Insider. Not-For-Profit. 10 Ways to Get the Most out of Your Board. In This Issue

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1 Not-For-Profit Insider Insights & Observations for Not-For-Profit Organizations Volume 6 :: Issue 4 In This Issue 10 Ways to Get the Most out of Your Board...1, 2 IRS News for Tax Exempt Organizations... 3 New Disclosures for Multiemployer Benefit Plans... 4, 5 UHY Partner Receives Distinguished Sustained Contribution Award Ways to Get the Most out of Your Board Your board is an essential part of your organization, or at least it should be. Unfortunately, board involvement for some not-for-profit organizations can be lackluster. You may think your board is just not committed to the organization s mission, or as enthusiastic about it as you are. However, they just may need some fine-tuning in order to perform at their highest level. Following are 10 ways to get the most out of your board. 1. Board Recruitment: The board recruiting process is vital to your organization. Many new board members come from referrals from other board members, and while this may be a good process, you may be overlooking other valid candidates. When a board position opens up, it should be treated like a job opening. First assess your current board members, and determine where your board is lacking. Do you need more diversity, an active community member, or a leader? Once you have determined what you are looking for post the job. Board members can be recruited from many sources: referrals, board banks, clergy, major donors, community organizations, local businesses and newspapers to mention a few. From there, meet the candidates and assess whether or not they fulfill what the organization is looking for. Finally, make your selection. Continued on Page 2...

2 The Next Level Of Service UHY LLP 10 Ways to Get the Most out of Your Board Continued from Page Express Expectations: When you have decided upon your new board member, be sure to confirm their commitment. It s important to inform them of what is expected before they enter the board room. A formal letter should be drafted that details at least the following: meeting attendance, committee participation, financial obligations, and special event expectations. 3. Board Orientation: Orienting your board is an important piece of the puzzle. Your organization should have a standard package for new board members that reiterates the above commitments, as well as covering items such as: fiduciary responsibility, conflicts of interest, code of conduct and press releases. In addition, it should cover organizational and board structure, committee definitions and expectations and any other important informational items. 4. Sharing of Needs: In a perfect world, people will join your board because they have a passion for the organization s mission. In reality, though, people join boards for many reasons: whether it is to network, to develop skills, for prestige, to feel good or to use their talents. To help board members succeed in their personal goals for joining the board, and therefore being more productive on the board, board members should be encouraged to share their needs so they can be addressed. 5. Committees: Instead of relying on one person, boards should establish standing committees to help accomplish tasks. Committees should be developed with specific objectives. Example committees are: strategic planning, finance, executive, board self-assessment, and public relations. By developing committees with qualified individuals, they can collectively perform the tasks that may be too daunting for one person to accomplish. 6. Ownership: Board members have to understand that they are running a business, even if it is a nonprofit. Keep board members involved from the beginning. For instance, if there is a new policy to be adopted, don t just present a draft for approval inquire of the members what should or should not be in the policy and get their input before the draft is prepared for approval. In other words, have them take ownership over the decisions being made by being involved in the complete process. 7. Listen to Them: Hand-in-hand with number six is listening to your board members. If you ask them to get involved and share opinions, and then do nothing with them, you ll end up back at step one with an unproductive board. So listen and validate their opinions, and even if you do not use them at least explain why, so they will know their ideas were considered. 8. Recognize Them: A thank you goes a long way. Recognize board members at special events, publish their names in marketing materials, and provide them with service awards. Board members are an important part of your organization and you should let them know they are needed and appreciated. 9. Board Retreat: A board retreat does not have to be extensive or expensive: it could just be an evening at a board member s house. For a larger organization, it could mean two to three days at an out-of-town facility. Either way, the objective is to link members together and to your organization s cause and to discuss what the organization is about. A retreat can bring collectivity to your board. 10. Hire a Consultant: A consultant can help an organization and its board in many ways: from capital campaigns, to strategic plans, to general board development. A professional can jump start your board by giving them new ideas, adding enthusiasm and establishing a feeling of accomplishment between the members. Every organization wants a committed and competent board, but it will not get there by itself. A little planning and effort can help you get the most out of your board. Cynthia Szczur is a Manager in UHY LLP s Farmington Hills office. She can be reached at or cszczur@uhy-us.com. 2 UHY LLP Not-For-Profit Insider Volume 6 :: Issue 4

3 IRS News for Tax Exempt Organizations The IRS recently announced two bits of interesting news relating to treatment of independent contractors and cell phone usage. On the IC front, the IRS has announced a voluntary program that provides an opportunity for taxpayers including exempt organizations to reclassify their workers as employees for employment tax purposes. This program was launched in conjunction with a Department of Labor initiative to step up enforcement related to misclassification of employees in order to avoid providing employment protections. Several federal agencies and states have agreed to coordinate enforcement and share information regarding worker misclassification. The program applies to taxpayers that are currently treating workers as independent contractors or other non-employees. You will want to consider this program if you have employees misclassified as independent contractors and it has been too expensive to correct the classification issue in the past. To qualify for the program the workers must have been consistently treated as nonemployees and all associated 1099s must have been filed for the previous three years. Your organization cannot currently be under audit and if it has previously been audited regarding worker classification, it will only be eligible if it has complied with the results of the audit. As part of the program agreement, the organization will agree to treat the workers as employees for future periods. In exchange, the organization will pay only 10% of the employment tax liability that was due on the compensation paid to the workers for the most recent year. The organization will not be liable for any interest and penalties on the amount and will not be subject to a worker classification employment tax audit of the workers being reclassified under the voluntary program. Forms were made available this fall to apply for participation in the program. The application should be filed 60 days before the organization wants to begin treating workers as employees. Once accepted into the program, the organization will be required to make a full and complete payment of any amount due. At long last, the IRS has issued guidance designed to clarify the tax treatment of employer-provided cell phones. When an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment. The IRS also announced the approach that applies with respect to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personallyowned cell phones. Under this approach, employers that require employees, primarily for non-compensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee s regular wages. The guidance does not apply to the provision of cell phones or reimbursement for cell-phone use that is not primarily business-related, as such arrangements are generally taxable. Jennine Anderson is a Partner in UHY LLP s Columbia, MD office. She can be reached at or janderson@uhy-us.com. Volume 6 :: Issue 4 Not-For-Profit Insider UHY LLP 3

4 UHY LLP The Next Level Of Service New Disclosures for Multiemployer Benefit Plans Currently, entities involved in multiemployer benefit plans are only required to disclose in their financial statements historical contributions to the plan. Beginning with fiscal years ending after December 15, 2012, for non-public entities, the Financial Accounting Standards Board (FASB) is requiring further disclosures. The reason for the change more transparency. The additional disclosures will provide readers of the financial statements with details of future potential cash flows related to the plan, indicators of the financial health of the plan and how to access more information about the plan. This amendment affects all non-government entities that participate in multiemployer plans. It also applies to subsidiaries that participate in their parent s single-employer defined benefit plan and not-for-profit entities that participate in their national organization s single-employer defined benefit plan. The additional disclosure will include the following: Details of the plans an employer participates in the full plan name and the identifying number of the plan Level of participation in the plan the dollar amount of employer contributions and whether the employer contributions make up more than 5% of the entire plan s contributions Financial health of the plan the funded status of the plan, preferably the certified zone status of the plan or, if not available, comparable over or under funded information. Disclosures are needed if funding improvements for the plan are pending or implemented, and if there are surcharges imposed on plan contributions Employer commitments for collective bargaining agreements that require contributions to the plan, expiration dates of the agreements will be disclosed as well as required minimum Continued on Page 5... Volume 6 :: Issue 4 Not-For-Profit Insider UHY LLP 4

5 The Next Level Of Service UHY LLP New Disclosures for Multiemployer Benefit Plans Continued from Page 4... contributions to the plan and how the minimum contributions are calculated Differences from a single-employer plan for a multiemployer plan that provides pension benefits, disclosures are required that describe the plan and the major differences and risks from a singleemployer plan If, by using the plan name and identifying number provided in the above disclosures, the users of financial statements cannot get additional public information about the plan, such as a copy of the Form 5500, there are further disclosures that will be required. These are: A description of the plan benefits A description of how the employer could be responsible for obligations of the plan, including obligations for benefits earned by employees of other employers Financial information related to the plan, such as total plan assets, actuarial present value of accumulated benefits and total contributions received by the plan All of these additional disclosures do not change how an entity currently recognizes transactions for a multiemployer plan, nor does it change any necessary recognition related to an obligation due to a withdrawal from a multiemployer plan this is probable or reasonably probable. These amendments will be applicable to all years in comparative financial statements; therefore an entity will have the gather the required information for prior years as well as the current fiscal year. Gathering this information should be addressed as soon as reasonably possible to ensure proper disclosure by the required implementation dates. Cynthia Szczur is a Manager in UHY LLP s Farmington Hills office. She can be reached at or cszczur@uhy-us.com. UHY Partner Receives Distinguished Sustained Contribution Award Marilyn Pendergast, a Partner in UHY s Albany office and national co-leader of the Education/Nonprofit Group of UHY, has been named a recipient of the American Institute of Certified Public Accountants (AICPA) inaugural Sustained Contribution Award. The award recognizes AICPA members who have contributed measurably to the AICPA and the CPA profession through their volunteer service. All the recipients have served on an AICPA volunteer group for 20 or more years and have served at least once as a chair of an AICPA committee, task force or resource panel. Marilyn Pendergast, Partner The AICPA congratulates all of the recipients of the Sustained Contribution award, stated Kathy Eddy, chair of the awards committee and former AICPA chair. The work they ve done in volunteer leadership roles at the AICPA will help strengthen the profession for many years to come. Volume 6 :: Issue 4 Not-For-Profit Insider UHY LLP 5

6 Not-For-Profit Industry Insight With the increasing complexity of laws and regulations, it s important for associations, foundations, charities, hospitals, schools and other tax-exempt entities to seek out professionals with extensive experience in not-for-profit compliance issues. Accounting/Assurance Audit, Reviews & Compilations Financial Management Consulting Internal Controls & Forensic Accounting Compliance/Governance Capabilities Accounting Policies and Procedures Updates Design, Implementation & Testing of Internal Controls Sarbanes-Oxley Education uhyllp-us.com Tax & Management Consulting Cost Allocation Planning Assistance Financial Forecasting Analysis Implementation of New Accounting Standards IRS Controversy State, Federal and Local Tax Planning Unrelated Business Income Tax Analysis Georgia Maryland Michigan Missouri New York Our Locations Atlanta Columbia Farmington Hills Sterling Heights St. Louis Albany New York Westchester Dallas Houston Additional UHY Advisors Locations Chicago Oakland New York Houston Washington Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of UHY Advisors. UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. UHY is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members. Texas Illinois New Jersey New York Texas Washington DC 2011