“Money Matters” 4-H Club Financial Management

Agenda Background 4-H Federal Tax Exempt Status Change in Maryland 4-H Financial Policies Charter/Renewal Applications –Supporting Documents Timeline – Transition Year and Annual Best Practices Fundraising Additional Financial Resources

Federal Tax Exempt Status Group Exemption 2704, Issued by the IRS in 1946 made 4-H Clubs and Groups exempt from federal taxes: –Clubs could accept donations of money, animals or items, and donors could claim this as a tax deductible donation –Clubs considered subsidiary of National 4-H Headquarters –“correspond to section 501 c(3) of the IRS Code”

Pension Reform Act of 2006 – significant changes in IRS laws & guidelines Result – GEN (2704) eliminated All states directed to secure tax-exempt status Following transition- MD 4-H Foundation will hold GEN Transition will cause some changes in reporting requirements.

Changes Needed …. Safety and accountability. Proper use of funds. Programmatic and fiduciary responsibility required for the use of the 4-H Name and Emblem. Compliance with current federal and state laws. Prevent loss of nonprofit status.

4-H Money = Public Funds Regardless of source, ALL 4-H funds must be used for 4-H YD educational programs. ALL 4-H funds are public funds and must be publicly accountable. UME has oversight for 4-H programmatic and financial accountability.

4-H Charters Only document officially recognizes 4-H Club or Group. Federal regulations require annual reporting. Identifies 4-H Clubs and Groups as subsidiaries of The Maryland 4-H Foundation, Inc. Exempt from paying federal income tax.

Charter Requirements – 4- H Club New EIN At least five members Two trained UME Volunteers Elected and trained officers By-Laws - Revised Affiliation Agreement - New Planned educational program Compliance with AA Six meetings a year Renewal Filed appropriate 990 Completed Annual Financial Report and Property Inventory Report

EIN’s EIN stands for "Employer Identification Number” also known as a “Federal Tax Identification Number”. A nine-digit number the IRS assigns to business entities. Every club must have EIN, even those that do not handle money. **Exception of afterschool programs and military clubs, in some cases.***

4-H clubs and other 4-H entities need an EIN number to open a bank account. Form SS-4, Application for Employer Identification Number, is available on the IRS Website. IRS Website Please see “How to Apply for EIN” fact sheet for more information. Personal social security numbers should never be used for 4-H BANK accounts.

See Sample SS-4 Form Official Name of Club – must contain “4-H” and be specific – i.e. Allegany 4-H Dairy Club Address of 4-H Club – must be address of Local UME Office

Federal Tax Exempt Status for University of Maryland Extension 4-H Clubs/Authorized Groups and Reporting Guidelines JANUARY 31, 2013 All 4-H Clubs and Authorized Groups must complete the appropriate 990 or 990 N form by January 31. For 2012, this filing will report on the January–December 31, 2012 financial year. After the transition year, 4-H Clubs and Authorized Groups will report on the July 1 – June 30 th fiscal year. See Fact Sheet “Filing 990 N Directions” for assistance.

Affiliation Agreement Legal Document Club to become affiliated with The Maryland 4-H Foundation, Inc. as a subordinate under Foundation’s GEN 4-H Club can maintain federal tax exempt status. Signed once. Kept on file.

JANUARY 31, ‐ H Clubs and Authorized Groups must submit the following to the 4-H Youth Development Educator : The completed 2013 New 4 ‐ H Charter Application or 4 ‐ H Charter Renewal Application, Signed Maryland 4-H Foundation Affiliation Agreement for 4-H Clubs and Authorized 4 ‐ H Youth Development staff can establish an earlier due date for County/City 4 ‐ H Clubs and Authorized Groups to meet local programming needs and to accommodate staff scheduling to complete all documents required.

JULY 1, 2013 Change Fiscal Year: All 4 ‐ H Clubs and Authorized Groups must be on the fiscal year of July 1 through June 30 beginning July 1, Oct. 15, 2013 Due to County/City Offices from Clubs/Groups: 4-H Club/Group Annual Financial Summary Report 4-H Club/Group Property Inventory Report 4-H Club/Group Treasurer books for local review Nov. 15, 2013 All 4-H Clubs/Groups must file 990 (reporting Jan 1-June 30).

After the Transition Year –TO BE COMPLETED ANNUALLY: BY JANUARY 31: Submit annual 4-H Charter Renewal Applications to your local UME office. BY OCTOBER 15: Complete a Financial Report along with a 4-H Property Inventory Report and submit to the local University of Maryland Extension office. 4-H Treasurer’s Books should also be turned in for local review. NOVEMBER 15 All 4-H Clubs and Authorized Groups must complete and file the appropriate 990 or 990 N form by November 15. For 2013, 4-H Clubs and Authorized Groups will report on the January 1 – June 30 fiscal year..

This is not optional…. Any club/group that is not compliant with the guidelines set forth will not have authorization to use the 4-H name and emblem and therefore cannot be considered a 4-H Club or a 4-H Authorized Group.

Best Practices… 4-H Funds deposited in a FDIC or NCUA insured institution in account bearing 4-H name. Treasurer – youth Checks – 2 signatures (youth/adult, not related to each other) Financial records up-to-date/reported monthly. –See “Financial Handbook for Club Leaders and Financial Handbook for Club Treasurers”

Fundraising 4-H Youth Development Educator must approve all club fundraising activities before the event occurs, see sample approval request form. Must be used for 4-H educational purposes for club not individuals or other community groups. Generally, money raised should be spent same year. –See “4-H Fundraising Fact Sheets for more information.”

Questions? Need more assistance? Additional Financial Resources Available EIN – Applying/Misplaced Filing 990 Financial Handbooks Acknowledging Donations Fundraising

Volunteer Forum Handling Club Finances What is an EIN and why does my 4-H Club need one? Update on 4-H Tax Exempt Status.

As questions arise, please contact your local UME 4-H Extension Educator.

Questions?

THANK YOU, THANK YOU, THANK YOU for your patience and understanding as we work through the development and implementation of this transition process.

Resources University of Wisconsin-Extension “4-H Money Matters Fact Sheet” University of Maryland Extension “MD 4-H Leaders Financial Handbook”