Frequently Asked Questions by Asha Treasurers
1.
OVERVIEW
1.1. What is the purpose of this FAQ?
This FAQ is intended to serve as a repository for some of the most commonly questions asked
by the Asha chapter treasurers.
1.2. What are the roles and responsibilities of a chapter treasurer?
The Asha chapter treasurer is the custodian of Asha funds and financial records of the chapter.
The following are some of the tasks that the chapter treasurer has to perform:
2.
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Accept donation cheques and process them within a reasonable period of time. In case the
chapter has a local bank account, the treasurer should deposit them in the account. If not, the
cheques should be forwarded to the Asha treasurer.
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Issue and disburse receipts for all donations. Thank-you letters should be issued wherever
appropriate.
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Issue cheques for projects and fundraising related expenses. For chapters not having
independent bank accounts, the treasurer should co-ordinate with the Asha treasurer for this.
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Maintain accounts for all donations received and cheques issued.
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Prepare financial reports as and when requested by the Asha treasurer. This typically
happens twice in a financial year.
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Maintain a database of donors so that they can be informed of important events.
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Ensure that the chapter is not utilising any of the donor funds for administrative purposes.
ACCOUNTING AND BOOKKEEPING
2.1. What are some of the guidelines that the chapter treasurer should follow to maintain
chapter accounts?
The chapter treasurer should ensure that the accounts are always up to date. All donations
received and funds disbursed should be properly recorded. All disbursements, other than those
for projects, should be issued against an invoice.
2.2. We have been offered a non-cash donation (stocks, bonds, cars etc.). How should we handle
this donation?
The non-cash donation should be liquidated at the earliest possible opportunity. The liquidation
value should be recorded as the donation amount. The treasurer should encourage the donor to
liquidate the donation and donate the proceeds. The treasurer should offer to assist the donor in
the liquidation process. The receipt that is issued for such a donation should be the actual
proceeds received from the liquidation of the donation. The treasurer should be especially
careful about stock donations. It is inappropriate to delay the liquidation since such an action is
interpreted as speculation.
3.
BANKING
3.1. We are unsure of whether to have an independent bank account or bank with the central
bank. What are some of the pros and cons?
Some of the advantages are:
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Convenience in depositing cheques.
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Shorter turn around time for the issuance of cheques.
Some of the disadvantages are:
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Since the account is classified as a business account, in most cases the banks will impose a
fee for operating the account. This overhead increases collectively as more chapters choose
to maintain independent bank accounts.
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If more chapters bank with the Asha bank, Asha will have a larger balance. It can use these
for better money management and for negotiating better rates and service from the bank.
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When a new chapter treasurer takes over, the chapter has to go through the procedure of
having appropriate changes made in the banks records of legal signatories etc.
3.2. We want to have an independent chapter bank account. What are the requirements?
A written request should be sent to the Asha treasurer. The Asha treasurer in turn will issue an
authorisation letter. The chapter should ensure that the new account is opened in the name of
'Asha for Education' using Asha's tax id (77-0459884). The account should be classified as a
small business account for non-profit organisations. There should be, at a minimum, two chapter
representatives as legal operators of the account one of which should be the chapter treasurer.
The account should be set up as to be operated on an either or survivor basis.
3.3. Does the Asha chapter have to incorporate with their state in order to open an independent
bank account?
There is no requirement regarding incorporating in the state in order to open a bank account. The
bank is misleading you in case it is stating that this is required. The chapter treasurer should
consult another bank. In case you incorporate with the state, Asha for Education may be required
to file tax-returns for that state in addition to the tax-returns that it is already liable for and this
should be avoided at all costs. The Federal 501c(3) certificate is all the documentation that is
required for opening the account and a copy of this can be obtained from the Asha treasurer.
3.4. We want to bank with the central bank. What are the requirements?
Inform the Asha treasurer of your decision. The Asha treasurer will open an account for the
chapter. The chapter can from that point on start using this facility.
3.5. If we bank with the central bank, will the funds of our chapter be separately accounted
for?
The Asha treasurer maintains a separate account for each chapter that banks with the central
bank although there is only one physical account at the bank. The distinction is maintained in the
Asha accounts. All cheques sent by a chapter and issued for a chapter will affect only that
chapter's account.
3.6. We have received donation cheques and we bank with the central bank. What should we
do?
Send the cheques at the earliest possible date to the Asha treasurer. The treasurer should make
appropriate accounting entries of the cheques and also make copies of them for their own
records. The treasurer should notify the Asha treasurer that a batch of cheques has been sent so
that the Asha treasurer can expect it. Some details like the total number and total amount of the
cheques should also be provided.
3.7. We want to send funds to a project and we bank with the central bank. How can we do it?
In case a cheque needs to be issued, the chapter treasurer should send a request to the Asha
treasurer. The details to be provided include the name of the beneficiary of the cheque, the
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amount on the cheque (in USD) and the address to which the cheque has to be mailed to. The
mailing address should be an address in the United States and should preferably be that of either
the chapter treasurer or the treasurer co-ordinator. It is the chapter's responsibility to send the
cheque to its final destination. The Asha treasurer will issue the cheque (normally within 3-5
days) and send it to the specified address.
3.8. Are there any additional considerations in sending funds to projects?
Any NGO (Non-Governmental Organisation) that wishes to receive foreign funds, must have
FCRA (Foreign Contributions Regulation Act) approval. This approval is granted by the Home
Ministry, Government of India. NGO's can either apply for a blanket FCRA clearance for all
future donations or on a case by case basis for each foreign donation they expect. However, in
all cases, NGO's must have FCRA clearance before any fund transfer can take place.
3.9. How can an NGO in India obtain FCRA clearance?
Obtaining FCRA clearance is a lengthy process. NGO's should apply for this registration if they
plan to receive foreign funds over an extended period of time. Registered
Organizations/Institutions can take prior permission from the Home Ministry for acceptance of
foreign contributions in case they don’t have FCRA clearance. The Home Ministry, Government
of India, will give permission within 90 days of application. In the application (FC-1A) the name
of the proposed donor with address, the amount that is going to be received, purpose etc. should
be mentioned. This needs to be done on each occasion when money is remitted, until a
permanent FCRA registration is obtained. This kind of one-time clearance is very easy to get,
provided there has been no violation in the past by the organisation.
After utilisation of the funds, the institution has to give details of expenditure incurred out of
such donations. The organisation is also supposed to maintain a bank account exclusively for
foreign donations. The bank account for domestic contributions cannot be used to deposit a
foreign contribution. It is better to ask the organisation to contact their auditor to have a one to
one discussion on this matter.
3.10. Can we send funds to a project that does not have FCRA clearance through Asha-India?
This is strongly discouraged since it implies that the project becomes a project of Asha-India
making it legally responsible for the project. It would be obligated to maintain and submit the
accounts of such projects to the regulatory bodies. Asha-India has neither the infrastructure nor
the resources to effectively handle this.
4.
DONATION RECEIPTS AND THANK-YOU LETTERS
4.1. Is there a prescribed format for receipts and thank-you letters?
There is a specified format for the receipts and thank-you letters. These can be obtained from the
Asha treasurer.
4.2. When should receipts be sent?
Receipts should be issued for all donations irrespective of the donation amount and should be
sent at the earliest possible.
4.3. What is the difference between a 'donation' and 'benefit received' columns on the receipt?
The 'benefit received' column on the receipt should be used to account for situations where the
donor is getting a benefit or service in return for their donation. For example, the chapter is
organising a dance programme as a fundraiser and the tickets are priced at $25 each. A donor
purchases one ticket but gives a cheque for $40 stating that the excess is a donation. The chapter
treasurer, in such a case, should issue a receipt stating $15 as a donation and $25 as benefit
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received. In case the donor had given a cheque for $25 there would not be a need for issuing a
receipt since the donor has a received benefit for the entire amount and hence there is no
donation involved.
4.4. It is the beginning of a year and we have received a cheque issued towards the end of last
year. What should be the date of the donation - last year or the current year?
The date of the donation should be the date on the cheque. However, the chapter treasurer should
use good judgement for this purpose. If the cheque appears to be intentionally pre-dated, the
chapter treasurer should request the donor to issue a new cheque with a current date or issue the
receipt with the current date and make a note of this situation in their records.
5.
FINANCIAL REPORTING
5.1. Why does a chapter need to maintain accounts and submit financial reports?
Asha for Education is registered with the Internal Revenue Service of the United States of
America as a not for profit organisation with a section 501c(3) tax-exempt status. One of the
requirements of maintaining this status is to file an annual tax return with the IRS. This has to be
a consolidated tax return including financial reports of all of Asha's activities within the US.
Hence it is critical that the chapter treasurer maintain good accounts of all financial transactions
that the chapter was engaged in. This would be of crucial importance in the event of an audit by
the IRS. In preparing the Asha wide tax returns, the Asha treasurer consolidates the financial
reports submitted by each of the chapters. Hence the need to submit chapter financial reports to
the Asha treasurer as per the schedule specified by the Asha treasurer.
5.2. How often do we need to submit a financial report of our chapter?
The current requirements are to submit the reports on a semi-annual basis. A report for the first
half of the year (January - June) should be submitted in the July-August timeframe. The second
report should be an annual report for the full financial year (January - December) and should be
submitted in the January-March timeframe.
5.3. What should be the contents of the financial report?
There is a specified format for preparing the financial reports. This format is similar to the
format specified by the IRS for preparing the tax returns. The chapter financial reports should
necessarily be submitted in the specified format.
6.
GENERAL
6.1. We have to buy certain goods and/or services. Are we subject to a sales tax?
Being a tax-exempt organisation under section 501c(3), Asha for Education is not subject to any
sales tax for any goods or services that it may purchase. However, different states have varied
laws and some states require Asha for Education to register with the state comptroller before it
can enjoy this benefit. This is a fairly simple process and typically requires filling up one form
and sending it to the state comptroller's office along with supporting documentation like the
501c(3) certificate. The chapter treasurer should inquire about the state laws in such a situation
and do the needful. The Asha treasurer should be contacted for any assistance.
Need to put receipts, thank-you letter and financial report format on the web and add links to
the same in this document.
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