Client Alert: Full Debate Begins on Delaware HB 240: Can a Compromise Amendment Save the Charitable Deduction From Being Thrown Out With the Bathwater?

Delaware Nonprofits and Supporters Should Remain Concerned and Voice Their Opinions to their State Legislators

Summary. The Delaware General Assembly continues to review legislation that, if passed, will significantly impact all Delaware nonprofits and houses of worship. Section 4 to House Bill 240, related to taxes on personal income ("Section 4 to HB 240"), eliminates itemized deductions, which will effectively exclude charitable deductions from being taken on individual state tax returns. Innovincent and others have previously summarized the main problems regarding Section 4 to HB 240 in its current form. Following debate on Wednesday, June 21, the Delaware House Revenue & Finance Committee approved HB 240 by a 7-4 vote. It now moves to the House for full discussion.

While other parts of HB 240 and other related bills are beyond the scope of this alert, Innovincent believes that a carefully crafted amendment to HB 240 could effectively strike a balance between the budgetary issues otherwise encompassed by HB 240 and the charitable deduction issue in Section 4 to HB 240 that may unintentionally cripple the Delaware nonprofit sector. We offer for consideration a proposed amendment, as discussed below, to cap rather than eliminate itemized deductions, while excluding charitable contributions from that cap. The cap amendment may be a compromise way to generate revenue without risking the benefits of charitable contributions in the process.

Call to action. All nonprofits should continue to review Section 4 to HB 240 and determine how it will impact their operations and budget. Additionally, nonprofits should gather, summarize, and share the extent that they rely on individual contributions and how a 20% or higher decrease would impact them. Nonprofits and other interested members of the public should also continue to contact their legislators and voice their concern.

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Client Alert: Delaware HB 240: Draft Legislation Regarding Charitable Deduction to Impact Delaware Nonprofits

The Delaware General Assembly is currently reviewing legislation that, if passed, will have a significant impact on all Delaware nonprofits and charitable organizations. As discussed herein, House Bill 240, related to taxes on personal income ("HB 240"), contains a provision (Section 4) to eliminate itemized deductions. This provision seeks to impact only those taxpayers who itemize their state returns, or about a third of the Delaware tax filer population. While this may have some positive effect on the state treasury, Delaware nonprofits and the communities they serve will be impacted adversely by this legislation. As such, Section 4 to HB 240 should not become law in its current form.

The elimination of the state charitable deduction in Section 4 to HB 240 will negatively impact individual charitable giving in Delaware. When comparing outcomes in other states that passed similar legislation, Section 4 to HB 240 could result in Delaware charitable organizations such as nonprofits and houses of worship collectively receiving anywhere from $30 million and $60 million less from individual donors in FY18 than FY17. Consequently, these groups will likely be forced to lean more heavily on the State in the future and reduce services to the communities and constituents they serve, offsetting any potential revenue gains since local governments will be forced to pick up the slack with their own funds and resources.

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CLIENT ALERT: FLSA Overtime Rules on Hold

Alert: The pending FLSA overtime rule changes scheduled to go into effect on December 1 are on hold. As many nonprofits and businesses are aware, these changes would have (among other things) raised the salary threshold to qualify for exempt status from $23,660 to $47,476 per year. These changes would have significantly impacted the budgets for many nonprofits in Delaware and elsewhere. Those changes have been put on hold and will no longer go into effect next month. For more information, please read the Client Alert provided by the Employment and Labor Counseling team at Potter Anderson & Corroon: Implementation of FLSA Overtime Rule on Hold 

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CLIENT ALERT: IRS Proposing Regulations That Could Require Nonprofits to Collect Social Security Numbers

Delaware nonprofit organizations should be concerned that the IRS is proposing regulations that would create a new donor disclosure form for donations over $250, which may lead to requirements that charities collect their donors' social security numbers. To express your concern, comments are due to the IRS via an online submission form by December 16, 2015.

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A Step-By-Step Primer on How to Obtain Large Government Grants For Nonprofits (Part 7)

STEP 7. Reporting

Reporting is one of the most critical components of the grant writing process. This article focuses on two key points: (1) reports and reporting generally and (2) information to collect for reporting purposes.

Reports and Reporting Generally

Generally, the type of reporting required is typically consistent with the type of grant you have been awarded. (Typically, grants are for research, community development, capital construction or development, or programs). Regardless of the grant type, however, once a nonprofit organization receives government funding, it has responsibility for the implementation of the project supported and for reporting the results achieved. The grantee must also monitor the performance of the project to assure adherence to performance goals, time schedules, or other requirements as appropriate to the project or the terms of the grant. 

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A Step-By-Step Primer on How to Obtain Large Government Grants For Nonprofits (Part 6)

STEP 6. The Budget

Creating a budget is an important component to the grant process and requires critical thought and internal evaluation. This article will touch briefly on three areas: (1) reviewing the framework before creating the budget, (2) creating the budget by addressing the types of costs that should go into the budget, and (3) addressing how to determine whether a cost is reasonable. We will conclude by briefly highlighting some points and general advice about the budget process.

Budgetary Framework

It is not possible to instruct grant seekers on how to prepare the perfect government budget for your grant because every format for every grant is different. For example, if you are seeking funding for a new charter school, chances are the budget requirements and formats for the City, County, State and Federal grants are all different! That being said, there are some generalities that you can consider regardless of the type of funding you are seeking.

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A Step-By-Step Primer on How to Obtain Large Government Grants For Nonprofits (Part 5)

STEP 5. Logic Models

Logic models are the primary mechanism by which your program's performance can be measured against the projected goals, objections, and outcomes. They differ from the traditional measurement standards that were focused on budget and are used primarily in part because budget alone is not necessarily the best indicator of success when it comes to fulfilling the organization's mission, especially for health and social services programs.

What is a logic model?

A logic model describes how your program or project is supposed to work. It defines what success will look like at the end of the program. It explains why your strategy is a good solution to the problem. Effective logic models make a specific statement of the activities that will bring about change, and the results you expect to see for the community you are serving. A logic model keeps the participants involved with implementing the program or project moving toward clearly defined goals by providing, dates, times, goals, and specific measurements of anticipated achievements.

There are several terms that you will need to become familiar with as they relate to logic models. They are:

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Delaware Charity Challenge Opens for Registration

After several months of planning, Innovincent is proud to announce the Delaware Charity Challenge, the area's first "race to raise" event where nonprofits, organizations, and individuals can form teams, choose their charity, and compete against each other in fun races and also in a general fundraising challenge. The First Annual Delaware Charity Challenge will take place Saturday, May 2, 2015 at Lums Pond State Park in Bear, Delaware. For more information, visit www.delawarecharitychallenge.com.

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Dice Game Fundraiser for Golf Outing

Introducing a dice roll element to your charity golf outing is an easy way to engage the golfer participants and help raise money for your organization at the event in addition to whatever typical fundraising elements you may have (sales of mulligans or 50/50 tickets, silent auction, etc.). The dice roll contest provides a fun way to get participants more excited about the event (and help keep the pace of play moving along).  

The dice roll game rules are simple. For a $5 (or more) donation, team members could roll the dice and depending on what number they rolled, their team would have an advantage at that hole. In our case, a roll of a 6 got the team to tee off from the 100 yards off the green, a 5 got the team to tee off from the 150 marker, a 3 from the ladies' tees, a 2 from the regular tees, and a 1 from the championship tees. Golfers could also "bribe" the volunteers to let them tee off from one of the closer location spots in the event they only wanted to roll the dice once. The roll would count for the whole group (for example, the most a group of 4 would pay to roll would be 4 times). In terms of pure fundraising analysis, this event is better suited as a stand alone event as opposed to including a roll in your tournament's "super ticket" (if you have one).

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A Step-By-Step Primer On How To Obtain Large Government Grants For Nonprofits (Part 4)

STEP 4. Writing The Application

This article focuses on how to prepare the grant application. In step one, you learned how to prove on paper that your organization had the capacity to partner with the Federal government and become a vendor. In step two, you learned how to research to generate support for your grant application. In step three, we discussed how the case for support should be written to align with the Federal agency's objectives for the community. In step four, we will focus on writing the application.

Deciding where to start on the application after your organization has decided to pursue Federal grants can be a daunting task, but is manageable. Much legwork and time should have already been spent on determining that your organization has met the capacity requirements, generating support, and working on a case statement. Next, after you have downloaded the grant application on Grants.gov, you are probably staring at approximately 100 pages of "Paper Reduction Act" detailed instructions explaining how to apply for the funding your organization needs.

The first step to completing this task is to read, read, read! Reading the application (multiple times) will ensure that over the next few months, you will know the application so well that you will be able to quote the requirements and the location of the content in each section.

After reading the application comes the arduous task of digesting the process, which can be quite formidable. Fortunately, there are several methods that can be useful to break the process of completing the application into smaller, manageable steps. These steps are outlined below.

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A Step-By-Step Primer On How To Obtain Large Government Grants For Nonprofits (Part 3)

STEP 3. Writing the Case Statement

A case statement is a concise document that clearly explains what goal your organization seeks to meet, how you plan to meet that goal, and what you can achieve with additional resources. According to expert fundraiser Hank Russo, the "case" is the underlying rational for fundraising. It is the urgent call for a solution to a problem. It makes the argument of why the government should support your project; and what your project will accomplish. Case statements vary in length, depth and scope according to the particular needs being addressed.

When preparing a case statement, remember to focus outward on community needs and the benefits derived rather than inward on institutional desires. A case statement should be more factual than persuasive, and be between four to ten pages. The writing should be brief and succinct with excellent, but simple grammar.

Before you begin, write down several strong, compelling reasons why the organization deserves funding and support, and use these as your key points as your write. Writing your case statement will be much easier if you have prepared the documents described in Step 1 of our series, "Obtaining Large Government Grants." The resources you will need to complete your case statement are your mission statement, goals, objectives, description of your current programs and services, the project budget and financial plan, description of the governance, staff, explanation of current facilities and service delivery, and a plan for evaluation of the programs and services.

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A Step-By-Step Primer On How To Obtain Large Government Grants For Nonprofits (Part 2)

As explained in the first part of this series on obtaining large government grants for nonprofits, there are many steps toward making a successful application. Step 1, as previously described, requires showing proof of organizational capacity. This allows your organization to effectively demonstrate (on paper) that it is ready to ask the government to invest in your programs or services. Once that is done, it is time to focus on Step 2.

Step 2 is research. Research has many elements. While researching potential government funders on Grants.gov or the Federal Register is certainly one aspect, the research step discussed herein is more intricate. Particularly, you will need to research your community's need, demand, competition, and find out whether there are any collaborative partnerships within your area. This requires developing an understanding of (1) the community needs of your Federal, State and local government agencies and (2) how these agencies collaborate together to develop an effective solution (e.g., program) to meet them. Below is a brief summary of ways to help develop this understanding effectively.

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