Penan & Scott, P.C.

01/09/2025

To reduce rent expenses, your not-for-profit might want to consider sharing a workspace. Options include teaming up with another nonprofit to share space, utilities, equipment and even staffers. Or you might join a commercial shared workspace that houses many types of organizations, including for-profit businesses. Some spaces offer back-office services such as HR and IT. Or a private foundation may have more space than it needs and be willing to rent part of it to you at a reduced rate. Of course, in some areas, office space is ample and you may be able to find a deal. Contact us to discuss the best course of action.

01/08/2025

Even if you’re confident your organization operates with integrity, a code of ethics can help prevent fraud, guide staffers in their decision-making and reassure donors. Think of it as a statement of how you, your staff and volunteers, and your board practice ideals and put values into action. Start the drafting process by reviewing your mission statement and strategic plans to identify values such as fairness, justice and accountability. Also consider any applicable licensing requirements, conflicts of interest, governance and legal compliance. Your board must approve the code before you implement it.

01/07/2025

Some nonprofit leaders mistakenly believe that board member independence is only about addressing conflicts of interest. But when evaluating board member independence, the IRS looks at factors such as whether the nonprofit compensated board members as employees or paid them more than $10,000 as independent contractors. It also considers whether the nonprofit has been involved in certain types of financial transactions with the board members or their close family members. To avoid conflicts and the appearance of poor governance, make sure a majority of your board members are independent. Contact us for details.

01/06/2025

Without a credit card use policy, you could have trouble responding satisfactorily if a staffer misuses your organization’s card. You may also have a hard time recovering funds lost as a result of improper charges. So it’s important to craft a policy explicitly stating that employees can’t use a work-issued card for personal expenses. The policy also should prohibit cash advances and electronic cash transfers and require staffers to seek manager preapproval for charges. Lay out repercussions for violations, for example termination and pursuit of criminal prosecution. Contact us for help preventing fraud.

01/03/2025

Your nonprofit’s monthly board meetings should ideally fall short of two hours. If they routinely run longer, they could undermine members’ confidence in leadership. Planning is essential. Once you’ve set a date, prepare an agenda with timetables and assignments. During the meeting, impose limits on discussions, and if members need to think about an issue, postpone decisions. Be sure to follow up after the meeting by finding answers to questions that arose and placing unfinished business on future agendas. Also, consider adopting a consent agenda, which consolidates routine items into one vote. Contact us for more information.

01/02/2025

Your not-for-profit’s new board members and staffers may not necessarily know the differences between for-profit and nonprofit accounting systems, particularly if they come from a corporate background. One area of significant variation is financial reporting. For example, for-profit companies prepare balance sheets to express their owners’ equity and nonprofits produce statements of financial position that account for assets, liabilities and prior earnings. And while for-profits create income statements, nonprofits prepare statements of activities. Contact us for help explaining nonprofit accounting concepts to your stakeholders.

01/01/2025

12/30/2024

Restricted gifts to nonprofits require greater care than unrestricted ones. If a donor attaches strings to a gift, your staffers should follow procedures designed to ensure the restrictions are honored. For example, staffers must properly label these gifts and record expenditures associated with them in a spreadsheet or track them as individual funds in the general ledger. You may need to decline some restricted gifts because they’ll be more trouble than they’re worth. To avoid such situations, take every opportunity to encourage donors to make unrestricted gifts. Contact us to learn more.

12/27/2024

If you’re a business owner working from home or an entrepreneur with a side gig, you may qualify for home office deductions. On the other hand, employees who work remotely can’t deduct home office expenses under current federal tax law. To be eligible for a deduction, you must use part of your home regularly and exclusively as your principal place of business, or a place to meet with customers, clients or patients in the normal course of business. Typically, the business use percentage is determined by your home office’s square footage, but other methods exist. We can address questions about the best way to compute home office deductions and the tax implications when you sell your home.