We live in the information age, and for not-for-profit organizations, that can mean broader exposure for your mission, activities and your ultimate asset—goodwill.
Considerable information about not-for-profit organizations is available online, from digitized IRS Form 990 information to mission statements. Exposure to a broader audience comes with its upsides, but it also means that not-for-profit organizations have more information to manage than in years past. Reviewing the types of information available helps ensure what the public can see online reflects your organization’s objectives.
Your website is a valuable source of information. Reviewing other databases, such as Federal websites, various state and local jurisdictions, ratings agencies such as GuideStar, BBB and Charity Navigator can reveal risks that may impair your organization. An organization can capture relevant information in real time in our digitized world of information and address issues immediately.
Evaluating your not-for-profit organization’s online presence comes with another benefit as well. It might help minimize compliance and exposure risks. Online databases make it easier than ever for your organization—and the public—to see if financial reporting requirements are being met. Not-for-profit organizations that build a review of their public-facing data into their quality control processes can manage their reputation and protect their organizations from jeopardizing their tax-exempt status.
Take a Look at Your Website
Your organization’s website is the online face of your organization. It is a living presence that requires constant updating or it may become outdated. One of the first steps your organization should take with its website to ensure that the organization owns the domain name as well as any substantially similar domains that users may use to try to access your information.
On the site itself, every effort should be made to ensure that your website matches your internal messaging. An “About Us” or “History” web pages are fairly common among organizations, but keep in mind that these are not replacements for your mission statement. It is highly recommended that your organization list a clear and concise mission statement that is consistent with what it would use on internal and external documents.
Any messaging from or about other organizations, external initiatives or individuals should be carefully evaluated as well. Not-for-profits are permitted to do a small amount of lobbying, but they must be transparent about the types of activities in which they engage. Organizations should review their website for banners or other content that could be construed as lobbying to ensure they are not unknowingly engaging in lobbying activities. An organization should also consider whether to inform visitors when they are leaving the organization's website through a hyperlink. Not-for-profit organizations should be aware of the implications of linking to certain websites, particularly if those websites contain political messages. The IRS has indicated that the organization is responsible to for the content on the other organization website and should monitor it on a consistent basis.
Banners and website content should also be reviewed for advertising or sponsorship language. Advertising and sponsorships are considered unrelated business income (UBI). Tax-exempt organizations must be careful not to endorse commercial products or services and should monitor where the hyperlinks directs the user on the other organizations website.
Any organization that generates more than $1,000 from UBI is subject to certain filing requirements, and failing to comply with these requirements or generating UBI above a certain threshold could have serious consequences for your organization.
Review the Databases
State and federal government websites have put together databases that can be used to uncover tax-exempt statuses, property tax obligations, Form 990 schedule filings, Form 5500 filings and many other pieces of information. As part of your financial reporting process, your organization should verify these databases have your not-for-profit organization’s most recent information. If they do not, your organization should take immediate action to correct any issues encountered. The easy availability of the databases means that donors and the public could potentially be seeing the same information, and if compliance concerns are evident, it could have serious reputational consequences for your organization.
The following are websites not-for-profits should regularly monitor:
- IRS Exempt Organizations Select Check: Verify your tax-exempt status
- U.S. Patent and Trademark Office: Verify your logos and branding are up-to-date and registered to your organization
- U.S. Copyright Office: Verify your copyrights are up-to-date
- U.S. Senate Lobbying Disclosure Act Database: If your organization does any lobbying, this database can help ensure the proper Form 990 disclosures have been made
Additionally, not-for-profit organizations should be monitoring databases collected at the state level. State attorneys general monitor charities, and many collect Form 990s into state database. Most local secretaries of state provide searches of annual reports and other document filings. Reviewing state and local tax assessor’s database can help ensure there are not outstanding property taxes due for your organization.
One of the ways not-for-profit organizations can differentiate themselves from similar types of organizations is through external rankings and ratings by groups such as GuideStar or Charity Navigator. If your organization isn’t currently participating in these rankings, consider submitting information to one or both of these groups.
Watchdog group ratings serve both as benchmarking tools and ways to help consumers compare organizations. Their databases typically pull from information obtained from the organizations’ Form 990. Some of the information commonly pulled from the Form 990 includes operating and overhead costs.
If your organization is not faring well with these watchdog group rankings, it should consider steps to be taken to improve its standing. At the very least, your organization should be prepared to respond to potential donors who are curious about your organization’s ranking.
Conduct Your Reviews On a Regular Basis
Information can change quickly. As your organization evolves, its core activities may change and the organization may need to update its mission statement accordingly. Not-for-profit organizations may go through a rebranding process that would require an update to the branding and other imagery commonly used for its promotions. When these changes occur, the external facing data should be updated accordingly. To stay current with your information, we recommend not-for-profit organizations conduct a review of their data every three years. For assistance in identifying and addressing potential liabilities, please contact us
Joe Giso, CPA, MST, is a Managing Director in the Not-for-Profit & Education Tax Practice. Joe can be reached at JGiso@cbiztofias.com or 617.761.0623.