“Money Matters”4-H Club Financial Management

Agenda

• Background 4-H Federal Tax Exempt Status• Change in Maryland 4-H Financial Policies • Charter/Renewal Applications

– Supporting Documents• Timeline – Transition Year and Annual• Best Practices• Fundraising• Additional Financial Resources

Federal Tax Exempt Status

• Group Exemption 2704, Issued by the IRS in 1946 made 4-H Clubs and Groups exempt from federal taxes:– Clubs could accept donations of money, animals or items,

and donors could claim this as a tax deductible donation– Clubs considered subsidiary of National 4-H Headquarters– “correspond to section 501 c(3) of the IRS Code”

• Pension Reform Act of 2006 – significant changes in IRS laws & guidelines

• Result – GEN (2704) eliminated• All states directed to secure tax-exempt

status• Following transition- MD 4-H Foundation will

hold GEN• Transition will cause some changes in

reporting requirements.

Changes Needed ….

• Safety and accountability.• Proper use of funds.• Programmatic and fiduciary

responsibility required for the use of the 4-H Name and Emblem.

• Compliance with current federal and state laws.

• Prevent loss of nonprofit status.

4-H Money = Public Funds

• Regardless of source, ALL 4-H funds must be used for 4-H YD educational programs.

• ALL 4-H funds are public funds and must be publicly accountable.

• UME has oversight for 4-H programmatic and financial accountability.

4-H Charters

• Only document officially recognizes 4-H Club or Group.

• Federal regulations require annual reporting.

• Identifies 4-H Clubs and Groups as subsidiaries of The Maryland 4-H Foundation, Inc.

• Exempt from paying federal income tax.

Charter Requirements – 4-H Club

New• EIN • At least five members• Two trained UME Volunteers• Elected and trained officers• By-Laws - Revised• Affiliation Agreement - New• Planned educational program• Compliance with AA• Six meetings a year

Renewal• Filed appropriate 990• Completed Annual Financial Report and Property Inventory Report

EIN’sEIN stands for "Employer Identification Number”

also known as a “Federal Tax Identification Number”.

A nine-digit number the IRS assigns to business entities.

Every club must have EIN, even those that do not handle money. **Exception of afterschool programs and military clubs, in some cases.***

4-H clubs and other 4-H entities need an EIN number to open a bank account.

Form SS-4, Application for Employer Identification Number, is available on the IRS Website.

Please see “How to Apply for EIN” fact sheet for more information.

Personal social security numbers should never be used for 4-H BANK accounts.

See Sample SS-4 Form

Official Name of Club – must contain “4-H” and be specific – i.e. Allegany 4-H Dairy Club

Address of 4-H Club – must be address of Local UME Office

Federal Tax Exempt Status for University of Maryland Extension 4-H Clubs/Authorized

Groups and Reporting Guidelines

JANUARY 31, 2013

All 4-H Clubs and Authorized Groups must complete the appropriate 990 or 990 N form by January 31. For 2012, this filing will report on the January–December 31, 2012 financial year. After the transition year, 4-H Clubs and Authorized Groups will report on the July 1 – June 30th fiscal year.

See Fact Sheet “Filing 990 N Directions” for assistance.

Affiliation Agreement• Legal Document• Club to become affiliated with The

Maryland 4-H Foundation, Inc. as a subordinate under Foundation’s GEN

• 4-H Club can maintain federal tax exempt status.

• Signed once. Kept on file.

• JANUARY 31, 2013

4‐H Clubs and Authorized Groups must submit the following to the 4-H Youth Development Educator :

 

The completed 2013 New 4‐H Charter Application or 4‐H Charter Renewal Application,

Signed Maryland 4-H Foundation Affiliation Agreement for 4-H Clubs and Authorized

4‐H Youth Development staff can establish an earlier due date for County/City 4‐H Clubs and Authorized Groups to meet local programming needs and to accommodate staff scheduling to complete all documents required.

 

JULY 1, 2013

Change Fiscal Year: All 4‐H Clubs and Authorized Groups must be on the fiscal year of July 1 through June 30 beginning July 1, 2013.

Oct. 15, 2013

Due to County/City Offices from Clubs/Groups:

4-H Club/Group Annual Financial Summary Report 4-H Club/Group Property Inventory Report

4-H Club/Group Treasurer books for local review

Nov. 15, 2013 All 4-H Clubs/Groups must file 990 (reporting Jan 1-June 30).

After the Transition Year –TO BE COMPLETED ANNUALLY:

BY JANUARY 31:

Submit annual 4-H Charter Renewal Applications to your local UME office.  

BY OCTOBER 15:

Complete a Financial Report along with a 4-H Property Inventory Report and submit to the local University of Maryland Extension office.  4-H

Treasurer’s Books should also be turned in for local review.

NOVEMBER 15

All 4-H Clubs and Authorized Groups must complete and file the appropriate 990 or 990 N form by November 15. For 2013, 4-H Clubs and Authorized Groups will report on the January 1 – June 30 fiscal year..

This is not optional….

Any club/group that is not compliant with the guidelines set forth will not have authorization to use the 4-H name and emblem and therefore cannot be considered a 4-H Club or a 4-H Authorized Group.

Best Practices…• 4-H Funds deposited in a FDIC or

NCUA insured institution in account bearing 4-H name.

• Treasurer – youth• Checks – 2 signatures (youth/adult, not

related to each other)• Financial records up-to-date/reported

monthly.– See “Financial Handbook for Club Leaders and Financial Handbook for

Club Treasurers”

Fundraising• 4-H Youth Development Educator must

approve all club fundraising activities before the event occurs, see sample approval request form.

• Must be used for 4-H educational purposes for club not individuals or other community groups.

• Generally, money raised should be spent same year.– See “4-H Fundraising Fact Sheets for more

information.”

Questions? Need more assistance?

Additional Financial Resources Available

• EIN – Applying/Misplaced• Filing 990• Financial Handbooks• Acknowledging Donations• Fundraising

Volunteer Forum

• Handling Club Finances

• What is an EIN and why does my 4-H Club need one? Update on 4-H Tax Exempt Status.

As questions arise, please contact your local UME 4-

H Extension Educator.

Questions?

THANK YOU, THANK YOU, THANK YOU for your patience

and understanding as we work through the development and

implementation of this transition process.

Resources

• University of Wisconsin-Extension “4-H Money Matters Fact Sheet”

• University of Maryland Extension “MD 4-H Leaders Financial Handbook”