
George Washington was unanimously elected President when the Senate and House met for the first time on April 6, 1789 in New York, the nation’s first capital, to count ...
There are many not-for-profit organizations (NFP) with an independent Foundation whose function is to obtain contributions to support certain unbudgeted activities of the NFP. Usually the Foundations hold substantial assets that generate cash flow that is also used to support the mission of the NFP. The entities have separate Boards, management and obtain separate tax returns and separately audited financial statements. A question frequently arise about whether the boards should be merged. My partner Ruben Cardona, CPA, recently met with the separate boards of related entities and here are some of his considerations.
Many times there are multiple bodies serving different functions for the same end result. The above illustrates two entities, but many times there are much more than that and questions arise continuously about the efficacy of some of the obvious duplication.
Ruben also recommended that legal counsel should be consulted before any actions are taken, and to also verify his recommendations. The above illustrates some of the issues that need to be considered, and while any number of entities more than one usually has some duplication, many times there are sound reasons for the structure. This needs to be reviewed when a new purpose, activity or fund raising method is decided upon causing consideration of a separate entity; where substantial fund raising for a specific long-term purpose will be initiated; or there is or will be an endowment fund or substantial restrictions of funds and the funds will be separately and independently maintained or managed. Further, regardless of the structure, it should be reviewed annually by the Board to determine if the present structure is still necessary
If you have any questions about the above or any NFP governance issues you are welcome to reach out to me at emendlowitz@withum.com or Ruben Cardona at rcardona@withum.com.
George Washington was unanimously elected President when the Senate and House met for the first time on April 6, 1789 in New York, the nation’s first capital, to count ...
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