Thursday, February 25, 2010

Nonprofit Video: 9 Steps to Success, Plus Our Mistakes to Avoid

I really do enjoy Nancy Schwartz's insights for nonprofit marketing.  This is a great read if you are considering producing a video to tell your nonprofit's story and it's an even better read if you haven't considered it, because you should.  In the interest of full disclosure, one part of my business is getting government and nonprofit videos distributed to local Public, Educational and Government access television channels.  We now have the Subtance Abuse and Mental Health Administration's video series "Road to Recovery" on 500 television channels nationwide and Mercy Medical Airlift's video "Compassion Takes Flight" on 230 channels.  One of the advantages of getting your video out to the television channels is they will air the video repeatedly.  We recently found that 48% of the stations have run Compassion Takes Flight over 20 times!  Go to my website at Riedel Communications  to find out more about video distribution.  Bunnie

Nonprofit Video: 9 Steps to Success, Plus Our Mistakes to Avoid
by Nancy Schwartz, Getting Attention

In the age of YouTube, everyone knows there’s nothing like great video to grab someone’s attention. In the past two years, we’ve seen more and more for-profit and nonprofit organizations putting online video to work to reach out and engage their networks to build loyalty and motivate action.

So I thought I should put together a list of key things to think about, if you are considering a video production. I’m putting this together for our clients, but I think it can be useful for anyone thinking about making a video. The more you consider these issues before beginning, the smoother your project will advance.

Three Reasons Why You Should Use Video Now

1. Video production, once complicated and expensive, is now doable by anyone with a video camera and access to the internet. Brief, on-the-fly videos provide authenticity and compelling visuals via a short production cycle. This is great news for nonprofit organizations looking to connect with their networks in a way that’s reaches beyond narrative and photos.

2. There’s a growing expectation that video will be integrated in every communications mix.

3. Video, when done right, contributes immediacy and excitement to your organization’s communications mix, and strengthens overall impact. Well-crafted online videos can emotionally engage your audiences in a way that reading can’t. It’s almost like being there in person and sometimes even better, with the ability to provide the human element (e.g. an online site visit) that’s unmatched for building interest, creating trust and driving action.

Videos are shown to:

• Generate a response that’s both intellectual AND emotional.

• Inspire action. The right combination of storytelling, imagery (through photos and video) and personal appeals can be more effective in moving people to act.

• Significantly expand audience reach through online distribution. An engaging video is easy (and likely) to be passed on by your viewers, representing an exponential growth in reach.

What We Did Wrong, So You Don’t Do It

Our Goal

We wanted to build our video skills and decided to start by producing a video announcement of the 2009 winners of our annual Nonprofit Tagline Awards program. We were confident a video featuring the finalists and winners would be a compelling and complementary addition to the marketing mix (mostly narrative, online and offline) and an effective way to build awareness of award winners and the Nonprofit Tagline Report publication.

Our Mistakes

Eager to get our feet wet in the online video world and with limited video production experience, we dove right in with little more than a concept outline in hand. As a result, our initial end product was a seven-minute video featuring tagline award winners and finalists. It took over 30 hours to produce.

When we shared the video with colleagues, the main response was “it’s too long,” and we agreed. We went back to the drawing board and cut the video to less than two minutes, transforming it into a “trailer” for the Report.

In hindsight, we realized we did not do the proper initial planning for the video. We didn’t ask ourselves the simple questions — “What is the goal of this video?” or “How long should it be”?

In particular, our most significant mistake was that we did not storyboard the movie or concept before beginning the production. We began production before we had a clear vision of what we wanted to produce. Don’t forget the storyboard!

We did do some things right, like beginning with a fairly simple production strategy. Our video movie is a simple slide presentation with text animations, created in Keynote (you can also use PowerPoint) and exported into a movie file format. Once editing was complete, we uploaded the video to Vimeo, a free video-hosting website.

Next Time: The Right Way to Do It

Despite our mistakes, our first experience in producing online video was a valuable one. We flexed our creative muscles and learned useful lessons about planning and production that we can pass on to you. We are excited to get our next production rolling and have a much clearer sense of the right production process.

So, upon further reflection and research, here’s our new, expanded take on how to succeed:

9 Steps to Launching a Successful Video for Your Nonprofit

1. Develop a Simple Plan to Guide Your Project

Whether you’re shooting a 30-second PSA or an hour-long documentary, you must start out by creating a plan that includes the pre-production, production and post-production aspects of your video project. It’s a critical first step.

This is really no different than other nonprofit marketing endeavors you’ve worked on. You don’t start the development of a brochure, annual report, website, fundraising campaign, advocacy campaign, etc., without some upfront planning.

2. Test Your Video Idea Against Your Communications Goals

You’re not going to do a video just for the sake of doing a video. (Though, you certainly may choose to produce a low-risk, low-budget video as your first effort using this medium.)

Review your organization’s communications goals and evaluate if video is a relevant channel. Key questions include:

• What’s the purpose of the video?

• Who is the target audience?

• What actions do we need to motivate?

• Whom do we need to reach to make that happen?

• What are the best channels to reach them?

3. Evaluate Your Resources to Ensure They Match Your Concept

There’s always a connection between the degree of complexity and the size of your resources when shooting a video. However, advances in software and hardware technology and a growing number of people trained to work in video production, means quality video is within reach of the typical nonprofit budget.

No matter the complexity you have in mind, the concept for your video must take into account at least these basic items: the people who work on the video — on camera and off; the location or locations where it will be shot; the equipment needed for the shoot (cameras, lighting, editing suites, etc.); the graphics needed for the video (still photos, logos, other typical artwork you encounter in your marketing materials); other effects including music, props, costumes, etc.

4. Make Sure the Video Has a Clear, Relevant Message

Remember, your video has to be clearly linked to your overall messaging. So, as you head down the path of video production, be sure you first summarize your video’s chief message and goals in one simple paragraph that you can have on-hand and share with everyone involved in its production. When you run into the inevitable twists and editing challenges, you’ll have this clear statement of your video’s goals to guide your decisions.

5. Decide on Your Video’s Format

In general, the format most easily achieved for nonprofits producing a short-message video doesn’t involve live people. Instead, the video’s format includes a series of still images — photos and text artfully arranged with various, subtle movements and transitions on the screen — a zoom, a page turn, a dissolve, etc.— done to the backdrop of a compelling voiceover and music.

Other formats to consider are the ones you’re probably more familiar with through a life-time of seeing video and television: The talking head (generally a simple, tight shot of someone speaking into the camera); the standard interview with two people usually either sitting across from each other or standing up; the documentary (which can involve a wide range of formats); the story approach with a completely written and rehearsed script; and the video magazine approach, which typically includes an in-studio host who introduces the topic and serves up transitions from various “in the field” reports, and then wraps up the program.

6. Choose a Style that Matches Your Goals

This is an easy concept but one you have to get right. Will a silly or serious video be more effective? Formal or informal? Be sure your selection of style matches your goals.

Some web video pros believe a successful video must move at least two emotions (i.e., sympathy, outrage, fear, joy, laughter, awe, wonder, etc.); tell a bit of story (dramatic tension, heroes and villains and victims, etc.); and provide a spectacle (the viewer is wowed in some manner, often in a way that ultimately causes her to respond to the call to action).

Caution: Silly certainly has its place. But you’ll want to be sure that the silliness-factor is properly tempered for your video. It can be done right and make sense — but getting it right can be a real challenge when you consider serious nature of most nonprofits’ messages.

7. Get Feedback from Colleagues and Members of Your Target Audience

Once you’ve got a rough cut of your video — meaning you’ve done all your shooting and most of your editing — be sure to show it to people whose opinions you respect. It’s critical to get some more objective opinions. It’s very common to hear “It’s too long” and you’ll have a good sense of what parts you love but need to go. Collect the feedback, review it and revise.

8. Make Sure It Gets Seen

We’re in the midst of a video-Cambrian explosion. There have never been more outlets for delivering a video to your target audiences, with more appearing every day. So you don’t want to go to the trouble of producing your nonprofit video and just to post it on your website.

Once you have the finished product in hand, be sure to maximize your video’s exposure by:

• Posting it on YouTube

• Linking to it from your org’s Facebook and LinkedIn pages

• Tweeting about it through your Twitter account

• Embedding the video in your blog and website

• Sending out an email (in your e-news, if you have one) to your base with an invitation to view, share and comment.

9. Emphasize the Call to Action and Track Results

Don’t overlook this one. As you map out your video, be sure you set it up with a clear call to action and a trackable URL, email address and/or phone number. This way you’ll get the best measure possible of its success. These results will inform your next video project and other communications strategies

Friday, February 19, 2010

The IRS' New Employment Tax Initiative: What Does It Mean for Nonprofits?

When I was Executive Director of a national nonprofit 501 (c) 3, I really hated administrative duties.  Primarily because I was much more interested in "program" and membership than researching health insurance or going through the annual audit.  So many nonprofits start because someone or a group of people feel a need is not being met, and "program" or "mission" is the driving factor.  As important as they are, nonprofit executives and Boards of Directors must focus on the business end of the nonprofit.  Nonprofits are a "business" after all.  And, here in the states, nonprofits must be diligent about their precious relationship with the Internal Revenue Service because the last thing you want to do is lose your tax exempt status.  Jessica R. Luber of Venable LLP, provides information about a new initiative by the IRS to ensure nonprofits are in compliance when it comes to tax issues.  I also want to refer you back to Stephen Tatum's article on Stephen K. Verret v. United States of America, these two articles are a must read by every executive and Board of Directors.  Bunnie

The IRS’ New Employment Tax Initiative: What Does It Mean for Nonprofits?
by Jessica R. Lubar, Esq., Of Counsel, Venable LLP, Baltimore, MD

The IRS will soon begin a three-year research project on employment tax compliance issues (the “NRP”). The project will entail employment tax audits of at least 6000 employers over the term of the project, including nonprofit organizations. Although nonprofits may be exempt from income tax under Internal Revenue Code Section 501(a), they are not exempt from employment taxes, such as FICA and income tax withholding requirements. Therefore, failing to comply with the employment tax rules could lead to the imposition of interest and penalties on underreported amounts. In addition, nonprofit employers have certain issues that are unique compared to for-profit employers, which also may arise in an employment tax audit.

IRS National Research Program


The IRS NRP begins in Feb. 2010 and will be the first employment tax project conducted by the IRS since 1984. The purpose of the project is to collect data that will allow the IRS to understand the compliance characteristics of employment tax filers. Theoretically, the IRS should be able to use the information gathered in the NRP to target non-complying taxpayers for audits in the future. However, for the NRP, employers will be chosen randomly for examinations. The NRP will include employers from all industries in order to be comprehensive. According to John Tuzynski, chief of employment tax operations in the Small Business/Self-Employed Division, the scope of review will be greater in these examinations than normal.

The Tax Exempt and Government Entities Division will participate in the NRP and expects to do full examinations of 500 organizations in 2010.

Areas of Focus

Examiners will focus primarily on three employment tax areas: (1) Worker Classification (independent contractor, common-law employee, statutory employee, statutory non-employee); (2) Fringe Benefits; and (3) Officer’s Compensation. Tax-exempt employers also have unique employment related tax issues that may arise in an examination. For tax-exempt employers – particularly those that are tax-exempt under Sections 501(c)(3) or 501(c)(4) – issues that arise in an employment tax audit could affect reasonable compensation determinations that had been made for purposes of the IRS’ “intermediate sanctions” rules (located in Code Section 4958).

Worker Classification

The proper classification of a service provider as either an employee or an independent contractor is a frequent area of contention between the IRS and employers. A worker is considered an employee if the employer exercises the requisite amount of control over the employee under common-law principles. Over the years, the courts and the IRS have articulated certain factors that are considered in making that determination. The IRS organized the factors that are considered into three categories: (1) Behavioral Control – whether the business has a right to direct and control how the worker does the task for which the worker is hired; (2) Financial Control – whether the business has a right to control the business aspects of the worker’s job; and (3) Type of Relationship.

Due to the factual nature of any worker classification determination and the consequences of being wrong, Congress provided relief from employment tax liability for certain employers who misclassified workers as independent contractors using the common-law facts and circumstances standards. The relief was enacted as Section 530 of the 1978 Revenue Code (as amended) and is known as “Section 530 Relief.” In order to be entitled to Section 530 Relief, a taxpayer must meet three requirements:

1. The Substantive Consistency Requirement: The taxpayer has not treated the individual as an employee for any period and has not treated any other individual holding a substantially similar position as an employee (for purposes of employment tax) for any period.

2. The Reporting Consistency Requirement: All federal returns (including information returns) that are required to be filed by the taxpayer with respect to the worker for such periods are filed on a basis consistent with the taxpayer’s treatment of the individual as an independent contractor.

3. The Reasonable Basis Requirement: The taxpayer had a reasonable basis for not treating the worker as an employee. A reasonable basis only exists if it is supported by judicial precedent, IRS rulings, a past IRS audit, or a long-standing practice of a significant segment of the relevant industry.

Misclassifying a worker as an independent contractor, whether deliberate or inadvertent, has the same consequences to a tax-exempt employer as a taxable employer. Therefore, it is critical that any employer review its relationships with its service providers to determine how they should be classified. If the proper classification is not clear, an employer may ask the IRS to determine the proper classification by filing a request for a worker classification determination on Form SS-8. A Form SS-8 may be filed by either a service provider or a service recipient, however, historically service recipients have not filed many requests for a classification determination. Practitioners differ on whether employers should make such a request.

In all events, any nonprofit that is receiving services should at the very least ensure that individuals that it treats as independent contractors would satisfy the requirements for Section 530 Relief so as to avoid the consequences of misclassification.

Fringe Benefits

The fringe benefit area is frequently overlooked by employers, both nonprofit and for-profit. It often comes as a surprise to employers (and employees) that certain of the “perks” they provide should be included in an employee’s income as taxable compensation, even if no cash is paid. Perks provided by employers may be either taxable or tax-free fringe benefits. If an employer incorrectly treats a fringe benefit as tax-free, it is treated as if the employer did not report the full amount of compensation paid. The result of such an error by a tax-exempt entity has potentially significant consequences in addition to the typical employment tax consequences.

If the employee’s compensation was the subject of a reasonable compensation analysis, failure to treat a fringe benefit as taxable could invalidate the reasonable compensation determination. A taxable fringe benefit increases an employee’s compensation by the value of the fringe benefit. If the fringe benefit had not be treated as taxable by the employer, it would not have been included in the amount of the employee’s compensation that was approved pursuant to the reasonable compensation determination process. Therefore, depending on what the “perk” was, the value could be significant and affect whether the compensation qualifies for the rebuttable presumption under the intermediate sanctions rules.

Further, if a 501(c)(3) or 501(c)(4) organization does not have any contemporaneous documentation showing that the fringe benefit was provided to the employee as compensation, the perk will be considered an excess benefit resulting in penalties under Code Section 4958. Under Code Section 4958, penalties could be imposed both on the recipient of the fringe benefit and any organization manager who participated in providing the fringe benefit. For the recipient, in addition to requiring the individual to repay the excessive value of the benefit, the penalty amount is automatically 25% of the excess benefit, but it could go up to 200%.

In past initiatives with respect to tax-exempt organizations, the IRS has found fringe benefits that were not considered and reported as compensation, such as the personal free use of a car or apartment, personal components of business travel, holiday gifts, etc. Fringe benefit issues also come up when employer’s pay for relocation travel and expenses or education expenses for the employee, among other instances.

Employee reimbursements are also part of the fringe benefit review. Reimbursed expenses, even employment-related expenses, must be made in accordance with a written reimbursement plan or otherwise qualify as a tax-free fringe benefit to be excluded from an employee’s income. For employment related reimbursements to be tax-free under a written reimbursement plan, the plan must require employees to adequately account for the expenses and to pay back any excess payments received (such plans are known as accountable plans). In past initiatives, the IRS has identified the following reimbursements that sometimes fall through the cracks: expense reimbursements outside corporate policies, spouse travel expenses, tax gross-ups, non-accountable expense allowances, club memberships, etc.

In contrast to most employers’ perception of fringe benefits, the value of any benefit or “perk” provided to an employee needs to be included in compensation unless an exception applies. Common exceptions to income inclusion are the working condition fringe benefit and the de minimis fringe benefit. Even if the value of the fringe benefit that is provided is relatively small on an individual basis, if the benefit is provided to many employees, interest and penalties for failing to report it as taxable could be significant. Interest and penalties on employment taxes would apply to all unreported taxable fringe benefits, not just those paid to disqualified persons under Section 4958.

Officer Compensation

The third area of focus of the NRP – officer compensation – has different significance to nonprofit employers than for-profit employers. The primary issue for nonprofits with respect to officer compensation is the applicability of the intermediate sanction rules to compensation paid to disqualified persons. The rules under Section 4958 of the Internal Revenue Code are referred to as the intermediate sanctions rules because it provides for penalties that are less severe than revoking an organization’s tax-exempt status. Section 4958 allows the IRS to impose significant excise taxes on the insiders, such as executive officers and board members, of section 501(c)(3) and (c)(4) organizations who benefit excessively in transactions with a tax-exempt organization. In the event that the IRS determines that an insider received an excessive benefit from his relationship with an exempt organization, the IRS can impose intermediate sanctions, requiring that individual to repay the excessive amount to the organization and pay an excise tax up to 200% of the excess benefit. Under Section 4958, penalties imposed on the recipient of an excess benefit may be limited to 25% of the value of the benefit if the excess benefit transaction is “corrected” before an assessment is made by the IRS.

The IRS has recently begun vigorously enforcing this section of the Code. In fact, during the last year, we have seen the IRS impose intermediate sanctions with an unprecedented frequency. It is also important to note that the IRS may impose penalties on certain organization managers as well under Section 4958.

Other Issues

Among other issues, examiners conducting NRP reviews also will be looking at whether an employer is not filing required tax returns and whether the employer is backup withholding on payments to independent contractors, if necessary. Backup withholding is when a taxpayer is required to withhold 30% from payments that it makes to independent contractors under certain circumstances. Backup withholding is required if the contractor does not provide its taxpayer identification number to the payor, the payor is notified by the IRS that the taxpayer identification number is not correct, or if the IRS notifies the payor that backup withholding is required. Any Form 1099 that is submitted by an employer without a taxpayer identification number should have had backup withholding done on the payment.

Additional Initiatives Affecting Tax-Exempt Organizations

The IRS’ concern regarding employment tax compliance by nonprofits is not new. Although the current NRP is not limited to tax-exempt organizations, the IRS has in the past conducted programs focusing on compensation issues of tax-exempt organizations. The Exempt Organizations Executive Compensation Compliance Project that started in 2004 looked at executive compensation issues. While final reports were issued in March 2007 with respect to two parts of the project, the third part has not been completed. One of the areas of concern that was uncovered by the IRS during the project involved substantial loans to insiders and undocumented loans. As a result, a new phase of the project began in March 2006 that was dedicated solely to loans.

In addition, the final Report on Parts I & II of the Project noted the following compensation related recommendations: (1) future initiatives should focus on the correlation between satisfaction of the rebuttable presumption by an organization and the reasonableness of compensation paid to its disqualified persons by such an organization; (2) the relatively small percentage of corrections made by disqualified persons before contact by EO illustrates the need for a continued enforcement presence in this area; and (3) EO should continue to review compensation issues in more focused projects and should pursue baselining general compliance with the compensation rules.

What Can Nonprofits do?

The existence of the NRP and the statements made regarding tax-exempt organizations demonstrate that employment tax compliance is an area that the IRS will be focusing on for some time. Even if an employer is not subject to an examination under the NRP, employment tax is an issue that is likely to arise in future examinations of the employer. Nonprofits should take this opportunity to review their current compliance status and, if necessary, address any issues that arise before a visit from the IRS.

There are certain steps that a nonprofit employer should take:

Review existing service relationships

  • Are worker’s appropriately classified?
  •  Are any corrections necessary?
  •  If a worker is being treated as an independent contractor, is the documentation consistent?
  •  Look at the Section 530 requirements.
  • Would the organization qualify for relief if the IRS determines that the worker was misclassified?
  • Not sure? Consider a request pursuant to Form SS-8
  •  Quantify the risk: FICA, income tax withholding, interest, penalties, state reclassification, DOL
Review existing benefit arrangements
  • Have all benefits/perks been accounted for correctly? If not, how can they be corrected?
  •  Review your benefit plans to ensure that they exclude persons that you, as the plan sponsor, classify as independent contractors (so that any retroactive reclassification of such persons as employees will not result in unintended plan coverage).
  •  Do you have a written reimbursement plan that qualifies as an accountable plan?
Examine any loans with insiders/disqualified persons

  • Are they properly documented and consistent with the excess benefit transaction rules?
  • Are there any loans to employees, in general? Evaluate the application of the employment-related below-market loan rules.
Confirm that compensation arrangements satisfy the rebuttable presumption for reasonable compensation

  • Is there contemporaneous support that any taxable fringe benefits that were not included in income were provided as compensation?
  •  If any portion of compensation paid, including taxable fringe benefits, would be an “excess benefit,” determine what steps are necessary to correct the excess benefit.
  • Determine whether any Form 1099s have been filed that do not have the payee’s taxpayer identification number and whether backup withholding was done
* * * * *
Jessica Lubar is Of Counsel in Venable’s Baltimore Office. She is a member of the firm’s Nonprofit Organizations and Tax practice groups, and advises clients on a broad array of tax, estate and business matters at the state, federal and international levels, For information, contact Ms. Lubar at 410-244-7736 or

This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to specific fact situations.

Tuesday, February 16, 2010

Get Your Bottlenecks Worked Out Now

I love Dianne Crampton's work!  It is insightful and very spot on.  I was honored that she sent me an advance of her new book coming out; Tigers Among Us: Winning Business Team Cultures and Why They Thrive.  We've had several discussions about Dianne adapting her book to nonprofits and while I think it would be exciting, more nonprofits have got to start seeing themselves as "business enterprises."  It's not enough to do good, it is imperative that the good you do succeeds.  For business and nonprofit, the past couple of years have been difficult, but it won't always be so and now is the time to fine tune, or "get your bottlenecks" worked out.  At the core of Dianne's work is always a discussion about corporate culture and how to empower people to be their best.  Think about your bottlenecks, your culture and investigate Dianne's website.  Plenty of good, applicable advice there.  Bunnie

Get Your Bottlenecks Worked Out Now
by Dianne Crampton, Tigers Among Us

Two years ago, Alan Beaulieu – principal at the Institute for Trend Research – predicted that the United States and its global partners would be heading into a deep recession, including a stock market correction. This notion differed greatly from mainstream economists, including those at the Federal Reserve Bank.

On January 22, 2010 at the Central Oregon Economic Development Business Forecast luncheon, Beaulieu offered a new prognosis for the years 2010, 2011 and 2012. “Get your bottlenecks worked out now,” was his advice to business owners.

Beaulieu, armed with graphs and 30 year data streams, is predicting a modest rise in consumer spending in 2010 followed by an increase in demand by 20 percent in 2011, spurring higher oil and gas prices.

Therefore, 2010 is the time to accomplish the following activities:

-- Refine business and manufacturing procedures.

-- Correct work flow and manufacturing bottlenecks.

-- Purchase and upgrade equipment.

-- Build team capacity through cross functional training and team development.

-- Resolve business culture problems to improve team morale and productivity.

-- Get the core business functions in alignment.

-- Spend money on marketing and advertising.

These activities, says Beaulieu, are for courageous leaders to fund now. In doing so, prepared companies will be ready for 20 percent and higher growth due to increased demand and reduced competition from businesses that did not prepare.

Another prediction is that inflation will rise in 2011. This means that interest rates will increase with demand. Therefore, businesses that are upgrading and getting the kinks out now are doing so with lower cost dollars.

Given the predictions, as a business leader what does this mean for you?

Some leaders are holding onto their businesses by threads. The past two years have been brutal. For many, they still do not see any light at the end of the tunnel and are ready to sell their businesses or lock the doors.

This means that businesses will be up for sale or competition will decrease at a time when values are at an all time low. As an excellent way to expand, purchasing existing businesses does make sense when business functions are aligned and the purchaser’s business culture is held true to course and not allowed to waffle during expansion.

In TIGERS Among Us: Winning Business Team Cultures And Why They Thrive (2010, Three Creeks Publishing,, team culture consultant, Dianne Crampton, gives leaders and teams the framework for team culture refinement so that expanding businesses do not compromise their cultures.

According to Crampton, “Consciously choosing a business personality, or way of being, is one of the most important decisions a business founder or leader can make, and small business owners and entrepreneurs creating new companies often overlook it. It is also often neglected in business mergers and acquisitions or in any planning scenario focused on short-term returns rather than long-term results.” Crampton adds, “Culture is a critical part of the strategic planning process. It helps an organization determine, through core value demonstrations, what it will be like to work in the business and to do business with it.”

Ultimately, according to Crampton, many acquisitions fizzle or drain resources away from growth when human resource problems could have been avoided through proper planning and culture preparation. Therefore, in the first quarter of 2010, leaders who take the time to encourage their employees with an accurate accounting of their business solvency will lay the foundation for growth. Likewise, leaders can bolster their employees’ spirits by producing a list of initiatives that show employees how their daily contributions build greater stability so that the company is prepared to spring forward without a sputter.
 Finally, if businesses have been scaled back, now is the time to fund marketing budgets and add back support services for those business functions that will be needed to manage growth. This can be accomplished through employee cross training, by analyzing skills that will be needed and developing existing employees, merging job functions, and by hiring temporary workers for entry level positions.

What this means for existing employees is that now is the time to develop their skills so that your business is more scalable and can do more with less through entry level employees, which according to Beaulieu’s predictions could start as early as fourth quarter 2010.

Thursday, February 11, 2010

The Building Blocks for a Successful Nonprofit Merger

Greetings from the snow covered tundra of Maryland!  Just as we have found ourselves in a deep freeze with snow totals over 40 inches, some nonprofits are finding themselves freezing for lack of membership and funds.  This situation can offer opportunities to nonprofits and associations if they resist the temptation to sit back and do nothing or just conduct business as usual.  Brock R. Landry and Lisa M. Hix, of Venable LLP in Washington, DC, give us a glimpse into what it might take to bring two struggling organizations together to create a single but stronger nonprofit.  No doubt it's not an easy thing to merge two organizations who may have similar goals but very different cultures, however, in today's climate, we must all be ready to explore every option.  Bunnie

The Building Blocks for a Successful Nonprofit Merger
by Brock R. Landry, Esq. and Lisa M. Hix, Esq.
Venable LLP, Washington, DC

Financial imperatives, contractions in membership bases, and consolidation in industries have led to an unprecedented period of growth in interest in nonprofit mergers. As a result, many nonprofits are eyeing current competitors as potential partners. However, mergers can easily fail when organizations mistake a central fact: mergers occur between people, not organizations. Mergers can fall apart for a variety of reasons: unexpected discoveries in the due diligence process, intractable issues that have been ignored, and differences in organizational cultures, among others. The following is a list of "lessons learned" from two association attorneys who have handled a broad range of association mergers.

Establish a Core Group of Merger Stewards. Establishing a group of volunteer and staff leaders to act as stewards of the merger is critical to success. The merger stewards will have two roles: 1) to come to an understanding of the merger plan, and to communicate this plan to the association's stakeholders, including the boards, staff and membership; and 2) to work through the inevitable issues that will arise in the due diligence process and/or as the groups integrate.

Ask the Hard Question Early: Which Organization Survives? Strength of negotiation posture can be measured by financial assets, membership base, industry contacts, and depth of operational expertise. Deciding how, and whether, to acknowledge this power disparity can be key to success in the long run. Early on, the organizations should agree on whether one organization should be viewed as the "surviving" entity, or whether both organizations will combine as equals. Although most mergers are described as the marriage of equals, rarely is this, in fact, the case.

Ask the Harder Question: What Are the Roles of the Respective Staff and Officers? A clear understanding of future roles and authority is central to a successful integration.

Jointly Develop a Merger Plan. The merger stewards from each organization should jointly develop a merger plan. This plan should include an outline of the combined governance structure, mission, core activities, membership categories and dues, and a broad staffing plan. A critical component of this plan is identifying board appointment procedures and the key leaders of the combined organization. The merger plan should include sufficient detail on the hard issues, but should be broad enough to allow for revision and elaboration based on stakeholder input.

Understand Approval Requirements and Dynamics. Once the core elements of the merger plan are in place, each organization should undertake a careful analysis of its respective board and member approval requirements. These requirements will be outlined in the state corporate code provisions of the organization's state of incorporation, as well as each organization's governing documents, such as bylaws. Where high approval requirements exist, early and active communication to the board and members is essential, as is a thorough understanding of permissible voting mechanisms.

Coordinate Internal and External Communication. In organizations with overlapping membership, having a coordinated "sell" document for the staff, board and members of each organization is critical. Release of information should be carefully coordinated between the organizations and each party should agree to give the other notice before making any announcements to the public. Nothing kills a merger faster than being blindsided by an unauthorized communication.

Agree on Coordinated Due Diligence. Merger timelines must allow for thorough due diligence. Associations considering mergers face a multitude of legal, governance, financial, and administrative issues that must be carefully explored and coordinated. To facilitate this process, the parties should agree upon a scope of due diligence and a due diligence timeframe.

Culture Matters. Finally, while it may make good business sense to merge, key stakeholders – including members, staff, and volunteer leaders – will not shift allegiances if the combined organization fails to bridge the cultures of both entities. Mergers work only when associations take the necessary steps to build teamwork and a shared vision of the future.

Brock Landry and Lisa Hix have handled a variety of mergers, including the American Bankers Association/America's Community Bankers merger and the American Electronics Association/Information Technology Association of America merger. For more information, please contact or Mr. Landry at or Ms. Hix at

This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to specific fact situations.

Wednesday, February 3, 2010

Adapting to Social Media

I am not sure why this happens, but nonprofits tend to be late adapters.  I think it may be a matter of time and resources and having too little of each.  I can't imagine any nonprofit not having at least a Facebook page (it is free after all), but I know of many who do not.  Juan Munoz goes through five points regarding social media and gives examples of how social media helps turn interested prospects into donors.  Enjoy.  Bunnie

Adapting to Social Media
by Juan Munoz, CEO, Open Global Marketing

This article might look like repetitive for some of you, but there are many non-profits that have not adapted fully to the new social media boom. Here are five points to successfully convince your Executive Director (or you) about the benefits of using social media in your organization.

The non-profit world has been always reluctant to adapt new technologies. Sometimes they stick to proven techniques and are attached to their Grantors or Founders as a source of income. The new online landscape has changed andnonprofits are flocking to the social web, although mostly in the last two years. Nonprofit organizations that have embraced social media in a short period of time have see astonishing results. But still the masses of nonprofits act late.

Social media is beginning to transform nonprofits both in the way they work as well as their relationships with their donors.

Here are five points about how this is happening:

1. Building stronger relationships with donors and constantly updating them.

Over the past two years, one of the non-profits that we advise have been seeing an increase in their current donor list and have tripled their prospective donor list. The Roberto Clemente Health Clinic, an emergency and primary care clinic located in the south of Nicaragua created a blog to inform their prospective donors about their project while the current donors get a different and more personalize email about their semester performance. Now, the conversion rate using this technique is around 15% compared with 3% in previous years. Many people identify with the project but are not ready to donate immediately. Once you keep them informed they feel at ease to send their money for a good cause! Also we updated the website to make it more donor-friendly, creating different programs and different levels of donations. The website is called

2. Individuals & small groups are self-organizing around non-profit causes

Social media is enabling individuals to create, join, and grow groups around issues they care about outside of the direct control of a non-profit. Whether it is healthcare issues, minority women owned business or fundraising events activities, you can communicate easily by email or using a tweeter account. One example is the Maryland Hispanic Chamber of Commerce where we created a LINKEDIN profile as a group to advertise their events. They also have the regular newsletter and their website. We have created a PowerPoint presentation that teaches you the difference between Social Media and Search Engine Optimization.

Social software design is also helping accelerate this trend. Look no further than the Facebook Causes Birthday application that encourages an individual who is a member of a Cause to use their birthday as an excuse to raise money for a non-profit organization. DonorsChoose recently launched a similar feature called “Birthday Give Back,” with Stephen Colbert leading the charge. And keep an eye out for more social apps with a conscience that will offer even more creative ways for supporters to self-organize and take action around causes.

As non-profits begin to engage their own communities in these online conversations, they are able to reach more people than ever before, and use less effort doing so. 100 letters sent to donors might cost around $350 including the time of putting them together and stuffing envelopes, plus printing and shipping but anEmail campaign cost $0.02 cents per email on average.

3. Facilitating collaboration with international and national organizations.

The social web lets non-profit organizations connect and collaborate formally and informally with international organizations quickly and inexpensively. Nonprofit organizations are also collaborating with their supporters by using them as fundraising battalions. You can bring volunteers (well-known) or regular people within a big network and provide them the tools to fundraise in their name. One example of this is when people jump into running marathons and 5K races and the contributions go towards a specific cause.

Another example is WeAreMedia, a wiki project where over 100 non-profit technology professionals have pooled knowledge resources and developed training materials to help nonprofits learn how to use social media effectively.

4. Social responsibility spreads faster in the green era.

One of the perplexing things about corporate social responsibility (CSR) is that it has long meant different things to different people. To some, an action only counts as true CSR if it is unprofitable and hence motivated by altruism. Socially beneficial actions that increase profits are merely strategic CSR. However, even advocates of altruistic CSR admit that most CSR actions can be viewed through a strategic lens. Nonprofits are taking advantage of this trend using specific causes and spreading the news in blogs and social media sites. This type of project also impact a community specifically when corporations feel identified with the project.

4- A good cause is more important than the Mission of your Nonprofit.

We’re just at the beginning of seeing how social media is impacting how nonprofits engage with their supporters and do their work. As more and more nonprofits adopt social media and their practice improve over time, we will no doubt see a transformation of the nonprofit sector. In our website you can see how Search Engine Optimization is as important, if not more, as social media is. SEO is the art of making your website more visible for the searchers.

In the wake of the devastating earthquake in Haiti, the Red Cross has raised over $140 million largely through text message and online donations.

This recent disaster has cast a new light on social media tools for nonprofits. Their benefit is simple: Social media provides a compounding effect on your message.

The element of trust is critical to nonprofits. People trust messages from friends and colleagues more than from organizations. A recent Aberdeen study on the value of online communities states that 77% of people trust friends, family, and other consumers above retailers and manufacturers.

Therefore, using these five points, I hope you can start investing resources and money into Social Media in 2010.

Contact Juan at