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

MEMO:

FROM:    Ira Kaminow, President
TO:          Friends of Tzedakah, Inc.
DATE:     October 18, 2006
RE:          What's new in the world of nonprofits    

    Comments, suggestions or questions? You can send me email by clicking on my name above. If you'd like to get off our list, let me know that via email as well.

     Please remember to give tzedakah in memory of your departed loved ones. If you recited Yizkor on the recent holidays, please remember that the Yizkor prayer includes a pledge to give tzedakah in memory of our departed loved ones. You are encouraged to give to your favorite tzedakah, or can find one on our site at: >>more>>

     Tzedakah, Inc. Publishes new Pamphlet Smart Tzedakah: How to Evaluate Charities Before You Give.   This pamphlet is for donors who take the mitzvah of tzedakah seriously and want suggestions for evaluating charities. Jewish tradition strongly encourages us to give generously. But our sages also want us to give smart. Donors have a right and responsibility to know about the organizations to which they contribute and charities have a reciprocal responsibility to be transparent. >>more>>

     Four Organizations Qualify for Our Jewish Nonprofits in the Sunshine Program.  Tzedakah, Inc.'s new Jewish Nonprofits in the Sunshine program seeks to encourage nonprofit transparency by setting rigorous disclosure standards. So far four nonprofits have met these standards: A.H.A.V.A.: English Learned in a Natural Method (Teaches English to Israelis - an important professional and business skill), Beit David Institute/Center for Deaf-Blind Persons (Provides services to Israelis who are both deaf and blind) Ezrat Avot (Enables seniors to age-in-place in comfort and dignity in Nachalat Tzvi neighborhood of Jerusalem), MAZON: A Jewish Response to Hunger (Makes grants to organizations working to reduce hunger). We congratulate these organizations for their steadfast commitment to transparency and accountability, and we encourage donors to give special consideration to them when considering their giving choices. A detailed profile of each of these organizations appears on our website. >>more>>

   IRS Give and Take: New Tax Legislation Allows More Deductions...and Fewer.   Here is a summary of some interesting provisions. (This summary should not be relied upon in practice. The new law is very complicated and you should consult your accountant or lawyer to understand how the law relates to your particular circumstances.)

(1) You will not be legally allowed to deduct a monetary contribution unless you maintain "as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution." You won't need to send the documentation with your return. But you may have to show it if the IRS audits you. (This might help: when you make contributions through the www.just-tzedakah.org website, you can access the history of your donations online.)

(2) In-kind contributions such as household items and clothing must be in "good used condition or better," otherwise they will not be deductible. "Good condition" is yet to be defined by the IRS.

(3) If you're over 70-1/2 years old, you'll be able to donate up to $100,000 a year directly from your IRA account, with no penalty for early withdrawal. The distributions will be tax-free. This provision is set to expire on December 31, 2007. >>more>>

     Charity on the Brain?  A paper just published in the Proceedings of the National Academy of Sciences reports on brain activity during the act of giving to charity. The conclusion? There is a physiological basis for the good feeling that comes with charitable donations, even when donations are made anonymously with no recognition or other external rewards. The authors write: "In this article, we use functional magnetic resonance imaging while participants anonymously donated to or opposed real charitable organizations related to major societal causes. We show that the mesolimbic reward system is engaged by donations in the same way as when monetary rewards are obtained." This supports the so-called "warm glow" motive for giving that some have theorized about. (For example, Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving by James Andreoni) >>more>>, >>much more>> (requires subscription or fee)

     Do Synagogues (and Churches) Enjoy Unfair Advantages?  The New York Times just ran a fascinating four-part series on how religious institutions are given special privileges under the law. Topics include parsonage (the clergy can deduct up to a third of their salaries to pay for housing), exemption from some property taxes, limitation on protections for employees of religious institutions, and exemption from the annual reporting requirements mandated for other nonprofit organizations. >>more>> (requires free sign-up)

   What we Know About Nonprofits...And What We Don't.   The Federal Reserve Bank of Minneapolis recently published two short articles which report on some research about nonprofits. One provides a statistical profile of the nonprofit sector. There are large gaps in what economists know about the sector, but there are some interesting stats. For example, gross annual receipts of nonprofits doubled in the last ten years to $2.6 trillion. However only $260 billion -- 10% -- come from donations; the rest come from fees, mainly hospital charges and school tuition. One conclusion that I think bears emphasis: "the goal of administrative efficiency might discourage nonprofits from making necessary investments in their infrastructure. Taken to the extreme, it turns into a race to the administrative bottom and assumes that all administrative costs are inefficient and wasteful, when in fact good administrative infrastructure is essential to good programs." >>more>>. The second article looks at the differences between nonprofit and for-profit organizations and concludes that nonprofits have different motivations and are operated differently from for-profits. One conclusion cited: "for-profit [hospitals] had larger price markups, while nonprofits adopted more trustworthy practices and served as incubators for new health services, but were also slower to react to changing conditions." >>more>>

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