Not-for-Profit Notes

The AICPA Audit Committee Toolkit: Not-for-Profit Organizations

noreply@blogger.com (Dennis Burbridge CPA) — Thu, 07 May 2009 20:27:00 +0000

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Audit committees have a big job to do in an organization—tough when the members have other responsibilities and the audit committee role is a part-time job with huge accountability. The AICPA Audit Committee Toolkit: Not-for-Profit Organizations is the needed help for audit committees to do the job they need to do as effectively and efficiently as possibly. Providing these tools in the public interest, the AICPA, with the generous support of our sponsors, endeavors to help audit committees, internal auditors, and the leaders of the financial management organization execute corporate governance.

Permission is granted to download the tools below and tailor or customize for internal use. Note: Please retain the AICPA copyright notice that appears at the bottom of each document.

990, 990-EZ & 990-PF Due Date & Extension Requests

noreply@blogger.com (Dennis Burbridge CPA) — Thu, 07 May 2009 20:10:00 +0000

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Calendar year exempt organizations that file Forms 990, 990-PF, or 990-EZ are reminded that their annual information returns are due on May 15. An organization may request an initial automatic extension of time to file its annual information return by filing Form 8868 by the due date of the return. For more information, see Form 8868 and its instructions.

Forms 990, 990-EZ and 990-PF for non-calendar year organizations are due on the 15th day of the 5th month following the end of their annual accounting period.

IRS Reminds Small Tax-Exempt Organizations of the First Filing Date for the e-Postcard Electronic Notice

noreply@blogger.com (Dennis Burbridge CPA) — Wed, 14 May 2008 04:09:00 +0000

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WASHINGTON –– The Internal Revenue Service today reminded small tax-exempt organizations of their new annual electronic filing requirement as the first filing deadline of May 15 approaches. Organizations can file by going to the appropriate page on this Web site.

Beginning this year, most organizations whose gross receipts are normally $25,000 or less must file Form 990-N, also known as the e-Postcard. Previously these small organizations did not have an annual filing requirement.

“The e-Postcard is fast and easy. An organization just quickly answers a few questions online,” said Steven T. Miller, Commissioner of the Tax Exempt and Government Entities Division of the IRS. “It’s free, totally paperless and will help ensure integrity and transparency in the tax-exempt community.”

The first e-Postcards are due by May 15, 2008, from small tax-exempt organizations whose tax year ended on December 31, 2007. For organizations with a tax year that ends after December 31, 2007, the e-Postcard is due by the 15th day of the 5th month after the close of their tax year.

It is important for small organizations to file the e-Postcard because, under the Pension Protection Act of 2006, if an organization fails to file for three consecutive years it will lose its tax-exempt status.

Some organizations do not have to file including organizations that are part of a group return, as well as churches, their integrated auxiliaries and conventions or associations of churches.

IRS Complaint Process For Tax Exempt Organizations

noreply@blogger.com (Dennis Burbridge CPA) — Thu, 14 Feb 2008 21:33:00 +0000

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FS-2008-13, February 2008

The Internal Revenue Service gives serious consideration to complaints made alleging the abuse of the tax exempt status granted to certain organizations.

When reviewing filed complaints, the IRS carefully follows special procedures designed to assure the public of the IRS’s objectivity in the treatment of tax-exempt organizations. These procedures ensure that the IRS operates in an unbiased and appropriate manner and that its compliance programs are not improperly influenced by outside intervention.

The responsibility for administering these procedures belongs to the Exempt Organizations (EO) function, which is part of the IRS’s Tax Exempt and Government Entities Operating Division.

Complaints (Referrals)

A complaint (also called a referral) is any communication alleging that a tax-exempt organization is in potential noncompliance with the tax law. EO receives complaints from the general public, members of Congress, federal and state government agencies, as well as from other parts of the IRS.

Filing a Complaint

A referral of an exempt organization may be made by submitting Form 13909, Tax-Exempt Organization Complaint (Referral) Form, downloadable from IRS.gov.

Form 13909 and any supporting documentation may be submitted in a variety of ways. They can be sent via:

Mail to IRS EO Classification, Mail Code 4910DAL, 1100 Commerce St., Dallas, TX 75242-1198,
Fax to 214-413-5415, or
Email to eoclass@irs.gov.
Submission of Form 13909 is voluntary.

Acknowledgement and Disclosure Prohibition

All referrals are sent to analysts at the EO Classifications Office in Dallas. After a referral is made, the IRS will send an acknowledgement letter to all non-IRS sources making a referral, unless it was made anonymously.

Section 6103 of the Internal Revenue Code prohibits the IRS from disclosing whether it has initiated an examination or the results of any examination. Therefore, the IRS cannot communicate with the original source of a referral beyond the acknowledgement letter.

The Review Process

Upon receipt, research is done to confirm the identity of the organization in question and once this is complete, information is entered into a database to help the IRS keep track of the progress of the review.

An experienced EO revenue agent then performs a thorough technical analysis of the allegation made on the referral. The agent uses a “reasonable belief” standard to evaluate the facts and to determine whether EO should take further action. Before taking action, the revenue agent must determine that the facts create a reasonable belief that the allegations may be true when considered fairly and in light of other reliable information.

The reviewing EO agent will decide one of the following:

The information does not warrant further action. In this case, the agent inputs information, including rationale, into the database and closes the referral.
The referral relates to activities that should be considered at a future date. The agent documents the database and schedules the appropriate date to re-evaluate the information.
The referral contains characteristics that require it to be forwarded to a committee of career EO managers and agents. This committee evaluates referrals monthly -- more often in some circumstances -- and decides whether to proceed with an examination. The committee also applies the “reasonable belief” standard.
The information warrants an examination of the organization. The agent documents his or her decision and the reasons for it in the database. The information item then becomes part of the examination file.
If this process results in a decision to examine an organization, the Classification Office will forward the case to a field group for assignment to a revenue agent. The revenue agent will contact the organization and schedule an appointment to begin the examination. (For details on the EO examination process, see Fact Sheet 2008-14.)

IRS Issues Fact Sheet on Exempt Organization Examination and Compliance Check Processes

noreply@blogger.com (Dennis Burbridge CPA) — Thu, 14 Feb 2008 21:30:00 +0000

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FS-2008-14, February 2008

The Internal Revenue Service has a variety of tools at its disposal to make certain that tax-exempt organizations comply with federal law designed to ensure they are entitled to any tax exemption they may claim.

The responsibility for administering these procedures belongs to the Exempt Organizations (EO) function, which is part of the IRS’s Tax Exempt and Government Entities (TE/GE) Operating Division.

Examinations vs. Compliance Checks

A review of a tax exempt organization falls into two broad categories: compliance checks and examinations.

The IRS conducts examinations, also known as audits, which are authorized under Section 7602 of the Internal Revenue Code. An examination is a review of a taxpayer’s books and records to determine tax liability, and may involve the questioning of third parties. For exempt organizations, an examination also determines an organization’s qualification for tax-exempt status.

EO conducts two different types of examinations: correspondence and field examinations.

A compliance check is a review to determine whether an organization is adhering to recordkeeping and information reporting requirements and is not an examination since it does not directly relate to determining a tax liability for any particular period.

Correspondence Examinations

Correspondence examinations are limited in scope and focus on only one or two items on a return. An EO specialist typically conducts the examination through letters and phone calls with the organization’s officers or representatives.

If the issues become complex, or if the organization does not respond to a letter or call, EO may require the officers or representatives to bring records to an IRS office. EO may also convert a correspondence examination into a field examination.

Field Examinations

A field examination is one conducted by a revenue agent at the organization’s place of business. Generally, these audits are the most comprehensive. There are two distinct types of EO field examinations – EO Team Examination Program (TEP) and EO General Program.

EO TEP examinations are field examinations of large, complex organizations that may require a team of specialized revenue agents, as well as coordination between IRS functions and other governmental agencies. They are often conducted using coordinated team examination approaches and procedures.
EO General Program examinations are typically performed by individual revenue agents. They usually do not require a team of specialists.
A field examination usually begins when the revenue agent notifies the organization that its return has been selected for examination. This initial contact is by telephone or by letter to schedule an initial appointment. The organization receives Publication 1, Your Rights as a Taxpayer, with the appointment letter.

In the appointment contact, the revenue agent will typically request the following documents to begin the audit:

Governing instruments (articles of incorporation, charter or constitution, including all amendments; and bylaws, including all amendments),
Pamphlets, brochures, and other printed literature describing the organization’s activities,
Copies of the organization’s Forms 990 for the years before and after the year under examination,
For the year under examination (at a minimum):
Minutes of meetings of the board of directors and standing committees or councils,
All books and records of assets, liabilities, receipts and disbursements,
Auditor’s report, if any,
Copies of other federal tax returns filed and any related workpapers (Form 990-T for taxable income, Form 1120-POL for political activity, etc.),
Copies of employment tax returns and any related workpapers (Forms W-2, W-3, 941, 1096, 1099).
(Note: Many of these records may also be required for a correspondence examination.)

During an opening conference with the organization’s officers or representatives, the revenue agent explains the audit plan and the reason the organization has been selected for examination. The revenue agent usually conducts a comprehensive interview and tours the organization’s facilities to gain a basic understanding of the organization’s purposes and activities.

The examination of a tax-exempt organization is multifaceted and includes a review of its operation and activities to verify the existence of an exempt purpose, as well as a review of financial records. The length of the examination will depend upon a variety of factors, such as the size of the organization, the complexity of its activities and the issues that may arise during the examination. Some audits can be completed in just a few days; others can last for a year or more.

A field examination typically concludes with a closing conference. The revenue agent will discuss the audit with the organization’s representatives, and if necessary, furnish a report explaining proposed adjustments to the organization’s returns or exempt status. If the revenue agent and the organization’s representatives disagree on the findings, the organization may request a meeting with the revenue agent’s manager to discuss the disagreement. If the manager cannot resolve the differences, the organization may pursue its case through the IRS appeals process. For additional information on the appeals process, see Publication 892, EO Appeal Procedures for Unagreed Issues.

Compliance Checks

Exempt Organizations also maintains an active compliance check program. EO specialists conduct the checks by corresponding with or telephoning exempt organization representatives. A specialist may inquire about an item on a return, determine if specific reporting requirements have been met or whether an organization’s activities are consistent with its stated tax-exempt purpose.

An officer or representative of an exempt organization may refuse to participate in a compliance check without penalty. However, EO has the option of opening a formal examination, whether or not the organization agrees to participate in a compliance check.

At the beginning of a compliance check, the specialist will inform the officer or director that the review is a compliance check and not an examination. The specialist will not ask to examine any books or records or ask questions regarding tax liabilities. The specialist may ask whether the organization understands or has questions about filing obligations for required forms. The specialist may also ask questions about the organization’s activities. If, during a compliance check, the specialist decides an examination is appropriate, he or she will notify the organization that EO is commencing an examination before asking questions related to tax liability.

Because a compliance check only reviews whether an organization is adhering to record keeping and information reporting requirements or whether an organization’s activities are consistent with its stated tax-exempt purpose and is not an examination, it is possible to have more than one compliance check for a tax year if facts and circumstances warrant. For more information, see Publication 4386, Compliance Checks.

Selecting Organizations for Examination or Compliance Checks

EO strives to ensure consistency and fairness in its examination and compliance check processes. In its annual Implementing Guidelines, which are available on the IRS website at www.irs.gov/eo, EO describes its proposed examination and compliance check activities for the year.

EO designs and implements comprehensive projects to address issues that carry the most non-compliance risk. To determine which organizations should be targeted, experienced specialists analyze information from Forms 990 and other sources. This analysis will usually result in the selection of a group of returns for examination or compliance check.

EO also reviews media reports and receives complaints from the general public and Congress about potential non-compliance by exempt organizations. After confirming the information, and when appropriate, these organizations may be selected for examination or to receive a compliance check. For details on how EO handles complaints about exempt organizations, see Fact Sheet 2008-13.

Regardless of the process used to select returns, EO does not presume that an organization is violating the tax laws before it begins the examination or sends a compliance check letter.

Budgeting: A Guide for Small Nonprofit Organizations

noreply@blogger.com (Dennis Burbridge CPA) — Wed, 23 Jan 2008 22:49:00 +0000

Budgeting: A Guide for Small Nonprofit Organizations

Dennis Burbridge, CPA Offers Reduced Audit Fees for NPOs

Introduction
Selecting the budget committee
The task of the budget committee
Setting budget priorities and realities — revenues
Setting budget priorities and realities — expenses and costs
When to prepare the budget
A budget for capital expenditures — bought or received
Restricted grants
Changes and conclusions

________________________________________
Introduction | Top

The need for each nonprofit organization (NPO) to budget both its expectations of income and the attached costs and expenses is one that is easily recognized. However, most guides on the subject are written with the large organization in mind.
Every volunteer brings to a small NPO the enthusiasm and interest necessary to do a good job. Most small NPOs lack the funds necessary to seek and pay for professional guidance in the business and larger nonprofit world.
This guide is written to present the theories and practicalities of budgeting for the small NPO staffed by volunteers whose expertise does not always correspond with the budgeting needs of the organization.
In this guide, Goodworks, Inc. is a hypothetical nonprofit organization that receives funds from grants, the public and sales of T-shirts to help with the problems of runaway teenagers. The example of Goodworks, Inc. should provide guidance for most NPO budget situations.
________________________________________
Selecting the Budget Committee | Top

A budget is a planning tool for the NPO. The budget committee should reflect the collective knowledge of the organization concerning the goals and objectives for the period in question. Volunteers who serve on the budget committee also should have the following qualities:
A familiarity with prior years' activities and the changes that are contemplated in the year(s) to come
A desire to serve the organization as a whole rather than to lobby for a particular project
Knowledge of ordinary budgeting, whether on the personal or business level
Hands-on experience with budgeting
While the qualities listed above are desirable, their absence should not preclude excellent service by volunteers who are otherwise interested and dedicated.
________________________________________
The Task of the Budget Committee | Top

The task of the budget committee is to develop the budget for the current year (or current and future year if it is a multi-year budget). The steps in developing the budget are as follows:
Develop list of objectives or goals for the current year (or current and future year).
A familiarity with prior years' activities and the changes that are contemplated in the year(s) to come
Estimate the cost for each objective or goal. Previous year’s actual expense and budget can be used as a starting point. If there was no budget for the previous year, the actual expenses can be used as a starting point. If the goal involves new programs for which last year’s expense cannot be used, estimate cost by listing out in detail all of the expenses involved in achieving that particular goal.
Estimate the expected income that will be generated
Compare the expected income to the estimated expense in achieving the goal
Develop the final budget

The need to present the budget to the board for approval will be the overriding constraint in planning the period for the budget process. There must be time to consider, question and change the budget both before and after the presentation to the board.
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Setting Budget Priorities and Realities — Revenues | Top

A budget may start in one of two places. One is to plan based on the amount that must be spent to fulfill the goals and objectives of the organization.

This method unfortunately tends to encourage a "pie in the sky" attitude, where so much is needed that the revenues necessary to pay for such a plan are not available even in the most optimistic of projections. This is when reality must be considered. The budget committee will need to examine the reasonable expectations of revenue. Each potential source of revenue must be examined to determine possible enhancements in the future. The availability and probability of grants from outside sources must be discovered. Together with the possibility of grants, there must be a measurement of the costs of such grants.

Do separate accounting reports need to be provided to the grant-giving organization? Are the funds restricted to a particular purpose? Does the grant provide an allowance for overhead expenses of the organization? Moreover, must the organization be audited in order to qualify for the grant or to account for it? Does the grant allow for the creation of a program that cannot be carried on financially after the grant funds are used? Will the grant lead contributors to believe their contribution is not needed? Can the grant change the tax status of the Organization? Sometimes the cost of revenue may be more than it is worth.

There are grants that are unrestricted. They may match contributions from outside contributors, or they may be from small, local charities that are interested in your type of program. Libraries are excellent resources for this type of information.

What are the expectations of contributions from the public? Be realistic! Is there a history of increases in past years? Has a major contributor had a good year or a bad one?

What are the fund-raising possibilities of the organization itself? What are the costs of fund raising? What are the legal and tax implications of selling goods and services to raise funds?

Are "suggested donations" better than a fee for a production or fundraiser? Some of these questions require knowledge of local and state laws, but the best answers may keep the organization out of trouble later.
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Setting Budget Priorities and Realities — Expenses and Costs | Top

The opposite side of revenues (income) is expenses (costs). Sometimes revenues and expenses are tied together, as in fund-raising projects that generate revenue at a certain cost. Excess revenue over expenses can usually be used to cover other expenses of the organization, e.g., programs that do not generate revenue and administrative expenses. The by-laws of the NPO also need to be reviewed for requirements that may place an undue burden on the organization, i.e., the requirement to have an annual audit.

Expenses are generally associated with those disbursements that do not have a future value, e.g., postage, telephone service, etc. Costs are associated with items that have a future benefit, e.g., desks, computers and other assets. These also are known as capital expenditures. In either case, they must be budgeted.

As noted in the revenue section, some programs are funded entirely by grants. The budgets for specific grant programs are made at the time of the grant application. These budgets should include not only requests for the specific costs of the program, but also enough to cover the internal costs of administering the program if the grant is awarded. Many a program has been granted based on direct costs, without any consideration of the indirect costs of telephone, transportation, stationery, postage and the incidentals that can add up quickly and doom a well-planned effort.

Planning for programs that are to be covered by general contributions and unrestricted grants entails a budget that has some elasticity.
________________________________________
When to Prepare the Budget | Top

A budget is a planning tool and should be prepared well in advance of the period of the actual performance. Plenty of time should be allowed for presenting the budget to the board of directors for approval, and for making changes. After your hard work preparing the budget, it may be hard to recognize good suggestions for improvement, but you must be willing to go back to the drawing board.
Once the budget is prepared and approved, do not put it away in a dark corner. To be useful and effective everyone should take the budget seriously. The budget should be compared with the actual experience in order to measure whether the organization's goals, set by the budget, are being met.
Goodworks, Inc. Comparative Income Statement With Budget 199x

Actual Budget Variance
Income
Contributions 25,000 27,500 (2,500)
Grants(unrestricted) 5,000 5,000 0
Sales (Net) 4,325 4,000 325

Total income 34,325 36,500 (2,175)

Expenses
Staff 10,000 12,000 (2,000)
Office expense 1,120 1,000 120
Telephone 5,665 6,000 (335)
Counseling 12,000 12,000 0
Bus tickets 4,960 5,000 (40)
Misc. support 510 500 10

Total expenses 34,255 36,500 (2,245)
Excess 70 0 ( 70)

This is a simple comparison at the end of a period. Ideally, with every presentation of financial information there should be a comparison and recognition of what remains to be done to achieve the budget expectations for the year. There are other types of budget reports that are essential to the smooth running of an organization. For the small group, the most important is a cash flow budget. This is the budget of income and expense broken down monthly to ensure cash will be there when needed. If you expect all your expenses in the first three months of the year and all your income in the last three months of the year, you will be out of luck unless the organization has built up a large cash surplus. Plan your cash flows.
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A Budget for Capital Expenditures — Bought or Received | Top

Capital expenditures are those that acquire assets whose useful lives are greater than the current period. Many times a small organization will borrow assets, or members will use personal assets for the needs of the organization. Donors of non-cash items will need to help provide a solid estimate of the value of the items, both for the organization's records and for the donor's records for tax and other purposes.

Some donated items, such as stock or a vehicle, require a transfer of title, which is recorded with local or federal authorities. Make sure this transfer of title is carried through in an orderly and timely manner.

Some gifts bring new responsibilities to the organization. Can you safeguard this asset? Does it need to be insured? Do you need a safe deposit box? If an asset is housed on premises that do not belong to the organization, then a master list of such assets and their whereabouts should be prepared and maintained in a safe and central location.

Other gifts need accounting and budgeting. One is the forgiveness of rent for space. The fair market value of the rent should be recognized on both the budget and actual financial information as income and expense.

This type of recognition gives a better picture of the true state of affairs for the organization. If you lose the free rent, can you make up the difference in cash donations and afford to pay the rent? This question is best answered when the value of the prior gift is recorded.

Capital budgets can be achieved over a period of years when a sinking fund is established to collect money for a future capital expense.
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Restricted Grants | Top

Budgeting for restricted grants must be done in advance. A careful inquiry of the grant giver will allow you to know the expectations of the grant-giving organization. As noted in the discussion of revenue sources, there can be many strings tied to grants. Be aware of them. Discuss the requirements not only with the grantor, but, if possible, with another organization that has received such a grant in the past.
________________________________________
Changes and Conclusions | Top

Can budgets be changed? Sometimes they have to be when expectations are not met. Rather than abandon a sound budget plan when an emergency or opportunity arises, an organization should be able to handle the change in an orderly fashion. By-laws should also be examined for guidance on how an adopted budget can be altered.

If an expected donation that has been budgeted does not materialize, you have several choices. The most obvious is to seek other sources of funds. Next, you can cut expenses. Less obvious is a rearrangement of expenses. A gift of an asset, as previously discussed, might relieve a budgeted expense. A program that was scheduled to begin in one quarter might be moved to another period, allowing the expenses of that program to be moved as well. All of the decisions above should be made with reference to the budget, as well as to the current cash and financial picture.

Budgets should be a major part of every organization's plan. This plan should give the flexibility needed to achieve goals with order and success. The documentation of budget assumptions and changes will provide a basis for improving the efficiency of the budgeting process each year.

This guide was last updated in September 2007. Permission obtained from the Virginia Society of CPAs

e-file for Charities and Non-Profits

noreply@blogger.com (Dennis Burbridge CPA) — Mon, 14 Jan 2008 08:39:00 +0000

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e-file for Charities and Non-Profits

Electronic filing is quick, secure, and more accurate than filing a paper return; and e-filing provides fast acknowledgement that the IRS has received the return. E-filing reduces normal processing time and makes compliance with reporting and disclosure requirements easier. Charities and non-profits can file the following forms electronically through an Approved IRS 990-efile Provider.

* Form 990, Return of Organization Exempt from Income Tax
* Form 990-EZ, Short Return of Organization Exempt from Income Tax
* Form 990-PF, Return of Private Foundation
* Form 8868, Application for Extension of Time To File an Exempt Organization Return
* Form 1120-POL, U.S. Income Tax Return of Political Organizations
* Form 7004 (extension form for the 1120-POL)

All charities and non-profits are encouraged to take advantage of the many benefits of electronic filing. Refer to Frequently Asked Questions (FAQs) - e-file for Charities and Non-profits for additional information.

Need to eFile?

Annual Electronic Filing Requirement for Small Exempt Organizations — e-Postcard (Form 990-N)

noreply@blogger.com (Dennis Burbridge CPA) — Tue, 08 Jan 2008 12:00:00 +0000

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Annual Electronic Filing Requirement for Small Exempt Organizations — e-Postcard (Form 990-N)

Beginning in 2008, small tax-exempt organizations that previously were not required to file returns may be required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. This filing requirement applies to tax periods beginning after December 31, 2006. Organizations that do not file the notice will lose their tax-exempt status.

Small tax-exempt organizations, whose gross receipts are normally $25,000 or less, are not required to file Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. With the enactment of the Pension Protection Act of 2006 (PPA), these small tax-exempt organizations will now be required to file electronically Form 990-N, also known as the e-Postcard, with the IRS annually. Exceptions to this requirement include organizations that are included in a group return, private foundations required to file Form 990-PF, and section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. In addition, this filing requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches.

The IRS began mailing educational letters in July 2007 notifying small tax-exempt organizations that they may be required to file the e-Postcard. The IRS is developing an electronic filing system (there will be no paper form) for the e-Postcard and will publicize filing procedures when the system is completed and ready for use.

The PPA requires the IRS to revoke the tax-exempt status of any organization that fails to meet its annual filing requirement for three consecutive years. Therefore, organizations that do not file the e-Postcard (Form 990-N), or an information return Form 990 or 990-EZ for three consecutive years, will have their tax-exempt status revoked as of the filing due date of the third year.

If you would like additional information about this new filing requirement, including notification when the filing system is ready, or information about other new developments, subscribe to Not-for-Profit Notes, a regular e-mail newsletter that highlights new information posted on the Charities pages of irs.gov.

IRS Has $110 Million in Refund Checks Looking for a Home

noreply@blogger.com (Dennis Burbridge CPA) — Thu, 15 Nov 2007 02:27:00 +0000

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IRS Has $110 Million in Refund Checks Looking for a Home

IR-2007-189, Nov. 14, 2007

WASHINGTON — The Internal Revenue Service is looking for 115,478 taxpayers who are due refund checks worth about $110 million after the checks were returned as undeliverable.

The refund checks, averaging about $953, can be claimed as soon as taxpayers update their addresses with the IRS. Some taxpayers have more than one check waiting.

“Taxpayers should not miss out on getting their money back,” said Richard Morgante, commissioner of the IRS Wage and Investment Division. ”The IRS makes it as easy as possible for taxpayers to update their addresses and claim their refunds.”

The “Where’s My Refund?” tool on IRS.gov enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2006 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

New York Junior League Grants

noreply@blogger.com (Dennis Burbridge CPA) — Mon, 22 Oct 2007 16:41:00 +0000

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In addition to its volunteer efforts, the New York Junior League sponsors three community grant programs. The First League Fund provides up to $2,500 per grant (awarded three times a year up to a total of $20,000 over the course of each year) to smaller or newer organizations with emergency, one-time needs. Upcoming deadlines are November 26, 2007 and February 1, 2008.

Larger, more-established organizations may want to consider applying for a separate NYJL grant program, the Volunteer Impact Project Fund (VIP), which awards grants up to $25,000 annually to fund projects requiring the use of a minimum of ten NYJL volunteers. The purpose of this grant is to fund unmet community needs by bolstering financial and volunteer support given to existing and new NYJL community partners. The VIP application deadline is October 15. Organizations working in the area of domestic violence may want to consider applying for a separate NYJL grant program, the First League Fund for Domestic Violence, which awards grants annually to enhance services provided to victims of domestic violence.

For more information, visit www.nyjl.org/ny/npo.jsp?pg=action9.

Nonprofit Governance in the United States

noreply@blogger.com (Dennis Burbridge CPA) — Mon, 22 Oct 2007 02:15:00 +0000

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Findings on Performance and Accountability from the First National Representative Study

Author(s): Francie Ostrower

Posted to Web: June 25, 2007

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

The text below is an excerpt from the complete document. Read the complete paper and its appendices in PDF format

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Abstract

Nonprofit boards are increasingly a focus of those interested in greater accountability and transparency, including policymakers, media, and the public. To help inform current policy debates and initiatives to strengthen nonprofit governance, in 2005 the Urban Institute conducted the first ever national representative survey of nonprofit governance, with over 5,100 participants. This report presents survey findings, discussing: relationships between public policy and governance, factors that promote or impede boards' performance of basic stewardship responsibilities, board composition and factors associated with board diversity, and recruitment processes, including the difficulty experienced by many nonprofits in finding members.

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Introduction
Nonprofit boards are ultimately responsible for the organizations that they oversee, and are one of the primary vehicles through which citizens participate in the nonprofit sector. In recent years, nonprofit boards have become an increasing focus of those interested in nonprofit accountability and transparency, including policymakers, the media, and the public. Legislative reforms have been proposed, nonprofit associations are calling on their members to review and strengthen nonprofit governance practices, and the Internal Revenue Service has released a draft paper on "Good Governance Practices for 501(c)(3) Organizations."

It is critical that both proposed policy reforms and best practice guidelines be informed by solid knowledge about how boards currently operate and what factors promote or hinder their performance. To help ensure the availability of such knowledge, in 2005, the Urban Institute conducted the first-ever national representative study of nonprofit governance. Over 5,100 nonprofit organizations of varied size, type, and location participated in our study, making it the largest sample studied to date.

Our survey covered a wide array of topics but included a special focus on practices related to current policy proposals and debates. This focus was in keeping with one of our primary goals—to draw attention to the links between public policy and nonprofit governance. Attention to the influence of organizational environments on boards has declined significantly in the board research literature, and when attention is given, it is typically to the financial context (Ostrower and Stone 2006; Stone and Ostrower forthcoming). Funding relations are important, but the environment includes far more. As organizational theorists remind us, nonprofits face normative pressures to adopt certain policies and practices in order to demonstrate their public legitimacy (DiMaggio and Powell 1983). Nonprofits today are facing pressures to be more accountable and transparent, which has had a profound impact on discussions of appropriate board roles and policies.

This study draws attention to the relationships between the public policy environment and nonprofits. A major point of this study, however, is that the impact of public policy extends beyond legislative proposals aimed specifically at nonprofits. One of the most important developments to shape thinking about nonprofit governance today was the passage of the Sarbanes-Oxley Act, legislation intended to deter fraud in the corporate sector. Developments in the corporate sector not only shape wider expectations about governance that influence nonprofits, but as our findings show, board members that sit on both corporate and nonprofit boards serve as a channel through which corporate practices are brought into the nonprofit world.

Another major purpose of this study is to identify factors associated with promoting or impeding boards' performance of basic stewardship responsibilities related to overseeing and supporting the organization and its mission. Attention to accountability and concerns about loss of public legitimacy have dominated the dialogue about nonprofit governance in recent years. Concerns about accountability, however, should not obscure attention to performance and effectiveness. We have to ask not only whether nonprofit boards have various practices and policies in place to avoid malfeasance but whether they are actively serving the organization's mission and ensuring that the organization is accomplishing its mission. Here we find wide variations, including evidence that significant percentages of boards are not very active when it comes to carrying out some basic stewardship responsibilities.

A third and related purpose of this study is to draw greater attention to board composition and recruitment processes. Our findings show that efforts to strengthen nonprofit governance have insufficiently dealt with the fact that many nonprofits are having difficulty finding board members and that this is one important factor associated with lower levels of board engagement. To promote not just adoption of strong practices and policies in theory but to implement them in practice requires an engaged and dedicated board. The dramatic growth in the number of nonprofit organizations over the past decade (Pollak and Blackwood 2006) means that greater numbers of board members are needed, which may contribute to greater competition in recruitment. Whatever the reasons for the difficulty, initiatives are clearly needed to enlarge the available pool of board members. Furthermore, our findings concerning high levels of ethnic homogeneity on many boards raise questions about nonprofit boards' ability to be responsive to the diversity of the constituencies served by their nonprofits.

As rich as these data are, keep in mind that these data come from self-reports. As is true in all such surveys, including those that assure confidentiality as this one did, respondents may be inclined to choose answers that are more favorable to their organizations and thus the percentage reporting positively on board practices may be biased upward. Since there is no reason to believe that this tendency is more or less prevalent among particular subgroups, however, any upward bias should not influence conclusions about relationships between various factors and board practices.

(End of excerpt. The complete paper and its appendices are available in PDF format.)

Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

New Annual Electronic Filing Requirement for Small Tax-Exempt Organizations — e-Postcard (Form 990-N)

noreply@blogger.com (Dennis Burbridge CPA) — Mon, 22 Oct 2007 02:04:00 +0000

Beginning in 2008, small tax-exempt organizations that previously were not required to file returns may be required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. This filing requirement applies to tax periods beginning after December 31, 2006. Organizations that do not file the notice will lose their tax-exempt status.

Small tax-exempt organizations, whose gross receipts are normally $25,000 or less, are not required to file Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. With the enactment of the Pension Protection Act of 2006 (PPA), these small tax-exempt organizations will now be required to file electronically Form 990-N, also known as the e-Postcard, with the IRS annually. Exceptions to this requirement include organizations that are included in a group return, private foundations required to file Form 990-PF, and section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. In addition, this filing requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches.

The IRS began mailing educational letters in July 2007 notifying small tax-exempt organizations that they may be required to file the e-Postcard. The IRS is developing an electronic filing system (there will be no paper form) for the e-Postcard and will publicize filing procedures when the system is completed and ready for use.

The PPA requires the IRS to revoke the tax-exempt status of any organization that fails to meet its annual filing requirement for three consecutive years. Therefore, organizations that do not file the e-Postcard (Form 990-N), or an information return Form 990 or 990-EZ for three consecutive years, will have their tax-exempt status revoked as of the filing due date of the third year.

If you would like additional information about this new filing requirement, including notification when the filing system is ready, or information about other new developments, subscribe to Not-for-Profit Notes.