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NonProfit Finance 101

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Non-Profit Finance 101. Staying in the Black. Special Considerations. In general, non ... Non-Profit Directors' Duties. Care. Loyalty. Obedience. Integrity ... – PowerPoint PPT presentation

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Title: NonProfit Finance 101


1
Non-Profit Finance 101
  • Staying in the Black

2
Special Considerations
  • In general, non-profit organizations may not
  • Generate profit but may hold funds in reserve to
    reinvest in the organization.
  • Provide dividends to individual shareholders.
  • Engage in activities deemed anti-competitive.

3
Special Considerations
  • In general, non-profit organizations may not
  • Provide any pecuniary gain, incentives or
    compensation to its officers, directors or
    members for their service or membership.
  • Hold funds under the name or identification
    number of an individual, or blend funds from an
    organizational account with those of an
    individual account.

4
Non-Profit Directors Duties
  • Care
  • Loyalty
  • Obedience
  • Integrity

5
Financial Executives Responsibilities
  • Maintain financial accounts with due diligence.
  • Record financial transactions with appropriate
    documentation.
  • Provide regular written/oral reports on the
    organizations financial status to the board and
    membership.
  • Prepare annual tax filings, if applicable.

6
Financial Executives Responsibilities
  • Seek expert counsel when needed.
  • Develop policies and procedures for managing the
    organizations finances.
  • Control organizational bank and other accounts.
  • Oversee periodic audits of the organizations
    finances.
  • Maintain all organizational financial records.

7
Important Information the Financial Executive
Should Have
  • Bank account information
  • Bank statements (past/current)
  • Annual financial statements (past/current)
  • Audited financial statements (past/current)
  • Financial policies and procedures
  • Financial records and forms

8
Financial Policies/Procedures
  • Financial Executives
  • Who is generally responsible for handling
    financial transactions and accounts?
  • Who has a support role and what is the extent of
    each role?

9
Financial Policies/Procedures
  • Accounts and Record Maintenance
  • Receipts, disbursements and forms
  • General ledger and chart of accounts
  • Membership roster
  • Property, investment and inventory records
  • Bank statements and reconciliations

10
Financial Policies/Procedures
  • Bank Accounts
  • Type(s) of accounts to maintain
  • Signatories on account(s)
  • Authority to borrow funds
  • Insurance/bonding
  • Employer Identification Number or other account
    identifier

11
Financial Policies/Procedures
  • Financial Reports
  • Who receives reports?
  • How often are reports provided?
  • What type of verification process or internal
    audit is done of financial reports?

12
Financial Policies/Procedures
  • Investments
  • Type(s) of investments
  • Person(s) authorized to invest funds
  • Investment policies

13
Financial Policies/Procedures
  • Transactions
  • Membership dues
  • Special assessments
  • Fees
  • Loans/grants
  • Interest/dividends

14
Financial Policies/Procedures
  • Expense Reimbursement
  • What activities are covered?
  • What limits apply (e.g., per diem, coach airfare,
    etc.)?
  • What is the authorization process?
  • Who authorizes pre- and post-activity?

15
Budgeting
  • Pointers
  • Identify goals/objectives for coming year.
  • Review current year revenue and expenses as
    baseline.
  • Identify revenue/expenses that will not recur.
  • Obtain input from organizational leaders.

16
Budgeting
  • Pointers
  • Estimate income and expense for coming year.
  • Review proposed budget with leadership.
  • Approve budget.
  • Communicate budget to members.
  • Monitor budget.

17
Tax Exemptions
  • Federal (US)
  • There are 23 exempt classifications under the
    Internal Revenue Service code.
  • As a business league, NADL and its Components
    can qualify for exemption under Section 501(c)(6)
    of the IRS code.
  • As 501(c)(6) organizations, NADL and its
    Components may not receive charitable
    contributions.

18
Tax Exemptions
  • State (US)
  • Federal tax exemptions do not necessarily apply
    at the state level.
  • Some states grant their own exemptions for
    nonprofit organizations.
  • The process for obtaining an exemption varies
    from state to state.

19
Tax Exemptions
  • International
  • The laws vary significantly from country to
    country.
  • Component leaders will need to investigate the
    requirements and process in each country.

20
Obtaining Exempt Status
  • Federal (US)
  • Individual exemption.
  • Group exemption.
  • Filing requirements.

21
Tax Filing Requirements
  • Federal (US)
  • Tax filings.
  • Taxes for unrelated business income.
  • Taxes related to employees.
  • State (US)
  • Requirements will vary from state to state.
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