Blog.
Most Recent Posts
![The Case for Capitalizing Portable Electronic Devices (PEDs) [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708829753340-FXKX30FD1R3ASK09NL3B/nastya-dulhiier-Ihi56-Qs39U-unsplash.jpg)
The Case for Capitalizing Portable Electronic Devices (PEDs) [SUBSCRIBERS-ONLY]
Nonprofit organizations are now accustomed to living with changing conditions. Change can come in many different forms, from dramatic and fast (remote working, inflation) to subtle and out of sight (technology, rules, and regulations). A noteworthy example involves portable electronic devices (PEDs), which have seen subtle steady changes leading to lower cost with expanded performance and capacity. These changes have led to new risks that deserve special attention.
Q&A #145 – Does an annual fundraising event trigger unrelated business income tax (UBIT)?
Unrelated business income tax (UBIT) is not typically owed from the type of annual fundraising events that many nonprofit organizations traditionally hold because most once-per-year events are not considered to be “regularly carried on.” However, the analysis may be more complex for annual events that involve significant efforts and related activities throughout the year.
VIDEO: Describing Your Mission in the Form 990 | 5-Minute Lessons 4 Nonprofits
SE4N's A. Michael Gellman provides a short lesson on how to approach drafting a nonprofit organization's mission statement and description for the three different parts of the Form 990.
Q&A #144 – What is the year-end charitable deduction deadline for donations made via credit card?
According to Internal Revenue Service guidance, donations made via credit card are eligible for the charitable deduction in the year in which the charge is made on the donor’s credit card, regardless of when the donor pays the credit bill or when the nonprofit ultimately receives the funds. See IRS Revenue Ruling 78-38 and Publication 526.
Q&A #143 – Should a nonprofit include the audited financial statement in its annual report?
You can choose to include the audited financial statement in an organization’s annual report provided to members, donors, funders, and the public, but it would not be a wise choice. Audited financial statements, although important, are very long and designed to meet generally accepted accounting principles (GAAP) and other compliance purposes. They do not work as well to “brag” about the organization’s accomplishments.
Drafting Dissolution Language for the Articles of Incorporation
The “dissolution” clause in a nonprofit organization’s Articles of Incorporation is one of the key provisions required to qualify for 501(c)(3) status. This language must require that the organization’s assets remain dedicated to 501(c)(3) exempt purposes in the event it dissolves. While this basic principle is easy to understand, many overlook the significance of subtle differences in how to approach drafting this language.
Q&A #142 – Can a home address be used when incorporating a new nonprofit?
Virtually all states requires that nonprofit corporations designate a street address (and not a P.O. box) as their principal office in the state and/or the office of their “registered agent.” It is generally permissible to use a residential address for this purpose, although some jurisdictions may have special permitting or zoning requirements. However, there are several disadvantages to consider.
Purpose-Built Financial Messaging and Reporting
Financial reports show up each month with great regularity but little fanfare and excitement. Consequently, we tend to take financial reports for granted and do not give them the attention they deserve. To correct this deficiency, nonprofit organizations need to add purpose to their financial reporting, aiming to fulfill the “needs” of users while also satisfying their “wants.”
Q&A #141 – Does a grant recipient’s lobbying count towards the grantor’s lobbying limits?
A grant to an organization that engages in lobbying may count towards the grantor’s lobbying limits, depending on how the grant is structured and the tax-exempt status of the grantee. In summary, grants to a 501(c)(3) organization generally do not count towards the grantor’s lobbying limits unless specifically earmarked for lobbying activities, while grants to a non-501(c)(3) organization do not get this treatment unless structured to meet the requirements of a “controlled grant.”
![How Nonprofits Can Better Manage Overhead Expenses [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1709126597632-SJHVEWF0DRESA41HDB7F/joanna-kosinska-bF2vsubyHcQ-unsplash.jpg)
How Nonprofits Can Better Manage Overhead Expenses [SUBSCRIBERS-ONLY]
Managing a nonprofit organization’s overhead (management and general) expenses is just as important as managing program and fundraising expenses. Most nonprofits would not dispute this statement. However, most organizations tend to put an inordinate focus on managing program and fundraising expenses and ignore or not give equal attention to managing overhead expenses.
Q&A #140 – How do nonprofits report a name change to the IRS?
A formal name change must be reported on the organization’s next Form 990 or 990-EZ by checking the “name change” box in Column B on the left side at the top of page 1 and including a state-certified copy of the amendment to the organization’s Articles of Incorporation. Form 990-N filers must instead send a letter or fax with this supporting documentation to the IRS Exempt Organizations Division.
Q&A #139 – Does a nonprofit name change require an amendment to the governing documents?
A nonprofit organization may generally change its name either by amending its Articles of Incorporation and other governing documents, or, alternatively, by registering a “trade name” in the applicable states, often referred to as a fictitious name, “doing business as” name, or “DBA.” While amending the governing documents is not required, it is usually the recommended approach to minimize confusion.
Making the Most of Your Time as a Board Member
To get the most out of your commitment to serve as a Board member of a nonprofit organization, think of your service tenure as an investment of time and resources. Like any investment, you need to choose wisely and strive for high performance. Our 4-part Pathways to Effective Board Leadership Series will help you assess and choose a leadership path that is aligned to your passion and capacity to serve so that you are in a position to complete your Board service without regrets or second guesses.
Q&A #138 – How do nonprofits report a change of address to the IRS?
Nonprofits may, but are not required to, report a change of address to the IRS on Form 8822-B. Alternatively, a change of address may be reported on the organization’s next Form 990 by checking the “address change” box in Column B on the left side at the top of page 1.
Ending Your Nonprofit Board Service on a High Note
Whether your Board service is ending because of term limit rules or because you have determined that “enough is enough,” planning for a successful exit as a Board member of a nonprofit organization can be as important, if not more important, than all your active service time added together. Exiting the right way with thought and purpose will ensure that organizational momentum will be sustained, and continuity will be enhanced.