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A Tale of Two Nonprofit Websites

Once upon a time, there were two websites, each belonging to a different charity.  Our tale follows the adventures of these websites.

The first website…we’ll call it “the good site”…was considered a real asset to its owner.  While not fancy or flashy, it was nice to look at and was obviously well taken care of.  The content of the good site talked about the charity, the charity’s mission, its programs…it even had nice pictures of some of the volunteers helping the charity’s beneficiaries.  And, everything was correct and up to date.  The good site was very good indeed.

The other website…we’ll call it “the bad site”…was also considered a real asset to its owner.  It was fancy and flashy and quite beautiful to behold.  The content of the bad site talked a little about the charity, the charity’s mission, its programs…but, it talked a lot more about the charity’s president, John, and John’s for-profit business.  In fact, it was kind-of hard to tell who the website was supposed to be promoting, John or the charity.  There were some nice pictures of John, John’s family…even John’s dog…plus lots of conveniently placed “Buy Now” buttons for website visitors to snap up John’s new book.  The bad site was very bad indeed.

One spring day in April, the IRS received a complaint that the second charity was doing things that were not appropriate for a 501(c)(3) organization to do.  An IRS agent…we’ll call him Bob…was asked by his supervisor to look into it, so Bob did.  The first thing Bob did was Google the charity’s name.  The charity had named the bad site the same name as the charity itself, so Bob clicked on the result of his search.  Imagine Bob’s amazement as he perused the bad site.  There he found lots of interesting things:  pages promoting John, links to John’s business, books for sale that were written by John, advertisements for other businesses, plus a little bit of information about the charity’s supposed programs.  Bob was very concerned and initiated an examination of the bad site’s charity.  After several, painful months, Bob presented the bad site’s charity with a bill for unrelated business income.  To be fair, Bob also presented bills to each board member for intermediate sanctions penalties for allowing John to do bad things with the charity’s website.  Then, some months later, the bad site simply disappeared after its charity filed Articles of Dissolution with the state of Maryland.

Meanwhile, the good site continued to shine and promote the programs of its charity.  Though times got tough and donations decreased, the good site stayed true to its mission.  Never did advertising appear on its pages, nor did the good site give in to temptation.  One autumn day in October, the IRS received a complaint from a disgruntled volunteer (who was a little unbalanced), alleging that the first charity was doing things that were not appropriate for a 501(c)(3) organization to do.  Bob was again asked to look into it.  Bob Googled and found the good site.  But after looking at each page very thoroughly, he saw nothing troubling.  He pulled the charity’s prior Form 990s and found them to be in order as well.  Bob was very busy, so he decided that the complainer was probably just a crackpot and moved on to the next case on his desk.

The moral of the story:  Bob Googles…often.

Greg McRay, EA

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 2 Comments
  1. Thank you for the scenario you presented. It was very much to the point and extremely useful.

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