Industries Archives

Grant proposals in the age of AI

Non-Profits|September 2, 2025

With fewer federal grants available to not-for-profit organizations, the competition to qualify for funding — from all sources, including foundations — has become more intense. Now, more than ever, your nonprofit needs to submit sharp, clear and attention-getting grant proposals to potential funders. Many organizations are enlisting AI tools to generate proposals. However, it remains critical to understand the fundamentals of proposal writing.

Grantmakers have mixed feelings

A recent survey of foundations by nonprofit data company Candid found that only 10% of funding foundations accept or plan to accept applications created by generative AI. However, most of the survey’s respondents admitted they didn’t necessarily know if they’ve received AI-assisted proposals.

Many funders say they welcome tools that enable a more level playing field, but they’re also understandably concerned about the potential for ethical issues. And for many foundations, grant proposals are only one piece of a larger application process that also involves such elements as interviews, site visits and a review of financial statements.

Customizing your content

Even if you use generative AI for grant applications, you’ll need to edit any content to help ensure its accuracy and specificity to your nonprofit. You also need to ensure it’s customized to the grantmaker. Familiarize yourself with grantmakers’ primary goals and objectives, the types of projects they have funded in the past, and their processes and procedures.

Performing such research enables you to determine whether your programs are a good fit with a grantmaker’s mission. If they aren’t, you’ll save yourself the time and effort of preparing a proposal. If they are, you’ll be better able to tailor your proposal to your audience.

Structuring your proposal

Every grant proposal has several essential elements, starting with a single-page executive summary. Your summary should be succinct. You also should include a short statement of need that provides an overview of the program you’re seeking to fund and explains why you need the money for your program. Other pieces include a detailed project description and budget, an explanation of your organization’s unique ability to run this program, and a conclusion that briefly restates your case.

Support your proposal with facts and figures but don’t forget to include a human touch by telling the story behind the numbers. Offering case studies in your own words is an excellent way to augment AI-generated content and engage your reader.

Following the rules

Review grantmaker guidelines as soon as you receive them. That way, if you have questions, you can contact the organization in advance of the submission deadline. Then, be sure to follow application instructions to the letter. This includes submitting all required documentation on time and error-free.

To that end, double-check your proposal for common mistakes such as excessive length, math errors and missing signatures. Also watch out for overuse of industry jargon.

Be candid

As with most people, grantmaking decision-makers are likely to become more accepting of AI-assisted applications as they become more familiar with the technology. Some grantmakers may ask about the use of AI in your proposal. Be sure to answer honestly to avoid repercussions if the funder later learns you didn’t respond truthfully. Contact us for advice if your nonprofit is having trouble meeting its funding goals.

Trimming your nonprofit’s meeting and fundraiser budgets

Non-Profits|August 19, 2025

Whether you’re planning an off-site retreat for board members, a luncheon for potential corporate funders or a formal fundraiser, you likely will encounter opportunities to cut expenses. Although no one wants a meeting or event to look “cheap,” most of your nonprofit’s stakeholders will appreciate attention paid to thrift. How can you reduce costs yet still arrange gatherings that will impress attendees and strengthen their bonds with your organization?

Food and beverages

As you work with caterers or your event space’s restaurant, make smart meal choices. Buffets, such as salad, meat carving or pasta stations usually are less expensive to staff than individually served meals with multiple courses. Boxed lunches are an even more budget-conscious choice, though they’re inappropriate for more formal events.

When providing drinks for meetings, skip the bottled water and offer pitchers of good old tap water. It’s cheaper and more environmentally friendly. And consider limiting alcoholic beverages at events to a few choices — such as one brand of beer, one red wine and one white wine. Open bars can be extremely expensive, and your supporters will likely understand if you charge them for any alcoholic drinks.

Contract items and labor

Consider contract line items to be open to negotiation. You won’t win every battle, but few venues or vendors have the heart to say no to every request from a nonprofit. Seeking bids from more than one vendor gives you leverage, so consider getting several. For one-time events, book as early as possible to get the best pricing. For regular events such as quarterly board meetings, consider using the same vendor and requesting volume pricing.

Another way to cut expenses is to use your own or an outside vendor’s audio-visual equipment. For example, a hotel may offer projectors, wireless microphones and sound systems, but the cost to rent them for a meeting is probably higher than an outside vendor would charge.

Also pay attention to labor costs. If your event requires extensive setup, arrange schedules so that staffers (yours and the venue’s) work during normal business hours and don’t incur overtime. This is a good opportunity to engage your volunteer workforce.

Special events

In a time when many meetings and even fundraisers are conducted digitally, in-person events should be special. Just don’t confuse “special” with “expensive.” If you try to cut costs but an event still looks like it’s going to be a budget-buster, think about soliciting donations from supporters and asking sponsors to help defray costs. Contact us for more suggestions.

How to keep cost cutting from increasing fraud risk

Non-Profits|August 7, 2025

In the process of slashing expenses? Just be careful not to cut essential items, such as sufficient staffing to maintain strong internal controls, from your not-for-profit’s budget. Internal controls are critical for preventing occupational theft. Cybersecurity is something else your organization can’t afford to do without. The good news is fraud prevention measures don’t have to be expensive. Some simply require rigorous oversight and effective communication.

Bad timing

It’s usually imprudent to remove internal controls when employees and volunteers are under increased financial pressure and your organization has fewer people “minding the store” due to budget and staff cuts. Financial stress and greater opportunity could tempt even longtime, trusted stakeholders to misappropriate your organization’s funds. So if anything, you might want to increase internal controls at this time.

For example, your nonprofit’s policies need to specify that no one person should have sole responsibility for tasks such as receiving invoices, recording payments and making bank deposits. If your nonprofit is shorter-staffed than usual and only one accounting employee is available, assign an employee from another department or a trusted board member to provide necessary checks and balances. What if those solutions don’t work? You may need to bite the bullet and pay for an outside vendor to pick up the slack.

Also maintain strict policies for financial outlays, such as requiring dual signatures on checks over a certain amount. In fact, you may want to lower your current threshold of expenses or payments that trigger a manager’s review or a co-signature and start performing random audits more frequently.

Make workarounds feasible

If you ask staffers from elsewhere in your organization to assist temporarily or part-time with accounting duties, be sure to fully train them. You might want to shadow them for a while to ensure they follow all procedures correctly.

Now is also an excellent time to offer an internal controls refresher course for managers. They may be asked to authorize expenditures or perform other new duties. For instance, supervisors may need to provide greater oversight to team members and investigate potentially suspicious activities.

Protecting your network

You’ll also likely need to authorize expenditures for continued cybersecurity. Cyberfraud is the most common way for outsiders to gain access to nonprofit donor and employee data, including bank account and credit card numbers. Regardless of the cost, maintain software licenses that entitle you to manufacturers’ patches and consider upgrading your security tools as technology evolves to keep up with emerging threats.

Also, be wary if a new volunteer offers to perform IT tasks for free. You may be able to save on the cost of paying IT employees or consultants, but you risk giving network and data access to a potential bad actor.

More with less

Even with fewer employees working harder, you may have to stretch your budget and hire outside professionals. Make the most of these engagements by having staffers work closely with consultants so they acquire knowledge they can use in the future. Contact us for help with trimming your budget and doing more with less.

4 common accounting errors for nonprofits to avoid

Non-Profits|July 31, 2025

It may be tempting to try to save money and perform your nonprofit’s accounting tasks internally. But if your staff isn’t experienced and properly trained, mistakes are likely to occur — with potentially serious repercussions. Some accounting mistakes are common among newer nonprofits and smaller organizations that attempt to go it alone. In particular, work to prevent:

1. A laissez-faire attitude toward rules. Even the smallest nonprofit should establish formal, documented and detailed procedures for managing bookkeeping and accounting tasks. Your process needs to address all aspects of managing money, including the proper way to accept, document and deposit donations, pay bills, and handle every step in between. Put your procedures in writing and ensure staffers follow each step, every time. This helps minimize the chances of skipping something important and makes it possible to have cross-trained employees fill in for those who regularly perform specific accounting activities.

2. Data entry mistakes. It’s easy to wreak havoc on your accounts by entering a $500 payment as $50 or transposing numbers, so require employees to check and double-check every single entry. Also, reconcile accounts against bank statements immediately, and don’t overlook even the smallest discrepancy. Little errors don’t go away; they just become bigger problems.

3. Budget-free decision making. You can’t control overspending or invest a surplus if you don’t know they exist. That’s why budgets are important. They offer a baseline. Budgets don’t have to be intricate to be useful. Just look at a few months’ worth of bills and deposits to set a starting point. Then refine your plan as you go along. Include a “miscellaneous” category, but don’t allow it to account for the majority of your expenses.

4. Disorganization. Properly store and file documents such as receipts, invoices and bank statements so you can easily find them when you need to create reports, generate financial statements and complete your IRS Form 990. Establish file naming conventions and secure storage locations and mandate a daily or weekly filing schedule for all accounting paperwork.

For most organizations, it’s best to have qualified accounting professionals handle such tasks as payroll, accounts payable/receivable, financial statements and tax compliance. If you have the expertise on staff, great! If not, consider outsourcing these critical tasks. Contact us for more information.

President Trump signs his One, Big, Beautiful Bill Act into law

Non-Profits|July 8, 2025

On July 4, President Trump signed into law the far-reaching legislation known as the One, Big, Beautiful Bill Act (OBBBA). As promised, the tax portion of the 870-page bill extends many of the provisions of the Tax Cuts and Jobs Act (TCJA), the sweeping tax legislation enacted during the first Trump administration. It also incorporates several of President Trump’s campaign pledges, although many on a temporary basis, and pulls back many clean-energy-related tax breaks.

While the OBBBA makes permanent numerous tax breaks, it also eliminates several others, including some that had been scheduled to resume after 2025. Here’s a rundown of some of the key changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning in 2025.

Key changes affecting individuals

Makes permanent the TCJA’s individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%
Makes permanent the near doubling of the standard deduction. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers, with annual inflation adjustments going forward
Makes permanent the elimination of personal exemptions
Permanently increases the child tax credit to $2,200, with annual inflation adjustments going forward
Temporarily increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000, with a 1% increase each year through 2029, after which the $10,000 limit will return
Permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers) but includes mortgage insurance premiums as deductible interest
Permanently eliminates the deduction for interest on home equity debt
Permanently limits the personal casualty deduction for losses resulting from federally declared disasters and certain state declared disasters
Permanently eliminates miscellaneous itemized deductions except for unreimbursed educator expenses
Permanently eliminates the moving expense deduction (with an exception for members of the military and their families in certain circumstances)
Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions
Makes permanent the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts
Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward
For 2025–2028, creates an above-the-line deduction (meaning it’s available regardless of whether a taxpayer itemizes deductions) of up to $25,000 for tip income in certain industries, with income-based phaseouts (payroll taxes still apply)
For 2025–2028, creates an above-the-line deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts (payroll taxes still apply)
For 2025–2028, creates an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain American-made vehicles, with income-based phaseouts
For 2025–2028, creates a bonus deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts
Limits itemized deductions for taxpayers in the top 37% income bracket, beginning in 2026
Establishes tax-favored “Trump Accounts,” which will provide eligible newborns with $1,000 in seed money, beginning in 2026
Makes the adoption tax credit partially refundable up to $5,000, with annual inflation adjustments (no carryforwards allowed)
Eliminates several clean energy tax credits, generally after 2025, including the clean vehicle, energy-efficient home improvement and residential clean energy credits
Permanently eliminates the qualified bicycle commuting reimbursement exclusion
Restricts eligibility for the Affordable Care Act’s premium tax credits
Creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026
Imposes a 0.5% floor on charitable contributions for itemizers, beginning in 2026

Key changes affecting businesses

Makes permanent and expands the 20% qualified business income (QBI) deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships
Makes permanent 100% bonus depreciation for the cost of qualified new and used assets, for property acquired after January 19, 2025
Creates a 100% deduction for the cost of “qualified production property” for qualified property placed into service after July 4, 2025, and before 2031
Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward
Increases the cap on the business interest deduction by excluding depreciation, amortization and depletion from the calculation of “adjusted taxable income”
Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses)
Makes permanent the excess business loss limit
Prohibits the IRS from issuing refunds for certain Employee Retention Tax Credit claims that were filed after January 31, 2024
Eliminates clean energy tax incentives, including the qualified commercial clean vehicle credit, the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings
Permanently renews and enhances the Qualified Opportunity Zone program
Permanently extends the New Markets Tax Credit
Permanently increases the maximum employer-provided child care credit to $500,000 ($600,000 for small businesses), with annual inflation adjustments
Makes permanent and modifies the employer credit for paid family and medical leave
Makes permanent the exclusion for employer payments of student loans, with annual inflation adjustments to the maximum exclusion beginning in 2027
Makes permanent the foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deductions and the minimum base erosion and anti-abuse tax (BEAT)
Expands the qualified small business stock gain exclusion for stock issued after the date of enactment

Buckle up

We’ve only briefly covered some of the most significant OBBBA provisions here. There are additional rules and limits that apply. Note, too, that the OBBBA will require a multitude of new implementing regulations. Turn to us for help navigating the new law and its far-reaching implications to minimize your tax liability.

Put qualified charitable distributions to work for your nonprofit

Non-Profits|July 3, 2025

Individuals with traditional IRAs generally are mandated to start taking required minimum distributions (RMDs) after they reach age 73. However, they have the option of making qualified charitable distributions (QCDs) to their favorite nonprofits to satisfy their RMDs. This tax allowance provides several benefits for donors and, of course, can be beneficial for charities.

History of QCDs

QCDs were first established by the Pension Protection Act of 2006. Their availability was extended several times, eventually becoming permanent as a result of the Protecting Americans from Tax Hikes Act of 2015. The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act upgraded QCDs by indexing annual distribution limits for inflation, starting in 2024. As a result, donors are now able to make greater QCD donations over time.

In 2025, eligible donors can transfer up to $108,000 per year directly to a qualified charity if they’re at least age 70½ ($216,000 for married couples filing jointly if both spouses are age 70½ or older). QCDs aren’t deductible, but they’re removed from taxable income and count toward RMDs, if applicable. QCDs can be especially beneficial to taxpayers who don’t have enough total itemized deductions to benefit from claiming the charitable deduction or whose deduction would be reduced due to adjusted gross income limits.

Split-interest entities

The SECURE 2.0 Act also provided donors with a new way to make QCDs: through a split-interest entity — a charitable remainder unitrust (CRUT), charitable gift annuity (CGA) or charitable remainder annuity trust (CRAT). Split-interest entities generally allow donors to make gifts while also creating income streams for themselves. After a designated period of time, the balance goes to their named charities.

These QCDs are subject to a lower limit but still adjusted annually for inflation. The 2025 limit is $54,000. Spouses can each make a donation to the same split-interest entity to double a gift. However, taxpayers are limited to one such distribution per lifetime, and only a donor and donor’s spouse can be income beneficiaries.

The split-interest entity must pay a 5% minimum fixed percentage for the life of the donor or the donor’s spouse, and those payments must begin within one year of funding. The payments are taxed as ordinary income to the beneficiary.

Educating donors

Your nonprofit’s current and prospective donors may not know about the QCD option or recent enhancements to it. So be sure to prepare an educational brochure and post information on your website about the possible benefits to donors. You may also want to reach out to financial professionals in your community who advise potential donors and would be able to explain the tax benefits to them. Contact us for help.

An education plan can pay off for your employees — and your business

Employee Benefit Plan Audits|June 26, 2025

Your business can set up an educational assistance plan that can give each eligible employee up to $5,250 in annual federal-income-tax-free and federal-payroll-tax-free benefits. These tax-favored plans are called Section 127 plans after the tax code section that allows them.

Plan basics

Sec. 127 plans can cover the cost of almost anything that constitutes education, including graduate coursework. It doesn’t matter if the education is job-related or not. However, you can choose to specify that your Sec. 127 plan will only cover job-related education. Your business can deduct payments made under the Sec. 127 plan as employee compensation expenses.

To qualify for this favorable tax treatment, the education must be for a participating employee — not the employee’s spouse or dependent. Also, the plan generally can’t cover courses involving sports, games or hobbies.

If the employee is a related party, such as an employee-child of the owner, some additional restrictions apply that are explained below.

Plan specifics

Your Sec. 127 plan:

1. Must be a written plan for the exclusive benefit of your employees.

2. Must benefit employees who qualify under a classification scheme set up by your business that doesn’t discriminate in favor of highly compensated employees or employees who are dependents of highly compensated employees.

3. Can’t offer employees the choice between tax-free educational assistance and other taxable compensation, like wages. That means the plan benefits can’t be included as an option in a cafeteria benefit program.

4. Doesn’t have to be prefunded. Your business can pay or reimburse qualifying expenses as they’re incurred by an employee.

5. Must give employees reasonable notification about the availability of the plan and its terms.

6. Can’t funnel over 5% of the annual benefits to more-than-5% owners or their spouses or dependents.

Payments to benefit your employee-child

You might think a Sec. 127 plan isn’t available to employees who happen to be children of business owners. Thankfully, there’s a loophole for any child who’s:

Age 21 or older and a legitimate employee of the business,
Not a dependent of the business owner, and
Not a more-than-5% direct or indirect owner.

Avoid the 5% ownership rule

To avoid having your employee-child become disqualified under the rules cited above, he or she can’t be a more-than-5% owner of your business. This includes actual ownership (via stock in your corporation that the child directly owns) plus any attributed (indirect) ownership in the business under the ownership attribution rules summarized below.

Ownership in your C or S corporation business is attributed to your employee-child if he or she: 1) owns options to acquire more than 5% of the stock in your corporation, 2) is a more-than-5% partner in a partnership that owns stock in your corporation, or 3) is a more-than-5% shareholder in another corporation that owns stock in your corporation. Also, a child under age 21 is considered to own any stock owned directly or indirectly by a parent. However, there’s no parental attribution if the child is age 21 or older.

Ownership attribution for an unincorporated business

What about an unincorporated business? You still have to worry about ownership being attributed to your employee-child under rules analogous to the rules for corporations. This includes businesses that operate as sole proprietorships, single-member LLCs treated as sole proprietorships for tax purposes, multi-member LLCs treated as partnerships for tax purposes or partnerships.

Payments for student loans

Through the end of 2025, a Sec. 127 plan can also make tax-free payments to cover principal and interest on any qualified education loan taken out by a participating employee. The payments are subject to the $5,250 annual limit, including any other payments in that year to cover eligible education expenses.

Talent retention

Establishing a Sec. 127 educational assistance plan can be a good way to attract and retain talented employees. As a bonus, the plan can potentially cover your employee-child. Contact us if you have questions or want more information.

Automate that! How AI and other software can help improve efficiency

Non-Profits|June 19, 2025

Not-for-profits often work with limited resources, making efficient operations critical. Artificial intelligence (AI) and other forms of automating repetitive tasks can improve donor engagement, optimize fundraising and expand outreach.

Human touch

Nonprofits understandably might fear that automation will remove the human touch valued by everyone from founders to constituents, but they have plenty of reasons to embrace the technology. For example, automation removes the risk of human errors that can create more work for staffers.

Moreover, automating mundane tasks frees up time so employees can focus on more fulfilling efforts, from nurturing donor relationships to mission-oriented work. Technology investments, such as new AI software, might seem like an unaffordable luxury when your resources are limited. But improving operational efficiencies can ultimately position you to boost your impact.

Important functions

The most obvious targets for automation are time-consuming and tedious — yet essential — tasks. For example, big fundraising events generally require hundreds of staff hours to plan, promote, execute and follow up. Automation can make it easier to track workflow and handle tasks like registration, mailings and ticket distribution. It can also simplify event budgeting and financial reporting.

Automation can support other important functions, including:

Marketing and communications. AI can help you determine the most effective marketing strategies and channels and efficiently produce content. AI apps, for instance, can generate, edit and proofread tailored, even personalized, messaging to different audience segments. This, in turn, can facilitate more efficient social media posting and distribution of newsletters.

Fundraising and development. You can issue receipts automatically and schedule follow-up contacts. AI might be able to analyze donation and other data, detect patterns and suggest when previous donors might be ready to contribute again — and in what amounts. You can deploy automation to perform prospect research, too. Bots can crawl the internet much more effectively and quickly than even the most online-proficient human could ever hope to do.

Financial reporting. Whether required for grantors, lenders or internal purposes, you can easily produce regular reports to monitor and analyze your key performance indicators and metrics. When such metrics are updated on a real-time basis, you can track them on a dashboard and take quick action when needed. For example, you can make adjustments to campaigns and budgets while you still have time to head off or mitigate adverse consequences.

AI plugins

Your nonprofit already likely uses some form of accounting software. Software with AI plugins can boost effectiveness in categorizing expenses, tracking inventory, accelerating reimbursements and detecting fraud. Contact us for software recommendations and suggestions for automating tasks.

Crowdfunding can be easy, but the tax implications may not be

Non-Profits|June 10, 2025

Does your not-for-profit use crowdfunding platforms — such as Kickstarter, GoFundMe and Indiegogo — to raise money? Many nonprofits have found they’re a great way to engage potential supporters, particularly younger adults. However, there are tax implications that may be different from what you’re used to with other fundraising methods. Let’s take a look.

IRS definition

According to the IRS, crowdfunding is a method of raising money through websites by soliciting “contributions” from a large number of people. Crowdfunding is often used to help small businesses raise cash or fund other for-profit projects. But it also can be used to solicit donations for charitable causes.

Your organization might, for example, run a crowdfunding campaign for a specific organizational project or to generate funding for an urgent need among one or more of your constituents. In addition, your supporters might organize crowdfunding campaigns for you.

A lower threshold

Under tax law, a crowdfunding website or its payment processor may be required to report distributions of funds by filing IRS Form 1099-K, “Payment Card and Third Party Network Transactions.” If so, it also must provide a copy to the recipient (your nonprofit or, potentially, an organizer) of the distributions.

As recently as 2023, the reporting threshold was met if, during a calendar year, the total of all payments distributed to an organization or organizer exceeded $20,000 in gross payments resulting from more than 200 transactions or donations. Now, the threshold is much lower: If the total of all payments distributed to your organization exceeds $2,500 in gross payments in the 2025 calendar year (down from $5,000 in 2024) — regardless of the number of transactions or donations — the threshold is met. So if $2,500 or more in distributions are made directly to your nonprofit, the form should be furnished to you. (This threshold is scheduled to drop to only $600 beginning in 2026.)

Different scenarios

The issuance of Form 1099-K doesn’t necessarily mean the amount of distributions is taxable to recipients. Let’s say, for example, that one of your supporters, Leah, starts an Indigogo campaign that raises more than $2,500 for your organization. She subsequently receives Form 1099-K. If she distributes the money raised to your nonprofit, the distributions in Box 1 likely won’t be taxable to Leah. However, donors to the campaign might not be able to deduct their contributions because the campaign wasn’t run by your nonprofit.

Here’s another scenario: Your organization runs a GoFundMe campaign to raise funds for a specific client with immediate medical needs, and the platform distributes money directly to him. According to the IRS, if contributions are made because of contributors’ “detached and disinterested generosity,” and they don’t expect to receive anything in return, the amounts may be gifts and therefore aren’t taxable to your client. To be certain, crowdfunding recipients should discuss the situation with a tax professional.

Don’t pass it up

Tax rules are complicated when raising money on crowdfunding platforms. This doesn’t mean you should pass up this potentially valuable fundraising method, particularly at a time when federal government funding is drying up. But contact us first to help ensure you’re following IRS rules and providing the right information to your supporters.

Promoting good governance with a board policy

Non-Profits|May 29, 2025

Your nonprofit’s board of directors should enjoy the role, the opportunity to support a cause close to their hearts and the camaraderie of working with others who’re dedicated to achieving the same mission. But the job can be challenging. For example, boards must take ethical and practical action in times of crisis and always avoid conflicts of interest. You can help your directors navigate obstacles and make appropriate decisions with a board governance policy.

Start with a purpose

Begin your board governance policy by explaining its purpose. In general, your policy should provide a framework for making decisions consistent with your charitable mission. Be sure to include your nonprofit’s mission statement, a common thread that weaves through directors’ obligations, in your policy. Another purpose is to inform board members of their fiduciary duties under state law and obligations related to your nonprofit’s federal tax exemption.

From there, your policy should describe director responsibilities and obligations, emphasizing that the board can oversee all organizational operations. This is a good place to differentiate between board member and staff responsibilities. Also, the policy should advise board members that they may rely on information and reports from staffers and professional advisors they believe are dependable and competent in particular areas.

Recognize fiduciary responsibilities

The heart of your governance policy should explain board members’ core fiduciary duties, starting with their duty of care. This duty stipulates that directors must exercise reasonable care in all decision-making and not incur unnecessary risk. When performing their duties, board members should act in good faith and in a manner they believe to be in your nonprofit’s best interest.

Duty of care implies “reasonable inquiry,” meaning directors must ask questions and demand information that allows them to make informed decisions. They don’t have to be financial experts, but they should:

Understand basic financial terminology,
Be able to read financial statements and judge their soundness, and
Know how to recognize red flags that signal a possible change in your nonprofit’s financial health.

As stewards of public trust, they also have a duty of loyalty. In a nutshell, directors must always act for the good of your organization. Mandate that they fully comply with your nonprofit’s code of ethics and conflict-of-interest policy. And state that they must refrain from taking advantage of business or personal opportunities that become known because of their position on your board.

Support your effort

Some nonprofit boards have a governance committee that oversees organizational policy and helps ensure that the organization complies with its governing documents. A governance committee can operate effectively without a formal policy as long as it’s able to coordinate the board’s manner of governing.

A board handbook is another tool you might consider. It details the board’s size, term limits, and required committee structure (although some of these responsibilities may be found in your bylaws) and includes other policies that relate to the board and its oversight of your organization.

Finally, professional support is critical to good governance. If your board is unsure how to act in a particular situation — or simply needs assistance formulating a governance policy — consult your financial and legal advisors.

Grant proposals in the age of AI

Trimming your nonprofit’s meeting and fundraiser budgets

How to keep cost cutting from increasing fraud risk

4 common accounting errors for nonprofits to avoid

President Trump signs his One, Big, Beautiful Bill Act into law

Put qualified charitable distributions to work for your nonprofit

An education plan can pay off for your employees — and your business

Automate that! How AI and other software can help improve efficiency

Crowdfunding can be easy, but the tax implications may not be

Promoting good governance with a board policy

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