Aren’t tax returns *Fun*?

01/01/2012 at 6:47 pm | Posted in Uncategorized | 6 Comments
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Is everybody excited for tax season?! January 15 to April 15, woo-hoo…!

I’m dreading it. My tax return is the opposite of fun; I bet yours isn’t much better. Certainly filling out tax returns can be headache-inducing, to the point where some folks hire out the service to a third party. But sometimes, examining financial statements and tax returns can reveal useful – if dry – information.

I don’t mean to get paranoid here, but since Jezebel pointed to a fascinating critique of anti-gay marriage group NOW’s tax records carried out by American Independent, and Feminist Whore pointed out the high salaries received by higher-ups at the Police Executive Research Forum (timely in light of their alleged involvement in suppressing OWS,) I figure it’s fair for me to point you in the direction of some feminist & health nonprofit organizations tax returns – if only to use them as examples of some interesting features to look for when choosing where to donate your hard-earned tax deductible donations. It’s a way for the public to hold charities accountable and a way for the charities to maintain transparency.

Caution: Among many other things, I am not a tax professional. There’s a limit to my interpretations of the following tax returns. I know enough to find public returns mildly interesting, but please address serious inquiries to a real pro. (Good luck with that – I knew a tax professional who replied to all questions about taxes from laypersons (including his friends and family) with, “Sure, I can help you with that, I’ll do some research – if you pay me!”) Nonetheless, nonprofit tax returns are publicly available information you have a right to review. All we’re doing today is stating the obvious. One additional caveat: This post is US-centric, since we’re dealing with US tax laws.

If you want to evaluate charities, there’s some decent guides available online. According to CharityGuide, excellent organizations put about 80 cents out of every donated dollar towards their stated purpose – and you’ll find that purpose explicitly stated within a tax return. In general, fundraiser, salary reimbursement and administrative costs should be relatively low. Good luck with that, since some charities classify fundraiser activities as something else. A shortcut to some strong charities is compiled here and here. I recommend this easy-to-understand 990 guide by Ronald Campbell, but it’s in Word .doc format – Google Docs can open it though.

Of course the financial criteria do not address the subjective, ideological importance a charity to you. That means organizations with high administrative costs may in your eyes still be “Worth it.” Or not – for example, the Salvation Army has an excellent financial rating, but it has been subject to criticism from sex workers and LGBT advocates. So there’s more to think about than money.

Protip: Usually you can use the IRS’s search pages, to confirm that donations to organizations are in fact tax-deductible by using the Search for Charities tool. Alternate searches for financial records can be conducted at Guidestar and Foundation Center. However, according to the IRS’s site, small tax-exempt organizations with revenues below a minimum thresh hold (Between $50,000 or $25,000, depending on the year,) don’t need to file a regular tax return. Such small organizations can report in using an e-postcard instead. And the IRS search function to look for 990-N e-postcard organizations is located here.
It can be a little tricky to find some organizations since the DBA (“Doing business as” – how you know an organization) names might be different from the name on their official tax return. Bitch Media’s official name is “B Word Worldwide.” And to make matters more complicated, some nonprofit orgs accept tax-deductible contributions through a loophole via a pass-through.  In order to make a tax-deductible donation to sex education site Scarleteen, you have to go through the Center for Sex and Culture. (You can donate any amount at any time – but you can’t necessarily deduct the amount at year end unless you do it a specific way.) UPDATE 1/3/11: Heather Corinna stopped by (*excited gasp*) and pointed out that you can make tax-deductible donations to Scarleteen through the NetworkforGood nonprofit organization.

Speadking of Bitch Media! Let’s start off with this feminist organization as an example. You’ll find that there’s a lot of jumping around to do when you look at a tax return.

The most recent tax return is from 2009. Here’s some highlights about how Bitch did that year: I’m seeing negative income (loss, so their expenses were greater than income) for the year – which can happen when you run a non-profit – and negative assets. Non-profits place a higher priority on goals other than making “Profit,” so losses can happen from time to time. But according to the tax professional I quoted earlier in this post, ultimately nonprofits still have to run like a business… I’ve seen nonprofits collapse for financial reasons.

Next up are some yes/no disclosure questions. When I do a quick rundown of this part of the return, I look for check marks that don’t line up with everything else – a “Yes” where most other answers are “No.” For Bitch’s return, I find most of the answers to yes/no questions in the return to be mundane, except for one indicating that a loan to a major stakeholder was outstanding at year end. We can learn more about this loan by jumping to Schedule L, which indicates about $5k remained to be paid back by Lisa Jervis – she’s the founding editor of Bitch.

Parts VIII, IX, and X break out the yearly revenue, expenses & balance sheet by category. Basically, most of the 2009 revenue came from “Other sources” and sales of inventory (magazines?) The revenues in Part VIII Column B & C add up to the $117,386 listed back in Section III as revenue toward Bitch’s goal – analyzing pop culture from a feminist perspective. The biggest expenses (Part IX) were labor related, and about half of their expenses (Column B) went most directly towards Bitch’s mission statement (for tax purposes anyway.)
(FYI I’m not using shorthand for ‘section,’ ‘part,’ or ‘schedule’ – these all have unique meanings and locations so don’t mix ‘em up.)

Turning towards women’s health, here’s a copy of the Boston Women’s Health Book Collective’s (AKA Our Bodies, Ourselves) 990 for 2009.

What I find most interesting about this return is that, between 2008 and 2009, the amount of net income this non-profit earned netted to almost zero. There was a loss one year and a profit the next. The net income between the two years was ever so slightly negative – something like a loss of -$1660+ total. Interestingly, OBOS lobbied for political activity, as described in Schedule C, $1400 worth of lobbying. Most of their revenue came from “Other sources” and royalties (books?) Most of their expenses were program-related and again, labor-related costs made up the biggest chunk of expenses. If we jump down to Schedule A, we can drill down farther and see that the revenue from “Other sources” came from the public. Schedule F is included, and it lists the value of activities outside of the US.

Readers with vulvar pain problems may be interested in the National Vulvodynia Association’s tax return for 2009. Here’s some highlights of how the NVA did:

The organization had net income (“Profit,” if we were talking about a business,) of a little over $100k for 2009. One interesting response to a yes or no question is that, we see that under part VI (page 6) that there’s a familial or business relationship between at least two of the key stakeholders. A disclosure like that can indicate a potential conflict of interest, so it’s something to keep in mind as a donor. If we drill down to schedule O, we can see that the board president & treasurer are married. Part VII lists out compensation to officers & directors – with this return, we can see that executive director Christin Veasley (you may recognize her name from the website and from interviews, etc.) received about $50k for the year for her work with the NVA.

The NVA generated most of its revenue (almost $300k) from “Other sources,” which means the public at large – and over $50k from investment income, with another $20k from selling assets. The balance sheet shows that the organization holds over $1 million in investments. The NVA’s 2009 tax return lists limited fundraiser expenses. The NVA funds grants for research & treatment of vulvar pain. Labor and grant allocation were the largest expenses – the NVA distributed about $75k worth of grants. Schedule F & I break out where the research grants went – about $50k (doled out over 6 grants to medical and educational facilities) stayed within the US, and $25k (2 grants) went abroad. There are printing, internet, mailing and publishing related expenses broken out as well – keep in mind the NVA maintains a website and produces pamphlets & guides, etc. for patients & doctors. So per Column B of Part IX, most of their operational expenses were related to the NVA’s mission statement.

At this point, I would like very much to show you all the tax records for the New View Campaign, a feminist nonprofit organization dedicated to spreading the social construction view of sexual dysfunction and combatting the medicalization of sex. After all, Dr. Petra Boynton has recommended directing donations to the organization for the last two years. However I can’t find their records on Foundation Center, GuideStar, or on in New York’s state’s registry of corporations (including nonprofits) and businesses. I can’t find the group listed in the IRS charity database. I’m both fascinated and frustrated that I’m having difficulty confirming the organization’s tax-exempt status. It’s not just that I can’t see the 990 document – nonprofits are not obligated to make the forms available online - it’s that I can’t confirm the group’s exemption using the IRS’s publication 78 database.

I’m stumped, however the lack of confirmation doesn’t necessarily mean anything. The New View Campaign could be operating under a different DBA name. The most likely scenario is that the tax stuff isn’t readily available because the revenues are small (I’m comfortable estimating under $25k/year,) and that if I just ask politely, a representative from the group would be happy to send me the New View Campaign’s public tax records. I may yet do something like that – we can always swing back around to analyze the records later.

In conclusion, I hope I have provided readers with some tools about how to follow the money trail at non profit organizations, how much cash you’re willing and able to provide to charities, and what charities make the most efficient use of funds. Keep in mind that there’s limits to the information though, and it can be hard to find this information in the first place if you don’t know where or how to look. Understanding nonprofit finance isn’t easy, and the tax froms can’t tell you everything, but sometimes you can quickly find interesting answers to burning questions.

As for other blogging news – every blog and their grandmother is posting 2011 retrospectives in light of the new year! Expect to see mine, listing 2011′s don’t-miss posts from this blog, later this month.

6 Comments »

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  1. So appreciate the shoutout!

    Just FYI, though, people can make tax-deductible donations online to Scarleteen through NetworkforGood, right here: https://npo.networkforgood.org/Donate/Donate.aspx?npoSubscriptionId=1005181&code=STPRIMARY

    We had to do it differently before because we are a fiscally-sponsored org, which means setting things like this up involves us having to jump through a lot more hoops to make extra options happen than were we our own 501c3. :)

    • Thank you Heather, I have updated the body of the post to reflect the donation link as well.

      • Cheers! And private gasp, wha-huh? I love what you’re doing here! This blog has rocked!!

        Though, not to nitpick — or, okay, baldly nitpicking — but I’d not call fiscal sponsorships a loophole. They’re their own bonafide legal agreements that represent legal partnerships or affiliations. Loophole, to me, makes them sound kind of shifty, when they’re totally not. What they usually are are orgs like ours without the resources or staff support to operate as a 501c3, including all the filing that can be involved, on our own, in fiscal partnerships with orgs who have those resources and are awesome enough to share them. :)

        • (How excited got translated into private by my tired brain, I will never know.)

          • Okay this is a little late and I meant to do this sooner buuuuut

            I changed around the wording to pass-through instead. I seem to recall hearing that term somewhere at some point in time and even if my memory is in fact faulty then it still sounds more appropriate.

        • Yeah I can see how “loophole” would be a problem in this context. Sponsorships is a tax concept I’m not very familiar with so I meant it in a more casual way. But in light of the fact that we’re talking about taxes that particular word looks worse than it actually is. Hmmm…


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