Category Archives: Audit

Why nonprofits might want to revisit the Donor Bill of Rights

The Donor Bill of Rights was designed about 25 years ago as a blueprint of best practices for not-for-profits. Some critics have since asserted that the rights are out of date or not comprehensive enough. However, revisiting the list’s basic principles can help you build solid relationships with donors — and even boost fundraising.

Here are the rights and what they might mean for your nonprofit:

1. To be informed of the organization’s mission, how it intends to use donated resources and its capacity to use donations effectively for their intended purposes. This information is the bedrock of your outreach efforts and should be clear to your board, staff and anyone reading your organization’s materials.

2. To be informed of who’s serving on the organization’s governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities. You must be transparent about who serves on your board, their responsibilities and the decisions they’re making.

3. To have access to the organization’s most recent financial statements. Make your nonprofit’s financial data easily accessible to constituents, potential donors and charitable watchdog groups.

4. To be assured gifts will be used for the purposes for which they were given. Donors expect that you’ll minimize administrative expenses so their funds are available for programming and that you’ll honor any restrictions they’ve placed on gifts.

5. To receive appropriate acknowledgment and recognition. In addition to thanking donors, provide them with the substantiation required for a federal tax deduction and information about the charitable deduction rules and limits.

6. To be assured that donation information is handled with respect and confidentiality to the extent provided by law. Post your organization’s privacy policy on your website and be clear about what information you’re gathering about donors and how that information will be used.

7. To expect that relationships between individuals representing organizations and donors will be professional. Staff and board members should be trained in proper donor interaction — both off- and online.

8. To be informed whether fundraisers are volunteers, employees of the organization or hired solicitors. Again, transparency about your operations is critical.

9. To have the opportunity for donors’ names to be deleted from mailing lists that an organization may intend to share. Donors, not your nonprofit, get to decide whether their information can be shared. Make it easy for donors to opt out of email and other lists.

10. To feel free to ask questions and receive prompt, truthful and forthright answers. Open dialogue between your nonprofit and your donors fosters respect and deepens relationships.
Contact us for help implementing these 10 tenets or developing a customized donor bill of rights.

 

Our firm, Perry, Fitts, Boulette & Fitton CPAs work with an extensive amount of nonprofit organizations.  Reach out to us if you have any questions.  We’re happy to help.  Contact us at 207-873-1603 or visit one of two locations at 259 Front Street, Bath or 46 First park Drive, Oakland.

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Tax Season is for Nonprofits, Too

“Tax season” is a term that most of us are familiar with and things are certainly getting into full swing at tax firms across the country. Typically, people think of Forms 1040, 1120 and 1065 at this time of year. There is however, another very important form that non-profit organizations (NPO) need to file, which is IRS Form 990 – Return of Organization Exempt from Income Tax. Unlike individuals, NPO’s have varying year ends which keep CPA firms busy year-round.

Form 990 presents the organization’s financial picture for the year. In addition, it provides information on governance, compliance with other tax filings, specific information on programs and overall general operations. In short, it is a one-stop shop for users to learn about an organization. Consequently, it’s important for the NPO to complete the return accurately and of course timely.

There are 16 schedules to the 990 that a nonprofit organization needs to be aware of. Management, along with assistance from the auditor/accountant, should go through the “Checklists of Required Schedules” on pages 3 and 4 of the 990 to determine which schedules pertain to them and that will in fact need to be filed. The following are some of the more common schedules required: Schedule A – Public Charity Status and Public Support, Schedule B – Schedule of Contributors, Schedule D – Supplemental Financial Statements, Schedule G – Supplemental Information Regarding Fundraising or Gaming Activities, Schedule J – Compensation Information, Schedule L – Transactions with Interested Persons and Schedule O – Supplemental Information to Form 990.

For nonprofits with gross receipts of less than $200,000 and total assets at the end of the year of less than $500,000, the Form 990-EZ should be filed. Smaller tax-exempt organizations who’s annual gross receipts are normally $50,000 or less can comply with their annual reporting requirement by electronically submitting Form 990-N (e-Postcard). The due date for the Form 990 series is the 15th day of the 5th month following the year-end. For NPOs with a December 2016 year-end, the initial due date is May 15th.

Form 990 is not only an IRS compliance requirement, but more importantly it is a way for the NPO to educate potential donors and board members, tell their story, explain their mission and market their organization and programs. It can be a key tool in an organization’s fundraising and marketing efforts.

About the Author: Danielle D. Martin, CPA is a Senior Audit Manager at PFBF CPAs with 24 years of experience in the accounting world. She can be reached at danielle@pfbf.com or 873-1603.