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FINANCIAL DISCLOSURE REQUIREMENTS FOR FEDERAL AND STATE NON-PROFITS

FINANCIAL DISCLOSURE REQUIREMENTS FOR FEDERAL 501 (c) AND STATE NON-PROFITS

By Richard E. “Rick” Dennis
for Allaboutcutting.net
March 2, 2019

Since my last article,  “WHATS THE DIFFERENCE BETWEEN A NON-PROFIT AND A 501 (C) 3 NON-PROFIT,” released on February 24, 2019 on http://www.allaboutcutting.net, I’ve received a flurry of phone calls requesting guidance on acquiring financial information on a specific non-profit organization about whether it’s a Federal 501 (C) or a state-organized non-profit.  More specifically, the main topic of concern can be summed up into one question:  “Exactly, what financial records are nonprofits required to disclose to the general public, including donors?”

My research revealed that essentially, non-profits are broken down into two distinct categories: Federal non-profits and State non-profits. Federal non-profits are generally tax exempt, charitable organizations and are assigned the 501 (C) designation along with a number after the “C” such as (3) which correlates to its exact Federal non-profit classification.  For example, the 501 C (3) designation correlates to a charitable organization.

State non-profits are comprised of being either a Sole-Owned Proprietorship, a Limited Liability Company, a Corporation, etc. In most cases, the privately owned non-profit may choose to not apply for a Federal tax-exempt status and elect to remain a State non-profit.  For the record, each type of non-profit enjoys some tax-exempt status.  However, the main difference between the two non-profit organizations is that “each one adheres to different financial disclosure laws and requirements, but the Federal non-profit allows for tax write-offs”.

FEDERAL 501 C NON-PROFITS:

The Federal 501 (C) 3 etc., is only required to disclose to the general public certain financial records, via the IRS Form 990, which can be found on Guidestar.org. An excellent IRS publication on the subject can be found by clicking on the following link:

 

STATE-ORGANIZED NON-PROFITS:

The state of the organization of a non-profit will list each state’s specific requirements pertaining to the disclosure of financial and other information to the general public, if any. Generally, and as stated in the foregoing, state-organized non-profits are generally comprised of private ownership; therefore, disclosing finances to the general public are limited, if at all, and in some cases non-existent.  A privately held non-profit absent of the 501 C moniker, such as a Limited Liability Company, a Sole-Owned Proprietorship or a Corporation, enjoy the same privacy and nondisclosure laws as a private citizen owning a business of the same type, except in certain circumstances when state funding comes into play and requires reporting and an audit.  However, the non-profit moniker may subject the non-profit to a completely different set of parameters.  The safe avenue to proceed, in regard to investigating a specific non-profit prior to donating, that is in a specific state, is to contact the Department of Revenue or the Secretary of State in the state of its organization for the correct answers and guidance.

The “National Council of Non-Profits” has an excellent article on the subject entitled, “STATE LAW NON-PROFIT AUDIT REQUIREMENTS”.

Click on the following link and review this excellent article on the subject:

NEFARIOUS ACTS:

As previously reported, the Internet is chock full of examples of cyberbullying, harassment and nefarious acts,  including, but not limited to threats, extortion, coercion, slander and harassment of private individuals and horse rescues.  My queries included a myriad of social media examples of this unorthodox, criminal and in some cases, “the perception of possibly libelous behavior”.  However, in my few exchanges with such individuals, I determined their allegations to be completely unfounded and without legal proof or merit, In fact, most of my reviewed character assassinations were being disseminated by erroneous  “rumor-mill linguistics” and were not based on any factual, legitimate and legal proof of their reporting, which is simply harassment and cyberbullying at its finest. In fact, some of the methods used by certain individuals could be likened to the tactics used by the KKK or a terrorist organization.  In an abundance of caution, I would suggest for such individuals to cease from this unorthodox behavior prior to someone taking them to task with legal action – more specifically, having him or her arrested for criminal acts, filing a lawsuit against him or her or both.

As a former Drug Enforcement Agent and Law Enforcement Officer as well as a current Private Security Professional and Risk Manager/Analyst, my professional standings, in the community has dealt with a fact or fiction mentality. It’s sort of like a woman being pregnant:  Either she is is or she isn’t. There’s no in between.

However, it seems their “cover story” is that they are performing such nefarious acts for the sake of and welfare of the horse.  As a freelance writer, I’ve written a lot of articles on the subject of horse abuse as well as horse slaughter and not once have I ever “crossed-the-line” and succumbed to this type of nefarious and in some cases criminal and perhaps libelous behavior to make a point in a conversation.  More specifically, accusing an individual of specific allegations absent of legitimate or legal proof while using a “rumor-mill linguist,”cyberbullying, threats, harassment and extortion to ruin a person’s reputation is very much, and without question, violating the law.  All of my reporting has been performed with verified legal backup.

It’s also against the law to use unfounded allegations to character assassinate the owner of a non-profit horse rescue, in order to recommend a favorable rescue of their choice. 

HOW TO PICK A HORSE RESCUE TO DONATE TO:

In picking a horse rescue for donations, my main concerns would be:  How long has the rescue been in business, who owns the rescue, determine whether the horse rescue is a Federal 501 C non-profit or a state-organized non-profit, as well as the length of service in the business.  It would be prudent to visit with the rescue itself, (i.e.) on-site, as well as interviewing the owner. Also, it would be prudent to ask for a list of randomly picked references who could enlighten the prospective donor of the professional character of the organization.

Another prudent proposal to the donor is to suggest that he or she contact law enforcement and inquire whether or not any horse-abuse or animal-cruelty complaints have been filed against the rescue or the owner. The same goes for animal shelters and animal organizations in a particular area. If, by chance, the donor is contacted by one of these so-called self-proclaimed animal rights activists for the sole purpose of discouraging an individual from donating to a particular horse rescue, the donor should immediately request legal proof from the activist substantiating all allegations to corroborate his or her claim(s). If proof positive can’t be delivered, the donor should discard this information as being non-factual and non-relevant.

In order to verify a particular businesses 501 C or state non-profit status, simple Google Guidestar.org for Federal Tax Exempt status or the Secretary of State in the state of organization.

“Until Next Time, Keep Em Between The Bridle!”

Copyright 2019, All Rights Reserved

RICHARD E. “RICK” DENNIS
WIND RIVER COMPANY LLC
MANAGING MEMBER
FREELANCE WRITER AND AUTHOR
PHONE:  (985) 630-3500
Email:  richardedennis@yahoo.com
Website:  http://www.richardedennis.net

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6 Comments

  1. Thanks Rick for your well-crafted, genuine and educational articles on non-profits.
    Susan

  2. Rick,
    You are a warrior for the weak and oppressed. Sometimes bullies just need a good punch in the. nose. This article does it. Thanks for all you and Glory do for horses.
    Carol

    • Could not possibly agree more with this comment! Rock on, Rick!

  3. Great article! I see you’ve expanded your talents to include journalistic documents. As usual, your article is very concise and complete.
    Charlie

  4. A good dose of reality and style. Glad to see you and Glory are back in action. In the horse business, AAC is the only magazine that can be counted on to deliver the truth on topics concerning the horse industry. thanks for all you guys do.
    David

  5. WOW! Very proud of you. I see this insanity taking place on social media all the time. Your article is just a good old dose of reality check. Lol!
    Kim

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