Highlights of the 2008 Western Conference on Tax Exempt Organizations (Part One)

I recently returned from Los Angeles, where I attended the 2008 Western Conference on Tax Exempt Organizations co-sponsored by Loyola Law School and the IRS.  As usual, the Conference featured great speakers, relevant topics, and an interesting group of attendees.  This year, I had the pleasure of meeting, among others, Ellen Aprill, Associate Dean and Professor at Loyola Law School and the Chair of the Conference's Planning Committee, Lani Collins, Chair of the Nonprofit and Unincorporated Organizations Committee of the State Bar of California, and Beth Bergman, Bergman & Allderdice.

The big news in the nonprofit sector this year is the redesign of Form 990, the annual information return required to be filed by many tax-exempt organizations.  Not surprisingly, the programs and speakers emphasized the significance and consequences of this major development.

Some Highlights of the Conference (Part One):

  • IRS Colleges and Universities Compliance Project
  • Are Best Practices Really Best?  Douglas Mancino
    • Does the adoption of good governance practices lead to the desired outcome?  What is that outcome?  How is performance measured?
    • If you assume a practice is a "best practice," how do you deal with offenders?
    • Does a nonprofit with high marks provide any assurance that the nonprofit is, in fact, a good organization?
    • Will good governance practices, over time, assure superior performance based on operating measures or other characteristics?
    • How do you establish those across a diverse nonprofit sector that includes grant-makers such as private foundations, social service organizations, educational organizations, hospitals and others?
    • How can you establish the predictive validity of "best practices"?
  • The Appropriate Role of the IRS with respect to Tax-Exempt Organization Good Governance Issues, Advisory Committee on Tax Exempt and Government Entities
  • Overview of Form 990 and its Instructions, Jody Blazek, Michael A. Clark, and Stephen Clarke
  • Some Unintended Consequences of Form 990, Michael A. Clark
    • Consider adopting policies to permit an affirmative response to governance and management questions (contemporaneous documentation of board and committee meetings, conflict of interest policy, whistleblower policy, document retention/destruction policy, joint venture policy, audit committee policy)
    • Revisit policies governing chapters, branches, and offices to confirm that they follow organization policy.
    • Consider procedure to provide Form 990 to the organization's Board in advance of filing and develop Schedule O explanation.
    • Develop explanation for enforcement of conflicts policy for Schedule O.
    • Revisit procedures for assuring reasonableness of officer and key employee compensation, and develop explanation for Schedule O.
    • Develop policy for making governing documents, conflicts policy, Form 990, Form 990-T, and financial statements available to the public.
    • Plan for collection of new information that may not have been required before or that may not have been adequately reported (business relationships among officers, directors, trustees, key employees, and the organization; grants or assistance to current officers, directors, trustees, substantial contributors, key employees, and family members.