communication department

Volume XX Number 7

Communities

Ask Evelyn

What You Should Know about Chapter Financial Reports

By Evelyn McCamey, STC Community Relations Manager

Editor’s note: This is the first monthly column written by Evelyn McCamey, STC’s new manager of community relations. Future columns will include important information and updates for communities. If you have any questions, you may e-mail Evelyn.

About Me

I am very excited to join the staff of STC. I will be working with the Leadership Community Resource (LCR) to ensure that STC communities are receiving the financial management, governance, and program support that they need from the Society office. The health of STC’s communities is vital to its success, and I hope to be able to provide useful tools that will ensure your success and growth. I have approximately thirteen years of association experience, and I have helped design and set up systems to assist chapters in managing their programs, and developed materials intended to provide policy and procedural guidance. Most recently, I was with the Navy League of the United States, where I was manager of executive services; my duties included acting as a liaison between the national president and approximately 300 councils, and managing the dissemination of awards for those councils.

I look forward to communicating with you in this monthly column.

Chapter Financial Reports

I’d like to spend the remainder of my introductory column providing some information that may help guide you through the process of submitting your chapter financial reports, which are due to the Society office at the end of September.

Chapters must file a chapter financial report form with the Society office at the end of each fiscal year. This year’s report must cover the period from July 1, 2006 to June 30, 2007. The FY2007 chapter financial report form is available in Excel. This form was e-mailed to you in July and is also available on the Society Web site. The Excel file contains formulas to assist you, so take care not to delete or enter data directly in formula fields.

When submitting your form, please be sure to include your supporting documentation. This includes your chapter’s June 2007 reconciliation statement and photocopies of its bank, money market, and certificate of deposit account statements as of June 30, 2007. Your completed report form and documentation must be returned to the office by September 30, 2007. You may send the report via mail, or alternately, you may scan your signed documents and supporting documentation and e-mail them to me directly. Should you choose to send them via e-mail, be sure to include your chapter name and “Chapter Financial Report” in the subject heading.

Things You Need to Know about IRS Form 990

Under the provisions of the Internal Revenue Code Section 6033, nonprofits, charities, and other tax-exempt organizations are required to file Form 990 or Form 990-EZ along with Schedule A annually to maintain their tax-exempt status. Nonprofits are not required to file Form 990 or 990-EZ if their gross receipts are normally $25,000 or less.

If you need to file a Form 990, you can file the shorter Form 990-EZ if you have less than $100,000 in gross receipts and less than $250,000 in total assets at the end of the year. You are required to attach Schedule A to your Form 990 or 990-EZ return. The Schedule A form is used to report information that is not open to public disclosure. If you do not have to file a Form 990, then you do not have to file a Schedule A.

Very Important!

If your chapter has unrelated business income tax (UBIT) net income over $1,000, you must file Form 990-T (even if total chapter revenues are less than $25,000). The first net $1,000 is exempt from taxes. This means that even if you do not need to file a Form 990 or 990-EZ, you may still need to complete Form 990-T. This form was included with your chapter financial report materials for your convenience.

Chapters will need to calculate net UBIT income. This means you can deduct related expenses from gross income to calculate net income. For example, a chapter collects $1,000 for a one-page ad in a four-page newsletter. The cost of the four-page newsletter is $400. The chapter may deduct one-fourth of the newsletter expenses from the $1,000, to get a net income of $900. The first $1,000 of net UBIT income is not subject to taxes. Therefore, the chapter would not need to file Form 990-T.

Please Remember

If line C of your chapter financial report form is $25,000 or greater, you must file a Form 990 or 990-EZ IRS report with the Society. These forms should not be forwarded to the IRS—you must send them back to the Society, and we will forward the required report to the IRS on your behalf. If this is the first year that your chapter’s income surpassed $25,000, and you need assistance, please call me at +1 (571) 366-1919 or e-mail me. I would be more than happy to assist you.