Financial Mines

This from the Internal Revenue Service today:

Dear Editor:
We at the Internal Revenue Service are concerned because as many as 3,900 small community-based nonprofits in Connecticut are in jeopardy of losing their tax-exempt status. The loss of this status could greatly impact the organizations’ charitable work and their donors’ potential tax deductions.

Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.

The organizations that are at risk failed to file the required returns for 2007, 2008 and 2009, according to IRS records. The requirement to file is the result of a tax law change that occurred in 2006. For many of these small organizations, complying with the new law may be as simple as completing a 10-minute form online. They can preserve their exempt status under a one-time relief program the IRS announced in July, but only if they file by Oct. 15, 2010.

The IRS has made numerous attempts to alert these organizations, but we are concerned that many may not have gotten the word. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.

We encourage everyone who is connected with a small nonprofit community group to make sure that their organization is aware of the law change and is in compliance before the October 15 deadline.

Best regards,
Gregg Semanick
IRS CT Spokesperson
200 Sheffield Street, Mountainside NJ

Nobody in Stamford is losing their job as the result of today’s announcement.  However, as GEAM positioned itself for the change earlier this year, there were some layoffs, a spokesman said, without specifying how many.

Can somebody explain what this means, from today’s press release about GE Asset Management oursourcing to Highland Funds Asset Management in Dallas:

“For more than two decades, GEAM has brought its 80-year heritage of investment expertise to the marketplace, which includes individuals who invest in the GE Funds directly and through intermediaries,“ added Mike Cosgrove, President and CEO of Mutual Funds at GEAM. “Our decision reflects our commitment to this market, while also better aligning our business model with our core strengths as an institutional asset manager and limiting our servicing responsibilities in this area.“ 

Is GEAM downsizing in Stamford?

Constitution Corporate Credit Union in Wallingford, a “bankers’ bank” for the state’s retail credit unions, went down in flames on Friday, falling to a government seizure caused by the failure of its investments in mortgage backed securities.

Like so many financial firms that got burned, AIG, Lehman Brothers, Citi, et al, the local corporate chased higher returns in risker investments, and lost the bet.

It begs the larger question, though, if credit unions should be allowed in the game at all. From their founding as cooperatives that put relatively small amounts of money to work among a group with some common bond, many CUs have positioned themselves as regional retail banks. These days, they are allowed to take outside customers and grow to billions in assets.

The system has had to create organizations like Constitution Corporate to handle clearing duties and other backroom functions, including investing substantial assets for smaller credit unions. They’re playing with the big kids, and maybe that’s not the wisest thing for what was supposed to be a movement to allow access to savings accounts and home loans for everyday working people. Members of the state’s credit unions should be outraged that the group backing their local CUs should have gotten so far out of hand.