Has your nonprofit organization ever considered lobbying activities? An organization exempt from taxation under section 501(c)(3) will lose its tax-exempt status and its qualification to receive deductible charitable contributions if a substantial part of its activities are carried on to influence legislation.

However, there are circumstances where lobbying is allowed for certain eligible 501(c)(3)s. Read the rest of this entry »

Hopefully those of you with calendar fiscal years are at least in the beginning stages of working on your budget for next year.  It’s probably about time to start thinking about it and making a plan. 

Before you start, I wanted to let you know about a common misconception that the total revenues have to equal total expenses on the budget. This is not true. You can budget for a surplus or a deficit. “But I’m a non-profit”, you say. Well it’s not a requirement of a tax-exempt nonprofit to end up with no money at the end of the year. The requirement is that any surpluses you do finish the year with, don’t go to stockholders or owners, the surpluses stay within the organization to continue its mission. Read the rest of this entry »

Final regulations that were adopted in 2007 take effect on January 1, 2009, for most tax-exempt organizations. 

What changed? How is your T-E organization affected?

The final regulations require all 403(b) providers, including churches, to have a plan document in place no later than 12/31/08. Failure to adopt a written plan before 1/1/09 will render all subsequent contributions to the plan to be fully taxable. The plan document must address several issues, including: Read the rest of this entry »

Has your company considered using IFRS?  The IASB has now issued IFRS for Small and Medium Sized Entities (“IFRS for SMEs”) which is a modification and simplification of full IFRS and private companies now have the option of preparing their financial statements in accordance with US GAAP, OCBOA, full IFRS or IFRS for SMEs.  IFRS and IFRS for SMEs are not OCBOA; rather, they are GAAP.  The final version of IFRS for SMEs, in total, is a mere 230 pages in length!

IFRS for SMEs applies to private companies or those that do have public accountability (i.e. companies that file, or are in the process of filing, with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market; or it holds assets in a fiduciary capacity for a broad group of outsiders such as banks, insurance companies, brokers and dealers in securities, pension and mutual funds).

For private companies that are owned by a foreign parent, have a significant foreign investor, supplier or venture partner, IFRS for SMEs is an alternative to the more complicated and voluminous US GAAP.  For such companies using a consistent global financial accounting and reporting standard will increase comparability and improve efficiencies of conducting business with their foreign counterpart.

The key differences in IFRS versus US GAAP:

• Disclosures are simplified in a number of areas including pensions, leases and financial instruments
• LIFO is prohibited
• Goodwill and indefinite life intangible assets are amortized over a period not exceeding ten years
• Depreciation is based on a components approach
• A simplified temporary difference approach to income tax accounting
• Reversal of impairment charges, if certain criteria are met, is allowed
• Accounting for financial assets and liabilities makes greater use of cost

 Key challenges if your company decides to use IFRS for SMEs:

• Understanding the differences between IFRS for SMEs and US GAAP
• The willingness of financial statement users to accept financial statements prepared under IFRS for SMEs
• Working with and accepting a more principles-based set of accounting standards compared to the more rules-based US GAAP
• The impact on taxes and tax planning strategies
• The impact on financial reporting metrics

 The final IFRS for SMEs can be obtained free, after registering, from the IASB website: http://www.iasb.org/IFRS+for+SMEs/IFRS+for+SMEs.htm

 Additional information about IFRS for SMEs and about activities of IASB can be found at www.ifrs.com

Anyone…at least that is how one should think when analyzing fraud risks.

Fraud is a hot topic. If you don’t think so ask someone who used to work for Enron or invested in Madoff’s investment company, they might change your mind. But, because of instances like these, people often think of fraud in large terms, and the mention of the words carries a lot of weight; when very often fraud occurs in all sizes and forms.

But, who is likely to commit fraud? Most people use what is commonly known as the fraud triangle to identify areas where one can commit fraud. The three criteria are Pressure/Incentive, Opportunity, and Rationalization.

The pressure/incentive trait is common with performance based jobs where there is motivation for employees to record false sales to meet sales/performance quotas or up their commission, or other incentive pay.

Opportunity rears its ugly head when an individual has too much control over one key process in a business. Let’s say a cashier at a bank did not have to reconcile the cash drawer at the end of the day. The “opportunity” is there for cash to be stolen without any knowledge of it being gone.

A big one in today’s economy is rationalization. This is commonly referred to as the “I deserve this,” mentality. Where an individual develops a frame of mind where they can justify their actions and commit the fraud even though it is outside their typical ethical guidelines. For example, the company is generating large revenue streams, but an employee needs money to pay for his kid’s summer baseball league; this employee could find themselves thinking “They won’t miss this money, and I can’t say no to my child.”

Now let’s not confuse fraud with honest mistakes, errors, or plain ignorance; there is a difference. Fraud is defined as “intentional” deception…intentional being the key word.

Stay tuned as we post methods to address these instances and help you to minimize fraud in your business.

The National Association of Church Business Administration has organized an event to celebrate the power of peer-learning to address the increasing complexity of running the business of a church in contemporary society. 

Scrutiny of non-profits, including churches, has increased in recent years and has magnified with the current condition of the economy. It is even more important during these times to run the business of a church properly.  Honest mistakes and inadequate safeguards can expose churches to many different negative outcomes. This event will provide an opportunity for leaders from different sizes of churches to meet with each other in a training session format to learn from each other how to manage some of these current challenges.

Debbie Miller, secretary of the Greater Kansas City Chapter of NACBA said “Churches need to be the example to our communities in doing things right and with excellence.” Phil Martin, NACBA’s deputy CEO has also made the point that most church leaders do not get formal training in business administration. With these facts in mind, Church Administration Day is a chance for larger churches to reach out to smaller churches that may not even have an administrator. 

The information above was summarized from the article “Complexity of congregational life inspires first annual event for church administration”, which can be found at the following website: http://www.nacba.net/cad/.

For locations and contact information for regional training events:
http://www.nacba.net/cad/cad_locations.htm

For contacting a NACBA chapter in your area:
http://www.nacba.net/Structure/chapterlst.htm

For more information on National Church Administration Day:
http://www.nacba.net/cad/

For information on the National Association of Church Business Administration:
http://www.nacba.net/index.html

In October of 2008, the FDIC made some changes to the deposit insurance coverage. The coverage limits were increased from $100,000 to $250,000. The coverage limits were originally going to fall back to $100,000 on January 1, 2010, but recently the increased limits were extended through December 31, 2013. Below is some guidance on FDIC coverage. These limits help you calculate the amount of funds that your organization has at risk at your bank/banks. For more information, visit www.FDIC.gov.

FDIC-Insured Accounts
• Checking Accounts (including money market deposit accounts)
• Savings Accounts (including passbook accounts)
• Certificates of Deposit

Not FDIC-Insured Accounts
• Investments in mutual funds (stock, bond or money market mutual funds), whether purchased from a bank, brokerage or dealer
• Annuities (underwritten by insurance companies, but sold at some banks)
• Stocks, bonds, Treasury securities or other investment products, whether purchased through a bank or a broker/dealer

Some Banks that Participate in FDIC’s Transaction Account Guarantee Program
Bank of America
Chase
Wells Fargo
Frost

To calculate your deposit insurance coverage, use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) at: www.fdic.gov/edie.

For questions about FDIC coverage limits and requirements, visit www.FDIC.gov/deposit/deposits, call toll-free 1-877-ASK-FDIC, or ask a representative at your bank.

Thanks in part to some hard work and outreach by the association community, Senator Grassley pulled his two amendments to the Finance Committee health care bill late Thursday night, meaning that no language regarding nonprofit governance or executive compensation will be contained in the Finance Committee bill. The numerous comments and letters shared by association executives from across the country helped educate members of the Finance Committee and the Senate about these issues, and we thank you for your support.

However, ASAE knows that this will not be the last time the nonprofit community will see this legislative language. Speaking to the Bureau of National Affairs, a Grassley aide said that although the Senator did not offer the amendments at this time, he is leaving open the option to offer them to another bill that has tax implications. It is important that the nonprofit community remain vigilant and ready to debate the issues of nonprofit governance and compensation whenever the debate is held.

For more information on these issues or to inquire how you can remain involved, contact ASAE’s Public Policy Department at (202) 626-2703 or publicpolicy@asaenet.org.

The above reprinted with permission.