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Archive for January, 2012

Board Giving: Starting the Conversation

Nearly every authority on nonprofit governance I know agrees:  One element of board responsibility is to contribute to the nonprofit they serve.  The concept does make sense.  If members of the board of directors are reluctant to give we’re off to a rough start in our fundraising.

And while this concept makes eminent sense to me, and I expect to you, too, how do we start a conversation that’ll move us in this direction if there’s been no clarity about board responsibilities up to now?

Here are three ways to get the subject on the table for serious consideration:

  • Ask the board chair to appoint a group to write a board job description. If you have a governance committee, it’s a natural task for them. If you don’t, appoint a small working group. But be sure there are a couple of members who get the concept and will be willing to argue for “board giving” to be among the responsibilities.
  • Has there been board training on governance in the past couple of years?  If not, get a session organized and on the agenda. And bring in a consultant, or a volunteer leader from another nonprofit in your community where board giving is part of the drill.  Be sure the volunteers and not the staff are leading the discussion.
  • If you have a chair of the board and a chair of the development committee who are “with the program,” start an informal conversation with them about getting this addressed and put before the board for action.

Remember:  Your chance for success is greater if the charge is led by volunteers.  And further: That you don’t start by mandating a minimum donation.  In the first one, two, or three years make the amount voluntary.  But do discuss the “ouch factor:”  If I don’t wince when I write the check, it’s probably not enough.

Give it a go!  Remember that most donors expect giving to start with the board of directors.  Charitable foundations frequently want to know that all board members are on board and donating.  It just makes sense.  But if it hasn’t been practice ’til now, start the conversation. You’ll get there.

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Simple Plan to Start Planned Giving Program

Nonprofit organizations that have been around for a bit (number out of a hat: five years) should consider implementing a planned giving program.  Revenue from wills, trusts, insurance policies from your donors can be a good boost to income for the mission.  From the start, I recommend that your finance committee prepare a policy on how planned gifts will be used by your public benefit organization.  Bequests and trusts of $1,000 and more can go to a board designated fund for your nonprofit’s long-term purposes.  This money can build a reserve for you that can earn interest income as well as growth of principle value.  Over time, this fund can generate revenue that can be used to help underwrite operations.  Some nonprofits set a policy allocating 5% of principle value each year for these operations costs.  Discuss your plan with the experienced accounting firm that conducts your annual audit and prepares your audited financial statements under AICPA standards.  You want to be sure you’re in compliance with local, State, federal law.

If you’re going down this path, I also recommend that your development committee recruit an experienced Estate Planner: an attorney who writes wills and trusts for clients, has significant experience in this area, and who has a passion for your mission.  And will join you as a volunteer with the clear understanding that s/he will not earn income from your nonprofit.

At the same time, creating a Gift Acceptance Policy that indicates how donated income comes in to your organization and gets properly allocated will be very helpful to you down the road.  Over time, you might receive real estate or common stock and there should be predetermined procedures on how these gifts will be handled.  Also, some donors may want the executive director or development director to serve as a trustee or executor of their estate.  This is a conflict of interest and should be avoided.  A competent attorney in these matters will advise you properly and help keep you out of wickets that can become rather sticky.

Once the development committee and Board of Directors are in agreement on how to proceed, you want to let your donors know of this new program.  Writing appropriate announcements for your newsletter, noting your program in your annual fund appeal can help get the ball rolling. And working with local funeral homes to have memorial envelopes available so families looking to direct memorial gifts to a “charity” that they know was important to the deceased person can consider you.

These simple steps can lead to a well thought out plan that can bring great benefit to your nonprofit.  Starting in a thoughtful, conservative way can get you on the right track.

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Revenue Plan to Fit Your Strategic Plan

Nonprofit organizations generally do a good job building a Strategic Plan.

The Board of Directors works with the Chief Executive Officer to identify a competent consultant to facilitate the plan process. The group decides what internal and external resources and markets need to be examined to design a Plan that addresses needs of the nonprofit primary customers: the clients and others who benefit most from the work of the organization.  If there are no sacred cows, if the environmental scan is based on data that impacts the customer base, odds are good that a sound Plan will follow.

But then will come implementation.  And for there to be solid execution of a sound Strategic Plan, the resources of this nonprofit will need to be aligned with the Plan goals.  Plain and simple.

Some program activities may need to be dropped because they’re not relevant in the current customer and market environment.

And the CEO needs to do some revenue planning to line up the resources…actual and potential….and how steps will be staged year-to-year during the life of the Strategic Plan to generate revenue so the Plan comes to fruition.

The Revenue Plan is not just about fundraising.  There are fee-for-service considerations, grant considerations, cause-related-marketing considerations.  Does the nonprofit have access to the expertise to plan this out?  Having just come out of a Strategic process with a paid consultant, it can be a tough sell for the Board to buy the idea of investing another chunk of fancy change for an expert to help shape the Revenue piece.

Think about it for a second. Maybe even a minute.  Investment in expertise can pay dividends for the nonprofit. To get beyond Planning to Execution.  This is why so many organization founder after they have a Plan which ends up on the proverbial “shelf.”  There’s likely new stuff to do in the Plan.  And “new” can benefit from some new, outside thinking.

For small to mid-size nonprofits (budgets under $5 million) bringing a consultant in to advise on steps to generate the $$ that’ll get the nonprofit where it wants to go can be money well spent.  For the bigger kids on the block, the staff team and development committee in place may have the brain and muscle power to get the Revenue job done.

The important lesson from this is: When the Strategic Plan is in the can, the work is not done. It’s only just begun. And investment in execution, particularly in generating revenue, can get the necessary returns that’ll get the Plan off on the right foot.

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