As we near the two-year mark of the first COVID-19 lockdowns and stay-at-home orders, some nonprofits still are struggling with financial sustainability. This can mean that your board of directors is taking a greater interest in your organization’s financial performance. Key performance indicators (KPIs) can help focus your board’s attention on important metrics. Identify KPIs…
Tag: finance
3 Tips for Getting Your Budgeting Back on Track
The pandemic has wreaked havoc with many nonprofits’ budgets over the past two years. Some organizations have taken a more permissive approach to budgeting, but they can’t afford to continue it indefinitely. If your nonprofit is in this position, it’s time to buckle down. Here are three tips to help you develop the realistic budgets…
5 Critical Issues for Your Nonprofit’s Finance Committee
The role of a nonprofit’s finance committee is probably more important now than at any time since the 2008 financial crisis and ensuing Great Recession. Here are some of the areas your committee should focus on almost two years into the COVID-19 pandemic. 1. Cash flow Financial reserves have taken a hit across all types…
Employee Retention Credit: Get the Credit You Deserve
In response to the financial impact of the COVID-19 pandemic, the CARES Act established the employee retention credit (ERC) to encourage employers — including nonprofits — to keep employees on the payroll. The credit has been expanded and increased for 2021, but it’s also not too late for eligible employers to amend their 2020 employment…
Adding It Up: The Roles and Responsibilities of a Nonprofit Treasurer
When you think about it, it’s a bit inaccurate to refer to your organization as “nonprofit.” In fact, money is rarely far from the minds of your organization’s leaders. At least, it shouldn’t be. Like your for-profit counterparts, you can’t succeed without maintaining sound fiscal health. That’s why the title of “treasurer” is so much…
Time to Replenish: Are Your Operating Reserves at a Good Level?
Operating reserves — generally, unrestricted assets you can easily tap — are often called “rainy day funds.” But stable reserves are critical for far more pressing reasons than the metaphorical rainy day. Many nonprofits, for example, have drawn on their operating reserves since the spring of 2020 to cope with the economic backlash of the…
Board members: Stay alert for these 4 financial red flags
Your board members are undoubtedly well aware of your nonprofit’s financial problems during the COVID-19 pandemic. But as 2021 unwinds, the board should keep its eyes on potential problem spots, ask questions and direct remedies as needed. These four areas can present clues that the organization is headed for trouble. 1. Financial statement flaws. Late,…
COVID-19 Changes the Landscape for Single-audit Compliance
COVID-19 and its economic impact have left the nonprofit niche financially vulnerable, with corporate and individual donations dropping precipitously for many organizations. Relief funding under the CARES Act has helped some nonprofits remain reasonably stable. But funding also will likely impose new single-audit requirements on recipients already struggling to keep their heads above water. The…
Are you using relevant ratios in these uncertain times?
Financial statements play an important role in assessing your organization’s health. However, they aren’t necessarily the best way to communicate performance to stakeholders. Ratios, on the other hand, grab information from your financial statements and can be presented as easy-to-process snapshots, an effective tool in the COVID-19–related economic crisis. Ratios help board members and other…
IRS issues proposed regs on UBTI “silo” rules
Ever since the Tax Cuts and Jobs Act (TCJA) changed the rules about unrelated business taxable income (UBTI), nonprofits have had questions about just how those rules apply. Now there are proposed IRS regulations that nonprofits with more than one unrelated trade or business can rely on until final regulations are published. The proposed regs…