An outside financial audit may seem like an extravagance to not-for-profits working to contain costs and focus on their mission. But undergoing regular audits allows your organization to identify risks early and act quickly to prevent problems.
Independent audits also provide valuable reassurance to donors. Fortunately, you can reduce the cost of external audits with good preparation.
A key fiduciary duty of your not-for-profit’s board of directors is to oversee and monitor the organization’s financial health. Some financial red flags and warning signs, such as the loss of a major funder, may jump out immediately.
But other red flags can be more subtle. Here are some of them.
On Monday, February 10, 2020, the Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update (ASU) – “Not-for-Profit Entities (Topic 958).” The update aims to improve transparency of contributed nonfinancial assets — or more commonly referred to as in-kind donations — for not-for-profits by enhancing presentation and disclosure.
According to the draft of
The deductibility of most charitable gifts hasn’t changed since passage of the Tax Cuts and Jobs Act, but some recordkeeping requirements have. Helping your donors who itemize deductions understand the rules and benefits of their gifts can strengthen your not-for-profit’s ties with them — and may help increase contributions.
Do you associate enterprise risk management (ERM) with for-profit businesses? This systemic approach to risk reduction can be just as effective when adopted by not-for-profit organizations.
Even organizations with limited resources can — and should — use an ERM process to combat threats.
According to the Center for Effective Philanthropy, practically all not-for-profits in the United States solicit feedback from their clients when designing programs and services. However, resource constraints — lack of adequate staffing, funding and sophisticated technology — may mean that they don’t collect data as often as they’d like or use it as well as they could.
If you’d like to collect more, and more meaningful, feedback from the beneficiaries of your not-for-profit’s services, here are five suggestions:
Does your not-for-profit organization have a conflict-of-interest policy in place? Do your board members, trustees and key employees understand how the policy affects them?
If you answer “no” to either (or both) of these questions, you have some work to do.
A not-for-profit capital campaign aims to raise a specific — usually, a significant — amount of money over a limited time period. Your not-for-profit may undertake a capital campaign to acquire land, buy a new facility, expand an existing facility, purchase major equipment or seed an endowment.
Whatever your goal, a capital campaign can be grueling, so you need to ensure stakeholders are on board and ready to do what it takes to reach it.
If you think search engine optimization (SEO) is something only for-profit businesses need to worry about, think again.
The Google rankings of your not-for-profit’s website can make a tremendous difference in the donations and other support you receive.
Creating a succession plan isn’t as difficult as you might think. If your top executive were to step down tomorrow, would your not-for-profit know how to make a smooth leadership transition or would your boat suddenly be rudderless? Research by the not-for-profit BoardSource has found that only 27% of charitable organizations have written succession plans. Most not-for-profits, therefore, face an uncertain future — one that could include lost funding, program disruption and even an early demise.
An experienced advisor can guide you through the process. But there are several points for you and your board to keep in mind as you establish policies for replacing leaders.