Some of your not-for-profit’s communications are of interest only to a select group of your supporters. But your organization’s annual report is for all stakeholders — donors, grantmakers, clients, volunteers, watchdog groups and the government.
Some report elements are nonnegotiable, such as financial statements, but you also have plenty of creative license to make your report engaging and memorable for its wide-ranging audience.
If your not-for-profit owns its own facility, it likely will have more control of work space than if you’re leasing. However, ownership carries risks — and leasing can provide several advantages.
If you’re trying to make a buy-or-lease decision, be sure to weigh the following factors.
It’s no secret that this is a challenging time for charitable fundraising. In its annual Giving USA 2019 report, the Giving USA Foundation noted a decrease in individual and household giving, blaming such impersonal factors as tax law changes and a wobbly stock market.
So why not fight back by making personal appeals to supporters? Requests from friends or family members have traditionally been significant donation drivers. Even in the age of social media “influencers,” prospective donors are more likely to contribute to the causes championed by people they actually know and trust.
One of the worst things that can happen to a not-for-profit organization is to have its tax-exempt status revoked. Among other consequences, the not-for-profit may lose credibility with supporters and the public, and donors will no longer be able to make tax-exempt contributions.
Although loss of exempt status isn’t common, certain activities can increase your risk significantly. These include ignoring the IRS’s private benefit and private inurement provisions. Here’s what you need to know to avoid reaping an excess benefit from your organization’s transactions.
Who would defraud a kids’ organization? The answer, unfortunately, is that trusted adults sometimes steal from not-for-profits benefiting children. Youth sports leagues and teams, for example, are ripe for fraud. Cash transactions are common, and coaches and board members usually are volunteers with little accountability.
If you or your children are involved in a youth sports league, here’s what you can do to ensure that its funds support the kids, not thieves.
Many not-for-profit organizations use fundraising methods which cross boundaries of different states. If your not-for-profit is one of them, it may need registration in multiple jurisdictions.
But keep in mind that registration requirements vary — sometimes dramatically — from state to state. So be sure to determine your obligations before you invest time and money in registering.
Borrowing isn’t just for businesses. Many not-for-profits borrow money for major capital purchases, new program funding and even to manage current cash flow. But if you’re hoping to borrow, it’s important to understand that there are likely to be obstacles ahead, including finding a lender that offers reasonable rates.
It’s never easy to say “no” to a generous donor. But a gift acceptance policy can make the decision and process easier. When you receive a personal gift from a friend or family member — even if it’s not something you particularly want — you accept the gift and thank the person. The same isn’t always true of gifts given to your not-for-profit.
Why? There are many reasons, from space limitations to unsuitability to your mission. Gifts should be examined, and, possibly, refused.
Jen: This is the PKF Texas Entrepreneurs Playbook. I’m Jen Lemanski, and I’m back again with Nicole Riley, an Audit Senior Manager and one of the faces of PKF Texas’ Not-for-Profit team. Nicole, welcome back to The Playbook.
Nicole: Thanks, glad to be here.
Jen: Now as a CFE I know you talk about fraud – Certified Fraud Examiner. What is occupational fraud, and can it happen in a not-for-profit organization?
Nicole: So occupational fraud really is a fancy word for employees stealing. And yes, unfortunately it does happen in the not-for-profits. The 2018 Report to the Nation by the Association of Certified Fraud Examiners found the median loss at a not-for-profit was $75,000 per instance.
Jen: Wow.
Nicole: Yeah. It is actually better than the for-profit loss; the median loss there was $164,000, but not many nonprofits that I know can handle a $75,000 loss in their budget, and that doesn’t even consider the indirect impact on their reputation or the loss of donor trust.
Jen: Right. So, how does fraud happen in a not-for-profit organization? It seems like there’s so few people you’d be able to catch it quick.
Most not-for-profit board members are unpaid volunteers. They’ve agreed to serve, because they care about your mission and the impact your organization is making. You owe it to them to make the job as easy as possible — starting with well-organized board meetings that are only as long as necessary.
