Tzedakah, Inc.
Supporting More Effective Jewish Giving
Web address:www.just-tzedakah.org


MEMO:

FROM:    Ira Kaminow , President
TO:          Friends of Tzedakah, Inc.
DATE:     May 8, 2006;
RE:          What's new in the world of nonprofits

   This is the first in a series of occasional updates on what's going in the world of nonprofits.

   I'd appreciate any feedback you might have. Just let me know by email whether you think the information is interesting and useful, and how I might improve the content or layout. Of course if you want to get off our list, let me know that as well. You can send me an email by clicking on my name above.

   Want to know why you're inundated with mail solicitations? The New York Times ran an interesting story on why charities send so many mail solicitations. If you're interested, have a look at http://www.nytimes.com/2006/04/29/business/media/29shortcuts.html (This article is archived and available through Times Select).

   What you should know if the Police Protective Fund calls. I got a phone call a few days ago asking for a contribution to the Police Protective Fund. I declined. According to documents filed with the IRS, between 2002 and 2004, the organization spent 10 times as much on fundraising as on progams: $1.2 million on program and $12 million on fundraising.

   IRS calls some charity-related downpayment-assistance a scam. "The IRS has found that organizations claiming to be charities are being used to funnel down-payment assistance from sellers to buyers through self-serving, circular-financing arrangements." Here's how it works: The FHA allows charities to fund downpayments for home-buyers. The downpayment provided by the charity allows the mortgagee to qualify for FHA insurance and a lower interest rate. The FHA does not allow the home seller to fund the downpayment. Certain "charities" take advantage of the provision by "giving" downpayments to home buyers. The home seller then makes a contribution to the charity to cover the cost of the downpayment plus a fee. According to the Government Accountability Office (GAO), seller-financed schemes account for about 93% of downpayment assistance from charities. The GAO found that "when a homebuyer receives down payment assistance from a seller-funded nonprofit, property sellers often raise the sales price of the property to recover the required payment to the nonprofit providing the assistance." For more on this see: http://www.irs.gov/newsroom/article/0,,id=156675,00.html and http://www.gao.gov/new.items/d0624.pdf

   Current status of change in tax-deductibility of charitable contributions. The House and Senate are close to agreeing on a final tax bill for this year. The Senate version includes a number of provisions related to charities. One would allow non-itemizers to deduct some charitable contributions and reduce the charitable deduction for itemizers. As of this writing, the betting is that the charity-related provisions will not be in the final bill. However, Chuck Grassley, Chairman of the Senate Finance Committee, is apparently trying to work out a deal for a second tax bill that would include provisions left out of the current bill.

   Tzedakah, Inc. Tzedakah, Inc. is a nonprofit organization supporting effective Jewish giving through more informed donors and more accountable non-profits. To find out more about our activities and services, visit us on the web at www.just-tzedakah.org

Tizku L'mitzvos