by Dan Schipp

Looking for a way to help nonprofit board members understand what is expected of them? 

How about telling them they have the duties of care, loyalty, stewardship, and compliance? 

That’s how two presenters at the Fall Joint Nonprofit Conference, sponsored by the Ohio Association of Nonprofit Organizations and the Ohio Attorney General’s Office, summarized the duties of members of nonprofit boards. 

With these four aspects of board participation, the presenters, Matt Oyster and Melissa Smith of the Ohio Attorney General’s Office, offered a good framework for thinking about the responsibilities of a nonprofit board.  (I have substituted “stewardship” for what the presenters originally defined as the “duty to maintain accounts.”) 

Let’s consider what each of these duties entails.

Care

A board member who “cares” for an organization is concerned about, attentive to, and involved with the organization.  It means that the board member, at a minimum, prepares for, attends and actively participates in meetings.  It means that the board member advocates for the organization and makes sure it is mission-driven and mission-effective.  It also means the board member shares her financial resources, as well as her time and talent, to advance the organization’s mission.

Loyalty

The duty of loyalty requires the board member to place the interest of the charity above any personal interest that may come into play in serving the organization.  Any potential conflict of interest – personal or business — must be disclosed.  The board member must know and adhere to the organization’s written policy for handling conflicts of interest.

Stewardship

The broad duty of stewardship involves the board in oversight of how the organization is acquiring, using, and managing the resources necessary to carry out its work.  The board helps ensure that the organization has in place the systems, policies and procedures for accurately recording and reporting income, expenses, and investments, as well as for developing and monitoring budgets.  The board also is responsible for making sure there are in place internal control systems with checks and balance.  Most importantly, the board “stewards” the organization by procuring resources (especially through fund raising), by hiring, developing and evaluating the organization’s leadership, and by building and assessing the board itself.

Compliance

The fourth and final duty of a board member is that of compliance.  The board is charged with the task of ensuring that the organization complies with legal requirements and all other obligations.  This oversight duty includes federal and state laws, governing documents, contracts, and representations made in fund raising solicitations.

How is your board carrying out its duties of care, loyalty, stewardship and compliance?  Does your board come up short in any one of these areas?  What can your board do to strengthen and enhance its effectiveness?

by Andy Canada 

Would you say you’re knowledgeable about basic financial principles and concepts? 

If you answered yes, you are not alone. 

In a recent financial literacy survey conducted by the Center on Philanthropy at Indiana University and sponsored by Moody’s Financial, 76 percent of nonprofit managers considered themselves financially “knowledgeable” and another 7 percent claimed to be “experts” in that regard.

Unfortunately, if you are like the average nonprofit manager, there is a decent chance you overestimate your level of financial understanding. 

In reality, only a third of respondents were able to correctly answer a series of three questions on basic financial concepts like inflation, investment risks, and diversification.  

While nonprofit managers are not expected to be Warren Buffett, when donors make a gift, they expect it to be competently managed, especially when that gift is meant to be held in an endowment. 

We don’t have to look too far back to see significant examples of financial naivety costing nonprofits and foundations dearly.  Whether falling victim to criminal schemes like the one perpetrated by Bernie Madoff, or leaving themselves overly exposed to volatile market fluctuations, a number of nonprofits have paid a high price for not arming themselves with the appropriate expertise and assistance in financial dealings.

The silver lining to this news is that nonprofit managers were more knowledgeable than the public at large.  But nonprofits don’t have to compete with the general public for donations. They compete with each other. 

In an environment where nonprofits are increasingly coming under scrutiny from donors and regulators, it is important for nonprofit managers and their boards to honestly assess their own knowledge and practices to avoid missteps that could have a long-term impact on donor confidence.

So, take some time to crack open that Finance 101 book and brush up on your financial knowledge.  It will pay dividends.

by Ted Grossnickle

The Center on Philanthropy atIndiana University released their analysis yesterday of the impact the Obama Administration’s proposed tax changes may have on nonprofits.

 In their view, impact of the proposed 7% reduction of the value of charitable deductions allowed for taxpayers with an AGI of more than $250,000 would be relatively small.  More concerning are the estimated impact of proposed higher tax rates for this income bracket.  Though they represent only 3% of all tax returns in 2008, these taxpayers claimed 43.5% of all itemized charitable giving deductions.

 “Our estimates indicate that if the Administration’s proposals had taken effect in 2009 and 2010, total itemized giving would have declined by 0.4 percent in the first year and by 1.3 percent in the second year,” said Patrick M. Rooney, executive director of the Center on Philanthropy. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term.”

As Rooney points out, with the many other stressors weighing on the nonprofit community currently, the impact could likely be magnified and comes at a time when few nonprofits are at the pinnacle of stability.  What nonprofits need and what donors need, is more stability in the overall economy.

Thank you to the Center on Philanthropy and our respected colleagues at Campbell & Company for supporting this research.

by Kris Kindelsperger

Unemployment is hovering at more than 9%. Significant layoffs have been seen in recent years in the nonprofit sector.  Many organizations are fighting for their financial lives.  So, how is it possible that some organizations claim that they cannot find qualified candidates for development positions?

The overall turbulence in the economy is causing many good candidates to hold tight and not make any moves at all.  Professional search firms will tell you that two-career couples are reluctant to move for fear that a spouse will be unable to find a job in today’s market.  Candidates who own homes may be underwater in their mortgage or concerned that they will be unable to sell their existing home.  The recession has put downward pressure on salaries making some moves less financially attractive.

As we have worked to help clients fill open development positions, we have seen several visible trends at work in the advancement job market:

A bird in the hand – Many of the best qualified professionals are not “in the market” for positions.  They have a good situation and are sticking with it.

Home Sweet Home – Some qualified candidates are not willing to relocate, especially to smaller communities, even for a significant career advancement.

Great Expectations – The expectations of some presidents/CEOs/boards for quick fundraising results are scaring away the best candidates.

What can you do about this?

• Many organizations are working harder to home-grow their staff.  Forward looking managers are doing more hiring and promoting from within to build future leadership.
• Good major gift officers are hard to find, so some organizations are more willing to experiment with individuals with sales and marketing backgrounds, as long as they embrace the mission of the organization.
• Lots of organizations are finding that their candidate pools are shallow so they have to exercise patience and be prepared to look longer and harder to find the right person.

One benefit of the recession is that new candidates are looking at the nonprofit industry who may not have in the past.  They look to the nonprofit world today as a safe haven from the perils of the economic storm ravishing many for-profit companies.  If they really care and believe in what you do, they may be the right person for the job at the right time.

Whatever your situation, remember three things:

1. Don’t settle for second best hoping that the person will somehow work out, they seldom do.
   
2. Do hire for the personality and work ethic characteristics necessary to do the job.  The resume can’t tell you this part of the human equation.
   
3. Do pay attention to your instincts about fit and dedication to your culture and mission. 

by Dan Schipp 

Johnny has been on the job – Assistant Director of Annual Giving – for nearly a year . . . and he just doesn’t seem to be getting it. 

He doesn’t appear to comprehend how annual giving fits into the overall picture of development.  He doesn’t seem to know where to focus his efforts. And he keeps bringing up ideas that just don’t fit the culture of the organization. 

Why is Johnny failing?  Perhaps, it has something to do with how Johnny was brought on staff.

Too often organizations and institutions do not pay sufficient attention to getting their new employees started off on the right foot. Effective onboarding is much more than a meeting with the Human Resources administrator and a tour of the campus or office. 

A quality, comprehensive onboarding experience is a long-term process that begins before an employee’s first day on the job and continues for several months.  Onboarding is more about positioning employees for success and retaining talent than getting them settled in their new jobs.

A well planned and executed onboarding process serves several objectives, including:

• promoting an understanding of the organization’s culture, values and priorities
• building positive relationships within the organization
• reducing new employee anxiety
• setting performance expectations
• decreasing the learning curve

What are some things to keep in mind when bringing on board a new worker in an advancement office? 

In addition to the usual steps — sending a letter of welcome before the employee’s first day, thoroughly preparing an office, and creating an onboarding plan/schedule (perhaps for the first six months), I suggest the following actions:

• Compile an orientation binder that includes:
  •  the organization’s mission and vision statements,
  • case for support, 
  • organizational and advancement office strategic plans,
  • job descriptions for everyone on the advancement staff,
  • organizational charts for the advancement office and the organization as a whole,
  • brief biographies of organizational leadership, board members and advancement staff,
  • brief history of the organization,
  • fact sheets on the organization and the advancement office,
  • advancement performance dash board, and
  • office policies and procedures.
• Arrange for the chief advancement officer or another senior advancement officer to meet with the new staff member several times over the first few months to discuss the organization’s history, culture, guiding principles, and philosophy of development.
• Assign someone on staff to serve as an onboarding peer to be available to the new staff member to provide support and facilitate introductions to others in the organization.
• Schedule orientation meetings with advancement staff members to have them explain their responsibilities and advancement objectives.
• For someone taking on personal solicitation of gifts for the first time, arrange for a major gifts officer to accompany the new staff member on several calls and model how to cultivate and solicit gifts for the organization.
• Schedule frequent meetings between the new staff member and her supervisor to discuss expectations, to review progress, and to assess the challenges and opportunities in the new staff member’s area of responsibility.

What would you add to this list of steps to take to ensure a positive onboarding experience for a new advancement staff member?

by Dan Schipp

I was seated across the table from the chief executive officer, a highly successful fund raiser.  We were having a conversation about the record-setting, fundraising year his organization had just completed. 

He leaned across the table and said, “But I want more for this institution . . . I want to ensure that the success we are currently having in fundraising continues well beyond the tenure of the present team – CEO, advancement staff, and volunteers . . . I want to “systemize” a high-functioning, productive development program.”  

How do you do that?  How do you provide for continuity and on-going, long-term success in fundraising?  How do you build a culture of effective development?

For answers to those questions, I look to an organization, located in Indiana, that has had a strong, distinctive development culture since the 1960’s. 

How has this organization gone about systemizing its approach to development? I can identify four primary ingredients in its recipe for successfully sustaining a consistent, distinctive effort in fundraising:

1. A vision or philosophy of development.  Early on the architect of the organization’s program articulated his vision for development, captured it in writing, and passed this “philosophy” on to those who succeeded him.  For nearly 50 years, this philosophy with its foundation stones of planning, communicating values, and inviting support has guided the  program. 
2. Orientation, on-boarding and mentoring of new staff.  Efforts are made early on to familiarize new administrative and advancement staff with the organization’s tradition of development.  Through written materials and frequent oral reminders about the program’s basics, new staff members are instructed in the organization’s approach to fundraising.  The orientation often includes extended conversations or mentoring relationships with those who have previously worked in the development office. Lastly, a common frame of reference for staff is established by having the executive leadership and all development officers attend The Fund Raising School’s “Principles and Techniques of Fund Raising” course.
3. Emphasis on building relationships.  From the outset, the organization’s  development program has focused on building mutually rewarding relationships with benefactors.  The emphasis has been on long-term returns rather than immediate results.  Thus, cultivating and nourishing relationships with benefactors through frequent contact with institutional leadership and advancement staff is a hallmark of the program.
4. Longevity of staff.  For an organization to develop a culture of effective fund raising based on building relationships, it cannot have a constant turnover in executive leadership or advancement staff.  Over the past 50 years, this organization has had six presidents and four chief advancement officers.  Such stability in leadership comes about when the leadership is motivated by the mission and values of the organization and the organization offers a rewarding work experience and competitive compensation to the leadership.

Those are one organization’s key ingredients for systemizing a highly effective development program.  What other ingredients would you add to the formula?

By Meg Gammage-Tucker

An active and committed board of directors is an essential component of any successful non-profit.

Boards have several duties that include:

• Determining and managing the organization’s mission and purpose.
• Selecting, managing, supporting, and evaluating the efficacy of the chief executive officer.
• Conducting effective organizational planning and evaluation.
• Determining, monitoring, and evaluating programs and services.
• Enhancing and effectively managing the organization’s public, legal, and ethical integrity.
• Recruiting, orienting, supporting, and assessing board performance and engagement.
• Ensuring and effectively management appropriate and adequate human, financial, and organizational resources.

While all are very important to the success and growth of nonprofits and the fulfillment of their missions, it is simply impossible to overstate the importance of board members’ leading by personal gifting.  Why, because a board’s fundamental responsibility is to ensure the sustainability of nonprofits and their programs.  To do so they have to lead by example.

Why should a prospective donor give to an organization whose leadership has not given themselves?  If the leaders—who are legally and ethically responsible for the health of the organization—are not personally committed enough to invest their own precious resources, why should someone else?

The Board member that leads through personal gifting is the board member that is able to be an honest advocate and broker for the organization:  “I gave, this is why, and this is why you should too…” 

There is no better indicator of the strength of the leadership of a nonprofit than 100% board giving to its campaigns –whether annual funds or capital projects. 

If you are on a board—lead by example.  Truly, there is no more important role you have to assure its success.

By Ted Grossnickle

Back in April of this year (wow, it’s been six months now) JGA and Achieve, LLC announced results of the Millennial Donor Study — and the response to that donor research since then has been unlike anything either firm has seen.

Perhaps we should not be surprised given the topic and interest in philanthropy around the nation in this millennium! Since April there have been more than twenty blog postings about the study results — and those are only the ones we’ve managed to catch.

What surprises me is the continuing circulation of the research even now. There are recent comments regarding the applicability of it to fundraising by national political parties in this midterm election season and a posting this past week on the Social Edge blog forum from the Skoll Foundation – affiliated with the founder of eBay- about the importance of young donor engagement for social entrepreneurs.

At this rate, I expect the results of our research to show up in Christmas cards!!

We believe it is time to seriously rethink our perceptions about younger people in philanthropy and volunteerism.

For too many years, there has been the assumption that “they’re too busy,” or “they don’t have resources yet,” or “they’re just not interested,” or – perhaps worst- “we can’t expect them to engage with causes the way everyone else does.”

All of these are pretty much incorrect — at least according to our research (http://www.millennialdonors.com/) and to the many people who have followed our Study.

I can tell you this — there is more to come. JGA and Achieve are partnering to conduct a second round of nonprofit research in this area and you can expect more results during the spring of 2011. 

Want to be a part of the next Millenial Donors study?  We are in search of 10 institutions to participate in the study of young donor attitudes and engagement trends.  If you are interested in participating, please contact Joanna Nixon at Achieve or download the Request for Interest application.

by Meg Gammage – Tucker

Nonprofit professionals are regularly asked to justify the efficiency and effectiveness of their missions, programs, staff, and all other elements of their existence.   The reason—we live in an era of substantial competition for limited financial and human resources; under the light of growing public attention and scrutiny; and greater demands from donors for evidence of organizational impact and importance.

How can nonprofits deal with the growing demands of volunteers, audiences, clients, and donors who need more justification to invest in us and our missions and programs?  For the majority of the 1.6 million+ nonprofit institutions, the response has historically been to produce reports that generally outline the need for their “vital” services.  The organization then lists the number and amount of gifts received. 

It becomes somewhat circular as a justification process. 

Our clients and those who attend my classes often indicate that those reports are the extent of what they can generate given the substantial limitations on their time and staff resources.  Planning, modeling, evaluation, reports, impacts, outcomes—take too much time and they limit the energy available for running their organizations and developing and deepening donor relationships. 

It is not enough, however.   More justification and reports are necessary.  Why?  For the very reasons that you shy away from the concept:

• you have limited resources,
• your competition is growing, and
• you  have to justify our existence, let alone any possibility of growth or greater impact or influence. 

In other words, you simply need to work smarter, be better, and share the results of your successes (and, sometimes, your challenges).

How can we do this?  Employ simple and effective models and metrics to:

• illustrate your effectiveness;
• gain the support and greater engagement of your volunteers and investors; and—certainly not last or least—
• justify your existence. 

They do not need to be elaborate, but they do need to be meaningful, reflective, informative, and useful.  Start simple and seek board input.  Once you engage that audience and answer their questions, you can offer larger audiences more insights into your nonprofit’s efficiency and effectiveness.