Strategic Planning for Nonprofits: 5 Helpful Tax Time Tips

strategic planning for nonprofits

You started a nonprofit to help the community and get behind a cause. Yet, business does not run on good intentions. There are expenses many find difficult to cover despite the tax-free status.

Every dollar counts.

Come tax time, you’re required to file a Form 990 if revenue exceeds $50,000. Strategic planning for nonprofits maximizes benefits of the tax-exempt status. It helps with following the strict government guidelines. The plan emphasizes goals and vision. It will create action steps to fulfill your mission. The following outline provides  some items to explore during tax time. For a more comprehensive review we suggest consulting a tax attorney or CPA that specializes in non-profit accounting.

Strategic Planning for Nonprofits: Action Steps

A Form 990 details operations. It gives the IRS an understanding of the nonprofit’s mission. Failure to file begins the auditing process. This results in an automatic revoking of the tax-exempt status if this happens 3 years in a row. Form 990 is a valuable resource for strategic planning for nonprofits. The form creates a baseline to help understand progress and commitment.

Here is how Form 990 further improves efforts during tax time:


Form 990’s must display to the public. The public information allows understanding and scrutiny of the public. This transparency is beneficial when profiled by organizations like Charity Navigator or GuideStar. Nonprofits with high financial commitments receive positive public perception. Better perception results in news coverage and donations. Donors like to see that the majority of their donated dollars are going towards the cause and not to operating/administrative costs.


Tax time creates an incentive for detailed inventory reporting. The net effect being:

A) less wasteful spending on unnecessary items

B) identifying setbacks from the lack of resources

The inventory assessment will also provide a fundraising goal for these needed resources. It helps set priorities and accelerates the strategic planning for nonprofits.

Hybrid Models

Many nonprofits are turning to a hybrid model. The model creates a sister companies when efforts threaten the tax-exempt status. This scenario creates two entities — one nonprofit and another for-profit.

        • The for-profits company may come about as a result of revenue sources that can function as a business on their own like, for example, filing patents for inventions. The successful invention is available to generate revenue. The nonprofit keeps its standing to receive donations and grants. The for profit may donate a portion or all of its profits to the non-profit. Many nonprofits will do this with rental properties.
        • Strategic planning for nonprofits will help to determine when to divide part of the nonprofit into a for-profit sister company to create the hybrid. It will also help determine if this hybrid strategy will develop a strong income-generating offshoot for the nonprofit. Note that hybrids are very tricky and must be set up and maintained with care and specific planning otherwise both nonprofit and for profit are at risk from huge legal liabilities.


The strategic planning should provide understanding for donors. It aligns goals and objectives of the nonprofit and answers common questions for donors:

        • Is this nonprofit doing good work?
        • Do they need the funding?
        • Have they accomplished their goals?
        • Are they taking action for the future?

Fundraising efforts improve when donors feel their contributions going toward a worthy cause. A strategic plan shows potential donors their money is well placed.

Fraud Alert

Nonprofits receive most of their funding through small donations from individuals. Corporate philanthropy, grants, and government funds are other ways nonprofits garner finances.It’s easy to lose track of financial accounts when there are many sources and the potential for fraud lurks within these contributions. Additionally, employee or board skimming does happen. Strategic planning will help the organization detect and end these occurrences.

Finding Help with Strategic Planning

Almost all nonprofits can benefit (and thrive) from strategic planning. The planning creates a roadmap. It helps to identify ways to maximize resources during tax times.

Need help navigating legal guidelines and setting up a strategic plan? Want to stretch every dollar? Let LaSusa & Deb be an extension of your team. Call us today to take the action steps toward a prosperous future for your nonprofit.