Staying in “The Know”

As I write this post, the special extended deadline for small nonprofits to file their Form 990s has just passed.  As the story goes, Congress passed two small laws back in 2007.  These laws require all nonprofits to file a Form 990, and if a nonprofit fails to file for three consecutive years, then it would lose its tax-exempt status.  The IRS applied this law by creating a new and truncated version of the Form 990, called the Form 990-N (“e-Postcard”).  This new form is for the smallest organizations which previously were not required to file, ones with budgets of $25,000 or less. 

 

The real problem did not become apparent until earlier this year.  The IRS released figures in the spring of 2010 which listed hundreds of thousands of small charities that had not filed a Form 990-N for the three consecutive years (08, 09, and 10) since the above mentioned laws were passed.  Either these charities no longer operate, and/or these charities were not keeping up with important news and knowledge.

 

Even if you were not affected, there is a clear lesson to learn from this situation.  Make sure you stay in the know.  The Standards for Excellence® state,

“Nonprofits should periodically conduct an internal review of the organization’s compliance with known existing legal, regulatory and financial reporting requirements and should provide a summary of the results of the review to members of the board of directors.”

Not only should you carry out the mission of your organization; you also must devote the time to keep abreast of important news and happenings in the nonprofit sector.

 

As the opening story shows, nonprofit organizations can be hurt by a lack of vigilance.  Nonprofits must keep up with all the various laws and regulations of federal, state, and local governments.  These laws can and will change.  For this reason, the Standards for Excellence Institute® provides its members with a Legal Requirements Checklist educational packet.  We routinely update this resource with the information you need to stay on the right side of the law.  This and other packets are free and available to Standards for Excellence Institute members through the members only section of our website. Hard copies are also available upon request.  We also offer one-to-one technical assistance tomembers.  Not a member? Join now!

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