Form 990 Archives - Page 2 of 3 - Gordon Fischer Law Firm

COLLEGE FOOTBALL NATIONAL CHAMPIONSHIP IS TONIGHT.

I CAN PREDICT ONE THING FOR CERTAIN: ALL IOWA NONPROFITS CAN LEARN A VERY IMPORTANT LESSON!

For two formidable teams (Washington Huskies versus Michigan Wolverines in the College Football National Championship), it’s the culmination of a season. It’s been a grueling schedule with tons of variables from pre-season training camp to the regular season kick-off to the playoffs.

With absolute certainty however, I can predict one thing about tonight’s Big Game. That is, each team will have proper equipment, including helmets, cleats, shoulder pads, knee pads, gloves, mouth guards, and so on. And the referees, too, will be sure to have zebra shirts, whistles, yellow flags, and chain markers.

For a nonprofit to operate without having proper policies and procedures in place, is like playing the Big Game without any of the aforementioned equipment!

Without certain policies in place, a nonprofit simply cannot run properly. Without the right apparatus in place, there can be no expectations. Board members, officers, staff, donors, volunteers, and other stakeholders must work to ensure they’re scoring and not fumbling. Give your stars the protection they need, and the tools they require, to be a winning team.

WHERE TO START?

From working with a wide range of nonprofit clients, I’ve learned that many want proper policies and procedures, but they are simply stymied or confused on where to start. That’s where an attorney well-versed in nonprofit law can come in.

Many nonprofits have to fill out an annual form, IRS Form 990. Form 990 is unique in that it not only asks about financial information but also many of its questions directly ask about policies and procedures. There are at least 10 major policies asked about on Form 990.

SPECIAL OFFER!

I offer 10 major policies and procedures nonprofits definitely need for a flat fee of $990. This includes consultations and a full review round to make sure the policies and procedures fit the needs and operations of your particular nonprofit. Adopting the policies explained in this guide will ultimately save your nonprofit organization time and resources, and you can feel great about having a set of high-quality documents to guide internal operations, and present to the public.

ALL NONPROFITS NEED THESE 10 POLICIES

Whether a nonprofit is large or small, new or decades-old, or has a narrow or multi-faceted mission, all nonprofits should have these policies in place.

Yes, these policies are asked about on Form 990, but even if a tax-exempt organization is not required to submit a variation of the 990, the benefits are still immense. In general, having policies in place provides a framework and the expectations for an organization’s executives, employees, volunteers, and board members. Such policies can also be referenced if/when issues arise.

Another major reason to have proper policies and procedures in place is that they provide a foundation for soliciting, accepting, and facilitating charitable donations.

Additionally, investing in strongly written, organization-specific policies is a practice in preparation in case of an audit. (The IRS audits tax-exempt organizations, just as it audits companies and individuals).

POLICY HIGHLIGHT

Among the major policies and procedures included in my special 10 for 990 offer are the following:
(You can also download my free guide with more extensive information and explanations regarding these policies and procedures.)

COMPENSATION

The IRS recommends a three-step process for determining appropriate compensation: conduct a review of compensation at (1) similarly-sized peer organizations, (2) in the same or similar geographic location, (3) with comparable positions.

CONFLICT OF INTEREST

A conflict of interest policy should do two important things: (1) require board members with a conflict (or a potential conflict) to disclose it, and (2) exclude individual board members from voting on matters in which there is a conflict.

If consistently adhered to, this policy can inspire internal and external stakeholder confidence in the organization, as well as prevent potential violations of federal and state laws.

DOCUMENT RETENTION AND DESTRUCTION

The document retention policy should specify what types of documents should be retained, how they should be filed, and for what duration. This policy should also outline proper deletion/destruction techniques.

FINANCIAL POLICIES AND PROCEDURES

This specifically addresses guidelines for making financial decisions, reporting the financial status of the organization, managing funds, and developing financial goals. The financial management policies and procedures should also outline the budgeting process, investment reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place.

FORM 990 REVIEW

Form 990 asks about . . . . Form 990! That’s about as meta as the IRS gets. Specifically, this policy covers how Form 990 was prepared and how it was approved. A written policy is incredibly useful in clarifying a specific process for distribution and procedure review by the board of directors.

FUNDRAISING

This one may seem obvious, but almost every nonprofit needs a fundraising policy, as almost all nonprofits engage in some sort of charitable fundraising. Your organization is no exception! This policy should include provisions for compliance with local, state, and federal laws, as well as the ethical norms the organization chooses to abide by in fundraising efforts.

GIFT ACCEPTANCE

If well-written and applied across the organization, the policy can help the organization to kindly reject a non-cash gift that can carry extraneous liabilities and obligations the organization is not readily able to manage.

INVESTMENT

Before investments are made on behalf of the organization, there should be a sound investment policy in place to define who is accountable for investment decisions. The policy should also offer guidance on activities of growing/protecting the investments, earning interest, and maintaining access to cash if necessary.

PUBLIC DISCLOSURE

Form 990 specifically asks the filing organization to report if certain documents are made available to the public, such as governing documents (like the bylaws), conflict of interest policy, and financial statements. Additionally, the form asks for the name, address, and phone number of the individual(s) who possesses the financial “books” and records of the organization.

WHISTLEBLOWER

Nonprofits, along with all corporations, are prohibited by the federal government from retaliating against employees who call out, draw attention to, or “blow the whistle” against the employer’s practices. This policy outlines the steps an organization will take to investigate allegations and protect whistleblowers.

KEEPING UP-TO-DATE

If you already have some (or all) of the above-listed policies in place, seriously consider the last time they were updated. How has the organization changed since they were written? Have changes to state and federal laws impacted these policies at all? It may be high time for a new set of policies that fits your organization.

WHY 10 FOR 990

The mission of Gordon Fischer Law Firm is to promote and maximize charitable giving in Iowa, and to that point, I want to help every Iowa nonprofit be legally compliant. It’s like how the coach wants to do everything they can to help their team win on the field. The 10 policies a part of this promotion will save you time, and resources and you can feel good about having a set of high-quality policies to guide internal operations and present to the public.

Again, for now, I’m offering these 10 policies—including needed consultations—for the low flat fee of only $990. Contact me anytime at gordon@gordonfischerlawfirm.com. I look forward to discussing your tax-exempt organization’s needs and how we can set you up for compliance
success to be nonprofit champions!

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January 8, 2024/by Lexi Luneckas

SUPER SPECIAL SALE:

FOR IOWA NONPROFITS, THE TEN (10) POLICIES WHICH APPEAR ON IRS FORM 990 FOR ONLY $990

Nonprofits

$990 FOR THE TEN POLICIES ON FORM 990

Every year, Iowa nonprofits must complete and file IRS Form 990, essentially the “tax return” for nonprofits. The “long version” of Form 990 expressly refers to ten (10) policies, briefly discussed below. While the IRS says it doesn’t require nonprofits to adopt these ten policies, the IRS is clearly signaling what it considers to be “best practices.”

All Iowa nonprofits should adopt (or revise and update) these critically important policies.

I provide Iowa nonprofits with the ten documents for the flat fee of $990 (nine hundred and ninety dollars). The flat fee of $990 includes as many conferences with me as you deem reasonably necessary.

The ten policies which appear on IRS Form 990 include (in alphabetical order):

Compensation — formalizes the process of determining compensation that is reasonable and not excessive, while also rewarding enough to attract and retain the best possible management and staff
Conflict of Interest — assists the organization in avoiding financial or other material benefits flowing to individuals in positions of authority in the nonprofit, and protects it against charges of impropriety involving officers, directors, employees, volunteers, and other stakeholders
Document Retention and Destruction — defines what types of documents should be retained, duration of storage, and how documents should be filed/stored for tax, business, and other regulatory purposes
Fiscal — specifically addresses guidelines for making financial decisions, reporting the financial status of the organization, managing funds, and developing financial goals. This policy should also outline the budgeting process, reporting on investments, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place
Form 990 Review — governs the process for distributing IRS Form 990 to the Board of Directors for review and approval, and identifies any areas that need particular scrutiny
Fundraising — guides compliance with local, state, and federal laws, and defines the organization’s own fundraising criteria
Gift Acceptance — evaluates non-cash gifts, such as identifying non-cash gifts which could and should be accepted and under what circumstances, and offers guidance on how to decline gifts with liabilities and obligations the organization is not able to sufficiently manage
Investment — determines accountability for investment decisions, offers guidance on growing and protecting investments, and governs overall financial management decisions
Public Disclosure — establishes which organizational documents (other than those required by law) will be made publicly available
Whistleblower — sets a formal process for grievances (including protection) to encourage sound and swift responses to complaints, and to protect the organization from knowingly (or unknowingly) violating state and/or federal laws

I have a longer discussion of these ten policies here.

Again, I’ll draft these ten policies for Iowa nonprofits for a flat fee of $990.

Of course, I must always reserve the right to decline representation of any person or entity, for any reason (or even no reason).

If your favorite Iowa nonprofit wants to talk about this super special sale, please email me:
gordon@gordonfischerlawfirm.com

I look forward to hearing from you. Thank you.

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YOUR FAVORITE NONPROFIT NEEDS THESE TEN (10) POLICIES

January 3, 2024/by Lexi Luneckas

YOUR FAVORITE NONPROFIT NEEDS THESE TEN (10) POLICIES

Nonprofits

I. INTRODUCTION

Happy New Year! A great way to start 2024 for Iowa nonprofits? Adopt the ten (10) policies referenced on IRS Form 990, as discussed fully below.

II. IRS FORM 990

Every nonprofit, every year, must complete and file a version of Form 990, which the IRS calls its “Return of Organization Exempt From Income Tax.” The “long” version of Form 990 asks about many financial matters – donations, money on hand, non-cash assets, breakdown of expenses, and so on.

Form 990 goes even further however, and asks nonprofits if they have certain policies in place. In fact, there are ten (10) specific policies that the IRS asks about on Form 990.

To be clear, the IRS does not mandate adopting these ten (10) policies. But the IRS, at least to me, is signaling what policies nonprofits should have in place. Again, my read of Form 990 is that the IRS is showing nonprofits what it considers to be “best practices.”

III. REASONS FOR THESE TEN (10) POLICIES AND THEIR BENEFITS

One might ask, if these policies are not absolutely required, why have them?

Generally, these ten (10) policies provide substantial benefits, including, but hardly limited to:

Enhanced confidence of donors and other stakeholders
Consistent framework for decision making
Increased compliance with federal, state, and local laws
Reduced risk to the nonprofit and its management and governing board

The existence of policies doesn’t mean compliance is always assured of course, but having policies in place provides a framework and sets expectations for a nonprofit’s board members, employees, donors, volunteers, and other stakeholders. Such policies can be referenced if (when) issues arise.

Another major reason to invest in adopting these policies is because the IRS audits tax-exempt nonprofits, just as it audits companies and individuals. Having certain policies in place will only serve to benefit the nonprofit should it happen to be audited. Also, proper policies provide a foundation for soliciting, accepting, and facilitating charitable donations.

Last, but not least, Form 990 is made accessible to the public, meaning it can be used as a public relations tool if filled out diligently. Major donors can and often do review a nonprofit’s Form 990 to ensure the nonprofit is compliant, putting charitable donations to good use, and continuing to operate in alignment with its overall mission.

IV. WHAT POLICIES ARE WE TALKING ABOUT?

The IRS made a major revision to Form 990 in 2008. The old version focused largely on financial data. Now, Form 990 reports extensive information on operations such as board governance, fundraising, non-cash assets, and more. Let’s cover all ten (10) policies the IRS asks nonprofits to report on in its Form 990. I’ll discuss each policy in alphabetical order.

1. COMPENSATION

Data related to compensation is reported in multiple sections on Form 990: Part I, Part VI, Part VII, Part IX, and Schedule J.

Competitive compensation is just as important for employees of nonprofits as it is for for-profit employees. Having a policy that objectively establishes salary ranges for positions, updated job descriptions, relevant salary administration, and performance management establishes equality and equity in compensation practices. A statement of compensation philosophy and strategy, which explains to current and potential employees and board members how compensation supports the nonprofit’s mission, should be included in the compensation policy.

2. CONFLICT OF INTEREST

Found on Form 990 Part VI, Section B, Line 12 a-c.

A conflict of interest policy should do two important things. First, it should require board members with a conflict (or a potential conflict) to disclose said conflict. Second, it should exclude individual board members from voting on matters in which there is a conflict.

The Form 990 glossary defines a “conflict of interest policy” as follows:

A conflict of interest policy defines conflicts of interest, identifies the classes of individuals within the organization covered by the policy, facilitates disclosure of information that can help identify conflicts of interest, and specifies procedures to be followed in managing conflicts of interest. A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, manager, or key employee can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated. For this purpose, a conflict of interest doesn’t include questions involving a person’s competing or respective duties to the organization and to another organization, such as by serving on the boards of both organizations, that don’t involve a material financial interest of, or benefit to, such person.

Form 990 asks whether the nonprofit has a conflict of interest policy, as well as how the nonprofit determines and manages board members who have an actual or perceived conflict of interest. This policy is hugely important, as conflicts of interest that are not successfully and ethically managed can result in sanctions against both the nonprofit and the individual with the conflict(s).

3. DOCUMENT RETENTION AND DESTRUCTION

Found on Form 990 Part VI, Section B, Line 14.

This policy should clarify what types of documents should be retained, how they should be filed, and for what duration. It should also outline proper deletion and or destruction techniques. The document retention and destruction policy (sometimes called, sometimes simply called a “DRD policy”) is useful for a number of reasons. The principal rationale as to why any nonprofit would want to adopt such a policy is that it ensures important documents—financial information, employment records, contracts, information relating to asset ownership, etc.—are stored for a standard period of time for tax, business, and other regulatory purposes. No doubt document retention is incredibly important should litigation or governmental investigation arise.

A strong, clear DRD policy also allows nonprofits to save time, space, and money associated with both hard copy and digital file storage, by determining what is no longer needed and when…it’s like sanctioned spring cleaning!

4. FINANCIAL POLICIES AND PROCEDURES

Different than the investment policy (as discussed below), financial policies specifically address guidelines for making financial decisions, reporting the financial status of the nonprofit, managing funds, and developing financial goals. The financial management policies and procedures should also outline the budgeting process, investment reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place. Form 990 does not make a specific ask about a nonprofit’s financial policies, but this type of policy will serve as an indispensable guide to organizing, collecting, and reporting financial data.

5. FORM 990 REVIEW

Found on Form 990 Part VI, Section B, Line 11.

Form 990 asks the following questions:

Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form? Describe in Schedule O the process, if any, used by the organization to review this Form 990.

In asking these questions, the IRS is indicating that careful distributing and reviewing Form 990 prior to filing is optimal. This policy is extremely useful in clarifying the specific process for distribution and procedure review by the governing body (such as the board of directors). It also acts as a reminder to nonprofit leaders that Form 990 is coming due!

6. FUNDRAISING

The topic of fundraising gets substantial attention on Form 990; fundraising income and expenses are asked about in Part I, Part IV, Part VIII, Part IX, and Schedules G and M.

Almost every nonprofit needs a fundraising policy, as so many nonprofits engage in some sort of charitable fundraising. This policy should include provisions for compliance with local, state, and federal laws, as well as the ethical norms the nonprofit chooses to abide by in fundraising efforts. Remember that fundraising doesn’t just include solicitation of donations, but also receipt of donations.

7. GIFT ACCEPTANCE

Gifts and contributions are referenced many times on Form 990: Part I, Part IV, Part V, Part VIII, Part IX, and Schedule M.

While related to the fundraising policy, the gift acceptance policy is different, as it establishes how nonprofits will handle certain types of assets. This policy provides written protocols for nonprofit board members and staff to evaluate proposed non-cash donations. The policy can also grant some much-needed guidance in how to kindly reject donations that can carry extraneous liabilities and obligations the nonprofit is not readily able to manage.

8. INVESTMENT

One way a board of directors can fulfill their fiduciary responsibility to the nonprofit is through investing assets to further the nonprofit’s goals. But, before investment vehicles are used, the nonprofit should have an investment policy in place to define who is accountable for the investment decisions. The policy should also offer guidance on activities of growing/protecting the investments, earning interest, and maintaining access to cash if necessary.

The policy should be written to give the nonprofit’s management personnel the authority to make investment decisions, as well as preserve the board’s oversight ability. Beyond the specifics of investments, this policy can also govern financial management decisions regarding situations like accepting charitable gifts of securities.

Many nonprofits hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the investment policy. Form 990 does not ask if a nonprofit has a specific investment policy, but it does refer to investments in multiple places throughout the form, and there is an obvious need.

9. PUBLIC DISCLOSURE

Found on Form 990 Part VI, Section C, Lines 18-20.

Speaking broadly, nonprofits exist to serve the public in some way or another, and some nonprofit documents must be made available to the public upon request. Other documents can be kept entirely internal. This policy should overview (1) what documents the nonprofit must disclose, and (2) to what extent does it want to make other non-required documents and information available to the public.

Form 990 specifically asks the filing nonprofit to report if certain documents are made available to the public, such as governing documents (like the bylaws), financial statements, and the conflict of interest policy. Additionally, Form 990 asks for the name, address, and phone number of the individual(s) who possesses the financial “books” and records of the nonprofit.

10. WHISTLEBLOWER

Found on Form 990 Part VI, Section B, Line 13.

Nonprofits, along with all organizations, are prohibited from retaliating against employees who call out, draw attention to, or “blow the whistle” against employer practices. A whistleblower policy should set a process for complaints to be addressed and include protection for whistleblowers. Ultimately this policy can help insulate your nonprofit from the risk of state and federal law violation and encourage sound, swift responses of investigation and solutions to complaints.

A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the nonprofit, specifies that the nonprofit will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported.

V. CONCLUSION

Iowa nonprofits make such a huge difference all across our state. Nonprofits can make an even larger impact by adopting the ten (10) policies referenced on IRS Form 990.

Questions about the ten (10) policies referenced on IRS Form 990? My email is:
gordon@gordonfischerlawfirm.com

January 2, 2024/by Lexi Luneckas

Nonprofit Need to Know: File the Iowa Biennial Report

Nonprofits

I’ve written a lot about IRS Form 990 on this blog, but all nonprofits organized in Iowa or authorized to business in the state also need to file a Biennial Report with the office of the Iowa Secretary of State. The report is required under Iowa Code §504.1613.

The report is pretty basic and is essentially entity information updates of which the Iowa Secretary of State’s office records. Report requirements vary by state, so I’ve laid out all the basics below!

When is my nonprofit’s Biennial Report due?

Biennial Reports should be submitted between January 1 and April 1 in odd-numbered years (like this one, 2019!). An organization’s first Biennial Report is due on the first odd-numbered year following the calendar year of formation. So, if your nonprofit was formed (meaning you submitted articles of incorporation) in October 2019, the first Biennial Report would be due by April 1, 2021.

Does someone have to sign it? Does it need to be notarized?

Yes; someone with authority in the organization should sign it (such as the president of the board of directors), however, original signatures are not required. Notarization is also not required.

What information is included in the biennial report?

The statute requires the following information be reported. (Note that a nonprofit is still a “corporate” entity, even though we don’t typically refer to nonprofit organizations like corporations.):

Name of the corporation
State or country under whose law the nonprofit incorporated
Address of the corporation’s registered office
Name of the corporation’s registered agent at that office in Iowa
Consent of any new registered agent, if applicable
Address of the corporation’s principal office
Names and addresses of the president, secretary, treasurer, and one member of the board of directors
Whether or not the corporation has members

The information on the Biennial Report should be related to the two-year period immediately preceding the calendar year in which the report is filed.

Is there a form?

Yes, there is a form you can file online or by mail. You will need both the corporation number and a temporary code to begin the filing process. Each corporation’s registered agent will receive a Biennial Report notice in early January.

Does it cost money?

Unlike the costs for LLCs or for-profit corporations, for nonprofit corporations, the filing fee is $0.

Other Considerations

While you’re thinking about reporting, once you have the Biennial Report submitted turn your attention to Form 990. Do you know which version you can submit? Do you need to adopt any beneficial policies and procedures to boost your filing (and amplify good governance and successful operations in your organization)?

Nonprofit Policy Special: 10 for Form 990

Don’t hesitate to contact me with questions about any forms and reporting. It can seem like a pain at first, but the more prepared you are and the more knowledge you have, the faster you can get back to work, forwarding your mission.

June 19, 2021/by Gordon Fischer

Form 990 Variations: Which Annual Return Should Your Nonprofit File?

Nonprofits

Not paying federal taxes is a big deal for a nonprofit and is one of the major benefits of going through all that work of Form 1023, state filing requirements, drafting foundational policies, and the like. For oversight and evaluation purposes, many organizations that fall under the Internal Revenue Code Section 501(a) provision need to annually file Form 990 (Return of Organization Exempt From Income Tax) instead. Beyond aspects of the organization’s finances, Form 990 also collects information related to practical and operational aspects like conflicts of interest, Sarbanes-Oxley compliance, and charitable gift acceptance. Submitting an annual filing (if required to do so under the provisions of Internal Revenue Code Section 6033) is also essential to retaining the coveted tax-exempt status. If an organization fails to file the required return for three consecutive tax years the IRS automatically revokes the entity’s tax-exempt status. (It’s one of many reasons why having updated, quality policies and procedures in place is so essential!)

Nonprofit Policy Special: 10 for Form 990

One Form Doesn’t Fit All

Charities fall on a wide spectrum in terms of size, income, and number of programs. Consequently, not all organizations are required to file the same type of annual return. Indeed, some nonprofits are exempt from filing an annual return entirely. In addition to the “regular” Form 990, there are options for 990-PF, 990-EZ, and 990-N.

Form 990 and the shorter 990-EZ are the most common forms filed by tax-exempt charities. Nonexempt charitable trusts (which are not considered private foundations) and section 527 political organizations are also required to file such a return.

Read on to find out which organizations need to file which annual form. Note that this is general information and any specific questions on which form your organization needs to file should be directed to an attorney experienced in nonprofit law.

Form 990

There are financial thresholds that determine which form your organization must file. However, any tax-exempt organization can choose to file a full return if they so choose. Organizations that meet or exceed the highest financial threshold are required to file Form 990. This includes organizations with gross receipts greater than or equal to $200,000 OR a total of assets greater than or equal to $500,000.

Form 990-EZ

Don’t let the title of this form fool you! There is less required information to report on than the full Form 990, but it’s not exactly easy. 990-EZ generally applies to small to medium-sized organizations with gross receipts less than $200,000 AND assets totaling less than $500,000. Organizations that meet these revenue qualifications can opt to file the full 990 or the EZ version.

Form 990-N

This is the shortest version of the 990 and isn’t so much of a full form as a basic electronic “postcard” submission. (The official name is “Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ.” Needless to say, I’m glad it’s been shortened to a simple “N.”) Smaller nonprofits with gross receipts less than or equal to $50,000 qualify to opt for this form. These nonprofits could also elect to file the more comprehensive Form 990 is they so choose.

For example, let’s say a group of high school students formed a small nonprofit with the non-partisan mission of registering high school students to vote across the state. Their reach is growing, but it’s still a small nonprofit with just $24,000 in gross receipts. This organization could certainly elect to file 990-N, but if they wanted to (if even for the experience) they could still choose to file a complete and full 990 return.

990-PF

Private foundations, regardless of gross receipts or asset value, must file Form 990-PF. Nonexempt charitable trusts treated as a private foundation also need to file this form.

Extension

Just how sometimes you need to file an extension for your personal federal income taxes, the same goes for tax-exempt charities. If needed, the organization should file IRS Form 8868 by the annual filing due date in exchange for an automatic six-month extension.

When in Doubt, File Above and Beyond

Many organizations may find they need to file one form one year and then as they grow or change, need to file a different form the next. Other nonprofits may report gross income very close to either side of the threshold, which can make it confusing as to which form to file. When in doubt, it’s always better to “file up” and provide more information and data, rather than less. Hypothetically let’s say your organization filed 990-EZ last year, and is very close to the financial threshold, but could technically file 990-N this year. Just in case, it doesn’t hurt to file the more comprehensive 990-EZ again. For specific advice on your nonprofit’s individual situation, again, seek counsel from a qualified nonprofit law attorney.

Organizations Exempt from Filing

I mentioned earlier that some nonprofit organizations are not required to file an annual return of any type. These organizations include the following condensed list from this full IRS guide:

State institutions, federal corporations, & governmental units

Examples of state institutions exempt from filing an annual return include state-run hospitals and state universities. Tax-exempt federal corporations (organized under an Act of Congress) are also exempt from filing. Qualified governmental units and affiliates are also exempt if they meet the requirements listed in this Revenue Procedure document.

Political organizations

Local and state qualified political organizations are only required to file Form 990 if they have annual gross receipts equal to or greater than $100,000. Additionally, the following are all exempt from filing:

Local or state committee of a political party
Association or caucus of local or state officials
Political committee of a local or state candidate
Any organization excluded from the requirement to file Form 8871

Subsidiaries of parent organization

Let’s say there’s a statewide nonprofit organization that has small chapters in multiple counties across Iowa. If the “parent” organization files a group return that includes or “covers” the subsidiary, then that subsidiary would not need to file their own annual return. A parent organization may only file for the subsidiary organization if said subsidiary is covered under the IRS’ letter of exemption. Plus, the subsidiary covered by the exempt parent must give written consent for legal inclusion in the group return.

Additionally, parent organizations are under no obligation to file such a group return, in which case each subsidiary would be responsible for filing their own return.

Faith-based organizations

Faith-oriented organizations comprise a number of organizations that don’t need to file a version of Form 990, including churches, associations of churches, church-operated or religious-based schools, and some missionary organizations. Note that some religious groups that aren’t a church or associated with a church will need to register as a 501(c)(3) and file the corresponding annual return.

I recommend that all Iowa nonprofits have policies and procedures in place for top of the line compliance, but this advice especially applies to those organizations which need to file Form 990. For most nonprofits that do need to file Form 990, it’s typically due the 15th of the fifth month after the organization’s taxable year; this is May 15 for most organizations. However, in 2020, due to COVID-19, the IRS granted nonprofits and foundations the opportunity to extend the filing due date out to July 15, 2020.

Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

Any questions about which forms your organization needs to file, or want to discuss how the 10 for 990 policy special could be helpful to your nonprofit? Contact me at any time via email or by phone (515-371-6077).

June 17, 2021/by Gordon Fischer

Nonprofit Policy Special: 10 for Form 990

Nonprofits

Tax-exempt organizations need to have specific guidelines in place to be compliant and in order to meet the IRS’ expectations. It’s never too late (or early!) to invest in comprehensive internal and external policies and procedures. That’s why I’m offering the Nonprofit Policy: 10 for 990 special. You don’t have to feel overwhelmed or burdened at the thought of trying to draft legally correct and comprehensive policies. I’m offering a special deal for 10 important policies (read on for an overview of each) at the rate of $990. This also includes a comprehensive consultation and one full review round.

If you’re a nonprofit founder, executive, board member, or even an active volunteer, this is an excellent way to ensure the organization you’re deeply invested in is meeting (and exceeding!) the gold standard for tax-exempt organizations.

I don’t know anyone who loves paperwork more than the Internal Revenue Service (IRS). But, if you’re operating a nonprofit, you’re going to have to learn how to embrace paperwork as well. Why? The IRS requires certain information from your organization be submitted annually via Form 990 “Return of Organization Exempt From Income Tax.” This 12-page document (not including schedules) serves as a check to make certain nonprofit organizations are still qualified for that coveted tax-exempt status. To that point, the 990 asks nonprofits about policies and procedures that help ensure the nonprofit is conducting business in a transparent way that’s consistent with their exempt purposes. Specific governance policies encouraged by the IRS limit potential abuse, protect against vulnerabilities, and prevent activities that would go beyond permitted nonprofit activities.

Major Benefits & Reasons for Policies for Compliance

If governance policies are not technically required, why do them?

The existence of a policy doesn’t mean compliance is assured, of course, but having policies in place provides a framework and the expectations for an organization’s executives, employees, volunteers, and board members. Such policies can also be referenced if/when issues arise.

One of the major reasons to invest in strongly written, organization-specific policies is because the IRS audits tax-exempt organizations, just as it audits companies and individuals. (Having certain policies in place will only serve to benefit the organization should it happen to be audited.)

Another major reason to have proper policies and procedures in place is because they provide a foundation for soliciting, accepting, and facilitating charitable donations. Last, but not least, the 990 is made accessible to the public, meaning it can be used as a public relations tool if filled out diligently. Major donors can and often do review a charity’s 990 to ensure the charity is compliant, putting charitable donations to good use, and continues to operate in alignment with the overall mission.

Form 990 also serves the greater nonprofit sector as the data collected allows for the monitoring of growth and trends, tracking the types of needs/issues being addressed by nonprofits, and identifying specific adopted practices.

What Policies are We Talking About?

25 Days of Giving: Nonprofit Policies Your Organization Needs to Consider

One thing’s for certain, articles of incorporation and bylaws are just the beginning when it comes to foundational documents.

The IRS made a major revision to Form 990 in 2008. The old version focused largely on financial data. Now, Form 990 reports extensive information on operations such as board governance, fundraising, international programs, non-cash receipts, joint ventures, use of subsidiaries, and more. Let’s cover all the policies the IRS asks tax-exempt nonprofits to report on:

Conflict of Interest

Found on Form 990: Part VI, Line 12 a-c

A conflict of interest policy should do two important things:

require board members with a conflict (or a potential conflict) to disclose it, and
exclude individual board members from voting on matters in which there is a conflict.

The Form 990 glossary defines a “conflict of interest policy” as follows:

A policy that defines conflict of interest, identifies the classes of individuals within the organization covered by the policy, facilitates disclosure of information that may help identify conflicts of interest, and specifies procedures to be followed in managing conflicts of interest. A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, or manager, may benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated. For this purpose, a conflict of interest does not include questions involving a person’s competing or respective duties to the organization and to another organization, such as by serving on the boards of both organizations, that do not involve a material financial interest of, or benefit to, such person.

Form 990 asks whether the nonprofit has a conflict of interest policy, as well as how the organization determines and manages board members who have an actual or perceived conflict of interest. This policy is all too important, as conflicts of interest that are not successfully and ethically managed can result in “intermediate sanctions” against both the organization and the individual with the conflicts.

If consistently adhered to, this policy can inspire internal and external stakeholder confidence in the organization as well as prevent potential violations of federal and state laws.

Nonprofit Policy Spotlight: Conflict of Interest

Document Retention and Destruction

Found on Form 990: Part VI, Line 14

This policy should clarify what types of documents should be retained, how they should be filed, and for what duration. It should also outline proper deletion and or destruction techniques.

The document retention and destruction policy (DRD policy) is useful for a number of reasons. The principle rational as to why any organization would want to adopt such a policy is that it ensures important documents—financial information, employment records, contracts, information relating to asset ownership, etc.—are stored for a period of time for tax, business, and other regulatory purposes. No doubt document retention could be important for proof in litigation or a governmental investigation.

You may have heard of the federal law, the Sarbanes-Oxley Act of 2002. It reaffirms the importance of a DRD policy. Sarbanes-Oxley reads:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

While the Sarbanes-Oxley legislation generally does not pertain to tax-exempt organizations, it does impose criminal liability on tax-exempt organizations for the destruction of records with the intent to obstruct a federal investigation.

Nonprofits & Sarbanes-Oxley Compliance

Another reason a DRD policy is an excellent idea, is it forces an organization to save space and money associated with both hard copy and digital file storage, by determining what is no longer needed and when…it’s like sanctioned spring cleaning!

Whistleblower

Found on Form 990: Part VI, Question 13

Nonprofits, along with all corporations, are prohibited from retaliating against employees who call out, draw attention to, or “blow the whistle” against employer practices. A whistleblower policy should set a process for complaints to be addressed and include protection for whistleblowers.

Ultimately this policy can help insulate your organization from the risk of state and federal law violation and encourage sound, swift responses of investigation and solutions to complaints. Don’t just take it from me, the IRS also considers this an incredibly helpful policy:

A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the organization, specifies that the organization will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported. (Instructions to Form 990)

The Sarbanes-Oxley Act (referenced under the document retention and destruction policy above) also applies here. If found in violation of Sarbanes-Oxley, both an organization and any individuals responsible for the retaliatory action could face civil and criminal sanctions and repercussions including prison time.

Compensation

Competitive compensation is just as important for employees of nonprofits as it is for for-profit employees. Data related to compensation is reported in three different sections on Form 990: “Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees;” “Statement of Functional Expenses,” lines 5, 7, 8, and 9; and Schedule J;” and “Compensation Information for Certain Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees.”

Having a set policy in place that objectively establishes salary ranges for positions, updated job descriptions, relevant salary administration, and performance management, is used to establish equality and equity in compensation practices. A statement of compensation philosophy and strategy, which explains to current and potential employees and board members how compensation supports the organization’s mission, can be included in the compensation policy.

Generally, this policy provides the benefits of:

Enhanced confidence of donors and supporters
Consistent framework for decision making on compensation
Increased compliance with federal and state employment laws
Reduced risk to the organization and its management and governing board

Fundraising

The topic of fundraising gets substantial attention on Form 990; fundraising income and expenses are asked about in Part I, three places in Part IV, Part VIII, Part IX, and Schedules G and M. Almost every nonprofit needs a fundraising policy, as almost all engage in some sort of charitable fundraising. This policy should include provisions for compliance with local, state, and federal laws, as well as the ethical norms the organization chooses to abide by in fundraising efforts. Remember that fundraising doesn’t just include solicitation of donations, but also receipt of donations.

4 Tips for Effectively Managing a Monthly Giving Program

Gift Acceptance

Found on Form 990: Schedule M, Part I, line 31

While related to the fundraising policy, the gift acceptance policy relates to charitable contributions. There are no legal requirements for a gift acceptance policy, however this policy provides written protocols for nonprofit board members and staff to evaluate proposed non-cash donations. The policy can also grant some much-needed guidance in how to kindly reject donations that can carry extraneous liabilities and obligations the organization is not readily able to manage.

Investment

One way a board of directors can fulfill their fiduciary responsibility to the organization is through investing assets to further the nonprofit’s goals. But, before investment vehicles are invested in, the organization should have an investment policy in place to define who is accountable for the investment decisions. The policy should also offer guidance on activities of growing/protecting the investments, earning interest, and maintaining access to cash if necessary.

Beyond the specifics of investments, this policy can also govern financial management decisions regarding situations like accepting charitable gifts of securities.

The policy should be written to give the nonprofit’s management personnel the authority to make investment decisions, as well as preserve the board’s oversight ability.

Many organizations hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the investment policy.

Form 990 does not ask if an organization has a specific investment policy, but it does refer to investments in multiple places throughout the form, hence the obvious need.

Financial Policies and Procedures

Different than the aforementioned investment policy, the financial policies and procedures policy specifically addresses guidelines for making financial decisions, reporting financial status of the organization, managing funds, and developing financial goals. The financial management policies and procedures should also outline the budgeting process, investments reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place. Similar to the investment policy, Form 990 does not make a specific ask about an organization’s financial policies, but this type of policy will serve as an indispensable guide to organizing, collecting, and reporting financial data.

5 Resolution Ideas for Nonprofit Pros

Form 990 Review

Found on Form 990: Part VI, Section B, Line 11

Form 990 asks the following questions:

Has the organization provided a copy of this Form 990 to all members of its governing body before filing the form?
Describe in Schedule O the process, if any, used by the organization to review this Form 990.

In asking these questions, the IRS is indicating that distribution of the form prior to filing is optimal. (This is also one of those gold standard governing practices that is beneficial when using the form as a public relations material.) There are no federal tax laws requiring Form 990 review, and Form 990 does not mandate a written policy. However, a written policy is incredibly useful in clarifying a specific process for distribution and procedure review by the governing body (such as the board of directors). It also formalizes a review process and acts as a reminder to nonprofit leaders to distribute accordingly.

Public Disclosure

Found on Form 990: Part VI, Section C, Lines 18 – 20

Public charities exist to serve the public in some way or another, and some organizational documents must be made available to the public upon request. Other documents can be kept entirely internal. This policy should overview (1) what documents must the organization disclose, and (2) to what extent does it want to make other non-required documents and information available to the public.

Form 990 specifically asks the filing organization to report if certain documents are made available to the public, such as governing documents (like the bylaws), conflict of interest policy, and financial statements. Additionally, the form asks for the name, address, and phone number of the individual(s) who possesses the financial “books” and records of the organization.

Where Do I Start?

The mission of Gordon Fischer Law Firm is to promote and maximize charitable giving in Iowa, and to that point I want to help every Iowa nonprofit be legally compliant.

The 10 policies part of this promotion will save you time, resources, and you can feel good about having a set of high quality policies to guide internal operations, present to the public (if appropriate), and fulfill form 990 requirements.

If you already have some (or all) of the above listed policies in place, seriously consider the last time they were updated. How has the organization changed since they were written? Have changes to state and federal laws impacted these policies at all? It may be high time for a new set of policies that fits your organization.

Interested? It’s always a good day to contact Gordon Fischer Law Firm via email Gordon@gordonfischerlawfirm.com or by phone (515-371-6077).

June 12, 2021/by Gordon Fischer

When do Nonprofits Need to File Form 990 in 2020

Nonprofits

Most people have Tax Day earmarked in their minds like a birthday or federal holiday (typically it’s April 15, although with the nationwide COVID-19 pandemic the IRS pushed the due date for filing income taxes back to July 15, 2020). Nonprofit leaders should have another day highlighted on their calendars for the next few years: when the annual reporting return, Form 990, is due.

Tax-exempt nonprofit organizations don’t pay federal taxes (obviously from the “tax-exempt” category), but the IRS still requires certain information in order to evaluate organizations on details like programs, finances, governance, and mission. It’s a way of confirming that tax-exempt entities are still qualified to operate without paying federal taxes. Form 990s are also made available to the public so there’s also accountability and transparency involved.

Due date?

So, when is Form 990 due exactly? It depends on the end of your organization’s taxable year; the form is usually due the 15th of the fifth month after the organization’s taxable year. For most tax-exempt organizations that follow the typical calendar year (January 1 through December 31), this means Form 990 is due on May 15 every year.

However, on April 9, 2020, the IRS issued Notice 2020-23, which granted nonprofits and foundations the opportunity to extend the filing due date out to July 15, 2020. Taxes owed with Form 990-PF and Form 990-T are also due at the time of the filing. Additionally, Form 8868, “Application for Automatic Extension of Time to File an Exempt Organization Return,” can be filed to request an additional extension until November 15, 2020. Note that

What happens if there’s a failure to file?

Just like if you fail to file your income taxes there are repercussions, if an organization is required to file Form 990 and fails to for three consecutive years, the IRS will automatically revoke tax-exempt status. That’s right, no questions, no appeal process, just revocation in accordance with the law. Timely submission of Form 990 also can help your nonprofit organization avoid filing additional documents and certain user fees.

Collective Responsibilities of Nonprofit Boards

What happens if tax-exempt status is revoked?

If your nonprofit’s tax-exempt status is revoked, then the organization will have to pay corporate income tax on annual revenue. Additionally, the organization may be subject to penalties and back taxes if the revocation date was in the previous tax year. The nonprofit will then lose any state tax exemptions that were dependent on federal tax-exempt status. (Common examples of such state tax exemptions are property, income, and sales/use taxes.) Of course, the organization will no longer be able to receive tax-deductible charitable contributions and, accordingly, donors will no longer be able to receive the federal income charitable deductions for any gifts post-revocation date. Losing tax-exempt status will also disqualify the nonprofit from receiving many private foundations’ grants.

First Day of the Season: Spring Ahead with Nonprofit Success

Be prepared for the filing date!

Form 990 is over 10 pages (not including additional schedules and written attachments) so your organization should get jump start on the process. The best way to be prepared, year after year, is to have updated and applicable policies asked about on the form readily available to be referenced. I’m offering a great deal that features 10 policies related to Form 990 for $990. The rate includes a comprehensive consultation and full review round.

Any questions about when your nonprofit specifically needs to file, or want to discuss how the “10 for 990” special could work for you? Contact me at any time via email or by phone (515-371-6077).

April 13, 2020/by Gordon Fischer

Nonprofit Formation: Responsibilities to Consider

Nonprofits

two women talking about forming a nonprofit

Any good attorney worth their weight will advise you on multiple aspects of any given important action or decision. Let’s say you’re considering forming a new 501(c)(3). You may have thoroughly considered all the prospective benefits of a tax-exempt entity, but what about the responsibilities? Indeed, there are serious obligations that come along with creating and running a nonprofit. These can’t be overstated and should certainly be taken into account. Let’s dive into a few of them.

Monetary cost

Establishing a nonprofit organization does require a monetary cost including the filing fees to governmental agencies, such as the Iowa Secretary of State’s Office and the IRS. (The Iowa Secretary of State has a $20 filing fee, and the IRS 1023 Form has a current user filing fee of $600.) If you elect to hire a qualified nonprofit attorney to guide you through the formation process and draft the required forms, then that will be an additional cost. (Although I would always argue a worthwhile one!)

Once the nonprofit is formed you’ll also want to invest in keeping your nonprofit organization on track, compliant, and successful. A major part of this is drafting and implementing quality internal and external policies and procedures. Again, a nonprofit lawyer can be a valuable asset and provide expertise here.

Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

Cost of time & effort

On top of the monetary costs, there are additional costs of time and effort. It typically takes a few months to pull all the paperwork together for the formational documents—especially the lengthy Form 1023. After all the paperwork is submitted for IRS review, actual 501(c)(3) approval can vary in the time it takes. A submitted Form 1023 can take anywhere from a month or two to a year to make its way through the review process; the 1023EZ‘s turnaround time depends on the backlog of review at the time.

Even after all of the required documentation is submitted for recognition of exemption, the IRS may request additional information through follow-up questions and supporting materials. And, of course, actually operating the nonprofit will take significant, continuous time and effort which can range in extent, but can include new employee hires, nonprofit board orientations and training, and compliance with state and federal laws (like Sarbanes-Oxley, for instance).

The flip side of this is that nonprofit work is often incredibly rewarding and important, making the effort and time even more worthwhile. But, again, it’s something good to just keep in mind as you weigh all inputs to your nonprofit formation decision.

Paperwork

A nonprofit is required to keep detailed records and also submit annual filings to the state and IRS by particular deadlines to keep its active and exempt status. (Reminder: having well-written policies and procedures will make the annual filings, like Form 990, an easier process!)

Form 990 Variations: Which Annual Return Should Your Nonprofit File?

Shared control

As an incorporator of a nonprofit, you will certainly have a say in the development of the organization. Although one who creates nonprofits may want to shape his/her creation, personal control is limited. A nonprofit organization is subject to laws and regulations, including its own foundational documents such as articles of incorporation and bylaws. An Iowa nonprofit is required to have a board of directors, who have certain legal and financial fiduciary duties to uphold. The board itself also has collective responsibilities, so no one person is held solely accountable. Board orientation, trainings, and materials—like a board handbook—organized in a specific way can go a long way toward ensuring the board is set-up for success in working toward the mission you as the founder envisioned.

Scrutiny by the public

In the eyes of the government and society alike, the nonprofit must be dedicated to the public interest in one area or another. This is where it derives its tax-exempt status. It’s also why its finances are open to public inspection. For these reasons, nonprofits must be steadfastly transparent in nearly all their actions and dealings.

Interested parties may obtain copies of a nonprofit organization’s state and federal annual information filings to learn about salaries, program expenditures, and other financial information. You should be able to view copies of exempt organizations’ forms for free on the IRS’ website, or you can request a copy from the organization and they must provide it. Additionally, to make it easy for the public, many nonprofits link to these documents on their website. The information can be useful to current and prospective donors, new board members and employees, and grant-making organizations.

Nonprofit Need to Know: File the Iowa Biennial Report

I hate to sound like a broken record, but again, this is where superior policies like “public disclosure” and “Form 990 review” are paramount to the operation.

These responsibilities shouldn’t scare you off from forming your change-making organization, but rather important elements to be aware of from the beginning. Plus, if you know the big picture of what you’re getting into, you can plan by enlisting the appropriate professionals to help you with your endeavor!

Nonprofit Policy Special: 10 for Form 990

Want to discuss how to move forward with your nonprofit? Don’t hesitate to take me up on my offer for a free consult and the 10 For 990 policy special! Contact me via email or by phone (515-371-6077).

March 11, 2020/by Gordon Fischer

New Nonprofits: Form 990 While Waiting for Tax-Exempt Status

Nonprofits

Submitting Form 1023 for “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code” to the IRS is cause for celebration for any organization seeking that coveted tax-exempt status. While waiting for the determination letter from the IRS regarding the application, there can be many uncertainties regarding what to tell donors about donations, and what to do about other submissions, like Form 990.

What to do with Donors While Waiting for Tax-Exempt Status

For oversight and evaluation purposes, most nonprofits need to annually file Form 990 (Return of Organization Exempt From Income Tax) instead. Beyond aspects of the organization’s finances, Form 990 collects information related to practical and operational aspects like conflicts of interest, Sarbanes-Oxley compliance, and charitable gift acceptance. Submitting an annual filing is also essential to retaining the tax-exempt status.

When is Form 990 Due?

So, when is Form 990 due exactly? It depends on the end of your organization’s taxable year; the form is due the 15th day of the fifth month after the organization’s taxable year. For most tax-exempt organizations that follow the typical calendar year (January 1 through December 31), this means Form 990 is due on May 15th every year.

What Do New Nonprofits Need to Do?

What does this mean for new nonprofits and organizations waiting on the tax-exemption determination letter? Expect to submit a variation of Form 990 in the year following the close of the first tax year. This is the case even if the organization is still waiting on the determination letter from the IRS in regard to tax-exempt status.

So, for example, let’s say a nonprofit filed articles of incorporation with the Secretary of State and adopted bylaws in March 2019. The organization subsequently submitted Form 1023 to apply for tax-exempt 501(c)(3) status. In the governing documents, the organization’s tax year is established as the typical January to December. For this organization, they should expect to file Form 990 by May 15, 2020, with information related to the receipts for the 2019 operating year.

Form 990 Variations: Which Annual Return Should Your Nonprofit File?

Plan Ahead to be Prepared to Submit

The full Form 990 is over 10 pages (not including additional schedules and written attachments), so no doubt your organization should have a jump start on the process. The best way to be prepared, year after year to avoid a failure to file, is to have updated and applicable policies asked about on the form readily available to be referenced. I’m offering a great deal that features 10 policies related to Form 990 for $990. The rate includes a comprehensive consultation to discuss your organization’s need and a round of reviews so we can make certain the documents fit your organization’s needs.

Nonprofit Formation: Responsibilities to Consider

No matter what stage of the nonprofit process you’re at—from just getting started to hiring employees to board management—don’t hesitate to contact me with questions or challenges. I’m available via email (gordon@gordonfischerlawfirm.com) and by phone (515-371-6077).

February 25, 2020/by Gordon Fischer

Stanley Cup Inspired: How Policies & Procedures Help Nonprofits Win the Game

Nonprofits

Robert Frost famously quipped that writing poetry that doesn’t rhyme is like “playing tennis without a net.”

Right now, a different sport without a net is grabbing our attention. Currently, the NHL sports fans are tuned into the NHL All-Star Game where representatives from some of the best teams like the St. Louis Blues and Boston Bruins take to the ice. So, allow me to make a Frost-ian point about nonprofits in a hockey context.

For a nonprofit to operate without having proper policies and procedures in place, is like playing the NHL All-Star Game without a net – and without sticks, skates, helmets, or a puck. Without certain policies in place, a nonprofit simply cannot run properly. Without rules, there can be no expectations. Board members, officers, staff, donors, volunteers, and other stakeholders must work to ensure they’re not skating on thin ice. Give your stars the protection they need, and the tools they require, to be a winning team.

25 Days of Giving: Nonprofit Policies Your Organization Needs to Consider

Where to Start?

From working with a wide range of nonprofit clients, I’ve learned that many want proper policies and procedures, but they are simply stymied or confused on where to start. That’s where an attorney well-versed in nonprofit law can come in.

Many nonprofits have to fill out an annual form, IRS Form 990. Form 990 is unique in that it not only asks about financial information but also many of its questions directly ask about policies and procedures. There are at least 10 major polices asked about on Form 990.

Special Offer!

I offer 10 major policies and procedures nonprofits definitely need for a flat fee of $990. This includes consultations and a full review round to make sure the policies and procedures fit the needs and operations of your particular nonprofit. Adopting the policies explained in this guide will ultimately save your nonprofit organization time and resources, and you can feel great about having a set of high-quality documents to guide internal operations, and present to the public.

Nonprofit Policy Special: 10 for Form 990

All Nonprofits Need These 10 Policies

Whether a nonprofit is large or small, new or decades-old, a mission that is narrow or multi-faceted, all nonprofits should have these policies in place. Yes, these policies are asked about on Form 990, but even if a tax-exempt organization is not required to submit a variation of the 990, the benefits are still immense. In general, having policies in place provides a framework and the expectations for an organization’s executives, employees, volunteers, and board members. Such policies can also be referenced if/when issues arise.

Another major reason to have proper policies and procedures in place is that they provide a foundation for soliciting, accepting, and facilitating charitable donations.

Additionally investing in strongly written, organization-specific policies is a practice in preparation in case of an audit. (The IRS audits tax-exempt organizations, just as it audits companies and individuals.

Policy Highlight

Among the major policies and procedures included in my special 10 for 990 offer are the following. (You can download my free guide with more extensive information and explanations regarding these policies and procedures.)

Compensation

Under IRS rules, compensation for nonprofit staff must be “reasonable and not excessive.” The IRS recommends a three-step process for determining appropriate compensation: (1) conduct a review of what similarly-sized peer organizations, (2) in the same or similar geographic location, (3) of comparable positions.