5 New Year's Resolutions for Tax Exempt Organizations

As we continue to make effective plans for an awesome 2018 work year, we wanted to share some New Year’s Resolutions with you that could greatly benefit your nonprofit organization. 

New Year’s Resolutions

1) Better Money Management

Gaining necessary funds to adequately run your nonprofit organization can be a challenge. Make every effort you can to closely manage the funds of your organization to maximize its usage and allocate accordingly for the fiscal year. 

2) Increase Your Social Media Presence

The world that we live in today is extremely driven by social media. Take advantage of this easy, free, and trendy method of communication! Having your nonprofit active on social media can increase your audience and interact with current and potential donors, supporters, and volunteers more frequently. 

Social media platforms such as Facebook, Instagram, Twitter, LinkedIn, and Reddit are great to use. YouTube is also another way to promote your organization and its activities.

3) Revamp Your Organization’s Correspondence

This is actually one of the easiest resolutions to tackle. Instead of sending out the same generic correspondence each year, simply create something new! Rewrite your “thank you message,” website content, etc., to attract the attention of the reader. 

4) Redefine Your Target Audience 

In your upcoming team/staff meeting, take a few moments to analyze the mission of your organization and determine which audience(s) you should target this year. 

Having more than one target audience is okay!

5) Become Mobile-Friendly

With 9 of 10 American adults owning a mobile phone of some kind, it is extremely important that your website is mobile-friendly.

Mobile-friendly sites are very effective and useful for informing others about your organization and increasing online donations.

You Can Do It

While New Year’s resolutions require effort and dedication, these 5 resolutions can easily be accomplished by your organization during 2018. As always, the ExpressTaxExempt team is here to help you as much as possible. 

We’re just a phone call, email, or chat away if you ever have any questions or need assistance during any part of the e-filing process. 

Feel free to contact our support team of e-file experts at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also reach us 24/7 via email with support@ExpressTaxExempt.com.

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Unique Ways to Fundraise for Your Nonprofit

Any leader of a nonprofit organization will tell you that receiving adequate funding for their organization can be somewhat of a challenge. Although charitable nonprofits usually rely on the generosity of donors to support their annual efforts, fundraising initiatives are sometimes necessary to assist with supporting the financial needs of the organization. We’ve provided some fundraising techniques that your organization can utilize for years to come!

FUNDRAISING TECHNIQUES

Collaborate with other Organizations

Reach out to other organizations in your area to host events and support each other’s endeavors.

Supporting each other can assist with finances by cutting the cost in half as well as unique ideas, planning, and execution and follow through.

Have Fun Activities Become Fundraisers

Find out what your community enjoys doing during their free time and turn it into an enjoyable fundraiser. People don’t mind giving or setting aside a few dollars to do what they enjoy.  Let’s take a Talent Show/Competition for example -- the cost of hosting a local talent show can be very inexpensive and if you have a few members of your organization that like to bake, you could sell light refreshments during the intermission of the event to make an extra few dollars. Other events such as a cook-off, charity tournament, scholarship banquet, or even the latest current trend, an escape room puzzle event.

Be Involved in Your Community

Giving back to your community is always beneficial in more ways than one. It pays to educate the community about what your organization does. By making donors aware of your community service initiatives, many will feel comfortable supporting your various endeavors and fundraising efforts. People tend to not give to groups that they know nothing about. The more exposure your organization receives, the better.

Crowdfunding

This is considered to be peer-to-peer fundraising by way of members asking their friends, family members, and coworkers for donations prior to an event and then having them participate in the event.

This type of fundraising is ideal for a marathon, walkathon, pageant, etc., and is a great way to directly involve donors.

FUNDRAISERS

When conducting planning for your organization annually, it can be a challenge to find different ways to raise money. Here are some various fundraising ideas that can be done:

FUNDRAISERS	FUNDRAISING EVENTS
50/50 Raffle or Basket Raffle Bingo	Silent Auction
Sip and Paint	Talent Show / Lip Sync Competition
Recipe Books	Battle of the Bands
T-Shirt Sales	Comedy Night / Karaoke Night
Polar Plunge	Gala
Engraved Bricks	Marathon / Walkathon
Wrapping Paper Sale (Holiday Seasons)	Rainbow Tea
Car Wash	Classic Car Show
Baby Photo Contest	Cooking Class
Penny Drive	Trivia Night
Appreciation Grams	Dinner Theatre
Pie Throwing Contest or Dunk Tank	Date Auction

For more neat fundraising ideas, click here.

Be sure to save those receipts when planning a fundraising event and know that ExpressTaxExempt is always here to be a consistent resource to you and your organization for all things tax exempt! Visit our website for any tax forms that your tax-exempt organization may need throughout this year and save even more when you e-file with our recently reduced filing rates! We’re available to assist you via phone at 704.839.2321 on Monday through Friday from 9 a.m. to 6 p.m. EST or reach out to us 24/7 via email at support@ExpressTaxExempt.com.

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Are Donations to Animal Rescue Shelters Tax Deductible?

Like with many other nonprofits or charities, if you make a donation, you can typically deduct the value of your contribution from your annual tax bill.

To do so, the nonprofit group you’re giving to must be officially recognized by the IRS as a section 501(c)(3) organization. You can check an organization’s tax-exempt status by searching the IRS Exempt Organization Select Check.

Are Donations to Animal Rescue Shelters Tax Deductible?

When you’re filing, you will also need to itemize the amount of your donation - this may not be worth the extra effort if you only gave a little here and there. But if you gave a significant amount throughout the year, it is best to itemize the deduction on your personal tax return.

Here are 3 things to consider when donating to an animal rescue shelter:

1. Pet Adoption vs. Donation

A common misconception most people make is thinking that payment for adopting from an animal shelter is the same as making a donation. Only donations in which the donor receives no goods or services in return can count towards a deduction.

In this case, you’re giving money in exchange for your pet - that's more of a service charge rather than a charitable contribution. However, if you paid over the cost of adoption or gave a gift outside of the adoption transaction, that counts as a valid charitable contribution.

2. Donation Value

If you’re donating items, you’ll need to estimate the fair market value for each of those items. There’s no one particular method for finding fair market values - you can look through local shops or online stores to figure out prices of similar items in the open market. For special unique gifts, such as a hand-woven, nap basket for kittens, you can get it appraised for the market value.

3. Written Proof of Donation

When you’re donating to an official 501(c)(3) organization, it’s common practice to receive a physical receipt for your donation. If your total contribution amount is at least $250, the IRS requires you to submit proper documentation along with your tax return. Like other receipts from nonprofits or charities, it should contain the description of the contribution and the amount along with the name and address of the organization.

If you received a gift or benefit from the animal shelter in return for your donation, include a description of the gift on the written receipt. Any reciprocated gifts with a monetary value should be subtracted from the amount of your contribution when reporting. A paper certificate or “Thank You” card typically don’t have cash values, but a coupon or gift card does.

Animal rescue shelters can report received contributions over $5,000 to the IRS by using a Schedule B along with their Form 990 or 990-EZ tax return. Taxpayers that want to claim an itemized deduction for their donations to an animal shelter can complete a Schedule A with their IRS 1040 form.

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Are Public Libraries Considered Nonprofit Organizations?

In general, public libraries do not receive 501(c)(3) exemption status from the IRS; however, tax officials recognize them as a governmental unit under the 501(c)(3) Internal Revenue Code which allows exemption from federal taxes.

For grant applications from foundations or charitable organizations, government entities usually need to provide proof of its tax-exempt or charity status.

Are Public Libraries Considered Nonprofit Organizations?

Tax-Exempt Status for Libraries

A public library can use its federal taxpayer identification number, commonly known as its Employer Identification Number (EIN), to identify itself. The IRS can also distribute a “governmental information letter” upon request which proves the library’s exemption from federal taxes. The letter also explains how the entity is applicable for deductible contributions and income exclusion.

When a new public library gets commissioned by an administration of public education, it is automatically exempt from state taxes and typically doesn’t pay federal taxes because of its governing entity status. In particular circumstances, a library can request to qualify as a 501(c)(3) organization instead of a government entity but has to submit a Form 1023 to receive a determination from the IRS.

While operating as a government entity, libraries can enlist another 501(c)(3) organization to accept funds or donations on its behalf - these nonprofit organizations are typically friends groups, community foundations, or library associations. They use public contributions and grants towards charity, education, the promotion of literature, and related administrative costs. Among other activities, these exempt organizations' charitable efforts are for improving public libraries, promoting literacy, and awarding scholarships.

Please Read: File Form 990-N, 990-EZ, 990, 990-PF Securely

Tax Deductible Contributions for Public Libraries

Public libraries and their associations are eligible to receive tax-deductible charitable contributions. The IRS requires a receipt written to donors who contribute over $250. You can give receipts or a “thank you” for lesser amounts if you choose, but the primary reason is for those planning to deduct their donation from their tax bill.

The tax receipt should contain the following information:

• Name and address of the organization
• Date the contribution was given
• The amount of a cash contribution or the description of a non-cash donation
• A statement of goods or services that are given in return for a contribution, if necessary

If there’s a donor that gives numerous small donations throughout the year, and their total amount is over $250, they will also need a written receipt for tax purposes. 501(c)(3) organizations or associations that are accepting contributions on behalf of a library will need to report individual donations of $5,000 or greater on Schedule B of their Form 990.

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Tax Deductible Contributions to Nonprofit Schools

Taxpayers can claim deductions towards their annual tax bill from donations they make to recognized 501(c)(3) organizations. Qualified 501(c)(3) groups typically include nonprofit schools operating solely for literary and education purposes.

But if the school significantly participates in activities that are unrelated to its charitable purposes, then the donation may not be tax deductible.

Here are some relevant guidelines from the IRS about donating contributions to your local nonprofit schools:

Value of School Donations
When filing your personal taxes, you can deduct the monetary value of cash or items you donated to a nonprofit school during the tax year. The process requires you to determine the fair market value of the donation on the day you gave it away.

There are various ways to find the valuation based on the type of item, and while the IRS won’t endorse one method over the other, they firmly state that the value must accurately indicate pricing that the item could sell for in an open market. An example would be donating clothes - you could check local thrift shops to find out how much the clothes would sell for or find prices from online stores selling similarly conditioned clothing.

Receiving Benefits from Nonprofit School
If the school gives you a gift or some benefit in return for your contribution, then the IRS requires you to reduce the value of your donation by the value of the gift you received from the school. The gift may be something of little to no monetary value such as a certificate, card, or plaque - in such a case, you won’t have to reduce your donation. But if the school happens to give you a $50 shopping card, you’ll need to subtract that amount from the value of your contribution.

Proof of Contribution and Penalties
Beware of filing overvalued charitable contributions. The IRS charges 20% of the underpaid tax from a valuation that exceeds 150% of its actual value and 40% from valuations exceeding 200% of normal value.

Furthermore, the IRS can deny your deduction if you don’t have proper documentation. You are responsible for maintaining a record of all your contributions - cash or items. You should have a description of the contribution and the name of the organization that received it. If your donation was cash, you should provide a bank statement, canceled check, or receipt. For large cash contributions, usually over $250, the IRS requests a written acknowledgment or receipt from the organization before deducting the donation.

Claiming tax deductible contributions towards nonprofit schools is only possible through itemizing your personal expenses. Taxpayers can claim itemized deductions on Schedule A of IRS Form 1040 if total deductible expenses are greater than standard deductions for the tax year. And for schools needing to report received contributions, you can do so by submitting a Schedule B with your IRS 990 form.

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How Schools Can Acquire 501(c)(3) Tax-Exempt Status

It’s typical for schools and Parent-Teacher Association (PTA)/Parent-Teacher Organization (PTO) to be recognized as a 501(c)(3) organization and have tax-exempt status. However, there is a common misunderstanding when a school has 501(c)(3) status, but the PTA/PTO does not and vice-versa.

Both groups are eligible to apply for tax-exempt status, and with it comes benefits from being a 501(c)(3) organization. Here is some important information for schools or PTAs/PTOs interested in becoming tax-exempt.

Exemption Status for Schools
Schools usually receive a tax identification number (TIN) from the IRS - this number works much like a regular social security number, so there isn’t any tax exemption implied with it. The IRS typically views public schools as government entities in which they are automatically exempt from federal income tax.

Even though schools are automatically tax-exempt, that doesn’t mean the IRS recognizes them as 501(c)(3) groups. Like many other organizations, schools must complete an application to receive 501(c)(3) status from the federal government. Any organization seeking exemption status has to file IRS Form 1023 - if approved, the IRS mails a “Determination Letter” that identifies the organization as a 501(c)(3) group.

You can ask your school’s principal whether or not it has 501(c)(3) status - the determination letter from the IRS is mostly likely filed in the school or district office.

Exemption Status for PTAs/PTOs
A PTA/PTO can operate independently from the school - in such cases, the PTA/PTO is not automatically tax-exempt and will need to file a 1023 form to apply. Conversely, if the PTA/PTO is storing its funds using the school’s tax identification number, then the organization is seen as an extension of the school.

Most parent-teacher groups use their school’s TIN thinking that it’s common; however, experts explain that as long as the organization’s money is not from an account using the school’s TIN, then their group classifies separate from the school. If it is separate, the PTA/PTO can register for its own tax identification number.

There are a few services available for PTAs/PTOs to automatically register as a 501(c)(3) tax-exempt organization without submitting a Form 1023 or paying any filing fees. These services can also assist with getting a federal TIN, state incorporation, and 990 returns for your group. After receiving 501(c)(3) status. Donors may ask for a copy of the determination letter - this letter ensures your organization is a federally recognized charity and that charitable contributions towards your PTA/PTO are tax deductible.

Why Apply for Section 501(c)(3) Status
Other than preventing income taxes imposed on revenue earned by your school or PTA/PTO, there are more benefits with receiving 501(c)(3) status. With an exemption status, you can request for an increased number of grants - public and private donors usually require tax-exempt status for funding which can bring in more money and resources for the school.

Organizations that are recognized as 501(c)(3) legally exist as separate entities. Key members and employees typically aren’t held directly responsible for debts from the organization though special circumstances may apply. And with any litigation event, courts can only access assets that belong directly to the organization - not from individual members.

The most common advantage is that purchases are exempt from state sales tax. Keep in mind that regulations may vary from state to state, so check with your nonprofit association for more information. And once your organization or school receives its tax-exempt status, remember to stay compliant with IRS rules and file your 990 form each year.

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