Dear Nonprofiteer, Fast, free or accurate? They said I could have any two

Dear Nonprofiteer:

My question is, a prominent accounting firm agreed to do our 1023 for us. The original price was $2500, but they implied that it would be significantly less or perhaps free because they liked our cause. The second-in-command is working on it, but has said she’s in the final stages since October. We’re desperate to get it done, yet I hate to prod her. If she’s doing it for free, obviously she has to put the paying customers first. I’m afraid if I pester her, the price will go up. Any suggestions?

Signed, A Day Late and A Dollar Short

Dear Day, 

First things first: do a quick poll of your Board and make sure everybody’s
prepared to swallow $2500-plus if it comes to that.  Then tell your contact at the
accounting firm that the agency needs its audit by January 31 to apply
for grants in the coming year, and that if need be it will pay the full
price for getting it done timely.  Feel free in that conversation to
note that you’re hoping the firm is even more impressed with your
agency now that it’s had detailed encounters with your books.  Let the
accountant infer your point: that you hope it’s still free but you need
it now.

For future reference, separate these questions
entirely.  Hire an accounting firm to do your audit by a date certain
for a set price.  Then–2 or 5 or 7 months after the audit is complete
and the bill paid–go to your contact at the accounting firm and ask
who you should approach about soliciting a contribution to your
agency.  You’ve learned the hard way the reason to keep these separate:
because it’s hard to be as demanding a client as you sometimes need to
be when you’re a beggar.

I
don’t remember the IRS rules, but it seems to me that professional
services can’t be deducted as charitable contributions.  So it’s better
for you both–the agency and the accounting firm–if the firm gets paid
and then makes a contribution rather than if you keep the whole thing
off the books.

To reiterate, though: you’d better be prepared to
pay full price for the audit before you demand its completion, so before you talk to the auditor make
sure your Board can pony up the full cash price as the cost of a lesson learned.

Advertisements

Tags: , , , ,

3 Responses to “Dear Nonprofiteer, Fast, free or accurate? They said I could have any two”

  1. Joe Hungler Says:

    Great question! We run into this regularly on many services.Before we accept free, we ask if we can accept the costs. We have found that communication is critical. I loved your answer.

  2. Robert Tolmach Says:

    “I don’t remember the IRS rules, but it seems to me that professional services can’t be deducted as charitable contributions.”
    ———— correct

    “So it’s better for you both–the agency and the accounting firm–if the firm gets paid and then makes a contribution rather than if you keep the whole thing off the books.”
    ———— nope. And this doesn’t follow from the prior sentence.

    Keep up the good work.

  3. Nonprofiteer Says:

    What I meant was that the firm would rather make a deductible rather than a non-deductible gift, and that the charity would rather show a cash contribution than simply omit an expense.

Comments are closed.


%d bloggers like this: