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SUPER SPECIAL SALE:

FOR IOWA NONPROFITS, THE TEN (10) POLICIES WHICH APPEAR ON IRS FORM 990 FOR ONLY $990

$990 FOR THE TEN POLICIES ON FORM 990

Every year, Iowa nonprofits must complete and file IRS Form 990, essentially the “tax return” for nonprofits. The “long version” of Form 990 expressly refers to ten (10) policies, briefly discussed below. While the IRS says it doesn’t require nonprofits to adopt these ten policies, the IRS is clearly signaling what it considers to be “best practices.”

All Iowa nonprofits should adopt (or revise and update) these critically important policies.

I provide Iowa nonprofits with the ten documents for the flat fee of $990 (nine hundred and ninety dollars). The flat fee of $990 includes as many conferences with me as you deem reasonably necessary.

The ten policies which appear on IRS Form 990 include (in alphabetical order):

  1. Compensation — formalizes the process of determining compensation that is reasonable and not excessive, while also rewarding enough to attract and retain the best possible management and staff
  2. Conflict of Interest — assists the organization in avoiding financial or other material benefits flowing to individuals in positions of authority in the nonprofit, and protects it against charges of impropriety involving officers, directors, employees, volunteers, and other stakeholders
  3. Document Retention and Destruction — defines what types of documents should be retained, duration of storage, and how documents should be filed/stored for tax, business, and other regulatory purposes
  4. Fiscal — specifically addresses guidelines for making financial decisions, reporting the financial status of the organization, managing funds, and developing financial goals. This policy should also outline the budgeting process, reporting on investments, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place
  5. Form 990 Review — governs the process for distributing IRS Form 990 to the Board of Directors for review and approval, and identifies any areas that need particular scrutiny
  6. Fundraising — guides compliance with local, state, and federal laws, and defines the organization’s own fundraising criteria
  7. Gift Acceptance — evaluates non-cash gifts, such as identifying non-cash gifts which could and should be accepted and under what circumstances, and offers guidance on how to decline gifts with liabilities and obligations the organization is not able to sufficiently manage
  8. Investment — determines accountability for investment decisions, offers guidance on growing and protecting investments, and governs overall financial management decisions
  9. Public Disclosure — establishes which organizational documents (other than those required by law) will be made publicly available
  10. Whistleblower — sets a formal process for grievances (including protection) to encourage sound and swift responses to complaints, and to protect the organization from knowingly (or unknowingly) violating state and/or federal laws

I have a longer discussion of these ten policies here.

Again, I’ll draft these ten policies for Iowa nonprofits for a flat fee of $990.

Of course, I must always reserve the right to decline representation of any person or entity, for any reason (or even no reason).

If your favorite Iowa nonprofit wants to talk about this super special sale, please email me:
gordon@gordonfischerlawfirm.com

I look forward to hearing from you. Thank you.

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YOUR FAVORITE NONPROFIT NEEDS THESE TEN (10) POLICIES

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YOUR FAVORITE NONPROFIT NEEDS THESE TEN (10) POLICIES

I. INTRODUCTION

Happy New Year! A great way to start 2024 for Iowa nonprofits? Adopt the ten (10) policies referenced on IRS Form 990, as discussed fully below.

II. IRS FORM 990

Every nonprofit, every year, must complete and file a version of Form 990, which the IRS calls its “Return of Organization Exempt From Income Tax.” The “long” version of Form 990 asks about many financial matters – donations, money on hand, non-cash assets, breakdown of expenses, and so on.

Form 990 goes even further however, and asks nonprofits if they have certain policies in place. In fact, there are ten (10) specific policies that the IRS asks about on Form 990.

To be clear, the IRS does not mandate adopting these ten (10) policies. But the IRS, at least to me, is signaling what policies nonprofits should have in place. Again, my read of Form 990 is that the IRS is showing nonprofits what it considers to be “best practices.”

III. REASONS FOR THESE TEN (10) POLICIES AND THEIR BENEFITS

One might ask, if these policies are not absolutely required, why have them?

Generally, these ten (10) policies provide substantial benefits, including, but hardly limited to:

  • Enhanced confidence of donors and other stakeholders
  • Consistent framework for decision making
  • Increased compliance with federal, state, and local laws
  • Reduced risk to the nonprofit and its management and governing board

The existence of policies doesn’t mean compliance is always assured of course, but having policies in place provides a framework and sets expectations for a nonprofit’s board members, employees, donors, volunteers, and other stakeholders. Such policies can be referenced if (when) issues arise.

Another major reason to invest in adopting these policies is because the IRS audits tax-exempt nonprofits, just as it audits companies and individuals. Having certain policies in place will only serve to benefit the nonprofit should it happen to be audited. Also, proper policies provide a foundation for soliciting, accepting, and facilitating charitable donations.

Last, but not least, Form 990 is made accessible to the public, meaning it can be used as a public relations tool if filled out diligently. Major donors can and often do review a nonprofit’s Form 990 to ensure the nonprofit is compliant, putting charitable donations to good use, and continuing to operate in alignment with its overall mission.

IV. WHAT POLICIES ARE WE TALKING ABOUT?

The IRS made a major revision to Form 990 in 2008. The old version focused largely on financial data. Now, Form 990 reports extensive information on operations such as board governance, fundraising, non-cash assets, and more. Let’s cover all ten (10) policies the IRS asks nonprofits to report on in its Form 990. I’ll discuss each policy in alphabetical order.

1. COMPENSATION

Data related to compensation is reported in multiple sections on Form 990: Part I, Part VI, Part VII, Part IX, and Schedule J.

Competitive compensation is just as important for employees of nonprofits as it is for for-profit employees. Having a policy that objectively establishes salary ranges for positions, updated job descriptions, relevant salary administration, and performance management establishes equality and equity in compensation practices. A statement of compensation philosophy and strategy, which explains to current and potential employees and board members how compensation supports the nonprofit’s mission, should be included in the compensation policy.

2. CONFLICT OF INTEREST

Found on Form 990 Part VI, Section B, Line 12 a-c.

A conflict of interest policy should do two important things. First, it should require board members with a conflict (or a potential conflict) to disclose said conflict. Second, it should exclude individual board members from voting on matters in which there is a conflict.

The Form 990 glossary defines a “conflict of interest policy” as follows:

A conflict of interest policy defines conflicts of interest, identifies the classes of individuals within the organization covered by the policy, facilitates disclosure of information that can help identify conflicts of interest, and specifies procedures to be followed in managing conflicts of interest. A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, manager, or key employee can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated. For this purpose, a conflict of interest doesn’t include questions involving a person’s competing or respective duties to the organization and to another organization, such as by serving on the boards of both organizations, that don’t involve a material financial interest of, or benefit to, such person.

Form 990 asks whether the nonprofit has a conflict of interest policy, as well as how the nonprofit determines and manages board members who have an actual or perceived conflict of interest. This policy is hugely important, as conflicts of interest that are not successfully and ethically managed can result in sanctions against both the nonprofit and the individual with the conflict(s).

3. DOCUMENT RETENTION AND DESTRUCTION

Found on Form 990 Part VI, Section B, Line 14.

This policy should clarify what types of documents should be retained, how they should be filed, and for what duration. It should also outline proper deletion and or destruction techniques. The document retention and destruction policy (sometimes called, sometimes simply called a “DRD policy”) is useful for a number of reasons. The principal rationale as to why any nonprofit would want to adopt such a policy is that it ensures important documents—financial information, employment records, contracts, information relating to asset ownership, etc.—are stored for a standard period of time for tax, business, and other regulatory purposes. No doubt document retention is incredibly important should litigation or governmental investigation arise.

A strong, clear DRD policy also allows nonprofits to save time, space, and money associated with both hard copy and digital file storage, by determining what is no longer needed and when…it’s like sanctioned spring cleaning!

4. FINANCIAL POLICIES AND PROCEDURES

Different than the investment policy (as discussed below), financial policies specifically address guidelines for making financial decisions, reporting the financial status of the nonprofit, managing funds, and developing financial goals. The financial management policies and procedures should also outline the budgeting process, investment reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing will take place. Form 990 does not make a specific ask about a nonprofit’s financial policies, but this type of policy will serve as an indispensable guide to organizing, collecting, and reporting financial data.

5. FORM 990 REVIEW

Found on Form 990 Part VI, Section B, Line 11.

Form 990 asks the following questions:

Has the organization provided a complete copy of this Form 990 to all members of its governing body before filing the form? Describe in Schedule O the process, if any, used by the organization to review this Form 990.

In asking these questions, the IRS is indicating that careful distributing and reviewing Form 990 prior to filing is optimal. This policy is extremely useful in clarifying the specific process for distribution and procedure review by the governing body (such as the board of directors). It also acts as a reminder to nonprofit leaders that Form 990 is coming due!

6. FUNDRAISING

The topic of fundraising gets substantial attention on Form 990; fundraising income and expenses are asked about in Part I, Part IV, Part VIII, Part IX, and Schedules G and M.

Almost every nonprofit needs a fundraising policy, as so many nonprofits engage in some sort of charitable fundraising. This policy should include provisions for compliance with local, state, and federal laws, as well as the ethical norms the nonprofit chooses to abide by in fundraising efforts. Remember that fundraising doesn’t just include solicitation of donations, but also receipt of donations.

7. GIFT ACCEPTANCE

Gifts and contributions are referenced many times on Form 990: Part I, Part IV, Part V, Part VIII, Part IX, and Schedule M.

While related to the fundraising policy, the gift acceptance policy is different, as it establishes how nonprofits will handle certain types of assets. This policy provides written protocols for nonprofit board members and staff to evaluate proposed non-cash donations. The policy can also grant some much-needed guidance in how to kindly reject donations that can carry extraneous liabilities and obligations the nonprofit is not readily able to manage.

8. INVESTMENT

One way a board of directors can fulfill their fiduciary responsibility to the nonprofit is through investing assets to further the nonprofit’s goals. But, before investment vehicles are used, the nonprofit should have an investment policy in place to define who is accountable for the investment decisions. The policy should also offer guidance on activities of growing/protecting the investments, earning interest, and maintaining access to cash if necessary.

The policy should be written to give the nonprofit’s management personnel the authority to make investment decisions, as well as preserve the board’s oversight ability. Beyond the specifics of investments, this policy can also govern financial management decisions regarding situations like accepting charitable gifts of securities.

Many nonprofits hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the investment policy. Form 990 does not ask if a nonprofit has a specific investment policy, but it does refer to investments in multiple places throughout the form, and there is an obvious need.

9. PUBLIC DISCLOSURE

Found on Form 990 Part VI, Section C, Lines 18-20.

Speaking broadly, nonprofits exist to serve the public in some way or another, and some nonprofit documents must be made available to the public upon request. Other documents can be kept entirely internal. This policy should overview (1) what documents the nonprofit must disclose, and (2) to what extent does it want to make other non-required documents and information available to the public.

Form 990 specifically asks the filing nonprofit to report if certain documents are made available to the public, such as governing documents (like the bylaws), financial statements, and the conflict of interest policy. Additionally, Form 990 asks for the name, address, and phone number of the individual(s) who possesses the financial “books” and records of the nonprofit.

10. WHISTLEBLOWER

Found on Form 990 Part VI, Section B, Line 13. 

Nonprofits, along with all organizations, are prohibited from retaliating against employees who call out, draw attention to, or “blow the whistle” against employer practices. A whistleblower policy should set a process for complaints to be addressed and include protection for whistleblowers. Ultimately this policy can help insulate your nonprofit from the risk of state and federal law violation and encourage sound, swift responses of investigation and solutions to complaints.

A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the nonprofit, specifies that the nonprofit will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported.

V. CONCLUSION

Iowa nonprofits make such a huge difference all across our state. Nonprofits can make an even larger impact by adopting the ten (10) policies referenced on IRS Form 990.

Questions about the ten (10) policies referenced on IRS Form 990? My email is:
gordon@gordonfischerlawfirm.com

 

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25 Days of Giving: Last Minute Year-End Fundraising Tips

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For better or worse, for most nonprofits in the U.S., end-of-year giving comprises a significant portion of the charitable donation pie. In fact, between October and December nonprofits receive half of all annual donations! Yes, you read that right.

The last quarter of the year accounts for donations equal to those raised the other nine months out of the year. Even more intriguing? 33 percent of donations made in December occur on the 31st of the month and 12 percent of all giving happens in the last three days of the year….talk about last-minute donors!

snow-globe-christmas

Why is this the case? There are multiple reasons. First, time is of the essence for donors to make a tax-deductible charitable gift before January 1 of the new year. Nonprofits are also racing to meet annual fundraising goals and typically spend a significant portion of resources in order to exceed fundraising levels of the previous year. Additionally, the holiday season is synonymous with the actions of gifting, love, peace, joy, and a time to be generous. This means donors can be extra receptive to a charity’s marketing campaign that extolls these feelings that now is the best time for giving.

This is all to say, last-minute fundraising efforts can and should be used to target prospective last-minute donors. It’s a busy time of year for all, but the return for a strong end of year fundraising push can be well worth the time and energy. Consider these quick tips:

What are you Doing New Year’s Eve?

new year sparkler

Because New Year’s Eve day is such an important day for charitable donations, do not hesitate to keep fundraising through the very end of the year. Make those calls and get out the digital media campaigns. Reinforce to donors that December 31 is not too late and they’ll qualify for the charitable deduction federal income tax benefits on 2017 taxes.

Make Your Homepage Your Home Base

Your website should be the home base for year end giving. If you don’t have one yet, publish a dedicated page (or site) specifically for end-of-year giving information and brand it with your associated year end campaign. It doesn’t have to be complex, just consolidate the basics of who you are, what your mission is, and how donations help solve an issue or advance a cause on one campaign page.

homepage Mac fundraising

To that point, also take a review of your online donation page. If you can, brand it to fit with your end-of-year campaign…branded donation forms can mean up to seven times more than a non-branded, generic donation portal. Also, make sure the online donation portal is easily accessible no matter “where” the donor is coming from. Also, ensure all giving and donations portals are optimized for mobile access. (18 percent of all digital-made donations come from mobile devices.)

Ready, Set, Action

If you haven’t already, make a 60-second (or shorter) video explaining how donations to your charity can make an impact. A video can be an incredibly powerful tool for cutting through the end-of-year giving noise; videos can leave a lasting impact of imagery and tell an emotional story often better than just words or photographs can. According to a Google survey on online donation patterns, 57 percent of online donors make a charitable donations after watching a fundraising video that tells an inspiring story. This is exemplified through the ever-growing crowdfunding platforms; crowdfunding pages that have a video promo component raise four times as many donations as those that don’t. Just like your website and online donation pages need to be optimized for mobile, more than half of all videos happen on mobile.

video on iphone

Video content creation can sound scary at first if you don’t have a marketing team in place to facilitate, but it doesn’t have to be. Consider these tips, bust out your iPhone, acquire a tripod if possible, and use your laptop’s basic editing software. If you don’t have enough “last minute” time for that, shoot a video like you would for your own personal Instagram story or Facebook page.

Communicate, Communicate, Communicate

Remind your prospective donors what you stand for and what benefits they stand to gain with at least one weekly email each week before the end of year. Also, send out a special dedicated email early on both December 30 and December 31. As most year-end donors know they will in fact donate, they’re just undecided about how much they will actually give. Make it ridiculously easy for donors to “see” what their donation could do.

In terms of timing, for example, on December 31  send out follow-up emails to only those donors who didn’t open the first iteration of the communication. Stay on message with all social media postings and branded links back to your donation page.  

Celebrate!

After the year-end fundraising push, don’t forget to reward your nonprofit’s hardworking staff and volunteers! Refresh, refocus, and get ready to tackle your next year’s fundraising goals.

Happy new year headband

What year-end fundraising tactics have worked well for your charity? If you’d like to discuss any aspect of nonprofit fundraising, don’t hesitate to reach out via email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077).

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5 Resolution Ideas for Nonprofit Pros

fireworks with man reaching up to the sky

The talk around New Year’s resolutions tends to focus on personal goals, like getting in better shape, traveling more, reading more, going to bed at a regular time every night, eat less chocolate…the list goes on. But frankly, most of those great January 1 intentions fall by the wayside around Valentine’s Day (and for me, usually even earlier!). But resolutions don’t just have to focus on the personal—what about the professional?

Professional resolutions are promising because they involve the accountability, inputs, and outputs of more than just yourself. Your entire network of employees, volunteers, and/or donors can help the resolutions become a reality. For nonprofit professionals and leaders, now is the perfect time to set actionable goals that can help further your organization’s mission, progress, and fundraising. Here are five ideas to get you started:

Optimize policies and procedures

Both internal and external policies will guide your organization and set standards. These policies should cover certain legal issues including, but certainly not limited to, conflicts of interest, investments, document retention, whistleblower protection, gift acceptance, and endowments. Your organization is always evolving and so should your policies. If your nonprofit is new, you’ll want airtight legal policies in place from the start. (For example, do you have appropriate disclaimers in the employee handbook, so it’s not considered an employment contract?) If your policies have been in place for a while, should you make an annual overview part of your standard operations? Pay attention to provisions that should be added/edited due to government and tax law changes.

Nonprofit Policy Special: 10 for Form 990

Best board ever

Make this the year of the most efficient, effective board ever. Invest in educating and training the board of directors on issues that impact your industry and the nonprofit sector in general. Prepare your board with materials that will set them up for success such as an updated, comprehensive board handbook.

This is also a good place for a reminder to connect and leverage your board members’ experience, connections, and talents. Consider, when was the last time you had a one-on-one conversation with a board member outside of the monthly board meeting? Inviting a board member to lunch or coffee is a good opportunity to ask for valuable ideas on the organization and fundraising. Plus, taking the time to connect as individuals actively shows the board member you care for their connection and investment in the organization.

Collective Responsibilities of Nonprofit Boards

Excellent ethics

Let this be the year that you put ethics in operations above all. Does your entity have a conflict of interest policy in place? Does it need to be updated? Are there any areas for potential ethical infractions? Make a point to address these BEFORE they become an issue. Provide ethics training to your stewards—board members, employees, volunteers—so that everyone is on the same page of standards.  

Perfected planned giving

Managing planned giving programs is an art in the practice of effectiveness. And, as you may already know, such a giving program is a beneficial investment in future financial well-being; it takes significant time to construct and even more time to see results. From charitable gift annuities to even simple bequest programs, it’s likely that your planned giving program can be better organized and publicized to prospective donors. Review the readiness of your organization’s ability to accept a planned gift or endowment. Don’t be afraid to enlist an external auditor for improvements and legitimate practices.

Volunteer regularly

As a nonprofit leader, you’re dealing with the administrative details of development, human resources, and budgeting. Unfortunately, when you’re in the management weeds, you may not have much time to be on the ground executing programs. Make a commitment to volunteer with the organization at regular intervals. It will remind you of the all-important “why” behind the dollars and will enable you to better communicate this to board members, donors, volunteers, and other stakeholders. Better yet, encourage other employees at your organization to join you or set up a calendar of consistent volunteer slots.

change neon light

As I mentioned, these are just a few ideas to get you started. What resolutions can YOU and your organization’s board members, donors, volunteers, and other stakeholders imagine? Perhaps you should set some time aside for everyone to think about priorities moving forward into the new year. In any case, I’d truly love to hear from you about any and all resolutions you and your fave nonprofit have made!

Working with nonprofit leaders in Iowa is one of the best aspects of my job. The opportunity to help people achieve their goals for the cause or issue they care deeply about, is perpetually awe-inspiring. I believe that nonprofit leaders should focus on what’s most important—the mission and communities their organization serves—and I’m here to help with the necessary legal matters that come with nonprofit operation, like personnel contracts, internal and external policies and procedures, record-keeping requirements, and maintaining compliance with all local, state, and federal laws. Of course, don’t forget the complexities surrounding legal and sustainable fundraising.

I’m looking forward to helping you meet your nonprofit’s resolutions this year; please don’t hesitate to contact me.

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4 Tips for Effectively Managing a Monthly Giving Program

monthly calendar highlighter

In pretty much any industry—finance, business, health care, marketing, etc.—you can and should always be learning. For me, continuous learning often translates into better advice for my clients, especially on trends and new technologies within my main areas of service. One of my favorite ways to do this is to attend webinars presented by subject matter experts. Recently I attended one such presentation, hosted by NonProfit PRO, entitled “Effectively Managing a Monthly Giving Program That Exceeds the Thousand-Sustainer Mark.”

This subject is super interesting and important for nonprofit leaders, but nonprofit leaders are notoriously busy, so I took notes for you! Read on for the four main takeaways for managing a monthly giving (or monthly sustainer) program. The information presented was directed toward large giving programs, but much of it applies to any giving program, regardless of number of donors or nonprofit size.

Background

Monthly giving (or sustainer) programs can be the lifeblood of nonprofit organizations. These types of programs enlist, encourage, and facilitate regular donors—think automatic monthly or quarterly charitable donations. They are a definite best practice within the fundraising mix as they provide predictable funding and more engaged donors at a high retention rate. These types of programs also produce higher average annual gifts and can be mission critical for net revenue. Needless to say, monthly giving programs are extremely valuable and should be managed accordingly.

Be Dedicated to Donor Care

people laughing on beach

Your monthly donors are valuable and are going to be who help sustain the organization’s operations and key programs. Take care of prospective donors as if they are donors already. What does this mean?

Start at the beginning of “the funnel” and walk through the entire process of what joining your organization looks and feels like. Be honest about your sign-up process and review any barriers to entry. Your nonprofit is likely going to spend more money to bring regular donors into the fold, but the value of an invested sustainer is immense in the long-term. Make it just as easy to sign-up to be a donor, as it is to be a part of something—a movement, an initiative, a solution.

Taking care of your donors means paying attention to intentions. For instance, a donor might accidentally create two accounts, or a donor may make a large gift they intended to be a one-time donation, but registered it as monthly. The organization’s staff need to be available, organized, and equipped to facilitate requests to change whatever was set-up initially. If a donation situation seems strange or you have immediate questions, be proactive and contact the donor. Donors will feel the best about continuous giving if they’re able to donate exactly as they intended.

Taking care of donors means being prepared to be excellent communicators. If you’re running a donor drive or launching a new campaign, expect an increased number of calls, emails, and even social media messages from prospective donors. First of all, make contact information easily accessible. Equip all staffers that may have contact with prospective donors with FAQs, and other information they may need, including flexible phone and email scripts, so that messaging is clear and conducive to the campaign and overall mission.

Taking care of donors means that they need to feel engaged and part of the team from the get-go. This can look different at every organization, but common examples include a progression of on-boarding “welcome emails,” gift acknowledgement/thank you letters, and branded content they can share on social media.

Deliver a Personalized Experience

Collect data from your donors across all platforms and use it to deliver as much of a personalized experience as possible, with targeted messaging via social media and e-newsletters, direct mail, and engaging phone calls. One idea from the presentation was to follow up with donors with an update on the topic that encouraged them to become a donor in the first place. For example, let’s say Jill Donor joined as a monthly donor as a result of a specific campaign featuring the story of a little boy who would directly benefit from increased giving to the nonprofit. It would be smart to target Jill Donor with an update on that same little boy a few months later, and illustrate how her donation made a difference and will continue to do so.

computer on desk with booksThis is, of course, easier said than done, especially for nonprofits that source donors from multiple platforms. To that point, you’ll want all your data systems “speaking” to one another, regardless of which specific systems your organization operates with. If your systems are not centralized or properly organized, it could be detrimental. For example, you wouldn’t want to accidentally send an automated “lapse in giving” letter to an individual who has been one of your regular, steady donors of two years.

This advice goes not just for your information technology systems, but also personnel systems. Staffers involved with donor care should be able to view all available information on a single donor in a single centralized contact file.

Pay Attention to Trends & Analytics

green light

On its front, donor management may not seem like a data-centric field. Yet, data plays an extremely important role in gaining insights into the state of your sustainer programs. Define your key performance indicators (KPIs) and create reports and graphs that make it easy for other organization stakeholders to view trends over time. The webinar experts suggested the following main KPIs:

  1. Attrition: Who is falling off and when? This should provide some information to the bigger question: “Why are sustainer accounts declining at all?” (Hopefully you don’t have to ask this question at all, but if you do, you want to plug in the numbers for  who, when, and why.)
  2. Credit card updates: This KPI refers to credit card updater systems that automatically edit donor credit card information when the card expires or otherwise. It should measure if the credit card update service/system employed is working effectively. How many cards could not be accurately updated?
  3. Chargebacks: How many and for what amount did chargebacks to credit cards occur? Negative trends here could indicate a flawed process that requires updates.
  4. Reactivation: How many donors reactivated after previously cancelling a regular donation?
  5. Deactivation: How many donors canceled from the sustainer program?
  6. Average monthly gift: How much are donor gifts averaging?
  7. Online sign-ups: How many people are registering as repeat donors and where are they coming from—social media, e-newsletter, search engine, directly from the website, direct mail (send recipients to a shortened and tagged URL that will indicate how many people came from each letter campaign.) etc.?
  8. Cost to acquire: What’s the average spend in exchange for donor acquisition?

Ability to track all or some of these will likely depend on the size and capacity of your organization. If your nonprofit is small just focus on a couple main KPIs for donor management. Use your historical KPI data to set goals and expectations for coming periods.

Know When You’re Getting Paid

The webinar speakers used this phrase “know when you’re getting paid,” to discuss the important topic of billing capabilities.

One subject discussed were the differences and advantages of different billing options. If possible, offer your donors a variety of options for billing, so it’s tailored to their intent. But, not every organization will be able to offer a selection, so you choose between the merits of monthly/fixed-day (billing on the same day of each month, regardless of when the donor initially registered) and anniversary (each invoice is the same day of the month the donor registered).

Credit card payments are typically one of the easiest ways for donors to register, but know that the average nonprofit will see 15 to 30 percent of all credit cards payments declined due to failure to renew. That means that either a donor didn’t update their billing info, or a credit card updater system you pay for failed to update automatically. If possible, keep track of what cards are about to expire and then reach out to the donor directly. This is a good time to reconnect with the donor, discuss initiatives, and explain how an increase in giving could further along the mission.

Be sure to offer the ability to accept as many different types of payments as possible. To that point, and to surpass the many complications credit cards can present, the webinar leaders also recommended exploring options for ACH (Automated Clearing House Network) payments. ACH, as you may already know, is a network that facilitates electronic money transfers. ACH payments can be as fast as a wire transfer and the banking info required doesn’t tend to change or expire like credit cards do. However, ACH payments are subject to strict policies, so just be sure to adhere to the rules and regulations if you’re going to offer this option.

Finally, know when you’re going to actually have access to donated funds and at what amounts. This impacts cash flow and budget development and execution.

Don’t Delay Effective Management

Successful fundraising can and should involve sustainer giving programs, as they can be incredibly successful and rewarding for both the organization and donor alike. But, if you don’t implement effective donor-centric tactics as well as data organization and analysis from day one, you are at risk of losing your sustainers before you even start.

https://www.gordonfischerlawfirm.com/nonprofit-policy-special-10-form-990/

In addition to the four main points, I would also like to add that that having sound, quality policies and procedures in place can make all the difference for effective management, let alone legal compliance. I’m offering a deal for 10 important policies asked about on Form 990. Policies like a gift acceptance policy fit in as an important piece of the fundraising puzzle.

Questions? Thoughts? Advice from your own experience with monthly sustainer programs? Comment below or reach out via email or by phone (515-371-6077).

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Not Every Charitable Donation is Tax Deductible

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hand holding flowers

It’s the end of January and that means Tax Day is creeping closer. You tend to hear a lot about what sort activities are tax deductible. You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. And, you’ll certainly want to be aware for substantiation purposes what contributions are indeed deductible.

What recordkeeping is required for charitable deduction?

But, in conquering your charitable giving goals, it’s just as important to know which nonprofit organizations are NOT qualified beneficiaries for tax-reducing gifts. Additionally, not all gifts to qualified charities are eligible. Contributions to certain entities may appear to be tax-deductible, but in actuality are not. This is not to say that these contributions are not valuable and helpful to the respective donees, it’s just that the U.S. government isn’t going to give you a tax break.

Knowing what you can and can’t claim helps you maximize the potential tax savings that the charitable tax deduction offers.

Contributions made to the following are NOT considered viable for the charitable deduction:

Promises and Pledges

man on computer in blue room

Let’s say you made a charitable pledge to a local 501(c)(3) for $150, but only paid $50 in donation during the tax year of the respective tax return. You can only deduct the $50 actually donated. Once you make the transfer of the rest of the pledge ($100) then you could deduct that from the appropriate tax year.

Political parties, campaigns, and action committees

It’s important to get involved in the process fo democracy, but joining politic through monetary support does not translate into a charitable donation. Funds given to political candidates, parties, and PACs cannot be claimed. This also includes money spent to host or attend fundraising events or advertising.

boy skateboarding with American flag cape

Fundraising tickets

I’m sure you cannot count all the times you’ve been asked to purchase raffle tickets, bingo cards, lottery-based drawings and the like. It’s a common fundraising tactic, but such costs are not deductible.

Personal benefit gifts

The IRS considers a charitable contribution to be one-sided. This means if you receive something in reciprocity for a donation—anything from a tote bag, to a plant, to a three-course dinner—only the amount in excess of the fair market value of the item/service received is deductible. Let’s say your little neighbor is selling popcorn to raise money for their scouting troop. You buy some popcorn from the kid for $10 and the retail value of such a popcorn tin is $6. This donation would translate into a $6 charitable deduction. Likewise, you purchase a $75 ticket to an annual event hosted by a qualified charity. The event includes a meal that would have cost you $30 at a restaurant; overall your charitable deduction would be $45. (Read more about quid pro quo donations here.)

25 Days of Giving: What the “No Smile” Rule Means for Your Taxes

Receipt-less donations

You’ve probably given more than you can write off from small cash donations to your church’s collection plate, the Salvation Army holiday bell ringer, and charity bake sales. Why cannot you just guesstimate, add this all up, and deduct the amount off of your taxes? Receipts. The IRS requires proof of all cash donations big and small; a canceled check, statement or receipt from the recipient organization can suffice for cash donations up to a $250 (in total), and then more substantiation is demanded.

Person-to-Person

I’ve seen many successful crowdfunding campaigns for individuals raising money for a multitude of things. Let’s say your cousin is raising money for an expensive medical procedure through an online site and you donate to help them reach their goal. Or, maybe your nephew is raising money to take a mission trip this summer. Unfortunately and contributions earmarked for a certain individual (despite the economic/medical/educational need) are not deductible, according to IRS Publication 526. However, if you were to make a contribution to a qualified organization that in turn helped your cousin or nephew out with a grant or scholarship, for example, the contribution would be deductible. Make note though, even if you were to give a contribution to a charity in order to help a specific individual, you cannot designate the money to one specific individual for the gift to. Basically, the contribution cannot be given directly or indirectly to a specific individual and still be tax deductible.

two people talking

The list could go on for contributions that are not deductible, but some other notable inclusions to be aware of include:

  • For-profit schools (nonprofit schools are good to go so long as donations are not made to benefit a specific individual)
  • For-profit hospitals (nonprofit hospitals are A-OK)
  • Foreign governments
  • Foreign-based nonprofits (with some exclusions for specific nation-states)
  • Fines or penalties paid to local or state governments
  • Value of your time for services volunteered to a charity
  • Value of blood donations (you just need to do that one out of the goodness of your heart…literally)
  • Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups
  • College tuition (Even if the school is a nonprofit, tuition to attend the school is NOT tax deductible as a charitable contribution)
  • Professional groups/associations (such as civil leagues)

This may make it seem like there are many exceptions to the charitable deduction rule, however there are still an innumerable number of qualified nonprofit organizations that are a good way of reducing taxes (remember, you have to itemize) while also helping others. If you have questions about the charitable contribution tax deduction it’s a good idea to consult with your professional advisors. It’s also a good idea to heed these tips prior to making a charitable donation and double-check the organization’s status on the IRS’ Exempt Organizations Select Check tool, which allows users to search a list of organizations eligible to receive tax-deductible charitable contributions.

25 Days of Giving: Donation Bunching

I would be happy to have a conversation regarding the tax code, the best time and way to maximize a charitable donation, and help ensure you’re in compliance in compliance with all state and federal laws. Contact me at via email or by cell phone (515-371-6077). 

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Press Play on these Nonprofit-Related Podcasts

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Headphones

Podcasts undoubtedly are a component of the upper echelons of the Interwebs—one of the aspects of digital content that actually help us be more knowledgeable, interesting people. Unlike cute animal videos on Reddit, the time suck that is Twitter scrolling, or the easily enabled spending sprees on Amazon Prime, podcasts open our eyes to stories that capture our minds. They give us tidbits to discuss with our dinner companions, can help us forget we’re cleaning the house, and make driving through the long swaths of nothing-but-cornfields in the Midwest that much more manageable. Podcasts give us a chance to enrich and enhance our personal and professional lives in an accessible way.

A major sector of my practice is dedicated to working with nonprofits and the donors who support them. Be it writing and filing organizing documents, offering valuable training for nonprofit boards and staff members, handling compliance issues, or coordinating complex charitable gifts, I love working with Iowa nonprofits. In order to do my best work in the intersection between nonprofit operations and law, I try to stay on top of news and best practices in the industry. One way to do that? Podcasts—they’re like free professional development. If you work for a nonprofit, serve on a board, or are simply an interested donor, here are four top-notch podcasts related to nonprofits.

Business of Giving

Business of Giving

Hosted by Denver Frederick, who can boast 40 years of valuable experience “in the world of philanthropy and social good,” the Business of Giving explores topics and solutions to complicated social issues. In the past, the program has explored topics such as affordable housing, education, access to clean water, and global poverty. Based out of New York City, a new episode is released on Sundays, 6-7 p.m. The best place to listen is on Soundcloud. Recent episodes of the show (of the over 300 tracks available to listen to) include interviews with Dan Cardinali, President and CEO of The Independent Sector, Megan O’Neil, Staff Writer for The Chronicle of Philanthropy, and Adarsh Alphons, Founder and Executive Director of ProjectArt.

Nonprofit Leadership Podcast: Making Your World Better

Nonprofit Leadership Podcast

This is a great listen for nonprofit leaders (like the name of the show says) as each episode covers opportunities, trends, and problems applicable to leadership in the sector. First hand advice from other leaders can be invaluable in helping others apply the same practices in their own respective organizations. Dr. Rob Harter hosts the show and brings with him more than two decades of work in “leading and building non-profit organizations, leveraging resources, communication and personal development.” The episodes (available in iTunes) give advice and tell stories to help you ultimately be more efficient and effective in your leadership. I liked one of the recent episodes from June that featured the “Fundraising Coach,” AKA Marc A. Pitman, on how to lead with less stress.

Tiny Spark

Tiny Spark Podcast

Not only does Tiny Spark have a cool owl logo, it also has pretty fantastic episodes that dig in deep on “philanthropy, nonprofits and international aid.” Founder and managing editor, Amy Costello, is a rock star reporter who has an impressive reporting resume including PBS, BBC, and NPR; she was nominated for an Emmy Award on her reporting on Dafur, Sudan. Subscribe on iTunes for episodes such as the recent ones on “The Rise of Philanthropy’s ‘Shadow Giving System’,” and “Why Big Philanthropy Needs Scrutiny Not Gratitude.”

Nonprofit Ally

NonProfit Ally

The Nonprofit Ally podcast wraps essential topics like “social media strategies, capacity building, board of director development, fundraising and budgeting,” into conversations with nonprofit leaders. Episodes are under an hour and after tangible advice you can with you into your nonprofit role, such as how to have better board meetings with Roberts Rules, how to fundraise over email, and tips of the trade from a professional grant writer. The podcast is hosted by Steve Vick of the podcast’s associated website, nonprofitally.com. You can listen on the website or subscribe on Android and Apple platforms.

What nonprofit-related podcasts would you add to my listening library? Share below in the comments. (On a related note, I also wrote about how the podcast S-Town made a strong case for the need and power of estate planning.)

If you want to discuss the issues your nonprofit is facing, don’t hesitate to reach out via email or phone, at 515-371-6077. I’m more than happy to offer a free consultation.

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