Association Executive - January/February 2008 - (Page 22)

Form 990 continued from page 21 According to the instructions for Form 990, family relationships include spouses, ancestors, children, grandchildren, great-grandchildren, siblings (whole or half blood), and spouses of all. Business relationships include employment and contractual relationships and common ownership of a business where any officers, directors, or trustees individually or together possess more than a 35 percent ownership interest in common. Line 75c of Form 990 delves even further into the issue of interrelationships. It asks if any officers, directors, trustees, key employees, highest compensated employees, highest compensated professionals, or independent contractors receive compensation from other organizations, taxable or tax-exempt, that are related to the organization. A “yes” answer is required if the aggregate compensation from the reporting organization and all related In response to calls for increased scrutiny and regulation of not-for-profits, the Internal Revenue Service (IRS) has introduced a series of changes in recent years to Form 990, the annual information return that not-for-profits must file with the IRS. organizations is $50,000 or more. The IRS originally outlined eight relationships in the 2006 instructions. It has since revised the instructions removing two of these relationships. In general, though, an outside organization is deemed to be related if there is common supervision or common control. If there is a qualifying relationship, not-for-profits may need to provide the names of board members or other insiders receiving compensation from a related organization; a description of the relationship between reporting and related organizations; and, in some cases, specific details of outside compensation involving board members or other insiders. The crux of these questions is to identify conflicts of interest within a group of board members or any private benefit allowed as a result of a board member’s relationship with an exempt organization. While the IRS understands that most exempt organizations are directed by volunteer board members, some well-publicized abuses in the not-for-profit sector have forced a higher level of transparency for all organizations. Exceptions to Reporting Several reporting exceptions are also provided. For instance, an exception is made if the reporting organization 22 ASSOCIAT IO N EX 1 ShowStore_Editorial_Ad.indd EC U T IV E JANUARY/FEBRUARY 2008 11/26/07 4:56:29 PM http://www.theshowstore.com

Table of Contents Feed for the Digital Edition of Association Executive - January/February 2008

Association Executive - January/February 2008 Contents From the CEO Good Governance Practices for 501(c)(3) Organizations A New Model: Helping Smaller Not-For-Profits with Their Endowment Management Inside NYSAE Book Beat Too Much of a Good Thing? Enhanced Form 990 Disclosures and Their Impact 7 Myths about Financial Planners An Executive's Guide to Responding to Third-Party Subpoenas Relationship Selling: Maximize Your Talk, Time & Tech to Keep Your Connection Strong Save the Dates Index of Advertisers

Association Executive - January/February 2008

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