Harrington Group Blog

As most of us (if not all of us) know by now, filing tax returns on time is essential to avoiding penalties and additional fees. April 15th, the dreaded Tax Day, is the usual deadline. That is, unless April 15th falls on a weekend or a Holiday, in which your forms would be due on the following business day.

Coming off of a very unique and, most would say, challenging year, some of us may not be quite ready to file our tax returns. 2020 came with many surprises and the last thing we want to add to that list is a penalty from the IRS. Luckily, we all have the option to file a tax extension if we fear the current deadline. It’s fairly easy to file an extension but there are some important points to stay aware of. Here is what you need to know, in order to pull it off flawlessly.

How much extra time does a tax extension grant?

For an individual, the answer is 6 whole months. When you submit your request for an extension of time to file your tax returns, you will be assigned a new due date of October 15th (woo!). Same as the current deadline, if October 15th falls on a weekend or a Holiday, your due date will be the following business day.

For a nonprofit organization, you can choose either 3 months or 6 months.

How do you request a tax deadline extension?

For an individual filing a tax extension, the process includes submitting a single form to the IRS: Form 4868 “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. This form can be sent via mail or e-filed using an online service. As an individual, you will not have to wait for the IRS to approve your request. You will be granted an automatic extension of your tax deadline. It’s important to note that you MUST submit the form 4868 by the April 15th deadline, in order to get your extension without penalty.

For a nonprofit organization filing a tax extension, the proper form to use would be the IRS Form 8868 “Application for Extension of Time to File an Exempt Organization Return”. This form will request an automatic 3 month extension but can also be used to apply for an additional 3 month (non-automatic) extension – taking it up to a total 6 month extension. It is important to keep in mind that for nonprofit organizations, the IRS will want a “reasonable cause” for filing an extension. As 2020 was a crazy year, and many businesses/organizations were understaffed (especially those that are non-essential), it is safe to say that there is much reasonable cause floating around.

When do you have to pay your taxes?

It is very crucial to note that although filing a tax extension grants you extra time to turn in all your paperwork, it does not grant you extra time to pay your fees. If you owe the IRS money, you should still submit payments by the April 15th deadline. There is ONE little loophole here – as long as you pay 90% of your fees by the April deadline (and you filed a tax extension request on time) then you may pay your outstanding balance by the extended October 15th deadline. This will not result in any penalties or extra fees.

Either way, make sure you file your taxes by your deadline (whether April 15th or an extended deadline) in order to avoid a failure-to-file penalty fee. Even if you cannot afford to submit your payments in full by your filing deadline, don’t skip it. The failure-to-pay penalty is not as expensive as the failure-to-file penalty.

Happy Tax Season!!!

       As we kick off a fresh year, Harrington Group is very excited to announce the admittance of Oswaldo Torres to the 4th partner of the company. Ozzie has been with Harrington Group since 2009, when he was brought on as a Senior Auditor. His extensive background, including work for a regional public accounting firm conducting audits of manufacturing and apparel entities, as well as providing accounting and consulting services to a vocational college in Commerce, CA, allowed him to shine in this position – ultimately earning him a promotion to manager in 2015. As manager, Ozzie has been leading audit engagements for a variety of nonprofit clients, using his expertise in financial and operational areas and in evaluating internal control systems. He has excelled, maintained admirable work ethic and does so with grace. For these reasons and more, Ozzie is the perfect person to round out the partner positions here in 2021.

        As newly appointed partner, Ozzie will be bringing a fresh perspective to this role. A few of Ozzie’s many strengths include taking initiative and a drive for continuous learning. Over his career with HG, he has initiated research on new and emerging accounting and audit topics. For example, Ozzie researched the new revenue recognition standards and did in-house training on the topic. In addition, as the 2020 Pandemic hit, he researched funding sources available for our nonprofit clients because he wanted them to have information on accessing the Payment Protection Program funds, so they may continue to provide essential services and not have to worry about financial limitations. He also plays a big brother type roll here in our Harrington Group family, as he mentors junior staff, encourages them to perform their best and advises them in the same way that he would advise his own siblings. Through this mentorship role, Ozzie takes pride in his ability to connect with junior staff, allowing them to feel comfortable expressing both their career aspirations and reservations. He can ultimately relay this information to the rest of the partners, so that the HG family as a whole can continue to be successful today, tomorrow and in the foreseeable future.

        Let’s get to know Oswaldo Torres a little better – here are some insights into his accomplishments, his interests and into what makes him the Ozzie we know and love!

• Ozzie’s favorite part of working for HG is “working with talented colleagues who enjoy seeing our clients succeed in making positive differences in our communities.”

• When asked his favorite part of accounting, Ozzie responded – “I enjoy the logic and stories that numbers communicate. In addition, meeting new people is also an enjoyment. These are the reasons why I chose auditing as my career path.”

• When asked his feelings on ending a challenging year with admittance into partnership, Ozzie’s heartfelt answer was – “Bittersweet! A lot of profound changes have happened in the world, like the pandemic and civil unrest, and within HG, the sudden passing of one of our dearest colleagues Vilitati Bikai.”

• Outside of his professional pursuits, Ozzie enjoys attending various sporting events, coaching his son’s little league teams, venturing out to new cycling trails and spending time with his friends and family.

• Ozzie is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants

• He graduated from California State University with a Bachelor’s degree in Business Administration


All in all, we are THRILLED to have Ozzie in a leadership role here at Harrington Group. He has always brought many strengths to the table and he continues to push our company and all of our employees to their best. From all of us here in the HG family we say…

CONGRATS OZZIE!!

It’s that time of year again…you guessed it; tax season is upon us. We may still be a few months away from deadlines but if you’ve ever heard the phrase “on time is late and early is on time”, well that applies to taxes as much as anything. The sooner you can send your (hopefully organized) tax documents, expense reports and receipts over to your accountant…the happier your accountant will be! Plus, you’re setting yourself up for success, getting the work out of the way and won’t suffer any delays.

We’re sure you’re all seasoned vets in tax prep by now but just in case you need a little refresher, we have your back. Start gathering the following line items to get the ball rolling on your taxes because the sooner that you start, the sooner you’ll be done and won’t have to worry about them again until next season!

• Do you have a nonprofit organization? If so, your first step is to determine if you even need to file at all! Nonprofits that have less than $25,000 in gross receipts are not required to file an annual tax return. Instead, you will simply file the form 990-N.
• Did your organization hire any vendors throughout the year who require a 1099 form? This would include LLCs, S Corps or C Corps but not Corporations. Make sure to request W9s from the appropriate vendors right at the beginning of the year, so that 1099s may be filed in a timely manner!
• Do you have your expenses organized? Are you using a secure cloud-based system, easily accessible by your accountant? Are your categories separated and have you made the necessary notes? Your accountant will need a clear breakdown of your expenses.
• Along with the organized expense breakdown, do you have the receipts to go along with this information? Are they clean and categorized and clear? Or are they crumbled in a ball, full of coffee/food stains and in disarray? Spend a little time separating these out into a system that is easy for your accountant to understand.
• If you are a nonprofit organization, do you have all of your donor receipts and a breakdown of any donations that you received throughout the year? Gather it…and make it organized!

There you go! If you can sort out all of these details in a timely manner and send them off to your accountant, you will be well on your way! Additional tips for a happy accountant include cookies, treats, snacks…you get the idea :)

Happy Tax Season!

Here at Harrington Group, we pride ourselves on being one big happy family. We respect each other, work well together and year after year, we bond. Part of this bonding is our annual holiday party, a tradition of celebration for a successful year and a quick break before we embark into another year of accounting. This year has obviously looked quite different than years passed, as we have all spent most of our time out of the office, away from one another and adjusting to these socially distant changes. Part of adapting to these changes meant re-evaluating our approach to our annual holiday party. We did just that!

Enter...Zoom. Saving the day (again). Zoom allowed us to gather, without actually gathering. Each of our staff received a goodie basket to their homes, which included all the materials to make an epic gingerbread house. Also included were some additional treats, to detour anyone from trying to eat their gingerbread house in the process (kidding but there were treats). We ate together, drank together, laughed together and we did this very holiday themed activity together. Although our interactions were through a screen, it did not take away from our holiday joy or our company bonding. We even did our annual spinning of the wheel, where staff have a chance to win some fun bonuses!

As 2020 comes to a close, we have taken a look back to recognize that it was a challenging year. In this reflection, we are also grateful to say that we have not lost our connection as a strong family unit, we have not lost our connection to our clients and as a society, we have not lost connection to each other. As challenges come along in life and we face them head on, it only makes us stronger and more inventive. We are thankful for these challenges, the chance to grow and for our continued support of one another. Our annual holiday (Zoom) party was a chance us to express that to one another and we are headed into 2021 full force!

Running a nonprofit organization differs from running a for profit organization in many ways. One of these distinct differences is the importance of transparency from nonprofit organizations. Both audits and reviews are a way to provide a third-party analysis of your organization’s finances, therefore achieving this required transparency. More often than not, audits are a requirement for funding (although there are times you may be able to get away with a review).

Although audits and reviews are very similar, they do have some key differences. So, how do you decide which option is best for your organization? The answer will depend on the size of your organization, the resources that you have available and what kind of funding you receive.

Let’s look at some key differences between audits and reviews:

1. Cost

Audits are going to be more expensive than reviews (about double the price). This is because they are more comprehensive and time-consuming. An audit may run an organization anywhere between $10K-$20k. This may seem like a big hit but will provide ultimate transparency to your donors, as well as federal and state governments. If your organization has a gross revenue that surpasses $500k, an audit is likely the best choice for you. If you fall below $500k, you may be able to get away with a less expensive review.

Generally, the larger and more complex your organization is, the more likely it is that you will require an audit. It could also be a worthwhile strategy to rotate between audits and reviews on alternating years.

2. Depth

Although audits and reviews are both providing a third-party analysis, an audit is ultimately providing a more in-depth analysis. The auditor provides an expert level deep dive into your documentation and finances. They conduct extensive research and testing, providing the highest level of assurance. Basically, they leave no stone unturned. On the other hand, a reviewer will only analyze a certain percentage of documents. They may be able to identify some problem areas but overall, they are not identifying a full scope of red flags nor are they extensively testing your financial controls.

3. Additional Services

Audits, unlike reviews, often include a number of additional services. An auditor will go the extra mile in order to develop an understanding of your organization’s internal control environment. The additional services include walk-throughs of your office space, physical inspections and observations. They will also confirm balances and transactions with outside parties, unearthing an additional layer of transparency. In addition, auditors will conduct tests wherever they deem necessary. Reviews do not include any of these additional services.

Conclusion

In order to determine whether your organization would be better suited for an audit or for a review, make sure to take these key differences into account. You will need to assess your reasoning for an audit/review, the size and complexity of your organization, your budget and your unique internal environment. If you feel that an audit is a requirement for your specific type of funding, know that you can at least inquire to see if a review would be acceptable (even if just on a bi-annual basis).
 

So, the Holidays have arrived. Thanksgiving is here, which means Black Friday and Cyber Monday are creeping around the corner. With the added challenges of 2020, Cyber Monday is sure to blow black Friday out of the water this year. I’m sure you’ve already got a slew of advertisements crowding your e-mail inbox and that you’re being bombarded by side bar marketing highlighting all of the % off deals.

For anyone who is trying to responsibly manage their finances, for those who may have been financially impacted due to the pandemic or even for those who are trying to reduce their clutter, the excess of sales can be an unwelcomed temptation. Buying anything simply for the fact that it’s a “great deal” isn’t a good reason to be buying it. This is not responsible budgeting. However, taking advantage of the opportunity to buy something (that you have good reason to be purchasing) at a discounted rate, as opposed to full price, is saving money! This is the determining factor when deciding if your purchase was an impulse buy or a strategic buy.  

Our advice to you, is that you stick to strategic buys this Cyber Monday, if you plan to participate in the discounts and deals. To help you achieve that healthy budgeting guideline, we have compiled some tips to avoid impulse shopping on Cyber Monday:

1. Make a Shopping List

Pretty straight forward, right? If you go in with a plan, you will be able to refer to your list every time you have to question yourself. To the question “Is this an impulse purchase?” you should be telling yourself “Yes”, if it’s not on your list.

Make your list as specific or as vague as you like, as long as it includes all the types of purchasing that you set out to do. For example, you can just add a line item that says “Christmas gift for Dad”, instead of specifying what the gift will actually be.

2. Create a Budget

It can be easy to get sucked into deals, especially when there are web banners from your favorite stores telling you that if you spend $200, you get $50 off….buy one, get one free…free shipping on all orders over $100…ect ect ect. You may end up spending more money than you set out to just over the thrill of snagging that deal. This is why a budget is helpful. If you have a projected amount that you want to spend, writing that number down ahead of time will help you control your purchasing.

3. Replenish your Staples

To get the most out of Cyber Monday deals, you must plan ahead. Think about items that you will always need (AKA your staples) and try to avoid purchasing them throughout the year. Use Cyber Monday as your opportunity to replenish these items. Some examples include socks, underwear, bras, plain tank tops or t-shirts, boxers, jeans and even towels or linens. Using these deals to your advantage, will ultimately save you money because replenishing your staples throughout the year at full price is more expensive.

Not only is this strategy saving you money, it’s also giving you that satisfaction of shopping on Cyber Monday and you don’t have to fight off the urge to spend money. You are simply channeling that into strategic purchases. Healthy budgeting!

4. Fill Your Shopping Cart and Leave it

Online shopping can be addicting, and you inevitably start to fawn over all of the options of things you can buy with the click of a button. It can be easy to drop items into your cart that catch your eye…but that you don’t really need. Even having a budget doesn’t always keep you in check. A further step of accountability that you can take to avoid impulse purchases is to “walk away” from your shopping cart and come back to it later. These days, Cyber Monday deals are running for multiple days and up to a week or more. So, you will not miss out on savings by taking a break to think about it.

Sometimes, when you come back to that cart after the rush of shopping dopamine has settled, you will notice there are some items that you can probably do without. Do a quick edit and then move forward!

5. Create a Buddy System

Having a friend or family member give you their opinion before you click that “place order” button can help you avoid some unnecessary purchasing. The people closest to you in your life will know you the best and therefore their opinions may be insightful. If you are about to purchase $250 worth of clothes and your best friend points out that you already bought new clothes recently, that your closet is too full and that you always talk about wanting to save money…you may be able to take a step back and think twice about spending that money. On the other hand, if you’re buying $150 worth of staples, that would have otherwise cost you $300-$400 throughout the year, having your best friend affirm that this is a good use of money will make you feel even more validated to go through with it.

Conclusion

All in all, we want you to make the most of your money and create healthy budgeting habits. Living beyond your means, due in part to the allure of materialism and the addiction of impulse purchasing, can easily put you into a cycle of debt. Debt causes stress and stress impacts your life in many unfortunate ways. You CAN walk the path of a debt free lifestyle, where you are financially free and independent! It starts with strategic Cyber Monday shopping (if any at all).

2020 is a year that has brought about a lot of changes and they just keeping coming. Beginning this year, the IRS has split the 1099 tax form into two separate forms: Form 1099-NEC and Form 1099-MISC (because we all needed another tax form added to the list). Let’s break down the differences, as outlined on the IRS website, so that you can be prepared for the upcoming tax season:

Form 1099-NEC

This form is for reporting N(on) E(employee) C(ompensation). If your organization has paid out at least $600 or more in compensation for services to a nonemployee (such as an independent contractor), in fees or in commissions, then you may be required to file a 1099-NEC form. There are four conditions, outlined by the IRS, that constitute the filing of a 1099-NEC. If you meet the following conditions, then you should be prepared to file this new form during this upcoming tax season. The form will be due to the IRS, as well as the recipient, by February 1, 2021.

1. You made the payment(s) to a nonemployee
2. You made the payment(s) for services (not merchandise or other)
3. You made the payment(s) to an individual, partnership or other unincorporated entity
4. You made the payment(s) to a recipient totaling at least $600 or more during the tax year

Remember, if payment(s) for these conditions do not total at least $600, you generally do not need to file a Form 1099-NEC.

Form 1099-MISC

This form is aimed at all other miscellaneous service payments (OTHER than nonemployee compensation). The IRS outlines the following conditions, which indicate that payments should be reported on the Form 1099-MISC:

1. Payments of at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest
2. Payments of at least $600 or more in the following categories:
a. Rents
b. Prizes and awards
c. Other income payments
d. Cash paid from a notional principal contract to an individual, partnership, or estate
e. Fishing boat proceeds
f. Certain medical and health care payments
g. Crop insurance proceeds
h. Payments to an attorney (other than fees for services)
i. Section 409A deferrals
j. Nonqualified deferred compensation

The Form 1099-MISC is also due to the recipient by February 1, 2021 but not due to the IRS until March 1, 2021 (for paper filing) or March 31, 2021 (for electronic filing).

CONCLUSION

It’s important to make sure you are aware of these changes, in order to ensure correct filing of your organization’s 2020 tax documents. Be sure to request a W-9 from your independent contractors and service providers ahead of tax season. You may even request this form upon hiring them for work. This will ensure that you have all their necessary tax information in case you need to file a 1099 for their services. Pay attention to all filing deadlines and reporting requirements for this new form change.

A Virtual Office

Working from home is an isolating experience and can be a drastic transition for those who are used to commuting to an office building 5 days a week. Ensuring that employees do not fully lose the social aspect of an office environment is key in keeping your staff engaged. Investing in the best video conferencing and collaboration tools will give you the foundation that you need to facilitate a virtual office.

Using video conferencing, so that everyone can still interact “face-to-face” (even through a screen) will help combat the variety of distractions that come with working from home. It may also give employees the motivation to maintain their morning routines, which include getting dressed and ready for work. Putting on business appropriate attire and getting out of PJs is a mental step into work mode.

Create Opportunities to Socialize

Humans are social creatures and interaction with one another, even virtually, will help to ease the isolating experience of working from home. Once you have established a virtual office environment, you can start to outline some strategies and formats for both teamwork projects and non-work socializing.

Grouping employees together in work pods can be an effective way to facilitate a feeling of teamwork. This also helps to create an internal system of accountability, as members of the same work pod can keep each other on track with completing tasks and keeping the flow of productivity moving forward. You can choose to keep the same pods together or do a monthly rotation to create new pods. As this strategy is meant to relieve the stress of isolation, it would be best to make decisions based on the satisfaction (or lack thereof) of your employees. Try sending out surveys for feedback, which will help you determine if your staff enjoys rotating work pods, keeping the same pod or even if they find the teamwork aspect to be adding more stress and would prefer to work alone.

Encouraging and facilitating opportunity for non-work socializing will also help to ease the pains of isolation. Launching daily video conference “social hangouts” would give employees the opportunity to chat with one another about non-work topics. Think virtual coffee breaks, virtual lunch breaks or virtual post-work happy hours. Every employee can be sent an invitation to join and choose to accept or decline. Mixing in some activities can also add a little excitement. Perhaps you have an employee who would love to lead a lunch time yoga session. There may be a group who is interested in playing virtual games or someone who would love to host virtual karaoke. This would be another great opportunity to survey the office! Having a forum where employees can all post and talk to one another, will allow ideas to flow and help to keep everyone engaged with one another.

Friendly Competition

Employee of the month might be a little overdone (or not?) but the concept has a strong foundation. A little friendly competition can keep things exciting and positive recognition for the winners acts as a morale booster. I mean, who doesn’t love games??

If you have chosen to group employees into work pods, you can create a pod verses pod monthly challenge. The winners get some sort of prize or incentive. This is a page taken straight from psychological analysis and the “Incentive Theory of Motivation”, which suggests that behavior is best motivated through reinforcement or incentives, in this case positive incentives. The game or challenge can be work related, or non-work related. You can also do an every man for himself challenge, or allow employees to choose teams or a teammate.

Most work from home employees, experiencing loneliness and isolation, suffer from the sheer monotony of living the same day over and over. Ultimately, engaging their brains and peaking the interest of your staff, will increase their energy and focus when it’s time to get back to work. Giving them this variation will help to keep them from falling into a slump of low-energy, which decreases productivity.

Managerial Support

Due to the fact that every home situation is different, it is crucial to ensure that your staff has the freedom to speak up to a manager, should they feel the need. Whether its personal or professional, it is in your best interest to support your employees during this unexpected shift in work/life balance. HR is of the utmost importance.

This support system should also include technological support. Not all staff members will have the same home set up, WIFI capabilities or proper equipment to carry on with their expected quality of work. If this home set up is to fall solely on the shoulders of each employee, they may not have the financial means to acquire the necessary tools. It would be wise to take direct interest in the home office of each employee, whether that means sending them equipment, fully compensating them or partially compensating them, it could mean the difference in overall productivity.

Conclusion

The fact of the matter is that we have been thrown into an unexpected challenge, forced to adjust the way we conduct business and have been given no timeline for return to normalcy. The experience of working from home is a new experience for many people who have been shifted over from office buildings. Many people may not have chosen office jobs, if they previously knew it would mean working from home every day. This puts pressure on employers and organizations to step up and make it more enjoyable, for the sake of employee retention and overall happiness of staff members.

Keep your employees engaged through an increased focus on internal socializing, some friendly competition and an open doors policy on managerial support.

Vilitati Bikai was a beloved manager at Harrington Group, as well as a cherished husband, father, son, and friend. His recent and unexpected passing sent a ripple effect of sorrow throughout our team and we are still searching for our footing, as to how we will move forward, lacking his presence.

Vilitati was an exceptional man who became the light of every room that he entered, spreading kindness and cultivating genuine connections. His trademark smile, coupled with his humble demeanor, made Vili (for short) a magnet for friendships and uplifting conversations. His presence in our offices, in his family and among his friend group will be greatly missed and is irreplaceable.

In remembering our dearest Vilitati, we are honored to share some words from those who were closest to him. His father, Simione Bikai, shared with us that Vilitati “was a very humble and obedient child during his young days. He was a very good and intent listener and a meticulous follower of instructions.” “He was always hardworking, in all areas of life”. This description captures many of the qualities that made him such an impactful part of the Harrington Group team. His strong communication skills were a constant asset to both clients and fellow employees. His work ethic shone through in every task that he took on, as he worked hard to ensure that all his clients were served well, which consistently upheld his reputation of being both trustworthy and reliable. Vilitati was known to strive for nothing short of excellence and for going above and beyond what was expected of him.

His life-long friend Fr. Leronio Vodivodi, who knew Vilitati for over 30 years, described him as “a leader who consistently looked out for others”, explaining that he was “his brother’s keeper”. This is the Vilitati that we know and love. The big brother of our Harrington Group family, constantly looking out for our team, our clients and truly for any being with whom he could make a connection. Vilitati welcomed you with his heart-warming smile and truly embodied everything we cherish about the nonprofit community.  

Inoke Qarau, who works alongside Vilitati’s father Simione as one of the Fijian representatives on the Pacific Islanders Study Committee of the United Methodist Church, a cause very near and dear to the Bikai family, migrated to the United States from the Fiji Islands. Inoke explains that the committee was tasked with the study and writing of a comprehensive plan of the Pacific Islanders community nationwide, in which “Vilitati assisted in logistics to begin his selfless and unrivaled service to the community, until his untimely passing”.

Vilitati’s commitment to his community is clear. This is a big reason why he thrived as an accountant in the nonprofit sector, as a teammate, as a family member and as an overall compassionate human being. Vili put others before himself.

Vilitati was heavily involved with his church and with the community at large. To give an idea of the scope of his commitment to the service of others, as well as his overall work ethic, we would like to share a glimpse of his service here:

Church
• Steward & Treasurer of Palo Alto United Methodist Church Fijian Ministry
• Treasurer of the Fijian Caucus of the United Methodist Church of the California & Nevada Annual Conference
• Treasurer of the Fijian National Caucus of the United Methodist Church
• Treasurer of the Pacific Islanders Ministry of the United Methodist Church of the California & Nevada Annual Conference
• Treasurer of the First Fijian Fellowship of the United Methodist Church Inc. (Youth Ministry)
• Served as a Board of Trustees member of the California & Nevada Annual Conference
• Advisor to Fijian communities of faith as they explored ways of legitimizing their fellowship (forming 501C3 status) or acquiring properties
Community
• Treasurer of the Province of Tailevu USA, Inc. (scholarship program for tertiary education in Fiji that began in 2013 with 25 helped and 5 graduates, and awarded $110K FJD in scholarships)
• Treasurer of Home Island of Gau USA.
• Financial advisor to various community groups and alumni organizations (Marist Brothers High School Alumni, Duavata Club, etc.)

Words cannot truly explain what a special person Vilitati was, nor can they accurately convey the deep loss that is felt without his presence. He was a man who wore many hats and impacted many lives in positive ways. He is an ongoing inspiration for those in the nonprofit community, for members of our team and for his own circle of loved ones. Although we cannot physically work with him anymore, his spirit will live on within our company, as we will always remember to strive for the same level of excellence that Vilitati pushed himself towards day to day.

Our deepest love to Vilitati Bikai,
The Harrington Group Family

It takes many moving parts to get a Nonprofit Organization up and running (and to keep it running!). Included on this list of integral parts is a Board of Directors. Appointing board members for a nonprofit is a non-negotiable requirement for operation of the organization. Although it is not difficult to assemble a group of bodies, there should be a level of thoughtfulness that goes into the selection process.

How do you decide which individuals should comprise the board of directors? How many members should it include? What qualifications should you be looking out for? Although there is no one right answer to this scenario, there are some key points that should be taken into consideration.

Diverse Backgrounds of Experience
 
Assembling a diverse group of individuals, with varying degrees of experience, is an important strategy when appointing a board of directors. Members of the board do not need to specialize in the same industry as your nonprofit is operating within. It is more beneficial to seek out members with diverse professional backgrounds, that differ from both you and others involved in the organization. You may want to consider what skills and/or knowledge are lacking and seek out members to round out those areas.

Keep in mind that candidates with managerial expertise, former executives and business gurus who have learned how to grow companies are invaluable, even if they lack knowledge of your specific industry. The same goes for retired legal attorneys, former human resources experts or marketing professionals.

Also consider mixing up the ages of your members. Older members will have more field and life experience, but younger generations will bring a fresh perspective. The world is constantly changing the rules of business. Marketing and fundraising were vastly different 10-15 years ago than they are now. Younger generations will (most likely) have more experience with social media platforms and building an online presence.  

Diverse! Diverse! Diverse!

Teamwork

Although boards won’t be meeting everyday (or even every week), it is crucial to fill these spots with members who will work together to achieve a common goal. They must collectively have the best interest of the organization in mind, while also being flexible enough to bend to the opinions of the other members. You don’t want to end up with stale mates during decision making processes and you don’t want to have any members who are so strong minded that they either overpower the collective and/or drive others away.

Teamwork will be especially important when appointing a diverse board (as you should). With many different backgrounds and areas of experience merging together, there will need to be cohesion between varying opinions and ideas.

Vision and Mission Statements

Another key point to keep in mind when compiling your board of directors, is to ensure that members are aligned with the vision and mission statements of your nonprofit organization. Be clear about the role that your board of directors will need to play within the organization and do so up front. Setting board expectations before assembling the actual board, will help to ensure that selected members will be set up to achieve said expectations. This will help to weed out any candidates who may be thinking that sitting on a board is a stagnant position. Incomers will understand that they must be active in aiding the organization to achieve goals and remain aligned with the vision and mission statements.

Quality Over Quantity

Having too many “cooks in the kitchen” is usually not a good thing. Although you don’t want your board to be too small, you also don’t want it to feel too stuffed. Choosing quality members, with professional expertise and a commitment to the organization, is much better than having a larger group with possible dead weight.

Having said that, there is a minimum requirement of board members that nonprofit organizations have to reach. This minimum depends on the corporate law of the state where the nonprofit was incorporated, but the average number is three.

Additional Tip: Try staggering the terms of your board members. This way, as seats are turned over and new members are onboarding, it will only happen one member at a time. Experienced members will be able to help new members get acquainted.

Let’s Summarize…

A Board of Directors is much like the government of a Nonprofit Organization. They brainstorm ideas, vote on high priority issues and decisions and they should collectively work with the best interests of the organization in mind. The board should contain members of diverse professional backgrounds with varying degrees of skill, whom are capable of effective teamwork and have good ethics.