Nonprofit Organizations Articles

In a significant development affecting federal funding, the Office of Management and Budget (OMB) issued Memorandum M-25-13 on January 27, 2025, directing a temporary suspension of obligations and disbursements of federal financial assistance.

Penetration testing (pen testing) is crucial for nonprofit organizations to enhance their cybersecurity measures. It involves simulating cyberattacks to identify vulnerabilities, helping nonprofits protect sensitive data, maintain donor trust, and prevent financial losses.

Nonprofits should consider shifting their fundraising focus to younger generations, who are set to inherit significant wealth and are passionate about giving back. Engaging Generation X, Millennials, and Generation Z through tailored strategies can help secure consistent donations, leverage digital platforms, and foster long-term relationships.

Nonprofits can manage financial uncertainties by building and maintaining operating reserves. Key steps include establishing a written reserves policy, identifying windfalls and budget items, and enlisting support from the board and leadership team.

Cost allocation procedures for nonprofit organizations are necessary to comply with GAAP standards and provide transparency to donors and funders. It outlines the need to analyze expenses by nature and function, categorize supporting activities, and disclose the methods used for expense allocation. Proper cost allocation ensures accurate financial reporting and helps nonprofits manage their resources effectively.

Charitable fundraisers featuring games of chance, such as bingo, raffles, baccarat, and roulette, are popular ways for nonprofits to raise money. However, hosting gambling events comes with certain tax-related responsibilities, including reporting participant winnings and ensuring compliance with IRS rules and state regulations. To remain compliant, nonprofits should plan accordingly.

A federated nonprofit organization is a network of independent entities that operate under a common mission and brand, allowing for both autonomy and collaboration. This structure offers benefits such as scalability, increased fundraising potential, and enhanced advocacy, making it an attractive option for nonprofits looking to expand their reach and impact.

Exit agreements are essential for nonprofit organizations to manage leadership transitions smoothly and fairly. These agreements, developed by the board of directors, outline the terms of a leader's departure, focusing on compensation and the ongoing relationship with the organization.

When starting a new 501(c)(3) nonprofit organization, you have two options for applying for tax-exempt status with the IRS: the traditional Form 1023 and the streamlined Form 1023-EZ. The traditional Form 1023 is more comprehensive and available to all organizations, but it is time-consuming and costly. In contrast, Form 1023-EZ is shorter, cheaper, and designed for smaller nonprofits, but it has strict eligibility requirements.

Balancing competition and collaboration is crucial in the nonprofit sector. Nonprofits often collaborate on events and campaigns, but they also compete for resources like donations and volunteers. Understanding when to compete and when to collaborate is essential, and the article offers strategies for managing both.