A lack of solid documentation is one of the most common mistakes employers can make when addressing an employee’s promotion, performance, behavior, or discipline issue. Not properly documenting, or not documenting at all, can hurt employers and employees in several ways. The value of good documentation is that it helps leaders provide useful feedback to employees, while also tracking both positive performance and areas of improvement. Documentation can make or break a manager’s ability to discipline, terminate, fairly promote, reward, and recognize employees.

Documentation is key to appropriate and effective disciplinary action. Although most employees never require discipline, some exceptions can occur, and it is useful to have a method that objectively, accurately, and fairly documents employee performance. Perhaps most importantly, solid documentation is critical should a terminated employee bring discrimination or other employment-related claims against the company.

One way to appropriately document workplace activities is the FOSA method. Identifying and documenting Facts, Objectives, Solutions and Actions (FOSA) helps ensure a fair and accurate recollection of events. The FOSA method helps keep a reliable record of employee performance, while also serving as a guide for managers when meeting to discuss an employee’s performance. Properly identifying the FOSA of every incident ensures that decisions are made correctly and that the employee clearly understands the expectations and steps to improve their performance.

Facts: Include specific facts explaining the who, what, where, when, and how. When recording the facts, keep them specific and focused on behavior, avoiding labels or attitude. Behavior is something that can be observed, whereas attitude is interpreted. Be careful not to interject your own opinions, emotions, or judgments. Include any information relating to dates, times, and previous discussions with the employee.  For example, John increased sales by 7%, which exceeded his previously established goal of 5%. Michelle was 15 minutes late to work seven times in January.

Objectives: Objectives are your expectations. These can include performance expectations, work habit expectations, attendance and more. It can also include the impact of an employee’s behavior on peers, the organization, coworkers and customers. Define a specific behavior or result for the employee in measurable terms against which you (and they) can gauge performance.

Solutions: Solutions are ideas and suggestions in the form of assistance or coaching that can be offered to the employee to help him or her solve the performance problem. Examples of solutions include training, coaching, education or providing resources. The solutions offered should be designed to help the employee reach their objectives. Remember to include the employee when developing solutions because they may be able to come up with alternatives that you may not have considered. It will also help the employee become part of the solution while increasing accountability and a sense of ownership.

Actions: Actions are the steps in implementing the solutions. This is an important component because the actions communicate the importance of the situation and your commitment to helping the employee resolve the problem. In discipline situations, actions are the consequences for the employee if they do not improve their performance. The actions should clearly outline what will happen if the objectives are not met. When highlighting positive performance, the actions may be outlined as accomplishments or the positive impact that the incident had.

Do not put off documenting employee performance; be sure to write down the incident right away. Do your best to use objective terminology and stay away from vague language like “bad attitude” or “failure to get along with others.” Also, do not use terms such as “always” and “never,” as in, “Joshua never turns in his reports on time.” Using these types of absolutes without being 100% certain will undermine your credibility. Vague phrases that are unsupported by objective facts are almost as bad as not documenting at all.

Always remember that it is the responsibility of business leaders to create an environment of support, not fear. Most employees want to do a good job, and a good leader looks for the best in their employees.

This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.

Unless 501(c)(3) organizations prove they’re publicly supported, the IRS assumes they’re private foundations. The distinction is important because publicly supported charities enjoy higher tax-deductible donation limits and generally are exempt from excise taxes and related penalties.

The tax code recognizes several types of publicly supported organizations, but most 501(c)(3) charities fall into one of two categories. The first, Sec. 509(a)(1) organizations, primarily rely on donations from the general public, governmental units and other public charities. The second category, Sec. 509(a)(2) organizations, have significant program revenue. The IRS has established tests for each type of organization. If your nonprofit doesn’t pass the 509(a)(1) test, it may qualify under Sec. 509(a)(2).

First test

The Sec. 509(a)(1) test requires that:

1. You have at least one third of your total support from the public, governmental agencies or other public charities, or
2. You have at least 10% of your total support from such sources and that the “facts and circumstances” indicate you’re a publicly supported organization.

Several facts and circumstances help determine whether your organization is publicly supported — for example, whether you have actual sources of support above the 10% threshold, answer to a representative governing body and serve the general public on a continuing basis. Such tests measure public support over a five-year period, including the current and four prior tax years.

The public support percentage excludes certain types of contributions, program revenue fees from related activities, unrelated business income, investment income and “unusual grants.” Net income from unrelated activities and gross investment returns are included in total support, though unusual grants aren’t.

Second test

Under the Sec. 509(a)(2) test, your organization must receive at least one-third of its support from contributions from the public and gross receipts from activities related to its tax-exempt purpose. No more than one-third of its support may be from investment income and unrelated business taxable income. Public support is measured over a five-year period.

This test is subject to limitations. When calculating public support, you can count only the greater of $5,000 or 1% of your total exempt-purpose-related revenue from a single individual, corporation or governmental unit in the numerator. Receipts of any type or amount from disqualified persons, such as board members, aren’t considered public support either.

Be careful about misclassifying gross receipts that are subject to the limits. IRS auditors will look for payments that should be deemed gross receipts but instead are classified as, for example, contributions, gross investment income or unrelated business taxable activity.

Mission critical

It’s critical to maintain your nonprofit’s publicly supported status. Certain organizations automatically qualify as public charities. For other nonprofits, we can help determine whether you pass one of the two tests.

© 2023

This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.

Can you guess which months are the least productive of the year? If the timing of this article doesn’t give it away, you might be surprised to hear that it’s the first two months of the year. A study by the data collaboration software provider Redbooth found that January and February are the least productive months. Cold temperatures and daylight hours that are in short supply seem to cause dreary conditions that impact everyone’s productivity.

Instead of simply bundling up and waiting out the slump, try some new actions to boost productivity in your business or organization. Rae Ringel, president of leadership development consultants The Ringel Group, developed four strategies that can breathe new life into this notoriously gloomy time of year:

Experimentation Mode

The new year is an excellent time to think about introducing new routines, tools, and habits into a team’s culture. The more radical the departure from business-as-usual, the more likely employees are to break old habits and reexamine what brings out their best.

Some ideas include replacing hour-long meetings with 15-minute check-ins. Or setting aside one day a week as a meeting-free zone. Maybe even move to a 4-day work week? Whatever your team’s experiment is, be sure to commit to it for at least a few weeks.

Fail-fast February

Sometimes the key to success is failing spectacularly and quickly, but then working and changing a solution until it succeeds. The final product or strategy may be significantly different from the starting point, but in the end, the most important thing is that success is achieved.

Consider designating February (or March) as a month when fast failure will be celebrated. Encourage employees to creatively develop large and small ways to improve the organization, so that leaders can crack open underexplored opportunities and spark new thinking. One way to kick off the “fail-fast” month might include business leaders recalling their own most disastrous professional failures and what they learned from them.

Unexpected Appreciation

Many employees expect some type of monetary gift around the end of the year as a form of appreciation for a year’s work. When leaders surprise their employees with employee recognition moments early in the new year, these gestures can take on greater significance because they don’t feel obligatory. Leaders could frame such gestures as a “thank you in advance” for work to come in the new year. And these acts don’t have to be monumental. Sometimes food-delivery gift cards or other simple gifts can go a long way when they are unexpected.

Reconnecting with What Matters Most

Finally, reconnect your team with what matters most. This may be the customers an organization caters to, the clients it serves, or users of the products it develops. As an example, a law firm might bring in a client whose life was positively affected by the firm’s work.  That impactful work wouldn’t have been possible without a lot of team members who may never have heard the client’s name. The idea is for employees to see themselves as essential sparks in the work the organization performs. Reflecting on the new year can ground your team in your organization’s purpose and meaning.

The new calendar year offers an opportunity to shake things up in a meaningful way. You can’t change the weather, the amount of sunlight, or the general lack of enthusiasm, but the suggestions above can help build energy and excitement that can fuel productivity year-round.

Most not-for-profits can’t afford to turn down offers of financial support. At the same time, you shouldn’t blindly accept government or foundation grants simply because they’re offered. Some grants may come with excessive administrative burdens, cost inefficiencies and lost opportunities. Here’s how to evaluate them.

Administrative and other burdens

Smaller or newer nonprofits are at particular risk of unexpected consequences when they accept grants. But larger and growing organizations also need to be careful. As organizations expand, they usually enjoy more opportunities to widen the scope of their programming. This can open the door to more grants, including some that are outside the organization’s expertise and experience.

Even small grants can bring sizable administrative burdens — for example, potential reporting requirements. You might not have staff with the requisite experience, or you may lack the processes and controls to collect the necessary data.

Grants that go outside your organization’s original mission can pose problems, too. For example, they might cause you to face IRS scrutiny regarding your exempt status.

Costs vs. benefits

As for costs, your nonprofit might incur expenses to complete a program that may not be allowable or reimbursable under the grant. As part of your initial grant research, be sure to calculate all possible costs against the original grant amount to determine its ultimate benefit to your organization.

Then, if you decide to go ahead with the grant, analyze any lost opportunity considerations. For unreimbursed costs associated with new grants, consider how else your organization could spend that money. Also think about how the grant affects staffing. Do you have staff resources in place or will you need to hire additional staff? Could you get more mission-related bang for your buck if you spent funds on an existing program as opposed to a new program?

Quantifying the benefit of a new grant or program can be equally (or more) challenging than identifying its costs. Assess each program to determine its impact on your organization’s mission. This will allow you to answer critical questions when evaluating a potential grant.

The long-run

If your organization has lost grants during the COVID-19 pandemic, you’re probably tempted to welcome any new funds with open arms. But in the long-run, it pays to scrutinize grants before you accept them. Contact us if your nonprofit is trying to grow revenue and needs fresh ideas.

This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.

© 2023