Many nonprofit groups are suffering from a new disease I term RMRD (Record & Memory Retention Disorder). If not caught and stopped in its tracks, RMRD can be fatal, resulting in total loss of an organization’s IRS tax-exempt status. What’s causing the rise of this disease and how can we stop it?
RMRD is directly related to rapid volunteer turnover which is a common, often annual occurrence in organizations like school booster clubs, fraternities and sororities, youth organizations like Girls, Inc. and sports teams, and civic groups such as Kiwanis, Jaycees, and Soroptimists. Volunteers can only be expected to serve a few years, and new volunteers bring in new energy, ideas and enthusiasm which is all good. But organizational memory is very fragile and loss of this memory, including all the forms that must be filed with state and federal officials to keep a groups’ corporate and tax-exempt status, is deadly.
So, what can be done short of locking the volunteer revolving door? Business strategist Ron Ashkenas suggests three ways to keep your organizational memory healthy:
- Build-in a strategy. There must be an expectation, and a method, for each year’s officers to keep important data.
- Identify the key information. Your strategy must clearly identify the critical information that must be passed from officer-to-officer, year-to-year. For nonprofit groups this includes a list of reports that must be filed with your state government (e.g. Annual corporate report, sales tax exemption, and charity registration) and when the federal IRS tax return (Form 990-series) is due.
- Use technology. Toss out the shoe-box full of receipts and the plastic tub of unsorted documents. Cloud-based software makes it easier than ever to store everything online requiring only a password for the handoff to next year’s officers.
Each year the IRS revokes the tax-exempt status of about 50,000 organizations for failing to file the required Form 990-series tax return. To get reinstated, organizations must start over, filing a complete IRS exemption application along with filing fees and any professional help needed to get the job done. Thousands of other organizations are in “bad” standing with their states for failing to file required documents. What needs filed, when to file, who to send it to is complicated, and even more so when institutional memory loss rears its ugly head. That’s why I created RENOSI™. To help stop nonprofit memory loss and provide a simple solution to keep track of required registrations and deadlines. Take a look at myrenosi.com and recapture your institutional memory once and for all.
RENOSI is the leader in helping national organizations set up and manage affiliate chapters. Setting up local, regional and state affiliate chapters is an excellent way to grow your national organization. Managing hundreds and even thousands of chapters, however, is time-consuming and difficult.
Since its inception, RENOSI has provided a simple and stress-free solution to help obtain and maintain tax-exempt status for over 4,000 nonprofits. With the interactive myRENOSI dashboard, our partners can organize their state and federal registrations, allowing our team of experts to help ensure your tax-exempt status is not revoked.