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Why Gift Acceptance Policies are Important and Must Be Periodically Reviewed and Updated
A gift acceptance policy fills many important roles for a nonprofit organization, including acting as a set of guidelines for fundraising efforts, a tool for risk management, and a protector of the organization’s good governance practices, mission, ethics, reputation, and culture. These characteristics are naturally sensitive to unexpected change and evolving economic conditions, so regularly reviewing and updating your organization’s gift acceptance policy is essential.
Establishing a Form 990 Review and Approval Process
Many nonprofit organizations treat the annual Form 990 filing like a sprint at the end of a long 5K race. After the year is completed and the audited financial statements finally appear, the rush to get the Form 990 assembled and filed too often becomes a hectic “mad dash.” Formalizing the process for review and final approval of the Form 990 before filing will help to avoid mistakes, better reflect current conditions, and show the organization in the best possible light.
The Best Nonprofit CFOs Go Beyond the Numbers
Chief financial officers (CFOs) occupy a unique position of leadership within a nonprofit organization’s senior management team. Often, CFOs are viewed only as protectors of financial assets, immersed in the numbers and devoid of strategic thought. CFOs must work harder to shed these images and venture beyond the numbers to be thought leaders, advocates for strategic change, and catalysts for innovation to help organizations grow and advance their mission.
Why and How Nonprofits Use Limited Liability Companies (LLCs)
The Limited Liability Company (LLC) is a flexible and widely used entity structure in virtually every industry, from one-person businesses to some of the largest companies in the world. LLCs can also be useful as a subsidiary or joint venture vehicle for certain nonprofit programs or activities, but the use of single-member and multi-member LLCs in a nonprofit context is often misunderstood.
The Case Against Board “Give or Get” Policies for a Nonprofit Organization
For nonprofit organizations, especially public charities, individual Board member giving is almost always a sensitive subject. Board giving is usually an important benchmark for nonprofits and frequently is treated as a “badge of honor” when an organization can report that 100% of its Board members have made an annual contribution. Board “give or get” policies may help some organizations reach Board giving goals, but they are complex and often hard to enforce, quantify, and manage.
In the Search for Professional Services, Caring is as Important as Knowledge
In the search to find the best professional service providers such as attorneys, accountants, consultants, investment advisors, and real estate brokers, nonprofits often overemphasize subject matter expertise and knowledge. However, if the service provider does not display a caring attitude and willingness to understand the organization’s unique needs, mission, and culture, the results will not be what the organization expected.
What Many Nonprofits Misunderstand About Employee Probationary Periods
A new hire’s first few months with a nonprofit organization is a crucial time for onboarding, communicating expectations, and setting up the employee to achieve success. However, the common framing and messaging of this time as a “probationary period” has led to many misunderstandings about the legal status of new employees and what employers should be aspiring to achieve during this introductory phase.
Defining the Purposes and Roles of the Executive Committee
The executive committee (EC) can be one of a nonprofit organization’s most powerful governance tools. However, ECs are often poorly positioned and structured, with too much emphasis on who sits on the EC and too little thought about how it will be used. Reimaging and restructuring your organization’s EC with a focus on its purposes and roles will pay big dividends in the future.
The Functional Approach to Budgeting for Expenses
Often, we refer to the size of a nonprofit organization by the total expenses within its annual operating budget. This emphasizes the important role of expenses in the budget while also serving as a measure of an organization’s capacity to provide programs and services. To get the best possible budget for expenses, nonprofits should use a functional (programmatic) approach that better displays the cost of programs, activities, and operations and encourages staff ownership and accountability.
Budgeting for Salaries is Key to the Nonprofit Budget Building Process
When preparing a nonprofit organization expense budget, I generally favor using a programs and operations approach rather than an expense by line-item method. The one exception is budgeting for staff costs (salaries, employee benefits, and payroll taxes), which is usually the largest expense line-item in a nonprofit’s budget. Preparing a separate labor budget at the front end of the budget building process will enhance planning and improve management of the organization’s workforce.
Six Key Steps for Managing Nonprofit Corporate Governance Disputes
For most nonprofit organizations, it is a rare occurrence for internal corporate governance disputes to escalate to the point of litigation. However, court cases are sometimes unavoidable. A recent D.C. Court of Appeals decision addressed several important issues related to corporate governance challenges and illustrated some key steps nonprofits can take to better manage these disputes.
Budgeting for Nonprofit Organizations and Why It’s Important to Start with Revenue and Support
Assembling a budget for a nonprofit organization often feels like an endeavor that requires more artistic methods than scientific computations. This is especially true when it comes to budgeting for revenue and support, which is usually hard to predict with accuracy. To help balance the art (intuition) with the science (analysis) of budget building, consider using a “funding-first” approach.
The Importance of Budgets to Nonprofit Organizations
The word “budget” has almost universal recognition. Budgets have a very broad spectrum of usage and applicability beyond just nonprofit organizations, ranging from large entities (governments, Fortune 500 companies, professional sport teams) to small businesses, individual entrepreneurs, and even smaller applications such as families juggling home budgets and providing their children with early exposure to budgets through managing allowances.
How Intermediate Cash Fund Pools Support Long-Term Investment Portfolios
Nonprofit organizations should expand their cash management policies and procedures to include provisions for establishing and maintaining intermediate cash fund pools. This will not only enhance protection and management of operating (short-term) cash funds, but also act as a conservative buffer for long-term investment strategies, allocation targets, and portfolio risk management.
How to Make Your Nonprofit Audit Committee More Impactful
Audit committees for nonprofit organizations are charged with filling a very important and broad fiscal and financial accountability and governance oversight role. Most nonprofit audit committees center their attention on the back-end of the annual financial statement audit process when they receive draft auditor reports. While this is an important function, audit committees can be more impactful if they shift more of their focus to the front-end of the annual audit process and expand their internal control and business practices oversight roles.