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Nonprofit Governance – Are You Accountable?
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Nonprofit Governance – Are You Accountable?

When it comes to the IRS, nonprofits need to take the phrase from Buzz Light Year to heart, “To infinity… and beyond!”

Today and surely forever the IRS will continue to show the nonprofit arena who is boss.

Evidence of the pot starting to boil began in 2002 with the Sarbanes-Oxley Act.
Granted while the intended target was focused toward the for profits’ side of the fence there was a great push to let nonprofits know that they too should take heed and begin to feel the heat too.

In February 2007 the IRS released a “preliminary draft” of proposed “guidelines” i.e. “Good Governance Practices for 501(c)(3) Organizations.” In March of 2007 the IRS released Exempt Organizations Executive Compensation Compliance Project.

In 2009 the IRS Released: The Appropriate Role of the Internal Revenue Service With Respect to Tax-Exempt Organization Good Governance Issues i.e. a report of the Advisory Committee on Tax Exempt and Government Entities:

Many nonprofits during this time have kept their heads in the sand. Some simply shrug their shoulders and say, “Oh, that does not apply to us, we are too small.” However, I would urge you to think again! No matter the size of your organization both paid staff and board members alike are expected to act in a professional manner and spend time analyzing your organization’s internal controls and identify any weakness or deficiencies your organization might have.

The bar has been raised and it will be raised higher in the not too distant future.

There will be new specific governance practices that all nonprofits will be required to follow in order to remain a tax exempt organization soon!

DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.