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The Benefits of Multi-Year Budgets
I have been a strong advocate of year-end budget projections that are updated monthly throughout the year. These budget projections help nonprofit organizations to keep track of their progress while providing an opportunity to react to changing circumstances in real time. The impact on the psyche is immediate and beneficial. This impact is enhanced when paired with multi-year budgets as shown in our Multi-Year Budget Financial Dashboard Template.
![TEMPLATE: 3-Month Rolling Budget [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/155123d1-883c-495d-9558-f39385027986/andres-dallimonti-kjqTlMHLci4-unsplash.jpg)
TEMPLATE: 3-Month Rolling Budget [SUBSCRIBERS-ONLY]
During periods of high growth or rapid expected and unexpected changes and disruption, this 3-Month Rolling Budget Template will be a useful planning tool to help your nonprofit organization strategize, pivot and change course, documenting your search for a sustainable and smooth path forward.
![TEMPLATE: Multi-Year Budget Financial Dashboard [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/7af9aba8-cf74-4d2a-90db-c53d81c47856/matt-noble-BpTMNN9JSmQ-unsplash.jpg)
TEMPLATE: Multi-Year Budget Financial Dashboard [SUBSCRIBERS-ONLY]
For evolution and change to be fully appreciated, nonprofit organizations need to include multi-year forecast budgets in financial reporting to show how the organization is evolving and how its programmatic goals and activities will be reflected in the future.

Q&A #92 – Are nonprofit Boards required to have term limits?
Generally, there is no legal requirement for a nonprofit Board to have term limits. While it is true that some state nonprofit corporation statutes limit the number of years in a single Board term, there is typically no limit on the number of times a Board term may be renewed through re-election (unless specified in the Articles of Incorporation or Bylaws).

Q&A #91 – Does the Past President have voting rights on a nonprofit Board of Directors?
The question of whether the Past President has voting rights on a nonprofit organization’s Board of Directors does not have one universal answer, and ultimately depends on the organization’s Articles of Incorporation and Bylaws. If these documents truly do not address the issue and there is nothing in the Articles or Bylaws connecting the Past President position to a seat on the Board, then the Past President will not have voting rights on the Board.

Successful Charity Auctions Start with Careful Planning
Charity auctions are used by nonprofit organizations of all shapes and sizes. Organizations that are thoughtful with their investment in time and planning can realize major benefits from their charity auctions. However, many nonprofits commit to holding charity auctions without committing to the time, planning, and due diligence necessary to realize the most successful event possible. A poorly planned charity auction can potentially impact net proceeds received, damage the organization’s reputation, and even expose the organization to tax liabilities and other possible risks.
![CHECKLIST: Charity Auctions Done Right [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/16fe2e55-4530-46ff-b4ee-f2d8c1c88760/Canva+auction+photo.png)
CHECKLIST: Charity Auctions Done Right [SUBSCRIBERS-ONLY]
R. Michael Sorrells (CPA) and A. Michael Gellman (CPA, CGMA) jointly authored this checklist of key “Dos” and “Don’ts” to help your nonprofit optimize its charity auctions, run them efficiently and without unwanted hiccups, and be prepared to comply with key tax and legal requirements.

Q&A #90 – What happens if a Board member’s term expires and no successor is elected?
The status of Board members whose terms have expired depends on the organization’s Bylaws and the applicable state nonprofit corporation statute. The law in many states is that unless the organization’s Articles of Incorporation or Bylaws provide otherwise, Directors continue to serve past the expiration of their term until a successor is elected and takes office. This often applies to Officer positions as well.

Internal Accounting Controls and the Importance of Perception
Internal accounting controls are an everyday fact of life. They protect nonprofit organizations from many types of risks ranging from theft, fraud, and diversion of assets, to errors and mistakes, to highly sophisticated scams and cyber security threats. Organizations must maintain vigorous and sustainable internal accounting control systems. However, if the perception of an organization’s internal accounting controls is weak, its ability to battle these threats will be greatly reduced.

Q&A #89 – Are grants from donor advised funds subject to 2% limit when calculating public support on Form 990, Schedule A?
As of the date of this post, contributions received from a donor advised fund (DAF) are generally counted in full and not subject to the 2% limitation when calculating public support under section 170(b)(1)(A)(vi) of the Internal Revenue Code on Form 990, Schedule A. This favorable treatment currently applies regardless of whether the individual who holds the DAF account makes substantial contributions to the organization. However, this treatment has been under increasing scrutiny, so be aware that these rules could change significantly in the future.

If Theft or Fraud Happens, Do Not Make It Worse with Silence
It’s hard to find a nonprofit organization that has not been hit by a theft, fraud, or other material diversion of assets. It almost seems inevitable to happen at some point. We must continue to strengthen internal controls and stay vigilant, searching for evolving weaknesses and risk exposures. If a theft or fraud does happen, it is important to be fully transparent with messaging and avoid the tendency to go silent.

Q&A #88 – Does theft or fraud need to be reported on the Form 990?
Whether theft or fraud must be reported on the Form 990 depends on the amount, and also on the role of the individual who committed the offense. Part VI, Line 5 of the Form 990 (on page 6) requires organizations to disclose whether they became aware of a “significant diversion of the organization’s assets.” Also, if assets were stolen by a “disqualified person,” this must be reported as an “excess benefit transaction” on Part IV, Lines 25a and 25b (on page 4) and Schedule L.

Q&A #87 – Who controls the remaining funds when fiscal sponsorship is terminated?
While the specific rights of each party would be determined by the specific fiscal sponsorship agreement at issue, it is very likely that the fiscal sponsor has retained the sole discretion and control (also known as “variance power”) over how to disburse the funds raised in furtherance of the charitable purposes of the project when the fiscal sponsorship is terminated.

The Importance of Operating and Intermediate Cash Management Target Policies
Establishing operating and intermediate cash management target policies will provide many benefits. This simple but often overlooked cash management best practice will augment internal accounting controls, boost cash management awareness, and enhance perceptions that nonprofit organization management systems are significant and robust.

Q&A #86 – Is a private foundation always required to obtain an equivalency determination opinion letter before making a grant to a foreign charity?
In general, a private foundation that wishes to make a grant to a foreign organization is required to either: (1) verify that the foreign organization has been approved by the IRS as a 501(c)(3) public charity; (2) exercise “expenditure responsibility” over the grant; or (3) make a good faith determination that the foreign organization is equivalent to a United States public charity (typically by relying on an opinion letter from a qualified tax practitioner). Thus, it is not always necessary to obtain an equivalency determination, but this is generally the safest option for a private foundation in the event the grantee organization has not received an approval letter by the IRS.