The board of directors bears the legal responsibility for the League's funds. In order to carry out this responsibility, procedures should be in place to ensure that
- Financial records are accurate, up-to-date and documented.
- Appropriate internal controls are in place.
- No single person has complete control over financial transactions.
- Access to computerized financial records is limited through use of a password.
- Computerized records are backed up on a regular basis, with off-site storage.
- Financial records are periodically reviewed or audited.
The League Budget
A budget is a planning instrument that reflects the goals, priorities and activities planned for the year. It is the responsibility of a local/state League board to
- Provide input to the committee charged with budget development.
- Review the proposed budget prepared by the committee.
- Revise it as necessary.
- Recommend its adoption by the annual meeting/state convention.
A well-conceived, realistic gross budget
- Reflects all anticipated income and expenses for a fiscal year.
- Shows planned growth in members, dues, contributions and League activities.
- Includes funds for sending delegates to state and national conventions (an important investment in the League’s future).
- Reflects each League’s obligation to support the League as a whole through the per member payment (PMP) system. (The LWVUSPresident’s Packet discusses in detail how the PMP assessment and billing system works.)
Once League members or their delegates adopt the budget, the board is responsible for seeing that it is carried out. Expenses should be recorded and allocated in the same fashion as they were budgeted, and the board should approve any significant expense requests that were not budgeted. The board can revise the budget to respond to changed circumstances, for example if a grant or donation comes in that was not anticipated in the budget, the board has the authority to make those kind of adjustments. Having said this, it is usually the case that Boards do notmake major changes in the overall level of expenditures authorized or the general direction of League emphasis approved at the annual meeting or convention.
The League of Women Voters at all levels must be adequately financed in order to operate and achieve its goals. And each level of the League is responsible for the financial well-being of the League as a whole. Financial support for League activities comes from members (who are our most dedicated and committed source of funds) and from the community (individuals, foundations, corporations and businesses).
Fundraising, more aptly termed “fund development,” is a year-round effort, not just a once-a-year fundraising drive. It must be built into every activity and project on the League’s agenda, and it is every board member’s responsibility. In addition to using contacts and making fundraising calls to ask for support for League projects and general operations, another way for a board member to assist with this effort is by making a contribution that is significant for his/her means.
It is reasonable to ask League members to make additional annual financial contributions, over and beyond their dues payment. In addition to mailings, telephone solicitations and personal visits, a League is encouraged to have its Web site includes the capability to receive contributions via a secure system.
Since most giving comes from individuals (not corporations and foundations), Leagues should plan their fundraising efforts accordingly. No matter what development methods are used, remember that appreciation and recognition help to ensure repeated gifts.
(For more information on League development methods/fundraising tips, see the Leaders section of the League Web site.)
For tax reasons, the League maintains two legal entities to carry out its mission. The LWVUS and nearly all state and local Leagues are 501(c)4 organizations, which means that contributions to them are not tax deductible. An individual cannot deduct League dues on his/her income taxes as a charitable contribution because the League is established as a lobbying organization.
The League also maintains an education fund—the League of Women Voters Education Fund (LWVEF). It is a 501(c)3 organization, which means that contributions to it are tax-deductible for the donor. It is through this side of the League that voter information and citizen education activities are carried out at the national level, many through grants from foundations. A number of state Leagues and a few local Leagues also maintain education funds. Many of the educational activities conducted by state and local Leagues are eligible to be funded with tax deductible monies.
As a service to Leagues, the State and Local Grants Program of the LWVEF banks funds raised by local and state Leagues that are earmarked for local/state educational activities, thus freeing Leagues of the legal and fiscal red tape that operation of such a fund entails. (There is no charge for this service.) The key criteria for ensuring that such a project is “educational” are:
- No lobbying will be associated with the event/publication, although advocacy is acceptable (see below for more information about advocacy vs. lobbying).
- The event/publication will be offered to the general public.
- Questions for candidates will be neutral/nonpartisan.
- All candidates will be treated equally.
In addition, a state or local League may authorize a transfer from its account to the LWVEF general operating account in lieu of paying a portion of its PMP. (See the LWVUS President’s Packet, available on the League Web site, for further information.)
The Internal Revenue Service has developed detailed regulations on tax-deductible and non-tax-deductible contributions. For example, specific language must appear on reply forms for fundraising letters indicating whether or not a person's contribution to the League will be tax-deductible. When putting on a fundraising event, the League must be sure to let donors know what portion of the event ticket price is tax-deductible (if any).
The IRS also has detailed reporting requirements and restrictions on certain activities that are funded with tax-deductible monies. Voters’ guides and candidate debate activities are sometimes reviewed to ensure that they do not give the impression of favoring any particular candidate. Questions should be unbiased, even on issues where the League has a position, so as to not reflect or suggest a bias or preference for or against any candidate's views. Events exhibiting even an unintentional bias may jeopardize the League's tax-exempt status. Leagues are strongly encouraged to refer to publications such as Face to Face: A Guide to League-Sponsored Debates (published by the LWVEF) and The Rules of the Game (published by The Alliance for Justice) to ensure that their events meet all legal requirements.
While most educational activities conducted by Leagues can be funded with tax-deductible resources, it is strongly recommended that the 501(c)4 (the local League - rather than 501(c)3 Education Fund) host most of its events. This procedure is recommended because direct membership recruitment can take place at an event hosted by a 501(c)4 organization (the local League). The event can be funded with a grant from an education fund, provided that the membership materials to be distributed are funded by the 501(c)4 organization (local League) itself. League moderators and leaders can and should encourage people to join the League from their presentations at the podium or include membership ads in voters’ guides, again as long as the ad is paid for with 501(c)4 money.
League volunteers may hand out brochures that describe the League to the audience, announce the availability of these materials from the podium, and even encourage individuals to sign up to receive additional information about the League (which can then be followed up by a mailing or e-mail notice).
Leagues using education fund monies should create an agreement between their 501(c)4 and 501(c)3 and make a grant to cover educational activities sponsored by the League.
Note that it is possible for certain advocacy—but not lobbying—activities to be carried out using tax-deductible monies. Advocacy is a broader concept than lobbying. The League advocates for change through the education of policymakers and the public, and education is a legitimate use of such funds as long as care is taken to be sure that lobbying does not take place. Lobbying is defined as an attempt to influence specific legislation, transmits a point of view on a specific piece of legislation to elected officials or their staffs, as well as a call to action urging the public to contact their legislators about a specific piece of legislation. Lobbying activities must be funded through general operating funds (501(c)4).