1. Financial Accountability for Nonprofits Reduce Risk Increase Confidence Manage Compliance October 18, 2011 Presenter Miriam Robeson, Attorney

2. Why Are We Here? Information Level –Intermediate Assumes some familiarity with basics of nonprofits

3. Why Are We Here – Part 2The Horror Stories and Bad Press

4. Why We are Here – Part 3The IRS

5. What is Financial Accountability?The Board is Responsible for:

6. Accountability

8. Accountability

9. Best Practices

10. Risk Management

12. Compliance – State Requirements

13. Compliance – State Requirements

14. Compliance - Federal Failure to file – automatic revocation of §501(c)(3) status

16. http://www.irs.gov/charities/article/0,,id=96136,00.html

17. Go to IRS website and search “Publication 78”

19. Compliance - UBIT

21. Financial Controls

22. Monitor appropriate use of nonprofit funds

24. Handling Money

25. Recording Money

27. Financial OversightWatch the money – Watch the people Handout – 10 Tips for Keeping an Eye on Finances

28. Accountability - Governance Handout – Conflict of Interest Policy

29. Accountability - Conflicts of Interest Watch Appearance of Impropriety!

30. Accountability - Personal Benefit

31. Accountability - Ethics

33. Donations of time are not tax-deductible

34. Donor “influence-buying”

35. Improper arrangements with donors

36. Failing to include both spouses in joint gift paperwork

37. Staff/ED/Board/Volunteer accepting gifts from donors

38. Failing to take responsibility (“Not My Fault”)Only 10% of the public believes that charities are ethical

39. Handout – Whistleblower Policy More Examples - Ethics

40. Transparency – Credibility to Public Regularly provide information to the Public

41. Time for a Break

42. Risk Management for Nonprofits Best Practices to Prevent Financial Crisis Identify Risk Ranks Risk Identify Policies to manage risk Implement protections Implement procedures in event of crisis

43. Risk Management – D&O Insurance Directors & Officers Insurance Protects the Board and Key Staff

44. Risk Management PlanTypes of Risk to Manage Handout – Risk Management Policy

45. Handouts – 10 Ways to Catch Fraud and Mistakes from Outside Handout – 15 Ways to Minimize Employee Fraud Risk Management - People Poor economy has resulted in an increase in criminal conduct against nonprofits Embezzlement by employees Embezzlement by officers Fraud from “outsiders” Phrase of the Day – “Trust But Verify”

46. Fraud Alert! Nonprofits and FraudWhat to do when it happens to you!

47. PR for NonprofitsPublic Relations During Fraud Crisis

48. Preventing Fraud

50. Other Danger Zones

51. Danger Zone - Lobbying

52. Danger Zone – Charity Gaming

53. What is “Charity Gaming?”

54. Danger Zone - Abuse of Status

55. Has Your Status Been Revoked? Google: “recent IRS revocations” http://www.irs.gov/charities/charitable/article/0,,id=141466,00.html Comprehensive List of “Automatic Revocations” (organized by state)http://www.irs.gov/charities/article/0,,id=240099,00.html

56. What if you LOSE nonprofit status?

58. Must go through re-application for tax exempt status

59. May include request for retroactive reinstatement to avoid taxes for “interim period”

60. Requires payment of user fee ($400 or $850)

61. Small nonprofits might be allowed to pay $100 user fee

62. Must write “Automatically Revoked” on application

64. Publication 557 – Tax Exempt Status Info

65. Publication 78 – Approved nonprofit list

66. Indiana Charity Gaming Commission

67. Indiana Secretary of State

68. Indiana Department of Revenue

69. Guidestar.org

70. Charity Navigator

71. Handout – Nonprofit Guide to Sarbanes-Oxley

72. Handout – For Further Reading

74. Any Questions? Thank you for your attention! Miriam Robeson, Attorney Today’s materials are available on Miriam’s Website: http://blog.lawlatte.com/index.php /upcoming-workshops/