Fourth Quarter 2006

THE

President’sPen

by Ken Behr

continued on page 2 ➤

Making aDifference

R ecently I attended my firstlarge secular nonprofit con-ference, a three-day event full

of interesting forums and discus-sions groups. Although the confer-ence was attended by 800 leadersof various foundations and otherorganizations, I was one of the fewevangelicals present. Despite mysense of being in a minority, I didcome away with the strong belief—as did most of the attendees—thatwe are making a difference.

Christian charities spend over$90 billion annually making a dif-ference: they collectively providefood to those who are hungry andshelter to those who are homeless.They provide medicine, educationand training for millions. And thegiving does not stop at our borders.Charities provide these thingsabroad, too, in developing nationsand also those in distress; emer-gency relief in drought and famine,during natural disasters and in war-ravaged areas.

F E A T U R E F E A T U R E F E A T U R E F E A T U R E

This past spring, Iwas present asboards of threefaith-based orga-

nizations said good-bye to members com-

pleting their terms of service. Theeight people whose farewells Iobserved had a combined 92 years ofboard work to their credit—animpressive record, to be sure, but notso impressive as the wisdom andwealth these men and women hadcontributed to the organizations. Atleast that’s what the tributes spokenin their honor implied.

Affection between the departingboard members and those remainingbehind was palpable. Yet I couldn’thelp wondering: after the thank-yousand good-byes, then what?

CEOs and board leaders devoteconsiderable time and energy torecruiting well-connected, talented,generous board members—or as JimCollins puts it in Good to Great, to“getting the right people on the bus.”And once the “riders” are in place,even greater effort goes into equip-ping board members for the challeng-ing ministry of nonprofit governance.

In turn, individual board memberscontribute considerable time andenergy to governing well. Over thecourse of the usual eight- to 12-yearboard term, they advise, they maketough decisions, they give, and theypray. Some also attend workshops

and seminars to sharpen their gover-nance know-how.

For a season, board membersthrow their minds, hearts, and finan-cial resources into the organization,and then they leave. That’s the cycle ofboard life. Despite declarations of con-tinuing devotion, absence seldommakes the heart grow fonder—at leastwhen it comes to former board mem-bers. In fact, the more apt cliché is “outof sight, out of mind.” Unless you areintentional about trying to stem thenatural progression of things, all those

years of service to your charity veryquickly fade to a pleasant memory.

So back to my question: after thethank-yous and good-byes, then what?Ask first. A logical first step is to asksoon-to-depart board members if andhow they wish to be involved with the

‘‘Years of board servicemay quickly fade

to a pleasant memory.’’

✔ Which Gifts Are DonorRestricted? p. 3

✔ Faith-Based Hiring Rights Come Under Fire p. 5

✔ Recent Developments p. 7

continued on page 2 ➤

by Rebekah Burch Basinger

Making a Difference– from page 1

After Thank You and Good-bye– from page 1

Most importantly, Christian char-ities offer an eternal relationshipwith the Creator of the universe andthe Savior of all mankind.

Organizations like ECFA are alsomaking a difference—1,222 Chris-tian organizations are now accred-ited with a combined income of over$15 billion. For the past two years inWashington D.C., ECFA has taken anactive role in deliberations on ThePanel on the Nonprofit Sector. ThisPanel has significantly impacted thebreadth of legislation signed intolaw in August 2005. Interestingly, thePanel’s recommendations addressedhow elected representatives and theIRS may encourage integrity andethics within nonprofits, both secu-lar and religious. These recommen-dations prominently featured theimpact of accreditation agenciessuch as ECFA.

The Panel found that althoughhalf of the large nonprofit organiza-tions—those with revenues of $1million or more—are covered by oneor more accreditation agencies,most of these agencies have differ-ing standards: some activity basedand some donor based. Some ofthese accreditation agencies carrythe “weight of law.” Others, likeECFA, are voluntary, dependentupon the impact of membership andreputation.

One of the primary recommenda-tions of the panel was to encourageall accreditation groups to embracegovernance, transparency and finan-cial accountability standards. Mostaccreditation agencies are primarilyfocused on a narrow segment (i.e.,education, health care, child care),and very few include what I considerto be the DNA of ECFA accredita-tion, which is the integrity of ourfinances and transparency in ourfund-raising.

My prayer is that ECFA accredita-tion may increase in influence.Together, may we call more andmore of our evangelical charitiesincluding our churches to a higher

standard and a higher purpose.

2

organization. It’s a hard truth forCEOs and board leaders to accept, butI’ll say it anyway. Not every boardmember desires a continuing relation-ship beyond his or her term of service.

Some people accept the nomina-tion to a board out of loyalty to thecharity. Others join as a personalfavor to a CEO or board chair. Thisdoesn’t mean these folks take theirboard work lightly. It’s just that whentheir allotted terms of service come toan end, so does their sense of obliga-tion to the organization. And that’s allright. You can bless them and sendthem on their way, guilt-free.

Fortunately, the majority of boardmembers will welcome a continuedconnection to the charity, even if itcomes without as much power as theyonce had. Board members are generallypassionate about the mission and pur-poses of the organizations they serve,and most are eager to do what they canto ensure a strong future for the organi-zation. All you have to do is ask.Emeritus alternatives. There areother ways to a former board mem-ber’s heart than through emeritus sta-tus. Recognition and thanks for boardservice are always necessary andappropriate, but don’t worry abouthurting the feelings of outgoing mem-bers if you are selective in conferringemeritus or other honorary status.Reasonable people understand thatfor a special title to remain so, it mustbe conferred sparingly.

In fact, too many organizations fallback on the emeritus label from lackof creativity. It takes some work andadvance planning to say a personaland appropriate farewell tooutgoing trustees, but themore individually tailored thegood-bye, the more likely it isto result in a lasting bond withthe organization.

Depending upon organi-zational culture, the boardmember sendoff may includea roast where humorousremembrances are commin-gled with more serious wordsof appreciation. Some boards

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

Published quarterly by ECFA (Evangelical Council for Financial Accountability)

Ken Behr, PresidentDan Busby, Vice President and Managing Editor

440 West Jubal Early Drive, Suite 130, Winchester, VA 22601

Telephone: 540-535-0103 • 800-323-9473Fax: 540-535-0533 • Email: info@ECFA.org

www.ECFA.org • www.ECFAmembers.org

present departing members with apainting or piece of pottery by afavorite local artist. Or there is thecharity where a tribute rose bush isplanted in a lovely garden just outsidethe headquarters building as a fra-grant reminder of services provided.

The sky’s the limit (tempered a bitby budget) when it comes to honoringthe work of departing board mem-bers, so let your creativity flow.Realism. Be realistic in what youpromise. Caught up in a flurry of opti-mistic fervor, CEOs (and especiallythose new to the job) can fall into thetrap of envisioning a level of involve-ment for former board members thatsimply isn’t sustainable.

Take the idea of a special organi-zation for past board members. Itsounds easy enough, in theory. But

when faced with staffing the groupand giving it meaningful work to do,many CEOs discover they’ve commit-ted to more than they can deliver.(And let’s be brutally honest—boardleaders may say they will take respon-sibility for staffing activities for for-mer board members, but nine timesout of 10, responsibility falls on theshoulders of the CEO.)

If you have the staff to support analumni group for former board mem-bers, great. If not, the more prudentcourse is to capitalize on what alreadyexists. For example, in addition to

‘‘‘Too many organizationsfall back on the

emeritus label fromlack of creativity.’’

continued on page 5 ➤

3

W hen a church or other charityreceives funds, it is essentialthat any donor-restricted giftsbe identified, properly

receipted and segregated in theaccounting records, with related doc-umentation retained for accountingand auditing purposes. It sounds soeasy, but it can be so complex!

ECFA receives more questionsabout donor-restricted gifts than onany other topic. This is why Donor-

Restricted Gifts hasjust been publishedand why a series ofarticles is being writ-ten to highlight vari-ous facets of thistopic. The first arti-cle in this seriesfocuses on the iden-tification of donor-restricted gifts.

Unless a charityproperly identifiesd o n o r- r e s t r i c t e dgifts, the accountingfor and the account-ability of these fundswill not be properlyhandled.• Accounting. A gift that is not

donor-restricted may be recorded inthe accounting records and in theaudited financial statements as unre-stricted. However, recording a donor-restricted gift must be consistent withthe restrictions as either temporarily orpermanently restricted. (There are cer-tain exceptions for reporting donor-restricted gifts as unrestricted activityon the financial statements—this topicwill be covered in a later article.) • Accountability. A gift that is not

donor restricted is subject to generalaccountability requirements. Butaccountability is heightened for a

continued on page 4 ➤

donor-restricted gift because thefunds must be expended consistentwith the donor’s restrictions (ECFAStandard 7.3) and the charity must beprepared to provide a financial reporton the restricted project (ECFAStandard 5).Who can restrict a gift? Onlydonors have the power to restrict

gifts. A recent audit report that cameinto the ECFA office reflected a sub-category of unrestricted net assets on

the statement offinancial conditionas “board restricted.”This phrase is anoxymoron—boardscannot restrict unre-stricted net assets.Boards have thepower to designate

unrestricted netassets and undesig-nate them but theylack the power torestrict a gift or unre-stricted net assetsgenerated from non-gift sources.How are gifts

restricted? Certaindonor-restricted gifts are easy to iden-tify. Here are a couple of examples:• A donor’s instructions accom-

panying an unsolicited gift. A giftthat is received by a charity unrelatedto a charity’s solicitation and isaccompanied by a restriction as topurpose or to time clearly qualifies asa restricted gift.• A donor provides a gift for a

certain project. If a charity accepts agift for a specific project (such as abuilding or certain equipment), the giftmust be recorded as a temporarily-restricted gift.• A donor specifies that the

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

F ormer ECFAP r e s i d e n tClarence Reimerwent home to be

with the Lord onOctober 25, 2006, atage 84.

After serving on the ECFA Board ofDirectors for six years, Clarencejoined ECFA in 1987 as Director ofMember Review and Compliance. Hehad just retired as president ofCRISTA Ministries in Seattle. Duringhis 23-year tenure at CRISTA, first asvice president and then as president,he led the ministry through dramaticgrowth and change.

When ECFA’s then-president, ArtBorden, stepped down in 1991, theECFA Board appointed Clarence toserve as ECFA’s interim president andlater as president. Under his leader-ship, ECFA enjoyed steady growth inmembership and initiated its fieldreview program, now seen as a dis-tinctive of ECFA. (Clarence person-ally completed 181 field reviews.)Clarence modeled character, integrityand excellence to the ECFA staff mem-bers, and encouraged development oftheir God-given gifts and abilities.

His life, personally and profession-ally, reflected a steadfast commitmentto serving God and bringing honor andglory to His name. He invested himselfdeeply in the lives of believers, corpo-rately and individually, throughout hislife. “Clarence was always a gentle-man, proper and distinguished, withthe heart of a peacemaker. He was anexcellent representative for ECFA anda true witness for the Lord,” said PaulD. Nelson, ECFA’s president emeritus.

Typical of Clarence’s humility, hislove for Jesus Christ, and commit-ment to service in His Kingdom, hislife verse was Galatians 6:14: “May Inever boast except in the cross of ourLord Jesus Christ, through which theworld has been crucified to me, and Ito the world.”

by Dan Busby

ECFA’s Latest Publication

Available at www.ECFA.org

Which Gifts Are Donor Restricted?– from page 3

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

principal of the gift may never be

spent. If the donor specifies thatonly the earnings from a gift may beexpended but the principal, or thecorpus, of the gift must be held forperpetuity, the gift must be recordedas a permanently-restricted gift.

Difficulty in determining whether a gift is restricted or unrestrictedoften arises when there is “muddy”communication by the charity and/orthe donor. The gift solicitation and theresponse form may be unclear as to apotential donor restriction. Likewise,the communication from the donor tothe charity may lack clarity.Gifts may be restricted based on

the charity’s purpose. The relation-ship between the charity’s purposes(s)and certain gifts is a fundamental fac-tor in determining whether gifts arerestricted or unrestricted (see theexample at the bottom of the page). Ifthe purpose of the gift matches theoverall purposes of a charity, the gift isgenerally unrestricted. However, if agift purpose is more narrow than theoverall purposes of a charity, the gift isrestricted.

Examples of the impact of a

charity’s purpose on gifts include:• Example 1. A gift relates to a spe-

cific country or region of the worldand the charity’s purposes arebroader than one country or oneregion of the world. This gift is tem-porarily restricted.• Example 2. A gift is preferenced to

support the work of a particular mis-sionary. The communications betweenthe charity and/or the missionary andthe donor clearly represent that theministry will occur in Zambia, Africa.The charity’s purpose is to provideministry in many countries around theworld. Although the charity has theflexibility to use these funds for thepreferenced missionary or anothermissionary—complying with the prin-ciple of discretion and control overpreferenced gifts—the gift is temporar-ily restricted because the donor’s com-munication implies the gift is restrictedfor one country of the many countriesserved by the charity.Summary. While there are manyother facets of properly handlingdonor-restricted gifts, which will becovered in later articles, the chal-lenge of identifying whether or not agift is donor restricted is certainly thestarting point.

Bill Altman is one of the real pio-neers of ECFA. He joined theECFA Standards Committee in

1985 and served until 1990 and againfrom 1992 to 1999.

Bill completed 36 years with Ernst& Young, 26 of those years as an auditpartner. In 1995, ECFA needed a tech-nician to assist with annual member-ship reviews, compliance issues andfield reviews, and he joined the staffas a part-time employee at that time.

The year before Bill started work-ing with ECFA, a total of 35 fieldreviews were completed. ThroughBill's dedicated efforts, the number offield reviews has steadily increased tothe 2006 level of 150 reviews. From1995 to 2006, Bill completed 242 one-day field reviews. Only when one con-templates the travel, time spent dur-ing the review, and writing up the tripreport is it possible to properly appre-ciate the personal investment hemade in helping ECFA achieve itsfield review goals.

Bill is a graduate of UCLA and hasprovided years of service on variouscommittees on the California Boardof Accountancy, on the Board ofCalifornia CPA Society, was presi-dent and board member of theCovina-Valley Unified school district,board member for the CMA chapterin Los Angeles, and served on manyother boards and committees. Billserved ECFA as Vice-President ofCompliance and later as a FieldReview Representative.

Bill was recently honored at theStandards Committee held inColorado Springs for his many yearsof service to ECFA.

Bill is highly commended for hiscommitment over and above the callof duty to ECFA and the Kingdom.

Example:

CharityPurpose(s)

To uphold the sanctity of human life by ministering to women andfamilies in our community who are facing unexpected pregnancies

Fund-raisingAppeals

Certain fund-raisingappeals only referencethe charity’s general pur-pose(s).

A specific appealfor new satelliteoffice

A specific appealfor new equipmentfor the office

AccountingTreatment

Since the fund-raisingappeals match (e.g., arenot more narrow than)the broad purpose of thecharity, gifts in responseto these fund-raisingappeals are unrestricted revenue.

Since both of these appeals are morenarrow in purpose than the charity’sgeneral purpose(s), all gifts received inresponse to these appeals are temporar-ily restricted. (Note: Since these appealsdo not request funds for projects thatmight be permanently restricted [e.g.,endowment], the donor restrictions areonly temporary.)

Discretion and control—If the charity notifies the donors that thecharity will exercise discretion and control over the gifts for the satelliteoffice and the equipment, this fact does not change the temporarily-restricted nature of the gifts.

Certain fund-raising appeals match the charity’s general purposeand some appeals are more narrow than the general purpose

4

continued on page 6 ➤

programs that are often of extraordi-nary importance to religious organiza-tions. However, evangelical ministriesare learning that at least some govern-ment agencies do not share thisunderstanding. Wisconsin, Michiganand Arizona, to name a few, recentlyexcluded certain evangelical groupsfrom their state employee charitablecampaigns when those organizationswould not certify that they do not “dis-criminate” on the basis of religion inhiring. And if your organization partic-ipates in charitable campaigns forwhich a nondiscrimination pledge isrequired and where there is no exemp-tion, the administrators of those cam-paigns appear to believe that yourorganization has effectively waived

any exemptions from state and federalreligion nondiscrimination laws.

Even where religious organizationsare exempt from the religion portionsof nondiscrimination laws, as inIllinois, they nevertheless face effortsto prohibit them from “discriminating”against employees who unrepentantlyengage in or advocate extramaritalsex, particularly if their preferredpartner is of the same sex.

Faith-based organizations shouldexamine their own response whenconfronted with conditions on publicfunding that require the adoption of“nondiscriminatory” hiring or mem-bership practices. As faith-based orga-nizations increasingly face a choicebetween pledging adherence tonondiscrimination policies that do not reflect their actual hiring practicesor risking the loss of critical resourcesif they refuse to make these pledges,

N on-profit ministryleaders are facingincreasingly com-plex legal issues

arising from laws thattreat faith-based hiring

and member selection as religious“discrimination.” Christian charitieshave been excluded from stateemployee charitable campaigns inWisconsin, Florida, Michigan, Arizonaand other states because they main-tain policies that restrict hiring, mem-bership or volunteer opportunities tothose who affirm the organization’sreligious beliefs.

An Illinois law that went into effecton January 1, 2006, threatens civil finesagainst any employer who discrimi-nates on the basis of “sexual orienta-tion,” with no exemption for religiousorganizations—not even churches.

Christian student groups are beingremoved from the campuses of publicuniversities denied funding becausethey won’t allow non-Christians toserve as officers. If unchecked, theserules threaten to either coerce faith-based organizations into abandoningtheir faith-based hiring and leader-ship policies or sacrificing their iden-tity and the integrity of their mes-sages in order to participate in publicservice programs or public forums ofexpression.

The problem is compounded bythe misunderstanding that ministriesare already protected from thesekinds of threats because Title VII ofthe Civil Rights Act and state and localnondiscrimination laws exempt reli-gious organizations from their bans onreligious discrimination.

Many ministries have assumed thatthese exemptions protect them fromreligious and sexual orientationnondiscrimination rules applicable tostate employee charitable campaigns,government contracts, and other

5

‘‘Ministries often misunderstand their hiringand volunteer protections.’’

by Gregory S. Baylor

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

making certain that former boardmembers receive the usual cycle ofmailings (appeal letters, magazines,annual reports, etc.), be sure toinclude them on the distribution listfor the CEO’s newsletter to currentboard members. Personal invitationsto organization events send a strongmessage that yesterday’s board mem-bers still matter today.

And the list goes on. Even thesmallest charity has more thanenough going on to hold the attentionof past board members.Not to be served, but to serve.

When it comes to engaging the con-tinued interest and involvement ofexiting board members, “significant”is the word of the day. In fact, puttingformer board members to work onimportant and interesting projects isthe sincerest form of appreciation.This might include:• Asking departing members towrite about what serving on the boardhas meant to them and then includingtheir testimonials in the board hand-book or as part of a board-only sec-tion on the organization’s website.• Inviting top performers from eachdeparting group of board members tosign on as mentors to the new crop ofboard members.• Recruiting board members fromthe near past to help with special pro-jects such as a capital campaign, CEOsearch, or strategic planning process.After thank you and good-bye.

Immediately on the heels of yourwords of appreciation for board service should come an invitation tocontinued involvement. The goal,after all, isn’t simply to rotate mem-bers off the board, but rather to rotatethese most committed volunteers intonew realms of service to the charity.When that happens, holding onto thehearts and interests of former boardmembers won’t be a problem.

Dr. Rebekah Burch Basinger is a member

of the ECFA Board of Directors. She

works as an independent consultant pro-

viding fund-raising assistance and

board education to Christian ministry

organizations. Rebekah may be reached

at RBbas3001@aol.com.

After Thank You and Good-bye– from page 2

Faith-Based Hiring Rights– from page 5

6

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

The IRS will no longer collect thethree percent excise tax on long

distance telephone service (Notice2006-50). Nonprofit organizationsmay request a refund based on theactual amount of federal excisetaxes paid on nontaxable servicebilled after February 28, 2003 andbefore August 1, 2006. Alternately,the IRS has approved a formula(Notice 2006-179) which will bemuch easier than pulling telephone

records for the 41-month period.Form 8913, Credit for Federal ExciseTax Paid, must be completed andattached to Form 990-T (the 2006form), even if the charity is not oth-erwise required to file Form 990-T.

The refund is capped at two per-cent of the total telephone expensesfor nonprofit organizations with 250 or fewer employees and one percent for those with more than 250employees.

2007 Pension PlanLimitations

The IRS announced cost of livingadjustments applicable to dollar

limitation for pension plans for 2007(Notice 2006-162).

The limitation for defined contri-bution plans is increased from$44,000 to $45,000 under 415(c). Thelimitation under 402(g) on the exclu-sion for elective deferrals is increasedfrom $15,000 to $15,500. The dollarlimitation for catch-up contributionsfor individuals aged 50 or overremains unchanged at $5,000.

Ten ECFA regional seminars areplanned for 2007. The seminar

topic will be “Accountability forEvangelical Ministries”:

• April 3 Tulsa, OK

• April 5 Orlando, FL

• April 12 Chattanooga, TN

• April 26 Grand Rapids, MI

• May 8 Minneapolis, MN

• September 11 Seattle, WA

• September 13 San Jose, CA

• October 25 Columbus, OH

• November 1 Charlotte, NC

• November 8 Phoenix, AZPlan now to join your colleagues

in ministry for a member-benefit,no-cost, day-long seminar (9 a.m. –3 p.m.). These sessions will providean overview of the nonprofit com-munity from ECFA’s unique vantagepoint, including recent tax, finance,and current legislative develop-ments as well as a special emphasison board governance issues—all inan evangelical context.

Reserve your space by register-ing at www.ECFA.org.

Per Diem Issues

The new per diem federal rates forthe continental U.S. effective

October 1, 2006, through September30, 2007, are available at www.gsa.gov.Standard rates ($60.00 for hotel and$39.00 for meals and incidentalexpenses per day) remain unchangedfrom the prior fiscal year (Rev. Proc.2006-41).

The revenue procedure alsoamends the IRS’s list of high-costlocales, including the addition of twoCalifornia cities (Santa Barbara andSouth Lake Tahoe) and three Floridacities (Ft. Lauderdale, Ft. WaltonBeach, and Stuart). The per diem ratefor travel to any high-cost localeincreased to $246—up from $226; therate for low-cost locales increased to$148 from $141.

When employers make per diempayments in excess of the IRS limitsand do not add the excess to theemployee’s compensation, the entireper diem will be taxed for income andemployment tax purposes. The factthat the employer determined thepayments based on reliable industrydata is of no consequence (Rev. Rul.2006-56).

When a per diem allowancearrangement that fails to track theexcess amounts and does not includethe unsubstantiated, unrepaid excessamounts in the employee’s income, apattern of abuse of the rules for tax-free expense reimbursements isdemonstrated.

Federal Telephone Tax Refunds

compliance with government man-dates has become a matter of integrity.

For more information about theAssociation of Faith-Based Organi-zations (AFBO) formed by theCenter for Law and ReligiousFreedom (an advocacy ministry ofthe Christian Legal Society) seewww.allfaithbased.org. AFBO identi-fies and challenges instances of dis-criminatory exclusions of religiouscharities by the application of reli-gion and “sexual orientation”nondiscrimination rules and similarexclusions based on faith identity orpractices.

AFBO’s first lawsuits were filedthis year against Wisconsin andFlorida officials who denied evan-gelical groups access to their stateemployee charitable campaignsbecause of their refusal to certify thatthey do not discriminate in member-ship, board membership and employ-ment on the basis of religion. AFBOexpects to file suit in the near futureagainst other orientation nondiscrim-ination law in Illinois, and to chal-lenge a Pennsylvania Department ofLabor rule excluding faith-basedemployers from listing job openingson a public employment recruitingdatabase.

Gregory S. Baylor is President of the

Association of Faith-Based Organiza-

tions and Director of the Center for Law

& Religious Freedom of the Christian

Legal Society. He may be reached at

gbaylor@clsnet.org.

7

ECFA is

ON THEROADON THEROAD

Jan. 9-13 Christian StewardshipAssociation (CSA)Dallas, TXKen Behr, Dan Busby

Jan. 20 Evangelical Fellowship ofMission Agencies (EFMA)Dallas, TXDan Busby, Presenter

Jan.26-27 Mt. Vernon NazareneUniversity Church ConferenceMt. Vernon, OHDan Busby, Speaker

Feb. 9 Keller & Owens, CPAsNonprofit ConferenceKansas City, MODan Busby, Presenter

Feb. 17-20 National ReligiousBroadcasters ConventionOrlando, FLKen Behr, Dan Busby

Feb. 19 M7 Conference on Missionsand EvangelismKansas City, MODan Busby, Presenter

Feb. 21-24 Association of BusinessAdministrators of ChristianColleges (ABACC) Annual ConferenceOrlando, FLTim Maxwell, Presenter

Mar. 10 Children-at-Risk InternationalConferenceAnaheim, CADan Busby, Presenter

Mar. 12-15 Christian ManagementAssociation ConferencePalm Springs, CAKen Behr, Dan Busby, Tim Maxwell

• Flex plans can’t reimburse the

cost of dietary supplements. TheTreasury Department recently statedthat although food products bearnutritional claims, these products donot constitute medical care withinthe meaning of the Internal RevenueCode unless they are prescribed by adoctor. The same rule applies toHealth Savings Accounts and fortaxpayers trying to deduct dietarysupplements as medical expenses(letter dated July 19, 2006).• IRS tightens rules on health

reimbursements arrangements

(HRAs). The IRS has ruled that HRAscan be used only to cover medicalexpenses for workers, their spousesand dependents. If an HRA allows adifferent beneficiary to receive thefunds left after the employee’s death,then all reimbursements on the planare taxable (Rev. Rul. 2006-36). • Credit card issues. The issue ofcredit card usage has become a hottopic for nonprofit organizations.This new focus is based on nationallypublicized reports of allegedlyimproper use of credit cards, includ-ing some findings made during recentIRS audits.

Specific laws in some states pro-hibit a board member from borrowingmoney from a tax-exempt organiza-tion under any circumstance. In onecase, a state attorney general took theposition that if a board member inad-vertently or intentionally uses a non-profit’s credit card for a personalexpense they have “borrowed” moneyfrom the charity.

The IRS has discussed this publiclyand taken the position, while perform-ing audits of tax-exempt organizations,that credit card usage for personalitems can lead to an accidental “auto-matic excess benefit” transaction.

• Treasury issues revised anti-

terrorism guidelines. The Trea-sury has released revised guidelinesto help nonprofit groups preventtheir charitable dollars from unwit-tingly being used to support terror-ism and other violence. The govern-ment first issued the guidelines in 2002, revised them in 2005 andnow again in 2006. The new guide-lines are available online athttp://www.treasury.gov/offices/enforcement/key-issues/protecting/charities-intro.shtml.• 2007 standard mileage rates.

Beginning January 1, 2007, the stan-dard mileage rates for the use of a car(including vans, pickups, or paneltrucks) are (Rev. Proc. 2006-49):

■■ 48.5 cents per mile for businessmiles driven (up from 44.5 cents permile for 2006);

■■ 20 cents per mile driven for med-ical or moving purposes (up from 18 cents per mile for 2006); and

■■ 14 cents per mile driven in serviceof charitable organizations, remainingthe same as in recent years.• “Good used or better” condi-

tion. Under the Pension ProtectionAct, no charitable deduction isallowed for contributions of clothingand household items if such itemsare not in good used condition orbetter. The law did not state whetherthe charity or the donor determinesthe condition.

In a meeting with representativesof large charities, the IRS clarifiedthat the burden to value items ofclothing and household goods is onthe donor, not on charities. The IRSencouraged charities to include lan-guage on donation receipts indicat-ing that to qualify for a charitabledonation, items must be in good usedcondition or better.

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

ECFA will be represented at the following events and meetings:

Credit Card: ❏ Corporate ❏ Personal MasterCard or Visa Only

Card #: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Date: ___ ___

Name on Card ________________________________________________________________________________

Signature ____________________________________________________________________________________

Changes to ECFA’s Membership

MEMBER NEWSMEMBER NEWS

New Members:1. Children’s Hope International, St. Louis,

MO

2. Global Disciples, Lancaster, PA

3. Harvesters Reaching the Nations, Plano,TX

4. Josiah Venture, Wheaton, IL

5. Man in the Mirror, Casselberry, FL

6. Neighborhood Christian Clinic, Phoenix,AZ

7. Push the Rock, Emmaus, PA

8. Reach Out Youth Solutions, StoneMountain, GA

9. The HOPE Center, Woodstock, GA

10. Union Gospel Mission of Gray’s Harbor,

Aberdeen, WA

Name Changes:1. Arrow Leadership Ministries, Blaine, WA, is

now Arrow Leadership International

Ministries

2. Criswell Center for Biblical Studies, Dallas,TX, is now Criswell College

3. Global Partners Ministries, Plano, TX, isnow e3 Partners Ministry

4. Great Commission Association of Churches,Columbus, OH, is now Great Commission

Churches

5. Greater Baltimore Crisis Pregnancy Center,Baltimore, MD, is now Greater Baltimore

Center for Pregnancy Concerns

6. Greater Orlando Leadership Foundation,Orlando, FL, is now Lifework Leadership

7. LifeCare Pregnancy Services, Austin, TX isnow Austin LifeCare

Voluntary Resignations:1. Northwest Christian Community

Foundation, Portland, OR

Terminated by ECFA Board:1. Care Net Pregnancy Center of Central

Texas, Waco, TX — Failure to submitrenewal information

2. Grace Centers of Hope, Pontiac, MI —Standards 2, 4, 6 and 7.1

3. Inner City Youth, Houston, TX — Failureto submit renewal information

4. Joint Aid Management, Euless, TX —Standard 3

5. Shield of Faith, Texas City, TX —Failure to submit renewal information

6. Youth Conference Ministries,

Chattanooga, TN — Failure to submitrenewal information

8

E C F A F O C U S O N A C C O U N T A B I L I T Y / F O U R T H Q U A R T E R 2 0 0 6

ECFA • 440 West Jubal Early Drive, Suite 130 • Winchester, VA 22601Phone: 800-323-9473 Email: info@ECFA.org

Fax: 540-535-0533 Web: www.ECFA.org • www.ECFAmembers.org

Expiration

Church and Nonprofit Tax & Financial Guide_______ copies @ $13.00 (retail $15.99)

Minister’s Tax & Financial Guide_______ copies @ $13.00 (retail $15.99)

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M inisters and churches can use these award-winning tax guides from Zondervan to complywith federal tax laws. Dan Busby, CPA, nationally recognized

nonprofit expert, has written a work of accuracy and reliability. Theseguides go beyond other tax guides because they provide:

❑ complete tax and financial guides for ministers, churches, and nonprofit organizations

❑ recent and last-minute changes in this year’s tax laws

❑ easy-to-follow explanations (in plain English)

❑ help in taking advantage of favorable tax laws

❑ sound advice for future planning

❑ money-saving tax strategies (now and for the future)

❑ sample forms and worksheets

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The Zondervan

Church andNonprofit

Tax & Financial Guide��

The Zondervan

Minister’sTax & Financial Guide

2007 Editions for 2006 ReturnsDan Busby, CPA

Dan Busby is an ECFA staff member.Royalties are paid by the author to ECFA on all sales made through ECFA.