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Old Invoices

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Our Board recently received an invoice from someone doing social media and website work for our nonprofit, yet it was for work done over two years ago. How late can people submit invoices and still expect to get paid?

Generally, if your organization engaged a contractor to do work , the work was done, and you accepted it, your organization owes the contractor for the work. Not sending you a timely invoice is a poor business practice but does not cancel your obligation to pay for the services you received.

In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement. However, the creditor may still send you collection notices, call you to try to get you to pay, or report your debt to credit reporting companies.

Worker Self-Directed Nonprofits

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Someone recently contacted Spokes to say, “I’m thinking of starting a worker self-directed nonprofit. Can Spokes help me?”

A worker self-directed nonprofit? I’d never heard the term. I know about public benefit nonprofits, mutual benefit nonprofits, and benefit corporations, but this inquiry required some research!

The Sustainable Economies Law Center describes a self-directed nonprofit as a sort of cross between a worker cooperative and a 501(c)3 nonprofit. Specifically, it defines a worker self-directed nonprofit as,

a nonprofit organization in which all workers have the power to influence the programs in which they work, the conditions of their workplace, their own career paths, and the direction of the organization as a whole.

In general, a worker cooperative is “democratically managed business that is owned and controlled by the workers.” California corporation code has specific provisions for the formation of a for-profit worker cooperative. California code also has specific, separate provisions for incorporating as a nonprofit. As far as I have learned, California code does not include explicit provisions for something called a worker self-directed nonprofit.

I have lots more to learn on this subject, but it’s intriguing to think about how one might structure a nonprofit within California’s current code that might mimic or embody key features of a worker cooperative such as election of the board of directors. More to come on this topic, but in the meantime, check out these resources:

Free Human Resources Hotline

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SLO Cal Careers has partnered with the California Employers Association to provide San Luis Obispo County employers with a no-cost human resources hotline. Get advice on:

  • Hiring and firing best practices
  • Paid sick leave laws
  • Wage and hour laws
  • Employee handbook policies
  • HR compliance
  • Accommodations in the workplace
  • And much more!

HR Directors are available for San Luis Obispo County Employers
Monday – Friday from 8 a.m. – 5 p.m. Call 888.710.0905.

This WIOA Title I financially assisted program or activity is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities. California Relay Service 711 or 1-800-735-2922 (English) 1-800-855-3000 (Spanish).

Can we pay our volunteers?

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We appreciate our volunteers so much. Most of our nonprofits could not begin to provide services without the help of selfless volunteers. It’s natural to want to reward them. But can you pay them something for their hard work?

Frankly, no. California Labor Code has a strict definition of volunteer. It is someone who “performs work for civic, charitable, or humanitarian reasons…without promise, expectation, or receipt of any compensation for work performed.”

It is permissible to reimburse volunteers for necessary expenses incurred in their volunteer work for you. You can certainly have a volunteer appreciation party and treat everyone to some refreshments. Likewise, a token of appreciation such as some flowers, a plaque, or a framed certificate of appreciation is fine.

Just not cash or a check (or even a “cash equivalent” such as a gift card). From the IRS’s point of view, that would be income. From California’s point of view, it could make them your “employee.”

Learn more:

Can the treasurer be the bookkeeper?

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A new nonprofit was struggling to put together its first board of directors. The organizers had contracted with someone to be the bookkeeper and they wondered if it would be acceptable to have that person also serve on the board as the treasurer. The answer: maybe, but it might not be the best idea.

One issue is conflict of interest. Directors of nonprofits are not to benefit financially from their role on the board. So, even if the bookkeeper were a director but not the treasurer, if her firm is paid to do the bookkeeping, that could easily be seen as a conflict of interest. That might be mitigated if the firm did the bookkeeping pro bono. Another possible mitigation is to get bids from several bookkeepers and, if the bookkeeper’s firm is willing to do the work for significantly less, then that also might mitigate the conflict. In the latter situation, the board would want to clearly document the research that was done, and the bookkeeper would recuse herself from participating in the decision to contract with her firm.

A second issue to consider is that a fundamental part of the treasurer’s responsibilities is to provide financial oversight. So, if the treasurer is the bookkeeper, he/she is overseeing him/herself. In that case, it would be prudent to put a structure in place to ensure oversight. For example, the board might formally appoint another person to be the Chief Finance Officer and provide a written description of the CFO’s duties, which would include oversight.

The board also needs to keep in mind that if the organization is paying the director/bookkeeper, then that person becomes an “interested person.” In California, no more than 49% of the board of directors may be interested persons.

Finally, whatever arrangements are made, the board would be wise to put in place some basic internal controls. Here are two useful resources on that topic.

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