Take a Look at Your Bylaws

bylawsIn their formative stage, nonprofit organizations usually create bylaws to govern their organizations. Some nonprofits create short documents that have only a few bylaws and others include a significant amount of detail. But then the bylaws are often put away in a drawer and forgotten.

As time goes by, situations change and your organization may no longer be in compliance with your bylaws. Pull them out and review them periodically to see whether they are still appropriate for your organization. If so, be sure you are following them. If they no longer fit the organization, amend them to reflect your current operations and needs.

Some states have statutes that dictate the content of bylaws. Review current statutes and compare your bylaws for any missing content.

Even if you determine no changes need to be made to your bylaws, the time spent in reviewing them as a committee or board will likely be well spent. The discussions about the way your organization is governed and operated are healthy and serve as a helpful reminder to your board of their responsibilities.

Valuing Gifts in Kind

GiftsForbes recently reported that the nonprofit organization, Operation Compassion, will likely revise downward its reported revenues over four years by as much as $250 million. The restatement is due to the valuation of its gifts-in-kind (GIK).

This has been an area of controversy and scrutiny for quite some time, especially within organizations providing services overseas through the donations of medicines, medical supplies, clothing and other items, because they receive a significant portion of their revenues from these GIK. Overvaluation of these items may make an organization seem much larger and more efficient with its resources than it actually is.

GIK that can be used in the organization’s programs or sold should be recorded at fair value. When making an assessment of fair value, the organization should consider the quality of the items, as well as the quantity received. Any discounts (including quantity discounts) that could be received by the NPO if it was purchasing the items should be factored into the assessment.

A Plea to Board Members

questionRecently I participated in the presentation of our audit to the executive committee of a client – something we do with regularity. The presentation was fairly typical – an overview of the financial statements, explanation of the required communications, and suggestions for improvements in operations and internal controls. There wasn’t really anything in the meeting that was out of the ordinary. Unfortunately, the response of the committee members was not all that uncommon either. It was dead silence. In spite of multiple requests for comments or questions, not a single member had a question or comment.

How can this be? Those charged with governance of an organization have a responsibility to gain an understanding of the financial operations of the organization and to familiarize themselves to the best of their ability. Not every member is a financial expert, and they don’t have to be. But each member should do their best to understand what is going on.

So please, if you are on a board, audit or finance committee, or participating in other ways in the governance of an organization, ASK QUESTIONS! If you don’t know something, ask. If something isn’t clear, ask. If references are made to situations or activities that you are unaware of, ask. An inquisitive mind and willingness to ask questions is one of the greatest attributes you can bring to your organization.

Creating a Technology Plan – Overcome the Fear

TechnologyMany nonprofit organizations create strategic plans, but not as many include technology into their long-term plans. Often a fear of technology is a barrier to effective technology planning. Organizations don’t know what they don’t know and that fear can cause them to make poor decisions or to avoid making decisions.

To alleviate that anxiety, management needs to become educated. This isn’t to say they need to become experts in technology, but attending workshops and seminars related to technology is helpful. Learning the terminology and understanding the basic concepts make navigating the process more comfortable. It is also helpful to reach out to similar organizations to discover how they use technology and what processes they have in place to plan for future technology needs.

There are a number of websites devoted to the use of technology in nonprofit organizations and creating technology plans. Assign someone with an interest in technology the task of reviewing options and summarizing opportunities. This can then be the starting point for an effective technology plan.

American Taxpayer Relief Act of 2012

2013-TaxThe bill passed by Congress to address the “Fiscal Cliff” has some provisions that will be of interest to nonprofit organizations.

While the bill did not include a limitation on charitable deductions, it does include a limitation on itemized deductions for individuals with income in excess of $250,000 and married couples filing joint returns with income in excess of $300,000.

The bill did not extend the temporary 2% employee payroll tax holiday, resulting in a reinstatement of the 6.2% tax on the first $113,700 of wages. The rate had been reduced to 4.2% in 2009.

Some other items set to expire have been extended. These include IRA distributions by those age 70 ½ and older to charitable organizations, which can be made without including the withdrawal in the taxpayer’s gross income. The special rule for contributions of capital gain real property for conservation is extended and the charitable deduction by businesses for donations of food inventory has been enhanced.