nonprofit test 1

Civil War and Reconstruction Period

- 1865- Freedman's Bureau created to help the south recover (led to housing, food, medical aid, and creation of thousands of schools - helped created a culture of fundraising - developments in tax incentives/tax laws o 1861 Lincoln imposes first federal income tax under revenue act o 1865 congress establishes Freedman's Bureau o 1913 congress passes the Revenue act of 1913 exempting charities from paying income tax o 1917 revenue act of 1917 allows tax payers to deduct their charitable contributions off their federal income tax

contributions of Colonial Era

- English settlements emphasized charity as religious duty - Colonist saw themselves as a self-organized and self-governing - Personal links were keys to this practice - Churches, seminaries, colleges/universities

key developments that blurred relation between government and nonprofit social services

- assumption that govt. not only could but should intervene in and regulate the economy and directly support those in need - 1947-1954 tax reform that provided donors with the greatest possible financial benefits o the IRS code and its regulatory provisions transferred individual and corporate charitable given into a tax-driven activity, with gifts and bequests carefully calculated to provide donors with the greatest possible financial benefits - nonprofits viewed as policy partners—growth in advocacy efforts - new federalism and devolution to state and local communities

tax- exempt status

- charitable organizations receive their tax exempt status under section 501c3 of the internal revenue code - a group interested in obtaining this designation must submit an application to the internal revenue service that details its charitable purpose, its sources of funding, and the members of its board of directors

mission statement- purpose, characteristics, and criteria

- purpose: should be a statement of an organizations reason for being and its strengths - characteristics: one verb, target population, outcome - Criteria: o Establish boundaries (you cant do everything) o Motivates board, staff, volunteers, and donors o Helps in the process of evaluation

Challenges of government "contracting" of social services

- restricted gifts - burdensome reporting requirements - prohibitions against lobbying - unpredictable of funding o election cycles o sequestrations- have to vote to pass budget o cycle of late or absent payments

significance of Freedom of Association to NP sector

- without nonprofits wouldn't exist - don't have limitations, don't really think about it just do it - price of freedom: threatens powers/ can't maintain power if people are meeting with their own ideas - essential to pluralism: nonprofits allow us to practice this - institutionalized the religious duty to do charity work o religious/moral duty to practice charity - city upon a hill= American exceptionalism/manifest destiny

Industrial Revolution/Gilded Age

-Rockefeller/ Carnegie/Ford/JP Morgan big during this time (Rockefeller foundation 1913, Rockefeller institute of medical research 1917) -gap between rich and poor got bigger -health and charity weakened - private foundations "Robber barriens"- wealthy industrialist- exploited the poor - lot of wealthy and private foundations create some of the problems - birth of private foundations= institutions capable of distributing private wealth with intelligence, vision, and longevity - inescapable precondition for philanthropy: CAPITALISM

what makes the "perfect soil" for Social Entrepreneurs

1. barriers disappeared- emerging democracies 2. need more than freedom- need money 3. increase in life span- "people want to think about what they leave on this earth so more likely to help" 4. education and rise of middle class 5. social mobility of women and minorities 6. communication revolution- awareness of need for social change and have tools to address it (freedom, time, wealth, health, exposure, mobility, and confidence- makes the perfect soil)

new about Social Entrepreneurs today

1. occurring on never seen before scale 2. organizations are globally dispersed and diverse 3. not stop-gap but more systematic- solutions not meant to be short term 4. more independent from church and state 5. greater partnerships between all sectors 6. increased competion and innovation and heightened attention to performance

6 characteristics of nonprofit

1. organized- show proof that you meet regularly and on board 2. private- money cant come from govt. 3. may not distribute profit- "non-distribution constraint" 4. self-governing- have to control own activities to some extent 5. voluntary- no one is forcing you to do this 6. beneficial to the public

Characteristics of a social entrepreneur (is an ATTITUDE not an INDUSTRY)

1. transformative force- has idea and refuses to give up 2. propels social change- tap into existing networks or create own 3. has new ideas to address major problems and are relentless in pursuit of their visions 4. don't take no for an answer, don't give up until ideas have been spread as far as possible

why tax status so important?

1.federal exemptions- initiative to make contributions 2. favorable legal treatment- formations of nonprofit is a right not a privilege 3. broad definition encompasses diversity of organizations but can be controversial

alternative labels for nonprofit sectors and problems with them

charity- give money/time passively -tends to be short term, emotional, immediate response, focused primarily on rescue and relief voluntary- "work with no pay" independent- "suggest they don't need help" tax exempt- don't have to pay taxes (most accurate term)

necessary conditions of democracy and capitalism to NP sector

have to be independent, voluntary and self-governing - nonprofits can not survive without democracy and capital - Tocqueville="Democracy in America" -civil society= without them can't have a democratic society

religious organizations and tax exemption

in keeping with constitutional protections separating church and state, religious congregations automatically receive 501c3 status *churches include= synagogues, temples, mosques, and similar types of organizations

political limitations on 501c3

nonprofits are absolutely prohibited from engaging in political campaign activity -charity official may not support or oppose a candidate for public office -the charities resources may not be provided as a campaign contribution to a candidate for public office -BUT charitable nonprofits MAY engage in voter registration and voter engagement activities

non distribution constraint

states that a nonprofit organization is prohibited from distributing its net earnings among individuals who oversee the organizations. This includes board members, staff and directors

financial requirements of 501c3

tax exempt organizations with more than 5000 in annual gross receipt must register with IRS, but they don't have to file the annual information report until they reach 25,000