Archive | Non-Profits

What is an Employer Identification Number?

imagesAn employer identification number (EIN), also known as a federal tax identification number (TIN), is used to identify a business entity.  Generally businesses need an EIN.  If you answer yes to any of the following questions, your business must get an EIN:  Do you have any employees?  Do you operate your business as a corporation or partnership?  Do you file an employment, excise or alcohol, tobacco and firearms tax return?  Do you withhold taxes on income, other than wages, paid to a non-resident alien?  Do you have a Keogh plan?  Are you involved with any of the following:  Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns; estates; real estate mortgage investment conduits; non-profit organizations; farmers’ cooperatives; or plan administrators?

It’s important to remember that a business entity is separate and distinct from its owner(s), and as such needs its own identification.  You can apply for an EIN online, for free, and receive your EIN immediately.  The application is fairly straightforward and takes only minutes to complete.

 

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Client Testimonial

“I’ve been working with lawyers and governance issues for more than 20 years.  Working with Nancy brings all the bests together – she has a great mastery of non-profit law and governance issues; she is brutally efficient – resulting in great value for the investment in her work; and, she has a way of breaking down complicated issues to promote understanding and good decision making.  I’d highly recommend Nancy for your non-profit legal needs.”  Steve Millard, President and Executive Director, COSE | Council of Smaller Enterprises

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Donating Property

As the year-end donor season approaches, we want to remind you that the donor is required to pay for an appraisal for any property, real or personal, for which the donor wants to take a deduction of $5,000 or more.

We often see agreements between a donor and non-profit organization whereby the non-profit agrees to pay for a qualified appraisal of the property to be donated.  IRS rules does not permit this, notwithstanding the terms of any such agreement.  More specifically, the donor is required to file Form 8283 with her tax return to take a charitable deduction for donated property, which requires her to get a qualified appraisal of real and personal property.  Not all donations require an appraisal, such as cash or marketable securities.  But where an appraisal is required, it is up to the donor to obtain and pay for it.

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The Nonprofit Board/Staff Relationship

I do a lot of speaking and coaching on the topic of board governance and board responsibilities.  I also do a lot of ballroom dancing, and lately it occurred to me that the relationship of ballroom partners is a great example of how the relationship between a nonprofit’s board and staff should work.

In ballroom dance, the gentleman determines the step and the general direction in which it will go.  This is not accomplished by using an iron grip to force the partner to do a certain step or go a certain way.  It is accomplished by keeping a good connection with the partner, staying aligned with your center, and giving the partner room and permission to do her part of the job.

The woman, in turn, is responsible for executing the step, filling up the space offered by her partner, and giving the step shape and style.  This is not accomplished by making independent decisions about what step should be done or what direction should be taken.  It is accomplished by keeping a good connection, responding to the movements of the partner, and maximizing the opportunities your partner gives you.

When each partner does his or her job, it supports the other partner and the partnership.  The dancing flows, creativity grows, steps are more powerful and shapes are stronger.  Yes, sometimes one partner or the other might go further than expected and the couple may get off balance, but they regroup and use the opportunity to find the right balance for them as a team.  Mutual trust and individual confidence are the keys to success.  Along with hours and hours and hours of practice, but that’s another topic!

dancersTake a look at this picture and try to imagine how either of these dancers could achieve this line without the other.

Think about this dynamic in terms of the nonprofit board and staff.  The board determines the mission and vision of the nonprofit.  They are responsible for good communication with the CEO and staff (the connection), to ensure programs and services are aligned with the mission (staying aligned with center), and for giving the staff the room and opportunity to do their work by effectively delegating the running of the business (giving room and permission).

The staff is responsible for keeping the board informed of successes and challenges (the connection), responding to the strategic direction set by the board (the partner’s movements), and maximizing the opportunities presented to the organization for its programs and services.

When the board and staff each do their jobs, and each allow the other to do their jobs, the organization is strong and dynamic, powerful, and successful.  Yes, sometimes the relationship may get off balance, but with a good connection, staff and board can regroup and regain focus.  Mutual trust and individual confidence are the keys to success.

Remember your role, have confidence in your partner, and maximize your opportunities, for the good of the whole.

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Define Your Charitable Purpose

We receive many calls from people thinking about starting a nonprofit organization to help solve a particular problem or address a particular issue.  The idea is that a nonprofit will allow people to raise money to fund a defined need.  Sometimes, though, the very real problem or issue to be addressed isn’t one that can be funded with a charitable organization.  For example:

  • Something that will benefit a single individual, like a wheelchair ramp to provide easy access to the individual’s home, or
  • Expenses that are someone’s personal or parental obligation, like fees for sports or other extracurricular activities.

hatinhandWhen considering the need for a new nonprofit organization, keep in mind that the charitable purpose must be broad and the organization’s work must benefit a whole community, not just the members of the nonprofit or a specific individual.

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Happy Hour

BauerGriffith and Independence Leads Group

Happy Hour Event

Where Doing Good is Good for Business

The principals of BauerGriffth, and the members of the Independence Leads Group, invite our non-profit and for-profit clients, associates and colleagues for spirits and libations, and good networking opportunities.

When:              May 8, 2014, 5:30 – 7:30

Where:             Winking Lizard Tavern, 25200 Miles Road, Bedford Heights, Ohio

Cash bar, hors d’oevres provided

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Help From the IRS

irspubsDid the title of this post catch your attention?  Yes, the IRS really can be helpful to nonprofits with many commonly asked compliance questions.  The IRS publishes tons of material each year, much of it very technical and very much geared toward tax professionals.  But they also publish some very clearly written, plain language documents that can help us as nonprofit board members and staff leaders.  These documents are referred to as IRS Publications (as opposed to Forms, Technical Advice Memoranda, Opinions, etc.), and are easily accessible by searching the IRS website.  You can enter the publication number if you know it, or just search by keywords.

Some of the most common issues and questions for charitable organizations are addressed by the following:

  • Publication 526, for rules regarding charitable contributions.
  • Publication 557, for information on how to obtain and keep your tax exempt status.
  • Publication 1771, for rules on receipts and acknowledgements of gifts and contributions.
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Creating a New Non-Profit

orgThere are a lot of issues to consider when you’re thinking about starting a new non-profit organization to run your community or charitable activities.  One of the first is, are you prepared to run a business?  When you start a new organization, keep in mind there are lots of filing and compliance requirements, both with the IRS and with your state, that will apply no matter how small you are, and that last for the life of the organization.  To avoid trouble, you’ll need to take your new organization seriously, and run it like a small business.

Speaking of small business, also keep in mind that your non-profit status is a tax election.  Successful non-profits are still run like a business.  And they make money, too!  A non-profit organization simply can’t distribute its proceeds to individuals such as shareholders or partners.  All of a non-profit’s proceeds must to be used for its charitable purposes.

The form of your non-profit business organization matters, too.  While the IRS does allow various forms of organizations, such as partnerships or LLC’s, to achieve non-profit status, choosing this type of form will create lots of complications and add lots of time to the process of achieving your tax exempt status with the federal government.  So when you form your organization at the start, choose the basic corporate form in your state.  It will save time and aggravation, and allow you to run and grow your charitable business over time.

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