On Saturday, July 19, Eighteen Henry & Horne, LLP team members and their families volunteered their time to get creative and decorate the lobby and door of the Ryan House. The team colored beach balls, hung fish netting, signs and ceiling hangings and took tours of the facility. The goal was to decorate the glass door festively as well as cover it so outsiders cannot see in to the facility to protect the privacy of the children and their families. Having a group come in to decorate frees up the staff at Ryan House to tend to the children and give them the best care possible.
At the end of the morning, the lobby looked cheerful and fun with a luau theme décor, candy for the children, and extra beach balls so they, too, could be part of the festivities. The team had a great experience and several are planning to continue to support the house by sharing their musical talents and time with the children and their families.
Ryan House is a facility that provides respite and palliative care to children with life-threatening conditions and, as needed, end of life care. They also support the families in every step of the process. It is fully publicly supported and families can receive their services at no cost to them. To learn more, visit ryanhouse.org.
By Samantha E. Mahlen, CPAPosted on July 18 2014 by admin
On Saturday, June 28th, 17 Henry & Horne, LLP team members volunteered their time to cook dinner at the Ronald McDonald Houses. We prepared meals for 55 people at the Roanoke House and 40 at the Cambridge House. Any left-overs were packaged for the families for later. We were told that no food is wasted. If the families are not available at dinnertime, they will have plenty of left-overs for later.
Dinner is served buffet style. We prepared a taco bar with all of the fixings and then for desert an ice cream sundae bar. We found out that we had some wonderful cooks! The volunteers planned the menu, purchased the food, cooked and served the meal and cleaned up afterwards.
Ronald McDonald Houses give a place for families to stay while a child is being treated at the Phoenix Children’s Hospital. The meal we prepared is the only healthy “home-cooked” meal for the day. Otherwise the families live on hospital food and vending machine food. This is one of the few activities at the House that offers volunteers the opportunity to interact with families staying there. To learn more about Ronald McDonald House, go to www.rmhcphoenix.com.
This was a great experience for all of us and I thank all of the volunteers for their hard work on a hot Saturday evening.
By Andrea Hejnal-Hilger, CPAPosted on June 3 2014 by admin
Donors advising on the use of their donation sounds relatively the same as donors restricting the use of their donation, doesn’t it? These are actually very different concepts. Donor advised funds are separately identified accounts that are maintained by a public charity. After the donor makes an unrestricted donation to the donor advised fund/account, the charity has legal control over it. However, an arrangement or agreement has been made between the charity and the donor, where the donor retains advisory privileges on how those funds should be used throughout the existence of that separate account. A donor advised fund tends to be more of a long lived account that receives donations and from which disbursements are periodically made. Even though the donor can advise on the use of the funds, the charity still has the ultimate authority on the use, with the responsibility of ensuring that the use meets the tax exempt mission of the charity. Donor advised funds are carefully watched by the IRS due to past abuse with these funds where the donor essentially has control over the use of the funds, and then uses those funds in a way that results in an economic personal benefit to the donor, while the donor still receives a tax deduction. A charity can actually lose its tax exempt status if an individual uses the charity in some way in order to attain a personal benefit.
A restricted donation relates to a specific donation, rather than relating to a separate account set up specifically relating to one individual donor’s donations. A donor places either a time or purpose restriction on one specific donation, which is received by the charity and usually pooled into the general operating or investment accounts of the organization. The charity has the responsibility to use the donation in accordance with the donor’s wishes, but after the donor makes the donation, the donor generally does not have any further involvement and does not have any ongoing advisory privileges.
There is sometimes a misconception that a restricted donation can be made to a tax exempt entity, with the donor-restricted purpose naming an individual to benefit from the donation. Under IRS rules, no tax deduction is allowed if there is a direct personal benefit to the donor or any other person. Also, as mentioned above, a tax exempt entity is at risk of losing its tax exempt status if a personal benefit transaction occurs. For example, if a charity has a scholarship program, there should be an unbiased selection process as well as a conflict of interest policy to prevent personal benefit transactions from occurring.
By Colette Kamps, CPAPosted on May 27 2014 by admin
What makes a not-for-profit a great place to work? According to a recent survey done by the NonProfit Times, it depends on the size of the organization. However, communication appears to be the key factor regardless of the number of people the entity employs.
Large Organizations (250+ employees)
When you’re a large operation, staying connected is key for employees. After all, it’s not like you can get everyone in the same room at the same time (a luxury smaller organizations can enjoy). Because all not-for-profit organizations rely on their employees to achieve mission-driven results, keeping staff engaged is an important focus.
Medium Organizations (50-250 employees)
Employees of moderately-sized organizations appreciate that decisions can be made directly where they are to be implemented. Getting employees to feel “responsible” for the entire organization tends to lead to the highest levels of employee satisfaction.
Small Organizations (<50 employees)
Flexibility is the biggest benefit smaller organizations have to offer. Flex time and telecommuting options were cited in the study. Also, because top management works right alongside staff level employees, development and training can be targeted in a way that larger organizations cannot. Employees of this size of not-for-profit enjoy breaking away from the “one size fits all approach” that larger organizations are forced to take.
To read more about the 2014 study, you can access it here.
By Jessica Puckett, CPAPosted on May 20 2014 by admin
For an organization to be recognized as a 501(c)(3) tax exempt organization, it is generally required to submit Form 1023 to the IRS. Form 1023 is a 28 page, time intensive form that may be difficult to complete for many smaller nonprofits. As a result the IRS is currently in the process of creating Form 1023-EZ. This will be a simplified, shorter version of Form 1023 and will be significantly easier to complete. The IRS has estimated that Form 1023-EZ will take approximately 14 hours to complete, as opposed to the 101 hours estimated for the full Form 1023.
Organizations will qualify to use Form 1023-EZ by meeting the following requirements:
- Projected annual gross receipts of no more than $200,000 in any of the next three years.
- Annual gross receipts of no more than $200,000 in any of the past two years.
- Total assets of no more than $500,000.
Additionally, the organization must qualify as a private foundation or a publicly supported public charity. Although the form is not available for use yet, the IRS has posted a draft of the 3 page form on their website at: http://www.irs.gov/pub/irs-dft/f1023ez–dft.pdf.
By Paul BiggsPosted on May 15 2014 by admin
This past Saturday, ten Henry & Horne, LLP team members volunteered at Maricopa County Animal Care & Control where we walked dogs that are available for adoption. By getting these dogs out of the kennels and giving them some exercise and personal contact it maintains their socialization and helps maintain their adoptability. Some dogs were happy just being held and petted while others were more than anxious to walk. This was a great event and we send a very big thanks to all the volunteers for participating!
Posted on April 29 2014 by admin
On Saturday April 26, seventeen Henry & Horne, LLP team members and their friends and family braved the rain and hail to hike up Usery Mountain in Mesa to help support United Food Bank in its mission to end hunger in Arizona. The five mile Hike for Hunger took team members and others in the community to the Wind Cave to overlook scenic Arizona, and got everyone involved to help spread the word about those who go hungry every day in our state.
United Food Bank of Arizona provides food to hungry children, seniors and families through various community programs and partnerships. Last year they distributed enough food to provide more than 51,100 meals each day to those in need.
By Becky Barnett, EAPosted on April 1 2014 by admin
I recently read the 2014 Nonprofit Employment Practices Survey, and thought I would share some of the results. The survey, which invited responses from more than 20,000 not-for-profit organizations in the United States and Canada, focuses on four key areas: staff size and projected growth, recruitment strategies and budgeting, staffing challenges, and staffing resource management. Here are some of the highlights:
Related to Recession Rebound:
- Nonprofits are hiring again. Almost 50% of those surveyed have increased their staff size, and the number who are letting employees go has decreased significantly since 2009.
Related to Finding Talent:
- Only 15% have a line in their annual budget for formal recruiting. Organizations are still relying heavily on informal networks to find new talent, with 88% satisfied to network with friends and colleagues.
- LinkedIn is the most popular social media recruitment resource (60%), followed by Facebook (42%) and Twitter (21%).
Related to Staffing Challenges:
- Twenty percent of surveyed nonprofits indicated that turnover had been their biggest employment challenge. The reported turnover rate for 2013 was 16%.
- Succession planning is still not a priority at most not-for-profit organizations as less than 15% say they intend to create a plan in future years.
If you’d like to see the entire survey, you can find it here.
By Jessica Puckett, CPA, CFEPosted on March 25 2014 by admin
If your entity utilizes grant funding, it is important to identify if that funding is obtained from the federal government, whether by direct funding or a pass-through agency. Per Circular A-133 section 300, the grantee is responsible for identifying federal awards that must be reported on a supplementary statement to the financial statements: the Schedule of Expenditures of Federal Awards (SEFA). Depending on the amount of federal funding, your entity may be required to have a Single Audit in addition to your financial statement audit.
Here are a few ways to determine if grant amounts include federal funding that must be reported:
- The grant award has a seal in the heading of a federal department such as the Department of the Interior.
- A federal department is noted in the grant agreement as a contributor to the grant. Many times, a grant is partially federally funded and the percentage of federal funding is noted in the award.
- The grant award has a CFDA number listed. If anywhere in the grant award you note a five digit number formatted as follows, 18.677, the award is either fully or partially federally funded. It can be tricky to identify federal funds in a pass-through grant, so it’s important to fully read the agreement.
- The check or direct deposit is from a federal department or agency.
- The check or direct deposit document lists a CFDA number.
Identifying and reporting your federal funding correctly is vital to complying with your grant agreements. Also, if amounts are not properly reported as federal funding and aren’t included in your SEFA, your audit could result in a material weakness or significant deficiency.
By Samantha E. Mahlen, CPAPosted on February 25 2014 by admin
In order to address cash flow problems, many not-for-profit organizations seek additional revenue streams in order to continue to carry out their missions. But not-for-profit organizations should be aware of whether or not their activities are related to their organization’s exempt purpose. When activities are considered unrelated to the organization’s exempt purpose, the revenue earned from these activities may be considered unrelated business income (UBI) by the IRS, and will be taxable. The organization will need to report unrelated business income as taxable to the IRS on the form 990-T.
A “facts and circumstances” test is used by the IRS in order to determine the treatment of income, judging activities upon whether or not they substantially further the exempt purpose of the organization.
The IRS gives us a three part test for unrelated business income:
- The income must be from a trade or business, which generally refers to activities that produce income (usually from the sale of goods or services).
- The trade or business must be regularly carried on. This means that the business operates continuously or frequently. An infrequent activity such as an annual fundraiser is not considered regularly carried on.
- The trade or business is not substantially related to the organization’s exempt purpose. This means that the activity does not contribute in a significant way to the organization’s exempt purpose.
There are some exceptions to unrelated business income which will be non-taxable. These include situations such as activities conducted by uncompensated volunteers or the sale of merchandise donated to the organization.
If an activity results in UBI and may result in taxes payable to the IRS, this does not necessarily mean that the organization needs to discontinue the activity – unrelated activities will generally only put an organization’s tax-exempt status at risk when they are significant in comparison to all of the exempt activities conducted by the organization. Organizations should give careful consideration to their activities however, as it is important to be aware of what activities may be considered UBI and can result in a tax liability. Otherwise, an organization may come to the end of the year and realize that they have unintentionally conducted unrelated taxable activities and have accumulated a tax liability for which they are unprepared.
The IRS provides guidance and requirements regarding UBI for not-for-profit organizations via their website at www.irs.gov/Charities-&-Non-Profits/ as well as providing additional resources regarding obtaining and maintaining tax-exempt status at www.stayexempt.irs.gov.
By Paul Biggs
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.
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- Henry & Horne, LLP Team Members Get Creative and Volunteer at Ryan House
- Henry & Horne, LLP Team Members Volunteer at Ronald McDonald House
- What is the Difference Between Donor-Advised Funds and Restricted Donations?
- Best Nonprofits to Work For: 2014 Study
- IRS Creates1023-EZ Streamlined Application for Tax Exempt Status
- H&H Employees Let the Dogs Out
- H&H Team Members Hike for Hunger
- Not-for-profit Employment Trends
- Properly Identifying and Reporting Federal Funding
- Determining Unrelated Business Income