4.
Articles of Incorporation
› Most Important Governing Document
Bylaws
› Should be readily available
› Should be reviewed and updated every 5
years
› Should “work with” the Board
Conflict of Interest Policy
› Sign every year
› For new and returning board members
Handout: Conflict of Interest Policy
6. Board Meetings don’t have to be
TORTURE!
Have an Agenda
Be Prepared
Know your Audience
Keep it Short!
Keep track of what happens
Handout: Sample Agenda
7. 1.
Keeps the meeting focused and moving
Include routine and special items
Consent Agendas save time
Have handouts for reports and financial
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2.
Be Prepared
Read your Board Packet - Know the issues
Do your homework from previous meetings
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3.
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Have a (written) Agenda
Know your Audience
What does YOUR Board expect from meetings?
“Show and Tell” versus “Just the Highlights”
Level of detail expected in reports
Board Meetings should be RELEVANT to the time, place,
issues facing the board
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8. 4.
Keep it SHORT!
1 hour or less (use “Time Checks”)
Agenda helps manage time
Robert’s Rules NOT required
If you can’t end on time –
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Ask the Board to help prioritize remaining agenda items
Save some items for another meeting
Consider a special meeting to handle special matters
5.
Keep Track of What Happens at Meetings
Have someone take notes and prepare minutes
Keep track of who is assigned to which tasks
Document who makes motions and note “nay” voters
Record action taken on Board matters
(HINT: sometimes the government will ask for copies of
minutes)
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9. 3 “traditional” – 2 “extra”
Duty of Care (Due Diligence )
Duty of Obedience
Duty of Loyalty
Duty to the “Mission”
Duty to the well-being of the
organization
Handout: 8 Questions Asked by Nonprofit Boards
10. 1.
Duty of Care - Due Diligence
Board Members are required to be INFORMED
Must know - financial, government status, projects and
operations
› No excuse for ignorance
› Includes a duty to train successors about their duties!
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2.
Duty of Obedience
Do what you are required to by the order of the Board, the
policies of the organization or the law
›
3.
Duty of Loyalty
Support the Board - even when you don’t agree with it’s
actions (or politely resign)
› Don’t talk about Board matters outside the Board room
› Always act in the organization’s best interest
›
11. 4.
Duty to the Mission
› KNOW - BELIEVE - SUPPORT the Mission
Should be able to recite the Mission - anytime, anywhere
(otherwise, why are you on the Board?)
5.
Duty to the Well-Being of the organization
› It is the responsibility of the Board of Directors to
ensure the financial and philosophical well-being of the
organization
› The Board of Directors MUST:
Manage the organization through financial hardship
Ensure that programs and activities thrive
Ensure the longevity of the organization
14. Annual Business Entity Report
• Indiana Secretary of State
Entity Annual Report (E-1)
• Indiana State Board of Accounts
• Financial Reporting for Government
Funds
NP-20
• Indiana Department of Revenue
15. IRS – 990 Form
<$50,000 – 990 N
• Change in threshold
beginning 2010
• On-line ONLY
• Due 5 + 15 after end of
fiscal year
• NO extensions of time!
>$50,000 – 990 EZ/990
• Due 5 + 15
• 6 month automatic extension
• For most nonprofits – 990 EZ
• Minimal property or real
estate
• Normal gross receipts <
$200,000
• Total Assets < $500,000
Failure to file – automatic revocation of §501(c)(3) status
16. CANNOT DO
• Endorse political
candidate
• Spend more than 5%
of annual budget on
lobbying activities
• Directly lobby
legislators
CAN DO
• Hold Candidate
forum
• Educate the public
on the issues
important to the
nonprofit
• Encourage likeminded supporters to
contact their
legislators
17. Employment
taxes and reports
must be timely
filed!
Federal -- 941 –
Employer’s
Quarterly Federal
Tax Return
State -- WH-1 –
Employer’s State
Tax Return
January 1 –
ONLINE
requirement for
many
organizations
Federal – EFTPS
(electronic
federal tax
payment system)
State – IN-Tax
Employer
conduct
“Exempt” versus
“non exempt”
employees
Wages and
Hours laws
Fair Hiring and
Nondiscrimination
Does not apply
to all employers
APPLIES FOR
GOVERNMENT
FUNDING!
18. UBIT – Unrelated
Business Income
Tax
• (A) Trade or business
• (B) regularly carried on
• (C) not “substantially related” to exempt
purpose
Examples:
• Apartment rental income
• Store or shop unrelated to mission (coffee
shop)
If UBIT constitutes “substantial portion” of
income, nonprofit can lose exempt status!
20. Board reports to
The Buck Stops
with the Board
• Donors
• Government
• Sponsors
• Grantors
Are you Good
Stewards of the
resources the
public entrusts in
your care?
21.
Policies for –
Handling Money
Recording Money
Reporting Money
Handout – Nonprofit Financial Control Policy
22. Financial Procedures Manual
Restrictions documented and honored
• Donor restrictions
• Grant requirements
• Commingling Funds
Training program for Staff and Board
Document Retention/Destruction Policy
23. Regularly provide information to the Public
Required disclosures
• Tax returns
• Organizational Documents
• Articles of Incorporation
• Bylaws
• Funds used for lobbying
• Application for Exempt
Status
Recommended
disclosures
• Annual report
• Basic Financial Statement
• Report of Activities
• Mission/Vision
24. Watch the Rules regarding charitable donations!
• What can be considered a donation?
• What paperwork is required?
• Donations of goods or funds > $250 require
written acknowledgement
• How to handle In-Kind Donations
• Magic language: “No goods or services were
provide in exchange for this donation”
NOTE – donations of TIME and EXPERTISE are NOT deductible!
Handout: Top 10 Rules for Charitable Donations
Handout: In Kind Donation Form + Instructions
26. Do you NEED Insurance?
What are your risks?
› Events
› Location/Premises
› Goods and Services
Insurance is recommended to protect
the nonprofit in the event of a claim for
harm to person or property.
27. Don’t Leave
Home Without
It!
Most places
require it
“Slip and Fall”
insurance for
basic activities
Facility rental
Personal Injury
Working with
other
organizations
Property
Damage
NOTE –
Usually DOES
NOT COVER
MEMBERS
28. Directors & Officers Insurance Protects
the Board and Key Staff
D&O
Insurance
covers
Breach of Duty
Wrongful acts of
the board
What
D&O
Does
Provides legal
defense
Pays claims
What
D&O
Doesn’t
Normal liability
claims
Criminal acts
Mismanagement
29.
Best Practices to Prevent
Financial Crisis
› Identify Risk
› Ranks Risk
› Identify Policies to manage risk
› Implement protections
› Implement procedures in event
of crisis
30. People
• Board members, volunteers,
employees, clients, donors, the
public.
Property
• Buildings, facilities, equipment,
materials, copyrights,
trademarks
Income
Goodwill
• sales, grants, contributions,
sponsors, fund raising
• reputation, stature in community,
ability to raise funds and appeal
to prospective volunteers
Handout – Risk Management Policy
31. Financial Oversight is the review of both finances and financial
practices
Ensures safe, ethical financial procedures
Protects Nonprofits and the Directors/Staff
Provides integrity and transparency to the public
Catches financial difficulties before they become financial
impossibilities
Handout – 10 Tips for Keeping an Eye on Finances
32. Have and use financial control
policies
Know who handles the
money
Remove temptation
Review financial information
• ALSO - have independent review of
finances
Be aware that it can
happen to your nonprofit!
Handout: Sample Board Anti-Fraud Policy
33.
34.
General Tips for Healthy Nonprofits
› Pay attention to finances as well as mission
› Recruit Board members based on need
› Embrace in-kind donations – but have a
plan
› Make smart decisions about facilities
› Growth is not always good – watch
“mission creep” and inadequate capacity
Handout – How Small Nonprofits Can Improve
35. Step
1 – Review the Organization
› How well do you meet your budget
(typical year)?
› What shortfall do you anticipate?
› How long can you survive at
reduced budget levels?
› How are you affected by each
funding source?
36. Step
2 – Make a Plan
› Risk Management Plan
› What can you reduce and maintain
current levels of service?
› What can you reduce and maintain
minimum service?
› Where can you increase funding
Lapsed donors, new donors, alternate funding
sources
37. Step
3 – Creative Options
› New Fund Raising Opportunities
Social media, networking, microfundraising
› Collaborations with similar or
complementary nonprofits
› Spin-off/Re-Master current activities
38. Step
4 – Acute Crisis Management
› Reduction in programs
Prioritize – what MUST you retain?
Reduce scope/ Increase fees
› Reduction in Staff
Reduction in Staff ≠ previous service levels
Reduction in Staff = do it right
› What is your “limit”?
Minimum financial - resource - program - mission
Handout: PR in times of Crisis – Preserving public image
39. Nonprofit Corporations
have the Public Trust
Ethical
conduct of Board and Staff is
essential!
› No conflict of interest -- No self-dealing -- Volunteer Board
(but you can have paid staff that report to the Board)
Three
areas Nonprofits Fail Ethics Issues
› Failure to watch the money
› Failure to watch the staff (and each other)
› Failure to watch conflicts of interest
40. Ethics and Conduct – What NOT to do
Improper donor
acknowledgements
Donations of time are not tax-
deductible
Donor “influence-buying”
Improper arrangements with donors
Failing to include both spouses in joint
gift paperwork
Staff/ED/Board/Volunteer
accepting gifts from donors
Personal Benefit from Nonprofit
Work
