Fairfax County Chamber of Commerce
Non-Profit Forum: Manging for Today’s Economy
Those of us that work in the non-profit industry have been keeping an eye on the upcoming switch to International Financial Reporting Standards (IFRS) and what it will mean for non-profits. Currently IFRS has no guidance for non-profits because the concept of a non-profit industry is fairly American in its make-up. Not trying to instigate political debate but by and large the areas that are managed in America by non-profit groups are handled by the government or not at all. With the dissolution of the FASB, who is going to take over guidance for non-profit has been the question on everyone’s mind. Now we have an answer. The FASB has created a new Not-for-Profit Advisory Committee (NAC). Continue reading »
The IRS has wizened up to the potential for fraudulent reporting in the reported values of donated vehicles. The IRS has changed their reporting requirements since so many people were donating clunkers and deducting for Rolls-Royces. Some organizations are beginning to be concerned about the risk of accepting high-mileage, low value vehicles.
Here is a breakdown to help with the new guidance: Continue reading »
Over the last few years the non-profit industry has seen an increased amount of pressure to be transparent and make public the procedures in place to increase transparency. Many organizations have noted the increase in questions on the new Form 990 and asked for clarification on their purpose. Many of these are designed to make the organization consider their transparency and their procedures that ensure that.
Questions such as “Does the board review the 990 prior to its submission,” highlight that the IRS thinks this is probably a good idea to consider implementing. Having a board review would increase the level of board involvement and the level of monitoring activities in place. Having the board actively involved in the approval process of the 990 is one way of increasing transparency because there’s one more level of awareness and one less place to hide anything. The board’s job is in essence to protect the public trust. Transparency and accountability go hand in hand.
Documenting procedures that ensure transparency is not just a 990 consideration however. The 990 has just been deemed an appropriate place to make these procedures public and certainly it has had the effect of making organizations scrutinize their current procedures.
An area deeply affected by transparency and the public’s perception is fundraising. Fundraising ratio requirements are ripe for fraud and can increase incentives for dishonest reporting. It is exactly this kind of dishonestly that the push for transparency seeks to uncover. An out of whack ratio may make some donors turn away and a perception of dishonesty over that ratio would turn donors away in droves. It can murky territory that an organization wants to avoid by being as transparent as possible.
Zimmerman-Lehman, a fundraising consulting firm in San Francisco has come up with a helpful transparency quiz so that organizations can take to see how they measure up. There are 20 questions and the more ‘yes’ boxes you have, the higher your transparency. Questions include:
- Does your organization periodically evaluate your programs and services to ensure they are effective at accomplishing their goals?
- Does the Board review the prudence of overhead expenses (administration and fundraising expenses) and fundraising ratios?
- Does your organization utilize recruitment strategies that create boards with diverse backgrounds, experience, and the organizational and financial skills necessary to advance the organization’s mission?
- Does your organization have policies that ensure the independence of a substantial number of board members (free of conflicts of interest)?
- Does your organization share information with the public about its Form 990?
- Are your fundraising materials honest and do all funds raised support the programs they were given for?
It can be helpful to review a questionnaire such as this against your own organization’s policies because there are bound to be some suggestions that would not have come up without some ‘outside of the box’ thinking. Many of the questions posed suggest policies that would be fairly easy to implement and go a long way towards that goal of providing transparency. For the full quiz and to see how your organization stacks up, see http://www.zimmerman-lehman.com/transparency.htm
Will tax-exempt bonds work for me?
Answer that question and learn the basics in this free webinar.
Tuesday, October 27, 2009
Tax-exempt borrowing costs can be as much as 35% lower than equivalent taxable borrowings. But the bond-issuing process can be complex, and you need to know which bond structure will give your non-profit exactly what it needs.
Register now to join this one-hour, complimentary Webcast that will give you a better understanding of:
- The key elements related to tax-exempt financing
- The current market conditions for bond financing
- The limitations and scope in bond financing
Tax-exempt financing can be a very cost effective way for eligible organizations to borrow money for eligible projects. Bank of America /Merrill Lynch wants to help you navigate this complex process and is proud to feature international law firm Holland & Knight partner, Mark Raymond. Joining him will be investment banker and specialist in higher education financing with Bank of America Merrill Lynch, Jay Bellwoar. Bank of America Merrill Lynch Senior Vice President, Frank Vrabel will be on hand to moderate the discussion, and we hope you’ll join in and increase your understanding of tax-exempt borrowing.
The non-profit / association world is one of the few where defined benefit plans (DB) still exist in some numbers . Many of our clients with defined benefit plans are underfunded currently and are looking for ways to approach the problem . A recent article from The Washington Post highlights the magnitude of the problem state and municipal plans are facing with regard to DB plans . You are clearly not alone if you in an underfunded position .
For better or for worse, the fact is that FIN 48 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes) does apply to not-for-profit entities. In fact, the IRS now requires each not-for-profit to include on its Form 990 a copy of the FIN 48 accrual footnote presented in its audited financial statements. Continue reading »
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