Finance & Strategy

Real world nonprofit finance matters, and real world thinking about strategies for financial, programmatic, and leadership sustainability. This column is written by Steve Zimmerman, principal of Spectrum Nonprofit Services.

photo of Steve Zimmerman

Raise Money in 30 Days

Sometimes you need to raise funds in a hurry. It's easy to think, "We should have established a fundraising plan earlier!" That may be true, but it doesn't help now. Here are some ways to raise modest funds in a pinch. Because institutions like foundations, government, and service clubs typically take more than a month to make funding decisions, your best bet to raise money in 30 days usually involves asking individuals for donations.

Each of these techniques can raise a lot or a little depending on who is doing the organizing. For example, a house party in one organization can raise $500 in one evening, while in another it can raise $100,000. In either case, the amount raised is . . .

Nonprofit Business Model Statements

Although every nonprofit has a mission statement that defines the organization's core purpose and work, many are unaware of its useful companion, the business model statement: a brief summary that spells out the organization's economic drivers. Like a mission statement, a business model statement acts as a touchstone: a reminder and a guide for the organization's focus and strategies.

Nonprofit executives and board members usually have a good sense of the various types of funding that support the organization, but they may have a harder time explaining the organization's business model. Let's imagine a childcare center with the following mission statement: "We provide high quality child care in a cross-cultural setting." A first draft of their business model statement . . .

Treasurers of All-Volunteer Organizations: Eight Key Responsibilities

More than half of the nonprofits in the United States are estimated to be all-volunteer organizations. Here is a wonderful, succinct guide for the 600,000 + treasurers of such organizations:

My time as treasurer of a faith-based nonprofit was a labor of love. Starting out as an all-volunteer organization with a $20,000 budget, we developed financial systems, workable budgets, and demonstrated accountability. We served families affected by incarceration and there's no greater personal reward than seeing people realize they have real hope for a better life. In just three years the budget grew to over $330,000.

However, there was stress as well. As a CPA I found myself the recipient of unnerving deference at times. I frequently fell short in communicating financial information to board and staff. But the outcomes made it all worthwhile.

This experience helps me appreciate one of the many unsung heroes of our time: the treasurer of the all-volunteer organization (AVO). AVOs are among the most important and most invisible building blocks of our communities. Members of all-volunteer organizations read to children, care for the dying, get clean water legislation passed, serve as . . .

Nonprofits and Copyrights: What You Need to Know

There are two things to worry about with copyrights: protecting original material that your organization has created, and making sure that your organization isn't improperly using material that someone else owns. Blue Avocado asked copyright attorney Kate Spelman to help us with these issues, and she generously gave all of us her expertise and time.

Q: Should we be copyrighting things we publish in print, on our web site, in our music CD, and elsewhere? Is it enough to put a (c) (copyright symbol) on things?

Kate: It's a good idea to put the (c) symbol (a 'c' in a circle) on original materials, along with the year and the copyright owner. But a copyright can't be enforced unless the work has been registered. See the U.S. Copyright Office at www.copyright.gov for the official site.

Is it hard to register a work?

Not really. Works can be registered at the United States Copyright Office for $45 each, and the benefits include . . .

Five Internal Controls for the Very Small Nonprofit

Segregation of duties, checks & balances . . . difficult to implement in the organization that has perhaps three or fewer staff, or only a few active board members in an all-volunteer organization. We asked CPA Carl Ho, who works with dozens of small nonprofits, what would be the five most important, most do-able controls for small groups:

1. The first and most important consideration is to set the control environment, that is, to let everyone know, from the top down, that there are policies in place and everyone has to follow the policies. In so many organizations the top person makes exceptions for himself or herself about policies, which sets a sloppy or even unethical tone. Then other people don't think they have to follow procedures, either, and they start cutting corners. The top person can't ask for reimbursement for anything for . . .

Attorney Recommends Review Instead of Audit

When one nonprofit considered moving away from having an annual audit to having a review, the board wanted a legal opinion before making a decision. They sought out nationally-recognized nonprofit attorney Tom Silk, who has generously shared his letter with

Blue Avocado readers:

Dear _____ [CEO]:

You have asked me to advise you and the board of _______ whether it should obtain an audit or review of its financial records for FYE June 30, 2009.

Background

There is currently no federal requirement mandating financial audits of charitable organizations, with one exception: OMB Circular A-133 requires . . .

An Agreed-Upon-Procedures (AUP) Success Story

An Agreed-Upon-Procedures Engagement is one where an auditor performs tests on only a portion of the organization's finances, and can therefore be done at much lower cost. CPA Dennis Walsh discusses how this little-used process could be utilized more for nonprofit benefit:

In Southeast Alaska, the United Way coordinates the federal government's Combined Federal Campaign (CFC). In 1998, the CFC required an audit when program revenues exceeded $100,000. Southeast Alaska had many nonprofits with revenues over $100,000 but less than the federal single audit theshold (currently $500,000), above which a financial statement audit is mandatory for entities receiving federal funds.

"Given that many of these organizations were only receiving a few thousand dollars or so from the United Way/CFC, it hardly made sense for them to . . .

Seven Ways to Reduce Your Audit Costs

Too many of us think of audit costs as an expense to suffer, not to manage. CPA Dennis Walsh tells us differently:

Executive Director Blair Benson of the Mental Health Association of Greensboro, North Carolina, was hoping her audit costs wouldn't go up much. With a budget of $340,000, there isn't a lot to spare. But although she had expected an increase, she was stunned when her auditor said he would be increasing his fee by 40%. "An increase like this is something you just can't build into your budget," said Benson.

Audits are getting more expensive -- have you noticed?

A survey of 160 community-based nonprofits in Guilford County, North Carolina, showed recent average audit fee increases of 9%, and noted that audit costs remain a significant burden to organizations.

Under the new risk-based audit standards (Statements on Auditing Standards (SAS) Nos. 104-111), effective since 2007, your auditors must obtain a deeper understanding of your organization, its environment, and your internal control systems. "The burden for documentation, combined with . . .

Focus on the Destination, Not the Route (Budget)!

It's time to stop looking at budgets, argues Jeanne Bell in this provocative finance column, and pay attention instead to projections and financial goals:

In this precarious era, annual budgets have become like new cars: they lose value even as you drive them off the lot.

How many of us could predict even a few months ago what might take place to affect our donations, our foundation grants, or our government contracts? The entrenched practice in many nonprofits of using the approved budget as the primary financial reference point just isn't suited to effective financial leadership anymore.

Focusing on the annual budget -- adopted months ago -- is like setting a course on the high seas and staying with it even when unexpected rocks suddenly appear, or a more favorable, alternative route opens up ahead. Instead of being locked into . . .

A Nonprofit Dashboard and Signal Light for Boards

(If you have trouble seeing the graphics in this article, you can download a PDF free here.)

The dashboard in a car gives an instant update on many important factors: speed, gas left in the tank, engine temperature, whether the air conditioner is on. If your dashboard isn't working, it's unnerving and upsetting. But at the same time, when it IS working, you glance at it from time to time but you don't look at it constantly.

A nonprofit dashboard is similar: it gives important information to decision makers such as executives and boards in a quick-read way. But a dashboard has limitations: it doesn't tell you if you're taking the right road to Chicago, or more importantly, whether you should be going to Chicago at all!

The idea of making data -- especially financial data -- easily readable for board members is not a new one. Building on that basic idea, we've added two critical features:

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