Posts Tagged ‘nonprofit’

Dos and Don’ts of Gifting & Donations

Thursday, December 10th, 2015

Is it just me, or can you feel the magic in the air this time of year? Even though the days are colder and the nights are longer, the holidays seem to bring out the best of humanity; and, having worked with many not-for-profit organizations over the course of my career, I have the pleasure of seeing some of the best of humanity first hand.

Listen now: The Warm Glowing of Giving

People choose to make donations to organizations and initiatives for many reasons. We learned in episode 11 of our podcast: “The Warm Glow of Giving,” that charitable donations are primarily guided by the heart and that 87 percent of all donations are made by individuals. That being the case, I still believe individuals – as well as businesses – should embrace strategy (the head) when it comes to writing checks to a worthy cause.  Here are some do’s and don’ts to keep in mind when writing your check to charity.

Gifting Donations - Ohio Accounting Firm

Looking to make a donation this holiday season to your favorite charity? Keep these dos and don’ts in mind before making that donation.

Do

  1. Do your research. Make sure you learn all you can about the organization you are donating to. You want to make sure you are donating to a worthy cause and not a fake charity.
  2. Know where your money is going. Find out how the organization will use your donation. It is OK to ask prior to your donation.
  3. Understand how this will affect your taxes. Most people know that making a donation can lead to a tax deduction, but do you know how much you can claim? If not, this is something your Rea advisor can help you understand.
  4. Get documentation. Any donation of $250 or more requires documentation if you are going to use it as a tax deduction. A cancelled check, receipt, etc. all work as documentation to include with your tax return.
  5. Give away appreciated assets, such as stocks. When doing this you get a deduction for the full value in most cases and you escape  the capital gains on the appreciation.

Don’t

  1. Expect a gift in return for your donation. That’s not the true meaning of a donation. Also, to be deductible, a gift cannot be received when making the donation, including a meal. If the donation was made at a dinner event, the cost of the meal must be subtracted from the donation amount.
  2. Pay with cash. For tracking and to prevent fraudulent activity, paying by check or credit card is usually the best option.
  3. Give randomly. Do your homework when donating, you won’t regret it. Make sure your money is going to a good cause and being used properly.
  4. Give more than you can afford. We all want to help, but donating more money than you can afford just creates more problems for you. Don’t put yourself in a situation where you are giving away more money than you can afford.
  5. Give away assets that have declined in value. Doing this will waster the capital loss opportunity for you.

Around 358 billion dollars are donated to not-for-profit organizations every year and these organizations turn around and do amazing things with your gift. From feeding the hungry, providing support to veterans and ensuring that others get the health, monetary or education assistance they need, nonprofits are an critical component of our society and you can be sure that the money you donate to any one of these types of organizations is appreciated. But you should still make sure you are using your head when making a donation to ensure that your money is being used in the best way possible. Want to learn more about how to choose the right not-for-profit organization for your tax-deductible donation? Listen to episode 11 of our podcast, Unsuitable on Rea Radio. You can also email Rea & Associates to get answers to your specific questions..

By Lesley Mast, CPA (Wooster office)

Learn more about the benefits of donating to charity. Check out these blogs posts:

Is It A Charity Or A Scam?

Tis The Season: Charitable Giving Through A Donor-Advised Fund

Charitable Giving Is Good For The Heart, The Soul And The Tax Return

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Study: Nonprofit Organizations Lack Governance Structure, Processes

Tuesday, May 19th, 2015
Directors of Nonprofit Organizations Lack Governance Structure - Rea & Associates - Ohio CPA Firm

Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying.

If you had to guess, how strong do you think your nonprofit organization’s policies are? If you’re unsure or have that gut feeling they’re not strong, you’re certainly not alone. After surveying more than 900 directors of nonprofit organizations, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, reported some concerning findings in their 2015 Survey on Board of Directors of Nonprofit Organizations.

You may know that it’s important to have good governance when it comes to ensuring the stability and strength of your organization. Without having the right procedures in place to help govern the board of directors and the institution as a whole, the entire organization risks collapse.

Read: How Effective Is Your Nonprofit Organization?

While securing sources of revenue and recruiting new members are critical elements of every nonprofit, the real backbone of your organization is your board’s governance. Without the proper structure in place to help shape and reinforce your vision, mission and objectives, your board will not have the tools needed to lead – making your funding and membership objectives less effective.

According to Stanford Graduate School’s survey:

“Over two thirds (69 percent) of nonprofit directors say their organization has faced one or more serious governance-related problems in the past 10 years. Forty percent say they have been unable to meet fundraising targets. Twenty-nine percent have experienced serious financial difficulty. A quarter (23 percent) have asked their executive director to leave or had to respond to unexpected resignation [and] sixteen percent say they have had extreme difficulty attracting qualified new board members.”

Furthermore, the study found that:

  • Too many directors lack a deep understanding of the organization
  • Most lack formal governance structure and processes
  • Many directors are not engaged, do not understand their obligations

While the shortcomings underscored by this report highlight a widespread problem throughout the nonprofit industry, the solution may be as simple as writing (or reevaluating) and implementing a variety of key policies. Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying. Policies can, and should, be in place to help manage the organization’s advisory council, board member orientation, ethics, confidentiality, donor relations, performance, and sponsorship activity – among many others.

Not sure what policies you should have in place? Take a look at this comprehensive Not-for-Profit Policy Checklist. Here are also a few examples of sample policies to give you greater insight into what you should be striving to accomplish.

By Mark Van Benschoten, CPA (Dublin office)

 

Related Articles

How Do You Build A Strong Not-for-Profit Board?
Which 990 Policies Do Nonprofits Need?
Should Your Not-for-Profit Complete Online Charity Registration?

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Obtaining Tax-Exempt Status Just Got Easier

Tuesday, August 12th, 2014

Many individuals want to know how easy it is to obtain tax-exempt status. About a month ago, you would have been told that the application process alone was rather lengthy. In fact, the standard Form 1023, which is the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is 26 pages in length. On July 1, the Internal Revenue Service introduced a significantly shorter application form – Form 1023-EZ – which is just three pages long.

What Is Form 1023-EZ?

Form 1023-EZ is a simplified version of Form 1023 and its use is limited to organizations with gross receipts of $50,000 or less and total assets of $250,000 or less. The IRS says that 70 percent of new applicants should be able to use the new form, but to ensure that the right organizations are using the right form; the IRS has outlined factors that may disqualify larger organizations from using the new form. Be sure to read the instructions carefully.

The IRS says it currently has more than 60,000 backlogged 501(c)(3) applications. The new, streamlined application form is anticipated to speed up the approval process for smaller groups, which means the agency will have more resources available to review applications submitted by larger organizations.

What You Need To Know About The 1023-EZ Form

If you are planning to fill out the new EZ form, here are three things you need to know:

  • The new EZ form must be filed online.
  • A $400 user fee is due at the time the form is submitted and must be paid through pay.gov.
  • Users must complete an eligibility checklist, which is included in the instructions for Form 1023-EZ, before filing the form.

Obtaining Tax-Exempt Status and Creating A Tax-Exempt Organization

The new EZ form makes it very easy to create a tax-exempt organization, but applicants should always seek professional assistance to ensure that their organization is operating, and will continue to operate, in accordance with their tax-exempt purpose.

Email Rea & Associates and ask if your organization qualifies to use Form 1023-EZ. Our team of business accounting and consulting professionals can answer your questions and guide you on your path to formally establishing your tax-exempt organization.

Author: Lisa Beamer, CPA (New Philadelphia office)

 

Want more best practices for nonprofit organizations? Check out these blog posts:

How Effective Is Your Nonprofit Organization?

How Do You Build A Strong Not-for-Profit Board?

How Do You Protect Your Non-Profit’s Donations From Fraud?

 

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How Effective Is Your Nonprofit Organization?

Tuesday, June 10th, 2014

You’re busy. Your staff is busy. Everyone is busy. It’s easy to get bogged down in the day-to-day tasks and responsibilities of your organization. Meeting with prospective donors, educating groups on the mission of your organization, and managing volunteers. But let me ask you, when did you last spend time evaluating the effectiveness of your nonprofit organization? Has your donor base increased? Are you seeing an increase in volunteers and people who want to support your organization? Are you truly living out your organization’s mission and vision?

Evaluate Your Not-For-Profit’s Effectiveness

Can’t remember the last time you considered the effectiveness of your organization? Now is probably a good time. If after evaluating you discover that your organization has some areas for improvement, considering asking yourself the five questions below. Addressing these questions and areas may help you create a more effective nonprofit organization.

  1. Are we communicating our organization’s accomplishments?

    Many organizations make a lot of effort to communicate how much money they’ve raised, and how they use their funds. The focus seems to mostly be on the money and percentages. And while it’s important to communicate this information, don’t forget to talk about what your organization is actually doing. How are you carrying out the mission of your organization? What key accomplishments has your organization achieved? Place a greater emphasis on communicating your organization’s accomplishments.

  2. Is our organization’s board of directors actively engaged in the organization?

    When you conduct board meetings, do you sense that your board in engaged in the meeting? Are your board members asking questions and providing insight on how to strengthen the organization? Are they participating in and attending organization activities and fundraisers? If you can’t provide answers to these questions or the answer is “no,” then maybe you need to evaluate how you’re communicating and interacting with your board. A strong, engaged board can help drive the effectiveness of your organization.

  3. Is our organization’s mission and vision statements clearly defined and communicated to our audiences?

    If you were to survey your donor base, prospective donors, volunteers and others throughout the communities you serve, would you find that people understand your organization and its mission? Not sure what kind of responses you would get? One reason that your organization may not be as effective as it could be is because your audiences may not fully understand the mission and vision of your organization. Take a look at your mission and vision statements and see if you need to make some revisions.

  4. Do we clearly and timely communicate to our board of directors?

    This question really ties into whether or not you feel like you have an engaged board. One of the reasons you may not have an engaged board is because you’re not clearly and timely communicating with them. If there are important decisions that need to be made, make sure that you providing them with the necessary information to make the decision within a timely manner.

  5. How strong are our organization’s internal controls?

    Unfortunately, internal fraud is a real concern within nonprofit organizations. Few nonprofits have strong internal controls. As organizations grow, the internal controls need changing. Make sure the controls are operating at a level that will deter and detect fraud. Establish a code of conduct that will create a clear understanding of what is expected of all employees. Even if your organization only has a few employees, it is still possible to implement a system of checks and balances. These controls should help safeguard assets, produce accurate reports and improve administrative effectiveness. 

Ohio Non-For-Profit Help

Effective nonprofit organizations are impacting the communities they serve. If you are questioning the effectiveness of your organization, contact Rea & Associates. Our Ohio non-for-profit team can help you evaluate your organization and where you can increase your efficiency and effectiveness.

Author: Mark Van Benschoten, CPA (Dublin office)

 

Looking for more nonprofit organization tips and best practices? Check these blog posts out:

Which 990 Policies Do Non-Profits Need?

How Do You Build a Strong Not-for-Profit Board?

How Do You Protect Your Non-profit’s Donations from Fraud?

 

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How Do I Apply For Ohio’s Honor Project Trust?

Wednesday, February 19th, 2014

Please note the funds from this project have been distributed. 

Could your nonprofit use some “extra cash”? I’m sure most of you answered “yes” to that question. And the timing couldn’t be better. A few months back I wrote a blog post about Ohio’s Honor Project Trust. The Honor Project Trust was created as a result of a lawsuit settlement. Excess settlement proceeds from the lawsuit totaling approximately $9 million were earmarked for Ohio nonprofits. The trust’s mission is to identify and providing funding to not-for-profit charitable organizations that have a societal impact in the State of Ohio.  (more…)

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How Can My Nonprofit Organization Benefit From Ohio’s Honor Project Trust?

Thursday, October 10th, 2013

Please note the funds from this project have been distributed. 

Nonprofit organizations in Ohio may soon have “free money” coming to them. Who’s giving out the money? The State of Ohio. The Honor Project Trust was created as a result of a recent lawsuit settlement. Excess settlement proceeds from the lawsuit totaling approximately $9 million were earmarked for Ohio nonprofits. The trust’s mission is to identify and providing funding to not-for-profit charitable organizations that have a societal impact in the State of Ohio. So how do you know if you qualify for this grant and get a piece of the pie? (more…)

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Can Your Charity Profit from Instant Bingo?

Monday, March 25th, 2013

Between the new Ohio casinos, Ohio Lottery drawings and instant games, legalized gambling is all over the place. Have you ever considered how this pastime could benefit your charitable organization?

Qualifying charitable organizations can benefit from properly structured bingo operations, but the requirements could prove to be a burden. As an alternative, qualifying charitable organizations can receive proceeds from instant bingo activities. (more…)

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How Do You Build a Strong Not-for-Profit Board?

Wednesday, August 22nd, 2012

Not-for-profit organizations need strong active engaged boards for long term success. Success can be defined as continually achieving/reaching the potential of the organization. Success can also be defined as continued existence and continuing to providing services. All things change; economy, funding, services needed, staffing, technology – it is reasonable to expect and/or demand that boards also change. (more…)

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How Do You Manage Your Non-Profit’s Investments?

Friday, June 22nd, 2012

Ten Tips to Help Your Organization Protect Its Investments

A nonprofit organization’s investments can be its lifeblood, allowing the group to maintain services or supplement its day-to-day income. Or investments can provide the insurance that an organization has long-term financial security. However your group uses investment income, it’s important to take steps to protect it. (more…)

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What is the 990 Form?

Monday, June 18th, 2012

Understanding Tax-Exempt Reporting

The IRS Form 990 is an annual reporting return that certain federally tax-exempt organizations must file with the IRS. It provides information on the filing organization’s mission, programs, and finances.

Form 990 has been around for more than 50 years. The first 990 was filed for tax years ending in 1941. This comparatively simple two-page form included only three yes/no questions, an income statement, and a balance sheet (although some line items required attached schedules). For example, individuals paid a salary of $4,000 or more were required to be listed on a schedule showing their name, address and amount paid. Similarly, contributions exceeding $4,000 received from any one person were required to be itemized. (more…)

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Did a not-profit’s tax return compromise your identity?

Thursday, April 19th, 2012

A new study by Identity Finder shows that 18% of non-profit organizations have published social security numbers on their Form 990 tax returns.

But, we all put our social security numbers on our tax returns.  So, what’s the big deal?  Unlike personal income tax returns, 990s are available to the public.  They’re regularly published by the IRS and shared with various grant-making organizations and the public.  Non-profits use 990s for a lot more than just filing taxes – often they submit copies of 990s with grant applications and make them available to donors.  A 990 can tell you a lot about the financial health of an organization; they’re considered the industry standard financial snapshot for non-profit organizations. (more…)

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Filing a 990? Some Tax-Exempt Groups Receive a Deadline Extension

Tuesday, January 17th, 2012

The IRS recently announced an extension until March 30, 2012, for tax-exempt organizations that normally have a January or February return filing deadline. (more…)

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Does Your Nonprofit Qualify for the Health Care Tax Credit?

Wednesday, December 14th, 2011

Wouldn’t your not-for-profit organization love to find an additional $500 to $5000? Nonprofit groups are often surprised to find that they may qualify for the small business healthcare tax credit, which began in 2010. The credit, which applies to both for-profit and nonprofit entities, has already netted several of our clients between $500 and $5000 in refunds for the 2010 tax year. (more…)

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Raising Funds for Booster Club? The Rules are Tricky

Tuesday, September 13th, 2011

The Internal Revenue Service has issued a warning to booster clubs that conduct fundraisers that they may be subject to IRS scrutiny, including jeopardizing the groups’ 501(c(3) status. An IRS directive addresses the possible tax consequences for booster clubs that reduce the amount a participant is required to pay based on the amount of fundraising the individual has done. (more…)

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Is Your Group Still Exempt? 11,000 Ohio NFPs Lose Tax-Exempt Status

Friday, July 8th, 2011

The IRS recently announced that nearly 11,000 Ohio not-for-profit organizations lost their tax-exempt status. Why? They failed to file an annual informational return for three consecutive years. (more…)

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Is there a silver lining in revised 990 reporting requirements?

Monday, November 8th, 2010

IRS Form 990 causes anxiety for many trustees of tax-exempt organizations. The form, expanded and revised beginning in the 2008 tax year, was designed to help organizations communicate their business operations more transparently to the IRS, members and the general public. (more…)

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How can technology help your non-profit?

Monday, September 20th, 2010

Can technology help you solve some of your nonprofit’s biggest challenges? In a word, yes, in many cases. Every organization is looking for ways to do more with less, and technology can serve as the additional person on your staff to help make things happen. (more…)

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How can small charities still comply with the 990-N filing?

Wednesday, August 4th, 2010

The IRS has announced it will help thousands of small charities keep their tax-exempt status who missed the May 17 deadline for filing the new online return, called the Form 990-N or “e-postcard.” (more…)

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How can I make a donation for Gulf animal rescue to a reputable charity?

Friday, June 25th, 2010

Just as they did when earthquakes ravaged Haiti, many fast-acting organizations have mobilized to help rescue animals caught in the massive Gulf oil spill. But as was also the case with Haiti, not all groups have the best interests of the animals, or the donors, in mind. If you want to help, how do you know which ones are responsible, versus inefficient, ineffective or outright scams? (more…)

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Has the IRS extended the 990 Filing Deadline?

Friday, June 4th, 2010

Hundreds of thousands of not-for-profit organizations are in danger of losing their tax-exempt status because they missed a critical May 17 filing deadline, however smaller nonprofits are being thrown a lifeline by the IRS. The IRS is working to help organizations with annual receipts under $25,000 maintain their tax-exempt status and encourages these groups to go ahead and file the document even though the deadline has passed. (more…)

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What should not-for-profit trustees know about the 990 Form?

Wednesday, May 5th, 2010

In recent years, the IRS has made several revisions to its Form 990, the tax return for tax-exempt organizations. These changes focus on obtaining additional information that help organizations become more transparent to both the IRS and the general public. However, these changes also mean increased responsibilities for the trustees of these organizations. (more…)

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