Many not-for-profits supplement their usual income-producing activities with sponsorships or advertising programs. Although you’re allowed to receive such payments, they’re subject to unrelated business income tax (UBIT) unless the activities are substantially related to your organization’s tax-exempt purpose or qualify for another exemption. So it’s important to understand the possible
Nonprofits don’t face the same government regulations or public scrutiny as for-profit public companies do. But that doesn’t mean your board can afford to get slack about financial governance. Donors and watchdog groups pay close attention to organizations’ Forms 990 and the media is quick to pounce on rumors of
If your not-for-profit is struggling financially, you’ve probably already taken steps to cut costs, such as wage freezes and layoffs. But to keep your organization afloat, you may need to come up with more creative ways to generate operating cash flow. Here are five: 1. Revisit your mission and programs.
Annual financial statements that have been audited by a professional auditor can help assure funders and lenders that your not-for-profit is financially sound. Here are three critical audit issues to understand when preparing financial statements: 1. The auditor’s role Auditors are responsible for expressing an opinion on financial statements. Beyond
Not-for-profits that ignore the IRS’s private benefit and private inurement provisions do so at their own peril. These rules prohibit an individual inside or outside a nonprofit from reaping an excess benefit from the organization’s transactions. Violation of such rules can have devastating consequences. Defining terms A private benefit is
Information is power. And regularly supplying information to your not-for-profit’s board of directors is the key to the board properly fulfilling its duties. This doesn’t mean you have to share every internal email or phone message. Board members should, however, receive and understand information that will help them work together
Whether you’re planning to raise funds for your not-for-profit with a simple bingo game or raffle, or with a more elaborate casino night, you need to understand and follow the federal rules that govern these kinds of activities. Gaming activities can open the door to unexpected taxes and trigger requirements
To err is human, but your not-for-profit’s supporters, not to mention the IRS, may be less than forgiving if errors affect your financial books. Fortunately, if you attend to accounting details, you can avoid these common pitfalls: 1. Failing to follow accounting procedures. Even the smallest nonprofit should set formal,
As the end of the year approaches, not-for-profits are eagerly soliciting — and accepting — donor gifts. While your first instinct may be to accept all gifts, it may be prudent to turn some of them down due to such factors as space restrictions and unsuitability to your mission. Here’s
Your not-for-profit’s board members may be able to offer access to better deals or services than your organization could get on its own. However, there’s a fine line between a board member helping your nonprofit get fair pricing and the member receiving perceived or actual personal benefits. The latter can
