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Avoiding Merger Missteps

two men shaking hands

You’re not imaging things if it seems like nonprofit charitable organizations are popping up like sweet corn in the summer. According to the National Center for Charitable Statistics, more than 1.5 million nonprofits were registered with the Internal Revenue Service (IRS) in 2015—an increase of 10.4% from 2005.

Is this a good thing?

On the one hand, Americans are incredibly generous, donating $427.71 billion to charity in 2018. On the other hand, more nonprofits mean more competition for those dollars and the duplication of services, both of which can limit a nonprofit’s effectiveness. When nonprofits can’t pursue their missions effectively, those who benefit from their services may suffer.

The issue of whether or not some nonprofits might be better off merging in order to be more efficient and successful in fulfilling their objectives and meeting their goals is a real one. But for the average donor, or those designating an organization in a will or trust, learning that a favorite nonprofit is merging with another nonprofit can raise questions about what this means immediately and in the long run.

Purposeful Planned Giving: What it is & How to Make a Powerful Differece

The urge to merge

Philanthropy can be incredibly personal. We are motivated to donate time and money to organizations that represent some of our most deeply felt attachments and interests, so when a beloved nonprofit announces it is merging with another one, it can feel like a kind of betrayal.

A merger is a kind of partnership in which two or more organizations become a separate entity. Mergers between and among nonprofits can be well-planned, strategic, and result in greater collective impact and growth. Or, they can be messy, fraught, and lead to confusion and a loss of support.

Make a Nonprofit Merger Happen

Nonprofit mergers are more common than you might think and even though they’re often seen as simply a survival tactic to stave off financial ruin, they can take place for many different reasons:

  • Expand the range or improve the quality of services each provides by pooling and leveraging resources
  • Diminish competition between organizations that vie for donors, board members, and funding
  • Compensate for the loss of a founder or key leader that leads the board to question its viability
  • Establish stronger strategic positioning with funders, competitors, and policymakers
  • Formalize an existing relationship or collaboration

Donors and nonprofit mergers

While a merger might be good for a nonprofit, what about donors or volunteers?

Nonprofits should send out a notice to stakeholders early in the merger process and be completely transparent. It’s a smart step to make supporters aware of the following:

  • The reasons behind the merger
  • Information about the other nonprofit and how each organization’s mission and programs align
  • A timeline and status updates
  • The names of the merger team
  • Any anticipated changes in leadership

YOU Are a Super Hero: Charitable Giving Through Estate Planning

If donors plan to give a donation during life or make a charitable bequest through an estate plan will they go to the new organization? Or the old organization? For donors, one way to make certain a donation is honored for the purpose it’s given by setting clearly articulated expectations. Merging nonprofits can honor this by offering options for donors to do this via a templated form.

Nonprofits are often reluctant to merge because they fear alienating loyal donors, but a merger can mean reducing costs. It can also mean cutting duplication of services and increasing reach and effectiveness for the charity. Nonprofits that effectively articulate these benefits to their loyal funders will be unlikely to lose supporters of the mission. Furthermore, it’s a good idea to invest in a strong set of policies and procedures, including a gift acceptance policy so that equal standards for all gifts are communicated to current and prospective donors.

New Article Published: Why Every Nonprofit Needs a Gift Acceptance Policy

Donors that happen to already support both nonprofits already, should consider contributing the total amount to the merged nonprofit. The old nonprofits will cease to exist upon the merger, but that shouldn’t be let that be a reason to end full support for the causes the donor cares about!

Is your Iowa nonprofit considering a merger? Please contact me via email (gordon@gordonfischerlawfirm.com) or on my cell phone (515-371-6077). I’d be happy to discuss best practices for your merger with you anytime. I offer a free, one-hour consultation for all!

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Purposeful Planned Giving: What it is & How to Make a Powerful Difference

planned gift pink bow

A planned gift is literally what is sounds like. Sort of. The term refers to the process of creating a charitable bequest now that will take effect later. In other words, during your lifetime you plan for a gift that will be given a future date—usually at or upon your death. A planned gift is best accomplished as part of an overall estate plan and it is usually delivered through a will or trust.

While you can make provisions to give a specific dollar amount, there are many different types of planned gifts. You can make a planned gift of real estate, life insurance, and retirement plans, or tangible property (such as artwork). You can also remember organizations with planned gifts of charitable remainder annuity trusts (CRATs), charitable remainder unitrusts (CRUTs), Net Income with Makeup Charitable Remainder Unitrusts (NIMCRUTs), FlipCRUTs.

Let’s Head Back to School! First Lesson is on Planned Giving

For now, let’s go over exactly what planned giving is; the benefits of planned giving; the kinds of charities you need to consider when making a planned gift; and the kinds of gifts that qualify for a tax deduction.

Who gives? Donors and benefactors

In July 2018, Warren Buffet donated about $3.4 billion to five charities, including the Bill & Melinda Gates Foundation—itself headed by the country’s most generous philanthropic couple who gave it $4.8 billion. Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, donated $1 billion to their charitable foundation.

It’s fun to read about the super-rich and their bountiful bequests, but you don’t have to be a modern-day Rockefeller or a member of the one percent to donate to charity or create a planned gift. Indeed, ordinary people with ordinary means can bequeath gifts that make an extraordinary difference.

Celebrating Women’s History Month: Inspiring American Philanthropists

In 2016, a legal secretary in Brooklyn, New York, who had worked at the same law firm for 67 years, bequeathed $8.2 million to, among others, New York City’s Henry Street Settlement and Hunter College to help disadvantaged students. Sylvia Bloom, who worked until she was 96 years old, saved her fortune through frugal living and savvy investing.

People make planned gifts for any number of reasons:

  • Streamline estate planning and closing;
  • Make a meaningful contribution to a cause or organization that reflects their beliefs and values;
  • Create a legacy that will have lasting impact into the future;
  • Gain income and tax benefits.

There are three types of planned gifts:

  • Outright gifts that use assets instead of cash;
  • Gifts that return income or other financial benefits to you in return for a contribution;
  • Gifts payable upon your death.

YOU Are a Super Hero: Charitable Giving Through Estate Planning

Who receives? Planned giving beneficiaries

Organizations love planned gifts. After what are known as “major gifts”—the six-figure endowment, the priceless Old Master painting, the stretch of valuable coastline—planned giving makes up the largest chunk of donations a nonprofit receives. Planned giving helps nonprofits weather fluctuations in other kinds of charitable giving and income, such as yearly donations and gift shop sales. It can alleviate the possibility of dipping into an endowment or cutting back on services and programs. Planned giving is also a way to develop and sustain relationships with donors — and in an increasingly competitive giving environment, nonprofits can’t afford to ignore planned giving programs. Even though organizations don’t immediately receive a planned gift, it is worth the wait.

The reality is that nonprofits can no longer simply ask donors to pony up with cash by writing a check. Donors expect and often demand an array of choices when it comes to helping their favorite nonprofits. Many if not most nonprofits have programs in place to accept planned gifts. But if you’re interested in donating an asset your favorite nonprofit isn’t accustomed to accepting, your best bet is to connect it with an experienced nonprofit attorney to make your gift a reality.

Latest Iowa Lawyer Mag Article: Charitable Giving Strategies Under the Revised Tax law

Not all nonprofits are the same when it comes to giving

When we talk about “charitable giving,” it is usually when referring to a particular kind of nonprofit organization. Specifically, organizations formed under 501(c)(3) of the Internal Revenue Service tax code.(Click to the IRS website to check if a possible beneficiary is a qualified 501(c)(3).) A 501(c)(3) can come in many different forms: foundations, charities, churches, community organizations, schools. They all have one thing in common in that they are formed to benefit the general public, not individuals, not for the mutual benefit of their members (such as homeowners associations, and not for political coalitions).

March Madness Inspired: 64 Charitable Gifts of Non-Cash Assets

Be aware, however, that not every nonprofit is a 501(c)(3) organization. There are actually 29 types of nonprofits in the U.S. federal tax code, but when it comes to planned giving you can only take a tax deduction if you donate to one that the IRS has conferred 501(c)(3) status. Contributions to non-501(c)(3) groups, charities, and organizations can be valuable to recipients and make you feel good as well. It’s just that the federal government is not going to give you a tax break for your donation. Knowing what you can and can’t claim helps you maximize the potential tax savings that the charitable tax deduction to a 501(c)(3) offers.

Before we discuss what kinds of giving qualify for a tax deduction, here are some that don’t qualify:

Promises and pledges

Let’s say you made a charitable pledge of $150 to a 501(c)(3), but only gave $50 that particular tax year. You can only deduct from your taxes the $50 that you actually donated that year. Once you donate rest of the pledge (the remaining $100) you can deduct that amount for the tax year in which this occurred.

Political support

While it is important to be involved in the democratic process, monetary support is not considered charitable giving. Monies given to political candidates, campaigns, parties, and political action committees (PACs), as well as money spent to host or attend fundraising events, or to purchase advertising, lawn signs, and bumper stickers are not considered charitable giving.

Fundraising and special event tickets

I’m sure you can’t count the number of times you’ve bought raffle or lottery tickets, bingo cards, and partook other kinds of games of chance. These classic and popular fundraising methods support charities and are fun to imagine winning, but you can’t claim a deduction for them.

25 Days of Giving: Charity Auctions & Tax Deductions

Personal benefit gifts

The IRS considers a charitable contribution to be one-sided. This means if you receive something in return for your 501(c)(3) donation — from a tote bag to a T-shirt, from a side of beef to a three-course meal — only the amount above the fair market value of the item/service is deductible. Let’s say your neighbor’s child is selling popcorn to raise money for a scouting troop. You buy a bag of popcorn for $10 whose retail value is $6. This amounts to a $4 charitable donation. Similarly, you purchase a $75 ticket to a fundraising dinner sponsored a favorite charity. The dinner would cost you $30 at a restaurant, so your charitable deduction would be $45.

Gifts without proof

Cash placed in your church’s collection plate, dropped into the Salvation Army’s Red Kettle, and handed to a student for a cupcake at a bake sale…these are all worthy donations, but you can’t just guesstimate how much you’ve given and deduct the amount from your taxes. Of course, I believe, you gave, but the IRS demands documentary proof of all cash donations, no matter the amount in order for you to claim the deduction. Proof might be bank records such as a canceled check, a receipt from the nonprofit organization, or a pay stub if the donation was made through a payroll deduction. For single cash donations of more than $250, the IRS requires a statement from the organization.

25 Days of Giving: Quick Rule-of-Thumb on Charitable Deduction Limits

Gifts to individuals

I’ve seen many successful crowdfunding campaigns to support any number of good causes. Let’s say a friend is raising money for her child’s expensive medical procedure through an online site and you make a donation to help her reach her goal. Or, perhaps your nephew is raising money for a mission trip over the summer and you write him a check for $25. Unfortunately, contributions earmarked for certain individuals (despite their economic, medical, educational or other needs) are not deductible according to the IRS. However, if you donate to a qualified organization that in turn helps your friend or nephew, that contribution would be deductible — although you can’t designate your donation to be directed to that person. Again, a contribution can’t be given directly or indirectly to a specific individual and still be tax-deductible.

Retirement Benefit Plans and Charitable Giving

Bountiful opportunities for charitable giving

It may seem like there are a lot of kinds of giving and plenty of nonprofits that do not qualify for the tax benefits you’re looking for, but don’t worry!  There is a multitude of ways for you to show your generosity and contribute to a charity that can minimize your estate taxes, bypass capital gains taxes, and receive current tax deductions. Of course, planned giving is not the only kind of giving. Unplanned giving is no less a means of showing your generosity and supporting those organizations whose mission and activities you believe in.

I’d love to discuss your charitable giving goals and options tailored to your individual situation. Don’t hesitate to contact me via email or by phone (515-371-60770).

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New Article Published: Why Every Nonprofit Needs a Gift Acceptance Policy

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reading gift acceptance policy article

I love the opportunity to write for the Iowa State Bar Association‘s monthly publication, The Iowa Lawyer. I enjoy even more that you don’t have to be an attorney, judge, or even work in the legal field to read it! I recommend all nonprofit professionals, as well as professional advisors that advise nonprofits, to give my latest piece a read. Entitled “Minding the GAP: Why Every Nonprofit Needs a Gift Acceptance Policy,” the article (on page 24) overviews:

  • what this important policy entails
  • why it’s essential
  • what provisions should be included
  • different types of charitable gifts to consider when drafting the policy

minding the GAP - why every nonprofit needs a gift acceptance policy

That all said, a gift acceptance policy is just one of many policies that each nonprofit should have drafted to fit their unique mission and operations. Other documents to review, adopt, and employ include:

I’m happy to discuss any elements regarding how a gift acceptance policy can help your organization; don’t hesitate to contact me by phone (515-371-6077) or email (gordon@gordonfischerlawfirm.com).

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Estate Planning Basics: What You Need to Know, but Were too Bored to Ask

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I KEEP six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.– Rudyard Kipling

I’ll use all six “serving men”—what, why, when, how, where, and who, albeit sometimes in slightly different order—to explain three broad topics: (1) estate planning; (2) trusts; and (3) business succession planning. If you’re unsure of any of the three topics listed, this is the blog post for you.

man taking notes in notebook

WHAT is an Estate Plan, Anyway?

What do we talk about when we talk about estate planning? There are six documents that should be part of everyone’s estate plan. Additionally, you should also keep these six documents updated and current. It’s also important you take note of assets with beneficiary designations (such as those on IRAs and bank accounts).

WHO Needs an Estate Plan? Everyone!

Everyone needs an estate plan. If you’re young, healthy, unmarried, have no children, and have no significant or unusual assets, perhaps you could talk me into the idea that you don’t entirely need an estate plan. Even in such exceedingly rare cases, I strongly recommend making sure your beneficiary designations are completed and up-to-date.

5 Reasons to Have an Estate Plan When You’re a Single Young Professional

For example, beneficiary designations can be found on your checking and savings accounts and on your retirement benefit plan. But, if you’re married, and/or have kids, and/or have significant or unusual assets, and/or own part or all of a business, you most definitely need an estate plan.

WHY Do You Need an Estate Plan?

Estate planning is not exactly material for scintillating conversation. In fact, I’d bet most of us like to avoid this topic because it can be confusing, and requires lots of decision-making. And, yes, it forces one to think about the mortality of loved ones and the self. Estate planning, after all, is a roadmap about what you want to happen after you move on from this life. While it may not be a fun topic, it is indeed a necessary one. If you die without an estate plan, there are several negative consequences.

Without an estate plan, you cannot choose who receives your estate assets.

If you die without a will, you leave the decision of who will receive your property, in what amount, and when up to the Iowa legislature and/or Iowa courts. With this situation, there is always the very real possibility that the distribution of your estate will be greatly different than if you had chosen it through an estate plan.

Without an estate plan, you cannot choose a guardian for your minor children.

If you die without an estate plan, Iowa courts will choose guardians for your children. One of the most important aspects of a will is that it allows you to designate who will be the guardian for your children. This can ensure that your children are cared for by the person that you want, not who the court chooses for you.

Without an estate plan, Iowa courts will choose your estate’s executor.

If you die without an estate plan, the probate court is forced to name an executor. The executor of your estate handles tasks like paying your creditors and distributing the rest of your assets to your heirs. If the probate court has to pick who will be your estate’s executor, there is always a chance that you would not have approved of that person if you had been alive. If you have an estate plan, your will names a trusted executor who will carry out all of your final wishes, pay your bills, and distribute your assets as you intended.

Without an estate plan, you can’t help your favorite nonprofits.

If you die without an estate plan, all your assets— house, savings, retirement plans, and so on—will pass to your heirs at law as specified under Iowa’s statutes. If you have an estate plan, you can include gifts to your favorite nonprofits and see that they are helped for many years to come.

HOW Do You Structure Your Estate Plan?

light bulb on post-it note

Again, there are six basic documents that should be part of everyone’s estate plan:

  1. Estate Planning Questionnaire
  2. Last will and testament
  3. Power of attorney for health care
  4. Power of attorney for finance
  5. Disposition of personal property
  6. Disposition of final remains

We’ll go through each document briefly, so you have a sense of what each entails.

Estate Planning Questionnaire

Estate planning involves facing heavy questions, and depending on the number of assets and beneficiaries you have, may take quite a bit of time and thought. I recommend clients (and even those who aren’t my clients) complete an Estate Plan Questionnaire. An Estate Plan Questionnaire is a simple way to get all of your information in one place and makes it easier for your attorney to build your estate plan.

As with any project, it helps “to begin with the end in mind.” A questionnaire can help get you there.

hand holding orb

Last Will and Testament

Now let’s discuss your last will and testament. In sum, you’ll be answering three major questions:

Q1. Who do you want to have your stuff?

This includes both tangible and intangible things. An example of a tangible item would be your coin collection. An example of an intangible asset would be stocks.

Q2. Who do you want to be in charge of carrying out your wishes as expressed in the will?

The “executor” is the person who will be responsible for making sure the will is carried out as written.

Q.3. If you have kids under age 18: who do you want to take care of your minor children?

You’ll want to designate a legal guardian(s) who will take care of your minor children until they are adults.

The Kids are Alright: Guardianship for Children

Power of Attorney for Health Care

A power of attorney (POA) for health care designates someone to handle your healthcare decisions for you if you become unable to make those decisions for yourself. A healthcare POA can govern any kind of decision that is related to your health that you want to address. A healthcare POA may include decisions related to organ donation, hospitalization, treatment in a nursing home, home health care, psychiatric treatment, and more.

For example, if you don’t want to be kept alive with machines, you can make this clear in your POA for healthcare. But, keep in mind your POA for health care isn’t just about end-of-life decisions, again, it can cover any medical situation.

Power of Attorney for Finance

The power of attorney for financial matters is similar to the health care document just discussed, only your designated agent has the power to make decisions and act on your behalf when it comes to your finances. This gives them the authority to pay bills, settle debts, sell property, or anything else that needs to be done if you become incapacitated and unable to do this yourself.

It might be obvious by now, but I’ll state it just in case: choosing an agent for a power of attorney requires that you think long and hard about who would be best suited for the job and who can be trusted.

woman on laptop on patio

Disposition of Personal Property

Now, let’s get to the disposition of the personal property. This is where you get specific about items you want particular people to have. If you’re leaving everything to one or two people, then you may not need to fill this out. But, if you know you want your niece Beth to have a specific piece of jewelry, and your cousin Karl to have that bookshelf he loved, then you’d say so in this document.

Disposition of Final Remains

The disposition of final remains document is where you get to tell your loved ones exactly how you want your body to be treated after you pass away. It can be as general as simply saying “I want to be cremated and scattered in my garden,” or it can be specific and include details of plots you’ve already purchased or arrangements you’ve already made.

Beneficiary Designations

Along with the six basic estate planning documents, don’t forget about your assets with beneficiary designations.

Common accounts with beneficiary designations include savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRAs are all transferred via beneficiary designations. These beneficiary designations actually trump your will!

Regarding assets with beneficiary designations, you must make sure that designations are correctly filled out and supplied to the appropriate institution. Remember to keep these beneficiary designations updated and current.

6 Simple Tips for Beneficiary Designations

WHEN Do You Update Your Estate Plan?

Let’s say you’ve gone to an estate planning lawyer, and these six basic estate planning documents have been drafted and signed. What else? You need to keep these documents updated and current. If you undergo a major life event, you may well want to revisit with your estate planning lawyer, to see if this life event requires changing your estate planning documents.

What do I mean by a major life event? Some common events would include:

  • Selling or buying land
  • Birth or adoption of a child or grandchild
  • Marriage or divorce
  • Illness or disability of your spouse
  • Purchasing a home or other large asset
  • Moving to another state
  • Large increases or decreases in the value of assets, such as investments
  • If you or your spouse receives a large inheritance or gift
  • If any family member, or another heir, dies, becomes ill, or is incapacitated

This is just a short list of life events that should cause you to reconsider your estate plan. There are many others; if you think you might have undergone a major life event, check with your estate planning lawyer.

5 Scenarios for Estate Planning Revisions

WHERE Do You Keep Your Estate Plan?

You should store your estate planning documents in a safe place, such as a fireproof safe at home, or a safety-deposit box. Another option in our digital era is storage on the “cloud.” Just make sure the important agents under your estate plan—say, for example, the executor of your will, or power of attorney representative—can access the documents if and when the need arises. For most folks, that’s enough: the six documents, keeping the documents current and remembering about those assets with beneficiary designations.

Don’t Forget About Benefiting Charities!

Perhaps most importantly, through proper estate planning, you can help your favorite charities in ways large and small. One common way grantors elect to support the causes and organizations they care about is by naming them as a beneficiary of a certain amount or percentage of the estate’s assets.

YOU Are a Super Hero: Charitable Giving Through Estate Planning

Time for a Trust?

Wait a second…what do you mean by “for most folks, that’s enough?” Indeed, for most Iowans what I’ve outlined here is enough. There may be folks who have a high net worth, or who have complex assets (for example, more than one piece of real estate), or own part or all of a robust business, or otherwise have unusual situations. In such cases, a trust may be helpful. That’s considered more “advanced” estate planning and will mean additional conversations and collaboration on what estate planning tools work best for the situation.

Calling all Word Nerds: 9 Terms to Know About Trusts

See? That wasn’t so bad!

Whether it’s complicated or simple, it does require some thought and time. But, it’s worth the investment. A proper estate plan can save you and your estate costs and fees, help your family and friends, and provide you peace of mind.

Do you have an estate plan? Why or why not? I’d love to hear from you in the comments below. You can reach me at any time at 515-371-6077 or gordon@gordonfischerlawfirm.com.

Everyone has unique needs and thus every estate plan needs to be personalized. Online templates for estate plans won’t cover the nuances of your life, wishes, and assets. The best place to start on your personalized estate plan is with my Estate Planning Questionnaire.

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Nonprofits & Sarbanes-Oxley Compliance

two boardroom tables

If you’ll think back to the early 2000s, in the aftermath of the Enron scandal (among others such as Tyco, Global Crossing, and WorldCom) the climate of distrust and dramatic malfeasance demanded reform of corporate accounting, governance, and other business practices. Accordingly, U.S. Congress passed the Sarbanes-Oxley Act, a law name that’s easier to remember than the actual full legislation name: The American Competitiveness and Corporate Accountability Act of 2002. In summary, the legislation required adherence to certain governance standards by corporate management, and expanded the role the governing board plays in financial and auditing oversight and procedures. It also applied standards of operation to public accounting firms.

Sarbanes-Oxley’s intended consequences were multitudinous, including closing accounting loopholes, increasing accountability and disclosure requirements, rebuilding public trust in American corporations, and increasing penalties for corporate and executive wrongdoing.

Although Sarbanes-Oxley was passed with publicly-traded companies top mind, there are two provisions that are explicitly relevant to tax-exempt organizations: the whistleblower policy and document retention and destruction protocol.

Whistleblower

A whistleblower policy is not technically mandated for nonprofit organizations, but it makes smart sense to adopt such a policy. Why? First off, it encourages stakeholders in the organization to bring attention to problems in the early stages where issues may be more solvable. It’s also important for state and federal liability purposes and ensuring organization executives, board members, and other stakeholders understand their right to report as well as the implications of inhibiting such reporting.

Collective Responsibilities of Nonprofit Boards

Section 1107 of Sarbanes-Oxley makes it a federal crime to knowingly take any action with the intent of retaliation against a person who has reported truthful information to law enforcement relating to any current or possible federal offense. Violators of this provision are subject to fines and/or imprisonment for up to 10 years.

An ideal nonprofit whistleblower policy should both set a process for complaints to be addressed and include protection for whistleblowers. A well-written whistleblower policy can encourage an appropriate, swift response of investigation and solutions to complaints.

Form 990, the annual information report the majority of nonprofit organizations are required to file, states the following in its instructions:

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

Record-keeping

macbook on table

The acts of document retention and destruction are also covered under Sarbanes-Oxley. Section 802 of the Act defines the criminal penalties for tampering with documents in relation to federal investigations and bankruptcy. It reads:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

You read that right. Violators of this provision can be fined and/or imprisoned for up to 20 years.

Additionally, Section 1102 of Sarbanes-Oxley makes it a crime to tamper with a record or otherwise impede an official proceeding. Violators of the provision may be fined and/or imprisoned up to 20 years if they “corruptly” alter, destroy, mutilate, or conceal a record, document or other objects, or make an attempt to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding. (Note, the term “corruptly” is not defined, but your organization can and should use the best judgment on the word.)

Your nonprofit should include specifics related to these Sarbanes-Oxley provisions in a “document retention and destruction policy.” 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 to ensure compliance and reduce liability risks.

Get Policies Set in Place: 10 for 990 Policy Special

Nonprofit Policy Special: 10 for Form 990

Nonprofit organizations should have relevant and updated policies in place that provide guidance for compliance with these Sarbanes-Oxley requirements. I’m offering the 10 for 990 nonprofit policy special where I’ll draft 10 policies related to annual reporting on Form 990 for only $990. Two of the policies included—whistleblower and document retention and destruction—specifically address requirements under Sarbanes-Oxley.

Seize the opportunity to get strong policies in place for a compliant future! Additionally, if you have specific questions about Sarbanes-Oxley compliance don’t hesitate to contact me directly via email (Gordon@gordonfischerlawfirm.com) or by phone (515-371-6077).

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When is an Employee Handbook not an Employee Handbook?

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employees as a desk

An employee handbook is just an employee handbook…or so you may think. But, what happens when it doesn’t have an appropriate “disclaimer?”

Incorporate a Disclaimer

In addition to smart employment policies, all nonprofit entities should develop an employee handbook as a part of the onboarding/training process for all employees. The handbook, like other employment policies, serve the purpose of capturing the values you wish to instill in your workforce, outline the standards of behavior you expect, and provide a clear guide for rights and responsibilities.

Smart Employment Policies for Nonprofits

That said, an employee handbook can actually be considered an employment contract if you’re not careful. And, to best set out the parameters of the employment relationship, it’s best if the handbook and contract are two different documents.

If you think about it, an employee handbook has all the elements of a contract—it’s written, it’s specific, it “promises” certain things will (or won’t) happen. It’s even “signed” by the nonprofit/company.

An employee handbook could actually be considered a unilateral employment contract unless the employer includes an appropriate disclaimer, with wording like this:

“The policies, procedures and standard practices described in this manual are not conditions of employment.  This manual does not create an express or implied contract between the Nonprofit/Company and employees.  Nonprofit/Company reserves the right to terminate any employee, at any time, with or without notice or procedure, for any reason deemed by the Nonprofit/Company to be in the best interests of the Nonprofit/Company.”

Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

Free Employee Handbook Sample

To make all of this more salient, I’ve compiled a free Employee Handbook guide that you can use as a sample guide to better understand how a handbook and a contract or agreement differ.

There are many reasons why an employee handbook should be just that and not also serve as an employment contract. I would be happy to review the employment documents you currently have in place or outline what documents your nonprofit needs, to ensure you have the best possible foundation for legal compliance. Shoot me an email (gordon@gordonfischerlawfirm.com) or give me a call (515-371-6077) and we’ll get your free (no-obligation) one-hour consultation scheduled.

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March Madness Inspired: 64 Charitable Gifts of Non-Cash Assets

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march madness basketball

Want to help make your favorite charity a winner? Encourage the charity to discuss the potential of charitable gifts of non-cash assets with donors. Donee charities can gain access to what has been called prospective donors’ “treasure chest” of non-cash assets. After all, the vast majority of a potential donor’s net worth will not be in cash, but in non-cash assets such as a home, retirement benefit plan, life insurance, etc.

Inspired by the start of NCAA March Madness, and the number of bracketed teams, here are 64 non-cash assets that could be used for charitable gifting.

Please note the alphabetized listing, I’m not recommending one gift over another, since so much depends on the individual circumstances of the donor.

airplane flying

  1. Airplanes
  2. Antique Automobiles
  3. Antiques
  4. Artwork
  5. Assets held by C Corporation
  6. Assets held by S Corporation
  7. Autograph Books
  8. Barn Doors
  9. Beach House
  10. Beanie Babies
  11. Boats
  12. Bonds
  13. Books
  14. C Corporation Stock
  15. Coin collections
  16. Comic books collection
  17. Commercial and residential real estate
  18. Condominiums
  19. Credit Card Rebates
  20. Depression-era Glass
  21. Dolls
  22. Enamelware
  23. Equestrian Ribbons
  24. Farmland
  25. Gold Bullion
  26. Grain
  27. Guitars
  28. Hedge Fund Carried Interest
  29. Historic Papers
  30. Installment Notes
  31. Intellectual Property
  32. Life Insurance
  33. Limited Liability Partnerships
  34. Livestock
  35. Marbles
  36. Mineral Rights
  37. MLB Team
  38. Mutual Funds
  39. Oil and Gas Interests
  40. Operating Partnership Units
  41. Paint-by-number Landscapes
  42. Painted Planks
  43. Paintings
  44. Patents
  45. Photographs
  46. Pooled Income Funds
  47. Racehorses
  48. Real estate
  49. Restricted Stock (144 and 145)
  50. Retained Life Estate
  51. Retirement benefits
  52. Royalties
  53. S Corporation Stock
  54. Sculpture
  55. Sculpture Garden
  56. Seat on New York Mercantile Stock Exchange
  57. Seats at Events
  58. Stamp Collection
  59. Stocks
  60. Tangible Personal Property
  61. Taxidermy
  62. Timber Deeds
  63. Vacation Home
  64. Vehicles

Vintage blue car

Pretty exhaustive list right? Like stamps and dolls, there are so many assets that you likely never even considered could be a charitable gift. And, that’s where I come in and can assist! If you’re a donor or donee nonprofit do not ever hesitate to contact me. I can always be reached at gordon@gordonfischerlawfirm.com and 515-371-6077.

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January GoFisch Book Club Pick

If you set a resolution to read more books this year, you’re in good company. Most of us could all read a little more. Luckily, January is, in my opinion, actually one of the best times to start a lasting reading habit. The days are short, snow blankets the ground, and nothing sounds better than staying in with a warm mug and a good read.

gofisch book club january

So far, the GoFisch Book Club has added a variety of titles to the list, ranging from fiction relating estate planning to charitable giving nonfiction. This month all readers and especially nonprofit professionals can benefit from diving into Made to Stick: Why Some Ideas Survive and Others Die.

It’s not a new book (it was published in 2006), but it is a book that will be a standout on your business bookshelf. Of course, it’s “stats” speak for themselves: Made to Stick has been translated into 29 languages and topped all the lists. It’s an easy, engaging, funny read that doesn’t plod or self-aggrandize like the narratives in some business books. With plenty of real-world stories, the authors Dan and Chip Heath explain how to communicate and build on creative ideas that take projects, programs, and products to the next level. Undoubtedly, a book like this can help nonprofit leaders take the execution of their missions up to the next level.

What books would you like to see selected by the GoFisch Book Club in the coming months? I always love to hear reviews, so shoot me an email at gordon@gordonfischerlawfirm.com!

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What Nonprofit Pros Can Learn From Fiji Water Girl

red carpet up stairs

For every Golden Globes show, a consensus emerges as to who The Big Winner was, the Biggest Winner of all the Big Winners. And, without any doubt, the most favored of the star-studded night (beyond the impressive Sandra Oh)…was “Fiji Water Girl.”

In case you haven’t heard, Fiji Water Girl (AKA model Kelleth Cuthbert) traversed the pre-show carpet in a bold blue dress and had a knack for finding the perfect camera angles while carrying a tray of Fiji Water. Her immediate job was to hydrate the stars on the red carpet, but, she went above and beyond. By working strategically, she made it into the background of photo after photo of high profile stars. Fiji Water Girl was so noticeable she soon became a meme-worthy “celebrity” herself, and her employer undoubtedly appreciated the free/extra publicity.

Fiji Water Girl’s moment of fame is also a moment for nonprofit pros to learn three important lessons.

Everything you do, do well

There’s an old saying in Hollywood regarding bit parts, “there are no small roles, only small actors.”

I don’t have to tell you not every job in the nonprofit world is glamorous. Sure, sometimes you’re receiving accolades from your peers, scoring that massive grant, or your board is celebrating a particularly successful program you started. But, often your day is taken up by gobs of paperwork, stay atop of fundraising, field messages from donors and potential donors, and handling a veritable ocean of other administrative tasks. But, when you do have to do mundane tasks, do them unceasingly well! When you keep up an enthusiasm for tasks, no matter how seemingly small, your reputation for being dependable will bode well with colleagues, donors, and board officers.

Stay Current With Your Calendar

There are certain community events that nonprofit leaders must attend. You likely know what they are in your situation, for example, the grand opening of a donor or potential donor’s business or the big annual gala in your town. Make certain that you, or representatives from your nonprofit, are properly seen at these must-attend events. The vast majority of such events will be publicized well in advance, so it might be good to do a little brainstorming at a board meeting, to identify must-attend events and decide who’ll attend on your nonprofit’s behalf. Before anyone does attend on the nonprofit’s behalf it’s a good idea to be sure they are well versed on talking points, and fully understand the connection the nonprofit has with the event.

Build an Even Better Nonprofit in Iowa

Go Ahead and Rock the Boat

Think about doing conventional things in unconventional ways. As many have written before, sending a receipt to a donor is mandatory – but that doesn’t mean it can’t be fun, imaginative, or convey a meaningful message in a memorable way. Make waves! Or, let’s say your fellow board members or staff are hesitant to invest in a set of influential, important policies. Maybe they’re dragging their feet on updating a set of outdated formational documents. Make your mark by explaining the many benefits and how it will further the organization’s mission. Or, bring in a speaker (like me!) to explain the legal consequences of NOT having quality policies and procedures in place.

Smart Employment Policies for Nonprofits

In short, when you’re working with a nonprofit, you could just keep to the status quo. Or, you can seize this moment, your moment, to find your light and shine. Sure, the Internet may not make a meme of you, but you can smile knowing you’re making a difference where it matters. Want to strategize? Don’t hesitate to contact me or to read more information useful for nonprofit pros.

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The Ethical Nonprofit: Beneficial Policies

never settle ethics picture

Acting ethically as a charitable organization is paramount to success. Even the illusion of unethical operations can cause lasting damage to your organization. (Case in point: Look at what happened to the Donald J. Trump Foundation and, by association, Eric Trump’s foundation.)

Smart nonprofit boards adopt, in writing, crucial values such as honesty, integrity, transparency, confidentiality, and equity. Sure a policy or two cannot “create” a certain culture or ethical operations by itself. But, well-drafted policies CAN actively promote and reinforce ethics in conduct and decision-making to all involved within the organization.

Reasons to Enlist an Attorney to Write your Nonprofit’s Policies

Major Benefits of Promoting Ethics

The realities of modern communication and social media mean that just about anyone can be a publishing “journalist.” This also means that organizations, especially nonprofits, can be subject to intense scrutiny. Because of tax-exempt status and dependence on charitable donations, nonprofits tend to be held to a higher standard than their for-profit counterparts.

An ethical issue—even the illusion of one—can split boards, cause stakeholders to pull back, snap donors’ wallets shut, and even result in expensive litigation. Fortunately, there are policies and procedures that can prevent your hardworking organization from having to deal with such controversy, by deterring unethical situations from every occurring. These policies include:

Code of Ethics

Every nonprofit should adopt a set of ethical principles to guide its decisions and conduct of its board members, officers, employees, independent contractors, volunteers, and other stakeholders. These ethical principles are typically called a “code of ethics,” “statement of values,” or “code of conduct.” Regardless of the title, the purpose of formally adopting a set of ethical principles is to provide guidelines for making ethical choices and to ensure that there is accountability for those choices. When board members adopt a code of ethics, they are actively expressing their deep commitment to ethical behavior. Making such a commitment can help earn and maintain the public’s trust.

 Confidentiality

Respecting the privacy of donors, prospective donors, employees, and volunteers, as well the nonprofit itself, must be a paramount value. For example, financial information of a donor must be treated as highly confidential, and not be disclosed or discussed with anyone without the express, explicit permission.

Care should also be taken to ensure that unauthorized individuals do not overhear any discussion of confidential information and that documents containing confidential information are not left in the open or inadvertently shared. In short, it is critical to adopt a confidentiality policy regarding identity, financial institution accounts, credit card numbers, and all such information about finances.

 Ethical Fundraising

Federal and state law significantly impact nonprofit fundraising. Beyond merely meeting what the law requires, nonprofits can demonstrate a first-class commitment to legal compliance by adopting an ethical fundraising policy. This would codify, for example, that all communications to donors and potential donors are honest and accurate. Another example: requirements to provide attributions for marketing imagery and never include information with minors that could be considered personal identifying information.

Fresh Iowa Lawyer Mag Read: Policies & Procedures Iowa Nonprofits Need

 Financial Management

Nonprofit board members, both individually and collectively, owe a fiduciary duty to ensure the organization’s assets are used in accordance with donors’ intent and the charitable mission. To ensure prudent financial management, nonprofits should adopt financial management policies.

Financial management policies clarify the roles, authority, and responsibilities for essential activities and decisions. Examples of nonprofit financial policies commonly used include a description of how cash is handled; whether and how travel expenses will be reimbursed; and the board’s role in reviewing executive compensation. 

Financial Transparency

Nonprofits also should adopt a financial transparency policy. An example of a fundamental financial transparency practice is to make information accessible to interested individuals regarding the nonprofit’s budget, sources of revenue, and information about board composition, programs, outcomes/impact, and staffing.

Basic “Good Governance” Practices

There are several basic practices every nonprofit should engage in to maintain “good governance”:

  1. Maintain corporate minutes
  2. Annual review of “conflicts of interest”
  3. Annual review of compensation
  4. Self-assessment process
  5. Diversity
  6. Board orientation/training

Updating Ethics Policies

If you already have some (or all) of the above-listed policies in place, seriously consider the last time they were updated. How has the organization changed since they were written? Have new legislative policies impacted these policies at all? It may be time for a new set of ethics policies for your organization.

Additional Policies Need

Note nonprofits also need additional policies for optimal compliance. In addition to the ten major policies and procedures that support the best possible IRS Form 990 (such as public disclosure, gift acceptance, and whistleblower) nonprofits should have documents in place covering the topics of employment; grantors and grantees; endowment management; and legal training for directors.

Smart Employment Policies for Nonprofits

Questions? Please don’t hesitate to contact me via email (gordon@gordonfischerlawfirm.com) or on my cell phone (515-371-6077). I’d be happy to discuss your nonprofit’s specific needs and policies promoting ethics, with you at your convenience.

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