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I am pleased to recommend Mark and his firm. He has helped us to become a better organization and better people as well.

Rev. Louis R. Lothman, Th.D., Director, Pastoral Counseling Services, Presbyterian Minister, Presbyterian Church (U.S.A.)

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Nonprofits: Take another look at Inflation Reduction Act tax breaks

When the Inflation Reduction Act (IRA) became law in late 2022, you might have assumed that the tax breaks it contained wouldn’t affect your tax-exempt organization. That’s not the case. One IRA provision could help reduce construction project costs if you use energy-efficient materials and qualified labor. Another could provide direct cash payouts of certain tax credits. It’s time to take a second look at the IRA.

All tax-exempt entities included

After the Consolidated Appropriations Act of 2021 made the IRC Section 179D tax deduction for energy-efficient buildings permanent, commercial property and certain residential property owners could use the deduction by assigning it to qualified “designers.” Eligible owners included some government entities, but not the vast majority of nonprofits.

With the IRA’s passage, all tax-exempt entities became entitled to allocate their building tax deductions to qualified designers. You may already prioritize energy efficiency because it aligns with your mission and values — or simply to cut future utility expenses. Now, the Sec. 179D deduction may help you reduce up-front costs on construction projects that incorporate sustainable materials.

Qualified designers create technical specifications for the installation of energy-efficient commercial building property. Installation, repair or maintenance of such property isn’t sufficient to qualify for the deduction. Designers may include architects, engineers, contractors, environmental consultants and energy services providers.

A look at the process

To see how the allocation process works, let’s look at an example. Say that your nonprofit plans to build a 40,000 square foot, LEED-certified building and that you have $200,000 in tax deductions to allocate to qualified architects, engineers and other construction professionals. You may allocate the entire Sec. 179D deduction to a single designer or make proportional allocations to multiple designers. This can help you negotiate a better overall price for the project.

The exact deduction amount will be determined through a Sec. 179D study obtained by the designer. The study is performed by a qualified contractor or professional engineer who will make a site visit to your property to confirm that it has met or will meet energy savings requirements. You’ll also need to sign an allocation letter that includes the cost of the energy-efficient property (including labor); the date the property is placed in service; the amount of the Sec. 179D deduction allocated to the designer; and a declaration that the information presented is true and complete.

Note that you’re prohibited from seeking or accepting payments from a designer in exchange for providing an allocation letter. And you can’t require a designer to pay you a portion of the deduction’s value.

Cash refunds for tax credits

In addition to expanding availability of the Sec. 179D tax deduction, the IRA allows eligible tax-exempt organizations to receive certain tax credits as cash payments from the IRS. Previously, most tax credits were of no use to nonprofits.

The “direct pay” provision allows organizations to participate in clean energy benefits related to such credits as the Investment Tax Credit, Production Tax Credit, Advanced Manufacturing Production Credit, Commercial Clean Vehicle Credit and Alternative Fuel Vehicle Refueling Property Credit. The IRS makes credit payments after an eligible nonprofit files its return for the applicable year.

Seek advice

Contact us for a full list of federal tax credits that can potentially allow your nonprofit to receive cash payouts. And if you’re contemplating a building project, ask us about qualifying for Sec. 179D deductions.  You can reach us at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024


Making the most of your nonprofit’s social media accounts

When’s the last time you evaluated your not-for-profit’s social media strategy? Are you using the right platforms in the most effective way, given your mission, audience and staffing resources? Do you have controls to protect your nonprofit from reputation-damaging content?

These are important questions — and it’s critical you review them regularly. At the very least, you need a social media policy that sets some ground rules.

Annual reviews

As you know, the social media landscape changes quickly. The platform that’s hot today may be decidedly not hot tomorrow. So review your online presence at least once a year to help ensure you’re dedicating resources to the right spaces. Most nonprofits maintain a presence on Facebook and LinkedIn because that’s where likely donors tend to be. But if you’re an arts nonprofit or visually oriented, Instagram may be a better venue. And if your constituents are teenagers or young adults, you’re most likely to find them on TikTok.

In general, fresher, frequently updated accounts get more traffic and engagement. So try not to overextend your organization by posting on multiple platforms with only limited staff resources. Determine where you’ll get the most bang for your buck by surveying supporters and observing where peer nonprofits post.

Content monitoring

Social media is 24/7, and incidents can escalate quickly. So closely monitor your accounts, as well as conversations that refer to your nonprofit. A “social listening” tool that scans the web for your nonprofit’s name can be extremely helpful.

But the best defense against reputation-busting events is a formal social media policy. Your policy should set clear boundaries about the types of material that are and aren’t permissible on your nonprofit’s official accounts and those of staffers.

For example, it should prohibit employees, board members and volunteers from discussing nonpublic information about your organization on their personal accounts. With organizational accounts, limit access to passwords and regularly check posts and comments. Content from your feeds can easily go viral and create controversy. Make sure your staff knows when to engage with visitors, particularly difficult ones, and maintains a zero-tolerance policy for offensive comments.

Crisis plan

Mistakes, or even intentionally damaging posts, can occur despite comprehensive policies. Create a formal response plan so you’ll be able to weather such events. The plan should assign responsibilities and include contact information for multiple spokespersons, such as your executive director and board president. Identify specific triggers and a menu of potential responses, such as issuing a press release or bringing in a crisis management expert. Be sure to include IP staffers or consultants on your list.

Hopefully, a crisis won’t occur. But if it does, you’ll want to sit down and review your plan’s effectiveness after the situation has been resolved.

Select and protect

These days, no nonprofit can afford to ignore social media. Just make sure you’re applying your time and effort to the right platforms and protecting your accounts from those who would harm your organization. Be sure to contact us at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024


Plan now to reimburse staffers, board members and volunteers

Even if your not-for-profit organization rarely needs to reimburse staffers, board members or volunteers, reimbursement requests almost certainly will occasionally appear. At that point, will you know how to pay stakeholders back for expenses related to your nonprofit’s operations? If you have a formal reimbursement policy, you will. Plus, you’ll be able to direct individuals with reimbursement questions to your formal document and minimize the risk of disagreements.

2 categories

In the eyes of the IRS, expense reimbursement plans generally fall into two main categories:

1. Accountable plans. Reimbursements under these plans generally aren’t taxable income for the employee, board member or volunteer. To secure this favorable tax treatment, accountable plans must satisfy three requirements: 1) Expenses must have a connection to your organization’s purpose; 2) claimants must adequately substantiate expenses within 60 days after they were paid or incurred; and 3) claimants must return any excess reimbursement or allowance within 120 days after expenses were paid or incurred.

Arrangements where you advance money to an employee or volunteer meet the third requirement only if the advance is reasonably calculated not to exceed the amount of anticipated expenses. You must make the advance within 30 days of the time the recipient pays or incurs the expense.

2. Non-accountable plans. These don’t fulfill the above requirements. Reimbursements made under non-accountable plans are treated as taxable wages.

Policy items

Your reimbursement policy should make it clear which types of expenses are reimbursable and which aren’t. Be sure to include any restrictions. For example, you might set a limit on the nightly cost for lodging or exclude alcoholic beverages from reimbursable meals.

Also be sure to require substantiation of travel, mileage and other reimbursable expenses within 60 days. The documentation should include items such as a statement of expenses, receipts (showing the date, vendor, and items or services purchased), and account book or calendar. Note that the IRS does allow some limited exceptions to its documentation requirements. Specifically, no receipts are necessary for:

  • A per diem allowance for out-of-town travel,
  • Non-lodging expenses less than $75, or
  • Transportation expenses for which a receipt isn’t readily available.

Your policy should require the timely (within 120 days) return of any amounts you pay that are more than the substantiated expenses.

Standard rate vs. actual costs

Finally, address mileage reimbursement, including the method you’ll use. You can reimburse employees for vehicle use at the federal standard mileage rate of 67 cents per mile for 2024, and volunteers at the charity rate of 14 cents per mile. Unlike employees, however, volunteers can be reimbursed for commuting mileage.

Alternatively, you can reimburse employees and volunteers for the actual costs of using their vehicles for your nonprofit’s purposes. For employees, you might reimburse gas, lease payments or depreciation, repairs, insurance, and registration fees. For volunteers, the only allowable actual expenses are gas and oil.

What makes sense

You don’t need to craft a reimbursement policy on your own. We can help ensure you include the elements that make sense given your nonprofit’s size, mission and activities and update it as your organization grows and evolves. Be sure to contact us at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024


6 ways nonprofit retirement plans are changing

Some provisions of 2022’s SECURE Act 2.0 (a follow-up to the SECURE Act of 2019) have been in force for over a year — including several that affect 403(b) retirement plans. If your not-for-profit offers staffers a 403(b) plan, you likely made some minor changes in 2023 and may have made more significant ones on January 1, 2024. A few additional provisions are scheduled to become effective in 2025 and 2026. To help ensure you’re adhering to the applicable rules and implementing enhancements where they make sense, review these significant SECURE Act 2.0 provisions.

Effective January 1, 2024

1. Pension-linked emergency savings accounts (PLESAs). Nonprofit employers may allow workers to contribute to a PLESA linked to their 403(b) plans. Contributions to these accounts are made on an after-tax basis, and the account balance attributable to employee contributions can’t exceed $2,500 (which will be indexed for inflation). Workers generally may make withdrawals from a PLESA much more easily than they can obtain a 403(b) plan hardship distribution or loan.

2. Student loan match. Employers can elect to make matching contributions to employees’ 403(b) accounts based on their student loan payments. This provision is intended to help build workers’ retirement savings even if their student loan payment obligations are preventing them from contributing.

Effective January 1, 2025

3. Automatic enrollment. For new plans adopted after 2024, nonprofits must provide automatic enrollment. Employees can then choose to opt out if they don’t want to participate. One exception: Organizations with 10 or fewer employees or that have been in operation for less than three years aren’t required to meet this mandate.

4. Catch-up contributions for some older employees. Generally, taxpayers age 50 or older are allowed to make additional “catch-up” contributions to their 403(b) plans. SECURE 2.0 will allow employees age 60 to 63 to make even larger catch-up contributions of $10,000 (indexed for inflation) or 150% of the regular catch-up limit, whichever is greater.

5. Part-time worker participation. Under the first SECURE Act, part-time workers are eligible to participate in their employers’ 403(b) plan if they have 500 hours of service each year for three consecutive years. Starting in 2025, the eligibility requirement will fall from three years to two years.

Effective January 1, 2026

6. Catch-up contributions for higher-paid employees. Changes to 403(b) catch-up contribution rules originally were scheduled to go into effect in 2024. But, in 2023, the IRS announced a two-year transition to help nonprofits comply with the new rules. Beginning in 2026, employees who earned more than $145,000 in the prior year (indexed for inflation) will be allowed to make catch-up contributions only to a Roth 403(b) account.

Another Roth 403(b)-related provision went into effect in 2022: Employees can elect that their employer makes matching contributions to their Roth 403(b) — if the nonprofit offers one. (Previously, matching contributions could be made only to an employee’s traditional account, even if the employee contributed to a Roth account.)

What stays the same (for now)

As always, traditional 403(b) plan contributions grow tax-deferred in participants’ accounts and withdrawals are taxed — generally when participants are retired and in a lower income tax bracket. Employee contributions are deducted from paychecks pre-tax.

The 403(b) contribution limit for 2024 is $23,000, and participants age 50 or older can make catch-up contributions of an additional $7,500. Also, participants who have been employed by your nonprofit for more than 15 years may be eligible to contribute an extra $3,000 a year, if you’ve included this provision in your plan. Contact us if you have questions about 403(b) limits or any changes under the SECURE Act 2.0 at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024


3 tips for making the financial statement auditing process smoother

Not-for-profits aren’t required to produce audited financial statements. But audited statements are more likely to reassure big donors and grant makers about your financial stability and generally will be required if your organization applies for a bank loan. When you hire a CPA to audit your statements, the auditor is responsible for expressing an opinion on them and obtaining reasonable assurance that they’re free of material misstatements. Here are three tips for making the process as smooth as possible.

1. Understand roles

You’ll need to prepare estimates (such as an allowance for bad debts), adopt sound accounting policies, and establish, maintain and monitor internal controls. Auditors may make suggestions about these items, but it isn’t their responsibility to implement them.

Your auditor is required to evaluate whether internal controls, accounting policies and estimates are adequate to prevent or detect errors or fraud that could result in material misstatements. But remember, all decision making is strictly your nonprofit’s responsibility.

2. Involve your board

Sometimes nonprofits overlook their board’s role in annual financial statement preparation. That’s a mistake. Your board should have a strategic and oversight role in the process, which is part of its overall fiduciary duty. The board also can be a good resource for certain technical matters, depending on the members’ professional backgrounds.

3. Understand statement formats

Financial statement items — such as debt ratios, program vs. administrative expense ratios and restricted vs. unrestricted resources — can help tell you how your nonprofit is doing. So when your organization’s financial team is preparing them, make sure statements are as user-friendly as possible.

One of the best ways to see the big financial picture is to compare your budget, your year-end internally generated financial statements and the financial statements generated during an annual audit. This task can be completed more easily if the format of your annual audited statements is similar to that of your internal financial statements and budgets. If audited financial statements are formatted differently than internally generated reports, you may need to develop a bridge between them, perhaps in the form of an internal memo.

When reviewing internal vs. audited statements, look for any large differences in individual accounts resulting from audit correcting adjustments. These often are an indication of an internal accounting deficiency. You’ll also be able to spot any significant discrepancies between what was budgeted for the year and the actual outcome.

First timers

If you’re engaging an auditor to prepare financial statements for the first time, don’t be anxious. Just provide your auditor with every requested document and keep the lines of communication open. Your auditor will let you know if there’s anything you should be concerned about. Be sure to contact us at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024

Got independent contractors? Get to know Form W-9

If your not-for-profit is perpetually shorthanded, you may have decided to engage independent contractors or freelancers to pick up some of the slack. Just make sure you’re collecting the right information from these individuals and filing it with the IRS. Clean paperwork now can save you a lot of headaches — including tax penalties — later.

W-9 rules

When engaging an independent contractor, obtain that person’s individual or business Taxpayer Identification Number (TIN). For individuals, this generally is the contractor’s Social Security number. Use the number to complete IRS Form W-9, “Request for Taxpayer Identification Number and Certification.”

If a contractor doesn’t provide a correct TIN or doesn’t sign the certification in Part III of Form W-9, you’re generally required to “backup withhold” on reportable amounts. In other words, you must withhold and pay to the IRS 24% tax from future payments. If you fail to do so, the IRS may hold your organization liable for any uncollected amount.

The IRS will send you a backup withholding notice if a worker’s name and TIN on a Form W-9 don’t match its records. If you receive a notice, you may have to send what’s called a “B” notice to the contractor to solicit another TIN.

Collection and reporting

Several best practices can help you collect and report information about independent contractors:

Make W-9 completion part of the onboarding process. If contractors drag their feet on submitting Form W-9s, make clear that they can’t begin working for you until you have the completed and signed form in hand.

Review every form. When you do receive a Form W-9, take the time to review it. If you need additional information, request it from the contractor immediately to help preempt IRS penalties. Note that sole proprietors must furnish their individual names, not only a business name or “Doing Business As.”

Use the IRS’s TIN Matching service. You can find this free tool on the IRS website (search “e-services” at irs.gov), rather than simply waiting to see if the IRS sends you a notice about a Form W-9. The IRS allows payers and their authorized agents to match TIN and name combinations with IRS records before submitting forms so they can follow up with the individual if there’s a discrepancy.

Send annual notices to independent contractors. The notices should remind them to keep their forms with you up to date. If they’ve undergone a change — such as a change in entity type or owner — they need to provide a new form.

Retain records. Keep W-9 forms for at least three years after the last tax year for which you filed a Form 1099-NEC for the contractor. The IRS usually limits its audits to returns filed in the previous three years.

Filing 1099-NECs

You’ll use Form W-9 to report any payments for services by nonemployees you’ve paid at least $600 to during the tax year. Issue a 1099-NEC, “Nonemployee Compensation,” to each worker and file it with the IRS. Be sure to contact us if you’re needing help with filing your 1099s at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2024


When are sponsorship and advertising payments subject to tax?

Sponsorship and advertising dollars can provide a real boost to your not-for-profit organization’s income. However, if sponsors or advertisers receive a “substantial benefit” or if providing benefits isn’t a related business activity, you may owe unrelated business income tax (UBIT) on the payments. Here’s a quick look at what is and isn’t taxable.

UBIT typically doesn’t apply to sponsorships

Sponsorship dollars generally aren’t taxed. Qualified sponsorship payments are made by a person engaged in a trade or business with no arrangement to receive — or expectation of receiving — a substantial benefit from the nonprofit in return for the payment. The IRS allows exempt organizations to use information that’s an established part of a sponsor’s identity, such as logos, slogans, locations, phone numbers and URLs.

There are exceptions. For example, if a payment amount is contingent upon the level of attendance at an event, broadcast ratings or other factors indicating the quantity of public exposure received, the IRS doesn’t consider it a sponsorship. Therefore, the payment would likely trigger UBIT.

Providing facilities, services or other privileges to a sponsor (such as complimentary tickets to a concert or admission to a golf tournament) doesn’t automatically disallow a payment from being considered qualified. If the privileges provided aren’t what the IRS considers a “substantial benefit” or if providing them is a related business activity, the payments won’t be subject to UBIT. But when services or privileges provided by an exempt organization to a sponsor are deemed to be substantial, part or all of the sponsorship payment may be taxable.

UBIT usually does apply to advertising

Payment for advertising a sponsor’s products or services is generally considered unrelated business income, so it’s subject to UBIT. According to the IRS, advertising includes endorsements, inducements to buy, sell or use products, and messages containing qualitative or comparative language, price information, or other indications of value.

Some activities often are misclassified as advertising. Using logos or slogans that are an established part of a sponsor’s identity is not, by itself, advertising. And if your nonprofit distributes or displays a sponsor’s product at an event, whether for free or remuneration, it’s considered use or acknowledgment, not advertising.

Contact us

Recognizing the difference between taxable and nontaxable payments can be challenging. Be sure to contact us if you’re soliciting support from possible sponsors and advertisers and aren’t sure what crosses the tax line at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2023


Consider these 2 issues before searching for new staffers

Despite many predictions to the contrary, U.S. employers have continued to add workers to their payrolls and the unemployment rate has remained low — at 3.7% as of November 2023, according to the Bureau of Labor Statistics. Is your not-for-profit among the employers that need fresh staffers? The new year is a good time to start looking, but make sure you consider a couple of issues before you place any ads.

1. Your workforce

First, do you really need to hire? Even if you plan to expand services and introduce new programs, volunteers may be capable of picking up the slack. Or current staffers may be underused on projects that are stagnating or winding down. Carefully review your nonprofit’s priorities and consider eliminating programs that aren’t meeting expectations so you can redeploy human resources.

If staffers have been working from home since the start of the COVID-19 pandemic, you may want to call them back to the office before making the decision to hire. It’s possible some staffers will refuse to return to the office full time. In that case, you’ll need to decide whether to keep them working from home and on the payroll or start searching for new employees. Just keep in mind that you could have trouble finding new workers at compensation levels your organization can afford to offer.

2. Your finances

The second major consideration, of course, is money. Thanks to generous donors and grant-makers, some nonprofits have bounced back and even expanded in the post-pandemic period. Others have been forced to pinch pennies just to maintain the existing programs. Wherever your nonprofit falls on this spectrum, ensure you can fit new staffers into your budget before hiring.

Remember that when you hire full-time employees, the expense isn’t limited to salaries or hourly wages — you’ll also be paying employment taxes and benefits. In many cases, it’s cheaper to outsource functions, particularly accounting, IT and human resources work. Outsourcing offers the additional benefit of being temporary if you aren’t happy with the service.

Finally, even if you can afford to hire or outsource, the fact remains that nonprofits are obligated to be careful financial stewards. Donors, watchdog groups and the media demand it. So consider how you’ll make the most of any new staffing budget before you spend it.

Making the decision

The economy in the U.S. remains relatively strong, making it a good time to hire for many employers. However, this situation could change. Ultimately, the decision to hire depends on your organization’s staffing needs and financial resources. We can help by reviewing your budget and suggesting ways to free up cash.

Contact us to discuss your organization’s questions at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2023


How to get the financing your nonprofit needs

Relatively high interest rates and tight lending standards are making it difficult for even for-profit businesses to apply and qualify for bank loans. But not-for-profits, which may lack adequate collateral or steady cash flow, generally face a greater uphill battle when it comes to obtaining financing.

If you’ve ruled out finding a grant or launching a capital campaign to fund your expansion or cover the cost of a large project, one of the following financing options may work for you.

Traditional lenders and products

Bank financing generally comes in two basic forms:

1. Line of credit. This is a negotiated amount that you can draw against as needed. If your goal is to smooth out cash flows over the year, it’s usually the best option. A maximum amount is available to you, but you use only what you need. Required monthly payments may be limited to interest expense and principal payments can be made any time. So you have flexibility in how much you repay each month.

2. Term loan. Here, you receive a lump sum, usually for a specific purchase. The application process is usually more complicated, and approval typically takes more time. Repayment is in installments, which means you’d make equal monthly payments consisting of interest and principal throughout the entire loan term.

Bank lenders usually look at an applicant’s financial statements, cash-flow predictability, management and governance, collateral, and repayment plan. But even if your nonprofit is approved for a loan, the interest rate may be prohibitive. Banks almost always charge higher rates for what they perceive as higher risk loans.

Credit unions may be more likely than traditional banks to take a chance on nonprofits. Because they’re also nonprofit entities and don’t pay income tax, they may extend loans with lower interest rates.

Other possibilities

Although credit cards usually are much easier to obtain than a loan, avoid using them to finance any large amount you can’t repay quickly because the interest will add up fast. If your project is relatively small, a crowdfunding campaign through GoFundMe, Donorbox or a similar online platform, may be a less expensive way to go — particularly if you already have a large online following.

Also take a look at nonprofit loan funds — such as the Nonprofit Finance Fund or Propel Nonprofits — that specialize in servicing charities. They may offer a range of products (including lines of credit and emergency and mortgage loans) at low to no interest and favorable terms.

A tax-exempt bond issued by your municipality, county or state government is another possible option. Tax-exempt interest rates generally are two to three percentage points lower than on loans from other sources and the Internal Revenue Code generally allows nonprofits to use the proceeds of a bond issue to further their stated charitable purpose.

However, the process can be lengthy, complicated and expensive. Bond issues usually involve stringent financial disclosure requirements and tighter overall scrutiny. A line of credit or term loan can be approved in a matter of weeks, but bond financing can take six months to a year before funds are received.

Don’t despair

If none of these options seem viable, don’t despair. We can help your nonprofit by preparing financial documentation for lender scrutiny and suggesting the best possible approaches for obtaining the financing you need. Contact us to discuss your organization’s questions at Online Stewardship or our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2023


Best practices for effective board meeting minutes

If you think the recorded minutes of your nonprofit’s board meetings are just a formality, think again. Meeting minutes can become critical documents if, for example, your organization is audited by the IRS or your directors are sued due to a board decision. That’s why it’s important that your minutes capture the right information and are reviewed by a second set of eyes before they’re finalized and distributed. Keep the following in mind.

Level of detail

First and foremost, board meeting minutes should be clear and focused, yet detailed. Certain information is fundamental — for instance:

  • The meeting’s date and time,
  • Whether it was a special or regular meeting,
  • The names of directors attending, as well as those who didn’t attend, and
  • All board actions, including motions, votes for and against, and resolutions.

Some information may not seem critical to include, but it is. Your meeting minutes should indicate whether board members left and/or re-entered the meeting (for example, in the case of a possible conflict of interest) and whether anyone abstained from voting or discussions. Also include any action items and who will be responsible for carrying them out. And summarize key points from reports to the board and alternatives considered for important decisions. If you aren’t sure about how much detail to include in your minutes, consult legal counsel.

Reviewing for clarity and accuracy

The individual assigned to take minutes at your organization’s board meetings should produce a straightforward report that summarizes actions taken and describes the basis for any decisions. Simple and unambiguous wording is best. But if meeting minutes are so abbreviated that only the keenest insider can understand them, your leaders aren’t meeting their obligation to be open and transparent.

So have a second person review your meeting minutes. That person and the original writer should ask whether the report would make sense if they hadn’t been in the meeting or were unfamiliar with the issues. The minutes then should be ready for inspection by the next board meeting or within 60 days of the date of the original meeting, whichever comes first. IRS Form 990 asks whether there is “contemporaneous,” or timely, documentation of the board and board committee meetings in minutes or written actions.

Throughout this process, keep in mind that if your organization is ever audited by the IRS, your meeting minutes likely will be among the first documents requested. In addition, any attachments, exhibits and reports generally are considered part of the minutes and will also be reviewed. Finally, meeting minutes can serve as evidence in court.

Public documents

The bottom line: Board meeting minutes are public documents and may, at some point, be reviewed by anyone from auditors to major donors to insurers. Make sure your minutes will be ready for their close-up.  Contact us to discuss your organization’s questions at our parent company, Patrick & Raines CPAs. You may reach out to Lynn by calling (904) 396-5400 or email her at Lynn@onlinestewardship.com or office@CPAsite.com.

© 2023


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