You are president of the board of the Theler Community Center in Belfair, WA. Revenues have...

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Psychology

You are president of the board of the Theler Community Center inBelfair, WA. Revenues have come from facilities rental, donations,grants, and community classes. The 2014 revenues had been projectedto be $71,000. Expenses cover insurance, utilities, supplies,taxes, and payroll. Expenses are projected to be $68,000. On 1/8/14during the board meeting the interim Executive Director (ED)informs you, the board and the public that the center is faced with$162,000 in debt and back taxes. In addition, there is a criminalinvestigation into the centerâ€™s former ED. The interim ED was hiredlast month after the former ED was put on suspension andultimately, fired. The new ED informed the group that the former EDhad created a financial mess that dated back to 2008 when thecenter last filed a tax return. The center owes state unemploymenttaxes and social security and medicare taxes for the employees tothe tune of $97,000. The IRS has additionally levied the centerâ€™sbank accounts because of the failure to file for the past 5 years,making it unable to pay its bills this month. What are theramifications of not having filed the 990 tax forms with the IRS?Besides not being able to pay the bills how will this contribute tothe financial situation? What impact does this have on receivingdonations and grants from foundations? How may you, and the boardmembers, be held accountable by the IRS? Do the board members havea duty to keep the organization from losing money? Explain.

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Q What impact does this have on receiving donations and grants from foundations Answer The range of different funding sources that the governing body needs to consider The main sources of income are Gifts and donations Grants Loan financing and equity capital Contracts Trading Each source has specific governance issues relating to it More detail can be found in our funding and income pages Gifts and donations Donations generally come from individuals eg from a fundraising appeal or given as a legacy from companies or from charitable trusts and foundations Unless they have been given in response to a particular appeal you generally have considerable freedom in how to apply them Gifts and donations are a particularly important source of income for charities and can attract tax relief Raising funds however can be timeconsuming and costly and you could even lose money Key issues for members of the charity or nonprofit board body to consider Is your fundraising effective and economic Have you set costincome ratios for your fundraising recognising that some types of fundraising are more expensive than others and are you achieving them Are you claiming back tax eg through Gift Aid Is your fundraising legal The rules about fundraising can be detailed and complex and you may need to seek advice There are for example rules on data protection the use of professional fundraisers and for housetohouse collections and lotteries Is your fundraising ethical Do you comply with the Institute of Fundraisings Codes of Fundraising Practice Have you signed up to the selfregulatory scheme for fundraising Are your fundraising activities likely to damage your reputation in any way Do you have policies for example on corporate donations Have you made clear what the appeal is for See Answer

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