All posts by Mike Sperling

NEWSBYTES

Nonprofit leaders share AI concerns

Artificial intelligence (AI) seems to be everywhere these days, including in nonprofits. A recent survey by Stanford University’s Institute for Human-Centered Artificial Intelligence and Project Evident explores the current use of, interest in and opportunity for AI in the social and education sectors. The survey’s results show that AI already has a considerable presence there; nearly half of funders and nonprofit respondents said their organizations use some type of AI. And three out of four funders and nonprofits believe their organizations would benefit from using AI more.

The most common barrier to adoption is bias in AI systems, followed by challenges in envisioning how nonprofits can use the technology and a lack of internal expertise. In addition, nonprofits also are concerned about the cost.

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Donor-advised funds are here to stay

Grants from donor-advised funds (DAFs) to charitable organizations totaled $52 billion in 2022 and contributions to DAFs reached $85 billion, an all-time high, according to the 2023 Donor-Advised Fund Report from the National Philanthropic Trust (NPT). Data for the NPT’s 2024 report is currently being collected.

Even with these astounding numbers, NPT data from 1,151 charities shows that DAFs actually grew at a slower pace than in previous years. Nevertheless, nonprofits should keep their eye on them. Here’s what your organization needs to know if it’s considering DAF funds.

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Cyber protection — Why and how to “pen test” your systems

The global cost of cybercrime is expected to soar in coming years, and nonprofits are far from immune to the threat. The rising role of technology, especially in an age of increased remote work, leaves organizations of all kinds vulnerable to data-related crime.

You may take some comfort in the controls you’ve implemented, but will they actually work with future cyberintruders? Penetration (pen) testing can help you preempt intrusions and attacks by identifying weaknesses so you can proactively address them.

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NEWSBYTES

What to know about Charity Navigator’s updated methodology

newsletterNonprofit evaluator Charity Navigator — which has rated nearly 210,000 organizations as of Fall 2023 — has made significant changes to how it calculates its scores. Its Accountability & Finance scores now are calculated based on defined nonprofit characteristics. Larger, donor-funded charities will undergo an in-depth evaluation, while organizations that are smaller or not funded by donors will be assessed with a more-focused set of metrics. Charity Navigator also is removing metrics such as administrative expense ratios, fundraising ratios and program expense growth metrics.

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The benefits of cost allocation

newsletterCost allocation can be a cumbersome task for nonprofits, especially organizations with many activities. However, the process is critical for multiple reasons, and it’s worth reviewing your cost allocation practices regularly to ensure they’re working as intended.

Why make allocations?

Cost allocation often refers to how an organization’s costs are assigned to its programmatic, administrative and fundraising activities to determine the actual costs of those activities. While it’s obvious how some costs (usually direct costs) should be allocated, indirect costs (for example, management compensation, utilities, rent and other overhead) can prove more challenging.

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Is it time to hire a CFO?

newsletterLet’s face it: Most nonprofits are founded on a passionate belief in service. This doesn’t always include a passion for numbers. To fill this gap in financial expertise, nonprofits often hire chief financial officers (CFOs). But do all nonprofits — including small organizations — need one?

CFO defined

Generally, the CFO (or “director of finance”) is a senior-level position charged with oversight of an organization’s accounting and finances. This person works closely with the executive director, audit/finance committee and treasurer and serves as a business partner to program heads. In general, the CFO reports to the executive director and board of directors on the organization’s finances, analyzes investments and capital, develops budgets, and devises financial strategies.

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SECURE 2.0 opportunities — Take advantage of 2024 and 2025 updates

newsletterPresident Biden signed the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act into law in late 2022, but much of the wide-reaching retirement legislation is being phased in over time. There are some significant changes in 2024 and 2025 that may help nonprofit employers recruit and retain employees. Here’s what you need to know.

New for 2024

Several changes took effect January 1, 2024, including:

Matching for student loan repayments. Younger employees can sometimes miss out on their employers’ matching contributions to retirement plans because of their student loan obligations. SECURE 2.0 allows employees to receive matching contributions to retirement accounts based on the qualified student loan payments that they have made.

Nonprofits can make matching contributions to a 403(b) plan, 401(k) plan or SIMPLE IRA if contributions based on student loan payments are available to all match-eligible employees.

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NEWSBYTES

Watchdog launches campaign to measure equitable funding

Candid, the nonprofit evaluation organization that resulted when GuideStar and Foundation Center merged, has announced a new data-driven campaign to encourage equitable funding practices. “Demographics via Candid” is designed to provide a standardized benchmark measurement, reduce inefficiencies and cut down on duplicate information requests from funders.
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What nonprofits need to know about alternative investments

With today’s economic uncertainty, businesses, including nonprofit organizations, are increasingly considering the use of alternative investments. But these investments can have unexpected tax implications for nonprofits. Here’s what you need to know before your organization moves ahead.

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