1. Non-Profit Finance 101 Staying in the Black

2. Special Considerations n In general, non-profit organizations may not: – Generate profit but may hold funds in reserve to reinvest in the organization. – Provide dividends to individual shareholders. – Engage in activities deemed anti- competitive.

3. Special Considerations n In general, non-profit organizations may not: – Provide any pecuniary gain, incentives or compensation to its officers, directors or members for their service or membership. – Hold funds under the name or identification number of an individual, or blend funds from an organizational account with those of an individual account.

4. Non-Profit Directors’ Duties n Care n Loyalty n Obedience n Integrity

5. Financial Executive’s Responsibilities n Maintain financial accounts with due diligence. n Record financial transactions with appropriate documentation. n Provide regular written/oral reports on the organization’s financial status to the board and membership. n Prepare annual tax filings, if applicable.

6. Financial Executive’s Responsibilities n Seek expert counsel when needed. n Develop policies and procedures for managing the organization’s finances. n Control organizational bank and other accounts. n Oversee periodic audits of the organization’s finances. n Maintain all organizational financial records.

7. Important Information the Financial Executive Should Have n Bank account information n Bank statements (past/current) n Annual financial statements (past/current) n Audited financial statements (past/current) n Financial policies and procedures n Financial records and forms

8. Financial Policies/Procedures n Financial Executives – Who is generally responsible for handling financial transactions and accounts? – Who has a support role and what is the extent of each role?

9. Financial Policies/Procedures n Accounts and Record Maintenance – Receipts, disbursements and forms – General ledger and chart of accounts – Membership roster – Property, investment and inventory records – Bank statements and reconciliations

10. Financial Policies/Procedures n Bank Accounts – Type(s) of accounts to maintain – Signatories on account(s) – Authority to borrow funds – Insurance/bonding – Employer Identification Number or other account identifier

11. Financial Policies/Procedures n Financial Reports – Who receives reports? – How often are reports provided? – What type of verification process or internal audit is done of financial reports?

12. Financial Policies/Procedures n Investments – Type(s) of investments – Person(s) authorized to invest funds – Investment policies

13. Financial Policies/Procedures n Transactions – Membership dues – Special assessments – Fees – Loans/grants – Interest/dividends

14. Financial Policies/Procedures n Expense Reimbursement – What activities are covered? – What limits apply (e.g., per diem, coach airfare, etc.)? – What is the authorization process? – Who authorizes pre- and post-activity?

15. Budgeting n Pointers – Identify goals/objectives for coming year. – Review current year revenue and expenses as baseline. – Identify revenue/expenses that will not recur. – Obtain input from organizational leaders.

16. Budgeting n Pointers – Estimate income and expense for coming year. – Review proposed budget with leadership. – Approve budget. – Communicate budget to members. – Monitor budget.

17. Tax Exemptions n Federal (US) – There are 23 exempt classifications under the Internal Revenue Service code. – As a “business league,” NADL and its Components can qualify for exemption under Section 501(c)(6) of the IRS code. – As 501(c)(6) organizations, NADL and its Components may not receive charitable contributions.

18. Tax Exemptions n State (US) – Federal tax exemptions do not necessarily apply at the state level. – Some states grant their own exemptions for nonprofit organizations. – The process for obtaining an exemption varies from state to state.

19. Tax Exemptions n International – The laws vary significantly from country to country. – Component leaders will need to investigate the requirements and process in each country.

20. Obtaining Exempt Status n Federal (US) – Individual exemption. – Group exemption. – Filing requirements.

21. Tax Filing Requirements n Federal (US) – Tax filings. – Taxes for unrelated business income. – Taxes related to employees. n State (US) – Requirements will vary from state to state.