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August 2017 – Nonprofit Governance and Compliance

Most fundraising professionals and many nonprofit personnel are familiar with the newspaper, Nonprofit Times, which is available as both hard-copy and on-line (www.thenonprofittimes.com). However, they may not be as aware of Exempt:  The Financial Magazine for Nonprofits (www.exemptmagazine.com). It is published six times annually by Nonprofit Times.

In the November/December issue of 2016, the lead article discussed “Five Things That are Making Regulators Buzz.”  Written by Tracy L. Boak and Karen I. Wu, the article acknowledges that legal issues and compliance regulations are perpetual operations concerns, but they consider five to be of greatest interest to regulators, and therefore perhaps present the greatest challenges to nonprofit leadership.

First is the failure of boards to properly implement governance and compliance regulations, such as matters of conflicts of interest. Second is inadequate scrutiny of fundraising and overhead costs, such as high costs of hiring a fundraising professional and misrepresentation of how much is actually spent on the program versus the costs to bring in the donated funds.  Third is the matter of restricted funds and donor expectations. Fourth are the complex issues of the use of technology in fundraising; these raise many questions, from legal matters to use of donor data that is collected.  Finally are the considerations of social impact efforts, such as income-producing ventures rather than donations. This, perhaps, is the one that will bear consideration for some time to come, due to the vast changes that occur in this arena.

Understanding the viewpoint of what is significant in terms of regulations of nonprofits isn’t necessarily an easy matter but is vital for ethical and credible organizations that are accountable to their donors and the public. Exempt makes that challenging task easier for the busy nonprofit and fundraising professional.

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