UBIT: When a Nonprofit Is Profitable. By Meredith N.
Pratt, CPA. Playing without Referees at the Institute for International Sport: A Lesson in Why Accountability Matters. A meltdown is occurring in Rhode Island at the Institute for International Sport (IIS).
The situation is still unfolding through the excellent coverage of the Hartford Courant and the Providence Journal, which we wish to acknowledge as the original sources of much of what follows. NPQ has also gleaned some information from an analysis of a Rhode Island state audit of the organization, as well as the IIS’ 990 tax forms filed for 2007 through 2009.
Taken as a whole, we see in this situation a warning to organizations dominated by a charismatic founder, and their funders. Founder leadership can and often does work beautifully, but when it is not supported by reasonable management systems and a board that takes its oversight responsibilities seriously, there is way too much that can go wrong. IIS was founded in 1986 at the University of Rhode Island (URI). An Executive Director’s Guide to Financial Leadership. “Voyage” by Sangjun Roh. © the artist There is an important distinction between financial management and financial leadership.
Financial management is the collecting of financial data, production of financial reports, and solution of near-term financial issues. Financial leadership, on the other hand, is guiding a nonprofit organization to sustainability. This is the job of an executive director. He or she is responsible for developing and maintaining a business model that produces exceptional mission impact and sustained financial health. 1. Strong annual budgeting is an essential element of financial leadership. Achieve a net financial result.
Anticipate the future. Annotated Excerpts of the Gates Foundation 990 Form 2009 - Document. Previous Next Creating entirely new advocacy groups In general, grants go to existing organizations that are worthy, in the foundation's view, of financial support.
Occasionally, however, the foundation decides that there is a need for a new organization to do work nobody is doing. Often in these cases the foundation turns to Rockefeller Philanthropy Advisors to create an advocacy group that the foundation can finance. RPA created the "Ed in '08," an organization that conducted a campaign designed to raise awareness of education issues during the 2008 presidential campaign.
California Attorney General Sues Monterey County ... On May 24, 2010, the California Attorney General filed a complaint against the Monterey County AIDS Project (MCAP) and several of its officers, directors, and key employees for, among other things, diversion and improper distribution of charitable assets, breach of fiduciary duty for failure to use assets for a restricted purpose, breach of fiduciary duty for failure to take actions to recover improperly diverted funds, and negligence.
According to the complaint, more than $2.8 million of charitable assets was "misappropriated, misapplied or wasted. " It may be instructive for California nonprofits to read the complaint, which alleges that the defendants: The complaint alleged that defendants breached their fiduciary obligations in managing and accounting for charitable trust funds they received by engaging in the following conduct:
Nonprofit Industry News Article - Sage Nonprofit Solutions. Nonprofit Newswire. Many Groups Stand to Lose Charity Status Under IRS Rule Change - Tax Watch. By Grant Williams Hundreds of thousands of nonprofit organizations could lose their tax-exempt status this month.
Nobody really knows for sure how many organizations will lose their tax exemptions, but several research groups estimate that more than 300,000 organizations listed on the Internal Revenue Service’s rolls ultimately could be affected. Time's Up! What You Need to Know about Your 990. If the number of nonprofits registered with the IRS shrinks by 20 percent this year, don’t blame it on an ailing economy.
A simpler explanation is available: thousands of small nonprofits may not meet a new filing deadline, causing revocation of their tax exempt status and removal from the IRS list. Most nonprofits with fiscal years of January 1–December 31 and revenue under $25,000 had 3 years—or until May 17 of this year—to file form 990-N or lose their federal tax exemption. Active organizations that do not file will face fees and lost time as they reapply for their exemption unless reasonable cause is shown for not filing.
But the true story behind any large drop in registered nonprofits may prove to be that long-defunct organizations are finally being removed from the IRS list. Sex and Tax Breaks—A “Charitable” Foundation has Status Revoked. Fraud in Fruitlands—Museum Comes Late to Financial Controls. May 6, 2010; Source: Nashua Telegraph | As a CFO, she must have been very good at her job.
While holding that post at the Fruitlands Museum in Harvard, Mass., Peggy Kempton managed to steal some $1.3 million over six years. According to the Nashua Telegraph, Kempton pleaded guilty this week to creating "credit card accounts for herself, family members, and museum employees and charged items for her personal use, paying the balances with money from the museum. " The money paid for college tuition for her children and clothes for herself. To keep her theft hidden, Kempton manipulated the museum's books to make it look like the expenses were legitimate. Kempton could be sentenced to a long stay in the state prison for admitting to 17 counts of larceny and credit card fraud, and one for making false corporate entries. A separate civil case brought by the museum in 2008 for misappropriating the organization’s money is pending in Worcester Superior Court.
One-Fourth of Nonprofits Are to Lose Tax Breaks. Will Your Nonprofit Lose Charity Status on May 15? It may be April, but this is no Fool's joke.
