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Sunday, October 12, 2014

Nonprofit: Bits and Pieces


There is a lot of miscellaneous news about the nonprofit industry to report, so I have broken it down into bits and pieces for you.

Tax Exempt Applications
As a follow-up to the story that seemingly will never end, the IRS has announced it will no longer screen approximately 80% of the organizations seeking tax-exempt charitable status each year.

A change which will ease the creation of small charities while doing away with a review intended to counter fraud and prevent political and non-charitable groups from misusing the tax code.

As of July 1, any group that pays a $400 fee and declares on a three-page online form that it has annual income of less than $50,000, total assets of less than $250,000 and is in compliance with the tax-code requirements of a charity will automatically be allowed to accept donations that are tax-deductible for the donors.

Top 10 Major Donor Fundraising Trends
And no, the ice bucket challenge is not among these (but at $20mm – and counting – incoming for ALS, it may be in next year’s). Check out the Fired-Up Fundraising blog at www.gailperry.com for some trends you may not have seen coming, like the introduction of the boomer generation who are now 34% of all donors but provide 43% of all the money. Interesting reading.

California Raises the Bar on Suspending Exempt Entities
The California Franchise Tax Board (FTB) has one-upped the IRS in its ability to suspend the activities of an exempt organization possibly resulting in a revoked exemption. The three primary ways range from tasks as mundane as failure to file the annual Statement of Information with the Secretary of State, to as vague as failure to pay an amount due or as obvious as failure to file any past due tax returns with the FTB. Reinstating a revoked tax exempt status isn’t a lot of fun so even the mundane must now be given stricter attention.

Visit www.ftb.ca.gov/businesses/exempt_organziations/suspended for more information.

How Tax Exempt is a Tax Exempt Entity?
Armanino issued a recent email blast which addressed the sales and use tax requirements of tax exempt entities as explained in the California Board of Equalization its recent Publication 18. This answers many questions we get on a daily basis.

Accounting for Restricted Monies
All has been quiet on the “new proposed accounting standards” desk for a while. It doesn’t mean they aren’t busy coming up with new proposed standards—but it does mean that the new exposure drafts keep getting postponed. What can be ascertained by the most recent Board minutes is that whenever this new promised exposure draft surfaces it will certainly include the elimination of the three categories of net assets we have grown to love (unrestricted, temporarily restricted and permanently restricted). Instead these will be replaced by two categories— unrestricted and restricted. There has also been talk of mandating a more operations-oriented set of financial statements so that the true operations are not clouded by investment earnings and other non-operating items. We will keep you in the know when we become in the know.

Single Audit Thresholds
The single audit threshold will be raised from $500,000 to $750,000 effective for single audits of years beginning on or after January 1, 2015.

Nonprofit Fraud
Did you realize that the nonprofits are the #2 sector affected by embezzlement frauds (before you ask—financial institutions are #1). Who are these people? How do they perpetrate the fraud? Many of these questions will be answered in our upcoming fraud seminar.

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