Tips From The Trenches

• Published date: 01 August 2017
• DOI: http://doi.org/10.1002/ban.30513
• Date: 01 August 2017

August 2017 • Volume 33, Number 12 7

DOI 10.1002/ban© 2017 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

Tips From The Trenches

Keep tabs on scal agents

If your nonprofit has a fiscal agent, you

should be receiving a regular accounting of the

organization’s financial reports, writes Valerie

Leonard, host of the Nonprofit “U” blog radio

talk show.

“You should also be privy to your fiscal

agent’s financial statements showing your orga-

nization’s activities within the context of your

fiscal agent’s finances (usually presented as a

line item or program),” Leonard writes on her

blog.

“If you are a member of a board or organi-

zation with a fiscal agent and you have never

seen your fiscal agent’s 990’s or recent financial

statement, you are not exercising your fiduciary

responsibility, and neither is your fiscal agent,”

she says.

For more information, visit http://www.valerief

leonard.com. ■

Plan for all types of crises

Nonprofit leaders and boards alike have roles

to play when it comes to crisis management and

minimizing hits to your organization’s reputa-

tion. But while some crises are obvious—think

United Airlines earlier this year when it yanked

a passenger off one of its planes—others aren’t

so plain, and you should have plans in place

for all eventualities, according to Joanne Fritz,

former director of development for The Girl

Scout Council of Greater St. Louis and current

curator of the About Nonprofit Charitable Orgs

Facebook page.

“Crises come in all flavors,” Fritz writes. “Your

crisis might be an accident involving a volun-

teer, the death of a client, embezzlement by your

chief financial officer, or even a lawsuit by a

former employee. They all require different re-

sponses. Prepare for as many as you can imag-

ine, and do your best to put plans in place to

minimize the damage to your nonprofit’s reputa-

tion,” she says.

For more information, visit https://www.facebook.

com/AboutNonprofit. ■

Be careful to avoid excess benefit

transactions

If your board members serve the organiza-

tion in a professional capacity—for example,

they provide marketing or sales expertise—it is

permissible to pay them for their time—so long

as the compensation is in line with standard

market rates according to the Internal Revenue

Service.

If the board member receives anything in

excess of that, the organization has engaged in

what the IRS calls an excess benefit transaction.

Such transactions must be reported to the agen-

cy, and the transaction must be reported on

Form 990 or Form 990-EZ. Excise taxes will be

imposed on the person that received the excess

benefit, as well as any organization manager

who knowingly approved such a transaction, the

IRS said.

According to the agency, any public charity that

becomes aware that it may have engaged in an

excess benefit transaction should consult a tax

advisor and take appropriate action to avoid any

potential impact it could have on the organiza-

tion’s continued exempt status.

For more information, visit http://www.irs.

gov/eo. ■

Remind board of benets of service

Nonprofit board service can be hard, especially

when the organization is making only incremental

progress on a seemingly intractable social chal-

lenge and resources are limited. Nonprofit execu-

tives can help boost morale by reminding the

board of some of the ways they benefit, personally,

from board service, such as:

• Learning about an issue that is outside of, or

complementary to, their chosen field or profession.

• Gaining insight on organizational governance

that translates to the corporate world.

• Developing leadership skills through commit-

tee service or filling a board officer position.

• Building soft skills of problem solving, nego-

tiation and consensus building that employers of

all stripes value in leadership positions. ■