Service Not Self

Finance

The purpose of the Finance Committee is to oversee the general financial policy of the organization and to prepare and monitor the annual budget and its expenditures.

The matter of finance is one of great importance to each level of the American Legion Auxiliary – National, Departments, Districts, and Units.  To that end, it is recommended that the Finance Committee ensure that proper internal controls are designed, implemented and maintained.  Potential donors expect the majority of the funds collected by a nonprofit organization be designated to supporting the mission of the organization through its programs.

It is essential that a well-planned budget be one of the first objectives of the administrative year.  An adequate budget ensures there will be funds earmarked for all purposes necessary to participate in the various Auxiliary programs throughout the year.  Since the American Legion Auxiliary is a membership organization, we rely on member dues to cover our expenses.  By bringing in other resources that support the ALA mission either by donations to the ALA National Funds, corporate sponsorships, special events, or bequests; we lower the dependence on dues and/or reserves alone to meet our obligations.

The Finance Committee needs to share with members who are the investors of the organization and have a legal right to know how their investments are being managed and what results are being obtained.  The Finance Committee makes recommendations to the governing body, and that body is responsible for the actual policy decision.  The Department Executive Committee (DEC) should receive clear, timely and accurate information regarding the financial status of the organization at each of their meetings and at additional times as needed.  District and Unit Finance Officers have the same obligation to report to their respective entities.

Units and Districts should have an annual audit as described in the “Duties of Unit Treasurer” section of the Unit Guide Book and must file an annual tax return.   Since 2009, the IRS began requiring small charities, many of which were not required to file tax returns, to submit an annual electronic report, known as a Form 990-N.  This has been a mandate for every District and Unit.  The form 990N-, titles the Electronic Notice for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ (and also known as the e-Postcard) is required of charities whose annual gross receipts are $50,000 or less.

The Pension Protection Act also requires the IRS to revoke the tax-exempt status of any organization that fails to meet its annual filing requirement for three consecutive years.  This requirement applies to small tax exempt organization and the e-Postcard.

By provision of the National Constitution and Bylaws, Unit officers having custody of organization funds shall be bonded.  The National Organization maintains a blanket position bond whereby all Unit officer are bonded.

 

Links:

How To Financially Support Our Mission-Based Programs

How To Set Goals Through Annual Budgeting

Unit Sample Budget

How To Complete the 990 Filing Process

TAX, IRA and EIN Info

Michigan Legionnaire