Wednesday, March 12, 2008

Growing Your Future Board

Board members are typically older-in their mid 40’s to late 50’s. At this stage of life people have developed in their careers, made significant financial decisions, and have developed some “life wisdom”, that brings value to the non profit organization.

However, don’t discount the benefit of bringing younger members on to your Board. Although they might not have the life experience they can bring new insight and energy to your Board. It is generally recommended that your Board include someone with financial expertise and someone with legal expertise. Many Boards have difficulty finding professionals in these areas. They can tap the resources of someone in these areas with 3 to 5 years experience in their field. The expertise they have, even at this stage, will be valuable. As long as the individual knows when they need to research and when to ask questions, they can be beneficial.

Also, consider a “junior Board” for younger adults to participate in. Determine what rights this Board would have and what Board meetings they would attend. This is basically a Board in training from which hopefully you will develop future board members. Make sure, though, that this junior Board has an opportunity to share their suggestions and observations with the Board and that as much as possible, their ideas can be used. Give them responsibility over certain functions (like elements of a fund raising event). This Board needs to feel that their commitment and time is valuable to the organization.

Friday, March 7, 2008

Decisions, decisions

Still thinking about setting priorities, especially in light of some consulting projects we are involved in right now. Great missions, passionate staff, tons of ideas, not a lot of time or financial resources—yet. Lots of creative ideas. Some of the ideas have the potential to generate significant funds. What to do first?

Here is a model to help narrow focus. Look at your financial picture. Get it down on paper. Where are the current revenues sources coming from? What programs generate what type of funding stream? Analyzing objective financial data can help point you in the right direction. Next, use a matrix to classify ideas.

Classify your ideas into four categories: low risk or high risk and high return or low return.

The low risk ideas are likely to be successful. More people can be reached, better response rate to treatment more likely, etc. These are proven concepts with a likely chance of success. The high risk ideas are the long shots. Maybe it is a great idea, but you aren’t sure if it will really work.

The high return refers to the dollars likely to net from the idea. What type of donations will this attract? How will the fundraising event do? What type of program service fee could be charged? What are the costs associated with the idea? When you compare the revenue generated in excess of the costs what is the net return?

Next group the categories into quadrants.

High return, low risk concepts go in the upper left quadrant. High return, high risk ideas go in the upper right quadrant. Low return, low risk ideas go in the lower left quadrant and low return, high risk ideas go in the lower right quadrant.

Those ideas in the upper left quadrant are most likely to be successful. The concepts in the lower quadrant are least likely to be successful.

It is assumed that the ideas generated will be mission focused. However, if you feel your organization has drifted from its mission or is spread too thin you can substitute high mission and low mission for the low risk and high risk considerations.

Although you probably have a general perception of the ranking of the initiatives, charting them out and attaching objective financial data, clarifies things for everyone. Initiatives that offer a high return and low risk are the ones you consider first. Low return, high risk concepts may be less of a priority.

This model can also help you narrow down what you need to do to make an initiative better—how can more revenues be generated, how can risk be minimized—to improve a concepts position in the quadrant.

Pairing the objective financial data with subjective program information can help you see which ideas have the best chance of success.

Monday, March 3, 2008

Protecting People from Themselves

I find it interesting how many organizations are hesitant to institute checks and balances for fear of offending someone. They think that the person will think that the organization doesn’t trust them. Maybe the person will think that but it’s your responsibility to put safeguards in place, not only to protect the organization but because it is kinder to the individual in the long run for two main reasons:
1. We are all only human. If cash regularly passes through our hands and there aren’t any checks and balances, how long before we need $5 for lunch one day and decide to borrow the money. We might pay it back, we might forget. Time passes and later we need more money. If you are reading this and thinking—that would never be me—remember that many people who ended up taking large sums of money from their company said the same thing, with equal conviction, at one time.
2. We need to protect others from false accusations. You never know when the political climate of your organization can change. You may be doing well financially now, but in three years if finances change, people sometimes starting looking for somewhere to place blame. If someone falsely accuses another of misappropriating funds, you want to be able to say—“no, that’s not possible because of…(name safeguard that is in place)

General rule of thumb—make sure 2 to 3 people are involved in every financial transaction. Small organization? Make sure items go before the Board. Involve the Board in approving bills, signing checks, reviewing the monthly bank reconciliation, and reviewing monthly financial reports.