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Year End 2001

Article Summaries

Paddling Upstream

The Search for Alternative Association Revenue Streams

In this highly competitive economic environment, associations often struggle with how to maintain a steady flow of capital and provide value-added services without increasing member dues. One way to achieve this without upsetting or losing valued supporters is by developing alternative revenue streams. This articles explores some creative ways associations can raise extra cash.

Put Your Best Foot Forward

The Important Implications of Form 990

IRS Form 990 is more than just a government reporting requirement. It’s also an opportunity for your nonprofit to showcase its accomplishments. Form 990 is the public presentation of an organization’s financial and legal compliance and is available to potential contributors and grant makers, the media, and watchdog organizations, to name a few. In this article we discuss essential Form 990 details that tax-exempt organizations should be aware of.

The Tangled World Wide Web

Why Nonprofits Must Exercise Caution With Internet Fundraising

Web sites can provide charities with seemingly endless fundraising possibilities. But beware: This virtual-fundraising feeding frenzy has created some potentially sticky tax situations. The IRS has provided little formal guidance beyond the reminder that using the Internet to perform a particular task doesn’t change the way tax laws apply to that same task performed in more traditional ways. In this article we look at crucial tax considerations every tax-exempt organization must considered before soliciting donations in cyberspace.

News for Nonprofits

This section reports on recent changes in IRS PAC filing requirements. In addition, it looks at public disclosure requirements for nonprofit Web sites and a recent study that’s reported a slowdown in charitable giving.

Will Your Form 990 Withstand Increased Scrutiny?

Federal disclosure laws require your nonprofit organization to give a copy of its Form 990 tax return to anyone asking for it. To easily comply with requests, many nonprofits may post it on the Internet or answer requests by e-mail. This will mean immediate access and may increase the number of people watching how you spend donations and grants.

Increased Scrutiny

Some nonprofit executives and board members worry that recipients will not fully understand the financial information disclosed on Form 990. They are concerned that current or potential donors may misinterpret what nonprofits spend on lobbying, fundraising and executive salaries — and draw faulty conclusions.

Increased scrutiny and more widespread dissemination call for both big and small organizations to prepare Form 990 more carefully. In the past, board members and executive directors rarely took a close look at the form to ensure its accuracy. An accountant prepared it, and an executive signed it and sent it to the IRS without careful review.

Disclosure and the IRS

The new disclosure requirements reduce the IRS’ burden in monitoring nonprofit activity. Now millions of Internet users will in effect be IRS volunteers, accessing data and scrutinizing the activities of approximately 750,000 charitable organizations. This frees the IRS to evaluate and further analyze nonprofits’ financial affairs.

On the other hand, some executives and board members optimistically view new public openness as a way to promote their charitable purposes and generate new funding and private donations. Nonprofits can also file electronically. This will facilitate the process and reduce costs for organizations that must file in multiple states as well as with the IRS. Electronic filing will further diminish the IRS’ burden of form collection and paper shuffling and allow it to concentrate on monitoring nonprofits’ compliance with tax laws.

Review Forms Carefully

Your board members, executives and staff will want to carefully review your Form 990 before it is filed and consider its impact on recipients. Knowing and understanding the disclosed information will help your nonprofit answer questions about your financial decisions.

Please call us for help with your Form 990. We’ll ensure its accuracy before it’s out on the Internet for all to see. And we’ll help you put effective controls in place.