Category Archives: NONPROFIT

When should your nonprofit organization reconsider a special event?

Not-for-profits use special events to raise large amounts in a short period of time. Most often, the donor receives a direct benefit from the event — such as dinner or participation in a gaming activity. But special events don’t always meet their fundraising goals. In fact, organizations can lose money on them. Following these steps can help boost your event’s potential and enable you to decide whether to hold it again in the future.

Step 1: Make a budget

Planning and holding a successful event is a process that should start with a budget. Estimate what you anticipate revenue to be. If costs are likely to be greater than revenue, consider forgoing the event. Of course, you can also come up with a less costly event or look for sponsors to help defray expenses.

Step 2: Develop a marketing plan

Determine the target audience for your event and the best way to reach that audience. For example, bingo nights are often popular with seniors. And they may be more likely to read about the event in the local newspaper than on your nonprofit’s blog.

Step 3: Account for everything

Track all of your event’s costs to arrive at an accurate net profit amount. For example, a gala’s costs could include:

• Amounts paid to market the event, such as printed invitations and paid advertisements,
• Amounts paid related to the direct benefit that the participant receives, such as food, drinks and giveaways, and
• Other actual event costs, such as rental space and wait staff.

Step 4: Evaluate the event

After the event, review a detailed statement of its revenue and expenses, and compare them to what was budgeted. Take a look at ticket sales: Did you bring in the amount you had anticipated? Was the attendance worth the amount of planning and organizing that went into the event? Next, evaluate money raised at the event itself. How much did your silent auction or raffle raise? Did you make more than the fair market value of the items donated?

Also review unexpected expenses. Were these “one-time” or “special” costs that aren’t likely to occur yearly, or are they recurring? The answers to these questions can help you determine if the event was a true success.

Crunching the numbers

Consider these results — along with changes in your organization and evolving economic conditions that could affect profitability — when determining whether your event is likely to be successful in the future. If you’re unsure, contact our reputable professionals at Perry, Fitts, Boulette & Fitton CPAs. We can help you crunch the numbers.  207-873-1603

 

© 2018

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.

© 2018

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.

IT’S BETTER TO GIVE THAN TO RECEIVE

Since moving to the Mid-Coast area a few years ago, my wife and I have been called upon many times to help a number of local charities. We are very strong believers that it is our obligation to make our community stronger during our brief stay in this wonderful world so we choose to help where we can. We ask all readers to support their favorite local charities as they are the heartbeat of society, making a difference in all of our lives.

Two of our favorites include the Bath YMCA and Big Brothers Big Sisters. For over 150 years, the Bath YMCA has promoted healthy living and provided youth with a safe place to grow. BBBS has been creating nurturing relationships for children facing adversity since 1904. Clearly both organizations make a positive impact on the lives of youth in our area. What they also have in common is that they are both qualified charitable organizations defined under the IRS Code.

As most already know, donations to nonprofit groups like the YMCA and BBBS are tax deductible if you itemize deductions. By definition, a donation is voluntary and is made without getting, or expecting to get, anything in return. To be deductible, a donation must also meet other strict criteria as outlined in IRS Publication 526.

Most of you reading this column have a good handle on what is deductible. Donations to the annual appeal at church, the building fund at the hospital and expenses paid when you volunteer at the museum are all examples. What you cannot deduct are the cost of raffle tickets bought to benefit a charity, the value of your volunteer time, the value of your blood given at the local blood drive, political contributions or the cost of your girl scout cookies. (…sigh)

Donations can get a little sticky when goods or services are received as a result of the contribution. Take for example, the local fundraising silent auction that you pay $1,000 to stay a beach house. If the fair value of that stay is $1,000, you have not made a contribution and no deduction is allowed. If, however, you pay $1,500 for the same stay you could be entitled to a $500 deduction.

For those who think that there is a safe amount that can be deducted be warned, the IRS has many strict rules for deducting charitable contributions. The rule that impacts most people is the requirement that individual contributions of $250 or more be backed with a written acknowledgement from the qualified organization. The acknowledgement must be in your possession before you file your return, include a description of the gift and a statement as to whether you received any goods or services as a result of the contribution.

My wife and I firmly believe that we all have an obligation to give back. Giving back is the life blood for local charities, and the tax deduction feels good too. The next time you attend a charity auction, bid high and bid often.