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.
Friday, October 14, 2011
Monday, October 10, 2011
Map out your Future Success
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.
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.
Tuesday, August 30, 2011
Key Performance Indicators
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
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
Thursday, August 11, 2011
The Data (and Donations) are in the Details
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
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
Thursday, July 7, 2011
Using Technology to Improve Transparency
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?
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.
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.
Wednesday, June 29, 2011
Numbers to Know
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.
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.
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