Publications by Topic
Topic: Nonprofits and Taxes
A Method for Measuring and Partially Testing "Charitability", 3 of 3 parts: Some Complexities (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
In this series so far, I have suggested that it is possible to test "charitability" — at least in terms of transfers of resources from some class of donors to some class of recipients — by using a balance sheet approach to identifying how those donors and recipients match up. After all, they should be equal in size. Now I will examine two additional complications — past charitable contributions and transfers from government—and then conclude by reexamining some of the objections to the approach I have suggested.
Published: 08/06/07
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A Method for Measuring and Partially Testing "Charitability", Second of Three Parts: Applying the Tool (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
All charities claim to be performing some good for others or for society. These "outputs" require inputs of charitable resources. Nongovernmental sources can be divided broadly into two major categories: financial or real capital, and volunteer labor. These contributions of money or property and time are typically tax favored. This article examines how the balance sheet exercise matching uses and sources of charitable "resources" can serve as a cross-check for how charitable an organization is.
Published: 07/30/07
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A Method for Measuring and Partially Testing "Charitability", First of Three Parts : Balancing Uses and Sources of Charitable Funds (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
How charitable are charities? Can a charity that provides education or healthcare and has no profits be "noncharitable"? The Senate Finance and House Ways and Means committees think those questions are so important that they have been examining whether and when nonprofit hospitals deserve tax exemption. Many state and local governments have done likewise. And apart from any possible action of the IRS or Congress or state legislatures, Independent Sector and other institutions serving and monitoring charities have been giving increased attention to how charities can more effectively achieve their charitable purposes. Even if there were no outside pressures, the community of consultants and advisers to charities would seek to find ways to measure success by more than sustainable budgets or outputs such as meals served or babies delivered.
All those efforts at one level or the other raise the important and sensitive issue of measurement. I contend that there is one powerful tool that could be used by many nonprofit organizations to try to more effectively measure — at least in one important respect — whether they are "charitable" and, to some degree, the extent of their charitability.
The measurement tool I suggest charities use is nothing more than the accountant’s most powerful tool: the balance sheet. However, the balancing exercise I am recommending goes beyond the traditional balancing of assets and liabilities and to what I will call the uses and sources of resources intended to achieve private charitable transfers.
Published: 07/23/07
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Individual Giving Compared To Charitable Gross Receipts (Article/Tax Facts)
Author(s):
Elizabeth Bell , Adam Carasso , C. Eugene Steuerle
Individual giving to public charities-most of which comes in the form of charitable deductions from tax filers who itemize on their returns-actually comprises only a small part of charities’ gross receipts each year: between 8 and 12 percent of gross receipts over the 1996-2003 period.
Published: 01/16/06
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Expanded Information Reporting For Charitable Giving (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
The IRS does not administer well items for which it does not have information reporting. Extending information reporting to most charitable contributions would simplify life for most individual givers, improve compliance, and likely be better for the charitable sector as well. An improved information reporting for charitable contributions goes hand-in-hand with the continually improving systems of accounting that accompany the advances of information technology.
Published: 08/15/05
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Options for Reforming the Estate Tax (Article/Tax Break)
Author(s):
William G. Gale , Leonard E. Burman , Jeff Rohaly
Retargeting the estate tax to very wealthy households and lowering its rates would blunt much of the criticism against it while retaining many of its advantages. This brief explains how the estate tax works and examines who is affected by it under current law. It discusses how reform would affect tax revenues, the distribution of tax burdens, farms and small businesses, and charitable giving and bequests. A concluding section discusses ways to reduce the tax's complexity.
Published: 04/18/05
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A Win-Win Option for Charity and Tax Policy (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
Stories of abuses by both donors to charities and by charitable organizations have once again filled newspaper headlines recently. The types of abuse are multiple, stretching from overvalued donations of easements (restrictions on certain uses of land to protect it, say, for conservation purposes) to vacations financed by donations of dead animal heads to the storage rooms of museums. In every crisis there is opportunity, and, in this case, it blends together a clean-up of the charitable sector with additional charitable incentives.
Published: 04/12/05
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Chinese Accounting for Stock Options (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
For a long time I have tried to remain open on the issue of valuing stock options. I know that despite modern finance theory they can be hard to value perfectly, due mainly to their unusual and asymmetric risk structure and lack of open trading in the market. I have listened patiently to all the arguments of start-up companies who complain that it is somehow harder to give restricted stock than stock options to their executives. I know that valuation for financial purposes and for tax purposes are not exactly the same policy issue. Still, none of this offsets my fundamental distaste for accounting badly for income, a distaste that derives in no small part from my experience with Chinese accounting as it had evolved in the 1960s and even the 1970s.
Published: 08/30/04
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Comments on US Senate Committee on Finance Staff Discussion Draft of June 21, 2004 (Testimony)
Author(s):
Elizabeth T. Boris , Linda M. Lampkin
In response to a Senate Finance Committee Staff Discussion Draft of June 21, 2004, which made suggestions aimed that strengthening transparency and accountability of the charitable sector, the Center on Philanthropy submitted comments covering three major points: (1) Electronic filing of Forms 990 will improve the quality, access, and timeliness of data on charities, and will reduce costs for the IRS, the states, and charities. (2) Gaps and omissions in Forms 990 and Forms 990-PF must be eliminated and better reporting must be enforced. (3) An accurate list of tax-exempt organizations must also be a priority.
Published: 07/16/04
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Charitable Tax Credits: Boon or Bust for Nonprofits? (Policy Briefs/Charting Civil Society)
Author(s):
Carol J. De Vita , Eric C. Twombly
Over the past decade, legislators have been looking for ways to increase private charitable giving and direct these resources to programs that serve low-income people. To further these goals, Arizona enacted a charitable tax credit in 1997 as part of the state’s welfare reforms. This brief examines the structure of the Arizona program, the initial effects on giving, and the types of organizations that benefited from the charitable tax credit. It concludes that although the Arizona charitable tax credit stimulated some additional giving during relatively good economic times (1998-1999), it is not a panacea for funding the nonprofit sector. The jury is still out as to whether it may weaken a broad array of organizations that create community cohesiveness and civil society.
Published: 07/01/04
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