Foundations feel financial effect

The Chronicle of Philanthropy reports on a recent article in the NY Times on the effects of the collapse of two Wall Street investment banks and the takeover of AIG. (Registration required)

clipped from philanthropy.com Foundations Feel Wall Street�Fallout Several big foundations in New York are suffering from the recent collapse of Lehman Brothers and Bear Stearns and the government takeover of the American International Group, reports The New York Times. The Starr Foundation, which held 15.5 million shares of AIG in May, has seen its assets fall by at least $1-billion since the end of 2006. As a result, the grant maker says it will postpone some planned grants. The personal foundations of Bear Stearns executives have also taken losses, and the future of Lehman Brothers Foundation is in question now that Lehman Brothers is bankrupt.

NPR reports on financial fallout to nonprofits

One of the first efforts I’ve seen to look at the effect of the financial crisis on the nonprofit sector. Audio available shortly.

clipped from www.npr.org Assessing Impact Of Financial Crisis On Nonprofits All Things Considered, September 30, 2008 � The financial crisis is going to have an effect on many organizations that are not interested in making any money. Nonprofits rely on corporate donations and interest income from their endowments for special programs, operational support and long-term sustainability.

Target National Index reports median revenue, donor drop

The Q2 National Index of Fundraising Performance has just been published by Target Analytics, a division of Blackbaud. Authors Helen Flannery, Rob Harris, and Carol Rhine report that “most of the organizations in the Index faced fundraising challenges” in the period through June 30, 2008. “Overal direct marketing donors and revenue both declined in Q2 … over the same period last year, and these declines were evident across most of the sectors in the index.” Once again, revenue per donor rose, but it most cases it wasn’t enough to overcome the donor decline and, therefore, revenue dropped.

Keep in mind that the period covered was only at the leading edge of the turmoil now roiling the nation’s economy. Are greater challenges in store? Read our earlier posts on how to deal with economic uncertainty.

Pastors to defy 501(c)(3) rules

NPR’s Barbara Bradley Hagerty reported on All Things Considered yesterday the commitment by more than 30 pastors to endorse political candidates this weekend. As the article reports, the issue is not whether religious leaders have a right to their own political views, but whether organizations that engage in political activity should enjoy the benefit of their tax exempt (and therefore taxpayer subsidized) status. As we commented in an earlier blog about political activity by 501(c)(3) organizations, we believe this activity threatens the entire bedrock of charitable tax status.

clipped from www.npr.org On Sunday, more than 30 pastors across the country are expected to preach a sermon that endorses or opposes a political candidate by name. This would be a flagrant violation of a law that bans tax-exempt organizations from involvement in political campaigns.

Misusing non profit status?

A controversy is swirling in the newspaper industry now about an anti-Muslim DVD being bundled into newspapers in election swing states around the country.

clipped from www.editorandpublisher.com The arrival of tens of millions of DVDs of a controversial film on doorsteps around the nation — but almost exclusively in election “swing states” — via newspaper home delivery continues this weekend, with explanatory articles and subscriber feedback appearing on some of the papers’ Web sites.The DVDs of the 60-minute film, made in 2005, and titled “Obsession: Radical Islam’s War Against the West,” arrived Saturday with, among other papers, the Charlotte Observer and the News & Observer in Raleigh, with delivery with the Miami Herald and other papers set for Sunday.

What has news critics so exorcised is the idea of newspapers such as the New York Times being used as a delivery system for anti-religious attacks apparently aimed at boosting the candidacy of one presidential candidate. (For more on the logic of this, go to the E&P article.)

[Update: the Oregonian distributed the same video in its issue of Sunday, September 28, which has caused a bit of a stir in this fairly progressive corner of the world. Publisher Fred Stickel styled it as a free speech matter and said he could find nothing in their ad guidelines to justify not distributing it.]

But what is of interest here is the that producer and distributor of the video, Clarion Fund, is a 501(c)(3) non profit. According to Clarion’s website, it is “a non-profit, non-partisan organization whose mission is to educate Americans about issues of national security. Our primary focus is on the most urgent threat of radical Islam. By utilizing the following three mediums, Clarion Fund is helping Americans understand that the mainstream media is not adequately conveying the reality of radical Islam.”

Under the guise of providing “education,” a variety of organizations have been established, using 501(c)(3) status, to push particular political agendas. Here in Oregon, the Center for Union Facts, a 501(c)(3) “educational and charitable non-profitan” orgnaization run by p.r. consultant and lobbyist Richard Berman, aired a flight of television spots this spring and summer attacking unions.

Blogger Chris Lowe tells me, “CUF is associated with another more recent outfit called the Employee Freedom Action Committee (EFAC), which is a main force in [a] campaign … targetting a number of pro-union U.S. Senate candidates this year. This 501(c)4 organization followed up the CUFs ads with a series advocating against “the Employee Free Choice Act” and asking viewers to “Call Jeff Merkeley [the Democratic senatorial candidate] and tell him” union members should have the right to vote.

The one-two punch essentially used a 501(c)(3) “educational” organization to prepare the ground for a series of attack ads from a 501(c)(4.)

What is wrong with all this is that it misuses tax-exempt non profit status for political purposes and thereby puts honest non profits at risk. Because when corrective legislation comes (as it will), it will put an additional regulatory burden on every 501(c)(3) — honest or sleazy.