August 11, 2016

Paper, Paperless, Past, and Future - How Should Nonprofits Handle Documents?

Nonprofits are increasingly going paperless with their documentation, and all organizations should have protocols for addressing document management, retention, and destruction.  So how should responsible nonprofit organizations develop new document retention policies or upgrade their old policies, in light of technological advances and legal compliance requirements?  Key aspects including clear guidance for nonprofit workers, liability-related issues, related best practices, IRS Form 990 reporting requirements, important accessibility considerations, and data security.

Why do we need a document retention policy?

The most basic answer is that a document retention policy provides clear instructions for a nonprofit’s governing body and staff as to which records must be kept, for how long, and whether some or all records may be stored electronically instead of physically. The retention periods associated with specific records are generally tied to the statute of limitations for actions that could arise under state or federal laws.  The time frames can vary widely from one year to permanent retention.  Without clear guidelines, a nonprofit will often fail to retain important records needed for appropriate legal, tax, or accounting protection.  As an organization grows and more employees and volunteers are involved in handling records, the need for a uniform and clear policy becomes critical.  

Governance
August 3, 2016

FAQs: IRS Requirements for Private School Racial Nondiscrimination Policies

Since the early 1970s, the IRS has embraced racial nondiscrimination requirements as an express condition of Section 501(c)(3) status for private schools.   Such racial nondiscriminatory policy must be well publicized and applies to all facets of student life:  admissions, financial aid, and all school programs.  Here’s what leaders at private schools need to know about the policy requirements, legal compliance, and related practical aspects.

1.         How did the IRS develop this racial nondiscriminatory policy requirement?  

The origins of today’s nondiscrimination policies for schools date back to the landmark Supreme Court 1954-decision, Brown v. Board of Education, which ruled separate public schools for black and white students unconstitutional.  In 1970, the IRS extended the racial nondiscrimination laws beyond public schools by creating an internal policy mandating that all private schools seeking to qualify for Section 501(c)(3) tax exemption must operate on a racially nondiscriminatory basis.  The policy was formalized in 1975, when the Service issued Revenue Procedure 75-50, which sets forth the racial nondiscriminatory policy requirements for private schools exempt under Section 501(c)(3).

Governance/Tax Exemption
May 16, 2016

Keeping Track of Nonprofit Governmental Filings: 990s, Annual Reports, Taxes, and More

Is your nonprofit up to date on its government filings?  Many nonprofits have recently filed their IRS Form 990 annual information returns.  But several more government filing and reporting requirements may apply for nonprofits, in distinctly separate legal compliance areas.  The following is a list of federal and state requirements, along with some recommendations for staying on top of these important matters.   

A.             Key Government Filings

In many ways, nonprofits operate like any business – and businesses have plenty of government compliance obligations.  The specific types of compliance may vary, however, given a nonprofit’s nature and the state in which it operates.  The key regular filings are as follows:

1.              IRS Form 990:  Every Section 501(c) tax-exempt nonprofit must file a version of the IRS Form 990 information return.  Organizations with less than $50,000 in annual revenues are generally eligible for the very simplified Form 990-N, which must be filed online.  Other nonprofits must file the Form 990-EZ, which calls for minimal financial and program activity, or the Form 990, which is quite extensive and should be completed with professional assistance.  The Form 990 is due within four and a half months after the organization’s fiscal year-end (i.e., by May 15 for a calendar fiscal year).  An organization’s late-filed Form 990 may result in unpleasant financial penalties.  Further, an organization’s failure to file a Form 990 for three consecutive years will result in automatic revocation of its tax-exempt status, and therefore a new obligation to file Form 1120 corporate tax returns (unless the organization is able to get its tax-exempt status retroactively reinstated).

Governance/Tax Exemption

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