Spring has sprung and many nonprofit organizations have been busy planning their summer and fall fundraising events. Planning is key to a successful event. While dates, location and activities are important parts of planning, considering how the money is raised, secured and recorded is as crucial, yet often overlooked.

A good way to begin is to get together with key staff or board members and brainstorm all the ways that money will be collected before and during the event.  Asking the questions who, what, where, when and how can be useful in developing proper cash handling.  For example, if tickets are sold before the event, decide who is going to sell the tickets and how many tickets each person will be responsible for selling. Consider numbering the tickets and keeping records of how many each person sells and returns. This not only keeps track of where the tickets are but also gives the event coordinator an expected revenue estimate and provides useful planning data for the future.  

Remember to print quid pro quo contributions disclosures on the ticket, if applicable.  A quid pro quo disclosure lets the donor know how much of the ticket price is for goods and services, such as the price of a meal. It also tells how much the deductible contribution is.

If your event will have several opportunities to donate such as raffles, auctions or pull tabs, treat each opportunity as a separate event. Decide who will be in-charge, how the money will be collected during the activity and how volunteers will make cash drops, if necessary.  Consider creating some cash handling policies before the event, and educate volunteers and staff about the expectations of how to treat cash.  This brings awareness to the importance of securing the cash and is a deterrent to theft during the event. 

Making arrangements to have a secure place to count the money is also essential, and money counting should always be under dual control.  Event cash should be deposited in a bank immediately after the event.  Each activity should have a separate cash box, and there should be start-up cash in each to make change. Additionally, ensure the organization has complied with local and state laws and permit requirements. Also, consider buying liability insurance to cover the event. At the end of the event, it is a good idea to have a debriefing meeting to discuss any items or procedures that could improve the event while it is still fresh in everyone's mind.

Carefully planning and educating staff and volunteers on clear policies and expectations as to how cash will be handled before the event takes place and during the event will give the necessary tools to execute the event seamlessly, eliminate surprises and provide safeguards against theft.

Recently, IBM Security reported on an active cyber attack campaign they called "Dyre Wolf."  This attack shows incredible innovation in using a form of malware called 'Dyre' along with spearfishing, phishing, social engineering, and Denial of Service (DDoS) attacks in various combinations.  As part of the infection, the Dyre malware establishes a persistent service running on a victim's computer called "Google Update Service."  This service is set to run automatically every time the system starts.  At some point, a screen will pop up telling users that the bank's site is down, and to call a certain phone number.  When the victim calls this number, English-speaking cybercriminals extract banking details from the callers.  After this, large wire transfers are made from the compromised account.  The money is moved in and out of various international bank accounts until finally cashed out by mules.  As money is being moved, some victims also experience a DDoS attack so they are unable to use their web resources.  The thefts are discovered too late to do anything about them.  

What can you do about this?  First, realize that your organization is only as strong as your weakest link.  Proactive education and security awareness are critical.  Secondly, consider performing mock phishing attacks on your employees to see where your weaknesses are--you'll learn a lot.  Educate your employees on basic cyber security. Then, run the mock phishing attack again later to see if you've made any improvements and adjust.   Last, train employees in charge of corporate banking to never provide banking credentials to anyone. 

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Jack Moneypenny, President/CEO of the DCVB, and Stephanie Klett, Secretary of Wisconsin Department of Tourism, plugging in the first car the DCVB charging station.

By this fall, the bureau plans to add 10 electric-car charging stations to its network in Door County and one at the Manitowoc Visitor Center for tourists traveling from the south.  These stations will be located near restaurants, shops and local attractions.

"The charging stations don't add a considerable cost to business owners or the bureau," said Moneypenny. The charging station at the DCVB in Sturgeon Bay was used 43 times last summer. Total electricity cost for that unit was approximately $48.

Additionally, the DCVB is working with local municipalities to make Door County a more bicycle friendly region. Strategically placed bike stations will make traveling by bike easier and safer.

The DCVB is the official tourism marketing organization for Door County. Its mission is to generate incremental economic impact for the community by attracting visitors with strategies that ensure sustainable tourism. For more information on traveling green in Door Country, visit:  

In an earlier article we discussed some of the basics of unrelated business income including criteria used to determine when an activity may result in unrelated business income.  As a follow-up to our earlier discussion, this article will include filing requirements for unrelated business income and risks of generating too much unrelated business income.

An exempt organization is required to file a Form 990-T if the organization's gross income from unrelated business income is $1,000 or more.  If the organization has more than one type of unrelated business income, all unrelated business income is reported on a single 990-T.  Although the filing requirement is relatively low, simply exceeding the gross income threshold does not necessarily mean the organization will owe tax for unrelated business income.  Any tax is assessed on income remaining after allowable expenses.  Direct costs associated with generating the unrelated business income are allowed as a deduction to reduce the amount of unrelated business income as are indirect costs allocated to this activity in accordance with the organization's cost allocation plan.

Now, if an organization has significant unrelated business income, some additional considerations must be reviewed to make sure the organization is still operating in accordance with its exempt purpose.  The issue comes up when one or more unrelated business activities shift the primary purpose away from the organization's exempt purpose.  The question becomes, is there a point at which the unrelated business activity could jeopardize the tax-exempt status of the organization?  If the answer to that question is yes, the Internal Revenue Service can take action to revoke an organization's tax-exempt status if the unrelated activities shift the primary purpose away from its tax-exempt purpose.

Although not defined in the Code or Regulations, there are many examples of organizations with unrelated activities and how the Internal Revenue Service treated those organizations.  A representative sample is listed below:

• A tax-exempt organization kept its tax-exempt status even though unrelated business receipts accounted for 63% of the total revenue. (TAM 200021056)
• The IRS allowed a tax-exempt organization to retain its exemption even though only 41% of its activities related to its charitable purpose (50% related to tax-exempt bingo games and 9% admin). (TAM 9711003)
• An organization was not penalized because the activity did not consume substantial staff time or other charitable resources.  They did not define "substantial." (TAM 9809062)
• *   In one case a tax-exempt organization lost its status when the unrelated business income approximated one-third of its total support. In this case, there were some other circumstances (personal benefits) that made the IRS unsympathetic.
• The IRS has held that a tax-exempt organization receiving 50% of its gross income from an unrelated business retained its status as tax-exempt.  The IRS position was based on the fact that time spent on the unrelated activity was small in relation to the time spent on the organization's purpose. (LTR RUL 9521004) 

Every situation is different and depends on the specific facts and circumstances.  If you believe your organization might have unrelated business activities which could affect its tax-exempt status, or just have questions on unrelated business income, please contact a member of our not-for-profit service group.

Read: Unrelated Business Income: An Introduction

Author: Chuck Krueger, CPA

Contact: 920.684.2547or ckrueger@hawkinsashcpas.com