FOR IMMEDIATE RELEASE

Contact:

Jerri Chou

All Day Buffet

617.470.9478

jerri@alldaybuffet.org

Social Entrepreneurship Event Brings Together the Best

For-Good For-Profit Ideas

Quick pitch competition brings together most innovative individuals to share, act, and invest in long-term change.

New York– (September, 2009) – On October 2, New York-based company All Day Buffet will assemble the world’s most socially minded investors, venture philanthropists and press for a cutting edge quick pitch competition in New York. The Kitchen will feature the most innovative for-good for-profit entrepreneurs looking to make the world a better place. Each venture will be have five minutes to pitch in front of industry-leading judges, speakers and an audience full of investors, entrepreneurs, and press.

An event the focuses on solving the world’s problems through creativity and business, The Kitchen is a part of Feast Social Innovation Conference – a cross disciplinary event that highlights the most creative ways of addressing the world’s most pressing issues. Part of the new social entrepreneurship movement, The Kitchen seeks to bring together leaders in the burgeoning space of socially responsible investment and business.

“For much too long, there’s been an irrational divide between doing business and doing good,” said Jerri Chou, Co-founder of All Day Buffet. “We want the world to see that sometimes, you can actually do more good and see more returns—social and otherwise—by investing in inherently good companies than by traditional “giving.”

Speakers, Judges and Presenters at The Kitchen include:

SPEAKERS:

Nathaniel Whittmore, Change.org & Assetmap

Nathaniel Whittemore is the co-founder of Assetmap Strategies, a company that builds web tools to better help people leverage and share the resources that exist within their personal and professional networks. Previously, he was the founder of the Center for Global Engagement, a global service learning program design center at Northwestern University, from which he graduated in 2006. He writes about social entrepreneurship and innovation on Change.org and is fascinated by the ways in which the net generation are reshaping activism, careerism, and the pursuit of meaning.

Diana Ayton-Shenker, Fast Forward Fund

founder of Fast Forward Fund (FFF) and of Global Momenta, Diana Ayton-Shenker, focuses on accountability and impact through strategic philanthropy, corporate social responsibility and private-nonprofit partnerships. She brings 20 years of experience working with international organizations, private and corporate foundations, the U.N. and academia, to help leaders be more effective in affecting social change. Ms. Ayton-Shenker has held senior positions with Mercy Corps, PEN, Human Rights Watch, and has served on the board of several nonprofit organizations.

David Blumenstein, Hatchery.vc

David Blumenstein has made his mark as a technology strategist with broad skills across diverse technology platforms.  David brings his unparalleled network of technology leaders to The Hatchery and as well as his extensive experience in strategic and tactical deployment of new technologies, and background in advertising, marketing and finance.  Prior to The Hatchery, David was the Managing Director of Tekworks, specializing in Talent Management and Recruitment, CTO of EURO RSCG/MVMBS, Director of Technology for Ogilvy Interactive and Systems Analyst for Salomon Brothers.

JUDGES:

Eric Friedman, Union Square Ventures

Eric Friedman is a net native originally from New York City. Eric has a background in information technology and advertising and has blended this skill set within his entrepreneurial pursuits. Eric began his career with his own IT consulting practice in high school, followed by joining an Internet Startup in 1999. Soon after graduating from George Washington University in 2004 with a B.B.A. in Marketing, Eric joined Grey Advertising. In 2006 Eric joined Reprise Media as an Account Manager specializing in SEM, SEO, and Social Media services.  Eric can be found blogging at www.marketing.fm

Bryan Birsic, Village Ventures

Prior to joining Village Ventures in 2007, Bryan started his career as a consultant at Bain & Company’s New York office. While at Bain, he advised Fortune 500 clients in the healthcare, financial services, consumer products and media industries on a variety of strategic issues including M&A, competitive positioning and adjacency growth. Bryan also worked in Bain’s private equity group performing due diligence on potential buyout targets. Bryan holds a B.A. in Political Economy from Williams College, where he graduated Phi Beta Kappa. Bryan lives in New York, NY and is active with local community organizations Big Brother Big Sister and City Year. While at Bain, Bryan founded and led an organization to significantly reduce the environmental impact of Bain’s operations that was featured in Forbes. He remains active in the organization in an advisory role and has also consulted other services companies on aligning responsible environmental practice with positive brand and financial outcomes. Bryan is a board observer for Babble and Extreme Reach.

Josh Cohen, City Light Capital

Josh Cohen is the Managing Partner of City Light Capital. Prior to creating CLCM, Josh co-founded City Light Capital (the predecessor fund to CLCM), which invested in and managed a portfolio of double bottom line companies. He is currently on the Board of Rotomotion and is an Observer to the Boards of Shotspotter and ImageSpan. He was formerly an Observer to the Board of Arxceo before it was acquired by JCI Group. Josh had previous venture capital experience working with a family office in St. Louis and the SV Group, a private debt fund.

Deb Parsons, Investors’ Circle

Deb currently serves as Co-Director for Investors’ Circle, emphasizing on Business Development, Membership, and Strategic Partnerships. Deb joins IC after being a member for 4 years at two member funds, SJF Ventures and Good Capital. For the past two years, she was Vice President at Good Capital, launching and managing the fund’s operational aspects, investor relations, and deployment of capital. Deb was an associate at SJF Ventures during business school, a community development venture fund focusing on cleantech and the LOHAS sector. Prior to school, she spent six years in business development, marketing, and partner management at WGGH, Intuit, and the North Face. Deb received her MBA from Kenan Flagler Business School, UNC_Chapel Hill, where she was a Carolina Venture Fellow with a focus on sustainable enterprise and entrepreneurship. As the Net Impact chapter leader, Deb launched the Sustainable Venture Capital Investment Competition (SVCIC), an event that puts MBA student teams in the role of VCs evaluating real business opportunities of socially-responsible businesses actively seeking capital. Raised in St. Louis, MO, Deb now calls San Francisco home.

STARTUP FINALISTS (MORE TO COME):

Michael Mossoba, Goodness500.org

Goodness500 makes it easy for people to learn which corporations are the most socially responsible.

Nicole Betancourt, Parent Earth

Connects busy parents to the newest and best ideas for raising healthy children on a sustainable and equitable planet.

Jose Serrano-Reyes, Trust Art

Trust Art is a social platform that is commissioning ten public artworks over the next year.

Marco Puccia, International Transperency Solutions

International Transparency Solutions is a startup company designed to connect investors and the developing world.

Monaqui Porter Young, Srina

Srina tea is 100% organically grown, hand-plucked, packaged and produced on a small scale farm in a rainforest in Sri Lanka.

Eli Halliwell, VotaVox

VotaVox collects opinions from voters around the world on issues that are meaningful to them.

Breatt Beach, Madecasse

Madécasse chocolate is the only chocolate produced bean to bar on the island of Madagascar.

TICKETS:

Regular Ticket $99.00

Startup Ticket $50.00

Purchase online at http://feastkitchen.eventbrite.com/

WHEN:

Friday, October 2, 2009

8:30 AM – 12:30 PM

WHERE:

Tribeca Grand Hotel

2 Avenue of the Americas

New York, NY

MORE INFO:

http://feastongood.com/

http://feastongood.com/conference/kitchen/

# # #

About All Day Buffet:

Changing the world through creativity and business. We put things into the world that make it a better place. For more information, visit www.alldaybuffet.org.

About The Feast:

The Feast is a cross-disciplinary series of programs addressing social innovation and new ways to make the world a better place. Culminating in a conference on Oct 1. The Feast Conference gathers the world’s greatest innovators from across industries and society to empower, inspire and engage each other in creating world-shaking change. For more information, visit http://feastongood.com/

A particularly well written analysis posted on LinkedIn by Robert Lang, creator of the L3C. -Richard

We’ve had various questions in recent days about the L3C and thought this particular information might be useful.

All states have no choice but to recognize L3Cs from another state as they are a variant form of LLC and every state must honor every other state’s LLCs just as you can use a Delaware corporation in Idaho. In so far as revenue rulings go, the ones on LLCs would apply. It may elect pass through status just like any other LLC and would most likely do so. The IRS does recognize L3Cs but it is not going to give them the “Good Housekeeping” seal because it is not concerned with the generic group. Its interests relate to whether any particular L3C meets the conditions for investment by a particular foundation as a PRI. This is foundation specific. What is an acceptable PRI for one foundation may not be acceptable for another. The foundation must still use due diligence and work with its attorney both to choose the investment and negotiate the operating agreement to be sure if fulfills the foundation’s needs.

An L3C can get a grant from a foundation or the foundation can make a PRI investment. There are also ways for individuals and corporations to make a tax deductible contribution that ends up in the L3C. The L3C has the advantages of the flexibility of organization under the LLC laws. If properly put together the L3C integrates mission and income and eliminates UBIT issues and the regulations regarding percentage of control that a foundation may have in a for profit. Since a PRI into an L3C can replace a grant it also does not fall under the jeopardy investment regulations.

The L3C as an LLC allows the members of the L3C to make investments, have responsibilities, receive income, and have voting power in disproportionate relationships to one another. The LLC is effectively a partnership with corporate protection. That means that the operating agreement or contract among the members, can within the framework of the law, essentially embody whatever the members agree upon. This makes the L3C very well suited to membership by a disparate group of organizations.The membership could include corporations, nonprofits, government organizations and individuals. The nonprofit, could be given total day to day control and never invest a dime.

Finally the L3C designation as a brand will come to be recognized by the world at large for what it is. The transparency and efficiency will elevate L3C organizations from obscurity to high public awareness. Once that is achieved it will be far easier to get public investment in the L3C which is the eventual goal. We need to greatly reduce the burden on the very limited resources of the nonprofit community and allow businesses to perform many of the services in our society which can be performed under a for profit umbrella. For profits make a positive financial contribution to the community. An L3C will not be exempt from property tax so its existence makes positive contributions to the community without making a hit on the public treasury.

Written by Robert M. Lang
CEO, L3C Advisors, L3C

Whenever I see something that looks GREAT, I wonder if I am missing something…You know, the old; “Too good to be true”. Over the last many months, I have been doing due diligence on the most appropriate corporate structure for a film project I am working on called “Time To Impact”. The film has a social agenda; use the film to inspire philanthropy, social entrepreneurship, and civic engagement to turn around Paterson, NJ, the third largest city in the state and one of the poorest in the nation in 365 days.

The biggest concern is raising money for the film project. I wondered whether I should set up as a for profit or nonprofit. Going the for profit route didn’t seem to feel good. For one thing, I didn’t want to have a perception that we were doing this just to make money. In addition, I wasn’t comfortable being the guy who says; “Oh, this is going to be the greatest thing since An Inconvenient Truth and Supersize Me. The appeal isn’t in how MUCH people can make, but for the benefit that the film will have from a social standpoint. The pure for profit model just didn’t feel right. On the other hand, setting up a nonprofit involves setting up a 501(c)3, a process that takes many months, requires a board of directors, and other things that just seemed to be a distraction from the main goal at hand. Compound those issues with the fact that we are in a very difficult fund raising environment, we are likely to be grouped with everyone else asking for money, the grant process itself is a labor intensive process, and getting access to for profit money is less likely (if not eliminated), and the nonprofit model also didn’t seem to fit. Months of contemplation on this, and still no decision. Recently, I started taking a closer look at L3C’s.

The more I learned about L3C’s, the more attractive they looked for our film project. Over the last month or so, I have had discussions about my project with some of the top minds in country on the L3C. They seem to agree. This seems to be the perfect fit. So what’s so great?

L3C’s are hybrids of for-profit and nonprofit entities. They are a for-profit company that first and foremost has a social agenda, and making money secondarily. This seemed to address my concern about the issue of perception of my motivation of “doing this just for money”. My understanding is, there are no limits to the profit, as long as the mission is socially oriented. Second, and what I perceive as most beneficial and cutting edge, is the fact that L3C’s automatically qualify as “Program Related Investments” (or PRI’s) for foundations. This is a big deal. Why?

According to Foundation Center, “Program-related investments (PRIs) are investments made by foundations to support charitable activities that involve the potential return of capital within an established time frame. PRIs include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations or in commercial ventures for charitable purposes.”

So what does that mean? It means a lot. Foundations are required by the IRS to give away 5% of their assets each year in order to maintain their tax status with the IRS. Traditionally, this 5% takes the form of grants to 501(c)3 charities (the kind we would have been). As a Certified Financial Planner™ Professional, I look at the 5% requirement this way. Starting with 100 percent of the foundation’s investment portfolio, 5% is given away. Those grants hopefully are being given out to worthy causes who will “invest” the money effectively and use it prudently, however it is difficult to determine what the “social return on investment” actually is because in many cases it is difficult to measure the actual social return. I could write another entire column on just that subject alone, but let’s not go there right now. So what is the actual social return on investment of the 5% money? Enter the L3C.

L3C’s are businesses just like any other. Good ones should have a tight business plan and expectation that they are going to earn a profit or else they would not exist. If a business goes to a bank for a loan, the bank wants to know what the likelihood the loan is going to be repaid. That is determined largely on the strength of the business. The BIG deal with the L3C and for the foundation, is that a foundation can invest in the L3C and has the opportunity to actually earn a return on the money. Better yet, the foundation’s investment into a PRI (L3C), COUNTS toward the 5% they must give away each year. Ok let’s stop and recap now.

From a purely capitalistic “non social” viewpoint for a second, the 5% given away represents a 100% loss (looking at it strictly as an investment). Foundations give to good causes which is why they are able to get a tax deduction for the contributions when money is put into them.

If a foundation has an opportunity to earn a return on money and get it back to give again by investing in profitable social business ventures, AND it counts toward money they must give away anyway, why aren’t more foundations doing this?

In an environment of depressed investment portfolios, isn’t this a wise thing do do?

Worst case, the investment doesn’t make money and you lose your investment. Consider it a grant, which is what you are already doing anyway.

Am I missing something here?

If I have piqued your interest, watch the video below. (I’m “The Philanthropic Advisor” in the trailer)

Foundations, let’s make a difference and turn around a city. Please consider helping us fund this film. Email me at rich@timetoimpact.com to inquire.

Join the Movement:

Time To Impact Website

Facebook Fan Page

Time To Impact on Twitter @ImpactMovie

Richard J. Krasney on Twitter @PhilanthropyCFP

Richard J. Krasney on LinkedIn

By the way, nothing in this should be considered legal or financial advice and you should not rely on my opinions or the information expressed here in place of doing your own due diligence. Consult your financial professional before making any important financial decisions. This is just my opinion. End CYA.

Face it, many of us “wonks” (which I lovingly use) in the philanthropic sector have become enamored with being able to measure things. We also like to complain a lot when we can’t measure something.

Lately, all of the talk has been on the various ways to measure an organizational outcome. Under Ken Berger’s leadership, Charity Navigator has set a new course and begun studying ways to incorporate measurement of outcomes into their charity rating system. I applaud Ken and Charity Navigator and believe that for too long, we have not been focusing donor attention on the entire picture. It is inherently good to ask the question, “How effective have you been at actually achieving the thing we’ve been giving you money for?”. To be able to create mechanisms that address that question could potentially have a huge impact and be a game changing moment for the nonprofit sector.

In my work as an investment adviser, I choose investments to put money into. For the most part, I frankly don’t care how much a company spent on advertising expenses or other overhead costs, I care about their earnings. I care about their dividend. I care whether the company is growing or contracting. I care how much market share they have relative to their competitors. These and other things tell me how healthy a company is. While it is useful to compare the overhead of Home Depot to Lowes, it is pointless in my opinion to compare it to Johnson & Johnson if you are interested in the metrics of the home improvement business. They do completely different things. Measuring the right things is something that we’ve done a poor job at and it seems like good people are committed to making real improvements to how we track effectiveness. This is long overdue. Have we missed something along the way though?

When I first started becoming interested in philanthropy as part of my business, I wanted to help charities tell the planned giving story. When I went to become a Certified Financial Planner™ Professional, I saw the tax wizardry of Charitable Remainder Trusts and was amazed when I saw that one could potentially leave more money to heirs through the use of these and other kinds of charitable vehicles. I thought, “Wow, why doesn’t everyone know about this?” I felt that many more people would give to charity if they knew what kind of tax benefit they could get and that if heirs actually wound up receiving more in the process, well that would certainly be a win for everyone but the government. Over time, I learned that while many people do give for tax reasons, more give because they are inspired to do so for one reason or another. They give from their heart. They give to give something back or to make a difference.

While the measurement issue is a critical one, let’s not lose sight of the fact that we also need to be focused on showing people the way into philanthropy. We need to be creating opportunities to make new philanthropists by showing the world that we all make a difference and have the ability to do so. I discovered philanthropy. A business coach asked me to write my own eulogy. After a few minutes of sitting there, staring at him, and thinking about the question, I answered. I said, “I guess I would want people to say I made a difference…” The rest is history.

A few days ago, I was working on my computer and only had Facebook open in the background when I suddenly heard the sound of my instant chat window pop up (you know that sound). When I opened the window, I was pleased to see someone whom I hadn’t spoken to for a long time. I personally knew this person from my networking and had spoken a number of times to this person by phone, but we had never met in person. When I asked how he had been, he replied to me, “Not good”, and proceeded to tell me that he had just been held up at gunpoint, mugged, and had all of his cash, wallet, and cell phone stolen. “That’s terrible”, I replied. He said he needed money to settle his hotel bill and promised to pay me back tomorrow, saying his flight back to the US was leaving soon and he had to settle the bill. Immediately, my “B.S. detector” went off. While I did know this person, I am certainly not the first person he would have asked for money. I asked a few more questions and determined that someone had hijacked my friend’s Facebook account and was posing as him. I knew this person well enough to know it wasn’t him. I tried to call my friend to see if he was ok but unfortunately I couldn’t reach him. This guy was good though. When I asked him for a phone number to call him, he gave me a number, saying it was for the hotel in Kentish Town. I Googled the name and location and got a hit that this was indeed a scam. While I watched, the person actually changed my friend’s email address in his Facebook profile. The guy posing as my friend tried to get me to wire $800 bucks to a Western Union account.  I was astonished that this person was actually so bold. Stalling for time, I actually called the FBI while the person was online and reported the person.

Watch out on Facebook if anything like this happens to you. Happy surfing and keep safe.

It is always nice to get a quote in the Wall Street Journal. Unfortunately, it seems other advisors aren’t having such a positive experience with Twitter and other social networking websites, so I thought I would expand on the notion that these sites are not “measuring up” and talk about some of my own personal experiences and what has and hasn’t worked.

In terms of my own personal use of social networking sites, I first started with LinkedIn, then Facebook, then eventually went Twitter. With all of these sites, I think there are some common stages of acceptance. First comes “denial” (that will never work), next “curiosity” (my friends and colleagues keep talking about this thing, perhaps I should check it out), next “acceptance” (may be interchanged with addiction for some), and lastly “adoption” (figuring out where it fits). With each of these services there was initially denial, “that will never work”. With Twitter in particular, I already had over 5000 connections on LinkedIn and I couldn’t figure out why I would ever need to use anything else. Having explored each of these services in some detail, I can tell you that that they all do different things and having an opinion on one should not have you forming conclusions on the others. The key to success in social networking is, knowing what you want to get out of it before you start. Unfortunately, if you haven’t taken the time to learn what the services do or what they are about, it might take some time to figure out how to get the most from it.

Let’s address the issue of  “measuring up”. What does seem clear is that you should check you expectation of your social networking profile being an instant client magnet. If your expectation is to put up a profile and have droves of qualified clients start emailing and calling you, you can forget it. For sure, your expectations won’t measure up. So what good is it?

Twitter is by far, one of the best ways to keep up on news in your niche, find out who the influencers are, and be in the know about what’s being discussed when it comes to things you are interested in. As was mentioned in the Wall Street Journal article, within a very short period of time (less than a week as I recall) of joining Twitter, I followed Jean Case and The Case Foundation. Because I was blogging and talking about philanthropy and social entrepreneurship related topics, Jean Case followed me back and started listening to what I was talking about. Soon we also connected on Facebook as well. It turned out, while our relationship was limited to online, we shared a few common Facebook connections whom I knew offline too. While Jean and I have Re-Tweeted a few posts from each other, our relationship has remained one of “social networking acquaintances”. Since she and I connected, I discovered the great work their organization does. We are both on each others “radar” if you will. Who knows what will come in the future. Had it not been for Twitter, we would not have know about each other. There have been dozens of people I have met in the social networking world, many whom I have actually met in person and have developed business relationships with.

Social networking helps me cast a wide net and meet people who are interested in the same things I am. If you use social networking properly, these relationships can turn into business opportunities as they have for me. Having a philanthropic and social entrepreneurial wealth management practice isn’t something that you just hang a shingle and advertise. Social networking is a key tool for building your reputation, meeting key contacts, and emerging with a niche. It has become an essential and effective tool for me and makes meeting new people easy, effective, and fun.

BAUCUS UNVEILS LEGISLATION TO PROVIDE TAX CERTAINTY, RELIEF TO MIDDLE INCOME FAMILIES
Finance Chairman’s proposal makes permanent middle income tax rates, child tax credit, fixes estate tax and AMT for all Americans

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) today announced legislation that would make existing tax breaks permanent for working families and individuals including the child tax credit, marriage penalty relief, and lower middle-income tax rates among other provisions. The measures were originally passed as part of tax legislation in 2001 and 2003, but are set to expire in 2010. Baucus unveiled his proposal after a Finance Committee hearing today that examined the affect of the current economy and the U.S. tax code on America’s middle class.

“Today we’re offering a piece of certainty during an uncertain time for millions of hard-working, honest Americans. These measures are not excessive or outrageous, but timely and targeted, and will build on earlier efforts to stabilize the economy,” said Baucus. “By guaranteeing a little extra cash in the pocket of working moms and dads, and by making sure that the AMT and the estate tax can move with the economy, we avoid sweeping tax increases for millions of American families. By promising spouses tax fairness in marriage, giving help to those helping others through adoption, and by giving lower-wage workers confidence at a critical time, we can restore our footing, and begin to climb back to a position of national strength and economic security.”

Original co-sponsors of the Baucus legislation include Senator Jay Rockefeller (D-WV) and Charles Schumer (D-NY).

Elements of the Baucus proposal include:

- Permanent protection for more than 20 million Americans from being hit by the alternative minimum tax

- A measure to make permanent the 10, 25, and 28 percent individual tax rates, as established by the Economic Growth and Tax Relief Reconciliation Act of 2001

- Permanence of the income eligibility threshold for the child tax credit, recently set at $3,000 by the American Reinvestment and Recovery Act of 2009, to give families up to $1,000 for every child under age 17

- For taxpayers in the 10, 15, 25, and 28 percent tax brackets, a proposal to make permanent a reduced tax rate on capital gains and dividends, as established in the Jobs and Growth Tax Relief Act of 2003 and extended by the Tax Increase Prevention and Reconciliation Act of 2005

- Permanence of the marriage penalty relief provision, so that married couples will not be taxed more severely filing jointly than they would as two single persons filing separately

- Estate tax relief, making permanent 2009 levels for taxation of family possessions and property. The measure would also index exemption amounts for inflation

- Makes permanent the 45 percent credit rate for the refundable earned income tax credit for lower wage taxpayers with three or more children, as passed in American Recovery and Reinvestment Act of 2009

- Permanent expanded assistance for families that adopt a child including a $10,000 tax credit per eligible child

- Makes permanent the 35 percent credit rate for child care expenses up to $3,000 for one child and $6,000 for two or more children
The Taxpayer Certainty and Relief Act of 2009

I. Permanent Middle Class Tax Relief

Individual Tax Rates. Current ordinary income tax rates are imposed at 10, 15, 25, 28, 33, and 35%. These tax rates expire at the end of 2010. The proposal would make permanent the 10, 25, and 28% tax rates. (The 15% tax rate is already permanent law.)

Capital Gains and Dividends. The proposal would make permanent the reduced tax rate on capital gains and dividends for taxpayers in the 10, 15, 25, and 28 percent brackets. The 2003 tax bill created a new tax rate of 15 percent (5 percent for low-and middle-income taxpayers, going to zero percent in 2008) for dividends. Prior to passage of this bill, dividends were taxed at ordinary income rates. The 2003 bill also reduced the capital gains tax rate from 20 percent (10 percent for low- and middle-income taxpayers) to 15 percent (5 percent for low- and middle-income taxpayers, going to zero percent in 2008). These reduced tax rates were originally set to expire at the end of 2008, but were extended until the end of 2010 in the “Tax Increase Prevention and Reconciliation Act of 2005″ (TIPRA).

Child Tax Credit. Generally, a taxpayer may claim the child tax credit to reduce income tax liability by up to $1,000 for each qualifying child under the age of 17. If the amount of a taxpayer’s child tax credit is greater than the amount of the taxpayer’s income tax liability, the taxpayer may receive a refund if the income threshold is met. The Economic Growth and Tax Relief Reconciliation Act of 2001 set the income threshold for child tax credit refundability at $10,000 (indexed). The American Recovery and Reinvestment Act decreased the threshold for the 2009 and 2010 tax years to $3,000. The proposal would make these changes to the child tax credit permanent.

Marriage Penalty. A “marriage penalty” exists when the combined tax liability of a married couple filing a joint return is greater than the sum of the tax liabilities of each individual computed as if they were not married. A “marriage bonus” exists when the exemption amounts and rate brackets are larger for the joint returns filed by married couples than for singles’ returns. As part of the 2001 tax cuts, the standard deduction for married filers was scheduled to increase annually until 2009. In addition, the bill eliminated the marriage penalty in the 15% tax bracket and for the earned income tax credit. The marriage penalty relief expires on December 31, 2010. The proposal would make the marriage penalty relief permanent.

Dependent and Child Care Credit. The dependent care credit allows a taxpayer a credit for paid child care expenses for qualifying children under the age of 13 and disabled dependents. The credit is 35% of eligible expenses. This rate decreases by 1% for each $2,000 of income above $15,000, but the rate never falls below 20%. Eligible expenses are limited to $3,000 for one child, and $6,000 for two or more children. (After 2010, the amount of eligible expenses returns to the pre-2001 amounts of $2,400 for one child and $4,800 for two or more. In addition, the 35% credit rate decreases to 30% and the income threshold decreases to $10,000.) The proposal would make 2009 law permanent.

Earned Income Tax Credit. The EITC is a refundable tax credit available to low wage workers. Because the credit is refundable, a taxpayer will receive a refund if the amount of the EITC is greater than the amount of the income tax liability or if no income tax liability exists. The American Recovery and Reinvestment Act increased the credit rate for taxpayers with three or more children from 40% to 45% and increased the phase out range for all married couples filing a joint return (regardless of the number of children) by $1,880. The proposal would make these changes permanent.

Adoption Credit and Adoption Assistance Programs. Current law allows a maximum adoption credit of $10,000 per eligible child and a maximum exclusion of $10,000 per eligible child. These benefits are phased-out for taxpayers with modified adjusted gross income in excess of certain dollar levels. These tax incentives go back to $5,000 per child ($6,000 for child with special needs) after 2010. The proposal would make 2009 law permanent.
II. Permanent Alternative Minimum Tax Fix

For the 2009 tax year, the American Recovery and Reinvestment Act provided a patch for the AMT, setting the exemption amount at $46,700 (individuals) and $70,950 (married filing jointly), and allowed the personal credits against the AMT. When this patch expires, the exemption amounts will return to $33,750 (individuals) and $45,000 (married filing jointly) and the personal credits will not be allowed against the AMT. The proposal would make the 2009 exemption levels permanent and index them for inflation. In addition, the proposal will permanently allow the personal credits against the AMT.
III. Permanent Estate Tax Relief

Under current law, U.S. citizens and residents must pay taxes on transfers of property both during life and at death. These taxes are due under three separate tax systems: the estate tax, the generation-transfer skipping tax, and the gift tax. Currently, the top tax rate for all three taxes is 45%. Both the estate and generation-skipping transfer taxes currently have a $3.5 million exemption for individuals ($7 million for couples). The gift tax has an exemption of $1 million ($2 million for couples). For the 2010 tax year, the estate and generation skipping transfer taxes are repealed. In the same year, the gift tax rate will fall to 35%. In 2011, the estate, generation skipping transfer, and gift taxes are scheduled to revert back to pre-2001 levels, with an exemption of $1 million, a 55% rate, and a 5% surtax on large estates.

The proposal would make permanent the 2009 estate, gift, and generation skipping transfer tax laws going forward and index the exemption amount. The proposal would also reunify the estate and gift taxes. In addition, the proposal would allow portability of exemption for spouses. Finally, the proposal would increase the amount available under the special use valuation revaluation to equal the estate tax exemption.

We folks who deal with high net worth clients have wondered for years what will happen with estate taxes when the current plan sunsets in 2011. Let me make a guarantee here (which is something I don’t often do). I guarantee that estate taxes will be addressed before 2010 which is when they are set to return to zero and return to 2001 levels when 2011 begins. Already, congress is abuzz with talk about what to do about it. Frankly the estate tax has been the running joke in the planning community for years when congress said that the estate tax would disappear in 2010. People said that they would start to write special instructions for “pulling my plug”, but only if it were advantageous from an estate tax planning perspective. All kidding aside, regarldless of what gets decided, I guarantee that there will be implications. As The NY Times reported in 2005, the last time there was talk about eliminating the estate tax, charities remained shockingly silent for fear that any attempts to block the measure would be donor suicide. I mean really, would you give to a charity that intentionally lobied for higher estate taxes? Are you crazy? Make no mistake, this time, I guarantee there will be legislation being passed and it will have a major impact on both the wealty, and nonprofits.

While many in the nonprofit community have been quite vocal against Obama’s plan to lower the charitable tax deduction, if history is any guide, I don’t think they will be speaking up now. Perhaps they should. I believe that the changes to the estate tax will have a much bigger impact on charities than the income tax deduction. Charities felt that they had nothing to lose by speaking up on the proposed change to the deduction because the change would be bad for BOTH the wealthy, AND the charities. By lowering the deduction, the wealthy would be losing a tax incentive to give to charity (perceived as bad for the wealthy), and the charities would be hurt by that. Nobody had a problem speaking up to say this was a bad idea. The estate tax is a completely different animal and I would argue, will hurt charities much more than the income tax deduction. Have you heard anyone talking about this? Nope. This will be a silent walk to the grave for the nonprofits. Here’s how it will happen.

Year/ Exclusion Amount /Max Top tax rate:
2001 $675,000 55%
2002 $1 million 50%
2003 $1 million 49%
2004 $1.5 million 48%
2005 $1.5 million 47%
2006 $2 million 46%
2007 $2 million 45%
2008 $2 million 45%
2009 $3.5 million 45%
2010 repealed 0%
2011 $1 million 55%

In the above chart, notice that the estate tax exemption amounts have been going up since 2001. From 2001 until 2008, the exemption amounts didn’t go up that much; essentially from $1-2 million. The period from 2001 to 2002, up until recently, was the worst period of time for the markets since the great depression. While the exemption amounts did go up slightly from $675,000 to $1 million dollars, that was not a big increase in real dollars for the wealthy. From 2003 up until 2008, the stock market experienced a bull market while the exemption amounts only increased from $1 million to $2 million. This year however, the exemption amounts went to $3.5 million. That means that a husband and wife can leave $7 million dollars free from federal estate taxes. Compare that to only $2 Million total in 2002 ($1 million for each individual), and that’s a lot of extra millions. Let’s add somthing else here. Portfolios are down much more than the last recession. This means that exemption amounts are much higher, and people have less money. Well that’s great for the wealthy right? How about for the nonprofits? They are still talking about how the drop in the income tax chariable deduction is going to impact them. Folks, wake up, you have a new problem. It’s called the estate tax. While nonprofits have had lots of other things to deal with lately, I fear that what’s being discussed with the estate tax is going to be yet another blow to their ability to continue to operate as they had been.

Before the wealthy shoot me here, let me point out that there’s a fine balancing act that needs to take place here. Nonprofits play an essential role in society and they perform many responsibilities for society that the government isn’t good at and has no place in. If charities are not fundamentally strong, society is worse off and someone else needs to pick up the slack. If the government needs to do more, guess what, that means we all will wind up paying higher taxes anyway. It’s in our nation’s interest to make sure they remain financially healthy.

At present, the latest word on the street is that the Democrats support leaving the estate tax at the current level of $3.5 million. The exemption amount has never been this high before and only time will tell how much of an impact that will have on charities and donations. In my business, avoiding paying estate taxes is one of the primary functions that a wealth manager helps clients peform. While emotion has been the primary driver of charitable contributions, not taxes, I fear there’s a perfect storm that is lining up. For many in the wealth managent community, charity is only a means of avoiding taxes for their clients. Unless an adviser can use charity as a way to save taxes for their clients, they generally don’t bring it up. Doing so means less under management for the adviser and that translates directly to less fees. I assure you, right now, many advisers are just struggling to keep their doors open and discussing charity with their client is the last thing on their mind. The big question is, how many potential donors were lost by dropping investment portfolio values, raising the estate credit amounts from $2 million to $3.5 million, and cutting the charitable income tax deduction?

Just to be clear, I would be in favor of  freezing the estate exemption limits. I feel people pay enough in taxes and they shouldn’t have to pay again when they die. Make no mistake though, this will be another blow for charities. Don’t drop the charitable tax deduction, raise it, by a lot. I’d also be in favor of paying higher income taxes to pay for things like universal health care, education, and alternative energy. I realize you can’t have your cake and eat it too, I just worry that the cake recipe is looking like pie and we’re all going to get some in the face if we don’t think these things through more clearly.

Charity Navigator CEO, Ken Berger talked with CNN’s Anderson Cooper about Obama’s plan to cut the charitable tax deduction.

Are you representing your nonprofit organization on Twitter? Are you trying to use Twitter to get the name of your organization out there and possibly get new donors? If so, you had better listen up, and fast. There are a couple of things you should know before you start to make enemies on Twitter. You might call these the rules of the road. While it’s good advice for anyone looking to make new contacts, it’s particularly important for nonprofits.

1. Follow people who follow you- This is one of the dumbest mistakes I see people making with Twitter charity profiles. My username on Twitter is “PhilanthropyCFP”. If you are a nonprofit, why wouldn’t you follow back someone with the word “Philanthropy” in their name? That’s just dumb. If your objective is to recruit people to follow your cause, the first rule is to follow them back. There are no exceptions to this rule in my opinion. If you don’t follow someone who has expressed an interest in your charity profile, not only will they likely be upset because you weren’t interested enough to follow them back, but they will find another charity who is “interested in them”. This is dumb. Don’t make that mistake. I can’t tell you how many nonprofits I have unfollowed because they didn’t follow me back. While I’m not making myself out to be anyone “important” here, the bottom line is that it is a lost opportunity. We’re in the same industry, yet for some reason, their organization wasn’t interested in what I had to say. I say “NEXT”…
2. ReTweet interesting articles that people post. If you are generous, people will return the favor and your followers will grow.
3. Post interesting content (Not just yours). Did you read an interesting article that your followers might find interesting? Great post it. Useful Twitterers will increase their followers.
4. Show your personality (as long as it isn’t negative). In my case, it’s my company and I can be negative if I want. If people don’t like what I have to say, they can look elsewhere. I’m positive most of the time, but as my friends know, I do take a stand when needed (like here).
5. My favorite: “Tweet others like you would like to be tweeted”

Twitter can be a great way to meet people for any number of reasons. Just understand these basic rules and you should be just fine. If anyone has other suggestions, please feel free to add them here.