Blog.
Most Recent Posts
![Recruiting and Using Finance Volunteers in Governance Roles [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708259933364-EUWBFATR04OGEEGPMJT5/pexels-singkham-1108572.jpg)
Recruiting and Using Finance Volunteers in Governance Roles [SUBSCRIBERS-ONLY]
Finance should always have a seat at the leadership table within a nonprofit organization. There is an embedded financial impact in all Board and management decisions. To ensure the delicate balancing act of mission vs. financial health is kept front and center, make thoughtful positioning of volunteers with financial experience a priority when finding and seating your Board of Directors and various committees.
Q&A #53 – How should a nonprofit provide a copy of its Form 990 to the Board before filing?
Virtually all organizations check “Yes” to Part VI, Line 11a on page 6 of the Form 990, to affirm that they provided a complete copy of the Form 990 to all members of their governing Board, and failure to check “Yes” can negatively impact an organization’s reputation and appearance to honor transparency (and for publicly supported charities, affect their rating on charity watchdog websites). However, organizations should put careful thought into what it means to satisfy this standard.
Q&A #52 – Is it better to provide combined PTO or have separate vacation and sick leave policies?
In evaluating whether to provide combined PTO vs. separate vacation and sick leave policies, there is no one answer that applies to all organizations. Both approaches have pros and cons. The choice involves weighing which pros and cons best match your organization’s priorities and capabilities. In general, combined PTO policies are easier to administer, while separate vacation and sick leave policies potentially have lower financial burdens on the organization.
There Is No Perfect Financial Dashboard and That Is Good
The problem with financial dashboards is that everybody has a different idea about what makes up a “perfect” dashboard. Opinions are important and the sharing of those opinions in a collaborative process is value-added. It is important to set up a proper framework for this discussion to develop a financial dashboard that fulfills most of the needs of your organization’s many different end-users, which may be quite different from other organizations. The question to ask is not whether a financial dashboard is “perfect” but whether it is “useful” to your particular organization.
Q&A #51 – How can a 501(c)(3) organization change its public support test?
It is not uncommon for organizations to switch to a different public support test due to evolution in their programs and funding sources. Switching between the 170(b)(1)(A)(vi) test (sometimes also called the 509(a)(1) test) and the 509(a)(2) test can be done simply by checking the appropriate box and filling out the applicable parts in your next Form 990, Schedule A. However, this change will not be reflected in the IRS records or tax-exempt organization database, which may cause some confusion with your grantors or donors if additional steps are not taken.
Q&A #50 – What are the duties of a corporate secretary?
The secretary is the officer who is generally in charge of the corporate records. The time commitment of any Board or officer position varies widely depending on the particular organization and how much staff support and outside assistance the organization can afford. However, while the secretary is a very important role, it fair to say that the secretary role is usually the least time intensive of the three main officer positions (president or chair, treasurer, and secretary).
How to Be a More Impactful Treasurer
How can treasurers step up their game and be more influential as a Board leader? The answer lies in expanding the traditional treasurer role beyond financial reporting and protecting the organization’s financial assets. Enterprise risk management (ERM) is very important, but treasurers have so much more to give.
Q&A #49 – Can a nonprofit Board of Directors vote to temporarily suspend a provision in the Bylaws?
The short answer is that the Board of Directors generally does not have the power to vote to suspend a provision in the Bylaws apart from the formal Bylaws amendment process (although you should check the applicable state nonprofit corporation statute to be sure). The Bylaws are binding and must be followed, even under extenuating circumstances. However, there are creative approaches you could explore to avoid making the amendment more permanent than is desired.
Q&A #48 – Are nonprofits that received PPP funds eligible to receive employee retention credits?
The Consolidated Appropriations Act of 2021 (P.L. 116-260), which was signed into law on December 27, 2020, included a significant expansion of the employee retention credit (ERC), so it is true that your organization may indeed be eligible to receive both Paycheck Protection Program (PPP) loan forgiveness and ERC. However, there are important limits nonprofits that received PPP funds must be aware of.
Repositioning for the Long Road of Recovery
We are on the doorstep of one year into a pandemic that no one saw coming. Nonprofits of all shapes and sizes had to move rapidly to respond to unexpected disruptions. Capacity, operations, and funding all were impacted and impacted quickly. As we watch mass vaccination centers come on-line and COVID-19 safety restrictions starting to be lifted, we can begin to look ahead to the long road of recovery and dream about the new normal somewhere in the future.
Q&A #47 – Is my nonprofit permitted to record volunteer services as in-kind contributions?
While the Form 990 does not allow inclusion of in-kind gifts of services as revenue, whether volunteer services can be recorded as in-kind contributions under generally accepted accounting principles (GAAP) is a separate issue that is governed by the Financial Accounting Standards Board (FASB), specifically, FASB’s Accounting Standards Codification found at ASC 958-605-25-16, discussed further below. However, regardless of whether these volunteer services can be recorded in the financial statements, tracking and documenting in-kind contributions of goods and services is always important and beneficial to a nonprofit organization.
Q&A #46 – What are the downsides of using the Form 1023-EZ instead of the Form 1023?
True to its name, the Form 1023-EZ is certainly an easier, faster, and cheaper way to apply for 501(c)(3) status for organizations that meet the eligibility criteria (mainly, organizations that are not projecting more than $50,000 in gross receipts in any of their first 3 years and do not currently have more than $250,000 in assets, among other requirements). But there are some downsides that should be considered, especially since both the Form 1023 and Form 1023-EZ are public documents.
![Strong Financial Health Opens the Door to Collaborations with Other Nonprofits [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708208448070-YU7WZF74N968ZVG8EHDM/door-handle-3633943_1920.jpg)
Strong Financial Health Opens the Door to Collaborations with Other Nonprofits [SUBSCRIBERS-ONLY]
There are many advantages to participating in joint ventures, coalitions, strategic alliances, or other types of collaborations with other like-minded nonprofit organizations. These types of formal and informal partnerships enable organizations to share programs, capabilities, and gain access to a wider array of members, constituents, and geographic regions. These opportunities multiply if your nonprofit has strong financial health.
Q&A #45 – What donor incentives were included in the COVID-19 relief legislation that was enacted in December 2020?
You are referring to the Consolidated Appropriations Act of 2021 (P.L. 116-260), which was signed into law on December 27, 2020. In addition to many other provisions (the law is over 5,000 pages long), there are three main donor incentives: (1) the reestablishment (and slight modification) of the $300 “above the line” charitable deduction; (2) the extension of increased limits on deductible contributions for corporations and individuals who itemize; and (3) a special increased deduction limit for certain disaster relief contributions made by corporations.
Q&A #44 – Should a Board member personally own a nonprofit organization’s trademarks and website URL?
I have not seen guidance from the IRS directly addressing this situation, but I think it is problematic for a founder or Board member to personally own a nonprofit organization’s trademarks, website URL, social media accounts, and other types of intangible assets. While one could make an argument that there is no harm if the nonprofit is allowed to use these assets for free (or for a fee that is no more than fair market value), there are problems with this situation that become increasingly apparent over time.