Not-For-Profit Notebook

Receiving pledges from donors who will make their contributions at a later date is great for your nonprofit, but accounting for these pledges is complicated. Pay close attention to the details below so you are able to record your contributions properly.

An advisory board can bring new value, skills and resources to your existing, more formal board of directors. Is creating an advisory board right for your nonprofit?

Many people feel a sense of dread when they receive a letter from the IRS. Often, people will comply with whatever request is made, assuming that they must have made a mistake when completing their tax return. But what if that letter isn’t really from the IRS? Scams involving people claiming to represent the IRS are so prevalent that the IRS has an entire page on their website devoted to helping determine if an encounter is actually with an IRS representative.

There is a standard life cycle that most not-for-profits experience. It begins with their early stage, which precedes a growth period that runs several years, followed by maturity. Once mature, the nonprofit has built its core programs and achieved a reputation in the community. But no organization can afford to rest on its laurels.

Are your programs relatively the same as they were a few years ago? If so, it’s time to review each of your programs and potentially replace, or simply refresh, your offerings.

In her latest report, the National Taxpayer Advocate, Nina E. Olson, says that the IRS still isn’t asking for enough information on the simplified Form 1023-EZ to ensure organizations using the form actually qualify for the exempt status. Further, a soon to be released revised Form 1023 runs the same risk.

When a corporate partner agrees to match the value of a donor’s gift, you can quickly double your organization’s gain. Are you doing everything you can to educate your financial supporters and their employers about matching gifts?

The key role of a not-for-profit’s internal auditors was once limited largely to testing financial and compliance controls and reporting their findings to the organization’s leadership. But today, with their cross-departmental perspective, internal audit staff (whether employees or outside consultants) can help anticipate and mitigate a variety of risks, improve processes — and even help evaluate your nonprofit’s strategies.

If your organization neglects to file the required annual forms with the IRS for three consecutive years, you will lose your tax-exempt status. Loss of your tax-exempt status will likely mean loss of donors, so it is imperative that you take action to reinstate your status immediately. Use the steps we’ve outlined below to reclaim your nonprofit designation.

While you are able to supplement your usual income-producing activities with sponsorships and advertising programs, it’s important to understand the possible tax implications of income from these outside sources.