Compliance and Efficiency in the Economic Recession
Exempt Economic Landscape
Tax-exempt organizations are currently facing a tremendous measure of financial pressure and volatility. Throughout this current economic crisis in the United States, exempt organizations must reevaluate not only their corporate structure, but also their operational efficiencies and regulatory compliance. Corporate responsibility is magnified for the tax-exempt organization due to its unique vision and capacity to compete in the social impact marketplace. Although the IRS routinely grants tax-exempt status to qualifying entities, that which the IRS grants they may also take away. As a result of an antagonistic shift in Federal policy in 2008, by which the IRS made changes to the Form 990, revocation of tax-exempt status by the IRS is on the rise. Strategic foresight and swift action is more necessary than ever to equip organizations with the tools vital to fulfilling its purpose and maintaining compliance. Has your organization assessed its operational efficiencies and corporate compliance?
Issues
Failure to adhere to the guidelines set forth by the IRS and the 990 will inevitably result in the revocation of an organizations tax-exempt status. Although the IRS has always possessed this power over the exempt community, the additional requirements and heightened scrutiny reveals non-compliance and repercussions. Common issues that frequently arise include:
- Conflicts of Interests
- Integrity of Financial Statements
- Fundraising Accountability
- Excess Benefit Transactions
- Disqualified Persons
- Board Compensation
- Board Meeting Minutes
- Third Party Management Companies
- Joint Ventures with For-Profits
- Transactions with Insiders
- Executive compensation
- Written policies
- Form 990 Review
- Public Disclosure of Key Documents
These organizational decisions should be made by the board of directors at the creation of the entity or as soon after. While these issue may appear convoluted and expansive the steps towards operational efficiency, compliance and continued impact are available.
Solutions
Whether your organization is in the creation or fully developed stage of societal impact the core structure should be identical. At the minimum, every organization should create and implement the following:
- Board of Director Meeting Minutes
- Internal Policies Covering the Organization’s Operational Guidelines and Authority
- Proper Execution of Form 990 to Ensure Compliance With and Maintenance of the Organization’s Exempt Purpose
Contact
For more information and assistance on strengthening and achieving your organization’s vision contact Gabriel McCoy, Esq., an attorney with The Keel Group, Ltd., with attorneys licensed to practice law in New York, New Jersey, Virginia and the District of Columbia.