Posts Tagged ‘board of directors’

Study: Nonprofit Organizations Lack Governance Structure, Processes

Tuesday, May 19th, 2015
Directors of Nonprofit Organizations Lack Governance Structure - Rea & Associates - Ohio CPA Firm

Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying.

If you had to guess, how strong do you think your nonprofit organization’s policies are? If you’re unsure or have that gut feeling they’re not strong, you’re certainly not alone. After surveying more than 900 directors of nonprofit organizations, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, reported some concerning findings in their 2015 Survey on Board of Directors of Nonprofit Organizations.

You may know that it’s important to have good governance when it comes to ensuring the stability and strength of your organization. Without having the right procedures in place to help govern the board of directors and the institution as a whole, the entire organization risks collapse.

While securing sources of revenue and recruiting new members are critical elements of every nonprofit, the real backbone of your organization is your board’s governance. Without the proper structure in place to help shape and reinforce your vision, mission and objectives, your board will not have the tools needed to lead – making your funding and membership objectives less effective.

According to Stanford Graduate School’s survey:

“Over two thirds (69 percent) of nonprofit directors say their organization has faced one or more serious governance-related problems in the past 10 years. Forty percent say they have been unable to meet fundraising targets. Twenty-nine percent have experienced serious financial difficulty. A quarter (23 percent) have asked their executive director to leave or had to respond to unexpected resignation [and] sixteen percent say they have had extreme difficulty attracting qualified new board members.”

Furthermore, the study found that:

  • Too many directors lack a deep understanding of the organization
  • Most lack formal governance structure and processes
  • Many directors are not engaged, do not understand their obligations

While the shortcomings underscored by this report highlight a widespread problem throughout the nonprofit industry, the solution may be as simple as writing (or reevaluating) and implementing a variety of key policies. Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying. Policies can, and should, be in place to help manage the organization’s advisory council, board member orientation, ethics, confidentiality, donor relations, performance, and sponsorship activity – among many others.

Not sure what policies you should have in place? Take a look at this comprehensive Not-for-Profit Policy Checklist. Here are also a few examples of sample policies to give you greater insight into what you should be striving to accomplish.

By Mark Van Benschoten, CPA (Dublin office)

 

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Nonprofit Service Is Voluntary, Workers Comp Coverage Is Not

Monday, November 3rd, 2014

Did you know that the Ohio Bureau of Workers Compensation (BWC) expects you to provide workers compensation coverage to your nonprofit’s board of directors? And while the bureau hasn’t heavily enforced this guideline in the past, you can expect to see more enforcement of the rule in the future.

We recently caught up with a BWC representative to validate a letter one of our clients received pertaining to this issue. The conversation was valuable because we were able to walk away with some important pieces of information that, over time, had either been forgotten or ignored by many in the nonprofit sector.

Even though your board of directors may not receive a paycheck for the time and resources they have put in to your organization, they are likely on the front lines when it comes to managing the organization’s volunteers, finances, events and other initiatives. In other words – they are “working” for you.

“Active executive officers of a corporation, except for an individual incorporated as a corporation or officers of a family farm corporation, are considered employees for workers’ compensation purposes,” the bureau states in its Coverage Information by Employee Types.

Here are four facts nonprofit organizations need to know to avoid issues with the BWC:

  1. An organization’s officers are always considered employees of the organization. Even if an individual receives no pay, officer status indicates that they’re responsible for regular organizational work. Therefore, they are identified as an employee by the BWC, not a volunteer.
  2. Individuals who perform volunteer, non-emergency services for private employers (including nonprofits) are not covered under the BWC’s compensation policy.
  3. Since the BWC identifies those who hold an office with nonprofit organizations as employees, the nonprofit organization is responsible for reporting all wages paid to officers to the BWC, as well as to the IRS.
  4. You must pay the minimum reportable amount even if you have an “all-volunteer board.” However, non-officer board members are not subject to these rules.

Email Rea & Associates today to learn more about the BWC’s compliance requirements. The sooner you understand your compliance requirements, the sooner you can get back to focusing on doing more for your communities, families and causes your organization cares about.

By: Maribeth Wright, CPA (Cambridge office)

 

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