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Integrating Financial Health Assessments into Your Organization’s Planning Process
The markers for tracking and assessing a nonprofit organization’s financial health are not a mystery. The key elements of financial health (operating reserves, funding, and operational expenses) are generally easy to identify and understand. You just need a willingness to keep your eyes open and a commitment to pause and make an honest assessment of a financial picture that has most likely been changing.
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Watching Over Pledges Receivable During Periods of Change and Uncertainty [SUBSCRIBERS-ONLY]
Pledges receivable are a vital asset on a nonprofit organization’s balance sheet. However, this asset is highly sensitive to changing economic conditions and donor sentiment. Understanding how past management actions have impacted pledges receivable, and learning to adopt new management tactics, is vital to protecting current pledges receivable and attracting new pledges.
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The Importance of Keeping Records of Board and Officer Terms [SUBSCRIBERS-ONLY]
Corporate recordkeeping is an area where nonprofit organizations often fall short of best practices. One common pitfall is the failure to maintain a list of the current Board member and Officer terms of office with precise start and end dates. This oversight seems small but can have very significant consequences, especially when an internal dispute arises.
Why Gift Acceptance Policies are Important and Must Be Periodically Reviewed and Updated
A gift acceptance policy fills many important roles for a nonprofit organization, including acting as a set of guidelines for fundraising efforts, a tool for risk management, and a protector of the organization’s good governance practices, mission, ethics, reputation, and culture. These characteristics are naturally sensitive to unexpected change and evolving economic conditions, so regularly reviewing and updating your organization’s gift acceptance policy is essential.
Five Nonprofit Bylaws Issues That Are Often Overlooked
All nonprofit organizations should regularly review and assess their Bylaws to ensure this key governing document complies with the law and is optimally aligned with the organization’s governance needs and operational practices. The following are five common Bylaws oversights to look for when doing your organization’s next Bylaws review.
Establishing a Form 990 Review and Approval Process
Many nonprofit organizations treat the annual Form 990 filing like a sprint at the end of a long 5K race. After the year is completed and the audited financial statements finally appear, the rush to get the Form 990 assembled and filed too often becomes a hectic “mad dash.” Formalizing the process for review and final approval of the Form 990 before filing will help to avoid mistakes, better reflect current conditions, and show the organization in the best possible light.
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Seven Key Steps for Managing Nonprofit Corporate Governance Disputes [SUBSCRIBERS-ONLY]
For most nonprofit organizations, it is a rare occurrence for internal corporate governance disputes to escalate to the point of litigation. However, court cases are sometimes unavoidable. A notable D.C. Court of Appeals decision addressed several important issues related to corporate governance challenges and illustrated some key steps nonprofits can take to better manage these disputes.
The Best Nonprofit CFOs Go Beyond the Numbers
Chief financial officers (CFOs) occupy a unique position of leadership within a nonprofit organization’s senior management team. Often, CFOs are viewed only as protectors of financial assets, immersed in the numbers and devoid of strategic thought. CFOs must work harder to shed these images and venture beyond the numbers to be thought leaders, advocates for strategic change, and catalysts for innovation to help organizations grow and advance their mission.
Why and How Nonprofits Use Limited Liability Companies (LLCs)
The Limited Liability Company (LLC) is a flexible and widely used entity structure in virtually every industry, from one-person businesses to some of the largest companies in the world. LLCs can also be useful as a subsidiary or joint venture vehicle for certain nonprofit programs or activities, but the use of single-member and multi-member LLCs in a nonprofit context is often misunderstood.
The Case Against Board “Give or Get” Policies for a Nonprofit Organization
For nonprofit organizations, especially public charities, individual Board member giving is almost always a sensitive subject. Board giving is usually an important benchmark for nonprofits and frequently is treated as a “badge of honor” when an organization can report that 100% of its Board members have made an annual contribution. Board “give or get” policies may help some organizations reach Board giving goals, but they are complex and often hard to enforce, quantify, and manage.
![In the Search for Professional Services, Caring is as Important as Knowledge [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1695143467556-O18KCGS7N8B5ZC1UWH9G/jc-gellidon-EH9f0TI5wco-unsplash.jpg)
In the Search for Professional Services, Caring is as Important as Knowledge [SUBSCRIBERS-ONLY]
In the search to find the best professional service providers such as attorneys, accountants, consultants, investment advisors, and real estate brokers, nonprofits often overemphasize subject matter expertise and knowledge. However, if the service provider does not display a caring attitude and willingness to understand the organization’s unique needs, mission, and culture, the results will not be what the organization expected.
What Many Nonprofits Misunderstand About Employee Probationary Periods
A new hire’s first few months with a nonprofit organization is a crucial time for onboarding, communicating expectations, and setting up the employee to achieve success. However, the common framing and messaging of this time as a “probationary period” has led to many misunderstandings about the legal status of new employees and what employers should be aspiring to achieve during this introductory phase.
Defining the Purposes and Roles of the Executive Committee
The executive committee (EC) can be one of a nonprofit organization’s most powerful governance tools. However, ECs are often poorly positioned and structured, with too much emphasis on who sits on the EC and too little thought about how it will be used. Reimaging and restructuring your organization’s EC with a focus on its purposes and roles will pay big dividends in the future.
The Functional Approach to Budgeting for Expenses
Often, we refer to the size of a nonprofit organization by the total expenses within its annual operating budget. This emphasizes the important role of expenses in the budget while also serving as a measure of an organization’s capacity to provide programs and services. To get the best possible budget for expenses, nonprofits should use a functional (programmatic) approach that better displays the cost of programs, activities, and operations and encourages staff ownership and accountability.
Budgeting for Salaries is Key to the Nonprofit Budget Building Process
When preparing a nonprofit organization expense budget, I generally favor using a programs and operations approach rather than an expense by line-item method. The one exception is budgeting for staff costs (salaries, employee benefits, and payroll taxes), which is usually the largest expense line-item in a nonprofit’s budget. Preparing a separate labor budget at the front end of the budget building process will enhance planning and improve management of the organization’s workforce.