Your Community Foundation Year-end Checklist

Year-end is an exciting time for community foundations, with a flurry of donations and grants by donors. It is also a critical time, especially if it falls to you to make sure your accounting records are in order. Here are a few items to consider as we head into year-end.

Year-End Checklist

Many accounting tasks occur once a year, such as annuity adjustments, pledge write-offs, and accruals. Create a checklist to help ensure all needed accounting tasks for year-end are taken care of. Start at the top of your trial balance and create a task to ensure that each general ledger account balance is reviewed, and any third-party support is requested. For example, any life insurance policies owned by the community foundation, request an updated Cash Surrender Value and make the appropriate adjustment. Even if the community foundation does not currently have an annual audit, it’s good to start the practice now so that first audit is less daunting.

Tip: If you’re a CommunitySuite user, consider using the Tasks feature to create your Year-End Checklist and assign to staff as appropriate.

Constructive Receipt of Donations

The IRS states that donations are constructively received when they are postmarked, not the date of the check. So, donations received the first few days of the New Year are probably postmarked with a 12/31 date or earlier, and thus should be considered a 2017 donation. Keep the envelope, or scan along with the check, for support to show the appropriate year of the donation.

IRS Guidance: https://www.irs.gov/pub/irs-pdf/p526.pdf (See page 13 for Timing of Contributions Guidance.)

Expenses

Expenses should be recorded when incurred, and not based on invoice date or the date you cut the check to the vendor. For example, if a vendor performed services in December but did not invoice you until January 1, the expense should be recorded to 2017 and the community foundation will have an outstanding account payable as of 12/31/2017. Also, if the community foundation is aware of an expense but has not received the invoice from the vendor, the Community Foundation should estimate the amount of the expense and record it to 2017.

1099s

If the community foundation paid certain vendors at least $600 in 2017, a 1099 should be issued to the vendor and a copy submitted to the IRS by January 31, 2018. For example, payments for professional services provided by attorneys or accountants are applicable 1099 events. Also, payments for rent and other contract services are 1099 events. Also note that although a majority of activity goes into Box 7, expenses such as rent go into Box 1. The link to the IRS instructions is included below for reference, as the criteria for when to issue a 1099 can be very specific to the transaction.

1099 Instructions – IRS Link: https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

Tip: CommunitySuite users can click on the Reports link in the Core section, then select the Vendors Paid Report. From the drop-down menu select 2017; the report is already sorted by amounts paid for a quick review.

W-9s

If you have not obtained a W-9 from your vendors, now would be a great time, so all information is complete on your 1099s. Often, a vendor will have a DBA “Doing Business As” name but the legal name will be different, and you will want to issue the 1099 with the legal name. A good practice, if you are not currently collecting W-9s, would be to collect W-9s for any new vendor before you make your first payment to them.

W-9 Instructions – IRS Link: https://www.irs.gov/pub/irs-pdf/iw9.pdf

Tip: CommunitySuite users, consider uploading the vendor’s W-9 to their vendor profile and marking the “Need 1099” box once you have received their W-9 and confirmed they are a 1099 vendor. (Curious about CommunitySuite? Check out our solutions designed specifically for community foundations here.)

With a little preparation, more time can be spent with your donors and families, and not on pesky accounting tasks.

Have a charitable year-end and a Happy New Year!

About the Author

Crystal Macmillan received her Master in Accounting from the University of Missouri – Kansas City and maintains her CPA license in Missouri. Crystal has been an adjunct instructor at UMKC, teaching systems and governmental accounting courses. Before joining Foundant, she spent over six years with the Greater Kansas City Community Foundation as part of the Foundation Services Team providing back-office accounting services to community foundations across the country. Outside of work, Crystal and her husband chase after two little guys who enjoy Legos, dinosaurs, and apple pie. In her remaining time, she enjoys quilting – her favorite quilt so far is her mother’s flannel quilt.

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