The Importance of Competitive 401(k) Plans in Attracting and Retaining Nonprofit Employees

By Lisa Cardinal, CRC, CEBS of Empower

Nonprofit organizations face unique challenges in attracting and retaining top talent. With budgets often constrained and salaries that may lag the private sector, nonprofits must lean on the strength of their benefits packages to remain competitive. Among these, a robust retirement plan—such as a 401(k)—stands out as one of the most powerful tools for both recruitment and retention.

Retirement Benefits as a Differentiator

According to an Empower study,¹ employee engagement is the single greatest factor driving savings behavior. Engaged employees are 2.5 times more likely to capture their full employer match and nearly twice as likely to save above the match threshold. The study also found that clear match formulas outperform complex designs, and that auto-enrollment drives both higher participation and increased savings without discouraging employees.

Additional insights from recent Empower research highlight the broad financial concerns employees face:

• 78% say having a financial plan to guide their decisions ahead makes them happier and less stressed.²
• 70% of retirees would advise their younger selves to start saving earlier for retirement and to save more.³
• 67% agree that “My employer has a responsibility to provide options to help me reach my financial goals.”³

These findings reinforce that employees value financial guidance and meaningful support from their employers—making competitive retirement benefits a key differentiator, especially for nonprofits.

Impact on Retention

A recent article from PLANSPONSOR⁴ highlights that benefits, especially retirement savings options, are a core driver of retention. Many employees report staying with their current employer because of access to competitive benefits, even when salary might be lower elsewhere.

Financial wellness and retirement readiness play an increasingly significant role in an employee’s decision to stay. As Empower research shows, employees who feel supported in reaching their financial goals are more engaged and more likely to remain with their employer.

Why It Matters for Nonprofits

For nonprofits, employee turnover is especially costly. Beyond recruitment and onboarding expenses, turnover disrupts program delivery, strains donor and community relationships, and puts added pressure on already limited staff resources. Competitive retirement benefits—such as employer matches, immediate vesting, and auto-enrollment—signal investment in employees’ long-term well-being and strengthen organizational loyalty.

Practical Steps

• Consider offering a 401(k) Plan benefit for your employees if you do not offer one.
• Consider adopting a clear, competitive employer contribution formula.
• Consider implementing auto-enrollment to increase participation.
• Consider shortened vesting schedules to encourage retention and engagement.
• Provide access to financial wellness tools, which Empower’s research shows boosts savings across income levels.

Conclusion

In the nonprofit sector, where every resource must be maximized, offering a strong retirement benefit is not simply a cost—it is a strategic investment. The evidence is clear: competitive retirement plans help nonprofit employees build financial security, improve retention, reduce turnover costs and reinforce an organization’s reputation as an employer of choice.

Lisa Cardinal, CRC, CEBS is the Sales Director of Empower.

1 Empower, “Empowering America’s Financial Journey 2025^TM.”

2 Empower, “Great Decide,” March 2025.

3 Empower, “Time is Money,” 2024.

4 PLANSPONSOR, Benefits Continue as Major Factor in Employee Retention, September 30, 2025.

FOR PLAN SPONSOR USE ONLY

Empower refers to the products and services offered by Empower Annuity Insurance Company of America and its subsidiaries. This material is for informational purposes only and is not intended to provide investment, legal, or tax recommendations or advice.

“EMPOWER” and all associated logos and product names are trademarks of Empower Annuity Insurance Company of America.

©2025 Empower Annuity Insurance Company of America. All rights reserved.

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http://massnonprofitnet.org/blog/nonprofit-employee-401k/

By Marrissa MacLeod of Baker Newman Noyes

The Board of Directors is the guiding hand of any nonprofit organization, responsible for governance, financial health, oversight of operations and adherence to mission, strategic plans and advocacy. 

An effective board is comprised of individuals committed to the organization’s mission that also share complementary skills, talents and backgrounds. Knowing their role and how that differs from management functions is also a key theme of successful boards. 

What should organizations consider when building and refreshing a Board of Directors?

When selecting members for a board, organizations should aim to include a variety of levels of backgrounds and expertise. Some of the most successful boards that our team works with have a variety of strengths and perspectives. For example, for an organization that deals in fine arts and craftsmanship the board includes artists, as well as an attorney and accountant who can provide insights on legal and financial considerations in addition to the operational needs of the organization. Having a well-rounded board that believes in and understands not only the operations and mission of the organization, but also the administrative elements of running a successful business or organization, can be extremely beneficial.  

Enthusiasm is also key, and it is crucial to seek out board members who are invested in your organization and mission. There is a big difference between a board member that regularly attends meetings but does not contribute to the discussion or ask questions, and an engaged board member who asks questions, seeks to understand (and have a positive impact on!) your organization, and considers the bigger picture. A questioning mindset applies to everything such as your strategic plan, budget, annual financial audit process or running capital campaigns.  

It can be a challenge for nonprofits, especially smaller organizations, to recruit board members who offer expertise and enthusiasm. Reaching out to your network and trusted service providers (accountants, lenders, attorneys) for assistance may be helpful.  

How long do board members typically serve? How many members should be included? 

Board members typically have term limits. We see terms of two to six years depending on the organization, with various options for reappointment after this initial term. The goal of term limits is to introduce new individuals and fresh perspectives.

The size of a board can vary greatly between organizations. Larger boards may have up to 20+ members. An organization’s bylaws should have important wording and rules on the number of board members, term limits, roles and certain responsibilities.

Effective leadership can guide an organization through both good and challenging times

By understanding and fulfilling key board responsibilities, defining clear boundaries from management functions, and recruiting a qualified and involved board, nonprofits can drive their organizations towards successfully achieving their mission and making a positive impact in their communities. Effective governance, strategic planning, and financial management are the cornerstones of a successful nonprofit organization.

If you have questions about your organization or would like to learn more about the services we offer, reach out to a member of BNN’s nonprofit team.

Marrissa MacLeod is an assurance senior manager at Baker Newman Noyes.

By James A. George of James A. George, P.C.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (H.R. 1), a sweeping tax reform package that revises and extends many provisions of the 2017 Tax Cuts and Jobs Act. For nonprofit organizations, the bill brings significant changes—some challenging, some beneficial. These provisions take effect for tax years beginning after December 31, 2025, giving nonprofits the remainder of 2025 to prepare.

Key Provisions Affecting Nonprofits

Executive Compensation:

A 21% excise tax now applies to any nonprofit employee earning over $1 million annually—not just the top five highest-paid individuals as before. This will mostly impact large organizations, especially in healthcare and education, increasing both costs and reporting complexity.

Charitable Giving Changes:

• Corporate Donations: A new 1% floor has been set for charitable deductions—corporations can only deduct gifts exceeding 1% of taxable income. The overall 10% deduction cap remains, but this floor could reduce or shift corporate giving patterns.

• Individual Donations: The tax benefit for itemizers is now capped at 35 cents per dollar donated, and a new 0.5% AGI floor means deductions are only allowed for giving above that threshold. This alters incentives for high-net-worth donors and may affect how and when they give.

• Universal Deduction: On a positive note, the bill introduces a permanent deduction for non-itemizers—$1,000 for individuals and $2,000 for joint filers. Though donor-advised funds are excluded, this could boost small-dollar, grassroots donations.

Private Foundations: 

Proposed hikes to foundation excise taxes were dropped; the 1.39% rate remains. However, organizations that modeled higher rates can still use those scenarios for long-term planning.

Action Steps for Nonprofit Leaders

To stay compliant and strategic, nonprofit executives and finance teams should:

• Review executive compensation structures to minimize excise tax exposure.
• Reassess fundraising strategies, especially for corporate sponsors and major individual donors.
• Update gift acceptance and pledge policies in line with new deduction rules.
• Conduct financial modeling to gauge donation volatility and plan for cash flow changes.
• Communicate proactively with donors about what the law means for their giving.

Financial Advisors Can Help

You don’t need to navigate this alone. Many nonprofits are turning to Certified Public Accountants (CPAs) and financial advisors for flexible, project-based support. A qualified advisor can:

• Translate legal changes into clear, actionable steps
• Build financial models tailored to your operations
• Advise on tax-efficient compensation strategies
• Help refine donor communications to maintain trust
• Ensure accurate accounting and regulatory compliance

CPAs bring specialized expertise in nonprofit finance, tax law, and reporting—making them a valuable resource during this period of change.

Conclusion

The One Big Beautiful Bill adds complexity but also offers opportunities. With informed planning and clear communication, nonprofits can adapt successfully. Whether using in-house resources or outside advisors, taking action now will help turn compliance into a competitive advantage.

James A. George is the owner of James A. George, P.C.

By Ryan Knight of Insource Services, Inc.

Marketing automation may not be the first priority you think about when considering how to allocate your limited resources, but you may be overlooking a highly effective growth opportunity to increase donor engagement.

One area where data investment helps drive growth relates to marketing automation and campaign management. Efficient data management can make a big difference in your communications approach (meaning higher personalization), frequency of communications, and overall reach, and therefore can have a direct impact on donations to your non-profit.

On the marketing and communications front, over the past 10 years, there has been an explosion in hyper-personalized communications. This benefits greatly from structuring your information in a useful and complete format and from gathering as much data as possible to inform your communications.

• Systems such as Salesforce Marketing Cloud (formerly Pardot) allow you to build customer/prospective donor journeys (rules-based/triggered custom communications). These systems also gather input from website traffic and email responses to better understand the contact’s individual preferences.
• The use of content to help drive awareness within your audience and create a sense of community around your cause is paramount. This content creation often involves blogs, webinars/video, podcasts, or other media types. These are often hosted on different systems with traffic data stored separately.
• Google analytics and traffic resources are often handled separately.

AI and search tools can be used to gather content for insertion in communications (e.g. testimonials, case examples, background data on the “need” in the community).

Data solutions can be implemented to bring this disparate data together and provide a feedback loop to drive the process of constructing and managing effective outreach campaigns. These can be optimized to get the best response rates managed at an individual relationship level, based on their preferences and behaviors driving increased contributions and donations.

In addition, the data can be augmented, analyzed, and streamlined using AI- based solutions. The result is that investment in marketing automations can have a high return on investment for even smaller nonprofits by turning brand engagement into converted donations.

Working with a Data Solutions technology partner can help your organization stay ahead in an increasingly data-intensive world. Whether you’re looking to improve efficiency, reduce costs, or make smarter decisions, working with external experts can unlock new opportunities for growth.

Ryan Knight is the Team Lead, Data Solutions at Insource Services, Inc.

By Emily Wagman of Hemenway & Barnes

A promise is a promise. But that doesn’t always mean that it can or will be enforced — especially in the area of charitable giving. Donors sometimes make charitable pledges, but intervening events, such as an economic downturn or dissatisfaction with how the charity uses the gift, may cause donors to delay or even fail to fulfill their pledges.

Documenting major gift transactions can help avoid misunderstandings on both sides. For most gifts, maintaining simple written records of the gift promise and documentation of receipt is sufficient. For major gifts (i.e., capital improvements or endowments), it is a good idea for the donor and charity to sign a gift agreement outlining the terms of the gift. This ensures that both sides have the same understanding of the terms of the gift when the gift is made.

The terms of these agreements can vary, but at a minimum should:

• Identify the gift, the schedule of payment, and the purpose of the gift.
• Outline whether property other than cash can or will be used to satisfy the commitment.
• Clarify whether the agreement is intended to be a statement of intent (with no legal obligation to make future payments, but conversely more flexibility to satisfy payments from foundations or donor-advised funds) or a binding pledge (legally enforceable against the donor or the donor’s estate).
• Establish terms and conditions of any naming opportunity.
• Outline procedures for approving press releases or publicity related to the gift.
• Specify which jurisdiction’s law applies to the agreement.
• Include procedures for altering or amending the pledge if circumstances change.
• For restricted gifts, outline alternatives should initial restrictions become impractical.

If it does not already have one, a charity should consider adopting a gift acceptance policy to govern the acceptance and recording of gifts. While the specifics may vary depending on the charity’s mission and circumstances, common elements of such policies include:

• Identifying who within the organization has the authority to review, approve, or decline proposed gifts—especially those that may create an administrative burden or risk, incur excessive expenses, or fall outside the scope of the organization’s mission.
• Defining the types of gifts that will be accepted and detailing the procedures for valuing, accounting for, and recording gifts.
• Outlining procedures for handling both restricted and unrestricted gifts.
• Detailing the documentation required for all gifts, particularly multi-year, challenge, or capital gifts.
• Identifying planned giving opportunities and vehicles.

Clarity around these issues fosters positive donor relationships, improves efficiency, and helps reduce legal fees in the long run. Gift acceptance policies are particularly important in volatile economic climates, where donors may request to fulfill pledges with assets other than cash or seek to be released from commitments they have made. These policies help establish clear expectations and “rules of the road” at the outset of a donor relationship.

Emily Wagman is an associate in the Nonprofit Group at Hemenway & Barnes. Emily advises tax-exempt organizations, including private foundations, public charities, and colleges on tax rules and procedures, governance, contracts, research and licensing agreements, and compliance matters.

By Michael Cecere, CPA, MST & Julianne Schwallie, CPA, MBA, with Gray, Gray & Gray, LLP

To retain the trust and support of donors and the public, nonprofit organizations must maintain high levels of transparency, particularly in their financial reporting. Transparency helps to build trust and demonstrate that the organization is using its resources responsibly and effectively.

Key Principles of Transparent Financial Reporting

Transparent financial reporting for nonprofits should be guided by the following key principles:

• Completeness: Financial reports should provide a comprehensive overview of the organization’s financial activities, including revenue, expenses, assets, liabilities, and net assets.

• Accuracy: Financial reports should be accurate and free from errors. This requires strong internal controls and regular audits or reviews.

• Timeliness: Financial reports should be released in a timely manner, allowing stakeholders to make informed decisions about their support for the organization.

• Clarity: Financial reports should be presented in a clear and understandable manner, using plain language and avoiding technical jargon.

• Accessibility: Financial reports should be easily accessible to the public, typically by posting them on the organization’s website.

Enhancing Transparency

In addition to adhering to the key principles outlined above, nonprofits can implement best practices to further enhance transparency in their financial reporting:

• Adopt a clear and consistent accounting framework: Use a well-established accounting framework, such as Generally Accepted Accounting Principles (GAAP) or the Financial Accounting Standards Board’s (FASB) Accounting Standards for Not-for-Profit Organizations (ASC 958), to ensure consistency and comparability in financial reporting.

• Provide detailed disclosures in the notes to the financial statements: Use the notes to provide additional information about the organization’s financial activities, such as its revenue sources, expense allocations, and investment policies.

• Obtain an independent audit of the financial statements: Engaging an independent auditor to review the organization’s financial statements adds credibility and assurance to the financial reporting process.

• Make financial statements easily accessible to the public: Post financial statements, including the organization’s Form 990, on the organization’s website in a downloadable format.

• Use plain language and avoid jargon in financial reporting: Use clear and concise language that is easy for non-financial stakeholders to understand. Avoid using technical accounting terms or jargon.

• Provide comparative financial statements for multiple periods: Present financial statements for multiple periods to allow stakeholders to track the organization’s financial performance over time.

• Use charts and graphs to visually represent financial information: Use charts and graphs to make financial information more visually appealing and easier to understand.

• Conduct regular reviews of financial reporting policies and procedures: Regularly review and update the organization’s financial reporting policies and procedures to ensure they are aligned with current accounting standards and best practices.

• Seek professional guidance when necessary: Consult with accounting or financial professionals when needed to ensure that the organization’s financial reporting is accurate, compliant, and transparent.

Transparent financial reporting is essential for building trust with stakeholders and demonstrating that a nonprofit organization is using its resources responsibly and effectively. By implementing the key principles and best practices outlined in this article, nonprofits can enhance their financial transparency and strengthen their relationships with donors, funders, and the general public.

Michael Cecere, CPA, MST is a Partner and Julianne Schwallie, CPA, MBA is a Senior Accountant in the Nonprofit Practice Group at Gray, Gray & Gray, LLP, an accounting and consulting firm in Canton, MA.

By Sachin Gujral, Founder and CEO, CTS

In the heart of every nonprofit is a mission—a vision to change the world, one act of service at a time. Yet, behind the scenes, countless organizations fight silent battles against outdated systems, cybersecurity threats, and the ever-present constraints of limited resources. These challenges often feel like insurmountable hurdles, but what if they were the catalysts for transformation instead?

Nonprofits exist to change lives, but behind every life changed is a foundation of people, processes, and technology. By embracing resilient IT infrastructure and robust cybersecurity, nonprofits can transform their vulnerabilities into strengths—allowing them to do more, reach further, and serve better, even in the face of adversity.

The Quiet Struggles of Doing Good

If a nonprofit dedicated to providing emergency housing for families in crisis were to experience a sudden server failure, the consequences could be devastating. Critical data—donor records, service schedules, client case files—becomes inaccessible at the worst possible moment. Staff scramble to find workarounds, but the trust of both donors and beneficiaries wavers.

Unfortunately, this is not a rare story. Nonprofits are often under-resourced in IT, leaving them vulnerable to disruptions that compromise their ability to serve those who depend on them most.

Beyond operational breakdowns, the threat of cyberattacks also looms large. With sensitive donor and beneficiary information stored digitally, a single breach could devastate the trust painstakingly built over years. For mission-driven organizations, the stakes are uniquely personal.

The Pivot: From Reaching to Innovating

What if nonprofits could change the narrative? Instead of viewing IT as a cost center, they could see it as a catalyst for resilience and growth. This shift starts with a mindset change: viewing technology as an enabler of mission success, not a burden.

1. Build Resilient Foundations
   Nonprofits need more than just functioning IT systems—they need adaptable infrastructure. Cloud solutions, for example, offer scalability and flexibility, ensuring organizations can respond to changing needs without hefty upfront investments. Secure backups and redundancy plans mean that even in a crisis, operations can continue uninterrupted.
2. Strengthen Cyber Defenses
   Cybersecurity doesn’t have to be a daunting expense. By prioritizing essentials like multi-factor authentication, phishing awareness training, and managed detection services, nonprofits can protect their mission-critical data without overwhelming their budgets. These defenses not only secure sensitive information but also reinforce the trust of donors and stakeholders.
3. Embrace Strategic IT Planning
   Technology planning shouldn’t be reactive; it should be proactive. With a clear roadmap, nonprofits can align their IT investments with long-term goals, ensuring that every dollar spent supports their mission.

The Human Impact of IT Resilience

Technology is about people. It’s about enabling a frontline worker to access critical client information when it’s needed most. It’s about ensuring that a donor feels confident their contribution will be used wisely and securely. It’s about giving nonprofit leaders peace of mind, freeing them to focus on their mission.

For nonprofits, the journey toward robust IT infrastructure and cybersecurity isn’t just about keeping the lights on—it’s about shining brighter. By investing in technology, nonprofits can protect their missions and inspire greater trust, efficiency, and impact.

It’s time to stop seeing IT as a necessary evil and start embracing it as a powerful tool for transformation. Because when nonprofits thrive, so do the communities they serve.

Sachin Gujral is the Founder and CEO of CTS, an IT and Cybersecurity Solutions Provider dedicated to helping nonprofits create non-disruptive technology environments, instill security to avoid cyber disasters, unify systems & manage costs so users can thrive and focus on your mission. Learn more by visiting our website at www.charterts.com.

By Johanna Bates, Co-Owner and Principal, DevCollaborative

It can be cathartic to vent about a website that’s frustrating to update and use. 

But likely, many people–working with different challenges and constraints–made many decisions that created your website.  When a site isn’t working for an organization, it can be tempting to ask: who’s to blame? Can you future-proof your next site? 

Blame the Content Management System (CMS)

Content editors spend their workdays in their CMS’s editing interfaces. Every quirk is like a paper cut, adding up to a daily trial. Are some systems just junk? 

As successful organizations evolve, most outgrow platforms like Squarespace and Wix. Once click-together ease makes work harder, you’re better served by professional, custom design and development. 

Open-source CMSs are built and supported by global communities of users instead of VC-funded proprietary companies. We only work with nonprofits and build sites with the top two open source systems: Drupal and WordPress. 

Many clients approach us saying:

“Drupal’s terrible, let’s rebuild in WordPress!” 

Or vice-versa. Some kinds of sites do better in one system, and perhaps you’ve got a mismatch.  

Or, your site may be outdated. A three-year-old site can be a relic if it hasn’t been kept up-to-date.

And because an open source CMS is like a box of LEGOs, there are many ways to build with it. Perhaps your site was built poorly. 

Blame the Developers

Poor design and development can ruin a site’s usability for editors and audiences. And because open source is LEGO-like, there may be a quick way to build a feature, but another might take longer and hold up better over time.

It’s paramount to look for experts steeped in the Drupal, WordPress, and nonprofit technology communities, who understand accessibility and information design. They’ll be transparent with you about tradeoffs and help you consider them alongside your goals, budget, and timeline. 

But even the best developers can build a terrible website. How?

An excellent partner brings their expertise to the table and pushes back against requests that will take a website off-course from goals, accessibility, and sustainability. Sometimes, forces within an organization limit possibilities for success. 

Blame Yourselves

In my early career as nonprofit staff, we’d build sub-par sites by structuring them according to our own mental models, instead of our audiences’. I still see this today. 

Other times, a board member or funder is enamored with a technology trend or aesthetic that is at odds with project goals. 

When leadership doesn’t value outside expertise to check assumptions, projects get knocked off course. 

Often, a good internal steward and development partner can collaborate to find constructive ways to steer a project to excellence, or at least mitigate some of the trouble these tensions can cause. 

TL;DR Who, Actually, Is To Blame? 

Any good organization is evolving, as is technology. When you haven’t been able to keep pace, it’s time to approach your website in a new way. Partner with an expert who will guide you through planning. Understand that a great website is only ever somewhat complete. Plan for continual user testing and proactive enhancements into the future. This doesn’t mean you won’t ever need a redesign. But when you do, you’ll have a better sense of what needs addressing and why, without having to blame anyone at all.

By Cruz Mendez, Marketing Director, First Nonprofit

Who pays for unemployment?

The truth behind who pays for unemployment and the often-overlooked hidden costs may surprise you. While many believe individuals pay into a fund, HR and finance staff will tell you that it is employers, including nonprofits, who usually foot the bill*.

501(c)(3) nonprofit, governmental, and tribal entities are all exempt from paying Federal Unemployment Taxes (FUTA). However, most employers must pay state unemployment taxes (SUTA), and only religious entities that operate exclusively for religious purposes are exempt from SUTA. But the following organizations have a unique savings option for paying SUTA:

• Nonprofits: Organizations that are exempt from federal income tax under Section
  501(c)(3) of the Internal Revenue Code
• Native American Indian tribes: Tribes and their wholly owned businesses
• Government entities: Government entities such as federal, state, and local
  government agencies

These entities can cover their mandatory unemployment costs in one of two ways:

1. Paying the state unemployment insurance tax (SUTA)
2. Reimbursement financing, also known as self-insurance, is a legal right allowing
   these organizations to opt out of paying SUTA. Instead, they can reimburse their
   state unemployment agency dollar-for-dollar for unemployment claims paid to
   former employees. This option can provide significant cost savings for these
   entities.

Though opting out of paying SUTA can save employers money in the short term, it’s crucial to have a well-thought-out strategic plan accompanying this decision to avoid budgeting volatility in the long term to cover claims costs. First Nonprofit (FNP) provides the expertise to assist nonprofit employers utilize this option, which can save organizations as much as 60% annually! Contact FNP to help determine eligibility for the best reimbursement option for your organization. Click here to request a free, no-obligation savings evaluation.
*Alaska, Pennsylvania, and New Jersey employees pay a small tax into their state employment fund.

By Peter Martin, Partner, Bowditch

Donors often provide support to nonprofits in a way that responds to contemporary issues and the donor’s particular interests. Examples include a prohibition on spending principal or a requirement that the fund be used only for a specified program or within a given geographical area. Over time, such restrictions can make full use of the funds impracticable or impossible. 

What happens if the charity wants to use these funds despite such restrictions, but the donor has died and there are no donor representatives available to consent to changes to the restrictions? The charity will have to get the approval of the Attorney General’s Office (AGO) and ultimately a Supreme Judicial Court (SJC) decree releasing the restrictions to enable the full, expanded use of these financial assets.

This requires an understanding of the various legal doctrines that apply to releasing fund restrictions and the techniques available depending on the size, age and nature of the charitable fund restrictions.

Some funds have purposes that have become unlawful, impossible, impracticable or wasteful. For example, a “free bed” fund at a hospital that pre-dates Medicaid assistance for indigent patients. For charities that wish to use such a fund for distinctly different purposes, say paying a patient’s out-of-pocket costs, the charity would need to obtain AGO assent and a SJC order under the doctrine of cy pres (French for “as near as possible”).

Other funds have management, investment or durational restrictions that are compatible with the charity’s charitable activities but interfere with the accomplishment of those activities. For example, a geographical restriction on the use of funds to conserve land to a location where there are no conservable parcels remaining. In that case, the charity would seek what is called “equitable deviation” from that restriction, also requiring AGO assent and a SJC decree.

Not all releases from fund restrictions require assent by the AGO and a SJC decree. Some restrictions found in smaller, older funds may be released through a technique called administrative modification, which requires only the assent of the AGO. This method is available for funds at least 20 years old that also have a value of less than $75,000.

Finally, the Covid pandemic caused the Attorney General’s Office to produce guidance that permits charities to borrow against the value of their endowment funds, once they have exhausted other techniques, such as seeking donor release of the spending restrictions. In order to obtain permission to borrow against the principal of an endowment fund, the charity must convince the AGO and the SJC that such borrowing will not simply delay an inevitable closure of the charity, and that the charity has a reasonable business plan for repayment.

Charities with a variety of donor-restricted funds should identify those funds, distinguishing them from funds whose use has been restricted by the charity’s own board. They should assess whether they have older, smaller funds that might be eligible for administrative modification. They should try to discern to the extent possible the general charitable intent of those donors who have imposed restrictions that are troublesome, and either identify a changed purpose that is as close as possible to that intent, or identify a change in the donor’s restrictions that make the fund more usable consistent with donor intent.