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INSIDE THIS ISSUE
- Heveron & Company Does It Again!
- Advertising by Charities Is Unrelated Business Income…Maybe…
- AI Lies with Confidence
- A Free Tool to Enhance Your Nonprofit’s Financial Efficiency
- Tracking the Effects of Executive Actions
- Navigating Wage and Hour Laws: Expert Guidance Essential
- Key Performance Indicators
- WebStar Winner: ProBonoPartner.org
NON PROFIT GPS
HELPING TO KEEP YOU ON THE RIGHT ROAD
Summer 2025
Issue 134
Heveron & Company Does It Again!
For the third year in a row, Heveron & Company was recognized by the New York State Council of the Society of Human Resource Management as a “Best Company to Work for in New York” in the 15-99 employee category. For the second year in a row, Heveron & Company was number one on this list.
We are very proud of this recognition and pleased that it translates to excellent staff retention, which results in quality client services.
Firm leader Stephanie Annunziata was also recently recognized by the Rochester Business Journal as an expert in the finance and insurance category, and the firm itself was recognized by the Rochester Business Journal among the best women-owned businesses.
Advertising by Charities Is Unrelated Business Income…Maybe…
Advertising by charities is generally considered Unrelated Business Income, however, nonprofit sponsorships are not advertising and are not generally considered Unrelated Business Income. The difference can be subtle because neither the Internal Revenue Code nor the interpreting regulations provide a definition of advertising. Regulations do define what constitutes acknowledgment of the sponsor (not advertising).
Advertising includes qualitative or comparative language (e.g., savings, value) or other incentives to purchase or use the company’s services, products, or facilities. It also acknowledges the sponsor with their name, logo, product lines (including a general description), or contact information (address, phone numbers, or websites).
The expectations of the sponsor or advertiser are also a factor. When nothing more than a negligible business benefit is expected, the transaction generally is not Unrelated Business Income. When more than a negligible benefit is expected, that generally is considered Unrelated Business Income.
Other exceptions exist, such as when an advertisement is substantially related to the organization’s exempt purpose (like educational materials for students) or when it’s not regularly carried, such as in an event brochure. However, a yearbook or similar publication that would be published once a year but used as a reference throughout the year would be treated as regularly carried on.
AI Lies with Confidence
AI is an amazing resource that can be a timesaver and help you gain access to information which might be difficult if not impossible to find through other means. Additionally, it may produce efficiency in research, planning, and other applications.
Generative AI can also assist with the creation of emails and letters, blog posts, policies, spreadsheet calculations, brainstorming, formula creation, research summarization, and foreign language translations. However, we need to recognize the risks and concerns associated with generative AI which include but may not be limited to accuracy, confidentiality, and security or privacy.
You and your staff should be aware of these by keeping the following tips in mind:
• Be aware that AI-generated information can be outdated, misleading, or entirely fabricated.
• Maintain strict confidentiality regarding your organization’s, staff’s, and clients’ affairs when using generative AI.
• Never submit any organizational or client data into AI platforms.
• Thoroughly review all AI-generated content for accuracy before using it for work purposes.
• Cite the use of AI in any documents it helps create.
By understanding both the benefits and the risks and by keeping these guidelines at the forefront, your team can utilize AI more responsibly.
A Free Tool to Enhance Your Nonprofit’s Financial Efficiency
A valuable resource has come to our attention that could benefit your nonprofit’s financial operations. A commercial organization serving various nonprofit and other entities is offering a free downloadable guide titled “Non-profit Financial Efficiency.”
This ebook contains actionable steps designed to optimize your financial strategy through key areas such as digital transformation, leveraging data-driven insights, and fostering collaborative planning across your teams.
If these areas are of interest to your organization, you can find this free guide by searching online for “transforming nonprofit finance strategy.”
We discovered this resource through Smart Brief for the Nonprofit Leader, a newsletter from BoardSource. It’s worth exploring to see if its insights can help your organization move toward greater financial efficiency and better support your mission.
Key Performance Indicators
Charity Navigator has provided some key performance indicators for charities. They include:
• Average program expense ratio: the relationship between program expenses and total expenses, with a target of 70%
• Liabilities to assets: should be less than 30%
• Fundraising efficiency: ratio of fundraising expenses to total contributions, with a target of less than 20%
• Working capital (current assets minus current liabilities) compared to total expenses, with a target of 6 months
Several other performance indicators may be meaningful for your organization. Charity Navigator suggests program expense growth, government funding percentage, employee satisfaction, and donor retention.
It can be valuable to track trends in these indicators, but there’s also concern in the nonprofit sector about relying too heavily on ratios like program expense or administrative expense percentages.
Nonprofit organizations need sufficient administrative staff and tools. A recent nonprofit workforce survey revealed a post-COVID vacancy rate over 74%. Leaders highlight pressure to keep costs low, impacting frontline staffing, and emphasize that not all overhead is created equal. For instance, analysis improving client services is crucial overhead.
In fact, nonprofit leaders previously urged an end to the “overhead myth.” Search that phrase for a fact sheet with relevant statistics and talking points.
Tracking the Effects of Executive Actions
The National Council of Nonprofits has been tracking the impact of recent executive orders on nonprofit organizations. They have a concise PDF that tracks executive orders including their implications, status, and any related documents.
They keep the list up to date to help nonprofits assess risk with funding they have been receiving or expecting, as well as risks to programs they may be carrying on.
Search “Tracking the Effects of Executive Actions-National Council of Nonprofits” to get the most current chart and related resources, including a checklist for conducting a federal funding risk assessment.
This organization also provides information on the nonprofit workforce shortage and the status of tax legislation that might help or challenge nonprofits.
They also offer a sample whistleblower protection policy. If you don’t have one or want to evaluate yours, check that out as well.
Navigating Wage and Hour Laws: Expert Guidance Essential
Wage and hour laws run the spectrum from straightforward to intricate, highlighting the need for legal counsel with expertise in this area.
IRS-approved charities are exempt from federal unemployment tax. However, state laws vary. In New York, charities are generally not exempt from state unemployment tax, but they may opt to self-fund.
Self-funding might reduce costs but requires careful analysis, as the organization must reimburse the state for any benefits paid.
Certain exceptions exist. Compensation to disabled individuals in a sheltered workshop can be exempt. Also, elementary and high school students working for nonprofits during the regular school year may be excluded.
NON PROFIT GPS
HELPING TO KEEP YOU ON THE RIGHT ROAD
Published by Heveron & Company CPAs
260 Plymouth Avenue South
Rochester, NY 14608
WebStar Winner: ProBonoPartner.org
The ProBono Partnership provides legal services and educational resources for nonprofit organizations. They assist with tax exemption and dissolution, corporate governance, contracts and leases, and employment matters like exempt versus nonexempt workers and employee versus contractor status.
They also offer periodic workshops and on-demand articles and webinars.
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