Hi Everyone:
So what's wrong with this?
Well, Thursday afternoon I had a long talk with our accountant, and this is what we think happened. It goes something like this:
First. suppose the foundation makes a charitable disbursement to Mr. Mahlangu (who appears in the pictures above) so that he can take his kids to a tennis tournament. We don't just forget about it. Mr. Mahlangu then has to give me receipts for all the money that he spent up to the amount that we gave him. These receipts will include meals, tournament entry fees, hotel bill, etc.
I would then hand these receipts over to our accountant so that she could include copies to the IRS when we filed our yearly foundation tax return to show that the money we gave away was properly spent. But apparently this is where our accountant made an error.
She somehow was under the impression that these receipts were foundation expenses when in reality, as in this example, they were Mr. Mahlangu's expenses. That is any money given given to Mr. Mahlangu was a charitable distribution and the receipts which I would give to our accountant was just to show that the money was being spent properly even though it was not a Foundation expense. They were in fact expenses that Mr. Mahlangu had. But unfortunately, the receipts were reported as foundation expenses (when in fact they were not).
So for the year 2014 the Foundation should be showing on this form $14,000 in revenue, $0 in expenses (not $10,000), and $14,000 in Charitable disbursements. And it looks like we have, thanks to this accounting error, ten years of tax returns to correct.
By the way, even though we consider the
Mason & Charmaine Malmuth Foundation to be small, and we don't solicit donations from anyone else, we have now given away $280,000 since ithe foundation began in 2007, and as anyone can see from the pictures, we have worked with real people and have accomplished some good.
Also, Charmaine and I kept the foundation completely private for many years since we have a no solicitation for money policy on these forums which we strongly feel is the right policy. It was only after I began to be accused of being against charities, some of which turned out to be scams, that we let out the information that our foundation even existed.
Best wishes,
Mason