Is Your Governance House in Order?

Is Your Governance House in Order?

The tax deadline for not-for-profits is May 15.  It’s a good time to take stock of 2011 financially and to perhaps assess changes you need to make for 2012. 

More than that, though, it is an opportunity to review your organization’s compliance with best practices and other governance issues.  Several years ago, the IRS made sweeping changes to the 990 tax form that not-for-profits must file, assuming they generate more than $50,000 in annual revenue. 

Among the many updates was a new section asking not-for-profits to document whether they maintain a written conflict of interest policy, a whistle blower policy and a document retention policy. 

While not-for-profits are not required to maintain these policies at this time, they are an indication that the IRS perceives them to be best practices.  Those organizations that have not already done so should consider adopting them for their own protection. 

The 990 form also asks whether the completed return was circulated to the governing body prior to filing.  Again, while not a requirement, this is certainly an indication that the IRS expects board members to be aware of the information being provided on behalf of the organization.  This is easily accomplished by emailing a draft of the return to board members prior to filing.  Of course, all 990 returns are considered public documents and must be made available upon request by any member of the public.

The IRS is also considering changing or eliminating the Group Return option.  To this point, many organizations that have local chapters with revenues of less than $50,000 have taken advantage of the option to file a group return on their behalf.  The IRS has signaled that this option may be on its way out but specifics are not yet available.  For more information about group returns, visit the IRS website at:  http://www.irs.gov/charities/article/0,,id=177799,00.html 

Resources:

Check out Guidestar (www.guidestar.org) to see what information is available there about your organization and other not-for-profits.

BoardSource http://www.boardsource.org/  offers a wealth of information for board members, including templates for the above-mentioned policies.

The Association Law Handbook by Jerald Jacobs is a great reference for all aspects of not-for-profit law and also includes templates to guide associations.  It’s available from the American Society of Association Executives (www.asaecenter.org) or through Amazon.

-Kim