Whether You 990 or Not, Changes ARE Coming
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Post on 30-Dec-2015
DESCRIPTIONWhether You 990 or Not, Changes ARE Coming. Barbara Clemenson, CPA, CFRE. Outline. Causes of Increased Scrutiny Pressures for Increased Scrutiny Results of Increased Scrutiny Recommendations for Meeting the Pressures of Increased Scrutiny. Causes of Increased Scrutiny. - PowerPoint PPT Presentation
Whether You 990 or Not,Changes ARE ComingBarbara Clemenson, CPA, CFREOutlineCauses of Increased ScrutinyPressures for Increased ScrutinyResults of Increased ScrutinyRecommendations for Meeting the Pressures of Increased ScrutinyCauses of Increased ScrutinyNotorious Corruption Cases: Business, Government and NonprofitGeneral Atmosphere of Skepticism and Economic PressureCauses of Increased ScrutinyNotorious Corruption Cases: Business, Government and NonprofitCauses of Increased ScrutinyGeneral Atmosphere of Skepticism and Economic PressureSkepticismNonprofit HospitalsExecutive CompensationGifts in KindFamily/Friends RelationshipsCauses of Increased ScrutinyGeneral Atmosphere of Skepticism and Economic PressureEconomic PressureAs resources become more stretched and restrictedScrutiny to reduce spending, and pressure to increase revenue, intensifies.Pressures for Increased ScrutinyRegulation in the For Profit Sector: Sarbanes-Oxley, 2002General Methods of Government Intervention in the Nonprofit Sector: Federal and State LevelsSelf-RegulationLobbyingPressures for Increased ScrutinyRegulation in the For Profit Sector: Sarbanes-Oxley, 2002If we do not regulate ourselves, we WILL be regulated by others!Pressures for Increased ScrutinyGovernmental Pay-Go Rules: If new legislation is introduced that will increase the federal budget, it must pay for itself through:Increased taxesReducing other budget itemsClosing tax loopholesPressures for Increased ScrutinyThe Senate Finance Committee believes there is $1.8 billion being lost annually through fraudulent or inappropriate donor reporting.Senator Grassley (R), former Chair, was pushing for nonprofit Sarbanes-Oxley type legislation .. But then, Hurricane Katrina happened.Pressures for Increased ScrutinyNew Approach = Piecemeal legislation Tacking nonprofit regulation on to other laws, tackling abuses one at a time. American Jobs Creation Act of 2004 (auto donation regulation)Pension Protection Act of 2006 (August 2006)Pressures for Increased ScrutinyPension Protection ActRecordkeeping for monetary donationsDonated clothing and household items: Good condition; Appraisals for items worth more than $500Small charities, under $25,000, need to annually electronically file noticeReporting payments by controlled organizationsTax-free donations from IRAs by taxpayers 70 + up to $100,000 for 2006 and 2007.Pressures for Increased ScrutinyCurrent Government Intervention Areas of Interest:Donor advised funds and supporting organizationsTechnical corrections bill on the Pension Protection Act --General sessions in the House Ways and Means Committee this summer on the nonprofit sectorPressures for Increased ScrutinyGeneral Methods of Government Intervention: IRS in February 2007 published a draft of Good Governance Practices for Nonprofit Organizationshttp://www.irs.gov/pub/irs-tege/good_governance_practices.pdfPressures for Increased ScrutinyGeneral Methods of Government Intervention: IRS Good GovernanceThis has NOTHING directly related to do with finances. The IRS rationale is that NPOs with good governance will be more likely to act responsibly.Scope expansion!Pressures for Increased ScrutinyGeneral Methods of Government Intervention: IRS Good GovernanceThe IRS will monitor other self-regulation proposals, looking for an emergence of good practices.Might those practices be legislated in the future?Pressures for Increased ScrutinyGeneral Methods of Government Intervention: State LevelsStates increasing reporting and regulation of the NPOsStates passing Sarbanes-Oxley type laws: CA was the firstPressures for Increased ScrutinySelf-RegulationIndependent Sector: Panels Advisory Committee on Self Regulation Draft Principleshttp://www.nonprofitpanel.org/selfreg/index.htmlPressures for Increased ScrutinySelf-RegulationIndependent Sector Draft Principles cover:Facilitating Legal ComplianceEffective GovernanceStrong Financial OversightResponsible FundraisingPressures for Increased ScrutinyLobbyingAlliance for Charitable Reform, a project of The Philanthropy Roundtable.http://www.acreform.com/Results of Increased ScrutinyRevised 990Increased Oversight of New NonprofitsPressure for DisclosureResults of Increased ScrutinyRevised 990Increased scrutiny of donor advised funds:Line 1aLine 22aResults of Increased ScrutinyRevised 990Increased scrutiny of compensation and related party transactionsLines 23 and 24Lines 25a, b and c Schedule A Part 1.Lines 50 a and bLine 63Part V-A, V-BResults of Increased ScrutinyRevised 990Increased scrutiny of compensation and related party transactionsPart XISchedule A Part VII: Relationships to other NPOsResults of Increased ScrutinyIncreased Oversight of New NonprofitsSeeds of Grace, MissionPostcard Annual Registration for small NPOs (under $25,000)Results of Increased ScrutinyPressure for DisclosureIRS forced disclosure on 990 Expected public information for funders and mediaBest practicesRecommendationsGovernanceFinancesEmploymentRelationshipsRecommendationsGovernanceWiden your community representation.Conduct a board assessment to determine strengths and skill needs of your present Board.Perhaps use the resources of a third party to find new Board members. [We tend to recruit people we know, who are like us.]RecommendationsGovernanceWiden your community representation. The IRS is looking boards reflecting broad public interests, rather than the interests of a small group of donors or related parties. Specifically they are reviewing boards for the inclusion of:Public officialsIndividuals with expertise in organizations area of operationsLeaders from the local communityRepresentatives of the constituency the organization servesOthers representing a broad cross-section of community interests. RecommendationsFinancesHonestly report, understand and explain your finances.Acceptable percentagesCFO Cover Story, Misgivingshttp://www.cfo.com/article.cfm/8477078?f=searchBoth of these resources are in the convention notebook.RecommendationsEmploymentMake sure you are following all federal, state and local labor laws.RecommendationsEmploymentAre you paying aliving wage?RecommendationsRelationshipsMove towards NOT having people from the same family working at the Mission or on the Board.Move away from doing business with related parties. Its not illegal right now, as long as those transactions are disclosed, but that is an area where it might well become prohibited in the future.RecommendationsRelationshipsAdvantages:Looks better in the eyes of the communityBy having family and friends out in the community working at other organizations, you extend the outreach of and connections with the Mission.Resources: www.irs.govResources: www.irs.govConclusionMan looks at the outward appearance, but the LORD looks at the heart. I Samuel 16:7Man DOES look at the outward appearance!We are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of men. II Corinthians 8:21We might be within our legal rights, and still be doing things that dont pass the smell test in the eyes of our community.
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