Archive for the ‘Philanthropy’ Category

Learning Opportunity – This Friday

Anyone who’s going to be in the Western PA area this Friday, April 27, should seriously consider attending Grant Writing 201: Winning Grants in Southwestern PA with Eric Davis, Owner Procopio Fundraising and Managing Partner, Elliott & Davis, PC. 

Grant seeking in Southwestern Pennsylvania has never been more competitive than today. With information on grant opportunities so broadly available, most grant making foundations and agencies receive hundreds more worthy grant proposals for each funding cycle than they could ever fund. It is critically important that nonprofit organizations to learn how to set themselves apart by preparing winning grant applications.  Give your proposals the competitive edge of a serious grant seeker. If you’re ready to get serious about grant writing, invest a day honing your skills with proven techniques for generating support.

Here are the details on the event.

Prosperity and Integrity: Harnessing the New Power of Benefit Corporations

Given the economic volatility our country has endured during the past three years, it’s easy to think of corporations as faceless, legal entities that care only about bottom lines. And in the face of reduced government funding and support from private foundations and corporate giving programs, nonprofits have been feeling the pinch more sharply than most. But, in this era of “too-big-to-fail,” “bailouts,” and perceived greed, it’s important to remember that corporations were originally conceived with both economic prosperity and the protection of public welfare in mind.

Early American corporations were not given unlimited reign, but were closely guided by the views of their investors and the tenets of their charters. Transparency and accountability were not just marketing buzzwords, but common standards of practice.

There has been a recent movement-which many in the nonprofit sector have observed-of for-profit entities engaging in socially-conscious endeavors.  This trend falls under the broad umbrella of “social entrepreneurship” and, very recently, states have begun to recognize a new incorporation option available for businesses that wish to be both financially successful and socially conscious.

This new construct, called a “Benefit Corporation,” stresses sustainability along with financial success. More to the point, this new model is a boon to the non-profit world. It provides the opportunity for increased cooperation with a conscientious corner of the for-profit sector and the potential to leverage more sustainable impacts on business practices beyond existing corporations. Benefit or “B” Corporations redefine the modern notion of commercial success by valuing “stakeholders” above “shareholders.” Unlike traditional corporations, B Corporations must facilitate, and publicly report, positive social and environmental impacts through their work in order to register with the non-profit organization, B Lab ( This third-party validation process provides a number of valuable benefits to participating businesses:

  1. Save Money.  B Corporations have the potential to deliver immediate financial value, and B Lab has already saved B Corps over $1M through service partnerships.
  2. Set Yourself Apart.  B Corporations differentiate themselves in the marketplace, and the certification process allows companies to generate press, meet sustainability requirements set by other companies, enhance reputation and mitigate potential trust erosion from consumers.
  3. Find Common Ground.  B Corporations offer a “common ground” for businesses that are committed to both the mission-driven ethos of the non-profit world and the best practices of the for-profit section.
  4. Connect With Your Peers.  Through B Lab, B Corporations are encouraged (and incentivized) to collaborate amongst themselves and share best practices in sustainability, marketing, finance, IT, and HR.
  5. Grow Faster and Smarter.  The raw numbers ( demonstrate that registered B Corporations expand at a more consistent rate, work more closely with other area organizations, offer better benefits to their employees, and foster more positive change within their communities than traditional corporations.

Here’s a look at other companies that have already taken advantage of the B Corps model:

Impact Makers, Inc: Impact Makers delivers information technology and management consulting professional services, focused on the healthcare industry. They are a non-stock, “competitive” social venture – the critical difference between Impact Makers and their competitors is that all of Impact Makers’ profits go directly to their charitable community partners. (

PhilanTech: PhilanTech provides the PhilanTrack™ online grants management system – an innovative online grant proposal, reporting and management system that enhances accountability, transparency, and efficiency. This online system enables valuable resources to be redirected towards service delivery and greater social impact rather than to grants administration. (

Fair Trade Sports: Fair Trade Sports, Inc is the first sports equipment company in the US to launch a full line of eco-certified Fair Trade sports balls, ensuring fair wages and healthy working conditions for our adult workers. They have sports balls for soccer, football, basketball, rugby, volleyball, and more. (

Seventh Generation: Seventh Generation is the nation’s most recognized brand of natural household and personal care products. For 20 years, the company has been recognized for its non-toxic cleaners and personal hygiene products. (

Practical Energy Solutions: Practical Energy Solutions is a privately owned partnership located in West Chester, Pennsylvania. Their talented and passionate team provide common sense solutions for reducing energy consumption and costs. The business operates as an independent consultant for clients so there is no conflict of interest on any recommended efficiency and conservation measures. (

We hope that you’ll take the time to look at B Lab, investigate some of the other companies that have already taken advantage B Corps, and in general think about what this new model could mean for the future of business.

We’re excited. We hope you are too.

Please feel free to contact Elliott & Davis, PC with all of your questions about nonprofit formations and management.  Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.

For more information about these, or any of our other practice areas, please visit our website at:

Please feel free to give us a call at 412-434-4911 ext. 25 for a free phone consultation.


What Your Nonprofit Can Learn From the “Three Cups of Tea” Scandal

In the early 1920s, America’s faith in the presidency was rattled by something called the “Teapot Dome” scandal, in which President Warren Harding’s administration accepted bribes from the oil industry.

Flash forward to April 2011.  America’s faith in the nonprofit sector is currently in limbo—in something that’s been dubbed the “Three Cups of Tea” scandal.

Author and philanthropist, Greg Mortenson, made waves in the nonprofit sector and media by founding 170 schools in Pakistan and Afghanistan through his Central Asia Institute and documenting his travels and experiences in his popular book Three Cups of Tea.

A recent investigation by 60 Minutes and writer Jon Krakauer revealed that that Mortenson had fabricated parts of his story.  Even worse, 60 Minutes visited 30 of the schools supposedly built by his Central Asia Institute and found half empty or otherwise not receiving support from the Institute.  And according, to a May 5, 2011 article in Slate, additional stories of “ghost schools” have emerged after the program aired.

The scandal has already attracted the attention of Montana’s attorney general (Central Asia Institute is incorporated in Montana).  As Montana Attorney General Steve Bullock said in a statement:  “I’ve been in contact with attorneys for the Institute and they have pledged their full cooperation in addressing our concerns. While looking into this issue, my office will not jump to any conclusions – but we have a responsibility to make sure charitable assets are used for their intended purposes.”

So what are the lessons learned for nonprofits and for donors?

Charity Ratings Aren’t Perfect. 

The Central Asia Institute had garnered high ratings from some large charity websites.  According to the Wall Street Journal,, a ratings website, had previously awarded the Institute four stars (the website’s top rating).  The Institute’s ratings have since dropped and a “donor advisory” has been issued since the scandal broke.

“Like financial markets, ratings are supposed to have a predictive value,” Perla Ni, founder of GreatNonprofits, told the Wall Street Journal. “But we’re still in our infancy. There are going to be scandals in nonprofits, just like any industry.”

The takeaway for donors is obvious—it’s important to look beneath the surface and make an informed decision, based on more than a rating.  Nonprofits should learn not to be content with a high rating but should work to cultivate good donor relations—and base their operations on strong governance, transparency, and accountability. 

Using IRS Filings as PR Tools.

As noted by Guide Star, the IRS’s 990 requirements present an opportunity for organizations to “capitalize on the opportunities created by the increased transparency. If unprepared, they may be unnecessarily subjected to potentially damaging external risks.”   The 990 is no longer merely a tax-exemption compliance measure, but can now be leveraged by organizations as a tool for reaching out to potential donors.  990 forms filed with the IRS are public record, and the recent changes to the 990 requirements gives potential donors greater access to important funding-related considerations such as the organization’s mission statement.  For example, many potential donors might not be aware of an organization’s mission statement, which was previously buried on page three of the 990.  Following the new changes, however, potential donors won’t be able to miss the mission statement, which now appears prominently on page one.

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit .  

Consider an Independent Audit.

Self-reported numbers by staff members are obviously not as trustworthy as numbers prepared by an independent audit.  According to an article in the Chronicle of Philanthropy,  “[t]he Central Asia Institute did not have an audit even in 2008 when its net assets exceeded $10 million, it spent more than $5-million, and it generated a surplus of more than $8-million.  The board’s decision to forgo an audit until fiscal 2009, combined with the problem of the small size of the board and the financial self-interest of the charity’s founder and executive director, raise suspicions that it failed to exercise appropriate oversight and might have misused charitable assets.”  While audits are often mandatory for larger organizations, smaller organizations may want to consider retaining an independent firm to conduct an audit, simply for transparency reasons.

It remains to be seen what will come out of this scandal and the investigation to follow.  But the lessons are clear.  Whether your organization is large or small, trust matters.   Although controversies like this one and the Bernie Madoff scandal before it erode the public’s trust in the nonprofit sector, the only way to address this is for organizations to proactively re-earn this trust.

The Billionaires’ Club: The Giving Pledge and What It Means for Your Nonprofit

Looking back at 2010, the biggest story in philanthropy this year was the Giving Pledge, a call to arms by Bill and Melinda Gates and Warren E. Buffett in which America’s wealthiest individuals were asked to give half of their fortunes to charity.

The response has actually been quite impressive—the Pledge has secured commitments from 40 of the wealthiest Americans, totaling some $600 billion.

The Pledge has also sparked a debate about giving from such incredibly wealth individuals and its place in the nonprofit sector.

The purpose of this eBulletin is to provide an overview of this debate and offer some advice as to what nonprofits can expect in the coming months from a fundraising perspective.

According to a November 12 article in the Foundation Center’s Philanthropy News Digest:

“Critics of the pledge include those who are concerned it will only serve as a reminder of the growing concentration of wealth in society, while others, like Pablo Eisenberg, a senior fellow at Georgetown University’s Center for Public and Nonprofit Leadership, question how any additional philanthropic dollars generated by the campaign will be spent. Although Eisenberg acknowledged that the pledge is likely to inspire more giving among the rich and super-rich, he also expressed concern that it would ‘increase the number of mega-foundations, and I worry that will hurt our democracy because of the influence these institutions will exert.’

Despite such criticism, Bill Gates himself is optimistic that the campaign will not only help increase philanthropic giving in the U.S., and around the world, it will also improve the practice of philanthropy and help address income inequality by serving as a tool for the redistribution of wealth in society. ‘We will never be able to measure how much the group gets people to do more giving or do it in a better way,’ Gates told the Times via e-mail. ‘However, I think the impact is likely to be quite positive.’”

OK, maybe your nonprofit is not first in line when Bill Gates opens up his wallet.   Don’t worry—you’re not alone.  If your organization is like many other small-mid-sized nonprofits, you rely on support from regional foundations, from government, and from individuals whose means are a bit more modest than Gates, Buffett, et al (and, really, whose aren’t?)

What should all of this mean to you?   What can your organization expect in the months to come?

First, the Pledge should be welcomed—not only for the money it will generate directly—but also for the ripple-effect it is likely to have.   For instance, as the New York Times reports, Marc Benioff, the billionaire founder of, was not asked to sign the pledge, but he was inspired by the pledge and has made a $100 million gift to the Children’s Hospital at the University of California, San Francisco.

Second, there are a couple of reasons why you should be optimistic during the next few months, as well as in the year ahead.    Charitable contributions generally increase around this time of year.  This is because individual donors often feel more charitable during the holiday season and will often substitute a present under the tree for a donation to a favorite charity, and also because an end-of-year charitable contribution is an added bonus in terms of tax deductions.    In broader terms, if you look back at the Great Depression of the 1930s and other economic recessions, you will see that, when times are tough, the nonprofit sector has historically risen to the occasion and helped those in need.  According to a 2005 paper from the National Bureau of Economic Research, charitable giving by religious organizations appears to have risen during the Great Depression.

Please feel free to contact Elliott & Davis, PC with all of your questions about nonprofit law.

Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at:

Dodging a Bullet: More Than 200,000 Nonprofits Avoid Losing Exemption Thanks to IRS Extension of Filing Deadline

After several weeks of tense speculation that as many as 400,000 nonprofit organizations were set to lose their tax-exempt status, the Internal Revenue Service (IRS) is offering a time extension to more than 200,000 small charities that missed the May 17 filing deadline to file their IRS Form 990.

A 2006 law required nonprofit organizations with receipts of less than $25,000 to file IRS Form 990 for the first time in 2007. If charities fail to file for three (3) years, they will lose their tax-exempt status.

According to a May 18 press release from the IRS: “The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.   So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.”

Speaking on the upcoming guidance that the IRS plans to issue, IRS Commissioner Doug Shulman said “The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact…Filing a tax return for the small organizations is easier than you’d think. It just takes a few minutes to fill out the electronic notice Form 990-N.”

Organizations that have questions or concerns regarding 990 filing procedures and the automatic revocation process should check out the following list of Frequently Asked Questions (FAQs) provided by the IRS.

Although many nonprofits may be unhappy about having to file additional tax forms such as the 990 and at the costs associated with the new requirement, there are certainly good reasons for the new requirement.

As Suzanne Garment and Leslie Lenkowsky of the Center on Philanthropy at Indiana University note in a recent article for the Wall Street Journal, the primary purpose of the filing requirement is to make sure that tax-exempt organizations are, in fact, “doing good” in some way.

Garment and Lenkowsky go on to argue that the IRS can and should continue vetting organizations to make sure they are operating charitably, but they express fear that the IRS and state regulators may feel pressure to deny exemptions based on public anger over “eccentric” tax-exempt organizations (the authors cite as examples a nonprofit women’s roller derby league in Oregon and an organization called “The Red Nose Institute,” which sends red clown noses to U.S. troops overseas).

As the authors recognize, the “IRS and state regulators have sought mostly to ensure that charities behave charitably, not to pass judgment on the relative value of their activities.”  It will be interesting to see if that role begins to shift in the years ahead.

Finally, because it’s always best to plan ahead, we would like to wrap up by highlighting some of the key considerations involved in preparing a 990:

  • Know your mission. Your organization should have a clear understanding of its mission and be able to articulate its mission in a manner that helps maintain its exempt status and attracts new donors at the same time.
  • Know your board. Your organization’s board should be engaged, informed, and independent.  They should be aware of and abide by all rule related to conflicts of interest, self-dealing and private inurement. Board meeting minutes should be duly recorded and kept on file by someone in your organization.
  • Know your budget. Your organization should ensure appropriate use of assets and should develop and implement policies and practices that address executive compensation, support independent financial audits.
  • Know your lawyer. If the advice here seems like a lot to take in, the good news is you’re not alone.  Most smart nonprofit organizations rely on the advice of skilled nonprofit lawyers to help them with these questions and in the preparation of 990 forms as well as other IRS documents. Please contact a nonprofit lawyer before attempting to prepare your 990 or any other documents related to tax, accounting, or governance. Our firm would love to start a new relationship with you today!

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit .

Please feel free to contact Elliott & Davis, PC with all of your questions about 990s, as well as nonprofit formations and management.  Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at:

Volunteers Wanted: How Your Organization Can Boost Programming By Promoting Volunteerism

Chances are, if you’re reading this, you’ve served as a volunteer in some capacity at least once or twice.    And if modest salaries and grueling hours are a norm within your nonprofit, there’s a chance you feel like you’re volunteering all of the time!

In any event, volunteerism is part and parcel to most successful nonprofits.  Without volunteers to canvass neighborhoods, stuff envelopes, and share their time with the communities served by nonprofits, there’s a good chance many nonprofits would be forced to go under.

Winston Churchill expressed the volunteer spirit nicely when he observed that “[w]e make a living by what we do, but we make a life by what we give.”

The purpose of this post is to look at current trends in volunteerism and provide you with information that your organization can use to further your mission by enlisting the help of volunteers.

One-Time “Day of Service” Emerges as Trend in Volunteerism

With Kermit the Frog as its spokes-amphibian, Disney launched a new volunteering campaign dubbed “Give a Day, Get a Disney Day” in which volunteers who dedicate their time were given a one-day pass to a Disney theme park.   Participants were able to search through volunteer opportunities on the Disney Web site and manage their volunteering accounts.  The campaign, which has now come to an end, was successful—reaching its ultimate goal of finding 1 million volunteers.

According to a recent article in the NonProfit Times, Susan Ellis, president of Energize, Inc., in Philadelphia, said the Disney giveaway and other days of service “validate that you only have to do the minimum” and that, however well-intentioned they might be, they could be sending the wrong message.

With days of service increasing in popularity, the question becomes one of quality versus quantity.  Some might argue that efforts to promote volunteerism need to be more sustainable—focusing more on fostering long-term commitments to a cause rather than generating large turnouts.   But, on the other hand, many nonprofits would welcome any new volunteers—even if they were only there for a day and only to get the free Disney tickets.

How to Grow Volunteerism in Your Organization

Regardless of where you stand in this debate, your organization, like most nonprofit organizations, is always looking for more volunteers.  So what are some practical tips you can use to attract and retain volunteers?

First, figure out what roles you need to fill with volunteers.  Depending on the nature of your activities/programming, this could be anything from picking up trash on sidewalks to performing surgeries at no cost.  The task of determining which positions will be filled by paid staff and which will be filled by volunteers is not an easy one.  Clear communication and full participation among all board members is a key part of this process.

Second, once you have identified roles for volunteers, the next step is recruitment.   There are many different strategies that could be employed here.  Larger nonprofits that can afford it may want to consider using an advertising campaign as a tool to attract volunteers.  Smaller nonprofits with tighter budgets can still draw a lot of attention to their volunteer opportunities by using free social media tools such as Facebook.  Organizations both small and large may also want to consider teaming up with other nonprofits and for-profit organizations by taking part in a “day of service” program or other coordinated volunteer efforts.

Finally, once you have attracted volunteers, you will need to devise a strategy for retaining them.   Incentive programs such as the “Give a Day, Get a Disney Day” program are good at attracting volunteers, but they might have limitations in terms of retaining volunteers.  Organizations interested in retention will want to spend some time discussing different ways to recognize and reward volunteers.   Some ideas include: volunteer gifts, recognition in a newsletter or website, volunteer appreciation dinners, or other special events.

Some Good Economic News (Finally!)

On a somewhat different note, there’s good news coming out of the Chronicle of Philanthropy earlier this month.  According to a new poll of more than 500 donors, donors are showing increased confidence in their ability to give to charity as the economy shows signs of stabilizing.    Almost half of donors surveyed said they would give at least as much as they did in 2009.   According to the survey, the majority of donors said the economy was the main influence on their giving.   The most robust outlook for nonprofits was in the faith-based sector.  According to the survey, donors to religious charities scored 94.9 on a 100-point scale, compared with a score of 88.4 for nonprofit groups as a whole.