Requirements Manual

^{2C1(a), 3A2(b), 6A2, 6A3, 6A4, 6C1}

1. Audited, reviewed, or compiled financial statements obtained annually at the following level based on total annual support and revenue^?; include footnotes and disclosures; and show net assets without donor restrictions, with board designation, and with donor restrictions. _{(?Excludes value of donated properties/conservation easements but includes moneys from grants, from special fundraising, and for the purchase of land and/or conservation easements.)}

   ∙ >$1,000,000: Audit by independent CPA ^{Threshold applies to fiscal years ending 12/31/2022 and beyond; for earlier fiscal years, audit expected at the level listed in the applicable Requirements Manual for that year}

   ∙ $250,000 - $1,000,000: Review by independent CPA

   ∙ <$250,000: Compilation by CPA; if not using a CPA, the compilation must be prepared by an independent qualified accountant

2. Form 990 substantially^? complete and accurate. _{(?Such as financial statements generally reconcile with audit, review, or compilation; fundraising, management and general, and program service expenses segregated; insider transactions and/or family or business relationships between board members appropriately reported; relevant schedules completed.)}

3. Public support test met, unless a quasi-governmental entity.

4. Operating surplus^? exists at the end of last fiscal year, unless statement from board officer sufficiently explains reason for deficit. _{(?Operating surplus defined as an increase in net assets without donor restrictions, excluding land, property, and equipment, using the most recent audit, review, or compilation.)}

5. Substantial spending deficits not a trend.

6. A concentrated or sole source of funding not overly relied on.

7. Net operating reserves^? at the end of last fiscal year cover at least three months of that year’s operating expenses. If an applicant does not have the full amount, a feasible plan with specific funding targets, fundraising methods, and timelines exists so that the land trust will have the full amount at its next renewal. _{(?Net operating reserves defined as net assets without donor restrictions, excluding a) land, property, equipment, and b) any net assets board designated for stewardship and defense; plus any net assets with time/purpose donor restrictions for operations. Reserves and expenses calculated based on the most recent audit, review, or compilation.)}

8. Debt or lease payment obligations generally can be met.

^3A2

1. Board approves annual budget.

2. Board annually reviews audit, review, or compilation.

3. Board reviews financial reports periodically through the year that include the following:

a. Net assets^?  without donor restrictions, with board-designation, and with donor restrictions (such as on a statement of financial position or balance sheet) _{(^?Net assets are the difference between total assets and total liabilities on the balance sheet. Report must list each of the three categories of net assets that applies to the land trust.)} 

b. Statement of expenses and revenue that shows the following:

           i. Actual year-to-date operating revenue^? and total expenses as compared to budget _{(^?Excludes grants and contributions restricted by donors for specific purposes, other sources of funds that are not intended for use in operations, and grants and contributions not yet released from donor restrictions. Report should include operating revenue when restrictions are released on grants and contributions. For example, grants for land and conservation easement acquisition should be reported in (ii).)}

            ii. Schedule of restricted gifts/grants activity showing donor-restricted money received and released (if any) during the reporting period, with level of detail appropriate to the scale of the land trust’s financial activities

4. Board works to ensure sufficient financial resources are available.

^{5B2, 5B3}

1. Gift acknowledgement letter for any gift^? of $250 or more provided contemporaneous to the gift. _{(^?Cash, land, or conservation easements, even if donor indicates deduction may not be taken.)}

2. Gift acknowledgement letters include at least the following:

   a. Detailed gift description

   b. Statement that no goods or services were provided or, if goods and services are provided, a good faith estimate of their value

3. Financial records show contributions received and/or awarded are appropriately classified, tracked, and used in accordance with donor/grantor materials or communications, including:

   a. Gifts/grants for a specific time or purpose are shown as net assets with donor restrictions until time or purpose is met and the restrictions are released

   b. Gifts/grants for an “endowment” are shown as net assets with requisite perpetual donor restrictions

^6D1

1. Have written internal controls and accounting procedures.

2. Internal controls and accounting procedures address risks of misuse, loss, or misstatement of funds by describing: ^{Starting in 2027}

   a. Measures¹ taken to prevent or detect fraud related to cash receipts (including payments received electronically) and disbursements² _{(¹Measures include segregating specific duties) (²Disbursements include payments to vendors, contractors, and employees.)}

   b. Measures taken to ensure that receipt and use of all donor contributions (including foundation grants) and government awards are properly accounted for to avoid misstatement

   c. Procedures used to monitor compliance with the controls to ensure they are in force and effective

3. Appropriate action taken to address any significant internal control issues and/or recommendations for significant changes to financial procedures listed in the management letter or correspondence that accompanied the most recent audit.

^6A5

1. Has at least $3,500 per conservation easement in board-designated or donor-restricted stewardship funding. If a first-time applicant does not have the full amount, a feasible plan with specific funding targets, fundraising methods, and timelines exists so that the land trust will have the full amount before its first renewal.

2. Has sufficient financial resources to cover conservation property stewardship^?. _{(^?Costs associated with owning and maintaining the property and annual stewardship/management activities identified in the management plan as essential for the property and its intended use.)}

3. Has amount specified by the Legal Defense Reserves Calculator for conservation easements and conservation properties in board-designated or donor-restricted defense funding^?. If a first-time applicant does not have the full amount, it has at least half of the required funds and a feasible plan with specific funding targets and timelines so that the land trust will have the full amount before its renewal. _{(^?Stewardship and defense moneys can be co-mingled, but the total required is the sum of the stewardship and defense amounts.)}

6E2

1. Current general liability insurance policy exists.

2. Carry directors & officers liability insurance and property insurance as appropriate to the land trust’s risk exposure.