Join your fellow executives to hear how the organizations represented have navigated 2010 and how they plan to capitalize on opportunities and challenges for 2011. Be prepared to exchange your own situations and solutions as you seek to fulfill your mission.

Presenters:  

Date:   September 1, 2010 (Wednesday)

Time: 11:30 – 1:30 (lunch and networking 11:30; program 12:00)
Cost: $20 – Lunch provided.
Held at: Funding Information Center
Location: 329 S. Henderson, Fort Worth TX 76104, 817-334-0228

To register, click here.

This event is sponsored by Rylander, Clay & Opitz, LLP.

Does your organization struggle in determining “what” policies would mitigate loss when cash collections are decentralized? This post is a continuation of my previous post on internal controls at remote locations. If you just can’t get enough piece of mind (and who doesn’t love that), you might find these other “processes” useful.  And now, the continued list of suggestions:

• Determine staffing during collection times. For receipts over a certain dollar amount, always have at least two employees present (counting/depositing) to help lower this heightened risk factor.
• If receipts are provided to the donor or client: consider using a triplicate form. One copy to the donor/client, one that is included in the deposit report sent to the accounting office , and one to be retained in numerical sequence for accountability over the forms used.
• Maintain a cash receipts log when using numbered receipt forms. The log should include receipt number, date received, name of payor, amount of payment, form of receipt (cash, check, money order, etc.), check number and date (if applicable), and purpose of payment (if known or applicable).
• Posting signs at collection areas informing payors that they should get a receipt showing their transaction.
• When transporting cash receipts from the remote location back to the central office or bank, utilize a courier service if possible or appropriate. Minimally, keep receipts in a locked security bag with a trustworthy employee not involved in the recording or reconciliation process transporting the bag. If there is a large amount of receipts being transported, have two employees be involved for additional safety. Read the rest of this entry »

According to Nanette Downing, the IRS has announced that “another major initiative during the remainder of fiscal year 2010 will be examining charitable organizations’ sources and uses of funds.” On the source side, the IRS is interested in high levels of fundraising income and high levels of unrelated business income. For the use or expendiures side, focus will continue on private inurement and private benefit issues. 

Is your organization vulnerable for this scrutiny? Remember the key terms for establishing tax-exemption…organized and operated. Form 990 is the tool for reporting information annually to the IRS, substantiating the organization’s exempt purpose. Sources and uses…this will be interesting as the IRS moves forward in looking for additional revenue streams.

Is your organization vulnerable to this type of inquiry?  Call me. We can perform assessments to determine the organization’s risk.

For more information on this initiative, see this blog post by Land Trust Alliance.

If your organization utilizes remote locations collecting cash receipts, such as community centers or branches, you probably already know that this is an easy area for things to go wrong. You have likely considered designing and implementing, or have already implemented controls over your cash receipt procedures. These controls can include things such as developing written policies and procedures, implementing adequate separation of duties, ensuring timely deposits, and establishing reconciliation procedures that include accountability and management review. 

One of the most important controls you can implement Read the rest of this entry »

On Saturday, July 17th, the IRS is offering seven locations to help taxpayers impacted by the BP oil spill.

“Individuals who have questions about the tax treatment of BP claims payments or who are experiencing filing or payment hardships because of the oil spill will be able to work directly with IRS personnel at any of these locations on Saturday.”

For more information, see this IRS link.

A recent question came from a relatively large church that is considering raising funds to cover legal support related to property. Are these types of contributions allowable and deductible?

Allowable and deductible can mean 2 different things?  First to the donee and then to the donor.

As long as the qualified charitable entity maintains control or “use of the funds” and uses these to further their exempt purpose, the contributions are allowable for the organization and deductible by the donor.

Donors may designate a program, ministry, event, project, endowment etc., of the qualified charitable entity as long as the church controls the funding. Be careful in not designating a specific individual as the recipient, this often disallows the deduction for the donor and the church is then required to report the funds as an “agency” transaction.

So the church can solicit contributions for general, administrative and fundraising functions? Yes, as long as the church retains control or “use of the funds” and the church is operating within its exempt purpose, as designated by its IRS code.

Questions? Give me a call or post a comment.

Think again. Every two years the Association of Certified Fraud examiners publishes its Report to the Nations on Occupational Fraud and Abuse. It’s amazing to me to see how consistent the results are from period to period and across industries. The report also reminds me how dangerous and costly blind trust can be to organizations. Many of our nonprofit clients tell us that fraud is just not a significant risk for their organization because their employees are commited the cause.  And who could be more trustworthy than someone willing to serve an important cause?

If that’s really true, then why are are nonprofit organizations involved in almost 10 percent of all fraud cases reported in the study?

We often let our desire to trust other people cloud our judgment. Especially people we hired personally and have spent years building relationships with Monday through Friday. Deep down, we all believe we’re exceptional judges of character.

And that’s when it happens. 

If the most important fraud control in place in your organization is the ability to judge character in the people you hire, you may already be a victim.

If you’re concerned that you may be the victim of a fraud, or want more information on preventing fraud, we can help.

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. Major benefits include tax cuts, business credits and subsidies for state and local construction bonds. Two specific areas affect tax-exempt organizations:

1. Exemption  of payroll taxes for qualified employees. For qualified employees hired between February 3, 2010 and January 1, 2011, the employer’s share of Social Security taxes (6.2%) on salaries/wages earned after March 18 will be “credited” as reported under the quarterly payroll tax filings. Beginning with the second quarter (March – June) filing, Form 941 has been revised to include the exemption. In order to be considered a “qualified employee” the individual must have been unemployed during 60 days prior to starting work or have worked fewer than 40 hours during the 60 day period; didn’t replace another employee unless separation was voluntary or for cause; and no relationship to employer.
2. $1,000 annual business tax credit for each new employee retained for a least one year. This credit is 6.2% of the employee’s wages during the 52 consecutive week period, up to $1,000.

So what are the reporting requirements?

Beginning with the 2nd quarter reporting period, complete the additional items on Form 941, beginning with line 5a. The exemption can be applied to a future reporting period, are an overpayment may be requested.

For each “qualified employee”, retain a completed copy of W-11, “Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit”.

How does a tax-exempt organization claim the business tax credit? The IRS has not finalized how T-E organization will report the tax credits, but speculation has been Form 990-T. Stay posted for future clarification.

Even if your tax-exempt organization missed the May 17th Form 990 deadline, the IRS encourages organizations to go ahead and file the required form. Because these small tax-exempt organizations are vital to local communities, the IRS is encouraging compliance after the deadline. To help preserve the organization’s tax exemption, the IRS will be providing additional guidance soon. For more information, see the May 19, 2010 communication from Doug Shulman, IRS Commissioner.

When the Sarbanes-Oxley Act was signed into law on July 30, 2002, it overhauled corporate governance practices for publicly traded companies, with a significant emphasis on the role of the board of directors. In the years following, many of the governance policies and practices mandated for public companies were also adopted by nonprofit organizations as their board members began to question their own responsibility for the governance and oversight of their organizations. In 2005, according to a GuideStar survey of nonprofit organizations, 61 percent of of the participants said their organization had made changes in response to Sarbanes-Oxley.

Nonprofit boards had begun to change their focus, but not enough to stop the continued reports of fraud, misuse of assets, and excessive compensation for top executives.  The result was increased public scrutiny, new legislation, and the most significant changes to Form 990 in over 25 years. Those changes effectively required the board of directors to take responsibility for the oversight and governance of their organizations.

Although the fundamental principles of governance have not changed, governance practices have been completely redefined as boards have become more proactive in protecting the mission of their organizations by ensuring compliance with legal, financial, and ethical standards, and monitoring the progress and overall performance of their organizations. Time will tell if the “new” governance paradigm will protect nonprofit organizations from even more burdensome regulation that will divert already limited resources from the mission.