This article for Business in Savannah discusses the need for boards to reach their fullest potential and to operate within the boundaries of Sarbanes-Oxley legislation.
In the wake of the economic downturn, the nonprofit sector has experienced tremendous stress from lack of financial support, mainly due to a reduction in charitable donations and available grants, forcing many nonprofit organizations not only to cut back on their community outreach, but also to take draconian operational measures in order to cut costs.
As difficult as the situation may be, it is important for nonprofit organizations facing inevitable layoffs, mergers, furloughs, salary reductions and shut-downs to carefully consider the operational and legal ramifications of each option before moving forward. Consulting the organization’s board of directors and professional financial and legal counsel is highly advised before a nonprofit makes any major decisions.
The Pension Protection Act of 2006 requires most tax-exempt organizations, with the exception of churches and most church-related organizations, to file an annual tax return with the Internal Revenue Service (IRS). Any exempt organization that fails to file a return for three consecutive years will automatically lose its tax-exempt status.