Financial Issues for Student Organizations

1. Financial Issues for Student Organizations Student Organization Leadership Development

2. The Role of Finances • Financial health and stability are fundamental • All operations are ultimately dependent upon financial resources and management • The Business Approach • You should view your role in your organization as a manager of a business • Understand potential legal consequences of your role • Responsibility to pass good practices and training on to new officers

3. Review or Establish a Process • Steps that should be included in your financial process: • Prior to expenditures: • Budgets should be submitted for approval • Submitted budgets should be checked by Financial Officer or Treasurer • Approval should be obtained from Executive Committee of organization • Approval should be obtained from Advisor • Checks should require double signatures: one from Treasurer, one from President

4. Review or Establish a Process • After expenditures: • All receipts should be submitted to Treasurer or Financial Officer • A financial report should be submitted in writing to Treasurer or Financial Officer and Executive Committee of organization • Recommendations should be made for future related expenditures • Once you’ve reviewed or established a process, write it down! • Pass the process on to new officers and advisors!

5. First: the Basics • Do NOT use person information to set up bank accounts, etc.! • Establish checks & balances • Demand approvals for all expenditures prior to spending • Create event and/or activity budgets • Underestimate revenues! • Overestimate expenditures!

6. First: the Basics • Plan ahead • Secure multiple bids or quotes • Count your cash! • Make your cash deposits in a timely manner! • Keep ALL your receipts! • Keep all financial records

7. To Earn Tax Exemption To earn Tax Exempt Status from the IRS:(Forms on IRS Website) • Determine the type of Tax Exempt Organization - most common types will be "Charitable Organizations" [c(3)], "Social Clubs" [c(7)] and "Social Welfare (or Service) Organizations" [c(4)]. Note: to gain exemption from Title IX prohibitions against single sex organizations, you must be a "Social Organization" exempt under 501c(7). • File "Application for Recognition of Exemption under Section 501 (a)" - Package 1024 on IRS Website • File "Application for Employer Identification Number"- Form SS-4 on IRS Website. Note: This must generally be done before a bank account may be opened for the organization. • A helpful publication, although it is very lengthy, in this process is Publication 557- "Tax-Exempt Status for Your Organization". This contains all the information you need for applying for recognition of tax-exempt status. It is recommended that you download this form and refer to it frequently.

8. Important Point ~ Title IX Single Sex Organizations must gain approval from the General Counsel's Office at Baylor University • Submit organizational documents and IRS determination letter 1. Constitution and bylaws - must indicate that: a. membership is not limited to persons pursuing or having interest in a particular study, profession, or academic discipline, b. membership is not limited to persons who have a high level of achievement or other endeavor, and c. membership is not permitted to hold membership in other social fraternities or sororities. 2. The primary purpose of the organization must be social activities, and the organization must be recognized as exempt from taxation under section 501(c)(7). Submit a copy of the IRS Determination letter. • Above items should be taken to Christopher Holmes in the Office of General Counsel, 213 Pat Neff, 710-3821. A cover letter requesting a determination from Mr. Holmes that the organization meets the requirements for exemption from the Title IX prohibitions against discrimination on the basis of gender should be attached. When this letter is received, take it along with your organizational documents to Student Activities to apply for your charter.

9. Getting Started • What are the financial needs of your organization? • Establish non-profit status • Secure an EIN (Employer Identification number) • Earn tax-exempt status • Establish a bank account

10. Establish Non-Profit Statuswww.sos.state.tx.us Go to the Secretary of State website to find Articles of Incorporation for a Non-profit Corporation On Business and Public Findings choose Corporations

11. Establish Non-Profit StatusFiling Guides Choose “Nonprofit” from forms and summaries

12. Establish Non-Profit Status Articles of Incorporation for a Non-Profit Corporation Choose form 202 either as a word document or PDF

13. Establish Non-Profit Status Summary Non-profit Corporation (Forms on Secretary of State Website) • Articles of Incorporation for a Non-profit Corporation - Form 202 • Filing Guide - contains helpful information on selecting and filing to form an organization. • Draft Bylaws and Constitution - This must be done carefully, particularly if you will be seeking exemption from Title IX prohibitions against single sex organizations. Make sure that Bylaws comply with the Texas Non-profit Corporation Act (available on Secretary of State website by clicking on "Business and Public Filings", then "Corporations") NEXT…

14. Tax Exempt Status from the IRS Step 1: Go to www.irs.gov Step 2: Choose Charities and Non-Profits

15. Tax Exempt Status Determine the type of Tax Exempt Organization - most common types will be "Charitable Organizations" [c(3)], "Social Clubs" [c(7)] and "Social Welfare (or Service) Organizations" [c(4)]. Note: to gain exemption from Title IX prohibitions against single sex organizations, you must be a "Social Organization" exempt under 501c(7) www.irs.gov

16. Tax Exempt Status ~Charitable Organizations Application

17. Tax Exempt Status ~ Social Clubs Again… Remember that to gain exemption from Title IX prohibitions against single sex organizations, you must be a "Social Organization" exempt under 501c(7) Application

18. Tax Exempt Status ~ Social Welfare (Service) Organizations File "Application for Recognition of Exemption under Section 501 (a)" - Package 1024 on IRS Website SS4

19. Application for Recognition of Exemption under Section 501 (a) File package 1024

20. Employer Identification Number (EIN) SS-4 Note: This must generally be done before a bank account may be opened for the organization.

21. Tax Exempt Status ~Social Welfare (Service) Organizations Application

22. Thank You! For additional assistance, please contact Student Activities at (254) 710-2371 or e-mail: Karin_Klinger@baylor.edu Leslie_Poe@baylor.edu