2009 Mileage Rates

Heads up! The IRS has released its 2009 mileage rates. Here is an excerpt from the news release:

The Internal Revenue Service today issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

• 55 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

For the full press release click here. To learn more about efforts to raise the reimbursement rate for miles driven in service of charitable organizations please click here.

Volunteers

This is framed more as an HR topic than accounting one, but I'm going to guess many of the nonprofit financial staff out there where multiple hats. I like to say that I do all of the "non-fun" stuff in a nonprofit; accounting, HR and IT.

Many of us use volunteers, but are we doing it the right way? Volunteers work with us because they care about the cause and want to help so by nature may be disinclined to take action against us should something go wrong. But that is not something we should count on and you will be exposing your organization to unnecessary risk if you do so. This article presents something for us to think about and these resources from the Nonprofit Risk Management Center can help set up an run an effective volunteer program.

The Commensurate Test

From the Independent Sector's Memo To Members come these interesting bits of news:

1. IRS Plans to Make Greater Use of "Commensurate Test" in Oversight of Charities

   The commensurate test generally measures if a charity is undertaking, through contributions and grants, a charitable purpose commensurate in scope with its financial resources. Miller said that the Service will "re-energize" what he called a "little-used line of legal precedent."

   Thanks to some news about nonprofit college and hospital spending and levels of endowments the IRS wants to make sure we are using our funds for our charitable purposes and not hording our funds.
   

2. Senate Bill Proposes FTC Jurisdiction over
   Charities
   

   The business practices of 501(c)(3) nonprofits would be subject to Federal Trade Commission regulation and enforcement under a bill introduced last month by Senator Byron Dorgan (D-ND). The FTC Reauthorization Act of 2008 (S.2831) would expressly extend FTC jurisdiction by changing the current definition of “corporation” in the FTC Act to cover 501(c)(3) organizations. FTC commissioners stated in written testimony that their lack of jurisdiction “has prevented the commission from taking action against potentially anticompetitive conduct of nonprofits engaged in business.”

   Just to look at the dark side of this there have been a number of for-profit entities that have sued nonprofits because the for-profit businesses thought that the nonprofits had an unfair advantage over them because they didn't have to pay taxes. Is that what this is related to? Maybe they haven't heard of Unrelated Business Income?
   
   
3. IS Announces New Estimate for Value of Volunteer Time

2008 Mileage Rates

Heads up for 2008, the changes have been announced:

Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 50.5 cents per mile for business miles driven;
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.

More info on the whys and hows can be found here.

Recognizing Contributed Services

Contributed services are professional services that have been donated by someone outside of your organization with specialized skills — such as those provided by doctors, nurses, lawyers or accountants. A rule of thumb I like to apply is that if the person has letters after their name (CPA, JD, etc.) or requires some kind of licensing to do their job (architect, etc.) they can probably provide you contributed services that you (and they) can recognize.

The service:

• Must create or enhance a non-financial asset. For example, the organization acquires a graphic designer to create collateral materials to describe fund-raising and development programs. Although the services are provided on a pro bono basis, certain technical expertise is necessary to produce the materials, which would otherwise have been purchased.
  

Or the service:

• Must require specialized skills. General volunteer services, such as working a booth at a fundraising event, are typically not recognized as contributed services
• Must be provided by persons possessing those specialized skills, and
• Is of the type that typically would be purchased by the nonprofit organization if the service or skills were not donated.

An example of a recognized service would be a lawyer providing necessary legal advice. What would not be recognized is:

• A non-lawyer providing legal advice.
• A lawyer providing un-asked for legal advice.
• That same lawyer stuffing envelopes for a fundraiser.
  

Assuming the criteria above have been met, the nonprofit would record contribution revenue for the fair market value (based and invoice from the service provider) of the donated services and also as an expense in the appropriate category.

New Volunteer Time Value Estimate

Four posts today? And all from checking out IS's site? They do have good stuff there.

Alan

Volunteer Executive Director

Question from a recent Boot Camp attendee:
For a volunteer Executive Director, can the value of the salary they could be earning be included as in-kind professional service?

And the answer is: Not according to GAAP and IRS rules, it does not meet the characteristics of a donated professional service. BUT you could list this time on a proposal or funding request as an in-kind service, something to show them the value of the organization. It just is not an official contribution to the organization.

Valuation of Professional Services

A recent email from a Eureka attendee asked if there was any government publication that lists what you would value donated professional services. The link to Independent Sector's site shows a general value for volunteer time and also links back to the Bureau of Labor Statistics that lists hourly rates for various occupations.

The best way to value any donated service though is to get an invoice from the donor stating their hourly rate and the value of the service given to you.