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.
Thursday, January 26, 2012
Friday, December 2, 2011
10 Questions Your Audit Committee Can Ask External Auditors
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?
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?
Thursday, November 3, 2011
Find Capacity, Find Funders
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.
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.
Saturday, October 22, 2011
Writing with Passion
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.
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.
Friday, October 14, 2011
Economic Outlook--5 Strategies
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.
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.
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.
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.
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.
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