Transcript How to Thrive when the economy doesn't

What is in it for Land Trusts?
Connecticut Land Conservation Council
Conference - March 21, 2015
Engaging philanthropy … empowering your cause
The core form 990 is 12 pages with 16
schedules - it can be daunting to
complete.
If you hire an expert to prepare the
990, you still must own the report!
Review with your accountant before
you file with the IRS.
990 should be presented to your
board.
The short answer is:
ALL non-profits must file
(except certain religious and political organizations)
Lose tax exempt status if you fail to
file for three consecutive years
File Form 990

If your Gross Receipts >= to
$200,000 OR

Your Total Assets >= $500,000
File Form 990 N (e-Postcard)

File Form 990T

File form 990 EZ

If your Gross Receipts < to
$200,000 AND

Your Total Assets < $500,000
If your Gross Receipts < $50,000
If you have unrelated business
income

The form 990 is due the 15th day of the fifth
month after the end of your fiscal year

June 30 year-ends are due November 15

December 31 year-ends are due May 15

Automatic 3 or 6 month extensions are easy
to get (Form 8868)
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In the new Form 990 there is more
opportunity to include supplemental
information and to tell your story!
Take the opportunity to describe your
mission – Part I and Part III. Update as
necessary
Describe your three largest program
accomplishments in Part III. Spend the time
completing this section – update each year
Schedule A (Forms 990 and 990EZ)
Public Charity Status and Public Support
Schedule B (Forms 990, 990 EZ, and 990PF)
Schedule of Contributors
Schedule C (Forms 990 and 990EZ)
Political Campaign and Lobbying Activities
Schedule D (Form 990)
Supplemental Financial Statements
Schedule E (Forms 990 and 990EZ)
Schools
Schedule F (Form 990)
Statement of Activities Outside the United States
Schedule G (Forms 990 or 990EZ)
Supplemental Information Regarding Fundraising or
Gaming Activities
Schedule H (Form 990)
Hospitals
Schedule I (Form 990)
Grants and Other Assistance to Organizations,
Governments, and Individuals in the U.S.
Schedule J (Form 990)
Compensation Information
Schedule K (Form 990)
Supplemental Information on Tax Exempt Bonds
Schedule L (Forms 990 and 990EZ)
Transactions with Interested Persons
Schedule M (Form 990)
Noncash Contributions
Schedule N (Forms 990 and 990EZ)
Liquidation, Termination, Dissolution, or Significant
Disposition of Assets
Schedule O (Forms 990 and 990EZ)
Supplemental Information to Form 990 or 990EZ
Schedule R (Form 990)
Related Organizations and Unrelated Organizations

The IRS sends all 990’s to
GuideStar

Donors can review all
990’s before making
contributions

Make sure you tell your
story

Question 7 – conservation easements
 If yes, complete schedule D, Part II

Question 11 – do you have land on your balance sheet,
Schedule X
 If yes, must also complete Schedule D

Question 29 – non-cash contributions > $25,000
 If yes, complete schedule M
Use Schedule O – Supplemental Information
You are able to provide narrative
explanations and descriptions for any
sections and questions in the 990 !!!
Tell YOUR story –
don’t leave it to an accountant
Schedule O:
Explain, Elaborate and Educate

Boards should review Part VI, Section B. Policies, and know what
is expected and begin to develop policies
Good governance is sound risk management - per the IRS

IRS would like (not required):
 Board to review the 990
 Conflict of interest policy
 Whistleblower policy
 Document retention policy
 Compensation review
 If developing policies, note in Schedule O
Let’s look at some
common accounting
issues for Land
Trusts and how they
flow to the 990
Land Trusts should report gifts of land at FMV at
time of the gift
 Determine if gift requires permanent ownership
(can never be sold); if so, treat gift as permanently
restricted
 If gift permits sale/transfer, treat as unrestricted or
temp restricted depending on limitations on use of
proceeds
 All land recorded as an asset on the balance sheet
and in-kind contribution revenue on the income
statement
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Report donations of goods (land and
conservation easements) > $25,000
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The Land Trust gets involved if gift is > $5,000
A qualified appraisal is required and the Land
Trust must sign the form 8283
Supplemental statement required from
donors of conservation easement
If land is sold by the Land Trust within three
years of the donation, form 8282 must be
filed with the IRS and sent to donor
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Refers to acquisition of land or conservation
easement through a combination of purchase
and gift from the owner
In- Kind Contribution = difference between
purchase price and appraised value
Donor receives a tax deduction for the
difference as a charitable contribution

Conservation easements accepted or purchased by a Land
Trust many times are not recognized as assets or revenue in
their financials because the Land Trust doesn’t have fee title
to the properties

Purchased conservation easements can be expensed when
acquired (no asset is owned)
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Donated easements can be recorded as an in-kind gift and
equal in-kind expense (Extinguishment of development
rights)- this is not as common
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Disclose how you account for conservation
easements on Schedule D, Part XIII
No IRS or FASB written guidance on how to
record easements
Be consistent between 990 and financial
statements
Once a method is chosen, stick with it
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Program
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Administration/Management
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Fund Raising
Donors do not want to see that most of your
expenses are in administration or fundraising –
a major donor will not give to you.
Take the time to understand and allocate
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Acquisition
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Stewardship
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Education
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Restoration
Not recorded unless for specialized skills provided
by a professional and Land Trust would have
purchased if the services weren’t donated
This may be an issue if Land Trust has mostly
volunteers – administrative costs may appear to
be a high percentage of total expenses

Show your hours and the
value on Schedule O

Independent Sector values
volunteer hours CT volunteer at $27.77 per hour

Let donors know how you
maximize your dollars
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Financial management
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Board support
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Strategic planning

HR management
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Unsolicited requests for contributions
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All forms of contact with individual donors
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Most foundation grant-seeking activity
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Seeking government grants is normally
considered administration/management
expenses
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Systematic method for estimating the
portion of specific costs which provide
benefit to multiple program, administrative,
& fund raising functions (includes expenses
like legal)
Donors are looking at allocations and
evaluating your Land Trust based upon
expense categories

Land Trust can elect cash basis for the 990
 Record Income and Expenses as received and paid
 Records Cash transactions
 Doesn’t record Payables or Receivables
 Not GAAP
ALL Land should be recorded
on the balance sheet
Both donated (FMV) and purchased
Buildings should be recorded
as an asset and depreciated

Plenty of places to give additional
information including Schedule O
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Be sure to take the time to give potential
donors as much information as you can
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Boards get involved and take ownership of
the 990 – don’t let your accountant own the
form!
 No major changes by IRS for 2013 form –
reporting requirements clarified only
 House passed Conservation Easement Incentive
Act of 2015 on February 12 2015
▪ This bill amends the Internal Revenue Code to make
permanent after 2014 the tax deduction for charitable
contributions by individuals and corporations of real
property interests for conservation purposes
Engaging philanthropy … empowering your cause
Danosky & Associates
helps non-profit
organizations build the
capacity to move their
strategic vision
forward with a solid
foundation
and an army of
support behind them
www.danosky.com
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