Respond to each peer initial post and question at the end with a response about 3-4 sentences long.
For most, the thought of lobbying and non-profits don’t go hand in hand; however, even the most restricted non-profit can lobby. Getting involved and voicing opinions and concerns on the behalf of the communities that they serve is vital. Active non-profits know first hand the problems that plague their communities and are in the best position to suggest solutions and policies that will advance the lives of those they serve. In some instances, without the input of non-profits, policy-makers will create policies and budgets that completely overlook underserved areas.
A 501(c)(3) and 501(c)(4) organization are both nonprofits but are held to different standards when it comes to lobbying and activism. 501(c)(4) organizations can participate in a variety of political activities but to remain tax exempt those activities are limited to only being apart of the organization’s purpose (Fritz, 2011). A 501 (c)(3) organization is more restrictive as its tax-exempt status requires no political activity with limited lobbying. These organizations can educate the community and political leaders on issues that affect its cause as long as all views are represented (Fritz, 2011). While organizations can lobby for change, endorsing or advocating for a specific candidate is prohibited. Advocacy does not necessarily have to affect funding as it is can simply just be voicing concerns and inviting policymakers to learn more about organizations to see how funding is important to its activities. Once activism crosses into substantial lobbying is when charitable donations and funding is impacted.
I think activism can create a conflict of interest as well as negatively impact a nonprofit organization. If a nonprofit shows support for political candidates, this could affect the charitable giving to the nonprofit also. There may be beliefs or ideas a political candidate support that go against what the mission of a nonprofit is. Additionally, individual and corporate supporters of the organization may lose interest in supporting an organization that is getting into politics. For example, a nonprofit whose mission is to assist undocumented immigrants obtain proper documentation to become a US citizen would not want to support political activity that pertains to building a wall. Staying neutral and not publicly voicing opinions or showing support can help the organization continue to receive funding. However, by not participating in activism it could cause the nonprofit to be limited on public funding and not being able to network with public figures.
Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes (“The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax Exempt Organizations | Internal Revenue Service”, 2018).
“Tax increment financing is a method of reallocating property tax revenues which are produced because of an increase in taxable valuation above a “base valuation” figure within a tax increment area. Until the tax increment debt within an area has been repaid, tax revenues produced by property tax levies imposed on the increased taxable valuation by a city, county, school district, area school or any other taxing jurisdiction are all allocated back to the city or county which has established the tax increment area and must be spent by that jurisdiction for projects within that area.” (pdiowa.com) In my opinion, borrowing against future taxes is not a productive strategy. The future is to unstable concerning the economy and it wouldn’t be a safe bet to borrow against future taxes because if things don’t work out as predicted, a bad situation could possible turn into a city, county, or etc..being on the hook for millions of dollars’ worth of taxes.
An accounting system is very important, especially to hold public officials accountable when it comes to appropriation of funds. An accounting system not only keeps track of all funds and what their being used for but what department their going to. The accounting system is only as good, as the person who is monitoring it. That’s why a city should pay an external(outside) auditor to find and report all mistakes to them. An external auditor would have no ties or relationships with anyone inside of the company and would be the most trustworthy person to report all mistakes, this also would decrease misappropriation of funds from going unnoticed.
- Is borrowing against future taxes a productive strategy? Why or why not? Provide concerns from your readings and your personal views.
I believe that borrowing against future taxes is not a productive strategy. I say that because you can not be 100% sure what the future will be when it comes to the taxes. When you borrow more than you have you will have a negative return, because you will have to pay that back regardless if you have the funds to cover it. That’s just like going to the black Friday sale not knowing you don’t have the money, but you spend in hopes of getting the money later to cover those expenses.
- How critical is the accounting system to hold public officials answerable for the appropriated funds in their trust?
When waste or corruption becomes widespread or severe, public anger may result in the creation of an office of the inspector general. The inspectors general (IGs) are the heroes come to restore financial integrity and public trust, but the more successful they are, the more they threaten customary ways of doing business (Rubin, 2017). They examine financial reports, look for instances of fraud, waste, and abuse, and make recommendations to attack the structural sources of these problems. Inspectors general are widespread at the national level, common at the state level, and occur in some cities and counties (Rubin, 2017).
- Why would a city pay an auditor to find their mistakes and report them?
A city would pay an auditor to find their mistakes and report, because the city has something to gain from mistakes being found. When mistakes are found and reported this gives the city officials knowledge of corruption and fraud within that department or agency. Once the mistakes are found then city officials can prosecute and/or request restitution payments from that department head. Sometimes, the issue that evokes a cycle of control is not discrepancy from the budget as passed but a failure of implementation of a different sort, such as corruption, inefficiency, or ineffectiveness. Collectively, these problems are called waste, fraud, and abuse. A variety of overseers are tasked with finding and addressing these problems. Inspectors general are independent program and financial auditors who work with a team within or across specific departments or agencies.
- If the city was paying the auditor, would that relationship result in some lack of independence on the part of the auditor?
If the city was paying an auditor, I believe the relationship would still result in some lack of independence. The relationship of independence would be based on what and who the auditor is investigating. Some cities will give the auditor some limited power in order to get the investigation completed. Auditors sometimes can not complete an investigation, because they have some resistance from departments with turning over necessary reports and documents.
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