Strengthening Carroll County Nonprofits through Effective ... · Nonprofit Basics Risk Management Risk Management for Nonprofits Best Practices to Prevent Financial Crisis Identify

StrengtheningCarroll County

Nonprofits throughEffective Management

April 25, 2013

Presenter: Miriam E Robeson, AttorneyFlora, Indiana

www.lawlatte.com

© 2013, Miriam Robeson

Strengthening Carroll County NonprofitsThrough Effective Management

TABLE OF CONTENTS

Presentation Slides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Sample Nonprofit Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Sample Conflict of Interest Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Sample Agenda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Top 8 Questions Asked by Nonprofit Boards. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Nonprofit Financial Control Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Sample Document Destruction Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Top 10 Rules for Charitable Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Risk Management Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Fraud Prevention Checklist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Someone Stole the Cashbox!.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Public Relations During Nonprofit Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Where to Go for Government Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

* The standard disclaimer applies – the author is an attorney, but not YOUR attorney. Any informationpresented in the workshop materials are yours to use, but at YOUR OWN RISK. The author recommendsthat you (a) review any forms carefully and modify them to suit your particular circumstances and (b) have yourattorney review the materials before implementation, to be sure that they are legally appropriate for yourorganization.3

Strengthening Strengthening Strengthening Strengthening Carroll County Carroll County Carroll County Carroll County

Nonprofits Nonprofits Nonprofits Nonprofits through through through through Effective Effective Effective Effective

ManagementManagementManagementManagement

Carroll County Carroll County Carroll County Carroll County

Focus on the FutureFocus on the FutureFocus on the FutureFocus on the Future

Presenter: Presenter: Presenter: Presenter:

Miriam Robeson, AttorneyMiriam Robeson, AttorneyMiriam Robeson, AttorneyMiriam Robeson, Attorney

April 25, 2013April 25, 2013April 25, 2013April 25, 2013

Nonprofit Organization and Effective Management –What is it?

�Focus on basics in four areas:

�Nonprofit Governance

�Nonprofit Compliance

�Nonprofit Accountability

�Threats to Nonprofit Success

Nonprofit Basics

Governance

Effective Nonprofit Management 1 of 35

Corporate Formalities

�Articles of Incorporation - Indiana

�Tax ID number - from IRS

�Statement of purpose

�Bylaws/Governing Bylaws/Governing Bylaws/Governing Bylaws/Governing DocumentDocumentDocumentDocument

�Conflict of Interest PolicyConflict of Interest PolicyConflict of Interest PolicyConflict of Interest Policy

�Officers/Board of Directors

�Budget (4 year prior or 3 years future)

�IRS Form 1023 - Tax Exempt Application – required for §501(c)(3) status

Minimum Documents for Tax Exempt Status:

Important Documents

� BylawsBylawsBylawsBylaws

� Should be readily available

� Should be reviewed and updated every 5 years

� Should “work with” the Board

� Conflict of Interest PolicyConflict of Interest PolicyConflict of Interest PolicyConflict of Interest Policy

� Sign every year

� For new and returning board members

Handout: Nonprofit Sample BylawsHandout: Conflict of Interest Policy

Corporate Formalities�Board of Directors

�Minimum = 3 / Preferred = 5

�Officers –

�President

�Vice President

�Secretary

�Treasurer

�Functional Committees


5 Ways to Better Board Meetings

Board Meetings don’t have to be TORTURE!

� Have an Agenda

� Be Prepared

� Know your Audience

� Keep it Short!

� Keep track of what happens

Handout: Sample Agenda

5 Ways toBetter Board Meetings

1.1.1.1. Have a (written) AgendaHave a (written) AgendaHave a (written) AgendaHave a (written) Agenda� Keeps the meeting focused and moving� Include routine and special items� Consent Agendas save time� Have handouts for reports and financial

2.2.2.2. Be PreparedBe PreparedBe PreparedBe Prepared� Read your Board Packet - Know the issues� Do your homework from previous meetings

3.3.3.3. Know your AudienceKnow your AudienceKnow your AudienceKnow your Audience� What does YOUR Board expect from meetings?

� “Show and Tell” versus “Just the Highlights”� Level of detail expected in reports

� Board Meetings should be RELEVANT to the time, place, issues facing the board

5 Ways toBetter Board Meetings

4.4.4.4. Keep it SHORT!Keep it SHORT!Keep it SHORT!Keep it SHORT!� 1 hour or less (use “Time Checks”)� Agenda helps manage time� Robert’s Rules NOT required� If you can’t end on time –

�Ask the Board to help prioritize remaining agenda items�Save some items for another meeting�Consider a special meeting to handle special matters

5.5.5.5. Keep Keep Keep Keep Track of What Happens at MeetingsTrack of What Happens at MeetingsTrack of What Happens at MeetingsTrack of What Happens at Meetings� Have someone take notes and prepare minutes� Keep track of who is assigned to which tasks� Document who makes motions and note “nay” voters� Record action taken on Board matters� (HINT: sometimes the government will ask for copies of minutes)


5 Important Duties ofBoard Members

3 “traditional” – 2 “extra”

� Duty of Care (Due Diligence )

� Duty of Obedience

� Duty of Loyalty

� Duty to the “Mission”

� Duty to the well-being of the organization

Handout: 8 Questions Asked by Nonprofit Boards

1.1.1.1. Duty of Care Duty of Care Duty of Care Duty of Care ---- Due DiligenceDue DiligenceDue DiligenceDue Diligence� Board Members are required to be INFORMED� Must know - financial, government status, projects and operations� No excuse for ignorance� Includes a duty to train successors about their duties!

2.2.2.2. Duty of ObedienceDuty of ObedienceDuty of ObedienceDuty of Obedience� Do what you are required to by the order of the Board, the policies of the organization or the law

3.3.3.3. Duty of LoyaltyDuty of LoyaltyDuty of LoyaltyDuty of Loyalty� Support the Board - even when you don’t agree with it’s actions (or politely resign)� Don’t talk about Board matters outside the Board room� Always act in the organization’s best interest


4.4.4.4. Duty to the MissionDuty to the MissionDuty to the MissionDuty to the Mission� KNOW - BELIEVE - SUPPORT the Mission

�Should be able to recite the Mission - anytime, anywhere

� (otherwise, why are you on the Board?)

5.5.5.5. Duty to the WellDuty to the WellDuty to the WellDuty to the Well----Being of the organizationBeing of the organizationBeing of the organizationBeing of the organization� It is the responsibility of the Board of Directors to ensure the financial and philosophical well-being of the organization

� The Board of Directors MUST:

�Manage the organization through financial hardship

�Ensure that programs and activities thrive

�Ensure the longevity of the organization



Nonprofit Basics

Compliance

Compliance - State

• Indiana Secretary of State

Annual Business Entity Report

• Indiana State Board of Accounts

•Financial Reporting for Government Funds

Entity Annual Report (E-1)

• Indiana Department of Revenue

NP-20

Compliance - Federal

IRS – 990 Form

<$50,000 – 990 N

•Change in threshold

beginning 2010

•On-line ONLY

•Due 5 + 15 after end of

fiscal year

•NO extensions of time!

>$50,000 – 990 EZ/990

• Due 5 + 15

• 6 month automatic extension

• For most nonprofits – 990 EZ

• Minimal property or real

estate

• Normal gross receipts <

$200,000

• Total Assets < $500,000

Failure to file – automatic revocation of §501(c)(3) status


Compliance - Lobbying

CANNOT DO

•Endorse political

candidate

•Spend more than 5%

of annual budget on

lobbying activities

•Directly lobby

legislators

CAN DO

•Hold Candidate forum

•Educate the public on

the issues important

to the nonprofit

•Encourage like-

minded supporters to

contact their

legislators

Compliance - EmploymentEmployment taxes

and reports must

be timely filed!

Federal -- 941 –

Employer’s

Quarterly Federal

Tax Return

State -- WH-1 –

Employer’s State

Tax Return

January 1 – ONLINE

requirement for

many

organizations

Federal – EFTPS

(electronic federal

tax payme nt

system)

State – IN-Tax

Employer conduct“Exempt” versus

“non exempt”

employees

Wages and Hours

laws

Fair Hiring and

Nondiscrimination

Does not apply to

all employers

APPLIES FOR

GOVERNMENT

FUNDING!

Compliance - UBIT

• (A) Trade or business

• (B) regularly carried on

• (C) not “substantially related” to exempt purpose

UBIT – Unrelated

Business Income

Tax

• Apartment rental income

• Store or shop unrelated to mission (coffee shop)Examples:

If UBIT constitutes “substantial portion” of income,

nonprofit can lose exempt status!


Nonprofit Basics

Accountability

Accountability

The Buck Stops

with the Board

Board reports to

•Donors

•Government

•Sponsors

•Grantors

Are youyouyouyou Good

Stewards of the

resources the

public entrusts in

your care?

Accountability -Financial Governance Policies

� Policies for –

� Handling Money

� Recording Money

� Reporting Money

Handout – Nonprofit Financial Control Policy


AccountabilityFinancial ControlsFinancial Procedures Manual

Restrictions documented and honored

• Donor restrictions

• Grant requirements

• Commingling Funds

Training program for Staff and Board

Document Retention/Destruction Policy

Handout – Document Destruction Policy

Transparency – Credibility to Public

Required disclosures

•Tax returns

•Organizational Documents

•Articles of Incorporation

•Bylaws

•Funds used for lobbying

•Application for Exempt Status

Recommended

disclosures

•Annual report

•Basic Financial Statement

•Report of Activities

•Mission/Vision

Regularly provide information to the Public

Charitable Donations� Watch the Rules regarding charitable

donations!

� What can be considered a donation?

� What paperwork is required?

� Donations of goods or funds > $250 require written acknowledgement

� Magic language: “No goods or services were Magic language: “No goods or services were Magic language: “No goods or services were Magic language: “No goods or services were provide in exchange for this donation”provide in exchange for this donation”provide in exchange for this donation”provide in exchange for this donation”

� NOTE – donations of TIME and EXPERTISE are NOT deductible!

Handout: Top 10 Rules for Charitable Donations


Nonprofit Basics

Risk Management

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

Risk Management – General Liability Insurance

� Do you NEED Insurance?

� What are your risks?

� Events

� Location/Premises

� Goods and Services

� Insurance is recommended to protect the nonprofit in the event of a claim for harm to person or property.


Risk Management – D&O Insurance

D&O

Insurance

covers

Breach of DutyWrongful acts of

the boardMismanagement

What D&O

Does

Provides legal

defensePays claims

What D&O

Doesn’t

Normal liability

claimsCriminal acts

Directors & Officers Insurance Protects the Board and Key Staff

Risk Management PlanTypes of Risk to Manage

• Board members, volunteers,

employees, clients, donors,

the public.

People

• Buildings, facilities,

equipment, materials,

copyrights, trademarks

Property

• sales, grants, contributions,

sponsors, fund raisingIncome

• reputation, stature in community,

ability to raise funds and appeal to

prospective volunteersGoodwill

Handout – Risk Management Policy

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”


Issues of Fraud and the Nonprofit Sector

� “Headline News” creates an inaccurate picture� Impression of more fraud than actually exists� Impression of “we’re not like that” fosters

complacency

� Ignorance of Full PR Impact of fraud in “headline news”� Every dollar lost to fraud = lost ability to

achieve mission� Every fraud headline > public scrutiny of

nonprofits� Every fraud headline < public donations to

nonprofits

What are the most common types of fraud?

16.20%

9.60%

28%

15.10%

16.90%

10.60%

2.40%11.50%

Skimming

Larceny

Billing

Expense

Check

Payroll

Cash

Register

Cash on

Hand2010 Global Fraud Study, Association of Certified Fraud Examiners

How is Fraud Punished?

� Termination of employment = 72%

� No punishment = 7%

� Quit/disappeared = 8%

� Referral to law enforcement = 72%

� Prosecutor declines to prosecute =25%

(Note – numbers total greater than 100% because more than one action is taken)

“An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents,” Greenlee, Fischer, Gordon and Keating, 2006, Hauser Center for Nonprofit Organizations


What is the likelihood of recovering funds? (1)� Nothing recovered = 50%

� Partial recovery = 16%

� Complete recovery = 34%

� Small organizations are much more likely to be a victim of occupational fraud

� Lack of anti-fraud controls in smaller organizations contributes to vulnerability

WHO IS MORE LIKELY TO BE VICTIMIZED? (2)

1. “An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents,” Greenlee, Fischer, Gordon and Keating, 2006, Hauser Center for Nonprofit Organizations2. 2010 Global Fraud Study, Association of Certified Fraud Examiners

Nonprofits and FraudWhat to do when it happens to you!

• Lock-down data

• Start a formal audit process with outside auditor

• Change procedures and rotate staff responsibilities

If you suspect fraud – act immediately!

• All of the above, PLUS

• Confront the perpetrator (employee, officer, outside

contractor)

• Copy and compile evidence in a separate, protected and

confidential file

• Contact the police, if appropriate

If you verify fraudIf you verify fraudIf you verify fraudIf you verify fraud

Handout – Someone Stole the Cashbox!

PR for NonprofitsPublic Relations During Fraud CrisisIf Fraud or If Fraud or If Fraud or If Fraud or

embezzlement embezzlement embezzlement embezzlement

finds your finds your finds your finds your

NonprofitNonprofitNonprofitNonprofit,

•How the

public hears

about and

perceives the

incident can

drastically

affect the

nonprofit’s

ability to

move beyond

the event.

DO NOT DO NOT DO NOT DO NOT

HIDEHIDEHIDEHIDE or

Minimize the

seriousness

of the event

•If you are

contacted by

the press,

answer! - if you

don’t get your

story out, no

one will, and

speculation will

replace facts

Have a plan Have a plan Have a plan Have a plan

of action for of action for of action for of action for

responseresponseresponseresponse

• If employee:

suspension,

termination

• If board member:

resignation,

removal

•Note appearance of

impropriety is

enough to take action

for a board member,

but more evidence is

needed to take action

against an employee

Handout – Public Relations During Nonprofit Crisis


Preventing FraudHave and use financial control

policies

Know who handles the

money

Remove temptationReview financial information

•ALSO - have independent review of

financesBe aware that it can

happen to your nonprofit!

Nonprofit Organization and Effective Management

�Governance

�Compliance

�Accountability

�Threats

For More Information

� IRS.gov – Exempt Organizations

� Publication 557 – Tax Exempt Status Info

� Online – Exempt Org Select Check

� Indiana Secretary of State

� Indiana Department of Revenue

� Guidestar.org

� Charity Navigator

� Blue Avocado

Handout – Where to Go for More Information


Thank you for your attention!

Any Questions?

Miriam Robeson, Attorney

Today’s materials are available on Miriam’s Website:

http://blog.lawlatte.com/


BYLAWS FOR THE [Name of Nonprofit], Inc.

[Name of Nonprofit], Inc. (the "Corporation") is governed by the applicable provisions of the Indiana Nonprofit Corporation Act of 1991, as amended (the "Act").

Article I. Name The name of the Corporation is [Name of Nonprofit], Inc.

Article II. Classification of Corporation

The Corporation is a public benefit corporation.

Article III. Purposes and Powers

1. Purposes. The purposes for which the Corporation is formed are:

a. The Corporation is organized exclusively for the public benefit purpose of [Purpose of Nonprofit]

b. In furtherance of the aforesaid purposes, to transact any and all lawful business for which corporations may be incorporated under the Act, provided such business is not inconsistent with the Corporation being organized and operated exclusively for purposes consistent with Section 501(c)(6).

2. Powers. Subject to any limitation or restriction imposed by the Act, any other law, or any other provisions of these Articles of Incorporation, the Corporation shall have the power:

a. To do everything necessary, advisable or convenient for the accomplishment of any of the purposes hereinbefore set forth, or which shall at any time appear conducive to or expedient for the protection or benefit of the Corporation, and to do all of the things incidental thereto or connected therewith which are not forbidden by law; and

b. To have, exercise and enjoy in furtherance of the purposes hereinbefore set forth all the general rights, privileges and powers granted to corporations by the Act, as now existing or hereafter amended, and by the common law.

Article IV. BOARD OF DIRECTORS 1. Duties and Qualifications. The business and affairs of the [Name of Nonprofit], Inc. (the

"Corporation") shall be managed by the Board of Directors.

2. Number of Directors. The Board of Directors shall consist of a minimum of six (6) directors and a maximum of twelve (12) directors, with the exact number of directors specified from time to time by resolution of the Board of Directors. The number of Elected Directors must be fewer than Approved Directors.

3. Elected Directors. The directors shall be elected at the annual meeting of the directors by a plurality of the votes cast by the directors. The term of office of Elected Directors shall be staggered. One group of Elected Directors shall be elected at each annual meeting of directors. Each Elected Director shall serve for a term of three (3) years. Despite the expiration of a director's term, the director continues to serve until a successor is elected and qualifies, or until there is a decrease in the number of Elected Directors.


BYLAWS FOR [Name of Nonprofit],Inc. Page 2 of 8

4. Term Limits. No person shall serve as Director for more than three (3) consecutive terms. No one shall be eligible for a term as a director which would, if completed, exceed the term limit. Term limited directors are eligible to serve after one (1) intervening year.

5. Qualifications. Each director shall be a United States citizen. Each director is to be selected for knowledge of [specific purpose of organization], and shall serve without compensation except for payment of reasonable expenses incurred for the Corporation. Directors who are holders of any other office or position are to act in their own right as directors, and not as representatives or delegates of their own or any other organization, interest or group.

6. Duties. The Board of Directors shall manage the business and affairs of the Corporation. The Board of Directors shall have the power:

a. To establish the policies of the Corporation, develop strategic and operational plans, establish budgets, and select, supervise, and evaluate the executive director.

b. To purchase real estate, personal property, and inventory and enter into contracts in the Corporation name.

c. To initiate litigation in the Corporation name To annually submit to the Alliance a report of the total income received and a report of its total expenditures, which said expenses are broken down by category as well as disclose the salary of any and all full time staff members and fees paid to consultants

7. Vacancies. Any vacancy among the directors caused by death, resignation, removal, increase in the number of directors or otherwise may be filled by a majority vote of the remaining members of the Board of Directors. The term of office of a director chosen to fill a vacancy shall expire at the next annual meeting of the Board of Directors, at which time any vacancy in a Director position shall be filled as provided in Section 3.

8. Removal. Any Elected Director may be removed, with or without cause, by the remaining directors whenever the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors. A Director who fails to attend three (3) consecutive meetings without excuse shall be presumed to have resigned.

9. Annual Meeting. The Board of Directors shall meet each year at a time and place as specified each year for the purpose of election of directors and officers of the Corporation and consideration of any other business which may be brought before the meeting. No notice shall be necessary for the holding of an annual meeting. The annual meeting may be conducted as part of a regular meeting.

10. Other Meetings. Regular meetings of the Board of Directors may be held pursuant to a resolution of the Board to such effect, and shall be held whenever convenient for the Board of Directors, but at least quarterly. Unless otherwise provided by the Board of Directors, regular meetings shall be held at the Corporation's principal office. No notice shall be necessary for any regular meeting. Special meetings of the Board of Directors may be held upon the call of the President or of any three (3) members of the Board of Directors and upon at least forty-eight (48) hours' notice specifying the date, time, place and purpose or purposes of the meeting, given to each director either personally or by regular mail, electronic mail, facsimile transmission or telephone. Oral notice is authorized. A director may waive any required notice of an annual, regular or special meeting. The waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes of the Corporation records. A director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting, or promptly upon the director's



arrival, objects to holding the meeting or transacting business at the meeting and does not vote for or assent to action taken at the meeting.

11. Participation. A director may participate in an annual, a regular, or a special meeting of the Board of Directors by or through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating by this means is considered to be present in person at the meeting.

12. Quorum; Voting. A majority of the entire Board of Directors shall be necessary to constitute a quorum for the transaction of any business at a meeting of the Board of Directors. If a quorum is present when a vote is taken, the affirmative vote of a majority of the directors present when the act is taken shall be the act of the Board of Directors, unless the act of a greater number is required by law, the Articles of Incorporation or these Bylaws.

13. E-Vote. Voting by electronic mail (e-mail) is permitted under these Bylaws. Such calls of vote are to be reserved for issues of importance. This may arise, for example, In the event a quorum is not present at a formal meeting, or in the event that Board action is considered desirable at a time between regularly scheduled meetings. In such cases, all Board Directors have the right to submit a vote within a specified time period (no less than 48 hours, no more than 7 calendar days). Vote by e-mail will be conducted in the following manner:

a. The President or any three (3) Directors may request a vote via e-mail. Directors shall have 3 options regarding their vote:

i. Vote to pass the motion

ii. Vote to reject the motion

iii. Express the opinion that the motion is not amenable to an electronic vote.

b. If any member objects to the electronic vote, the motion would remain subject to the "in person" quorum voting rules. If no objections are received, a simple majority of all Board Directors is required to pass the vote.

c. All directors must have access to electronic mail, and it is the responsibility of each director to inform the Executive Director of the correct e-mail address for purposes of correspondence and e-mail voting.

14. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all directors. The action must be evidenced by at least one (1) written consent describing the action to be taken, signed by each director and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this Section is effective when the last director signs the consent, unless the consent specifies a prior or subsequent effective date.

15. Executive Committee. There shall be no executive committee.

Article V. OFFICERS 1. President. The President, if present, shall preside at all meetings of the Board of Directors. At

each annual meeting of directors, the President or the President's designee shall report on the activities of the Corporation. Subject to the general control of the Board of Directors, the President shall manage and supervise all of the affairs of the Corporation and shall perform all of the usual duties of the chief executive officer of a corporation. The President or the President’s



designee will work with any Executive Director of the Corporation in managing the day-to-day affairs of the Corporation.

2. Vice President. Subject to the general control of the Board of Directors, if the President is not present, the Vice President shall discharge all the usual functions of the President and shall have such other powers and duties as these Bylaws, the Board of Directors or an officer authorized by the Board may prescribe.

3. Secretary. The employed executive director of the organization shall be the Secretary, who will not be a volunteer member of the Board of Directors. The Secretary shall attend all meetings of the Board of Directors, and prepare, keep, or cause to be kept, a true and complete record and minutes of the proceedings of such meetings, and shall perform a like duty, when required, for all committees appointed by the Board of Directors. If required, the Secretary shall attest the execution by the Corporation of deeds, leases, agreements and other official documents. The Secretary shall attend to the giving and serving of all notices of the Corporation required by these By-laws, shall have custody of the books (except books of account) and records of the Corporation, shall be responsible for authenticating records of the Corporation, and in general shall perform all duties pertaining to the office of Secretary and such other duties as these By-laws, the Board of Directors, or an officer authorized by the Board may prescribe.

4. Treasurer. The Treasurer shall chair the Finance Committee. The Treasurer shall keep correct and complete records of account, showing accurately at all times the financial condition of the Corporation. The Treasurer shall have charge and custody of, and be responsible for, all funds, notes, securities and other valuables which may from time to time come into the possession of the Corporation and shall deposit, or cause to be deposited, all funds of the Corporation with such depositories as the Board of Directors shall designate. At each annual meeting of the directors, the Treasurer, or the Treasurer's designee, shall report on the financial condition of the Corporation. The Treasurer, or the Treasurer's designee, shall furnish, at meetings of the Board of Directors or whenever requested, a statement of the financial condition of the Corporation, and in general shall perform all duties pertaining to the office of Treasurer.

5. Assistant Officers. The Board of Directors may from time to time designate and elect assistant officers who shall have such powers and duties as the officers whom they are elected to assist shall specify and delegate to them, and such other powers and duties as these Bylaws or the Board of Directors may prescribe. An Assistant Secretary may, in the absence or disability of the Secretary, attest the execution of all documents by the Corporation. Assistant officers may be employees of the Corporation and, if volunteers, need not members of the Board of Directors.

Article VI. COMMITTEES

1. Authority. The Board of Directors may from time to time create and appoint standing, special or other committees to undertake studies, make recommendations and carry on functions for the purpose of efficiently accomplishing the purposes of the Corporation.

2. Governance

a. Led by the President of the Corporation.

b. Serves as the nominating committee for all positions, all task groups, and general membership.

c. Serves as the personnel committee, within requirements for confidentiality.



3. Finance

a. Led by the Treasurer of the Corporation.

b. Supervises the conduct of financial transactions of the Corporation Develops the budget and plans fundraising strategies for the Corporation’s operation.

4. Other Committees. Committees, to the extent specified by the Board of Directors, may exercise the powers, functions or authority of the Board of Directors, except where prohibited by law; provided, however, that if a committee is to exercise board powers, functions, or authority, (a) all the persons serving on the committee must be directors, (b) there must be at least two (2) persons on the committee, and (c) the creation of the committee and the appointment of its members shall be by a majority of all directors in office when the action is taken.

Article VII. FISCAL POLICIES

1. Insurance. The Corporation shall carry casualty and liability insurance for any owned or leased premises.

2. Books and Records. The Corporation shall maintain appropriate accounting records, minutes of all meetings of its Board of Directors, a record of all actions taken by the Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation. The Corporation or its agent shall maintain a complete and accurate list of Directors, giving the names and addresses of all Directors. All such books, records and lists of the Corporation shall be open to inspection and copying during the usual business hours for all proper purposes of the Corporation.

3. Authorization of Expenditures. Any officer may make expenditures or obligations of funds of Corporation or combination of officers of Corporation as may be determined from time to time by the Board of Directors.

4. Contracts. All contracts, agreements, deeds, conveyances, mortgages and similar instruments authorized by the Board of Directors shall be signed, unless otherwise directed by the Board of Directors or required by law, by the President or Vice President and attested by the Secretary

5. Loans to Officers and Directors. The Corporation shall not lend money to or guarantee the obligations of any officer or Director of the Corporation

Article VIII. MISCELLANEOUS

1. Corporate Seal. The Corporation shall not have a corporate seal.

2. Execution of Contracts and Other Documents. Unless otherwise ordered by the Board of Directors, all written contracts and other documents entered into by the Corporation shall be executed on behalf of the Corporation by the President and, if required, attested by the Secretary.

3. Fiscal Year. The fiscal year of the Corporation shall begin on January 1 of each year and end on the immediately following December 31.



4. Audit. An independent auditor appointed or approved by the Board of Directors shall at such time as the Board of Directors may determine, but at least biennially, prepare for the Corporation as a whole a consolidated financial statement, including a statement of combined capital assets and liabilities, and a statement of income, expenses, and distributions, and a list of projects, and/or organizations to or for which funds were used or distributed for charitable purposes, and such other additional reports or information as may be ordered from time to time by the Board of Directors. The auditor shall also prepare such financial data as may be necessary for returns or reports required by state or federal government to be filed by the Corporation.

Article IX. Indemnification

1. Rights to Indemnification and Advancement of Expenses. The Corporation shall indemnify as a matter of right every person made a party to a proceeding because such person is or was:

a. a member of the Board of Directors of the Corporation,

b. an officer of the Corporation, or

c. while a director or officer of the Corporation, serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, whether for profit or not (each an "Indemnitee"),

against all liability incurred by such person in connection with the proceeding; provided that it is determined in the specific case that indemnification of such person is permissible in the circumstances because such person has met the standard of conduct for indemnification specified in the Act. The Corporation shall pay for or reimburse the reasonable expenses incurred by an Indemnitee in connection with any such proceeding in advance of final disposition thereof in accordance with the procedures and subject to the conditions specified in the Act. The Corporation shall indemnify as a matter of right an Indemnitee who is wholly successful, on the merits or otherwise, in the defense of any such proceeding against reasonable expenses incurred by the person in connection with the proceeding without the requirement of a determination as set forth in the first sentence of this paragraph.

Upon demand by a person for indemnification or advancement of expenses, as the case may be, the Corporation shall expeditiously determine whether the person is entitled thereto in accordance with this Article and the procedures specified in the Act.

The indemnification provided under this Article shall be applicable to any proceeding arising from acts or omissions occurring before or after the adoption of this Article.

2. Other Rights Not Affected. It is the intent of this Article to provide indemnification to directors and officers to the fullest extent now or hereafter permitted by law consistent with the terms and conditions of this Article. Nothing contained in this Article shall limit or preclude the exercise of, or be deemed exclusive of, any right under the law, by contract or otherwise, relating to indemnification of or advancement of expenses to any person who is or was a director, officer, employee or agent of the Corporation, or the ability of the Corporation to otherwise indemnify or advance expenses to any such individual.



a. Notwithstanding any other provision of this Article, there shall be no indemnification with respect to matters as to which indemnification would result in inurement of net earnings of the Corporation "to the benefit of any private shareholder or individual," or an "excess benefit transaction" within the meaning of Sections 501(c)(3) or 4958 of the Internal Revenue Code of 1986, as amended, or similar provisions of any subsequent Federal tax laws.

3. Definitions. For purposes of this Article:

a. A person is considered to be serving an employee benefit plan at the Corporation's request if the person's duties to the Corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan.

b. The estate or personal representative of a person entitled to indemnification or advancement of expenses shall be entitled hereunder to indemnification and advancement of expenses to the same extent as the person.

c. The term "expenses" includes all direct and indirect costs (including, without limitation, counsel fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or out-of-pocket expenses) actually incurred in connection with the investigation, defense, settlement or appeal of a proceeding or establishing or enforcing a right to indemnification under this Article, applicable law or otherwise.

d. The term "liability" means the obligation to pay a judgment, settlement, penalty, fine, excise tax (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred with respect to a proceeding.

e. The term "party" includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

f. The term "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal.

Article X. Conflict of Interest

1. General. The Board and Staff of the Corporation shall administer the affairs of the Corporation, honestly and economically and exercise their best care, skill, and judgment for the benefit of the Corporation. The Officers shall exercise the utmost good faith in all transactions relating to their duties for the Corporation. In their dealings with and on behalf of the Corporation, they are held to a strict rule of honest and fair dealings. They shall not use their position, or knowledge gained therefrom, so that a conflict might arise between the Corporation’s interest and that of the individual or an organization affiliated with the individual.

2. Disclosure of Potential Conflict. Any officer, Director or Staff member of the Corporation, shall have a duty to disclose any potential conflict of interest by virtue of business or charitable affiliation.

3. Conflict of Interest Defined. A conflict of interest, or potential conflict of interest, or appearance of conflict of interest, occurs when an officer, Director, or Staff member of the Corporation, is in



a position to exert influence, in dealings with or on behalf of the Corporation, which would give preference to any other business or charitable organization with whom the officer, Director, or Staff member is affiliated, by virtue of employment with, membership in, ownership of, appointment to or election to said business or charitable organization.

4. Waiver of Conflict. Whenever a conflict of interest arises, or the appearance of a conflict of interest, such director or officer with the conflict who is present at the meeting of the Board of Directors or of a committee of the Board, shall disclose in good faith the material facts as to such interest, or financial interest, or appearance of conflict of interest, and any action of the Corporation to approve activity in which a conflict of interest, or appearance of conflict of interest, exists, shall be approved by a majority of the disinterested directors.

5. Recusal from Decision-making. Any conflict of interest or appearance of conflict of interest will render the Director or officer ineligible from voting on any matters relating to that conflict of interest. Said Director or officer may not participate in any discussion (other than to present factual information or respond to questions). Such Director or officer may be counted on to determine whether a quorum is present, but may not participate in any action taken on the matter relating to the conflict. The minutes of the meeting shall reflect the disclosure of the conflict, the vote, the abstention from voting and participation and whether a quorum was present.

Article XI. AMENDMENTS Subject to law and the Articles of Incorporation, the power to make, alter, amend, or repeal all or any part of these Bylaws is vested in the Board of Directors. The Corporation must provide notice to the directors of any meeting at which an amendment to the Bylaws is to be considered and voted upon.

Effective Date: , 2013


Save-The-World NonprofitConflict of Interest Policy

Section 1. General. The Board and Staff of STW NonProfit shall administer the affairs of STW NonProfithonestly and economically and exercise their best care, skill, and judgment for the benefit of the STWNonProfit. The Officers shall exercise the utmost good faith in all transactions relating to their duties forthe STW NonProfit. In their dealings with and on behalf of STW NonProfit, they are held to a strict rule ofhonest and fair dealings. They shall not use their position, or knowledge gained therefrom, so that aconflict might arise between the STW NonProfit interest and that of the individual or an organizationaffiliated with the individual.

Section 2. Disclosure of Potential Conflict. Any officer, Director or Staff member of STW NonProfitshall have a duty to disclose any potential conflict of interest by virtue of business or charitable affiliation.

Section 3. Conflict of Interest Defined. A conflict of interest, or potential conflict of interest, orappearance of conflict of interest, occurs when an officer, Director, or Staff member of STW NonProfit isin a position to exert influence, in dealings with or on behalf of STW NonProfit, which would givepreference to any other business or charitable organization with whom the officer, Director, or Staffmember is affiliated, by virtue of employment with, membership in, ownership of, appointment to or electionto said business or charitable organization.

Section 3. Waiver of Conflict. Whenever a conflict of interest arises, or the appearance of a conflict ofinterest, such director or officer with the conflict who is present at the meeting of the Board of Directorsor of a committee of the Board, shall disclose in good faith the material facts as to such interest, orfinancial interest, or appearance of conflict of interest, and any action of the Corporation to approve activityin which a conflict of interest, or appearance of conflict of interest, exists, shall be approved by a majorityof the disinterested directors.

Conflict of Interest – Board Member Affirmation and Disclosure Statement

My answers to this disclosure form are correctly stated to the best of my knowledge andbelief. Should a possible conflict of interest arise in my responsibilities to the Corporation, Irecognize that I have the obligation to notify, based on my position, the appropriate designatedindividual (President of the Board and/or the Board of Trustees), and to abstain from anyparticipation in the matter unless and until the Corporation can determine whether a conflict existsand how that conflict shall be resolved. If any relevant changes occur in my affiliations, duties, orfinancial circumstances, I recognize that I have a continuing obligation to file an amended “Conflictof Interest Disclosure Form” with the appropriate designated office.

I understand that the information on this form is solely for use by the Corporation and isconsidered confidential information. Release of this information within the Corporation will be ona need-to-know basis only. Release to external parties will be only when required by law and/orfederal regulations.

Signature Date


Please complete the following questions, and submit this form to the Board President.

1. Are you or a member of your immediate family an officer, director, trustee, partner (general or limited),

employee or regularly retained consultant of any company, firm or organization that presently has business dealings

with the Corporation or which might reasonably be expected to have business dealings with the Corporation in the

coming year?

________Yes _________No

If yes, please list the name of the company, firm or organization, the position held, and the nature of the business

which is currently being conducted with the Corporation or which may reasonably be expected to be conducted with

the Corporation in the coming year:

2. Do you or does any member of your immediate family have a financial interest, direct or indirect, in a company, firm

or organization which currently has business dealings with the Corporation or which may reasonably be expected to

have such business dealings with the Corporation in the coming year?

________Yes _________No

If yes, please list the name of the company, firm or organization, the nature of the interest and the name of the person

holding the interest, and the nature of the business which is currently being conducted with the University or which may

reasonably be expected to be conducted with the Corporation in the coming year:

3. Do you or does any member of your immediate family have a financial or personal interest in an entity in which the

Corporation has a financial or other vested interest?

________Yes _________No

If yes, please provide details below:

4. Have you or an immediate family member accepted gifts, gratuities, lodging, dining, or entertainment that might

reasonably appear to influence your judgment or actions concerning the business of the Corporation?

________Yes _________No


5. Do you have any other interest or role in a firm or organization, where that interest or relationship might reasonably

be expected to create an impression or suspicion among the public having knowledge of your acts that you engaged

in conduct in violation of your trust as a trustee, officer, faculty or staff member?

________Yes _________No


Please add additional pages as needed.

If any material changes to the responses provided on the annual disclosure form occur before the next form is due,

the trustee, officer or employee is required to update the information on this form in writing, and submit the update to

the Board President.


10 minutes

5 minutes

3 minutes

7 minutes

5 minutes

5 minutes

10 minutes

15 minutes

Save-The-World NonProfitBoard Meeting Agenda

[Date]

Attendance: [It’s good to keep track of who attends - and who is absent. Chronic unexcusedabsences are the sign of an unengaged board member]

Agenda:

1. Welcome, Introductions [Always take time to introduce new board members andguests]

2. Minutes from Previous Meeting – [Should be distributed prior to the meeting, oravailable for pick-up and perusal before the meeting begins]a. Corrections, Comments, Approval

3. Treasurer’s Report – [Should show income and expenses current to the mostrecently-received bank statement. May also show “encumbered funds” (unspentgrants). Should also show bank account(s) balances.]

4. Old Business – [This is where you receive reports on pending projects, previousassignments, etc.]

5. New Business – [This is where you discuss new projects and issues]

6. Optional topics:

a. Correspondence – Can be summarized or read in detail, depending uponthe importance to the organization. Can include requests for financialsupport, calls to action, expressions of gratitude.

b. Upcoming Events – Summary of events in planning - can include sign-up,volunteer tasks, discussion of opportunities or obstacles.

7. Other Business – Be careful - if you leave your agenda too open-ended, you canget more than you bargain for. If you have Board Members or members of thepublic who regularly take Board time with long discussions about topics not includedon the Agenda, you can regain control of your meeting by asking that all topics ofdiscussion be placed on the Agenda.

8. Next Meeting – Don’t forget to remind your Board of the next scheduled meeting! If you don’t have a regular meeting time, schedule two meetings in advance - thenext one, and a tentative date for the one after that.

9. Adjourn.

SuggestedTime


Top 8 questions asked by nonprofit boards:

1. Do we have to use Roberts Rules of Order for our meetings? NO - unless your organizationaldocuments (bylaws, policies) require it. Consider formally adopting an informal meeting structure to movethings along. Formal meeting procedures should be used when there is a large number of participants(national meetings) or if there is greater than expected disagreement or discussion on a topic.

2. As a Nonprofit Board Member, can I be paid for work I do for the Nonprofit? Legally, yes -practically, MAYBE - You can be reimbursed for reasonable expenses. Sometimes you can receive asmall stipend for unusual work. Technically, you can be paid for board service - however, this benefit istypically reserved for top nonprofits, and is generally frowned upon by government, corporate or foundationgranting organizations.

3. Can we reimburse expenses to our Directors? YES (mostly). The Board can approve policy whichpermits reimbursement of reasonable expenses incurred by Directors, including mileage for attendingevents as a Board representative, reimbursement of registration or admission fees to workshops, events,etc., and overnight accommodations. Care must be taken to be sure that the Director is not receiving unduebenefit from the reimbursement (for example, can reimburse dinner, but not a night of bar-hopping at anevent)

4. What do we do with a Board Member that never comes to meetings? Your bylaws can containlanguage which provides that a Board Member is presumed to have resigned if he or she misses 3 (orwhatever suitable number) consecutive meetings without excuse. If not, you should assign the Presidentto speak to the errant Board Member and ask that the Board Member voluntarily resign if he or she cannotfulfill a commitment of meetings.

5. There is pending legislation that will affect my nonprofit - can we talk to our legislators about it? IT DEPENDS. §501(c)(3) are prohibited from engaging in political activity. This means that a significant partof your operating budget cannot be used to effect legislation or political change. However, you can provideinformation about pending legislation, and give information as to how the legislation will affect you. Yourmembers can be personally active in promoting (or opposing) particular legislation, as long as they areacting as individuals, and not as your representatives.

6. Can the Directors be personally liable for liability of the Nonprofit? IT DEPENDS. Indiana NonprofitLaw protects Directors from most actions done in the course of their service as nonprofit directors. However, a Director can become liable for the Nonprofit’s actions under certain circumstances:a. If the Director personally and directly injures someoneb. If the Director personally guarantees a bank loan or a business debt on which the corporation

defaultsc. If the Director fails to deposit taxes or file any necessary tax returns (or knows that the returns are

not being filed, and does nothing about it)d. If the Director does something intentionally fraudulent, illegal, or clearly wrong-headed that causes

harm, ore. If the Director co-mingles nonprofit and personal funds.

7. What do we have to tell the public, if asked? Nonprofits must provide, upon request: a. Application for Tax Exempt Statusb. Bylawsc. 990 tax returnd. Public grant applications, if the grant funding is from a government agency, or if the private granting

organization requires it

8. Do we have to allow the public to attend board meetings? NO. You don’t even have to let yourmembers attend board meetings, unless your bylaws or board policy requires it. However, it’s a good ideato be as “open” as possible to avoid appearance of unfair or illegal dealing - especially when governmentmoney is involved.

© 2013, Miriam E Robeson, Attorney


Nonprofit Financial Control Policy

The Board desires to set a tone of accountability for managing finances. This policy establishescontrols for handling receipts and disbursements, including notation of what transactions requireBoard approval.

1. Check-Signing Authority. The board chair, treasurer, chief executive, and one senior staffmember other than the director of finance, as designated by the chief executive, are authorizedto sign checks.a. One Signature Authorized. Checks up to $250 require one signature.b. Two Signatures Required. Checks over $250 require the signature of two of the following:

the board chair, treasurer, chief executive, or other senior staff member as designatedabove.

c. Board Approval Required. Board Pre-approval for expenses in excess of $1000 is required.d. Self-signing Checks Prohibited. No one may sign a check payable to oneself, either as a

sole or a secondary signature.

2. Accounting and Cash Management Security. a. Counting Cash. For all fund raising activity or receipts of cash from events, two people will

count the cash, together.b. Deposits. All cash and checks will be processed immediately; if deposits cannot be made

in a timely manner, checks and cash will be locked in a secure location.c. Computer Controls. Computers will be password-protected and kept in a secure location.

Laptops will be stored in a secure location when not in use.d. Reconciling Accounts. All accounts will be reconciled monthly.

3. Cash Disbursements. Cash Disbursements are discouraged; however, an authorized checksigner will make disbursements only upon review and approval of the transaction, includingreview of proper supporting documentation, such as a purchase order and evidence of thereceipts of the goods and services.

4. Collection of Funds and Deposits. Ideally, the person that writes checks does not makedeposits. For all deposits, careful record funds must be made, including fund accountdeposited to, purpose of deposit, donor (or payor), and amount. Copies of all checks areencouraged. If possible, deposits should be verified and initialed by another staff or Boardmember.

5. Board and Staff Fiduciary Duty. It is the duty of any Board and Staff member who has authorityto sign check to verify that there are sufficient funds available for payment of the checks beforeaffixing his or her signature.

6. Board Approval Required for all Credit and Borrowing Transactions. Board approval must beobtained for all applications of credit and loans. At least two signatures, at least one of whichmust be a Board Member, are required to obligation Acme for any loan or extension of credit.

7. Credit Cards and ACH Payments prohibited. Except for payroll and as otherwise specificallyapproved by the Board, use of company credit cards or ACH payment of expenses isprohibited.

8. Annual Audit or Review. The Board will conduct an annual audit or review of the financialaccounts. If a third-party audit is not feasible, at least one Board Member, other than theTreasurer, will review all income and expenses, bank statements, and account balances for theyear. A report will be made to the Board of any findings

© 2010, Miriam E. Robeson


Document Destruction Guidelines

The Sarbanes-Oxley Act addresses the destruction of business records and documents and turns intentional

document destruction into a process that must be carefully monitored.

Nonprofit organizations should have a written, mandatory document retention and periodic destruction policy.

Policies such as this will eliminate accidental or innocent destruction. In addition, it is important for administrative

personnel to know the length of time records should be retained to be in compliance.

The following table provides the minimum requirements.

This information is provided as guidance in determining your organization’s document retention policy.

Type of Document Minimum Requirement

Accounts payable ledgers and schedules 7 years

Audit reports Permanently

Bank Reconciliations 2 years

Bank statements 3 years

Checks (for important payments and purchases) Permanently

Contracts, mortgages, notes and leases (expired) 7 years

Contracts (still in effect) Permanently

Correspondence (general) 2 years

Correspondence (legal and important matters) Permanently

Correspondence (with customers and vendors) 2 years

Deeds, mortgages, and bills of sale Permanently

Depreciation Schedules Permanently

Duplicate deposit slips 2 years

Employment applications 3 years

Expense Analyses/expense distribution schedules 7 years

Year End Financial Statements Permanently

Insurance Policies (expired) 3 years

Insurance records, current accident reports, claims,

policies, etc.

Permanently

Internal audit reports 3 years

Inventories of products, materials, and supplies 7 years

Invoices (to customers, from vendors) 7 years

Minute books, bylaws and charter Permanently

Patents and related Papers Permanently

Payroll records and summaries 7 years

Personnel files (terminated employees) 7 years

Retirement and pension records Permanently

Tax returns and worksheets Permanently

Timesheets 7 years

Trademark registrations and copyrights Permanently

Withholding tax statements 7 years

©2004 National Council of Nonprofit Associations, www.ncna.org

May be duplicated for non-commercial use, with attribution, by charitable organizations.

The National Council of Nonprofit Associations (NCNA) is the network of state and regional nonprofit associations serving over 22,000 members in 46 states

and the District of Columbia. NCNA links local organizations to a national audience through state associations and helps small and mid-sized nonprofits:

manage and lead more effectively; collaborate and exchange solutions; save money through group buying opportunities; engage in critical policy issues

affecting the sector; and achieve greater impact in their communities.


http://www.ncna.org

Top 10 Rules for Charitable Donations and Deductions

1. Qualified Nonprofit. Charitable contributions must be made to qualified organizationsto be deductible. You can ask any organization whether it is a qualified organization and most willbe able to tell you. Google “Exempt Organizations Exempt Check” for the website to check qualifiedstatus of nonprofits.

2. Donations of Labor (Volunteer Hours) Not Deductible. You cannot deduct donations oftime, even if it is in your area of business or expertise. If you don’t have an “out of pocket”component, you cannot deduct it. (You can, however, deduct your employees’ time, if theyvolunteer while on your clock.)

3. Valuation of Donations. You generally can deduct your cash contributions and the fairmarket value of most property you donate to a qualified organization. Special rules apply to severaltypes of donated property, including clothing or household items, cars and boats.

4. Only “True” Donations are Deductible. If your contribution entitles you to receivemerchandise, goods, or services in return – such as admission to a charity banquet or sportingevent – you can deduct only the amount that exceeds the fair market value of the benefit received.

5. Provide and Keep Records. Be sure to keep good records of any contribution you make,regardless of the amount. For any contribution made in cash, you must maintain a record of thecontribution such as a bank record – including a cancelled check or a bank or credit card statement– a written record from the charity containing the date and amount of the contribution and the nameof the organization, or a payroll deduction record.

6. Current Year Deductions Only. Only contributions actually made during the tax year aredeductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec.31, your deduction would be $200.

7. Credit Card Donations. Deducted when Received by Charity. Include credit card chargesand payments by check in the year they are given to the charity, even though you may not pay thecredit card bill or have your bank account debited until the next year.

8. Written Acknowledgment Required. For any contribution of $250 or more, you must havewritten acknowledgment from the organization to substantiate your donation. This written proofmust include the amount of cash and a description and good faith estimate of value of any propertyyou contributed, and whether the organization provided any goods or services in exchange for thegift.

9. Special Forms for Donations of Property Valued at More than $500. To deduct charitablecontributions of items valued at $500 or more you must complete a Form 8283, Noncash CharitableContributions, and attached the form to your return.

10. Appraisal Required for Property Donations More than $5,000. An appraisal generallymust be obtained if you claim a deduction for a contribution of noncash property worth more than$5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to yourreturn.

For more information see IRS Publication 526, Charitable Contributions, and for information ondetermining value, refer to Publication 561, Determining the Value of Donated Property.


Risk Management Policy

Acme Nonprofit

Risk Management Policy

Acme Nonprofit is committed to protecting its human, financial, tangible, real estate,and goodwill assets and resources through the practice of effective risk management.

Acme’s board and management are dedicated to safeguarding the safety and dignityof its paid and volunteer staff, its clients, and anyone who has contact with theorganization. To this end, the board will ensure that the organization has a riskmanagement plan for the organization that is reviewed and updated on an annualbasis.

1. Policy Overview. Financial resources of Acme are the responsibility of the boardof directors. The board will:

a. Have a clear plan for acquisition of financial resources to pay for theprograms and services provided by Acme

b. Provide guidelines for management and allocation of financial resourceswhich will produce optimum benefit for those we serve.

c. Monitor and evaluate the financial plans and guidelines of Acme toensure the financial integrity of Acme

2. Budget. An annual operating budget will be prepared by the executive directorand presented to the board for approval at least 60 days prior to the beginningof the next fiscal year. The budget will reflect the cost of carrying out theprograms and services of Acme for the next fiscal year. This budget will alsoreflect the anticipated revenues of Acme.

3. Budget Review and Implementation. The budget will be viewed by the board asthe financial plan for Acme, and approval of the budget by the board will beauthority for the executive director to manage Acme's finances according to theplan without seeking further approval of the board. However, the executive willkeep the board well informed of the ongoing status of the financial plan, and willnot make expenditures outside of the budget plan without seeking boardapproval to amend the budget. Amendments to the budget will be presentedto the board for approval for any of the following reasons:a. Acme enters into compacts or contracts that were not included in the

approved budget.b. Management proposes a major expenditure that was not included in the

approved budget.c. Significant unanticipated revenues are received or cost overruns occur

4. Capital Reserves. A working capital reserve sufficient to keep Acme operatingfor at least a 60-day period will be maintained at all times.

5. Accounting Systems. The accounting system used by Acme will utilize generallyaccepted accounting practices (GAAP) that are required and/or recommendedby regulatory or lending agencies and the Acme auditor.


Fraud Prevention Checklist

NOTE: This Fraud Prevention Checklist has been adapted as a tool to provide guidance tononprofits in finding where weaknesses in fraud detection and reporting might exist, and providesuggestions for implementation of stronger controls.

1. Is ongoing anti-fraud training provided to all board members and employees?

G Do board members and employees understand what constitutes fraud?

G Have the costs of fraud to the company and everyone in it — including lost profits, adversepublicity, job loss and decreased morale and productivity — been made clear?

G Do board members and employees know where to seek advice when faced with uncertainethical decisions, and do they believe that they can speak freely?

G Has a policy of zero-tolerance for fraud been communicated to board members and employeesthrough words and actions?

2. Is an effective fraud reporting mechanism in place?

G Have board members and employees been taught how to communicate concerns about knownor potential wrongdoing?

G Is there an anonymous reporting channel available to board members and employees, suchas a third-party hotline?

G Do board members and employees trust that they can report suspicious activity anonymouslyand/or confidentially and without fear of reprisal?

G Has it been made clear to board members and employees that reports of suspicious activity willbe promptly and thoroughly evaluated?

3. To increase a perception of detection, are the following proactive measures takenand publicized to board members and employees?

G Is possible fraudulent conduct aggressively sought out, rather than dealt with passively?

G Does the organization send the message that it actively seeks out fraudulent conduct throughfraud assessment questioning by auditors?

G Are surprise fraud audits performed in addition to regularly scheduled fraud audits?

G Is continuous auditing software used to detect fraud and, if so, has the use of such softwarebeen made known throughout the organization?

4. Are fraud risk assessments performed to proactively identify and mitigate thecompany’s vulnerabilities to internal and external fraud?


5. Does the financial review committee, if one exists, have adequate resources andauthority to operate effectively and without undue influence from the ExecutiveDirector or Officers?

6. Is the management and board tone at the top one of honesty and integrity?

G Are board members and employees surveyed to determine the extent to which they believemanagement acts with honesty and integrity?

G Are performance goals realistic?

G Have fraud prevention goals been incorporated into the performance measures against whichemployees are evaluated and which are used to determine performance-related compensation?

G Has the organization established, implemented and tested a process for oversight of fraud risksby the board of directors or others charged with governance (e.g., the audit committee)?

7. Are strong anti-fraud controls in place and operating effectively, including thefollowing?

G Proper separation of duties

G Use of authorizations

G Physical safeguards

G Job rotations

G Mandatory vacations

8. Does the hiring policy include the following?

G Past employment verification

G Criminal and civil background checks

G Credit checks

G Drug screening

G Education/credential verification

G References check

9. Are employee support programs in place to assist employees struggling withaddictions, mental/emotional health, family or financial problems?

10. Is an open-door policy in place that allows employees to speak freely aboutpressures, providing management the opportunity to alleviate such pressures beforethey become acute?

11. Are anonymous surveys conducted to assess employee morale?

From: 2010 Global Fraud Study, Association of Certified Fraud Examiners


Someone Stole The Cashbox!Personnel Matters in Nonprofit Fraud or Theft

A feeling of dread sets in when nonprofit officials discover fraud or theft in their nonprofit. Nonprofit organizationsoperate in a difficult financial environment; the added burden and betrayal of fraud, embezzlement or theft can triggera panicked reaction from the decision makers.

If your nonprofit is the victim of fraud, theft or embezzlement, here is a checklist to help manage the first few daysand weeks after the discovery and verification of an unexpected loss of funds due to criminal conduct:

1. If You Suspect Fraud – Act Immediately toprotect the nonprofit

a. Lock-down assets i. If Data and Dollars - change passwords,

verify access (Who has access to theaccount, who are authorized signators?)

ii. If “Physical” assets - change door locks,verify that security systems have not beencompromised, account for all keys/keycards

b. Rotate dutiesi. Most nonprofit employees are cross-trained

by necessity due to staff needing to coverillness and vacation time for otheremployees. Immediately rotate normalduties to cut off anyone with “guilty access.”

c. Change Procedures - Increase controlsi. Require two signatures on all checks, put

an alert at the bank, survey the bank for allaccount activity and immediately reconcileall accounts with the bank

ii. Add a person to income controls - countingcash, processing checks, opening mail -this would be a good opportunity to train aboard member in the nonprofit’s financialprocedures

d. Contact your accountant (if you don’t have one -get one)i. Request immediate supervision and review

of accounts to confirm fraud (or theft orembezzlement)

ii. Ask for audit of previous activities toconfirm fraud and identify source or keyvulnerabilities

iii. Ask for audit to create a “bright line”between “contaminated” f inancialinformation and “clean” financial information

iv. Request assistance in “starting over” foraccounting procedures to recalibrateincome and expense controls

e. Consult your attorney for legal guidance andramifications of suspected fraud

2. If you confirm fraud

a. Manage Assets. Work with your accountant toaddress vulnerabilities and implement new orrevised controls to prevent future fraud

b. Confront the perpetrator –

i. If employee – (1) Review employee manual (or contract)

for procedures for suspected theft andfollow termination guidelines

(2) If no manual or contract, ExecutiveCommittee should determine course ofaction (immediate termination,suspension, reporting to authorities)

(3) Confront employee with proof andconsequences. If termination, providean escort to clean out desk, turn in keysand leave the building.

ii. If Officer or Board Member (or significantother of Officer or Board Member)(1) Consult your bylaws for involuntary

removal of officer or board member andfollow guidelines, if necessary.

(2) Executive Committee or BoardPresident should meet privately withofficer or board member, provideevidence of fraud and requestresignation

(3) If perpetrator is SO of Officer or BoardMember, resignation should berequested for the good of the nonprofit

iii. If Volunteer, donor, or other stakeholder(1) Confront the perpetrator (at least two

representatives)(2) Formally sever ties (escort out of

building, ask to not come back,“persona non grata” status)

c. Contact police to report criminal activityi. Cooperate in investigation, provide

information butii. Protect donor privacy, employee privacy, to

the extent not involved with the crime

© 2011, Miriam E. RobesonEffective Nonprofit Management 33 of 35

Public Relations in Time of CrisisKeeping Cool When on the Hot Seat

When crisis looms (or crashes), there is little time to react before a story spins out of control. Thisguide or checklist can help a nonprofit keep cool and maintain public goodwill while managing a crisis.

1. When crisis is apparent. STOP AND PLAN. Sit down with the primary decision-makers todevelop a written and confidential response strategy.

2. A crisis response plan should include:a. Flow of information (who talks to whom, who should be included in key conversations, who

should be included in press release and other public response)b. Crisis response planning team - core group and support/implementation groupc. Crisis Response Goals – maintain community support, recover lost cash flow, prosecute

criminal behavior, implement plan to prevent future vulnerabilityd. A script for formal response for Spokesperson to use in interviews and press releasese. Public mantra (what everyone except the Spokesperson says to the public) – Public mantra

typically is, “Ms. X is our official spokesperson. You should direct all inquiries and commentsto her.”

f. Spokesperson marching ordersi. What to sayii. Who to talk toiii. When to defer response (when to not talk)

3. Appoint a Spokesperson. Qualities of a spokespersona. Credentials – Executive Director, Board Member, Board Officer, Attorneyb. Knowledge – Thorough knowledge of the business practices and programs of the nonprofit, as

well as a full understanding of the crisisc. Honesty – Demeanor and presentation are critical. Spokesperson should not demur or

dissemble. Even a slight appearance of “hiding something” can damage the Nonprofit’s imaged. Ability to handle criticism – The Spokesperson is both the source of information to the public,

and the target for negative comments and must be comfortable answering questions andaccusations calmly and competently.

4. Tell the Storya. Tell it all – don’t hide information just because it’s embarrassing or awkward (but don’t divulge

private information)b. Tell it on the record – don’t indulge in private conversations except for a select few (significant

stakeholders). Don’t ever talk to the press outside of prepared statements.c. Tell it fast – get YOUR story told before the rumor mill startsd. Tell them what you are doing about it – Have a polished plan to address and overcome the

crisis to provide the public with confidence that the nonprofit can survive the crisise. Get back to work – “Name it, claim it, and move on” – don’t dwell on the crisis - focus on

recovery and resuming the nonprofit’s mission.

5. Discourage prolonged discussion and analysis of the crisis (by the public and by the nonprofitstakeholders). Once the crisis has been identified, a plan has been developed and implemented,and the public has been suitably informed, discourage continued gossip about the crisis. Instead,gently but firmly redirect the conversation to what the nonprofit is doing now, and the progress andplanning that will help the nonprofit recover.

© 2011, Miriam E. Robeson


Safe Passage for NonprofitsWhere to Go for Government Compliance

Indiana Secretary of State

Annual Business Entity Report – Check your status and file your report onlineSearch: indiana secretary of state business entity reportURL: http://www.in.gov/sos/business/2436.htm

Indiana State Board of Accounts

Entity Annual Report – For nonprofits that receive state fundingSearch: entity annual report e-1URL: http://www.in.gov/sboa/3104.htm

Indiana Department of Revenue

Nonprofit Organization’s Annual Report – Financial reporting to IndianaSearch: indiana nonprofit np20URL: http://www.in.gov/dor/3506.htm

The IRS has redesigned their website - several search options have been combined into one toolfrom the IRS Exempt Organization website

IRS – 990N – Due May 15 for all small 501(c)(3) nonprofits – ONLINE ONLY

For nonprofits with gross receipts from all sources <$50,000Search: irs 990nURL: http://www.irs.gov/Charities-&-Non-Profits/Annual-Electronic-Filing-Requirement-

for-Small-Exempt-Organizations-%E2%80%94-Form-990-N-%28e-Postcard%29

IRS – 990 EZ or 990

For nonprofits with gross receipts from all sources >$50,000Search: irs 990URL: http://www.irs.gov/pub/irs-pdf/f990.pdfNOTE: This is a PDF fill-able form version of the 990 for your information only. The

presenter strongly recommends that you hire the services of a qualified professionalto complete and file the 990EZ or 990 for your nonprofit. Some nonprofitprofessionals consider in-house preparation of a 990 EZ or 990 to be a breach ofa nonprofit’s fiduciary duty.

IRS Publication 78 Exempt Organization “Select Check”IRS Recent Revocations of §501(c)(3) status

Cumulative list of approved nonprofit organizationsSearch: IRS Exempt CheckURL: http://apps.irs.gov/app/eos/
