The Lightning Rod M/M Blog

Kudos To These Regulators

"I'm from the government, and I'm here to help you." 

Actually, sometimes that's true.

The annual process of registering to do business and/or obtaining a license to solicit in multiple individual states is a requirement for many charities.  And -- with each state having different rules and different forms (many of which are truly confusing and opaque) -- the process is an administrative nightmare.  Indeed, there are a number of law firms whose main book of business is assisting their charity clients with this chore.

We'd do well, however, to keep in mind that the state staffers administering these programs aren't the ones who make up the rules and aren't the ones who designed the forms.  In fact, it's been my experience that if one calls these offices and politely asks for assistance, the staffers will go out of their way to assist you. 

I hear "state regulator" horror stories from charities all the time.  I know that dealing with bureaucracy can be frustrating.  But I don't hear commendations when state staffers act like advocates, not enemies.  I witnessed two examples of that last week, in the states of Washington and Virginia. 

In the interests of privacy I won't name names, but here are the stories.  I had a client member charity come to me with a problem.  The charity's executive director had mis-read the due date on the annual registration form; she had confused last year's due date with this year's new and different date.  She was facing a penalty, and worse, she was going to miss the due date for applying to the state's own employee fund drive, for which state registration was a pre-condition.  This is a small charity.  The penalty and the campaign loss would have hurt.  I told her I couldn't help her, but that she should call the regulators office and explain the situation.  She did, and guess what?  They gave her an extension so she could avoid the penalty, even though the availability of an extension was never mentioned in the registration instructions.  Then they fast-tracked the issuance of the registration so the charity wouldn't miss out on the fund drive.

In the other case, the charity asked me to explain how to answer a question on a registration form.  I read the question several times.  I had no clue what it meant.  So the charity called the regulator's office.  "Oh, dear," said the pleasant lady who answered the phone.  "We've told 'them' nobody understands this question."  She proceeded to explain in plain English what the question intended; then she asked a few questions about the charity's operations and offered pointers on how to answer the question.  Simply.

Kudos to these staffers and their states.  Keep hiring people like that, please. 

If you have any stories about regulatory staff that have gone out of their way to help you, please share them here.

 

Workplace Campaigns Require SIGNED Copies of the IRS Form 990

The majority of workplace fund drives that screen for eligibility requirements require a paper copy of the most recently filed IRS Form 990 return signed by the certifying officer of the nonprofit.  Copies that do not include this signature are never accepted.

At least one state employee fund drive – Texas – has decided that if a third party, such as a CPA, prepared the return then the copy submitted for eligibility review must also have the preparer’s signature.  The certifying official’s signature by itself is deemed to be insufficient.

The state’s theory is that its rules call for an identical copy of the return as submitted by the nonprofit to the IRS.  Since the IRS requires the third party preparer, if there is one, to sign the return, then, the campaign reasons, if it gets a 990 to review without this signature how does it know that this is the same return that was submitted to the IRS?

Don’t count on other states not following Texas’s example.

Unfortunately, preparers generally do not sign multiple copies of the returns they prepare.  They sign the original return only.  When they send file copies of the return to the nonprofit client the preparer’s signature box is simply stamped “copy.”

What to do:

If you are responsible for workplace campaign applications for your organization, make sure you have a copy of the organization’s 990 that includes both the certifying official’s signature and the preparer’s signature (if there was in fact a preparer).  Make sure your finance people understand that providing you with a 990 stamped “copy” will not be sufficient.  They should have a photocopy of the original return, with signatures, on file.  No preparer’s signature can put your eligibility at risk.  Both signatures make you bulletproof.

What about electronically filed 990s? 

The IRS now requires larger nonprofits to file their 990 returns electronically.  Thus, the “original returns” don’t contain signatures.  What to do?  Make sure you have a signed copy of IRS Form 8453 EO – Exempt Organizations Declaration and Signature for Electronic Filing.  This form provides the paper trail that certifies the 990 return copy to which it is attached is identical to the one that was filed electronically.  It is accepted by all workplace campaigns.