Doing Well by Doing Good Part III

In my last two posts, I shared some insights from the Main Line Chamber of Commerce’s panel discussion Doing Well by Doing Good.  A member of the audience asked the question-“ how do you decide which charity to invest in?”  The answer from Jay Coen Gilbert the Co-Founder of B-Lab was right in line with many of these blog postings—measure!   He looks for nonprofits who relentlessly measure their performance.  An organization that demonstrates measurable results attracts more support.

Doing Well by Doing Good Part II

In my last post, I talked about the great panel discussion Doing Well by Doing Good presented by the Main Line Chamber of Commerce.   In a previous post here I had discussed why I am not in favor of paid time off for employees to volunteer.   I was pleased to hear Mandy Cabot, the CEO of Dansko discuss their employee volunteer plan.  Dansko will accumulate the time that an employee volunteers and then donate the value of that time to the charity of the employee’s choice.  This program preserves the true spirit of volunteerism and still provides the employer a way to financially support an employee’s charity.

Doing Well by Doing Good

Thank you to Susan Bishop with Wells Fargo Bank for inviting me to the Main Line Chamber of Commerce panel discussion Doing Well by Doing Good.    The panel of corporate leaders inspired the audience with ways they serve both their community and their employees.     Kevin Nolan President of Nolan Painting, Inc. strongly encourages all employees to be involved in the community.  It is one of the interview questions at the hiring stage and it become part of their life.  

Volunteering impacts the life of the volunteer probably as much as it impacts the charity.  Statistics show that volunteers are generally healthier, report greater job satisfaction, and develop new skills.  They are able to meet more diverse people and build satisfying relationships.     Encouraging your employees to serve the community actually serves your employees by enriching their lives.

Relationship vs. Roles?

This thought provoking article from Nonprofit Quarterly starts off:

It is a pervasive and deeply held belief that clarification of roles and responsibilities between an organization’s board chair and executive director is the primary means for building an effective partnership.

The article then makes the case that focusing on roles and responsibilities has very little to do with a working partnership between the Board Chair and the Executive Director—the key is really relationships.

Key characteristics of successful relationships included:

1. Flexibility in negotiating roles

2. Trust between the Board Chair and Executive Director

Where there was a high trust level there was no need to draw distinct lines of responsibility as both parties were comfortable with the other’s roles. Where there was a low level of trust the Organization needed to rely more on prescribed structures to function.

The article is right on target. As with any interactions—relationships are the key to success. It is important for the nonprofit to seek to improve the relationships as their primary focus. However when the relationship is strained or dysfunctional, a clear understanding of roles and responsibilities can provide a framework that can lead to a restored relationship or at very least, a functional relationship. The issue isn’t really relationship vs. roles but relationships and roles.

A Little Goes a Long Way-Micro Volunteering

A Facebook post by my fellow blogger Liz Vibber alerted me to Sparked.com, the world’s “first micro-volunteering network” In a fun, engaging way, this site finds out what you are interested in and offers you options (challenges) that use your talents to help nonprofits in meaningful ways--all online.

After reading this article-Would You Volunteer More If you Could Do So in Your Pajamas? by Jessica Roy, I had to check out the site for myself.

In less than 3 minutes, I had selected my interests and entered my talents and was choosing between 2 challenges (both in the research area) to either help a youth organization find potential grantors or to recommend education apps to a school. Both challenges were clearly written and already had three useful responses from micro-volunteers. I felt that I could invest 30 minutes to an hour researching information and be able to provide something of value to the nonprofits.

Across the challenge selection page are four examples of success stories and it is evident that the “group think” process is helping these nonprofits with research, brainstorming ideas, social media, technology, marketing, blogging, etc.

This friendly email is an example of the site's appeal:

We want to be the first to high-five you for becoming a microvolunteer. You may not be able to leap tall buildings in a single bound, but you're using the power of your unique skill-set to help nonprofits. And that's an awesome super-power.

If your organization is looking for ideas, wants to test out a tag line, or needs help in areas related to social media or technology it is worth checking out Sparked.com.

Instructors: Employees or Independent Contractors?

In the past year, we have heard that the IRS is more strictly enforcing employee status for instructors of art and recreational programs.   In many cases, municipalities or arts organizations will offer classes and pay the instructors for the classes as independent contractors.  However, if the organization sets the time of the class, pays the instructor an hourly rate, and provides the class materials, the IRS is likely to classify the the instructor as an employee.   Even if the organization has a contract with the instructor and it seems like they have clearly defined their position, the IRS could still classify the worker as an employee.

The case of the City of Dana Point California is a good study of this situation.   You can find more details about the case here.   What is important to note is that city had the following items already in place, and the IRS still said the workers were employees:

1.  There was a written contract.
2.  The city had no control over the class curriculum or the way it was taught.
3. The instructor determined the number of classes offered each session; the length of the class; and the minimum/maximum number of students.
4. The city did not provide training to the instructors.
5. The instructors could provide training (and did) in other venues.
6. The instructor had to find and pay for their own substitutes or assistants.
7.  The instructor had to provide their own materials & supplies.
8. The instructor received a percentage of the revenue-not an hourly rate or payment per class.  (This demonstrates risk of loss.)

The City had to challenge the IRS in court and ultimately prevailed.  However, the IRS has contiuned to take the same position with other organizations and classify the workers as employees.

It is also important to note that even though the City of Dana Point prevailed with the IRS, other organizations cannot point to that situation in their defense.  If the IRS classified workers as employees and another organization disagreed, they would have to challenge the IRS on their own given their own situation and how they structure their relationship with their instructors.

Furthermoe, the 8 items noted above strengthened the City of Dana Point's position but many organizations do not have all 8 of those points existing in their current independent contractor situations, and actually have an even weaker case before the IRS.

So, what should you do?

1. Review the IRS site and the issues that the IRS considers.
2. If you decide that the worker is a contractor, document why and make sure you have a contract between the instructor and your organization.  Make sure the contract and your agreement is at least as strong as noted with the City of Dana Point.
3.  Recognize that even with the documentation and the contract, the IRS still might decide that your instructors are employees and if you will have to remedy the situation and pay related back taxes and possible fines or challenge the IRS in court and pay related attorney fees.  Determine if your organization is willing to take this risk.
4.  If you decide to classify the worker as an employee---as of the date of this post (2/6//12) the IRS has a Voluntary Classification Settlement Program.  You can go to this link to see Form 8952 that needs to be filed as well as related instructions.

Caution:  As with any tax or accounting advice on this blog (or any other blog) you should always contact your own tax or accounting advisor for their guidance on your specific situation before taking action.

Behind the Scenes of the Upcoming Super Bowl

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.