Stuff to think about from Gene Takagi at Non-Profit Law Blog. He links to a piece on The Chronicle of Philanthropy about the increasing scrutiny on charities. (Not that there aren’t people abusing non-profit status, but shouldn’t the hammer really be coming down a little heavier on big bank misdeeds?) A symposium was conducted earlier this month “focused exactly on the issue that is first in the minds of policymakers in Washington who are interested in the tax-exempt sector: whether there is merit to a broader review and consideration of what is a charity. More specifically, should there be an effort to distinguish between types of charities?”

The piece links to articles which examine how many companies with non-profit status seem to be operating as thinly veiled for-profit businesses. In this context, most arts organizations probably wouldn’t worry because there is little chance of anyone accusing them of making massive profits. However, writing about the symposium agenda, the writer asks:

The question for tomorrow is should we move beyond just reforming certain sectors but instead look at broader changes to the subsidies for charities? For example, should there be line drawn that would allow for greater tax subsidies to charities that provide direct support to the poor? What lines should be drawn? What lines can be drawn?

Since governments often tend to think there is a binary choice for funding non-profits- your show or dying orphans, Carnegie Hall or criminals running free and houses burning down– my concern is that creating a scale for subsidies and donation exemptions will present a clear judgment about the value of organizations in the community. How will people’s perceptions change when 100% of their donation to Juvenile Diabetes is deductible, but only 80% of the donation to the opera? True, so much of it is already unspoken or written up in editorials and blog posts, but that might solidify perceptions. I would think there is a very real chance of arts organizations ending up on an uneven footing with other non-profits. It is politically much easier to advocate for better consideration of health and human services than the some times controversial arts.

There hasn’t been a follow up post on the Chronicle of Philanthropy site so I don’t know how the discussion played out. There was a mention of one of the speakers, the chief of staff for the US Senate Finance Committee mentioning that perhaps Congress should create a “for benefit” corporate status. But I haven’t seen anything much more about the meeting.

On a semi-related topic, Takagi also linked to the IRS’ new rules dealing with “Tax on Unrelated Business Income of Exempt Organizations ” Unless you have been wondering how to find these rules and enjoy reading IRS publications, this may not be of great interest to you.

He also linked to a site addressing what to do if you are a for-profit who wants to help raise money for a charity. The answer given isn’t really extensive, but it is a starting place if you are considering partnering to create one of those programs we often hear about where a “portion of the proceeds is donated to…”