Ann Mills-Griffiths: Creative Accounting

Today’s post is going to take a look at the National League of Families’ creative accounting.

We thought we would take a layman’s look at the forms.  If you would like to see the forms we are referencing, you can find them here: Past 990 IRS forms.    Here are some questions that really jumped out at us from the 990s forms:

 

1)  In recent years, the NLF’s tax forms have not disclosed any revenue they take in from membership dues.   Why, with at least two locations in the forms where they are supposed to indicate income from membership fees, is the amount not listed?

2)  The NLF states that it makes no income from any fundraising events. Yet, in 2009 they claim to have spent $3,317 and $3,105 in 2008 for just that.   Therefore how do they justify the various amounts they dedicate annually to fundraising?  Also, are we to believe that the fees we pay just to attend the annual meetings in DC do not have even an additional $5 or so in them to add to the NLF coffers?  What about the League sanctioned vendors who sold their wares outside the conference hall?  Did the NLF not receive revenue from those vendors?

3)  On the first page of both the ’08 and ’09 990 forms they claim to have no volunteers yet list the services of unpaid volunteers at $400,123 and $422,914 respectively.  How do we explain over $820,000 in volunteer hours over two years with no volunteers?

4)  If anyone out there has an accounting background, we would love to know what “casual labor” is.  On p. 10 of the 2009 990 form it lists $10,031 for casual labor and the only definition we can find of ‘casual labor’ is “work that does not promote or advance the cause of the organization/business.”

We sincerely hope that the NLF’s Board Members are paying very close attention to what is being shared here.  While researching for this piece we discovered something very revealing.  If the League were to lose their non-profit status, according to multiple websites we consulted, Board members could be responsible for paying any excise tax that is levied against the NLF if the IRS determines that actions of the League financially benefited another individual.  We would highly recommend that everyone read the following links:  Link #1 (About loss of tax-exempt status), Link #2 (IRS link to Questions about running a tax-exempt organization) and Link #3 ( IRS Exemption requirements).

This last link includes this significant piece of information, 

“The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.”

Could the fact that close to half of an organization’s income was routinely used to pay the salary, benefits and pension for its sole employee be considered an excess benefit transaction?

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