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Managing The Money I
Internal AccountingThere are basic internal accounting issues that need to be addressed when forming a nonprofit, including who is allowed to sign checks, what duties the Treasurer has, what financial duties the board members have and creating and following a budget. Sarbanes-Oxley ActThe Sarbanes-Oxley Act states laws that govern the accounting practices and the most recent financial activities of an organization. Two provisions of the Sarbanes-Oxley Act apply to nonprofit corporations, whistle blower protection and record retention. Whistle Blower
Record Retention
TreasurerThe treasurer is normally the financial officer for the nonprofit corporation. The specific duties and actions of the treasurer are described in the articles of incorporation, the regulations or by resolution of the board of directors. The responsibilities of the treasurer typically include maintaining all financial records for the nonprofit corporation and regularly reporting the financial condition of the nonprofit to the board of directors. Normally the treasurer will assist the president in preparing a budget for the nonprofit. The budget is to outline the expected income and expenses of a corporation over a calendar or fiscal year. The treasurer will report to the board of directors as to whether the current income and expenses are in line with the budget. Because the treasurer may handle large sums of money, the nonprofit may require a surety bond (guarantee) to be completed by the treasurer to assure that the corporation won't have any loss due to actions by the treasurer. In order to maintain the financial truthfulness of a nonprofit corporation, an independent auditor, preferably a CPA, should be used to annually audit the financial records of the nonprofit. Each member of the board of directors is to perform his or her duties in good faith in a manner s/he reasonably believes to be in the best interest of the corporation and with the care that an ordinarily cautious person would use in a similar situation. The board of directors guides all banking activity by the nonprofit corporation. The board of directors, by resolution, authorizes the treasurer or any other designated officer of the nonprofit to establish a bank account. The corporation's board of directors will determine who will sign checks. Many nonprofit corporations require two signatures on their checks. Usually this would be the treasurer and the president or one of the other officers. Nonprofit corporations may be sued. Corporations are responsible for injuries caused by their behavior in the same way that any individual would be liable. Corporations may be convicted of criminal offenses. Ohio law states that nonprofit corporate officers are not personally liable for certain obligations of the corporation. Lobbying ExpensesA nonprofit corporation's exemption from federal income tax will be denied if a substantial part of its activities consist of attempting to influence political votes for a specific candidate or law. An election can be made by using Form 5768 to allow a Section 510(c)(3) organization to utilize its money to influence legislation. This is a complicated area, and a specialist such as a tax attorney or a CPA should be consulted. Detailed information about lobbying expenditures can be found in IRS Publication 557, which is at the IRS Internet site.
This site has information about internal accounting
FundraisingRaising money to support charitable causes is the main focus of most nonprofit corporations. There are laws that must be followed when fundraising, so be sure to check and obey all federal, state and local laws. It is recommended that you work with specialists in each area such as an attorney or CPA. There are many funds available to organizations doing certain types of work or supporting certain causes. Your nonprofit may be able to benefit from grants. A good source of information is the Ohio Grantmakers Forum. You can call them at (614) 223-1344 or visit their Web site
If you are considering having gambling or games of chance (raffles, bingo, etc.) as fundraisers, you need to know Ohio laws very well. Ohio has very strict rules about who can run such events; raffles are, for the most part, illegal in Ohio. The best source of information about gambling/games of chance is the Ohio Attorney General's office. The Charitable Law section answers questions at (614) 466-3180, or you can visit its Web site at
Additional information can be found at
Donations and Gifts Donations and gifts may come in many forms. If you are a tax-exempt organization, many of your donors may be interested in taking a tax deduction for their donation/gift. Accurate records of donations must be kept, and you need to give the donor written proof stating that you are tax-exempt and list what (how much) the donor gave you. If a donor receives something in exchange for the donation, the value of the item received must also be noted. For example, if your nonprofit sponsors a dinner and sells tickets for $250.00 each and the cost of the dinner is $50.00 per person, your thank you letter should clearly state that only $200.00 of the ticket price might be tax-deductible. Notice the use of the word "might." It is always best to tell donors to consult their attorney or accountant about whether their gift is tax-deductible. Your organization should not be giving legal advice! Two good resources are on the IRS Web site
Donation Tips
Again, check the IRS Web site for details
Continue to Managing the Money
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