Focus on finance

1. New Jersey Education Foundation Partnership Member Meeting January 17, 2014 Focus on finance

2. 1099s • Issue 1099-MISC for all non-employee compensation and rent • Threshold for issuance is $600 • Deadlines • Due to recipient by 1/31 • Due to IRS by 2/28

3. W-2s • Issue W-2s for all employees • Deadline • Due to employee by 1/31 • If any foundations have paid executive directors, make sure you know whether they qualify as an independent contractor (1099-MISC) or an employee (W-2)

4. Donor Acknowledgement Letters • Required for all donations > $250 • Donors cannot claim tax deduction without “contemporaneous, written acknowledgement from the recipient organization”

5. Donor Acknowledgement Letters • Deadline: • To be considered “contemporaneous”, donor must receive by the earlier of: • The date on which the donor actually files their tax return, or • The due date (including extensions) of the tax return • Best practice: issue as soon as possible after donation is received • General rule of thumb: issue by 1/31

6. Donor Acknowledgement Letters • Minimum requirements: • Your organization’s name • Amount of cash contribution • A description of non-cash contribution • Statement that no goods or services were provided by the organization, if applicable • Description and good faith estimate of the value of any goods or services, if any • Statement that goods or services, if any, that organization provided in return consisted entirely of intangible benefits, if applicable (such as a small gift)

7. Donor Acknowledgement Letters • Sample letter • See attached

8. Policies • Calendar year-end is a good time to set aside for reviewing all relevant non-profit policies and have board members and/or employees sign their acknowledgement of them:

9. Policies • Common examples: • Conflict of interest • Whistleblower • Document retention / destruction • Joint venture • Expense reimbursement • Gift acceptance

10. Financial Check-Up • Calendar year-end is a good time for 6/30 year-end entities to perform a financial check-up so adjustments can be made, if needed, in the second half of the year:

11. Financial Check-Up • How are expenses trending as compared to budget? • If they are trending over budget, identify why and determine if cuts can be made in second half of year. • How is revenue generation trending as compared to budget? • If it is falling short of budget, begin identifying potential new revenue streams.

12. Financial Check-Up • What is the organization’s cash position? • Is projected cash flow sufficient to carry the organization for the second half of the fiscal year? • If not already done, develop a calendar of key payment due dates. • Look at liquidity and any potential “cash crunches” you can foresee.

13. Special Consideration for 12/31 Year-End Entities • Have year-end balance sheet and income statement generated. • Identify program accomplishments and calculate revenue and expense for each of the 3 largest. • Identify “key” employees • Gather names and address of contributors / grantors over $5,000

14. 990 • For 12/31 year-end entities (and 6/30 year-end entities on extension): • Refresh yourself with 990 filing rules: • Types • 990-N (“Postcard”) • <$50,000 receipts • 990-EZ (“Short Form”) • <$200,000 receipts and <$500,000 assets • 990 (“Long Form”) • >$200,000 receipts or >$500,000 assets

15. 990 • Deadlines • 12/31 year-ends • Initial: 5/15 • 1st extension: 8/15 • 2nd extension: 11/15 • 6/30 year-ends • Initial: 11/15 • 1st extension: 2/15 • 2nd extension: 5/15

16. 990 • Penalties for late filing / failure to file (for organizations with gross receipts <$1,000,000): • $20 per day • Maximum: lesser of $10,000 or 5% of organization’s gross receipts for that year