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Could Your Nonprofit Be Out of Compliance?

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It happens more often than you might think.

Recently, a small nonprofit contacted Spokes with a question about its filings. After a quick compliance review, we discovered the organization had unintentionally lost its tax-exempt status. Like many nonprofits, they believed they had filed everything correctly and had no idea there was a problem.

Unfortunately, over the years we’ve seen several organizations find themselves in similar situations.

California nonprofits have numerous filing requirements each year. For many organizations, some of those required filings are surprisingly simple—even a one-page form or IRS e-Postcard. But missing just one required federal or state filing can have significant consequences.

While it’s often possible to restore an organization’s good standing, the process can be lengthy, involve additional paperwork and fees, and divert valuable staff and board time. A few minutes spent reviewing your compliance status now can help prevent much bigger headaches down the road.

CalNonprofits recently shared two excellent compliance resources:

We encourage every nonprofit to take a few minutes to review these resources and make compliance part of its annual organizational checkup!

Changes to Medi-Cal & CalFresh Requirements

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At our recent ED/CEO roundtable, we welcomed representatives from Family Service Agency and County of SLO Department of Social Services to discuss changes to community engagement requirements for Medi-Cal and CalFresh recipients. We also heard from United Way CEO Liz Summer about Volunteer SLO and it being a resource for nonprofits looking to provide volunteer pathways for those affected by the new requirements.

Access the presentation resources HERE and watch the session recording below.

What CRM Are Local Nonprofits Using?

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Choosing a donor database or constituent relationship management (CRM) system can feel overwhelming. With dozens of options available, nonprofits often rely on peer recommendations and real-world experiences to help guide their decisions.

To learn more about what local organizations are using, Spokes recently surveyed nonprofit professionals throughout SLO County. Respondents represented organizations of varying sizes and missions. While the sample size was small, the responses offer a useful snapshot of the systems organizations are using, what they value most, and what they wish they had known before making a decision.

CRM Platforms in Use

CRM Platforms Reported by Respondents

  • DonorPerfect (4)
  • Bloomerang (3)
  • Salesforce (3)
  • Neon CRM (2)
  • Blackbaud (2)
  • Network for Good (2)
  • Little Green Light (1)
  • Wild Apricot (1)
  • Givebutter (1)
  • Other Systems (4)

Some organizations reported using more than one platform, so totals exceed the number of survey respondents.

Survey respondents reported using a wide variety of platforms, with no single CRM dominating the field. Several organizations indicated they use multiple systems to support fundraising, membership management, events, and donor engagement.

The diversity of responses highlights an important reality: the best CRM depends on your organization’s size, fundraising model, staffing capacity, reporting needs, and budget.

Are Organizations Happy with Their CRM?

  • 😊 Satisfied or Very Satisfied: 62%
  • 😐 Neutral: 31%
  • ☹️ Dissatisfied: 8%

While no system was universally praised, most organizations indicated that their CRM meets their core needs for donor management, fundraising, and constituent tracking.

What Nonprofits Value Most

Donor Management

Online Giving Integration

Membership & Event Management

Ease of Use

Reporting & Data Access

When asked what they appreciate most about their CRM, respondents frequently cited the ability to manage donor relationships, process online gifts, track memberships and events, access fundraising data, and streamline day-to-day operations.

Common Challenges

Cost

Reporting Limitations

Learning Curve

Integrations

Even satisfied users noted challenges. Affordability, reporting functionality, staff training, and connecting CRM systems with other software tools were among the most common concerns.

Advice from Your Peers

Start with strategy before evaluating software.

Clearly define your goals, workflows, reporting needs, and staff capacity before comparing platforms.

Talk to other nonprofits before making a decision.

Peer recommendations and firsthand experiences can provide valuable insight that vendor demonstrations may not reveal.

Don’t pay for features you won’t use.

Several respondents cautioned against selecting the most robust or expensive system without first assessing what functionality is truly necessary.

Consider your organization’s unique needs.

A CRM that works well for one nonprofit may not work for another. Membership organizations, performing arts groups, social service agencies, and foundations often have very different requirements.

Takeaway

Whether you’re evaluating a new CRM or making the most of your current one, local nonprofits agree: take time to understand your needs, seek peer input, and choose a solution that fits your organization rather than chasing the latest features.

Interested in learning more? Spokes has access to the full survey responses and would be happy to share additional insights with member organizations. If you’re exploring a particular CRM platform and would like to connect with a fellow nonprofit that has firsthand experience using it, we’re also happy to help facilitate those conversations.

Leadership Change Is Inevitable, Preparation Is Optional

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Last week at our in-person ED/CEO Roundtable, nonprofit leaders gathered to discuss one of the most important — and often avoided — organizational topics: succession planning.

Whether an executive director abruptly leaves because they “won the lottery” (preferred by most participants!), gets “hit by a bus” (much less preferred) or simply retires, organizations that have a plan in place are far better positioned to maintain stability and confidence during change.

One valuable area of discussion centered around interim executive directors and the important role they can play during periods of transition. Published the same week as our session was a timely article from Blue Avocado outlining key considerations and best practices for bringing in interim leadership during a nonprofit transition.

Read the article.

Perks for Board Members?

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Recently, one of our Spokes member organizations inquired about the legality of providing a “perk” to board members. In this particular instance, the perk would be free tuition to an educational program run by the nonprofit. I had some concerns about such a practice. With the help of ChatGPT, I did some research and my concerns were confirmed. Here’s how I responded:

Providing a tuition discount to board members whose children are enrolled in your program is not automatically prohibited, but it raises several important legal and governance concerns that should be carefully considered.

First, under California law, a director who receives a material financial benefit from the organization may be classified as an “interested person.” If multiple board members utilize the discount, this could risk exceeding the rule that no more than 49% of the board may be composed of interested persons.

Second, while this type of discount would not be considered compensation, it does represent a financial benefit tied to board service. The Internal Revenue Service generally prohibits private inurement and limits private benefit in 501(c)(3) organizations. A benefit available only to board members—rather than based on need, employment, or program criteria—may raise concerns in this area.

Third, offering such a benefit introduces ongoing conflict of interest considerations. Board members receiving the discount would have a personal financial interest in decisions related to tuition, enrollment, and program policies, requiring disclosure and recusal. This can complicate governance and affect public trust.

Finally, there is an equity consideration. A tuition discount would only benefit board members with age-eligible children, creating an uneven “perk” structure that may affect board culture and recruitment.

Best Practice Recommendation
Most nonprofits avoid providing financial benefits tied to board service. Instead, they maintain board roles as strictly voluntary and uncompensated. If tuition assistance is offered, it is typically structured based on objective criteria such as financial need or made broadly available to program participants, not linked to governance roles.

Conclusion
While the proposed policy may be legally permissible if carefully structured, it carries sufficient legal, ethical, and practical concerns that it is generally not recommended as a best practice.

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