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Q&A #43 – Should a nonprofit conflict of interest policy address non-financial conflicts?
You are correct that perceived or actual conflicts of interest can arise in a variety of different contexts and not all of them involve financial transactions. However, it is generally best to keep your conflict of interest policy focused on financial conflicts, while addressing concerns about non-financial conflicts in other ways.
![Now is the Time to Push for Changes to Non-Full Cost Funding Practices [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708202695946-1RIQ96RWEC3ITI9NKMQP/door-1587863_1920.jpg)
Now is the Time to Push for Changes to Non-Full Cost Funding Practices [SUBSCRIBERS-ONLY]
Our recent article on the Challenges of Accepting Non-Full Cost Funding prompted compelling and thoughtful comments on the universal problem of non-full cost funding in the nonprofit sector. Many commented that non-full cost funding is a systemic problem that fuels marginalization of the communities, causes, and peoples we serve. To right this wrong, we must draw attention to these problems and advocate for change. Indeed, real sustained effectiveness cannot be achieved if this harmful funding culture continues.
Q&A #42 – When must an Executive Director obtain Board approval for a transaction?
This is one of those questions that is both extremely common and unusually difficult. Whether or not a transaction should (or must) have Board approval depends on the individual organization and the particular transaction. In some cases, the answer is clearly yes, such as with the sale of a major asset like a building. However, there are many cases where the answer is not so clearly defined.
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The Challenges of Accepting Non-Full Cost Funding [SUBSCRIBERS-ONLY]
Most nonprofit organizations are confronted with an unfair choice each year: accept or not accept critical funding that is inherently designed to not cover the full cost of programs and activities for which the funding is provided. This reality has been around for a long time. Looking to the future, we must actively push funders to recognize that sustainability will be damaged if nonprofits continue to be forced to compete for, and pressed to accept, non-full cost funding.
Why and How Should a Nonprofit Form a Subsidiary?
The formation of subsidiaries is a consideration that surfaces during the lifetime of many nonprofit organizations as a strategy to expand operations, growth, and overall capacity to deliver more on mission. A subsidiary is a separate entity that is controlled (to some degree) by a parent organization, and subsidiaries are created by nonprofits for a wide variety of reasons.
Q&A #41 – How should new nonprofits acknowledge donations received prior to approval of 501(c)(3) status?
This question is one that is shared by virtually all new nonprofits that are seeking 501(c)(3) status. You are correct that an acknowledgment letter will be required in order for your donors to use the charitable deduction for their donations (assuming the donations exceed $250). And yes, donations made prior to the organization receiving 501(c)(3) status should retroactively qualify for the charitable deduction if and when 501(c)(3) status is approved (assuming the Form 1023 was correctly prepared and timely submitted). Your main question regarding how to handle the donation acknowledgment letter requires a bit more explanation.
Q&A #40 – How should nonprofits acknowledge donation checks received after December 31?
The short answer is that donors are permitted to treat a charitable contribution as made on the date it is placed in the mail via U.S. Postal Service, even if the check is not delivered or cashed until the following year, see Treas. Reg. § 1.170A-1(b). While it is not the charity’s responsibility to establish the date of delivery in the acknowledgement letter, you want to be as helpful as you can be to your donors. This can lead to some tricky situations.
To Plan for 2021, We Have to Learn How to Recognize People’s Uncertainty
This December is different from all others. We have the familiar ritual looking ahead and embracing the anticipation of how the next year will play out. But COVID-19, the expanded attention on correcting social injustices, and other events of 2020 have introduced unprecedented new challenges into this end-of-year planning process.
Q&A #39 – How should a small-staffed nonprofit address audit findings on segregation of duties?
Addressing segregation of duties findings in an audit is a common challenge for small-staffed nonprofits, and this issue can best be mitigated by proactive front-end outreach and communications with your independent auditors and audit committee, and by submitting a formal written Management Response to be included in the auditor’s Management Letter before the final draft is issued.
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When to Prioritize Legal Review of Your Nonprofit’s Contracts [SUBSCRIBERS-ONLY]
Contracts are the lifeblood of any nonprofit organization’s day-to-day operations, just as with for-profit businesses. In an ideal world free from budget and time constraints, nonprofits would have every contract reviewed by a reputable attorney with the relevant subject matter expertise. However, for some organizations legal review is not always feasible.
Q&A #38 – Is a nondisclosure agreement better than a confidentiality policy?
A nondisclosure agreement (“NDA”) would very likely be more protective than your employee handbook and Board policies. Employee handbook and Board policies addressing confidentiality are helpful because they establish the understanding, culture, and expectation that sensitive information must be kept confidential. However, the remedies for a violation of a confidentiality policy are quite limited.
![Strategies to Keep Board Members on Track with their Commitments [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708200617091-DK4DWQU4IP8UL8CIJF0Q/rails-3309912_1920.jpg)
Strategies to Keep Board Members on Track with their Commitments [SUBSCRIBERS-ONLY]
Getting Board members to follow through on their commitments of time and money to the nonprofits they serve can be very challenging. Often, we let our emotions rule, getting frustrated and blaming the Board members for lack of engagement. This is misguided. We need to work harder to help Board members engage at higher levels.
Q&A #37 – Should my nonprofit use a Consent Agenda for Board meetings?
There is not one uniform answer to this question for all nonprofits, but the consent agenda is used and recommended by many organizations and nonprofit consultants. The consent agenda is a powerful tool that can save precious Board meeting time and keep the focus on strategic matters where Board discussion is most needed. However, a consent agenda can be tricky to implement, so it is important to be thoughtful about this practice.
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Financial Teaching Moments are All Around Us [SUBSCRIBERS-ONLY]
As financial professionals, we are immersed in the language of finance and all its silent and not so silent nuances. To everyone else, the language of finance is mysterious at best and frightening to most. We must constantly strive to make the language of finance accessible to non-financial managers and build their financial acumen and confidence.
Q&A #36 – What Board committees are recommended for a newly formed nonprofit?
Like a lot of things in life, less is more. Generally, for a new nonprofit, especially a small organization with seven or fewer founding Board members, I recommend starting with one governance-focused committee and one key program committee. This results in a tight governance structure consisting of a Board of Directors supported by two standing committees.