4Thought Blog

The recent Coronavirus Aid, Relief, and Economic Security (CARES) Act provides relief to employers struggling to stay afloat during the novel coronavirus (COVID-19) pandemic.

The nonprofit sector is no exception. In fact, some provisions in the new law are specifically tied to charities.

Following is a brief summary of seven key benefits for nonprofit employers and supporters.

If your nonprofit has been active for many years, it probably has experienced significant change — it may even have drifted from its initial mission. There are many possible reasons for this. Perhaps the underlying issues your organization addresses have evolved or you've decided there are more pressing issues that deserve your attention.

Or maybe a larger funding base or new supporters have encouraged you to think bigger and expand your mission's scope. It's possible that other nonprofits in your community have folded and you've assumed responsibility for their clients.

It's common, even healthy, for long-running nonprofits to experience these changes. However, you can't let your mission drift too far without formalizing the shift. Otherwise, you might risk your organization's tax-exempt status. If you've been dragging your feet, now's the time to act.

Your nonprofit CPA auditor should help you assess opportunities, risks and financing opportunities.

They should have connections in the community and a good relationship with your board so your organization can be on solid financial footing.

Do you plan on making contributions to charity this year? If you're in a giving mood, you may be rewarded with sizeable charitable deductions on your tax return.

But the tax law is fraught with numerous twists and turns, so you must be careful to navigate the rules.

As a nonprofit, tax-exempt organization, you might think the subject of “uncertain tax positions” doesn’t apply to you.

Think again. Some of the basics of your operations, including your tax-exempt status, could create uncertain tax positions that trigger critical reporting obligations.

Nonprofit leaders have a lot of important duties to accomplish. Right behind following your mission should be managing your finances – without best practices in force, nonprofit leaders could make some costly missteps.

See our best financial practices for nonprofit organizations below. And these are not just for the CEO, CFO and other executive officers – nonprofit board members have fiduciary responsibilities to their organizations, including having a deep understanding of the finances.

Is your nonprofit organization pursuing planned gifts? It should be. Research suggests that the average planned gift in the United States falls between $35,000 and $70,000 -- and the amount may increase with more Baby Boomers moving into retirement. Yet many nonprofits, especially small and medium-sized organizations, lack formal planned giving programs.

Audits have become more important due to increased public and government scrutiny of nonprofit organizations, their management and their boards.

Audits not only provide you with a fair assessment of your organization's financial health, but also can reveal vulnerabilities such as weak internal controls, insufficient cash reserves and poor investment policies. Perhaps most important, regular audits reassure your donors, members and other stakeholders that you run a fit organization.

Taxes generally aren’t a top business concern for nonprofits, but if your organization has unrelated business income, it’s an issue even tax-exempt organizations have to keep track of.

What’s unrelated business? It involves a trade or business regularly carried on (including seasonally) by an organization, which isn't substantially related to the exercise or performance of its exempt purpose or function.

It’s an issue that’s been the subject of tax pursuits and even a lawsuit in Allentown. The city has recently started seeking business privilege taxes on nonprofit organizations’ profit generating activities. Good Shepherd Rehabilitation Network filed a lawsuit against the city about the tax pursuit.

The Financial Accounting Standards Board is in the business of rulemaking, and there’s a new one nonprofits need to be aware of.

Back in 2016, FASB issued new guidance required for all nonprofit organizations with fiscal years ending after December 15, 2018. While the majority of the changes are purely cosmetic, understanding each will make your year-end financial reporting much easier.