Accreditation There would be an authorization of $10 million to the IRS to support accreditation of charities nationwide, in states, as well as accreditation of charities of particular classes (e.g., private foundations, land conservation groups, etc.). The IRS would have the authority to contract with tax-exempt organizations that would create and manage an accreditation program to establish best practices and give accreditation to members that meet best practices and review organizations on an ongoing basis for compliance. The IRS would have the authority to base charitable status or authority of a charity to accept charitable donations on whether an organization is accredited.
What does this mean for nonprofits? This proposal seeks to empower the IRS with the authority to require accreditation of nonprofits as a requisite to accepting charitable donations. The authors are seeking to empower the IRS to add another layer of compliance to the Form 990 proposals and five-year reauthorization of nonprofits. The staff discussion draft recommends the following oversight provisions: (more…)
Popularity: 10% [?]
U.S. Senate Finance Committee Hearings on Nonprofit Accountability, June 2004 Although the features of the SOX legislation may on the surface appear to have more impact on the private sector, the public sector (i.e., government) push for greater accountability includes the independent sector (i.e., the nonprofit world) as well. This section discusses the recent United States Senate Finance Committee June 22, 2004 hearings on Charitable Giving Problems and Best Practices, along with the highlights of recent California “Sarbanes-Oxley clone” legislation (SB1262) signed into law on September 29, 2004. The common theme of the testimony of witnesses, the Congressional staff papers, and the California “Nonprofit Integrity Act” (SB1262) is that nonprofit organizations have, through fiscal and governance abuses, diminished public trust. Public outrage fueled these Congressional hearings on nonprofit abuses. Further reports of financial and governance mismanagement appear on an almost daily basis—sometimes even in the “Food” section of the newspaper.1
Internal Revenue Service Commissioner’s Testimony As part of the Senate Finance Committee’s June 2004 hearings on nonprofit accountability, Mark W. Everson, the commissioner of the IRS, provided some very sobering testimony on that agency’s plans for oversight and enforcement of the nonprofit sector. The following excerpts of Mr. Everson’s testimony (more…)
Popularity: 11% [?]
Provisions That Apply to Nonprofits with Budgets in Excess of $2 Million: The state of California passed a “Nonprofit Integrity Act” that imposes many of the features of SOX on nonprofits with budgets in excess of $2 million operating in that state. Some of the key provisions of this law include:
- Nonprofits will be required to have an annual audit performed by a CPA who is “independent” as defined by U.S. Government auditing standards.
- The results of the audit will need to be made available to the public and the Attorney General.
- Nonprofits will be required to have an audit committee whose membership cannot include staff and must not overlap more than 50 percent with the finance committee; the audit committee can include members who are not on the organization’s board of directors.
What does this mean for nonprofits in California? To ensure greater accountability in executive compensation, the law requires (more…)
Popularity: 15% [?]
What would this mean for nonprofits? This recommendation would require nonprofits to submit documentation every five years that proves to the IRS that the organization continues to comply with its 501(c )(3) designation. The list of documents specified here are particularly enlightening about the intent of this proposal:
• Current articles of incorporation and by-laws. The nonprofit would need to be clear about how its operations and governance continues to be in harmony with its founding documents.
• Conflicts of interest policies. The nonprofit would have to provide evidence of a conflict of interest policy and, most likely, proof that board members and senior management have completed annual affidavits identifying real or potential conflicts of interest.
• Evidence of accreditation. This document would be based on another recommendation, which is that nonprofits be required to obtain specific accreditation. (This recommendation is discussed later in this section.)
• Management policies regarding best practices. The nonprofit would be required to develop and submit written policies that demonstrate that the organization is implementing best practices in management and governance. (more…)
Popularity: 11% [?]
The Great Depression, which began in 1929 and lasted more than a decade, was one of the deepest economic slumps to affect the United States, Europe, and other industrialized countries. Although the actual causes of the Great Depression are still intensely debated, some of the factors believed to contribute to the Great Depression in the United States were the mass stock speculation that occurred during the 1920s; a general imbalance of purchasing power and wealth in that a large percentage of the population was poor while a small percentage was very wealthy; the laissez-faire economic philosophy adhered to by Presidents Warren Harding (1920–1923), Calvin Coolidge (1923–1928), and Herbert Hoover (1929–1933); and the catastrophic crash of stock prices on the New York Stock Exchange (NYSE) in 1929. On October 29, 1929, known as “Black Tuesday,” the U.S. stock market crashed, and the value of stock steeply plummeted.
Black Tuesday was one of the worst trading days in the history of the stock market. Stock prices collapsed and most of the financial gains of the previous year were wiped out within the first few hours of the market’s opening. Since most Americans viewed the stock market as the chief indicator of the health of the economy, the 1929 crash destroyed public confidence in both the stock market and in the U.S. economy. (more…)
Popularity: 12% [?]