Club Finances MidWinter Conference Mansfield, MA March 21, 2015 William T. Jenkins, CPA

Who am I? Kiwanis – District Secretary – Past District Treasurer – Past Distinguished Lieutenant Governor – Past Club President Career – Certified Public Accountant – CFO of both Public and Private Companies – Chairman of Cape Cod SCORE 2

Club Finances Requirements Accounts Budgets Accounting Systems Audit Permanent Records Tax Returns Annual Reports 501(c)(3) 3

Requirements Receive all funds and deposit promptly Disburse fund only by order of the Board Maintain club financial records Reconcile bank accounts monthly Report financial status at the monthly Board meetings Guide the Board in preparing Annual Budget File annual tax return, as required File annual report, as required 4

Club Accounts (Sources) Administrative Account – For all administrative expenses of the club Annual club dues Meeting meals Membership fees 50/50 raffles, Happy Dollars, etc. Community Service Account – For all club service projects run by the club Fund-raising projects Designated donations 5

Club Accounts (Uses) Administrative Account – Pay annual dues to District and International – Expenses such as web-site hosting, mailings, banners, gifts and other miscellaneous expenses Community Service Account – All expenses incurred with a fund-raising project – Charitable, educational, and religious activities of the club – Expenses of sponsored youth clubs ( a service activity) 6

Good Internal Controls Cashier at meetings Secretary bills for dues Co-sign checks with another officer (> than $xxx) Approval of Board Give receipt for funds received Require invoice or check request for checks written Annual Audit Suggested record retention – 5 years 7

Create an Annual Budget Schedule budget-planning session with Board and Committee Chairs Develop a historical three trailing perspective of financial activity of the club Identify projected source(s) and use(s) of funds for both Administrative and Community Service accounts Present to Board for approval 8

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Accounting System Will differ with each club but should meet the following requirements: – Identify all sources of income – Identify all disbursements – Accurate (agrees with Secretary and the monthly report) – Handles billing of membership dues – Provides timely reports – Can provide information regarding delinquent members 11

US Revenue Act re: Solicitation Solicitations must include an express statement that “contributions or gifts to the club are not deductible as charitable contributions for federal income tax purposes” The statement must be in a conspicuous and easily recognizable format for all solicitations, whether in written or printed form, by television or radio, or by telephone 12

Annual Audit Every club’s bylaws requires an annual audit The Board names the auditors Certification is not required and may be conducted by a committee of club members May not include present Secretary or Treasurer May be incoming Treasurer 13

Permanent Records Records should be retained as permanent club records until such time as disposal may be permitted by law (with Board authorization) Records should be retained by both the Secretary and the Treasurer Records should include: Pertinent information on present and former members Lists of officers, directors, and committee each year Official monthly reports Club’s annual report to International 14

Permanent Records Records should include: (continued) – Official documents and reports related to club incorporation – Financial records and reports for each year – Canceled checks (retained for seven years) – Historical information such as correspondence, newspaper clippings, club publications and the club charter – Tax returns – State Annual Reports 15

Tax Return Requirement Gross receipts less than $25,000 – If gross receipts are less than $25,000 and the club did not receive a Form 990 package from the IRS no filling is required Gross receipts more than $25,000, but less than $1,000,000 – Form 990-EZ is required annually Gross receipts greater than $1,000,000 – Form 990 must be completed 16

Use of Form 990-EZ May file 990-EZ for: – 2008 tax year (filed in 2009 – 2009 tax year (filed in 2010) – 2010 and later tax years If gross receipts are: – < $1 million – < $500,000 – < $200,000 17

Where to find the filing information Form 990-EZ - Form pdf/f990.pdf Instructions for Forms 990 and 990-EZ - ez/index.html 18

Other Compliance Filings Some states require the club to file a copy of their IRS filing on an annual basis Annual returns are generally require by the Secretary of State on an annual basis – Listing of Officers and pertinent data (addresses, term of office, etc.) – Date of Annual Meeting 19

Annual Report Filings URL’s Connecticut - recording/allforms/corp-organization.pdf Maine - Massachusetts - New Hampshire - Vermont Biennial Report - Rhode Island - ofit.html 20

501(c)(3) - You Can Do It 501(c)(3) status is limited to groups formed exclusively for one or more of the following purposes: – charitable – Educational – religious A 501(c)(3) must serve public purposes, rather than private purposes. A (c)(3) must not pay dividends or distribute earnings in any other way to private shareholders or individuals. Legislative activity (lobbying) must be limited. 21

Why does a Kiwanis Club Qualify The IRS term for those who deserve our charity is "charitable class." IRS rulings have held that persons who are aged, ill, handicapped, unemployed, or otherwise distressed, are members of a charitable class. The term also includes children and, of course, the poor, indigent, and underprivileged. You cannot set up a charity to benefit a specific person, even if that person is in need. To have a true charitable class, the specific individuals who will benefit cannot be selected ahead of time. The term charitable has a meaning beyond just helping the poor. It includes many activities that serve the common good, such as establishing or maintaining public buildings, monuments or works, relieving the burdens of government, reducing neighborhood tensions, eliminating prejudice and discrimination, defending human and civil rights, battling community deterioration, combating juvenile delinquency, promoting the arts, and preserving and protecting the natural environment for the benefit of the public. Historically, "charitable" is an evolving concept that can change with society's needs. 22

Where to Start IRS internet website to begin the process – – – Other documentation required – Kiwanis International Bylaws – Club Bylaws – Articles of Organization – Annual Reports – Tax Returns – Form