profitable solutions for nonprofits: addressing your concerns about form 990

Profitable Solutions for Nonprofits

Addressing your concerns about Form 990

Hosted by Davis Kinard & Co, PCwith speaker Lori Herrick, CPA, CFE, CICA

Organizations responsible for filing the 2009 IRS Form 990

* Certain religious organizations, religious affiliated organizations and governmental organizations are not required to file. Check www.irs.gov for the 990 instructions on filing.

September 23, 2010

Profitable Solutions for Nonprofits:Addressing your concerns about Form

990

Form 990 Gross receipts greater than or equal to $500,000 or total assets greater than or equal to $1,250,000

Form 990-N

Gross receipts of $25,000 or less

Form 990-EZ

Gross receipts less than $500,000 and total assets at the end of tax year, less than $1,250,000

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http://www.irs.gov/

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CONFLICT OF INTEREST POLICY

(Part VI, Section B, question 12: a, b, c)

Conflict of Interest Policy (Part VI, Section B, question 12: a, b, c)

• What is this policy?– Defines conflicts of interest– Identifies classes of individuals within the

organization covered by the policy– Facilitates disclosure of information that can

help identify conflicts of interest– Specifies procedures to be followed in

managing conflicts of interest

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• What is this policy?– Arises when a person in authority within

organization can benefit financially from a decision he or she could make in such a capacity

– Does not include questions involving a person’s competing or respective duties to the organization and to another organization that do not involve material financial interest

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• What is this policy?– Question 12b: Required disclosures of officers,

directors, trustees, and key employees. (Hand out of example of disclosure statement.)

– Question 12c: Describe the practices for monitoring proposed or ongoing transactions or conflicts of interest and dealing with the conflicts.

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• What is this policy?– Three essential elements of a conflict of

interest policy:• Full disclosure• Board member’s abstention from discussion

and voting• Staff member abstention from decision-

making

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• Where can I find one? – Internal Revenue Service

• www.irs.gov/instructions/i1023/ar03.html

– National Council of Nonprofits• Appendix A:

– Conflict of Interest Policy and Annual Statement– Board Member Conflict of Interests Disclosure Form

– The Board Source (for a fee)

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http://www.irs.gov/instructions/i1023/ar03.html

• Why do I need one?– Board members have legal responsibility to

act in the best interest of their organization– Form 1023 Application for Exempt Status

specifically asks if the organization has adopted a conflict of interest similar to Appendix A

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WHISTLEBLOWER POLICY

(Part VI, Section B, question 13)

Whistleblower Policy (Part VI, Section B, question 13)

• What is this policy?– Encourages staff and volunteers to come forward

with credible information on illegal practices or violations of adopted policies of the organization

– Specifies the organization will protect the individual from retaliation

– Identifies those staff or board members or outside parties to whom such information can be reported

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• What is this policy?– The policy should provide at least three

things:• Guidelines for reporting questionable activities• Processing, tracking and retention of the

concerns reported• Security of the employees and board members

in the reporting of information without retaliation

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• Where can I find one?– SAFRline

• Appendix B: ABC Whistleblower Policy

– Nonprofit Risk Management Center• Appendix C: Employee Protection (Whistleblower) Policy

– Blue Avocado• Appendix D: Model Whistleblower Policy for Nonprofits


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• Why do I need one?– Not only provides an open forum to

communicate fraudulent concerns, but gives the Board an additional level of oversight

– Employees and board members more aware of Management’s commitment to high moral and ethical behavior

– Deterrent to fraud

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DOCUMENT RETENTION AND DESTRUCTION POLICY

(Part VI, Section B, question 14)

Document Retention and Destruction Policy (Part VI, Section B, question 14)

• What is this policy?– Identifies record retention responsibilities

of staff, volunteers, board members, and outsiders for maintaining and documenting storage and destruction of organization’s documents and records

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• What is this policy?– The process of developing this policy

includes:• Identify what types of paper work and e-mails

are generated by the organization• Determine the appropriate and legal length of

time to retain them• Record those retention times on a schedule

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• Where can I find one?– National Council of Nonprofits

• Appendix E: Sample Document Retention/Destruction Policy

– Blue Avocado• Appendix F: Model Document Retention Policy for

Nonprofits


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• Why do I need one?– A formal policy with allow everyone to know what

to save, what to discard and when– Sarbanes Oxley Act’s prohibition of destruction of

documents subject to review in litigation propel nonprofits to create business practice of systematic document destruction

– Protect organization from additional legal hassles

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Questions

&Answers

Lori Herrick, CPA, CFE, CICA

• 11 years of public accounting experience• Established SAFRline, a 24-hour fraud hotline to

report concerns within organizations• Extensive experience in tax preparation for

individuals, corporations and partnerships• Practice emphasis in audits for nonprofits,

governmental entities and private companies• Memberships in TSCPA, AICPA, TASBO, TANO and

ACFE

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References

• Blue Avocado, www.blueavocado.org • Board Source, www.boardsource.org• Internal Revenue Service, www.irs.gov• National Council of Nonprofits,

www.councilofnonprofits.org • Nonprofit Risk Management Center,

www.nonprofitrisk.org• SAFRline, www.dkcpa.com/services/safrline.html

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http://www.blueavocado.org/

http://www.boardsource.org/

http://www.irs.gov/

http://www.councilofnonprofits.org/

http://www.nonprofitrisk.org/

http://www.dkcpa.com/services/safrline.html

profitable solutions for nonprofits: addressing your concerns about form 990

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