Valuing Donated Goods: What Nonprofits Need to Know

Nonprofits frequently receive noncash donations such as clothing, equipment, artwork and other tangible items. While these contributions can be valuable, determining how to assign an accurate value is not always simple. Without a clear approach, nonprofits may face challenges with financial reporting and donor documentation.

Understanding how valuation works can help organizations apply consistent and reliable methods when recording donated goods.

Understanding Fair Market Value

In most cases, donated property is recorded at fair market value (FMV), which represents the price an item would sell for in an open market. For example, donated clothing should be valued based on what similar items of the same age, condition and quality would sell for, not their original purchase price.

Any restrictions placed on the donated property must also be considered. If a donor requires that an item be used in a specific way, such as displaying artwork rather than selling it, that limitation can reduce its value. The same applies to real estate or other assets that come with use restrictions, which can significantly affect their market worth.

Key Factors That Influence Value

Several factors help determine fair market value:

• Original cost or selling price. This reflects what the donor paid or what the item could sell for. However, its relevance decreases over time as market conditions change.

• Comparable sales. Looking at the selling prices of similar items is often one of the most reliable ways to estimate value. Factors such as similarity, timing, sale conditions and overall market trends can all influence how useful these comparisons are.

• Replacement cost. This considers how much it would cost to acquire or produce a similar item. While helpful, replacement cost should align reasonably with market value and not exceed what a buyer would typically pay.

Special Rules and Exceptions

Certain situations require additional consideration. For example, businesses that donate inventory are generally limited to deducting the lesser of the item’s fair market value or its cost basis. If the cost of the inventory was not previously included in accounting records, the allowable deduction may be zero.

Large donations may also trigger additional IRS requirements for the donor, particularly when claiming tax deductions. These rules often involve documentation or formal appraisals, depending on the value and type of property.

Taking a Consistent Approach

Valuing donated goods requires more than a quick estimate. Nonprofits should apply a consistent method that considers market conditions, relevant restrictions and applicable rules.

Accurate valuation supports reliable financial reporting, helps donors meet tax requirements and reduces the risk of future scrutiny. By establishing clear processes, nonprofits can handle noncash contributions with greater confidence and transparency.

How Many Board Members Does Your Nonprofit Really Need?

As nonprofits navigate ongoing challenges such as economic uncertainty, evolving donor expectations and emerging technologies like AI, one foundational question remains: what is the right size for your board?

There is no one-size-fits-all answer. The ideal board size depends on your organization’s needs, resources and governance goals. Understanding the advantages and limitations of both smaller and larger boards can help you build a structure that supports effective leadership and long-term sustainability.

Weighing Small vs. Large Boards

Smaller boards often benefit from stronger communication and closer collaboration. With fewer members, meetings are typically easier to schedule, discussions stay focused and decisions can be made more efficiently. Research suggests that groups of roughly five to eight individuals tend to make effective collective decisions.

However, smaller boards may lack the range of perspectives and expertise needed to fully evaluate complex issues. In addition, responsibilities may fall heavily on a limited number of members, increasing the risk of burnout.

Larger boards offer different advantages. With more members, responsibilities can be distributed more evenly, which can improve sustainability and reduce pressure on individual directors. A broader board may also bring more diverse professional experience, from financial and legal knowledge to community engagement and fundraising connections.

That said, larger boards can face challenges with engagement. Members may feel less connected to decision-making, and coordination can become more complex. Administrative demands also increase, requiring more effort to manage communication, onboarding and logistics.

There Is No Perfect Number

While state laws typically establish a minimum number of directors, most nonprofits have flexibility beyond that requirement. Determining the right size involves evaluating several factors, including the responsibilities expected of board members, the skills and expertise needed, fundraising expectations and the organization’s internal resources.

A board that is too small may struggle to meet its obligations, while one that is too large may become difficult to manage effectively.

Some organizations prefer an odd number of directors to avoid tie votes. However, tie-breaking mechanisms such as a board chair’s vote can address this concern. In many cases, a split decision is a signal that further discussion is needed rather than a problem to solve quickly.

Designing a Board That Supports Strong Governance

Adjusting board size requires careful planning. Expanding a board is generally easier than reducing it, as asking members to step down can be sensitive and may require changes to governing documents.

Many nonprofits find it helpful to define a range for board size instead of a fixed number. This approach provides structure while allowing flexibility as the organization grows or evolves.

Ultimately, the right board size is one that enables meaningful participation, informed decision-making and effective oversight. By aligning board structure with organizational needs, nonprofits can strengthen governance and better support their mission over time.

Timekeeping for Nonprofits: Compliance, Clarity and Smarter Management

Nonprofits often manage multiple programs, funding sources and staffing models, which makes accurate time tracking a critical function. In addition to internal needs, organizations must comply with wage and hour laws and may face additional reporting requirements from grant providers. With the right systems in place, timekeeping can support both compliance and better decision-making.

Understanding Legal and Funding Requirements

Most nonprofits are required to track hours worked by hourly employees. While salaried employees are not paid based on hours, maintaining records of their time can still be important, especially in the event of disputes related to compensation or exempt status.

Under the Fair Labor Standards Act, exempt employees typically include executive, administrative and professional roles that meet specific salary and duty thresholds. Even so, documenting their time can help protect the organization and ensure proper classification.

Time tracking also plays a role in compliance with the Affordable Care Act. Organizations with 50 or more full-time and full-time equivalent employees must offer health coverage to at least 95% of eligible staff or risk penalties. Employees who average 30 hours per week or 130 hours per month are generally considered full-time.

From an accounting standpoint, nonprofits that follow Generally Accepted Accounting Principles must allocate payroll expenses across programs and supporting activities. These allocations often serve as the foundation for assigning additional costs and may also apply to expenses tied to unrelated business income.

Grant funding adds another layer of responsibility. When funding is tied to specific programs or reimbursable expenses, accurate time records are essential for proper documentation and reporting.

Although tracking volunteer hours is not typically required, doing so can provide valuable insight. It helps demonstrate the full scope of program support, highlights the value of volunteer contributions and supports recognition efforts.

Building a Reliable Timekeeping Process

An effective timekeeping system starts with collecting accurate data as early as possible. Employees should record their time consistently, whether through daily entries or automated systems such as digital time clocks.

Clear policies are key. Once expectations are established, all staff should follow the same process to ensure consistency and reliability.

Tracking time becomes more complex when employees work across multiple programs or administrative functions. In these cases, organizations should aim to capture and allocate time as close to real time as possible. If daily tracking is not practical, nonprofits can collect data during representative periods and apply those percentages across similar timeframes.

Using Time Data to Improve Decision-Making

Accurate timekeeping does more than meet compliance requirements. It provides leadership with a clearer understanding of how staff time is distributed across programs and operations.

With reliable data, nonprofits can better evaluate program costs, refine budgets and make more informed strategic decisions. Over time, strong timekeeping practices can improve resource allocation and support long-term planning.

When Accounting and Development Disagree on Financial Reporting

Differences between Accounting and Development teams can create more than just workplace frustration within nonprofit organizations. When the two departments are not aligned, the consequences can affect financial reporting accuracy, compliance requirements, and even the organization’s ability to secure or retain funding.

Improving collaboration between these teams often requires clearer processes and stronger communication.

Understanding the Different Financial Perspectives

One of the main sources of tension is that Accounting and Development frequently record financial activity using different approaches.

Accounting teams typically follow Generally Accepted Accounting Principles (GAAP) when recording contributions, grants, pledges, and donations. Development teams, on the other hand, often track fundraising activity using a cash-based approach within their donor management systems.

Because of these differences, both teams may produce financial figures that appear inconsistent even though each set of records is technically correct.

For example, imagine a donor fulfills a pledge in February 2026 that was originally made in December 2025. Development may record the payment in February because that is when the funds were received. Accounting, however, would typically recognize the revenue in December when the pledge was originally committed.

As a result, February reports from the two departments may look different, even though both are accurate according to their respective reporting methods.

Strengthening Collaboration Between Departments

To minimize confusion and maintain accurate reporting, Accounting and Development teams should regularly reconcile their records. Monthly reconciliation meetings can help ensure that both teams understand how financial transactions are being recorded and reported.

Communication is especially important when dealing with grants. If Development fails to notify Accounting about new grants or funding agreements promptly, Accounting may not be aware of the reporting requirements attached to those funds. In some cases, this could lead to compliance issues or even the loss of grant funding.

Likewise, Accounting depends on timely information from Development to ensure pledges and grants are recorded in the correct financial periods according to GAAP standards. Without this coordination, nonprofits may encounter challenges during audits or financial reviews.

Creating a Clear Communication Process

Regular meetings can help bridge the knowledge gap between the two departments. Accounting should explain what information it requires, when it needs that information, and why timely reporting matters.

At the same time, Development teams should keep Accounting informed about upcoming fundraising activities. This might include pending grant applications, major gift commitments, or planned capital campaigns.

Development should also provide periodic reports detailing the status of different funding sources, including donations, grants, and pledges. This is particularly important for contributions received through multiple payments, as Accounting may need to apply discounting or other adjustments when preparing financial statements.

Formalizing Expectations When Needed

If communication challenges persist, nonprofits may need to establish formal procedures to guide collaboration between departments. Written policies and standardized processes can help ensure that information is shared consistently and on time.

Clear expectations not only improve financial reporting accuracy but also strengthen compliance and protect the organization’s funding sources over the long term.

Enterprise Risk Management for Nonprofits: A Practical Approach

Nonprofit leaders sometimes assume that enterprise risk management (ERM) is only relevant for large organizations with extensive resources. In reality, nonprofits of all sizes can benefit from a thoughtful approach to managing risk. A well-structured ERM framework does not need to be complex or expensive. Even organizations with small teams can use ERM to direct their attention and resources toward the issues that matter most.

Understanding the Purpose of ERM

Enterprise risk management is essentially a structured process for identifying and addressing the risks that could threaten your organization’s mission. The goal is not to eliminate every risk. Nonprofits regularly take calculated risks when launching programs, expanding services, or pursuing new opportunities to support their communities.

Instead, ERM helps leadership evaluate risk across the entire organization. By taking this broader perspective, leaders can determine which risks require the most attention and which are acceptable in pursuit of their mission.

For example, a nonprofit may be comfortable accepting some reputational or programmatic risk when developing new initiatives. However, the same organization may be far less willing to tolerate risks related to financial stability, regulatory compliance, or governance. An ERM framework clarifies these priorities so decisions are consistent and aligned with organizational goals.

Importantly, ERM can scale to fit your organization’s size. Smaller nonprofits do not need advanced technology platforms or dedicated risk departments. What they do need is a shared understanding of risk and a simple process for identifying and addressing it.

Core Steps in Building an ERM Framework

Financial advisors or risk consultants can help guide nonprofits through the ERM process. However, many organizations can begin building their framework internally. The first step is establishing a governance structure that defines responsibilities for managing risk. Leadership and board members should also determine the organization’s overall tolerance for risk and demonstrate support for the process.

From there, nonprofits should assemble a team that represents multiple perspectives across the organization. Even if your nonprofit has a small staff, the goal is to ensure a variety of roles and experiences are represented.

Once a team is formed, four key steps help establish a functional ERM framework.

1. Identify Potential Risks

Risk identification works best when it involves multiple viewpoints. Conduct interviews, surveys, or discussions with staff, leadership, board members, and even clients to uncover risks that might otherwise go unnoticed.

A helpful starting question is simple: What events or challenges could prevent us from fulfilling our mission?

Risks may arise from many areas, including financial oversight, regulatory compliance, leadership transitions, cybersecurity threats, program outcomes, public perception, or stakeholder trust.

2. Organize Risks into Categories

After identifying potential risks, grouping them into categories can improve clarity and efficiency. Categorization helps leadership avoid treating each issue in isolation.

It can also reveal patterns. For instance, several risks might stem from a common root cause, such as outdated technology systems or insufficient staffing levels.

3. Prioritize the Most Significant Risks

Prioritization is especially important for smaller nonprofits that operate with limited resources. Each risk should be evaluated based on two primary factors: the likelihood that it will occur and the potential impact if it does.

This process helps leadership focus on risks that could significantly disrupt the organization’s mission, financial health, or public credibility.

4. Develop Mitigation Strategies

Once key risks are identified and prioritized, the next step is determining how to respond to them. Leadership typically has three main options:

• Accept the risk if the cost of mitigation exceeds the potential benefit
• Reduce the risk through improved controls, policies, or oversight
• Avoid the risk by modifying or discontinuing certain activities

In many cases, effective mitigation does not require complicated systems. Simple improvements such as clearer responsibilities, stronger documentation, improved communication, or additional oversight can significantly reduce risk.

ERM Is an Ongoing Process

Enterprise risk management should not be treated as a one-time project. As nonprofits grow and evolve, new risks emerge while existing ones change.

Regularly reviewing key risks, monitoring relevant indicators, and adjusting strategies helps ensure the organization’s risk tolerance remains aligned with its goals. With a practical structure and leadership commitment, even smaller nonprofits can build and sustain an effective ERM program.

Turning Donor Data Into Stronger Relationships With DRM

Customer relationship management tools have changed the way many businesses stay connected with their buyers. Nonprofits can get the same kind of lift from donor relationship management (DRM) systems, which bring information about supporters into one place and make it easier to see who gives, why they give, and how to keep them engaged over time. When your donor data is organized and accurate, it also makes life easier for your nonprofit audit services team when they review contribution records and reporting.

What Donor Relationship Management Really Does

DRM (often called “nonprofit CRM”) is about building and maintaining one-to-one relationships at scale. Instead of scattering notes across spreadsheets, email threads, and sticky notes, you track each person’s:

• Contact details and communication preferences

• Donation amounts and timing

• Event attendance, volunteer history, and committee roles

• Conversation notes and follow-up tasks

Without that shared view, staff members only see parts of the picture. One person might know a donor is interested in planned giving, another might know they prefer text messages, and someone else may have heard that they care deeply about a specific program. A good DRM system ties all of that together so you can tailor outreach and avoid missed opportunities.

Making DRM a Habit, Not Just a Tool

The real payoff from donor relationship management comes when everyone who interacts with supporters uses it consistently. That usually means:

• Giving appropriate staff access to the database

• Providing simple, practical training on how to enter and update information

• Setting expectations that important donor interactions are recorded promptly

Each meeting, phone call, or quick conversation at an event becomes a chance to refine your understanding of a donor’s interests and capacity. Over time, that living record supports better fundraising strategy and smoother California nonprofit audit services, because contribution histories and acknowledgments are easier to trace and verify.

Examples: Monthly Giving and Legacy Gifts

A well-maintained DRM platform can help you grow both recurring and long-term giving.

For a monthly sustainer program, you can segment out people who:

• Have given several times in a year

• Respond positively to email or direct mail appeals

• Match demographic patterns that correlate with recurring donations

Instead of inviting every donor, you design a focused campaign for those most likely to say “yes” to an automatic monthly gift. That keeps your costs down and respects the time and attention of donors who are better suited for occasional appeals.

For planned and major gifts, robust profiles help you spot supporters who:

• Have a history of generous one-time gifts

• Own appreciated assets or complex portfolios

• Have expressed a deep, long-term commitment to your mission

With that insight, your team can introduce options such as charitable remainder trusts or other structured gifts in a targeted, respectful way rather than guessing who might be interested.

Industry resources on nonprofit donor management echo this point: the more effectively you use data to understand donors, the easier it is to match the right giving opportunities to the right people.

Choosing a Donor Relationship Management Solution

There are many donor management platforms on the market, from general CRMs with nonprofit add-ons to tools built exclusively for charities. When comparing options, most organizations focus on:

• Monthly or annual cost and how pricing scales

• Core functions such as gift entry, receipting, and reporting

• Integration with online giving forms, email tools, and accounting systems

• Data migration support and training for staff

• Quality of ongoing customer support

Whatever you choose, make sure the system aligns with how your team already works or wants to work. A slightly simpler tool that people genuinely use will beat a feature-packed platform that only one person understands. As you refine processes around donor data, resources like EWA’s article on how new tax rules apply to your nonprofit’s donors can help align your receipting and documentation with IRS expectations.

What To Do Next

1. Assess how you track donor information today.
   List your current tools for storing donor data, from spreadsheets to email lists, and identify gaps where important information is getting lost or duplicated.

2. Define what you need from DRM before you shop for vendors.
   Prioritize the features that matter most, such as reporting for the board, integration with your website, or better support for recurring and planned gifts.

3. Connect donor data practices with your overall governance and audit picture.
   Talk with your auditor about how a stronger DRM system can support cleaner contribution records, better internal controls, and smoother nonprofit audits.

Donor relationship management software is not a magic wand, but when your team uses it consistently, it becomes a powerful foundation for fundraising, stewardship, and transparent reporting.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or accounting advice.

Fiduciary Duty and Broker-Dealer Audit Services: What Your Board Should Really Understand

“Fiduciary” is one of those words that gets used a lot in financial and governance circles, but not always with a clear, shared definition. At its core, it describes a legal and ethical obligation to act in someone else’s best interests. For broker-dealers, that means your directors and key leaders must consistently put the firm’s customers, investors, and regulatory obligations ahead of personal convenience or gain.

When boards take that responsibility seriously and pair it with specialized broker-dealer audit services, the annual audit becomes more than a compliance exercise—it’s a way to test whether fiduciary responsibilities are truly embedded in how the organization operates.

What “Fiduciary” Means in Practice

Fiduciary duty isn’t just a label; it’s a standard of conduct. Board members and senior officers are expected to:

• Make informed decisions based on reliable information

• Ask hard questions when something doesn’t look right

• Protect client assets and firm capital

• Avoid using their position for personal benefit

In other words, they must behave as responsible stewards, not just figureheads. A board that understands this role is far better positioned to oversee risk, challenge weak processes, and support your broker-dealer audit services team when issues surface.

The Classic Fiduciary Duties: Care, Loyalty, and Obedience

Governance experts often break fiduciary duty into three related obligations:

• Duty of care: Directors must devote sufficient time and attention to the firm’s affairs, review information carefully, and seek outside expertise when needed.

• Duty of loyalty: They must put the organization’s interests ahead of personal or competing business interests, including those of friends or family.

• Duty of obedience: They must ensure the firm follows its governing documents and applicable laws and regulations.

Resources available at nonprofit board fiduciary responsibilities make the same point: regardless of sector, people in positions of authority must act as trustworthy guardians of the organization’s mission and assets.

Conflicts of Interest: When Fiduciary Duty Is Tested

Conflicts of interest are where fiduciary duty often gets complicated. A conflict can arise when:

• The firm does business with a company in which a director has a financial stake

• A board member’s family member or close associate stands to benefit from a decision

• A director sits on multiple boards with overlapping interests

Even the appearance of self-dealing can damage trust with clients, regulators, and investors. That’s why strong boards adopt clear conflict-of-interest policies that require:

• Full disclosure of potential conflicts

• Recusal from discussion and voting when a director is conflicted

• Documentation showing how the remaining board members evaluated and approved any transaction

During an audit, these policies—and how they’re applied—help demonstrate that the firm’s decision-making process respects fiduciary obligations. A firm-wide culture of disclosure makes it much easier for auditors to see that control environments are working the way they should.

How Audit and Governance Work Together

Audit readiness isn’t just an accounting issue; it’s a governance issue. A board that understands its fiduciary responsibilities is more likely to:

• Insist on timely, accurate financial reporting

• Support internal control improvements rather than resist them

• Take audit findings seriously and follow through on remediation plans

That’s where a full-service firm can be especially valuable. When your auditors understand both the technical standards and the realities of board governance, they can help directors see how their fiduciary responsibilities connect to specific audit procedures and regulatory expectations. An offsite explainer, such as this article on broker-dealer audits, can also help board members connect the dots between day-to-day oversight and what auditors are looking for in practice.

What Your Board Can Do Next

If you’re not sure your board fully understands its fiduciary role in the context of broker-dealer audit services, consider:

1. Reviewing fiduciary duties at the board level. Add a brief refresher on care, loyalty, and obedience to your next meeting agenda or annual board training.

2. Updating your conflict-of-interest policy. Make sure it covers related-party relationships, disclosure expectations, and how recusals are handled and documented.

3. Connecting governance to the audit plan. Invite your audit firm to walk the board through how fiduciary responsibilities show up in the audit scope and reporting.

By aligning fiduciary education, conflict-of-interest processes, and your audit strategy, your board can move beyond checking boxes and truly support the long-term health and credibility of the firm.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or accounting advice.