Divide and conquer: How joint cost allocating works

In recent years watchdog groups, the media and others have increased their scrutiny of how much not-for-profits spend on programs vs. administration and fundraising. Your organization likely feels pressure to prove that it dedicates most of its resources to programming. However, accounting rules require that you record the full cost of any activity with a… Read more »

Warning! 4 signs your nonprofit is in financial danger

Signs of financial distress in a not-for-profit can be subtle. But board members have a responsibility to recognize them and do everything in their power to avert potential disaster. Pay particular attention to: 1. Budget bellwethers. Confirm that proposed budgets are in line with strategies already developed and approved. Once your board has signed off on… Read more »

Holding on to your nonprofit’s exempt status

If you think that, once your not-for-profit receives its official tax-exempt status from the IRS, you don’t have to revisit it again, think again. Whether your organization is a Section 501(c)(3), Sec. 501(c)(7) or other type, be careful. The activities you conduct, the ways you generate revenue and how you use that revenue could potentially… Read more »

3 ways to improve development and accounting collaboration

Communication breakdowns between a not-for-profit’s development and accounting departments can lead to confusion, embarrassment and even financial problems. Here are three ways your organization can facilitate cooperation between these two critical functions. 1. Recognize differences Accounting and development typically record their financial information differently, which is why they can produce numbers that vary but nonetheless… Read more »

5 questions can help nonprofits avoid accounting and tax mistakes

To err is human, but some errors are more consequential — and harder to fix — than others. Most not-for-profit organizations can’t afford to lose precious financial resources, so you need to do whatever possible to minimize accounting and tax mistakes. Get started by considering the following five questions: Have we formally documented our accounting… Read more »

Exchange Transaction or Contribution? Conditional or Restricted?

In June 2018, the FASB issued Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958), which clarifies the scope and the accounting guidance for contributions received and contributions made. Specifically, the update assists entities in determining whether a transaction should be accounted for as a contribution or an exchange transaction and, after that determination is… Read more »

When it comes to revenue, nonprofits need to think like auditors

Auditors examining a not-for-profit’s financial statements spend considerable time on the revenue figures. They look at the accounting methods used to record revenues and perform a detailed income analysis. You can use the same techniques to increase your understanding of your organization’s revenue profile. In particular, consider: Individual contributions. Compare the donation dollars raised to… Read more »

Holding A Fundraising Auction? Make Sure Your Nonprofit is Tax-Compliant

Auctions have long been lucrative fundraising events for not-for-profits. But these events come with some tax compliance responsibilities. Acknowledging item donations If you auction off merchandise or services donated to your charity, you should provide written acknowledgments to the donors of the auctioned items valued at $250 or more. You won’t incur a penalty for… Read more »

How successfully has your nonprofit shifted from overhead to impact?

In the not-so-distant past, charity watchdog groups such as GuideStar, Charity Navigator and the Better Business Bureau’s Wise Giving Alliance were notorious for giving overhead ratios significant weightings in their rankings of not-for-profits. While such a practice can help potential donors weed out spendthrift organizations, it also tends to unfairly penalize nonprofits making reasonable expenditures… Read more »

What is missing? | Disaster Recovery Planning

With all of the focus on Cybersecurity in IT these days I think it is important to not forget about your disaster planning.  A cyber-event can definitely be considered a disaster and sometimes your Disaster Recovery Plan (DRP) could save you from a cyber-event but I want to talk about a basic element of a… Read more »