Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Please Note: Our office will be closed Wednesday, April 16th.
Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Please Note: Our office will be closed Wednesday, April 16th.
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One in 12 respondents to a recent GuideStar Economic Survey said they believed their nonprofit was in danger of closing for financial reasons. If your organization is dealing with a lack of either financial or human resources, you need to start looking for solutions — fast. Joining forces with another nonprofit is one strategy to consider. When researched and executed carefully, a merger can make both organizations stronger.
The decision to merge isn’t an easy one to make. But if your organization has experienced steady declines in grants and donations, it’s worth considering. Duplication and overlap of services may be another valid reason to merge. Bringing organizations together can be a powerful way to build unity, achieve objectives faster and use funding more efficiently.
You also might consider joining with another nonprofit to gain access to a larger skill set. Perhaps another organization has an outstanding and dedicated staff, while you have excellent fundraising skills. Combining forces may enable you and the other nonprofit to provide better services and maximize capabilities.
If you’re mulling a merger, think about what you really want to achieve. Develop realistic objectives stated in measurable terms, such as striving for a 25% increase in donations or an expansion of services into an adjacent community.
You also need to assess your readiness to be a partner. Assemble a committee of key managers, board members and advisors to discuss the financial, legal, public relations and other implications of a potential merger. Invite critical outside stakeholders, such as major funders and service recipients, to provide input. If you’re going to lose funding because a merged entity would deviate from a major funder’s goals, it’s better to know before you make your decision.
In general, nonprofits are better merger candidates when they have stable management — including a strong relationship between the executive director and the board — and a good handle on their strategic challenges. Nonprofits that are growth-oriented, with a history of successful risk-taking, also may be better candidates.
Naturally, nonprofit mergers involve considerable risk of stakeholder resistance as well as internal hurdles. For example, it may be difficult for two organizations to combine their cultures. Out of habit and expectation, staff may oppose efforts to act as a united organization when it comes to everything from the flexibility of work hours to program procedures. Combining information technology systems can be challenging as well.
Funders, program partners and community leaders also may object. Good communication can help alleviate much — but not all — resistance. Legal obstacles are another possibility. Many states have specific procedures that must be followed, particularly if either of the entities owns real estate, and forms that must be filed when nonprofits merge. Further, you may need to get consent from donors to legally transfer gifts or grants.
Finally, consider just how much time and other resources are needed to merge two entities successfully. Depending on the size and complexity of the organizations, a merger can take as long as two years to complete. The process also will involve additional costs, such as for the services of financial consultants and attorneys.
Two organizations becoming one clearly face obstacles. But, if going it alone no longer seems doable, combining resources with another nonprofit may be the answer. Just make sure that your organization’s plan to merge is as strong as its desire to succeed.
One of the top priorities for nonprofits is engaging with their supporters and building relationships. It’s no surprise, then, that interest is surging in technology that can help nonprofits do just that. How can your organization maximize the potential of current technology tools and avoid wasting time with passing fads? Let’s look at what’s working.
According to the Pew Internet and American Life Project, 45% of American adults had a smartphone as of September 2012, and 25% had a tablet computer (a dramatic jump from only 4% in September 2010). As of April 2012, Pew reports, 55% of adult cell phone owners used the Internet on their phones — almost twice as many as three years earlier. And 31% of the cell Internet users said that they mostly use their phones to go online, as opposed to using a desktop or laptop computer.
With mobile Internet access poised to surpass that of conventional computers in the coming years, some nonprofits are wisely taking steps now to develop mobile websites and apps. Why do you need a mobile-specific website? Imagine a supporter who receives an e-mail call to action on his phone and immediately clicks through to your regular site, only to find that it’s difficult to read and use on his phone’s small screen. That’s a lost opportunity — one that will only multiply as users increasingly rely on phones for their online communications.
Mobile websites and apps provide your supporters with information at their fingertips and allow them to act, including donating, on the go. As with any type of online transaction, of course, it’s important to establish strong internal controls to protect users’ data and privacy and prevent the fraudulent misappropriation of funds.
Mobile websites and apps also can help nonprofits leverage their supporters’ social networks. The past few years have taught many organizations the critical role that social networks can play in spreading their missions to wider audiences than ever and attracting new supporters and donors.
Some may have initially scoffed at the idea that Facebook or Twitter could provide real value. But few can argue with the power of social media at this point, particularly for nonprofits. It’s an indisputable fact that people are much more likely to engage with organizations endorsed by friends, families and trusted sources.
That’s one reason why peer-to-peer fundraising has taken off in recent years. Thanks to social media, it’s much easier for participants in your 5K race, cycling event or dance-a-thon to drum up financial support for their efforts. By providing social media tools as part of your registration materials, you empower your participants to personalize their pitches and meet or surpass their — and your — fundraising goals. Again, though, you’ll need to have proper internal controls in place, such as firewalls, encryption and other protections for credit card data.
Social media also allows nonprofits to easily and cost-effectively participate in back-and-forth, multiparty conversations, rather than just one-way communications. A single posting might elicit numerous enthusiastic responses that can snowball as the posting is passed along by readers with a click of a button.
Engaging in social media doesn’t mean you can afford to neglect your existing website, though. Instead, savvy nonprofits are expanding their Web presence.
Your website visitors should find a simple, secure way to donate, as well as a range of compelling content that will bring them back again and again. Online videos, for example, offer effective, inexpensive opportunities to tell your organization’s story and mobilize viewers. Partnering with an experienced Web-design firm to improve your online presence can be an investment with results measuring far greater than the cost.
The tools listed above are by no means the only technological advances that can pay off for your organization or enhance your outreach efforts. Nonprofits are also turning to cloud computing, social analytics and software that produce solid financial metrics. Such advances are no longer a luxury — they’re a matter of survival. If your organization has lagged behind, now is the time to jump into the water.
The notice sends shivers down your spine — the IRS has called or written to inform you that your organization has been selected for an audit. Now what? Understanding the nuts and bolts of IRS reviews can help reduce your risk of running into trouble.
The IRS conducts three types of reviews of nonprofits:
1. Field audit. If your initial contact letter schedules an agent to visit your premises, the IRS is conducting a field, or in-person, examination. Field audits are done at an organization’s location, the organization’s representative’s office or an area IRS office. It usually takes place where the nonprofit’s books and records are located.
Field audits fall into two categories. A general program exam usually is conducted by a single IRS agent. A team examination program audit focuses on large, complex organizations and may involve a team of examiners.
2. Office /correspondence audit. If the initial letter asks you to deliver documents to an IRS office by mail, you are undergoing a correspondence audit. An agent generally conducts the audit using letters and phone calls to work with the organization’s officers or a representative.
But a correspondence audit can expand to become a field audit if the issues grow more complex or the not-for-profit doesn’t respond. Both correspondence and field audits can expand to include prior and subsequent tax years.
3. Nonaudit. The contact letter might indicate that the IRS is conducting a compliance check, which isn’t an audit but may include a checklist with specific questions. Or the compliance check may ask about information and forms that your nonprofit is requred to file or maintain, such as Forms 990, W-2 or W-4.
Compliance checks are an accountability tool, like audits, but are simpler and less burdensome and don’t directly determine a tax liability for any particular period. They can, however, lead to an audit.
Nonprofits are chosen for reviews based on several methods, including:
Form 990 plays a strong role in the selection process. In its FY 2012 Annual Report & FY 2013 Workplan, the IRS delivered this “bottom-line message” to nonprofits: “The IRS uses the Form 990 responses to select returns for examination, so a complete and accurate return is in your best interest.”
An audit begins with the initial contact and continues until audit findings are discussed in a closing conference (in person or by phone) and a closing letter is issued. Both the conference and the letter will explain your appeal rights.
A compliance check also starts with the initial contact letter, and the IRS may contact your organization again if it needs more information or you don’t respond. The agency typically issues a closing letter at the end of a compliance check.
During a field audit, the agent will tour your office and interview an officer or representative. For a correspondence audit or compliance check, IRS personnel will review requested items submitted via mail and follow up as needed. They may request additional information.
This can be serious business – worst-case audit findings include adjustments to tax liability or tax-exempt status. If you get a call or letter from the IRS, contact your CPA immediately.
Here are some ways Stockman Kast Ryan + CO can help:
Feel free to contact us with questions, clarifications, or assistance with any IRS dealings.
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Notice of an IRS audit may be unnerving to a nonprofit, but understanding the nuts and bolts of IRS reviews can help reduce its risk of running into trouble. This article looks at the three types of IRS reviews and how the agency selects an organization for scrutiny. A sidebar lists some of the matters that a particular type of review may cover.
One of the top priorities for nonprofits is engaging with their supporters and building relationships. It’s no surprise, then, that interest is surging in technology that can help nonprofits do just that. This article shows how organizations can maximize the potential of current technology tools by developing mobile websites and apps, leveraging social networks and expanding their Web presence. A sidebar discusses specific metrics to use in evaluating technology investments.
Nonprofits that are suffering a lack of either financial or human resources might want to consider joining forces with another nonprofit. When researched and executed carefully, a merger can make both organizations stronger by building on their complementary skills. But there are questions to ask and a variety of hurdles to overcome; this article looks at some of them.
Many taxpayers have to file extensions this year because the IRS was not ready to accept certain forms at the beginning of tax season. Therefore, the IRS announced yesterday that it is waiving the late-payment penalty for taxpayers filing one of the
Effective cash flow management involves more than taking annual budget figures and dividing by 12 to come up with a static, monthly amount – after all, costs can vary significantly from month to month for a variety of reasons. This article explains how to prepare a cash flow report and how a CPA can help ensure that it's used to a nonprofit's best advantage. A sidebar discusses how to make decisions based on the report.
In this issue, "Newsbits" takes a quick look at how to reach younger donors through smartphones; shows why charities that have recently adopted a more conservative approach to valuing corporate product donations can, with Charity Navigator's help, make past financial data be more comparative; and cites a survey indicating that 66% of U.S. nonprofits need pro bono services more than any other volunteer work.