Fund Management and Reporting

When it comes to managing donor gifts, fundraising professionals in nonprofit organizations have to walk a fine line. On the one hand, professional fundraisers are not the accountants or financial managers of their organizations. On the other hand, they have a fiduciary responsibility under the AFP Code of Ethics to ensure to the best of their ability that donations are recorded and reported accurately and used according to the donors’ wishes—even if the donor is no longer around. 

It’s a little like when you were young and your mother told you not to let your little brother run into the street.

The following sources can help fundraisers get the information they need to monitor and evaluate financial management practices in their organizations.

Principles of Nonprofit Investment Management
This PDF document identifies and defines seven key issues involved in nonprofit investment management: objectives, payout policy, asset allocation, manager selection, risk management, cost, and responsibilities.
https://www.commonfund.org/_catalogs/masterpage/principlesofnonprofitinvestmgmt.pdf

Nonprofit Asset Management: Effective Investment Strategies and Oversight
This book is a guide for effective investment management and oversight of endowments, foundations and other nonprofit investors. Although not aimed primarily for fundraising professionals, it provides valuable information to help fundraisers evaluate and oversee their organization's management of donor funds. It covers topics such as a simple framework for the oversight of assets, setting investment objectives, investment policy, asset allocation strategies, investment manager selection, alternative asset classes, and how to establish an effective oversight system to ensure the program stays on track.
http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118004523.html

All About Financial Management in Nonprofits
This "free library" provides links to a multitude of information sources on topics such as basics and getting started; planning and cash management; financial statements, analysis, and reporting; and special topics such as cutting costs and lease versus buy.   
http://managementhelp.org/nonprofitfinances/

Financial Management Tools and Resources
The Council of Nonprofits website provides links to information sources on financial management, unrelated business income taxation, nonprofits and the new OMB uniform guidance, own your own costs, (mis)understanding overhead, and other related topics.
https://www.councilofnonprofits.org/tools-resources-categories/financial-management

Reporting Net Assets In Correct Columns
Financial statements of nonprofits display net assets (equity) in three classes: unrestricted, temporarily restricted and permanently restricted. This article clears up some of the confusing classification issues and reporting pitfalls that persist.
http://www.thenonprofittimes.com/management-tips/reporting-net-assets-correct-columns/?r=ig-mo

The 2015-2016 Nonprofit Accounting Insights & Analysis Survey 
This survey by Nonprofit PRO magazine reports information central to nonprofit accounting management, including the amount of time spent inside and outside an organization’s financial system pulling and manipulating data, and specific software features used to manage nonprofits.  
http://www.accufund.com/npo-survey/uncategorised/npo-survey

Outcomes Reporting
This survey found reporting on outcomes is made difficult for most nonprofits.
<http://thirdsectortoday.com/2015/10/29/survey-finds-reporting-on-outcomes-made-difficult-for-most-nonprofits/>

Selling Ad Space in a Nonprofit Newsletter

Q: My 501c3 nonprofit organization is looking to sell ad space in it’s free newsletter. How should I proceed?

A: First, there are the nonprofit mail rates to consider before going forward. Any and all information you need from the United States Postal Service regarding the rules and regulations about advertising can be downloaded at: http://www.usps.com/tools/calculatepostage/nonprofitpostagerates.htm.

Also, offering outside vendors the option of posting an ad in your publication could serve useful for offsetting the costs of printing. However, please be mindful that unrelated business activity could accrue do to the advertising and subscription model preferred. Please consider the following article on unrelated business income: http://www.irs.gov/charities/article/0,,id=96104,00.html

As always, please seek the advice of your lawyer and accountant before proceeding.

Related vs. Unrelated Business Expenses

Q: What is the difference between business activities that are taxable and those that are not?

A: While pursuing a cause, a nonprofit organization may accrue some profit. This profit is considered tax-exempt, as it is a result of business related activities that prove beneficial to the given cause. Any profit that may come from business activity not related to the mission of the organization may be subject to taxation. There are exceptions in which unrelated activities will not be taxed, such as tasks performed by volunteers, the sale of donated merchandise, and/or the rental of mailing lists.

However flexible this rule may be, nonprofit organizations are often cautioned to lessen their unrelated business activities, as not to provoke inquiries from the IRS about tax-exempt status. It is also suggested that you seek legal advice before pursuing business activities as means to cultivate your mission or increase annual income.

For more information, please consider the following sources:

Publication 557: http://www.irs.gov/publications/p557/index.html
Exempt Organizations (UBI) Tax Statistics: http://www.irs.gov/taxstats/charitablestats/article/0,,id=97210,00.html