Charities and Philanthropy

IRS purges more than 6,000 Indiana charities from database

July 2, 2011

More than 6,150 charitable organizations in Indiana lost their tax-exempt status, but most of them were no longer active.

The list includes 1,272 organizations in Indianapolis, everything from sports boosters to fraternities to little-known causes.

The Internal Revenue Service published the list of revocations on its website June 9, and it was long anticipated in the not-for-profit sector.

Until 2007, the IRS didn’t require charities with less than $25,000 in revenue to report annually, and it wouldn’t necessarily revoke the status of larger organizations that failed to file annual reports.

In an effort to clean house, the IRS began requiring all charities to file at least an abbreviated form. The IRS will now revoke tax-exempt status from any charity that fails to file three years in a row. May 17, 2010, marked the first three-year cutoff.

Observers in the not-for-profit sector looked forward to the IRS database purge because it will give a clearer picture of the sector’s growth pattern. With so many inactive organizations lingering on the rolls, IRS statistics gave the impression of continual growth. The most recent stats showed 11,056 public charities in Indiana.

The revocation list may cause confusion for organizations that are still active, but share their names with an inactive entity. The Damar Guild, for example, appears on the list, but it’s alive and well, raising money to benefit Damar Services for the developmentally disabled.

Liaison Donna Stutler explained that Damar Guild’s tax ID number changed back in 1991. It’s that entity that appears on the list. Stutler said the guild might send a notice to its supporters, just to reassure them. “Hopefully there won’t be lots of people that look at this list.”

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