As Easy as Pie: Why a Charities Program Expense Ratio

Should Not Be the Only Measure

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Documenting Contributions

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How to Read the IRS Form 990 and Find Out What It Means

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In Charities We Trust: How the Nonprofit Sector Can Inspire Public Trust

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Management Checklist: Nonprofit Legal Obligations

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Minnesota Nonprofit Corporation Filing Requirements

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One Million Minnesotans Can See Your Form 990

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How to read the irs form 990 and find out

what it means

by Peter Swords, former Executive Director of the Nonprofit Coordinating Committee of New York

"There is information in the Form 990 that you may find interesting and helpful for learning about the nonprofit organization that filed the Form 990.  But you need to know where to find this information and how to interpret it.  To help you do this, we offer a list of the ten most significant pieces of information that can be found in the Form 990 and show you exactly where you can find the information."

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One Million Minnesotans Can See Your Form 990 
by Jon Pratt, Executive Director, Minnesota Council of Nonprofits

"The world now has electronic access to information from your organization’s IRS form 990 through the new Web site of the Minnesota Attorney General’s Office. Minnesota has once again lead the way, becoming the first state in the U.S. to put charities registration information on the internet. In addition to financial data from over 2,000 Minnesota organizations, the Web site includes searchable records on groups from 50 states and the District of Columbia registered with the AG’s office, Charities Division."

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As Easy as Pie: Why a Charities Program Expense Ratio Should Not Be the Only Measure

by Matt Karl, Senior Research Associate, Charities Review Council of Minnesota

"On a recent bus ride, I couldn't help but overhear . . .

The other day my brother-in-law noticed how much mail I get from groups asking for contributions. He told me how to tell the difference between a good charity and a bad charity.

How's that?

The good charities always have pie charts in their annual reports.

Although I had just started my new job at the Charities Review Council, my experience in nonprofit finance told me the brother-in-law's advice missed the mark. I think he meant to say that when a charity uses a pie chart to show expenses by category, a big pie piece for program expense is good, but big pie pieces for fundraising or administration are bad."

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Documenting Contributions

Minnesota Council of Nonprofits publication Handbook for Starting a Successful Nonprofit in Minnesota
    

Charities must send written acknowledgements of donations and contributed property worth $250 or more. Nonprofits should send a written document and retain a copy for its records. The acknowledgement must include:

1. Amount of cash contributed (or description, but not the value of property other than cash).

2. Whether or not the organization provided goods or services in exchange for the contribution. An exchange of goods or services reduces the tax deductible amount by the retail value of the good or service exchanged.

3. Additionally, if goods or services were provided in exchange for the contribution, the acknowledgement must include a description plus a good faith estimate of the value of the good or service exchanged.

4. Additionally, if goods or services were provided in exchange for the contribution, the acknowledgement must include a description plus a good faith estimate of the value of the goods and/or services provided.

5. Acknowledgement of an “intangible religious benefit” if true of the goods or services provided. An example of this would include admission to a religious event.

Minnesota Nonprofit Corporation Filing Requirements

Minnesota Council of Nonprofits publication Handbook for Starting a Successful Nonprofit in Minnesota

Nonprofit corporations are required to file a simple registration statement with the Office of the Secretary of State once each calendar year. Many nonprofits may not know of the requirement as they do not have an address on file with the secretary to which the registration can be sent.

To determine if a nonprofit corporation has filed the necessary registration or to receive the registration form, call the Business Information Phone Lines at (612) 296-2803 between the hours of 8:00 am and 4:30 pm. Nonprofit corporations are encouraged to call as soon as possible as those nonprofit corporations not filing an annual registration will be dissolved and their corporation status ended.

Once a nonprofit has filed, a registration form will be mailed to the address of record once each year as a reminder of the requirement.

Management Checklist: Nonprofit Legal Obligations

Minnesota Council of Nonprofits publication Handbook for Starting a Successful Nonprofit in Minnesota

As a nonprofit, you need to ensure that your organization is in compliance with federal and state and federal law. The Minnesota Council of Nonprofits has compiled this checklist to help you remember some of the tasks that are required.

• File Form 990 with the IRS and the Minnesota State Attorney General's Office, Charities Division on an annual basis if the organization has more than $25,000 a year in financial activity (purely religious organizations exempt).

• Have an audit completed if total organizational revenue exceeds $350,000 in a year; file with the charities division of the State Attorney General's Office.

• Report change of name, address, or amendments to the Articles of Incorporation to the Secretary of State and pay fee for such changes.

• Make IRS Forms 990 and 1023 available to the public.

• Report any Unrelated Business Income (UBI) to the State Department of Revenue and the IRS, and send tax payments with form 990T.

• Withhold taxes from employees, and send withholding payments to the IRS and MN Department of Revenue.

• Comply with laws that affect all employers: ADA, OSHA, FLSA, FICA, COBRA, Family Medical Leave Act.

• Report any lobbying activities on Form 990, and register as a lobbyist if required by the Minnesota Ethical Practices Board.

• Give receipts to donors for contributions above $250.

• Collect sales tax on items sold by your organization, unless you are selling tickets to performances as a performing arts organization.

• Get court approval for distribution of assets.

• If the organization conducts charitable gambling activities, register with the gambling board.

• If the organization owns real property, pay property taxes or obtain an exemption from the county where the property is located.

• If the organization sends bulk mail, pay regular bulk mail rate or obtain a nonprofit bulk mail permit.

• Comply with the terms of donations; promises made to donors are legally binding. Funds given for specific projects or programs need to be kept separate.

• Comply with Minnesota state law regarding conflicts of interest.

• Make sure any professional fundraisers register with the State Attorney General's Office, Charities Division; file copy of contract.

• Obtain city permits for all cities in which the organization actively solicits door-to-door by paid solicitors.

• Record minutes of board and annual meetings.

Minnesota Attorney General - Charities Division Guide to Minnesota's Charities Laws

"In Minnesota, the Attorney General has primary responsibility for regulating, enforcing and supervising charitable organizations and charitable trusts. This guide summarizes Minnesota's laws that govern charitable organizations, professional fundraisers and charitable trusts, including laws that require registration with the Attorney General and laws that require notice to the Attorney General of certain actions involving charitable organizations and trusts. The discussion below is intended simply as an introduction. For exact statements of the law, refer to the statues themselves."

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This document is in PDF format and can be viewed using Adobe Acrobat.  To download a free copy click here.

Be an Empowered donor

Charities Review Council of Minnesota

Make a plan

"Make a budget for both time and money. Giving to charity is a social investment. Don't shortchange your investment in your community - whether it be locally, nationally or internationally. You can budget by specific organization or by causes you want to support (environment, animals, etc.). Having a budget ensures that you will not forget to give, and reminds you to set money aside for disaster relief or other immediate needs. Don't forget to think about long term options, such as planned giving."

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Recommendations for the Reform of the Nonprofit Sector

A statement by Pablo Eisenberg, Senior Fellow, Georgetown Public Policy Institute, to the U.S. Senate Committee on Finance, July 22, 2004

"Nonprofit abuses, malpractices and scandals that have been so graphically depicted in the media during the past couple of years are not a recent phenomenon. They have existed for many years. The rapid expansion of the sector, the heightened focus on charities after September 11 and the investigative reporting of the New York Times, Boston Globe and other major newspapers have turned the spotlight on what was before a well hidden facet of nonprofit life."

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This document is in PDF format and can be viewed using Adobe Acrobat.  To download a free copy click here.

Being a Good giver Takes More THan Just Heart

    Guidestar

"Donating to charity requires lots of heart—and the facts. We give you unbiased information on more than 1 million nonprofit organizations. We don't tell you which charities to support because we believe that only you know which causes are important to you. Nor do we rate or evaluate charities."

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In Charities We Trust: How the Nonprofit Sector Can Inspire Public Trust

Peter Shiras, Vice President for Programs at Independent Sector spoke at the Charities Review Council of Minnesota's June 18, 2003 Annual Forum (PowerPoint Presentation)

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If you do not have PowerPoint installed, download the free viewer from Microsoft. 

Principles and Practices for Nonprofit Excellence

Public Accountability

Volunteers, board members, employees and donors voluntarily become involved with a private nonprofit corporation because of its public benefit mission. Therefore, a nonprofit is transparent and makes information about its mission, program activities, and finances available to its constituencies. A nonprofit is accessible and responsive to public inquiry and reaches out to interested parties.

Related Practices 

Principles and Practices for Nonprofit Excellence

This booklet is a statement of the nine principles and 87 practices for nonprofit excellence. Principles and Practices for Nonprofit Excellence provides specific guidelines individual organizations can use to evaluate and improve their organizations. A great introductory guide for nonprofit board members and managers.

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