Presentation on theme: "Connecticut Land Conservation Council Conference - March 21, 2015 Engaging philanthropy … empowering your cause What is in it for Land Trusts?"— Presentation transcript:
Connecticut Land Conservation Council Conference - March 21, 2015 Engaging philanthropy … empowering your cause What is in it for Land Trusts?
The core form 990 is 12 pages with 16 schedules - it can be daunting to complete. If you hire an expert to prepare the 990, you still must own the report! Review with your accountant before you file with the IRS. 990 should be presented to your board.
The short answer is: ALL non-profits must file (except certain religious and political organizations) Lose tax exempt status if you fail to file for three consecutive years
File Form 990 N (e-Postcard) If your Gross Receipts < $50,000 File Form 990T If you have unrelated business income File Form 990 If your Gross Receipts >= to $200,000 OR Your Total Assets >= $500,000 File form 990 EZ If your Gross Receipts < to $200,000 AND Your Total Assets < $500,000
The form 990 is due the 15 th day of the fifth month after the end of your fiscal year June 30 year-ends are due November 15 December 31 year-ends are due May 15 Automatic 3 or 6 month extensions are easy to get (Form 8868)
In the new Form 990 there is more opportunity to include supplemental information and to tell your story! Take the opportunity to describe your mission – Part I and Part III. Update as necessary Describe your three largest program accomplishments in Part III. Spend the time completing this section – update each year
Schedule A (Forms 990 and 990EZ)Public Charity Status and Public Support Schedule B (Forms 990, 990 EZ, and 990PF)Schedule of Contributors Schedule C (Forms 990 and 990EZ)Political Campaign and Lobbying Activities Schedule D (Form 990)Supplemental Financial Statements Schedule E (Forms 990 and 990EZ)Schools Schedule F (Form 990)Statement of Activities Outside the United States Schedule G (Forms 990 or 990EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990)Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the U.S. Schedule J (Form 990)Compensation Information Schedule K (Form 990)Supplemental Information on Tax Exempt Bonds Schedule L (Forms 990 and 990EZ)Transactions with Interested Persons Schedule M (Form 990)Noncash Contributions Schedule N (Forms 990 and 990EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Forms 990 and 990EZ)Supplemental Information to Form 990 or 990EZ Schedule R (Form 990)Related Organizations and Unrelated Organizations
The IRS sends all 990’s to GuideStar Donors can review all 990’s before making contributions Make sure you tell your story
Question 7 – conservation easements If yes, complete schedule D, Part II Question 11 – do you have land on your balance sheet, Schedule X If yes, must also complete Schedule D Question 29 – non-cash contributions > $25,000 If yes, complete schedule M
Use Schedule O – Supplemental Information You are able to provide narrative explanations and descriptions for any sections and questions in the 990 !!! Tell YOUR story – don’t leave it to an accountant Schedule O: Explain, Elaborate and Educate
Boards should review Part VI, Section B. Policies, and know what is expected and begin to develop policies Good governance is sound risk management - per the IRS IRS would like (not required): Board to review the 990 Conflict of interest policy Whistleblower policy Document retention policy Compensation review If developing policies, note in Schedule O
Let’s look at some common accounting issues for Land Trusts and how they flow to the 990
Land Trusts should report gifts of land at FMV at time of the gift Determine if gift requires permanent ownership (can never be sold); if so, treat gift as permanently restricted If gift permits sale/transfer, treat as unrestricted or temp restricted depending on limitations on use of proceeds All land recorded as an asset on the balance sheet and in-kind contribution revenue on the income statement
Report donations of goods (land and conservation easements) > $25,000
The Land Trust gets involved if gift is > $5,000 A qualified appraisal is required and the Land Trust must sign the form 8283 Supplemental statement required from donors of conservation easement If land is sold by the Land Trust within three years of the donation, form 8282 must be filed with the IRS and sent to donor
Refers to acquisition of land or conservation easement through a combination of purchase and gift from the owner In- Kind Contribution = difference between purchase price and appraised value Donor receives a tax deduction for the difference as a charitable contribution
Conservation easements accepted or purchased by a Land Trust many times are not recognized as assets or revenue in their financials because the Land Trust doesn’t have fee title to the properties Purchased conservation easements can be expensed when acquired (no asset is owned) Donated easements can be recorded as an in-kind gift and equal in-kind expense (Extinguishment of development rights)- this is not as common
Disclose how you account for conservation easements on Schedule D, Part XIII No IRS or FASB written guidance on how to record easements Be consistent between 990 and financial statements Once a method is chosen, stick with it
Program Administration/Management Fund Raising Donors do not want to see that most of your expenses are in administration or fundraising – a major donor will not give to you. Take the time to understand and allocate
Not recorded unless for specialized skills provided by a professional and Land Trust would have purchased if the services weren’t donated This may be an issue if Land Trust has mostly volunteers – administrative costs may appear to be a high percentage of total expenses
Show your hours and the value on Schedule O Independent Sector values volunteer hours - CT volunteer at $27.77 per hour Let donors know how you maximize your dollars
Unsolicited requests for contributions All forms of contact with individual donors Most foundation grant-seeking activity Seeking government grants is normally considered administration/management expenses
Systematic method for estimating the portion of specific costs which provide benefit to multiple program, administrative, & fund raising functions (includes expenses like legal) Donors are looking at allocations and evaluating your Land Trust based upon expense categories
Land Trust can elect cash basis for the 990 Record Income and Expenses as received and paid Records Cash transactions Doesn’t record Payables or Receivables Not GAAP
ALL Land should be recorded on the balance sheet Both donated (FMV) and purchased Buildings should be recorded as an asset and depreciated
Plenty of places to give additional information including Schedule O Be sure to take the time to give potential donors as much information as you can Boards get involved and take ownership of the 990 – don’t let your accountant own the form!
No major changes by IRS for 2013 form – reporting requirements clarified only House passed Conservation Easement Incentive Act of 2015 on February 12 2015 ▪ This bill amends the Internal Revenue Code to make permanent after 2014 the tax deduction for charitable contributions by individuals and corporations of real property interests for conservation purposes
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