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Q&A #111 – How should nonprofits fill out the Form W-9?
The Form W-9 does not provide an option that clearly describes the tax classification applicable to most nonprofit organizations. I recommend checking the box for “Other” and writing in “tax-exempt nonprofit corporation” or something similar, except in the relatively rare cases in which an organization is structured as a trust or does not have a federal income tax exemption.
Preparing for Your First Board Meeting as a New Board Member
You only get one first Board meeting as a new Board member of a nonprofit organization. Thoughtful front-end preparation for your first Board meeting is essential to help you to make a lasting impression that you are serious about your commitment and appreciative of the honor.
Q&A #110 – Are small nonprofits required to provide paid interns with health insurance?
As discussed in Q&A #108, paid interns usually must be treated as employees. Whether a particular employee is required to be offered coverage under an organization’s group health insurance plan is determined first and foremost by the eligibility rules set forth in the plan document and summary plan description (SPD). For small-staffed organizations that do not meet the definition of an “applicable large employer” under the Affordable Care Act, the main consideration will be how the terms of the plan are drafted.
Three Steps to Get Your New Board Member Service Off to a Good Start
You’ve just been appointed to the Board of a nonprofit organization you believe in and trust. Now what? The time between receiving this good news and beginning your Board service is important for laying the groundwork to be an impactful Board member. I have always found that putting in a little extra effort before your Board service starts will help both you and the organization get the most out of the relationship.
VIDEO: Establishing a Cash Management Target Policy | 5-Minute Lessons 4 Nonprofits
SE4N's A. Michael Gellman provides a short lesson on cash management target policies for operating and intermediate cash funds.
Q&A #109 – Can Board members insist that meeting minutes reflect their dissent?
The right of Board members to insist that their dissenting positions be reflected in the Board meeting minutes is ultimately determined by the organization’s Bylaws and the applicable state nonprofit corporation statute. Your state’s nonprofit corporation statute may provide Board members with a right to have their dissenting vote reflected in the meeting minutes, but there is generally no requirement that meeting minutes articulate the reasons for the dissent.
Q&A #108 – Can interns be paid as independent contractors?
While nonprofit organizations are usually afforded more latitude than for-profits to have unpaid volunteer interns, the decision to pay interns a stipend in lieu of employee wages raises difficult issues. Most paid interns would not fit the criteria for independent contractor treatment under the applicable laws. This means that paid interns must generally be treated as W-2 employees subject to minimum wage laws, payroll tax and withholding laws, and other requirements applicable to employees.
![Audit Planning Calendars Can Make Audits Less Stressful and More Efficient [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708791377742-HS2EGEXSLWLWC8DBVTV5/board-218535_1920.jpg)
Audit Planning Calendars Can Make Audits Less Stressful and More Efficient [SUBSCRIBERS-ONLY]
Financial statement audits have natural “built-in tensions” between nonprofit organizations and their independent auditors. These tensions are advantageous from a checks and balances point of view but can lead to communication challenges if not properly managed. Agreeing on a detailed planning calendar at the front end of the audit will make for a less stressful and more efficient audit process.
Q&A #107 – Should a majority of a nonprofit’s Board members be independent?
While it is not necessarily a bad thing to have some non-independent members on the Board of Directors of a nonprofit organization, it is important for both perception and governance reasons to ensure that a majority of the Board members are “independent” as defined in Part I, Line 4 and Part VI, Line 1b of the Form 990.
![Aligning Investing Purpose to Institutional Mission and Culture [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1695078743847-JHV3GVLD4SYG6VDZ7FPT/directory-235079_1920.jpg)
Aligning Investing Purpose to Institutional Mission and Culture [SUBSCRIBERS-ONLY]
An increasing number of nonprofit organizations are implementing mission aligned investing and this approach may soon become an expected best practice. Core investment acumen will always be focused on safety, liquidity, and return on investment (ROI), balancing the risk/reward of these three key investment pillars. However, many nonprofits with investable funds now consider mission aligned investing as an important fourth pillar of their investment strategy.
Three-Dimensional Financial Messaging
The delivery and interpretation of financial reports is a complex and sometimes unpredictable process. It becomes even more complicated when you realize that the target audience consists of multiple end-users who will be considering financial information from multiple points of view. Effective financial messaging tactics that incorporate a three-dimensional (3-D) tactical approach will give you more options and opportunities to connect with the many different types of users of financial information.
Q&A #106 – Should a finance committee vote to approve monthly financial reports?
No, a nonprofit organization’s finance committee should not vote to approve interim monthly financial reports. Finance committees use information within financial reports but do not have the direct responsibility, time, or resources to check the financial reports for accuracy and compliance. Thus, while it is common for finance committees to receive and review monthly financial reports and discuss the reports with staff, it is neither proper nor a best practice for finance committees to “approve” these reports.
Weighing the Benefits of 501(c)(3) Status
One of the most important but overlooked steps in forming a new 501(c)(3), nonprofit organization is to make a fully informed decision about whether the benefits of 501(c)(3) status are worth pursuing in the light of the many compliance burdens that come with operating a charitable organization. This important choice is difficult to change once an organization is formed, so we included this as Step 1 in our new guide sheet: Steps to Forming a 501(c)(3), Nonprofit Organization.
Q&A #105 – Can an exception to a contractual requirement be approved without signing an amendment?
Approving an exception to a contractual requirement, such as a specified deadline, essentially means that your organization is choosing not to enforce (or “waiving”) the particular requirement. It is generally not necessary to have both parties sign an amendment to the agreement every time a requirement is waived, but it may be advisable to do so if the exception is something that could repeat or impact other obligations.
Q&A #104 – Does indemnification language in a contract apply only to third party claims?
Indemnification language in a contract is traditionally understood to apply only to third party claims and not to “direct” claims between the parties themselves. Many courts will presume this interpretation unless the parties clearly express an intent for indemnification to apply to direct claims. However, courts differ on this issue, so it is important to clearly state that indemnification only applies to third party claims if that is the interpretation your organization wants.