6. Fundraising Policy
Charitable fundraising is an important source of financial support for many charities. Success at fundraising requires care and honesty. The board of directors should adopt and monitor policies to ensure that fundraising solicitations meet federal and state law requirements and solicitation materials are accurate, truthful, and candid. Charities should keep their fundraising costs reasonable. In selecting paid fundraisers, a charity should use those that are registered with the state and that can provide good references. Performance of professional fundraisers should be continuously monitored.

7. Financial Audits
Directors must be good stewards of a charity’s financial resources. A charity should operate in accordance with an annual budget approved by the board of directors. The board should ensure that financial resources are used to further charitable purpose by regularly receiving and reading up-to-date financial statements including Form 990, auditor’s letters, and finance and audit committee reports.

If the charity has substantial assets or annual revenue, its board of directors should ensure that an independent auditor conduct an annual audit. The board can establish an independent audit committee to select and oversee the independent auditor. The auditing firm should be changed periodically (e.g., every five years) to ensure a fresh look at the financial statements. For a charity with lesser assets or annual revenue, the board should ensure that an independent certified public accountant conduct an annual audit. Substitute practices for very small organizations would include volunteers who would review financial information and practices. Trading volunteers between similarly situated organizations who would perform these tasks would also help maintain financial integrity without being too costly.

8. Compensation Practices
A successful charity pays no more than reasonable compensation for services
rendered. Charities should generally not compensate persons for service on the board of directors except to reimburse direct expenses of such service. Director
compensation should be allowed only when determined appropriate by a committee composed of persons who are not compensated by the charity and have no financial interest in the determination.

Charities may pay reasonable compensation for services provided by officers and staff. In determining reasonable compensation, a charity may wish to rely on the rebuttable presumption test of section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6.

For example, government agencies can be a great funding source but often are accompanied by strict reporting requirements that utilize a great deal of staff time and expertise. That is why many established nonprofits hesitate to apply for certain funding since their current workloads are so demanding already. At the same time, newer or smaller nonprofits must demonstrate the fiscal capacity to win such awards before ever applying for the grant. Add to that, increased demands caused by recent federal legislation (Sarbanes-Oxley Act of 2002) requiring greater transparency from funders and grant recipients alike and it is obvious why so many nonprofits are seeking ways to improve ability and efficiency.

However there are numerous new solutions to the challenge of managing awards that will reduce the work for nonprofit staff while meeting all underlying responsibilities.

How can nonprofits ease the burden of grant administration?

Nonprofits have different options to help manage their awards that can make them more attractive to funders. One obvious solution is to buy new or upgraded financial software. Purchasing software enables nonprofits to retain control of this function in-house, but the initial capital expenditure can be quite high. Plus, it requires sustaining trained staff to apply and manage the software and expensive upgrades are frequently needed. All of which diminish the original mission of the nonprofit.

Increasingly nonprofits are finding a more cost effective and efficient option may be working with a fiscal agent via the internet. A fiscal agent is someone who can do the work for you. Though the initial perception is staff loses some of the daily control of budgets since inputting the financial data into the system is farmed out, but the reality is working with a fiscal agent will ensure timely reimbursement for expenditures and provide value added services. The benefit of improving cash flow, while satisfying transparency requirements and building greater capacity make using a fiscal agent quite attractive. More importantly, working with a fiscal agent may be quite cost effective as it compares to purchasing and maintaining software and the people required to do so.

What does a fiscal agent do?

A fiscal agent serves as the contract administrator for the grant or funding source and is responsible for providing all the back office functions and procedures associated with the award.

The Research Foundation of The City University of New York, for instance, serves as the fiscal agent for the 23 schools located in the 5 boroughs of NYC that make up The City University of New York system – the third largest in the country. The Research Foundation also served as the fiscal agent for the September 11th Fund to ensure accountability for financial disbursements for both the fund and the service providers who worked with the Fund.

More recently, GrantsPlus was created by the Research Foundation to reduce the burden of government and grant management by serving as a fiscal agent for nonprofits. Services include fiscal management and reporting, sponsor liaison and compliance management, payroll, fringe benefit conformity, and purchasing assistance.

GrantsPlus sets up budgets and then tracks all financial activities on a daily basis to ensure funding compliance. Financial reports are available online and show both the detailed financial status of an individual revenue source, such as a grant award or special event, and the overall financial picture for the entire nonprofit organization. The fiscal agent can also make payments, either vendor payments or personnel, and can offer full payroll services and benefits administration.

What nonprofits can benefit most?
There are many scenarios where nonprofits benefit from working with a fiscal agent: Newcomers in need of infrastructure to established organizations looking to streamline their back-office – enabling staff members to focus on programs instead of complex fiscal reporting requirements. Nonprofits looking to build their capacity or be more transparent to funders benefit from the detailed compliance oversight and financial reports, and organizations that are managing grants with difficult reporting requirements benefit from a fiscal agent’s experience and guidance.

To learn more about GrantsPlus or to schedule an online demonstration, contact Randy Stevenson at 919-481-1511 or stevenson@firstnonprofit.com.