Study shows importance of general operating support, capacity‐building grants for nonprofits

• Date: 01 July 2020
• DOI: http://doi.org/10.1002/nba.30798
• Published date: 01 July 2020

NONPROFIT BUSINESS ADVISOR JULY 2020

6© 2020 Wiley Periodicals LLC • All rights reserved

DOI: 10.1002/nba

Nonprot Research

Study shows importance of general operating

support, capacity-building grants for nonprots

Funders looking to achieve maximum impact with

their grant dollars would be wise to offer a combina-

tion of general operating support (GOS) and capacity

building (CB) grants, according to new research from

Synergos and the Citi Foundation.

The research study was launched to assess the

benets and impact that these types of grants offer, as

opposed to programmatic grants that funders award

to support specic programs and activities. As noted

in the report, many funders have paid lip-service to

the concept of boosting funding of this sort, but those

pledges and commitments have not materialized to

the extent they should.

The core problem is impact measurement—the

on-the-ground impacts of program grants are easily

measured, at least in most cases, while identifying

the specic impacts of a GOS grant or CB grant is

much harder, if not impossible. And as funders of

all types struggle to demonstrate progress on their

missions, easy impact metrics and data become ever

more crucial, making program grants heavily favored.

Synergos conducted extensive interviews with some

50 funders and nonprot execs, as well as represent-

atives from numerous intermediary organizations,

to get a look at trends in and insights into this area.

Some key ndings include:

• Long-term GOS grants coupled with CB grants

(See STUDY on page 8)

IRS nalizes changes to tax reporting requirements

The Internal Revenue Service has issued nal rules

clarifying the reporting requirements applicable to

tax-exempt organizations. According to the agency,

the rules formalize several statutory changes and

some temporary reporting relief announced by the

Treasury Department and the IRS in prior guidance.

Among other provisions, the nal rules include

the following:

• Clarication on the specic items generally re-

quired to be reported by tax-exempt organizations.

These items relate to taxes imposed on certain lob-

bying and political expenditures by organizations de-

scribed in section 501(c)(3), as well as those relating

to taxes imposed with respect to an organization, an

organization manager, or any disqualied person on

any excess benet transaction.

• Amendments to the gross receipts threshold that

triggers a ling requirement under section 6033 for

tax-exempt organizations other than private founda-

tions and supporting organizations. According to the

agency, the IRS and the Treasury Department have

previously determined that tax laws do not require

the ling of returns by organizations that are exempt

under section 501(a) (other than private foundations

and supporting organizations) that normally have

less than $50,000 in gross receipts annually, except

for foreign organizations and organizations formed

in a U.S. possession that have signicant activity in

the United States. That exception was previously

announced in Revenue Procedure 2011-15. The

new rules formally amend the regulatory language

to reect this $50,000 gross receipts ling threshold.

• Clarication on which organizations are required

to provide names and addresses of donors. The agency

and the Treasury Department have concluded that

the IRS does not need the names and addresses of

substantial contributors to tax-exempt organizations

not described in section 501(c)(3) to be reported an-

nually on Schedule B of Form 990 or Form 990-EZ

to effectively administer the law. In light of the risks

and burden associated with requiring the annual re-

porting of such information, the nal rule revises the

regulations under section 6033 to remove the general

requirement for tax-exempt organizations not de-

scribed in sections 501(c)(3) or 527 to report annually

the names and addresses of substantial contributors.

The rule now states that organizations described in

section 501(c)(3) generally are required to provide

names and addresses of contributors of more than

$5,000 on their Forms 990, 990-EZ and 990-PF. The

nal rule also removes the requirement to provide the

names of contributors who contribute over $1,000

for a specic charitable purpose to organizations

described in sections 501(c)(7), (8) and (10).

For more information, the nal rules can be viewed

online at https://go.aws/3gJbKDP. ■