Very kindly, I have been invited to contribute to this site by the management of CoreStrategies for Nonprofits where I have agreed to be a part-time Senior Consultant. After 46 years of successful professional experience, 29 in the For-Profit (FP) world and 17 years in the Not-for-Profit (NFP) world, I retired in June 2009. In the last 26 years, I was at the Senior Level or the President & CEO of seven organizations; In those 26 years, we successfully turned around 20 (fifteen FP and five NFP) organizations, from “ready to close” to complete financial and programmatic stability.
There are many fundamental pillars on which the management, quality, and growth of an organization, regardless of the size and sector [NFP vs. FP] in which it operates that are essential for the organization’s success. In these challenging times, I urge that you consider changing or dismantling these key aspects of your organization only after careful consideration and forethought.
For-Profit and Not-for-Profit -- For me there never was a distinction between the NFP and FP worlds. In one, I operated a “Business for Shareholders”; in the other, I operated a “Business with a Heart” but I operated under the fundamental principle that I was running a business.
Fundamental Pillars - The keys that permitted us to succeed in each organization, regardless of the industry or country are simple. Each key has been carefully developed and tested over time.
1. Three to Five-Year Business Plan: Vision and Implementation – Ensure that a three to five-year plan is always in place, casting the vision and intentions out in front of us to guide our day-to-day work.
2. Philosophy and Methodology – Ensure the creation of a common organizational culture marked by:
• Commitment to the children and families that you serve and the staff that
serves them;
• Vision of the future that you are creating, grounded in reality;
• Planning that creates a map for the realization of your vision;
• Team Work that is guided by partnership and accountability, and
• An Empowering Environment that recognizes the power of an environment to shape outcomes and empower people to succeed.
3. Finance and Accounting – Create a Finance and Accounting Department that will ensure that all aspects of the organization’s finances will comply with all applicable procedures and legal requirements, including: a balanced budget; 100% accuracy; and financial reports that are produced accurately and on time, and will be distributed to everyone who has accountability and interest for the financial results.
4. Human Resources – Create a Human Resources Department that supports the hiring of excellent people, ensures that the organization provides an environment in which motivated people can thrive, and vigilantly monitors your compliance with all HR-related legal, administrative and procedural requirements.
5. Programmatic Components: Fully Funded and at Capacity -- Ensure that all your programs are: Fully funded; At capacity or nearly so; Are excellent in both concept and delivery; Always seeking to take that excellence to new levels; Provided the resources – in terms of facilities, technology, staffing, etc. – that they need to succeed; and the most important part, Monitored for program results, and those results shared with funders and with the community, as appropriate, both to comply with grant and contract reporting requirements and to inspire continued funding of programs that make a difference.
6. Fund Development -- Create a Fund Development Department that prepares an Annual Fund Raising Plan; Make prospect identification, qualification and cultivation a regular part of the work; Generate partnership and broad-based participation (by staff members, Board of Directors, volunteers, etc.) in fund-development efforts; Establish and meet interim (pledge and revenue) targets; Be accountable by insuring that results are the Driver; and Thank Generosity -- Acknowledge donors and involve them with your organization, to foster long-term participation and support.
7. Information Technology – Ensure that the hardware and software required to operate the organization is in place; Ensure that it is maintained and upgraded as needed.
8. Internal Audit and Compliance – Engage this “Internal Conscience” that is accountable for ensuring that your organization develops and maintains internal controls to (a) foster accountability, (b) maximize effectiveness of operations, and (c) ensure that the organization complies with all applicable laws and ethical standards
9. Everyone Must Comply -- Ensure that the Board of Directors, the President and CEO, the Executive Management Team, and the Staff comply with all legal, administrative and ethical requirements for the integrity of the organization.
10. Facilities -- Take steps to ensure that all properties owned by the organization are used strategically, or to sell those properties and use the realized gain to further your mission.
Thursday, August 27, 2009
Wednesday, August 5, 2009
Why is Cumulative Giving So Neglected?
I've been contributing annually to not one, not two, but at least a half dozen environmental groups for over 35 years. Granted, my gifts have not been huge -- mostly in the $25-50 range -- but they have been consistent. I don't believe I have ever missed a year in all this time. I'm sorry to report that NONE of these organizations has acknowledged my cumulative giving over so many years, or contacted me outside of direct mail. What a shame.
It seems I am invisible to them, just another of the tens of thousands of donors who cycle through their organizations, usually introduced through a direct mail appeal. The difference about me is that I have never stopped giving, while I'm sure many tens of thousands of others have moved on to other charities. After all these years, they know absolutely nothing about me. Here's just a small sampling of what they don't know or what they have ignored:
1. I've moved dozens of times over these years, and every time I made sure to give them my change of address.
2. I'm incredibly loyal. Even after all these years of being treated like someone they've never heard of every time I give, I still keep giving.
3. I'm older now! I'm a member of the cohort of excellent planned giving prospects. I'm low hanging fruit!
4. I live in a major metropolitan area where I'm sure many other donors to these organizations live. They could get us together and bring us much closer to the organization. They are probably ignoring all those donors too.
5. I've been giving unrestricted gifts all these years. Maybe I could be persuaded to support specific projects at a higher level if I were made aware of those opportunities.
I'm re-evaluating my giving to these groups this year for the first time. Frankly, if I wanted to be ignored and under-valued for 35 years I could have stayed married to my first husband!
I deserve better, and this is the year I make my move. I've been giving to a few other groups that show appreciation, keep me informed and make me feel like my gifts matter. I'm going to reward them for knowing how to treat a gal right.
It seems I am invisible to them, just another of the tens of thousands of donors who cycle through their organizations, usually introduced through a direct mail appeal. The difference about me is that I have never stopped giving, while I'm sure many tens of thousands of others have moved on to other charities. After all these years, they know absolutely nothing about me. Here's just a small sampling of what they don't know or what they have ignored:
1. I've moved dozens of times over these years, and every time I made sure to give them my change of address.
2. I'm incredibly loyal. Even after all these years of being treated like someone they've never heard of every time I give, I still keep giving.
3. I'm older now! I'm a member of the cohort of excellent planned giving prospects. I'm low hanging fruit!
4. I live in a major metropolitan area where I'm sure many other donors to these organizations live. They could get us together and bring us much closer to the organization. They are probably ignoring all those donors too.
5. I've been giving unrestricted gifts all these years. Maybe I could be persuaded to support specific projects at a higher level if I were made aware of those opportunities.
I'm re-evaluating my giving to these groups this year for the first time. Frankly, if I wanted to be ignored and under-valued for 35 years I could have stayed married to my first husband!
I deserve better, and this is the year I make my move. I've been giving to a few other groups that show appreciation, keep me informed and make me feel like my gifts matter. I'm going to reward them for knowing how to treat a gal right.
Tuesday, August 4, 2009
Being Publicly-Funded, How Much Must We Disclose?
Q: I was re-reading something you wrote previously on confidentiality versus transparency in the boardroom. You peaked my curiosity. When an organization is operating with "public funds," what degree of "disclosure" is REALLY is required?
A: Can I consider your word “REALLY” to be lower case as I craft my response? In all seriousness, this is a tough question because there are no black and white answers.
The Panel on the Nonprofit Sector, convened by Independent Sector, stated in its final report to Congress in June 2005, “Comprehensive and accurate information about the charitable sector must be available to the public.” They went on to clarify this:
To encourage participation and confidence in the nonprofit sector, the public must have access to accurate, clear, timely and adequate information about the programs, activities, and finances of all charitable organizations. Government regulation should promote such transparency while providing sufficient flexibility to accommodate the wide range of resources and capabilities of nonprofit organizations, particularly of small organizations. (Report to Congress and the Nonprofit Sector on Governance, Transparency and Accountability, p. 21)
Unfortunately, this isn’t very instructive. It doesn’t even give us an idea of what constitutes “small organizations.”
The Internal Revenue Service is a bit more clear. Since 1999, public charities have had to make immediately available to whomever asked copies of their three most recent Form 990's, with all schedules and attachments, along with their exemption application. The only thing that can be redacted is the names and addresses of donors.
With the latest version 990’s, more information than ever before must be shared. This includes new reporting of the organization’s level of public support, any endowment and/or special funds, including donor advised funds, and non-cash contributions. It also requires that a summary of the organization’s mission and activities, as well as its governance structure, policies and practices be shared – including its disclosure practices. Transactions with interested persons, such as board members, must be revealed, as must relationships with professional fund raisers. Even its accounting methods must be spelled out and copies of audited financials or their equivalents provided. (For more information, go to http://www.irs.gov/pub/irs-tege/moving_from_old_to_new.pdf.)
While many organizations rely on GuideStar’s posting of their 990’s to satisfy the disclosure requirements, you might want to consider additional methodologies to communicate to the public how you operate, how you are using its money and the impact you are having in the community as a result. I suggest you work with your PR specialist and your accountant to help you in the presentation of this information. After all, you want people to actually read and understand what you are providing them.
All this having been said, my guess is that you are less concerned about the regulartory issues above and more concerned about how much you should disclose about those issues that come before the board, such as personnel problems, potential lawsuits or pending mergers. I am unaware of any “official” guidelines on this. What I would say, is that your board should have policies in place that spell out how to proceed if – or more likely, “when” – the organization is faced wtih such situations. The policies should indicate if you will disclose information proactively or reactively, the types of trigger points that would cause you to disclose, the manner in which you prefer to disclose – e.g., press conference, news release, email blast – and who shall serve as the spokesperson(s). Here again, working with a PR person, especially one who understands crisis management, is critical. He or she can help you design messages and dissemination strategies that keep the organization in the best light.
In today’s environment, where transparency and trust are paramount and people are re-evaluating the organizations they choose to support, the more information you can provide, even if it is not required, the better.
A: Can I consider your word “REALLY” to be lower case as I craft my response? In all seriousness, this is a tough question because there are no black and white answers.
The Panel on the Nonprofit Sector, convened by Independent Sector, stated in its final report to Congress in June 2005, “Comprehensive and accurate information about the charitable sector must be available to the public.” They went on to clarify this:
To encourage participation and confidence in the nonprofit sector, the public must have access to accurate, clear, timely and adequate information about the programs, activities, and finances of all charitable organizations. Government regulation should promote such transparency while providing sufficient flexibility to accommodate the wide range of resources and capabilities of nonprofit organizations, particularly of small organizations. (Report to Congress and the Nonprofit Sector on Governance, Transparency and Accountability, p. 21)
Unfortunately, this isn’t very instructive. It doesn’t even give us an idea of what constitutes “small organizations.”
The Internal Revenue Service is a bit more clear. Since 1999, public charities have had to make immediately available to whomever asked copies of their three most recent Form 990's, with all schedules and attachments, along with their exemption application. The only thing that can be redacted is the names and addresses of donors.
With the latest version 990’s, more information than ever before must be shared. This includes new reporting of the organization’s level of public support, any endowment and/or special funds, including donor advised funds, and non-cash contributions. It also requires that a summary of the organization’s mission and activities, as well as its governance structure, policies and practices be shared – including its disclosure practices. Transactions with interested persons, such as board members, must be revealed, as must relationships with professional fund raisers. Even its accounting methods must be spelled out and copies of audited financials or their equivalents provided. (For more information, go to http://www.irs.gov/pub/irs-tege/moving_from_old_to_new.pdf.)
While many organizations rely on GuideStar’s posting of their 990’s to satisfy the disclosure requirements, you might want to consider additional methodologies to communicate to the public how you operate, how you are using its money and the impact you are having in the community as a result. I suggest you work with your PR specialist and your accountant to help you in the presentation of this information. After all, you want people to actually read and understand what you are providing them.
All this having been said, my guess is that you are less concerned about the regulartory issues above and more concerned about how much you should disclose about those issues that come before the board, such as personnel problems, potential lawsuits or pending mergers. I am unaware of any “official” guidelines on this. What I would say, is that your board should have policies in place that spell out how to proceed if – or more likely, “when” – the organization is faced wtih such situations. The policies should indicate if you will disclose information proactively or reactively, the types of trigger points that would cause you to disclose, the manner in which you prefer to disclose – e.g., press conference, news release, email blast – and who shall serve as the spokesperson(s). Here again, working with a PR person, especially one who understands crisis management, is critical. He or she can help you design messages and dissemination strategies that keep the organization in the best light.
In today’s environment, where transparency and trust are paramount and people are re-evaluating the organizations they choose to support, the more information you can provide, even if it is not required, the better.
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