Your Questions Answered

Tax Reporting for Local Knights of Columbus Councils

• I want to bring to your attention a matter of concern to all small, tax-exempt organizational units such as K of C councils and other organizations to which some of us may belong. The subject act will, over time, require councils to pay attention to IRS reporting requirements (Form 990 or 990-EZ or 990-N).

  You may be aware of the guidance for the filing of the proper form, but EVERY council, beginning in 2008 is required to file one of these forms. Many will be able to file the Form 990-N, an "e-Postcard", but the council Advocates and Grand Knights and Financial Secretaries need to have you provide the proper guidance. In addition, every council will have to have an Employee Identification Number (SS-4 is the application form) in order to complete the IRS form.

  Thank you.

  Fraternally yours,

  George Weber, F.S. Concord Council 112 25 Bela Brook Ln, Concord, NH 03301-8414 (603) 225-0108 ga-mi-weber@comcast.net

  • [State Advocate Jordan Ulery reply:] The rule for filing taxes in 2007 have not yet been published. They are expected around 10/1. The rules for 2008 will appear in 2007. Educational letters have been sent out and those councils that receive an educational letter should follow the instructions provided. Most likely the return will be a simple post card or eventually an electronic filing.

    Since there are no rules in place, no assistance to the several councils can be proffered. For a copy of the educational letter please visit:

    http://www.irs.gov/pub/irs-tege/cp299.pdf 

    Form 990 usually applies only to not-for-profits that gross more than 25k per year, no NH council grosses more than that per year. The state council does go above that. As a 501 (c ) 8 organization fraternal organizations are usually exempt from most filings. Copies of the K of C status from the IRS are found on the state web site.

    Some, but not all, councils have reported their existence to the IRS and have filed their non-taxpayer status with that entity. Those entities that have an EIN # associated to the EIN of Supreme Council have filed numerous 990 returns. The new regulations are supposed to have in place a three-year grace period in any event so there is ample time to get the details from this government intrusion.

    As I read the act, the major requirement is upon the tax filer to list charitable donations with a receipt or other documentation (canceled check, church donation receipt, etc.).

    http://www.dol.gov/EBSA/pensionreform.html 

Council Liability Insurance

• If a Council gets the $1M liability insurance policy and the Council is sued for more than that (say $2M), are the individual members liable?

  • [State Advocate Jordan Ulery comments:] for a council to be sued for more than $1M and be successful, the act would have to be willful and wanton.  Certain exemptions from liability are already provided to not-for profit organizations, including serving tainted food (so long as it was unwittingly done).  While there are no absolutes, the real story would be that all the members of the council would be sued, but first the assets of the council would be taken, then the officers and then, as last resort the members, but beginning with the members who contributed to the act in hierarchical fashion.  Now the jury may (and that is a big step to take in New Hampshire where we have the lowest jury awards in the nation) award a lot, but in reality each member can defend himself after the defense of the council.
    
     What Insurance does is spread the defense out over a wide, wide area and provide some, not absolute, but some very good protection.  Remember also that there are no punitive awards in NH by law so the total amount is limited to real damages, which are very hard to inflate.
     

• How does this differ from a Home association being sued? No matter how much insurance they get, aren't the general membership still liable if the suit is more than the policy?

  • [State Advocate Jordan Ulery comments:] A Home Association is different in that the structure is different and that there is real property to take.  Without insurance a Council Home is gone. PERIOD.  Depending upon how the Home Association is designed it may not be that all members of the Council are members of the Association (active versus inactive, insurance versus associate, etc.)

Budget and Per Capita

• Question 1: How is the Per Capita Amount Set?
  • This starts with a draft copy of the State Budget made up by the State Secretary and State Treasurer. It includes normal operating expenses of the State Council. We look at what was budgeted during the previous year and compare it to the Actuals expenses/income so far and what we expect it to be. This is normally done in early Janaury, so we are only half way thru the budget year (July-June). This is why we have to make an educated guess as to what some of the actual expenses will be.
    
    Next this draft is passed to the Budget Committee. This year it is being headed by DD Ray LeMay and a group of Grand Knights appointed by our State Deputy. They review every line item and ask the State Secretary and State Treasurer questions about why estimates went up or down. They then make changes to the budget proposal and present it at the Convention.
    
    The Convention Delegates (2 per Council 68X2=136 + 1 per each State Officer = 7 = Total of 143 votes max.) vote on the Budget and approve it with or without changes. This budget goes into operation two months later on July 1st and finishes on July 30th the following year.
    
    The Per Capita rate is the difference between budgeted Income and budgeted expense divided by the number of members paying per capita in the State.
    (Total Number of Knights in NH minus Honorary Life minus Disabled) That number is just under 6,000. So each $600 of the budget represents $0.10 in the Per Capita rate. The bills for the per capita to fund this budget go out the next January when Supreme sends each State Jurisdiction the number of Per Capita members in each of their Councils.

  Question 2: How is this money Spent?

  • The State Council Budget is used to pay normal operating expenses of the State Council. (Communications, Degrees, ProLife, Squires, State Convention, Per Diem & Mileage for Convention Delegates, Vocations Program expenses, Youth Programs, Audit expenses, Awards, Honorarium, Insurance & Bonds, Meetings/Installations/State Events, KCIC Expenses, Postage, Printing, Supplies, Supreme Conventions, Technology, Telephone and Camp Improvement.)
    
    On the Income side are (Pro-Life Donations, Degrees & Ceremonial fees, Keeping Christ is Christmas revenue, Youth Program income, Interest Income, State Convention tickets & ad book revenue, Camp Fatima Work Weekend Cabin rental fees and any miscellaneous income. (I've included the 2006 Budget Package Chart of Accounts sheet with this memo)

  Question 3. How is this income expense reported when and how can a council get a copy?

  • Within 45 days of the Convention the State Secretary must publishes the minutes of the State Convention. It includes a copy of the approved budget. I believe the 2006 Convention Minutes are still on the Website for any Grand Knight to pull down and print.

State Camporee Weekend and Work Weekend

• Do I have to attend the Camp Work Weekend to qualify to attend the Family Camporee Weekend?
  • Thanks very much for the question. I do need to clarify immediately that participation in the work weekend at Camp Fatima on Memorial Day is in no way a "requirement" to attend the Camporee. The relationship of the two events is that those who participate in the work weekend are afforded a first choice of cabin reservations for Camporee. This was done as a way of rewarding those who put their time and effort over a long weekend to make the necessary repairs and improvements for the Diocese to run the Camp over the Summer. It also served as an incentive to attract laborers for the work weekend. In recent years, this scheme has worked well. Too well, in fact. We have discovered that cabin reservations made over Memorial Day weekend have accounted for nearly all available rentals - leaving a paltry number of cabins for those who did not come to the work weekend but still wanted to go to Camporee. This arrangement has made attendance at the work weekend more necessary than ever - and, effectively, has created the impression of a "requirement" to get a cabin at Camporee. Space at the Camp is limited and there's not much we will be able to do to counter that. But the current scheme will eventually need review as the number of Memorial Day laborers increases and the number of available cabins remains constant. I would like to avoid the circumstance of having all cabin rentals taken before I even send out reservation information. I hope this helps to make the relationship of the two clearer. Should you have any more questions, please feel free to contact me.
    Robert F Jursik
    SK Robert F Jursik, FDD State Camporee Chairman
     rjursik@comcast.net Yahoo Messenger: mr_j_03303 MSN Messenger: RJursik AIM: Robert Jursik

Special Olympics Reporting Form 4584

•  As I recall at a past quarterly meeting, Tom indicated a council is "involved" in the Special Olympics partnership if it runs a Tootsie Roll drive and donations some of the proceeds to the NH Special Olympics. My problem is how do we factor Tootsie Roll drive efforts (man-hours) into fields on Form 4584? Clearly, the form implies actual participation in "games/events" where the participants are special Olympians. There are no fields set aside for fund-raising efforts on the part of council members (except for Section IV, but council contributions in dollars are used at the discretion of the NHSO for state/regional/local games).

  • The way that Form 4584, which is available from the Supreme Website www.KofC.org under forms,  is constructed does not consider man-hours expended for financial donations. In my opinion it should. I believe Tom Ingham's intent was to say that providing a donation made your council involved in Special Olympics. From what I can see you need only complete Section 4
    Here's the help text from the from that may explain better what I just said. I copied pictures of the Form's sections into the help file.

    
    4584 - Partnership Profile Report with Special Olympics Help

    SECTION I.: VOLUNTEER HOURS PROVIDED BY K of C MEMBERS AND THEIR FAMILIES TO SPECIAL OLYMPICS THROUGHOUT THE CALENDAR YEAR: Volunteer service with all levels of Special Olympics by Council members and their families - games, events, programs, special initiatives, etc.

    
    
    SECTION II.: NUMBER OF K of C VOLUNTEERS AT SPECIAL OLYMPICS GAMES AND EVENTS: Event-Specific K of C Volunteers - announcer, athlete escort, awards presenter, competition volunteer, family services, food services, lane escort, lane judge, scorekeeper, timer, transportation, venue services, etc. Year-Round K of C Volunteers- program management, administration, clerical, planning, games management, sports training, Special Olympics Board Member, coaching, etc.

    
    
    SECTION III.: NUMBER OF EVENTS IN WHICH K of C MEMBERS AND FAMILIES VOLUNTEER: All events involving Special Olympics - state, national, international games, community programs, etc. Special Olympics Initiatives: - Athlete Leadership Programs - Family Leadership and Support - Schools and Youth - Healthy Athletes - Law Enforcement Torch Run

    
    
    SECTION IV.: TOTAL FUNDS CONTRIBUTED TO SPECIAL OLYMPICS: Local, state, and national contributions, "Healthy Athletes", donations to Special Olympics initiatives, etc. Donations to Special Olympics Support Programs: - Online Donation - Mail / Telephone Donation - Planned Giving - Matching Gifts - Wedding / Special Occasion Favors - Monthly Giving - Frequent Flyer Miles

    
    
    SECTION V.: NEW EVENTS ADDED THIS YEAR. Please provide the names of any new sporting events that your Council has contributed to or added to Special Olympics on any level this year. SECTION VI.: SPECIAL OLYMPICS AFFILIATIONS Please provide the names of any Special Olympics groups, organizations or teams your council is affiliated with or actively supports. Please indicate if this is a local, regional, or state organization or group.

    We do not reimburse the dialysis, that is normally covered by the government. What we do re-reimburse are the medications that dialysis patients must take while on dialysis or directly related to their kidney disease. We currently support 18 patients up to $300 per quarter or $1,200/year. This you can communicate. We also accept general donations to this Charity from the general public. Checks should be made out to "NH State Council Kidney Program"

State Kidney Program

•  May we put a notice in our church bulletin indicating that the Knights do fund a kidney dialysis cost reimbursement program for eligible patients?
  • We do not reimburse the dialysis, that is normally covered by the government. What we do re-reimburse are the medications that dialysis patients must take while on dialysis or directly related to their kidney disease. We currently support 18 patients up to $300 per quarter or $1,200/year. This you can communicate. We also accept general donations to this Charity from the general public. Checks should be made out to "NH State Council Kidney Program"
• I read the letter from Mark Speidel, published in the 2006 Convention Minutes which stated “There were no checks written against the Kidney Fund from May 2005 through April 20, 2006.” Given my understanding that the fund provides support for medication for NH kidney dialysis patients, why were there no checks written?”
  • Mark Speidel was talking about the Kidney Investment Fund and not the Kidney Program Fund Account that we pay medications for patients from. The Kidney Program Fund Account is a bank account at Citizens Bank and it is the operational account used to run the Kidney Fund Program.
    Back in the 1990s funds were raised to start an Investment Fund for the Kidney Program. Initial fund raisers were held and the money collected put in an investment fund through Edward Jones Inc. These funds have rarely been touched and allowed to grow. Mark Speidel was referring to this Investment Fund in his comments.

State Charity Raffle

• How are State Charity Raffle monies disbursed?
  • 50% of the monies that a local Council raises can be requested to go to the Charity of their choice. So if your Council raised $300, they could request that a check be issued to the Charity of their choice for 50% of that amount ($150). It is important that each Council that raised money for the State Raffle to be able to utilize their 50% portion to a local charity in their Council's community or Parish.
    The Grand Knight of the Council should send the State Secretary the name of his Council's charity. The State Secretary will then write out  a voucher for the State Treasurer to make out the check  to both the Council and the charity's name. In this way the Grand Knight can endorse the check and present it to the Charity. Monies not requested will be disbursed through donations to State wide charities.
• For the 2-party checks related to the State Raffle proceeds, how do we designate the second party if the proceeds are to be used for our RSVP seminarian?
  • Your Grand Knight needs to send the State Secretary an email or paper mail stating that his council's proceeds from the State Raffle will be donated to the RSVP program and include the name of the seminarian or postulate. The Voucher Warrant will be made out to the Council with RSVP in the memo area. The check will be mailed to the Grand Knight of record. The state checkh should be deposited into the Council's account and a Council check made out to the RSVP recipient. When you get this cancelled check back from your bank you can submitted it for the RSVP re-imbursement. The State Secretary will notify the State Vocations Chairman of the RSVP donation from your Council.
• I was looking for an Income line for the income from State Raffle ticket sales from the past year. Where is it captured in the budget ?”
  • State Raffle and State Budget State Raffle donations are not part of the Budget. They are a fund raiser for the Charity Account They are deposited into that account until requests come from Councils for their 50% share. These are made out as 2 party checks (The Council & the Charitable Recipient named by the Council) and are draw on the Charity account. The remainder of these funds are used to pay the Raffle Ticket winners; the Scholarships we give at the State Ball and individual State Charities throughout the year. Each year we deposit a portion of the funds from the State Ball into the Bishop Brady Scholarship Investment Fund. This is also managed through Edward Jones Inc. The six $500 scholarships we give each year are funded by the proceeds. In past years, if the Fund has not grown enough, we reduced the number of scholarships or drawn on the principal.

State Directory

• I would like to know if Financial Secretaries can obtain copies of the State Directory or if there is a plan to post the directory in a limited-access area of the website.
  • 3 State directories are provided to each Grand Knight. It is intended that he keep one and one be given to the Financial Secretary and one to the Council's Chaplain. We leave this in the hands and responsibility of the Grand Knight. We have a new electronic version of the State Directory that is intended to be used on a person's PC desktop. It uses an application called TreePad that the State has been testing with, using their trial version. A Zipped (compressed folder) and password protected download will be available from the website just as soon as we secure a live and licensed copy of the software.

State Council Accounts

• Could you explain to me what the different Accounts are that the State Secretary and State Treasurer manage and which ones effect Per Capita?
  • State Council Accounts There are 4 Checking Accounts that are managed by the State Secretary and State Treasurer. They are the: General Account Kidney Account Charity Account Tootsie Roll Account
    
    General Account  This is the operational Account that funds the operation of the State Council.
    Principle Revenue Source = Per Capita. Miscellaneous revenue is generated by the Camp Fatima Service Program, but this is really just a holding area as we donation 100% of the funds collected back to Camp Fatima. The General Account follows  the State Council's Budget that is proposed by the State Budget Committee (which is made up of DDs and GKs) to the State Delegates at the annual Convention It is approval (and/or modified) by the Delegates. Difference in the budgeted revenue and budgeted expenses is divided by the number of Per Capita paying members (~6,000 members) to determines the rate for the following January's Per Capita bills. So roughly every $600 of proposed spending over revenue represents $0.10 in the Per Capita Rate.
    
    Charity Account This account is used to provide State Scholarships to NH College students and to facilitate donations to Charitable organizations throughout the State. Principle Revenue Source = State Raffle and State Ball We used this account to issue checks to local council charities, pay expenses of the State Raffle and State Ball and to make miscellaneous donations to State Charities. Its investment Fund is the Bishop Brady Fund. 50% of the profit of the State Raffle is invested into the Bishop Brady Fund each year.
    
    Kidney Program Account  This account is used to fund the State Council Kidney Dialysis Program which pays for related medications for financially needy dialysis patients within New Hampshire. Principle Revenue Source = Donations made from Local Councils and other State Council Fund Raisers (ex. Granite Award Dinner, Florida Raffle, State Golf Tournament) The Kidney Fund has an Investment Fund called the Kidney Fund Investment Fund. The principle of this Investment fund came from monies raised during the 1990's by the State Council. Everything else is dividend growth in the fund. Regard this Investment Fund as an emergency fund for rare cases when the money coming into the Kidney Program do not meet our obligations to pay the Kidney Medication of our enrolled patients. Recent Changes in the Kidney Program include the following:
    - The Quarterly Allotment has been raised from $250/Qtr to $300/Qtr
    - Patients are approved for an entire year versus every quarter
    - The Kidney Fiscal Year is now aligned with our Fraternal Year July-June with standard fiscal quarters.
       Previously it ran on a staggered fiscal year ( August- July) and staggered quarters (starting on Aug, Oct, Jan and May)
    - The E-Board now manages all aspects of the Kidney Program
    
    Tootsie Roll Fund This account is used to manage the Tootsie Roll Program Principle Revenue Source = Proceeds from local councils drives. After expenses are paid,30% of the funds are retained within the Account and 70% given back to the local councils in the form of donations to organizations that support the mentally challenged of our state. The 30% is used to pay for any startup expenses to administer the program each year and any excess is donated to state organizations that support the mentally challenged. These State Recipients are proposed by a committee headed by the Immediate Past State Deputy and approved by the Convention Delegates.
    
    Investment Accounts  In addition to the Kidney Investment Account, there are also two other Investment funds managed by Edward Jones Inc. for us. They are:
    The Msgr Eugene Murphy Vocations Fund was most recently created for long term support of vocations within New Hampshire.
    The General Account Investment Fund provides an emergency backup for the General Account. The monies are very, very rarely used and when they are we make every attempt to replenish what was borrowed from the fund. This keeps the State Council solvent and reduces financial risk.