I recently attended a nonprofit seminar hosted by Fetzer, Simonsen, Booth, Jenkins Law Firm. Scott and Jaelynn Jenkins reminded us that there are 5 critical tasks nonprofits need to complete each year.
- GIFT RECEIPTS: By law, nonprofits need to send all prior year gift receipts for gifts of $250 and higher by February 1. I recommend that you send a gift receipt for all gifts (regardless of size) within one week of receiving the gift. If donors contribute monthly, it is good practice to send them a year-end statement listing all gifts made that year.
- CHARITABLE SOLICITATION PERMIT RENEWAL: 47 states require nonprofits and their representatives to obtain charitable solicitation permits or other registration annually. If your charity actively solicits gifts in more than one state, you must obtain a permit for each state. Follow link to see if your state requires a charitable solicitation permit. For further information please visit National Council for Nonprofits.
- CORPORATE RENEWAL: A nonprofit is a corporation established through the state and must renew it’s corporate license to operate annually. Your nonprofit should receive a reminder/invoice near the anniversary of your founding. CAUTION! If your license remains "un-renewed" for longer than one year, your corporation is deemed null and cannot be reinstated.
- CORPORATE MINUTES: Nonprofits are required to maintain corporate minutes. Minutes reflect the major decisions made on behalf of a charity. They must include: a) Names of board members in attendance and date of minutes b) The nature of the decision (made by a quorum at a meeting or made by unanimous consent outside a board meeting) c) Decisions regarding budget, nominations and replacements of directors, executive staffing decisions, strategic plan approval and program need to be recorded and approved.
- TAX FILING: All nonprofits are required to submit tax filings to the IRS by May 15 annually. While most nonprofits are not required to pay federal taxes (with the exception of taxes applied to Unrelated Business Income), they are required to file informational reports annually. Nonprofits with income less than $50,000 submit their information using the 990-N form. Nonprofits with income between $50,000 and $200,000 may submit their financial information using the 990-EZ (e-postcard) form. Finally, nonprofits with income exceeding $200,000 must file using the 990 form.
There are exceptions. Generally, the following do not have to file Form 990:
- Most faith-based organizations, religious schools, missions or missionary organizations
- Subsidiaries of other nonprofits – those that may be covered under a group return filed by the parent organization
- Many government corporations
- State institutions that provide essential services
It is important to check with the IRS to determine if your organ
ization needs to file a return. Follow the link for further information.
If an organization fails to file Form 990 three years in a row, the IRS will automatically revoke its tax-exempt status. Since 2011, more than 500,000 nonprofits across the country automatically lost their tax-exempt status for this reason.
If you or your charity seeks training and support in raising money, I invite you to request a free consultation by following this link.
Hope this helps you with your nonprofit venture!
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