Public Disclosure Requirements for Charities

Just a reminder that we are supposed to make certain documents open to public inspection if asked. Here is a list from the IRS that mentions the 990, form 1023 and the 990-T.

Posting on the web is good as long as one can save and print copies of the forms. Here is a good FAQ about the disclosure requirements.

More Boot Camp Questions & Answers

Q: Where do I find out about raffles and raffle registration in California?

A: The California Attorney General's Office is where you get the forms and the CAN website has a nice FAQ section on raffles.

Q: Our organization collects funds and items from donors to give to another organization. How do we handle these transactions in our accounting system?
A: It sounds like these might be considered pass-through transactions and subject to SFAS 136 rules. For a clear description of these rules and how to handle them check out this link for more information and here to buy the book.

Q: How do we prove that the board has reviewed our 990 before we submit it?
A: [The new form 990 has a yes or no question as to weather or not the the governing body of the nonprofit has reviewed the form 990 prior to submission. Can you guess what answer they want to see here?]
From the Independent Sector's guide to the new 990:

The organization must explain (in Schedule O) the process, if any, it follows to have officers, board members, committees, or management review the prepared Form 990, when that review happened, and the extent of the review. The instructions clearly say “If no review was conducted, state ‘No review was conducted.’ ” The IRS does not require or recommend any particular procedure for reviewing the Form, but most organizations will want to ensure that their senior staff managers and/or the board committee responsible for overseeing financial policies and procedures have a chance to review the Form before filing.

The New 990 - Financial Accountability Resources

I'm going to start off an occasional series about the new form 990. As we move closer to the end of 2008 and closer to the time when we have to start using this form it is important to look at our organizational and financial systems and make sure they are able to give us the information we need so we can fill out this report or get the right information in a timely fashion to those who will fill it out for us.

An important aspect of what the updated form 990 is looking for is financial accountability. There are several questions in the governance section (pdf) of the form that ask us about our governance practices. Do we have the minutes of Board of Director meetings? Do we have a document retention and destruction schedule? Is there whistle blower policy at our nonprofit? Not sure what some of the term s mean exactly, or wonder if the IRS has a different meaning for a word? Check out their handy Appendix and Glossary (both pdf's). Both excellent resources.

Much of this is similar to what for-profits have to have because of the Sarbanes Oxley-act of 2002. A great resource for implementing policies like those asked for can be found here on the National Council of Nonprofit Associations website. I encourage you all to read about what information the new 990 will ask to keep track of and have on hand before we or our auditors have to fill this out. Preparation will save us time and money

Outcomes Measurement

Kate Barr at Balancing the Mission Checkbook has a nice piece on the recent report of an annual survey of public confidence in nonprofit groups by Professor Paul Light from NYU’s Wagner School of Public Service.

What intrigued me in her post is her mention of how Professor Light asks the questions about how nonprofits spend our money versus how I think the majority of nonprofits and foundations view our spending. The survey asks the public if they think nonprofits are spending their money wisely. Not program vs. management or any of the other typical benchmarks we use but if the public thinks we are doing a good job with our funds.

How could we show this for our own organizations? Is it possible that if a nonprofit spends 35% of its funds on administrative functions that the public would still view it as spending its funds wisely? Could foundations and corporate funders be persuaded to evaluate organizations in such a manner? Click the link above to find an example of an organization that may have figured out the right way to do it. Outcomes measurement is something we will all need to figure out a way to do for our nonprofits.

Questions and Answers

Thanks to everybody who came to any one of the six workshops I presented at in the last month. Nonprofits from Orange County to Maine all seem to be interested in nonprofit accounting, governance issues, risk management and the new form 990.

I get asked a lot of questions at these events and the ones I can't answer I look up and respond to here. Unless I loose the paper with the questions on it.* To that end let me begin with the first one:

1. What is the difference between a Commercial Fundraiser and Fundraising Council? What are the rules that tell us how to work with them?
   In a nut shell a Commercial Fundraiser hold the funds they solicit on your behalf and then gives them to your organization less any fee. Fundraising Council does not hold the funds for you. Contracts between CA nonprofits and commercial fundraisers need to be approved by the California Attorney General's office. For all the details please see the overview of 2004's Nonprofit Integrity Act (pdf).
2. How do we change our nonprofits name?
   Need to file updated Articles of Incorporation with the state and let the IRS know and anywhere you have registered to solicit funds. This guy has the goods.
3. This came up during a discussion of the new Schedule M (pdf) of the updated form 990 which talks about listing and valuing donated non-cash items (if you get more then $25,000.00 of them). The question was:
   If we have a special event to raise funds and receive proceeds from a silent auction, where do we report the income?
   In part VIII of the core form with the revenue and in any of the appropriate schedules. Schedule M is sole concerned with the valuation of the donated items. The IRS wants to make sure donors are not inflating the value of items donated to the nonprofit. For more on valuing donated items and how to book these please click here.
4. Boards of Directors
   No specific questions here but clear from the tone of the comments and question at these events that many of us have an occasional issue with our boards. For an interesting study on this I would direct you here to the Urban Institute. For resources to help Boards out I would direct you to start with these folks.
   

*Sorry if I missed your question. Please email me or post a comment here if you want me to look up an answer for you.