You’ve got your mission statement, your program blueprint, and maybe even some pending funding. But before diving right into it, you are going to need to deal with some administrative, back office and support issues. We’re talking about accounting procedures, policies, tax planning, and a host of other issues that if left untended will make it impossible for your new social enterprise to effect change or make progress. Most new startup changemakers (and most people) don’t have an understanding, nor are they interested in accounting and taxes. This could be because of the stigma that accounting and taxes are inherently boring, or it could be leftover dread from managing their own personal finances and taxes.

After reading this guide, you will have a solid understanding of the most critical issues for a startup dedicated to social impact regarding accounting, tax and governance. This guide will provide a roadmap of sorts, one that many social entrepreneurs have not have access to, but wished they did. Clients have approached our firm for help in untangling messy situations that could have been avoided by being aware of tax rules and staying on top of the accounting. We have seen clients within their first five years of existence have their tax exemptions revoked for not filing tax returns because they were not aware of the requirement. We have seen organizations with misappropriation and embezzlement because no one was reconciling cash accounts regularly. These are more extreme examples of what can happen to well-intended but poorly executed social ventures. Our hope is that time invested in learning about these subjects now will save heartache like this down the road. Let’s jump in.

As a startup changemaker, you are going to be juggling many issues simultaneously. If you are a nonprofit you will be developing your programs, testing them out and iterating based on their success or failure; you will be looking for a team of people to help you execute on everything; you will be furiously looking for funding to support your program costs, money to support you and your operational costs such as staff, office supplies and occupancy, website maintenance, cell phones, contact management systems, and the list goes on. If you’re about to found a for-profit social venture you’re starting with a concept for a product or service that will benefit the customers it seeks to serve. You’ll develop a prototype for a product or a plan for how you’ll deliver your service (for example, providing free lunch to underserved students or low-cost health care to seniors), and then just like a startup nonprofit you’ll look for a team and funding. You’ll put together a business plan that will help you to understand how you’ll make money, if there are customers who will pay for what you’re selling, and how to attract them.

In the initial phase, most transactions will be expenses or cash outflows. When you finally receive funding or donations or your product/service begins to sell, revenue or cash inflows will begin. And once money comes in, it goes right back out again to pay for everything that continues to drive your company forward. Before all that begins, you’ll want to have your accounting infrastructure in place. Why? Because whether your organization is a nonprofit or a for-profit you are accountable to report to the IRS. Even 501(c)(3) charities need to file a tax return. Just because you are tax exempt doesn’t mean you are exempt from reporting accurate information to the government.

You also need to have your cash flow articulated properly because this is something future funders and investors will want to see. You will need to know basic financial metrics of your organization, such as return on investment and net margins. This information flows directly from reports generated by an accounting system and that system is only as good as its inputs.

Additionally, keeping corporate and accounting records is required in most jurisdictions and by the IRS. When you incorporate in states like California or Maryland, you are required to keep adequate and correct accounting records, as well as other organizational documents like board minutes as part of incorporation requirements. The IRS requires this so that when they examine any of your tax returns, you can explain items that are reported on the return. Per the IRS, good records will help you do the following:

1. Monitor the progress of your business
2. Prepare your financial statements
3. Identify the source of income receipts
4. Keep track of deductible expenses
5. Prepare your tax returns
6. Support items reported on tax returns

Recordkeeping aside, the importance of having the correct financial mindset from the beginning is best underscored by a client of our firm that was just getting off the ground with its mission and programs. The founders had all recently graduated and had a good idea for launching a nonprofit. Immediately they set out on speaking engagements and designing the specifics of the program. What they did not bother to do was set a budget, create and use an accounting system of any kind, nor manage its tax obligations. Fast forward to a year later, and the organization was presented with a big grant opportunity that would fund operations for the foreseeable future. One of the requirements to get the grant was to provide compiled financial statements and a budget for the next three years. Later that week they received a barrage of IRS notices assessing penalties and interest for failure to file certain payroll forms W-2 and 1099’s. They realized the immensity of the situation and contacted our firm for help, but by then the deadline to respond to both issues was closing in. By the time they were able to pull together financial records for the prior period the opportunity was gone and they were left to negotiate with the IRS for reduced penalties. Not the ideal way of starting off the early years of your company.

This doesn’t have to be you. The right information and professionals are out there – you just need to find them. This guide will get you started on becoming literate in the accounting and tax issues that face you on the road of social entrepreneurship.

Before you hit the ground running, here are some questions you need to think about as it relates to accounting and tax:

1. How will you track inflows and outflows of cash?
2. What method of accounting will you use?
3. Who will be responsible for managing the accounting?
4. Do you have a calendar of applicable tax deadlines?
5. Who will be responsible for managing tax obligations?
6. Does the organization have a budget of revenues and expenses?


There is a lot to know about accounting and taxes. The following is a sample checklist of the steps involved with getting your new social enterprise started. These steps are covered in more detail further in the guide.

Starting Checklist

1. Decide to be nonprofit, for-profit, or hybrid organization
2. Choose a legal structure, e.g. Nonprofit, C-Corporation, B-Corporation
3. Enlist board of directors
4. Incorporate or become an unincorporated nonprofit association
5. Draft bylaws
6. Apply for an Employer Identification Number (EIN)
7. Apply to the IRS for nonprofit exemption if applicable
8. Register with state
9. Choose accounting method and system
10. Develop accounting manual
11. Develop corporate policies
12. Hire employees
13. Draft budget
14. Make tax payments
15. File annual tax returns

Start Accounting for Business Assets

Big things often have small beginnings. At first, your newly minted nonprofit or social enterprise may only have cash, computers, and a few miscellaneous assets. One of the core concepts of accounting is being able to determine what assets the organization owns. Any entrepreneur creating a new business entity will need to keep business assets separate from any personal assets. Creating a business bank account is paramount. All cash inflows and outflows of the organization will go through this account. This allows the changemaker the ease of tracking all cash outflows and deposits through one account without any interference with personal expenditures. Any other acquisitions will need to be done in the name of the business. For the same reason, it’s important to obtain a credit card expressly designated for business expenses.


Another key preliminary step is to put together a budget, which is just a detailed plan of how you expect revenue and expenses will flow going forward. A budget lets you know if you are staying on track financially and allows you to react accordingly if not. Many social ventures don’t create a budget or have any sense about how money will flow over the first few accounting periods. This sometimes produces unpleasant results, like not having enough funds to pay salaries for staff and rent.

Here are is a very simple expense budget sample:

Legal: Incorporation Fees
Legal: Trademark Search and Application Fee
Office Space
Computer Software, Peripherals and Repairs
Office Supplies
Postage (mail and packages)
Work Phone
Cell Phone
Identity (logo, etc.)
Business Cards
Online Storage/Backup
Printer, Hard drives, etc.
Website Design
Website Development
Website Hosting (monthly fee)
Business Lunches/Dinners
Holiday Gifts for Advisors and Mentors
Business Courses
Coaching + Consulting
Magazines and Books
Public Transportation
Car + Expenses
Transport Total
Health Insurance
Liability Insurance


Tracking financial activity using bank statements and Microsoft Excel may be commonplace amongst new startups, but it is far from ideal. There are a plethora of options for accounting software out there that will do so much more with a lot less work. The first step in figuring out which one is best for your organization is to determine what you need out of it. Do you need to be able to run basic financial statements? Access it online? Allow multiple users to access it? Most entry level and mid market accounting software products have these features included and many others. In the early years of your social enterprise, there won’t be a need for the more complex, higher tier software that comes with a bigger price tag. So narrow it down to the two or three options that fit the output and specifications you need, and compare them against each other. There are accounting software seminars and conferences you can attend where you can try them out, or have a representative walk through the highlights and benefits of each.

A few examples of entry level accounting software include Xero, FreshBooks, Wave Accounting and Quickbooks. Some of the leading mid-market accounting systems include Microsoft Dynamics GP, Microsoft Dynamics SL, Intacct, and Sage. The foundation of all accounting systems is the chart of accounts, which is just a listing of the names of accounts that you will choose along with account numbers. This can be altered to accommodate future changes. Once your software has been setup, you can use the budget you created earlier to generate the accounts you think you will need.

Perpetual Instead of Periodic

A classic mistake of new businesses is to not worry about actually accounting for transactions until the end of the year when it’s time to prepare the tax return. Understandably, before any back office employees are hired, it can be hard to carve out time to enter transactions into the accounting system from bank statements and invoices. And depending on the volume of activity present, you may be able to get away with addressing this chore once or twice a month.

However, the best idea is to make a habit of entering transactions perpetually (i.e., ongoing) instead of periodically. Your accounting records will be more accurate and valuable to the user if they are updated frequently, and you will be more effective at spotting billing errors, collection issues, and fraudulent transactions.

As the business grows over time, it may make sense to hire a part-time bookkeeper or outsource the accounting to a professional.

Outsourcing versus In-house

It never hurts to bring in an expert to help address your accounting challenges. Some organizations have the mindset that they would prefer to focus on mission driven activities exclusively. For these organizations, there are plenty of professionals available to help with back office support and staffing solutions. This can include bill pay, financial statement generation, data entry, and payroll processing. Other organizations like to have the control of employing their own staff in these areas. Keeping a well-trained accounting and finance department can be challenging, and is usually a matter of finding the right people and treating them well. For medium to larger organizations, it is recommended that you retain a top financial official (such as a CFO) and staff to support this person. Using a third-party consultant may also make sense for specific projects in the back office like fundraising optimization, documentation assistance, or compensation studies.

Accounting Method: Cash versus Accrual

A decision you will need to make early on is whether to keep books on a cash basis or an accrual basis. Using the cash method, income is reported in the tax year you actually received it and expenses are deducted in the tax year they are paid. For the accrual method, you report income in the tax year you earn it, regardless of when payment is received. You deduct expenses in the tax year you incur them, regardless of when payment is made.

The cash method will feel more like how your personal finances operate. It is focused on the inflows and outflows of cash. Not much attention is paid to when the revenue is earned or expenses incurred. As a result, you will find this method easier to learn and account for. It isn’t the most accurate, however, and it is usually used by smaller nonprofits without employees or any immediate plans for growth.

Accrual accounting can seem unintuitive if you don’t have an accounting background. However, there are some important reasons why you might chose to use this method. For one, it is easier to budget accurately as well as perform financial projections (running ‘what-if’ scenarios in the future with your finances) and analysis (calculating returns on investment or ROI, and other financial metrics). Whereas expenses typically are incurred on a more rigid schedule, cash can be paid out in irregular intervals. You will be in compliance with GAAP, which stands for Generally Accepted Accounting Principles, the current financial standard of accounting that ensures accuracy, consistency, and clarity when it comes to accounting disclosures. This is good if you ever want to have a financial audit conducted. Also, if your organization has payroll or plans to raise funds from larger donors such as private foundations or the government, accrual accounting is preferred.

Internal Controls

There are certain ways to structure your activities and operations in order to protect the assets of the organization. As your business grows, there will be a greater number of employees and third-parties interacting with the entity. When you begin, fraud and misappropriation of funds will most likely not be on your mind, but these are things that happen, so it’s prudent to start to preparing ways to mitigate these problems. Generally, the more duties are segregated, the better. A good example is to have someone other than the person writing the check review the documentation and sign the check. This way you don’t have one person who can write checks to themselves or third-parties without anyone knowing.

You can have control over cash, payroll, equipment, inventory, expenses, financial reporting and more. Each time your business implements a control, it may take time and money to put in place. A cost-benefit analysis should be done for each potential control to determine if the added security would be worth the investment for your organization. For example, the control above regarding check review and signage might not be worth implementing for some smaller organizations, due to the high costs of hiring another person to review the documentation. Most companies consider this internal control fairly basic as it is an effective way of minimizing fraud.

Here are some other basic checks and balances that mitigate a lot of risk and are fairly easy to implement:

  • Control: Have mail opened by a secretary or administrator
    Benefit: Allows another set of eyes on the daily correspondence flowing into the organization, and prevents mail from being hidden by receiving party
  • Control: Reconcile bank statements to cash monthly, which is essentially comparing the two and making note of any differences
    Benefit: Gives assurance the amount in the bank is congruent with accounting records and helps manage uncashed checks or unauthorized withdrawals.
  • Control: Separate authorization of checks from custody and accounts payable
    Benefit: Prevents staff from diverting cash
  • Control: Have employees use timesheets
    Benefit: Effective tool in managing staff, prevents correct allocation of staff time into accounting system between programs
  • Control: Institute a capitalization policy for certain larger purchases
    Benefit: Good policy to simplify accounting process for purchases
  • Control: Count inventory periodically
    Benefit: Confirms inventory balances compared to accounting records
  • Control: Make journal entries to correct errors instead of changing accounting data retroactively
    Benefit: Leaves audit trail and prevents staff from covering up or hiding unauthorized accounting entries.

Accounting Manual

An accounting manual is the home for all written accounting procedures and provides guidelines that clearly define the process and assign responsibility for each accounting function in the organization. These functions include cash receipts, accounts payable, disbursements, fixed assets and more. It is important to have these procedures compiled into an accounting manual, and updated regularly.

There are four basic benefits of keeping an accounting manual. They document procedures which:

1. Standardize the methods used so that the correct and most efficient procedures are employed consistently by all the people in your organization who need access to this information
2. Help train accounting personnel, including current and new staff
3. Provide non-accounting personnel a reference guide that directs them to the right person to discuss any questions
4. Serve as a management tool to control operations; the procedures used can be specifically prescribed, changes approved, and unauthorized deviations detected

The accounting manual can be extremely useful in providing continuity during periods with high employee turnover. This is because when a key person in your business that was handling all manner of accounting functions leaves, it is very hard to pick up where they left off without a manual that shows clearly what their job function was and what procedures were being used.

Audits, Reviews and Compilations

One of the most important documents your organization will have is the financial statements. These typically include a balance sheet that shows assets, liabilities and equity, an income statement that shows revenue and expenses, and a statement of cash flows documenting activity in a particular period. There are many uses of financial statements, but the idea is to get a good sense for how the organization is doing financially during the current and prior year. Bankers, funders, founders, directors, and the general public will all ask to see them at different times. It could be because the bank is requiring it for a loan or because a donor is asking for it before funding the organization. It is very important that they are accurate and reliable. You will need a certain level of assurance that your financial statements are free from misstatement and error.

There are three main categories of assurance for financial statements: an audit, a review, and a compilation. Compilations are the most basic level of assurance a CPA (certified public accountant) is able to provide. It consists of putting together basic financial statements, sometimes even without footnotes. Although it doesn’t include any sort of analytical procedures or inquiries, and excludes the CPA’s opinion on the state of the financials, you will get peace of mind knowing that a qualified professional has put together the financial statements correctly and in compliance with Generally Accepted Accounting Principles (GAAP). At this level, the accounting data that supports the financial disclosures does not get examined. For this kind of assurance, you will need a review or audit. The above-mentioned services are performed by CPA firms.

A review provides your organization with limited assurance. It will include inquiry, analytical procedures, and other procedures aimed at determining whether or not the financial statements are free from material modifications or misstatements. This level of assurance takes more time and is more costly.

The highest level of assurance is the audit. The audit considers internal controls, fraud risk, testing accounting records, confirming balances, and can be extensive in time and cost. In exchange for this, and assuming all goes well during the audit, you are left with an unqualified opinion that your financial statements are presented fairly, in all material respects. This is highly valuable as most third-party requestors, like donors and banks require audited statements before giving or lending money. State regulating agencies also require this as part of the application for doing business or soliciting in their state.

Governance and Policies

An employee handbook or manual is a key part of your organization’s infrastructure. Think of it as a roadmap for the employee on what they can expect to see from their employer. Broadly speaking, it will cover areas such as background and reference checks, workplace safety policies, vacation and sick leave, benefit descriptions, and evaluations, among many other items. You want to be able to have this resource address most of the frequently asked questions by an employee, and you also want to have it made available to them immediately upon start. This is not only for their benefit, but to also limit liability to the employer.

Conflict of Interest Policy

Invariably in the organization’s existence a conflict will arise, and while it may be easy to resolve, it is best to be consistent and proactive with regards to discovering and defusing conflicts. A common example of a conflict of interest for organizations is when a board member for your organization is also a partner at the law firm being utilized. Back when the organization was thinking about retaining this firm, a decision was made either by management or the board. If this person had not been thinking in the best interest of your organization as is their fiduciary duty, but rather in the best interest of getting new business for their law firm, they may have supported the decision to choose their firm over more suitable options. BoardSource, a nationally recognized knowledge leader for board members serving organizations, says that fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.

Conflicts of interest need to be made known in advance. A policy that outlines what is considered a conflict, how often the questions should be asked, and what should be done when a conflict is detected should be adopted. Although having such a policy is not a requirement, for nonprofits and especially 501(c)(3) nonprofits, it is strongly encouraged. You will want to be able to show that the organization took every step to detect and prevent conflicts around decisions involving compensation determination, vendor selection, purchasing and selling, or any other transactions with the possibility of financial abuse. This is not to say that conflicts of interest are inherently illegal or unethical, or that they have any reflection of the integrity of your organization. The policy is not there to prevent board members and officers from having business relationships with each other, but rather, to make sure that conflicts are addressed properly.

Whistleblower Protection Policy

Whistleblowers are becoming more relevant in today’s society of interconnectedness and information availability. A whistleblower is someone who exposes dishonest or illegal activity within an organization. Having a policy that protects whistleblowers is not only the right thing to do, but can help you comply with the civil and criminal sanctions that may be applied for retaliation against an individual for reporting suspected wrongdoing or illegal activity. Such a policy will encourage your staff to report any illegal practices or violations of policy to the appropriate person in the organization first, and if nothing is done to remedy the action, to the appropriate parties outside the organization such as law enforcement. It will have a clear means for the employee to do this. Your organization should also have a straightforward process for investigating the matter and taking action. This is relevant for all organizations.

Document Retention and Destruction Policy

It is common to see companies store documents well beyond their usefulness and dispose of important documents they still need. Consistency and clarity are the goals of this policy. You want to be able to easily look up a document, such as a payroll tax return, and determine the best practice on how long to retain it (7 years in this case). Such a policy should name who on staff is responsible for storing and destroying documents. This is also important in matters of criminal liability such as the destruction of records with the intent to obstruct a federal investigation. Obviously, the policy should state that no destruction will occur during an investigation.

Compensation Policy

Having a policy that dictates how compensation will be determined, who will make the determination, and how it will be documented is important for all organizations, but especially for nonprofits. As a 501(c)(3) or 501(c)(4) organization, you are subject to a bevy of rules governing compensation. At the core of the issue is whether or not the pay given to your employees is reasonable or excessive. Newly formed organizations may not have higher levels of compensation that trigger these rules, but at some point you will need to be aware that there are best practices in this area. They include review and approval by a compensation committee of any compensation decisions being made for officers, directors, trustees and key employees. The committee should strive to eliminate or minimize any conflicts of interest during this discussion. The determination should involve comparing the compensation of equally qualified professionals in functionally similar positions, at analogous organizations. Finally, the deliberation and decision should be documented contemporaneously.

Nonprofits have an advantage when it comes to determining reasonable compensation. They have access to the Form 990 of all other nonprofits that are open to public disclosure, which they can download by way of [LINK TO:]. A Form 990 is an annual reporting return that most all nonprofits must file with the IRS. Since it provides information on the filing organization’s mission, programs, and finances, and Guidestar allows you to look up other Forms 990 by search, changemakers can use this information as a reference. For example, many nonprofits download similar nonprofits’ Form 990s as a way to compare salary information of top officials and key employees. Keep in mind: the organizations you benchmark against should be comparable. You would want to factor in size by total revenue or total employees, locale, mission, and even what type of 501(c) organization they are. Salaries can also be researched by using surveys or other market data, or by consulting with a third-party expert that does this research. These consultants are usually able to customize a report for your employees that shows all relevant information and can be documented and relied upon in the event of an IRS audit.

The tax issues facing a new social enterprise can be challenging, and ultimately should be approached with the help of an experienced professional. They will also vary depending on the type of business entity you have chosen to use to achieve your mission. Whether you have chosen to incorporate traditionally as a C corporation, operate as a L3C (low-profit limited liability company) or become a full-fledged nonprofit organization with tax-exempt status, you will want to consider the following:

Some tax challenges are universal regardless of entity type while others are unique to entity type.

Tax considerations for all social enterprises

Employer Identification Number

Obtaining an Employer Identification Number, or EIN, is one of the first steps when launching your social enterprises. Usually sought in conjunction with formation steps discussed in the legal guide, A Legal Primer for Changemakers by Carly Leinheiser, Esq., such as incorporation within the state and drafting bylaws, an EIN is required and assigned by the IRS to business entities operating in the US. Think of it as the corporate equivalent to the Social Security Number. You will need it to register for payroll, apply for tax-exemption, open a bank account and much more. Fortunately this is easy to do and can be acquired online on the IRS website.

State and Local Registration

There is no state equivalent to the EIN, although some states will assign you an additional registration number just for their own internal tracking purposes. The federal EIN is your sole unique identifier though, and once attained can be used to register to do business at the state and local level. Every state has their own way of doing things, so it is highly recommended to check with a qualified CPA in your area to make sure nothing has been missed. Typically, this process involves registering with the department of revenue of the state, which can be thought of as the state version of the IRS, registering for payroll withholding, sales and use tax, personal property tax, and others.

Payroll Taxes

The federal government is funded by tax revenue, and payroll taxes make up about 40% of all federal taxes brought in as of 2010. That’s almost as much as from all federal income tax receipts. Employer payroll taxes include Social Security Tax at 6.2% of wages paid up to a maximum of $110,100 for 2012, Medicare Tax at 1.45% and Federal Unemployment Tax (FUTA) at 6% of the first $7,000 of wages paid.

Payroll administration can be overwhelming for entrepreneurs with no previous business experience, and that’s a real shame since most of the heartache can be avoided with simple planning from the onset. When you register for your EIN with the IRS, one of the questions you will answer is whether or not the company expects to have employees in the near future. If yes, upon receiving the EIN certificate, the IRS will remind you of your payroll obligations, specifically that you have a Form 941 and a Form 940 due regularly. These forms report payroll taxes like Federal Insurance Contributions Act (FICA) and Federal Unemployment Insurance to the government. It is at this point you may say to yourself, “Hold on a moment, I don’t have any employees and I already have tax filings due?” For the majority of new businesses, employees will be hired within the first year or two. But for those that don’t, a few years down the road the IRS will assume that you have had employees and will charge your payroll taxes for you! The burden of proof will be on you to supply evidence of not having any payroll, or to correct the IRS assessment that is based on estimates.

So it pays to get payroll taxes right from the beginning. First decide whether the number of employees will be so large that it would make sense to hire a third-party payroll processor, of which there are a few good options. Two of the biggest companies are ADP and Paychex. There are a number of lesser-known but competent payroll processors out there that may be more suited for your business, and may come with a smaller price tag. It is important to compare the options available by all of these providers, including online access to payroll data, ease of use, and customer service, as well as the cost.

Another option might be to use a Professional Employer Organization (PEO). With a PEO, your organization’s employees become co-employees of the PEO. The PEO assumes responsibility for human resources, payroll, tax liabilities and insurance. Your organization would still control the employee’s daily activities, but as the employees are reported under the PEO’s tax identification number, all such responsibilities fall to them. This option is best suited for organizations with 10+ employees that are growing and looking to hire in the future. Outsourcing in this way reduces complexity and risk inherent with human resources and payroll, while also ensuring compliance and continuity with tax filings, insurance policies, regulatory information and software. Being part of the PEO also means being part of a much larger employee pool, which opens doors to better insurance alternatives. There are some downsides to using a PEO, however. Workers compensation insurance can be tricky since the PEO controls what your ‘risk category’ is. This could result in higher insurance rates, or difficulty becoming insured from a private insurer. Cash flow is also impacted, since the PEO will remit liabilities according to their own predefined schedule whereas if you had been handling the payroll internally, you might have been able to defer that liability a bit longer and, in general, have more control over cash. Once again, consider the cost of these services.

If you’re fearless or have some experience, you may want to do all of this ‘in-house.’ This option makes sense for smaller operations with relatively few employees. First become registered with the IRS for payroll, which includes creating an Electronic Federal Tax Payment System (commonly referred to as EFTPS) account. This will allow you to make deposits electronically. You will want to do the same thing for the state, which has its own filing requirements. Organization is important as you must make regular deposits for federal and state taxes on time. Check to see which schedule you are on, whether monthly or semi-weekly, and deposit accordingly. It’s recommended to use calendar reminders to stay on track. The IRS is very quick to assess late filing and deposit penalties with interest in cases of noncompliance, and are usually unwilling to abate them even with reasonable cause. The risk involved with federal deposits is one of the main reasons why some small employers choose to outsource their payroll.

Worker’s Compensation

When an employee gets injured on the job, worker’s compensation insurance can help to offset costs and replace wages and cover medical costs during recovery. In exchange, the worker relinquishes his right to sue the employer for negligence. Most states require this for any business with employees. Employers can meet their workers’ compensation obligations by purchasing an insurance policy from an insurance company. This can be done in conjunction with the payroll processing discussed above, or it can be done independently. Five states and two U.S. territories require employers to get coverage exclusively through state-operated funds. These are commonly called monopoly state funds. A general rule is that if you have employees who aren’t owners of the company, you probably need workers’ compensation insurance.

Independent Contractors versus Employees

Given the higher costs and risk of having an employee, you might be thinking it would be better to contract service providers as non-employees, or independent contractors. Independent contractors are self-employed and provide services under specified contract or verbal agreement for a given timeframe. Independent contractors are usually paid on freelance basis under the terms of the contract. The obvious benefits to you as the employer are that no payroll taxes need be paid, no workers’ compensation need be available, and no benefits need to be provided.

Most of the time it will be clear whether you have hired an employee or hired a third party independent contractor. A new CFO is an employee, third-party legal counsel is a contractor. Sometimes though, the lines get blurred and further analysis is required. For example, what if you hire a web developer to design the website, and then continue to use them for other projects as they come up in the future. Depending on the facts and circumstances of the arrangement, this individual could be classified as either one. In order to determine the status of someone you plan to work with, visit the IRS website where you’ll find the widely distributed ’20 points’ checklist. It explains the multiple factors the IRS might use to evaluate the classification of your worker. Generally, the factors are broken out into three categories: behavioral, financial and relationship. Behavioral factors include whether the employer has the right to give the worker instruction about how, when or where the work is performed. Can you control the hours being worked? Financially, whether your worker uses his or her own tools and equipment to perform the job rather than the employer’s. These factors will play a big role in determining whether someone qualifies as an employee or an independent contractor. So will whether or not the worker can suffer a loss as a result of the work. When considering the relationship between the worker and employer, does the worker have the right to quit or are they contractually obligated to finish the job? Do they serve just your organization or do they have multiple clients?

Hopefully after considering the facts your workers’ classification will become apparent. When in doubt, you can always ask the IRS to make this decision for you. They are more than willing to do so, but don’t be surprised if they lean towards your worker being an employee!

Sales and Use Tax

Your new business will be responsible for paying and collecting sales tax. When a for-profit makes sales of certain goods and services, sales tax will be added to the purchase price. Everyone is already familiar with the concept given it’s ubiquitous in consumer goods, however, you might be less familiar with the concept of use tax. Use tax is assessed upon tangible personal property purchased by a resident of the assessing state for use, storage, or consumption in the state (not for resale), regardless of where the purchase took place.

Let’s say your new business is acquiring furniture for the office and has found great deals online and out of state. This state happens to not assess a sales tax, which may or may not have been part of the decision-making, but either way you’re saving 6%. The furniture will be delivered to your home state, which does assess a sales tax, for use in the office.

In this situation, most states enforce use tax.

Use tax is also self-assessed, meaning the burden of identifying and reporting it to the state is on you alone. States have become more aggressive in recent years with collecting this tax in order to meet budget shortfalls. Enforcement is up with sales and use tax audits occurring more frequently.

Of course, incurring use tax liability could have been avoided had the state just charged the appropriate sales tax rate from your home state and remitted it directly to them. Sounds too good to be true? Well that’s exactly what 22 states are working on in the Streamlined Sales Tax Project (SSTP). SSTP has been at the forefront of an effort to get Congress to change the way sales tax is collected nationally. Legislation is working its way through Congress now that would give state authority to require sellers to collect sales tax on out-of-state sales. But if or until this gets changed, be aware of your responsibilities regarding sales and use tax.

Tax-exempt organizations, especially 501(c)(3) organizations can acquire a special exemption from paying sales tax, depending on the state in which they are operating. Usually there is no exemption on collecting sales tax, so these entities will still need to collect and remit sales tax on items such as periodicals, program guides, goods sold at fundraisers, and on their website.

Tax Considerations for Tax-exempt Social Enterprises

Many social entrepreneurs may consider pursuing tax-exemption for their fledgling nonprofit organization. Applying for tax-exemption status is an additional step taken after a nonprofit has been created, and involves asking the Internal Revenue Service for exemption from federal income tax as a 501(c) organization. This is discussed at length in the legal guide where you will find that the code sections that most likely apply to your organization are 501(c)(3) and 501(c)(4). The discussion below pertains to these two code sections.

What’s involved?

A lot. This is a big step and requires a lot of structural planning to make sure your organization qualifies. There are major differences between for-profits and nonprofits. For example, instead of being able to offer dividends to stockholders and compensation for ownership, compensation has to be paid in exchange for services performed and has to be ‘reasonable,’ which is determined by a study of how others are compensated for similarly sized organization, among other factors. In fact, there are no investors at all in a nonprofit because it is not owned by anyone. Instead of being able to focus on multiple missions or ventures that may not be related but maximize profit, the organization will need to have one exempt mission with underlying programs that further that particular mission. Income earned from sources outside that mission do become taxable despite being a tax-exempt organization, although there are a variety of exemptions to use. Instead of being able to sell the business to the highest bidder, or dissolve the assets to the officers and employees of the business, the organization will have to distribute assets to another similar organization. Essentially all assets held by your tax-exempt organization are no longer ‘yours’, but they are in the public domain. This can be a sticking point for some startups.

Benefits of Tax-exemption

There are many benefits to acquiring this tax status. The most obvious one is that your organization will be exempt from federal income tax, as long as that income is related to the mission of the organization. And since federal income tax rates max out at 35%, this is a lot of money saved and able to be used towards the organization’s mission. Your organization may also qualify for exemption from a variety of state and local taxes, such as real estate tax, property tax, sales tax and income tax. Each state writes its own rules about what kind of allowances it will make for tax-exempt organizations, but generally 501(c)(3) organizations enjoy the most favorable treatment. Tax-exempt organization may also be exempt from certain payroll taxes, eligible for tax-favorable retirement plans, and acquire tax-exempt bonds for funding.

Another widely known benefit is that 501(c)(3) organizations allow individuals and corporations to deduct contributions to them for federal income tax purposes. This provides a big fundraising advantage to eligible nonprofit social enterprises. With some minor exceptions, no other type of tax-exempt organization is able to reap this benefit, which is the reason why 501(c)(3) exempt status is the most sought after status year after year. Roughly 70% of all exempt organizations are 501(c)(3)s, with 501(c)(4)s the next largest category of around 10%. Once you’ve decided on becoming a tax-exempt organization, it will probably make most sense to go after 501(c)(3) status, unless you have a specific reason for pursuing 501(c)(4) status.

Disadvantages of Tax-exemption

In exchange for the offering of financial benefits provided by the government via tax-exemption, your organization will be giving up some flexibility on how it operates and is organized. There are strict requirements applicable to these types of organizations that traditional non-exempt organizations simply don’t have to contend with. Discussed in greater detail below, these requirements include:

1. Limits on compensation to officers and directors
2. Limits on amount of lobbying that can be performed
3. Limits on communication as it pertains to political activity
4. Restrictions regarding how much unrelated income can be earned
5. Restrictions on who can control the organization
6. Boundaries on which activities the organization can conduct

It is also more expensive to launch a tax-exempt organization. Applying for and maintaining tax-exemption requires a qualified attorney or CPA to help you navigate the process. The hourly rates of these professionals could range from $200-$500 per hour depending on the firm selected, and the budget for completing the initial application to the IRS as well as getting appropriately registered with the state could range between $5,000 and $20,000 or more. Ultimately though, it is worth having someone who has experience in these matters consult with you. The IRS does not respond favorably to applications for exemption that are incomplete, incorrect, or hard to follow. There is also a considerable wait time between when the application is mailed until when you will receive a determination letter, which is the final step. This wait time can be as little as a few months to a few years. Where you fall in that spectrum depends largely on how well prepared the application is.

Private Foundation vs. Public Charity

During this application process, you will need to determine whether your enterprise will be a private foundation or a public charity. Technically, all 501(c)(3)s are private foundations by default until proven otherwise. Private foundations typically are more closely controlled by a small group of directors, sometimes related by family, and get their income from one or a few sources. Public charities are comprised of larger more diverse boards and get their income from the general public through contributions or program service revenue.

The decision between these two types of organizations is largely driven by revenue. If your organization is confident it will have revenues from a diverse pool of donors in order to sustain itself over the long term, then it will probably qualify for public charity status. This is usually preferred, as private foundations pay excise tax on their net investment income and are even more regulated than public charities when it comes to lobbying and transactions between the organization and directors, officers, and key employees.

Board Selection

Most nonprofit social enterprises will be formed as corporations, and as a result will have a board of directors appointed to oversee the management of the organization. The founder of a nonprofit won’t have any ownership rights, as no stock or equity is issued to the founder. Their control of the organization will be limited to their vote (if they have one) on the board. Founders should be aware that the board holds a fiduciary relationship with the nonprofit and it must exercise due care. As such, it is important to choose wisely who will sit on the board. It’s not unheard of that the board can fire the founder of a nonprofit. The IRS imposes a requirement that the majority of the members of the board of directors of public charities be composed of persons who are representative of the community being served. What this also means is that the majority of the board members should not be related by blood or marriage to the principal officers of the organization.

There is also no specific minimum number of directors required by the IRS, although any less than four usually will be met with scrutiny. Most states require at least three board members. Regardless, the board should not just meet the minimum legal or technical requirements, but should be appropriately sized for the scope of the programs and mission of the entity. Often times the newly formed board is going to be made up of friends, family or colleagues of the founder who are interested in contributing to the efforts of the mission. It helps to have at least one person who understands finance and accounting that can serve as the Treasurer. Other skills needed for board service include the ability to fundraise for the organization, work well with others, dedicate time, travel, and understand the organization’s core mission.

The bylaws of the organization work to specifically define the roles, powers, and responsibilities of the board. It will also define term limits, which can vary but most often are around three years. Term limits allow new board members to bring their ideas and contributions to the organization while allowing older members to leave the board after their service has ended.

Application for Exemption

This is the Form 1023 or 1024, depending if you are pursing 501(c)(3) or (c)(4) treatment. The Form 1023 requires a range of information to be provided and it is easy to be overwhelmed, even when relying on a professional. It will ask about compensation, policies, procedures, budgets for the next 4 years, relationships between founders and board members and much more. The most important thing to focus on is explaining the mission and programs of the organization thoroughly and clearly, and in such a way that substantiates the code section you are acquiring. Want to become an educational foundation 501(c)(3)? Explain the research and public education campaigns that are being conducted. Want to be a nonprofit that serves underprivileged children in third world nations? Expect to provide information on foreign program offerings, how assistance is delivered, and how selection is determined. The better you can connect what you plan to do with your social enterprise to the code section, as well as using precedent of other organizations that have attained the tax status doing similar ventures, the easier it will be for the IRS to approve the request.

Types of Public Charities

Within the subset of public charity, there are four categories, three of which are relevant for newly forming charities; 509(a)(1)s, (a)(2)s, and (a)(3)s. (a)(1)s are an organization that receives much of its support in the form of contributions and grants from the general public or the government. This is the type of organization that most people think about when they think of a ‘charity.’ (a)(2)s are more service driven, getting most of their revenue from program services, conferences, consulting, and other similar modes. Although less common, this status may be better for your organization depending on how it will conduct its activities. (a)(3)s are supporting organizations. They exist to support a specific organization in conducting its own mission. This would be a more appropriate status if your organization works very closely with another 501(c) organization, has trouble funding its own operations directly, and wants to ‘piggyback’ on the mission of the other organization.

Pending Organizations

After you have submitted the application for exemption to the IRS there comes a waiting period. As mentioned previously, if your organization does not have complexities requiring further research and the application is put together well, you may hear back from the IRS within a few months with their decision. The vast majority of applications do not have such luck and are instead thrown into a queue. This queue wait time is currently a year and a half long. This is a problem for many people in the nonprofit sector and the IRS has acknowledged it is trying to improve how fast it is able to address submitted applications. Until the IRS is able to do something about it, you will likely find yourself as a ‘pending’ 501(c) organization for many months. This can be a challenging place to be for new nonprofits, especially when it comes to raising money. Some big foundations will not grant funds to pending organizations, as they like to rely on determination letter from the IRS. Others are more flexible and amenable to your position. It’s important to know that during this time, even though your organization does not officially have 501(c) status, that it must act in accordance with its application for exemption and the rules as they apply to the code section they claim to be.

One solution is to find a fiscal sponsor, which is an arrangement whereby an existing charitable organization acts as a “sponsor” for a new organization or project, allowing the new organization to receive tax-deductible donations under the umbrella of the sponsoring organization. A fiscal sponsorship arrangement enables a new organization to raise funds and test the viability of a project before going through the lengthy process of establishing a new charitable organization or obtaining its own tax-exempt status.

For more information on fiscal sponsorships see Carly Leinheiser’s guide A Legal Guide for Changemakers.

Charitable Solicitation and Business Registration

An often overlooked issue for new nonprofits is registration in the jurisdiction they will be doing business. Although the nonprofit will be exempt from federal income tax, it won’t be exempt from the many local and state registration requirements that apply. Most jurisdictions also require registration if there will be solicitation of charitable contributions conducted by your organization, or a hired consultant of your organization. If you are registering in just one state, your home state, the application can probably be accomplished with minimal burden. If your organization is planning on doing nationwide solicitation, it would behoove you to hire a professional to take care of these requirements. Keep in mind even online solicitation of contributions can trigger a filing requirement if the organization is specifically targeting persons in the state or receiving contributions from the state on a repeated and ongoing basis through the website. This can be quite technical and time consuming, and there are professionals that specialize in doing just this type of work.

Charitable Contributions

One major component of being a 501(c)(3) organization is facilitating charitable contributions. As described above, these organizations are specifically granted the ability to receive contributions, which allow the donor a charitable deduction on their taxes. This is part of the bargain of being a 501(c)(3) organization, since the charitable, educational, religious or scientific work that is being provided to the general public offset any tax revenue the government would have earned from the donor. However, in order to make sure these charitable contribution donations are legitimate, the IRS imposes recordkeeping and substantiation rules on donors of charitable contributions, and disclosure rules on charities that receive certain quid pro quo contributions. More information can be found on this topic by referring to IRS publication 1771.

Quid Pro Quo

A contribution made by a donor in exchange for goods and services is known as a quid pro quo contribution. A common example is the fundraising event held by the charity. In order to attend you may need to pay $200 per ticket even though the fair market value may only be half that. Because the payment is over $75, the charity must provide the donor with a statement that informs the donor that the amount of the contribution is deductible for federal income tax purposes, but is limited to the excess payment over the fair market value of services received. The statement should also provide the donor with a good-faith estimate of the fair market value of the goods or services

Donor Substantiation

Typically a donor must have some sort of written communication from a charity for a contribution before they can claim the deduction on their federal income tax return. They can also use bank records as evidence. If the contribution exceeds $250, they will need written acknowledgement from the charity. For amounts under $250, the donor may use a bank record or written acknowledgement from the charity. Timing is also important. For the documentation to be valid, the organization will want to issue the acknowledgement by the time the donor files his or her tax return, or the extended filing date if applicable.

Non-cash Donations

Donations of non-cash items are common, and a nonprofit organization should know the general rules of the road since donors will be asking you questions about whether they need to meet certain requirements. The donor substantiation rules apply as they do for cash contributions, but there is some extra work involved. A donation of more than $500 must have a description of the property attached to the donor’s tax return as well as Section A of the Form 8283 in order to substantiate the contribution. If the contribution is more than $5,000, it must seek a qualified appraisal of the property and complete additional sections of the 8283. This is not your organization’s responsibility, although donors may ask you to give them a receipt or thank you letter with a value and description. If you feel uncomfortable with this, the best approach is to educate the donor on their substantiation requirement.

Unrelated Business Income

Your organization should be aware that even though it is exempt from federal income tax, this exemption does not apply to a special kind of income known as “unrelated business income”, or UBI. The idea behind UBI is easy to understand – the IRS exempted your nonprofit to do a certain mission. However, if your nonprofit does other work that it wasn’t exempted to do, it should pay tax on any income earned from such activities. Usually nonprofits don’t make a habit of working in completely unrelated areas outside of their core mission and programs. However, UBI can be triggered unintentionally via activities in the normal course of business. Common examples of UBI include sales of merchandise, advertising income, insurance commissions, debt-financed income, and transfers from controlled organizations, like a subsidiary or affiliated chapter. In order for income to be UBI, it must meet a three-prong test:

1. Regularly carried on
2. Trade or business
3. Substantially related

If you can demonstrate that the income does not meet any one of those tests, you can avoid paying tax. If not, then you will have taxable income and the search for deductible expenses will begin. Most likely, you will have incurred some costs in the creation of such income. These can include cost of goods sold, labor costs, facilities, and depreciation. Additionally, allocations from other cost pools can be made to offset taxable income as long as the methodology is reasonable in the eyes of the IRS, and is applied consistently.

There are certain modes of income that are per se excluded from UBI treatment, including dividends, interest, royalties, mailing list rental, and sublease income. For example, interest earned on the money in the bank will not be taxable, nor will earning rent from leasing out unused parts of the building you are leasing.

Lobbying and Political Activity

Whether your organization is a public charity, private foundation or 501(c)(4) organization, there are limits you need to be aware of for lobbying and political activities. Lobbying, or expressing an opinion and communication directly or indirectly with lawmakers regarding pending legislation, may be an effective way to further your social mission. If you think this might be a substantial amount of the activity conducted by your organization, the 501(c)(4) code section is most appropriate for you. These organizations can do unlimited amounts of lobbying activity, as long as it promotes their exempt purpose. Public charities can lobby as well, but they must limit these activities to an insubstantial amount. That said, there is no bright-line test for what level of lobbying is considered ‘insubstantial.’ Even organizations that spend as little as five percent of total expenses on lobbying have been scrutinized by the IRS. The IRS considers all facts and circumstances when making this determination, and even volunteer time or other non-financial elements can be considered. This is why many 501(c)(3) organizations choose to make the ‘H-election’, which installs rigid dollar amount thresholds that the organization cannot exceed. There are tradeoffs to each though, so when deciding to use this election you should consider the specifics of your organization’s plans to lobby.

Political activity can be defined a number of ways. It can be political electioneering, or participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for political office. This includes publishing or distributing statements in print or on the web. There is a strict prohibition for all 501(c)(3) organizations engaging in political activity. Such endeavors are more suited for political action committees, or else a 501(c)(4), as long they do not become the primary activity of the organization.

Public Disclosure

It sometimes surprises people how transparent nonprofit organizations must be with It sometimes surprises people how transparent nonprofit organizations must be with regards to their finances and operations. Nonprofits are by nature public vehicles with enhanced tax-exempt status, and one of the trade-offs is that their tax return, which includes a lot of information about the organizations operations, revenue, expenses, personnel, compensation, and more, is open to public disclosure. Just as you can research other nonprofits’ 990s for guidance, your organization’s 990 will be automatically made public by the IRS via In addition, the Form 990 should be provided to any person requesting a copy, whether electronically or in person. The Form 990-T is subject to public disclosure rules as well for 501(c)(3) organizations.


I hope you have found this guide helpful and informative. Below is a list of resources where you can find additional information on these topics. One of the most important things to keep in mind as your social enterprise matures is that there is no replacement for hiring good accounting personal and competent third-party professionals. As you can see, there is a lot to know. The world of accounting is dynamic and ever changing, and new, pertinent information is released regularly. New tax regulations change the way organizations report and disclose on their returns. Structural changes at the IRS may impact the process to become a tax-exempt organization. It’s better to keep qualified people that specialize in these knowledge areas close to your organization in order to be ahead of the curve and as efficient and effective as possible.

Social Good Guides (SGG): When is it time to call in a financial consultant or accounting professional?

Aaron Fox (AF): Most new entrepreneurs find out very early on that it’s difficult to build a social enterprise on your own without any prior experience. Truly novice entrepreneurs should have a sit-down with an experienced professional to go over the business plan in order to identify shortcomings and weaknesses. Usually around the time the organization starts to incur some volume of revenue is when the more thorough help from a professional is needed, whether that be in setting up an accounting system that makes your life easier and produces helpful reports, helping the organization fundraise to large foundations, or just establishing good internal policies. Don’t wait until it’s too late to ask for help. There are plenty of service providers out there willing to provide some quick answers and point you in the right direction.

SGG: How do you recommend startup nonprofits and for-profit social enterprises go about qualifying accounting professionals for their needs, and how might that process differ for the two?

AF: An accounting firm, first and foremost, should be experienced in the industry or specialty in which your organization operates. It’s especially important in the beginning to work with someone who understands what you are trying to accomplish and has a track record of being able to make that happen for clients. Ask as many questions as you feel necessary during the up-front meeting. New for-profit businesses are far more common their nonprofit counterparts, so if you are sure becoming a nonprofit is the best path for your new endeavor, you should be more selective on who you work with to ensure they know what they are doing. Ask your provider for references, and benchmark multiple providers to find the right one.

SGG: Under what circumstances would you recommend a startup choose to pursue tax-exemption?

AF: If the organization thinks its activities will qualify it for federal tax-exemption, it should take advantage of this highly sought-after status. The activities that would qualify range from educational, charitable and scientific to representing business industries and promoting social welfare and the common good. However, if the founders of the organization have plans to gain financially from the business, either through selling the business in the future for a profit once it has been established or by taking the enterprise public, the tax-exempt nonprofit structure is not ideal. This sort of private benefit runs contrary to how nonprofits should operate. Still, there is a range of good options for social changemakers to consider that aren’t nonprofits but still act socially responsible and achieve a purpose other than profit.

SGG: Some changemakers might have an aversion to tax and accounting, but having a solid business foundation is so crucial to success. Aside from this guide, what tips or resources do you recommend?

AF: Network with other established organizations working in your industry – you will be surprised how helpful and open other people might be when asked. Keep close contact with a good accounting professional or firm that specializes in your area – often times they will produce free conferences and trainings which can be invaluable for gaining knowledge as well as knowing which questions to be asking. When in doubt, hire an employee who is financially fluent and can act as the top financial official for the organization.

These materials were prepared for informational purposes only. The links to third-party resources are also included for informational purposes only, and their inclusion does not constitute endorsement or approval. The information contained herein is general in nature and may not have application to particular factual or legal circumstances. These materials do not constitute legal advice or opinions and should not be relied upon as such. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Visitors to this website should not act upon any information in this web site without seeking professional counsel.


Council on Foundations website: One of the leading nonprofits for guidance on foundations and philanthropic organizations
EIN Application
Independent Contractor vs. Employee Checklist
Independent Sector website: This organization monitors the nonprofit industry and provides valuable insight
Interactive Form 1023
: Application for Exemption from Federal Income Tax under 501(c)(3)
IRS Website: Charities and nonprofits
Society for Human Resource Management Website: A resource for organizations looking for guidance with human resource management


A Legal Primer for Changemakers
Business Plans and Planning for Social Enterprises and Nonprofits
Operations: An Overview
What’s Strategy Got To Do With It?

ANoteToOurInternationalReaders_new_blueThe guides are primarily intended for social entrepreneurs based on the United States, though some of the resources may be generally of interest to an international audience. Please remember that many of the topics covered by the guides, such as corporate structures, laws and legal customs, accounting, business planning, funding and fundraising, etc., vary widely from country to country, and that the information presented here may not be correct, applicable, or relevant to any other country or jurisdiction.We strongly advise those of you building social impact ventures outside the United States to seek advice and support from reputable professionals who are licensed in your jurisdiction, and/or have area expertise in the country where you plan to build your businesses. For more information, please see our Terms of Use.



Senior Manager, Raffa, P.C., Washington DC

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Aaron Fox is a senior manager with Raffa, P.C., an accounting, consulting and technology firm specializing in the nonprofit industry. He has more than seven years of experience working with tax-exempt organizations to improve compliance and help solve the unique challenges they face.

Aaron consults with clients on unrelated business tax and board governance, IRS representation, exempt status applications, and retirement plan compliance. He is often called to provide staff and client education on a range of topics related to nonprofit tax, including lobbying regulations, nonprofit governance trends, Form 990 best practices, and filing requirements for foreign compliance. Aaron is a CPA in the state of Virginia and graduated from George Mason University with a BA in Accounting.



Partner, Raffa, P.C., Washington DC


Susan Hepner became a partner at Raffa, P.C. in 2009 when her firm Freidkin, Matron & Horn P.A. joined Raffa through a merger. She is a leader in the field of tax and governance structures for multigenerational groups concerned about the long-term protection of their shared assets. During the course of her 25 year career, she has been consistently acknowledged by her peers in Washingtonian Magazine’s “Top Financial Planners” survey. Susan offers clients advisory services in areas such as business strategies, insurance, investments, personal and estate planning and wealth management. In addition to her business acumen, Susan offers clients the benefit of shrewd contract and real estate negotiation, particularly regarding the purchase and sale of property, as well as the ability to provide extensive expertise in residential renovation and construction. 
Susan is a past Chair of the Board of Washington Performing Arts Society, and a current member of the Economic Club of Washington, D.C.
 She holds a bachelor’s of science in finance from American University and a master’s of science in taxation from Southeastern University.



Graphic Designer

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Tara Jacoby is an illustrator and designer living in Brooklyn, New York. While working as the designer for the Society of Illustrators, she earned her BFA in Illustration from the Fashion Institute of Technology. Over the years, she has developed an affinity for poster design and hand lettering. Her work has been recognized by the Society of Illustrators, American Illustration, SILA, Creative Quarterly: The Journal for Art & Design, and others.

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Consultant and Strategist, Social Good Guides

Website | LinkedIn | @think5577

As a Design Strategist and Creative Facilitator, Marc focuses on human-centered design and social innovation. Marc organizes, plans, and leads creative workshops to create positive change and tackle some of today’s gnarly social challenges.

Through playful exercises, he helps people come up with fun, usable, and innovative solutions to challenges. With a graphic and web design background, Marc is able to put ideas generated from these workshops into action, which continues conversations and encourages further collaborations across multiple industries. He loves finding ways for organizations to make huge changes and impacts in unexpected places.

Since 2009, Marc been actively involved, as both an advisor and facilitator, in Project M, an immersive program designed to inspire and educate young creative individuals by proving that their work can have a tangible impact on the world.

A multitude of his collaborative workshops and projects have been featured in the New York Times, Fast Co, AIGA, GOOD, Print, ID, PSFK, and various other design and culture outlets. Marc has lectured and facilitated numerous workshops at a number of distinguished universities and conferences throughout the country. Among other things, Marc is building out Secret Project @ CCA along with teaching in the graphic design department, and leading GOOD SF. He also rides a bamboo bike, makes homemade hot sauce, and unplugs in the outdoors. You can follow him on Twitter, @think557

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Founder, Social Innovators Collective
Series Producer, Art Director and Editor, Social Good Guides

Website | Email | LinkedIn | @shanadressler | @sic_org

In 2011, Shana Dressler founded the Social Innovators Collective with the mission to train and nurture the next wave of social change leaders to help them achieve measurable impact and financial sustainability. Since then she has been creating and leading workshops on business development for social enterprises and nonprofits at General Assembly, New York’s premiere center for entrepreneurship, the Social Good Summit, and social enterprise conferences at Harvard, Columbia, New York University, Brown, the School of Visual Arts, Rhode Island School of Design, and others. In 2014, she designed the curriculum for a startup business school designed to support 21st century entrepreneurial problem-solvers and creatives tackling the most pressing social and environmental challenges of our time.

A deeply committed social entrepreneur, Shana is widely recognized as the first person in New York to organize rigorous educational programming for social entrepreneurs in startup mode. To fill a notable gap in the lack of resources available, Shana co-created the Social Good Guides, a series of 20 guides focused on the essential small-business skills that would-be changemakers need to know and an 8-week workshop called Social Good Startup: Idea To Launch.

Shana is an Aspen Institute Scholar, a member of the International Academy of Digital Arts and Sciences, and a judge for The Webby Awards. In 2014 she became a Delegate to the United Nations Foundation Global Accelerator which brought together a “100 of the world’s top entrepreneurs to work together with policy leaders on global issues.” Shana was recently honored by the World CSR Congress as one of the 50 Most Talented Social Innovators. In addition to frequent travel to far-flung places, Shana loves all things chocolate, and makes her way around New York on a midnight blue Vespa. You can follow her @shanadressler and @sic_org.


Project Manager + Copy Editor: Gladie Helzberg
Web Developer: Keyue Bao
Consultant + Strategist: Marc O’Brien
Series Producer, Art Director + Editor: Shana Dressler


Three years in the making, the Social Good Guides are the result of the generous contributions of a team of esteemed authors, designers, copywriters, proofreaders, project managers, marketing consultants, researchers and interns. Initially conceived as a “nights-and-weekends” labor of love, the project quickly expanded beyond its original scope once we realized that accessible information about the essential small-business skills needed to build sustainable social impact organizations was missing in the social impact space.

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Text © 2015 Aaron Fox
Cover © 2015 Tara Jacoby
All other graphic design and elements © 2015 Social Innovators Collective.

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