Category Archives: Governance

How to Survive a Micro-Managing Board

The micro-managing board members show up to their first board meeting and before they have done anything of substance for the organization, they want to revamp the reports, review the nonprofit’s journal entries, question every expense, and critique the Chief Executive’s management style. One might rightly ask whether these activities are adding value. I would argue that nine times out of ten they are not. Continue Reading

Diversions of Nonprofit Assets

The Washington Post has identified over 1,000 nonprofit organizations that have reported a “significant diversion” of assets. Its important to note that there are over 1,616,000 tax-exempt nonprofits in the U.S. today; thus, these filings represent less than 1% of tax-exempt nonprofits. It’s also interesting to note that a quick review of Arizona’s list includes only 21 organizations – most of which reported the diversions in a clear, transparent, and confidence inspiring manner. Continue Reading

Co-Working Spaces – Nonprofit vs. For-Profit Models

“Co-working” has exploded in the last five years. Essentially, co-working spaces are places where workers – typically freelancers, self-employed individuals and start-up ventures – can go to work while being surrounded by like-minded, creative entrepreneurs without having to rent their own offices. Many co-working spaces have a mission to create social change and spur community rejuvenation, making them of great interest to the social impact sector. Continue Reading

Nonprofit Corporations: Eight Items to Do By Year End

Hold Annual Meeting. Most corporate bylaws require that the directors meet at least annually. Many state nonprofit corporation statutes also require an annual meeting. The annual meeting is typically the meeting where the board (or voting members) fill vacancies on the board, appoint officers, approve budgets, circulate and sign conflict of interest disclosures, and ratify actions taken during the year. Continue Reading

Abolishing Nonprofit Voting Members – Easier Said than Done

Voting memberships are most useful when an organization wishes to be democratically controlled by its constituents. By way of example, voting membership structures are commonly used by member driven organizations such as social clubs, churches, chambers of commerce and trade associations. In such cases, the organization exists to serve its members and its makes sense… Continue Reading

How to Use Nonprofit Advisory Boards

An advisory board is a group of talented, experienced, wealthy, or otherwise influential individuals who are invited to provide ongoing advice and support to a nonprofit’s Board of Directors. Members of an advisory board are not typically current members of the Board of Directors, but are volunteers with a passion for the nonprofit who can… Continue Reading

IRS Study Indicates Good Nonprofit Governance Leads to Better Tax Compliance

The IRS has released preliminary results from their study of tax-exempt organizations’ governance practices. As expected, the preliminary findings suggest that organizations with good governance policies are more likely to comply with tax laws. On April 19, Lois Lerner, the Director of the IRS’ Tax-Exempt and Government Entities Division, spoke on this issue at a… Continue Reading

Nonprofit Law Jargon Buster: What is a Consent Agenda

A consent agenda is the practice of bundling routine matters into one board vote to free up board meeting time to focus on the substantive issues facing the organization. Because every board action must be agreed upon and documented in the board meeting minutes, time is frequently wasted discussing and approving actions such as the… Continue Reading

IRS 2012 Work Plan – What’s New for Nonprofits

Each year, the IRS publishes a report detailing what its focus will be regarding nonprofit organizations and compliance during the year to come. The following are some of the highlights from the 2012 Exempt Organizations Work Plan. Continue Reading

Mechanics of a Nonprofit Merger

Merger proposals are being prompted by reduction of funding sources, the tight economy, the need for succession planning and a desire to consolidate expenses and increase capacity. Also, many funders prefer to deal with fewer providers of the same programs or services and encourage mergers and other forms of collaboration to reduce overhead and increase capacity. There are special challenges for nonprofits considering a merger. Factors, such as increased capacity and cost savings, drive the deal. Because these benefits can be more difficult to quantify, a proposed merger can feel threatening to a nonprofit board who feels they may lose power and influence. Continue Reading