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RECORDS MANAGEMENT,
GROSS RECEIPTS,,
Gross receipts are the amounts received from all sources, including contributions. A private foundation
should keep supporting documents that show the amounts and sources of its gross receipts. Documents
that show gross receipts include: donor correspondence, pledge documents, cash register tapes, bank
deposit slips, receipt books, invoices, credit card charge slips, and Forms 1099-MISC, Miscellaneous
Income.
PURCHASES, INCLUDING ACCOUNTING FOR INVENTORY,,
Purchases are items bought, including any items resold to customers. If an organization produces items,
it must account for any items sold to customers. Thus, for example, the organization must account for the
cost of all raw materials or parts purchased for manufacture into finished products. Supporting documents
should show the amount paid, and that the amount was for purchases. Documents for purchases include:
canceled checks, cash register tape receipts, credit card sales slips, and invoices. These records will
help a private foundation determine the value of its inventory at the end of the year. See Publication 538,
Accounting Periods and Methods, for general information on methods for valuing inventory.
EXPENSES,,
Expenses are the costs a private foundation incurs (other than purchases) to carry on its program.
Supporting documents should show the amount paid and the purpose of the expense. Documents for
expenses include: canceled checks, cash register tapes, contracts, account statements, credit card sales
slips, invoices, and petty-cash slips for small cash payments.
EMPLOYMENT TAXES,,
Organizations that have employees must keep records of compensation and specific employment tax 16
records. See Publication 15, Circular E, Employer’s Tax Guide, for details.
ASSETS & LIABILITIES,,
Assets are the property, such as investments, buildings, and furniture that an organization owns and uses
in its activities. Liabilities reflect the pecuniary obligations of the organization. A private foundation must
keep records to verify certain information about its assets and liabilities. Records should show:
n when and how the asset was acquired,, n deductions taken for casualty losses, if any,
n whether any debt was used to acquire the asset,, ,, such as losses resulting from fires or storms,,
n documents that support mortgages, notes, loans ,, n how the asset was used,,
or other forms of debt, ,,, n when and how the asset was disposed of,,
n purchase price,, , n selling price,,
n cost of any improvements,,, n expenses of sale,,
n deductions taken for depreciation, if any,,,,
Documents that may show the above information include: purchase and sales invoices, real estate closing
statements, canceled checks, and financing documents. If a private foundation does not have canceled
checks, it may be able to show payment with certain financial account statements prepared by financial
institutions. These include account statements prepared for the financial institution by a third party. All
information, including account statements, must be highly legible. The following defines acceptable account
statements.
IF payment is by: THEN statement must show:
check,, check number, amount, payee’s name, and date the check amount was posted
to the account by the financial institution,,
electronic amount transferred, payee’s name, and date the transfer was posted to the
funds transfer ,, account by the financial institution,,
credit card,, amount charged, payee’s name, and transaction date,,
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