Frequently Asked Questions by Non-Profits, Part 2

May 7, 2015

In our role as advisors to non-profit organizations, we learned that many leaders have similar experiences. The April issue of our eNews featured an introductory article. In part two, we’ve included additional FAQs to provide guidance on common issues:

When are my federal and state tax filings due?

Federal Forms 990-N, 990-EZ and 990 have original due dates of the 15th day of the fifth month following the end of your fiscal year. An extension of an additional three months is available, and your organization can apply for a second three-month extension if necessary, making the final due date November 15 for calendar year organizations.

Form 990-T, if required, is due the 15th day of the fifth month with a six-month extension available.

Wisconsin Form 1952, which is required for organizations that solicit contributions, is due nine months after the end of the fiscal year with no formal extensions available.

My non-profit does not have in-house human resource help. Where do I go?

There are many great resources available to non-profit organizations; some are free, while others come with a cost based on the work completed.

While not always the best option, various government websites can also offer some insight and resources. For example, among the “free” options found on the web is the Kaiser Family Foundation. Kaiser is largely seen as an unbiased source of information. They have information on everything from the Affordable Care Act to information on Medicare and Medicaid.

An often overlooked option can come from the students and staff of local technical schools and universities that offer degrees in human resources. While students studying in this field do not have the experience of a veteran professional, they are studying the same laws and may be able to help with more administrative tasks with the support of their faculty. At Schenck, our team of professional human resource consultants is also capable of supporting your needs in areas like compensation, policy development, business planning, training and development. We are available and ready to support you and your business needs.

I am thinking of starting a non-profit. Where do I start?

Starting a non-profit organization is an exciting endeavor, and starting a successful non-profit organization requires proper planning no different than starting a for-profit business. The following steps offer a good starting point to establishing a successful nonprofit organization:

  1. Assess your community
  2. Find at least two other people who share your passion
  3. Create a three year budget
  4. Apply for a federal identification number, establish articles of incorporation and bylaws, and file Form 1023 or 1023 EZ
  5. Register with your state as a non-profit organization
  6. Apply for exemption from state sales tax
  7. Establish best practices and policies
  8. Perform a needs assessment.

For a more thorough discussion on these steps, please read our in-depth article on the topic.

A donor has included our organization in their will. Do I need to record this?

No. A will is not an unconditional promise to give to your organization, because the donor can make changes to their will any time prior to their death. A donor may use other planned giving instruments which may be considered an unconditional promise to give. Please contact a member of the not-for-profit industry team at Schenck to learn more about when planned giving may need to be recorded.

My organization receives government funding. Do we need an A-133 audit?

The new Omni Circular audit requirements will apply to all audits in the fiscal year beginning after December 26, 2014. The new guidance raised the threshold for entities that are required to have an A-133 audit from $500,000 to $750,000. As a result, under the new guidance, all entities that receive $750,000 or more of federal funding will be required to have an A-133 audit.

My organization is planning a special event. Do we need a gaming or raffle license?

Any activity that involves prize, chance and consideration would require the organization to obtain a raffle license from the Wisconsin Department of Administration. Visit the Wisconsin Department of Administration website for more information.

My organization needs to adopt a conflict of interest policy. Where do I start?

The Internal Revenue Service has provided a sample conflict of interest policy in the appendix of the Form 1023 instructions available on their website. If you need assistance in complying with your policy or collecting information from your board of directors, please contact your Schenck representative.

Can I prepare my financial statements on cash basis?

Yes; however, if your organization is required to provide a reviewed or audited financial statement, it will most likely need to be prepared according to generally accepted accounting principles which require the accrual method of accounting. For example, if your organization is in Wisconsin and receives annual contributions equal to or greater than $200,000, the reviewed or audited financial statements provided to the state annually must be prepared according to accounting principles following the accrual method.

Please a member of Schenck’s not-for-profit team, for more information on any of the issues above.