CEGA pointer: Fundraising Focus

A story in USA Today makes clear that times will be tough for non-profits, particularly the big ones who relied heavily on Freddie, Fannie, and Wall Street firms. See the article, "It's a hard time to be a charity" below:


http://www.usatoday.com/money/economy/services/2008-10-26-fundraising-crisis-donations-charities_N.htm

The article makes clear that non-profits, particularly the large ones, are in for tough times. Organizations like Freddie, Fannie, and other Wall Street companies will not be making contributions this year. As all charitable organizations know, many individuals and foundations wait until the end of the calendar year to assess requests and determine contributions.

CEGA was formed to serve. Our mission is to help small to medium non-profit organizations. This may be the most challenging time ever for non-profits to survive and thrive. Take a moment to read the article and ponder the challenges -- and, the opportunities.

We recommend that non-profits use this opportunity to separate themselves from the pack, become poised for excellence, and demonstrate a commitment to Fundraising Focus by working with us on Certification.

No doubt, the non-profit sector is in for some very difficult times as the economic challenges continue to unfold.

We are here to help.

CEGA Observation: It's the Economy! Great Time for Non-Profits?

The economic events of the last few weeks have certainly captured the attention of most Americans. What effect will the economic recession have on the fundraising and operations of the Non-Profit Sector?

Well, that depends.

At CEGA, we believe that our Mission is more timely than ever: non-profit organizations (NPOs) can derive economic benefit by excelling in areas of Governance, Ethics, and Accountability, particularly in times of economic uncertainty, cutbacks, and increased competition for contributions and grants.

Just this past week, we were made aware of a non-profit that saw an enthusiastic donor's $150,000 pledge become a reluctant $20,000 pledge. It's tough to argue with a donor! The man stated, "the value of my portfolio is dropping by the minute. I'm in my 70s and I just don't feel comfortable right now."

This prompted us to ponder the effect the economy will have on Major Donors and National Foundations. Likely, it will be substantial. Competition will be tougher than ever. But, the missions of so many NPOs are so important to the ongoing success of American that we, at CEGA, still hold to our belief that the Non-Profit Sector is going to be called upon to fix serious problems in ways that neither the Government Sector nor the Private Sector can adequately address.

Will some NPOs fail (i.e. 'go out of business') during these troubled economic times? Absolutely; some will not make it. That's the basis of our capitalistic system. Will some NPOs be 'rescued' like the banks? Perhaps. But, that will depend on the generosity of individual donors and individual circumstances; we would not predict that to be the norm.

So, how is your non-profit organization situated as we continue to move into these times of economic uncertainty? Take a look around you at the issues that are driving the national debate. For example: (a) if CEOs on Wall Street are being hammered for excessive compensation, how does your NPO executive compensation review compare with your peers? (b) if Boards are being criticized for lack of oversight for bank operations, how does your NPO compare? Are your policies up to date? Is your board active and informed? (c) if Accountability and Regulation are at center stage among private sector firms, how does your NPO demonstrate leadership far beyond the norm?

As with all things, the future belongs to the prepared. We urge your organization to take action now to be a leader in what promises to be an exciting new chapter in the greatest country in the world.

Please let us know how we can be of assistance.

Part 3: Income vs. Expenses - Are You Charitable?

In this post, we will continue our discussion about regulatory expectations and your ability to keep your organization in a proactive mode.

Although it may have been a long time ago, your non-profit organization received its IRS determination letter. Requisite in your role as a charitable organization -- serving the community well-being -- your fund-raising (income) must be directed toward your charitable mission (expenses).

The greater the percentage of income directly devoted to the specific mission of the charity is all the better. How do your administrative expenses and overhead compare with the funds directly supporting the activities of your mission? Have you taken a look at those numbers? Do you have a process by which you track those numbers?

As we have predicted, these types of internal reviews are going to be increasingly important as the IRS steps up its reviews of Form 990 filings.

If you need an internal audit process, CEGA can help you.

Excellence in the non-profit sector demands that charitable organizations demonstrate that they are indeed charitable.

CEGA pointer: Documentation

Another "CEGA pointer" before we move on to Part 3 in this series...

I recently received an email from an executive director who had been contacted by the IRS regarding the late filing of its Form 990 and associated penalties. The 990 was indeed filed late, but to make matters even more challenging, the executive director could not find a copy of the 990 that he had mailed. Oops.

This immediately brings to mind the critical importance of keeping good records at your non-profit organization. It is, for sure, part of your Accountability responsibility as a charitable organization. Just a few thoughts:

1. With non-profit executive director (ED) turn-over a fact of life, is your filing system well established and not dependent on any one individual?

2. Do you have back-up copies (hard copy or electronic) of critical documents?

3. Is your legal counsel or your CPA familiar with your records and record-keeping practices?

4. If, as a board member, you were called upon to produce documentation on your non-profit, would you know what documents were required annual filings for your city, state, or federal compliance?

CEGA believes the non-profit world is poised for excellence. Your organization can be a leader. Excellence is an important defining element: take your Documentation responsibility seriously.

CEGA pointer: Accountablity for Board Members

Before moving on to Part 3 in this discussion series, I would like to take a moment and share a quick thought that I believe is important: Accountability for members of the board of directors of a non-profit organization.

What a challenge! But it must be done. Several questions that should provide food for thought on governance, ethics, and accountability issues for non-profit boards:

1. Do your board members attend the meetings regularly? (Many grantors are beginning to require documentation of board attendance.)

2. Do your by-laws include attendance requirements?

3. Is there a formal process for removing inactive board members? Is your board afraid to use it?

4. Do board members show up at the meeting with their packets still sealed? Or, have they read the material provided to them and are they ready to engage in the discussion?

5. What percentage of your attending board members rarely, if ever, have anything to say or anything to contribute during the meeting?

As a past chair of several non-profit organizations where I have had to make that uncomfortable telephone call to invite a non-participating board member to resign, I certainly understand that it is not a pleasant experience. But, for a number of critical reasons, when it must be done, it must be done! The board has an important job to do. Make board accountability a priority at your non-profit organization and you will, indeed, be on the path to excellence among your peers.