A contribution to a charity isn't always a tax-deductible contribution for the donor, as in the case of "quid pro quo" donations. This exchange of one thing for another happens when a charity receives a payment that includes a contribution and, in return, provides the donor with goods or services valued for less than the total payment.

As your not-for-profit strives to use its resources as effectively as possible, you might at some point consider outsourcing the functions that fall under your accounting and financial umbrella. But wait: You'll need to weigh the pros and cons before making this important decision.

Rules known as "intermediate sanctions" allow the IRS to assess penalties against not-for-profit executives who receive excess compensation — and the board members who have approved it. Do you and your board know what's considered excess compensation and what's viewed as a conflict of interest during the compensation-setting process?

Not-for-profit organizations that file IRS Form 990 must indicate the number of independent voting members or directors of the governing body. (This is entered on Parts 1 and VI.) The IRS is not the only group interested in these facts. Two other groups also focus on the number of independent directors: state attorneys general and prospective donors. All three groups believe that independent directors are the cornerstone of good governance. In other words, they believe independent directors are less likely to cause the organization to violate prohibitions on private benefit and private inurement.