Charitable Assistance: IRS Requirements

By CarolCarrie / December 3, 2018 /
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Last week we looked at Bridges for Heroes, an organization that provides assistance to veterans for health insurance and costs of health care not covered by insurance. We determined this type of help qualifies as charitable assistance because: Veterans constitute a “charitable class.” Recipients must show need by meeting eligibility requirements But is the charitable…

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Charitable Assistance

By CarolCarrie / November 26, 2018 /
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Jean Ryan started a nonprofit organization called Bridges for Heroes to help veterans and their families with the cost of health insurance, co-pays and deductibles. Does Bridges for Heroes qualify as a 501(c)(3) organization? Is this type of help considered charitable assistance? A Little Background The IRS states, “To be tax-exempt under section 501(c)(3) of the…

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Nonprofit Income Accounts Part 4: Merchandise Sales

By CarolCarrie / October 15, 2018 /
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“Hey, I have a great fundraising idea. Let’s sell {insert merchandise} to raise money!” Sometimes this can truly be a great idea. And it may be worth pursuing. Just proceed with full knowledge of what you are getting into. Selling merchandise involves a different type of accounting. In fact, it involves a lot of different activities.…

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A Plan to Keep Public Charity Status

By CarolCarrie / October 8, 2018 /
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Congratulations if your organization has achieved 501(c)(3) public charity status! Now what is your plan to keep it? Public Charity or Private Foundation? Organization founders are usually focused on obtaining 501(c)(3) status. Most likely they want to be a special type of 501(c)(3) – a public charity. The alternative is to be classified as a…

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Nonprofit Income Accounts Part 2: Contributions

By CarolCarrie / September 10, 2018 /
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In our last post we took a brief look at the nature of contributions, and all the many names that contributions go by. We distinguished contributions from exchange income. Today we look at accounts for contributions of cash. In-kind contributions, such as gifts of securities or other in-kind goods, services or rents, are for another…

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Alternatives to Diversification

By CarolCarrie / August 13, 2018 /
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Before your organization seeks to diversify income, consider three ways you may be able to move toward financial sustainability. This post continues a series on income diversification before we continue our Nonprofit Chart of Accounts Grand Tour on income accounts. 1. Reduce expenses Before you consider new sources of income, make sure you are not spending…

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Nonprofit Income Diversification: A Cautionary Tale

By CarolCarrie / August 6, 2018 /
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In 2014 one of our clients derived about 25% of income from one Federal pass-through grant. This grant substantially plugged the shortfall between the program service fees they charged to clients and their costs to provide the program. That year the notes to their audited financial statements cautioned (details changed): “The Organization received substantial support…

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Nonprofit Revenue Diversification

By CarolCarrie / July 30, 2018 /
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We’ve all heard the adage, “Don’t put all your eggs in one basket.” How does this advice hold up for nonprofit income? Before we continue our Nonprofit Chart of Accounts Grand Tour into income accounts (here’s the guide to the Tour of balance sheet accounts), first let’s consider the concept of income diversification. Income accounts…

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Nonprofit Income Streams: An Introduction

By CarolCarrie / July 9, 2018 /
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Over $1.85 trillion dollars of income was reported by public charities filing Form 990 or 990-EZ, based on 2016 IRS data compiled by The Urban Institute, National Center for Charitable Statistics.  Where does all that money come from? Specifically we are focusing on income of 501(c)(3) public charities. For comparison’s sake, here are common types…

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Biggest Bookkeeping Secret

By CarolCarrie / July 2, 2018 /
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Do you know the biggest secret to keeping good books?  Well, we’re going to let you in on it. It’s managing the balance sheet. Many of the problems we’ve seen with bookkeeping can be traced back to not keeping an accurate balance sheet. We see many people focus only on the profit and loss report, and…

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