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Best Practices

Saturday, April 20th, 2013
Dan Charobee

Dan Charobee

It’s morning. You walk in, and “BAM”, there it is. Someone did something that will shape your day, week, month; even year. And, it’s not in a good way. So, you begin as a firefighter, with damage control, thinking “how could this have happened”?

Having recently worked with an exceptionally gifted executive going through damage control, I found the OneOC presentation by Jennifer Farr, CPA, MBA of Mayer Hoffman McCann P.C, listing Best Practice Policies Disclosed in Tax Return so compelling that I wanted to share them with you:

  • Executive Compensation – Board reviewed comparability data (compensation survey)
  • Conflict of Interest Policy – including procedures for determining whether a conflict exists; Require directors, officers, and key employees to disclose potential conflicts annually
  • Fundraising Policies – ensuring solicitations meeting federal/state law requirements and solicitation materials are accurate, truthful, and candid

They come from, of all places, the Tax Form 990 that 501(c)s fill out each year. And like most questions on forms, they are answered and forgotten until next year. Jennifer put them in her Best Practice pocket and so should you. She consults nonprofits on finance and tax issues; hinting that they represent major red flags possibly launching an audit for organizations that don’t meet better standards. This can be a painful and possibly status ending experience for an organization.

Making them an integral part of your culture avoids most fires that take you off mission for an uncomfortable time period. So, outside of your finance office, here is the list of relevant questions:

  • 12a Did the organization have a written conflict of interest policy?
  • 12b Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts? 
  • 12c Did the organization regularly and consistently monitor and enforce compliance with the policy? 
  • 13 Did the organization have a written whistleblower policy? 
  • 14 Did the organization have a written document retention and destruction policy? 
  • 15 Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?

Each, in itself is a developmental concept well worth the time and effort, making sure your organization stays on mission. Combined, they may make you less of a firefighter, but a better overall service delivery agency.

Author:  Dan Charobee. Executve Coaches of Orange County. www.ECofOC.org

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Technological Planning- Dashboards

Wednesday, March 20th, 2013
Dan Charobee

Dan Charobee

High end project, revenue, and enterprise dashboards are an integral part of upper management large scale organizations. Managers and executive directors are able to judge the direction, capabilities, and progress of a highly efficient organization. Now, spreadsheet and database users are finding ways to take program activities and results to new levels of information sharing.

Here is how to build your own or select one that meets the size and scope of your organization:

  • Spreadsheets are available on almost every computer or over the internet. Microsoft’s Excel is one of the most recognized, but some prefer others. Most feature tabbed spreadsheet pages to enter numbers and formulas. With a little sophistication, users enter data on one sheet and compile sums, averages, percentages, and list counts (and more) in charts and graphs on a dashboard sheet. Today’s programs allow sharing of entire workbooks by multiple users along with annotations and comments.
  • Databases typically handle larger amounts of active data, such as client lists, donors, suppliers and payments; databases are usually easier to update, but require a high level of sophistication in formatting, reporting, and outputting information. The two most widely known are Microsoft’s Access, and dBase, by dBase.
  • Contact Management (CRM) focuses on relationship communications and results. Newer versions of ACT! (by Sage) and Goldmine (by FrontRange Solutions) offer comprehensive systems that include goals, traditional and digital communications, and progress dashboards. Constant Contact and MailChimp (and others) specialize in online digital communications as well as dashboards to show progress.
  • Financial Management software like Quickbooks (by Intuit) and Peachtree (by Sage) include dashboards of a nonprofit’s financial conditions, budgets and status.
  • Project Management specialty programs, managed with software like Microsoft Project, provide timelines, Gantt charts, and costing out activities.
  • Donor Management – Specialty donor management programs such as Raiser’s Edge (by Blackbaud), provide overviews of funding campaigns as well as working with individual givers.
  • Mission Management –Newer dashboard planning systems such as WePlanWell (Ibosswell, Inc.) focus on an organization from mission to objectives and activities, providing EDs, managers, and team members various levels of communication to succeed in their mission.

Visualizing current and future outcomes of ongoing activities can be a powerful way to keep your team on track. It also provides upper management and funders with a dashboard look at your progress, direction and speed in accomplishing your mission.

Author:  Dan Charobee, Executive Coaches of Orange County, www.ECofOC.org

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Nonprofits and Conflicts of Interest…

Monday, October 15th, 2012

Robin Noah

When was the last time you had to deal with a conflict of interest in your organization? Do the board members recognize when a conflict is present? When was the last time the board reviewed the organization’s Conflict of Interest policy? Do you need a written policy?

Having a written conflict of interest policy can help the organization resolve conflicting issues with the best interest of the organization.

Consider that the new IRS Form 990 asks, specifically, for disclosure of potential conflicts of interest. It not only asks whether the organization has a written conflict of interest policy, but they also want to know if there is a process for managing conflicts and how the organization determines whether board members have a conflict of interest. In other words do you have a written policy and a methods and procedure directive?

The purpose of a conflict of interest policy is to protect the interests of the organization when it is contemplating entering into a transaction or arrangement that might benefit the private interests of an officer or director of the organization or might result in a possible excess benefit transaction. Additionally it needs to state that the policy is intended to supplement, but not replace, any applicable state and federal laws governing conflicts of interest applicable to nonprofit and charitable organizations.

Every nonprofit organization needs a written policy governing conflicts of interests AND it should be reviewed annually.

The policy should 1) require those with a conflict (or who think they may have a conflict) to disclose the conflict/potential conflict, and 2) prohibit interested board members from voting on any matter that gives rise to a conflict between their personal interests and the nonprofit’s interests. 　Sometime you need to also write the process for reaching a decision.

Andy Robinson and Nancy Wasserman have written a book -The Board Member’s Easier Than You Think Guide to Nonprofit Finances that I found highly informative. It addresses the issues of conflicts of interest in a practical easy to read style. Readers will get a lot of ideas regarding issues that confront nonprofit organizations

You can round out your information at www.councilofnonprofits.org/conflict-of-interest

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

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“It will never happen here…”

Monday, September 17th, 2012

Robin Noah

Crisis management, small business failure, business turnaround, and other similar terms are not popular topics in the business world. Terms such as these rank very low on the search engine popularity lists. Failure to thrive is something that few entrepreneurs or business gurus want to talk about.

At the same time, business failure statistics tell us that over 5 million businesses shut down every year; most of these because they did not include crisis management in their business planning.

Part of crisis management is preparing for things that we hope will never happen. One of the worst possibilities is an employee or volunteer becoming violent. The thought of this happening is almost too terrible to imagine, but it must be done to ensure your nonprofit is prepared.

David Deakins, director of Massey University’s Centre for Small and Medium Enterprise Research found that an organization’s vulnerability increased if a crisis was caused by natural disaster, rather than an internal issue. The survey also found that a written plan did not necessarily make the organization more resilient, experience in dealing with the consequences of a crisis was more important.

However, having a plan to manage disaster and crisis will identify those areas or occurrences where planned action is the best approach. No organization is too small for a crisis. From bankruptcy to disgruntled customers or employees or volunteers seeking revenge, even the smaller nonprofits should be prepared to handle and manage a crisis.

Your best bet is to develop a crisis management plan that includes emergency notification procedures, assessment of the immediate safety of the workplace, proper notification to those in danger, process for investigation of the incident, resources, handling the media and other situations that are exclusive to your organization.

The organization should also have continuity plans that in addition to crisis and disasters identifies threats and impacts and ensures that the nonprofit is able to withstand the disruption that a full-fledged crisis can inflict.

Plan the best strategy that can get you out of that crisis… and …be well prepared for any unforeseen event that may come your way.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

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Should You Pursue that Funding Source?

Monday, September 10th, 2012
Bob Cryer

Bob Cryer

Karen Davis at www.Kedconsult.com writes in her April 2012 newsletter “Nonprofit opportunities are vast and varied. You have to decide if you will apply for that grant, open a ticket booth at Saturday’s market, do a phone-a-thon, send that mailer or join “on-line popularity contests” that require you to entice your customers to vote for you, and, while it’s not often thought of this way, ask individuals for donations”.

“With most nonprofit income opportunities, one size does not fit all. Some opportunities provide too little return or no return for the effort. Other funding options confuse current donors. (“I participated in their fundraiser, why are they asking me for a donation?”) Still others don’t fit with the strategy at the heart of the nonprofit’s efforts. At worst, they provide little money plus a lot of distraction from the key essential actions the nonprofit needs to do to succeed. To maximize income, nonprofit leaders must discern which opportunities are worthwhile and which to skip. They must do so with imperfect information, as flaws will continue to exist in all our crystal balls.”

Is there a way to make funding decisions to maximize your returns? Absolutely. Establish “Pursue or Not Pursue Criteria” to apply consistently to each opportunity encountered. Used regularly, criteria will help you to maximize funding and save time. With them, you can examine opportunities quickly. Criteria will also allow you to say “no” gracefully to presenters (by referring to the criteria.)

While the goal of funding decisions is first about funding, these decisions also impact your nonprofit’s other bottom lines. Well-designed criterion can guide you to options that provide more bottom lines for the buck. Those “Pursue or Not Pursue Criteria” can lead your nonprofit to more income, more coherent operations, more community, and more mission.

Author:  Bob Cryer, Executive Coaches of Orange County, www.ECofOC.org

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Instructive Statistics on the Nonprofit Sector

Tuesday, September 4th, 2012

Larry Tucker

 

 

A few of us coaches from the Executive Coaches of Orange County recently attended OneOC’s terrific workshop “Nonprofits by the Numbers”. On the agenda were presentations by:

The program was introduced by a very enlightening video prepared by Philanthropy Reports that emphasized the size and importance of the nonprofit sector in the U.S. Some interesting teasers: 

     

  • There are 2 million nonprofits in the United States (Estimates from some other sources are lower depending on the definition “nonprofit”.)
  • One in 10 Americans work for a nonprofit.
  • $300 billion is donated annually to nonprofits. 
  • Nonprofits generate about $1.1 trillion a year.
  • 6.5% of Americans volunteer for nonprofits.  

    •  

The presentations were loaded with important information. Some figures stood out for me: 

     

  • The number one reason people are motivated to donate to charities is the organization’s mission. (Not a surprise!) A close second is personal experience. This simply reconfirms that finding the right donors is the key to effective fundraising.
  • 57% of nonprofits have enough cash to cover 3 months or less of expenses. This is certainly an indication that many nonprofits teeter on the edge of existence on a daily basis.
  • The average cost of medical insurance per employee increased from $783 per month in 2011 to $907 per month in 2012, a 16% increase, prompting some nonprofits to freeze wages in return for maintaining the same level of health care coverage.  

    •  

My “takeaway” from this session: The nonprofit sector in the U.S. and Orange County is not only a critical “industry” for the millions of beneficiaries of these organizations, but an important part of our national and local economy.

 Author:  Larry Tucker, Executive Coaches of Orange County, www.ECofOC.org

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Forecasting- One Step Ahead

Friday, March 30th, 2012
Dan Charobee

Dan Charobee

 

How much? How many? When? Where? How long will it take? How long will it last? These questions provide leaders with essential planning information, but each is subject to the fatal flaws of forecasting.
Having worked with many executives that appear to have a natural instinct for forecasting the future, I found success is due to intense interest, experience, education (formal and self education), and effective communications. Here is what they know:
  • GIGO, coined during the advent of the computer age, corrupted results and reports due to this simple data problem; garbage in, garbage out. Qualify the information you are using.
  • ASSUME corrupts facts, making an “A–” out of “U” and “ME”. Verify all assumptions.
  • Weighted Forecasting comes from high value placed on producing high numbers. “Kill the messenger”, inexperience, and forecasts out of sync with operating cycles are culprits. Plan for realistic forecasts and adjust the timing to the situation.
  • Moving On, the tendency to develop a forecast to meet demands then let it go. Without relationships to objectives, it becomes a test, a painful experience; something to be forgotten. Integrate it into your communications.
One client questioned every research piece we prepared. How did this apply to his organization? What did this data tell him? Why was it prepared this way? How did other organizations use the information? What did we recommend for him specifically? We answered and they took the lead position in their field.
Larger, established organizations typically have systems for forecasting. They include baseline, break-even, last year plus/minus, planned growth, benchmark, and target. These systems consider estimates, industry trends, past performance, program development, and recruitment. To qualify the results and meet objectives, the best executives adjust their forecast and recommit resources to meet inherent operational changes. They do it by developing the timing and manageability of their forecast system.
In other words, make it yours. If you have busy, regular deadlines, consider your forecast to be a sign post to what is coming up around the corner. Then, begin to push the horizon further by opening communications with your stakeholders, talking about trends, opportunities, and foreseeable problems.
Whether you are handling revenue streams, client interactions and event participation; or preparing a financial projection for major funding; effective forecasting is one of your best tools for success.

Author: Dan Charobee, Executive Coaches of Orange County, www.ECofOC.org

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The Nonprofit Growth Dilemma

Monday, January 2nd, 2012
Bob Cryer

Bob Cryer

Growing a for-profit is relatively easy. Just demonstrate, in a credible test market, that customers will buy your product, and that you can deliver it at a cost that enables you to make a profit. Then venture capitalists, bank loans and your retained earnings will give you all the cash you need to expand at a pretty good clip.

A charitable nonprofit donates its services to the needy. If the nonprofit services increasing demands, its costs increase, but not its revenue, and its retained earnings available for further expansion declines. And there is no venture capital or bank loans to fund the nonprofit’s need to grow.

The government is a major funder of nonprofits, but local government agencies that disperse the funds have little influence on how much they have to disperse. Nonprofits that need to grow to meet rising needs must either find other government agencies with funds available for their mission or invest in a lobbying activity to increase the government funds available for their particular cause. The most likely outcome neither option, and being forced to underserve the need.

Growing a privately funded nonprofit is just as challenging. Foundations have a reputation of only wanting to fund a small portion of a new program for a few years, but not the growth of an established program. Corporations are typically interested in how much publicity they can get from sponsoring a nonprofit’s event, rather than funding where the needs are greatest. Individual donors tend to be attracted to unique causes and relationships that resonate with their particular values, rather than the cold realities of what volumes of what services are most needed in our community.

Given the nature of the funding sources available to nonprofits, it may be easier to fund a new program or nonprofit to serve a growing need rather than trying to get more funding for an established nonprofit program. Perhaps this is one reason why we have so many small nonprofits in our community.

Author:  Bob Cryer,  Executive Coaches of Orange County,  www.ECofOC.org

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Considering a Social Enterprise? Why Not?

Monday, August 8th, 2011

Larry Tucker

For decades now, Goodwill and the Girl Scouts have been using entrepreneurial ventures to create earned income, which is then used to fund the advancement of their mission. Hundreds of nonprofits throughout the world have followed this path to becoming more sustainable and less reliant on outside sources of funds.  

Most (maybe all!) nonprofits have assets, skills, knowledge or talents that can generate earned revenue. Some local nonprofits have created social enterprises: A child day care facility earns income by charging for evening and weekend care. A number of nonprofits use their facilities as event rental space. One organization who works with seniors uses their skills to teach classes for caregivers.  

Nonprofits can operate for profit businesses as long as those ventures are directly related to the pursuit of their social mission. Laws and tax codes vary by state and situation, so legal counsel should always be consulted before serious consideration begins.  

I’d suggest starting like this:   

  • Learn about social enterprises. There are many examples among local nonprofits. Go to the website of The Academies of Social Entrepreneurship for many facts and examples.   
  • Socialize the concept with your board and others in your organization. See how they react and if they have any objections or concerns.   
  • Attend training at the Social Enterprise Academies, a program of The Academies of Social Entrepreneurship to learn all the facets of starting a business.   
  • Brainstorm with your board and local business people about what marketable assets, skills, knowledge or talents exist in your organization.   
  • Establish at least one contact who can counsel you on legal and tax implications.   

Nonprofits will need to continue to look for creative ways to be sustainable. Starting a social enterprise may be a good alternative for your organization.

Author: Larry Tucker, Executive Coaches of Orange County, www.ECofOC.org

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Can We Afford to Update our IT Systems and Programs?

Monday, May 16th, 2011

Larry Tucker

Updating your IT infrastructure can really add to the efficiency and effectiveness of your organization, but the cost of just an initial assessment could be prohibitive. You might think that revamping or replacing an entire system might be out of the question.

If you find yourself in such a bind, I have two suggestions for you.

First, local colleges and universities are loaded with IT savvy students willing to lend their expertise. They participate in consulting clubs and donate their time to local for-profit businesses and non-profit organizations to gain some experience and add to their resumes. This is often a great place to start looking for help.   

Second, I just finished reading an Orange County Business Journal article by Shelly Hoss, the President of the Orange County Community Foundation, where she reminds nonprofits of the great work of Groundwork Group, a nonprofit organization that offers affordable IT consulting to nonprofits. This organization is itself a nonprofit and it focuses exclusively on nonprofits.

Are administrative processes carving out too much of the time your nonprofit should be spending on improving your community? Take some time to assess, with some outside help, the likelihood that you can create efficiencies in the way you manage your organization.   

Author: Larry Tucker, Executive Coaches of Orange County, www.ECofOC.org       

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