Section 5: Budget, Finance & Resource Development

A major function of the 4-H Council is to secure resources (financial and other) to conduct high quality and educational programs. The funds raised by the Council are handled by the 4-H Council treasurer with assistance and support from the budget and finance committee.

Almost all 4-H Council’s in Nebraska fall under the financial umbrella of the Nebraska 4-H Foundation. Only a Council that has applied for and operates as its own 501c3 organization, would not fall under this umbrella but would be responsible to the IRS on its own in the same ways. All 4-H Councils must follow the rules of being accountable with 4-H funds.

Because the Nebraska 4-H Foundation is the financial umbrella to the 4-H Councils they have fiscal oversight, in addition to the IRS. Program oversight comes from Nebraska Extension. The financial guidelines ask that 4-H Council give an annual report of finances to the Extension Board as a way to show how they are spending their money on the local 4-H program. No approval is needed. There is no oversight from the Extension Board of the 4-H Council.

This section of the handbook is intended to assist 4-H Councils in their responsibilities for the accountability of all funds under their purview. It is expected that the leadership of the 4-H Council will adhere to these guidelines.

Accountability with 4-H Funds

4-H is a publicly owned program, supported by tax funds, with a name and logo (the 4-H Clover) protected by federal law. Therefore, funds donated to 4-H or to programs and activities under the name of 4-H must receive the same accountability as required in the handling of public or tax funds. It is required that 4-H Councils maintain their own checking account. The 4-H Council Treasurer is responsible for expending funds as authorized by the 4-H Council. The 4-H Council Treasurer may work with UNL Extension office staff on the 4-H Council bookkeeping.

It is essential that the Council manage their funds in a responsible and accountable manner. The 4-H Council should be as transparent as possible in all business including the release of information to the public.

Minimum requirements for handling 4-H funds include:

  • Money is held in a financial institution in a checking account
  • Documentation of all receipts and disbursements
  • Internal control procedures that protect the funds and those who handle the funds.
  • Regular reports of the status of all 4-H funds.
  • Adherence to the IRS rules as either a subordinate of the 4-H Foundation or as a 501c3 organization.

Note:

  • UNL Extension employees and 4-H Council members should be sensitive to the confidentiality of financial information which they deal with in carrying out the duties of their positions.
  • Every effort should be made to avoid a potential conflict of interest issues.

Types of Revenue for 4-H Councils

The 4-H Council is authorized to generate revenue to support awards, scholarships, travel or other 4-H Council activities. Revenue to support these activities can come from a variety of sources. It is important that the Council have an intended and declared purpose for fundraising efforts. Following are a list of possible income sources for 4-H Council.

Enrollment Fees may be used to facilitate the 4-H program. The preference is that the fees are collected by the Extension office and deposited into the UNL 4-H Extension Educator account however these fees may also be collected by the 4-H Council. It is important that the Council clearly define the purpose and the use of these enrollment fees. In cases where the 4-H Council collects the money, the 4-H Extension program in each county will bill the 4-H Council for appropriate expense to include program materials. This is important because the UNL Extension Office must be reimbursed for the actual cost of program materials distributed.

Fundraising efforts typically constitute the primary source of revenue for the 4-H Council account. Examples include food stands, merchandise sales, car washes, etc. The Council is expected to provide oversight for these activities to ensure that the activity has reasonable potential to be profitable and that the inventory and the funds can be managed appropriately. 4-H Council members or their designees must oversee all fund-raising activities. Organizations or individuals should not ask or expect 4-H groups to sell items to benefit a specific product or individual, therefore taking advantage of the 4-H name. In certain cases, the sale of merchandise by 4-H can be a distinct community service where the product contributes to the educational program. In such cases, the Council should secure approval from the local UNL Extension Office. The UNL Extension Office may wish to consult with the 4-H Youth Program Administrator.

Grants are provided by organizations that require programmatic outcomes and restrict expenditures. All grants from federal or state agencies and large grants (>$1,000) to the 4-H/Youth Development program should be managed through the University of Nebraska–Lincoln Office of Sponsored Programs or Nebraska 4-H Foundation. Any exceptions to this policy must be approved in writing by the Research and Extension Director. If the grant requires hiring of personnel or specific financial or program reporting, the use of UNL Sponsored Programs is required. Each UNL Extension District Office has a Financial Support person who can provide assistance in the management of grant funds.

Small Grants (< or equal to $1,000) from sources other than federal or state agencies may be processed through the 4-H Council checking account. It is expected that the award will equal expenses at the completion of the activity.

Gifts are given without restrictions. Gifts to the 4-H Council may be tax-deductible depending on their intended use. Large gifts should be made through the Nebraska 4-H Foundation or University of Nebraska Foundation for this purpose. Funds received as gifts intended for the local 4-H program, should be handled by the local 4-H Council. Large gifts may require the use of the Nebraska 4-H Foundation depending on the IRS ruling on tax-exempt status of local 4-H Clubs and Councils. In this regard, it will be necessary to be aware of the most current IRS rules and dollar limits.

Foundations are funds on which interest only is used each year in support of scholarships or programs and must be carefully invested. 4-H Councils are not authorized to create a foundation for the purpose of receiving gifts and grants to carry out programs of UNL Extension. Existing Foundations whose sole purpose is to benefit 4-H are encouraged to transfer those funds to the Nebraska 4-H Foundation. The Nebraska 4-H Foundation can invest funds for the 4-H Council. An annual interest payment based upon current interest rates less a processing fee will be returned to the Council upon request. The Nebraska 4-H Foundation is a 501(C)(3) organization recognized by the Internal Revenue Service as exempt from Federal Income Tax. Gifts to the Foundation are tax-deductible. The 4-H Council account should not be used as a pass-through for foundation donations. In situations where gifts of property are given the donors should be notified that gifts of property may be liquidated for cash for the program.

The Concept of a Revolving Fund

From a management perspective, the 4-H Council fund is a revolving fund. Programs processed through a revolving account are expected to approximately breakeven (revenues are equal to or slightly greater than expenses). In other words, revenues are collected to cover predetermined costs and the two offset one another. Over time the 4-H Council account could have a positive balance resulting from effective project management. However, this balance should not be allowed to accumulate without a spending plan to support future programs of a similar nature or subject matter.

Budget Preparation & Control

The 4-H Council is expected to prepare an annual budget for planning purposes. The budget is a statement of the expected financial condition of the Council for the coming year. If is only an estimate, but should reflect a reasonable projection of the 4-H Council’s financial activity for the year. The line items of the budget should support the main goals that the Council wants to accomplish during the year. The Finance and Budget Committee develops the budget in keeping with the purpose, philosophy and long-term goals of the organization, sets appropriate objectives and identifies steps to achieve them.

Since the 4-H Council is considered a nonprofit organization Councils should plan to raise and spend approximately the same amount of money each year. The annual budget will help determine these anticipated expenses for the year and determine if it needs to raise money to meet those expenses. Generally, money raised during the course of the fiscal year should be spent that same year unless it is for a long term goal.

Since the budget establishes future expectations largely on past performance and present resources, it is provisional in nature. Unexpected circumstances such as changes in donors or expenses may affect the budget. This means that the budget must be flexible enough to reflect change without losing effectiveness in dealing with controllable events.

Specific functions of a finance and budget committee are to prepare:

  • Prepare a budget for the year to be approved by the entire Council.
  • Report on the financial condition and financial results of the operations of the Council.
  • Prepare an annual financial review.

Download Budget Example (Coming Soon!)

Fund Balance Policy

4-H Councils are required to manage their treasury responsibly. All funds must be used to support the 4-H program and educational activities of its members. The Council is not allowed to accumulate excessively large fund balances unless there is a specific project and activity that has been identified by the Council and a spending plan has been approved by the Council.

In Nebraska, 4-H Councils are allowed to have 1 ½ years of operating expenses in the treasury. Operating expenses relate to the actual expenses necessary to maintain the work of the council. Expenses that are in/out are not actual operating expenses (such as premium sales) and should not be considered in the amount of money that can be on hand. Anything over this 1 ½ years of actual operating expenses held in a council account has to have a spending plan approved and on file.

Resource Development/Fund Raising

Money for conducting the 4-H program comes from both private and public sources. Public (tax) dollars come from federal, state and Extension sources. Extension tax funds cannot be used for ribbons, medals, certificates, cash premiums, trips, scholarships, camp facilities or camp personnel; private dollars must be used for these purposes.

4-H Councils finance themselves with private dollars generated by donations or fundraising projects. Organizations or individuals should not ask or expect 4-H groups to sell items to benefit a specific product or individual, therefore taking advantage of the 4-H name.

Refer to the Nebraska 4-H Policy Handbook Section 12.6 Fund Raising for additional guidelines.

Setting Up and Managing a 4-H Council Account

Setting up the 4-H Council Checking Account

  1. The name on the 4-H Council checking account shall be “4-H Council in XXXXX County(ies)”. This account is to be used solely for 4-H Council funds. An essential procedure is the requirement that there be only one checking account for each county’s use in receiving and disbursing 4-H Council funds.
  2. The 4-H Council has their own Federal Tax ID Number also referred to as an Employer Identification Number (EIN). This number is used when in association with the Council bank account. In addition there is also an Employer Identification Number (EIN), assigned to the Nebraska 4-H Foundation that identifies that office as the “parent” entity for 4-H Councils/Clubs that are on its subordinate spreadsheet updated each summer by the local Extension office. This number is available for reference when addressing tax exemption status questions about 4-H clubs and affiliated 4-H organizations.
  3. Program/Committee/Club Sub-Accounts - It is required that the internal recordkeeping system of the 4-H Council be designed so records can be maintained within a single checking account. Within this account, program/committee/club sub-accounts should be kept to track specific dollars as they relate to a particular program/committee/club. All dollars raised in the name of 4-H must either be held within the account of the 4-H Council OR within the UNL Extension Educator Account held by the local county UNL Extension office. 4-H club accounts are exempt from this rule, but a council could hold club dollars if requested or if a club doesn’t have the proper financial procedures in place to have the money. Each sub-account should be defined with the following information: 1) a clearly defined purpose, 2) typical use of funds, 3) normal sources of funding and 4) typical entries that would affect the activity of this sub-account. In addition the personnel responsible for funds in each account should be clearly identified. This description will be maintained in the office and routinely updated to assist the user in the proper posting of transactions and to help those in financial reviews.
  4. All funds residing in the 4-H Council account must pertain to 4-H Council programs and be under the management control of the Council. The 4-H Council is not allowed to provide financial management for any other organization. In addition, any use of the 4-H Council for pass through dollars should be carefully considered; questions about this function should be directed to the 4-H Coordinator.
  5. Bonding a Treasurer - Councils that handle large sums of money (in excess of $25,000) should bond the Council Treasurer.
  6. Councils will submit a yearly budget, spending plans (if required) and a year-end treasurer’s report (form provided from the local Extension office) to the local Extension office each year to be kept in the Council’s permanent file.

Assigning Responsibilities and Separating Duties

Internal control is best achieved by separation of duties in relation to the receipt and disbursement of funds. Therefore, it is best to have one person responsible for deposits and a different person responsible for writing checks. No pre-signed checks or signature stamps may be used on checks. Monthly reconciliation of the checking account with the bank statement must be conducted. This should be completed by someone different than the person writing checks and the person depositing money. 

Conducting and Approving Financial Transactions

Determine the appropriate person(s) for the following:

  1. Signature Authority - The 4-H Council should approve the names on the signature card and must be noted in the Council minutes. The signature card should be reviewed annually and when a person designated on the card separates from the position, the signature card must be updated immediately.
  2. Cash Handling and Deposits
  3. Reconciling (direct recipient of unopened monthly bank statements)
  4. Establish a Budget and Finance Committee.

These assignments should be approved by a majority of the 4-H Council membership at a regular meeting of the Council. These actions should be recorded in the permanent minutes of the Council.

Changes in these responsibilities should occur immediately following officer elections or immediately when an officer leaves the Council.

Recommended Procedures Regarding Cash

Cash is a liquid asset and must be handled diligently. Excess and unnecessary cash puts the 4-H Council and its members in questionable situations. Cash increases the risk of loss, fraud, and embezzlement.

Cash Receipts

Objectives of Cash Receipt Procedures

  • To assure that all cash due to the 4-H Council is received.
  • To assure that the proper entries have been made on the pertinent accounting records.
  • To assure that all cash receipts were appropriately deposited or otherwise safeguarded.

Required Conditions for Cash Receipts

  1. Cash-receiving activities are centralized in as few hands as possible.
  2. Cash receipts are supported by other records. All money (cash, checks, etc.) received is documented on a receipts form. One suggested method would be the use of a pre-numbered, receipt book. This receipt form should provide:
    1. name,
    2. date,
    3. item or activity,
    4. amount received (with sales tax identified where applicable), and
    5. method of payment.
    If a transaction is voided, this should be noted by writing VOID across the original and carbons of the receipt form with the reason for voiding the transaction. If individual receipts are not used, a log should document the same information required on the receipt form.
  3. People receiving cash have no access to accounting records. Incoming money is controlled by people other than those having access to cash or the accounting records.
  4. The first person receiving any money should document the source and amount of money received.
  5. All checks are made or endorsed payable to the 4-H Council.
  6. All cash receipts are deposited intact or otherwise safeguarded until deposited. Large sums of cash should be counted and verified by two persons.
  7. When depositing funds a duplicate deposit slip should be maintained as an organizational record. Each check deposited should be listed separately on the deposit slip. If payments are combined on a log such as during registration, the log should be attached to the office file copy of the deposit slip. If there is some other form of supporting documentation it can be attached to the deposit slip.
  8. All receipts should be deposited into this single checking account a minimum of once per week, preferably within two business days of receipt for large deposits. The actual number of deposits made per week will be a function of the amount and level of activity of the particular 4-H Council.
  9. Cash should only be issued for one of two reasons: (1) When the primary function is to sell goods or services on behalf of the 4-H Council. (2) When the 4-H Council is hosting or sponsoring an event that requires making change for the cash transactions of the event. Cash cannot be used to reimburse staff or member expenditures, pay invoices or provide a refund (i.e. prepaid registrations).
  10. The 4-H Council can authorize the use of cash for only one reason: a Change Fund for use at activities/fundraisers, including a food stand. Change Funds are used to make change for cash business transactions. Petty cash funds are not allowed. To minimize the handling of cash, the 4-H Council should consider approval of these funds only when necessary. If approved, the funds must be managed in accordance with the procedures and guidelines in this handbook.

Cash Disbursements

Objectives of Disbursements/Expenditures Procedures

  • Assure that disbursements are justified, are properly supported by evidence and that value has been received.
  • Assure that disbursements were made only with proper authorization.
  • Assure that the proper entries were made on the pertinent accounting records.

Required Conditions for Cash Disbursements

  1. All disbursements are made by check.
  2. All checks are signed with two original authorized signatures (signature stamp not acceptable).
  3. No pre-signed checks are allowed.
  4. No checks are made payable to cash.
  5. All checks are pre-numbered. No counter checks are permitted.
  6. All disbursements are properly substantiated. Supporting documents include evidence of purchase, receipt and approval.
  7. All such supporting documents are canceled in a manner that assures they cannot be reused.
  8. The use of charge accounts is discouraged. If used, charge accounts should be authorized by the Council for a specific period of time. Itemized invoices are required from vendors.
  9. Those authorized to sign checks are to be bonded, particularly if annual receipts total more than $25,000. Cash receipts and disbursements journals must be maintained to record financial transactions. Transactions will normally consist of expenditures (checks written) and receipts (checks and cash deposited into a checking account). All receipts and disbursements must be processed through the checking account. Never pay a vendor directly out of cash received!
  10. Whenever possible, program expenses should be paid directly from the 4-H Council account. Employees and volunteers who pay expenses with personal funds should submit proper documentation prior to reimbursement. Employees should also recognize that this reimbursement must be appropriate and authorized. As such, personal reimbursements are not guaranteed.
  11. No checks should be disbursed until acceptable documentation is presented to authenticate the claim. The claim should be signed or initialed by the individual authorized to approve the payment and indicate approval date, program, and business purpose. The invoice should be marked to identify the check number, date paid and amount. All documentation including cleared checks and electronic copies, deposit slips and transaction authorizations should be maintained for a minimum of seven years plus the current year.
  12. The 4-H Council must comply with IRS guidelines. The current IRS guidelines require that a 1099 be prepared for certain payments totaling $600 or more to any entity or individual.
  13. The 4-H Council must comply with IRS guidelines. Small tax-exempt organizations, such as 4-H Councils, Clubs and affiliated 4-H organizations, which previously were not required to file IRS returns because they earned less than $25,000 are required to file an annual electronic notice called an e-Postcard http://epostcard.form990.org/

If the 4-H Council, Club or affiliated 4-H organizations raises:

  1. More than $25,000 – they are still required to file Form 990, Return of Organization Exempt From Income Tax or Form 990-EZ, Short Form Return of Organization Exempt from Income tax.
  2. Less than $25,000 but more than $0 – they are required to file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required to File Form 990 or 990-EZ.
  3. $0 – but plan to raise funds in the future and wish to retain inclusion under the Nebraska 4-H Foundation Group Exemption Number – they are required to file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required Form 990 or 990-EZ.
  4. $0 – and have no plans to raise funds – they are not required to file.

Signing of Checks

Two signatures of 4-H Council members are required for all routine business. Additional people can be included on the signature card and can be authorized by teh 4-H Council to sign checks if the two 4-H Council members are not available. This might include a bank official or 4-H program supporters that would be available to sign a check in a timely manner. A person associated with the UNL Extension Office can't be included on the signature card.

Auditing the Financial Records

Annually, the financial records of the 4-H Council should be reviewed by someone removed from the actual operations. A CPA, an officer of the bank or a financial review committee may be used. Always conduct a financial review when transferring responsibility from one person to another for the protection of both parties.

The purpose of a financial review is to check procedures as defined by the 4-H Council Handbook and the accuracy of the account. It is not a check for fraud, although fraud will be reported if found. Account records should be clear so a financial review committee or anyone can understand the financial transactions.

The financial review committee should submit to the Council a written report, signed by the committee, on the condition of the financial records.

The financial guidelines aks that the 4-H Council give an annual report of finances to the Extension Board as a way to show how they are spending their money on the local 4-H program. No approval is needed.

Reconciliation

A monthly reconciliation of the checking account with the bank statement must be conducted. This should be completed by someone different than the person writing checks and the person depositing money. It is recognized that it can be difficult to separate duties. If enough volunteers cannot be found to perform these functions, the 4-H Council should work with the Educator and/or 4-H Coordinator to develop an alternative solution. This reconciliation should include the check register as well as the computer program record. In the reconciliation process, all deposits and payments must be cross -referenced with appropriate documentation (receipts, disbursement approvals and check register). Any uncleared checks should be noted and appropriate follow -up actions implemented. Any discrepancies in the final balance must be corrected before the reconciliation is declared complete. The person reconciling the Bank Statement should document on the statement the date reconciled and by whom.

Reporting

Often the workings of the 4-H Councils depend on the funds available; therefore a Treasurer’s report should be submitted to the Council monthly or at each meeting if meetings are not held each month. At a minimum the report should include all receipts and disbursements, beginning and ending balances, and should be signed by the Treasurer.

An annual financial report should be prepared at the close of the fiscal year. This report should include:

  1. Beginning account balance
  2. All receipts and expenditures for the period
  3. Bank justification
  4. Bank statement balance
  5. Deposits made, but not on the statement (add to balance)
  6. Outstanding checks (deduct from balance)
  7. Bank balance adjusted for outstanding deposits or checks
  8. Report on all investments including accumulated interest

Computer programs can aid in financial record keeping but are not a substitute for sound budgeting and financial management.

Security

All 4-H Council records must be kept in a safe place for at least five years. Those handling 4-H funds need to be sensitive to the confidentiality of financial information. For example, while records of all donor contributions must be kept, respect the donor’s wishes when it comes to publicity surrounding donations.

A computer accounting program can be very useful in keeping financial records. Computer generated reports must receive the same safeguards and scrutiny as any others.

Donor List

Recognizing all types of donors is an import part of good community relations; keep a list of the names and addresses of all 4-H donors. Use this list to properly recognize those who support the 4-H program, this list should include names, addresses, type of donation, amount and date. Donations come in many forms in-kind contributions, such as meeting room space, place in a business to hold car washes or bake sales, public service announcements, newspaper articles; financial donations such as money for trophies, scholarships, pins; and volunteer time and expertise donations, such as help auditing Council books. All of these donations help 4-H throughout the year.

When gifts of any amount are received by a Council, the donor should receive a thank you letter acknowledging their gift. The amount of the gift should be stated in the letter. This letter will serve as the donor’s proof of the gift and can be used for tax purposes.

For gifts of $250 or more, the thank you letter needs to be sent on official stationary of the Council. The logo needs to appear somewhere on the thank you letter.

A business might request the 501c3 letter as proof they are making a gift to a non-profit. This will be their proof that their gift is tax deductible. Most businesses will ask for the 501c3 letter. That’s pretty standard when they are wanting the tax deduction or need proof that we are a registered 501c3 organization. The 4-H Foundation’s 501c3 letter is available for everyone’s use. It is also possible a business might need a letter from the state verifying the Council is a subordinate of the Foundation and under its umbrella, if needed this letter can be generated when requested.

A W-9 is issued as proof we have paid a person an amount $600 or more. We do this for State Fair award premiums that are $600 or more. We have to report these payments to the IRS and the W-9 would be issued to the recipient as their proof they received the funds. Sometimes a business will ask us to complete a W-9 and that would be to show they gave the funds to a non-profit. The Foundation’s W-9 is also available.

When a 4-H Council pays an independent contractor $600 or more over the course of a tax year, it is required to report these payments to the IRS on an information return called form 1099-MISC. An example would be paying a 4-H’er a premium award of $600 or more.

Guidelines on Equipment

Councils must keep an inventory of all equipment purchased by the Council which includes item, cost, date of purchase and storage location over $100. An inventory review can be conducted by the Council on a yearly basis.

In the event that a 4-H council owns property, contact the State 4-H Program Leader.

Debit Cards/Credit Cards

Debit Cards and Credit Cards are not allowed, there is too much risk because purchases can happen without dual approval. We suggest that if a purchase needs to occur at an establishment that will not accept checks, that someone pays personally for the expense and request reimbursement from the 4-H Council. That way we ensure there are dual signatures and the purchase is legit. 

Sales Tax Exempt Status of the 4-H Council

The State of Nebraska Department of Revenue says "The fact that a nonprofit organization qualifies for an exemption from income tax under section 501(c) of the Internal Revenue Code does not necessarily entitle the organization to an exemption from Nebraska sales and use tax." The Dept. goes on to say that very few nonprofit organizations actually qualify for sales tax exemption. Nonprofits that are exempt are almost exclusively health care organizations (hospitals, nursing homes, etc.) and educational institutions (like the University of Nebraska).

The regulations go on to say that "Affiliated or subsidiary organizations, including student organizations or parent - teacher - student organizations, although operating in support of or under the guidance of an exempt organization, may not use the exempt institution's certificate of exemption." In other words, 4-H Clubs or Councils are not allowed to purchase items using the sales tax exempt status of the Extension Office.

While it is clear that 4-H Councils and 4-H Clubs have nonprofit status (authorized by the federal government), it is also very clear that they do not qualify for sales tax exemption status (regulated by the State of Nebraska). Nonprofit and sales tax exemption are two different things. As a nonprofit, donors may deduct contributions to 4-H Clubs and 4-H Councils. However, 4-H Councils and 4-H Clubs must pay sales tax on items that they purchase, such as trophies or t-shirts.

You can get a tax certificate that says you will submit the sales tax later but you still have to pay sales tax on a purchase. You can pay sales tax to the original vendor or you can send in a form to the State where you pay all your sales tax from various things you sell like t-shirts, 4-H manuals or shooting sports shells. But in the end you must pay sales tax one way or the other.

For more information regarding federal nonprofit status, please reference Tax Exempt Status of 4-H Organizations Authorized to Use the Name and Emblem under the Policy Section of the 4-H website. Information regarding Nebraska sales tax exemptions can be found at the Dept. of Revenue website. Click on the “Nebraska Taxation of Non-Profit Organizations” link.

Information taken from NE DOR regulations:

Nonprofit Organizations That Are Not Exempt From Payment of Sales and Use Tax.

Only those organizations that are specifically listed in the Nebraska Sales and Use Tax Regulations as exempt entities are exempt from Nebraska sales and use tax.

Organizations that are not exempt from Nebraska sales and use tax must pay the tax on items and taxable services purchased for their own use. This includes purchases of items to be given away.

Some examples of organizations that are not exempt from sales and use tax are: Boy Scouts, Girl Scouts, YMCA, YWCA, United Way, community service groups such as Kiwanis or Sertoma, and fraternal groups such as the Masons or Elks. This includes 4-H.

Purchases for resale:

Nonprofit organizations, both taxable and exempt, purchasing items to be resold may purchase those items tax-free for resale purposes.

  • Example: A nonprofit youth club is selling books at a fund-raiser. The club may purchase the books tax-free from the supplier for resale at the fund-raiser. The club is a retailer like any other retail business and must obtain a Nebraska sales tax permit, and collect and remit sales tax on the books sold at the fund-raiser (see “Sales” section for permit information).

All tax-free purchases for resale must be supported by a properly completed Nebraska Resale or Exempt Sale Certificate, Form 13. The organization will complete Section A of Form 13 and give the completed form to the supplier.

Sales:

With very limited exceptions, both taxable and exempt nonprofit organizations making sales, including sales of donated items, MUST collect Nebraska and applicable local sales tax on all sales.

  • Example: A civic organization holds a rummage sale. The organization must obtain a sales tax permit and collect sales tax on the items sold at the sale.

All nonprofit organizations making sales are retailers and must obtain a Nebraska sales tax permit. The permit is obtained by completing and submitting a Nebraska Tax Application, Form 20, to the Department of Revenue.