Called Out

Today, I received a special alert from the National Council of Nonprofits:

Last night, the IRS issued the list of 275,000 nonprofits whose federal tax-exempt status has been automatically revoked.

The announcement of these revocations comes years after Congress imposed an annual filing requirement for all nonprofits and an automatic revocation penalty for those that do not file for three years in a row.

275,000!!! That's a wake-up call, people!

Then I read another Special Alert email from the Alliance of Arizona Nonprofits:

The IRS has released the names of the 4,025 Arizona nonprofits that have had their tax-exempt status automatically revoked.

I'm sorry, what? 4,025 nonprofits. In Arizona. That have been stripped of their tax-exempt status. I don't know how many nonprofits there are in the state of Arizona (something I should look into), but the fact that 4,025 of them haven't been reporting for the past 3 years is a bit...daunting? Shameful? Embarrassing? A travesty? INSERT YOUR OWN WORD HERE.

Especially since they've been called out.

Publically.

For the whole United States--and nonprofit world--to see.

I don't know about you, but to me, that would be a I'm-calling-in-sick-day type of situation for me. How do you explain something like that to your staff, your volunteers, the people you serve, your donors, and--God forbid--your board? I don't even have an organization to call my own yet and I'm turning a little red-faced as I type this.

How does this happen?

I'm still new to the sector, so I don't understand how something like this could happen.

Is the form too difficult to fill out? Does it take a rocket scientist to understand it?

Do you have to provide a lot of information?

Did someone not understand that they were supposed to file the form?

Did someone file the wrong form?

Did someone miss the deadline?

Or was it just pure laziness and someone just dropped the ball?

I'd like to understand. Really. I need to find someone to explain this to me.

In the special alert from the National Council of Nonprofits one of the questions asked was "Can a nonprofit raise funds while it is not tax-exempt?" Apparently you can, but there's a caveat: the nonprofit needs to be transparent and honest about the fact that it is not currently tax-exempt and, therefore, contributions to it are not deductible to the donor.

Ouch! That's gotta sting.

I DO NOT want this to happen to my organization. So, what have I learned from this lesson?

File. Every year (or whenever the hell I'm supposed to). No matter what. And if someone else is doing it for me (which, more than likely, someone else will be) follow up and make sure the person really filed. Because if they don't, I'm gonna be called out. Publically.