The main function of the financial officer of any organization is to track and safeguard the assets of the entity with which he or she is affiliated. Below is a basic list of duties and responsibilities for all Chapter Treasurers:
Maintain the financial records of the chapter
Select a financial management system
Maintain a Chapter checking account
File all required tax returns
Include disclosures on dues statements and solicitation letters
Forward financial information to the ASA office if included in the ASA Chapter Group Exemption
Make available a copy of the Chapter's most recent 990 tax return
Make available a copy of the Chapter's application for federal income tax exemption
501 (c) 3 status
Federal, state, local, and income taxes
State sales and use tax
Personal property and real estate tax
Charitable donations/contributions versus business expenses
Legal authority to sign contracts
Postal permits and rates
Maintain the financial records of the Chapter: It is the responsibility of the Chapter Treasurer to maintain accurate and timely financial records for the Chapter. All ASA Chapters participating in the ASA Chapter Group Exemption are encouraged to use the calendar year (January through December) as their fiscal year.
Select a financial management system that adheres to generally accepted accounting principles: The Chapter Treasurer has the responsibility to develop and follow a system of financial management that adheres to generally accepted accounting principles. These require the use of the accrual method of accounting, whereby income and expense items are recognized as they are earned or incurred, even though they may not yet have been received or actually paid in cash. There are many small accounting packages which will track this information quite easily for the Treasurer on the accrual basis.
Maintain a separate Chapter checking account: It is very important that Chapters have an independent checking account for all Chapter funds. These funds cannot be commingled with those of any other organization or person. The checking account must be in the name of the Chapter and use the Chapter’s Employee Identification Number. Each Chapter is a separate entity from the others, as well as from the ASA, and may not use any individual’s, other Chapter’s, or organization’s EIN. If you do not know your Chapter EIN, please contact the ASA office for the information. The ASA office will assist new Chapters in obtaining EINs as needed. Ideally, all Chapter checking accounts should require two signatures on checks; however, this is not always feasible. If a Chapter is unable to utilize two signatures, for whatever reason, another officer should always review and authorize payment of bills. Some Chapters, due to the limited funds on hand, maintain just a savings account to avoid the monthly bank fees. This is also acceptable, but the Chapter should still follow the guidelines on signatures, account name, and EIN.
File all required tax returns: The Chapter Treasurer is responsible for filing all financial paperwork for the Chapter. This may include the Federal form 990 series (visit www.irs.gov and download Publication 557, “Tax Exempt Status for Your Organization,” for more information), state income tax returns (if required by the state), state sales and use tax returns (if the state has a sales and use tax and the Chapter is registered with the state), personal property tax return (if applicable), and business licenses. Care should be taken to ensure that a copy of the return is retained in your Chapter’s permanent files. Chapters are separate entities and may not use another Chapter’s, organization’s, or ASA’s tax exemptions, registrations, or business licenses.
Include disclosures on dues statements and solicitation letters: Dues notices should contain the following language: “Contributions or gifts to this organization are tax deductible as charitable contributions for federal income tax purposes. However, payment of membership dues and subscriptions are not tax-deductible as charitable contributions.”
Forward financial information to the ASA office if included in the ASA Chapter Group Exemption: As part of the Group Exemption, ASA is required to report any changes affecting such exemption to the IRS each year.
Make available a copy of the Chapter’s most recent 990 tax return (if one is filed for the Chapter): Many tax-exempt organizations must make available for public inspection a copy of their three most recent 990 forms (if a Chapter is required to file one). All schedules to attachments filed with the Form 990 must be made available, except for the list of contributors to the organization.
How to file an IRS Form 990-N
Make available a copy of the organization’s application for federal income tax exemption: All tax-exempt organizations must make available for public inspection a copy of the organization’s application for federal tax exemption, along with copies of any relevant documents sent to, or received from, the IRS. (IRS Notice 88-120). Inspection must be permitted during regular business hours at the organization’s principal office, as well as any regional offices having at least three paid full-time employees. The organization is under no obligation to distribute a copy of the materials to a requester, but must either allow the requester to take notes freely or permit him or her to make copies. The organization may require a written request in order to provide copies, or it may choose to mail the information in lieu of an inspection.
Special considerations: In order for a Chapter Treasurer to be able to carry out these duties and responsibilities, he or she must be aware of the special characteristics of 501 (c) (3) organizations and how federal, state, and local laws relate to the operations and activities of ASA Chapters. It should be emphasized that all ASA Chapters are separate entities from ASA itself, as well as from each other, although most Chapters have been granted 501(c) (3) status through an IRS Chapter Group Exemption under the parent organization of ASA.
501 (c) (3) status: ASA and its Chapters enjoy a special status as a 501 (c) (3) nonprofit charitable association. Not only are they exempt from paying federal income tax on related business income (RBI), but there is a distinct advantage to donors and contributors to ASA and its Chapters in that both individuals and corporations can deduct their contributions as charitable donations, as long as certain guidelines are followed. As a 501 (c) (3), ASA and its Chapters must also adhere to certain restrictions on their activities. The most important restriction prohibits 501 (c) (3) organizations from engaging in any type of political activity (local, state, or Federal). Any political activity done by either ASA headquarters or Chapters may result in the revocation of the 501 (c) (3) status. The other restriction placed on all nonprofits is that their UBI cannot exceed their RBI. UBI and RBI will be discussed in a later section.
Federal, state, local, and income taxes: As a 501(c) (3), ASA is exempt from federal income tax for RBI. However, nonprofits are not automatically exempt from state income tax. Once a federal income tax exemption is received by a nonprofit, it may also apply for an income tax exemption in the state(s) in which it does business. ASA has applied for and received an income tax exemption from the Commonwealth of Virginia. It is up to each Chapter to apply for a state income tax exemption.
States sales and use tax: Being exempt from federal and state income tax does not automatically exempt the nonprofit from state sales and use tax.
Personal property and real estate tax: Being exempt from federal and state income tax also does not automatically exempt the nonprofit from state or local personal property or real estate taxes.
Business licenses: Although a nonprofit, ASA, as a corporation and legal entity, must register to do business in the state and local jurisdictions in which it is located. ASA is registered with the Commonwealth of Virginia and the City of Alexandria. It is up to each Chapter to apply for a business license in the state in which the Chapter is domiciled.
Insurance: ASA annually purchases a general liability insurance policy covering Chapter volunteers. For more information or to obtain an insurance certificate for a Chapter-sponsored event, contact the ASA office.
Charitable donations/contributions versus business expenses: Under IRS regulations, payments to ASA and its Chapters may be classified as either business expenses or charitable contributions by the individuals or companies making them. This distinction is very important for the payee. Generally, payment of dues, publication subscriptions, meeting and conference fees, continuing education fees, advertising charges, etc., are considered to be business expenses. This means that individuals or companies may deduct them, as appropriate, on their tax returns as such. As mentioned previously, ASA and its Chapters are 501 (c) (3) organizations and can receive tax-deductible, charitable contributions from individuals and companies.
Legal authority to sign contracts: Only elected and appointed officers of ASA Chapters are legally authorized to sign contracts that commit the Chapter to fiscal expenditures or other binding agreements, unless the authority has been delegated by one of those officials to another party (delegation must be in writing to be legal). This means that no Chapter member may authorize expenditures or commit the Chapter to a course of action without proper authorization or approval. This includes requests for grants, purchases of goods and services, hotels for meetings, etc.
Postal permits and rates: The ASA, as a nonprofit, enjoys reduced postal rates for various types of mailings. Chapters may also apply for the special rates under their exemption; however, they cannot use ASA’s federal ID number.
Fundraising solicitations: Most states require a solicitation license to solicit funds and donations from the general public (nonmembers) in that state. Please contact the ASA headquarters office for a copy of the ASA Development Policy, which provides guidelines on soliciting donations.