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How To Convince Donors To Remove “Restricted” From Their Gifts

Restricted gifts can be difficult for not-for-profits to manage. Unlike unrestricted gifts, these donations can’t go into your general operating fund and be used where they’re most needed. Some donors will be determined to make restricted gifts, but you may be able to persuade others to remove restrictions if you explain how the money will be used in a responsible and mission-enhancing way. Provide donors with sample bequest language that refers to your general fund. Use similar language in fundraising materials and thank-you letters. Contact us for more ideas.

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Public Companies To Disclose Stock Hedging Policies And Practices

Some public companies issue stock compensation to help align the financial interests of company insiders and shareholders. But the prevalence of hedging instruments has eroded that common interest. New SEC guidance will soon require public companies to disclose whether their employees (including officers) and directors are allowed to hedge a decrease in the market value of the company’s stock. Does this disclosure requirement apply to your company? In addition to drafting hedging disclosures, we can discuss best practices regarding hedging policies.

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Warning! 4 Signs Your Nonprofit Is In Financial Danger

To avert potential disaster and ensure your not-for-profit’s long-term survival, board members need to be alert to subtle signs of financial distress. These might include budget variances that aren’t easily explained or management dipping into operational reserves. Also be wary of financial statements that are late, inconsistent or not prepared according to GAAP. And investigate if long-time donors express concern about your nonprofit’s finances or the executive director starts to overstep his or her authority. Contact us if you suspect financial trouble.

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Private Companies: Have You Implemented The New Revenue Recognition Standard?

Private companies that follow Generally Accepted Accounting Principles (GAAP) must use an updated five-step method to recognize revenue beginning in 2019. Public companies that made the switch in 2018 report that the process was more difficult than expected. The standard required them to comb through contracts, make subjective judgment calls and offer paper trails to back up their estimates to auditors. If you haven’t started implementing this landmark standard, we can help prepare your revenue reporting systems, processes and policies.

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Why You Shouldn’t Wait to File Your 2018 Income Tax Return

The IRS opened the 2018 income tax return filing season on Jan. 28. Consider filing as soon as you can, even if you typically don’t file this early. It can help protect you from tax identity theft, in which a thief files a return using your Social Security number to claim a bogus refund. If you file first, it will be returns filed by any would-be thieves that are rejected by the IRS, not yours. Other benefits: You’ll get your refund sooner or, if you owe tax, you’ll know how much you owe sooner so you can be ready to pay it by April 15. Contact us with questions.

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Is Your Nonprofit Ready for a Raffle?

Raffles are popular fundraisers for not-for-profits. But they’re subject to strict tax rules. State laws on nonprofit-sponsored raffles vary, but you must comply with federal income tax requirements. First, you may owe unrelated business income tax unless your fundraiser is “substantially” staffed by volunteers. Second, raffle winnings must be reported to the IRS when the amount is $600 or more and at least 300 times the raffle ticket price. Third, you need to withhold income tax from the winnings if the proceeds are more than $5,000. Contact us for details.

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Don’t Let Unemployment Insurance Fleece Your Nonprofit

Many employers are overpaying unemployment tax and don’t know it. The burden is on your not-for-profit to ensure unemployment charges are accurate and to seek repayment of overcharges. Perform periodic audits of benefit statements to uncover errors, such as duplicate charges for the same period. Keep in mind that former workers may be falsifying claims. Your nonprofit may be able to avoid paying periodic unemployment taxes to the state altogether by becoming a “reimbursing employer.

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M&A Due Diligence: Don’t Accept Financial Statements at Face Value

Let the buyer beware: Do-it-yourself acquisitions can lead to costly mistakes! Before acquiring another business, you need to conduct comprehensive due diligence. This can be a daunting task, especially if it’s your first time negotiating a deal. In addition to evaluating historical and prospective financial statements, we can help you identify potential hidden liabilities and misrepresentations, as well as prepare independent forecasts and projections. This information is critical when determining the optimal offer price and deal terms.

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