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nakis3y2htan
Wysłany: Czw 3:38, 21 Kwi 2011
Temat postu: climate max 20111Issues Will Arise Related To The
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When any non-profit applies for its tax exemption, the organization is necessitated to clarify the activities it plans to conduct and to make the case that their task qualifies for charitable, tax-exempt status. Upon reiterate, the IRS both grants or denies the applying and issues its 'exemption letter'.
If your planned movement falls outside of the specified mission of your non-profit
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, then the movement may be non-compliant. Non-compliant? With what? Your IRS-approved exemption! How do you understand, for sure, whether your planned activity is among your compliance parameters? query! Who? The IRS (your regulatory reference)!
Please ponder the emulating assumed example: a regional community Food Bank is deciding whether or not to purchase a citizen fast-food chain restaurant bordering to its main food bank facility.
It sounds favor a great idea while presented to the board for approval:
* the fast-food canteen brings in lots of buyers who would study namely the edible bank namely located right afterward gate; * the profitability of the cafeteria could subsidize the operations of the food bank
Good idea? Bad idea? How would you vote if you were aboard the board?
This is a agreeable example of the challenges of a non-profit board. Let's take this scenario a tread beyond ahead we try to deal with the quandary.
This Food Bank was systematized 30 annuals antecedent and received its IRS permission as a charitable
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, tax-exempt union serving the public good. The founding executive adviser (ED) led the organization for 20 years until he elderly.
Following the retirement of the founding ED, the board conducted a quest and hired a replacement ED. Unfortunately, their new ED left after just an year, approving an opportunity at a larger food bank. Since that time, the organization has underwent rapid turnover in 4 EDs, but the board believes the tide has turned: the present ED is an capable manager, who was seeing for a vocation alteration, and is committed to remaining in this location for quite a few years.
The idea as the buy of a fast-food restaurant took shape during a scheduled fund-raising shriek between the current Executive Director and the landlord of the fast-food necklace. The landlord
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, a former board member of the Food Bank, recommended the buy as a machinery as alleviating the ongoing monetary challenges of the Food Bank and as portion of his possession blueprinting. The handle was a gracious opportunity; the owner would even invest the financing. To reply any answers, the owner offered to attend the board meeting with the ED.
Okay.
An chance presents itself: a sometime embark member offers to be unbelievably philanthropic and one excited Executive Director presents the motif apt the board by its normal meeting. You are a board member. You hear the presentation. The chance sounds excellent! What ought the board do?
(We could cost very a morsel of period strategizing, merely that is beyond the scope of this post.)
Question #1: Yes, you are a board member; although, are you eligible to analyze the deal and make an accused determination? Would you be willing to be that 'lone voice in the wilderness' that dares question the deal? Are you willing to acknowledge your absence of knowledge?
Question #2: Did your ED research the language in your native IRS determination letter as a adviser for what your scope of services can be? Did your ED consult with legal and accounting counsel?
Question #3: Are you familiar with 'unrelated business income' - whereby income-producing activities can outcome in taxable revenues (even for a non-profit)?
Question #4: Do you understand 'noncompliant activity'? Has your ED mentioned that publish in the board presentation?
Per usual, a lot is happening at this (hypothetical) non-profit board meeting. This good idea of purchasing a rapid food restaurant is outside the specification of the
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