IRS Update

From the IRS comes this announcement:

IRS Sends Compliance Questionnaires to 400 Colleges and Universities
Approximately four hundred U.S. colleges and universities will begin receiving compliance questionnaires from the Internal Revenue Service in the next few days as part of the agency’s focused effort to study key areas in the tax-exempt community. The college and university questionnaire will focus on unrelated business income, endowments and executive compensation practices. The questionnaires are being sent to a cross-section of small, mid-sized and large private and public four-year colleges and institutions.

Private nonprofit universities are generally exempt from tax under Internal Revenue Code section 501(c)(3) and like state universities are to unrelated business income tax.

Click here to read the rest.

This is part of a new compliance project for colleges and universities by the IRS. Will this effort by the IRS broaden out to other 501(c)3 organizations? Probably. I think they are looking at the biggest fish first but I'll bet it is just a matter of time until more of these types of letters will be sent.
Are there any lessons to be learned here? I think two at least:

• I'd say make sure that if you are doing any activities that might generate unrelated business income you should learn the rules (link opens a PDF) that apply.
• Make sure your salaries are justified.

Probably making sure your ready in general for the new 990 reporting will help as well.

Nonprofit Compensation Report

GuideStar has published highlights of their 2007 Nonprofit Compensation Report. Info was taken from over 55,000 990's filed in 2005. Highlights of the highlights:

• Median compensation of females continued to lag behind that of males when considering comparable positions at similar organizations.
• Females held 50 percent of CEO positions at organizations with expenses of $1 million or less but only 34 percent at organizations with expenses of greater than $1 million. Overall, women held 41 percent of the positions reported upon but received only 32 percent of the total compensation.
• Health and science organizations had the highest overall median salaries. Food, religion, and housing organizations brought up the rear.
• Washington, D.C., had the highest overall median salaries of the 20 largest metropolitan statistical areas; Riverside-San Bernardino, CA, had the lowest.

The linked-to article has a lot more information.

Finance and Governance

More updates from the Smithsonian scandal, another big nonprofit in the news with stories about how much the top two people were paid and how little they did to earn the $$.

The Nonprofit Times has an article here on it. The Nonprfit Quarterly talks about the story as well and the editor in chief, Ruth McCambridge makes a good point:

With the changes to the 990 reflecting the efforts of the Senate and the IRS to get better governance out of nonprofits, shouldn't they hold the Smithsonian Board, and the other big nonprofits who have been in the news for the wrong reasons, to the same standards? That board includes the Chief Justice of the United States and half a dozen members of Congress.

Shall they be exempt from being taken to task for what all who look at the case cite as a failure of governance? It will be interesting to see how this moves forward.

CAN's Employment Center

Not an accounting post but a heads up out there for people looking for work. CAN has created a new Career Center on its website. So check it out and let me know what you think.

WebCPA | Regulatory spotlight shines on NFPs

WebCPA | Regulatory spotlight shines on NFPs

Thanks to a board member for sending me this link. The article is another good round up of what is going on out there.

More on the IRS's compensation report

Guidestar has a nice summary of the recent report from the IRS’s Exempt Organizations Executive Compensation Compliance Project. It includes a link to a PDF of the actual report and has a bit of analysis on why this should matter to nonprofits.

New Volunteer Time Value Estimate

Four posts today? And all from checking out IS's site? They do have good stuff there.

Alan

Tid Bit On Nonprofit Compensation

Reminiscent of the Getty's troubles: Have you heard the news about the head of the Smithsonian Institution?

"The Senate passed a non-binding amendment to the budget resolution that would freeze a $17-million increase for the Smithsonian until it undergoes a series of ethics and accountability reforms, including requirements that no Smithsonian employee be paid more than the President of the United States, and that all travel expenditures conform with federal government guidelines.

While the amendment may be dropped in the final version, it provides an indication of some lawmakers’ thinking on nonprofit executives’ compensation."

Again, thanks Independent Sector

Excessive Compensation

From the The NonProfitTimes - eNewsletter

Some of the examples of what is being done by some nonprofits are just ridiculous, you wonder who filled out their 990's and what were they thinking. It is news like this that makes some people think ALL nonprofit personnel get paid to much.

Latest Cost Of Living Adjustment Percentage

Click here to go to the Social Security Administration's website to get the latest number.

In the December of 2008 it was adjusted to 5.8%.

Nonprofit Executive Compensation

This is from GuideStar's newsletter, a good resource. The IRS is upping its scutiney of nonprofit executive compensdation. Do you know what a rebuttable presumption of reasonableness is? click the link in the headline to find out why it could be important to you.

Alan

Volunteer Executive Director

Question from a recent Boot Camp attendee:
For a volunteer Executive Director, can the value of the salary they could be earning be included as in-kind professional service?

And the answer is: Not according to GAAP and IRS rules, it does not meet the characteristics of a donated professional service. BUT you could list this time on a proposal or funding request as an in-kind service, something to show them the value of the organization. It just is not an official contribution to the organization.

Life Cycle of a Public Charity

The IRS has a nice section on its site that details what most charities will go through and what they will have to do. Compensation issues, records retention, what does a donor get, a lot of good information can be found here.