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Three Steps to Simplify Monitoring the Balance Sheet
Balance sheets are part of standard nonprofit organization financial reporting. However, balance sheets are intimidating to most individuals and often misunderstood. Simplifying the monitoring process is key to improving engagement, enhancing understanding of the balance sheet, and helping individuals to fulfill their financial oversight roles and responsibilities.
The Wrong Way to Add a Charitable Arm to a For-Profit Business
I often receive inquiries from entrepreneurs who are looking to add a philanthropic component to an existing for-profit business, such as by forming a nonprofit as a charitable arm or subsidiary of their business or starting a corporate foundation. These ideas are usually well-intentioned. However, mixing business and charitable activities too closely can make IRS approval of 501(c)(3) status an uphill battle.
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.
Creating a Culture of Projections: Actively Engaging Staff in the Financial Planning Process
Creating a culture of interactive, financial projection-based planning must be a primary practice within a nonprofit organization. To effectively achieve this goal, organizations need more than standard historical trend analysis derived from monthly financial statements and financial dashboards. These reports are necessary and important but should be considered as the starting point. Staff and management must be actively engaged in the planning process to create a “culture of projections” in which interactive questioning, rolling forecasts, and forward thinking can thrive.
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.
Operating Reserve Policies are a Perfect Vehicle for Targeting Your Budget’s Bottom-Line
Nonprofit organizations would greatly benefit from adopting a standardized policy for strategically targeting and managing their annual budget bottom-line. You could argue that there is no greater safety net for overall financial health than having a formal policy, or at least a budget working rule or guideline, for this important metric.
The Finance Calendar: An Essential Tool that is Useful to All
I need to be more grateful for my “over-worked” and “under-appreciated” finance calendar. In my experience, nonprofit organizations gain comfort from its content and a sense of order and completeness from its structure, as do their many end-users, both inside and outside of the organization.
The Personal Liability Risks of Nonprofit Board Service
Serving on the Board of Directors of a nonprofit organization can be a rewarding experience that offers the chance to give back to a meaningful cause while providing a learning experience and opportunities to deepen one’s connections and stature within the community. However, this positive experience comes with a level of personal liability exposure under certain circumstances.
Annual Budget Process Assessment: Is Your Budgeting Process Helping to Drive Results?
Stepping back once a year to take a high-level assessment of your budget system is both a best practice and a proactive exercise.
There are five important questions to keep in mind as you work through the assessment process.
What I Look For When Deciding to Donate: An Attorney’s Perspective
The unprecedented social, economic, and public health upheaval of the past few months has led many people across the country to make heart-felt charitable donations (to the extent they are financially able to do so). Many would-be donors are looking to support nonprofits working in cause areas that may be unfamiliar to them, such as organizations providing COVID-19 relief, scientific research organizations, and organizations that combat racism.
Now Is a Good Time to Reassess Your Nonprofit’s Governance Practices
The current pandemic has ushered in a very tenuous period of hyper-change and disrupted planning for most nonprofits. This crisis has required organizations to be laser focused on survival, continuity, and operating with maximum efficiency. For many organizations, these challenges have shed light on old or outdated governance practices that may have been taken for granted in years past and most likely should have been changed years ago.
Options and Tactics for Managing Restricted Funds During a Crisis
When there is substantial accumulated restricted funding in place and held on the balance sheet, most nonprofit organizations find themselves at great risk of inadvertently using restricted funds for purposes other than those agreed to with the donor/funder.
Setting Up a COVID-19 Task Force is a Proactive Strategy
Through many conversations with clients and colleagues, and feedback from participants in my webinars and podcasts, I have found that nonprofit organizations are significantly benefiting from setting up a task force to help respond and react to the many issues and disruptions related to the COVID-19 crisis.
Using Operating Reserves During a Crisis: When and How Much?
Many nonprofit organizations have worked very hard over numerous years to build up operating reserves to a level that allows them to be considered a financially healthy organization with enhanced sustainability prospects for weathering an unexpected economic downturn. However, now that we are in the midst of a full-blown economic crisis, organizations that have built-up substantial operating reserves are faced with a real quandary of answering two simple questions: When? and How Much?
Top 10 Legal Action Items for Nonprofits in Light of COVID-19
While the usual legal compliance issues affecting nonprofit organizations (tax compliance, corporate governance, privacy issues, charitable solicitation registration, etc.) have not gone away, the massive wave of new legislation passed in response to the pandemic has made adapting to these new circumstances the number one legal priority for all nonprofits.