On February 4, 2008, the IRS posted Governance and Related Topics – 501(c)(3) Organizations, a document that updates an earlier IRS discussion draft, Good Governance Practices for 501(c)(3) Organizations.  The policies and practices recommended by the IRS for a charity’s consideration are divided into the following topics:

  • Mission
  • Organizational Documents
  • Governing Body
  • Governance and Management Policies
    • Executive Compensation
    • Conflicts of Interest
    • Investments
    • Fundraising
    • Governing Body Minutes and Records
    • Document Retention and Destruction
    • Ethics and Whistleblower Policy
  • Financial Statements and Form 990 Reporting
  • Transparency and Accountability

Some interesting points in the document:

  • The discussion on board size and independence (e.g., nonemployees).
  • Recommendation that a parent organization with subordinates have procedures and policies in place to ensure that the activities and operations of the subordinates are consistent with those of the parent.
  • Recommendation that charities rely on the rebuttable presumption test of Section 4958 of the Internal Revenue Code and accompanying regulations when determining executive compensation, including the use of comparables.
  • Recommendation that a charity’s governing body consider adopting a code of ethics.
  • Statement that "even if an audit is not required, a charity with substantial assets or revenue should consider obtaining an audit of its financial statements by an independent auditor."

Comments

  1. Jackie says:

    what is the law for a church to have a profit company – using the facilities? Can a profit making company use and sell at a church?