MissionFish is a fundraising tool for non-profits to use via eBay and PayPal. MissionFish (www.missionfish.org) partnered with eBay in 2003 to become their exclusive charitable partner, helping to raise over a quarter of a billion dollars via the eBay Giving Works program. The mission, according to their website, is to help nonprofits find new sources of unrestricted funding through online commerce. In 2011, the PayPal Charitable Giving Fund was established by eBay as a 501(c)(3) to operate MissionFish and further the charitable purpose. MissionFish raises money in three ways. The seller can designate a portion of their proceeds, buyers can also add a donation to their purchase during checkout, and anyone with a PayPal account can donate at any time with no purchase or sale required. For more information about MissionFish and to see if it would be a good fit for your organization please visit www.missionfish.org.
Effective 1/1/2012, the completely revised nonprofit corporation act takes effect. The full code can be viewed at DC Council website then click the “Legislation & Laws” button and then the “View the DC Code” link. Title 29 Chapter 4 addresses nonprofits. Several of the more significant changes are as follows:
- Membership organizations can now elect delegates to elect a board of directors.
- LLCs can be formed for nonprofit purposes.
Other changes involve record keeping requirements, member’s rights to review organizational records, conflict of interest, and officer positions.
Nonprofits incorporated in the District should review their current organizational documents and practices for compliance with the new code.
Most small organizations, other than churches and certain church-related organizations, whose gross receipts are normally $50,000 or less have an annual reporting requirement to file the E Postcard, also known as the 990-N. The $50,000 threshold is not as straight forward as you would think, so use this link to read more about how it’s actually calculated: http://www.irs.gov/charities/article/0,,id=177338,00.html.
Use this link to read more about the 990-N filing requirement: http://www.irs.gov/charities/article/0,,id=169250,00.html.
I realize it can’t be easy for each side of an audit to understand what it is like from the other perspective unless you’ve been on both sides of the table. To give some insight from the auditor’s perspective that might help you understand where your auditor is coming from, as well as the importance of audit preparedness and your role in it, I thought it might be helpful (and fun!) to go through some common audit misconceptions.
Contrary to belief -
- Don’t hold back or parcel out prepared items. Auditors LOVE an onslaught of information. I’m not kidding. Walking into a conference room with piles of documents already pulled and waiting is like an auditor’s Christmakkuh. Yes, that’s sad, but it’s true. Just think of the joy you could bring!
- Your auditors are not asking for items they don’t actually need. Your auditors understand and appreciate that you still have your normal job tasks to do while working on the audit. Wasting your time is not an auditor’s objective, I promise.
- The week of fieldwork is the time scheduled for the audit to take place. It is NOT the week that you get started preparing for your audit.
- Providing a requested item on the last day of fieldwork, or weeks (or months) later, does not count as “timely”.
- The PBC list (Prepared/Provided By Client) is intended to help you get prepared, your auditors will realize (quickly) if you haven’t read it.
- It may not be immediately apparent that this stack of items you’ve brought over is intended to support that particular balance or fulfill that request. Identifying what is being provided is tremendously helpful. It also reduces the chance of being asked for something you’ve already provided. We know you hate that and we try to not do that.
- What you have provided may not be exactly what your auditors were looking for. That is no one’s fault but that’s why it’s still on the open items list. There are frequently many differences in terminology and systems from company to company, or it may be about trying to target a specific population or procedure and a different approach may be needed.
- Your auditors work really hard to make you feel like you are their one and only client … and I hate to be the one to tell you this…but here it goes…that’s not likely the case. Not getting everything to your auditors in the allotted time means them trying to schedule available work time in and around someone else’s audit time.
- Your auditor is not interested in antagonizing you. No, really. Or if they are, they are giving us all a bad name. What you have become accustomed to may be something your auditor rarely sees. Styles of communication may vary and it may be helpful to try to narrow down an objective. Chances are high that you have insight into what particular report will provide the information that best addresses the request.
- Some of you ARE actually prepared and timely! It can and does happen! And your auditors know it and appreciate the effort.
The biggest take away message is this: delays in receiving requested items or time incurred in helping get a schedule corrected all add up quickly. Your auditor still needs time to actually perform the work required of them. It is important to understand that getting the schedule is just the beginning of the work your auditor needs to do. Being prepared for an audit is one of the best ways to help ensure that the process is a smooth one, or at least as smooth as it can be.
The IRS has granted an extension to nonprofits filing Forms 990, 990EZ, 990PF or 1120-POL whose normal filing deadline is either January 17, 2012 or February 15, 2012 due to the electronic filing system being taken down for work. This would affect nonprofits whose year end is either August 31, 2011 or September 30, 2011, or who had filed an extension to January 17, 2012 or February 15, 2012. For more details, click this link to IRS Notice 2012-4 posted on the IRS website December 16, 2011:
If your organization has a financial interest in or signature authority over a foreign bank account or financial account, including mutual funds or other type of financial account, you may be required to file Form TD F 90-22.1 annually. Use this link to the IRS website to read guidance and find the form if you think this applies to you:
Has your organization lost its exempt status for failure to file the required 990 forms for three consecutive years? You can apply for reinstatement and pay a user fee if you want the tax exempt status restored. http://www.irs.gov/charities/article/0,,id=239696,00.html.
Some organizations may qualify for a reduced user fee of $100 under a transitional relief program. Use Notice 2011-43 to see if you qualify. http://www.irs.gov/pub/irs-tege/n2011_43.pdf.
- Contribute certain appreciated capital assets, like stock, take a deduction for the fair market value, but not pay tax on the capital gain; http://www.fool.com/taxes/2000/taxes000714.htm ;
- Also certain taxpayers can benefit by making up to $100,000 tax-free IRA distribution gift directly to a charity. The distribution is not deductible, but there is a benefit by not having to include the amount in taxable income, thereby lowering AGI. This provision has been extended through 2011 only so far; http://www.intervarsity.org/page/rollover-extension;
These tax savings could be the incentive taxpayers need to donate to your worthy organization. Charities should always remind potential donors to consult their tax advisor when giving tax information in fundraising appeals.
“It could be that the purpose of your life is only to serve as a warning to others.” It’s a terrible role to play, but one that others should bother to learn from, and it’s the theme of a recent post by Lisa Chiu on the Chronicles of Philanthropy with a focus on what we can learn from the the Second Mile charity whose founder, Jerry Sandusky, is now infamous. It is worth taking a look at what the charity could have done differently that might have a different result now that it is considering shutting its doors.
The article points out a few of the primary weaknesses at the charity and they all relate to governance. The article quotes Deborah Davidson, a vice president at BoardSource as noting that Second Mile suffers from “founder’s syndrome“, which she defines as when the person who created the charity wields inordinate influence to the point that the board may be unwilling to question the individual. In the case of Second Mile, its by-laws lists Mr. Sandusky as an officer, cementing his authority and term for life.
In keeping with the mentality of not questioning authority, Second Mile had no whistle-blower policyin place. The article quotes Matthew Downey, program director at the Johnson Center for Philanthropy, as noting “even if the policy never gets used, it sets a culture in the organization that you can speak up and your job won’t come into jeopardy.”
The third problem in governance that Ms. Chiu notes Second Mile as having is too many board members. That may be counter to initial intuition but it makes sense that too many members results in an environment susceptible to “group-think” and a general sense of lack of responsibility because surely someone else will take care of it.
Having an under-performing, or worse, a scandal producing person entrenched high up in an organization undermines the organization’s mission and can lead to serious operational problems. Governance of any charity should include conversations about how to ensure that the mission comes first and can continue to serve its purpose above and beyond any personalities that get attached to it.
For additional detail, quotes and insights from those interviewed, see the post here.
Nonprofits and associations are more dependent on technology than ever before. The increased use and reliance upon technology, however, has also significantly increased the vulnerability to cyber security threats—any of which can result in significant out-of-pocket expenses and, more importantly, affect an organization’s most prized possession – its reputation.
Join Aronson LLC on December 13th from 9am – 10am for a complimentary webinar, where our special guest, security expert Ric Valentino of RCM&D, will focus on the following objectives:
- Breach and Network Security Risk Management
- Who causes data breaches and how they occur
- Probable exposure after a breach
- Preparedness risk management
- Response risk management
- Response best practices
- Contractual Risk Transfer
- Insurance and Risk Transfer
- Gaps in traditional coverage
- Types of risks that can be transferred
- Coverage available in the market
This webinar, moderated by Rob Eby, CPA, of Aronson’s Nonprofit and Association Industry Group, will provide helpful information for executives looking to protect their organization’s reputation and mission. RSVP today to reserve your spot!
Ric joined RCM&D in August 2004 and serves as Practice Leader, where he has worked with nonprofits over the entire course of his career. Ric is also a former United States Marine, having served a majority of his five-year career at American embassies and consulates in Jerusalem, Israel, Nicosia, Cyprus, and Geneva, Switzerland. He holds a Bachelor of Business Administration from St. John’s University’s School of Insurance and Risk Management in New York City (1989) and an MBA from The Johns Hopkins University (1999).
Vice President and Senior Client Executive
Karen brings nearly 20 years of industry experience to her role as Vice President with RCM&D.
Prior to joining RCM&D in 2006, Karen spent five years as a senior underwriter with a national insurance company followed by 13 years as a senior broker with Johnson & Higgins and later Marsh.
While at J&H, Karen became the broker for numerous education institutions, including Loyola College, The College of Notre Dame, Mount Saint Mary’s, and Goucher College. Karen’s experience in the education industry provides her with an advanced knowledge of insurance coverages and program design.
Ms. Randazzo earned her BA in English and American Studies from Dickinson College. She is a seminar leader and presenter for insurance related topics, and is currently pursuing her CPCU
|Date:||December 13, 2011|
|Time:||9:00 am – 10:00 am|
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