Thursday, March 2nd, 2017
Katie Smith took her mentee, Allison Moore, the Hawks vs. Mavericks game last night! The Hawks came away with a win, scoring 100 points to the Mavericks’ 95.
“We had so much fun at the game! The mentor program is a great way to build relationships & socialize outside of the office!” – Katie
Wednesday, March 1st, 2017
If your not-for-profit has too much work and not enough staff to go around, consider outsourcing your human resources function. It could give your internal team more time to spend on other core duties, mission-driven programs, and strategic plans.
Benefits and drawbacks
Labor-intensive responsibilities such as recruiting, training, benefits planning and administration, compliance monitoring, leave management, and performance reviews can all be outsourced. Transferring all or some of these responsibilities to the right outside party can vault your organization to a higher level of professionalism and efficiency in those areas.
The move also might result in improvements. For example, an HR specialist firm is likely to have more tools, contacts and time to spend recruiting new employees than your own organization has. But the primary draw for most nonprofits is reduced costs. So you’ll need to perform a cost-benefit analysis. Even if it costs more to outsource, you may decide that the extra dollars are worth paying to free up staff for other initiatives.
One of the biggest drawbacks to outsourcing is the loss of control. That’s why it’s important to think through the ramifications of handing off HR responsibilities. Certain tasks may require an understanding of your organization’s culture and history to be effective. Also consider the impact of letting go of any HR staffers you currently employ.
Preparing to launch
Be sure your board approves the decision to outsource and your attorney reviews any contracts with service providers. Your nonprofit also needs to have controls in place to monitor the quality of outsourcing arrangements.
We can help you assess whether to outsource, such as assisting with your cost-benefit analysis. If you decide to outsource, we can also provide advice on effectively monitoring the arrangement.
Tuesday, February 28th, 2017
As you file your 2016 income tax return and plan your charitable giving for 2017, it’s important to keep in mind the available deduction. It can vary significantly depending on a variety of factors.
What you give
Other than the actual amount you donate, one of the biggest factors that can affect your deduction iswhat you give:
Cash. This includes not just actual cash but gifts made by check, credit card or payroll deduction. You may deduct 100%.
Ordinary-income property. Examples include stocks and bonds held one year or less, inventory, and property subject to depreciation recapture. You generally may deduct only the lesser of fair market value or your tax basis.
Long-term capital gains property. You may deduct the current fair market value of appreciated stocks and bonds held for more than one year.
Tangible personal property. Your deduction depends on the situation:
- If the property isn’t related to the charity’s tax-exempt function (such as an antique donated for a charity auction), your deduction is limited to your basis.
- If the property is related to the charity’s tax-exempt function (such as an antique donated to a museum for its collection), you can deduct the fair market value.
Vehicle. Unless the vehicle is being used by the charity, you generally may deduct only the amount the charity receives when it sells the vehicle.
Use of property. Examples include use of a vacation home and a loan of artwork. Generally, you receive no deduction because it isn’t considered a completed gift.
Services. You may deduct only your out-of-pocket expenses, not the fair market value of your services. You can deduct 14 cents per charitable mile driven.
Your annual charitable donation deductions may be reduced if they exceed certain income-based limits. And if you receive some benefit from the charity, your deduction generally must be reduced by the benefit’s value.
In addition, various substantiation requirements apply. And the charity must be eligible to receive tax-deductible contributions. Finally, keep in mind that tax law changes could be passed later this year that might affect your 2017 charitable deductions.
If you have questions about how much you can deduct on your 2016 return, let us know. We also can keep you apprised of the latest information on any tax law changes.
Monday, February 27th, 2017
Congratulations to Bradenton’s Steve Parent and team for winning 2nd place in the Manatee Chamber Sporting Clays Tournament, held last month. 25+ teams participated. Way to go guys!
Friday, February 24th, 2017
Last Night’s Hob Nob event proved to be as good as ever! Hosted by the Bradenton Area Economic Development Council (EDC), nearly 900 people attended this beloved event — The ultimate networking experience, centered around a variety of tasty food and beverages. The Mauldin & Jenkins wine booth is always a popular stop! Thank you to everyone who stopped by to say hello, we enjoyed seeing you.
Wednesday, February 22nd, 2017
Bylaws are the rules and principles that define your not-for-profit’s governing structure. Your board and staff need to be familiar with exactly what the bylaws contain — and what they don’t. If they’re incomplete or don’t reflect the organization’s current mission, revising them is critical.
What do they contain?
Your bylaws might cover such topics as the:
- Broad charitable purpose of your organization,
- Size and function of your board,
- Election, terms and duties of directors and officers, and
- Basic rules for voting, holding meetings, electing directors and appointing officers.
Without being too specific, your bylaws also should provide procedures for resolving internal disputes, such as the removal and replacement of a board member. If you’re not familiar with the bylaws, you should get up to speed fast.
How are bylaws changed?
If you want to change your organization’s bylaws, first make sure you have the authority to do so. Most bylaws contain an amendment paragraph that defines the procedures for changing them. Then consider creating a bylaw committee made up of a cross-section of your membership or constituency. This committee will be responsible for reviewing existing bylaws and recommending revisions to your board or members for a full vote.
Your bylaw committee needs to focus on your nonprofit’s mission, not its organizational politics. A bylaw change is appropriate only if you want to change your nonprofit’s governing structure, not its operating procedures.
What else should be considered?
If your nonprofit is incorporated, ensure that any proposed bylaw changes conform to your articles of incorporation. For example, the “purposes” clause in your bylaws must match that in your articles of incorporation. Any new provision or language changes in your bylaws contrary to the objectives and ideals included in your incorporation documents may invalidate the revisions.
Bylaw provisions that suggest you’ve strayed from your original mission also can jeopardize your federal tax-exempt status. Make sure your bylaw amendments are consistent with your tax-exempt purpose. If they represent a “structural or operational” change, report the amendments on your Form 990.
Although bylaws aren’t required to be public, consider making up-to-date bylaws publicly available to boost your organization’s accountability and transparency. Contact us for more information.
Tuesday, February 21st, 2017
Rather than keeping track of the actual cost of operating a vehicle, employees and self-employed taxpayers can use a standard mileage rate to compute their deduction related to using a vehicle for business. But you might also be able to deduct miles driven for other purposes, including medical, moving and charitable purposes.
What are the deduction rates?
The rates vary depending on the purpose and the year:
Business: 54 cents (2016), 53.5 cents (2017)
Medical: 19 cents (2016), 17 cents (2017)
Moving: 19 cents (2016), 17 cents (2017)
Charitable: 14 cents (2016 and 2017)
The business standard mileage rate is considerably higher than the medical, moving and charitable rates because the business rate contains a depreciation component. No depreciation is allowed for the medical, moving or charitable use of a vehicle.
In addition to deductions based on the standard mileage rate, you may deduct related parking fees and tolls.
What other limits apply?
The rules surrounding the various mileage deductions are complex. Some are subject to floors and some require you to meet specific tests in order to qualify.
For example, miles driven for health-care-related purposes are deductible as part of the medical expense deduction. But medical expenses generally are deductible only to the extent they exceed 10% of your adjusted gross income. (For 2016, the deduction threshold is 7.5% for qualifying seniors.)
And while miles driven related to moving can be deductible, the move must be work-related. In addition, among other requirements, the distance from your old residence to the new job must be at least 50 miles more than the distance from your old residence to your old job.
There are also substantiation requirements, which include tracking miles driven. And, in some cases, you might be better off deducting actual expenses rather than using the mileage rates.
So contact us to help ensure you deduct all the mileage you’re entitled to on your 2016 tax return — but not more. You don’t want to risk back taxes and penalties later.
And if you drove potentially eligible miles in 2016 but can’t deduct them because you didn’t track them, start tracking your miles now so you can potentially take advantage of the deduction when you file your 2017 return next year.
Thursday, February 16th, 2017
In recent years, the IRS has increased its scrutiny — including actual audits — of not-for-profits. Do you know what to do if your organization receives an audit letter?
What is an audit?
An audit begins with the initial contact from the IRS and continues until a closing letter is issued. Before closing an audit, an officer of your nonprofit, your CPA and the IRS agent will discuss the agent’s conclusions at a closing conference. Both the conference and letter will explain your appeal rights.
Audits can cover many areas. For example, the IRS may want to learn whether your organization has filed all returns and forms as required by law. Or it might delve into whether your activities have been consistent with your tax-exempt purpose, or whether unrelated business income tax or employment taxes were properly paid.
The igniting spark for an audit might be an IRS examination initiative or project, or complaints to the agency about potential noncompliance. In general, Form 990 plays a strong role in the selection process. For instance, the IRS may apply risk models to your organization’s Form 990 data related to governance or the incidence of fraud.
Field vs. correspondence
If your initial contact letter schedules an agent to visit, the IRS is conducting a field audit, which falls into one of two categories:
- General program exam, which typically is conducted by a single IRS agent, or
- Team Examination Program audit, which focuses on large, complex organizations and may involve a team of examiners.
If, on the other hand, your initial IRS letter asks you to deliver documents to an IRS office by mail, the agency is conducting a correspondence audit. An agent generally will perform the audit via letters and phone calls to your officers or representative. If a correspondence audit grows more complex or your nonprofit doesn’t respond to requests, it can turn into a field audit.
The IRS might also contact you to announce a compliance check. This isn’t an audit; it’s a determination of whether your organization is adhering to record-keeping and information reporting requirements. However, a compliance check can lead to an audit.
Don’t do it alone
Receiving an audit letter can be scary, but your nonprofit doesn’t need to go through the process alone. Contact us for immediate help.
Tuesday, February 14th, 2017
Last year you may have made significant gifts to your children, grandchildren or other heirs as part of your estate planning strategy. Or perhaps you just wanted to provide loved ones with some helpful financial support. Regardless of the reason for making a gift, it’s important to know under what circumstances you’re required to file a gift tax return.
Some transfers require a return even if you don’t owe tax. And sometimes it’s desirable to file a return even if it isn’t required.
When filing is required
Generally, you’ll need to file a gift tax return for 2016 if, during the tax year, you made gifts:
- That exceeded the $14,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse),
- That exceeded the $148,000 annual exclusion for gifts to a noncitizen spouse,
- That you wish to split with your spouse to take advantage of your combined $28,000 annual exclusions,
- To a Section 529 college savings plan for your child, grandchild or other loved one and wish to accelerate up to five years’ worth of annual exclusions ($70,000) into 2016,
- Of future interests — such as remainder interests in a trust — regardless of the amount, or
- Of jointly held or community property.
When filing isn’t required
No return is required if your gifts for the year consist solely of annual exclusion gifts, present interest gifts to a U.S. citizen spouse, qualifying educational or medical expenses paid directly to a school or health care provider, and political or charitable contributions.
If you transferred hard-to-value property, such as artwork or interests in a family-owned business, consider filing a gift tax return even if you’re not required to. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.
Meeting the deadline
The gift tax return deadline is the same as the income tax filing deadline. For 2016 returns, it’s April 18, 2017 (or October 16 if you file for an extension). If you owe gift tax, the payment deadline is also April 18, regardless of whether you file for an extension.
Have questions about gift tax and the filing requirements? Contact us to learn more.
Thursday, February 9th, 2017
If your not-for-profit is “stuck” and you’re not sure how to move forward, consider adopting some for-profit business practices. The essential missions of businesses and nonprofits are different, but the ways to achieve them often are the same.
Make a plan
The strategic plan — a map of near- and long-term goals and how to reach them — lies at the core of most for-profit companies. If your nonprofit doesn’t have a strategic plan or has been lax about revising an existing one, make this a top priority.
Set objectives for several time periods, such as one year, five years and 10 years out, paying particular attention to each strategic goal’s return on investment. For example, consider the resources required to implement a new contact database relative to the time and money you’ll save in the future. Working through the financial implications of ideas can help you avoid the kind of initiatives that sound good in theory but are unlikely to provide returns.
Next, your annual budget should follow your strategic plan. For-profit businesses use budgets to support strategic priorities, putting greater resources behind higher priority projects.
Businesses also routinely carry debt, believing that it takes money to make money. Nonprofits typically do everything in their power to avoid operating deficits. Unfortunately, it’s possible to operate so lean that you no longer meet your mission. Building up your endowment, applying for a loan or even creating a for-profit subsidiary could provide you with the funds to grow.
Pay for experience
Most for-profit companies budget for experienced leadership. Although nonprofits typically can’t pay their executives as much as businesses do, you can ensure that compensation is competitive relative to other organizations.
Paying for experience is particularly critical when you’re embarking on major fundraising campaigns or looking to expand your program outreach. You may even want to consider candidates from the for-profit world, who might bring greater marketing and financial management expertise and new ideas to the table.
Take baby steps
Translating for-profit business practices to your nonprofit won’t necessarily be easy, so start with baby steps. If you need help, please contact us.