Nonprofit Observer

Better governance starts with a better executive/board relationship

Many boards and executive directors (EDs) have good working relationships, but a recent study found that there’s room for improvement. Although nonprofits have separate spheres for executives and boards, in reality the jobs often overlap. Nonprofits need to ensure that their EDs and board members understand their specific responsibilities — as well as when they must try to work together. A section lists board members’ duties. Full Article

How op-eds help you get the message out — for free

Nonprofits that have had to tighten their public relations budget may be having a hard time getting their message heard by the right people. But placing opinion editorials (op-eds) in newspapers and other media can be an effective way to target communications — for free.  This article provides tips for writing effective op-eds and getting them published. Full Article 

A quick look at recent IRS releases

Nonprofits must pay careful attention to all IRS releases regarding tax-exempt entities. This article discusses two recent IRS actions that merit their attention: finalization of Form 990 rules and guidance to help organizations be reinstated after losing their tax-exempt status. Full Article

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This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011  NPOwi12

Is your nonprofit vulnerable to fraud?

Nonprofits experience lower rates of occupational fraud than their corporate counterparts, but that’s cold comfort to the organizations that fall victim. This article offers advice regarding background checks and supervision; internal controls; motivation for fraud; and periodic audits. A section discusses the extra precautions that are necessary when hosting special events. Full Article

ERM: How to adopt this effective risk management tool

Greater regulatory oversight, tighter budgets, and increased scrutiny by donors and charity watchdog groups all mean that nonprofits are implementing fiscal and risk management practices that have been used in the for-profit world. While not foolproof, enterprise risk management (ERM) is one of the best. Instead of focusing on department- or project-level risks, it regards risk as an interrelated whole. This article explains how, implemented carefully, ERM can be useful to nonprofits. Full Article

Give your board members a break — and your nonprofit a boost

A nonprofit’s board members lead busy lives, so it’s essential to organize periodic retreats that bring everyone together in a relaxed setting. But good planning is necessary for a retreat to avoid wasting time and money and to be successful. This includes getting participant buy-in, creating a detailed agenda and making a postretreat plan. Full Article 

Giving USA survey — Donors increasing support of nonprofits

Although the U.S. economy isn’t out of the woods yet, the philanthropic picture is improving. This article summarizes the findings of a report, prepared by Giving USA Foundation and The Center on Philanthropy at Indiana University, showing improvement in giving in the 2008–2010 period. The report’s findings can help organizations set fiscal objectives and target their fundraising efforts. Full Article

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This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011  NPOfa11

Struggling? Try running your organization like a business

Nonprofits that are struggling and unsure how to move forward should consider adopting some corporate business practices. Though the essential missions of corporate businesses and nonprofits are different, the ways to achieve them often are the same. This article addresses goal-setting, budgeting, executive compensation and transparency. A section explains why goals should be SMART — Specific, Measurable, Attainable, Realistic and Timely. Full Article

Advantages of sponsoring another charity

Fiscal sponsorships — a kind of legal and financial umbrella — can benefit both established nonprofits and charitable projects that lack 501(c)(3) status. But before agreeing to sponsor a group, nonprofits need to understand how such sponsorships work, as well as how they differ from similar, less-advantageous arrangements. This article discusses the benefits and responsibilities for both parties, and describes projects that can best benefit from a fiscal sponsorship. Full Article

Subsidiaries can provide a more reliable income source

Tax-exempt entities are subject to regulations that may limit their ability to generate certain types of income. But they can create for-profit subsidiaries that do. As this article explains, a for-profit subsidiary can help charities generate revenue through new business activities, reduce taxable unrelated business income, limit legal liability and preserve their tax-exempt status.
Full Article 

10 tips for keeping volunteers

Short-staffed nonprofits rely on volunteer labor to pick up the slack. To help ensure everything is done to engage and retain unpaid workers for the long term, this article offers 10 tips, including building a formal program, assigning work that counts, and adapting to changing needs.
Full Article

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This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011  NPOsu11

Making the most of your nonprofit’s program budget

 
No nonprofit wants to cut programs that it believes further its mission and meet its constituents’ needs. But financial hard times have forced many charities to scale back or even eliminate programs. This article explains how nonprofits can benefit from the occasional program review to ensure they’re getting the biggest bang for their buck. It discusses the basics of doing research, measuring progress, and improving existing programs or starting new ones. A sidebar talks about strategic partnerships with other nonprofits. Full Article 

What you can do about state funding cuts

In 2011, most states are struggling to balance their budgets. And while everyone is feeling the pinch, nonprofits may be disproportionately affected because they don’t typically have the lobbying muscle of other special interests. This article offers tips that nonprofits can use to increase their political influence, including banding together with other organizations and honing the message they send to politicians and the public. Full Article

The great nonprofit challenge — Finding new board members

Although an underperforming board should always be a concern for nonprofits, weak leadership is particularly serious when budgets are tight and major strategic decisions need to be made. What’s more, government regulators are increasing their oversight of nonprofits and their boards, making finding and keeping dedicated directors essential to any organization’s future. This article offers advice on how to find board members who are enthusiastic about the nonprofit’s mission and are able to meet its changing needs and circumstances. Full Article

Cybercrime — Are your donors safe?

Hackers and identity thieves increasingly target charities because they typically have smaller budgets for computer security and are less tech-savvy. Just because a nonprofit hasn’t experienced problems doesn’t mean it’s safe. Even without the budget to launch a full-scale offensive, nonprofits can take steps to protect their constituents, so that supporters don’t have to worry about disclosing personal information to them. Full Article

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011  NPOsp11

Too much work, too few hands — Outsourcing can help solve understaffing problems

Thousands of U.S. charities have been forced to cut staff for lack of funds to pay them. This article examines what nonprofits should do if they’re short on staff and don’t have the funds or confidence in the future to hire employees — or even to retain the ones they have. Specifically, it lists the advantages of outsourcing some positions, but the drawbacks of doing so for others. A section discusses how to make the most of volunteers. FULL ARTICLE >  

Unraveling the mystery of donor motivation

People support charities not only for tax breaks and a vague sense of “giving back,” but also for a variety of other financial, emotional and social reasons. Understanding what motivates donors and how their motivations vary across demographic groups can help nonprofits more effectively reach and engage potential supporters. This article reviews research on the subject and suggests ways for organizations to use it. FULL ARTICLE >

New credit makes health care coverage more affordable

One of the provisions of 2010’s Patient Protection and Affordable Care Act is a health care tax credit for small employers, including nonprofits. The credit could significantly reduce health care costs — or enable nonprofits to offer employees coverage even where it might have seemed unaffordable. This article helps nonprofits determine whether they’re eligible. FULL ARTICLE >

D&O insurance allows your board to do good, safely

In the corporate world, directors and officers (D&O) liability insurance is considered a must-have. Unfortunately, many nonprofits fail to obtain this type of coverage because they think they’re less likely to have litigation concerns. But hundreds of nonprofits are sued every year. This article helps nonprofits determine if they need D&O insurance, and if so, what coverage they should or shouldn’t obtain.  FULL ARTICLE >

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011  NPOwin11

Rain or shine — operating reserves protect you from the elements

Maintaining adequate operating reserves is essential to the health of every nonprofit. This article talks about the amount nonprofits should keep in reserve, when tapping reserves is acceptable, and the importance of being able to do so quickly. It also discusses the downside of having too much in reserves.  FULL ARTICLE >  

Investment fraud — Your nonprofit may be an unwitting victim

Victims of investment fraud aren’t only individuals and for-profit companies. Nonprofits — which often operate on trust, rely on the services of volunteers, and receive income from varied sources — are especially vulnerable. This article provides several recent examples of investment fraud and discusses how nonprofits can protect themselves from fraudulent investment advisors and dishonest donors. FULL ARTICLE >

Make the budgeting process easier and more effective

Several principles can help make the budgeting task less onerous for nonprofits. This article explains the importance of reviewing strategic objectives for the coming year, and ensuring that both the organization’s capital budget and operating budget can support them. And monthly budget reviews can help nonprofits stay abreast of circumstances that may make it difficult to stick to their original budget. FULL ARTICLE >

New L3C structure — Building a bridge between nonprofits and for-profits

Traditionally, nonprofit and for-profit organizations have operated in very different financial and regulatory spheres. The new low-profit limited liability company (L3C) option could change that. Although this business structure has become law in only a handful of states, it’s available to any organization that wants to pursue a charitable mission and realize a profit. This article explains how L3Cs operate and why they appear to offer promise for social entrepreneurs and nonprofits with clear revenue streams.    FULL ARTICLE >

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2010  NPOfa10

Have you strayed from your mission? — Time to get back on track

Economic conditions over the past few years have forced nonprofit leaders to make many difficult decisions that affect their organizations’ programs. Inadequate funding may have diverted attention from goals and led to program downsizing, or even dramatic changes in direction. Such organizations may need to update their mission, or determine whether they’ve strayed too far from it. If they have, they may neglect what donors and other key constituents want, and could even lose their tax-exempt status. In the worst case, they could go out of business altogether. FULL ARTICLE >  

Fraud prevention — The buck stops at your board

Approximately 14% of all frauds in the United States occur at nonprofit organizations, for a median loss of $109,000. In some circumstances, boards are partly responsible. Many board members are volunteers who have little involvement with the organization’s day-to-day activities and don’t necessarily understand their role in preventing fraud. It’s essential that they learn to work closely with auditors and take responsibility for reviewing not only financial statements, but also the highest levels of executive management. FULL ARTICLE >

Don’t let a crisis KO your big event

Almost no benefit, gala, meeting or conference goes off without at least a small hitch. And event planners who aren’t prepared could see their big event turn into a disaster. A sound crisis management plan should address risk exposure, attendees’ travel planes, accommodations for those with special needs, and reliable communications with employees and vendors. It may also be appropriate to assemble a crisis response team.  FULL ARTICLE >

SROI: Investing in impact

Although hard dollars will always affect an organization’s ability to achieve its goals, many nonprofits are shifting their focus from an economic return on investment (ROI) to a social ROI (SROI) model. SROI can be a better measure of a nonprofit’s impact than traditional financial metrics because it focuses on how inputs, resources and policies help improve the lives of the individuals or communities the organization serves. SROI provides nonprofits with a way to measure and communicate the good they do.   FULL ARTICLE >

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2010  NPOsum10

What makes governance “good”? A checklist for nonprofits

“Good governance” is one of the hottest topics in the nonprofit world these days. Nonprofits have been strongly encouraged to adopt certain Sarbanes-Oxley (SOX) regulations, and the IRS has revised Form 990 to include several questions regarding governance policies. What’s more, the increasing power of charity watchdog groups means that nonprofits must try to put a responsible face forward to the public. This article offers a checklist of recommendations that a nonprofit’s board might follow, including forming an audit committee and regularly reviewing risk exposure. A sidebar discusses what constitutes “reasonable” executive compensation.  FULL ARTICLE >  

Audits are essential to your organization’s well-being

Audits take considerable time and effort, but they provide nonprofits with fair assessments of their financial health, in addition to revealing vulnerabilities such as weak internal controls, insufficient cash reserves and poor investment policies. And although the newly revised IRS Form 990 doesn’t mandate them, the IRS does ask organizations to discuss their audit activities, as well as the role their board plays in them. This article looks at the difference between internal and external audits, the role of the audit committee, and how to prepare for an audit.  FULL ARTICLE >

The pros of being proactive with the IRS

As long as an IRS examiner isn’t knocking at the door asking specific questions, many nonprofit leaders don’t volunteer information. In some cases, however, it could be to their advantage to do just that. If, for example, a mistake is uncovered in a filing, taking a proactive stance with the IRS can help minimize potential hassles and penalties. It’s important to get professional advice, learn the facts, and keep a sense of perspective. The IRS is likely to be more amenable to finding a solution for nonprofits that approach it voluntarily.  FULL ARTICLE > 

Managing payroll: In-house vs. outsourcing

At a time when many nonprofits are scrutinizing every line item in their budgets, one item in the crosshairs is payroll processing. But the decision regarding whether to bring payroll back in-house should be studied from every angle. Who will manage it? Are there sufficient checks and balances ? What about technological capabilities? Before deciding that a payroll vendor is one of those costs that can be cut, it’s important to remember that they provide expertise and experience that may not necessarily exist in-house.  FULL ARTICLE >

What's your plan when taxes and interest rates rise?

If you believe, like we do, that taxes and interest rates will rise at some point, what’s your plan? Are you going to “grin and bear it”, and give the IRS more of your money, or are you proactively searching for ways to keep more of your money, and increase your income when rates rise?  How are you being proactive?  FULL ARTICLE >

This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2010  NPOwin10