas </li></ul></ul><ul><ul><li>582 Micropolitan Areas (core city 10K > 50K) </li></ul></ul><ul><li>NTEE: National Taxonomy of Exempt Entities </li></ul><ul><ul><li>Classification system used by the IRS </li></ul></ul><ul><ul><li>Tag organizations into broad categories </li></ul></ul><ul><ul><li>Three-tiered hierarchy </li></ul></ul><ul><ul><li>IRS coding at third (tertiary) level </li></ul></ul><ul><ul><li>http://nccs.urban.org/classification/NTEE.cfm </li></ul></ul><ul><li>BMF: Business Master File </li></ul><ul><li>Private Inurement: excessive compensation or other unreasonable benefit granted to “insiders” </li></ul><ul><li>Intermediate Sanctions: penalties imposed by the IRS for excessive compensation levels or other private inurement violations (IRC Section 4958) </li></ul>http://www2.guidestar.org/rxg/help/glossary.aspx
  • 7. Affiliation Type Non-Profit Vernacular 101
  • 8. GuideStar Premium Tools for non-profit research and analysis Pamela Jowdy Senior Product Manager
  • 9. Best Practices and Applications Who Uses GuideStar Premium? <ul><li>Non-Profit Development Directors </li></ul><ul><li>Non-Profit Fundraising Directors </li></ul><ul><li>Grant Writers </li></ul><ul><li>Foundation Grants Administrators and Donor Services Managers </li></ul><ul><li>Corporate Foundation Giving Program Managers </li></ul><ul><li>Healthcare: Prospect and Research Directors </li></ul><ul><li>Accountants, Auditors and Compliance Officers </li></ul><ul><li>Attorneys and Paralegals specializing in non-profit practice </li></ul><ul><li>Asset Managers and Financial Services professionals specializing in non-profit practice </li></ul><ul><li>Marketing Communications professionals </li></ul><ul><li>Management and technology consultants </li></ul>GuideStar Premium
  • 10. Demonstration Areas of Focus <ul><li>Search and Refinement Tools </li></ul><ul><ul><li>Did You Mean </li></ul></ul><ul><ul><li>Related Keywords </li></ul></ul><ul><ul><li>Search Refinement </li></ul></ul><ul><ul><li>Sort Options </li></ul></ul><ul><ul><li>Advanced Search </li></ul></ul><ul><ul><li>Data Depth </li></ul></ul><ul><li>Research Tools </li></ul><ul><ul><li>Non-profit search </li></ul></ul><ul><ul><li>People search </li></ul></ul><ul><ul><li>Affiliation Type </li></ul></ul><ul><ul><li>Other Documents: </li></ul></ul><ul><ul><ul><li>Letters of Determination </li></ul></ul></ul><ul><ul><ul><li>Audited Financials </li></ul></ul></ul><ul><ul><ul><li>Annual Reports </li></ul></ul></ul><ul><ul><li>Knowledge Base Archive </li></ul></ul><ul><ul><ul><li>Articles, newsletters </li></ul></ul></ul><ul><ul><ul><li>16 Disciplines </li></ul></ul></ul><ul><ul><ul><li>10 year “long tail” </li></ul></ul></ul><ul><li>Analysis Tools </li></ul><ul><ul><li>Saved Organizations </li></ul></ul><ul><ul><li>Saved Searches (People and Organizations) </li></ul></ul><ul><ul><li>Organization Download </li></ul></ul><ul><ul><li>Select and Compare </li></ul></ul><ul><ul><li>Financial Charts </li></ul></ul>GuideStar Premium v3.0
  • 11. Survey. Interview. On-Site. Usability Lab. Repeat. Product Development Methodology <ul><li>960 conversations over 18 months </li></ul><ul><ul><li>Premium Users </li></ul></ul><ul><ul><li>Other Product Adopters </li></ul></ul><ul><ul><li>Prospects / Potentials </li></ul></ul><ul><li>891 Survey Participants </li></ul><ul><li>45 In-depth Interviews </li></ul><ul><li>24 Usability Lab Participants </li></ul><ul><li>5 on-site visits, 4 focus groups </li></ul><ul><li>From concept phase (2008) through late Beta phase </li></ul>
  • 12. GuideStar Premium v3.0 Online Demonstration and Learning Lab Pamela Jowdy Senior Product Manager
  • 13. Demonstration Recap <ul><li>Search and Refinement Tools </li></ul><ul><ul><li>Did You Mean </li></ul></ul><ul><ul><li>Related Keywords </li></ul></ul><ul><ul><li>Search Refinement </li></ul></ul><ul><ul><li>Sort Options </li></ul></ul><ul><ul><li>Advanced Search </li></ul></ul><ul><ul><li>Data Depth </li></ul></ul><ul><li>Research Tools </li></ul><ul><ul><li>Non-profit search </li></ul></ul><ul><ul><li>People search </li></ul></ul><ul><ul><li>Affiliation Type </li></ul></ul><ul><ul><li>Other Documents: </li></ul></ul><ul><ul><ul><li>Letters of Determination </li></ul></ul></ul><ul><ul><ul><li>Audited Financials </li></ul></ul></ul><ul><ul><ul><li>Annual Reports </li></ul></ul></ul><ul><ul><li>Knowledge Base Archive </li></ul></ul><ul><ul><ul><li>Articles, newsletters </li></ul></ul></ul><ul><ul><ul><li>16 Disciplines </li></ul></ul></ul><ul><ul><ul><li>10 year “long tail” </li></ul></ul></ul><ul><li>Analysis Tools </li></ul><ul><ul><li>Saved Organizations </li></ul></ul><ul><ul><li>Saved Searches (People and Organizations) </li></ul></ul><ul><ul><li>Organization Download </li></ul></ul><ul><ul><li>Select and Compare </li></ul></ul><ul><ul><li>Financial Charts </li></ul></ul>GuideStar Premium v3.0
  • 14. Perspective: Client Persona Taylor: Senior Manager, Non-Profit Governance <ul><li>Profile: </li></ul><ul><li>National public accounting practice </li></ul><ul><li>Manages auditing and accounting team specializing in exempt organizations </li></ul><ul><li>Writing and customizing RFPs for maximum relevancy </li></ul><ul><li>Benchmarking: program evaluation and industry scans </li></ul><ul><li>GuideStar Premium Business Integration: </li></ul><ul><li>Qualitative and quantitative data helps to tailor RFP and fully articulate needs of client </li></ul><ul><ul><li>Assets, income, expenses (program, administrative and total) </li></ul></ul><ul><ul><li>People data (number of employees) </li></ul></ul><ul><ul><li>Areas served, subsection codes </li></ul></ul><ul><li>Advanced search to establish peer groups for comparison </li></ul><ul><ul><li>Identify client areas for improvement and long term growth opportunities </li></ul></ul><ul><ul><li>Objective lens </li></ul></ul><ul><ul><li>Subsection, income, NTEE </li></ul></ul><ul><li>Organization Download : on the fly list creation eliminates cumbersome copy and paste exercises </li></ul>GuideStar Premium
  • 15. GuideStar Charity Check Pre-grant Due Diligence in the Pension Protection Act Era Pamela Jowdy Senior Product Manager
  • 16. Internal Revenue Code Grants Administration Milestones 1969 August 2006 Pension Protection Act New requirements on grants to certain supporting organizations [509(a)(3)] Definition of Type III supporting organizations Definition of Type III functionally integrated supporting organizations IRS Revenue Procedure 2009-32 Formalizes March 2007 FAQ Precendtial Instrument upon which compliance and grantmaking teams can rely Tax Reform Act The legal framework for the regulation of private foundations and public charities is established December 2006 June 2009 Internal Revenue Code Interim Guidance Regarding Supporting Orgs and Donor-Advised Funds Grantor may rely on IRS BMF or Letter of Determination for identifying supporting organization 509(a) status Charity Check v1.5 100% compliant with IRS FAQ and Revenue Procedure 2009-32 March 2007 IRS FAQ on Business Master File Reliance Allows grantors to use third party resources to obtain required IRS BMF information about a potential grantee’s charity classification under section 509(a)(1), (2) or (3)
  • 17. Pension Protection Act Implications Why Verify? Two Unique Due Diligence To-Do’s: To-Do: Data Source: Verify Current Charitable Status Publication 78 and Internal Revenue Bulletin Identify Supporting Organizations with 509(a)(3) status IRS Business Master File
  • 18. How it Works <ul><li>Incorporates Weekly Internal Revenue Bulletin </li></ul><ul><li>Marries Publication 78 data with IRS Business Master File data </li></ul><ul><ul><li>Married, but never modified </li></ul></ul><ul><li>OFAC verification included: EIN-level </li></ul><ul><li>9 year track record of working with IRS data </li></ul>An Integrated, One-Stop Verification Solution GuideStar Charity Check
  • 19. What it Delivers An Integrated, One-Stop Verification Solution GuideStar Charity Check Date and time stamp Latest Quarterly Pub 78 Weekly Bulletin Date Reason for Non-Private Foundation Status EIN IRS BMF Date Verify Current Charitable Status Identify Supporting Organizations with 509(a)(3) status Electronic or hard copy documentation
  • 20. An Integrated, One-Stop Verification Solution GuideStar Charity Check Why it Works Fully compliant with IRS Revenue Procedure 2009-32 concerning reliance on third-party resources for IRS BMF data: The grantees’ name, EIN and public charity classification (aka “reason for non-private foundation status”) under section 509(a)(1), (2) or (3) is presented in the report A statement that the information in the report is from the most currently available IRS monthly update to the BMF, along with the IRS BMF revision date <ul><li>The date and time of the grantor’s search is included on the report </li></ul>The third party IRS BMF data and report must be in a form which the grantor can store in hard copy or electronically.
  • 21. Charity Check User Experience Two Clicks to Compliance Pamela Jowdy Senior Product Manager, GuideStar
  • 22. Perspective: Client Persona Lee: Grants Manager, Community Foundation <ul><li>Profile: </li></ul><ul><li>Distributes ~ $30 million annually </li></ul><ul><li>Manages 600 funds, including DAF, unrestricted, scholarship and agency </li></ul><ul><li>Distributes 1,000 grants annually </li></ul><ul><li>Verifies at application and prior to distribution </li></ul><ul><li>Identification of supporting organization status particularly important </li></ul><ul><li>MicroEdge GIFTS user </li></ul><ul><li>GuideStar Charity Check Business Integration: </li></ul><ul><li>Verification of charitable status at time of initial application </li></ul><ul><ul><li>Publication 78 </li></ul></ul><ul><li>Identification of 509(a) status to identify potential supporting organizations </li></ul><ul><ul><li>Further research on Type III 509(a)(3) supporting organizations </li></ul></ul><ul><ul><li>Excise tax sensitivity </li></ul></ul><ul><li>Financial and trending analysis : for potential grantees and vetting of potential DAF investments </li></ul><ul><li>Documentation and compliance : via date and time stamped PDF report </li></ul>GuideStar Charity Check
  • 23. <ul><li>Data Delivery Options </li></ul><ul><ul><li>Subscription </li></ul></ul><ul><ul><li>Data Sets (Ad Hoc and Recurring) </li></ul></ul><ul><ul><li>XML* / Web Service </li></ul></ul><ul><ul><li>Hosted Solutions </li></ul></ul><ul><li>Tools for Prospecting </li></ul><ul><ul><li>Download versus Custom Data </li></ul></ul><ul><li>Verification Best Practices </li></ul><ul><li>Compensation Analysis </li></ul><ul><li>GuideStar Exchange </li></ul><ul><li>Feedback and Suggestions </li></ul>Common Participant Questions * Extensible Markup Language = easy way to share structured data via ether
  • 24. GuideStar Compensation Report: Benchmark, Establish and Justify Key Executive Compensation Levels <ul><li>99,827 Forms 990 </li></ul><ul><li>157,406 unique observations / data points </li></ul><ul><li>Only report to use official IRS digitized data </li></ul><ul><li>14 key job categories </li></ul><ul><li>Executive Summary </li></ul><ul><li>National, MSA, State, NTEE Breakdowns </li></ul><ul><li>Incumbent Analysis </li></ul><ul><li>Static PDF annual format </li></ul>http://publications.guidestar.org/private-inurement-primer/
  • 25. GuideStar CEO Checkpoint Report: Custom Peer Group Comparative Analysis <ul><li>Aligned with new 2008 Form 990 requirements </li></ul><ul><li>Establishment of Rebuttable Presumption </li></ul><ul><li>Documentation and verification that private inurement / excess benefits transactions do not exist </li></ul><ul><li>Avoid Intermediate Sanctions </li></ul><ul><li>Penalties: individual may be required to repay the excess benefit amount to make the charity whole as well as 25% penalty to IRS </li></ul>
  • 26. GuideStar Exchange: Share Your NPO’s Story
  • 27. GuideStar Exchange: Share Your NPO’s Story
  • 28. Dynamic, Persistent Feedback Mechanism
  • 29. GuideStar Professional Solutions: Non-Profit Tools and Intelligence to Fuel Your Research, Analysis and Pre-grant Due Diligence © 2010, GuideStar USA, Inc. All Rights Reserved. This information is copyrighted subject matter owned by GuideStar USA and is protected by United States and international copyright law.
  • 30. Appendix
  • 31. Pub 78 and Internal Revenue Bulletin Why Verify: IRS Data Sources Establish Tax Deductibility and Verify Current Charitable Status <ul><li>IRS Publication 78: </li></ul><ul><ul><li>Also known as Cumulative List of Organizations </li></ul></ul><ul><ul><li>Includes all organizations to which charitable contributions are tax deductible </li></ul></ul><ul><ul><li>Current tax-exempt status, percentage of contributions that are tax deductible </li></ul></ul><ul><ul><li>Deductibility limitations </li></ul></ul><ul><ul><li>Published quarterly </li></ul></ul><ul><li>IRS Internal Revenue Bulletin: </li></ul><ul><ul><li>Also know as the ‘IRB’ </li></ul></ul><ul><ul><li>Lists organizations whose charitable status has been changed or revoked </li></ul></ul><ul><ul><li>Updated weekly </li></ul></ul>Rev. Proc. 82-39, 1982-1 C.B. 759 Sec.3.01 and Sec.3.02 states that grantors “may rely on the classification of an organization listed in or covered by Publication No. 78.”
  • 32. IRS Business Master File Determine 509(a) Status <ul><li>IRS Business Master File: </li></ul><ul><ul><li>Lists all tax-exempt organizations registered with the IRS </li></ul></ul><ul><ul><li>Published monthly </li></ul></ul><ul><ul><li>Includes reason for non-private foundation status, aka “public charity classification” </li></ul></ul><ul><ul><li>Reason for non-private foundation status = 509(a) status </li></ul></ul>Why Verify: IRS Data Sources <ul><li>509(a)(1) and 509(a)(2): </li></ul><ul><ul><li>A public charity that receives a substantial amount of public support to fund its operations </li></ul></ul><ul><li>509(a)(3): Supporting Organization </li></ul><ul><ul><li>A public charity that provides support to one or more publicly supported organizations </li></ul></ul><ul><ul><li>Must demonstrate that is has a particular type of relationship with the organization it supports </li></ul></ul>
  • 33. Supporting Organizations Snapshot IRS Business Master File Why Verify: Pension Protection Act <ul><li>32,191 509(a)(3) Supporting Organizations: </li></ul><ul><ul><li>21,505 have filed a form 990 </li></ul></ul><ul><ul><li>4% of all 509(a) orgs </li></ul></ul><ul><li>12,305 of the 32,000 largest foundations, or 38%, made a grant to any supporting organization between 2000 and 2004 </li></ul>While the supporting organization universe is fairly discrete, failure to identify these organizations creates an exponentially greater fiscal and operational risk for private foundations and sponsors of donor-advised funds.
  • 34. Internal Revenue Code Grants Administration Milestones 1969 August 2006 Pension Protection Act New requirements on grants to certain supporting organizations [509(a)(3)] Definition of Type III supporting organizations Definition of Type III functionally integrated supporting organizations GuideStar Charity Check v1.5 Released Fully compliant with IRS Guidance on methodology for determining 509(a) supporting organization status Tax Reform Act The legal framework for the regulation of private foundations and public charities is established December 2006 April 2007 Internal Revenue Code Interim Guidance Regarding Supporting Orgs and Donor-Advised Funds Grantor may rely on IRS BMF or Letter of Determination for identifying supporting organization 509(a) status March 2007 IRS FAQ on Business Master File Reliance Allows grantors to use third party resources to obtain required IRS BMF information about a potential grantee’s charity classification under section 509(a)(1), (2) or (3)
  • 35. Access Points: Results GuideStar Charity Check
  • 36. Access Points: Report GuideStar Charity Check
  • 37. 509(a)(3) Supporting Organization GuideStar Charity Check
  • 38. OFAC Organization: Results GuideStar Charity Check
  • 39. IRS Guidance on BMF Reliance March 2007 Why Verify: Pension Protection Act Source: http://www.irs.gov/charities/charitable/article/0,,id=168531,00.html
  • 40. Grantmaker Verification Options <ul><li>IRS website provides search functionality for Pub 78 </li></ul><ul><li>Does not include IRB weekly updates; must search separately for changes and / or revocations </li></ul><ul><li>Cannot search by EIN </li></ul><ul><li>No date or time stamp </li></ul>IRS Publication 78 IRS Publication 78 Online Source: http://apps.irs.gov/app/pub78
  • 41. Grantmaker Verification Options <ul><li>Includes status changes and revocations </li></ul><ul><li>Published weekly in pdf and html format </li></ul><ul><li>Not searchable </li></ul>IRS Internal Revenue Bulletin IRS IRB Source: http://www.irs.gov/irb
  • 42. Draft of manual solution for 509(a)verification directly from IRS BMF Grantmaker Verification Options IRS Business Master File IRS Downloadable Business Master File
  • 43. Isn’t this good enough? What it is The Letter of Determination What it is NOT <ul><li>Static, historic snapshot </li></ul><ul><li>Only accurate at time of issuance </li></ul><ul><li>Confirms 501c3 status </li></ul><ul><li>Inclusive of changes in charitable status since date of original issuance </li></ul>

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