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Navigating The Crowded Non-Profit Sector

Nonprofit donors

How organizations can set themselves apart to secure—and retain—donors

By Shannon Crowley, CPA, MSA
Accounting Manager

Despite the Great Recession and the long process of economic recovery of the 2000s, the non-profit sector has become one of the country’s fastest-growing industries. According to the National Center for Charitable Statistics’ most recent research, the United States is home to more than 1.5 million registered non-profit organizations—marking a nearly 20 percent increase over the last 10 years, a time frame in which many businesses in the for-profit sector have struggled.

This rapid growth is certainly a sign of success, and—as non-profits employ nearly 11 million American workers and contribute roughly $887 billion to the national economy—it is difficult for anyone to argue against the economic value of a thriving non-profit sector.

However, the unprecedented rate at which new organizations are being created is also creating a challenge. The non-profit sector is more crowded than ever before, making it very difficult for organizations to secure—and retain—their donor bases.

On a local level, there are 33,000 non-profit organizations registered in Massachusetts—each competing with one another for precious dollars from a limited pool of individual donors, corporate foundations and other fundraising sources. In a recent cover story in The Boston Globe, many industry experts argue the field of non-profit organizations in Massachusetts is simply too large to sustain.

However, the organizations themselves, and the tens of thousands of Massachusetts residents employed by non-profits, are doing everything they can to prove those experts are wrong.

And that starts with donor retention.

The Association of Fundraising Professionals reports that, on average, donor retention rates across the non-profit sector are around 43%, meaning less than half of an organization’s 2016 donor base will contribute. In order to grow in a competitive non-profit environment, organizations have to find a way to land recurring donors. To do this, non-profits are employing several strategies. For the purposes of this article, we’ll focus on three:

Differentiating themselves from other, potentially similar organizations

Many potential donors or grant-awarding foundations would love to support every deserving cause that asks for and needs their help. Realistically, though, donors need to choose between hundreds, if not thousands, of similarly operating organizations to which they can lend their financial support. Non-profits, especially non-profits working to support similar demographics, are under enormous pressure to set themselves apart to attract new sources of funding. It’s never been more important for a non-profit to have a very clear, very specific mission.

Investing in “fundraising infrastructure”

Fundraising success is entirely beholden to the amount of time and resources organizations are willing to invest. In order to succeed in today’s hyper-competitive non-profit sector, organizations must invest in fundraising professionals, such as high-ranking development officers, and fundraising “infrastructure,” such as top-notch technology and donor databases.

The clear, specific vision makes an organization attractive to donors. Development professionals and in-depth donor databases help organizations find them.

Increase efficiency by streamlining their accounting functions

Back-office financial work is crucial to the long-term success of the organization. That said, it’s also very time-consuming. As many organizations are investing significantly more time to their fundraising operations, some non-profit leaders are finding ways to take complex financial paperwork off their desk so they can focus on the organization’s core competencies. This may entail creating new jobs for a full-time accounting team, or hiring a third-party financial organization to take on those responsibilities.

How BlumShapiro Can Help

BlumShapiro offers the accounting, tax and business consulting expertise non-profits need today. We are one of the largest non-profit accounting service providers in New England, our blend of accounting expertise and knowledge of non-profit organizations means we can offer you tremendous added value. We can assist you in complying with state and federal grant requirements, charitable giving rules, capital campaigns, endowment fund responsibilities and other specialized needs. Learn more >>

View Shannon’s Bio Here >>

Webinar: Critical Success Metrics for Your Non-profit Organization

shutterstock_119018866With all of the great work your non-profit does, how do you track and show results? How do you quickly and clearly validate, quantify, and report on the outcomes of your activities? Amid increasing demand for transparency and accountability, today’s non-profits are seeking ways to both produce and to demonstrate successful outcomes.

Outcome metrics are powerful, essential tools for demonstrating accountability and transparency. They can measure financial or non-financial criteria that reflect an organization’s, program’s, or initiative’s efficacy.

These metrics not only show funders and constituents how the organization is performing; they also help pave the way for sustainable growth and greater efficiency. This Intacct whitepaper describes how nonprofits can effectively leverage outcome metrics to boost their success.

Leading non-profits are utilizing key metrics and outcome measures to demonstrate success to donors and stakeholders.

Watch our webinar and learn what is driving forward-thinking non-profits to place a strong emphasis on success metrics—and the next steps you can take to put them into practice in your organization.

At the end of this webinar you will know:

  • What are the key metrics and outcome measures for non-profits?
  • Why are they critical to your non-profit’s success?
  • The key differences between performance and outcomes
  • What immediate steps you can take to be more successful

Download Webinar Here >>

 

Setting Executive Compensation: How Much is Too Much?

This is part of a series of articles focused on issues relevant to non-profit boards of directors

shutterstock_46389259In recent articles, I have outlined the roles and responsibilities of non-profit boards and focused on the legal and ethical responsibilities of individual non-profit board members. Now, I want to spotlight one very important task non-profit board members must complete carefully and strategically: setting executive compensation.

A non-profit’s chief executive is often the heart, soul and public face of the organization. The chief executive is responsible for leading and coaching staff members; overseeing revenue-generating and fundraising activities; making final strategic decisions to ensure the organization’s mission is advanced; and countless other day-to-day tasks.

Clearly, the chief executive position is vitally important to the overall success of any non-profit organization. So, how do you put a dollar value on something so important? In today’s hyper-competitive environment, non-profit organizations across the country are struggling to answer that question.

As we discussed in my previous article, the board of directors has the responsibility of hiring and setting compensation for executive leadership.

Study the marketplace: Of course, every non-profit organization wants to hire their first choice for the executive director role–but many quickly learn they’ve only budgeted for their third, fourth, or fifth choice.

Before going through the process of selecting a new chief executive, non-profit boards must find out the “going rate” for that position. That means analyzing the salaries and benefits of comparable positions in private, public, and non-profit sectors and comparing those salaries to what the organization is prepared to offer. Having in-depth knowledge of the current marketplace will help your board set expectations and budget appropriately.

Protect your bottom line: The board needs to find middle ground between compensation that attracts the top talent and cost-cutting strategies that help the organization fund its services. That means offering a salary range that the IRS calls, “reasonable and not excessive.”

The National Council of Nonprofits encourages non-profit boards to think carefully before finalizing a deal with a new executive leader and ask itself: “Are the assets of this non-profit being used prudently and to advance the mission?”

Play by the rules: The IRS has rules and regulations that aim to prevent non-profit organizations from overpaying their executive staff. If the non-profit board knowingly overpays an executive a salary the organization can’t afford, the IRS sees that as “excess compensation.” Penalties range from hefty fines to an organization losing its tax-exempt status.

Keep detailed records: Hiring a chief executive is one of the most important decisions a non-profit board has to make, and it should be documented as such. Non-profit board members will be asked by donors, supporters, reporters and perhaps the IRS to explain their hire and justify their salary and benefits.

Guidestar recommends a three-step process to ensure the board complies with IRS regulations and board members remain unbiased:

  • The board should approve compensation before an offer to the candidate is made and to ensure no board member has a conflict of interest related to the transaction.
  • The board should research comparable positions before approving compensation.
  • The board should document the decision-making process throughout the process.

Guidestar’s recommendations follow the IRS “rebuttable presumption of reasonableness” rules. In other words: The board is doing its due diligence and covering its bases while it makes a strategic, well-thought-out decision on executive compensation.

 

Hatch-Michelle-150x150

Michelle Hatch is a partner in our Non-Profit Services Group. She oversees audit and accounting engagements for non-profit organizations, including independent schools, trade associations, health and human service organizations and art, cultural and membership organizations. Michelle is also a member of the Employee Benefit Assurance Group and oversees audits for 401(k), 403(b) and defined benefit retirement plans.

 

The firm, with over 400 professionals and staff, offers a diversity of services, which includes auditing, accounting, tax, and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services, such as succession and estate planning, business technology services, employee benefit plan audits, litigation support, and valuation.  The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

What are the responsibilities of individual non-profit board members?

shutterstock_275563196In my previous article, I laid out the overarching responsibilities of non-profit boards, which include big-picture strategic planning; selecting executive staff members; overseeing executive leadership; approving the organization’s budgets; overseeing compensation for staff members and leadership; and fundraising.

In this article, I will focus on the responsibilities of each individual board member.

Understand your fiduciary responsibilities

As members of non-profit organizations’ governing bodies, individual board members must adhere to the legal responsibilities of fiduciaries. A fiduciary is a “person who has the power and an obligation to act on behalf of another under circumstances that require total trust, good faith and honesty.”

As fiduciaries, non-profit board members have three specific legal duties:

  1. Duty of Care: To act with such care as an ordinary, prudent person would employ in your position.
  2. Duty of Loyalty: To act in good faith and in a manner you reasonably believe is in the best interest of the organization.
  3. Duty of Obedience: To be faithful to the organization’s mission. You are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public’s trust that the organization will manage donated funds to fulfill the organization’s mission.

Long story short: board members must, at all times, act in the best interest of the non-profit organizations they represent.

Educate yourself on the organization you represent

In order to responsibly serve on a non-profit’s board, members should understand the organization’s mission, strategic vision and financial situation. That means reviewing:

  • Audited financial statements of past years
  • The organization’s Form 990
  • Missions and values of the organization
  • The organization’s bylaws
  • The organization’s most recent strategic plan
  • Current financial statements

Once new board members are initiated, they should review all provided information in advance of board meetings, including financial information, so that each member is prepared to make informed and responsible decisions.

Joining committees to stay involved with the organization

Most non-profit boards have committees dedicated to specific organizational efforts. These committees vary based on the size and operations of each organization.

Individual board members should actively seek out committees relevant to their specific skill sets and interests.

 

Hatch-Michelle-150x150Michelle Hatch is a partner in our Non-Profit Services Group. She oversees audit and accounting engagements for non-profit organizations, including independent schools, trade associations, health and human service organizations and art, cultural and membership organizations. Michelle is also a member of the Employee Benefit Assurance Group and oversees audits for 401(k), 403(b) and defined benefit retirement plans.

The firm, with over 400 professionals and staff, offers a diversity of services, which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services, such as succession and estate planning, business technology services, employee benefit plan audits, litigation support and valuation.  The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

Top 7 Responsibilities of Non-Profit Boards

iStock_000012107875_MediumNon-profit organizations in today’s business climate are expected to meet increasingly large demands while operating with small staffs and limited resources. In order to ensure sustainable success, non-profits must have in place effective, focused and committed leadership.

That starts with the organization’s Board of Directors.

Board Responsibilities:

Boards of directors (or boards of trustees) hold a great deal of responsibility in advancing non-profit organizations’ missions and leading the organizations toward successful futures. Some responsibilities of a non-profit board include:

  1. Strategic planning: The board should always be thinking about the “big picture.” From determining the organization’s mission and purpose to enhancing the organization’s public image, the board is responsible for the overall health of the non-profit.
  1. Selecting executive staff: Who will be the public face of the organization? That is one of the first and most important questions a non-profit board must answer. While the board operates behind the scenes to steer the organization in the right direction, the executive staff manages the day-to-day operations.
  1. Overseeing (and evaluating) executive leadership: The board should support the organization’s executive staff, making sure they have the resources and moral support they need to effectively do their jobs. Every organization hopes to avoid overturn, but – should the board deem it necessary – it does have the authority to remove executive leaders and team members.
  1. Budget approval: Serving as the non-profit’s governing body, the board is responsible for securing and strategically allocating financial resources in order to advance the organization’s mission. This is typically done through the approval of the annual budget.
  1. Setting compensation: While the board is not usually involved in setting individual staff salaries, they usually do this through the overall budget process.
  1. Fundraising: Non-profits’ annual budgets typically rely heavily on fundraising efforts. As the board is in charge of approving the organization’s budget, is is also responsible for ensuring the organization has the money it needs to fulfill its mission.
  1. Recruiting new members to the board: Membership on non-profit boards is typically very fluid. Board members step down for a variety of reasons, and new members are brought in to replace them. To ensure long-term success, an effective board will articulate clear prerequisites for members and offer training and guidance to new members.

Serving on a non-profit board can be a tremendously rewarding and enriching opportunity for any professional. But, as you can see, it also comes with a great deal of responsibility.

 

Hatch-Michelle-150x150

Michelle Hatch is a partner in our Non-Profit Services Group. She oversees audit and accounting engagements for non-profit organizations, including independent schools, trade associations, health and human service organizations and art, cultural and membership organizations. Michelle is also a member of the Employee Benefit Assurance Group and oversees audits for 401(k), 403(b) and defined benefit retirement plans.

 

The firm, with over 400 professionals and staff, offers a diversity of services, which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services, such as succession and estate planning, business technology services, employee benefit plan audits, litigation support and valuation.  The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

Recovering Indirect Costs from Federal Grants Under Uniform Guidance

shutterstock_228440362In previous articles, we have reviewed the major provisions of OMB’s Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance, or UG) and implementation of grantee requirements.

In this article, BlumShapiro Partner Reed Risteen, takes a look at recovering indirect costs from federal grants under UG. One of the common issues our grant-driven clients face is ensuring they are recovering the maximum amount of indirect costs from their federal grants. He covers the following items:

  • Direct Costs
  • Indirect Costs
  • Methods for Charging Indirect Costs
  • Charging Indirect Costs Under Uniform Guidance
  • Use of De Minimis Rate
  • Use of Negotiated Rate
  • Subrecipients

Read the article >>

Organizations with June 30 Year-end

Nonprofit AuditIf your organization has a June 30 year-end, that means it is time for your annual audit to begin. Looking for ways you can help improve your annual audit process?

Get 5 tips from our team of non-profit auditors on how your organization or finance department can prepare to make this year’s audit more efficient.

Get the 5 Tips Here >>

Best Practices to Keeping Your Board of Directors Engaged

A strong, engaged board of directors is crucial to the success of any non-profit organization, no matter the size, mission or vision of that organization. Ensuring the board is engaged should be a focal point for the leadership of the organization and the board itself. It is not enough to have a full slate of board members. Each of those board members should have a clear role within the organization’s board of directors. Following are best practices in order to keep the board engaged and facilitate the fulfillment of the organization’s mission:

  1. Keep the focus on the organization’s mission. The organization’s culture should assist with all employees and board members in carrying out the mission of the organization. The mission should be at the center of all decisions made by the board and the organization. Board members and potential board members should understand the mission and continually review the activities of the organization to ensure they are in line with the mission of the organization.

  2. Continuously monitor the organization’s strategic plan, including the goals set by the strategic plan. The organization’s strategic plan is not something to file drawer or put on a bookshelf. At least twice a year a significant portion of the board meeting should be devoted to the review of the strategic plan. In addition, the strategic plan should be updated periodically, especially if significant events take place, such as staffing changes or program changes.

  3. Review the needs of the board continuously. How often does someone say to their fellow board members during a meeting, “I wish we had someone who could do that for us.” I’m sure every board has had this conversation. The board should continuously review the skills of the existing board members and identify the holes they may need to fill. For example, if the organization’s social media presence is not quite up to par, the board should seek out a potential board member that can help with social media, or someone who can guide the organization’s staff members, depending on the size of the organization.

  4. Create a clear committee structure. Committees are particularly important to small organizations that rely on board participation and volunteers. Committees are equally important to large organizations that require governance over several different programs and activities. The board should ensure all board members are part of a committee and that each committee has clear marching orders and tasks to complete. This helps board members understand their roles within the organization and keeps them engaged.

  5. Plan for the future. Succession planning for non-profit boards is important. Current leadership must work with their fellow board members to identify the future leadership of the board. This is extremely important in small organizations that are managed by the board of directors or volunteer organizations where the board members take on staff responsibilities. The current leadership should look for opportunities for those future leaders to take on responsibilities within the organization to allow them to grow their skills. They also need to keep an open dialogue with fellow board members regarding the future of the board’s leadership.

  6. Communicate. Keeping the board engaged requires a lot of communication. It is not enough anymore to fill a seat at a monthly board meeting and vote on the issues put forth by the chairperson. Decisions constantly need to be made, and committees and subcommittees are constantly working to accomplish the goals of the organization. The leadership of the organization, the board and the committees must continuously communicate with each other in order to make timely, informed decisions.

There is a lot of responsibility that comes with participating on the board of directors for an organization. The easier the organization and the current board leadership makes getting involved in the organization, the more talented future board leaders they will attract. Also, the clearer and more structured the board is, through use of committees and communications from leadership, the more engaged the board members will be. This will result in a more productive and effective board for the organization, allowing for the organization’s success in fulfilling their mission.

Jessie Kanter, CPA, is a manager in the firm’s Accounting and Auditing Department with 15 years of public accounting experience. She has provided audit services to a variety of clients, including non-profit organizations. Jessie’s focus is in quality control of financial statement audits in which she provides consulting on complex technical accounting matters and internal support and review for the firm.

How Does the Affordable Care Act Impact Non-Profit Organizations?

Several non-profit organizations have recently asked how the Affordable Care Act (ACA) impacts them. The ACA treats non-profit organizations no differently than any other employer in the United States, and, therefore, its provisions are applicable. Pretty simple, right? In order to determine how it applies to your organization, it is important to understand how many full-time equivalents you have on staff. For example, the ACA requires employers with more than 50 full time equivalents (FTEs) (100 for 2015) to offer minimum health insurance coverage to their staff or be subject to penalties. This is often referred to as the “pay or play” provision and is effective beginning in 2015. The ACA defines an FTE as an individual who is employed on average for at least 30 hours of service per week (see IRS FAQ on FTE determination at http://www.irs.gov/pub/irs-drop/n-12-58.pdf).

While organizations with less than 50 FTEs (100 for 2015) are not subject to the pay or play penalties for not offering health coverage, the ACA provides those employers with access to a Small Business Health Options Program (SHOP), which is a health insurance marketplace available in each state. In general, small organizations tend to pay more than large organizations for health insurance. Thus, the purpose of the SHOP is to allow employers to pool their risk and purchasing power in order to obtain lower premiums. While SHOPs are currently available only to employers with 50 or fewer employees, they will open up to employers with 100 or fewer FTEs in 2016.

In addition to having access to a SHOP, organizations with less than 25 full-time equivalents may also be eligible for a Small Employer Health Credit to assist in defraying the cost of health insurance for staff. In order to qualify for the credit, your organization must have fewer than 25 FTEs, pay at least 50% of health insurance premiums (purchased through a SHOP) for those employees and have an average annual employee salary of less than $50,000. The credit is refundable, so even though your organization is tax-exempt, you may be eligible to receive the credit as a refund as long as it does not exceed your income tax withholding and Medicare tax liability

Other important requirements under the ACA are that employer-offered health insurance needs to be affordable and meet minimal coverage standards. A plan is considered affordable if the employee’s share of premiums for the lowest cost employee-only coverage that meets the minimum coverage standard is less than 9.5% of his/her family’s income. In other words, an employee’s share of the premiums for a plan that covers only him or her (the employee), not the entire family, is less than 9.5% of the family’s income, the plan is considered affordable. Employees may pay more than 9.5% of their income on premiums for spouse or family coverage from your employer. Further, the ACA indicates that a health plan meets the minimum coverage test value standards if it is designed to pay at least 60% of the total cost of medical services.

Health Insurance Notifications

The ACA also requires virtually all employers to provide the appropriate health insurance notifications to their employees. The necessary notifications vary based on the size of the organization and whether or not employer-sponsored insurance is offered. Further, starting in 2016, employers will be required to file informational returns on behalf of employees regarding the health insurance coverage offered during the year. Form 1095-B provides details of the coverage for each employee, including the name of the provider, months covered and whether the coverage meets the minimum coverage provisions of the law. The 1095-C will only be required to be filed by employers with 50 or more employees and is used to determine if the employer is offering the correct health insurance coverage and cost sharing to its employees. If the employer is offering the appropriate coverage, no penalties will be incurred.

With ACA provisions becoming effective, and given the complexities of the law and its varying levels of applicability based on the size of an organization, it is important that organizations work with their benefits providers and/or brokers to ensure they are compliant. The government website, www.healthcare.gov, is also a very useful resource and outlines how the law impacts both employees and employers.

Chris Ernest, CPA oversees audit and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.  Chris provides services to a wide range of  non-profit organizations, including independent schools, country clubs, museums and trade associations. In addition, he specializes in audits of employee benefit plans.

Communication Between the Business Office and The Board

As a member of the business or finance office, you hold some of the most sensitive and important information regarding the operation of your non-profit.  Budgets, cash flows, obligations, covenants, financials, audit, internal controls, legal and regulatory matters….all of these can have a tremendous impact on how the individuals running the program activities accomplish their goals. Matters surrounding finance can provide stepping stones or significantly hinder the progress of the organization’s mission.

The finance office is charged with providing the most useful and pertinent information to the Board, which will enable them to fulfill their responsibilities of providing guidance and decision-making, most importantly surrounding fiscal matters.

Nonprofit Board meetingAs the CFO, Controller or Business Manager, have you thought about what you should be providing to the Board and in what format? Boards typically meet for an hour or two once a month or quarter. Given the limited time frame, this should be the time that they discuss critical matters, review accurate and timely financial reports and vote on high-level governance matters. Providing a great deal of extraneous data can muddle the waters and prevent them from understanding the true issues and being able to make timely resolutions. Here are a few areas to focus on which will help to ensure the Board has the tools to be most effective in fulfilling their responsibilities.

Organizational, legal and regulatory matters: 

First and foremost, the Board should be well informed of any and all potential risks that arise in these areas. Has the organization consulted an attorney for any claims or potential litigation? Are there new financial, reporting or other regulatory matters that are coming down the pike that may affect the organization? Significant accounting or audit standards, personnel matters, 990 reporting, communications from regulators, filing complications, due dates, donor matters, etc. can all have an impact on the organization and its ability to continue with its mission.

Finances: 
The Business Office should be preparing timely, summarized financial reports that are relevant to the Board’s responsibilities. Reports should be formatted in a way that does not confuse, overwhelm or complicate discussions surrounding finance.  Discuss with the Treasurer of the Board the most effective method of providing these reports. Have the Treasurer review the reports, and other more detailed information prior to submission to the Board, which may help to identify any questions or concerns ahead of time. It is probably helpful if the Board can review current month/quarter budget vs. actual reports as well as year-to-date compared to budget and prior years. A concise analysis of the significant activities of that period, such as large new contributions, significant past due balances or write offs and reserves, unanticipated expenses or capital purchases as well as high level departmental budget to actual comparison. Most importantly, having the most relevant and timely reporting available will enable the Board to make decisions on a timely basis, and avoid surprises at the end of the year.

Conflict of Interest and Related Party Activity: 
All Board members should be reading and signing a conflict of interest (COI) policy each year. All possible related parties and transactions should be disclosed in full, and any interested person should be excused from those discussions and determinations.  One misconception is that it is undesirable to have any related party activity, such as a Board Member who can provide professional services to an organization. Often times, a Board member can give back to an organization by providing expertise that the Organization would otherwise have to incur significant expenses for. This is ok, as long as regulation allows for it (for example, a financial statement audit must be conducted by an Independent Auditor), and provided that the Organization follows its COI policies surrounding disclosing, understanding and voting on these relationships and the transactions.  The Business Office liaison is often times the individual who ensures that the Board has all of the relevant information, that these matters get on the agenda and that the process adheres to approved policy.

Form 990: 
The Business Office is typically the department that ensures that the Form 990 is prepared timely and accurately. One section of the 990 includes several questions surrounding governance and policy. It goes without saying that the Board should be well aware of these policies at the time that they sign on to be a Board member. However, one question asks whether the Board has received a full copy of the 990 (as filed), and what the process is for the review of the 990. These questions are really aimed at shining a light on the Organization’s responsibility for ensuring that the 990 contains accurate information. Typically, the auditor/CPA is preparing the form, however there is so much more than quantitative data on the 990 as compared to any other IRS tax form. The qualitative data must come from the leadership of the Organization.  Each Board member should be aware of what is contained in the filing, and be expected to understand the questions and implications of the Organization’s responses.

Timeliness:
As the key financial officer of a non-profit, the CFO or Business Manager should aim to provide the financial reports to the Board members in advance of their meeting dates. Having the appropriate amount of time to carefully review reports, budgets, forecasts and analysis will enable the Board members to prepare thoughtful questions and commentary on the information given.  This will set the stage for a more meaningful discussion and proposed responses, ultimately benefitting the mission of the Organization.

 

Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.