Wednesday, December 31, 2008

Most Popular Posts in 2008

The top 5 most popular posts in 2008 were (in order of popularity):

1. In-Kind Gifts 101: Definition, Acknowledgement & the Law

2. Using SWOT Analysis for Strategic Planning

3. Nonprofit Accounting: Cash vs. Accrual

4. Independent Contractor vs. Employee Part I

5. Nonprofit Blogging Tips from ProBlogger

Tuesday, December 30, 2008

3 tips to reduce expenses

When times are tough, nonprofits often need to cut expenses to match their declined revenue. It is important to be strategic when cutting expenses, and to avoid a knee-jerk reaction to the financial climate. Here are a few tips for reducing expenses:

1. Take a close look at what you are paying right now for everything.

There are savings to be had in almost any area of spending. For example, you can change your payroll service or negotiate a lower monthly fee. I know several nonprofits that use PressGold Payroll, a small local firm and they only charge $22.50 as a base fee and $1.75 per employee. You can also bring your nonprofit's communications into the 21st century by switching your phone service to VoIP (voice over internet telephony) based services like Skype, and take advantage of this website for free conference calls. Speaking of conference calls, schedule more of them! We all have been in meetings where a meeting wasn't really necessary. In those cases suggest a conference call which can save in mileage and parking. Also, take a look at your printing and office supplies costs. Businesses like Office Max offer special discounted prices for nonprofits, and don't be afraid of negotiating with them for a better deal.

2. Take advantage of free help.

Make sure to take advantage of your volunteers, and continuously recruit new ones. Volunteers can do amazing things, and to illustrate that is Pet Haven, a nonprofit organization in Minnesota. Pet Haven is run solely by volunteers. Volunteers plan their annual event that raises $20,000+, volunteers manage their 100+ other volunteers, volunteers run their website, and more. This is a great example of how volunteers can make a huge difference in your organization- in fact they could even run it. Also, don't forget about interns. Students are always looking for opportunities to gain knowledge and skills (and a good recommendation), and will work for little or nothing. If you have had to cut staff hours or lay staff off, don't let their work do undone, give it to a volunteer or intern.

3. Outsource some of the work.

Many nonprofit organizations have to make the difficult decision to lay off staff due to lack of revenue. In those cases, a viable option is often hiring an independent contractor to do some of the work of that employee. For example, if your organization had to let go of your communications coordinator, you can often find an independent contractor that can manage your e-newsletter and design your collateral for less than half of the cost of that employee. Now, this is rarely the recommended route because having staff in these important roles will affect an organization's long-term success, but in times of financial crisis it can be a short-term solution. If your organization decides to do this, you need to be very careful. You need to make sure that the IRS wouldn't classify this person as an employee, which will only get your organization fined and responsible for back taxes.

Finally, make sure you stay on top of your budget. A budget should not be made, approved by the board, and then set aside never to be looked at again. You should review it monthly to make sure you are on track. It should be a road map for your organization’s spending.

2009 Outlook for Nonprofits

I think most of us have seen how the financial crisis has impacted nonprofit organizations this past year, we just haven't known how bad it is. Well, the Minnesota Council of Nonprofits has done some research to examine how just how bad it really is.

What they found:

  • Over half of the organizations (54.5%) have experienced a decline in total revenue. Forty-seven percent are receiving reduced individual contributions. At the same time, 49.2% have to pay increased expenses.
  • By December 2008, many organizations have made changes in operations, including reducing their budgets (44.7%), putting expansion plans on hold (27.1%) and eliminating staff positions (25.6%).
  • This decreased program service is coming at the same time that 42.4% of organizations report that more people are in need and coming to them for services – yet 49.1% of these have already reduced their staff.

With over half of nonprofits experiencing a decline in revenue, it is especially important to start 2009 on the right foot. Watch out for "3 tips to reduce expenses" later today to help in dealing with this revenue loss, and "4 things nonprofits should do to start 2009 on the right foot" on Wednesday.

Click here to read the Minnesota Council of Nonprofit's full current conditions report, and here for their 2008 nonprofit economy report.

Monday, December 29, 2008

Nonprofit Blogging Tips from ProBlogger

Darren Rowse is known as the expert when it comes to blogging. He has several highly successful blogs, including one titled ProBlogger, that is dedicated to helping you blog better. He graciously gave me a few minutes of his time to answer two questions about nonprofit blogging:

1. What are your top 3 tips for nonprofits that blog?

I think the biggest challenge for most bloggers is developing a blog that is 'useful' to its readers (or potential readers). People tend not to subscribe to blogs unless they enhance their lives in some way or fulfil a need. So the challenge for a non profit blog is to find a need that THEY can fulfill in their potential readers. This might be a bit of a challenge (or at least take a little thinking) because many not for profit organizations are probably more used to thinking about how to appeal to people to offer help or fulfill needs that they (or their clients) have. So my first tip is to think really carefully about how your blog will provide value and be useful to people who you want to read it.

Two other quick tips:

Consistent posting - work out what you want to post about, how often you think you can manage to post, what voice you want to write in and try to stick to it. Most successful blogs develop a rhythm of posting that has a regularity about it. This means as a blogger you can get into the rhythm but it also means your readers know what to expect which can be good.

Get Interactive - one of the reasons blogging took off as a medium is that it's a highly interactive medium on a number of levels including between blogger and reader (via comments) and between bloggers (linking to one another, building upon what others are writing, commenting on each others blogs etc).

2. What do you think is the best way for nonprofits to make money while blogging?

Tough question - One thing that I'm pretty sure a nonprofit SHOULDN'T do is run advertising on their blogs. I think blogs are probably more effective to non profits for communicating what they are on about, finding people to support them etc. But if you start selling advertising you distract people from what you're on about as an organization.

The only real way that comes to mind for monetizing non profits would be to use them to direct people back to your other fundraising activities. In a sense the blog then becomes a way of building profile which indirectly helps raise money.

Sunday, December 28, 2008

Out of the country in January

I may be posting a little less frequently the first part of January as I will be heading to Amsterdam and Egypt from January 1st through January 17th. I plan on posting while I am gone, and will be using internet cafes while I am there.

Reader Question: Starting a new nonprofit...


I have a vision for a nonprofit organization and I am planning to initially just ask friends, family members, and people at my church for donations. But eventually, I want to ask small businesses. In order for the funds to be tax deductible, does my nonprofit "organization" need to be in a database somewhere? Or do I simply need to give them a receipt for their donations? Also, I know what name I want to use, how can I find out if that name is already being used by another organization? I don't want to deal with any lawsuits.


Here was my response:

For the donations to be tax-deductible you will need 501c3 status. To get that you need to apply through the IRS:

You need to be granted exemption before you can legally say that someones gift to you was tax-deductible. As for the name, I would first take a look to see if the website is available at

If it is taken, then you might want to think of another name. You can also do a google search, a search with the attorney general/secretary of state's website, and a search with the U.S. trademark office to check on the name.

Tuesday, December 16, 2008

Executive Directors: Is it ok to be all things to all people?

Nonprofit Leadership 601 asked an interesting question in her post "Are we asking too much of our Executive Directors?" and says "As a sector we should work harder to support the strengths of our Executive Directors rather than asking them to be all things to all people."

While she makes an interesting point, that Executive Directors are expected to be responsible for pretty much everything, I'm not sure that is a bad thing. Doesn't the very definition of being a CEO, President, or Executive Director include having ultimate responsibility for all aspects of an organization? That is why it is such an important job. Those that have the role of Executive Director typically have worked in multiple areas of an organization.

While no one expects that an Executive Director is perfect at everything, they must have some foundational knowledge of the different aspects of a nonprofit organization. Plus, those that seek the position typically know what they are getting themselves into. Which brings me to an important point (and what I think is the point of her article), to help reduce turnover make sure that those you hire understand all that is expected of them.

Friday, December 12, 2008

Samples Week- Collateral

Sample newsletters here, here, here, here, here, and here.

Sample annual reports here, here, here, here, and here.

Sample promotional pieces (postcards, brochures, etc.) here, here, here, here, here, here, and here.

Thursday, December 11, 2008

Samples Week- Finances

Sample financial procedures/policies here, here, and here.

Procurement policy here.

Sample fiscal sponsorship agreement here, here, and here.

Sample request for bid letter for an auditor here, here, here, and here.

Sample nonprofit audit here, here, here, here, here, and here.

Sample budget here, here, and here.

Sample profit & loss statement here, here, and here.

Nonprofit Financial Management Self-Assessment Worksheet here.

Financial ratios worksheet here.

Cash flow template here.

To see any nonprofit organization's 990, you can go to GuideStar.

If you have some spare time, this is a good read. It is a paper on Financial Statements, includes their background, talks about accounting methods, and includes samples of a cash flow worksheet and statement, balance sheet, and operating statement. It also includes several sample budgets, including a performance-based budget and a flexible budget.

If there are any other samples related to finances that I didn't include, please leave a comment and I will add the sample.

Wednesday, December 10, 2008

Samples Week- Evaluation

Sample employee performance reviews here, here, here*, here, here, and here.
*360 degree review

Sample volunteer evaluation here.

Sample evaluation plan here and here.

Sample logic models here, here, here, here, here, here, here, and this one is a guide for developing them (and explains their purpose).

Sample SWOT Analysis here, here, and here.

Sample strategic planning stakeholder survey here.

Tuesday, December 9, 2008

Samples Week- Board of Directors

Sample board member job description here, here, here, and here.

Sample board fundraising menu/board commitment form here, here, and here.

Sample board agenda here*, here*, here, and here*.
*Agenda includes a consent agenda

Sample board minutes here, here, here, here, here, and here.

Sample articles of incorporation here, here, here, here, and here.

Sample bylaws here, here, here, and here.

Some nonprofits list their board members on their website, others go a step further to include full bios and contact information. Here are a few websites of nonprofit organizations and what information they have for their board of directors: here, here, here, and here.

For more information about Boards of Directors, BoardSource is a great resource.

Monday, December 8, 2008

Samples Week- Fundraising

Fundraising forms:

Donor appeal and thank you letters, and grant applications will be different for each organization since they focus on the specific work of that particular organization, but here are some samples:

A few samples of good nonprofit websites and their donate page:

  • The United Way has a unique aspect to their donate page- a video. The video is appealing and draws you in. They also include a how-to for giving.
  • Achieve Minneapolis has a very attractive website overall with a very noticeable and easy to find donate option. Their donate page does a great job translating what a donor's gift does. They also include a "success story" at the bottom of the page that adds something special to the page.
  • The Seattle Humane Society has a good donation page. They have pictures to draw you in, and link to several things to make it easier for the donor to research the organization, or attend upcoming events. I always like when organizations include a "why donate" page, which this organization does well.

If there are any other samples related to fundraising that I didn't include, please leave a comment and I will add the sample.

Friday, December 5, 2008

Samples Week- Most Commonly Requested Samples (next week)

I often get emails from people looking for examples of an appeal letter, board menu, board job description, SWOT analysis, etc. So, next week I will post examples each day:

Monday: Samples- Fundraising (in-kind acknowledgement, appeal, thank you)
Tuesday: Samples- Board of Directors (agenda, minutes, job descriptions)
Wednesday: Samples- Evaluation (employee evaluation, swot analysis, strategic planning stakeholder survey)
Thursday: Samples- Finances
Friday: Samples- Collateral (annual report, newsletter, etc)

I will post both my own samples and samples from around the web. If your organization has a particularly good appeal letter, employee handbook, etc and you don't mind sharing it, please email it to me:

PTO vs. Vacation/Sick Time

I recently came across a blog post on PTO that inspired a lot of discussion in the comment section. For those that don't know, PTO (Paid Time Off) is when an organization no longer gives you sick or vacation time, they give you a set number of PTO days and you can use them however you want (vacation, sick days, etc).

Having experienced both forms, I am a fan of PTO. While working at organizations that still use the old fashioned model of a set number of sick days and a set number vacation days, I was often frustrated with how it worked. If I never got sick, then those days just sat there, never being used. Once I got a job that gave me 20 days of PTO and some floating holidays, I loved it. I would never use them all because you might actually get sick. But for people like me, who never get sick, PTO is great. Plus, having PTO made the difference for me when I was considering two job offers. With nonprofit organizations typically paying their employees less than their for-profit counterparts, PTO is an inexpensive way to help retain employees.

For more information about PTO vs. Vacation/Sick Time you can click here and here.

Tuesday, December 2, 2008

Two Fundraising Tips for Tough Times

Here are a couple tips for fundraising in tough times:

  • When a donor declines to give, don't let that be the end of the conversation. Consider it to be the beginning, keep in contact with them to find out why they won't give. Perhaps they only give at a certain time of the year, or they aren't sure how you are going to use their donation. If you address a donors concerns and reason(s) why they won't give, you can turn them into a donor.

  • Build your relationship with your donors. In tough times donors often look to scale back and give to only the organizations they are most committed to. This is the time to make sure your database includes everything you could want to know about your donors. Keep meticulous notes when talk to them. If they mention they can't give because they just bought a house, make a note of that and call back in a few months and ask how the move went. It is important to keep track of every minute detail like this to help build your connection with donors.

Sunday, November 30, 2008

Reader Question: Can the Executive Director be an independent contractor?

The answer is: Probably not.

I would err on the side of caution and say no, an executive director should not be an independent contractor. This is because they would likely fail multiple questions of the IRS's 20 Factor Test. The most obvious one that comes to mind is #3 on the 20 Factor Test- Integration. The IRS says that if the services that someone is providing for an organization are vital and ongoing for the organization's success (i.e. they are providing continuing day-to-day work) then they are probably not an independent contractor.

The only circumstance that they might be able to be an independent contractor is when they are serving as an acting or interim executive director.

To understand more about the difference between independent contractors and employees, read Independent Contractor vs. Employee Part I.

To learn about the process of transitioning an independent contractor to an employee, read Independent Contractor vs. Employee Part II.

Tuesday, November 25, 2008

Donor vs. Donation

As everyone is putting together their 2009 Development Plans and plotting ways to meet their annual goals for 2008, we all need to remember what the difference between a donor and a donation is.

Donations can be easy to come by. Co-workers, volunteers, and committed supporters need only to ask their friends, family, and acquaintances for a donation. Those people may give again, or they may not. But they aren't donors.

Donors are those that are committed to your cause and feel vested in your organization's success. They give almost every year. They are your volunteers, employees, and committed supporters. They also are the ones you should be focusing on and are ripe for planned giving.

Many organizations make the fatal mistake of focusing heavily on the "new donor" when they should be cultivating the donors they already have. New donors are important, but organizations need to understand the difference between a new donor and a new donation. Getting someone to give once to buy tickets to an event, and then never give again doesn't help your organization in the long run. While only focusing on donations can be necessary in tough times, it should never be the primary strategy. So, as you are putting together your 2009 Development Plans remember this and focus on getting more donors.

Wednesday, November 19, 2008

A word about Nonprofit URLs

One of the most important things about your organization's website is having a guessable URL. If your organization is called The Hope Shelter, don't get a domain (URL) name of Domains are extremely inexpensive ranging from $7-$10 per year from Go Daddy, and they are worth the investment. I recommend not only buying the .org, but also the .com of your URL. It's much better to buy it now, then to wait a few years to find that someone else has scooped up your domain. There are a lot of cybersquatters out there.

Nonprofit Marketing Resources

Here are a few helpful resources to help marketing at your organization:

Monday, November 17, 2008

Tips for Effective Nonprofit Partnerships

With limited funding and increased demand, many nonprofits are looking for ways to be more effective. Partnering with another nonprofit organization, business or unit of government is a great way to pool resources and make a bigger difference. Plus, foundations love to see collaboration.

Here are a few tips for creating effective partnerships:

  • Create a plan with goals and processes aligned with partners
  • Make sure the project will be self-sustaining over time
  • Balance power and ensure good governance
  • Define what success looks like for the partnership
  • Ensure that everyone involved feels included and is educated on pertinent topics
  • When possible, partner with like organizations- don't duplicate
  • Think long-term!

When partnering with a nonprofit organization, business, or government it can be helpful to use a partnership agreement that outlines the terms and expectations of the partnership. Here and is a sample partnership agreement, and this website talks about different types of partnerships that your organization can do.

Wednesday, November 12, 2008

Grant Writing Resources

While there are hundreds of blogs that deal with aspects of nonprofit life, one that I particularly enjoy is 79 Grant Writing Resources. This blog is useful for anyone is useful for anyone that writes grants. Posts include obvious tips like check out the foundations 990 (#61), to more obscure resources like "SMART Maps for Grant Writers" (#55) and very useful posts like "Thirteen Proofreading Tips for Grant Writers" (#52). I highly recommend you check it out!

Friday, November 7, 2008

Evaluation Technology Survey

Please take a minute to take a short, 3 question survey about evaluation technology.

Click Here to take the survey

This survey will be used to help fuel future posts about evaluation technology.

Thank you for your help!

Thursday, November 6, 2008

The Consent Agenda

I am a strong proponent of the use of consent agendas in board meetings. They allow boards to have items that do not require discussion or debate to be approved quickly. Consent agendas can help speed up meetings and cut off unnecessary discussion. They allow boards to focus and spend time on the things that require meaningful discussion.

Here are some of the things that should be on consent agendas:

  • Approval of minutes
  • Uncontested board elections
  • Committee appointments
  • Items that have already been discussed via email, or have been discussed at previous meetings and do not need any further discussion
  • Reports

If your board doesn't use a consent agenda right now, consider giving it a try and see how much time it saves you!

Monday, November 3, 2008

Vote Tomorrow!

This could be the most important election of our lifetime. At the times of this post, the US Debt is approximately $10,545,152187,483.12. This will impact our schools, families, nonprofits- pretty much every facet of our lives. So, please make sure to read about the candidates and vote tomorrow.

Wednesday, October 29, 2008

Tapping small businesses for money, in-kind donations, and volunteers

Small businesses are giving, and all you need to do is ask. A recent article by the Chronicle of Philanthropy took a look at giving habits of businesses. The study included 1,033 businesses, half of which were small businesses (with 2 or less workers). It found that many small business owners (43%) thought they should be doing more charitable giving.

That is a large proportion of businesses that would like to be doing more giving. Now your job is to ask. Some may think targeting small businesses is a waste of time (they don't have a lot of money, they never give cash, etc), but I can tell you that isn't the case. The study found that "66 percent of those who give through their company donate cash, while 51 percent volunteer, 41 percent give services, and 39 percent contribute products", with the median amount given between $500-$2,000 in cash.

Plus, a huge advantage of asking small businesses for their support is that you typically will get an answer immediately. While large corporations and companies often have complex processes to receive donations, which include paperwork and waiting 1-6 months until you hear anything, small businesses are the complete opposite. You can often walk in the door of your neighborhood restaurant and walk out with a gift certificate in less than 10 minutes.

So, now you know it is worth your time, but how to make the case? For most businesses you only will have to explain what your organization does and why you need a donation. Although, some businesses may require a little more persuading. For those, just convince them it is a good marketing tactic. In fact, the study found that 43 % of small-businesses use their giving as a way to promote their company.

Make sure you highlight this benefit to businesses when asking them for support. Some may ask "How effective is the promotion tactic really?" Well, a 2007 study that looked at corporate giving over 10 years found that "for every dollar spent 2 to 3 dollars is returned in sales." Now obviously this will vary business to business, but that is a pretty decent return on investment. Don't forget to mention that their donation is tax deductible!

Saturday, October 25, 2008

What does evaluation look like in practice?

Two researchers, Carman and Fredericks, recently took a look at what evaluation actually looks like in practice at nonprofit organizations. They targeted human service nonprofit organizations, and sent surveys out to a sample of over 300 nonprofits.

They found that most nonprofits (90%) complete at least some evaluation in their organizations, with 46% making a "concerted effort to evaluate most of their programs and organizational activities." This is great news, that so many are using evaluation in some way, but it is concerning that only half are making a "concerted" effort. Organizations need to use evaluation not only when developing new programs, but also to make sure their existing programs are effective.

Not surprisingly, most (80%) organizations use internal management or executive staff to gather evaluation data, and only two organizations in the entire study used external evaluators (the rest used an internal evaluation staff member, board committees/members, or their external funder). This statistic was a little scary. Not many people have experience or have been educated in evaluation methods- which is why I believe degree programs in nonprofit management should require at least one evaluation course. Hopefully the over 80% of organizations that do evaluation internally used an evaluator at one point to design their evaluation process to ensure they are following best practices and accurately measuring what they think they are measuring.

Their analysis also found that nonprofit organizations tend to think about evaluation in three distinct ways: (1) as a resource drain and distraction; (2) as an external, promotional tool; and (3) as a strategic management tool. This wasn't especially surprising, as many organizations only evaluate their programs because their funders require them to do so. This is why I think we need a fundamental shift in the way we think about evaluation. Evaluation, as I have mentioned in other posts, is at the core of many jobs, and we need to take an active role to evaluate our programs, policies, and organizations.

Here is the full article citation, in case you would like to read the complete article (I also have it available in PDF, email me if you would like a copy):

Carman, J. G., & Fredericks, K. A. (2008). Nonprofits and evaluation: Empirical evidence from the field. In J. G. Carman & K. A. Fredericks (Eds.), Nonprofits and evaluation. New Directions for Evaluation, 119, 51–71.

Tuesday, October 21, 2008

Using SWOT Analysis for Strategic Planning

An important tool that many organizations use when developing their strategic plan is a SWOT analysis.

S = Strengths
W = Weaknesses
O = Opportunities
T = Threats

When putting together a SWOT analysis for your organization, you will need to look at each of the following:

  • Strengths: These are internal factors that have helped the organization be successful (good cash flow, strong management team, etc) that you will want to leverage and grow.
  • Weaknesses: These are internal factors that are detrimental to the organization (high employee turnover, no funding, etc) that you want to stop and fix.
  • Opportunities: These are environmental factors that will help your organization (growing market for your services, demographic changes, strong economy, etc). You will want to take advantage of these factors.
  • Threats: These are environmental factors that can affect your organization negatively (poor economy, decreased demand for your services, emergence of multiple competing nonprofit organizations, etc). You will want to take these into consideration and have a plan of action for countering any negative affects of these factors.

Once you have developed a SWOT analysis for your organization, you will want to develop a plan of action that typically centers around the opportunities your organization has, while still addressing any threats and weaknesses. A SWOT analysis is an easy, effective strategic planning tool.

For more information about developing a SWOT analysis, you can click here and here.

Thursday, October 16, 2008

Upcoming Presidential Elections

This blog is nonpartisan. With that being said, the elections are only a few weeks away and it is extremely important that everyone votes. Not only is it important that everyone votes, it is important that people understand the candidate's positions on important issues. I thought I would highlight a few things about the two Presidential candidates related to nonprofits from the recent edition of the Chronicle of Philanthropy:

Senator John McCain

  • Contributed $105,467 to charity (26 percent of his income) in 2007
  • To balance the federal budget would consider a spending freeze on everything except entitlement programs (social security) and defense
  • A Cool/Unique Idea: Would hold volunteerism summits so people could share information about effective programs and get more students participating in community service.

Senator Barack Obama

  • Contributed $240,370 to charity (5 percent of his income) in 2007
  • To balance the federal budget would continue to prioritize affordable college tuition, early-childhood education, energy independence, fixing the health-care system, rebuilding infrastructure and science education
  • A Cool/Unique Idea: Would create American Opportunity Tax Credit worth $4,000 in exchange for 100 hours of public service.

To read more about either candidate you can visit their websites (click on their names above), or if you subscribe to the Chronicle, you can read the full article here.

Wednesday, October 15, 2008

Who should pay for the meal or coffee when meeting with a donor?

Meeting with donors is part of the job when working as an Executive Director or Development Director at a nonprofit organization. Organizations that are hip to donor cultivation and have strong donor programs in place, regularly meeting with their major donors to update them on programs and get their thoughts on the direction of an organization.

Now at the end of the meeting, after you both have enjoyed lunch and the check comes, who should pick up that check? Well, everyone does it differently. Some organizations believe that it is the donor's responsibility to pay since they are a donor. This is where I disagree, when you take a donor to lunch or coffee to update them about your organization, and especially when you are asking for money, you should always offer to pay. Typically, donors won't want their money to go towards taking themselves or other donors out to eat, so they will insist on taking care of the check, but it shouldn't be expected that they will.

Kim Klein goes over this and other common questions (like what to wear) in her Getting Major Gifts handout.

So, you can't afford to have a large amount of money allocated to these meetings for donor cultivation? Well, then be creative. Ask them to coffee (less expensive), ask them to your office and give them a tour, or go to their home. Regardless of how you meet with a donor, what is important is that you meet with them and keep them informed about your organization.

Monday, October 13, 2008

Reader Question: How do I start an individual donor program?

Dear Kristen:

Due to our lack of funds, my first project is to develop a private donor program for my organization. I think they are mostly interested in trying to find potential donors and figuring out a way to solicit funds. I am writing you to ask if you know of any resources (books, websites) you think might be helpful to me while trying to come up with a plan.

As our economic climate continues to shift, organizations that have been heavily dependent on government/foundation contracts and grants have begun looking at beginning or developing their individual donor program.

My response:

There are several resources available that I can think of right away. Here are a few you might consider:

Conducting a Successful Annual Giving Program
The Relentlessly Practical Guide to Raising Serious Money: Proven Strategies for Nonprofit Organizations
Building Your Direct Mail Program

MNCN's fundraising lunches are great. If you live in the Twin Cities (Minnesota) or can make it down, they are free and can give you great tips/advice. There really aren't many workshops/classes in Minnesota that are specifically about how to start an individual donor program. There are a couple nationwide, but I am assuming your organization wouldn't have the resources to pay for your travel and a large workshop cost (correct me if I am wrong).

Starting a monthly donor program
Starting a donor program
Building a donor base
Minnesot Council of Nonprofit's resources for fundraising


Also, please take a moment to take this quick survey. It only has two questions!

Wednesday, October 8, 2008

Make sure to use a traffic tracker on your website!

It is important to track your traffic for multiple reasons, here are a few:

  • You can see what your landing page is (what page people start at on your website from search engines).
  • You can see how many people visit your website, what type of browser they use (which informs web design), where they are located and more!
  • You can see the effect of different aspects of outreach and media (if you have an article in the Sunday paper about your event, you can see if traffic increased because of that article), this is particularly important because it enables you to judge the value of what types of media, pr, communications, outreach, etc you do.
  • What keywords people are using to get to your website.

There are many more great things that traffic trackers allow you to do or see. To highlight the traffic tracker that I use, Google Analytics, which in my experience has been the best. It is free (yes it doesn't cost anything!), very easy to use, and provides A LOT of information. And all you need to do to add it to your website is to add a little bit of html code to each webpage- it doesn't take more than 10 minutes. So, make sure to take advantage of this great resource!

Monday, October 6, 2008

What is too much when it comes to executive compensation?

An article in the Chronicle of Philanthropy's October 2nd edition focused on the recent uproar over the Charlotte United Way's compensation package for its leader, Gloria Pace King. Ms. King was set to receive a $2 million pension upon retirement. This edition also highlighted that a recent survey showed that the median compensation among the 291 organizations surveyed was $326,500.

The issue of what is appropriate compensation comes up frequently for boards trying to determine compensation packages for their leaders. Some believe that nonprofit workers should receive much less than their for-profit counterparts, but I have always wondered why? A CEO of a for-profit $40 million corporation in most cases has the same amount of work as the Executive Director of a $40 million nonprofit. Wouldn't you think that since the nonprofit is serving the public good they should receive equal or greater pay? :)

The issue of the pension package for Ms. King started as an anonymous tip to the media, hinting that they look at the organization's 990 (for those that don't know, you can find the compensation of nonprofit leaders on the organization's 990s). The media discovered a large pension payment and immediately reported on it. Of course, many other media outlets then picked it up and the public outcry began. For those that are wondering, Ms. King's salary was around $370,000, which is a little higher than the median, but considering that she ran a $45 million organization for over a decade and brought it up to the 18th largest United Way (in terms of revenue raised), the compensation is probably reasonable. Unfortunately, the Board gave in to the public pressure and gave her a month to resign or she would be fired. Oh, and they also said they are going to exercise their option to cancel up to $1 million in promised pension payments.

Unfortunately, these types of situations happen often. So, how to avoid it? Seek independent review from outside experts when determining compensation packages, and make sure to look at what similar organizations (both in size and focus) are paying their leaders.

AWOL Last Week

I'm sorry about missing my post last week. I was attending the Minnesota Council of Nonprofits Annual Conference in St. Paul, MN. I presented a session: "Thinking Outside the Box: How to secure funding and relationships with cities, counties and watersheds." The presentation slides will be available here later today. I will follow up with Monday's post shortly.

Wednesday, October 1, 2008

It's time for the end of the year appeal

Now that fall is here, it's the time of the year where every nonprofit is thinking about their end of the year appeal letter. For most organizations there timeline is something like this:

Early November- send holiday card/thank you card
Late November- send appeal letter with ask
Early December- follow up on those who have not yet donated

This timeline is what most organizations have followed year in and year out. With the current financial crisis causing donors to cut back on their giving, nonprofits are trying to make sure they don't decrease their individual donation income. For most nonprofits, that means moving this timeline up a week or two.

Yesterday, at a fundraising committee meeting, I was trying to think of ways to make sure that donors continued to donate to the organization and one thing I came up with was switching the way we do things. I was thinking that instead of calling at the end, only to those who haven't given, how about calling at the beginning?

What I mean is that we could call all donors before the appeal letter is sent, not to ask them for money, but to just update them on the organization and thank them for their past support. Then you send the letter. And of course, you would still likely do the follow up to those who haven't donated. But, I would be willing to bet that more people would donate right away and would possible donate more money. So, I'm curious if any organizations do this already and if they have found it is more effective? Or if there are other ways organizations have made their end of the year appeal stand out among the dozens of appeals people get?

Monday, September 29, 2008

A few of the biggest fundraising mistakes

What are the biggest blunders, oversights or mistakes in fundraising? Well, The Relentlessly Practical Guide to Raising Serious Money lists the twenty biggest fundraising mistakes you or your organization can make.

Today we are going to look at a few of those mistakes that I think many people make (these are excerpted from The Relentlessly Practical Guide to Raising Serious Money):

  • Failing to Cultivate Donors: Cultivation, a sustained effort to inform and involve your prospects, is needed for practically every gift—the bigger the gift, usually the more preparatory steps needed. The best cultivation, which uses a mixture of printed matter, special events, and personal attention, takes place slowly over a period of time, sometimes years. If there's any secret to it, it is being yourself and cultivating people the way you would want to be cultivated. That is, with simple sincerity, not glitzy programs. Donors give more when they can visualize an organization not as an organization but as people. Achieving that end is, in essence, the goal of all successful cultivation programs. *Gifts like these don't often drop out of the sky, they take months if not years of cultivation.
  • Thinking Your Organization Will Attract Support Simply Because It's a Good Cause: Just because you have a good cause—one of thousands, really—doesn't mean money will wend its way to you. Organizations must attract support the old-fashioned way—earn it. Giving away money is something we all do reluctantly, and it's hardly an instinctive act. Nonetheless, people will support you if you present them with a challenging project that is consistent with their interests. To succeed, you must explain exactly why you seek the funding, why your project is compelling, who will benefit, and why the money is needed now. In other words, your needs—presented as opportunities—must be specific, people-oriented, and have a sense of urgency. Keep in mind, always, that people give in order to get. They don't simply want to give away their money; they want to feel they're investing it and getting something in return. *This is often seen in smaller, newer nonprofit organizations and in organizations that get most of their money from government or foundation sources. Building a individual donor program is very important for all organizations.
  • Failing to Thank Your Donors: Thanking donors, besides being polite, is an act of cultivation—and a smart one. People appreciate when their generosity is recognized. They not only feel closer to your organization, they're inclined to continue giving. Most important with thank yous is to acknowledge gifts positively and quickly. You want the donor to know that your trustees are aware of the gift, that his or her generosity will stir others to give, and that your organization will put the money to good use. Board members can be especially effective in expressing appreciation, either by sending notes or by making telephone calls to selected donors. *Don't underestimate the impact of a personal phone call to a donor to thank them for their gift- no matter the size of gift.
  • Failing to Have a Strong Rationale: Before setting out to raise money, each organization must think through the rationale for its appeal: why do the funds need to be raised, what will they achieve, and who will benefit? The mere fact that you and your board need money won't stir people, no matter how well organized your effort. Rather, with your case for support you must move your prospects emotionally and intellectually. They need to feel that, by contributing to your organization, life will in some way be better for them, for their children and grandchildren. They need to sense that their community—or even the nation—will be advanced as a result. *This is extremely important and can make or break your fundraising goals. I serve on the Board of Directors of Pet Haven, a nonprofit animal rescue, which is an organization that does an excellent job of having a strong rationale. Every ask they send out, they send information on one or two new intakes (dogs or cats) with their story and why they need money. To read an example of one of their "stories", click here.
If you want to read the full list of all top twenty mistakes from the book, GuideStar published Part I and Part II, which lists all of the biggest fundraising mistakes.

Friday, September 26, 2008

Press Releases: When, What, How?

For those of you that are puzzled about press releases, this week's post includes some resources to make writing a press release a little easier.

If you have never written a press release before, this summarizes what all a press release should include, with a few tips on helping you get noticed. To get help you get started, here is a sample press release. Now that you know how to write them, here are a few more great tips for writing them effectively.

Now that you know how to write them, you can visit Kivi's Nonprofit Communications Blog, which has a great post that talks about timing of press releases. She discusses when you should send them out, depending on what type of coverage you are seeking (pre-event or post-event).

On an unrelated note, the Nonprofit SOS: Evaluation Series was featured on the TechSoup Blog. And if you haven't already, please take a minute to take this quick, two question survey.

Tuesday, September 23, 2008

Young donors are where it's at.

The Chronicle of Philanthropy included several articles in their recent publication about how our current economic times are affecting different nonprofits, including information about a recent survey, and it's results: "29% of Americans Plan to Cut Giving This Year." Yikes.

The survey found that although donors over 65 planned to give less or not at all, donors between 25 and 34 plan to increase this donations this fall. This will be an interesting shift for many nonprofit organizations that have been focusing on older donors for years.

This goes to show you, young donors are where it's at. They are starting giving circles and giving away their fortunes. And some have found that they give just as much as older donors.

So, how to reach these generous young donors? Well, the first and most obvious answer is- use technology! Young donors are online, they are using facebook and myspace, they check their email multiple times per day, they scout charities by looking at their websites and blogs. Also, young donors have indicated that they want to make our world a better place to live, so make sure to explain very specifically how their donation- regardless the amount- makes a real difference. And don't forget to get them involved with your board of directors, having a young person on your board will often bring new ideas into the organization and help you reach more young donors.

Now remember, as the years pass, people will tell you to focus on different age groups (a year ago some told you to give up on younger donors), but always keep in mind that young donors are the future. They will be alive and committed to your organization for 30, 50, 70 years to come.

Monday, September 22, 2008

Nonprofit SOS Survey

I need your help. Please take a minute (literally) and answer two short, quick questions about your nonprofit work.

Click Here to take survey

Thank you!

Reader Question: Can nonprofit board members win the organization's raffle?

Just to elaborate a little further, this person was asking whether a Director from their board of directors could win the raffle prize at their event. This same question could be asked about whether staff can win the raffle prize at an event.

This is a tricky question. Technically speaking, in most states, the answer is yes- your staff or board members can win raffle prizes. Now, this can vary, so make sure to check your state Gambling Board to see what the rules or laws are in your state.

So, it is allowed, but would you want your staff or board members to win the raffle? I would think no. From the appearance point of view, it may not look good to the donors and volunteers who spent money on raffle tickets if an organization insider won the prize.

I think this is a decision that each organization has to make, keeping in mind any rules or laws that gambling board have.

Thursday, September 18, 2008

Don't force nonprofit staff to ask their personal networks for donations.

Many people have worked at nonprofit organizations where people were expected to fundraise when their job didn't have much to do with fundraising- even worse, they were expected and even guilted into asking their personal networks for donations.

In my opinion, this is wrong. Although, I am a believer that pretty much all jobs have something to do with fundraising. I think if you are going to expect all employees to fundraise, that expectation needs to be included in their job description and clearly communicated to them. For most nonprofit workers, it doesn't work like that. They start a job as the Office Manager or Program Coordinator and when a big event comes along, so does the pressure for them to sell tickets to their friends, families and others in their personal network.

While not communicating expectations about fundraising to non-fundraising staff is frustrating, I think the bigger sin is forcing and guilting staff into asking their personal networks for donations or to buy tickets. If staff volunteer to do this, then there isn't a problem. But in many cases it is an unpublicized mandate and if you don't want to do it, people secretly question your commitment or say things like "you'll do this because we need money for your program (job, computer, etc)." Not only should a staff member not be forced into this, but they also shouldn't be looked down upon because they don't want to go to their personal networks for money. Nowadays, people have multiple charities they support. While they probably feel at least somewhat passionate about the organization where they are working, they probably also serve on a nonprofit board and volunteer for another nonprofit- both of which they fundraise for.

In short, it's ok to expect all staff to help with fundraising- as long as those expectations are clear from the start- but don't force or guilt staff into asking friends and family for money. They may or may not do it, but it's their decision and it doesn't make them less committed.

Tuesday, September 16, 2008

Should you have performance reviews for your board members?

Incorporating performance reviews for board members into your governance process can help ensure that you have an effective and successful board of directors for your organization. But they are just volunteers right? Well, yes, but volunteers and board member should be reviewed. Evaluating your nonprofit board is particularly important because they can have such an enormous impact on your organization.

So, the Executive Director reviews staff, the Board reviews the Executive Director...who reviews the Board? Well, itself. Boards need to be accountable and have self-evaluations.

Some recommend that you do mid-term and annual reviews, I think that as long as you do a review annually you will be set. Just remember that the goal of a review isn't to tell a board member that they are doing a bad job- it's to help build team work, increase communication and to ensure the board is doing what it set out to do. It also gives members a meaningful measure of accountability and will provide a guideline for effective board performance.

This PowerPoint presentation does a great job going over evaluating board members, why it is important and how to go about it.

Now that you have decided to incorporate board member evaluations, here are a few resources to help you:

  • Here is a self-evaluation that can be used by both board members and the Executive Director to gain an understanding of how well the board is doing.
  • Here and here are self-evaluations for individual board members about their own performance.
  • Here is a checklist for evaluating board. It includes indicators for what is needed to have a healthy, well-managed organization.

Monday, September 15, 2008

New Blog Design!

Thank you to Teresa over at Delicious Design Studio for doing an awesome job at redesigning this blog!

Friday, September 12, 2008

Evaluation Series: Fundraising

It is very important to use evaluation in your organization's fundraising efforts. You can do this in a variety of ways, from holding a focus group of your donors to see why they give to using program evaluation information to increase gifts to your organization.

Today we will look at three areas of fundraising- grants, donors and special events. All three use evaluation in some way. When most people think of fundraising and evaluation they immediately think of grants. Every grant writer knows that funders look to that section of your application titled "Evaluation" to make sure you are evaluating your programs and using their money in an effective way. This includes a description of how specifically your organization will evaluate the project being funded. 79 Grantwriting Resources has a post on Evaluation Tools for Your Grant Application that is primarily aimed at youth-serving organizations but has some good information about tools for writing the evaluation section of grants.

You can also use evaluation with your donors in several ways. Counting What Counts mentions a major finding of the keynote speaker of a conference they were at- "after a donor gives a gift to your worthy cause, they want you to learn the measurable outcomes that the gift and your program produce." What does that mean? Well, use one of the tangible outcomes from your program evaluation and share it in the thank you note mentioning how that donor made that possible. You can also use evaluation in the form of focus groups to invite a group of your donors to hear why they give to the organization. You can use your findings to help you increase donations and secure new donors.

With special events, you can use evaluation to evaluate it's success. Or in other terms, it's return-on-investment. I wrote a previous post about this here. You can also use this list of questions to help evaluate your event.

Also, here is a great article that talks about evaluation for fundraising and its importance.

I'll end this series with a few more evaluation resources throughout the web:

  • The Nonprofit Sector Research Fund awards research grants and organizes convenings to expand knowledge of the nonprofit sector and philanthropy, improve nonprofit practices, and inform public policy related to nonprofits. Their website has project findings from their research studies.
  • This website provides information and links to other website to help your organization with evaluation.
  • Here is a "Basic Guide to Outcomes-Based Evaluation for Nonprofit Organizations with Very Limited Resources."
  • Here is a Basic Guide to Program Evaluation.

Thursday, September 11, 2008

Evaluation Series: Volunteer Management

You can incorporate evaluation into your work with volunteers in several ways. You can use evaluation to determine the needs of an organization so that you can recruit and appropriately assign volunteers. When recruiting you can use surveys to determine the skills volunteers have. Similar to Human Resources work, you can use evaluation to track a volunteers’ effectiveness, performance and to estimate the value of their volunteer time.

There are many excellent resources online for best practices in volunteer management. This is a tool for the eight steps of volunteer management and describes each step (including the needs assessment and evaluation. Here is a thorough introduction to volunteer management. If you would like to evaluate the effectiveness of your volunteer program, here is a guide on program evaluation 101.

The final post in this week's evaluation series is: Evaluation Series: Fundraising. The goal of this week's evaluation series is to highlight how evaluation can play a role in your job and to provide resources to accomplish incorporating evaluation in your organization.

Wednesday, September 10, 2008

Evaluation Series: Human Resources

Evaluation plays a leading role for human resources professionals. Almost every aspect of their job deals with evaluation in one way or another. If you are the human resources person for your organization, you will likely use evaluation from day one.

You will use components of evaluation while developing job descriptions- you will interview and survey your colleagues to ensure that the job description includes everything it should.
Once you have the job description, then you will need to develop interview questions and complete the interviews using best practices. You will want to develop a rating scale to measure the key qualifications of a position and use it to make the hiring decision.

Once you have a new hire, you will continue to use evaluation throughout an employee’s career. You will use surveys to evaluate job satisfaction and performance reviews to determine raises. Make sure to follow best practices when determining how to measure an employee’s performance, which includes having clear, measurable metrics for an employee's performance and providing constructive feedback for areas of improvement. As you can see, evaluation plays a large role in human resources and can help you be more successful in your position.

A side note, you have likely noticed that I am using the term "best practice" a lot. I mentioned it in my last post, but I thought I should take a minute to more clearly define what exactly I am talking about when I say "best practice." So, what exactly is best practice? The Business Dictionary defines it as "Methods and techniques that have consistently shown results superior than those achieved with other means, and which are used as benchmarks to strive for. There is, however, no practice that is best for everyone or in every situation, and no best practice remains best for very long as people keep on finding better ways of doing things. See also best in class and leading practice."

Watch for tomorrow’s post- Evaluation Series: Volunteer Management

Tuesday, September 9, 2008

Evaluation Series: Nonprofit Communications and Marketing

Nonprofit communications and marketing professionals can and do use evaluation in a variety of meaningful ways. From evaluating communications efforts to holding focus groups to identify branding strategies. While many believe that these sorts of tools are only for our for-profit counterparts- this is simply not the case.

The underlying goal of nonprofit communications and marketing professionals is to ensure that the organization’s mission is communicated effectively. To achieve that, a lot of factors come into play. Do they have an appealing slogan and logo? Does the website draw people in? What type of advertising works best? How are people hearing about our organization? These are all questions that evaluation can answer.

You don’t need to do a formal evaluation or even hire a consultant. You just need to understand the role and importance evaluation plays in your day-to-day work and do your best to follow best practices.

What do I mean by best practices? I mean that when you use evaluation make sure you are doing everything in your power to do it right. For example, focus group best practices dictate that you need to make sure you have the right people participating in your focus group- not just settling for whoever signed up. These sorts of best practices can easily be found via a quick search online. I also have linked to a variety of resources throughout this post.

Watch for tomorrow’s post- Evaluation Series: Human Resources.

Monday, September 8, 2008

Evaluation Series: Why should you care about evaluation?

What could evaluation possibly have to do with my job? That is a question human resource managers, development professionals, communications directors and other nonprofit staff often ask. The answer? A lot.

While most nonprofit organizations do not have the capacity to complete formal evaluations of their programs, nonprofit staff can and should incorporate evaluation best practices in their day-to-day work.

Pretty much every nonprofit worker has used some form of evaluation at one point in their career. Program Managers use pre and post-tests to measure program effectiveness, communications directors use focus groups to determine branding strategies, human resources uses performances appraisals for annual reviews, and almost everyone has used SurveyMonkey for one thing or another.

What is important is making sure that when you use evaluation, that you are following best practices. This week, I will provide tips on evaluation and highlight how evaluation fits with four different nonprofit professions:

Tuesday- Nonprofit Communications and Marketing

Wednesday- Human Resources

Thursday- Volunteer Management

Friday- Fundraising

Friday, September 5, 2008

A blog worth your time.

I recently happened upon a great blog- Brazen Careerist by Penelope Trunk, that I had to share. While Penelope does not work in the nonprofit world, her posts are still very relevant and interesting. I found myself on her blog for over an hour reading post after post- I especially like how her posts include "Posts that are probably related" and lists a few more posts you should read. A few posts I especially enjoyed were "The Wall Street Journal tries to guilt women into giving up maternity leave", "You only need $40,000 to be happy", "How to wait: Don't" and "6 most violated resume writing rules." But believe when I tell you that there are hundreds, yes hundreds of entertaining and useful posts on her blog. Enjoy.

Thursday, September 4, 2008

Independent Contractor vs. Employee Part II

Previously we talked about the employee vs. independent contractor situation that many organizations face (both for-profit and non-profit). To read the original post, click here. That post has received an unbelievable amount of interest, it seems there are a lot of people and nonprofit organizations out there trying to figure out how to deal with the independent contractor vs. employee situation. So, I decided to expand on the original post and demonstrate that this transition is not as costly as one may think and it worth it in the long run.

In my previous post, I explained how to figure out whether someone is an independent contractor and what it means if you have misclassified independent contractors. For many organizations, they may realize they are misclassifying their independent contractors but have no idea how to change it, or just simply don't have the money to change them to employees.

I wanted to take a little time today to discuss this transition and the costs involved. When paying someone as an independent contractor there are typically few costs involved, you pay them for their work (and give them a 1099 at the end of the year) and sometimes you reimburse them for things like mileage or printing. You don't pay any FICA taxes for them, and they are responsible for turning in their share of federal and state income taxes in addition to paying a self-employment tax.

With employees, costs can rise significantly. With employees, you pay the employer portion of FICA (6.2% of gross compensation up to a limit of $102,000 of compensation) for social security and medicare. You also will typically provide benefits (depending on the benefit package your organization has), pay overtime, need unemployment insurance and if you don't currently have any employees, you will have to set-up payroll (either in-house or via a payroll service).

With all these new and additional costs, many nonprofit organizations continue to misclassify their employees to save money. Having worked with an organization on this very transition, I can tell you it can be done. It doesn't cost as much as you would think and it is worth the cost to avoid the risk of being sued by a misclassified independent contractor or being fined by the IRS.

What exactly does it cost? This will vary organization by organization. I will use the organization I worked with as an example. They were paying their independent contractor and acting executive director $44,000 per year. They recognized that the contractor was definitely an employee, so they decided to change their status. They had three new costs associated with this change- FICA, payroll service and unemployment insurance. They didn't have to worry about overtime pay because it was a salaried position. They didn't provide health/dental insurance to start (it was a goal once they had enough money). They did provide paid time off- which didn't cost them anything and would help staff retention. So, for the $44,000 position it cost them approximately $2,700 annually for FICA (6.2%) and about $1,000 annually for unemployment insurance (this cost varies depending on organization and state). The other cost was the cost to secure a payroll service. They didn't have the staff time or expertise to manage payroll in-house so they hired a payroll service. The payroll service only cost about $30 per month ($360 per year) and took care of withholding and paying all taxes for both the organization and the employee, providing w-2s and keeping the organization updated on employment laws. So, the entire additional annual cost of having an employee instead of an independent contractor was about $4,000, or about a 9% increase. This is very minimal and manageable, especially if your organization is small and only pays it's independent contractor $10,000 per year.

I hope this helps organizations avoid the risk of misclassification. If you have any questions about this for your organization, feel free to contact me.

Click here for Independent Contractor vs. Employee Part I.

Tuesday, September 2, 2008

How will the federal government change the tax deduction for donations?

Could donors lose the incentive of a tax-deductible donation? The Chronicle of Philanthropy published an article this week, Paying It Forward — and Back, that looks at upcoming changes that may occur in the tax code for nonprofit organizations.

With an estimated $44 billion in lost federal revenue due to tax deductions, legislators are taking a look at ways to get that back. This combined with increasing complaints of large universities and hospitals that are "business-like" with "lofty executive compensation", and with only 5 percent of $1 million gifts from 2001-2003 going to social service organizations, many are calling for something to be done. Some potential tactics that will be explored in 2009 include: going after large universities that "hoard" billion dollar endowments and do not have required payouts, creating a new tax category for universities and hospitals, changing the current deduction for donations to incentize people to donate to social service charities and taking a second look at the classification for who receives 501 (c) (3) status.

This could have enormous ramifications for nonprofit organizations, depending on what happens. Fortunately, the likelihood of the tax deduction for nonprofit donations being taken away is slim to none. This is certainly an issue all in the nonprofit world should keep an eye on.

You have to be a subscriber of the Chronicle to read the full article, if you are not a subscriber please email me for a PDF of the article.

Friday, August 29, 2008

In-Kind Gifts 101: Definition, Acknowledgement & the Law

An in-kind donation is a gift of goods and services. In-kind goods and services are typically goods and services that your organization would have to otherwise buy if they hadn't been donated. The value of the donated supplies or services may be recorded as the amount that your organization would have to pay for similar items.

Now, in-kind gifts should be a mirrored in your budget. You should have a line item for "in-kind" in both the income and expense sections of your budget (in-kind income = in-kind expense). For example, if you have in-kind printing worth $1,000. Then you would list "in-kind printing- $1,000" in the income section. And you would list "in-kind printing- $1,000" in the expense section.

When you receive an in-kind gift, the donor will often send you a note or letter placing a value on the gift. For example, when an artist donates an original art piece for your silent auction, they will often tell you that the value is X dollars. Many, many organizations will then send them a thank you/acknowledgement letter saying, Thank you for your generous gift of your original art valued at X dollars." THIS IS WRONG. Never place a value on an in-kind gift. Even if the value is told to you by the donor, and they ask you to send a letter with that value, you still can't. By law, non-profit organizations cannot provide a value of an in-kind gift to a donor. This is very important. has an excellent and easy to understand explanation of this, and includes sample wording for your acknowledgement letters, to read the article click here.

Wednesday, August 27, 2008

Nonprofit Accounting: Cash vs. Accrual

It is very important to make sure you are using the right accounting system for your organization. Using the wrong accounting system can hurt your financial sustainability and cash flow. There are two principal types of accounting systems, cash basis and accrual basis:

Cash: With cash basis of accounting, you only record income when you actually receive it in the door. So, if you receive a pledge letter from a donor or foundation, you only count the money when you actually receive the check. The same thing with expenses. You only record expenses when you actually write the check to the vendor- not when you receive the bill. It sounds like common sense right? Why wouldn't everyone use this method? Well, not all nonprofits use this method because it can distort your revenue and expenses. For example, you may show that you had a hugely successful month but in reality it was a slow month and you just had several donors and foundations pay out their pledges. It also can make it difficult to match income and expenses to get an idea of net revenue. There are some positives though. The cash method shows a better picture of how much cash you have and helps ensure good cash flow (you have enough income coming in to pay the expenses you have at any given time). Most smaller nonprofit organizations use cash basis accounting because of it's simplicity.

Accrual: With the accrual method, you record revenue when you receive the commitment. So, for example, if you receive a letter from a foundation saying that they have awarded you a $50,000 grant, you would count that $50,000 on the day that you received the letter- even if you don't actually receive the money for several months. The same thing for expenses. You record an expense as soon as you receive the bill. For example, if you purchase a new printer on credit in December and you don't have to pay for it until May. You would count that as an expense in December, even though the money isn't leaving your bank account for several months. This method provides you with a clearer picture of the financial status of your organization. Although, it can hurt your cash flow because it is often difficult to tell how much exactly you have in reserves. You make think you have thousands in the bank because you received several commitment letters, but in reality you have no money in the bank because you haven't actually received the checks yet. There are also issues with counting restricted money in one year, when the money was actually intended for another year.

Overall, the accrual method is the preferred standard because it shows the relationship between income and expenses most accurately.

To read more, Beverly Goodman at The Non-profit Times wrote an excellent article about selecting the correct accounting method.

Monday, August 25, 2008

Special Events ROI- Make it worth your while

Although special events have the lowest return-on-investment (ROI) of the top fundraising tactics, over 60% of nonprofit organizations use them to raise funds. For every $1 an organization spends on special events, they raise an average of $3.20. Click here to see the full return-on-investment chart for the top fundraising tactics.

This means that it is especially important to pick the right event to raise the most money that your organization can with the smallest investment. Not every event will work for every organization, and the same event could raise $100,000 for the Red Cross, but only raise $5,000 for a local animal rescue. It’s all about picking what is right for your organization, and what your organization can handle. Here are the top four event types (in no particular order):

1. Auctions
Silent and live auctions are one of the most common forms of special events. Nonprofit organizations secure donated items from businesses and individual donors and auction them off at a silent or live auction, or in an online auction. These are usually held in conjunction with a dinner or gala. Online auctions can help reduce the overhead of an event and increase dollars raised because they often have longer windows for bidding. To see a great example of an event that uses both silent and live auctions, see the Seattle Humane Society’s Tuxes and Tails, which raises over $400,000 every year.

2. Athletic Events
Athletic events include runs, walks, triathlons, bowl-a-thons, golf tournaments, and usually involve the participants raising a minimum amount of money to participate. These highly successful events include the Breast Cancer 3 Day and Relay for Life, which raise millions of dollars each year.

3. Gambling Events
Gambling events can include raffles and casino nights. Raffles raise money through selling raffle tickets for the chance to win a particular prize. Casino nights include all sorts of casino games including slot machines, black jack, and texas hold 'em. Raffles can be a lucrative fundraiser because they have a low cost and can raise a lot. Casino nights can be popular events and raise a lot of money as well. Legal restrictions around gambling vary state by state. Make sure to check your local laws before holding a gambling-related event.

4. Dinners/Galas
Dinners and galas are another popular choice for special events. They don't have to be a "dinner", they can be an event with appetizers, breakfast or lunch. The menu can include anything from filet mignon to hot dogs and cotton candy. The key to having a successful dinner or gala is to have a good program, it can include having a themed event (costume party or murder mystery party), having a musical or theatrical performance, speaker, fashion show or dance. These often also include another component to increase revenue, like a silent auction or a raffle.

Even with their low return-on-investment, special events are still a great fundraising tactic. As long as your organization use the event to not only raise money, but bring past, present, and new volunteers, donors and constituents into the organization they can be highly successful.

Thursday, August 21, 2008

Job Opening: Executive Director...You want it?

So, you want to be a non-profit executive? Now, you just need to figure out how to get there. The position of Executive Director is the most important in an organization; they are ultimately responsible for the day-to-day of the organization and can ensure its success. While this may seem like an impossible feat, and something you won’t be able to accomplish for many years, don’t worry. You can do it. I was able to lead my first organization before I turned 23 and I am not alone. With hundreds, if not thousands, of nonprofit executives retiring every year, strong leadership is needed.

So, how can you get there? Most organizations look for five key things in applications (these are listed in order of importance):

1. Fundraising Experience: In almost all postings for Executive Directors, you will see that a required qualification is something like “Fundraising experience, with demonstrated expertise in personal solicitation of individual gifts” or “Proven fund development experience and the ability to grow an organization’s budget through fundraising initiatives are imperative.” If nonprofit leadership is a career goal, I strongly encourage you to take a position in Development, preferably as Development Director. This will give you extremely beneficial experience working with donors, planning events and writing grants. You can also serve on fundraising committees of nonprofit organizations as well.

2. Financial/Organizational Management Experience: They want to make sure that you can actually run their organization, so you will see something like: “Candidates must have a minimum of 5-7 years of leadership experience as CEO or Director of a non-profit, faith-based, or volunteer-oriented organization”, “Candidate must have a solid understanding of finance, marketing, and organizational development”, or “Managerial skills in planning, budgeting, finance, staffing, and team building.” This can be a hard qualification to meet if you have not had nonprofit leadership in the past. This can be satisfied with continuing education and professional development. There are hundreds of workshops, seminars, and mini-MBA programs that can help bolster your financial and organizational management skills. You can also make the case that any director-lever position you have had translates to this qualification, particularly if you had to develop your own budget and/or manage staff.

3. Communication Skills: Since you will be the public image of the organization, you need to make sure you have excellent communication skills. Qualifications often include: “Excellent oral and written communication skills”, “As the key leader of the organization, this individual must be an effective public speaker and motivational leader”, “Outstanding interpersonal and communication skills are essential.” That means you need to make sure you have strong public speaking and written communication skills. There are a variety of ways to fine tune these skills, you can present at local conferences, sign up for you local Toastmasters group, and/or write articles for your local nonprofit newspaper.

4. Education: Nowadays a Bachelor’s degree is pretty much a given and most organizations will expect that you have them. You will usually see “Minimum qualifications: Undergraduate degree in related field, MA or MBA preferred” or “Requires a college degree in Business, Marketing or related field.” Advanced degrees can be particularly helpful with competitive positions. With the vast array of part-time or online programs, you can complete your degree(s) while working full-time. I also want to note that if you have sufficient experience (over 10 years), many organizations are willing to overlook this qualification.

5. Field Specific Experience: Some organizations want you to know something about their field and will include something along the lines of “Familiarity with the Lutheran community and its values”, “Commitment to our mission and a passion for working to overcome the challenges facing American Indian women and family’s in today’s world are mandatory” or “Experience with dementia preferred” in the posting. This can be a hard qualification to meet. It is not often that there will be an opening at the organization you have volunteered with, served on the board of, etc. So, my advice to help you meet this qualification is to get involved in your community. Volunteer, serve on boards and committees, this can only help you in the end and who knows, maybe that experience will directly relate to the organization you end up leading.

Now, I realize that this may seem like a daunting task. But, gaining all these experiences so that you can become a nonprofit leader can be done. Just believe in yourself and know that you can bring a lot to an organization and will have the opportunity to work on a cause that is important to you.