Money Matters
Many people think nonprofits can’t make this, but financial health depends on generating one to reinvest in the mission.
What is a profit (or surplus)?
Of the 29 IRS codes, this is the most common code for charitable nonprofits.
What is 501(c)(3) designation?
Calling it “just volunteering” overlooks the legal and ethical obligations tied to this kind of service.
What is board leadership?
Board members sometimes see themselves as volunteers like everyone else, but their legal responsibilities make them this instead.
What is fiduciaries of the organization?
Many people think that “fundraising” only means asking for money, but it actually starts with this relationship-based process.
What is cultivation or donor engagement?
Nonprofits don’t give dividends to shareholders, but they must reinvest this back into the mission.
What are earnings/revenues?
A common myth is that all donations to nonprofits are automatically this.
What is tax-deductible?
Nonprofits must have at least this number of board members.
What is three?
Nonprofits often need staff with this kind of skillset.
What are professional/technical skills?
Some board members believe they can skip this responsibility entirely, but every board member should play a role — even if it’s not making the ask.
What is participating in fundraising through advocacy, introductions, or personal giving?
Many assume restricted and unrestricted funds can be used interchangeably, but using restricted money this way violates this.
What is donor intent?
Nonprofits don’t pay federal income taxes, but they still pay these local taxes.
What are payroll/sales/property taxes (in some cases)?
Contrary to popular belief, board members have not just two but three of these legal duties.
What are the duty of care, duty of loyalty, and duty of obedience?
Some believe volunteers can receive gift cards, stipends, or cash “thank-yous” without consequence, but that can turn them into this.
What is an employee in the eyes of the IRS or Department of Labor?
This event type is often assumed to be the most lucrative, though usually grants or contracts bring in more.
What is a fundraising gala/event?
People often claim “we can’t spend reserves,” but reserves exist for this very reason.
What is ensuring stability or covering unexpected shortfalls?
Some believe this status means the organization can’t make a profit, but it really means profits must be used this way.
What is reinvesting surplus revenue back into the mission?
Some think governance just means filing forms and following bylaws, but true governance also includes this strategic function.
What is shaping vision and ensuring mission impact?
A common misunderstanding is that nonprofits are run entirely by these people.
What are volunteers?
Many people believe grants are “free money,” but they actually come with this — and failing to follow through can jeopardize future funding.
What is reporting and compliance obligations?
Staff sometimes believe that once the board approves the budget, it’s locked forever, but good financial management includes this practice.
What is monitoring and adjusting the budget throughout the year?
Nonprofits can engage in this type of activity, but only within strict IRS limits.
What is lobbying?
People often think board members can’t be paid. Some nonprofits legally can, though most rely on this instead.
What are volunteers?
Some organizations believe staff can also “volunteer” for their employer in the same work area, but the law says this is not allowed.
What is prohibited dual status?
Some organizations think that any fundraising message can include political endorsements, but doing so could endanger this.
What is their 501(c)(3) tax-exempt status?