Non-Profit Finance 101 Staying in the Black Special Considerations In general, non-profit organizations may not: Generate profit but may hold funds in reserve to reinvest in the organization. Provide dividends to individual shareholders. Engage in activities deemed anti-competitive.
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Non-Profit Finance 101
Staying in the Black
Bank account information
Bank statements (past/current)
Annual financial statements (past/current)
Audited financial statements (past/current)
Financial policies and procedures
Financial records and forms
Accounts and Record Maintenance
Receipts, disbursements and forms
General ledger and chart of accounts
Property, investment and inventory records
Bank statements and reconciliations
Type(s) of accounts to maintain
Signatories on account(s)
Authority to borrow funds
Employer Identification Number or other account identifier
Who receives reports?
How often are reports provided?
What type of verification process or internal audit is done of financial reports?
Type(s) of investments
Person(s) authorized to invest funds
What activities are covered?
What limits apply (e.g., per diem, coach airfare, etc.)?
What is the authorization process?
Who authorizes pre- and post-activity?
Identify goals/objectives for coming year.
Review current year revenue and expenses as baseline.
Identify revenue/expenses that will not recur.
Obtain input from organizational leaders.
Estimate income and expense for coming year.
Review proposed budget with leadership.
Communicate budget to members.
There are 23 exempt classifications under the Internal Revenue Service code.
As a “business league,” NADL and its Components can qualify for exemption under Section 501(c)(6) of the IRS code.
As 501(c)(6) organizations, NADL and its Components may not receive charitable contributions.
Federal tax exemptions do not necessarily apply at the state level.
Some states grant their own exemptions for nonprofit organizations.
The process for obtaining an exemption varies from state to state.
The laws vary significantly from country to country.
Component leaders will need to investigate the requirements and process in each country.
Taxes for unrelated business income.
Taxes related to employees.
Requirements will vary from state to state.