Financial accountability lafayette 10-2011

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Financial accountability lafayette 10-2011

  1. 1. Financial Accountability for Nonprofits<br />Reduce Risk<br />Increase Confidence<br />Manage Compliance<br />October 18, 2011<br />Presenter<br />Miriam Robeson, Attorney<br />
  2. 2. Why Are We Here?<br />Information Level –Intermediate<br />Assumes some familiarity with basics of nonprofits<br />
  3. 3. Why Are We Here – Part 2The Horror Stories and Bad Press<br />
  4. 4. Why We are Here – Part 3The IRS<br />
  5. 5. What is Financial Accountability?The Board is Responsible for:<br />
  6. 6. Accountability<br />
  7. 7. Financial Accountability for Nonprofits<br /><ul><li>Compliance
  8. 8. Accountability
  9. 9. Best Practices
  10. 10. Risk Management
  11. 11. Danger Zones</li></li></ul><li>Compliance<br /><ul><li>Government and other technical requirements</li></li></ul><li>Compliance – State Requirements<br />
  12. 12. Compliance – State Requirements<br />
  13. 13. Compliance – State Requirements<br />
  14. 14. Compliance - Federal<br />Failure to file – automatic revocation of §501(c)(3) status<br />
  15. 15. Compliance – IRS Is your nonprofit “on the list?”<br /><ul><li>IRS Publication 78 – Cumulative List of Nonprofit Organizations approved by the IRS
  16. 16. http://www.irs.gov/charities/article/0,,id=96136,00.html
  17. 17. Go to IRS website and search “Publication 78”
  18. 18. Incorporation as a State (Indiana) nonprofit does not equal IRS nonprofit - 501(c)(3) - Status</li></li></ul><li>Compliance - Employment<br />
  19. 19. Compliance - UBIT<br />
  20. 20. Accountability - Financial<br />Handout – 10 Financial Priorities for Nonprofit Boards<br /><ul><li>Financial Policies
  21. 21. Financial Controls
  22. 22. Monitor appropriate use of nonprofit funds
  23. 23. Audit - review</li></li></ul><li>Accountability - Financial Governance Policies<br />Handout – Nonprofit Financial Control Policy<br /><ul><li>Policies for –
  24. 24. Handling Money
  25. 25. Recording Money
  26. 26. Reporting Money</li></li></ul><li>AccountabilityFinancial Controls<br />Handout – Document Destruction Policy<br />
  27. 27. Financial OversightWatch the money – Watch the people<br />Handout – 10 Tips for Keeping an Eye on Finances<br />
  28. 28. Accountability - Governance<br />Handout – Conflict of Interest Policy<br />
  29. 29. Accountability - Conflicts of Interest<br />Watch Appearance of Impropriety!<br />
  30. 30. Accountability - Personal Benefit<br />
  31. 31. Accountability - Ethics<br />
  32. 32. Nonprofit Ethical Issues - Examples<br /><ul><li>Improper donor acknowledgements
  33. 33. Donations of time are not tax-deductible
  34. 34. Donor “influence-buying”
  35. 35. Improper arrangements with donors
  36. 36. Failing to include both spouses in joint gift paperwork
  37. 37. Staff/ED/Board/Volunteer accepting gifts from donors
  38. 38. Failing to take responsibility (“Not My Fault”)</li></ul>Only 10% of the public<br />believes that charities are ethical<br />
  39. 39. Handout – Whistleblower Policy<br />More Examples - Ethics<br />
  40. 40. Transparency – Credibility to Public<br />Regularly provide information to the Public<br />
  41. 41. Time for a Break<br />
  42. 42. Risk Management for Nonprofits<br />Best Practices to Prevent Financial Crisis<br />Identify Risk<br />Ranks Risk<br />Identify Policies to manage risk<br />Implement protections<br />Implement procedures in event of crisis<br />
  43. 43. Risk Management – D&O Insurance<br />Directors & Officers Insurance Protects <br />the Board and Key Staff<br />
  44. 44. Risk Management PlanTypes of Risk to Manage<br />Handout – Risk Management Policy<br />
  45. 45. Handouts – 10 Ways to Catch Fraud and Mistakes from Outside<br />Handout – 15 Ways to Minimize Employee Fraud<br />Risk Management - People<br />Poor economy has resulted in an increase in criminal conduct against nonprofits<br />Embezzlement by employees<br />Embezzlement by officers<br />Fraud from “outsiders”<br />Phrase of the Day – “Trust But Verify”<br />
  46. 46. Fraud<br />Alert!<br />Nonprofits and FraudWhat to do when it happens to you!<br />
  47. 47. PR for NonprofitsPublic Relations During Fraud Crisis<br />
  48. 48. Preventing Fraud<br />
  49. 49.
  50. 50. Other Danger Zones<br />
  51. 51. Danger Zone - Lobbying<br />
  52. 52. Danger Zone – Charity Gaming<br />
  53. 53. What is “Charity Gaming?”<br />
  54. 54. Danger Zone - Abuse of Status<br />
  55. 55. Has Your Status Been Revoked?<br />Google: “recent IRS revocations”<br />http://www.irs.gov/charities/charitable/article/0,,id=141466,00.html<br />Comprehensive List of <br />“Automatic Revocations”<br />(organized by state)http://www.irs.gov/charities/article/0,,id=240099,00.html<br />
  56. 56. What if you LOSE nonprofit status?<br />
  57. 57. How can you recover NP Status?<br /><ul><li>Loss of Status cannot be reversed or appealed
  58. 58. Must go through re-application for tax exempt status
  59. 59. May include request for retroactive reinstatement to avoid taxes for “interim period”
  60. 60. Requires payment of user fee ($400 or $850)
  61. 61. Small nonprofits might be allowed to pay $100 user fee
  62. 62. Must write “Automatically Revoked” on application
  63. 63. If exemptions do not apply, must provide complete packet of information for re-application</li></li></ul><li>For More Information<br /><ul><li>IRS.gov – Exempt Organizations
  64. 64. Publication 557 – Tax Exempt Status Info
  65. 65. Publication 78 – Approved nonprofit list
  66. 66. Indiana Charity Gaming Commission
  67. 67. Indiana Secretary of State
  68. 68. Indiana Department of Revenue
  69. 69. Guidestar.org
  70. 70. Charity Navigator
  71. 71. Handout – Nonprofit Guide to Sarbanes-Oxley
  72. 72. Handout – For Further Reading
  73. 73. Handout – Where to Go for Government Compliance information</li></li></ul><li>Financial Accountability for Nonprofits<br />
  74. 74. Any Questions?<br />Thank you for your attention!<br />Miriam Robeson, Attorney<br />Today’s materials are available on Miriam’s Website: <br />http://blog.lawlatte.com/index.php<br />/upcoming-workshops/<br />

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