4Thought Blog

Traditionally, 403(b) plans have been the qualified retirement plan of choice for nonprofits. These plans were established for the exclusive benefit of tax-exempt organizations.

However, nonprofits now have other options as well. Even if you continue to prefer a 403(b) plan, as many nonprofits still do, it pays to review and weigh the benefits of other types of accounts.

The last two years have been tough for most nonprofits. Now that there's some light at the end of the tunnel, you may feel more optimistic and with a renewed dedication to your cause.

How can you extend the concept of renewal to your organization's operations and even grow in 2022? Here are seven ideas: 

If certain IRS requirements are met, a nonprofit organization is exempt from federal income tax. But that doesn't mean it's completely off the hook.

Your nonprofit may still be liable for unrelated business income tax. Here's how you determine your organization's exposure.

Many nonprofits are dealing with the uncertainty of the ongoing pandemic as well as increased demand for their services. It’s a delicate balancing act, but with proper systems and support, nonprofits are up for the challenge.

The first blog of this two-part series covered how the sector has benefited from COVID-19 relief funds, along with best practices for complying with new accounting standards, safeguarding against cyberattacks in a hybrid or fully remote working environment, automating manual processes for greater efficiency, and implementing a successful diversity, equity and inclusion (DEI) strategy.

In this second part of the series, we highlight five additional considerations for nonprofits around succession planning, funding volatility, remote management and leadership, planning for disruption and change management.

Most nonprofit executives are aware of the prohibition against private inurement. Generally, nonprofit directors and executives — and their family members — aren't allowed to personally benefit from their positions while putting their organization at a disadvantage.

Penalties for violating the private inurement mandate could include financial sanctions for violators and, in the rare worst-case scenario, loss of the organization's tax-exempt status.

Usually, violations involve large organizations, yet smaller charities aren't immune. But whether a nonprofit is large or small, there are three areas where private inurement violations typically occur.

Since navigating the headwinds of the past year, nonprofit organizations have reimagined their operations to maintain relationships with donors, volunteers and the communities they serve while discovering new means to protect mission funding.

Even so, the impacts of the pandemic and calls to further social justice work won’t subside overnight, leaving many organizations continuing to reassess their processes, approaches and impact.

In this first blog of a two-part series, we outline five of the top 10 considerations nonprofits are contending with and how organizations can approach them:

The Tax Cuts and Jobs Act contains an often-overlooked crackdown on seven-figure compensation amounts paid to the highest earners. Essentially, beginning in 2018, your nonprofit organization could be charged a hefty excise tax if it pays more than $1 million to certain "covered" employees. 

The IRS issued final regulations in early 2021 that generally mirror proposed regs released in 2020 and guidance provided in Notice 2019-09. The new regs, which fall short of wholesale changes requested by nonprofits and other members of the tax community, went into effect on January 15, 2021.

But technically, they don't apply until tax years beginning after 2021. So you still have time to get up-to-speed.

Was your annual audit or quarterly filing process painful? Did you hear more about issues, or did you access meaningful insights?

Whether you’re looking for new perspective, enhanced access to resources, or greater responsiveness, developing a new auditor relationship can seem like a daunting task.

However, the transition can be made simpler with a vetting process that identifies the right firm, people, processes and technology to meet your needs and ensure seamless onboarding.

Due to its mission-driven purpose, a nonprofit organization’s financial and operational sustainability is significantly impacted by its environment. Natural disasters, economic slowdowns and unforeseen events are just a few factors that can adversely affect nonprofit organizations.

That is why a strong internal control system has always been a priority for audit committees and management of nonprofit organizations. They’ve established policies to address the primary question—“what could go wrong?”

Now nonprofits are facing the challenges of dealing with the results of the global novel coronavirus (COVID-19) pandemic, which include a scattered and remote workforce. As a result, management of nonprofit organizations are asking themselves—are the internal controls that were once effective still operating in a manner to achieve our objectives in this unprecedented time?

What can nonprofit organizations implement in order to adapt to this remote environment, when their employees, resources, technology and documentation may only be accessible through virtual means? Below are five tips that nonprofit organization management should consider to strengthen their internal control environment in response to a remote environment:

Many nonprofit organizations have been hanging on for dear life for the past year. But the days of survival mode are coming to an end.

Now, nonprofit leaders need to be innovative to position their organizations for future growth. In other words, if you're not moving forward, you're moving backward.

But how do you cultivate a culture of innovation in a nonprofit where it doesn't traditionally exist? There's no foolproof plan, but five techniques can help get you and your staffers in the right mindset.