In Non Profit Examiner

In This Issue:

New Edition of Publication 963 Now Available

5 Challenges to Overcome When Selecting a New Nonprofit CEO

Nonprofits are Finding Success with Collaboration

Charitable Contributions to Single Member LLCs

New Edition of Publication 963 Now Available

[dropcap]T[/dropcap]he office of Federal, State and Local Governments (FSLG) has announced a new edition of Publication 963. This is an update to the previous revision that was released in November of 2013. The updated document can be found on either the IRS website under “Forms & Pubs” or the FSLG website under “Educational Resources”.

Introduced in 1996, Publication 963 is an effort made by the IRS with the Social Security Administration (SSA) and the National Conference of State Social Security Administrators (NCSSSA). The publication provides state and local government employers information on FICA coverage and withholding and reporting guidelines. It is intended to focus on federal tax issues facing governmental entities, especially Social Security coverage and voluntary Section 218 Agreements. In addition, it includes information addressing employment taxes, information returns, fringe benefits, retirement systems and the legal status of government entities, among other issues.

The professionals in our office can answer any questions you may have regarding the new edition of Publication 963. Give us a contact today.

5 Challenges to Overcome When Selecting a New Nonprofit CEO

[dropcap]F[/dropcap]illing a position is no easy task, especially if that position is the Chief Executive Officer. The CEO of a nonprofit wears many hats. They must possess an impressive skill set and offer both leadership qualities and management traits. They are the hub of the organization responsible for carrying out day-to-day operations. An exceptional amount of time will be spent seeking the perfect candidate to fill these rare shoes. No matter how exceptionally qualified the executive may be, his or her success in their new role can be challenged by the following five obstacles:

1. Internal Disputes

A definite set-up for failure will be any interpersonal conflict among board members. The newly appointed CEO will need to spend time building healthy rapport between board members. This is time that would be more effective elsewhere. Internal disputes can also be between staff and board members. Both cases are encumbering and can lead to the demise of a newly appointed CEO.

2. Diverse Visions

It is essential for all parties involved, board members and staff, to support the organization’s bigger picture. All stakeholders must be on the same page when it comes to the mission, vision, values and direction of the nonprofit organization. Values that clash can be motivation for board members or staff to seek union protection.

3. Replacement Overlapping

In some situations the outgoing CEO can provide useful knowledge to the new executive. In this situation they are involved in the hiring process of their replacement. This can be dangerous for two reasons. First, it puts the staff and board in an uncomfortable position. It forces them to walk a fine line and may cause confusion—who exactly is in charge? Second, if the organization is hopeful the new CEO will make changes to processes, having the outgoing CEO around can be disastrous. Notorious as the most dangerous phrase in the human language, “we’ve always done it this way,” has the potential to delay any new ideas the new CEO may have. If the current CEO has too much influence on the incoming CEO, then the board and organization may lose the momentum of progress.

4. Lack of Diversity

In the search for a new CEO in the 21st century, diversity and inclusiveness must be at the top of the list. A board that is primarily dominated by one gender, ethnicity or age is undesirable. Today, stakeholders want inclusive boards where there is a wide range of representation. This ensures that new ideas from different perspectives are brought to the table. Having an inclusive board is crucial in the search for a new CEO.

5. Frequent Leadership Turnover

High turnover of nonprofit board chairs can result in misconceptions regarding the search for a new CEO. When board positions are frequently abandoned, there can be confusion regarding the process of effectively appointing a new CEO. Lack of succession experience on the board can result in making a poor hiring decision.

These five obstacles can lead to a poor hiring decision within your nonprofit organization. Before filling any major position, such as a CEO, be sure your board and staff have overcome these hurdles.

Nonprofits are Finding Success with Collaboration

[dropcap]T[/dropcap]o better impact their communities, nonprofits are revisiting the idea of collaborations. Whether they are experiencing financial hardship or looking to improve efficiency, nonprofit organizations who partake in collaboration are describing their efforts as mainly successful. New studies suggest that not only are an increasing number of nonprofits collaborating, but also they are finding it successful across the board.

A survey titled, “Making Sense of Nonprofit Collaborations” was conducted by the Bridgespan Group with support from the Lodestar Foundation. The objective behind the survey was to get a better understanding of how often and how successful nonprofit collaborations are.

A total of 338 respondents were surveyed, ninety-one percent of nonprofits use at least one form of collaboration. The survey was administered to nonprofit CEOs and foundation officers. The survey found that the most common types of collaboration used by nonprofits include associations, joint programs, shared support functions and mergers.

The survey also revealed that nonprofits expressed interest in seeking new opportunities to collaborate. Organizations are looking for variety; they desire alternate ways to work together. Nonprofit organizations are in need of collaboration opportunities beyond endorsements, co-sponsorships, affiliations, networks, mergers and acquisitions. There is a definite need for innovation. Nonprofits are looking for options that are currently not available to organically reach their communities and achieve their missions.

Although collaborations are receiving positive feedback from nonprofits, it is important to consider the potential barriers. Barriers for nonprofits who wish to participate in collaboration include funding, joint partnership and finding the right partnership.

Looking forward, collaborations offer a promising opportunity for nonprofits to grow impact and help achieve their missions. It will be essential for nonprofits to be proactive in identifying and working to minimize barriers that may compromise the success of these collaborations.

If resources are far and few between and the demand for services continues to climb in your organization, then you may want to consider revisiting the idea of collaboration.

The professionals in our office can provide more information on collaboration and help you determine if it is right for you.


Charitable Contributions to Single Member LLCs

[dropcap]R[/dropcap]ecently, the IRS issued a notice that makes it easier to donate to charities who own disregarded single member LLCs. Before this notice, it was questioned whether donations made to the LLC, instead of directly to the charity, were deductible. However, the IRS will begin to treat donations made to single-member LLCs as the same as a contribution made directly to the charity.

Donors may still meet their substantiation requirements by adhering to this new rule, and charities may use this rule to meet their disclosure requirements. For the purposes of §170(f), the charity itself is the donor. However, to avoid unnecessary inquiries by the IRS, the charity is encouraged to disclose, in the acknowledgment or another statement, that the SMLLC is wholly owned by the U.S. charity and treated by the U.S. charity as a disregarded entity. Moreover, the limitations of §170(b) apply as though the gifts were made to the U.S. charity.

For more information about how this rule affects your organization, please contact one of our professionals.


Recent Posts