FOCUS ON FINANCE

New Jersey Education Foundation Partnership

Member Meeting

January 17, 2014

1099s

Issue 1099-MISC for all non-employee compensation and rentThreshold for issuance is $600Deadlines

○ Due to recipient by 1/31○ Due to IRS by 2/28

W-2s

Issue W-2s for all employeesDeadline

○ Due to employee by 1/31If any foundations have paid executive

directors, make sure you know whether they qualify as an independent contractor (1099-MISC) or an employee (W-2)

Donor Acknowledgement Letters Required for all donations > $250

Donors cannot claim tax deduction without “contemporaneous, written acknowledgement from the recipient organization”

Donor Acknowledgement Letters Deadline:

To be considered “contemporaneous”, donor must receive by the earlier of:○ The date on which the donor actually files

their tax return, or○ The due date (including extensions) of the tax

return○ Best practice: issue as soon as possible after

donation is received○ General rule of thumb: issue by 1/31

Donor Acknowledgement Letters Minimum requirements:

Your organization’s nameAmount of cash contributionA description of non-cash contributionStatement that no goods or services were provided

by the organization, if applicableDescription and good faith estimate of the value of

any goods or services, if anyStatement that goods or services, if any, that

organization provided in return consisted entirely of intangible benefits, if applicable (such as a small gift)

Donor Acknowledgement Letters Sample letter

See attached

Policies

Calendar year-end is a good time to set aside for reviewing all relevant non-profit policies and have board members and/or employees sign their acknowledgement of them:

Policies

Common examples:Conflict of interestWhistleblowerDocument retention / destructionJoint ventureExpense reimbursementGift acceptance

Financial Check-Up

Calendar year-end is a good time for 6/30 year-end entities to perform a financial check-up so adjustments can be made, if needed, in the second half of the year:

Financial Check-Up

How are expenses trending as compared to budget?If they are trending over budget, identify why

and determine if cuts can be made in second half of year.

How is revenue generation trending as compared to budget?If it is falling short of budget, begin

identifying potential new revenue streams.

Financial Check-Up

What is the organization’s cash position?

Is projected cash flow sufficient to carry the organization for the second half of the fiscal year?

If not already done, develop a calendar of key payment due dates.

Look at liquidity and any potential “cash crunches” you can foresee.

Special Consideration for 12/31 Year-End Entities Have year-end balance sheet and

income statement generated. Identify program accomplishments and

calculate revenue and expense for each of the 3 largest.

Identify “key” employees Gather names and address of

contributors / grantors over $5,000

990

For 12/31 year-end entities (and 6/30 year-end entities on extension):Refresh yourself with 990 filing rules:

○ Types990-N (“Postcard”)

- <$50,000 receipts990-EZ (“Short Form”)

- <$200,000 receipts and <$500,000 assets990 (“Long Form”)

- >$200,000 receipts or >$500,000 assets

990

Deadlines12/31 year-ends

○ Initial: 5/15 ○ 1st extension: 8/15 ○ 2nd extension: 11/15

6/30 year-ends○ Initial: 11/15○ 1st extension: 2/15○ 2nd extension: 5/15

990

Penalties for late filing / failure to file (for organizations with gross receipts <$1,000,000):$20 per dayMaximum: lesser of $10,000 or 5% of

organization’s gross receipts for that year