Accounting Questions
1. We are not supposed to be "political" but can we accept donations from Political campaigns? Do we list "Campaign to Elect XXXX" as a sponsor? Is that okay?
You are correct that IRS rules do not allow 501(c)(3) organizations to participate or intervene in a political campaign. This means you are not allowed to contribute money to a political campaign or endorse a candidate. For business activities such as accepting a donation from a political campaign, the IRS looks at the facts and circumstances to determine if the organization has engaged in prohibited political campaign activity. The factors to consider are
· Whether the sponsorship is available to all candidates on an equal basis
· Whether the sponsorship is available only to candidates and not to the general public
· Whether the sponsorship amount is the same charged to other sponsors
· Whether the sponsorship is an activity that is an ongoing activity of the organization or whether it is conducted only for the candidate
It is ok to accept donations if the sponsorship is available to all candidates on an equal basis, also available to the general public, the amount charged the candidate is the same as other sponsors pay, and it is an ongoing activity of the chapter.
2. How much money can chapters keep in checking and savings accounts?
Funds in a bank are insured up to the FDIC limit of $250,000
3. Is it okay to give a chapter member a blank check to go buy something?
NO
4. My chapter has a budget for everything but charity ball. The charity ball chairman has the latitude to spend whatever she thinks is necessary to make the finance project work.The constitution says unbudgeted expenses have to be approved by the chapter. Wouldn't the Charity Ball expenses be unbudgeted? YES
Fundraising should be a part of your chapter budget. Chapters should prepare a budget based on what it will cost to run the chapter for the upcoming year using three budget categories: administration, service projects, and fundraising. I suggest that the charity ball chairman submit her detailed budget to be included in the fundraising section of the chapter budget. The budget is a map that shows what you plan to do and how you plan to get there. Once you know how much you are going to spend for all three categories, you then know how much you need to raise to meet your goals. Unbudgeted expenses should be rare.
5. What are the special issues regarding accepting grant money?
Each grant will have different guidelines and reporting requirements. You need to be aware and adhere to the grant requirements. All grants require that you spend the money for the purpose detailed in the grant and that you prepare a report documenting how the money was spent. Some grants will require that you actually submit receipts documenting how the funds were spent. Grants are an excellent way of obtaining funds for your projects.
6. Ideally, as non-profits, we should be revenue neutral at year-end, however, what are the ramifications of showing positive revenue? Are we inviting an audit?
Nonprofit doesn’t mean you can’t make a profit so you should strive for a surplus until you have built up adequate reserves. NAJA recommends that chapters have reserves equal to at least one year of expenses. Why do you need reserves? Basically to handle uncertainties.
· Unexpected shortfall in revenue (charity ball has to be cancelled or your biggest donor goes bankrupt) For example, chapters hit by Katrina were able to keep going in spite of the fact they could not have fundraisers for a year.
· Unexpected demands on your resources (flood/tornado/fire/etc.)
· Unanticipated opportunities (chance to buy supplies for the year at a discount)
· A change in direction is called for (Community needs have shifted and you need to change projects and resources are needed)
· Fluctuations in income and expenses (Charity ball or your fundraising event is in December but your projects start in May. You need money to go ahead and start working on projects)
7. Our chapter was given gift cards for relief work. Do we have to track the use of these cards the same way we would if we had deposited a monetary donation?
YES. The amount of the gift cards should be recorded as revenue and then when they are used, the expense recorded.
8. Our chapter requires reimbursement to members to be paid to their credit card or bank name (if they used a debit card), but some members want the check payable to them personally. Is there a recommended way to do it?
No reimbursement should be made by a chapter without the member submitting a receipt and preferably a reimbursement voucher which documents the project name, name of payee, date the expense was incurred, description of the expense, and signature of the payee and project chairman. If the reimbursement is adequately documented, then I think is ok to make the check payable to the member and not the credit card company or bank. Using a debit card is equivalent to writing a check and many times, the member will have already paid the credit card bill before getting reimbursed from the chapter.
9. Is it OK to give gift cards to a Chapter’s Child Welfare family? Examples – providinga gift card for a local grocery store or Wal-Mart?
YES. You should keep a record of which service project the expense relates to, who received the gift card, the amount, and the purpose of the card (e.g., purchase groceries, gas, etc.).
10. A Chapter is providing babysitting services during the Chapter meeting and paying for it with Chapter funds. Is this OK?
It is OK only if the funds used to pay for the babysitting are not from tax-deductible donations. IRS rules for 501(c)(3) organizations prohibit the organization from spending any of its assets or earnings on members. If your Chapter charges members a social assessment or dues that are not tax deductible, then these funds can be spent on items such as babysitting.