What Can A Financial Professional Do for Non-Profits?

Submitted by Neville Associates on July 30th, 2021

As of 2017, about two-thirds of all nonprofit organizations in the U.S. had annual budgets of less than $1 million.[1] For these non-profit organizations where every penny has a purpose, having the services of a financial professional can be incredibly valuable. Below, learn more about the different ways a financial professional can help non-profits succeed.

Fiduciary Oversight

If you're a member of a non-profit's board of directors, it is likely that you are serving the board in a fiduciary capacity. Fiduciary responsibility comes with a host of obligations, and keeping up with the most recent fiduciary regulations can be a full-time job in itself. Unfortunately, ignorance of the law is no defense here—a breach of your fiduciary duty, even if inadvertent, could possibly put your personal assets at risk.[2]

By adding a financial professional with non-profit experience to your team, you can help make sure that your fiduciary responsibilities are being carried out by someone with the experience to manage them. And even if the financial professional you choose is not a fiduciary, they can generally guide you and other members of the Board to ensure that the decisions you make are in the business's best interests.[3]

Tax Credits and Programs

Though non-profits already enjoy favorable tax treatment under the federal tax laws, there are sometimes hard-to-find credits and programs that may be available. For example, you may be able to advertise to prospective employees that their position will qualify for Public Service Loan Forgiveness of their federal student loans.[4] Because your financial professional should have specific experience in working with non-profits, they will be able to use this experience to find you all the "free money" to which you may be entitled.

A Balanced Budget

Many non-profits serve charitable missions, which can make financial decisions—especially those involving what services, positions, or salaries to cut—difficult. Having an impartial third party review your budget and make suggestions or tighten up inefficiencies can help preserve your capital and reduce waste. Your financial professional may also have suggestions on investment opportunities or other ways to increase your income and maintain certain services.[5]

Fiduciary Education

Institutional knowledge can be key when it comes to maintaining a non-profit's focus. A financial professional can work with you to create a culture of fiduciary education for your non-profit, where your board members, employees, and volunteers alike are continually reminded of the importance of reducing waste and innovating toward greater efficiency.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

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[1] https://trust.guidestar.org/what-does-the-nonprofit-sector-really-look-like

[2] https://millerlawpc.com/examples-of-breach-of-fiduciary-duty/

[3] https://nonprofitinformation.com/reasons-accounting-financial-experience...

[4] https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service

[5] https://www.councilofnonprofits.org/tools-resources/budgeting-nonprofits

Sources

https://millerlawpc.com/examples-of-breach-of-fiduciary-duty/
https://nonprofitinformation.com/reasons-accounting-financial-experience...
https://www.councilofnonprofits.org/tools-resources/budgeting-nonprofits