Another Pipe Dream Being Sold To Nonprofits

Because of the traffic on my website www.nonprofitexpert.com I receive a lot of email. Many times email is from individuals needing specific help or the nonprofit organizations themselves or board members with a specific question. Regardless, I am happy to answer these questions and help, that is what I do.

However, I also receive quite a few emails from companies either wanting to advertise on my site, which I am very picky who I allow, or people that want to promote the next great fundraising idea that will make nonprofit organizations able to walk on easy street.

Once again I received an email telling me about this wonderful opportunity where nonprofits can create a residual income stream, blab, blab, and blab. This statement alone in and of itself is a clue as to the line of bull that is surely to follow.

The nonprofit only has to pay a one time fee to get started of $199 and then $29 a month. Then, all they have to do is get their donors and friends and enemies and people they don’t know to shop online and the money will pour in or so the claim goes. Ugh!

All this nonsense makes a huge assumption that nonprofits are going to have the time, energy and effort to convince all their donors or people involved with their organization to magically and overnight change all their ingrained buying habits that they have established over the years as well as forgo all the discounted prices they can get at Wal-Mart, Sams or other retail stores not to mention the convenience of shopping locally to go to a website no one has heard of before and where the nonprofit will only get a few pennies from purchases made.

This pitch even said the average return for active sites was a whopping $2 to $4 a month. Yep right…. So to pay for the annual cost for the first year of $547 i.e. $199 plus $29 X 12 using you have to have 138 suckers… oops I mean donors to use this lame website site to make a purchase just to break even, assuming you will get $4 back from their purchases. That is of course is with the moon in the seventh house and Jupiter is aligned with Mars which I sure happens quite often, right?

In this presentation there was also an example of how easy it would be for a nonprofit to have a residual income of $3,600 annually.

My closing comment to this bozo was for him to ask the company to provide me with a list of nonprofits that have made the quoted $3600 annually from this program after expenses. My guess is there will be no such list.

Folks, I’m sorry but there is no easy fundraising program that will make hundreds of dollars for nonprofits with little to no effort.

Regardless, I’m sure people will keep looking and I will keep getting these ridiculous emails, but then again they can become blog entries!

Nonprofits Geting A "Free Pass" By Government

Today the IRS announced a one-time filing relief for small organizations that failed to file for three consecutive years!

Small nonprofit organizations who were at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008, and 2009 can preserve their exempt status by filing returns by October 15, 2010.

Two types of relief are available for small exempt organizations - a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard), and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

Find more information about the filing relief program on IRS.gov.

Preserving your Tax-Exempt Status

Most tax-exempt organizations, other than churches, must file a yearly return or notice with the IRS. If an organization does not file a required annual return for three consecutive years, the law provides that it automatically loses its tax-exempt status. Loss of exempt status means an organization must file income tax returns and pay income tax, and its contributors will not be able to deduct their donations.

What must be filed this year depends on the organization’s financial activity:

Financial activity Filing requirement

Gross receipts normally ≤ $25,000
990-N (e-Postcard)

Gross receipts > $25,000 and < $1 million, and
Total assets < $2.5 million
990-EZ or 990

Gross receipts ≥ $500,000, or
Total assets ≥ $1.25 million
990

Private foundation (regardless of financial activity)
990-PF


In 2010 the tax-exempt status of any non-profit that has not filed the required form in the last three years will be revoked.

The Pension Protection Act of 2006 requires that non-profit organizations that do not file a required information form for three consecutive years automatically lose their Federal tax-exempt status. This requirement has been in effect since the beginning of 2007.

If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.

Small non-profit organizations with annual receipts of $25,000 or less can file an electronic notice, Form 990-N ( e-Postcard). They will need only a few basic pieces of information to file: the organization’s employer identification number, its tax year, legal name and mailing address, any other names used, an Internet address if one exists, the name and address of a principal officer and a statement confirming the organization's annual gross receipts are normally $25,000 or less.

Tax-exempt organizations with annual receipts above $25,000 are required to file the Form 990 or the Form 990-EZ annually. Private foundations file Form 990-PF. Churches and integrated auxiliaries of churches are not required to file Form 990-series returns or notices.

Form 990-series returns and e-Postcards, are due by the 15th day of the 5th month after an organization’s tax year ends. For more information click here.

DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.