A local association has lost its federal nonprofit status; donations to it for quake victims aren’t tax deductible
An effort by the Eugene/Kathmandu Sister City Association to raise money for victims of the earthquake that struck Nepal on Saturday experienced an aftershock this week when the state Department of Justice discovered that the association is not a federally approved nonprofit organization.
Dennis Ramsey, president of the association, said it will continue with the fundraising effort but immediately complied with the state’s request to remove any reference to donations being tax deductible on its website, www.kathmandurelief.org.
Ramsey said his plan now is to donate everything the association raises to another nonprofit organization, such as Mercy Corps, so that all contributions made to the Eugene/Kathmandu Sister City Association thus far and in coming days still will be tax deductible. He said a staff member with the Justice Department told him that was OK.
But a state official said Wednesday that’s not allowed, and continuing to receive donations might not be a good idea.
“We have encouraged Mr. Ramsey to discontinue solicitations until we receive clarification regarding the identity and tax-exempt status of the organization for which Mr. Ramsey is soliciting,” Justice Department spokeswoman Kristina Edmunson said in an email to The Register-Guard.
“It also needs to be clear that Mr. Ramsey has that organization’s written permission to solicit donations in that organization’s name. In order for a donation to be tax deductible, the donor must make payment directly to an organization that has (nonprofit) status.”
The Justice Department notified the city of Eugene this week about the problem, and the city decided to take down a link to the association’s fundraising website, city spokeswoman Jan Bohman said.
The Eugene/Kathmandu association’s goal is $100,000, according to its fundraising website. As of Wednesday, almost $11,000 had been raised since Sunday, Ramsey said.
Ramsey said the lack of federal approval will hamper his group’s further fundraising only if the media makes a fuss about it.
The state was tipped off to the issue by an unnamed individual.
“We received an inquiry on Monday about a website soliciting donations for Kathmandu relief, and the website represented that donations would be tax deductible,” Justice Department spokeswoman Edmunson said in an email. “The website in question included an employer ID number for an organization that currently does not have tax-exempt status.
“We have been in contact with all parties involved, and we are working to clear up any confusion,” Edmunson said. “We have asked the website to take down any representations that donations from Oregonians will be tax deductible.”
Ramsey said that employer identification number, or EIN, belongs to the Eugene Sister Cities Foundation, which is the EIN the Eugene/Kathmandu Sister City Association always has used on various tax forms, such as W-9s.
“Unfortunately, (the Eugene Sister Cities Foundation) let their (nonprofit) status lapse,” Ramsey said.
After the inquiry by the Justice Department, Ramsey said he was told the foundation in 2013 applied to the Internal Revenue Service for nonprofit reinstatement but still hasn’t received it. The foundation oversees all four of Eugene’s sister city associations. The others are Irkutsk, Russia; Kakegawa, Japan; and Jinju, South Korea.
“I had not known that the organization had not yet received its determination letter” from the IRS, Ramsey said.
David Atkin, an attorney who represents the foundation, called the IRS on Tuesday to check on the status, Ramsey said. He was told that the reinstatement process is “in queue.”
Atkin’s office declined to comment, saying the foundation is a client.
Ki-Won Rhew, president of the foundation, said Wednesday that the foundation lost its nonprofit status around 2007 and applied for reinstatement in 2013. “It takes a long time,” he said.
Rhew said the foundation let the nonprofit status lapse because it no longer receives funding from the city, and thus has no income to report. The city used to provide about $30,000 to the foundation until about 2002 but eliminated it during budget trimming, Rhew said.
The other three sister-city associations all have secured separate nonprofit status, Rhew said, but not the Eugene/Kathmandu Sister City Association.
“We may,” Ramsey said. “But the process is long and hair-splitting.”
The Eugene/Kathmandu Sister City Association has existed since 1975 but never tried to raise money for anything until now, said Ramsey, who added that he takes the blame for what happened.
“In my haste to put (the fundraising effort) together, I had just assumed” the Eugene Sister Cities Foundation had nonprofit status, he said.
Ramsey said the Justice Department has blown the matter out of proportion. He said he is frustrated the state did not contact him directly but instead called the city, Rhew and Atkin.
“No one bothered to call me,” Ramsey said. “They could have nipped this in the bud by just calling me. They just let this spin and fester for two days. This is a legitimate effort to do fundraising.”
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