Treasure for Treasurers
Elaine Wiant
Susan Wilson
Greg Leatherwood
LWVUS Secretary/Treasurer
LWVUS Budget Chair
LWVUS Director of Finance
Convention 2010
What “treasures”are we going to
talk about?
Part 1: The e-Postcard return
Part 2: Stewardship of League finances
Part 3: The annual audit or review
Part 4: Using education funds effectively
Form 990-N
The e-Postcard
My League is small. Do we need to file
the e-Postcard?
• Yes.
• There are only two exceptions:
– Leagues that file Form 990 or Form 990-EZ
– Leagues that are included in a group return.
• The Form 990 cutoff increases to $50,000 in
2010.
Filing is an Easy Four-Step Process
1. Obtain an FEIN for your League, if it
doesn’t already have one.
2. NEW!! Telephone the IRS to inform
them that your League is a tax exempt
organization.
3. Register as a new user on the e-Postcard
website. http://epostcard.form990.org/
4. Create and submit your League’s ePostcard.
Does my League need its own Federal
Employer Identification Number?
• Yes.
• The only exception is Leagues covered by a
group exemption.
• DO NOT use your state League’s FEIN to file
your local League’s e-Postcard return.
What’s Involved in Getting an FEIN?
• Applying for and receiving an FEIN only takes a
few minutes; it doesn’t cost anything.
• You can apply by mail, but applying online is
much quicker and easier -https://sa2.www4.irs.gov/modiein/individual/index.jsp
• You must wait up to two weeks after receiving
your League’s FEIN before you can use it to file
the e-Postcard return.
What Information Will I Need to Provide?
• Your League’s name
• The name, Social Security Number, mailing
address and phone number of a responsible
contact person
• The month and year your League started
• A short phrase describing your activities
• Whether your League has any employees
Step 2: Call the IRS
• An officer of your League must call the
IRS eight weeks before your League files
its first e-postcard.
• This is a separate requirement from
applying for an FEIN.
• The IRS phone number to call is 1-877829-5500, option 2, option 4.
Questions the IRS Will Ask
1. Are you an officer?
2. Is your League a distinct legal entity with a
governing document?
3. What is your League’s purpose (mission)?
4. Are your League’s gross receipts normally less than
$25,000?
5. When does your tax year end?
6. Is your League covered by a group exemption?
7. The name, title and contact information of an
officer who will serve as the primary contact.
Filing the e-Postcard
What Information will my League
Need to Provide?
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Its Federal Employer ID number
Its tax year-end date
Its legal name and mailing address
Its website address, if it has one.
Confirmation that its annual gross
receipts are $25,000 or less.
When is the e-Postcard due?
• The 15th day of the fifth month following the end of
your League’s tax year.
• The first e-Postcards were due for tax years ending on
or after December 31, 2007.
• There is no monetary penalty for filing late.
• Three strikes and you’re out – Organizations that fail
to file for 3 consecutive years will automatically lose
their tax-exempt status.
Tips
1. Get started right away. Filing your League’s
first e-postcard normally takes 8 weeks.
2. Complete the following tasks in order:
– First apply online for an FEIN;
– Second, telephone the IRS;
– Third, wait eight weeks; and
– Fourth, complete your League’s e-postcard.
More Tips
3. When applying for an FEIN, specify that
your League is a tax-exempt volunteer
group.
4. Use a post office box for your League’s
mailing addresses.
5. ????
Still More Tips
6. If you need help with the e-postcard form,
contact IRS tech support at (866) 2550654 or epostcard@urban.org.
7. Ed funds must file a separate e-postcard
return unless they are part of the state or
national education fund.
Stewardship of
League Finances
Responsibilities of the League board
• Make sure that appropriate internal control
policies and procedures are in place.
• Recommend adoption of a detailed budget.
• Review and understand treasurer's statements.
• Make sure that bills are being paid on time.
• Approve unbudgeted expenses.
• Provide for an annual audit or review.
• Consider fidelity bond coverage for those
handling money.
Responsibilities of the League
board --Development!
• The League must be adequately financed.
• Financial support comes primarily from members.
• Support can also come from the community –
individuals, foundations, businesses.
• Fundraising is a year-round effort built into every
activity and project.
• Appreciation and recognition help to ensure
repeated gifts.
Responsibilities of the
League board – Budget
• Provide input to the committee charged
with budget development.
• Review the proposed budget prepared by
the committee.
• Revise it as necessary.
• Recommend its adoption by the annual
meeting/state convention.
The League’s Budget
• Reflects all anticipated income and expenses
for a fiscal year.
• Shows planned growth in members, dues,
contributions and League activities.
• Includes funds for sending delegates to state
and national conventions.
• Reflects the League’s obligation to support the
League as a whole through the per member
payment (PMP) system.
Liability
Insurance
What is It?
Insurance against:
Negligent acts or omissions
• Bodily injury
• Property damage
• Warranties and exclusions vary
Do We Need It?
• Evaluate the risks and benefits.
• Auditoriums, malls and other
public places may require Leagues
to have coverage.
• Federal law protects volunteers.
What Does It Cost?
$500 to $750 buys:
 $1 million per occurrence
 $2 million annual aggregate
 $1 million non-owned auto
 $10,000 of personal property
 $10,000 of employee dishonesty
Where Can We Get It?
• Shop around. Most insurance
companies and agents offer
general liability coverage.
• Willis HRH Insurance
Telephone: (800) 800-2860
Karen Earp or Robin Rider
The Treasurer
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Chief financial officer of the League.
Establishes fiscal management procedures.
Collects and disburses all League funds.
Makes reports to the board and members.
Keeps a record of all income and expenditures.
Serves as member of budget committee.
Forwards PMP to LWVUS and state League.
Deposits tax-deductible funds with the
appropriate Education Fund.
New Treasurer
• Receives records from previous treasurer.
• Reviews records with previous treasurer.
• Registers signatures of treasurer and president at
financial institutions.
• Learns use of relevant software.
• Promptly deposits receipts and pays bills.
• Anticipates large expenses.
• Assists with annual audit or review.
Your League should have WRITTEN
financial policies and procedures
Internal Controls
Procedures to increase likelihood that:
• Financial information is reliable
• Assets and records are not stolen, misused or
destroyed
• Policies are followed
• Laws and regulations are complied with
Internal controls
What kinds?
Trust is NOT a control
Internal controls
What kinds?
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Authorization and approval
Proper documentation
Physical security
Early detection
Recommended Controls
• Segregation of duties -- the same person
should NOT:
– Deposit funds AND record deposits
– Write checks AND receive and reconcile
bank statements
Recommended Controls for income
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Open mail promptly.
Record, copy and endorse checks upon receipt.
Prepare deposit and deliver to bank promptly.
Deposit all cash received (don’t use receipts to
pay bills or replenish petty cash).
• Reconcile income with deposits (not the same
person).
Recommended controls for
expenditures
• Board authorizes check signers.
• Require more than one signature for checks
over a certain amount.
• Obtain approval for each transaction, either
through the budget or through the board.
• Provide and maintain documentation for each
check written.
Security measures
• Checks:
– Pre-number checks.
– Secure blank checks with a lock.
– Limit access to blank checks to authorized
person(s).
• Computer records
– Limit access and protect with passwords.
– BACK UP records on a regular basis.
– Store backups at another location.
The Annual Financial Review or
Audit
What is the difference between a
financial review and an audit?
During a financial review, an accountant (or
other financially astute person)
– Asks questions,
– Reviews the financial statements,
– Does NOT examine the underlying records.
The duties of an auditor include
• Verifying that a sample of dues and
contributions agrees with the
corresponding deposit slips and records
• Verifying that a sample of recorded
expenses agrees with the corresponding
bills and checks
• Reviewing internal control systems
Steps for Financial Review
• Bank statements:
– Check recorded receipts against the deposits
on bank statements
– Investigate discrepancies
– Verify bank reconciliations
– Account for all checks by number
Steps for Financial Review
• Dues:
– Check dues collected during the year against
the current membership total.
– Investigate discrepancies (life members,
scholarships, etc).
Steps for Financial Review
• Vouchers
– Check records against vouchers.
– Are expenses backed by an invoice or
voucher?
– Are items debited to the proper account?
Steps for Financial Review
• Budget
– Compare income and expenses with budget.
• Education Fund
– Compare deposits of tax-deductible funds
with the records of state or national Ed Fund.
– Check transactions with the state or national
Ed Fund.
Steps for Financial Review
• Sample Month
– Verify income and expense totals.
– Verify individual categories.
– Check beginning balance and ending balance.
– Make necessary adjustments.
Steps for Financial Review
• Return to bank statements
– Check beginning and ending balances in each
account.
– Make necessary adjustments.
Steps for Financial Review
• Prepare report: “We have reviewed the
books of the League of Women Voters of
_____ as of ______, examined the records
of revenue and expenditures and traced
beginning and ending cash balances to
bank statements. The books are an
accurate reflection of the financial
condition of the League of Women Voters
of _____ as of ______ and the results of
its operations and cash flows for the year.”
Using Education
Fund Money
Effectively
What is the League’s tax status?
The LWVUS is a 501(c)(4)
social welfare organization.
• The LWVUS carries out lobbying and
membership activities.
• Dues and contributions to the LWVUS are
not tax deductible.
The LWVEF is a 501(c)(3)
charitable organization.
• Its primary activities are educational:
– providing election information
– hosting public forums
– conducting international exchange programs, etc.
• Contributions to the LWVEF are tax
deductible.
How does the LWVEF grant
service program operate?
• Acts as custodian for charitable gifts raised
by your League
• Disburses funds to your League upon
written request for educational programs
• Provides these services free of charge.
The LWVEF Carries Out:
• Educational projects funded internally
• Grant-funded projects (often with passthrough grants for local/state Leagues)
The LWVEF sponsors state and local
League educational projects through its
“grant service” program.
Examples of activities that the
LWVEF grant service and state
or local Ed Funds can sponsor:
• Educational forums and materials
• Nonpartisan voter service activities
• Satisfaction of up to 50% of your League’s
per member payment obligation through
contributions in lieu of PMP
What are the rules for using
Ed Fund monies?
We recommend that local
Leagues participate in already
existing state or national
education funds, rather than
forming their own.
Can my League recruit members
at an education fund event?
• Your League may distribute membership
brochures, but the Ed Fund may not pay for
creating or printing them.
• Speakers can and should urge attendees to join.
• Leagues may use the attendee list to solicit
members and contributions, but only if the
League purchases the list from the Ed Fund at
fair value.
How do these rules apply to
voters guides?
A voters guide that is published by or
funded by an education fund may include
member recruitment information, but that
portion of the guide must be paid for by
the state or local League.
Can we use education fund monies to
publicize our voter service activities?
• YES. Leagues may use Ed Fund resources
to publicize all educational activities,
including voter guides, candidate debates,
issue forums, voter registration drives, etc.
• Make sure the League name, logo and
contact information is prominent.
League Policy: Ed Fund monies
may not be used for “lobbying”
as defined by the IRS
• Not all advocacy constitutes lobbying.
• Lobbying is ONE form of advocacy that
– Refers to specific legislation
– Includes a “call to action” on that piece of
legislation.
Ed Fund monies may be used to
advocate or present only one
side of a policy issue
• To educate the public as long as the message
does not include a call to action.
• To educate legislators as long as legislation
has not been introduced
May education funds pay delegate
expenses for conventions/councils?
• Ed Funds may not directly fund delegate expenses.
• Ed Funds can provide grants to Leagues to fund
participation in educational activities at
Convention/Council.
• Leagues receiving such grants may only reimburse
this kind of delegate expense if delegates document
their expenses and attendance at educational sessions.
May Ed Funds pay part of the cost
of putting on a national or state
League convention/council?
• Ed Funds may pay for purely
educational activities such as panels
and other issue-oriented discussions.
• Ed Funds may not pay for League
governance activities.
May our Ed Fund pay for part
of the cost of our office space?
• Yes. Education funds may pay for their
fair share of office space.
• Leagues should document what % of their
operations are educational.
• Prepare a cost-sharing agreement that
specifies how costs will be allocated
between the League and education fund.
May our Ed Fund pay part of
the cost of our Voter?
• Yes. Ed Funds may underwrite purely
educational articles in Voters.
• This arrangement should be documented in a
written agreement.
How can our League pay its PMP
through the LWVEF?
• Establish an account with the State & Local
Grants Service of the LWVEF.
• Raise tax deductible monies from members
and community and deposit the checks in the
grant service account.
• Authorize a transfer to the LWVEF operating
fund in lieu of PMP.
Conclusion 1
File the e-Postcard
• Get a tax ID number (FEIN) if your League
doesn’t have one.
• Call the IRS at least eight weeks before you file
the e-Postcard.
• Do as much as possible online. It’s quick, easy
and free.
• Don’t get frustrated — email your questions to
epostcard@urban.org or GLeatherwood@lwv.org.
Conclusion 2
Pay attention to details
• Details of your League’s finances
• Details of the internal controls that
your League puts in place
• Details of the legal issues that affect
your League.
Conclusion 3
Maximize the use of Ed Funds
• Use education funds to cover appropriate
portions of operating expenses
• Use education funds to help make your
League’s educational activities more
visible
• Remember to ask people to join/donate at
educational events
Resources – lwv.org
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League Basics – 5. Money Matters
President’s Packet
Starting Point (Appendix II.B.4)
State and Local League Grants Program
Fiscal and Compliance Issues FAQ
Education Fund Information