The Burk Donor Survey

Posted on October 7 2015 by admin

The 2014 Burk Donor Survey was released earlier this year. This survey is a study that was done by fundraising expert Penelope Burk, which analyzes the changes in donor giving each year. More importantly, it gives insight to how donors intend to give in the upcoming 12-month period. This survey asked 23,000 donors in the U.S. and Canada about some of the factors that made them decide to start giving and what will cause them to stop their support. Some findings include:

Donors can give more. Donors gave over $335 billion; yet overall, 40% of donors surveyed said they could have given more. Fifty percent of those under the age of 35, which is the youngest age bracket, are the ones who are the most willing to give more.

Donors are donating smarter. Fifty-seven percent of those surveyed are spending more time than they did five years ago researching a nonprofit before they give for the first time or renew their support. Donors are paying attention to how much nonprofits are spending on administrative costs and fundraising. Seventy-five percent are more than likely to stop their support of an organization whose fundraising costs are too high and 81% said they would stop supporting an organization if their general administrative costs are high.

Donors intend to give more. Fifty-five percent of donors expect to give the same amount as they did in the prior year and four times as many donors are expected to give more, not less. This is good news for nonprofit organizations.

Donors don’t want token gifts. Seventy-two percent of the donors who received a plaque or some type of display as an appreciation are either throwing it away or storing it where they are not seen. Most donors who receive this type of appreciation gift often question the cost of the gift, which, in turn, causes them to wonder if their donation is being spent well. Those surveyed noted that they would much rather receive a simple thank you letter or a phone call.

By Sharlynn Garza, CPA

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Involvement of Nonprofit Board of Directors

Posted on October 1 2015 by admin

Recently I came across an article by Accounting Today that discussed a survey of over 100 not-for-profit leaders who were asked to gauge what they felt about their board members and those members’ involvement. Most spoke positively of their board but reported some challenges broken down below:

  • 15% of the leaders felt the board carefully observes their dashboard performance compared to their peers.
  • 28% thought their board members are highly strategic in providing guidance.
  • 29% said the board connects the organization to external sources.
  • 47% said board members provide their professional capabilities.
  • 45% said the board closely monitors investments.
  • 61% believed their boards are engaged but don’t micromanage.
  • 57% said directors closely monitor expenditures.
  • 54% said board members are active in attending board meetings.
  • Roughly half of those surveyed said board members follow the overall performance of the organization but fail to look into specific programs.

On the positive side, 73% of the nonprofit leaders said their board members are passionate about the mission of the organization. It should be an organization’s strategy to work on involving their board or keeping their board involved. I believe board members actively participating in the organization and its strategies benefit the not-for-profit greatly because it generates better accountability and transparency while at the same time motivating the not-for-profit to be innovative in advancing the organization in its charitable interests.

By Rebecca A. Gornto

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Internal Control Policies Reported on the 990

Posted on September 15 2015 by admin

Lately I’ve received several questions about the policies and procedures listed on page 6 Part VI Section B, three of which are a written conflict of interest policy, whistle blower policy, and a document and retention policy. The concern always seems to be, what if the organization doesn’t have these policies in place? The IRS does not require an organization to have any or all of these policies.

However, having these policies is considered a best practice for a non-profit organization. The length and detail for each policy would depend on the size and complexity of the organization.

A written conflict of interest policy should be reviewed and completed by at least the board of directors and key employees, if not all employees to help identify any potential conflicts. Once they have been identified, there should be a process to review the impact of the conflict. You may determine that there is no impact to the organization or, for example, a board member may abstain from voting on a particular topic.

A written whistle blower policy can take several forms. A few examples are to have a compliance officer or a third party hotline to take anonymous calls. It is equally important to ensure employees are aware this policy exists and are reminded on a regular basis.

A written document and retention policy can help ensure that employees and volunteers follow consistent guidelines on any accounting, legal, or internal needs of the organization. There are documents that need to be kept permanently and others that can be disposed of after certain time periods, typically a range of 7-10 years.

If you’re not sure how to start creating these policies, there are several websites (, that have examples to use as a starting point. We also have a few templates on our website at

By Kristin Cullen, CPA

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Why Your Nonprofit Needs a Mobile Site

Posted on September 10 2015 by admin

It should be no surprise that the use of cell phones has increased. While it has been the source of a lot of talk over the years, it appears we’re finally at a tipping point.

As shown below, Emarketer created a chart to show the shift in search volume in the U.S. since 2011. Their results concluded that in 2015 mobile usage is expected to be on par with desktop usage. In 2016, mobile usage is expected to exceed desktop usage.

Nonprofit Mobile

Additionally, donor behavior has changed significantly in recent years. In 2013-2014, the following year-over-year digital trend data was compiled from a group of nonprofits:

  • 28% year-over-year increase in revenue generated via mobile device transactions
  • 42% year-over-year increase in donations made from mobile devices
  • 35% year-over-year increase in web traffic going to mobile devices

As mobile usage increases, the trends will only continue to get larger.

Lastly, research has shown that 50% of all mobile users have dropped a brand because of a poor mobile experience. They did not interact with the brand in another way; instead, they just stopped engaging in those brands. This is pertinent for nonprofits to consider with the increase in donations made through mobile devices.

With these significant changes going into effect, is your nonprofit truly able to sit this one out?

By Kristian Haralson

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Accounting for Joint Activities

Posted on August 26 2015 by admin

Determining whether an organization conducts joint activities and properly accounts for these activities can be challenging at times, as it can be subjective depending on the fundraising activity. In our experience, we have encountered not-for-profit organizations with joint activities that could partially be divided into separate expense categories.

Not-for-profits have three categories to allocate expenses that include:

  1. Program—money spent on organization’s mission,
  2. Fundraising—the costs in raising money for the mission, and
  3. Management and General—the cost of managing the organization.

Many clients strive to allocate a majority of their expenditures towards their program mission in efforts to decrease total fundraising expenses. Fundraising costs can include advertising, telemarketing, publications, direct mail, and other solicitation activities; however, when these activities include a call to action, the organization may be able to report them as joint activities. The costs that are determined to be incurred for joint activities could be partially allocated to the specific program expense, and in part, to fundraising or management and general expenses.

The rules for an activity to be recognized as joint costs require criteria relating to “purpose, audience, and content”. These criteria must be met in order to allow partial allocation to a function of the program mission. The call to action must include a purpose directed at an audience that promotes the organization’s goal (not just the goal of raising money). Management must evaluate joint activities for the criteria to ensure that the costs are properly accounted for under the accounting standards. Determining when expenses meet the definition of joint costs is not a black and white decision. Interpretation and judgment are usually factors that go into the determination.

By Danielle T. Roisom

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Annual Giving USA Report Released

Posted on August 4 2015 by admin

The Giving USA Foundation (a public service initiative of The Giving Institute) has released their annual Giving USA Report on Philanthropy in collaboration with The Indiana University Lilly Family School of Philanthropy. The Giving USA report compiles and analyzes data on charitable giving in the U.S in order to identify trends that can be useful to nonprofit organizations. The following is a summary of the sources of the $358.38 billion in charitable giving disclosed in the 2014 report:

(Numbers in billions of dollars and rounded)

  • $258.03 (72%) Individuals
  • $53.76 (15%) Foundations
  • $28.67 (8%) Bequests
  • $17.92 (5%) Corporations

Seventy-two percent of donations came from individual donors in 2014. This was noted in the 2013 report as well. In fact, very little changed in the overall mix of donor sources from 2013 to 2014. Bequests increased from 7% to 8% of the total, and Corporations decreased from 6% to 5%. Giving USA notes that the total increase in charitable giving was 7.1% from 2013 to 2014, and this was primarily driven by an increase in donations by individuals.

In addition to the breakdown of contribution sources, the Giving USA Report also highlighted some other interesting information:

  • Average annual donations made by U.S. households reached $2,030 in 2014. It is also estimated that giving by both itemizing and non-itemizing individuals increased by 6% and 4.1%, respectively.
  • The 13.7% increase in corporate giving is attributed to the 2014 increase in GDP and corporate pre-tax profits.
  • The nonprofit categories seeing the highest increases in giving are arts, culture and humanities organizations, as well as environmental and animal organizations. These categories saw increases between 7 and 9%. The human services subsector also saw growth, at 3.6%.
  • Total giving as a percentage of GDP is at its highest since 2006.

More information regarding the Giving Institute and the Giving USA report can be found here. A two page summary of the highlights from the full report can also be obtained at no cost on the Giving USA website.

By Paul Biggs

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What Percent of My Donation Goes to the Cause of the Organization?

Posted on July 21 2015 by admin

I can’t count the number of times friends and family have asked me what percent of their donation goes towards the cause or programs of a charitable organization. There’s a common argument that the amount of expenses listed in the program column of the Statement of Functional Expenses on the Form 990 is the percent that supports the cause. This column is used to represent the amount of expense that was spent directly for the not-for-profit’s mission. (You can find this by searching for the not-for-profit’s tax return on and reviewing Page 10 of its 990).

However, I would disagree with that argument. There are several expenses that are not allowed to be considered program expenses on the Form 990 that the entity is required to incur to continue as an organization. For example, a not-for-profit’s audit or accounting expense cannot be considered a program expense, yet these services are required to properly account for the operations of the entity. Although this doesn’t directly support the mission (such as purchasing food for a food bank or supplies for a crisis center), the expense for accounting indirectly supports the organization as a whole and without incurring this expense, they couldn’t continue to operate. In addition, the office supplies used by staff for general expenses, the office space for management, and the salaries of management sometimes do not directly relate to the mission. However, without these supporting services, the entity could not continue with its mission.

There’s a third column of expenses on the Form 990 not-for-profits have to report: fundraising. These expenses relate to the amount spent to hold fundraising events or send out mailings to the public to solicit donations to support their mission. Even though these expenses don’t directly go to the mission of the organization, they directly result in additional funding to be spent for the entity’s mission. After all, without getting their name known, how can they get additional funding?

Charitable not-for-profits have several laws and regulations they must abide by. Many are required to have audits where internal control is reviewed and assessed for deficiencies in proper financial control. They also are governed by a board of independent directors who oversee the operations.

There are so many people and animals that are supported by not-for-profits and it would not be possible without donations from you. It’s important to understand where your money goes but I would recommend looking at the statistics of the number of people served or the number of success stories to assess if you want to support that organization.

I always advise looking at a not-for-profit’s tax return prior to donating to assess where the money is spent. However, don’t overthink the base numbers. If there are amounts or descriptions you’re unsure of, ask your CPA to assess them. Overall, let’s keep supporting charitable organizations. Without our donations, they couldn’t help those in need!

By Samantha E. Mahlen, CPA

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Developing Diverse Funding Sources

Posted on July 14 2015 by admin

To acquire a diverse set of funding sources, a nonprofit organization first has to be sure that the community has a positive impression of the organization and mission. Recently, I came across a publication issued by the Horatio Alger Association called, “Ten Traits That Make Nonprofits Great”. After reading through this infographic, I believe that trait Number 4 —“Develop Diverse Funding Sources” — is one of the most important traits in creating a successful nonprofit organization, as more services can be provided with increased funding. When acquiring new funding sources, we see that some sources are more available or recognizable than others. I have realized that funding sources are not consistently used by nonprofit organizations, as some smaller charities may not know or be familiar with the various funding prospects that are available. This infographic showed the following examples of funding sources that charities can utilize:

  • Individuals
  • Local Foundations and Businesses
  • Special Events
  • Investment Income
  • Government Grants
  • Payment for Services

The publication has listed great examples of various ways to diversify funding sources. It is important to have a balance of diversity while maintaining the organization’s focus on the funding sources that are most effective for the success of the organization. Considering advice from local public relations, marketing and advertising firms can help with increased community support and your organization’s development success. Being able to utilize a combination of funding sources can help with the increase of contributions for the organization, which in turn creates more growth, opportunities, and overall potential. It is best to take your organization’s funding sources into close consideration to help with identifying trends and other unique funding resources. The above insights can provide you with a good sense of an effective funding mix for your particular organization. Make sure to read the publication from the Horatio Alger Association for other ways to make your nonprofit great.

By Danielle Roisom

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Complimentary Not-For-Profit CPE Offered by Henry & Horne, LLP

Posted on July 7 2015 by admin

Did you know Henry & Horne, LLP offers complimentary continuing professional education (CPE) credits to our not-for-profit clients and friends!? To top it off, you also get a free lunch or breakfast!

Each month, one of our professionals presents various topics that are related to your not-for-profit organizations. We call it “The Learning Series,” and sessions are held every second Thursday of the month in our Scottsdale location for lunch at 11:30AM and every third Thursday in our Tempe location for breakfast at 7:30 AM. The same topic is presented at each location during the month, so you can choose to attend the location and time that is most convenient for you. If you really enjoy what you hear, and think it would be beneficial to have your board or other employees hear the presentation, then we will set up a time to re-present the presentation just for your organization at no charge. Most of our topics relate to technical accounting issues, but we also mix up the rotation by bringing in some legal, insurance or fundraising experts from time to time.

The Learning Series is also great opportunity for networking and meeting some other colleagues in the not-for-profit community who have similar interests and issues you may be dealing with at your organization. To sign up to receive monthly invitations for the next CPE opportunity with us and to find out more information, click here.

Additionally, we’re always looking for new topics as we plan our upcoming calendar. Is there a particular not-for-profit accounting topic you’d like to learn more about? We’d love to hear from you!
By Michelle Housman

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Releasing or Modifying Permanently Restricted Contributions – Is this Allowable?

Posted on June 30 2015 by admin

Recently I was talking to a client of mine about some of their permanently restricted net assets when he blurted out, “I wish I could just get rid of these little, old amounts that have been around forever! They’re more trouble than they’re worth!” Before I could get my reply out, he followed up with, “I’m not being serious, of course. I know that’s the whole point of permanently restricted contributions. I’ve come to terms that they’ll never go away!”

Actually, there is a way to make certain small amounts of permanently restricted contributions “go away,” assuming they’ve been on your books for a couple of decades or longer. It’s a provision in the Management of Charitable Funds Act, which is the law that governs expenditures of charitable endowments that the State of Arizona follows … and it’s not as difficult as you might think!

First of all, I should clarify what I mean when I use the words “little, old contributions.” Little means less than $50,000. Old means 20 years or more. If your contribution in question meets those requirements, and if meeting the restrictions is impracticable or wasteful, you can submit a plan of release or modification to the Attorney General for approval. There is an automatic approval after 60 days, as long as the Attorney General doesn’t object to the plan within that timeframe, and – of course – the contribution must be used in accordance with the charitable mission of the Organization.

Organizations with funds that do not fit into these criteria must petition the courts to modify or release the restriction.

By Jessica Puckett Moulder, CPA, CFE

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Our Not-For-Profit niche is a strong team of experienced professionals who focus their work in the not-for-profit industry. Henry & Horne has been a stable local firm in Arizona for 55 years, and the Not-For-Profit niche has a long history of working with charitable organizations and other tax exempt organizations of all kinds. Our focus is exceptional client service and building relationships with our clients to promote communication throughout the year, not just at the time of the annual audit. We highly value and are very proud to be helping those who help others.

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