Preparing and having the board approve an annual budget and program plan is one of the most important legal responsibilities of nonprofit groups. Making a budget is straightforward. First determine the main sources of income, and the expected amounts for each. Then determine your planned expenses and amounts for each. Reports should be prepared regularly throughout the year that show actual income and expenses compared to the budget. For example, a nonprofit budget might look like the following:
|Individual Contributions (memberships, annual appeal, memorial gifts)||$92,000|
|Payroll & Benefits||$195,000|
|Professional Fees — Engineering & Fundraising Consultants||12,000|
|Professional Fees — Bookkeeping, Audit, & Legal||10,000|
|Printing and Reproduction||8,000|
|Insurance (liability, directors & officers)||4,700|
|Supplies (office & field)||3,500|
|Advertising & Marketing||3,000|
|Bank Fees & Payroll Processing Fees||2,500|
|Equipment and Software||2,500|
|Internet Access & Web Page Design||2,000|
|Dues, Fees, & Memberships||1,800|
|Meals and Lodging||1,000|
Frequently Asked Questions
Is the amount paid for items purchased from an auction or fundraiser tax-deductible for the buyer?
No. Anytime a donor receives something of value in return for the money paid, it is not considered a tax- deductible contribution. However, to the extent that a purchaser pays more than the fair market value of an item, a deduction may be taken for the amount paid that exceeds the fair market value. For example, if a donor pays $50 for a $25 gift certificate to a local restaurant, the donor may deduct the amount exceeding the fair market value ($25) as a contribution. Some items, however, such as a quilt or painted furniture, are considered “one-of-a-kind items.” These items cannot be easily valued and therefore the price paid is considered by the IRS as the fair market value. Similarly, the cost of a raffle ticket is considered its fair market value because it is the price a willing buyer will pay for the chance to win the prize being raffled.
Must a nonprofit, tax-exempt group spend all of its funds each year? If not, is there a limit on the amount of funds that may be carried over?
There is no legal requirement that nonprofit, tax-exempt organizations spend all their funds and there is no limit on the amount of funds that may be carried over to subsequent years. Many large nonprofits hold funds equal to one year or more operating budget in reserves. Small groups frequently carry forward at least minimal sums to get the next year started.
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 4,500 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.