Standing Beside Alaska's Non-Profits

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Board members have responsibility to financially support organization

A charitable giving strategy clearly increased the board’s own responsibility. Board members can only ask others to give to their organization when they have made their own gift. It’s important that organizations that ask boards to give first adopt a policy of 100 percent board giving in an amount that is meaningful and significant to each member.

I don’t recommend setting an amount for each board member to give. When boards have a specific dollar expectation, such as “give or get $2,000,” fear exists that individuals without means or influence won’t be able to serve on boards. Some may think such a requirement will eliminate potentially good leaders with fewer financial resources.

It has been my experience that the board members with the least income are the most willing to give at sacrificial levels to support a mission they care about. Another problem with requiring a specific amount from board members is that it may exclude people with limited resources, and provides those people with the capacity to write a larger check to only give the specific amount that is requested. 

Therefore, what should be required is a gift that aligns with each board member’s individual ability to support the organization in a personally significant way.

What is your organization’s policy on board giving?

--Dennis

Dennis McMillian, is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.  




In his monthly article for the Foraker newsletter, Dennis explains how his family developed a personal philanthropy plan -- and how it's not hard to do. He asserts that "sharing one's abundance, giving, is required to be fully human." Read his letter here.



Feb
07
2014
Posted in Training.    

We have a full schedule of classes for you in February and March. Visit our class calendar to see what is available and then register for a class that will fit your needs.

GoToMeeting teleconferences and video conferences must be paid in advance of the class. If we don't have at least seven people registered for a class three working days before it's to be held, we have to cancel it.

If you have questions, you may contact us by email, info@forakergroup.org, or by phone at (907) 743-1200.




According to Giving USA, individuals – through both annual contributions and bequests – account for over 80 percent of all charitable giving in the United States. This percentage has had little variation over many decades. Individual giving can become a sustainable income source when approached strategically. An organization needs systems in place to manage donor relationships. It’s also critical that all board members fully participate in fundraising.

Relationship-based individual giving done well is a reliable source of revenue. People give money to an organization because they have passion for the mission and they believe the organization is using their gifts to accomplish that mission.

Many nonprofits find this process challenging. Raising money from individuals takes time and a commitment to build the right relationships. It is never a good idea for a board to fund a professional development (fundraising) position that “pays for itself in XX number of years.” The board needs to continue to fund and monitor this effort, often for years, before seeing tangible results.

Give us some examples of how you manage donor relationships.

--Dennis

Dennis McMillian, is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.




Foraker has been publishing surveys to support human resources within Alaska nonprofits since 2002. Our 2014 survey is now open and we urge you to participate in it. The deadline for submitting your suvery is Friday, February 21.

2014 features include:

  • Full survey components – salary and benefits – will be reported for the third consecutive survey.

  • All benefit data entry fields have been reviewed and updated to better reflect current options and practices.

  • Benchmark job descriptions have been edited for currency.

  • 2012 survey respondents can review their entries from that year and bring data current reducing the time and effort required to submit a 2014 response. No data will appear only if a pull down menu of options has been changed to better reflect benefit trends. New questions have been added about total compensation (for all respondents) and health care (for organizations with 50 or more employees).

  • Pricing for a survey report has remained flat since 2010 and is greatly below other market surveys:

    • $75.00 – Foraker Partners that participate in the survey

    • $150.00 – Foraker Partners that do not participate

    • $250.00 – Other nonprofit organizations that participate in the survey

    • $300.00 – Other nonprofit organizations that do not participate

  • The Executive Summary will again be provided at no cost to all participants.

Some of you are huge supporters and users of our surveys and use the data we provide to: 

  • Set salaries for new positions in your organization

  • Review your over-all salary structure for comparability with like organizations

  • Compare your benefit offerings with those of similar organizations

  • Satisfy IRS requirements to support salaries for senior staff at higher compensation levels with survey data of comparable positions

In addition, we will evaluate trends and provide comparative tables to show what’s happened in our sector from one survey period to the next. 

The survey is open for participation and can be accessed directly by clicking here or from the Foraker home page by selecting Salary and Benefits Survey under Quick Links.

If you are a 2012 participant, enter the e-mail and password used in 2012 – the system will provide the password if needed. If you need additional assistance on access, contact Rebecca Savidis at 907-743-1210.

We hope you will participate. The more data we collect the better the quality of the information we can report. 




Unrestricted funds are interesting because they actually come from the most sustainable revenue streams. That critical support includes committed individual donors and mission-related income. An individual charitable giving strategy succeeds when a donor both perceives that an organization delivers on its mission and feels nurtured in his or her relationship with the organization. Earned revenue succeeds when an organization provides a quality product or service that is valued either by individuals or by institutions.

While both require specific infrastructure to implement, these are the strategies for securing sustainable income. Eventually these strategies, when paired with disciplined budgeting, will result in reserves of unrestricted funds. The transition from grant-dependent income to revenue based on sustained charitable giving or earned income is much easier than you might believe. The skills needed to succeed in grant seeking – accountability to the funder, transparency in operations, and good communication – are the basic requirements needed with individual donors or with customers for an earned income operation.

When strategies are developed in a way that ensures a mutually beneficial relationship between an organization and either a donor or a customer, then sustainable income becomes much simpler to generate. The phase charitable organization is misleading when applied to most nonprofits. When taken as a whole, a majority of nonprofit income is earned, and less than 25 percent is from charitable donations.

Is your organization more dominant in earned or charitable revenue?

--Dennis

Dennis McMillian, is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.




The lack of flexibility from not having sufficient unrestricted funds can lead to loss of focus and often disrupts the board/staff balance. Nonprofits that lose government funding often turn to institutional funders like corporations and foundations. While these sources can be useful for specific projects and capital expenses, they are the least likely to provide ongoing, unrestricted operating revenue. As a result, too often organizations try to re-invent themselves and their programs every few years to appear new to these funders.

Increasingly, foundations are re-assessing the need to provide operational support, sometimes unrestricted, to help build the core capacity of nonprofits. This is a great trend. In the past, the rare situations in which such unrestricted funding was provided allowed some nonprofits to view grants as sustainable income.

For example, foundations with an emphasis on the arts or environment have long provided less restricted funds. In addition, nonprofit research institutions have been able to maintain ongoing foundation support. However, in most of these circumstances the funders still saw their support as backing something new – a new production, a new initiative, a new study. Yet even with the evolving attention to operational support from newly enlightened foundations, nonprofits should remain cautious about seeking too much support from one source.

Let us know where you get the majority of your unrestricted funds.

--Dennis

Dennis McMillian, is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.  




Each year the Nonprofit Finance Fund conducts a survey that provides a view of the sector from a variety of angles. We encourage you to participate, as does the National Council of Nonprofits. Once the survey is compiled, the information can be used in many ways -- as support for advocacy programs, to inform the public through the media, and to demonstrate the significant value of the sector to the vitality of communities. 

Results can be filtered by states, so the information from this survey is an excellent supplement to other research Foraker conducts, such as the ISER study on the impact of the sector on Alaska's economy. You can view the results for Alaska from the 2013 survey by clicking here.

Click here to get started. It will take about 15 minutes to complete. You'll be adding important information to our overall knowledge of the sector, both nationally and here in Alaska.

Thank you.




Many people, even those with a financial background, have difficulty with the nonprofit sector’s accrual accounting standards. Most of us think in terms of cash accounting: Do I have enough money in the bank or do I need to charge it? With accrual accounting, it can be easy to believe your organization has enough cash, only to discover that what seemed to be a healthy bottom line was masked by restricted funding.

Nonprofit organizations cannot be sustained without a financial reserve. A quick way to gauge this important part of sustainability is to look at the unrestricted income and reserves. Are they clearly presented in your organization’s financials? Are they adequate?

Determining the appropriate amount of unrestricted funds for an organization depends on several factors, including the goals outlined in the strategic and other organizational plans, historical and projected cash flow, and the organization’s ability to manage emergencies. Some nonprofits seek a three-month operating reserve as a cushion for tough times – others want up to a one-year reserve. Whatever the amount, it should be sufficient to allow the board and staff to manage cash flow and accomplish their vision.

Look at your reserve account. Does it allow you to implement your strategic and annual plans during tough times?

--Dennis

Dennis McMillian, is President of The Foraker Group, a capacity building organization based in Alaska, and the author of Focus on Sustainability: A Nonprofit’s Journey.



Jan
10
2014
Posted in Nonprofit News.    

Nonprofit Quarterly is a publication we depend on here at Foraker for news and analysis on issues affecting the sector. That's why we were pleased last week to receive the NPQ Cohen Report in which author Rick Cohen listed what he believes are the top stories from 2013 with implications for the nonprofit sector.

Click here to review Rick's list. Let us know if you would add any stories.




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