Category Archives: Q&A

Workshop Resources, Questions and Answers

Posted on July 20, 2009 | Leave a comment

Questions?As part of my follow-up to recent workshops that I’ve run in the last few weeks I wanted to answer a few questions.  But first I wanted to thank Alltop.com for including this blog in their list of nonprofit blogs.  It feels great to be in such respected company!

Managing the Money, Managing the Organization

For the Managing the Money, Managing the Organization workshop in Long Beach, you can download the handouts from the event here.  For those who are interested in looking at a budget narrative I have linked to a PDF of one here.  An online search of “sample budget narrative” will reveal a lot more.

Building Financial Literacy

From part one of the Building Financial Literacy workshop in Ventura there was a question about vehicle donation guidance.  I would refer all those interested in this to this PDF from the IRS. For other IRS contributions and donation information please check the IRS links and resources to the right. For the folks who wanted information on how to value in-kind donations, please click here.

Nonprofit Summer School

Thanks to all the folks who spent the day with me talking about nonprofit accounting issues at Cal State Fullerton’s event. Many of the questions were about QuickBooks issues, I would direct you to this page of the site for more information and resources.

For more information and resources I usually mention, please check here. And if I missed your question or you have others please feel free to remind me!

More Questions and Answers – Donated Items and Services

I have received a rash of questions lately on donation and valuation information for in-kind gifts.  I mentioned my post about valuation information above.  I have another post about how to enter in donation transactions and another on valuing donated services.  I hope those help.

More Questions and Answers – Employee Time and Cost Allocation

Question: We are just starting our marketing and communications program (hiring a marketing manager, revamping our website, etc.). I do not believe that I should classify 100% of these costs as fundraising (the website is mostly about information sharing and public relations). Rather I consider classifying some as program costs, some as administrative expenses and some as fundraising depending on the activities purpose. Is that correct?

Answer: Yes. Not all of the costs described should be lumped into fundraising. The costs should be allocated between programs, admin and fundraising as appropriate.

For example, the marketing manager spends time designing some promotional materials to get word out about a particular program you do. I’d say that is a program expense. Weather particular funder allows their money to be spent on advertising is a separate matter, but the expense is still a program expense. If that same person is designing something to be used for a fundraising gala, that would be a fundraising expense. If they are designing new signage for your offices? The expenses would probably be administrative.

You can click here for many more questions and answers.

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IRS Info and Some Questions and Answers

Posted on June 25, 2009 | 4 Comments

Questions and AnswersIRS, Governance and the Form 990

I’ll lead off with some exiting news.  Well, it’s exiting to me at least.   Last week I learned that the Urban Institute’s efile.form.990 site should start being able to process the latest version of the form 990 by the end of July (not June).  Their system allows you to electronically prepare and file your organization form 990, 990 EZ and extensions to file.  There is a small fee, but I encourage anyone who prepares your organizations forms by hand to look into their system.

Sarah Hall Ingram, the IRS Commissioner for Tax Exempt and Government Entities, made a presentation at Georgetown Law Center this week on nonprofit governance issues and what the IRS sees as its role relating to that.

While both state regulation and sector self-regulation are important, and I welcome and respect them, they do not get the IRS off the hook. Congress gave us a job to do, and we cannot delegate to others our obligation to enforce the conditions of federal tax exemption.

If you would like to read her remarks they are available as a PDF here.

Collaboration Resources

Need some tips on online collaboration tools? Gayle C. Thorsen at IMPACTMAX has a good rundown on some resources that should help you.

Questions and Answers: Revenue Recognition

Each year we have several matching gifts that come in after the fiscal year end of June 30.  Should these receipts be counted toward the past fiscal year or the current year?  For donor recognition purposes we count these gifts in the year they were pledged.  For accounting purposes, how should we be dealing with this?

You should count them the same way you do for recognition. Nonprofit accounting rules for donations take into account the donors intent, and if the check was written in before the end of your fiscal year, or the pledge was made before then end of your fiscal year, it should be counted as that fiscal years money.

Questions and Answers: Employee or Independent Contractor?

I’m a bookkeeper trying to help a recently started, all volunteer nonprofit. The one concern I have is the administrative costs for the person who runs it. If the nonprofit were to reimburse that person for a missed day at work, would they be considered an employee of the nonprofit?

You can’t reimburse somebody for a missed day of work, that is not a “real” expense. That would be considered compensation. This could be a 1099 / independent contractor relationship OR an employee relationship. I would look carefully at the duties tests between the two and make your judgment. The IRS is pretty serious about making sure employers classify folks correctly.  You can check out their resource pages here.

Question and Answers: Hiring Costs

We are a small nonprofit that had a change in our Executive Director. The costs to recruit, interview and move a new Executive Director to our state was extremely expensive. These costs are a one-time charge that are impacting our net assets. Is there a way that I can capitalize them to spread out the impact?

Not in this case. Capitalizing an expense is done for physical assets that have a long useful life so that the expense of the item is spread out over its time of use.  Employees can’t get treated the same way.

Just make sure to clearly explain and footnote the situation on all of your reports and financials so people will not think there is something wrong with the organization and you should be OK.

Do you have a question?  Click here to ask it

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A Nonprofit News Round-Up

Posted on June 10, 2009 | 1 Comment

roundupToday I just have a short round up of interesting items from the last few weeks.  But I first want to say thanks to the Nonprofit Congress Blog for mentioning this blog in the Nonprofit Blog Carnival it recently hosted.

This piece is from mid May but it is worth another mention.  The article is on administration costs and charity ratings from the Good Intentions Are Not Enough blog.  The premise is that the focus on administrative costs can do harm than good, and I agree with the author’s arguments.

This article from the Nonprofit Professionals Advisory Group is a nice wrap up of the President’s Stimulus plan and its possible effects for the nonprofit sector.  From helping organizations stay afloat to expanding others, there is a lot to know about the plan.

Our sector is not immune to questionable ethical decisions.  This article from the Stanford Social Innovation Review highlights some of the issues specific to the nonprofit sector and ways to promote ethical behavior in charitable organizations.

When groups talk about saving money all options should be on the table.  But eliminating Directors and Officers liability insurance is a risky option.  This article gives some good reasons why you shouldn’t cut it and some tips about judging your own coverage or shopping for other coverage.  Here is a good resource for D&O insurance and other organizational coverages.

Nonprofit Resources – Three helpful items

Have a question about a nonprofit issue?

BoardSource has a really nice Question and Answer section.  Some of the items are member only but there is plenty of free information available.  This site also has a bunch of Q&A’s here.

How does a nonprofit go out of business?

While there may be some state specific rules you’ll need to look up, the IRS recently published this piece on how to terminate an organization.

Private Inurement, Excess Compensation, Intermediate Sanctions, and Rebuttable Presumption

This free publication from GuideStar outlines what the IRS expects of charities and how we can comply with the rules that govern 501(c)(3) organizations.

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Posted in IRS, Nonprofit Accounting, Policies and Procedures, Q&A, Risk Management

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