Catalyst Center for Nonprofit Management

Behind the Scenes of the Upcoming Super Bowl

2012-01-26T08:31:00.000-08:00

Right now T-Shirts are being printed celebrating the victory for both Super Bowl teams. The T-Shirts for the losing team will go to a foreign country. This always sounded good to me until I came across this (older) article here. The article raises some good points. There are no easy answers.

And speaking of donated items, this post at the blog Nonprofit Update by Ulvog CPA notes the need to be careful when valuing gifts in kind on your financial statements. He does a great job outlining the considerations.

10 Questions Your Audit Committee Can Ask External Auditors

2011-12-02T12:23:00.001-08:00

We have been visiting with many nonprofit boards this past month presenting the 2011 audit. What questions should a Board or Audit Committe ask their external auditors? Here are some to get the conversation started adopted from an article by Boris Feldman:

1. What is your degree of comfort with the company's accounting decisions? How would you characterize the company's aggressiveness/conservativeness relative to other non profits?

2. Did you make any recommendations or suggestions that management did not accept?

3. Are there any employees of the company that you felt were not entirely candid and responsive to you?

4. How would you assess the internal controls at the Organization? What improvements would you make? In what priority?

5. How would you compare the quality of our accounting to other organizations with whom you work?

6. What was your materiality threshold?

7. Are we up-to-date on all of our filings and remittances?

8. Do our investments conform to our investment policy?

9. Are you getting the appropriate cooperation from management? Reluctance to cooperate can signal that there's something to hide.

10. Are there any areas of the financial statements including the notes, in which you believe we could be more explicit or transparent, or provide more clarity to help a user better understand our financial statements?

Find Capacity, Find Funders

2011-11-03T06:18:00.000-07:00

Last month I spoke to the Grant Professionals Association at their annual conference in Las Vegas about attracting more funders by illustrating to them the power of an investment with your organization. I have spoken and blogged (here) about this topic before. It is one of my favorite discussions. Just as my last post discussed ways to tell a compelling story, the numbers can also tell a compelling story.

The story is not just for your donors. It is also for you. We have illustrated for several organizations where they have unused capacity by analyzing the data and the financial information. This has led to the expansion of services and reaching new groups with services. How does this work?

As applicable, we look at the facility usage, staff and volunteer usage, and resource usage to determine maximum capacity. We determine the percentage of this capacity that is currently used. The organization is then able to focus on areas where there is room to grow because there is already existing capacity in this area. They identify the resources needed to use this capacity and can adopt a strategic plan of action. This plan can be communicated to funders and donors and show them clearly how their investment will fuel the expansion of services.

Writing with Passion

2011-10-22T08:51:00.000-07:00

Dalya F. Massachi in her presentation, Writing With Passion and Power discussed a number of great writing practices from her book Writing to Make a Difference: 25 Powerful Techniques to Boost Your Community Impact. One that resonated with me was the idea of two levels of “so what” Her illustration: your organization states that a donation of $100 will buy a new clinic massage table. You ask yourself “so what?” The answer—So our volunteer therapists can provide 50 additional revitalizing, healing massages per week to cancer patients in our community. Then you ask again--”so what?” The second level answer—So they will enjoy happier, healthier, more productive, and longer lives and YOU will be part of making that happen.

The answer to the second level “so what” results in getting to the heart of the impact your organization is making. We saw this illustrated at a recent seminar. Our opening question was “what would happen to your community if your organization did not exist?”

All of the organizations answered the question by describing the programs that the community would no longer have. While true, asking a second level of "so what" questions may reveal that graduation rates would decrease harming the future economy of the area; the quality and length of life for area seniors would be decreased; umemployment would increase harming the future economy of the area; and the culture and vibrancy that made the community an attractive place to live would be diminished.

Second level questioning can assist in directing boards and organizations to think with impact.

Economic Outlook--5 Strategies

2011-10-14T12:34:00.000-07:00

We have been to several conferences recently that featured an economic update. The consistent message was that the economy is not likely to improve in the near future and even indicated that it could be another five years. Nonprofits have been hit hard—reduced government funding coupled with increased demand for services.

A few things to do, if you aren't already:
1. Prepare a cash flow projection for 6 months, 18 months, and 3 years. Continually roll it forward. Determine now what changes you will make if you don't hit certain revenue targets.
2. Strengthen your volunteer program. Today's volunteers want to contribute in more meaningful ways and you can expand or maintain your capacity with volunteers. Volunteers are also more likely to give to your organization and to give in larger amounts.
3. Individual donors make up 73% of giving (81% if you count bequests and 87% if you include family foundations). I am still convinced that there are individuals who have not yet learned the joy of giving. Make sure you have a robust donor cultivation program and many opportunities to connect people to your organization.
4. Review nonprofit best practices. Talk with others in your field. Make sure your organization is operating efficiently and employing the best strategies.
5. Look for opportunities to collaborate with other nonprofits or even for profits.

2011-10-14T12:28:00.000-07:00

I just returned from speaking at the Grant Professionals Association/Charity Channel summit. My session was Find Capacity, Find Funders, a topic I have blogged about in the past. I will revisit that in a few posts but I first wanted to highlight points from some great presentations.

In Critical Compliance: State Registration of Charities, Helen Arnold from Clearly Compliant discussed the importance of complying with the state registration requirements. Most states require nonprofits soliciting contributions to register. Consultants and fund raising professionals (including grant writers) need to register in many of these states too.

A few practical recommendations from Helen:
-print a list of donors by state. Determine if you received the donation as a result of soliciting in that state. Be careful with the thank you notes to these donors—if you request more funds with the thank you—you are now soliciting in another state.
-most internet appeals are considered as coming from the state your charity resides in—except for NJ, NY, PA and FL. If you receive donations from an internet appeal from one of those states, you need to register there. Again when thanking internet donors, be careful about asking for more funds with the thank you note. Also be careful if you add internet donors to your mailing list.
-if you do have multiple states that you need to file in, there are several compliance services that can do this for you. They keep up to date on the state requirements and can save you time and money. Clearly Compliant offers this service
-the National Association of State Charity Officials has a list with links to all the state oversight offices
-the Unified Registration Statement which is accepted by 37 states can be found here There is also a nice state by state discussion of the requirements in the appendix on their site.

Map out your Future Success

2011-10-10T13:17:00.000-07:00

One of the tools we like to use when working with clients on a strategic plan is a cost benefit matrix map. This tool provides a straight forward way to map programs based on both mission impact and financial impact. The beauty of this matrix map is its visual simplicity.

We recently had the good fortune to learn about Jan Masaoka's enhanced version of this matrix map during a training session on "Understanding and Changing Your Business Model in 60 Minutes" while at the BoardSource Leadership Forum. Many of you know Jan from her work at Blue Avocado (www.blueavocado.org). She, along with Jeanne Bell, has just published a new book entitled Nonprofit Sustainability: Making Strategic Decisions for Financial Viability.

The cost benefit matrix map is a four-square which plots mission impact along the vertical axis and financial impact along the horizontal axis. Jan takes the matrix map one step further by classifying each of the quadrants in the foursquare with easily identifiable visual designations: stop signs, money trees, hearts and stars.

Stop Signs
In the lower left quadrant you will list the programs which produce little or no revenue and do not have an impact on your mission. These are your "stop signs". In other words, unless you are able to revamp these programs so that they increase their mission impact or generate new or more revenue, these are usually the first programs to be cut from an organization as their value is very low.

Money Trees
In the lower right quadrant you will list programs that generate a lot of revenue, but still do not have a significant impact on your mission. These are your ‘money trees’. Often you will find special events or donors in this quadrant. Look for ways to bring your mission message to these events.

Hearts
In the upper left quadrant you will list programs that have a high impact on your mission, but generate little or no income. These are your ‘hearts’. They often have a very valuable place in the organization, but they are sustained by revenue from other programs. Often these programs reach deep into the community with your mission message. If possible, strategize new ways to generate revenue for these programs.

Stars
Finally, the most important quadrant in the matrix is the upper right hand quadrant. The programs in this quadrant have high impact and generate revenue for the organization. These are your stars. When planning for growth, you will want to look first at these programs and investigate opportunities for expansion.

To learn more about the Cost Benefit Matrix Map or other tools to improve your organization’s financial sustainability, feel free to contact Cindy Bergvall, CPA, Catalyst Center for Nonprofit Management.

Key Performance Indicators

2011-08-30T07:55:00.000-07:00

I will be speaking at the Pennsylvania Community Providers Association 2011 conference in October on A Roadmap to Financial Health Using Key Performance Indicators and Dashboards. As I am putting together the presentation I am thinking about leading indicators and lagging indicators.

Key Performance Indicators (KPI's) are indicators used to measure performance in strategic area such as financial, quality of care, operational performance, and business development. My focus for this presentation is on financial indicators--days cash remaining, days sales in accounts receivable, cost per unit of service, etc.

Lagging indicators show you what happened in the past. Leading indicators help you see what might be happening in the future. For example, look at days sales in accounts receivable as a leading indicator. If over time, you see this number getting larger it means you are not collecting monies due you as fast as you used to. If this continues though--you are going to start to have cash flow problems. You may also end up having to write off revenue as a bad debt.

Initially you might look at the increasing days sales in accounts receivable and excuse it as a consequence of the economy, your client mix, payor difficulties, etc. However, if you have been tracking this as one of your indicators AND you are cognizant of the detrimental effect it has on other areas, you will pursue the reasons for the increase and seek to remedy the situation.

I have come across a few articles in these areas. While these articles relate to businesses, they have some great applications for nonprofits.

The Power of Leading Indicators - As Important As Ever by Paul Niven

Managing Through The “Rear View Mirror”…a dangerous practice for any business by Robert Champagne

Which is more important? Rearview mirrors or windshield? by Gary Cokins

The Data (and Donations) are in the Details

2011-08-11T06:22:00.000-07:00

Last summer I spoke with a wonderful group for a wonderful organization, the Association of Fundraising Professionals at their Lehigh Valley conference. The presentation was "Where Can your Limited Funding Dollars Have the Most Impact: Communicating to Your Funders the Power of Their Investment in Your Organization."

A lengthy title, but it reminds nonprofits that their funders are indeed investors. Prior to making an investment, investors will look at the investment and make sure it delivers a good return on their money, at a level of risk that is acceptable to them. What information do your investors need to determine that their money will make the most impact in your organization?

First you need to figure out where your funds have the most impact. If you have several programs you need to look at each program separately. What are the direct costs related to that program? How many people can you serve? What amount of staff time is required to deliver your services? Can you use your staff time or your facilities or your resources in a more efficient manner to serve more people?

Once you have the financial information and the data, you need to figure out the best way to communicate that to donors and grantors. Different audiences will need different types of communication. One grantor may be interested in investing in your organization because they can see that if they provide money for staff training, the staff will be able to serve 50 more people each week. Another donor may donate because you have explained that their donation of $500 will enable your organization to build a well that can bring water to 600 people every day. And another funder may appreciate your commitment to building a stable, healthy nonprofit that continually is a community resource. They are glad to add to your reserve fund because they can see evidence of this stability in your financial statements.

Financial and data analysis will not only attract more donors, it will help you manage your nonprofit better. As the saying goes, “If you can measure it, you can manage it”

Cindy Bergvall, CPA

Using Technology to Improve Transparency

2011-07-07T10:28:00.000-07:00

In his post Wednesday, David Matthew observed how technology can help nonprofits improve their transparency which in turn, can help them avoid mismanagement or accusations of mismanagement. As an accounting firm focusing on internal controls in our audits and a consulting firm focusing on helping nonprofits attract donors, we couldn't agree more. You can read the post here.

Volunteer?

2011-07-07T06:23:00.000-07:00

Last night I was reading an article about companies who invest in the community around them. It was a great article about great companies that have made a difference in their communities by their involvement with nonprofits. The article noted one company that provided paid time off to its employees to volunteer (my italics) in the community up to 2,080 hours in total—the cost of a full time person. I have seen variations of this from various businesses. While I applaud this benefit and recognize the financial donation of the company, I wrestle with the use of the word “volunteer”.

Dictionary.com defines volunteer as:

1. a person who voluntarily offers himself or herself for a service or undertaking.
2. a person who performs a service willingly and without pay.

Perhaps under definition 1 it is ok if the volunteer is paid by their company. However under definition 2, a volunteer is not paid.

Why this concerns me—
1. Are people really volunteering if their company is paying them?
2. Does it diminish the sacrifice of those who volunteer without pay?
3. Will people who were involved in the community when their company paid them, continue with community involvement if they went to another company where they did not have this benefit?
4. Over time would this trend change the concept of volunteerism?

That said, I recognize that—
1. Many employees are making a sacrifice even when they take a day with pay due to a heavy workload that they will need to catch up on later.
2. This growing trend in business has been a boost to the nonprofit sector and more and more people are encouraged to be involved in the community.
3. The business is truly making a financial sacrifice that benefits the community.

Businesses and individuals could consider—
1. Renaming the benefit from “paid time off to volunteer” to “paid time off for community service”
2. In lieu of paid time off a business could offer to donate the dollar amount of the time that a volunteer donates—essentially matching time donated with dollars donated. This could be an option presented in the employment policy.
3. The employee could consider donating the pay they receive for the time to the organization. This would be another option that could be presented in the employment policy.

It is hard to criticize a trend that has been so beneficial to the nonprofit sector and perhaps the benefits outweigh any downside to diminishing the concept of volunteerism. Maybe adding to the paid time off policies, options to donate dollars, would expand the benefit to the sector and still preserve the concept of volunteerism.

Numbers to Know

2011-06-29T07:46:00.000-07:00

Recently released .....

The value of volunteer time in 2010 is calculated at $21.36 (From NPCC News, June 2011)
Volunteers can be your biggest financial asset. Make sure you are capturing all your volunteer time and letting them and your donors know the value. If professional services are donated, make sure you get an estimate of the value of the services from the donor--the rate for these will be much higher.

IRS Increases Mileage Rate to 55.5 cents per mile If you reimburse employees for mileage following the IRS rates this is an increase that takes effect July 1, 2011. The mileage rate that volunteers can use to calculate a deduction on their tax return remains the same at 14 cents per mile.

Participate in The NonProfit Times 2011 Nonprofit Organizations Salary and Benefits Survey

2011-05-10T05:13:00.000-07:00

One of the procedures of a strong compensation policy is to annual compare salaries to similar organizations. This notice from our friends at PANO can help you do that:

Get a FREE Executive Summary and a chance to win $500 for your organization. All organizations who participate in the survey will receive a FREE executive summary of the results and will be able to purchase the full report at a 50% discount. In addition, any organizations that complete the survey by May 23, 2011 will be entered to win a $500 donation for their organization or organization of their choice!

Link to the NonProfit Times page describing more about the survey, benefits of participating and answers some FAQs: http://www.nptimes.com/salary/survey/
Link to the actual survey tool for when the user is ready to start the survey: http://www.bluewatersalarysurveys.com/NPT2011Survey/Pages/SignIn.aspx

Expanded 1099 Reporting Requirements Repealed

2011-04-15T13:23:00.000-07:00

On April 14, President Obama signed legislation repealing the expanded 1099 reporting requirements. Under the legislation that was passed last year within healthcare reform, organizations would have had to file a 1099 for every vendor whether incorporated or not for all payments over $600. This would have been a significant reporting burden. The rules for 1099 filing revert back to the old rules--you only need to file a 1099 for unincorporated businesses that provide you with services.

Strategic Living

2011-04-11T06:57:00.000-07:00

Many thanks to the Board Members who spent their Saturday morning at Boot Camp. We really appreciate their dedication to the nonprofit community.

We had two tracks to Boot Camp on Saturday. In the advanced track we looked at Strategic Thinking. How do you take the energy from your Strategic Planning and incorporate that into the Board work throughout the year?

A few ideas:
Stakeholder interviews during the process provided you with feedback from all directions. Keep that going by focusing on a different set of stakeholders throughout the year. The process does not have to be elaborate. It can be a five question survey after a service is provided; a short survey in the newsletter once a year; or a focus group lunch with the employees.

Periodically evaluate the financial condition of the organization to make sure you have the financial ability to continue to pursue the goals of the plan. Revisit funding goals and initiatives to make sure you are staying on track. If planned funds are not coming in, you will need to cut back on programs.

Set aside time at Board Meetings to discuss strategic items in more detail as necessary. The strategic plan will have scheduled times for the completion of certain items. Schedule these time frames on your Board agenda.

Modify the plan as necessary to address identify opportunities or threats. The Strategic Plan needs to be a living document, not a binder on the shelf that you dust off every three years.

Board Tools

2011-04-07T11:58:00.000-07:00

Our first session on Saturday’s Boot Camp will look at the General Duties of Board Members. There are the legal obligations:

Duty of Loyalty-avoid conflicts of interest and put aside personal and professional interests

Duty of Care-actively participate, ask questions

Duty of Obedience-stay true to the mission and obey both organizational and societal laws

We then review the Ten Basic Responsibilities outlined in the previous post from the Ten Basic Responsibilities of Nonprofit Boards, Board Source book. Lastly we provide some practical tools that can help Boards put these responsibilities in practice.

Board Profile-a chart that shows the Board members across the top with skills, interests, and background down the side. When the Board profile is completed you can see what talents you currently have on the Board and what you need to look for in new Board Members.

Board Candidate Form-to collect information specific to your nonprofit to help you evaluate potential Board Members

Board Orientation manual-to provide to new Board Members to help them learn about their role in your Organization

Board Manual-for all Board Members-includes Board calendar, mission, vision, strategic plan, roles & responsibilities.

Annual Affirmation/Board Expectation form-for Board Members to affirm their commitment to support the organization through their financial support, attendance at special events, and commitment to Board meetings.

Ten Basic Responsibilities of Nonprofit Boards

2011-04-06T08:28:00.000-07:00

As I mentioned in the previous post we are getting ready for Board Boot Camp on Saturday. Each participant will receive a copy of the Board Source book-Ten Basic Responsibilities of Nonprofit Boards. In less than 100 easy to read pages, with practical examples and tips, this book discusses the following ten responsibilities:

1. Determine mission and purpose

2. Select the Chief Executive

3. Support and evaluate the Chief Executive

4. Ensure Effective Planning

5. Monitor and Strengthen Programs and Services

6. Ensure Adequate Financial Resources

7. Protect Assets and Provide Financial Oversight

8. Build a Competent Board

9. Ensure Legal & Ethical Integrity

10. Enhance the Organization’s Public Standing

At $19 for members and $29 for nonmembers on the Board Source website, it is an easy decision to make sure that all of your Board Members have this great reference book. And it is also available as a digital download.

Picture This! Revisited

2011-04-05T08:43:00.000-07:00

I had a comment on the Picture This post from Jacob Smith whose blog Bright+3 had a great recent post-The Nonprofit Dashboard Roadmap. In the post, he looks at five types of dashboards with links to some excellent illustrations. I like the idea of categorizing the types of dashboards as it better helps you focus your purpose, your audience, and why you are trying to communicate with them.

Getting Ready for Boot Camp

2011-04-05T08:30:00.000-07:00

I am preparing for our Board Boot Camp and I am impressed with the number of Board members who are willing to spend time on a Saturday morning learning skills that will help them better lead their nonprofit organization. On what key areas will we be focusing?

General duties of Board Members
Strategic Planning
Fundamentals of Fundraising
Understanding Capacity Building
Financial Oversight for Boards
CEO and Board relationships

These areas provide a foundation for Board Members to lead their organization regardless of the economy or the challenges facing them.

Picture This

2011-03-14T09:20:00.000-07:00

A few weeks ago a Board Member contacted us looking for ideas on reports for the Board that would clearly communicate their financial situation. He had a 14 page package of monthly financial information that most Board Members could not easily understand. The Board knew the donations were down from the prior year and they were concerned that they might be using savings from prior years to cover current years expenses.

We worked with the Organization’s bookkeeper and came up with a set of Key Performance Indicators that the Board could monitor each month. Targets were set for each indicator and the Organization determined three monitoring levels: green-on target or better; yellow-headed in the wrong direction and the Board needed to consider making changes; or red-the Board needed to take action which could include cutting back on expenses.

The two indicators that the Board found most helpful was one that looked at revenues compared to the last two years and one that showed if the Board was using savings for current year expenses and if so, how quickly were savings used.

A one page report summarized the indicators. The Board still receives the detailed financial information. The details provide an explanation for the performance and help the Board determine courses of action. However the summary report, typically called a dashboard, helps the Board see where to focus their attentions.

The nonprofit blog Blue Avocado has a terrific post on dashboards with a variety of illustrations that expand on the discussion above. You can link to the article here.

Health Care Credit for Small Nonprofits

2011-02-19T05:45:00.000-08:00

Reminder! For small organizations--if you have fewer than 25 employees (full time equivalents) and an average payroll of $50,000 or less per employee--and pay for at least 50% of your employees health care, you may be eligible for the health care tax credit. You will apply for a refund of this credit on form 990-T (even if you don't normally file this form). Contact me or see the link at the IRS website for more information.

The Strength of Individual Donations over Federal Funding

2011-01-27T13:12:00.000-08:00

The news articles and emails about the federal and state budget crisis’ and the effect on nonprofit funding are rampant. Many of these are a call for nonprofits to contact their legislators and fight for their service. Others advise nonprofits to plan for the coming funding cuts through various strategic initiatives.

This past week I heard Dave Ramsey interviewed and he noted that if individuals gave more freely to the social sector, it would eventually make the government irrelevant. While this statement might seem too idealistic, think for awhile what happens to your tax dollars before they actually get to a nonprofit.

While nonprofits receive federal monies directly, many—especially the smaller nonprofits receive “pass through federal money” either through the state or through the County. In some cases, the money goes from the federal government to the state, then to the County, then to the nonprofit. Each step involves administrative costs—people, paperwork, compliance issues, etc. And this is in both directions. The nonprofit applies to the County for funding, the County applies to the state, the state applies to the federal government. Even if there isn’t an application, there are contracts signed, budgets agreed to, funding changes, statistical information, federal, state, and county procedures and rules to follow.

If your nonprofit receives government money, while I am sure you are very grateful, you know of the forms and paperwork. Monthly, quarterly, and annual financial and statistical reports. Countless phone calls and letters if your financial information doesn’t agree with their financial information. One client had to submit all invoices and front and back copies of canceled checks in order to get their reimbursement. And someone at each level is reviewing all of that paperwork.

And at year end (this is where we come in)—additional audit procedures are required at additional cost to the nonprofit.

It’s just a guess—but I suppose that less than 20% of your tax dollars that are supposed to go to nonprofit purposes actually make it to the nonprofit’s bank account.

Your tax dollars get so watered down before a tiny piece actually gets to the charity (with tons of redtape, bureaucracy, & strings attached). Give directly and 100% goes to the charity.

Don’t think the individual sector has money to give? I would propose that a number of individuals have not yet experienced the joy of giving and if they were better acquainted with some nonprofits and were asked to give, they would give more.

If you can still get Federal and State funding, pursue it aggresively and secure what you can, while you can. But even more aggressively, pursue your individual donors. Form relationships, find ways to engage the community with your nonprofit, get the word out. Speak out about the benefits and blessings of giving. Federal and state budget cuts are inevitable and individual donations can and should fill the gap.

PA Decennial Filing for Nonprofits: Do You Need to File?

2011-01-26T08:36:00.000-08:00

Decennial Filing with the PA Department of State will ensure protection of the corporate name.

The next Decennial Filing may be made any time from January 1, 2011 through December 31, 2011. A Decennial Filing is required ONLY IF the corporation has not made a new or amended filing with the Corporation Bureau of the Department of State in the 10-year time period from January 1, 2002 through December 31, 2011.

If the nonprofit corporation has filed an "Annual Statement" with the PA Department of State, within the 10-year period from January 1, 2002 through December 31, 2011, then it is not necessary for it to file a 2011 Decennial Filing. The advantage is that there is no cost to filing an Annual Statement, whereas the fee for the Decennial Report is $70. An Annual Statement is required whenever a nonprofit corporation changes Officers. This has been a long standing requirement that not many organizations have adhered to in the past.

PANO is now encouraging all nonprofit corporations to file that report the next time you change Officers of the Corporation. That way the PA Department of State has indication that the organization is active and the 2011 Decennial Filing will not be needed if an "Annual Statement" has been filed between January 1, 2002 and December 31, 2011.

Below is the information that is contained in the Standards for Excellence Legal Checklist regarding the Annual Statement filing:

Description: Form DSCB: 15-5110 Annual Statement - Nonprofit Corporation

Nonprofits must file annual reports only if there has been a change in corporate officers during preceding calendar year. (*No fee is required for this filing)

From the PA Association of Nonprofit Organizations

Ten Simple Tips for Good Governance (What I Learned from PANO)

2010-12-02T12:24:00.000-08:00

The end of the year is quickly passing. At the end of October, Liz and I attended the PANO Standards for Excellence consultant training. The session was full of very beneficial information. Liz wrote this article summarizing some of what we learned on good governance in our firm's newsletter for nonprofits and I wanted to post it here as well.

1. If your Mission Statement is more than 1 sentence, it is probably too long.

2. Review your Mission Statement every three years. Document your review and approval of the Mission Statement by clearly noting it in the Minutes.

3. Your Minutes should include who was present--identified as Board or staff, who was absent, the type of meeting, what was done not what was said, the start and end times and should be signed by the Secretary.

4. Question to ask when reviewing financials “Are all the bills input (whether they are paid or not)?

5. Every organization should have a Reserve Policy. 3-6 month Reserve is recommended.

6. 3:1 ratio is minimum when looking at funds raised vs. expenses (some exceptions apply)

7. If you are soliciting gifts in other States, you need to be registered there. Use a service like Labyrinth, Inc. to assist in the process. http://www.labyrinthinc.com/

8. Conflict of Interest Policies are not just for the Board-but for anyone who has decision making authority for the organization including staff and volunteers.

9. If your organization is involved in Lobbying, even a little bit, consider making the federal 501(h) election. The h election is an expenditure test that answers the question of whether your organization is doing too much lobbying by examining how much you spend on lobbying (lobbying expenditures).

10. Invest in the Standards of Excellence Educational Resource Packets. They are inexpensive and chock-full of great information.

Upcoming Payroll Changes: Get Ready!

2010-10-14T05:20:00.000-07:00

The Affordable Care Act included a number of changes to payroll reporting.

• On your 2011 W-2’s you will need to report the value of the employee’s health insurance. The amount reported does not affect tax liability. These are the W-2's that you will file in 2012 for the 2001 year. However you should take some steps now to get ready for next year. You need to contact your outside payroll company or your financial software company if you prepare payroll in-house, to make sure that the health insurance expense for each employee can be captured and included in next year’s W-2. Also check with your health insurer to make sure you will receive a yearend report that shows the health insurance expense for each employee.

• Starting January 1, 2011, the cost of over the counter drugs cannot be reimbursed from a Flexible Spending Arrangement unless a prescription is obtained.

20 Questions - Part III

2010-10-10T13:56:00.000-07:00

You want to have a good system to track data so that you can use it easily in your analysis process. Here are some things to think about when you are tracking data.

Do we have a good system to track data?
14. What are the deliverables that we can communicate to the grantor? Are they outputs or outcomes?
15. How many people can we serve with the grant? How many units of service can we provide?
16. Can we clearly communicate statistics? Will charts or graphs help us pictorially represent our impact on the community?
17. Are we consistently reporting our statistics to the community? Number of people served; units of service. Is our definition of units of service consistent?
18. Are we already collecting data for other purposes that can be used for grant seeking purposes?
19. Are we protecting the integrity of the data? How is the information verified?
20. Can we use national, state, or local statistics to further communicate the benefit of the grant?

20 Questions-Part II

2010-10-10T13:52:00.000-07:00

It can be tempting when you are desperate for funds to apply for every grant that even remotely seems close to your mission. However you need to make sure that the grant will not end up costing you more money in the long run. Here are four more questions from 20 Questions that Data and Financial Analysis can help you answer, that address this issue.

Is this grant the best fit for us?
10. If the grant is to fund collaborative work between two organizations will the collaboration be financial beneficial (or at least financially neutral) for both of the organizations?
11. If the grant is to start a social enterprise, will this social enterprise be financially beneficial to the organization?
12. If the grant is for a new program, can we afford to deliver the new program? Can it be sustainable beyond the grant period?
13. If the grant is provide a springboard to start a new program and we are expected to support the program on our own after the grant period is done (usually 2 to 3 years); what is the plan to become self supporting (sustainable)? How will we pursue donations from other sources for the program?

The last seven questions will be covered in the next post.

20 Questions that Data and Financial Analysis Can Answer

2010-10-09T11:11:00.000-07:00

A number of my posts have been about the information that you can gain to help you better manage your organization through the analysis of data and finances. Remember that data and financial analysis is part of the picture. Most donors give because of relationships; their commitment to the cause; and/or their values. However, data and financial analysis can help answer the following questions that you and/or your donors might be asking:

How can our resources best be used?
1. Where do we most need the money? What program will benefit the greatest from this investment?
2. Which programs will be able to increase services and the number of people they serve (increase capacity) with additional funds?
3. What is the power of investing with our organization?
4. What programs have the potential to attract more funding from other sources if we expand the programs?
5. Will this grant help us attract more volunteers or help us to use volunteers more effectively—adding to our capacity with both funds (the grant money) and people resources (the volunteers)?
6. Are we using our facility, staff, volunteers, specialized resources to their fullest capacity? Is there untapped capacity that we can develop with the grant funds?
7. Do we have a “wish list” of needs and the approximate dollar cost so that we can easily and quickly respond to grant opportunities?
8. How do we compare to other organizations offering similar services?
9. Why are we the best organization to receive the grant funds?

More questions will be listed with the next post.

Grantseeking Advice for a Challenging Economy

2010-10-09T11:01:00.000-07:00

This past Wednesday I had the privilege of being on a panel sponsored by the Margaret R. Grundy Memorial Library, the United Way of Bucks County, and the Bucks County Community College. The event was held in Bucks County Community College's Lower Bucks Campus' beautiful meeting space. As panelists we were asked to offer advice and insight to help nonprofits strengthen their grantseeking efforts.

My advice will be discussed in the next few posts. I wanted to used this post to spotlight something that I learned from a fellow panelist. Linda Goodwin from the Bucks County Foundation encouraged the nonprofits to introduce themselves to the Foundations and make sure that the Foundation knows about your organization before you ask them for money. She recommended that you include Foundations in your newsletter mailings and invite them to events. This way the Foundations know something about what you do when you approach them for funds. Linda also emphasized the value of keeping in touch with the Foundations after they award you funds. They have invested in your orgnaization and want to see you succeed.

Significant Changes to 1099 filing

2010-09-23T06:43:00.000-07:00

Currently you are required to file form 1099 for every unincorporated vendor who provides you with services who you pay $600 or more during the year. In 2012 you will be required to file a 1099 for every vendor who you pay over $600 to regardless of the whether they are incorporated or unincorporated and whether it is for services or for products. Basically everyone you pay money to will either get a W-2 (for employees) or a 1099 (everyone else). As you are already imagining, this is a major paperwork process. By 1/1/2012, you will need to have a system in place that can track these payments so that you can send a completed 1099 to your vendors in the beginning of 2013 for the 2012 year. What do you need to do?
· Make sure you have the EIN for everyone you pay. All vendors should complete a form W-9. Start collecting this information now if you don’t have it already. This will strengthen your internal controls too.
· Make sure your financial software system can track and accumulate payments to vendors and generate the 1099’s at year end. Most systems already have this feature but if it is a feature that needs to be added, you’ll need to get in touch with the company now because adding a new feature to a software package could be time consuming.
· Look at where you use petty cash. If you use $59 in petty cash each month for park & rec supplies from the same supplier, you are going to need to give that supplier a 1099 at year end and they won’t be in your computer system. Consider using other purchasing methods.
· Talk to your auditor if you are considering using debit or credit cards instead of cash. Make sure you have strong internal controls in these areas. Tentatively the IRS is considering exempting purchases made by debit and credit cards from the reporting requirements. While it might seem like an easy solution, these payment methods have been abused and you need to make sure you have strong internal controls in these areas.
· Expenses that you reimburse employees for are also subject to reporting. If you have five employees who stay at a hotel in Harrisburg for 5 different training sessions throughout the year and you reimburse them for the hotel stay, you are responsible to report the payments made to that hotel on a Form 1099, even though you didn’t make the payment to the hotel directly, you paid employees.

Possibly this part of the healthcare legislation could be overturned or modified, but this is too large an undertaking to wait to see if this happens. It is better to proceed based on the current legislation and be prepared.

Beware of the Common Copier

2010-08-13T08:13:00.000-07:00

Copiers don't just copy anymore—they scan, fax, and send email. And they could also end up inadvertently leading you to violate privacy rules. Nearly every copier built since 2002 has a hard drive. Everything that is copied, scanned, or emailed by the machine is stored on the hard drive. And unless you have the hard drive erased at the end of the copier lease term, private information from the hard drive could be accessible to the copier company or another organization that leases or buys the copier after you use it. The information can be accessed using software that is available for free on the Internet.

Organizations that provide social services frequently copy or scan papers that include social security numbers, wage information, or medical records. You can unintentionally violate Federal and State privacy rules if this information is accessed. The identities of your clients could be stolen.

You need to make sure that your policies for protecting that information extends to your copier too. Most copier manufacturers offer security or encryption packages for their products. Sharp and Xerox both have products that automatically erase an image from the hard drive as soon as it is printed. The cost of the product is $500—a very low cost to prevent potentially significant damages. You can also arrange to have the hard drive completely erased before the machine is removed at the end of the lease period.

Weighing the Benefits of Social Media

2010-07-12T18:54:00.000-07:00

Today this article about how successful social media has been for some accounting firms appeared in my inbox. A few hours later I read these lines in my son’s blog.

I woke up Friday morning to a text from a friend about Cliff Lee joining the Yankees. I then checked Twitter and read numerous updates from Buster Olney about Lee to New York. I continued to turn to all sources and grabbed the remote. I turned on the television….

The first source my son checked for information was Twitter!

As a result of these two items, a few things have been running through my mind:
1. I have got to figure out how to use Twitter on a regular basis
2. If social media is helping accountants gain more business surely it can help nonprofits
3. Our future clients (for our accounting firm) and future (and some current) donors for nonprofits are using Twitter as a resource
4. While I like blogging, Facebook, and LinkedIn, I don’t find Twitter as convenient but I feel like it is something I need to be involved in.
5. Are nonprofits (and accounting firms) really missing out if they aren’t involved in social media?

I was then reminded of a forwarded article from my associate Liz Vibber about social media from the very practical and informative frogloop blog. It is a very balanced, objective look at the current value of social media and where your best efforts are spent with this communication method. One of the best points the article makes is that you build community and then use that existing community to spread your word in the online world. This is a great starting point for nonprofits that aren’t quite sure what to do about social media.

I note “current value” of social media. If today’s 20 year olds check Twitter first for up to date information, perhaps 5 to 10 years from now nonprofits will see a more significant percentage of their donations come as a result of their social media communications. Both accountants and nonprofits need to figure out the best way to make social media part of their lives. But we both need to take the time to figure out where and how that is best done.

The Data (and the Donations) are in the Details

2010-06-30T07:51:00.000-07:00

I recently spoke with a wonderful group for a wonderful organization, the Association of Fund Raising Professionals at their Lehigh Valley conference. The presentation was “Where Can Your Limited Funding Dollars Have the Most Impact: Communicating to Your Funders the Power of Their Investment in Your Organization”.

A lengthy title, but it reminds nonprofits that their funders are indeed investors. Prior to making an investment, investors will look at the investment and make sure that it delivers a good return on their money at a level of risk that is acceptable to them. What information do your investors need to determine that their money will make the most impact in your organization?

First you need to figure out where your funds have the most impact. If you have several programs you need to look at each program separately. What are the direct costs related to that program? How many people can you serve? What amount of staff time is required to deliver your services? Can you use your staff time or your facilities or your resources in a more efficient manner to serve more people?

Once you have the financial information and the data, you need to figure out the best way to communicate that to donors and grantors. Different audiences will need different types of communication. One grantor may be interested in investing in your organization because they can see that if they provide money for staff training, the staff will be able to serve 50 more people each week. Another donor may donate because you have explained that their donation of $500 will enable your organization to build a well that can bring water to 600 people every day. And another funder may appreciate your commitment to building a stable, healthy nonprofit that continually is a community resource and they are glad to add to your reserve fund because they can evidence of this stability in your financial statements.

Financial and data analysis will not only attract more donors, it will help you manage your nonprofit better. As the saying goes, “If you can measure it, you can manage it”

You Haven’t Lost Your Status Yet

2010-06-04T07:59:00.000-07:00

If you are a small nonprofit under $25,000 and had not filed a 990 or the 990-N postcard with the IRS in the last three years by May 17, 2010 you were at risk for losing your status. However the IRS is willing to work with these small nonprofits, so go ahead and file, even if you did miss the deadline. Instructions to file and the IRS efforts to help the small nonprofits keep their status are on the IRS website in the charity section.

The impetus behind this provision is to clean up the IRS records. It is suspected that there are many nonprofits on the IRS listing that ceased doing business years ago. There is a good detailed article on this topic at Nonprofit Newswire (which is a great daily newswire service to subscribe to)

In the week prior to May 17 we looked up some area zip codes and contacted local nonprofits we knew, that were on the list in danger of losing their status. They were unaware of the IRS Form 990-N. The most common reason was that the Board Members had changed and it is likely that any IRS notifications went to a former Board Member. See this link to look up your area

Protecting your Organization from Fraud

2010-05-06T05:51:00.000-07:00

Last week’s headlines were all too familiar. The Treasurers of two local youth basketball leagues had stolen about $159,000 from the leagues. The thefts occurred over several years. In both cases, the Treasurers simply wrote checks out of the league accounts to themselves. This story has been repeated too many times over the last several years—in youth sports organizations, Home and School Associations, churches, fire companies, nonprofits, and businesses. The theme is the same—a trusted long time employee or volunteer steals money from the organization by writing checks to their own accounts or for personal expenses.

How could this have been prevented? The rule of two. In any organization, regardless of size or whether it is staffed by volunteers or employees, at least two nonrelated people should be involved in every transaction. What does this look like?

1. If someone writes and signs checks, then someone else receives the bank statements and reviews the canceled checks. Any unusual payee names are questioned. This step alone could have prevented numerous thefts.

2. For special events when cash is collected, there are two volunteers collecting and counting the money. They sign off on the total amount prior to the deposit.

There are numerous other controls but these two alone could reduce the amount and frequency of thefts significantly.

More Health Care Premium updates from the IRS

2010-04-30T12:28:00.000-07:00

Under the Affordable Care Act, health coverage provided for an employee’s children under the age of 27 is now tax free to the employee effective March 30, 2010. If you have a cafeteria plan or a Section 125 plan, employees can make pre-tax contributions to this plan to pay for this benefit. See more information on this topic at the IRS website.

And the 65% subsidy on COBRA health insurance premiums has been extended past March 31, 2010. This subsidy covers employees who are involuntarily separated from their jobs between September 1, 2008 to May 31, 2010 and lasts for a period of 15 months. Eligible workers pay 35% of their premium to their former employers and the employer applies for a credit of 65% on their payroll tax return. See more information on this topic at the IRS website.

Tweeting for Your Nonprofit-Seven things to consider before starting

2010-04-29T11:16:00.000-07:00

another great article from fellow strategic consultant Liz Vibber

Having just attended a Roundtable discussion on the basics of using Twitter for nonprofit development directors, I was struck by the potential this medium has. Of course, on the flipside, I was also struck by what a huge time drain Social Media can be—with no benefit—if you don’t invest the time in creating a following for your messages.

So where does this leave one who is interested in using this medium? Here are my Seven Things to Consider:
1. First things first-create a policy. If you’re Tweeting on your own, this probably isn’t necessary-but if you’re a large organization and you are encouraging your staff to Tweet on your behalf, consider a policy that set Tweeting guidelines on number of Tweets and content.
2. Make sure you have something useful to say. Tweeting for the sake of Tweeting gets old very fast. Most people aren’t interested in knowing that the Barista of your favorite coffee shop make your latte ‘fat’ not ‘skinny’
3. Know how much is enough. I follow one guy who must Tweet 8-10 times a day…I keep following him because every once in a while he has a nice piece that is interesting. But I’m still annoyed because he clogs up my Twitter and I may soon ‘unfollow’ him as a result.
4. Know what is not enough. If you’re going to the trouble of creating a Twitter, securing a following and finding thoughtful things to Tweet, don’t lag for weeks at a time. Try to Tweet at least once a week.
5. Manage Your Tweets. Use a tool such as TweetDeck or HootSuite to manage your Followees and Followers. These tools will also allow you to track Tweets with key words or know when someone mentions or re-Tweets you. I was especially pleased to get a Thank you from a nonprofit group who recognized that I re-Tweeted them.
6. Create a following. You have to let people know you’re out there. Thoughtfully include the ‘follow me’ button on your e-mails and organization’s website.
7. Twitter is but 1. There are many social media tools out there, and more new ones coming soon. Consider the other tools at your disposal-FaceBook, Linked-In, etc. Another advantage of TweetDeck and HootSuite is they will carry your Tweets to these other mediums so you don’t have to post the same thing in multiple places.

With these things in mind, go ahead and get started. But remember, there is so much to learn everyday so keep reading and looking for opportunities to expand your knowledge base.

New Hire Credit Form Now Available

2010-04-22T14:41:00.000-07:00

The IRS has just released Form W-11 that will help employers claim the special payroll tax exemption that relates to certain employees hired in 2010. The employees must have been unemployed 60 days prior to the hire date. The employer will then take the credit on their quarterly payroll tax returns starting with the 2nd quarter of 2010.

The credit is equal to the employers’ share of Social Security tax or 6.2% of the payroll. This equates to a credit of $3,100 on a $50,000 salary. The employees share is still withheld from their pay and remitted and this will not have an effect on the employee’s future Social Security benefits.

Additionally if the employer retains the employee for at least a year they can claim an additional credit of $1,000 on their 2011 income tax returns. Note—exempt organizations will not qualify for the $1,000 credit.

A new hire will only qualify if:

They were unemployed for 60 days prior to the hire date

The workers they are replacing left voluntarily or for cause or this is to fill a new position

They are not family members or relatives.

This tax benefit has an immediate cash flow effect as the tax on these wages is not remitted to the IRS with your payroll taxes. Also there are no minimum hours that the new employee must work.

For more information see the IRS website.

Consulting Vs. Facilitating: Clarifying Your Expectations is Key

2010-04-10T08:16:00.000-07:00

Looking to engage a consultant to help with your strategic plan but not sure what to expect? BCCNM Strategic Consultant, Liz Vibber, outlines the difference between a consultant and a facilitator in this article.

Capacity building is defined as the "process of developing and strengthening the skills, instincts, abilities, processes and resources that organizations and communities need to survive, adapt, and thrive in the fast-changing world."
Ann PhilbinCapacity Building in Social Justice OrganizationsFord Foundation, 1996

Capacity Building is taking center stage these days among funders who are looking for nonprofits to be organizationally effective prior to funding them. As a result, many organizations are looking closely at how to be front and center on this stage. Enter planning. Strategic planning, financial planning, succession planning—all have their place in a strong, well governed organization, so the question often isn’t should we plan, but rather how should we plan?.

Two options available to nonprofits are to use either an outside consultant or a facilitator as part of your planning process. Either option should provide a measurable benefit to your planning session; your choice will depend on what you are expecting their role to be in the planning process.

Consultant
When you hire a consultant, you are in essence looking for an analysis of your situation by an expert in the field. You are paying for and receiving the benefit of their knowledge and experience in the form of recommendations and suggested actions.

According to Peter Block in his book Flawless Consulting, the primary goal of consulting is some kind of change. This change comes in two varieties:
1. Creating change in an organization of a structure, policy or procedural nature.
2. People in an organization learning something new so that they may manage themselves differently.

The question your consultant should be asking is How can I make my client more successful?.1 The consultant will be involved in the process, will make comments, suggestions and provide feedback as part of the planning process. Once the planning is complete, the consultant’s involvement may then continue into the implementation of the change for the organization.

Facilitator
When you make the decision to utilize a facilitator in your planning session, their participation will be very different. Your group will provide the expertise (resource group) and the facilitator acts as your guide to keep the process moving along. You are benefiting from the facilitator’s understanding of the planning process and her ability to assess the dynamics of the group to help the group achieve its desired results.

In other words, your facilitator will be present at the planning session, but it will be the group itself that will discuss the issue and the possible solutions. The facilitator will ensure that the group stays focused and productive, that one or two members of the group doesn’t dominate the discussion while others are silent, manage conflict, as well as model neutrality. A facilitator will help the group illustrate their future state and note the action steps; she can also act as the scribe, taking notes and organizing them so that the group is free to focus on issue and content.

The facilitator’s involvement ends when planning is complete, they do not participate in the implementation of the change; however, they may can be engaged as a ‘coach’ to continue to monitor the group’s progress on action steps.
The following chart provides a clear illustration of the differences between consulting and facilitation.

Consulting Vs. Facilitation 1

Consulting

Analysis by an expert
Not neutral
The consultant offers content in the form of expert advice
May be involved in the implementation
Recommendations for action by consultant

Facilitation

Analysis by clients
Neutral
The facilitator invites an experience and exchange in the form of process, engaging the group to stay focused and on point. The faciliatior will not engage as a reosurce expert.
Client responsible for the implementation
Reommendations for action by client

1 (source: I. Bens, p. 18-Advanced Facilitation)

Often the professional you choose will not only be a skilled consultant but also as a skilled facilitator. By clearly explaining your organization’s expectations for your planning session, they will be able to assist you with the choice about what is best for your group.

For more information on the information contained in this article, or for consulting or facilitation, please contact the Bucks County Center for Nonprofit Management, 215-343-2727.

New Healthcare Tax Credit for Small Nonprofit Organizations

2010-04-03T11:09:00.000-07:00

The health care reform legislation includes a special tax credit for small businesses and small tax exempt organizations. Eligibility is determined as follows:
Must cover at least 50 percent of workers based on the single rate
Must have less than 25 full time equivalent workers
Pay average annual wages below $50,000

The credit is worth up to 35% of the health care premium costs for 2010. It phases out gradually for organizations with average wages between $25,000 and $50,000 and between 10 and 25 full time equivalent workers.

Details are still pending as to how tax exempt organizations can claim the credit. For more information see the IRS website.

10 Simple Things You Can Implement Now to Strengthen Your Nonprofit Board

2010-03-31T04:49:00.000-07:00

The Spring issue of PANO's (PA Association of Nonprofit Organizations) features this article by Elizabeth Vibber, MS, Strategic Consultant for Bucks County Center for Nonprofit Management

One of the most frequent concerns we hear from organizations is how to keep board members engaged and motivated. We have created a list of some very simple things you can do to energize your organization’s board meetings:

1. Have your Mission and Vision statement on every board Agenda.
A subtle reminder to all board members that the mission is central to all board discussions and decisions.

2. Start each meeting with a Member Minute where each board member spends a minute explaining what they have done since the last meeting to serve the organization: secured a donation, made an important contact, read an article, etc.
This exercise should only take about 15 minutes of your meeting, but will be well worth it by encouraging your board members to think about and promote your organization outside of the monthly meetings. Board members will learn from one another-and your organization will be the beneficiary.

3. Introduce a By-law amendment that limits the number of other boards your members can serve on.
I am always amazed to hear of individuals who sit on 2 or 3, even 4 Boards. Where do they find the time? How are they able to balance the tasks of your organization with their other commitments? Now if you have a Board Contract which clearly states the expectations for sitting on your board, and you hold your members accountable, this could be a non-issue. For other organizations this may be the nudge the ‘over-committed members on your board needs to move along. At the very least, it should make for an interesting discussion.

4. Create a 'Face page" for each of your board members in your board manual.
Although boards meet on a regular basis, they don’t always get to know one another on a deeper level. A ‘Face page’ or bio page would include more personal information for board members such as hobbies or previous work/board experience. This is another way to build camaraderie on your board, not to mention discovering the hidden talents of your board. These Face Pages belong in the board manual and aren’t for public viewing. Don’t forget the picture!

5. Use a DA or Devil's Advocate card at each board meeting.
Each meeting someone different is given the DA card and their job is to play the devil's advocate on issues before the board. This straightforward yet powerful tool can be used to avoid the pitfalls of those boards inclined to ‘group think’; to correct a flawed decision making process; or simply to give a voice to members of the board who may be less inclined to share an opposing view point.

6. Create a FAQ for new board members created by current board members.
Remember all those questions you had but were afraid to when you first joined the board? Or maybe you did ask them and you saw in the eyes of your fellow members that they realize they didn’t know the answer either. This is also a terrific tool to use when recruiting new members as it provides a glimpse into the culture of your organization!

7. Make sure all of your board members have business cards with the organization's mission statement on the back.
What better way to get your cause into the hands of your board member’s friends & acquaintances?!

8. Decrease the number of your committees and increase the number of your task groups.
Task groups are established to accomplish a specific objective—within a specified time frame. Once the objective is completed, the group dismantles. Task groups give boards greater flexibility, engage members more efficiently and allows issues to be tackled immediately.

9. Create a strategic plan dashboard tracking 3-5 critical indicators to the health of the organization and update monthly showing a 12 month trend for each.
Dashboards are designed to provide a simple visual overview of the health and direction of any organization that has financial statements, i.e. balance sheets, income statements (also known as profit and loss, or operating statement) and cash flow statements. These graphic images give the non-financial persons in your organization a better understanding of the finances..

10. Ask each board member to think of the single most important issue that they feel the organization should focus on in the next year and have them write it on an index card. Shuffle the cards and read them out loud to begin a strategic discussion.
This last tip is pretty self-explanatory and a great way to begin the annual review of your strategic plan.

IRS Filing Costs to Form an Nonprofit to Decrease

2010-03-24T05:51:00.001-07:00

Currently if you wish to form a nonprofit you are looking at a filing fee of $850 from the IRS, not to mention incorporation fees, legal fees, and accounting fees to assist you with completing the many questions on the Form 1023. If all goes well, you receive your approval. If not, you may receive correspondence from the IRS asking for more details and information. It appears this process will improve in 2010.

Later in 2010, the IRS will be coming out with Cyber Assistant. Applicants who use this online system will only have to pay an application fee of $200. The online application process will probably insure that the form is completed properly and increase the likelihood of approval the first time around. It should also reduce the need for accounting or legal assistance in completing the application.

Direct from the IRS site....

Cyber Assistant, a web-based software program designed to help organizations prepare a complete and accurate Form 1023 application, will become available during 2010. Once the IRS announces the availability of Cyber Assistant, the user fees will change again. 1. $200 for organizations using Cyber Assistant (regardless of size) to prepare their Form 1023, or 2. $850 for all other organizations not using Cyber Assistant (regardless of size) to prepare their Form 1023. IRS will announce when Cyber Assistant is available and the effective date of the user fee change. Sign up for the Exempt Organization (EO) Update, EO’s subscription newsletter, at www.irs.gov/charities, to automatically receive an alert that Cyber Assistant is available.

Devil's Advocate

2010-03-22T04:41:00.000-07:00

This article was written by Liz Vibber, my associate and strategic consultant with Bucks County Center for Nonprofit Management. It first appeared in Blue Avacado about a year ago. It is a great technique to help your Board make better decisions.

Wouldn’t it be wonderful if all Boards had 20/20 hindsight to assist them in making decisions? If they could clearly see the obstacles a project will encounter in time to make the necessary adjustments?

Absent a few sprinkles of fairy dust, using the Devil’s Advocate technique might assist boards in identifying such obstacles. A Devil’s Advocate is someone who takes an opposing view to test an idea or project the board is considering. Rather than simply participating in a board discussion, the DA’s job is to purposely ask questions and argue against the idea. By responding to these questions, the board is forced into healthy debate as they consider arguments they might never have thought of had it not been someone’s (the Devil’s Advocate’s) specific task to try and challenge the board’s thinking.

Your board can use this technique during every meeting or only when important issues are up for discussion. After explaining the technique, randomly select a board member and place an index card marked DA or Devil’s Advocate in front of them where all can see it. Throughout the meeting, this person should be asking questions to test the soundness of the decisions the organization is considering. A couple of caveats-holding the DA card does not give this board member the ability to block or hold decisions from a vote, nor should the board hold it against the designated DA for asking tough questions. You can’t be annoyed with someone whose ‘job’ it is to question the wisdom of an idea—can you?

Example-
For example, a small suburban nonprofit organization was considering expanding their adult program services to include children. This 25 year old agency had successfully been serving adults in accordance with its mission, but lately, at the insistence of one very vocal board member, was wondering if it could better serve the community by expanding its offerings to children. By using the DA card over the course of several meeting discussions, the agency realized that the additional licensure, insurance, and educational knowledge that would be necessary to be obtained in order to offer youth services outweighed the tangible benefit. Using this technique they were able to ask and answer a series of tough questions which ultimately clarified that their goal was ‘increased’ service delivery, not necessarily ‘expanded’ service delivery. The agency was then able to accomplish this by instituting transportation services to a neighboring bus depot. This solution increased their client base by 7% in the first year and their profits by 4% (after factoring in the additional costs). This provided the agency with growth that was acceptable to all, with the added benefit of having a wider geographic service area without the costs of ramping up new programs.

Excited by using the DA technique, board members went out of their way to prepare thoughtful and intelligent arguments resulting in healthy debate. After the first meeting using this technique, the board began to ‘pass’ the DA card around the table giving more individuals the opportunity to offer challenges to the proposal on the table—all under the cloak of security the DA card offered.

The Realities of the New Form 990

2010-03-04T05:28:00.000-08:00

This past Wednesday we had our roundtable on the new Form 990. Most of our attendees were looking at filing the Form 990 for the first time this year. Some of the items we talked about:
• Making sure that the mission description on page 1 and the program descriptions on page 2 fit within the space provided so that the reader of the Form 990 can readily access that information and does not have to turn back to the Schedule O.
• Several of the participants noted that they received contributions from donors who found them on Guidestar, emphasizing the importance of putting your best foot forward with your Form 990
• Reviewing the necessary policies-document destruction, whistleblower, conflict of interest, Form 990 review procedures, compensation setting, gift policy
• Noting that key employees are those with significant management responsibility who also receive more than $150,000
• Compensation reporting also health benefits, the deferral of income-including pension and other retirement pay
• Discussed functional expenses and the importance of reviewing your allocations
• The effect of contributions from special events on the special event income

A few of the nonprofits who do not have to file the new 990 yet, said that they would probably file it instead of the Form 990-EZ because they wanted the extended information available to their stakeholders. Those who had already filed the new form 990 agreed. They noted that even though it was a lot of work to put together, they wanted the information presented.

Board Member Review of Form 990

2010-02-22T16:24:00.000-08:00

In preparation for our Roundtable Discussion this Wednesday about the IRS Form 990 I have been thinking about some common issues from this past year related to the form.

One of the questions on the IRS Form 990 is did the Board review the 990 before it was issued. Your Board may be wondering what they should do in that review process. While some of the areas may vary depending on your organization, the following list is a good starting point.

1. Review the statement of program service accomplishments. This is where your strongest story is told. Do you include service statistics and outcome measures?
2. Review the functional expense schedule looking at the % of program expenses compared to total
3. Scan questions on pp. 3, 4, and 5-do you have all the necessary policies? Review the discussion of the compensation policy in Schedule O
4. Review officers, hours per week, and related compensation
5. Read Schedule O. Is everything explained the way you want it?
6. Schedule G-for IRS purposes, these contributions related to a special event, are in the contribution section and not included with the special event revenue—so your event shows a “loss” on Schedule G
7. Review independent contractors as applicable
8. Look at Schedule L and Schedule R if these are applicable. The IRS is concerned about situations where someone with influence over the organization would be paid amounts that exceed the value of the services rendered.

Pursue Individual Donors

2010-01-30T09:40:00.000-08:00

We’ve been looking at individual donations and Haiti. What about what we see in our local area? We work with over 100 nonprofit agencies and prepare over 700 tax returns for individuals. While it is a small population, observations can still be made:

You don’t have to write a grant application to ask individual donors for money
Individual donations are not normally restricted for specific purposes so you can use individual donations (in most cases) for general operating monies
Individuals will typically give to the same charities year after year and most tend to be life long donors
A nonprofit with about a $1 million budget with a good planned giving program in place for 10 or more years receives on average $50,000 annually. This has been our experience. However, I do not know the national statistics on this.
As a percentage of their income, lower income individuals give more than higher income individuals. While we note this at our CPA firm, it actually mirrors the same documented national statistics
Charities that are less dependent on government money and foundation money are more stable, survive the rough times better, and have more people resources to devote to their mission because they don’t have to file mountains of government paperwork or find new foundations to support them every few years.
A surprising number of very nice, caring people don’t give--at all.
When individuals talk about charities that they have had some relationship with, they say “If they asked me to give money, I would”

Haiti and Individual Giving – and how it relates to you

2010-01-27T18:13:00.000-08:00

I still continue to be amazed and moved by the generosity of so many in reaching out to Haiti and to reflect on the value of individual donors. We as nonprofits work so hard applying for grants when we should be putting that effort towards reaching individuals. In my last post I listed some important truths about giving illustrated by the outpouring for Haiti. What do these mean to your nonprofit?

Communicate the need
Communicate why you are effective at meeting that need—build your donor’s trust
Pursue individual donors
Make it easy. Make sure donors can give securely and easily through your website
Look into a text campaign—a good fit for certain events or causes
Invite people to participate at various levels of giving
Repeat---Pursue individual donors. Put more energy into this than pursuing corporate donors, foundations, and government grantors.

A client recently had their first annual appeal. They raised $12,000 increasing their total contributions by 5%. Not a bad start for their first year. Most of their contributions had historically come from foundations and corporate funders. Tomorrow the nonprofit I serve with is going to look into getting the “donate now” button on our website and we are working on a grant application. I’ll keep you posted on the outcome of each.

Haiti and the Message about Individual Donors

2010-01-26T06:16:00.000-08:00

As of January 21, over $305 million had been raised just eight days after the earthquake struck Haiti. This CNNMoney article goes on to discuss where the money came from and how it was raised.

The outpouring of donations for Haiti, and before Haiti, for the victims of Hurricane Katrina and the tsunami illustrate a number of important truths about giving.

People will give and give generously to a demonstrated need-they will give to hurting people in the US and they will give to people in need around the world.
People give to organizations they trust
The potential for individual giving is greatly untapped-for such a large amount to come in, in such a short period of time shows that people have money to give. Some people may have given sacrificially (another lesson for another time) but most probably will not miss the donated funds.
People give when they process is easy. It is estimated that over half of the donations have been online contributions. The American Red Cross reports over 60% has been received online and 15-20% through its text campaign. That means that only 20-25% of the funds have come through the mail.
A little goes a long way-by January 16, 700,000 people responded to the American Red Cross text campaign with donations of $10 each
Although the giving includes corporate gifts the American Red Cross noted that about 15% of the donations are from corporate gifts—meaning 85% are from individuals. Individuals have historically represented the largest percentage of givers.

Yes, the circumstances noted are catastrophic, and have received a tremendous amount of media coverage, and the need is immediate. But then again, you aren’t trying to raise $305 million in eight days.

More Than Great Cookies (in honor of Girl Scout Cookie Month)

2010-01-24T12:47:00.000-08:00

What are we best in the world at? This was the key question that the Girl Scouts of the USA asked as they began their transformation several years ago. www.girlscouts.org. It’s a great question that Organizations should ask periodically to refocus on their core mission.

Over time, nonprofits can find that they have drifted from their mission. Whether it’s following the greatest need or chasing the greatest dollars, an Organization can realize that they aren’t exactly doing what they initially set out to do. This is not necessarily a negative. If the needs of the community have changed and the Organization has changed to meet those needs, the nonprofit is relevant to its community. However if the mission changed in the process of pursuing funding, the nonprofit may be off track. Depending on the cause of the mission drift the Organization may need to restate its mission to better communicate what they do or get back on track.

The luncheon speakers at the BoardSource Leadership Forum were Kathy Cloninger, the CEO of Girl Scouts of the USA and Connie Lindsey, the National President of the Girl Scouts of the USA. In their own words they shared the process of “taking a deep look at the brutal truths facing the movement”. It was a challenging process but they were committed to complete transparency and steadfast in making the changes happen. Their goals were twofold: 1-to have a relevant purpose; and 2-to create a simple, faster business system. The process is described on their site.

The answer to the question? Girl Scouts creates leaders. 75% of women in leadership positions were once Girl Scouts. In the end the Girl Scouts emerged with some significant structural changes and a new definition of Girl Scouting—“Girl Scouting builds girls of courage, confidence, and character, who make the world a better place.”

What are you best in the world at?

The Auditors are Coming! The Auditors are Coming!

2009-12-16T04:51:00.000-08:00

We audit a number of organizations-nonprofits and municipalities and a few corporate entities. Every year our clients express relief when the audit is over, especially if there aren’t any major findings. We reassure the clients that we as auditors aren’t “out to get them” and they should not worry about the audit. Any findings or comments will only help to make their internal controls stronger and their organization better. However we do understand their apprehension. No one wants to have their errors written and memorialized for others to see.

Every three years we find ourselves in our clients’ shoes when we have our peer review. We are audited by another CPA firm who reviews our system and a selection of our accounting and auditing work to make sure we are following standards properly. A month ago, I was confident in the philosophy that any comments will only enhance our client service. But with the peer review starting tomorrow I completely empathize with our clients. Which reminds me of another philosophy—walking in another’s shoes is a good thing.

Year End Tax Tips for Donors

2009-12-12T04:26:00.000-08:00

The IRS published Year End Tips for Donors this week on their site.

IRA owners age 70-1/2 or older can directly transfer tax free up to $100,000 per year to an eligible charity. This provision is scheduled to expire at the end of 2009.
Clothing and household items donated to charity must be in good used condition or better.
All donations of money regardless of amount must have a bank record (typically a canceled check) or written communication from the charity. Payroll deductions can be documented by maintaining the last pay stub for the year.
Contributions need to be made by December 31 in order to take the deduction
As of this posting, just 19 more donating days!

Strategic Planning vs. Strategic Thinking?

2009-12-09T09:58:00.000-08:00

In the BoardSource session “Financial Leadership in this Emerging Economy”, the presenter, John Griswold noted that the strategic plan used to be for 5 to 7 years, now it is for 2 to 3 years. To which a Board trustee from a grant giving foundation replied—“forget the strategic plan—I want to see strategic thinking”.

We pay attention to what the grant makers are saying is important to them. After all, they are a significant source of funds for nonprofits. So is this a trend that nonprofits should be aware of—should they abandon their strategic plans—those nearly year long processes that result in a large binder with fancy charts and graphs and goals, objectives, and action items?

While I did not get to follow up with the Trustee who made the comment, I think she was expressing a common frustration—the strategic plan in the nice binder that sits on the shelf for 5 years until it is time for the next strategic plan. And in between, the plan is not looked to for guidance or updated annually or considered until then.

The common sentiment—“you don’t plan to fail, you fail to plan” embodies the reasons behind a strategic plan. But Boards and management, who spend countless hours and dollars on a plan and then don’t continually use it, cannot say that “the plan on the shelf” is truly planning. True strategic planning does include strategic thinking. It is not a “one and done” event. It is a continual process of incorporating your plan into every Board meeting and updating and modifying your action steps as you strategically look at what is happening in the world around you.

So it is not an issue of a strategic plan OR strategic thinking, it is strategic planning AND strategic thinking.

Another Great Thing about Vermont

2009-12-02T18:05:00.000-08:00

One of my favorite places to visit is Vermont. When people think of Vermont, they think of mountains, maple syrup, skiing, and hiking. Now something else—Vermont was the first state to enact the L3C (low-profit limited liability company). This is an innovative entity structure that has quickly gained in popularity and has been formally adopted by 5 states with legislation pending in a number of other states.

This entity combines the social mission of the nonprofit entity with the business concept of return on investment. The L3C can receive investment capital from foundations and the foundations can later receive a return on their investment. The Nonprofit Law Blog does a great job clearly explaining the details.

An entity can form the L3C in a state where legislation has been enacted and file as a foreign corporation in the state where they are located (similar to the idea of incorporating in Delaware).

The L3C offers just the right structure to meet the needs of certain industries as discussed by the Nonprofit Law Blog

As with anything new, there are some issues up in the air with the IRS as the NonProfit Times notes so the pros and cons of this type of entity need to be carefully reviewed before deciding if it is the right form of entity for your organization.

A Cornucopia of Ideas

2009-11-27T12:37:00.000-08:00

In honor of Thanksgiving, here is a collection of ideas, thoughts, and concepts from the 2009 BoardSource Leadership Forum….

…Foundations are looking more closely at Organization’s financials, they are looking for Organization’s that are sustainable who will be around long after the grant money is used…lagging economic indicators include giving so as the economy recovers giving may still decrease…Board members should include “ask me about (my nonprofit)” in their email signature tags to raise awareness about their nonprofit….millennials are excited about the nonprofit sector and see it as a desirable life career, not just a volunteer activity…
…the new 990 is only the beginning of IRS regulations that will affect nonprofits….pay attention to social entrepreneurs who look at social change differently…things aren’t broken, they are broken open….nonprofits need to market community value…
…a problem in the nonprofit sector is the 1.5 million small, disconnected nonprofits each going their own way, nonprofits need to merge or collaborate more…the Board and the Executive Director are responsible for determining strategy, the Executive Director is responsible for executing strategy… make sure you are measuring the right things…and one of my favorites…if you haven’t failed, you haven’t experimented enough

…the list goes on, but each of these items by themselves could be a post on its own…all good food for thought---without the calories of the Thanksgiving feast!

Energized by the BoardSource Conference

2009-11-25T05:46:00.000-08:00

I have just returned from the annual BoardSource Leadership Forum in Orlando, FL and I am re-energized to advance the cause of good governance. It wasn’t just the 80 degrees weather, the palm trees, the lake view, and the sound of the multiple waterfalls outside. (Although I suspect an environment like this on a daily basis could only continue to create energy) It was the reinforcement of what can be accomplished in any organization when they are established on a firm foundation.

We have worked with nonprofit organizations for over 25 years. Some organizations accomplish their goals very effectively. Their programs work, they are good at attracting donors and volunteers, and even in these difficult times, they are strategizing ways to continue on. Other organizations are not so effective. The key ingredient that is missing from the less effective nonprofits? Good governance.

The popular definition site, “Wikipedia” defines governance as: “consistent management, cohesive policies, processes and decision-rights for a given area of responsibility” We see it as the cornerstone for the foundation of a well run nonprofit.

BoardSource’s own site says it best “dedicated to advancing the public good by building exceptional nonprofit boards and inspiring board service” They accomplish this by focusing on Board governance and provide numerous resources and training on Board structure, meetings, legal issues, policies, financial management, etc.

My next couple of posts will focus on some of the great governance messages from the BoardSource conference.

Small Nonprofit Need to Remember to File the E-Postcard

2009-11-24T16:49:00.000-08:00

You are part of a very small nonprofit. Keeping the books is simple, what could go wrong? Well if you don’t pay attention to the IRS filing requirements-you could lose your nonprofit status.

Small nonprofits with gross receipts of $25,000 or less need to annually submit the Form 990-N to the IRS. The form is filed online at http://epostcard.form990.org. There is no paper filing option. While there is no monetary penalty for late filing, an organization that fails to file for three years in a row, will have its nonprofit status revoked.

The filing is simple. You just need your employer identification number, name and mailing address, tax year, website (if you have one) and the name and address of the principal officer. You will be asked to certify if your gross receipts are $25,000 or less.

Not sure if you are up to date on your filings? You can search for your organization at http://www.irs.gov/app/ePostcard/

While it is easy to file, it is easy to forget to file. The epostcard is due by the 15th day of the 5th month following your year end. Nonprofit status will be revoked by the 3rd consecutive missed due date. This IRS provision was first effective for years ending 12/31/06. So if you are a 12/31 year end and have never filed the epostcard and do not file by 5/15/10, your nonprofit status would be revoked. Now is the time to file.

More information is available at the IRS website http://www.irs.gov/charities/article/0,,id=169250,00.html

Growing Your Future Board

2008-03-12T03:56:00.000-07:00

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.

Decisions, decisions

2008-03-07T02:51:00.000-08:00

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.

Protecting People from Themselves

2008-03-03T04:20:00.000-08:00

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.

And to the naysayers....

2008-02-26T17:41:00.001-08:00

My last two posts address the importance of nonprofits living within their means. Even as I wrote them I am aware of nonprofit organizations that overspend believing that their donors will come through for them and the donors always do come through, and so the organization continues living from donation to donation. However it has been my experience that for every organization that manages to survive using that philosophy there are three other organizations that have to close their doors because they relied on that philosophy. I am also seeing that larger donors and funders are increasingly becoming more discerning. They are looking for financial healthy organizations to give to, where they believe their money will be handled wisely and can make a long term difference because the nonprofit will be around for the long term.

“The Millionaire Next Door” applies to Nonprofits too

2008-02-22T04:26:00.000-08:00

In their book “The Millionaire Next Door” authors Thomas J. Stanley and William D. Danko, systematically illustrate the point that the secret to becoming a millionaire has nothing to do with your inheritance, your nationality, or even the job that you have, it is a function of saving more than you spend. They provide example after example and study after study back up their point. This is another great application for nonprofits to apply in financial management. Spend less than you earn. Save money.

Nonprofits argue—we can’t do that. The needs are too great.

Let’s look at this from another angle. When a nonprofit has cash flow problems and is always running short on funds, how much time is spent trying to figure out which bills to pay first, calling creditors, paying late fees, etc. That is time that could be better spent meeting those needs. Instead it is wasted time and costly decisions are sometimes made in haste. And it is all because the nonprofit did not live within its means. Think what you could do with more money. Want to have more money in the future? Manage it well in the present.

"Feed the Pig" applies to Nonprofits too

2008-02-18T18:35:00.000-08:00

The American Institute of Certified Public Accountants (AICPA) has a clever advertising campaign www.feedthepig.org to encourage saving among consumers. (Feed the pig being your piggy bank). You do not have to look far to see the detrimental impact of America’s spending habits on the economy.

How do we save? Simple, spend less than you make. The same seemingly simple philosophy applies to nonprofits too. No matter how great the need, how successful the program—you need to live within your means. You cannot start a new program based on what you think donors might give to you once they see the success of the new program if you don’t have money saved to kick off the new program. You can’t keep running a program when funding was cut for the program three years ago and no new sources of funds have been developed. Nonprofits that are successful for the long run have learned that you can’t spend what you don’t have.

AI-It is all in the questions

2008-02-16T06:18:00.000-08:00

The website Appreciative Team Building gives this summary—“an appreciative approach starts with a series of questions about what is already working, in order to uncover the root causes of team success” When you read about AI you might conclude that it ignores problems that exist or by only focusing on the good things an organization doesn’t get the full picture. This could be possible. However, I like the summary noted. You can still look at a problem situation and ask “how have we overcome problems successfully in the past?” or “what is working well and why” and “how can we take why this is working well and apply it to this, that is not working well” It would be tempting for an organization to use AI to avoid talking about very real problems that could threaten the organization if they were not addressed. It is important to design the questions carefully to address issues in your organizations.

Just Starting Out with Appreciative Inquiry

2008-02-13T17:34:00.000-08:00

About two weeks ago I attended a seminar from the Association of Fundraising Professionals on the topic of Appreciative Inquiry. First of all, kudos to the speakers who had us work through an example to illustrate the more complex elements of Appreciative Inquiry. Most of us in the audience were new to the concept and a bit skeptical. The practical examples helped us see the enthusiasm that develops when issues are explored using positive inquiry. It would be hard to adequately discuss the elements of appreciative inquiry here so I’ll refer you to one of the websites that I found the most helpful. This group, Appreciative Team Building, presents a concise discussion of AI.

There are a lot of elements of AI that I can see would be beneficial to organizations. It can enhance the traditional strategic planning process, especially for organizations that have been through the process several times before and might be looking for a different approach. Even in informal planning processes, reframing a question from a positive standpoint can open up dialogue that helps find solutions. It is a process that I would like to explore more.

New Risk Assessment Standards-Cost Beneficial?

2008-01-30T15:56:00.000-08:00

As discussed in the last post, new audit risk assessment standards provide auditors with additional guidance to enhance understanding of the organization and to assess risk. In our preliminary audit work we have implemented these procedures and while we have not found any major issues, we have found some smaller procedural issues that have enabled us to provide our clients with some practical recommendations.

I cannot yet determine if the value of the recommendations exceeds the additional time on our end and the cost on the client’s end. However, many changes take place that don’t necessarily have a direct and equal economic value to all the participants. Hopefully industry wide the changes will provide value across the board and the long term result will be fewer problems with financial reporting.

New risk assessment standards can provide organizations with additional opportunities

2008-01-29T14:55:00.000-08:00

Audit risk assessment standards fully took effect this year. A few new standards were implemented last year. The standards are designed to help auditors increase their knowledge of the organizations they audit and provide additional guidance to improve risk assessment.

Organizations (especially small to midsize nonprofits) noted a change with their financial statements last year. If they outsource the preparation of the financial statements to their auditor, they will need to evidence their ability to take responsibility for the statements. This could be done by completing a disclosure checklist or other steps. While a number of our clients were pretty familiar with the various disclosures and could comfortably discuss their financial statements, they did welcome the opportunity to learn a little bit more about the statements and why the disclosures are there (after an initial hesitation). The more knowledgeable an organization is about their financial picture, even in seemingly insignificant areas, the better overall picture they will have of their operations.

Subcontractor filing

2008-01-24T11:49:00.000-08:00

In a previous post I discussed employee vs. subcontractor decisions. If you do have subcontractors, you need to send them IRS Form 1099-Misc by January 31. The form is due to the IRS by February 29. A subcontractor is:

a person or business that is not incorporated
that provides you with a service
that you pay more than $600 to during the calendar year

Common situations where you could have a subcontractor could be your cleaning service, landscape service, the disc jockey for your fundraiser, or people who you bring in to do temporary work.

Appreciative Inquiry

2008-01-21T18:15:00.000-08:00

The Association of Fund Raising Professionals in the Philadelphia area is having a half day seminar on using Appreciative Inquiry in Strategic Planning. Since we provide clients with strategic planning two of us from the Bucks County Center for Non Profit Management are signed up to go to the seminar. The past week, I spent some time online reading about Appreciative Inquiry. My first thought was that it is like the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) except for it is just the SO part. However, it is much more than that. Appreciative Inquiry approaches planning from a different angle. The traditional starting question has been-what are our problems and how do we solve them? Appreciative inquiry starts with questions to uncover what the organization does right and why. It is an intriguing approach and I am looking forward to learning more about it.

Employee vs. Subcontractor

2008-01-20T13:40:00.000-08:00

If you are a small non profit with just a few part time employees you may be considering reclassifying the employees as subcontractors to cut down on the payroll filing hassles. Be careful though, the IRS has guidelines as to who is an employee and who is a subcontractor. Generally a subcontractor is someone who you can only direct the results of the work, not the way the work is accomplished. The IRS provides more detail at www.irs.gov in Publication 15A Section 2: Employee or Independent Contractor? There they list ten main criteria to consider when deciding if someone is an employee or a subcontractor. These criteria include where and when the work is performed; if the person uses their own supplies to do the job; or the organization’s supplies; and if the person performs the same work for other organizations. It is important to carefully review the criteria and if you decide that someone is a subcontractor to document the reasons why. If the IRS decides they are actually an employee, the organization could face penalties.

Emotional Issues

2007-07-28T16:36:00.000-07:00

The participants in our recent Succession Planning roundtable agreed. The struggle with succession planning wasn’t with the steps involved in the process. Other than the time it takes to document the process, the steps alone are not that difficult. The primary challenge with succession planning is in the emotional issues. The Executive Director might not want to bring up succession planning for fear the Board would think they are planning to leave. The Board might not want to bring it up for fear the ED might think the Board wanted them to leave. You may have staff that you want to train to perform functions in the ED’s absence or in the interim between an old and a new ED but you don’t want them to be the new ED. The staff or key donors may have a close relationship with the ED and fear that the loss of the ED would adversely impact the future of the organization. Navigating the emotional impact that comes with succession planning can be mitigated by focusing on policies and procedures and investing time in fostering open communication. Focusing on policies diffuses the personal aspects. Developing better communication between all the people involved can reduce the tension that accompanies these discussions.

Board succession

2007-07-25T18:19:00.000-07:00

We started out at our last roundtable discussing Executive Director succession planning but ended up focusing more on Board succession. Thoughts—

You sometimes think that it will be hard to find Board members with the same passion for the organization. But new members join and its not long before they are “infected”.
Create meaningful roles for volunteers. Allow selected volunteers to serve on certain committees. This gives you (and them) an opportunity to see what their role as a Board member would be like.
Limit terms for all officers to 3 years. Limit terms for Board members to 2 consecutive 3 year terms with a year break before the next six year stretch. But ask your Board member if they would like to stay involved during the one year break—on a committee or helping with a program or a fund raiser. If you don’t limit terms you make it harder for the Board as a whole to get used to working with new members.
In at least the last year of the President’s term, have a President in training. This does not necessarily have to be the Vice President. This person will spend a year with the President assisting them with their duties so that the transition is easier.

Accountability

2007-07-22T13:21:00.000-07:00

At our Thursday breakfast roundtable, our discussion on succession planning moved into Board succession matters which then diverted to a discussion on Board accountability. Namely, what do you do when a Board committee is not keeping up with its responsibilities? A few suggestions:

Each committee chair needs to report to the President and/or the Vice President of the Board. The President and the Vice President should not chair committees so they are free to mentor and guide the other committee chairs.
Written descriptions of each committee and what the committee is expected to accomplish within a certain time frame.
Written reports from the committee as applicable.
Consider appointing a new committee chair if necessary. Sometimes, someone doesn’t have the time to be the chair but is afraid to let everyone down.

Decisions, decisions

2007-07-13T06:15:00.000-07:00

Still thinking about setting priorities, especially in light of two consulting projects we are involved in right now. Great missions, passionate staff, tons of ideas, not a lot of time or financial resources—yet. Some of the ideas have the potential to generate significant funds. What to do first? Here are two techniques 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. Make a chart divided into four quadrants. In the upper left quadrant place those ideas that are high return, low risk. In the upper right quadrant-high return, high risk. Lower left quadrant, low risk, low return. Lower right quadrant, high risk, low return. Those initiatives in the lower right quadrant are the ones you would be least likely to do. Those in the upper left quadrant have the most promise. You need to consider what can be done to either mitigate risk or increase return for the items in the other quadrants.
Although everyone probably has a general perception of the ranking of the initiatives, charting them out clarifies things for everyone.

Setting Priorities

2007-07-11T07:32:00.000-07:00

Sometimes the issue isn’t a shortage of ideas but limitations on resources and the challenge of determining which ideas to pursue. Organizations will have retreats and brainstorming sessions. New ideas abound. But seldom does an organization have unlimited resources. The challenge in deciding which ideas to implement is multi-faceted.

Which initiatives will staff be most likely to embrace, increasing the chance of success?
Which initiatives will result in the most return on the investment of resources?
Which ideas are most likely to be feasible?
Sometimes an idea with a high potential return has more risk attached to it. When do you take the risk? When do you stay the course and keep to steady progress?

There are no easy answers but the organization that is effective in answering these questions will be more successful in implementing new ideas.

A Whole New Meaning to Summer Camp

2007-07-01T13:42:00.000-07:00

I spent 3 days last week with a group of families who set aside one week a year to do maintenance and construction projects at a camp. Last week the group worked at Mt. Gilead Camp and Conference Center in the Pocono’s. The families replaced the kitchen and dining hall floor; constructed benches for a fire pit; dug trenches and spread gravel to help with the water flow; and numerous other tasks. There were about 80 people involved including the children and I have to include the children because I watched a 3 year old spend two hours removing rocks from an area so grass could be planted and children ages 7 to 12 work from 7 to 5 each day on various tasks. A number of teens helped too but it was especially impressive watching how hard the younger ones worked. At the end of the week they figured out that it would have taken the camp director a year to do all the things they did.

Most of the families had been involved with this for an average of nine years though some people had been involved from the beginning in 1974. An 82 year old man and his wife handled the plumbing tasks. There were carpenters, electricians, and other professional contractors but probably half of the group were not professional contractors.

The costs for the camp—materials for the projects. The cost for the families--$30 per person for food for the week. The camp provides the facilities at no cost. Different camps vary as far as amenities, but at Mt. Gilead, we swam in the pool at the end of each day; and slept in very comfortable, clean cabins.

There was no need to ask the families why they did this. They enjoyed working together; spending time together at meals and around the campfire; reconnecting a year later; and meeting new people who had joined. It was exciting seeing how much could be accomplished so quickly. And it was rewarding for parents to watch how hard and how enthusiastically their kids worked. I know that there was a lot of work prior to the week from the participants and the camp director but an endeavor like this makes volunteering fun.

How to Take Rejection

2007-06-16T07:25:00.000-07:00

At last month’s seminar the Foundations discussed reasons why your grant application might be turned down. These are situations that are out of your control. But when you contact the Foundation to find out why you didn’t get funding, if it is because of one of these reasons, you’ll be encouraged to try again next year.

There are limited amounts of funds available each year. A Foundation may have certain organizations that it will support year after year and then vary funding from year to year. You may receive funding from a Foundation for several years and then not receive funding. It doesn’t mean the Foundation no longer likes your mission; it just means they are varying the organizations that they are supporting.
A Foundation tries to diversify its funding. If you are a women’s services group and four other women’s services groups happened to apply that same year, they may only pick one. If it isn’t you this year, it could be you next year, so don’t give up asking.
A new non profit will rarely be funded the first year. The Foundation wants to see at least one year of history. After that they will be more interested to help keep the non profit going.

Decreasing the Odds

2007-06-15T04:18:00.000-07:00

In my last post I shared ways that Foundations suggested you could increase the odds of getting your proposal funded. Here’s the flip side…

Try to avoid:

Starting a new non profit. If you have a great idea for starting a new non profit, check with your area community foundation or a local family foundation. They will be aware of what is already out there and chances are there is already another non profit doing what you would like to do. The community foundations expressed their frustration with the number of new non profits starting.
Boiler plate applications. You can certainly copy and paste standard language, project descriptions, or an overview of your mission, but try to personalize the application to the specific Foundation. Have someone else proofread your final grant. Our panel all had stories to tell of applications with another Foundation’s name listed in the application.
Don’t exaggerate to make your program sound bigger. If you are expanding your program to help 100 new people, don’t say you are going to be helping 500 new people. You don’t want to explain next year why you only helped 100.
Don’t come back year after year for the same thing. Foundations are looking to diversify.
Foundations typically do not fund individuals so it’s not likely that you’ll be able to get scholarship funds.

That all said, there are Foundations geared to specific interests. So there are some Foundations that specifically mention scholarships. Some Foundations fund the same organizations year after year. Foundations may change their focus, so keep them on your radar in case their focus does change from North County to South County. Family foundations may be less likely to change, especially if the provisions of the Foundation were established in a will. Community and corporate foundations may change their focus over time and even as frequently as year to year.

Improving Your Odds

2007-06-11T19:36:00.000-07:00

Looking to get funded? The following ideas from our panel of Foundations might help:
Keep in mind that an overall goal of the Foundation is to put its money where it can reap the most from its investment.

Collaborate with another non profit. This allows the Foundation to get more from their investment.
Read the requirements of the Foundation. If the Foundation only funds in North County and your non profit is in South County don’t waste your time or their time with the application.
Explain to the non profit organization how your project will be “self sustaining” in three to five years. “Self sustaining” can include increased donations from individuals and other organizations as part of a donor development program.
The Foundations emphasized that they wanted to be part of a growing organization. They are glad to help something get off the ground but they don’t want the organization to be dependent on them for funding each year.
As part of this, keep in touch with the Foundation throughout the year so they can see how you are doing. They see themselves as being one of your partners and want to follow your success.
The Foundation wants to see Board buy in—meaning that 100% of your Board is giving time and money to your organization
And I’ll mention it again since it was brought up a few times—collaboration is the key to a successful proposal.

And So I Digress

2007-06-10T13:19:00.000-07:00

The spring has been filled with baseball, softball, ballet recitals, and end of year school events. It seemed like there would be more time to blog once work slowed down but other things picked up. I started to write more about the great advice from the Foundation meeting last month. But I wanted to fit this in first.

Friday I spent the day helping to decorate the middle school cafeteria for the Freshman Dance. This year’s theme was “A Night under the Stars in Central Park”. Thanks to yards of gossamer, white lights, fake trees, park benches, and a lot of creative parents the cafeteria became Central Park, with the Central Park Zoo, a stone arch with “water” flowing through it, and a patio under the stars. The hall featured the New York skyline, flowered arches, a gateway, and park benches.

One of the organizers suggested that next year the parents have a fundraiser the following evening to raise money for the class. That way the creative efforts could be used for two nights and enjoyed by more people. That idea could be expanded and the facility could be offered to a local non profit for their annual banquet.

Another local school transforms their gym every year for the after prom party. It is so elaborate that the school is open for about 2 hours earlier in the evening so that the public can see the theme and the decorations. While not every school does something like this, it would be a beneficial collaboration to allow a non profit to use the facility and the lavishly decorated areas for a fundraising banquet.

Meet the Foundations

2007-06-02T10:47:00.000-07:00

Last Thursday we assembled a panel of Foundations to meet with area non profits and discuss what makes a successful grant proposal. Three family foundations, a community foundation, and a corporate foundation graciously gave advice, told stories, and discussed the philosophy behind their funding choices.

Some tips on how much to ask for:

Be realistic. Look at the Foundation’s 990 and see what amounts are typically given. If the average grant is $10,000 don’t ask for $50,000.
If this is your first contact with the Foundation start off with a smaller request. You have a better chance to get funds to “get to know you”. A Foundation is not likely to give an unknown organization large amounts.
Let the Foundation know where other sources of funds are coming from. The Foundation doesn’t want to be the sole supporter of a new initiative.

Some of these might sound obvious but having seen a number of grant requests-they bear repeating.

Like Mother, Like Daughter-Part 2

2007-05-12T16:42:00.000-07:00

In an earlier post, I spoke about the influence that my co-worker at Bee, Bergvall, and Company, had on the community involvement of her daughters. I would be remiss not to talk about the influence that my mother has had on me. So this being Mother’s Day weekend, it seemed an appropriate time.

This past February I worked with my mom serving meals to about 45 adults and students at our youth group’s annual ski retreat at Camp at Old Mill. I arrived Saturday night, but my mom had started on Friday evening. She was assisted by two other friends we have worked with in the kitchen over the years. My mom work up each morning early to fix breakfast, stayed up late to clean up after the evening snack, and slept on the foam mattress in the room downstairs. She loved it. She enjoys the students and talking with the kitchen crew. My mom has done this for about eight years.

My mom’s best example when it comes to volunteerism is her faithfulness to what she committed to. Many years ago when I was four, I would not let her leave me in the Sunday school class. I cried and cried. So she started there as a teacher. And stayed there as a teacher of 4 and 5 year olds for 30 years. The only reason she stopped was because my dad was battling lung cancer and she wasn’t able to attend on Sundays for several months.

A year later she started working with the 2 and 3 year olds and has been with them for the past 9 years. All three things my mom has been involved in have had their rough times. Usually it’s been fun, but from time to time there have been kids that were hard to deal with. She has been kicked and punched (by 2 year olds—not teens). It has been tiring to do the same thing week after week at different periods. But she kept working through the hard times, and overall loves the kids.

Consistency like this is important to organizations. They need to be able to rely on dedicated volunteers who understand their organization and know how to carry out its mission. It builds a strong foundation from which the organization can expand. Thanks, mom for modeling this consistency for me.

The Personal Contact

2007-04-25T19:17:00.000-07:00

I was talking with a high school senior who was working on a project. She would make brightly colored quilts and then hand deliver them to children at St. Christopher’s Hospital for Children. Although it was time consuming work she loved seeing the children’s excited faces as they accepted the quilts. Even in the midst of senior activities, applying for college scholarships, and studies she still devoted time to this charity. This student probably would have still made the quilts if she didn’t meet the children, but meeting the children energized her.

As much as possible, we need to provide our volunteers with touch points and contacts with those our organization serves. It will keep their enthusiasm ignited.

Headline News

2007-04-17T03:42:00.000-07:00

The day after my last post extolling the benefits of volunteering I was thrilled to see the front page headline in our local paper The Intelligencer—Locals Touch Lives a World Away.

Following was a series of four articles that profiled four area residents who traveled to different countries to help AIDS orphans, provide cleft palate surgery through Operation Smile, teach at a school in Tanzania, and work in Japan’s rural countryside. The articles were full of inspiring messages that will hopefully encourage readers to volunteer locally and overseas.

There were great quotes like this one from 23 year old Lisa Talley who taught in a Tanzanian school—

This changes your opinion of people, life, everything….Volunteering is the best thing I’ve ever done in my life.

And this one from Barbara Kroberger of Jamison, who worked with AIDS orphans in Uganda—

Sometimes it is just one child at a time, but we all can do something.

I know that I’m “preaching to the choir” here. Most people reading non profit blogs are already enthusiastic about volunteering. But how can we spread this energy? Frequent feature articles like this in local newspapers publicize the rewards of community service. Thanks and kudos to the Intelligencer for making this “Headline News”.

Making Friends in Montreal

2007-04-14T10:03:00.000-07:00

A few years ago we went on a mission trip to Montreal with the youth group from our church, Faith Community Church. A ministry called Christian Outreach International organized the trip for us. Our group met for training for several months prior to the trip. We weren’t sure exactly what we would be doing when we got there, but we each prioritized what we would most like to do—work with children, teens, college students, the homeless, etc. We were to rank the categories from 1 to 3—with 3 being the group we would most like to work with. I am embarrassed to say that I ranked working with the homeless a zero. I had a number of prejudices against the homeless. I was adamantly against working with them.

Well, needless to say, we spent most of the week working with the homeless—serving food at a shelter; making sandwiches and handing out the food at a park (we did this twice); as well as handing out food to random homeless people on the street. We sorted clothes that had been donated to a homeless mission and was available for the men and also sold in their thrift store.

We also did some ministry on the campus of McGill University and some street ministry—but our main work was with the homeless.

A young man with long hair in braids who reaches out to homeless teens with his wife, explained the situation in Montreal like this—

No one in Canada lacks food or shelter, what they are really starving for is relationships.

Indeed we saw this was the case. Many, who came for food, actually lived in nearby subsidized apartments. Some of them spoke to friends on cell phones, while they lined up for sandwiches. We saw a few familiar faces at the different sites where we handed out food.

I won’t digress on the effectiveness of this system. However, what this young man said was true—it was all about the relationships. What the people we met valued and appreciated more than the sandwiches or hot meals, was listening to our youth group sing, watching the skit they did, playing Frisbee with them, and just sitting on the park benches talking to them.

This broke down the prejudices that I had. Regardless of why or how these people got where they were, they were people—“precious in His sight” as the children’s song goes. Our group, teens and adults, saw the homeless in a different light. We were able to see beyond the glazed eyes of drug use or the confused look of the mentally ill and see the person underneath. It was a life changing experience. I would not have believed it, if I had not experienced it myself.

That’s what volunteering does—it stretches you. It leads you to do things you never thought possible. And it leads you to think things you never would have imagined.

A Most Curious Answer

2007-04-11T17:56:00.000-07:00

In the last post I shared my husband’s answer as to what he thought about community service. In a nutshell, it was for people who had a heart for what they do, better for people with time on their hands, like retired people, and something most people were too busy to do. If someone who did not know my husband heard his explanation they would assume that he had decided that community service was not for him.

Here is why I was surprised at his answer. My husband works about 45 hours a week; he plays softball in the summer, and rarely misses my son’s baseball games. He is pretty decent at helping around the house and helps out with getting the kids where they need to be at different times. He is a typical busy father in the 21st century. He also volunteers anywhere from 6 to 20 hours a week as a youth leader with our church’s youth ministry. He goes on overnight trips; drives the 15 passenger van hundreds of miles to conferences, camps, amusement parks, ski trips, etc. He spends time taking individual students out to pizza, movies, or ice cream. He is involves in three group meetings a week, one of which is a college age discussion group that he leads.

I told him his answer surprised me, since he spends so much time in youth ministry. “That’s not community service” he said. “That’s something I enjoy doing.”

Research observation: Pair someone with something they really enjoy (in my husband’s words—something they have a heart for). Volunteer service should not end up being a chore. It should be something someone loves to do. It seems obvious but it’s a key component of the volunteer process.

The remaining question: How do you find people who love doing what you need them to do in your non profit?

Why People Volunteer- A Family's Perspective

2007-04-10T16:48:00.000-07:00

Recently I have spent some time thinking more intentionally about why people volunteer. Why people give is a close second in this line of questioning. I have heard of the recently published book Who Really Cares, by Arthur C. Brooks. I plan to order this from Amazon as soon as I have time to browse for another book to get my order total into the “free shipping” realm. I imagine that why people volunteer will be addressed in this book, as it is probably linked to why people give.

However, I have been thinking about the question for some time, on and off—especially when Boards or organizations that I am part of are looking for volunteers. Recently I decided to do my own research and just ask people what they think about community service.

I figured since charity begins at home, research should begin at home too. So I asked my family. I’ll discuss my children’s answers in a later post but here is my husband’s answer.

Some people have a heart for it. Some people have extra time on their hands, like retired people. If you can get a group together, like a church youth group, it usually works, as its more fun for the people doing community service. People don’t have enough time. They barely have enough time to take care of their own families. Many people work late or work on Saturday’s to take care of job responsibilities or to make ends meet.

I was surprised at his answer for reasons I’ll discuss in the next post.

The Proverbial Bus

2007-04-07T05:27:00.000-07:00

Do you have a succession plan for your non profit organization?

We have all heard it—what would happen if you got hit by a bus? Could your non profit continue without you?

Many non profits have sufficient staffing and leaders at various levels so that they could continue. Many other non profits would struggle. Either their non profit is small and the executive director wears many hats to keep the organization going OR the executive director is vested with a number of leadership responsibilities.

If you recognize yourself in the second situation, what can you do?

The Center for Nonprofit Advancement in Washington DC has a nice Emergency Succession Plan template. The procedures to follow in the event of an emergency are nice, but the key information listing near the end of the document is an invaluable resource. It prompts you to list the location of all the organizations important documents and critical contact information.

Transparency in Financial Statement Reporting (Part 5 of the Holding the Hammer Series)

2007-04-06T05:35:00.000-07:00

Your audited financial statements are governed by Generally Accepted Accounting Standards established by the Financial Accounting Standards Board. The framework for the statements is designed so that users can compare entities to each other. Along those lines there are some limitations as to what you can do to communicate to financial statement users. There are some things you want to make sure you do and some options you have to “personalize” your statements.

Make sure that donations that are donor restricted have been properly reported as temporarily restricted
Consider if you have projects that the Board has committed to in the coming year. If funds for the projects are not already donor restricted, they should be reported as Board Designated
Make sure the description of your organization in the footnotes clearly conveys your organization’s mission
Consider the use of supplemental schedules to break out revenues and expenses by program

You should also consider preparing a one or two page financial summary that would be more user friendly than your audited financial statements. This summary could be posted to your website or sent to donors. The summary should easily agree to your audited statements, but since the summary does not need to follow accounting guidelines, you can modify the format to highlight the financial information you want people to know.

Yay for Us!

2007-04-05T20:05:00.000-07:00

Keep your accomplishments in front of your donors frequently. Communicate in these meaningful ways.
• Graphs and pictures
• Data: number of people served, number of books purchased, and number of families counseled. Think of creative ways—tonight 30 families are putting their children to sleep in their own bed, in their own home because of you—is more effective than—you helped 30 homeless families
• Stories

And while we frequently mention sharing with donors, make sure to share stories with your staff and Board as well. We sometimes think the staff hears of the successes in the course of their day, but often they don’t. Celebrate even the small successes. They will appreciate the encouragement.

Be clear in your communications. Make sure any pie charts and graphs are easily understandable. Test them out on someone outside of your organization.
Don’t try to obscure bad news by making your data difficult to understand. It will frustrate donors and make them think you are hiding something. Its better to explain the situation with a footnote, as in, services to homeless women declined last year because of turnover in staff personnel. Then explain what you are doing to improve—new staff have been hired and we look forward to reaching out to provide homeless women with the resources they need to become self sufficient.

Talk to your donors and grantors and find out what key information they want to know about your organization. Make sure this information is communicated to them at various points of contact in concise ways. You can communicate this in donor appeal letters, your newsletter, on your website, and your donor thank you notes. We receive so much information today that clear repetition is the best way to ensure that your message is heard.

Dear Donor (Part 3 in the “holding the hammer” series)

2007-04-04T03:37:00.000-07:00

At a client’s office I saw thank you notes like this one.

Dear ……

My son loves the after school program at the Boys and Girls Club. His grades have improved because of the homework help. He has fun with the staff and his friends and has learned new games. Because he gets his homework done at the after school program, we have more quality time as a family in the evening. My son is too young to be home alone after school and we could not afford after school care that other organizations offer. I don’t know what we would have done without this program. Thank you so much.

Letters like this are why your donor gives to your organization. Your donor wants to know they are impacting lives. This letter tells them they are. Whenever you can, ask the people you serve for feedback or personal letters and pass them on.

Plugging People In (Part 2)

2007-04-03T03:35:00.000-07:00

In our area there is a great website at Doylestown Alive, under Community Service. If you are interested in volunteering, you fill out a questionnaire noting what areas you would like to volunteer in, how frequently you would like to be involved, and who you are (individual, family, student, etc.) Then you receive results listing the name of the organization, a link to their website, a description of the volunteer opportunities they have and contact information.

Organizations can register on the site for a nominal fee.

It’s an easy way for anyone regardless of age or time available to get involved with area non profits.

And in the spirit of collaboration, the site is sponsored by Univest Bank and maintained by the Central Bucks Healthier Community Team which is a committee of the Central Bucks Chamber of Commerce. The power of partnering!

Plugging People In (Part 1 of the Holding the Hammer Series)

2007-04-02T04:27:00.000-07:00

The more opportunities that you give to allow people to be involved with your organization “hands on”, the more connections you strengthen with current and prospective donors. You also can reduce the work that your staff needs to do. The challenge is that you need someone from your organization that can manage the volunteers.

The process of involving volunteers can be daunting. There may be training involved; you need time to get to know the volunteers to make sure they are qualified; and you want to provide volunteers with a meaningful opportunity to make a difference with your organization.

Here are some pointers:

1. Develop policies for the volunteer process

What training is necessary for the volunteers and for those who are managing the volunteers
What clearances or approvals do volunteers need
What do those who supervise volunteers need to know

2. Try to find opportunities for people to serve at various commitment levels

Ongoing regular service on a weekly or monthly basis. This could be helping sort clothes at a thrift shop, stuffing envelopes for a monthly mailing, etc.
Annual commitment for a specific fundraiser. The volunteers could serve on the committee to plan and execute the fundraiser and/or assist at the event.
Assistance with certain aspects of program delivery. You may need volunteers to assist with yard work twice a year on low income properties, to answer the hotline phones, or to deliver meals.
Consulting commitment to serve on your Board or Committees. Your committees do not necessarily need to have only Board members on them. Opening up the committee to non Board members gives you the opportunity to involve past Board members or others who may want to help you but don’t want a full Board commitment.
Consider a “junior Board” for younger adults (late teens to mid twenties) 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 that input from this Board will be valued by the “Senior” Board.

3. Brainstorm a list of every task that someone could help you with. After you are done brainstorming, go back and cross off items that you absolutely cannot assign to a volunteer.

4. Divide up the tasks in the different categories noted above

5. Delegate managing the volunteers to those involved in the various areas-fundraising, program delivery, consultation.

6. Make sure everyone—the volunteers, those who are supervising the volunteers, and staff working alongside the volunteers understands your policies for volunteers.

Reaching a New Generation

2007-04-01T13:33:00.000-07:00

At our seminar series the speaker offered an analogy along these lines.

“the older generation was glad to give money to a larger foundation (such as United Way or the American Red Cross or Rotary) so that they could give it to a worthy charity so that that worthy charity could purchase a hammer to rehab a house for a low income family; the next generation wanted to give money to the worthy charity directly, this generation wants to hold the hammer”.

Charities need to look for as many opportunities as they can to give donors the opportunity to “hold the hammer”. This can be accomplished in a number of ways:
• Setting up a variety of opportunities for donors and volunteers to be involved “hands on” with your organization
• Sharing personal stories from those you serve to build a connection with donors
• Being transparent in reporting accomplishments to allow donors to evaluate how effective you are
• Being transparent in financial operations to let donors see how you are managing your financial resources

The next several postings will look at each of these in more detail.

The Power of Conflict

2007-03-02T17:27:00.000-08:00

I recently came across excerpts from an article written by Jeffrey A. Sonnenfeld in the September 2002 Harvard Business Review on “What Makes a Great Board Great”. As one who dislikes conflict I was struck by two of his points on great boards.

1. A climate of trust and candor. They share difficult information, and they can challenge one another's conclusions coherently.
2. A culture of open dissent. "Respect and trust do not imply endless affability or absence of disagreement," writes Sonnenfeld. "Rather they imply bonds among board members that are strong enough to withstand clashing viewpoints."

As nonprofit Board members we need to recognize the danger with complete unanimity all the time. A respectful culture that encourages dissent will bring the best value to the organization as people’s viewpoints are honed and sharpened.

A Random Reminder

2007-02-22T17:33:00.000-08:00

It’s been some time since these guidelines were passed with Sarbannes-Oxley but we still run into non profit organizations who don’t realize that this applies to them. So here is a reminder.
Document Destruction - all organizations should have a written, mandatory document retention and periodic destruction policy. Such a policy also helps limit accidental or innocent destruction. The policy should include guidelines for handling electronic files and voicemail. Electronic documents and voicemail messages have the same status as paper files in litigation-related cases. The policy should also cover back-up procedures, archiving of documents, and regular check-ups of the reliability of the system.
Whistle-Blower Protection - all organizations should develop procedures for handling employee complaints. A nonprofit must establish a confidential and anonymous mechanism to encourage employees to report any inappropriateness within the entity's financial management. No punishment - including firing, demotion, suspension, harassment, failure to consider the employee for promotion or any other kind of discrimination - is allowed. Even if the claims are unfounded, the nonprofit may not reprimand the employee. The law does not force the employee to demonstrate misconduct; a reasonable belief or suspicion that a fraud exists is enough to create a protected status for the employee.
The National Council of Non Profit Organizations has a nice sample policy at these links. http://www.ncna.org/index.cfm?fuseaction=page.viewPage&pageID=430 for a whistleblower policy and http://www.ncna.org/index.cfm?fuseaction=Page.viewPage&pageId=429#q6 for a document destruction policy.

Like Mother, Like Daughters

2007-02-18T12:08:00.000-08:00

People often wonder—how do I promote volunteerism in my child? Another way to phrase this—how do I develop a heart for the community in my child? The difference—the heart connotes an internal change that will naturally produce the outward actions. Aiming to provide your child with volunteer opportunities will certainly influence the way they feel about their community. In the process though you need to make sure they truly care about what they are doing. Their community involvement is more likely to last into adulthood if this has been cultivated.

So how do you develop this heart? The old adage-children learn by example-is the key. Our marketing director, Liz Vibber has volunteered for numerous organizations. She assists with the school’s annual fundraiser, was instrumental in securing funding for new playground equipment for the school, and organizes the school’s after school club program. Is it any surprise that her daughters have started philanthropic endeavors of their own? Just this year, as part of a Brownie project, her 3rd grader wrote a note to the office to ask them to purchase candy to raise money to buy supplies for the local animal shelter. However, the candy wasn’t the typical box of fundraiser candy—it was her own Halloween candy. After raising the money and purchasing supplies, in good fundraising fashion, she wrote a thank you note “You are an angel to the animals”. Her other daughter, a 7th grader, approached the principal of their school with a friend. They wanted to start a reading program for the younger children at the elementary schools.

These are just two of several examples of the girls’ concern for their community. Why? Because of their mother’s example.

What I did with my snow day

2007-02-14T17:08:00.002-08:00

There is something magical about a snow day--even when you are a grownup and spend the day working from home. We had been eagerly anticipating the first snow day. Our school district had not even experienced a two hour delay yet, this school year. This storm looked promising—snow, changing to a wintry mix of ice. And indeed it was. School was closed. There was enough ice to convince me to stay in and work from home. Thanks to the wonder of technology I accessed the office through the VPN, signed on to AIM in case anyone from work needed to “chat”, and worked on and off throughout the day.

Being at home had its advantages, I made heart shaped pancakes in honor of Valentine’s Day for my two teenagers who still appreciate corny sentimental stuff like that; I reminded my son to shovel the driveway before my husband got home from work (thank you to the neighbor across the street who used his snow blower to clean out the end of the driveway); and I helped my daughter with some history questions in preparation for her midterm on Friday. As the kids have gotten older and busier, it was nice to be together for the whole day.

I was also able to get this blog started. Our CPA firm, Bee, Bergvall & Co., P.C. has been working with non profit organizations for over 25 years. About 6 years ago, with the encouragement of our enterprising marketing director, Liz Vibber, we started a non profit newsletter and a non profit management seminar series. This past summer we launched the Bucks County Center for Non Profit Management. Through the seminar series we have met many wonderful non profits and have been energized by the exchange of ideas. A number of us at the firm serve on non profit boards and are always asking each other questions and sharing ideas. Clients talk to us about accounting and tax issues; auditing issues; strategic planning; and grant writing issues. We talk about how we want our kids and teenagers to develop a heart for the community. The benefits to this exchange of information increases exponentially.

So with this blog we are taking these discussions to the web in hopes of sharing information that will help other non profit organizations; inspire individuals to make a difference in their corner of the world; and generate discussion.