The IRS produces three very useful guides under Publication 4221 to summarize what exempt organizations (EOs) must do to maintain their tax-exempt status with the federal government.
We extend our heartfelt support to the communities impacted by Hurricane Helene in western North Carolina. We'll continue to share resources for nonprofits and how to help.
Form 990
Guide to Nonprofit Governance - A substantial 285 page document, intended to help guide nonprofit boards with understanding their responsibilities and establishing organizational policies. For more established boards, it can be referenced to help address any problems via a "Checklist for Directors of Troubled Not-For-Profit Organizations" and related parts of the document.
As a result of attending this session, you will be able to: (1) understand and apply the three lenses used to complete an impactful Form 990; (2) describe how the Form 990 is organized along with the purposes of each section; (3) differentiate which areas of the Form 990 receive increased attention from the IRS and use that to evaluate the overall effectiveness of your Form 990.
Watch now!
Nonprofits must establish that the executive compensation (salary and benefits for senior level personnel) provided at their organization is "reasonable and not excessive." The IRS recommends a three step process referred to as "rebuttable presumption" to substantiate the reasonableness of compensation offered by an organization and provides legal guidelines:
"An effective recordkeeping system enables an organization to monitor the progress of programs and aid in the preparation of financial statements and returns. If an organization does not keep required records, it may be unable to show it qualifies for exemption. Thus, the organization may lose its tax-exempt status. In addition, an organization may be unable to complete its returns accurately and may be subject to penalties."
- Who’s responsible for which kinds of oversight? The Board of Directors has overall legal responsibility for the financial health of your nonprofit. Board members need to understand key financial information and policies, and it’s recommended that they look at the following reports at least quarterly: Fiscal year budget (with comparisons to actual expenditures/revenue). Profit and loss statement (including programs).
In a meeting of the National Association of State Charity Officials (NASCO), the National Council of Nonprofits heard directly from a panel of regulators about what conduct can spook state charity regulators into conducting investigations of charitable nonprofits. This resource provides valuable reminders of how nonprofits can maintain their tax-exempt status through fastidious legal compliance.
Sample bylaws for a nonprofit with membership.
Sample bylaws for a nonprofit with a self-renewing board of directors.
Adapt from these sample bylaws only for organizations without members.