Week 5: My Voice Sounds Funny
Gianna F -
Hello everyone. Welcome to our week 5 recap! We are officially halfway through our senior projects! This week was pretty exciting because I just published my first podcast! If you would like to give it a quick listen here is the link:
This week I interviewed Courtney, the Executive Director of The Launch Pad Teens Center. A mission I have with my podcasts is to share local organizations’ journeys/missions, so it was such a great opportunity to be able to explore The Launch Pad’s story. Along with this, I learned a lot about the extensive process that is required of nonprofit organizations. The Launch Pad has officially been recognized by the IRS as a nonprofit for ten years. In order to receive this recognition, you have to file for a 501(c)3 and Form 990s. To be a 501(c)3 organization means your donors can write off their donations, which is definitely going to increase the amount of donations you will receive. Courteny referred to applying for a 501(c)3 as something similar to “writing a short novel.” Once you plan out every detail of your organization, you have to file form 990s. These tax forms ensure your tax-exemption, but of course it is more complicated than just filing out your name and social security number. In fact, Courtney reflected on her experiences with those who sought out running a nonprofit over a business for the above reason, “they are in it for the wrong reason because it is NOT easy.” When filing these forms, her current CPA, sends over an expected packet with lots and lots of questions that takes The Launch Pad’s team a month or more to answer. The reason why it takes so long is because they have to track EVERY PENNY to make sure they are justly spending their donors’ money. Attached below is the recommended basic categories a nonprofit should be charting their accounts under…
| 1010: Checking (Bank Account)
1030: Savings (Bank Account) 1110: Investments 1210: Accounts Receivable 1310: Inventory 1410: Prepaid Expenses 1510: Property 1530: Equipment 1590: Accumulated Depreciation 1690: Accumulated Amortization 2010: Accounts Payable 2100: Accrued Salaries 2110: Accrued Payroll Taxes 2115: Accrued Employee Benefits 2150: Accrued Property Taxes 2200: Deferred Revenue 2300: Credit Card Payable 3100: Unrestricted Net Assets 3200: Temporarily Restricted Net Assets 3300: Permanently Restricted Net Assets 4010: Donations and Grants – Individuals 4020: Donations and Grants – Government 4030: Donations and Grants – Foundations |
3300: Permanently Restricted Net Assets
4010: Donations and Grants – Individuals 4020: Donations and Grants – Government 4030: Donations and Grants – Foundations 4110: Special Events – Sponsorships 4120: Special Events – Auction 4130: Special Events – Ticket Sales 4200: Program Revenue 4300: Sales of Merchandise 4500: Membership Dues 4600: In-Kind Contributions 4700: Temporarily Restricted Income 4800: Permanently Restricted Income 4900: Interest Income 4910: Dividend Income 5000: Salaries and Wages 5010: Payroll Taxes 5030: Health Insurance 5040: Dental Insurance |
5050: Retirement Benefits
5060: Workers Compensation 5070: HSA Contributions 6000: Depreciation Expense 6100: Amortization Expense 7000: Cost of Goods Sold 8000: Fundraising Expenses 8100: Special Event Expenses 8200: Program Expenses 8300: Marketing and Branding 8310: Advertising 8410: Contract Services 8420: Accounting Services 8430: Legal Services 8510: Rent Expense 8520: Utilities 8525: Telecommunications 8530: Maintenance and Repairs 8540: Office Supplies 8550: Printing and Copying 8560: Postage and Shipping 8570: Licenses and Permits 8610: Bank Fees 8620: Merchant Service Fees 8810: Board Expenses 8820: D&O Insurance 8890: Miscellaneous Expenses |
This is A LOT, but sometimes CPAs can make this process easier. Courtney was fortunate to have a CPA the entire way. She had a CPA volunteer at the beginning of her journey, but she admitted that without a CPA she probably would not have successfully made it because managing every number is not easy especially when she was already volunteering 40 hours a week to her organization. And if managing these numbers was not already enough pressure the matter of restricted and unrestricted donations come into play.
- Restricted donations: the money given by a donor HAS TO be used based on the guidelines laid out by the donor or will be taken back.
- Unrestricted donations: the donor is trusting the nonprofit to choose how their money is spent.
This was a big issue for Courtney because most donations are restricted which can occasionally minimize the money’s benefit. For example, if someone donated $2,000 to their seasonal “Trek for Teens” trip, but their sink just broke in their Moon Cafe, the repair costs have to be pulled from a smaller unrestricted pool of money. Especially for start up organizations, this can result in more out-of-pocket expenses. In essence, a lot of the financial team’s time goes to proving how each fund was spent to ensure they remain tax-exempt. However, they do get a grace period because their taxes are not due until May 15th. This is an interesting topic to compare…
- For hospitals, they are obviously also tax-exempt, but they do not have to prove the specific places where their money is going they just have to have a general description.
- For private clinics, they have to present to their investors where each penny will be going to maintain funding. This parallels nonprofits.
I suppose, the main difference is federal funding. However, it can beg the question: why do these private organizations have to jump through hoops to prove how they are spending their sought out funds while federally funded places also use our tax dollars but do not have to be as meticulous?
Anyways, next week I am interviewing another nonprofit and soon I will interview a CPA that works with The Launch Pad’s taxes and other nonprofits. I am also playing with the idea of having an Instagram account dedicated to explanation videos for the podcast. Thank you for reading!
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