[FIRM LOGO]

Exempt organizations across the country should be sensitive to the issue of excessive executive compensation. The IRS can impose excise taxes on the executive, and the organization will suffer reputational damage. Fortunately, a nonprofit can limit the potential liability of its members by taking advantage of a three-step procedure known as the rebuttable presumption. This article explains the three requirements for compensation arrangements to have a rebuttable presumption of reasonableness. A sidebar lists some of the issues that can create a conflict of interest for someone approving a compensation arrangement.
Read More

One study of charities found that 57% of the organizations surveyed had insufficient operating reserves to cover three months of expenses — the minimum level many experts consider necessary to maintain financial stability. Forgoing reserves leaves nonprofits vulnerable to rapid or unexpected drops in revenue or jumps in expenses. This article explains why it’s necessary to have sufficient operating reserves, and offers questions a nonprofit should ask itself when trying to determine what is sufficient.
Read More

“Quid pro quo” describes an arrangement in which a contributor gives money in exchange for something else. Whether it’s a supporter buying a ticket for a charity ball or an attendee at a charity auction successfully bidding on a hotel stay, such situations create an obligation for a nonprofit. This article describes the rules that determine whether a contribution is quid pro quo; how to value goods, services and auctioned items; and instances when quid pro quo reporting isn’t necessary.
Read More

This issue’s “Newsbits” describes how such nonprofits as the Salvation Army have begun shifting to digital donations; a new 501(c)(4) called CForward that was recently formed to champion the economic role of nonprofits and to educate and support candidates for political office; and the Celebrity Foundation Directory, featuring detailed descriptions of more than 1,700 foundations started by VIPs in the fields of business, entertainment, politics and sports.
Read More