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IRS 990 Overview PSGA 2013

PSGA Fall 2013 Presentation
by

Ken Ristine

on 2 January 2014

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Transcript of IRS 990 Overview PSGA 2013

990 two ways: An overview of private foundation and public charity 990s
by Ken Ristine
Senior Program Officer
Ben B. Cheney Foundation
Why is the 990 Important?
What does a 990 tell people about you?
Divide Fund Raising costs ($238,194) by the average of
Total Contributions: Pt. I Line 8 ((951,839+910,775)/2= $931,907). Fund raising appears to cost 25.6% of funds raised. The 14% figure comes from using total revenues as the divisor.
What it can tell you

What can 990-PFs tell us about funders?
How much money do they give away?

How do they give it away?

Who have they given it too?

Who is making the decisions?
Part XV - Page 10
Part XV Page 11
Page 8 Parts X - XII
This $293,952 would show up as grants for a program or programs outlined on Page 2
Part X-Page 11
Balance Sheet
Proposal Arrives
501 (c) (3) assisted-living facility for seniors in a rural community
990 Review
No previous grants to organization
2012 990

~ $88K deficit for 2012
~ $150K deficit for 2011

Questions
Raised
Can the organization continue to operate?

Will it close or be sold?

Should the debt be ignored in hopes the organization can keep helping seniors in the area?

Is there a strategy here that hasn't been articulated?
How a funder might use a 990
Asks for funding to assist the renovation of a kitchen and dining area
Community, type of grant, amount, and program area within funder's guidelines
Key Questions:
How stable?
Role of this funding?
Wanted to understand key financial information:
Business model (fee income vs. giving/grants)
Current financial status:
Organization stable
Could/should this be self-funded?
That information caused me to review the 990s for 2011, 2010 and 2009
From 2009 to 2012
Fund balance debt goes from ($419,000) at end of FY 2008 to ($1 million) at end of FY 2012
Operating deficit every year
~ $590K total for 2009 to 2012
Assets fell in value
esp. Liquid assets
Increased debt (mortgage) by
~ $80K/Year
Depreciation
Page 1 Part I Lines 19-22
Rev. less Exp. for current and last year
Assets, liabilities and net balances for end of year for current and last year
Liabilities
Page 11 Part X
Balance Sheet
Lines 17-26

501 (c) (3)s

990s a filed by all 501 (c) organizations
501 (c) includes 29 subsections

What we call the charitable sector are 501 (c) (3) organizations

Since 1969 there are two flavors of 501 (c) (3) organizations:
Private foundations (990 PF)
limited donors
often manage assets for growth and distribution
distribute $ for charitable purposes by
giving grants and/or running their own programs
grants primarily go to public charities
Not a private foundation (990, 990 EZ, or Postcard N)
Meet a public support test
Rely upon donors
individuals
grants
fee income


Page 10
Other Pitfalls
Statement of Program Accomplishments (Page 2 Section III) underwhelming
E.g. one program, 8 different activities
solution: either focus on the outcome of that program or you really have more than one program
Use special grants or the flow of clients to help you figure out how it should work
Talk to your accountant about cost centers
Not listing fund raising costs on functional expenses
IRS cracking down on groups showing contributions, but no F.R. expenses
Suggests your organization not good at accounting for its work
Too much M&G
E.D. does all the work, so all the E.D.'s salary must belong in M&G
need to track time/effort e.g., daycare exec
Too much "Other" or "Miscellaneous"
cannot be more than 10% of total expenses

What are you telling people
about your organization
with your 990?
Full transcript