6 Big Questions to Ask Before Starting a Nonprofit Social Enterprise

As they look for ways to become more self-sufficient and provide themselves with predictable revenue, increasing numbers of nonprofit organizations are engaging in social entrepreneurship.

The benefits of going this route take many forms. Making money through a nonprofit social enterprise can help fund the expansion of programs and services. That money is free from the restrictions of government agencies and foundations, which typically provide grants for narrowly defined purposes. And, with more money coming in, an organization’s leadership can focus less on fundraising and more on capacity building and the development of programs that meet the nonprofit’s mission.

Social entrepreneurship comes with its fair share of challenges, especially for organizations with little to no experience in the for-profit world. Below are several questions to consider before you move forward with a nonprofit social enterprise business plan:

1. What’s your current financial status?

Social entrepreneurship is not a feasible way to help a nonprofit out of immediate financial hardship. Rather, it’s a long-term strategy that may take several years to pay dividends. You may lose money on your venture for some time before turning a corner and becoming profitable.

2. Is your funding diverse enough?

There are few things scarier to a nonprofit than having one or two large funders responsible for the majority of its budget. If a funder does not come through on the next grant cycle, the impact could be devastating. A nonprofit social enterprise can diversify your funding and keep you from relying too heavily on any one revenue source.

3. How well are you raising funds now?

Are you having trouble bringing in funds from traditional sources? If so, social entrepreneurship could allow you to explore new methods of bringing more money through the door. If you are confident in your nonprofit’s ability to raise money through traditional means, you might be better off sticking with that.

4. What’s the status of your ‘funding well?’

As you look at your current and potential funders, is there a limit to the amount of money you could possibly raise? Many nonprofits find that they can raise a lot of money from a limited number of funders, but struggle to go beyond that. If your organization’s “funding well” appears to be drying up, social entrepreneurship could open up more opportunities.

5. Do you have strong leadership?

Launching a nonprofit social enterprise business plan is a big task—and not one that should be handled by an organization dealing with uncertainty in its leadership. Staff turnover should be relatively low and the board should have confidence in the executive director and other management personnel.

6. Does your nonprofit have an entrepreneurial spirit?

Some organizations like to take risks and explore new ideas, while others can be more traditional and conservative. If your nonprofit falls into the former category, it may be positioned well for social entrepreneurship opportunities.

While there are clear financial and capacity-building benefits to nonprofit social enterprise, it’s important for organizations and their boards to conduct a comprehensive assessment of their operations first. Without the leadership, staff and resources to make it happen, it can be difficult to support social entrepreneurship for the long term. Keep these questions top of mind as you discuss this issue with your board.

Contact Us if you would like to discuss how to use social entrepreneurship in your nonprofit organization.

The post 6 Big Questions to Ask Before Starting a Nonprofit Social Enterprise appeared first on Checkbox Accounting.

How good financial management increases your nonprofit’s social value

Managing a non-profit organization or trade association effectively is a very specialized skillset. As the management board or trustees, you’re the absolute experts in running the day-to-day elements of your non-profit in order to meet your key social objectives.

You’re driven by your social beliefs, you’re bringing in the donations you need and you’ve got all your event planning, fundraising, and membership under complete control. But there’s one element of managing your non-profit where many organizations fall down – and that’s getting control of your financials.

The better your financial management is, the more impact you can create from your available funding – and, after all, increasing your organization’s social value is precisely why you went into the non-profit sector, right?

So, how does better control over your financials impact your organization?

The impact of good financial management

When your non-profit organization was founded it had a mission;  to address an urgent social or community need or to serve the interests of a particular group of beneficiaries, stakeholders or members. Your aim is, no doubt, the same now as it was then, to have the most positive impact possible in furthering that mission.

A key part of creating this positive change is in  maximising your fundraising efforts and managing your financial affairs  responsibly and with a view toward greater efficiency and transparency. To do this well, you need to:

• Develop a budget and stick to itMonitor your costs, expenses and other transactions against your budget
• Record your donations and funding in detail
• Provide clear reporting on how you’re spending these funds.

In short, you need a robust and transparent accounting function.

The good news is that it’s never been easier to set up a cost-effective and easy-to-use accounting system. Advances in cloud technology and financial technology mean that there’s a great choice of cloud accounting solutions to choose from – from Xero Online Accounting to QuickBooks Online.

Cloud accounting software is simple to learn, automatically backs up all your data to the cloud and gives you a convenient, mobile way to access your accounts and key numbers at any time. Critically, with an accounting solution in place you’re in an excellent position to start improving the level of control you have of your organization’s financials.

A budget you can understand and track

Creating a budget for your spending is fundamental to staying in control of your financials. By knowing your expected overhead and projected funding income, you can calculate a budget that’s realistic and practical to adhere to.

This budget can then be plugged into your accounting system to give you a benchmark for the organization’s income and outgoings. By regularly reviewing your actual funding and spending against your budget, you can track these numbers and easily see where there’s a shortfall – and where there may be a need for urgent action.

Practical performance management

Tracking your budget is just one part of the wider need for performance management within your non-profit organization.

By running more detailed reports from your accounting system, and setting clear metrics and key performance indicators (KPIs), you can tag, monitor and review nearly every element of your internal performance. Keep a close eye on your cash-flow numbers, measure how your monthly funding income is performing against your projected budget, or see how well your payroll costs are comparing to your available income.

The core benefit here is that you have a transparent view of how well (or not) the organization is performing. By working closely with your accountant and advisers, you can monitor performance more productively, and get the guidance and advice that’s needed to avoid any pitfalls and take direct action, where needed.

And for those non-profits that have opted for the cloud accounting route, there’s the additional bonus of access to a wide range of hugely helpful cloud-based reporting, performance and forecasting tools – all of which adds to the depth of your financial insight.

The non-financial elements that help your non-profit

 Of course, it’s not just the financial elements of running a non-profit that have an impact on the organization’s cash reserves and overall performance. And that’s where a deep working relationship with your professional adviser can add real additional value.

• Increase your membership – working on strategies to expand your membership or finding new investor opportunities is a highly effective way to pump up your cash flow.
• Meet your compliance deadlines – running a non-profit means meeting a lot of regulatory and compliance-driven deadlines – something your adviser can help you with. The less time you spend on meeting your compliance requirements, the more time you have to focus on fundraising, events and other core ways of expanding your reserves.
• Expand your professional network – when you work with a non-profit expert, you have access to a growing network of other professionals who can help you get more from your own organization. The bigger your network, the more impact you can have.
• Find the best talent – your non-profit is only as good as the people that run it, so having access to a wider professional network also opens up opportunities to source the best possible talent and non-profit professionals to work on your team.

 Work with a nonprofit expert

 At Checkbox Accounting, we’ve been working with nonprofit organizations and trade associations for decades – so we know the challenges your organization faces and the most productive ways to overcome these potential hurdles.

Unlike some CPAs, we understand that running a nonprofit is a very different proposition to running the average private business. Your goals are different, you’re not driven by pure profit and your objectives are driven by a desire to work for the greater good of your communities.

We’ve pulled our nonprofit insights and advice into a free helpful guide – giving you all the key steps to take in order to improve the efficiency of your organization.

Download your free guide for nonprofits here

The post Use good financial management to increase your nonprofit’s social value appeared first on Checkbox Accounting.

Since the launch of “Giving Tuesday”, nonprofits have another compelling reason to engage in year-end fundraising. Started in 2012 by New York’s 922nd Street Y organization, and supported by the UN Foundation, the “Giving Tuesday” movement has become a nationwide and global phenomenon. In just a few short years, the event has drawn huge interest and participation from individuals, for profit business, nonprofit organizations, schools and other community groups. In 2016, $168M was raised from over 98 countries (source).

As stated by the organizers on their website, “It’s a simple idea. Just find a way for your family, community, your company or your organization to come together to give something more. Then tell everyone you can about how you are giving. Be part of a national celebration of our great tradition of generosity.”

To learn more about “Giving Tuesday” and how you or your organization can participate, go to www.givingtuesday.org. You will also find out about the exciting celebrations and events planned for “Giving Tuesday 2017” which takes place this year on November 28th.

Nonprofit organizations may find the celebration of “Giving Tuesday” an opportune time to kick off their year-end fundraising or awareness campaign, launch a matching gift challenge, start a volunteer campaign in their community or simply share their organization’s story.

At the same time, you or your organization will be participating in an important global movement to bring attention to the charitable sector and the important work they do.

Originally published 2016 – Updated 11/13/17

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But you know it is looming. Out there, in the not too distant future. Waiting.

Here’s the truth – your end of year audit isn’t going to disappear anytime soon. Taking the right steps now in getting prepared will not only save you time and money, but also a great deal of frustration.

And whether or not you think of it as merely a necessary (or unnecessary) evil, be assured that the annual audit does in fact have its benefits.

You see, an audit is a great opportunity for taking stock of your nonprofit organization; to come face to face with its true financial condition, and to gain a better understanding of how well it’s using its resources.

Inquiries will come from your auditor regarding your accounting processes and internal controls. It may not be the easiest of conversations to have, but it is a terrific opportunity to improve upon those processes and controls.

The discussion with your auditor will also help your organization better protect itself against fraud and theft, while your board and your donors will gain confidence in the reliability of your financial reports.

Take Action Now

Here’s a few suggestions that should make this year-end process go more smoothly.

• Have a sit down meeting with your auditor in advance of your fiscal year end. Let’s face it, sometimes there is no replacement for a face to face conversation. This is the ideal time to address any problems that were encountered in the prior year and talk about how they can be avoided during the audit coming up. Also, it’s the time to give your auditor a heads up for any changes or new developments that might have an impact on the audit process.
• Read the engagement letter that you receive from your auditor. That letter will outline what the audit is and isn’t about, and define your responsibilities, as well as those of the auditor.
• Request that your auditor send you, in advance of the start of fieldwork, a list of the documents and information that you will need to assemble for their use and review. Also ask them to specify the items they will need before fieldwork starts to do their pre-audit planning.
• Organize the requested documents for their use and review. Typically the auditors will want to see the following documentation:
  • Bank statements and monthly reconciliations;
  • Investment summary showing year end balances, annual investment activity, and income;
  • Documentation in support of donor pledges, donated securities and property, and grant funds received;
  • Fixed asset and depreciation schedules;
  • Accounts payable and receivable aging statements at year-end; and
  • Copies of lease and debt agreements.

Coordination Is Key

To make sure the audit goes ahead with the least amount of disruption to your nonprofit, coordinate the auditors schedule with yours and that of your staff.

It’s best to schedule the audit fieldwork for a time when it will be the least disturbing to your office routine, and when you and your staff can devote the necessary attention to the audit.

What’s more, it’s crucial that the year end closing of your books has been done properly, and that all cash and balance sheet accounts have been reconciled, fixed asset and depreciation schedules have been updated, and that adjusting entries have been booked to give effect to any required
accruals and deferrals.

And it’s important to remember the more efficient and organized you are in preparing for the audit and assisting with the auditors, the less time they will spend in your office. Since many firms bill on an hourly basis when performing audit services, the less time they spend on the audit, the less they will bill your organization upon its completion.

So keep this simple equation in mind:

Greater preparedness = Greater Efficiency = Reduced Fees.

We’re Here to Help

If you’re feeling a bit overwhelmed with the organization and preparation of your records prior to the end of year audit, we can help.

Simply contact us today to speak with one of our friendly advisers.

The post Year End Audit Preparation for Nonprofit Organizations appeared first on Checkbox Accounting.

And you would be right.

The first step in any effective strategic process is essentially a truth telling exercise. It’s a matter of confronting the reality of what an organization – any organization – is, and what it really does.

In his book ‘The Nonprofit Strategy Revolution’, consultant David La Piana of La Piana Associates calls this “understanding Organization Identity.” It’s fair to say that leaving out this step may doom a strategic planning process to failure.

Now, strategy is not the same as planning (although planning can be strategic). Strategy should be an ever-evolving, ongoing effort to determine the right approach towards a desired end.

Good strategy, not necessarily good planning, ultimately determines the success of a nonprofit’s attempt to achieve its mission. And it is often essential to good nonprofit leadership and management.

In this post, we will take a brief look at where you should start the strategic thinking process, and what you need to do to understand your own nonprofit’s identity.

Start Here

La Piana recommends that you start by being brutally honest about what your organization really is and does. Your board and management need to make an assessment of who they are as an entity, what they do, how they do it, and how they finance it.

This process of assessment is not your strategy, but it does lay out the “raw ingredients of strategy”.

Next, your management and board need to draft an ‘Organization Identity Statement’. This will outline the following:

• A Sound Organization Business Model
• A Clear Market Awareness
• An Understanding of Your Organization’s Competitive Advantage(s)

Here we address each of these sections in more detail.

Your Business Model

Your board and management team need to be crystal clear on the following:

• Who the organization is or seeks to be (i.e. its mission and vision).
• The work you do. In other words, what are the activities you perform to achieve your mission and promote your vision?
• How you do it (i.e. the structure, operations, budgets, and policies that support these activities).
• How you fund it.

If all of these elements – mission, organizational structure, program activities, and finances – click, then you have a sound business model.

However, if there’s something clearly not working (a lack of integration between these elements, or dissonance among board members with regards to the organization’s mission) then you must rethink the business model.

Take the time to identify it, and make sure it’s the right one. As La Piana contends, “a relatively brief structured conversation among organizational leaders… can lead to startling insights on the part of participants.”

Be open and honest with one another. Otherwise, you’ll set down the path of a costly and time-consuming strategic process, only to find that your strategy is built on unsteady ground.

Your Market Awareness

Next, you must know the marketing landscape for your organization. And you must be able to pinpoint its position in that landscape.

Your nonprofit needs to ask and answer the following questions:

• What is your organization’s market – i.e., who do they serve?
• Is that market expanding or shrinking?
• Who else is in the same market? Who are your competitors?
• Where does your organization stand in relation to its competitors? And what are your organization’s relative strengths and weaknesses?
• How did your organization obtain its current status relative to others?
• Where does your organization want to go in the future?
• What are the demographic, economic, social, and technological trends that will shape our market in the future? And what threats or opportunities do they post for your organization?

This isn’t a step to be taken lightly.

Developing a deep and meaningful understanding of your organization and its competition can be an involved process of fact gathering and analysis, or a focused conversation among staff, the management team, and the board.

Either way, it’s crucially important that you fully comprehend your organization’s market position, wider market trends, and the strengths and weaknesses of your competition.

Your Competitive Advantage

The discussion of the marketing landscape and competition segues quite nicely into the discussion of your organization’s competitive advantages.

Taken from the perspective of a nonprofit, competitive advantage is essentially about your organization’s unique ability to produce sustainable social change.

Therefore, understanding your competitive advantage comes from asking: “Is there something that differentiates us from our competition? What makes us better than the average organization in our market in order to produce superior outcomes?”

Your competitive advantage can take one of two forms:

1. Asset Advantages – These involve a process or method that your organization has developed or owns that is inherently better than what other organizations have. For example:

• Better program design.
• A highly accessible location, network of locations, website, special connection with funders, or a class of donors.
• Great name recognition and reputation among funders or members
• An influential and well-connected board of directors.

2. Execution Advantages – Even if there is no unique process, method or technology, your organization may just be doing things better than others. Examples would be:

• Greater efficiency or effectiveness in the delivery of products or services.
• Superior marketing to or communication with clients, members or beneficiaries.
• Better transparency in accounting and reports of outcomes.
• More effective use of social media in connecting with members.

As La Piana writes, “breaking the concept (of competitive advantage) down, as we have here, into asset advantages and execution advantages requires thinking about your organization in what is probably an entirely new way – and one that will not occur during a traditional strategic planning exercise”.

Do You Need Help Understanding Your Organization’s Identity?

La Piana’s book and the accompanying Facilitator’s Guide contain detailed direction on how to conduct a strategy thinking session for developing and documenting an Organization Identity Statement.

But if you’d like some hands-on guidance, contact us today to arrange a strategy session with Checkbox.

The post Laying the groundwork for a solid organizational strategy appeared first on Checkbox Accounting.

Implementing a performance measurement program requires the development of an information feedback system. By this we mean a system that allows the management to identify, monitor, and take action to improve select KPIs (key performance indicators) that relate to the primary performance areas of the organization.

In this post, we will discuss how to identify these performance areas for your nonprofit, and how to implement your own performance measurement system based on your mission statement.

Don’t Try to Measure Everything at Once

It’s important that you drill down into the performance areas that truly matter to your nonprofit. Trying to measure everything and anything will only lead to information overload.

For most for-profit businesses, the areas of interest typically include sales, customer relations, operations, finance, and personnel. You may have noticed that a number of these performance indicators are bottom-line oriented, or tend to influence and impact profitability and productivity.

More often than not, this kind of information can be quickly and easily accessed by running reports in an accounting system.

However, if your nonprofit organization is to evaluate how well it is doing in achieving its mission-driven goals, it will need to devise a way to measure the overall effectiveness of its programs and services.

In essence, your performance measurement system needs to be able to determine whether or not the not-for-profit programs and services provided by your organization are having the desired effect, as promised by your mission statement.

How to Measure Nonprofit Effectiveness

The performance indicators we recommend nonprofit organizations use to measure service effectiveness and accomplishments typically fall into one of the four following categories:

1. Input measures which quantify the efforts or resources expended in an activity or program.
2. Output measures which quantify the volume or level of services provided or delivered.
3. Outcome measures which quantify the actual effect an organization’s efforts have on its objectives.
4. Efficiency measures which compare the amount of inputs with output or outcome quantifiers.

And once you have identified the performance indicators relevant to your organization, you can then look at the process of implementing your performance measurement system.

This can be broken down into the following basic steps:

• First, clearly identify the organization mission and its mission related objectives.
• Then define the main performance areas that have a significant impact on whether or not, and how well, the organization achieves these objectives: service accomplishment, client relations, fundraising, community image, etc.
• Next, develop and map a system of key performance indicators organized by the above determined performance areas: meals served, beds occupied, cases treated, local literacy rate achieved, client satisfaction level, etc.
• Finally, implement the new performance measurement system, including procedures which require ongoing monitoring and reporting.

Put Your Mission Statement to Work

Most nonprofit organizations have a mission statement, but many don’t take the time to evaluate it.

The process of developing a performance measurement system provides an excellent opportunity for you and your management team to gauge whether your organization is on track to meet its mission goals.

At every step in the measurement process, the input of employees, program managers, accounting staff, and the board of directors is vital for developing practical, realistic, and workable measures for which management and staff can be held accountable.

What’s more, the identified measures or indicators should be incorporated into an overall performance measurement system. This should cover all the key performance areas of the organizations and allow for periodic monitoring, reporting, and reevaluation.

Do You Need Help Measuring Performance?

If you’ve come to the end of this post with the realization that you need to start tracking your nonprofit’s performance, then we can help.

By facilitating the process and helping with its maintenance, Checkbox can put your nonprofit on the path towards a more effective and efficient output.

Contact us today if you feel your organization would benefit from a performance measurement and performance improvement system.

The post Performance Measurement for Nonprofits appeared first on Checkbox Accounting.

Each individual board member should bring their own take on proceedings to the table, not to mention their own network of contacts and professional experience.

What’s more, with a mix of cultural backgrounds and ages on your board, in addition to the requisite skills, you will have a non-profit that is well placed to manage risk, plan accordingly, take advantage of future opportunities, and engage with the wider community on a much deeper level.

Why is non-profit board diversity important?

By reflecting the diversity of the very community you are serving, your non-profit board will be in a position to make meaningful connections with prospective donors, partners, and policy makers.

It’s also important that your board members aren’t too far removed from the issues that are impacting your stakeholders. An ability to identify and respond to external environmental factors and influences is key to both short and long-term success.

With diverse and varied perspectives present in the boardroom, major decisions can be taken with confidence. A board with many different voices and backgrounds are much better placed to identify both opportunities and threats, whereas one with very little or no diversity risks being stagnated by its narrow view of the world at large.

Implementing a diverse non-profit board

If your current board lacks the necessary levels of diversity to take your non-profit forward, all is not lost. You can take the following steps to make sure your board evolves into one packed with varied and important skills and experiences.

• First, seek new board members who can expand upon the existing board’s cultural awareness. Ideal candidates should offer something different in terms of their cultural backgrounds, professional expertise, personal experience, and networking capabilities to what you already have.
• And if you’re not totally clear on where your board currently stands in terms of diversity, skillsets and strengths, you can undertake a self-assessment program via BoardSource (click here to get started).
• Next, think about the direction in which your organization is heading. What should your board look like as your non-profit continues to grow and progress? And what particular skills, contacts, experiences, and backgrounds will be most useful in getting you to closer to your goal?
• Finally, set goals for improving your current board in certain areas. New candidates should be evaluated with those goals in mind, and current board members should be made aware of the areas that require strengthening as they too consider prospective board members.

Don’t be afraid to ask for help

When cultivating a diverse non-profit board, it’s not enough to leave things to chance. Developing a structured approach to identifying and recruiting new board members is the only way towards sustained success for your organization.

It is fundamentally important that your non-profit board includes individuals who have strengths and contacts across a variety of professional and personal backgrounds, including marketing, legal, and social media to name but a few.

It’s also crucial that every non-profit board have at least one member with expertise in finance to ensure everything is compliant and legal.

There are a number of resources available to help you take your first steps towards diversifying your non-profit board, such as the previously mentioned BoardSource and the National Council of Nonprofits. Locally, the Impact Foundry (formerly the Nonprofit Resource Center) is an outstanding resource. Under the leadership of Kim Tucker, its Executive Director, the newly named and restructured organization is offering a wide range of educational, consulting and networking programs and events aimed at helping non-profit boards and management to succeed in the non-profit world. Checkbox Accounting’s own non-profit expert, Bill Simi serves as Impact Foundry’s treasurer.

If you’d like to discuss non-profit board diversity further, contact Checkbox today.

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In the case of non-profit organizations one of those exceptions to the general rule of tax exemption is something called “Unrelated Business Taxable Income”. Nonprofit boards and management should be aware that it is out there and that it might be applicable to their organization depending on the kind of activities it carries out.

First, let’s get clear on a couple of acronyms that might otherwise be confusing:

UBTI = Unrelated Business Taxable Income
UBIT = Unrelated Business Income Tax

What is Unrelated Business Taxable Income?

If your non-profit is carrying on activities that are not related to the tax-exempt purpose of your organization, any income from that activity might be deemed to be UBTI and subject to income tax.

Unrelated Business Income Tax (UBIT) is applied to any income generated by commercial activities that don’t fall within the scope of your non-profit’s exempt purpose (remember, that purpose you declared you were dedicated to when you applied for your exempt status with the IRS). So if you’re bringing in revenues that don’t directly benefit your charitable cause, it’s likely that you’ll have to pay UBIT on this income.

How UBTI can impact your organization

If your non-profit hasn’t considered the potential impact of UBI, it can come as quite a shock when the IRS comes knocking and you are required to pay over an unbudgeted amount to cover tax costs and possibly penalties and interest.

How does an organization guard against this rude surprise? By finding an advisor who understands not only the exceptions to the exceptions but the exceptions to the exceptions to the exceptions.

With proper planning UBTI can be avoided or at least properly planned for. For instance:

• By restructuring an activity so that at least 85% of the labor involved in the activity was provided by unpaid volunteers, we were able to allow a client to avoid UBTI characterization even though the activity was otherwise unrelated.
• Another client involved in a profit splitting agreement with an insurance company had been reporting UBTI and paying tax for number of years. As the revenue grew, so did the tax. We assisted the client in structuring their contractual relationship with a new insurance company so that the majority of income was in the nature of royalty income, a kind of income that under most circumstances is excluded from UBTI. The result has been a tax savings of thousands of dollars.

Talk to us about your UBTI concerns

If you’re running a non-profit organization and are concerned about the potential impact of UBTI, we can help you to review your activities for UBTI potential and discuss the possible ways you can restructure the activities to place them outside the scope of UBTI or reduce any tax liability.

Contact us at Checkbox and arrange for a chat.

The post The impact of Unrelated Business Taxable Income on your nonprofit appeared first on Checkbox Accounting.

For nonprofits, it can be all too easy to overlook the importance of such filings, viewing it as a necessary evil – a dull and dry “must do” on the end of year checklist.

However, one form in particular – the 990 – should be considered a truly great opportunity (more on that later).

But first…

What is the 990?

For those of you unaware, the Form 990 was designed to allow both the IRS and the public to evaluate tax-exempt organizations and how they operate. It collects information about the nonprofit’s mission, programs, and of course finances.

And more recently, the 990 has been amended to gather even more information about nonprofits, including the compensation of board members and staff, the disclosure of any potential conflicts of interest, and financial accountability and the avoidance of fraud.

Who Needs to File a 990?

Large nonprofit organizations with gross receipts of $50,000 and over must file Form 990 or 990-EZ.

And smaller nonprofits with gross receipts of less than $50,000 must file Form 990-N so that they can retain their tax-exempt status.

Is Anyone Exempt?

Churches, religious schools, missions and missionary organizations are exempt from filing the Form 990.

Subsidiaries of nonprofits are also exempt if a group return is filed by the parent organization, as are some state institutions and Government corporations.

Remember, the 990 is Public Information

Now, remember earlier when we mentioned that filing the Form 990 is potentially a great opportunity for nonprofits? Well, here’s why.

It’s public information.

This means this “must-do” piece of paperwork can actually act as a platform from which you can shout about and celebrate your organization’s accomplishments and social impact.

What’s more, the form is available through a variety of internet platforms, such as Charity Navigator and Guidestar. You can therefore be certain that many donors and grantors alike will use the form’s information to vet charitable organizations.

So, when you reach the section of the form where you are required to describe your program accomplishments and activities, think of it as free advertising.

Grasp that opportunity with both hands; tell your story and frame your mission in such a way that it will resonate with readers.

Go Beyond Compliance

You will more than likely need to file the Form 990 every year. Nonprofits that go three years without filing the form can actually lose their tax-exempt status, with no appeal process.

You need to be compliant when completing your year-end paperwork, and we can help with that. But we can also help advise you as you go from being merely compliant to leveraging the opportunity for positive PR afforded by this form.

Contact us at Checkbox to find out more.

The post Form 990 – A Necessary Evil or a Great Opportunity? appeared first on Checkbox Accounting.

Having cash that’s available in the business for unexpected financial challenges is part of building risk control into your business model. In an uncertain world, knowing that the adequacy and growth of cash reserves has been considered in your budget plan provides real comfort that you will be able to:

• deal with the emergencies that may come, and
• build capacity toward the successful achievement of your organizational goals, whether those goals takes the form of an increase in profits or market share for your for-profit business, or the expanded and deepened social impact of your nonprofit’s programs.

On the flipside, not putting the right consideration into cash flow can have serious consequences for your reserves.

As an example, one of our nonprofit clients holds a regular, annual event which is its primary fundraiser for the year. A significant amount of board, staff and volunteer time is committed to making this event a success.  In the months leading up to the event, cash inflows from increased memberships, sponsorship support, exhibitor and attendee fees, caused cash reserves to swell.— So far, so good— But when the overall expenses for the event  were added up, including supplies, speakers and advertising etc., this overhead would subsequently cause the client’s cash reserves to plummet.

How, then, do you resolve this challenge of cash reserves being decimated by ever-increasing fundraising costs?

The answer was to supply the nonprofit with a trend analysis. This showed the client how, at the end of each year, they were ending up in the same cash position. Their cash was being emptied out and there was no profit to drive back into the charity. The organization as a whole was not growing.

With the information in the trend analysis, and our support and guidance as business advisors, the client could intelligently review the value of the event as it related to its social goals.

Running the event is a great fundraising opportunity for this client, but it needed to be planned with an eye on the organization’s financial stability and growth and with its ultimate and primary social purpose in mind. To do that effectively, they needed a proper budget and a cost center review.  Armed with those foundational tools, the client could then analyze if their event was aiding the long-term strategy of the organization and furthering its mission to serve a greater good.

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Whether you’re a small business who wants to increase your profits, or you’re an organization wanting to increase your social impact, Checkbox can help you achieve your goals.  Get in touch with us to get the expert assistance you need.

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