Sunday, March 29, 2015
NORTHCENTRAL UNIVERSITY
ASSIGNMENT COVER SHEET
Student:
Bayo Elizabeth Cary
THIS FORM
MUST BE COMPLETELY FILLED IN
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Cary, B. ACC7020-8-Assignment # 5
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ACC7020-8
|
Dr. Wendy Achilles
|
Accounting For Non-For-Profit
Organizations
|
Assignment # 5
|
This has been, my favorite class activity,
thus far. I choose, to not only learn the material well, I also choose to
follow through, and establish my own non-for-profit organization: Emergency
International Internet Relief. I am awaiting the final paperwork, that I just
recently filed online, through legalzoom.com, to establish my non-for-profit
organization, to operate here, out of Florida, U.S.A.. I will email, my direct
quote, assignment writing notes, and guidelines, to your Northcentral, email
address. Thank you.
Faculty Use Only
<Faculty Name> <Grade
Earned> <Date Graded>
March 29, 2015
Establishing a Non-For-Profit Organization
Assignment 5, Advanced Accounting: Bayo
Elizabeth Cary, A.A., B.A., M.L.I.S.
1.
Prepare
a memo to the group that outlines the process involved in creating a tax-exempt
not-for-profit entity. Be sure to point out particular alternative strategies,
including the advantages and disadvantages you believe the incorporating
officers should spend time considering.
2.
What
resources are available on the Internet to help this group understand the
regulatory, taxation, and performance measure issues that they will face as
officers of a tax-exempt, not-for-profit organization?
3.
Visit
a local NFP in your neighborhood other than a religious facility. You can
usually find a food bank, or neighborhood service facility. Interview a member
of the board preferably the financial accountant or the Director. Ask them 3-5
questions about the start-up of organization. Document your questions and their
responses as a supplement to your paper.
What is a
non-for-profit organization? A non-for-profit organization, is an organization
which is established, as a non-business entity-meaning, the organization does
not operate for profits, or for the benefits of owners, or shareholders. A
non-for-profit organization, operates for the benefit, of the public good, and
the community as a whole. Because a non-for-profit organization, is established
to assist people, in various capacities, the U.S. government, tries to
encourage the formation of non-for-profits, and, private contributions to
non-for-profits, by providing certain tax exemptions, for operations, and
contributions.
The first step in establishing a non-for-profit organization, is to
define what type of non-for-profit organization, you want to establish. There
is information available of the web, at Wikipedia, and at the IRS website,
regarding the various non-for-profit non-business structures, that can be
utilized, when creating, a non-for-profit organization. The most common type,
of non-for-profit organization, is established as a corporation. I choose to
establish a corporation: Emergency International Internet Relief. The different
structures, and nomenclature, for the various non-for-profit organization
designations, allow for different charitable programs and activities.
Although, it is clearly stated, that non-for-profit organizations, must
re-frame, for participation in politics, there are in place, allowable
exceptions. I read through the exceptions, which allow non-for-profit
organizations, to in some ways, contribute to the field of politics, in the
U.S. . I was not at all comfortable, by the thin line, that is spanned, and the
excuses that are made by non-for-profit organizations, when they state that their
affairs, are not really political activities, although, they are clearly
interacting, in the field of politics.
I think that the U.S. government, should issue a strict restriction, on
non-for-profit organizations, participating in any political activities at all.
The IRS said, that a number of complaints, are filed, about non-for-profit
organizations, engaging in political activities, and then-even after
investigations, and the establishment of guilt, very little, other the a warning,
is ever done, to the non-for-profit organizations, who are violating the rules,
of their tax exemption status. The IRS, upon discovery of a violation, of one
of the rules, pertaining to a non-for-profit organization, for participating in
politics, is supposed to revoke, the non-for-profit organizations tax exempt
status, however, that rarely happens.
In order to establish a non-for-profit organization, as a corporation,
an individual must follow certain required guidelines, for: articles of incorporation,
bylaws, filing with the state, obtaining an employee ID number, etc. .There are
soo many requirements, which must be met, for a corporation, to be established
as a legally operable non-for-profit organization, that, I choose to pay
legalzoom.com, to establish my non-for profit identity/organization, for me.
I paid legalzoom.com, a reasonable fee, after answering a series of
questions, pertaining to: what I wanted the non-for-profit to be called, where
I am located, what operational structure I wanted, how the organization would
be operated, etc., and legalzoom, set into motion, the filing of paperwork and
the obtaining of all legally required documents, and regulative bodies, in
order for me to operate, in the state of Florida, as the president, and
director, of my own, non-for-profit organization: Emergency International
Internet Relief. I am right now waiting, for the legal documentation,
establishing my non-for-profit, to arrive in the mail to me, from legalzoom.
I have assisted with establishing, a non-for-profit organization, in the
state of Florida before. However, the process of writing the bylaws, was long
and tedious, and therefore, for my non-for-profit organization: Emergency
International Internet Relief, I choose to hire a company, called Rocket
Lawyers Incorporated, to write my bylaws for me. Rocket Lawyers Incorporated,
offered me 1 week, of free services, after having constructed my
non-for-profits bylaws for me, as well as the ability, to submit questions online,
to a lawyer, who specializes, in the establishment of non-for-profit
organizations. I am right now, waiting to hear back, from a legal
representative, at Rocket Lawyers Incorporated. I can already download, and
print, the bylaws, that the Rocket Lawyers Incorporated, have prepared for me.
There are resources available online, on the IRS, U.S. website, which
provide step by step directions, for establishing a non-for-profit
organization, without the assistance, of an online company, who will perform:
the filing, registration, and other required paperwork for you. Establishing a
non-for-profit organization, by going through each step on your own, without
the assistance of a lawyer, and experienced professionals, is a long and
tedious task-although, it can be done. I would not suggest establishing a
non-for-profit organization that way, just because it would be soo time
consuming, and, there are many legal requirements, which must be met.
Non-for-profit organizations, under the auspice of corporation, can be
run in two different ways-as a membership organization, or, as a board of
directors only, organization. When a
non-for-profit corporation, is run as a membership organization, members help
the board of directors, and the president to decide, how the organization
functions. When a non-for-profit organization is run, as a board of directors
only organization, then, the board of directors, and the president of the
non-for-profit, make the decisions, pertaining to how the organization
operates, who to accept financial donations from, what services are provided to
individuals, and the community, etc. . When
establishing a non-for-profit organization, it is important for the
board of directors to consider, what structure to adopt: a membership structure,
or a board of directors only structure, dependent on how much input, and
control, the board of directors, and the president, want over their
non-for-profit organization.
When
operating, a non-for-profit organization, decisions pertaining to how the
organization operates, are crucial, to how well the organization, will be able
to assist people. When a non-for-profit organization, allows for membership,
the organization can get bogged down, by disagreements between various members,
who have different social concerns, and ideologies, about: how service should
be provided, to whom service should be provided, and where to accept financial
contributions from, etc. . It is important, for smooth transitions and delivery
of services, that, a non-for-profit organization be run, with as few
disagreements, as possible.
There are
two main ways, to finance a non-for-profit organization: the first major
financing option, is to turn to the government, for funding and grants. The
second major financing option, is to rely, on donations from private
individuals, and private organizations. When accepting donations, a
non-for-profit organization, must consider, any stipulations and funding
allocation requirements, which are attached to the donations. The spending
requirements, attached to money donated from governments, varies to a great
extent, from stipulations for spending, that are attached to donations, granted
by individuals, and organizations, to non-for-profits.
When accounting, for non-for-profit organizations-according to: Kattelus, Reck,
and Wilson (2010), donation monies are classified into, the following four
categories:
1. unrestricted
net assets;
2. board-designated
net assets;
3. temporarily
restricted assets;
4. and
permanently restricted assets. (p. 583)
Unrestricted net assets, are donations
that can accessed, and utilized, to further the charitable objectives and
goals, of the non-for-profit organization, with no stipulations, restrictions,
or funding guidelines, as to how the money must be spent. Board designated
assets, are financial donations, which are designated for use, in ways that the
board of directors chooses, and therefore, to spend these monies, the
organization, must obtain the approval, of the board of directors.
Temporarily restricted assets, are assets which are available to be
spent, only after certain criteria, by the organization is met. Temporarily
restricted assets are moved, for accounting purposes, from temporarily restricted
assets, to unrestricted assets, when the required conditions, for spending the
donations, have been met. Permanently restricted assets, are assets that can
never be spent, and which are often invested, and earn interest. Most of the
time, interest earned by the permanently restricted assets, can be spent by the
non-for-profit organization, however, the permanently restricted asset itself,
cannot be liquidated.
When accepting donations, for a non-for-profit organization, it is
important to consider, any restrictions, or stipulations, that may be attached,
to the spending of the money. It has be argued by some, that it may be better,
to rely on the government, for financial donations, and grants, when operating
a non-for-profit. A government, usually can afford to be more reliable, in
offering the same large sums, to a non-for-profit organization, year after
year. Non-for-profit organizations in the U.S., have a history, of competing
with the private sector, for qualified employees. Often times, the talent pool,
for possible employees, for non-for-profit organizations, is small, because the
private sector, is a more attractive work environment.
The private
sector, compared to the public sector (non-for-profit organizations), traditionally
pays a hirer salary, more benefits, and is a more stable and reliable support
system, for employees. Some non-for-profit organizations, choose to accept
government funding, over the contributions of private individuals, and
organizations, to attempt to maintain, a relatively stable work environment,
with higher pay, lower stress, and a higher retention rate, of non-for-profit
employees. Accepting government funding, can have serious draw back however.
Government donations, because of how the money is allocated, do not generally
require, the high accountability, and verifications, for charity work and
contributions out-put, that private donations, and donations from other
organizations require.
Studies show, that non-for-profit organizations, which are supported by
private donations, and organizations, do a much better job, serving
individuals, and the community, with much needed, and required services,
because people who choose, as individuals, to donate to a non-for-profit privately,
usually, check the reputation of the organization, and their track record, for
not over spending on administration, and for producing demonstrable-both:
qualifiable, and qualitative results-for actively working in the field, of
charitable contributions to society. When non-for-profit organizations, are
held accountable for what they accomplish, in so far as their charitable
service goals are concerned, then, more gets done.
Donating
money, to a non-for-profit organization, for charitable services, is an
investment in people, and in a community. When people donate to organizations,
that are non-for-profit, which accept funding from both government, and private
individuals, then-even if the organizations are well known, there are no guarantees,
that the charitable objectives, and goals, that the organizations purportedly
works towards, will really receive the services, that they have been promised.
Many non-for-profit organizations exist, in the U.S., and abroad, which are
well known, and which receive copious amounts of funding, and, however, do very
little, to actually solve, any of the charitable issues, that they are supposed
to address-Amnesty International, and Human Rights Watch, are examples.
Another problem, with government funded, non-for-profit organizations,
is competition, in the non-for-profit services market. When government funds,
large, and popular non-for-profit organizations, that do not have to meet many
measurable charitable goals, or standards-many times, money, and attention, are
diverted away, from smaller, more effective non-for-profits, which offer
services in the same, or similar areas, and, which rely primarily of private
donations-so, they are more effective. When the non-for-profit market, becomes
over crowded, the efficacy, of non-for-profit organizations, that really want
to help, becomes diluted, and less effective. It has been suggested, that some
new guidelines be introduced, to weed out non-for-profit organizations, which
do not really serve, for the benefit of mankind, out of the non-for-profit
service market.
It has also been argued, by non-for-profit organizations, which accept
donations, primarily from private donors, and from organizations, that the 501
(c ) (3 ) tax exemption benefits, that are offered by the IRS, in the U.S., are
not a strong enough incentive, to attract more financial donations, from
private contributors. Non-for-profit organizations, often times struggle a
great deal, to obtain financial contributions, to meet their program goals. If
the U.S., would be willing to increase the financial benefits, associated with
contributing financially, to non-for-profit organizations, then, non-for-profit
organizations in the U.S., that work very hard, toward the betterment of
society, could attract more financial support.
Information, is available online, from the IRS, U.S., regarding the
filing of a 501 (c ) (3 ) tax exemption qualification form, and other
documents, that are required, when operating, a non-for-profit organization,
in the U.S. .There is a financial
threshold, that has to met, before a non-for-profit organization, is required
to file for a tax exemption, and, certain non-for-profit organizations, like
churches, are not required to file with the IRS, in order to establish, their
tax exemption status. Financial, and accounting records, that a non-for-profit
organization, is required to file, with the IRS, in the U.S., are filed as, and
considered, public records, and are supposed to be, completely transparent, for
public scrutiny. The following, is a list of organizations, and websites, which
can be accessed, for assistance with establishing a non-for-profit organization
in the U.S., and with obtaining additional information, of the tax, and
accounting requirements, associated with establishing, and running, a
non-for-profit organization, in the U.S.:
Internet Resources
Non-For Profit Organization
Establishment/Bylaws&Articles of Incorporation
Legalzoom 99.00 USD
Speak to a Customer Care Specialist: (866)
738-1730
IRS
Before Applying For Tax Exempt Status
IRS
Definition of A Corporation
IRS
Application Form
IRS
Tax Information for Charities and Other
Non-Profits
IRS
Applying for Tax Exempt Status
Rocket Lawyers Incorporated
877.881.0947
Bylaw Creation
Bylaws Blank Templet
I had no trouble, because I utilized legalzoom, establishing the
paperwork, for my non-for-profit organization. All the required documents, and
paperwork, and support associated, and required for establishing, and operating
a non-for-profit organization in the U.S., will arrive to me shortly, by mail.
I interviewed, Mrs. Pam Demers, and asked her what the most difficult task was
for her, when she established her non-for-profit organization, and she stated,
that it was writing the bylaws. My bylaws, were written by Rocket Lawyers
Incorporated. I too, have hand written bylaws for a non-for-profit organization
before, and I must agree with Mrs. Demers, that it was a time consuming, and
daunting task.
I then asked Mrs. Demers, how she came to be the director, of her
non-for-profit organization, and she stated, that she inherited it. That he
husband, initially established the non-for-profit organization, and then, he
returned to work as clergy, with a local church. Obtaining financing, for
non-for-profit organizations, can be a challenging task. When I worked in
Tallahassee, FL, in 1999, I was pre-medical, and employed by the Florida State
University College of Medicine P.I.M.S. Program. While employed with the F.S.U.
College of Medicine in Tallahassee, FL, I wrote a successful grant application,
to the United Way of Tallahassee, FL. As part of my volunteer work, with Mrs.
Demers non-for-profit organization, I was able to locate a grant online, that
her organization qualifies for.
Finally, I asked Mrs. Demers, how she handles the financial side, of her
non-for-profit organization, in so far as audits, and record keeping is
concerned. Mrs. Demers told me, that she hires out, for the services of a CPA,
to assist with any accounting requirements, associated with her non-for-profit
organization, including audits, and financial statements. Running a
non-for-profit organization, can be labor intensive, however, I see it as a
labor of love, and a fun, and helpful way, to give back to individuals, and to
the community as a whole.
Works Cited
Conway, Catherine F., Sebranek, Tony A.
(Spring2002). 403 (b ) and 401 (k ) Retirement
Savings Programs: A Guide for 501 (c ) (3)
Organizations—Part 1. Journal of Pension Benefits: Issues in Administration,
9. Retrieved from http://eds.a.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=1&sid=be23d9ad-1f0e-48a8-bd5e-809bcbdace88%40sessionmgr4005&hid=4208
Kattelus, Susan C., Reck, Jacqueline L.,
& Wilson, Earl R.(2010). Accounting for Governmental
& Nonprofit Entities. Boston: McGraw-Hill
Irwin.
Kertz, Connie. (Aug/Sep2007). Politics in
the Pulpit: Political Campaign Intervention by Code
Sec. 501 (c ) (3 ) Organizations. Journal
of Tax Practice & Procedure, 9. Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=9&sid=4607f13c-a044-429b-9b95-67b0bcc15174%40sessionmgr111&hid=111
Scharf, Kimberley. (Feb2013). Impure
Prosocial Motivation In Charity Provision: Warm-Glow
Charities and Implications for Public Funding. Journal of Public
Economics, 114, 50-57.
doi: 10.1016/j.jpubeco.2013.10.002
Tutaj, Adam J. (Nov/Dec2012). Choice of
Entity Corner. Journal of Passthrough Entities, 15.
Unknown Author. (n.d.). Nonprofit. In Legalzoom.
Retrieved from
Unknown Author. (n.d.). Non-Profit Bylaws.
In Rocket Lawyers Incorporated. Retrieved from
Unknown Author. (n.d.). Application Form.
In IRS Website. Retrieved From
Unknown Author. (n.d.). Applying For Tax
Exemption Status. In IRS Website. Retrieved From
Unknown Author. (n.d.). Definition of A
Corporation. In IRS Website. Retrieved From
Unknown Author. (n.d.). Non-For-Profit
Organization Establishment. In legalzoom.com.
Retrieved from http://www.legalzoom.com/non-profits/non-profit-corporation-
Unknown Author.(n.d.) Corporation Bylaws.
In Rocket Lawyers Incorporated.
Retrieved from
Unknown Author. (n.d.). Tax Information
For Charities and Other NonProfits. In IRS Website.
Retrieved From http://www.irs.gov/Charities-&-Non-Profits
Wikipedia/501 (c ) organization. (n.d.).
Retrieved March 28, 2015 from the Wikipedia Wiki:
Wikipedia/Nonprofit Organization. (n.d.).
Retrieved March 28, 2015 from the Wikipedia Wiki:
Wilkins, William J. (Aug/Sept2014). Tax
Administration Priorities From The Office of Chief
Counsel. Journal of Tax Practice &
Procedure, 16. Retrieved from http://eds.a.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=7&sid=be23d9ad-1f0e-48a8-bd5e-809bcbdace88%40sessionmgr4005&hid=4208
Posted by Bayo
E. Cary, AA, BA, MLIS
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