Recently I was talking to a client of mine about some of their permanently restricted net assets when he blurted out, “I wish I could just get rid of these little, old amounts that have been around forever! They’re more trouble than they’re worth!” Before I could get my reply out, he followed up with, “I’m not being serious, of course. I know that’s the whole point of permanently restricted contributions. I’ve come to terms that they’ll never go away!”
Actually, there is a way to make certain small amounts of permanently restricted contributions “go away,” assuming they’ve been on your books for a couple of decades or longer. It’s a provision in the Management of Charitable Funds Act, which is the law that governs expenditures of charitable endowments that the State of Arizona follows … and it’s not as difficult as you might think!
First of all, I should clarify what I mean when I use the words “little, old contributions.” Little means less than $50,000. Old means 20 years or more. If your contribution in question meets those requirements, and if meeting the restrictions is impracticable or wasteful, you can submit a plan of release or modification to the Attorney General for approval. There is an automatic approval after 60 days, as long as the Attorney General doesn’t object to the plan within that timeframe, and – of course – the contribution must be used in accordance with the charitable mission of the Organization.
Organizations with funds that do not fit into these criteria must petition the courts to modify or release the restriction.
By Jessica Puckett Moulder, CPA, CFEPosted on June 23 2015 by admin
Once April 15th comes and goes, most Americans no longer are thinking about tax returns. If you’re involved in a not-for-profit, however, you may still be working on getting your informative return done and e-filed.
It’s human nature, especially when you’re busy, to only report what you have to on your 990. However, your 990 is referenced by many future donors by reviewing it on sites like Guidestar or Charity Navigator. Therefore, your 990 is not only a required IRS filing, it’s a potential marketing tool.
Before you file this year, review your mission statement, vision and program descriptions and edit them to become more appealing to potential donors. Using statistics and updating how many people your organization helped during that tax year will show the reader how big of an impact you make in your community and how worthy your organization is of their donation.
I recommend to anyone who will listen to check a not-for-profit’s 990 prior to donating to ensure that organization is what you want to support. On the other hand, I recommend to all of my not-for-profit clients to use their 990 as a marketing tool because more and more donors are checking the 990 than in past years.
Revise your 990 and think “would I donate if I read this?” Having an appealing, heartwarming informative return may bring in more donations for your organization.
By Samantha E. Mahlen, CPAPosted on by admin
On Saturday June 13, fifteen Henry & Horne, LLP employees and family members cleaned carpets, washed windows and wiped down chairs, desks and tables for The Children’s Center for Neurodevelopmental Studies. Rob from the Center was BLOWN AWAY by how hard-working our team was and was so thankful for the work done.
The Center is a school that has developed programs for children and teens with autism or other development disabilities to learn social, educational and life skills. They serve anywhere from 30-50 students each day with their year-long programs. The hours our team was at the Center on June 13 helped make the class rooms and auditoriums a cleaner place for the students to learn and grow this summer.
Thank you to all who came and made this event a success!
By Samantha E. Mahlen, CPAPosted on June 16 2015 by admin
Social media has become the top marketing tool in businesses today, which of course includes the not-for-profit community. By now, you probably have a team member that is responsible for the organization’s Facebook, Twitter and LinkedIn accounts. However, there are more ways that social media can affect your organization than its own pages.
Employees, volunteers and directors can now associate or link themselves with your organization by listing that they work or volunteer for your organization on Facebook and LinkedIn. On Twitter, they can tag your not-for-profit by using the unique tag line. Therefore, it’s important for your organization to have a policy in place that educates all people associated with the not-for-profit on what type of social media activity is acceptable and what types of posts will negatively impact the reputation of your organization posted either on behalf of your not-for-profit or on a personal basis.
Finally, it’s most likely not feasible to have an employee monitor all social media activity your employees, volunteers or directors post. You need to determine what level of monitoring is practical to protect your organization.
You can find more information and templates of social media policies at socialmediagovernance.com. Social media can be a tool for great marketing, or it can be a form of exposure that is harmful to your organization’s reputation. By implementing a policy, you can help mitigate the risk of damaging publicity.
By Samantha E. Mahlen, CPAPosted on June 9 2015 by admin
Last Saturday while browsing the internet at a coffee shop, I came across any donor’s worst nightmare. According to the Federal Trade Commission (FTC), over the past eight years The Cancer Fund of America, The Cancer Support Services Inc., The Children’s Cancer Fund of America, Inc., and The Breast Cancer Society spent $187 million dollars of donations on cars, luxury cruises, Jet Ski outings, and sports and music events as well as dating site memberships and college tuition for family and friends. The complaint states that the Children’s Cancer Fund funded two all-expense paid trips to Disney World for board members, employees, and their families. The initial complaint was filed with the District Court of Arizona but all 50 states and D.C. joined the FTC in filing the charges, making it one of the largest charity fraud cases to date. All in all, the four charities spent an average of $0.03 on cancer patients for every dollar collected. The charities could face charges of more than $135 million; however, it is unlikely that any of the charities have enough assets to collect this amount.
The fraud appears to be an interfamily affair. James Reynolds Jr. is the Executive Director and Board President of The Breast Cancer Society. His father, James Reynolds Sr. is the CEO and Board President of the Cancer Fund of America and The Cancer Support Services. James Reynolds Sr.’s ex-wife, Rose Perkins, is the Executive Director and Board President of The Children’s Cancer Fund of America, Inc. James Reynolds Jr. and Rose Perkins have since settled the charges against them for $75,000. Both will be banned from fundraising, charity management, and oversight of charitable management for life. Litigation is ongoing for James Reynolds Sr. who has chosen to fight the charges.
It is hard to believe that any individual would be willing to steal $187 million from such an honorable cause like fighting cancer. Many questions ran through my head as I read the article. How did they cover this up? What could the auditor have done differently to discover the fraud? How can donors protect their contributions against fraud? How can charitable organizations prevent this from happening? Stay tuned as I attempt to answer these questions and others in future blog posts.
By David WoodsPosted on June 2 2015 by admin
When it comes to IRS filing requirements relating to charities holding raffles, there are many steps to remember and they can be difficult to keep straight! Getting stuck trying to meet the filing requirements after the deadlines can result in late fees and a strained relationship with the winner of the raffle.
By Colette Kamps, CPAPosted on May 26 2015 by admin
On page 6 of the Form 990, the IRS asks the nonprofit organization if they have a written conflict of interest policy, if annual disclosure is required, and if the organization regularly monitors and enforces compliance with the policy. Often times when I ask the above question of my 990 clients, I get a response along the lines of, “is it required?” The answer is no, it is not required. However, it is a best practice for the organization.
The IRS asks this question to help them determine if the organization has proper oversight of funds that are received from the public. Board members have a duty of loyalty and should put their personal interest aside when making decisions on behalf of the organization. Having and maintaining a written conflict of interest policy and requiring annual disclosure will help protect the organization from any possible hidden motives that board members may have while making decisions on behalf of the organization. It will also help board members recognize when they have a personal interest and should handle any transactions differently.
It is acceptable to have conflicts of interest with a board member, but you must make them transparent so that the organization can handle the situation properly. For example, the organization may need to outsource a printing job and one of the board members may own a printing company. The organization should price shop other vendors to ensure they are making the best decision for the organization, and the owner of the printing company should not be allowed to vote on the decision due to the conflict of interest. Then if the rest of the board decides to use the board member’s printing company for the job, they must disclose the transaction on Schedule L of the Form 990 (and as a related party transaction in the financial statement footnotes if the organization has audited financial statements). As explained in the example above, implementing a conflict of interest policy at one’s organization can help to assist the board and maintain best practices at your organization.
By Michelle HousmanPosted on May 19 2015 by admin
Many companies reserve a small amount of cash in a petty cash fund to cover minute, miscellaneous expenses. The petty cash fund is typically replenished at month end or when the balance drops to a pre-determined level, i.e. $50.
The organization should select one employee to be responsible for the petty cash fund. This person will be required to review and keep track of receipts, maintain the petty cash register, and request reimbursement using a petty cash voucher. To replenish the petty cash fund, the employee should send a petty cash voucher and receipts to accounting for their review and proper approval. Accounting will then issue a check to the employee responsible for the petty cash fund to be cashed and make the corresponding journal entries.
For example, ABC123 Nonprofit decided to create a petty cash fund to cover miscellaneous expenses for the receptionists working at the front desk. Front Office Manager, Marco Polo, has been given the responsibility of maintaining the petty cash fund for the receptionists. To establish a petty cash fund, the company’s accountant made the following entry:
During the month of June, Marco used some of the petty cash funds to cover the costs of stationery, business cards, and a farewell card for a receptionist. He kept the receipts and petty cash in a locked box and recorded any transactions made during the month to a petty cash register. The petty cash balance as of June 30, 20xx, was $48.79. Marco completed a petty cash voucher and attached the receipts for accounting’s review. Once the reimbursement was approved, the accountant made the following entry:
To replenish the petty cash funds to its stated balance of $150, the accountant issued a check in the amount of $101.21 to “Office Manager, Petty Cash Custodian” and made the following entry on June 30, 20xx:
The accountant also signed the request and kept the supporting documentation of how the funds were spent with the check voucher.
By Kristian HaralsonPosted on May 12 2015 by admin
In March, the ownership of the National Football League (NFL) voted to give up their tax exempt status and become a taxable entity. The majority of the income generated by the league is from television rights fees, licensing agreements, sponsorships, and tickets sales, which are generated by the 32 individual teams and already taxed. The move will cost the NFL an estimated $109 million over the next ten years. Keeping the tax exempt status to save $109 million was viewed as a “distraction” by league commissioner Roger Goodell after the league generated $10 billion in revenues in 2013 alone.
Many Congressmen have been pushing recently to remove the tax exempt status of all pro sports leagues. In recent dealing with the NFL, Congress has used the tax exempt status as leverage against the NFL with issues regarding domestic violence and concussion protocol. Many view the move by the league as an effort to separate the NFL from the dealings of Congress and to take away the small amount of ammunition that Congress held. In the past, the NFL would have been required to file a public return that discloses the salary and benefit information for Roger Goodell as well as other officers, key employees, and highly compensated employees. Going forward, this information will not be made public. It should be noted that the NFL is not the first sports organization to give up their tax exempt status. Major League Baseball gave up their tax exempt status in 2007 while the National Basketball League has never held the non-profit distinction. The PGA and LPGA still hold their tax-exempt status.
By David WoodsPosted on May 5 2015 by admin
Arizona Gives Day, the annual one-day online giving campaign, was hosted by the Alliance of Arizona Nonprofits and the Arizona Grantmakers Forum for the third year on April 7. The first Arizona Gives Day event began in 2013 in order to rekindle the funding that typically slows after the holidays. In 2013, Arizona Gives Day raised over $1M. This increased to about $1.5M in 2014, and a new record was set this month with just over $2M raised for nonprofit organizations across Arizona.
Providing both large and small donors a chance to come together and see the impact of their collaborative giving, the website at azgives.org shows results by most dollars raised for small, mid-sized, and large nonprofits, as well as by most donors.
By Paul Biggs-- Older Entries »
Our Not-For-Profit niche is a strong team of experienced professionals who focus their work in the not-for-profit industry. Henry & Horne has been a stable local firm in Arizona for 55 years, and the Not-For-Profit niche has a long history of working with charitable organizations and other tax exempt organizations of all kinds. Our focus is exceptional client service and building relationships with our clients to promote communication throughout the year, not just at the time of the annual audit. We highly value and are very proud to be helping those who help others.
Before posting a comment on a blog post please be aware that we do not give free advice to non-clients by email, comment response, or phone. Thank you!
- Releasing or Modifying Permanently Restricted Contributions – Is this Allowable?
- Use Your 990 as a Marketing Tool
- June Community Event a Huge Success!
- Is It Time for You to Implement a Social Media Policy?
- Cancer Charity Fraud Part I
- IRS Filing Calendar for Raffles
- Conflict of Interest Policy: Financial Statements & Form 990
- How to Properly Record Petty Cash
- Touchdown or Fumble? NFL Gives Up Tax Exempt Status
- Arizona Gives Day Results