“When the going gets tough, the tough get going” Will your organization rise to the top or will it buckle under the pressure of an unstable economy?  Most likely, you would prefer the latter, but in order to “get going” it’s imperative that an organization utilize strategies that are both low cost and effective. 

Social networking, press releases, blogging and article writing are all ways to spread your brands image across a variety of mediums without breaking the bank.  If you take the time to learn and then execute each of these marketing strategies, they can provide any organization a maximum return on little investment.

Does your organization “RT” the latest tweets in your industry? If you have an upcoming event, do you update your “wall” with the details? Is your nonprofit “In” the network with other fundraisers, charities and donors? If the previous three questions went completely over your head, it is what you call social media and it has completely re-shaped the realm of marketing. Currently, there are well over 50 different of social networking sites including: Facebook, MySpace, Twitter, Plaxo, Mixx, LinkedIn, Tribe, Ryze, Digg, Reddit, Squidoo, Flickr, Freindster, Bebo, YouTube, Tagged, Xing, and the list goes on and on and on.  The key is to gain a presence on as many sites as you can maintain; meaning regularly capable of adding fresh content, interesting updates and organizational news.  Ideally and realistically, this will be around five to ten sites. If your organization does not already have a presence on at least three of the top social networking sites then now is the time to “get going” on the social media wave.

Press releases are more effective than ever and, if done right, can deliver better pick-up with traditional media outlets, new media outlets and even get directly to consumers. How would you like your annual Gala event to be plastered in front of 200,000 eyes in color, in sound and in action?  Accomplishing this means providing your local media with a newsworthy press release.  Local reporters are constantly on the prowl for the latest happenings in the area that will generate interest from the community.  While you may not be guaranteed a feature package every week, a few sound-bites and video on the evening news would get you free publicity that reaches thousands.  Additionally, to stay competitive in the market today you need to be searchable, believable and credible.  Press releases help you to promote these goals.

An organization’s blog can provide commentary or news on your specific organizations interests, beliefs, positioning on current news.  As a nonprofit it is important to start your blog early because this can be one of the most cost effective ways to reach followers of your organization.  As your organization grows so will your number of followers and those who become faithful will appreciate your information and possibly become a future donor. One of the best characteristics of a blog is that it’s not necessary to be a professional author or a multi-million-dollar company to have a blog.  All you need is opinions, information and insight in your cause.  If you prove to be genuine and knowledgeable your readers will notice and your blog will become one of the most cost effective marketing tools your organization could invest in.  If you have a sincere message, as most nonprofit organizations do, now is the time to “get going” on an organizational blog.

Spreading your organization’s passion to others is what builds the foundation for most nonprofits.   Writing articles for your organization is a great way to disseminate your mission to current and future donors, plus it will build your organizations credibility as an expert source for your cause.  Furthermore, blasting these articles out to websites, directories and news outlets will increase link-backs to your website, making your organization easier to find on the web.  Writing an effective article requires an understanding of professional writing and AP standards along with the capability to merge SEO tactics throughout the body of your article.  To “get going” with writing articles may be a bit trickier than writing for a blog, but with a little practice or help from a professional writer, your organization can be on its way to expert article status.

“When the going gets tough, will your organization get going?” Using the above strategies will give you the tools to get started; it is how you execute them that will determine the results you will receive.  Finally, keep in mind that every method will not deliver results right away, but not giving up and pushing forward through the storm is what will set you apart from other organizations.

Your dream has become a reality. The cause that is your passion has been transformed into a functional organization. You′ve established a board, clarified your mission, adopted bylaws, incorporated, and achieved 501(c)(3) status from the Internal Revenue Service. After such exhaustive effort has been expended, it would be senseless to allow the organization to lose its exempt status or even become administratively dissolved for failure to uphold administrative compliance. Thus, knowledge is power-organizational administrators must be diligent in educating themselves on all state and federal regulations.

First and foremost, it is important to recognize that almost all forms of regulatory compliance will be difficult without the maintenance of adequate financial records. It is imperative that administrators document all sources of receipts and expenditures. A sufficient donor database is ideal. It is also critical to retain all supporting documents, such as grant applications and awards, sales slips, paid bills, deposit slips, and cancelled checks. This will allow for easy preparation of financial statements, include statements of activities (income statement) and statements of financial position (balance sheet).

A 501(c)(3) organization′s annually mandated filing with the IRS is the form 990. All organizations are now required to file, regardless of revenue; however the version of the form will differ based upon the year′s receipts. The filing is due on the 15th day of the 5th month after the fiscal year end  (For example, if the fiscal year ends December 31, the 990 is due on May 15th), but it may be submitted anytime after the fiscal year end. To remain in full compliance, administrators must be aware of all forms that must be filed, i.e. the 990-T for unrelated business income, and special filing requirements for supporting organizations.

In addition to annual reporting, organizations with paid employees will be faced with additional quarterly filings. Like all employers, charities who pay wages must withhold, deposit, and pay employment taxes, including federal income tax, Social Security, and Medicare. This must be done for each individual paid more than $100 per year and reported on form 941.

In addition to IRS compliance some states, though not all, will require annual state level tax filings. Upon commencement of the activities, you′ll need to be sure to obtain state level sales and income tax exemptions, if they are available in your state. If the organization is not granted state exemption, they must file and pay taxes! In some states, even organizations exempt from state taxes must still file some sort of annual return.

In addition to state tax considerations, each year the organization must file an annual report with their state to remain an active corporation. While these forms typically require a minimal amount of information, failure to file may lead to an administrative dissolution of the organization.

A final state level compliance issue to remain abreast of is concerned with charitable solicitation registration requirements. Such laws have been implemented in most states in an effort to protect consumers, and the statutes require charitable organization to register and become licensed prior to the initiation of any solicitation activities. These registrations typically require annual renewal, and come with stiff penalties for violations. If an organization will solicit in more than one state, a valid registration must be in place in each state where representatives will seek donations.

Possibly most importantly, you must remain aware of what activities may jeopardize your exempt status. The most common offenses that lead to the revocation of a 501(c)(3) are private inurement and political campaign intervention. Private inurement occurs when an insider receives excess benefit from the existence of the organization, either in the form of direct financial gain or in more indirect means such as the provision of business to a for-profit in which an insider has an ownership interest. Excess benefit may also occur in transactions with outsiders, however the benefit in the situation must be substantial. Lobbying activities, or attempts to influence legislation, may be conducted; however these activities must be kept to a minimum.

501(c)(3) nonprofits are also strictly prohibited from undertaking any political campaign intervention. While organizations may provide voter education or a review of the issues supported by all candidates, a public charity may not, directly or indirectly, support or oppose any candidate for political office.

Finally, organizations must be diligent in filing annual returns on a timely basis each year. Not only can the IRS revoke the exempt status of any organization that fails to file returns for more than two years, it also reserves the right to impose penalties upon late filers. While an organization may not owe any taxes, the standard penalty for late filing of the annual information return is $20 per day, up to a maximum of $10,000.

Remaining in compliance after attainment of 501(c)(3) status may seem a daunting task; however with careful attention and cooperation of organizational administrators, public charities can function successfully and fulfill their missions abundantly.

Technorati Profile



&title=“>

Wow! 2009 is rapidly moving along already. It seems as if I was just anticipating Christmas, and now January has almost escaped me. For those of us in the nonprofit sector, just like all those individuals out there anxiously anticipating refunds, this time of year brings with it the joys of tax season as well. While most nonprofits classified under IRC 501(c)(3) are exempt from paying any federal income taxes, barring any unrelated business income, we still must be diligent in filing our annual information returns.

As I””m sure you””re aware, the 2008 Form 990 is a highly revised document. Many who have effortless (yeah, right) filed their organization”’’s 990 each year will have to undertake new training to understand all the changes that are made to this year”’’s form. The biggest areas of revision are compensation detail and a section on organizational governance. While the new form, which consists of an 11 page core form followed by 16 schedules, can seem daunting; with a little study time or the assistance of a professional you can effortlessly make it through yet another reporting period. Keep in mind that the returns are due by the 15th day of the 5th month following your fiscal year”’’s end, and avoid those dastardly $20 per day late penalties.

Good luck!

It’s that time again! Tax season is right around the corner! As I’m sure you’re aware, as of the 2007 fiscal year all nonprofit organization, regardless of revenue, are required to file an annual return with the Internal Revenue Service. In addition to that change, the IRS has established new filing guidelines and revised forms for this 2008 tax year. The IRS issued an updated version of Form 990, and provided transition relief so that small exempt organizations will have time to adjust to the new form.

The final form contains a redesigned format, consisting of a core form and a series of schedules. In response to public comments, the new core form allows an organization to describe its exempt accomplishments and mission up-front and provides more opportunities throughout the form for the organization to explain its activities. Other major changes were made to the form’s summary page, governance section, and various schedules, including those relating to executive compensation, related organizations, foreign activities, hospitals, non-cash contributions and tax exempt bonds. A checklist of schedules was also added.

The IRS also announced a graduated transition period for smaller organizations. These organizations will be allowed to file the Form 990-EZ instead of the Form 990. For the 2008 tax year, organizations with gross receipts over $1.0 million or total assets over $2.5 million will be required to file the Form 990. For the 2009 tax year, organizations with gross receipts over $500,000 or total assets over $1.25 million will be required to file the Form 990. The filing thresholds will be set permanently at $200,000 gross receipts and $500,000 total assets beginning with the 2010 tax year. Also, starting with the 2010 tax year, the IRS will increase the filing threshold for organizations required to file Form 990-N from $25,000 to $50,000.

The IRS also announced a phase-in of the form’s new hospital and tax exempt bond schedules. Certain identifying information will be required for the 2008 tax year, with completion of the entire schedules required for the 2009 tax year. In response to the nonprofit sector’s safety and security concerns regarding disclosure of certain foreign workers and volunteers, the IRS revised the form to permit reporting of foreign activities by region, rather than by country, until other safeguards may be implemented to protect the privacy interests of such persons.

All sound like a lot to tackle? Well, it may be. But that’s where the assistance of an experienced nonprofit accountant comes into play. If you need our help, we’re here for you.

In times where our current economic crisis is adversely affecting charitable giving in the U.S., it is more important now than ever for nonprofit administrators to develop cost-effective methods of marketing their services, recruiting volunteers, fundraising, and cultivating donors. One such method to affordably undertake such critical activities is to become involved in Web 2.0.

As defined by TechSoup, Web 2.0 is a category of new Internet tools and technologies created around the idea that the people who consume media, access the Internet, and use the Web shouldn’t passively absorb what’s available; rather, they should be active contributors, helping customize media and technology for their own purposes, as well as those of their communities. These new tools include, but are by no means limited to, blogs, social networking applications, RSS, social networking tools, and wikis.

But Web 2.0 isn’t just the latest set of toys for geeks, it’s the beginning of a new era in technology — one that promises to help nonprofits operate more efficiently, generate more funding, and affect more lives. Websites such as Myspace, Facebook, Twitter and LinkedIn are becoming vital networking tools for nonprofits. Additionally, there are sites springing up that are geared specifically at the nonprofit audience, such as Care2 and Blue Goose. More and more nonprofit leaders are blogging to keep their constituents up to date with the organization’s activities. Overall, it is apparent that nonprofits are realizing the value of such tools, both quantitatively and qualitatively. Is your organization on board with Web 2.0?

Charitable gaming is one of the most common and successful methods of fundraising for many tax-exempt organizations. However, careful attention to regulations is imperative. Charitable gaming activities may include, but are not limited to:
• Bingo
• Beano
• Raffles
• Lotteries
• Pull-tabs
• Scratch-offs
• Pari-mutuel betting
• Calcutta wagering
• Pickle jars
• Punchboards
• Tip boards
• Tip jars
• Video games

In order for your gaming fundraiser to be successful without jeopardizing the organization’s funds or, more importantly, their exempt status, all exempt organizations conducting or sponsoring gaming activities, whether for one night out of the year or throughout the year, whether in their primary place of operation or at remote sites, must be aware of all state and federal regulations concerning gaming activities.

Lawful gaming ordinarily requires a gaming license from the state that conducts it. Most states require that an organization be recognized by the IRS as exempt from federal income tax before issuing a license, and many states limit licenses to organizations recognized under specific subsections of Code section 501(c), such as 501(c)(3), 501(c)(4), and 501(c)(19). Additionally, many states make stipulations regarding the length of time an organization must be in operations and/or the specific areas and methods by which gaming sales may be conducted, thus it may be best to consult a professional nonprofit consultant to review the statutes in your area prior to commencing a gaming activity.

As far as the IRS is concerned, for almost all tax-exempt organizations, including 501(c)(3)s, gaming activities do not further an exempt purpose. This is true even if all proceeds from gaming will be used to fund exempt purposes. The result of such ruling is that the revenue generated from gaming is ordinarily subject to unrelated business income taxes. One exception is in North Dakota, where income from lawful gaming is excluded from UBI tax regulations.

An important consideration when conducting charitable gaming activities is the need for diligent recordkeeping. Organizations conducting gaming generate a substantial amount of income at each session, primarily in the form of cash. The cash passes through many hands, which could result in numerous abuses. Thus, every organization should be actively involved in overseeing and controlling each facet of the gaming activity to insure funds are not diverted to private individuals or for private purposes. Organizations conducting gaming activities must maintain records of gross income, prize payouts, and disbursements to substantiate the information submitted on the informational return, Form 990, and the income tax return, Form 990-T. Gross income from gaming activities is determined before any deduction for prizes, taxes, or any other expenses is taken. Additionally, the organization must retain and submit taxes frm the winnings. State and local laws may contain additional recordkeeping and reporting requirements for organizations conducting gaming.

If an organization is selling goods or services to generate income, even if it is conducting the activity within a larger group of activities related to its exempt purpose, the activity is a trade or business. It is important that you file the correct return and pay taxes on this income.

Sales of merchandise, publications, and other media can generate UBI if the items sold are not substantially related to the organization’s exempt purposes. If the items do have a substantial relationship, then the sales do not generate UBI, but their relationship to the exempt purpose must be clearly identifiable.

For example, the sale of educational videos or publication subscriptions by an animal welfare group would be substantially related if the content of those videos or publications promotes the organization’s exempt purpose. If the same animal welfare group sold pet accessories and apparel, the sale of these items would generate unrelated business income.

Exceptions and Exclusions

• Volunteer Labor: Any trade or business is excluded in which substantially all the work is performed for the organization without compensation. Some fundraising activities, such as volunteer operated bake sales, may meet this exception.
• Convenience of Members: Any trade or business is excluded that is carried on by an organization described in section 501(c)(3) or by a governmental college or university primarily for the convenience of its members, students, patients, officers, or employees. A typical example of this is a school cafeteria.
• Selling Donated Merchandise: Any trade or business is excluded that consists of selling merchandise, substantially all of which the organization received as gifts or contributions. Many thrift shop operations of exempt organizations would meet this exception.

If you have questions or concerns about whether your planned activity may generate UBI and thus subject you to taxation and/or jeopardize your tax exempt status, you may want to seek consultation with a nonprofit expert.

For many small startup nonprofits, learning the ins and outs of nonprofit operations, especially as an organization exempt under IRC 501(c)(3), can be overwhelming. However, it may be best to first begin to acquire knowledge of what activities have the potential of jeopardizing the exempt status that you have worked so diligently to achieve. Four primary types of activities exist that may result in revocation of an organizatio’s tax exempt status: Private Inurement, Lobbying, Political Campaign Intervention, and Unrelated Business Income.

Private benefit/inurement

The prohibition of inurement to insiders is absolute. Any amount of inurement is grounds for loss of tax-exempt status. In addition, the insider involved may be subject to excise tax.
In contrast, if the activities of an organization privately benefit someone who is not an insider, that benefit must be substantial in order to jeopardize the organization’s tax-exempt status.

Lobbying

Lobbying is activity designed to influence legislation. A 501(c)(3) is attempting to influence legislation if it contacts, or urges the public to contact, a member or employee of a legislative body to propose, support, or oppose legislation, or if the 501(c)(3) advocates or opposes legislation.

Political campaign activity

501(c)(3)s are prohibited from engaging in any “political campaign activity”—that is, directly or indirectly participating or intervening in any political campaign on behalf of or in opposition to any candidate for public office. This includes making contributions to political campaign funds or making public statements for or against the candidate. The prohibition of political campaign activity is absolute.

Activities generating excessive unrelated business income (UBI)

UBI is income from a regularly-carried-on trade or business that is not substantially related to the organization’s exempt purpose.

If you have any concerns as to whether or not your ongoing or planned activities may place your organization’s tax privileges in jeopardy, I’m here to help.

I believe steadfastly that nonprofit Boards should be fully contributing. However, in addition to contributing cash to their organizations, members of the Board of Directors should also assist in the generall fundraising efforts. When determining whether or not to fund your organization, in many cases funders will consider three questions:

1. What percentage of the board is contributing to the organziation? (the answer should be 100 percent)

2. How much, in total, does the organziation receive in board contributions? (the answer should be a substantial portion of individual contributions, perhaps 20 percent)

3. How active is the board in soliciting funds? (the answer should be very active)

While not all trustees feel comfortable in asking for money, they still can be involved in the general fundraising endeavors. For those not at ease with direct solicitation there are other activities. These may include working on a special fundraising event, updating mailing lists, undertaking analysis of donor records, writing personalized fundraising letters, researching funding sources, or hosting fundraising luncheons. There are plenty of tasks for everyone.

The most important reason why your board should be active in fundraising is because people give to people, and especially peers give to peers. To the extent that board members are active within the community, are givers themselves, and are not afraid to ask for money, the organization will be more successful in the fundraising effort. Futher, the fiscal health of the organization may depend on the extent that the board feels the income gap is their responsibility. Thus, board involvement in revenue procurement is one way that the funding community takes the measure of the organization’s vitality and health.