Introduction

AI is giving leaders a once-in-a-generation opportunity to reimagine work, roles, skills, and human potential. Rather than asking how AI can make existing jobs more efficient, leaders should ask a different question: Knowing what AI can do and the unique value of human workers, how do we want to organize jobs differently to improve business outcomes?

The urgency is growing. According to the World Economic Forum, employers expect 39% of workers’ core skills to change by 2030, while 63% identify skills gaps as a major barrier to business transformation. AI and information-processing technologies rank among the most powerful drivers of workforce change over the next five years.

Employees recognize this urgency as well. BDO’s Winning on the People Side of Business research found that 93% of employees and 94% of business leaders identify skills development and training as important to helping their organizations thrive now and in the future, making it one of the most highly ranked people priorities in our study.

This is not simply an HR initiative. It is a leadership imperative to redesign work in ways that unlock both business value and human ingenuity.

Rethinking How Work Gets Done

For decades, organizations have used defined jobs as the way to structure work. They hired employees into specific roles, assigned responsibilities, and their work evolved gradually over time.

AI is disrupting that model.

Many tasks that once required significant human effort can now be automated or augmented. At the same time, uniquely human capabilities such as judgment, creativity, empathy, relationship building, ethical decision-making, and complex problem-solving are becoming even more valuable.

This means leaders need to be asking very different questions:

• Which tasks create the greatest value?
• Which tasks should remain human-centered?
• Which tasks can be automated or augmented through AI?
• Where do people and technology produce better outcomes together?
• How should workflows, teams, and decision-making evolve as work changes?

The organizations creating the greatest value are not simply deploying new tools. They are intentionally redesigning work by bringing together technology, talent, and business strategy to create better outcomes that neither people nor AI could achieve independently.

Equally important, this work should not happen to employees. It should happen with them. Employees understand the realities of their work better than anyone else. They know which activities create value, which consume unnecessary time, which boost engagement, where bottlenecks exist, and where AI can improve efficiency without sacrificing quality, innovation, or relationships. By involving employees in reimagining work, leaders gain better solutions while building trust, reducing uncertainty, and creating greater ownership of change.

Why Traditional Job Architecture Can’t Keep Pace

As organizations reimagine work, they quickly discover that traditional job architecture no longer provides enough flexibility.

Mercer found that fewer than half of organizations believe their current job architecture effectively supports business needs. Traditional structures often struggle to adapt to changing priorities, provide limited visibility into career opportunities, and make it difficult to understand workforce capabilities beyond job titles.

Instead, work is increasingly defined by the combination of capabilities required to achieve an outcome rather than by a fixed position on an organizational chart. In other words, work is becoming more dynamic while many talent systems remain static.

As the pace of change accelerates, organizations need greater visibility into the skills and capabilities that exist across the workforce than traditional job titles alone can provide.

Business leaders recognize the implications. According to the World Economic Forum, 59% of CEOs consider the availability of critical skills a significant business risk, while nearly one-quarter believes their current organizational structure is limiting performance.

That shift naturally moves organizations from managing jobs to managing capabilities. Once work has been reimagined, leaders can identify the skills required to perform it, understand where those capabilities already exist, and invest intentionally in developing the workforce they will need for the future.

Building a Skills-Based Organization

Once organizations reimagine work, they can answer a more strategic question: What capabilities do our people need to create value now and in the future?

This represents a significant shift in workforce planning. Instead of asking, “Who can fill this position?” leaders begin asking, “What skills and capabilities are needed to achieve this outcome?” 

That shift creates meaningful advantages across the organization.

First, it improves agility. When leaders understand the capabilities available across the workforce, they can redeploy talent more quickly as business priorities change.

Second, it strengthens workforce planning. Rather than relying on job titles alone, organizations gain better insight into where to invest in development, where to hire, where to automate, and where existing talent can be reskilled or redeployed.

Third, it expands internal mobility. Employees gain greater visibility into adjacent career opportunities and the capabilities needed to pursue them, making career growth more flexible and responsive to changing business needs. It also creates greater visibility into hidden capabilities that often go unused in traditional role-based talent systems.

Finally, it helps organizations realize greater value from AI. Gartner notes that organizations seeing the strongest returns from AI focus not only on technology adoption but also on redesigning work and business processes to support it.

Unlocking Hidden Talent

One of the greatest benefits of a skills-based strategy is that it reveals capabilities organizations often do not realize they already possess.

Traditional talent systems typically define employees by the jobs they hold rather than the full range of capabilities they possess. Yet employees frequently develop valuable skills through previous roles, education, volunteer experiences, certifications, stretch assignments, and personal interests that are never reflected in formal job descriptions.

These untapped capabilities are becoming increasingly important as organizations respond to rapid technological change, evolving customer needs, and ongoing talent shortages. Too often, organizations hire for capabilities they already have. They simply cannot see them in their existing talent pool.

Understanding the capabilities within their workforce allows leaders to make better decisions about staffing projects, developing employees, building leadership pipelines, and preparing for future business needs. Equally important, it creates opportunities for employees to apply skills that might otherwise remain untapped.

What’s Holding Organizations Back

While many leaders recognize the need to reimagine work, translating that ambition into meaningful organizational change remains difficult.

One challenge is data. Many organizations lack a common language for defining skills or a consistent way to assess workforce capabilities across the enterprise.

Another is governance. Mercer found that organizations with effective job architecture are significantly more likely to have governance processes that keep jobs, skills, and business priorities aligned as work evolves.

Perhaps the greatest challenge, however, is being able to move beyond optimization to redesign.

Many organizations are still asking how AI can improve existing jobs instead of asking whether those jobs should be redesigned in the first place.

Reimagining work requires leaders to challenge longheld assumptions about roles, reporting structures, career paths, and how value is created. That kind of transformation cannot happen without employees.

As AI becomes more integrated into everyday work, employees naturally ask:

1. How will my work change?
2. Which tasks will AI perform?
3. Which skills will become more important?
4. What opportunities will exist for me in the future?
5. How will I continue to learn and grow?

These concerns are particularly relevant for workers in roles experiencing significant AI-driven change. Research shows that women are overrepresented in some of the occupations most exposed to AI disruption, including clerical, administrative, and data-entry roles. At the same time, many younger workers are employed in occupations with medium to high AI exposure. For these employees, uncertainty about the future of work can feel especially personal.

Without proactively acknowledging or addressing these questions, leaders risk creating uncertainty and resistance at the very moment they need employees to embrace change.

Organizations that create environments characterized by Deep Trust and High Expectations® are far better positioned to navigate this transformation. Trust gives employees the confidence to experiment, learn, and adapt. High expectations reinforce accountability, continuous learning, and shared ownership of results.

When employees are invited to help reimagine work rather than simply respond to change, they become active participants in shaping the future instead of passive recipients of it.

What Leaders Must Do to Reimagine Work

Reimagining work helps leaders make one of the most important workforce decisions they now face: whether capabilities should be built, bought, borrowed, or automated.

Historically, organizations addressed capability gaps primarily through hiring. Today, leaders have more options. The right decision depends on a clear understanding of the work to be done, the capabilities required, improving human talents, and where people and technology create the most value together. That is why continuous learning must be the most important part of the organization’s operating model. As AI evolves, so will the skills needed to create value. Leaders must create the conditions for employees to build new capabilities, apply them in meaningful ways, and grow as work changes.

The organizations that succeed will not wait for certainty. They will build while learning, lead while learning, and intentionally shape the future rather than react to it. In the age of AI, competitive advantage will come from leaders who continuously align work, skills, and technology to unlock both business value and human potential.

Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) recently issued Technical Release 2026-02, providing important guidance on the treatment of newly created Trump accounts under the Employee Retirement Income Security Act of 1974 (ERISA). The guidance specifies that Trump accounts established under Internal Revenue Code Section 530A and related employer contribution programs under IRC Section 128 generally will not constitute ERISA-covered employee pension plans.

For employers considering whether to offer Trump account contributions as an employee benefit, the guidance provides welcome clarity and could create an opportunity to offer a tax-favored benefit without the administrative burden typically associated with ERISA-covered retirement plans.

Background

The One Big Beautiful Bill Act of 2025 established Trump accounts as a new type of tax-favored savings account for eligible individuals under age 18. In December 2025, the IRS issued initial guidance on the accounts. During the account’s “growth period” (which generally ends on December 31 of the year before the beneficiary turns age 18), special contribution, investment, and distribution rules apply. After that period, Trump accounts generally operate under the same rules applicable to traditional IRAs.

Account funding can come from several sources, including:

• Government-funded pilot program contributions;
• Qualified general contributions from governmental and charitable entities;
• Employer contributions under IRC Section 128;
• Qualified rollover contributions; and
• Contributions from parents, beneficiaries, and other individuals.

DOL Clarification

The DOL’s analysis specifically focused on whether Trump accounts, and employer contribution arrangements supporting them, create ERISA-covered pension plans.

Under ERISA Section 3(2), a pension plan generally exists when an employer establishes or maintains a program that provides retirement income to employees or defers employee income until termination of employment or beyond.

The DOL determined that Trump accounts generally do not meet that definition because:

• Initial accounts are established by the U.S. Treasury rather than the employer;
• Employers generally have no authority over investments, distributions, or account administration;
• Many Trump accounts are established for employees’ dependents rather than employees themselves; and
• Account control resides with the designated responsible party rather than the employer.

As a result, employer involvement through IRC Section 128 contributions generally will not cause a Trump account arrangement to become an ERISA-covered pension plan.

Important Tax Benefits for Employers

IRC Section 128 allows employers to contribute up to $2,500 annually per employee (subject to future inflation adjustments) to a Trump account maintained for an employee or the employee’s dependent. Those contributions generally are excluded from the employee’s taxable income.

That creates a potentially attractive recruitment and retention tool that can provide tax advantages to employees while expanding employer-sponsored financial wellness programs.

Insight

• Although the DOL guidance does not address deductibility directly, employer contributions made under an authorized employee benefit program would, absent a statutory limitation, generally be expected to qualify as ordinary and necessary business expenses. Employers should monitor forthcoming IRS guidance for additional clarification regarding reporting and deduction requirements.
• Perhaps the most significant practical consequence of the DOL’s guidance is what employers can avoid. Because Trump accounts generally are not treated as ERISA pension plans, employers ordinarily would not be subject to ERISA requirements, including:
  • Form 5500 annual reporting requirements;
  • Fiduciary duties;
  • Claims procedures;
  • Disclosure obligations; and
  • Trust and plan administration requirements.

That distinction might make Trump account programs significantly easier to administer than many traditional employer-sponsored retirement arrangements.

Nondiscrimination Requirements Still Apply

While ERISA compliance might be limited, IRC Section 128 contribution programs are not entirely free from compliance obligations.

Technical Release 2026-02 notes that Trump account contribution programs are subject to rules similar to those applicable to dependent care assistance programs under IRC Section 129. That includes requirements relating to nondiscrimination, eligibility, average benefits testing, employee communications, and benefit reporting.

Employers should therefore expect that contribution programs will require some level of annual testing and compliance review to help ensure benefits are not disproportionately provided to highly compensated employees.

Cafeteria Plan Considerations

The guidance also notes that Treasury has said IRC Section 128 contributions can be offered through a cafeteria plan under IRC Section 125 when contributions are made to the Trump account of an employee’s dependent. However, cafeteria plan treatment is generally not available when contributions are made to a Trump account established for the employee.

Employers contemplating implementation should work closely with benefits counsel and payroll providers to properly structure contribution programs.

Maintaining Employer Neutrality

The DOL has emphasized that employers should maintain a limited role in connection with Trump accounts. To preserve the account’s non-ERISA status, employers generally should not:

• Influence investment decisions;
• Control distributions;
• Impose restrictions beyond those required by the IRC;
• Represent the arrangement as an employer-sponsored retirement plan; and
• Receive compensation related to the accounts.

At the same time, the DOL guidance confirms that employers can engage in various educational and administrative activities without creating ERISA concerns. That includes:

• Providing retirement savings education;
• Posting information on company intranets;
• Facilitating payroll deductions;
• Distributing neutral educational materials; and
• Linking employees to official Trump account resources.

ERISA Relief Does Not Eliminate Other Tax Rules

The DOL has also cautioned that Trump accounts remain IRAs for federal tax purposes. Accordingly, prohibited transaction rules under IRC Section 4975 remain applicable, and some prohibited transactions could result in the loss of favorable tax treatment under existing IRA rules.

Key Takeaways

• Technical Release 2026-02 provides employers with important clarity regarding the treatment of Trump accounts under ERISA. The DOL’s conclusion that Trump accounts and related IRC Section 128 contribution programs generally are not ERISA-covered pension plans could allow employers to offer a tax-advantaged savings benefit while avoiding many of the compliance burdens associated with traditional retirement plans.
• As employers evaluate whether to incorporate Trump account contributions into their employee benefit programs, attention should still be paid to IRC Section 128 requirements, nondiscrimination testing, payroll administration, and maintaining the neutrality necessary to preserve the arrangement’s non-ERISA status.

Written by Norma Sharara and Thomas LeClair. Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

The IRS on December 3 published Notice 2025-68, providing the first guidance on the establishment and operation of “Trump accounts,” a new type of tax-deferred savings account created under the One Big Beautiful Bill Act (OBBBA) for U.S. citizens under age 18 who have a Social Security number.

What Are Trump Accounts?

Trump accounts are a new type of individual retirement account (IRA) for children who have not attained age 18 before the close of the calendar year in which the account is created. Starting July 4, 2026, Trump accounts may be established under new Internal Revenue Code Section 530A. No contributions are permitted before July 4, 2026. Amounts in a Trump account can be withdrawn for any reason starting January 1 of the calendar year in which the child attains age 18.

Accounts must be set up with an initial trustee selected by the U.S. Treasury. A parent or guardian can set up a Trump account by completing new IRS Form 4547 or through trumpaccounts.gov. As of the date of this bulletin, the Form 4547 has not been finalized, and the registration website is not yet operational. Set up of a Trump account includes an election to receive the $1,000 pilot program contribution for eligible children. Only one Trump account per individual is allowed, though rollovers to other providers are permitted. The account must be designated as a Trump account when established and follow specific rules, including being a traditional (not Roth) IRA trust or custodial arrangement under Section 408(a). The notice states that the IRS intends to release a sample written governing instrument for Trump accounts (similar to current IRS model IRA plan documents).

Trustees must meet extensive reporting requirements for contributions, rollovers, and annual disclosures to the IRS and beneficiaries. Trustees must prevent excess contributions and may return funds to contributors to avoid excise taxes.

The IRS plans to issue proposed regulations on Trump accounts and is seeking public comments through February 20, 2026.

What Are the Contribution Rules?

• Are there annual limits? Contributions to Trump accounts are capped at $5,000 annually for 2026 and 2027 (indexed in $100 increments after 2027). Pilot program contributions, “qualified general contributions” (made by state, local, or Indian tribal governments or 501(c)(3) tax exempt organizations), and rollovers are exempt from that limit.
• Who can contribute? 
• • Contributions can be made by parents and others (e.g., grandparents, friends, etc.), but no deduction by any individual is allowed for contributions to Trump accounts.
  • Qualified general contributions by governments or tax-exempt organizations can be based on geographic area or date of birth, but no other eligibility requirements can be imposed.
  • New Section 128 allows employer contributions up to $2,500 annually for 2026 and 2027 (indexed in $100 increments after 2027) per employee (not per child), which counts towards the annual $5,000 contribution limit and are excluded from the employee’s income. For example, if an employee has two children who are eligible for Trump accounts, the employer can contribute a total of $2,500 in 2026 per employee, not $2,500 per employee child. Employers must have a separate written plan to make Trump account contributions that complies with rules similar to dependent care assistance plans under Section 129, including nondiscrimination, eligibility, notification, and statements and benefits provisions.
  • Section 128 Trump account contributions for an employee’s dependent(s) (but not the employee) can also be offered via salary reduction under an employer’s Section 125 cafeteria plan. Such contributions remain subject to the annual limitation on employer contributions discussed above. The IRS intends to issue rules clarifying that Trump accounts are permitted benefits under a Section 125 cafeteria plan, because generally deferred compensation plans are not allowed as qualified benefits.
  • Under a pilot program set forth in new Section 6434, starting July 4, 2026, U.S. citizen children with a Social Security Number who were born after December 31, 2024, and before January 1, 2029, will be eligible to receive a one-time $1,000 federal contribution. The $1,000 will be deposited in the child’s Trump account no earlier than July 4, 2026, and as soon as practicable after enrollment is completed and verified.
  • Additional private funding may be available. For example, Michael and Susan Dell are contributing $6.25 billion to fund Trump accounts, aiming to contribute $250 to children up to age 10 in U.S. ZIP code areas with median family incomes below $150,000, regardless of when they were born. That contribution is intended to inspire other private sector and charitable support for the savings initiative.

Insights

Hopefully, the IRS will publish a model Section 128 written plan document that employers can use, similar to the recent IRS model plan document for qualified education assistance under Section 127. Guidance is expected to clarify that ERISA will not apply to employer Trump account programs.

• When must contributions be made? Contributions must be made by December 31 each year (not by the extended deadline for the taxpayer’s federal income tax return).
• What tax rules apply? Contributions to Trump accounts during the “growth period” (i.e., the period that ends before January 1 of the calendar year in which the child attains age 18) are not includible in income by the child. Pilot program contributions, qualified general contributions, and Section 128 employer contributions do not create tax basis in a Trump account. Contributions from other sources during the growth period create basis in the Trump account. Rollovers from a prior Trump account carry over any basis attributable to the funds being transferred. Contributions to Trump accounts do not impact the ability to make regular (or Roth) IRA contributions. Unlike contributions to IRAs, contributions to Trump accounts may be made even if the account beneficiaries do not have includible compensation.

The notice facilitates the creation of a marketplace by allowing direct rollovers from one Trump account custodian or trustee to another. However, a rollover Trump account cannot be established after the growth period and no rollover contributions can be made to a new rollover Trump account. After the growth period, Trump accounts can be rolled over to an IRA for the child and in limited cases (for example, if there is no tax basis in the Trump account) may be rolled over into a tax-qualified workplace retirement plan if the child participates in that plan. Trump account plan documents may provide that immediately after the growth period, the Trump account will be transferred to a traditional IRA for the child. Any IRA trustee or custodian (including non-bank trustees and custodians) will be eligible to offer Trump accounts.

How Are Trump Accounts Invested?

• During the growth period, investments are limited to broad U.S. equity index funds or exchange traded funds (ETFs) that track a qualified index (for example, the S&P 500 stock market index or any other index that is comprised of equity investments in primarily U.S. companies, not including any industry or sector-specific index, but may include an index based on market capitalization), do not use leverage, and charge minimal fees.
• Annual fees and expenses cannot exceed 10 basis points (0.1%), excluding broker’s sales commissions. The notice requested comments on transaction fees, sales charges, loads, or redemption fees.
• Trustees or custodians must select a default investment and comply with these restrictions.
• Notably, during the growth period, Trump accounts cannot be invested in a money market fund or held in cash (except temporarily, such as dividends or amounts from sales of eligible investments).
• Trump accounts are not required to be invested in a single eligible investment, so multiple eligible investments for a single Trump account are permitted.

What Are the Distribution Rules?

• During the growth period, no distributions are permitted, except for qualified rollovers or due to the death of the child.
• Once a child attains age 18, Trump accounts can be paid to the child for any reason.
• Trump accounts cannot be closed and paid to the child during the growth period.
• Once a child attains age 18, the Trump account becomes subject to rules that apply to traditional, pre-tax (not Roth) IRAs, including inherited IRA treatment for beneficiaries, required minimum distribution (RMD) rules, 10% early withdrawal penalty, Roth conversions, and other rules (but IRA aggregation rules do not apply to Trump accounts). As with traditional IRAs, exceptions to the 10% penalty exist for certain medical expenses, qualified higher education expenses, and first-time homebuyers.

Action Steps for Employers

Employers should start considering whether to offer contributions to Trump accounts as a new employee benefit. Even though contributions are not permitted before July 4, 2026, employers will need to coordinate payroll and other administrative processes.

Why organizations investing in AI still struggle to translate adoption into measurable business value

Organizations have largely moved beyond debating whether AI should be integrated into their operations. Employees are using AI. Teams are testing use cases. Organizations are investing in copilots, AI platforms, and training programs. Yet many leaders are still asking the same question:

“Why are some organizations seeing measurable value while others are still struggling to move beyond experimentation?”

The challenge is not lack of interest in AI. It is the growing gap between adoption and operational integration. In BDO’s Techtonic States Chapter 2 report, Build Your Business Edge, 42% of organizations reported that their infrastructure still requires modernization to support AI and emerging technologies. While technology readiness remains a challenge, operational complexity, fragmented processes, and disconnected systems continue to limit the value organizations realize from technology investments.

Those same challenges are now surfacing inside AI initiatives. Many organizations are adopting AI tools faster than they are adapting the business processes, governance structures, and management practices needed to support them. That disconnect is often where AI ROI begins to stall.

Why AI Adoption Doesn’t Always Translate Into Business Value

Most organizations begin their AI efforts with technology deployment and employee training. Those investments are important, but they do not automatically change how work moves through the organization, how decisions are made, or how outcomes are measured.

As a result, many organizations experience:

• Strong adoption within individual teams
• Successful pilots that struggle to expand
• Productivity gains that remain difficult to quantify
• AI initiatives that operate separately from core business processes

The breakpoint occurs when organizations assume that technology adoption and business change are the same thing, which is a common misunderstanding.  In practice, adoption measures whether people are using the tools. Business value emerges later, when organizations rethink how work is performed, managed, and evaluated because of it. That distinction becomes increasingly important as organizations move from experimentation to enterprise-wide expectations around growth, efficiency, and return on investment.

What Organizations Seeing Stronger Results Have in Common

Organizations generating measurable value from AI tend to focus less on the tools themselves and more on the business environment surrounding them. Rather than asking how to increase AI usage, they focus on where AI can remove friction, improve decision-making, or support more consistent execution. Several patterns appear consistently:

They redesign workflows — not just tasks

Many organizations use AI to improve individual activities. Leading organizations evaluate entire workflows and identify where AI can streamline handoffs, reduce manual effort, or improve visibility across teams.

They establish governance early

Governance is often viewed as a constraint on innovation. In practice, clear guardrails can help organizations scale adoption more confidently by clarifying ownership, accountability, and acceptable use. These guardrails become increasingly important as AI is embedded into business-critical processes. In BDO’s Techtonic States Chapter 3 report, Protect Your Business Edge, 76% of organizations anticipated increased cyber threats as emerging technologies continue to evolve.

They align leadership expectations

Organizations often struggle when AI initiatives are measured primarily through adoption metrics. Leaders seeing stronger outcomes tend to focus on operational and business indicators such as cycle time, consistency, throughput, and decision quality. The common thread is straightforward: they treat AI as a business initiative, not solely a technology initiative.

What Measurable AI Value Actually Looks Like

One reason AI ROI can be difficult to quantify is that organizations often look for value in the wrong places. Early indicators such as licenses deployed, employees trained, or prompts generated may demonstrate activity, but they rarely demonstrate business impact.

Organizations often begin to see measurable value when AI contributes to outcomes such as:

• Faster decision-making
• Reduced manual effort
• Improved consistency across teams
• Increased throughput
• Better use of employee capacity
• Improved access to institutional knowledge

These outcomes are rarely driven by technology alone. They typically emerge when AI becomes embedded within existing business processes and supported by the operating model around them.

Questions Leaders Should Be Asking

Many organizations continue to evaluate AI through a technology lens:

• Is AI integrated into day-to-day workflows?
• Where is AI being applied in the business?
• Have we trained enough people?

Those questions matter, but they do not necessarily explain whether value is being created.

Leaders seeking stronger outcomes often focus on different questions:

• Which business processes should operate differently because AI is available?
• Where are manual handoffs slowing decision-making?
• How should accountability change when AI becomes part of the workflow?
• What governance structures are needed to support broader adoption?
• Which business outcomes should improve if AI is delivering value?

These questions shift the conversation from technology usage to business performance, where more meaningful discussions about ROI begin.

Executive Takeaway

Organizations rarely struggle with AI because employees are unwilling to use the technology. More often, they struggle because the business continues to operate the same way after the technology has been introduced. Technology investments can create new opportunities, but measurable value is more likely to emerge when workflows, governance, management practices, and performance expectations evolve alongside them.

The question for leaders is no longer whether AI should be part of the business, but whether the organization is prepared to change the way it works because of it.

Written by Ric Opal. Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

Family offices are created to manage complexity, but many of the operational challenges they face are familiar: attracting and retaining talent, maintaining continuity, coordinating multiple advisors, and building reporting processes that keep pace with an evolving wealth structure. As families expand their investment holdings, entity structures, philanthropic activities, and administrative needs, the demands on the family office often grow as well.

For some families, those demands raise a practical question: should every function remain in-house, or are there areas where outsourced support may provide added structure, continuity, and coverage? Increasingly, families are considering outsourcing not as a replacement for the family office, but as a way to strengthen it.

Operational Challenges Family Offices Face

One of the most persistent challenges is talent. Although the family office sector has grown significantly, the number of professionals with direct experience working in these environments remains limited. The challenge can become even more pronounced when geographic preferences, privacy concerns, and the broad range of responsibilities assigned to a family office finance leader are taken into account.

Even when a family is able to hire someone with the relevant background, no two family offices operate the same way. Differences in investment strategy, governance, trust and estate structures, philanthropic priorities, and tax considerations mean that a single individual may not bring the required experience across every area the family needs to address.

Continuity is another important consideration. Many family offices depend heavily on the institutional knowledge of a long-tenured CFO, controller, or other trusted professional. When that individual retires or leaves, families may face a difficult transition as processes are handed off and historical context must be rebuilt. In some cases, that transition can expose gaps in reporting, workflow management, or advisor coordination.

Why Coordination Matters

Family offices typically work with a wide network of external advisors, including investment managers, attorneys, tax professionals, insurance advisors, and others. Each may provide sound advice within their own discipline, but without a clear structure for coordination, families may not always have full visibility into how one decision affects another area of the wealth enterprise. This can be especially relevant when tax, liquidity, legal, and governance issues overlap. A family may be making decisions based on incomplete information simply because the right parties are not connected at the right time. In other situations, developments may not be addressed until after they begin to surface through reporting cycles or tax compliance deadlines.

Technology and reporting can add another layer of complexity. Some family offices still rely on a patchwork of systems, spreadsheets, and manual processes to track cash flow, capital calls, entity activity, and financial obligations. When information is spread across multiple sources, it can be more difficult to maintain timely visibility and support more informed decision-making.

How Outsourcing May Complement the Family Office

For families evaluating these challenges, outsourcing certain family office functions may offer a practical alternative or complement to a fully in-house model. Rather than concentrating responsibility on one internal executive, an outsourced or co-sourced approach can provide access to a broader team supporting accounting, reporting, tax coordination, governance, and other operational needs.

This approach may also help address continuity concerns. When knowledge, processes, and reporting responsibilities are shared across a team, the family office may be less dependent on a single individual. Likewise, more centralized processes and reporting tools may help families maintain better visibility across entities, investments, spending, and philanthropic activities.

Outsourcing may also help strengthen the family office’s overall risk profile. In addition to potential efficiencies in cost, time, and technology, an outsourced model can reduce exposure to internal errors, control gaps, compliance challenges, and single-threaded processes that depend too heavily on one individual’s knowledge. By shifting certain responsibilities to an experienced third-party provider, families may benefit from more institutionalized processes, broader oversight, and a more current operating environment.

A Strategic Question for Family Offices

For many families, the decision is not about replacing the family office. It is about evaluating where internal resources are best deployed and where external support may help create a more consistent operating model.

As family offices continue to evolve, so do the expectations placed on them. Families often manage increasingly complex structures while also seeking timely information, coordinated planning, and operational continuity. In that environment, outsourcing may become part of a broader conversation about how the family office is structured to support current needs and adapt over time.

Written by Betsy Flanagan. Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

Family offices play a pivotal role for multigenerational wealthy families, often serving as the central hub for financial management, estate planning, and family governance. However, even the best-intentioned family offices can encounter pitfalls that could derail their long-term success. This article explores 10 common ways family offices can go off track and offers insights into how these issues can be addressed. While this is by no means a comprehensive list, each topic should encourage further communication and planning within families and the family office team members that support them.

This article focuses on midsized, privately held family offices that primarily serve lifestyle management and wealth preservation functions for one or a few generations. These family offices typically manage private capital across a mix of assets—often including real estate, operating businesses, and market investments—but are not yet operating at the scale or complexity of institutional-grade offices. While they may not have formalized governance structures or deeply specialized internal teams, they are actively growing in capability and ambition. The focus is on those family offices that are early to mid-stage on the “maturity curve”—with the interest, and the capacity, to professionalize and scale further.

1. Governance by Gut

In the family office context, governance refers to a framework for family direction and decision-making based on a shared mission and goals. Too often, the purpose of a family office, the services it has been tasked to provide, the goals it aims to achieve are vague. Additionally, the decision-making framework within the family office can be authoritarian or opaque. This model may work when the family office services a single generation, but challenges arise as the number of family members, family units, and generations supported by the office grows. Someone needs to be empowered (or hired) to spearhead conversations about establishing well-defined governance frameworks and communication channels. While often difficult and time-consuming, this enables all stakeholders to be included, informed, and engaged in the family office’s long-term success.

2. Siloed and Stalled

Most family offices operate using a distributed service model, meaning some functions are managed internally while others are outsourced to third-party providers, including investment advisors, bankers, attorneys, insurance brokers, and others. Coordinating such a diverse set of stakeholders can be difficult and time-consuming, yet collaboration is the cornerstone of a successful family office. When advisors operate in silos, the lack of collaboration can lead to unintended consequences and missed opportunities. Investing time and resources in the cross-pollination of ideas is likely to pay dividends in the long run.

3. Succession Stumbles

Like operating businesses, family offices benefit from robust succession planning to safeguard continuity. It protects the long-term viability of the family office entity and minimizes potential conflicts or oversights down the road. Unfortunately, succession planning takes significant time and effort and requires accepting that the key individuals who may have faithfully served the family in the past will not be the same ones to serve future generations. In addition to identifying who will be the future family office leaders, a succession plan should include a clear process for transferring the historical knowledge that has been accumulated over the years – not just the what (assets the family owns) and where (documents are stored), but the why (certain decisions were made and/or advisors were appointed). Capturing decades of insights and information, storing that information so that it can be easily accessed, and creating a systematic approach for continuing to build on this foundation takes forethought and effort by those at the helm. Unfortunately, this work falls into the “important, but not urgent” category, and day-to-day responsibilities and requests often get in the way of making progress, catching many family offices off guard with a retirement announcement, illness, or death.

4. When the Glue is Gone

Many family offices rely on a few key people that seem to know everything about day-to-day operations, along with key nuances for successfully serving the family. They seem to always know who to call, where every document is saved, and how to address even the most esoteric needs. Documenting responsibilities and cross-training functional roles is difficult in a small family office, but it’s important to help mitigate the risks associated with key person dependency. These risks not only entail the disruption caused by an unexpected leave of absence or resignation, but the fraud risk inherent in such a role. Periodic internal control assessments, automated transaction testing, and dual approval of expenditures over a certain threshold are examples of techniques that can be applied to mitigate some of these risks.

5. Silence Isn’t a Strategy

Avoiding conflict for the sake of family harmony can lead to breakdowns in communication and put significant stress on family office employees. Ignoring difficult conversations about inheritances, unhealthy spending habits, poor investment decisions, drug and alcohol dependence, competing priorities, and lack of financial independence may put family office employees in a bind when these issues conflict with the goals and objectives they are trying to achieve for the family at large. Encouraging a professional approach to communicating concerns and providing the family with professional resources to address these issues will enable a cohesive working environment for the family office and strengthen relationships with family members.

6. Next-Gen Neglect

Engaging the next generation is essential for preserving the family’s legacy and ensuring continuity. Failing to involve younger family members in decision-making processes can result in disconnection and a sense of loss of purpose. By fostering relationships and providing opportunities for involvement, family offices can empower the next generation to take an active role in serving and supporting the family wealth enterprise. This engagement not only strengthens family bonds but also prepares future leaders to carry the family’s legacy forward. In addition, rising leaders often want to choose their own advisors (such as attorneys and tax accountants) and increasingly want more direct access to information such as their personal balance sheet, cash flow reporting, and investment performance reporting.

7. Only Counting What’s in the Bank

Human capital is a valuable asset for any family office, regardless of the number of employees. Neglecting employee policies and professional development can lead to dissatisfaction, turnover, and inefficiency. Implementing comprehensive human resources practices, including employee handbooks, annual performance reviews, compensation adjustments, and career development plans is not only an essential risk management technique but also enhances employee satisfaction and strengthens the family office’s overall capabilities.

8. Tech Without Traction

In today’s rapidly evolving technology landscape, family offices are presented with a growing array of software programs geared to serving the ultra-high net worth space. While some eagerly embrace sophisticated new tools, others struggle to move away from the familiar basics of QuickBooks and Excel. There are increasing demands for real-time liquidity and balance sheet reporting, yet it is easy to underestimate the accounting and investment reporting expertise required to produce accurate statements, let alone the complexities involved in compiling the data that underpins these reports. When implementing new technologies, it is easy to misjudge the level of expertise needed to administer more sophisticated systems, leading to frustration when the promised efficiencies and enhanced reporting fall short of expectations. Family offices are more successful when they take a balanced approach to evaluating and implementing new technologies, one that encourages investment in new solutions while also providing a roadmap for optimized adoption and use.

9. When Simple Gets Complicated

Many family offices seek tax-efficient solutions for growing and passing down wealth, employing tools such as family limited partnerships, complex trust structures, and for-profit business models with the use of carried interest. Often, however, family office employees are not up to speed on the intended purpose and technical aspects of these structures, nor do they have the right technology and resources to support efficient and accurate administration. Collecting and storing important documents, building and maintaining trust summaries and entity organizational charts, producing consolidated income statements and balance sheets, anticipating liquidity shortfalls, and projecting cash flow needs become increasingly challenging as the complexity of asset portfolios grows. Providing time, training, support, and tools to help manage turmoil is important for optimal outcomes.

10. The Hidden Cracks

In many family offices, failing to address and mitigate risks can lead to substantial threats, particularly in areas such as cybersecurity, fraud, and privacy breaches. Family members may be allowed to use free email accounts to communicate with the family office and outside advisors. Multi-factor authentication is viewed as an unnecessary annoyance. In family offices with only a few employees, implementing segregation of duties to prevent or detect fraud becomes a formidable challenge due to limited personnel available to divide responsibilities effectively. Although many family offices perceive themselves as small and straightforward, the reality is that they often face significant risks in today’s complex environment. Family offices of all sizes should prioritize the implementation of comprehensive risk management strategies to protect their assets and ensure privacy.

 How a CPA and Advisory Firm Can Help Family Offices Navigate Complexity

As family offices grow, so does the complexity of managing wealth, operating businesses, real estate holdings, trusts, and multigenerational planning. Many of the challenges discussed above—from governance and succession planning to entity administration and reporting—require specialized expertise that extends beyond investment management. A coordinated team of advisors can help family offices create structure, improve communication, reduce risk, and support long-term wealth preservation.

At Bregante + Company LLP, we work with family offices, high-net-worth individuals, closely held businesses, and multigenerational families to help simplify complexity. Our team provides strategic tax planning and compliance, family office accounting and reporting, entity structuring, succession planning, trust and estate coordination, cash flow management, and advisory services designed to support both current and future generations. Whether a family office oversees operating businesses, real estate investments, private partnerships, or a combination of assets, we help create systems and processes that improve visibility, strengthen governance, and support informed decision-making.

A Step-by-Step Guide for Nonprofit Leaders

Key Takeaways

• A nonprofit impact statement explains the problem you address, your organization’s approach, and measurable outcomes.
• Strong impact reporting builds donor trust and strengthens grant proposals with clear, outcome-focused evidence.
• Focus on outcome measurement, not just program activities, to show real change for people and communities.
• Apply a Human, Compelling, Visual Communications framework — clear, people-centered, and visual — helps nonprofits turn complex data into messages that motivate action and support fundraising goals.

Introduction

Every nonprofit has a story, but as competition for funding increases, clearly communicating impact matters more than ever. Donors, funders, and other stakeholders want to see strong evidence that their support is making a difference. In fact, 93% of donors in a 2025 philanthropy survey said they are more likely to give knowing the impact of their contributions.

For nonprofit leaders, crafting a powerful impact statement is one of the most effective ways to demonstrate results, build trust, and inspire action. This guide will walk you through the steps to create an impact statement that transforms data into a compelling narrative, motivates and energizes stakeholders, and sets your organization apart.

What Is an Impact Statement and Why Does It Matter for Nonprofits?

An impact statement is a concise, data-backed declaration that explains the challenge your nonprofit addresses, your unique solution, and the measurable results you achieve. It answers the essential question: “What does our data reveal about the problem we’re solving, and how does it prove our effectiveness?”

While closely related, an impact statement differs from traditional mission, vision, or values statements.

• Mission Statements focus on what your organization aims to do
  • Example: “To provide food and shelter to individuals experiencing homelessness”
• Vision Statements describe the ideal future state your organization hopes to achieve
  • Example: “A community where no one experiences housing or food insecurity”
• Values Statements name the principles that guide behavior within your organization
  • Example: “Compassion, Integrity, Collaboration”

Unlike these organizational statements, an impact statement is rooted in concrete evidence and focused on outcomes. It’s your nonprofit’s proof of impact, delivered in a way that’s clear, memorable, and actionable.

Example: Our data reveals that 90% of children in our after-school program improve their reading levels by two grades within a year, breaking cycles of academic struggle and empowering futures.

Why Impact Statements Matter for Nonprofit Success

Building donor confidence is essential for nonprofit growth. According to the Fundraising Report Card, 59% of respondents say shared accomplishments are the top signal of a charity’s trustworthiness, underscoring the importance of clear, data-driven impact statements. A strong impact statement can:

• Boost Donor Confidence

Donors want proof their gifts matter. A clear impact statement delivers that evidence.

• Strengthen Programs

Regularly analyzing your data sharpens your understanding of what works — and what doesn’t.

• Engage Stakeholders

Volunteers, community partners, and staff feel more connected when they see the real impact of their efforts. It fosters a shared sense of purpose and reinforces the value of their involvement.

• Win More Grants

Grantmakers prioritize data-driven proposals. Your impact statement showcases your commitment to measurable outcomes.

• Empower Advocacy

Data-backed stories make your voice louder and more influential in policy and public debates, raising awareness and driving systemic change.

A Common Pitfall to Avoid

Transparency is key to sustaining donor support. The Fundraising Report Card also reports that 1 in 4 potential donors would be discouraged from giving if they weren’t sure how the charity would use their money and 1 in 5 would feel the same if the charity did not share clear recent accomplishments. An effective impact statement directly addresses this concern by showing exactly how contributions make a difference.

5 Steps to Create a Successful Impact Statement

1. Define the Challenge and Your Unique Solution

Clearly state the core challenge your organization addresses and what makes your approach effective. Gather insights from frontline staff and dig deeper to identify the specific needs you meet.

1. Identify and Visualize Key Data

Choose metrics that best illustrate your impact. Focus on outcomes (e.g., reduced food insecurity) rather than just outputs (e.g., meals served). Use Human, Compelling, Visual Communications — leveraging charts, infographics, photos and video — to make your results easy to grasp.

1. Ask “What, So What, Now What?”

For each data point, ask: “What does this tell us? So, what’s the bigger story here? Now, what do we do with what we know?” Facilitate discussions with your leadership team and board to explore the deeper meaning behind your data. This process helps you connect numbers to real-world change and actionable insights.

1. Craft a Clear, Concise Narrative

Combine your challenge, solution, and results into one or two powerful sentences. Use active voice and strong verbs. Pair your statement with visuals or testimonials for greater impact.

1. Make It Future-Focused and Actionable

Highlight ongoing needs and future potential. Use your impact statement to inspire action, whether it’s donating, volunteering, or advocating. Focus on creating an impact statement that can evolve as your programs and data grow.

Putting Your Impact Statement to Work

Once you’ve crafted a results-driven impact statement, integrate it into your communications strategy:

• Internal Team Alignment: Help every team member understand and articulate your impact statement confidently.
• Donor Communications: Feature it in grant proposals, annual reports, and fundraising appeals.
• Marketing and External Communications: Display it prominently on your website, social media, and outreach materials.

Frequently Asked Questions

What is a nonprofit impact statement?

A concise, data-driven summary that explains how a nonprofit’s programs create measurable social or community outcomes.

How is an impact statement different from a mission statement?

A mission statement defines purpose, while an impact statement demonstrates results using evidence and outcomes.

Why do donors and funders value impact statements?

They provide transparency and proof of effectiveness, helping stakeholders understand how their support creates change.

What makes an impact statement effective?

Clear outcome data, plain language, and human-centered, visually engaging communication that makes results easy to understand.

How often should nonprofits update their impact statements?

Regularly, as new outcome data becomes available and programs or priorities evolve.

Written by Mara Minz and Sue Miller Wiltz. Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

California has finalized significant updates to the California Consumer Privacy Act (CCPA) that took effect January 1, 2026. The new regulations, issued by the California Privacy Protection Agency (CPPA), expand privacy obligations for businesses—particularly technology companies that rely on data, AI, analytics, and automated decision-making. At the same time, the CPPA has signaled a more aggressive enforcement posture, increasing compliance and operational risk for companies that are unprepared.

Why This Matters for Technology Companies 

The updated CCPA framework shifts privacy compliance from a primarily policy-based exercise to an ongoing governance, risk management and operational requirement. Companies should expect regulators to examine not only disclosures, but how data is collected, processed, retained, and used across systems and platforms—especially where automation or AI is involved.

Key changes include: 

• Mandatory Cybersecurity Audits (Phased based on revenue, Beginning 2027)
• Mandatory Privacy Risk Assessments (Effective 2026)
• New Rules for Automated Decision Making Technology (ADMT)
• Expanded Consumer Access Rights
• Heightened Enforcement Environment

Who Must Comply 

The California Consumer Privacy Act (CCPA), as revised effective January 1, 2026, applies to for profit businesses that do business in California and meet the following criteria:

• Activities that trigger a risk assessment:
  • Processing sensitive personal information
  • Selling or sharing personal information
  • Profiling / automated decision-making (ADMT) impacting consumers in a significant way
  • Any processing that could present a material risk to consumer privacy
• Activities that trigger a cyber audit:
  • Derives 50 percent or more of its annual revenues from selling or sharing consumers’ personal information

OR

• • As of January 1 of the calendar year, had annual gross revenues in excess of $25M in the preceding calendar year (adjusted for inflation)

AND

• • Processed the personal information of 250,000 or more consumers or households in the preceding calendar year

OR

• • Processed the sensitive personal information of 50,000 or more consumers in the preceding calendar year.

A physical presence in California is not required. As a result, many technology companies—including those operating SaaS platforms, data driven services, digital advertising models, AI enabled products, or automated decision making technologies—fall within scope based on their scale, data practices, or interactions with California residents.

What Technology Companies Should Be Doing Now 

• Identify high risk data processing and AI/automation use cases
• Assess readiness for formal privacy risk assessments
• Understand the scope of where California consumer personal information is stored
• Review data retention, access, and deletion practices
• Align privacy, security, and governance functions

Bottom Line

The updated CCPA represents a meaningful shift toward operational privacy and cybersecurity governance, particularly for data-driven and AI-enabled technology companies. Early action in 2026 will be critical to managing compliance, risk management, avoiding enforcement exposure, and maintaining customer trust.

How Small and Medium-Sized California Businesses May Be Affected

While the CCPA is often associated with larger companies and technology businesses, small and medium-sized businesses in California should not assume they are automatically unaffected. The law generally applies to for-profit businesses that do business in California and meet the certain thresholds, including annual gross revenue over $25 million, buying, selling, or sharing personal information of 100,000 or more consumers or households, or deriving 50% or more of revenue from selling or sharing personal information.

Even businesses that fall below these thresholds may still feel the impact indirectly. For example, a smaller company that serves as a vendor, service provider, or contractor to a larger CCPA-covered business may be asked to follow privacy-related contract terms, data security requirements, or documentation standards. California regulators note that the CCPA applies differently to businesses, service providers, contractors, and third parties, making it important for companies to understand their role in handling personal information.

Small and mid-size businesses should also pay attention to their website and marketing practices. Companies using online forms, email marketing platforms, CRMs, analytics tools, cookies, advertising pixels, or other tracking technologies may be collecting or sharing personal information in ways that create privacy obligations or contractual risk. The 2026 regulations place greater emphasis on how data is collected, used, retained, shared, and protected, especially when automated decision-making, risk assessments, or cybersecurity requirements are involved.

For many businesses, the practical takeaway is this: privacy compliance is no longer just a concern for large technology companies. It is becoming part of basic business operations, vendor management, website governance, and customer trust. Small and medium-sized businesses may benefit from reviewing their privacy policies, website disclosures, vendor agreements, data retention practices, and internal procedures now—before a client, regulator, or legal claim forces the issue.

Upon filing 2025 federal income tax returns, some individual taxpayers have received IRS Notice CP53E demanding that they provide bank account information to receive a refund of overpaid tax. In a number of cases, these notices have been issued even when the taxpayer did not request a refund, raising concerns that fraudulent third-party notices may be circulating with the sole purpose of stealing taxpayers’ financial information.

Notice CP53E is an official IRS notice sent when the agency cannot issue a refund by direct deposit because:

• A taxpayer did not provide bank account information or provided incorrect details;
• The bank rejected the deposit; or
• The taxpayer’s account could not be validated.

The notice requires the taxpayer to add or update their bank account information through their IRS online account within 30 days from the date of the notice.

Background

President Trump’s Executive Order (EO) 14247 issued on March 25, 2026 mandates a transition to electronic payments for all federal disbursements, subject to limited exceptions. As a result, the U.S. Treasury has significantly reduced the issuance of paper checks for refunds of overpaid tax reported on 2025 federal income tax returns.

To comply with EO 14247, the IRS updated its automated systems to scan 2025 Form 1040, line 35, for direct deposit information. When a taxpayer requests a refund but omits or misreports bank account and routing numbers, the system is now programmed to automatically generate Notice CP53E requesting corrected information.

Although the EO is intended to reduce refund theft and improve efficiency, the rapid shift from paper checks to electronic deposits has introduced some uncertainty for both taxpayers and the IRS during the current filing season. Bad actors may be attempting to take advantage of  this uncertainty by distributing fraudulent notices designed to harvest taxpayers’ personal and financial information.

Current State of IRS Notices CP53E

Informal reports from IRS Service Centers indicate that the IRS may have inadvertently programmed its systems to issue Notice CP53E to certain taxpayers who did not request a refund on their 2025 federal income tax return. Accordingly, receiving an unexpected Notice CP53E is not, by itself, cause for alarm.

However, some US tax professionals have reported receiving clearly fraudulent versions of Notice CP53E. These fake notices may:

• Direct recipients to non-IRS.gov websites;
• Provide telephone numbers not associated with the IRS;
• Include a QR code to a scam website;
• Allow the refund to be paid via a gift card, etc.; or
• Request a response via email or text message, methods the IRS does not use for initial taxpayer contact.

What You Should Do Now

Tax professionals and their clients should carefully review any notice purporting to be from the IRS. Fraudulent notices have become increasingly sophisticated, often closely mimicking the formatting and tone of legitimate IRS notices.

Vigilance is especially important when a notice requests personally identifiable information or financial details. Taxpayers should only respond to IRS notices by:

• Accessing the IRS.gov website directly;
• Using telephone numbers or mailing addresses known to belong to the IRS; or
• Independently verifying any unfamiliar website, telephone number, or address listed on a notice.

A quick online search can often confirm whether contact information is legitimate and may prevent taxpayers from falling victim to fraud.

Written by Allison Goodhartz, Katelyn Pascuzzi and Susan Pick. Copyright © 2026 BDO USA, P.C. All rights reserved. www.bdo.com

The U.S. Department of the Treasury announced a major Form 990 transparency initiative on April 23, 2026, aimed at increasing oversight and uncovering hidden funding in the nonprofit sector. The primary goals of the proposed revisions are to better detect fraud, abuse, misuse, and “extremist activity” by requiring more detailed disclosures from tax-exempt organizations.

Key Areas of Enhanced Reporting

The proposed revisions to Form 990 will focus on two specific areas Treasury officials say may currently be used to obscure financial activities:

• Government Contracts and Grants: Organizations may be required to provide clearer reporting on the sources and specific uses of public funds; and
• Fiscal Sponsorship Arrangements: New requirements may force nonprofits to identify sponsored projects directly, disclose who controls those funds, and how those funds are used.

Objectives of Enhanced Reporting

• Public Accountability: Treasury Secretary Scott Bessent stated that “tax-exempt status is not immunity from scrutiny” and emphasized that directors and officers could face legal liability for misusing charitable structures.
• Detection of Misconduct: The initiative follows a recent Whistleblower Alert calling for tips on the misuse of federal funds, self-dealing, and improper payments to insiders.
• Resource Allocation: By generating “structured data,” the IRS aims to use automated analysis to identify high-risk filings more efficiently.

Next Steps for Nonprofits

Treasury and the IRS expect to publish formal proposed regulations and will open a public comment period before any proposed changes are finalized. In the meantime, nonprofit leaders should proactively review their donor documentation and governance relationships to prepare for increased transparency requirements.

Potential Timing of Implementation

While the IRS and Treasury Department have signaled that revisions to Form 990 are being considered, the proposed changes are not expected to take effect immediately. Before implementation, the revisions would still need to move through the formal regulatory and public comment process, which can take considerable time.

Even if the IRS moves unusually fast, the absolute earliest tax year that could be affected is Tax Year 2027 (filed in 2028). Based on historical IRS timelines for significant Form 990 updates, tax policy experts and nonprofit professionals may expect any major reporting changes to be phased in over the next several years.  This change is estimated to most likely be delayed until Tax Year 2028 or later to give organizations adequate time to adapt.  However, organizations should continue monitoring developments closely, as additional guidance and draft reporting requirements could begin emerging throughout 2026 and 2027.

An Opportunity to Prepare Ahead

Although the final scope and timing of the changes remain uncertain, this is an important opportunity for nonprofit organizations to proactively strengthen their internal processes and documentation practices now.

Organizations that begin evaluating recordkeeping procedures, grant tracking, governance reporting, internal controls, and compliance workflows today may be better positioned to adapt smoothly once new reporting requirements are finalized. Taking steps early can also help reduce future administrative burden, improve transparency, and strengthen overall operational readiness in an increasingly compliance-focused environment.

Rather than waiting for formal implementation, nonprofit leaders may benefit from treating this period as a chance to assess where processes can be improved and where additional structure or oversight may be needed moving forward.