Top 10 “To-Do’s” for Non-Profits

Sometimes even the most proactive and well managed organizations need to revisit some of their tax, governance and management policies, procedures and protocols, especially if it has been a few years since they were last addressed. Here are some items that might make your “to do” list this year:

1. Staff, Directors and management should know the Organization’s crisis or emergency protocol. Staff should be well rehearsed on proper protocol for problems, improper events or accidents that present. Staff and Directors should also be well informed and prepared to respond regarding any public announcements the organization makes.

2. The activities, programs and mission on the Organization’s website and social media should support the mission and programs approved by the IRS. With the IRS having easy access to these materials and increasing its oversight activities, it is a good time to make sure that any new programs or any discontinued programs have been properly approved. If the Organization’s approved activities have become outdated, there are a number of methods to update this information with the IRS. In addition, if the site contains any sponsored advertisements or links there may be unrelated business income tax considerations that the Organization should be aware of.

3. The activities of service providers should be reviewed to make sure they are correctly classified as independent contractors or employees. There are a number of criteria that should be considered and this is a determination that involves a substantial amount of judgment, however, this is currently an issue the IRS is actively auditing and it may be a good time to revisit any relationships that have evolved over the years to make sure the Organization is aware of any exposure.

4. Governance policies that the IRS asks about on the tax return form each year should be in place and being followed. If the policies call for annual monitoring or archiving, that should be performed as well. These include:
   • Conflict of interest policy
   • Whistleblower policy
   • Record retention policy

5. Other policies not specifically addressed by the IRS should also be considered. Setting specific polices ensures that either management or the Board has considered and discussed the issues and documented their decision in order for employees to have a clear focus for their actions. These include the following as well as others
   • Privacy policy
   • Fundraising policy
   • Ethics policy
   • Social media policy
   • Investment policy
   • Public inspection policy
   • Personnel policies
   • Volunteer policy

6. An inventory of property and equipment should be conducted periodically and reconciled to the financial records. Maintaining good custody of assets is expected by donors and grantors. Some grantors- various state divisions and departments among them- even require a periodic inventory to be conducted and specific records to be maintained.

7. The Organization should maintain an Accounting Manual that sets forth a description of the daily, weekly, monthly and annual financial procedures, timelines, and sample documents. The manual should include at a minimum:
   • Chart of accounts with detailed descriptions
   • Accounting department organization chart
   • Controller and staff responsibilities
   • Referenced accounting procedures
   • Filing and record maintenance
   • Required content, documentation and approval process for journal entries
   • Detailed procedures and instructions for each element- for example the Cash section might include the following:
     • List of bank accounts and function of each
     • Cash drawers and credit cards
     • Cash receipts and deposits
     • Safekeeping procedures
     • Problem checks and fees charged
     • Wire transfers
     • Check signing authority
     • Check requests
     • Bank account reconciliations
     • Stale checks
     • Data entry methodology and reports
     • Source of data and detail used in data entry and reconciliation
     • Integration with general ledger
     • List of periodic reports generated
   • Purchasing policy- certain policies are required and required to be documented for most Organizations that receive federal or state funds
   • Allocation criteria and methodology
   • Capitalization policy
   • Approval process
   • Periodic report formats, approvals and distribution lists

8. The Organization should be careful to document important actions and decisions. Specifically certain minimum items include:
   • Board and committee meeting minutes
   • Compensation committee decisions for key employees, including:
     • Salary comparability study
     • Performance criteria and evaluation
     • Discussion and conclusion documentation
   • Endowment decisions, such as the specific decision to utilize funds required by the UPTMFA rules
   • Deferred compensation and other compensation matters (such as parsonage/living allowances for churches) which must be documented prior to being earned

9. The Organization should ensure that it acknowledges gifts and event proceeds in accordance with IRS requirements. The IRS requires that a charity send a formal acknowledgement letter for any donation that is more than $250. The donor will use this letter as proof of the donation and right to a tax deduction. In addition, if donors have received any goods or services (for example at a fundraising event that includes a dinner or golf) and they have paid $75 or more, a written estimate of the value of the goods or services they received is required.

10. Computer files and computer programs should be regularly backed up both on and off site and an emergency plan should be considered to get the Organization back up and running as quickly as possible in the event of a disaster or emergency.