The Free Press, Mankato, MN

May 6, 2010

Small nonprofit organizations face uncertain future

990-N filing required by May 15

By Robb Murray
Free Press Staff Writer

MANKATO — Marty Aldinger and others in the Amboy business community made a bold move several years ago.

They ditched the “Amboy Chamber of Commerce” moniker and filed tax documents to become a nonprofit under the government’s 501(c)(3) designation, which allows them to do fundraising and collect tax-deductible donations.

And it has made all the difference in the world.

“When I first got on here, we had barely enough money to function,” said Aldinger, who joined the group when it was still a chamber of commerce and now presides over the Amboy Community Club. “(Nonprofit status) really changed what we can do and how we can help the community. It has greatly helped us and given us an avenue for money we wouldn’t have had otherwise.”

The 501(c)(3) designation is an important one for many nonprofits. Without it and the money it allows them to raise, they’d cease to exist.

But now there’s another threat to their fundraising.

Any nonprofit with earnings of $25,000 or less must, by May 15, file a form 990-N. Failing to do so will result in the nonprofit losing its 501(c)(3) status and force it to pay the $750 fee to reinstate it.

Statewide there are about 4,400 small nonprofits that have yet to file. Nationally, about 400,000 nonprofits have yet to file.

The new law is bound to catch groups off guard. Until now, nonprofits earning less than $25,000 didn’t have to file tax returns. The new law and its consequences have led to the nonprofit sector referring to May 15 as “doomsday.”

Nonprofits can check their status at the Urban Institute’s website or by visiting the Minnesota Council of Nonprofit’s website.

To file to 990-N, visit irs.gov. Organizations that have been terminated can notify the IRS through this process as well.

“Assuming at least half of the 4,474 organizations that have not filed are still operating and had to reapply,” a Minnesota Council of Nonprofits statement said, “it could cost $3.3 million collectively merely to have their tax exempt status reinstated — not to mention the time and trouble of applications and attorney’s fees.”

Locally, the list of groups on the list is large. Included area fraternities and sororities at colleges and universities, sheriff’s posses in several counties, 4H groups, the American Association of University Women at Minnesota State University, the American Volkssport Association, Circle K International, Madelia Community Theater, Mankato Area Environmentalists, Mankato Area Youth Symphony Orchestra, Sleepy Eye Area Food Shelf and others.

“Many of the organizations are smaller and chapter-type groups or clubs, some are larger and some are defunct organizations,” said AmyJo Lennartson, regional coordinator for the Minnesota Council of Nonprofits, “but many of these are small, all-volunteer run, and critical to our communities.”