Nonprofit Conversation

The Hackers Are Coming: What Steps to Take NOW To Ensure Cybersecurity of Your Non-Profit

2011-09-14T10:21:00.000-04:00

This is an area I've been thinking about a lot lately. Organizations and individuals at all levels are vunerable to hacking. There is a major initiative in this country to counter "cyber terrorism" and cyber security is the hottest topic in board rooms and war rooms. What is scarey is that many nonprofit organizations have limited ability and resources to combat security breaches. And as more nonprofits move to online donations, online membership registrations and sales, personal information becomes more accessible to those who would exploit it. Joseph Steinberg points out that nonprofits must be concerned with cybersecurity and should take up this issue as soon as possible. Bunnie

The Hackers Are Coming: What Steps to Take NOW To Ensure Cybersecurity of Your Non-Profit

By Joseph Steinberg, CISSP, ISSAP, ISSMP, CSSLP

Non-profits, like most modern organizations, handle significant amounts of sensitive information – which often residesin electronic form on Internet-connected computers and networks. Donor details, information about programs run and people receiving aid, employee and payroll records, and many other forms of data are all of significant value to criminals.

Hackers know that non-profits often don’t have the resources to invest in expensive security systems, and that computer systems in use may be several years old and designed before non-profits were being targeted with digital attacks. Cyber-thieves understand, therefore, that such systems often contain vulnerabilities and lack cyber-defenses, making them easier to hack than many systems in the commercial sector.

The consequences of compromised security may not be small. Bad press, the breach of confidentiality and embarrassment emanating from the leakage of data about people being helped by the non-profit, fines from credit card companies for failure to confirm to security requirements, or donors suffering the anguish of identity theft and blaming anorganization’s negligencecan be catastrophic.

Some cases have made the media. When the Columbia Triathlon Association website was hacked, for example, cybercriminals successfully pilfered information about over 8,000 members – including a password database in encrypted form.

So what can a non-profit do to ensure that it remains cyber-secure? While a single article is not sufficient to cover all the aspects of cybersecurity in a non-profit setting, here are several high-level pointers…

First and foremost, commit to actively ensuring cybersecurity. The cost – in terms of time, money, and aggravation – will likely be far less if a proactive approach is taken.

Create proper policies governing who has access to which resources, and implement rules and technology to enforce these policies. Access to systems and information should always be on a “need to know” basis. Systems should be used for only their intended purposes and not for others, such as reading email or accessing Facebook. Ensure that every user has her own credentials and that all systems require a login with a password that is not easily guessable or found in the dictionary.

If wireless (or wired) Internet is provided for guests within a facility, implement it on its own separate network – isolated from any non-profit systems and networks.Visitors have no need to access any internal systems.

Don’t let them.

Branch office managers should ensure that they conform to all security policies of the parent organization and should also implement security to ensure that a breach at another branch, or at the main office, does not prorogate to their location.

Ensure compliance with all credit card security rules, and, unless truly necessary, do not store credit card data after processing transactions.Never store credit card security codes or debit card PIN numbers.

Store all sensitive data – including donor information, employee data, documents related to programs being run and beneficiaries from any charity, etc. – in encrypted formats. When in doubt, encrypt.

Select and implement security technology to meet functional and security requirements– and ensure that all technology is kept up to date. Keep in mindthat all major recent cybersecurity breaches have occurred to organizations running firewalls, anti-virus software, and other security products, and so…

Perhaps most importantly, leverage the services of a skilled cybersecurity professional to properly design your cybersecurity plan.Remember, cybercriminals have technical expertise. Shouldn’t you have it to defend your organization?

Joseph Steinberg (CISSP, ISSAP, ISSMP, CSSLP) is a respected cybersecurity expert and the C.E.O. of Green Armor Solutions, a leading provider of information security software. An industry veteran with 20 years of experience, Joseph is often sought after by organizations ranging from global corporations to small businesses to assist them with their digital security needs. He is the inventor of several cybersecurity technologies, the author of a book and many articles on cybersecurity-related matters, and a frequent lecturer on topics related to cybersecurity, technology, and business. For more information, or to contact him, please visit www.JosephSteinberg.com

Here’s an Easy Charity Auction Tip: Use Surveys

2011-08-22T12:08:00.002-04:00

Sherry Truhlar is the Diva of charity auctions. Not only does she know what's she'd doing, she absolutely knows what you should be doing. Knowing your constituents or customers (as I would call them) is vitally important to your fundraising efforts. People have very different motives for supporting your organization. Maybe they are absolutely emotionally involved in your work or perhaps they attend your events to social and have a good time. Knowing this and also knowing how well you performed can only help you build a "product" (your next fundraiser, next programming effort, next auction) that will appeal to your current donors and to future potential donors. Thanks Sherry for the advice! Bunnie

Here’s an Easy Charity Auction Tip: Use Surveys
by Sherry Truhlar, Red Apple Auctions

When it comes to incorporating a simple auction idea into your fundraising gala, don’t forget about one of the easiest ways to get feedback from your charity auction: surveying your auction guests. I was reminded of this recently while listening to the radio.

On a recent morning show, the DJ was asking his co-hosts and callers about their preferred superhero power.

“If you could have one superhuman power,” he’d ask, “What would it be?”

Flying and invisibility were popular, but so was the ability to read minds.

The ability to read minds would be handy at a benefit auction. You could finally learn what guests really thought about your creation. Did they notice the theme? Did they understand where the money was going? Did they mind the cash bar? From a planner’s perspective, we want to know what the guests preferred. Knowing our guests preferences helps us plan a better event.

Some guests will comment about the gala when they check-out. Others will complain to an administrator. Some folks will make an effort to find and compliment the Auction Chair before they leave. But all three of these methods are haphazard ways to track data.

Surveys are an excellent yet underutilized charity auction tool. Here are some questions you might ask:

Did you attend the gala as a sponsor, as a guest, or as an individual ticket holder?
What city / suburb is most convenient for you to attend a fundraiser?
How many fundraisers do you attend in a year?
What night of the week are you most likely to attend a fundraiser?
Where did the proceeds of the gala go?

You can also ask guests to rate elements of the night. For instance, on a 5-point scale, you might ask them to rate the registration, check-out, food, dress code, location, facility, benefit auctioneer, auction items, or entertainment.

For high participation in your survey, keep it short. And send your survey promptly, preferably within three to four days of the auction. That way, the gala is still easy for them to remember.

To create your survey, consider SurveyMonkey. It’s a popular service because the format is straightforward and the tool is free, as long as you work within the company’s designated parameters.

If you’ve got an event coming up, I advocate that you design and write your survey now, prior to the auction. Then the survey link will be ready to email the day after the event. Outside of reading your guests’ minds, a survey is your best method for finding out what your guests most enjoyed about your benefit auction.

About the Author

Benefit auctioneer Sherry Truhlar's entertaining stories and advice is often picked up by publications (e.g. Town & Country, The Washington Post Magazine, AUCTIONEER, The Eleusis, The Virginia Auctioneer) and television (e.g. E! Style, TLC) where she inspires and teaches volunteers how to hit new fundraising records in their auction galas. Enjoy her FREE Auction Item Guide(listing the 100 best-selling items to sell in your benefit auction) at http://www.RedAppleAuctions.com .

IRS Announces First Round of Revocations for Nonprofits that Failed to File Form 990

2011-08-01T14:49:00.002-04:00

The IRS is conducting the biggest crack-down on nonprofits in my memory. I believe part of this is an attempt to make up sluggish revenues due to our recession. The implication for nonprofits is great and the burden falls greater on small nonprofits. Think garden club or the local Kiwanis Club. Those with revenues below $25,000 per year are now required to file a 990 (pick the form).

According to Nonprofit Times, "In 2008, nonprofits known as “nonprofit institutions serving households,” a broad subset of the sector, generated 5.2 percent of U.S. GDP, representing $751.2 billion worth of output. Nonprofits’ share of GDP grew 0.4 percentage points from 1998 to 2008."

As a friend pointed out the other day, nonprofits are domestic because most work to benefit their local communities. That means nonprofits typically are not shipping jobs off shore, but instead keeping them local, very local.

I get it...we need revenue, but cracking down on the small nonprofits may not be exactly the most efficient way to get there. Thanks to the folks at Venable for another great article on trends in the nonprofit sector. Bunnie

Audra J. Heagney

Kristalyn J. Loson

IRS Announces First Round of Revocations for Nonprofits that Failed to File Form 990

by Audra J. Heagney and Kristalyn J. Loson

On June 10, 2011, the Internal Revenue Service ("IRS") released the complete list of approximately 275,000 nonprofit organizations that have lost their tax-exempt status for failure to file Form 990, Form 990-N, Form 990-EZ, or Form 990-PF for three consecutive years. The list of revoked entities is available on the IRS website.

The list includes the organization’s name, Employer Identification Number, last known address, and effective date of revocation of exempt status; it will be updated monthly. In its announcement, the IRS indicated that it believes most of these organizations are likely defunct, however, it has issued guidance regarding the steps such organizations must take to apply for reinstatement of their tax-exempt status.

This is the first group of revocations resulting from the passage and implementation of the Federal Pension Protection Act (the "Act"), passed by Congress in 2006. The Act mandated annual filing requirements for virtually all tax-exempt organizations, including tax-exempt organizations with gross receipts of $25,000 or less that were not previously required to file an annual return with the IRS. The Act also provided for the automatic revocation of any tax-exempt organization that does not file the required returns or notices for three consecutive years, and requires the IRS to publish and maintain a list of all such organizations that are so revoked.

In conjunction with its recent publication of the names of the first wave of organizations with revoked tax-exempt status, the IRS also issued guidance regarding the impact that the revocations have on charitable contributions to revoked organizations, and the manner in which organizations may seek reinstatement of tax-exempt status, including retroactive reinstatement. The IRS also announced transition relief for certain small tax-exempt organizations.

In connection with the announcement and publication of revocations of exempt status, the IRS issued the following guidance:

Revenue Procedure 2011-33 (Contributions to Revoked Organizations) states that where an organization listed in Publication 78 ceases to qualify as an organization to which contributions are deductible under Section 170 of the Internal Revenue Code (the “Code”), as a result of loss of exempt status due to failure to file annual reports for three consecutive years, grants and contributions made to the organization by persons unaware of the change in the status of the organization generally will be considered allowable if made on or before the date of publication of the list of revoked organizations. The IRS may disallow a deduction for any contribution made after revocation of exempt status but prior to the published notice of the revocation where the grantor had knowledge of the revocation prior to publication, was aware that revocation was imminent, or was, in part, responsible for the revocation. Publication on the list of organizations whose tax-exempt status has been revoked is intended to serve as a notice to donors and others that they may no longer rely on a prior listing in Publication 78.

Revenue Procedure 2011-36 (Reduced Fee for Reinstatement) reduces to $100 the user fee charged for the reinstatement of exempt status of small exempt organizations that normally have annual gross receipts of not more than $50,000 whose exemption was automatically revoked pursuant to Code Section 6033(j).

Notice 2011-43 (Transitional Relief) provides transitional relief for small organizations that had their exempt status revoked because they failed to file a required annual electronic notice for the last three consecutive years. An organization with annual gross receipts of less than $50,000 that qualifies for transitional relief pursuant to the criteria set forth in this Notice, and applies for reinstatement of exempt status by December 31, 2012, will be treated as having established reasonable cause for failure to file annual returns and exempt status will be reinstated retroactive to the date it was revoked.

Notice 2011-44 (Process for Reinstatement) sets forth the steps that an organization must take to apply for reinstatement of exempt status and request retroactive reinstatement after an organization's tax-exempt status was automatically revoked under Code Section 6033(j). An organization must use the same form filed by other applications for recognition of tax exemption to seek reinstatement, and must pay the applicable user fee. If an organization is seeking retroactive reinstatement, it must submit information demonstrating reasonable cause for failure to file an annual report, among other supporting materials.

The Treasury Department and the IRS intend to issue regulations under Section 6033(j) of the Internal Revenue Code, implementing rules regarding the application for reinstatement of tax-exempt status and the request for retroactive reinstatement. Comments are currently being solicited on the materials and issues addressed in Notice 2011-44. Comments are due August 19, 2011.

You can contact the folks at Venable, LLP at http://www.venable.com.

Charities Would be Wise to Adopt Professional Management and Oversight Standards

2011-07-26T09:27:00.000-04:00

Doug White, director of the Heyman Center for Philanthropy and Fundraising at the New York University School of Continuing and Professional Studies, provides excellent advice for management of nonprofits.

Sometimes it does amaze me how nonprofits operate without any business sense whatsoever. As a business owner myself, I understand the concept of responsible money management. However, I frequently see nonprofits that spend beyond their means, or offer compensation far beyond the capacity of the organization, or have boards of directors that haven't the first clue as to their roles and responsibilities.

The link in the title above leads you to Mr. White's book. Might be a good idea to pick one up and pass it around your board. Bunnie

Charities Would be Wise to Adopt Professional Management and Oversight Standards

by Doug White

Although the nonprofit world has grown tremendously over the past decade – nonprofit expenses fast outpacing GDP, for example – the management approach at charities has, in large part, stayed informal. In the past, charities were largely comprised of a few people who shared similar heartstrings and, if nothing scandalous happened, the public pretty much thought they were doing good by society. Although that’s true today for many charities, scrutiny by the public and by regulators has increased dramatically, and charities – large and small – would be wise to adopt professional management and oversight standards.

Unfortunately, those standards don’t exist. At best, we’re relegated to wobbly conversations about best practices; the worst among us just don’t care, and think their philanthropy is an extension of their business ventures or their personal egos. Does the name Madonna (Raising Malawi), Greg Mortenson (Central Asia Institute), or Lance Armstrong (Lance Armstrong Foundation) ring a bell? All have run charities where either they or their charities have run into trouble – within the last few months. And there have been others.

Not all charities need the highest, most sophisticated levels of governance; not all charities need federal and state charitable tax experts– attorneys and accountants – to serve as either advisors or board members; not all charities need the most accomplished executive directors. But all charities – as they all have in common that they were formed to serve the public good in a way that neither business can nor government will – must do their best to run themselves in a businesslike manner. At least to a point – and, as important, run themselves as stewards of the public trust.

Admittedly, there is a limit to the idea that a charity is a business. There is no question that charities need to balance their books and operate in a professional atmosphere – indeed, almost all charities are incorporated as businesses – but while business principles provide the basis for the basics, they alone do not serve a charity well in fully pursuing its mission. For that, a nonprofit needs vision and an understanding that the enterprise is not at all private: it is public in the most literal sense of the word. When an organization is granted tax exemption – when its donors are entitled to a tax deduction and its own profits are untaxed – it takes money from the public; it diverts money from the Treasury. For that reason – a reason quite separate from the growing swell of public scrutiny – charity leaders, both staff and trustees, need to be fully aware of financial, governance and ethical pitfalls.

That awareness does not come about by accident or even goodwill. It grows from a sincere commitment to serve society in an intelligent way. And that means tomorrow’s leaders (and as many leaders of today who are open-minded about staying up on things) must take seriously opportunities for learning. Tomorrow, take note, may be here sooner than we think: A recent study by the Meyer Foundation, “Daring to Lead,” reports that fully two-thirds of all nonprofit executive directors are planning to leave their jobs within the next five years. Talk abut turnover. The replacements will need solid training to prepare them to deal with issues that, quite frankly, most of them probably don’t think they should have to anticipate. But today’s daily headlines should be a forewarning to them, as well as a warning to executive directors and board members who are on the job today.

Like anything else, running a nonprofit is a skill no one is born with. Just as future professionals enroll in universities that offer business, law, and medical programs – as well as many other types of graduate learning – today’s nonprofit leaders would be wise to understand that their organizations will have the best opportunity to thrive if they are run by people who know what they are doing – by design, not by chance.

Doug White is the academic director of the Heyman Center for Philanthropy and Fundraising at the New York University School of Continuing and Professional Studies. His most recently published book is "The Nonprofit Challenge" (Palgrave Macmillan).

To Win Grants Stay the Course!

2011-06-29T11:00:00.000-04:00

There's so much competition out there for grant dollars. You have to be on your mark at all times. Betsy Baker, once again, gives great advice when it comes to competing for funders. The devil is in the details and frankly the presentation. To use the "active" voice is very important, you must appear confident and show the funder that you will succeed, that funding your organization will not be a waste of their money or their time. Bunnie

by Betsy Baker, Your Grant Authority

Why exactly did I pick the month of June to resume my daily running routine? Because after more months than I care to share with you without this routine, my body and my lifestyle were paying for the absence. I could kick myself in the behind for going this long without it and it only makes it just that much harder to get back into the swing of things.

Could it be that you’ve become lazy like I have when it comes to completing a grant application to the best of your ability? You let a few details slide at first and then before you know it your application has landed in the rejection pile. Yes, it’s easy to become a bit more laid back in the summertime but its important not to let your work be a reflection of that.

Remember, you are always in competition for grant dollars. Here are just a few reminders of details that don’t need to be overlooked:

Pick the Right Grant Funder to Apply for Funding. Don’t let your research skills slide. Pay attention to the grant funder’s mission and note what it is they want to fund. And don’t try to tailor your project to fit their mission just for the sake of their money – stay true to your own mission. Keep digging and find the right fit looking for a matching mission, the correct geographic location (do they fund where your organization is located?) and an interest in the particular population you’re trying to serve.

Pay Attention to Your Statistics. A compelling grant application is based on both personal examples and factual statistics. If it has been a while since you gathered new data for the folks your organization serves it may be time to consider doing so. Should you complete another needs assessment, organize another focus group or check for updates to other factual data that affects your client population such as, for example, poverty rates, deaths by incident, crime rates, etc.? According to your nonprofit’s mission, social indicators can bear heavily in a grant funder’s decision to award you.

Make Your Application Visually Pleasing to the Reader. Whether you like to admit it or not, we are all drawn to something that is visually appealing. This includes the presentation of your grant application. Even the application that is filled with compelling stories and facts loses something in translation if it’s sloppy. Present your application in the third person as this is more professional and write in an active voice. Be sure to define all acronyms, write in simple sentences and be enthusiastic about your project. Write “We will…” rather than “We hope to…” as this conveys confidence. Also, break up the text of your application and highlight key points with bullets, italics, boldface and headings (and charts and graphs where appropriate) but don’t get too fancy! Grant funders can slice right through all flash and no substance.

Show a Willingness to Collaborate and to Share Your Knowledge. Grant funders love to see an organization willing to partner with other agencies in a grant project. There are many nonprofits that serve the same target population and it only makes sense to collaborate to best meet their needs. Partnerships reduce a duplication of effort and nonprofits can share resources diminishing both cost and effort. Think about other nonprofits in your area that would be a natural fit for you to collaborate and approach them with an idea.

Also, why not spread the love? If you have a successful project, be willing to share the “how-to’s” of it. Feature your project on your website and by other publicity and be available to other agencies in helping them establish a successful project in their own community. Grant funders take notice to a nonprofit’s willingness to share the how-to steps of their success in helping other communities benefit. It’s a win-win for everyone.

So, I’m going to stick to my course with no shortcuts this summer. I will be a lean, mean energetic machine in just a matter of a few weeks! How about you? Don’t take those shortcuts and you’ll see a difference too – as you watch your funding grow by leaps and bounds. (Hopefully, I’ll be reducing as you’re gaining, right? ;)

Want more grant writing and grant consulting tips? Be sure to sign up for my f.r.e.e. ezine where I share all my secrets! Connect with me here..

Strategic Planning…Yuk!

2011-06-17T10:04:00.000-04:00

by Bunnie Riedel, Host

I’ve never met a “strategic plan” that I liked. Mostly because I see them as a horrific waste of time. It may make a nonprofit board feel good to sit in a room for a couple of days and dream up new and exotic ideas for what the organization should be doing, but rarely do strategic plans (done the typical way) turn into anything but dust collectors.

And don’t get me started on mission statements. Some boards want to change their mission statements every couple of years. Then there’s Bylaws. Some boards believe that if they aren’t re-arranging their Bylaws on a regular basis they aren’t doing anything.

But I digress.

Back to strategic planning. Let me give you a real life example of what can happen when the “good ideas committee” takes over.

A few years ago, some portions of the federal government decided to change out how they classify their employees. Instead of having “grades” and “steps within the grade” to determine pay and seniority, the feds decided to go to “pay bands.” Hundreds of millions of dollars and hundreds of thousands of hours of time were spent attempting to educate the federal workforce about the new pay bands.

I even sat next to a woman on a plane whose full time job it was to go around the country and have meetings with Navy personnel to educate them about the new system.

So about one year into the new pay band system, portions of the federal government decided it wasn’t working and they were going to go back to the old way of grades and steps. A colossal waste of time and taxpayer money to say the least. Why did this happen? Because a group of well meaning people sat in a room and engaged in strategic planning.

So if you don’t do strategic planning, what should you do?

Action planning. Plain and simple. Decide what it is you are going to do and then do it. And keep the action planning within reach, make it simple and make it immediate. Figure out what is absolutely necessary for the immediate future (no more than 12 months) and what is desired for the 24 to 36 month timeline. Here’s some do’s and don’ts.

· If it ain’t broke, don’t “fix” it.

If your organization has some program that runs like a well-oiled machine, leave it alone. Say you have an awards banquet you do every year that brings you recognition and a few dollars, stick to the formula. The truth is people find comfort in something they know and can depend on, think the McDonald’s Big Mac, for forty years it hasn’t changed and yet people go back to it time and time again because they know exactly what they are getting. Or how about the new Coke? That was a huge failure and they had to introduce “Classic Coke” to re-capture their market.

· Take what you are doing well and do it better.

Maybe this year the awards banquet could use a celebrity speaker. It doesn’t have to be Hollywood celebrity, maybe it’s a local news anchor or well known physician. Maybe it’s time for your quarterly publication to go online or become a downloadable app. Maybe it’s time to grow your tradeshow from 20 vendors to 50. Figure out where your success spots are and make incremental improvements and of course, heed the “if it ain’t broke don’t fix it" rule.

· Analyze what’s not working and if necessary, toss it.

This is kind of like cleaning out a closet. If you haven’t worn it for 2 years you probably need to get rid of it. Is our membership system relevant? Is our board too large (or too small)? Do we really need to hold a conference? Is our continuing education units program working? Before you come up with a new program or new service, analyze what is working and what’s not, don’t be hamstrung with the “but we’ve always done it this way” mantra.

· Everything requires time, money, resources.

It’s a shame that there’s only so many hours in a day, a limit on spending and boundaries on what human beings can do in a 24 hour period, but that’s the way it is. You can’t take a 3 person staff and expect them to do the work of 20 people. You can’t have champagne taste on a beer budget. For every program or activity your organization is doing you must factor in time, money and resources. Resources being staff, volunteers, technology, space, talent, intellect, mobility, property, etc. Given our time, money, resources…what are we really capable of accomplishing in the next 12 to 36 months?

An action plan identifies what you would like to do to meet some kind of need and then puts a definitive timeline on that action. It identifies what is to be done, who’s going to do it, what it will take to do it (time, money, resources) and when it will be done. An action plan calculates the likelihood of success and what the fallout might be if there is a failure.

An action plan prioritizes the actions and is realistic. I once saw an organization with a budget of around $500,000 per year claim they would raise $10 million in 10 months. Truth was they barely kept up with their annual budget. I may not be able to add 5 new staff this year but maybe I can add one. We may not be able to increase the attendance at our awards banquet by 50% but maybe we can increase it by 10%. Be clear about what you can actually accomplish given your time, money and resources.

And then…go out and do it!

Seven Things a Media Spokesperson Should Be and the Media Are Hungry For Pictures

2011-06-06T11:41:00.000-04:00

After a brief break, I thought I'd return with one of my favorite media experts, Bob Crawshaw, of Mainstreet Marketing Australia. And it's not just one post but two that I thought went well together. If you are choosing a media spokesperson you need to give thought to how that person "presents." And every organization should plan how to present their story in pictures, video and graphics. I think Bob's bottom line advice is plan and prepare. Most recently Bob has begun a blog talk radio show Traffic on Maine Street. Tune in when you get a chance! Bunnie

Bob Crawshaw, Mainstreet Marketing

Seven Things a Media Spokesperson Should Be

A key part in setting up a media relations program is selecting a spokesperson(s) to be the public face of your organisation when the media calls. This is a very important job and most agencies, businesses or not for profits identify the CEO, Chairperson or person responsible for communications to fill this role.

Irrespective of the choice, your spokesperson(s) should:

Know the topic you are presenting to the media.
Be able to speak with authority about what your organization does and answer general as well as specific questions.
Be well-groomed and dress suitably.
Uses plain language and speak clearly and simply.
Be continually contactable by mobile or cell phone.
Be reasonably flexible about when and where to be interviewed.
Be available by phone or email for any follow-up questions after the interview.

Journalists do not expect not for profits or smaller businesses to have well trained media spokespersons, but they do expect them to be represent your organization, provide information and be able to tell a good story.

Training in media interview skills is not really necessary unless your issue is controversial, you plan to talk to the media often or your spokespersons are not comfortable performing this important job. If so consider investing in professional media training for your spokespersons because good media coverage is so important to the future health of your organisation.

The Media Are Hungry for Pictures

A picture is worth a thousand words

Today our lives are so busy and time poor we rely on images as short cuts to help us process information and make decisions.

Media organisations have a constant appetite for images for their screens, on-line pages and portals. Even radio station websites cry out for pictures. That means a not for profit, business or agency that can offer compelling video or digital imagery to communicate its cause increases the likelihood of getting its story told.

Think about the imagery associated with your story before even approaching journalists You can supply your own photos and video to the media. This can work well with local papers and other small outlets with limited staff, however it rarely satisfies larger media organizations that need broadcast or print quality imagery. The best approach with them is to set up deliberate opportunities at your event for their news photographers and TV crews to get good pictures.

Good imagery - whether video or photographs – graphically and emotionally depicts what your organisation does. It might show a client using a service, staff helping someone or some picture-worthy aspect of your operation. The more emotion an image sends, the more likely the media will use it and the more likely they will report your story.

Imagery is so important you need to think through about what you can provide and then how you could describe your imagery over the phone to a TV producer or reporter. If you plan to send imagery to a local outlet regularly it is certainly a good investment in time and money to get a commercial photographer to help you or build up your own in-house skills.

Reduce Your Tax Bill By Accurately Deducting Charitable Gifts

2011-05-11T06:47:00.000-04:00

Here in the United States, we are one month past "tax time." It is a dreaded time for us Americans, April 15th. We agonize over it and spend millions, nay billions, of dollars seeking out professional help to file our taxes. As someone who does my own taxes, I keep a folder of the charitable gifts I have given during the year. They result in about a 30% reduction. In other words, for every $100 I give, I am able to deduct about $30 in taxes. I don't give to get that reduction, I give because as the article below says, it is for heartfelt, altruistic reasons. There are certain nonprofits and charities that I am attracted to: those walks, those animals, the charitable activities my friends and family take part in...and that's another whole article on "why people give." But if you do give, you need to be aware of how to "book" that giving come tax time and you need to be aware of it now to get ready for next year. Here, Charity Navigator gives you the guide. Bunnie

Reduce Your Tax Bill By Accurately Deducting Charitable Gifts

People give to charity for many heartfelt, altruistic reasons. But as evident by the surge in online gifts flowing through our site on the last few days of the year (about 10% of annual giving), the tax benefits of giving do impact our decision to support charities. We shouldn’t take issue with donors who are motivated by the tax benefits of giving. In fact, many worthy charities are funded by donors who are able to make larger gifts as a result of the tax deductions they later claim.

But before you prepare your tax return, you should know that the government continues to be concerned with taxpayers inflating the value of their gifts. In recent years, new laws have been passed to curb those who abuse the spirit of such tax breaks. And the IRS continues to scrutinize claims for charitable deductions to make sure taxpayers are entitled to such claims.

To help you maximize the tax benefits of your charitable endeavors and avoid making a false claim, Charity Navigator offers the following tips.

Document All Cash Donations
If you want to claim a charitable deduction for a cash gift, then you must be prepared to verify your claim. In other words, you can no longer deduct the spare change dropped in a charity's collection bucket without the proper documentation. If you are audited, the IRS will only accept one of the following to substantiate a monetary gift: a canceled check, credit card statement, bank statement or a written acknowledgement from the charity (showing the charity's name, the date of the donation and the amount given).

Donating online at Charity Navigator , through our partnership with Network for Good, helps you fulfill this requirement since all your giving records will be stored in one place enabling you to quickly obtain an annual record of your charitable giving for tax preparation.

Monetary Gifts of $250 or more Require Additional Documentation If you contribute $250 or more, then you must prove to the IRS that you (a) made the donation and (b) you didn't receive anything in return for that donation. Therefore you’ll need a receipt from the charity that includes the following information: the charity’s name, the value of your gift, the date you made your donation and a statement verifying that you did not receive any goods or services in return for your gift.

Be Careful When Valuing a Donated Vehicle
Although a new law implemented in 2005 attempted to crack down on taxpayers who were overvaluing donated vehicles, the government reports that many taxpayers still inflate the value of such donations. As a result, the IRS continues to take a close look at such deductions. If you donated a car worth more than $500, then you can only deduct the amount the charity received from the sale of your car. You can use the receipt from the charity to substantiate your claim. Do not attempt to use the fair market value unless one of the following conditions apply: (1) instead of selling the vehicle, the charity keeps and uses it, (2) the charity makes improvements to the car before selling it, (3) your car is sold at a discounted price to a person with a low income, (4) or if the car is worth less than $500.

Make Sure Donated Clothing and Household Items Are In Good Condition
Hopefully, all your donations of clothing and household items last year were in "good used condition or better.” Not only do donations of junk (such as used socks) cost charities a lot of money each year to discard, but the IRS does not permit deductions for such items. The only exception here is for any single clothing or household item worth more than $500. For these items you can claim a deduction, regardless of its condition, so long as you submit a qualified appraisal with your tax return. And speaking of documentation, you’ll want to maintain an itemized receipt from the charity for all gifts less than $500 to substantiate your claims in case of an audit.

Keep in mind that the above rules are predicated on the following conditions.

You Itemize
You must itemize in order to take a charitable deduction. Make sure that if you itemize, your total deductions are greater than the standard deduction. If they're not, stick with the standard deduction.

You Donated to a Qualified Charitable Organization
Just because an organization is exempt from income tax doesn't mean that contributions to the organization are tax deductible. For example, 501(c) (4) organizations, like the Disabled American Veterans or the National Rifle Association of America, are allowed to spend a substantial portion of their revenue on lobbying our government so not every donation to them is tax-deductible. However, all of the organizations rated by Charity Navigator are 501(c) (3) public charities to which all donations are tax deductible.

Your Gift Was Made in Time
If you were among the many donors that gave online on December 31^st, then your gift still qualifies for a deduction on your tax return even though you paid the credit card company in the following year. If you waited until the last minute and paid by check, you gift qualifies so long as the check was mailed on or before December 31.

There is one new special exception to this rule. Just as Congress did after the South Asian Tsunami and Hurricane Katrina, it passed a special tax exemption to encourage American taxpayers to give generously to Haiti relief efforts. Under this provision, if you made a donation to a qualified charitable organization between January 12 and March 1, 2010, then you have the option of claiming this deduction on your 2009 or 2010 tax return. Keep in mind that you can not claim a deduction for these gifts for both years. Also, the gift must have been a cash donation. This includes donations made by texting, check, credit card or debit card.

Tips & Resources

FAQ

Reprinted with the permission of Charity Navigator, www.charitynavigator.org, America's leadingindependent charity evaluator.

Protection of Charitable Assets Act: What the New Uniform Law Would Mean for Nonprofits

2011-05-02T08:47:00.000-04:00

We hear a lot in the news media about laws affecting business. Are existing laws or tax code restricting business? Encouraging business? Affecting the ability of business to get the economy growing?

According to a 2007 report from Johns Hopkins, nonprofits generate a significant amount of our gross domestic product, or GDP. "' Private, not-for-profit hospitals, schools, social service agencies, symphonies, environmental groups and many other organizations — accounts on average for 5 percent of the GDP in the countries covered, and exceeds 7 percent in some countries, such as Canada and the United States. By comparison, the utilities industry — including gas, water, and electricity — in these same countries accounts on average for only 2.3 percent of GDP, the construction industry for 5.1 percent, and the financial intermediation industry embracing banks, insurance companies, and financial services firms, for 5.6 percent."

For that reason and many others, I find myself becoming weary of lawmakers (many of whom have no idea of what goes into running a nonprofit) formulating regulations that ultimately are harmful to small nonprofits.

Here in the U.S. we had a law called Sarbanes-Oxley that was supposed to regulate large business and prevent another mega melt-down like Enron. But the end result was a series of regulations that none but the largest nonprofits could comply with adequately.

The IRS has recently begun a crack down on Girl Scout troops, church auxiliaries, garden clubs and a multitude of small nonprofits whose combined assets don't amount to a hill of beans.

Now this.

A proposed new uniform law that seeks to establish reporting requirements for nonprofits with $5,000 or more in assets. So if you have a couple computers, a copy machine and a few desks, you are now required to file an annual report with the Attorney General of your state?

Will someone please find out what drugs these regulators are taking?

This is beyond the pale and has serious consequences for nonprofit entities. Never mind the amount of money required to enforce such ridiculousness.

Thank goodness for the folks at Venable who keep an eye on these things. Jeff Tenenbaum, Robert Waldman and Alexandra Megaris provide us with a glimpse of what this new law might mean. Pay special attention and in the meanwhile, I will try to find out how you can weigh in on this knuckle-headed process and report back to you when I do. Bunnie

Protection of Charitable Assets Act: What the New Uniform Law Would Mean for Nonprofits

By Jeffrey S. Tenenbaum, Robert L. Waldman, and Alexandra Megaris

Jeff Tenenbaum

Alexandra Megaris

Robert Waldman

The committee tasked with drafting a new uniform law that regulates charities and charitable assets has released the newest version of the proposed law, renamed the Protection of Charitable Assets Act, which is currently under consideration by the drafting committee. If ultimately approved, the uniform act could become law in many states.

What is a uniform law? The Uniform Law Commission (“ULC”)—the same body that recently drafted and ushered through the Uniform Prudent Management of Institutional Funds Act—is an organization comprised of state commissions on uniform laws from each state, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. Once the ULC determines that a specific area of law should be uniform, it appoints a committee to draft the model legislation. The final uniform law is then submitted to a vote by the entire Commission. Once the ULC approves a proposed Model Act, the states then vote. A majority of the states present, and no less than 20 states, must approve an act before it can be officially adopted as a Uniform or Model Act.

At that point, a Uniform or Model Act is officially promulgated for consideration by the states. The state legislatures are urged to adopt Uniform Acts exactly as written, to “promote uniformity in the law among the states.”

What would the Protection of Charitable Assets Act do? The proposed act would do four main things:

(1) define the authority of the state Attorney General over the protection of charitable assets in that state;

(2) impose a registration requirement;

(3) oblige charities with assets above a minimum amount to file an annual report; and

(4) require a charity to notify the state in advance of certain specified “life events.”

1. Authority of the State Attorney General. The model act authorizes the Attorney General of each state:

to enforce the use of charitable assets by a charity for the purposes for which the asset was given;
to “act to prevent or remedy” a breach of a legal duty by the charity; and
to seek declaratory or injunctive relief to determine that an asset is a charitable asset.

In addition, the law would give the state Attorney General the power to commence or intervene in an action filed by another party to prevent or obtain damages for a violation of the law. The state Attorneys General would have the ability to initiate investigations and issue administrative subpoenas to charities in order to determine whether charitable assets are being used for the purposes for which the asset was given. While many state Attorneys General already exercise significant regulatory oversight over nonprofit organizations operating in their states, other state Attorneys General take a less active role. The proposed model law, if adopted by the states, would establish uniform standards in this area.

2. Registration and Reporting Requirements. The Model Act, as currently drafted, would require each charity that holds or administers charitable assets above $5,000 and that meets one of the following five criteria to register with the state: is organized (e.g., incorporated) under the state’s law, has its principal place of business in the state, holds charitable assets in the state other than assets held for investment purposes, conducts activities in the state, or holds assets that are given for the benefit of a person in the state. The registration provision includes limited exemptions for governmental, political, religious and financial entities and certain individuals holding charitable assets.

3. Annual Reports. Charities with assets above $5,000 also would be required to file an annual report with the state Attorney General. The report would require basic accounting and financial information and require the charity to attach its IRS filing (e.g., Form 990).

4. Notice to State Attorney General of Reportable Events. Charities required to register under the proposed statute also would be required to notify the state Attorney General if any of the following events occur:

dissolution or termination of the charity;
disposition of all or substantially all of its charitable assets;
a merger, conversion or domestication; or
removal of the charity or of a significant charitable asset from the state.

This proposed uniform law would impose significant registration and reporting requirements on many charitable organizations across the country, especially on those that operate in multiple states. We will continue to monitor the status of the proposed model statute. A final draft of the statute is expected to be introduced and voted on at the annual meeting of the Uniform Law Commission commissioners in July 2011.

Mr. Tenenbaum is a partner with Venable and chairs the firm's Nonprofit Organizations Practice Group, as well as its Credit Counseling and Debt Services Industry Practice Group. Mr. Waldman, a tax partner, chairs Venable's Business Division. He also leads Venable's national representation of tax-exempt organizations. Ms. Megaris is an attorney in Venable's Regulatory Practice who works regularly with the firm's nonprofit organization clients. She is resident in Venable's New York office.

16 Provocative Ideas That Will Raise More Money

2011-04-12T14:08:00.000-04:00

Raising money is a 24-7 job for the nonprofit community. Just as business must always be selling, we too cannot rest on our laurels, we have to cinch the deal. Gail Perry (Gail Perry Associates, Fired-Up Fundraising) shares what she learned at the Association of Fundraising Professionals. Very provacative ideas. I really like the monthly donations. For little more than one pizza delivery per month you can offer donors the ability to easily support your nonprofit. Bunnie

16 Provocative Ideas That Will Raise More Money

by Gail Perry, Fired-Up Fundraising (March 2011)

I am just back from an intense 4 days at the AFP International Fundraising Conference.

And I listened to some of fundraising’s most brilliant – and provocative - leaders. Here’s what’s on the mind of some of our smartest thinkers.

Do consider these ideas NOW. They may go against your typical practices. But I promise, absolutely, that you will raise more money if you implement them.

1. Go All Out for Monthly Donors On Your Home Page.

Monthly donors are worth gold to you. On average, they will stay for 10 YEARS. Put the ask right on your home page. The ideal monthly appeal ties a monthly ask to something specific. “$31 a month will do xxxx.” Harvey McKinnon

2. Focus on Fewer – Not More Donors.

You don’t make more money by having more donors. The more donors you accumulate – the less profitable your fundraising program. (Penelope Burk)

3. Encourage Restricted Giving.

Restricted asks raise more money. Period. We are holding our philanthropy back, because we are asking for unrestricted rather than restricted. (Penelope Burk)

4. Get Rid of the Words.

Put your whole message in the first 150 words. The rest of your copy just backs it up. (Tom Ahern)

5. Get Rid of “Unmet Needs,” “Programs,” “Services.”

Write like you are an outsider to your organization. Get rid of the boring, obtuse jargon. Jargon is a flame retardant! (Tom Ahern)

6. Make Your Case Like a Series of Ads.

Add photos while you get rid of words. Create your case or your fundraising materials with the fewest words and the best photos. (Tom Ahern)

7. Hire More Fundraisers.

Saying, “We can’t hire any more staff.” is stupid. Each additional fundraising staffer upticks gross fundraising revenue. Period. (Penelope Burk)

8. Give Your Fundraising Staff Raises.

Money is the #1 reason fundraising staff leaves. Investing in retention of staff will make you money. Retention boosts profit. Extend young staff from 18 months to 30 months saves you money. (Burk)

9. Get Rid of the Raise Money Now Mindset.

31% of fundraisers who are planning to leave their jobs will leave because of an unrealistic “old school” culture of fundraising: ie, “you HAVE to bring in the $ NOW.” How much more money could you raise if you took a long term, strategic approach? (Burk)

10. You Must Give Your Staff Management Training.

Success in business is 95% in the management of other people. But we cut staff training first whenever there is a shortfall. Training is essential. There’s not enough management training in nonprofits.(Burk)

11. Get Rid of Lousy Board Members Now.

Allowing a lousy, nonperforming board member to serve out their term is, two words: “Chicken S***” (Simone Joyaux)

12. Be Blatant.

Try this: “With your help, all these amazing things happened. And without your help, they won’t.” You‘re selling the impact of the donor’s gift. (Tom Ahern)

13. Stop Talking About The Money You Need.

You choose:

A case is about the opportunity you‘re putting in front of the donor.

A case is about your organization‘s need for cash. (Ahern)

14. Become a Shrink.

When dealing with volunteers, you are a psychologist not a fundraiser! (Laura Fredricks)

15. Don’t Believe Your Prospect, When. . .

If he says, “I’m just a plain ole country boy,” it really means he is a wealthy prospect! (Eli Jordfald)

16. Close Down Some Programs.

Leaders will close or giveaway a program or activity that is no longer profitable and has little impact.

So were these ideas provocative? Would they challenge your status quo?

Remember fundraising is changing. Donors are changing. Doing what you’ve always done the same old way will get you yesterday’s results. Go for it! Change is good.

Contact Gail at Gail Perry Associates

Policy vs. Paper Clips

2011-04-05T14:33:00.000-04:00

There's a lot of advice out there about governance structure. Particularly when a board has always operated in a certain way, sorting through all the advice and finding the governance structure that fits your nonprofit can be difficult. And it is more difficult when the board has acted as staff and now must transition to policy makers. Dr. Eugene Fram sent me a copy of his book Policy vs. Paper Clips and I found it to be an interesting read. One of the reasons it is actually a fun book to read is Dr. Fram tells the story of how to transition to a corporate model of governance through the fictional exchange of emails between friends. Here are some of the things you can expect from the book:

From Dr. Fram...

Policy vs. Paper Clips is an unusual how-to book. It is a serious subject – improving nonprofit board governance while enhancing a management focus – but it is written in a highly user friendly way. Two old friends with ties to vastly different nonprofit organizations discuss via email what it takes to adopt the Corporate Model, an approach that can position your nonprofit to meet the demanding realities of the 21st century world.

Given today’s difficult times for nonprofits, hardly any can continue to operate as they have in the past. For most, it is no longer possible for a volunteer group of directors to be involved in day-to-day operations of the organization. The Corporate Model establishes a framework for separating policy development from operational activities. When customized appropriately to your own nonprofit, the Model promotes growth. This book shows you how to tap the creative energies of the board of directors to address critical issues about vision, direction, assessment of outcomes; how to adapt to new challenges and how to capture emerging opportunities – while turning over day-to-day operational matters to management.

The Corporate Model works best for nonprofits that have an annual budget of about $1 million or more and staffs of about 15 or more. However, anyone associated with a nonprofit group can benefit from reading this book. It provides an essential self-examination that can serve as a catalyst for becoming a more dynamic organization.

Your Board Members & Chief Executive Working Together Can More Effectively:

• Focus an organization on strategic issues over operational minutiae

• Encourage directors to bring their special expertise & cultural values to board discussions

• Understand the need for – and implement – rigorous assessment of operational outcomes

• Pinpoint management’s responsibility & clarify its responsibility

• Establish a system of organizational checks & balances

ALSO

• Allow for more management flexibility to develop a more entrepreneurial culture

• Increase focus on productivity at the expense of bureaucratic processes

• Improve the CEO’s fund raising capacity to drive development productivity

• Obtain greater efficiencies through lower costs

• Keep board involvement high when developing policies & strategies

• Create a partnership between board and staff that builds trust

Your Board Members Can More Effectively:

• Provide an appropriate mission-focused board structure for growth

• Operate effectively with only three standing board committees

• Make major board structural changes with minimum disruption

• Evaluate the chief executive fairly despite only having imperfect metrics

ALSO

• Reduce or increase board size

• Develop effective audit committee & fraud protection procedures

You can contact Dr. Fram at

eugenefrm@yahoo.com

Decline and Fall of the Vanguard Public Foundation

2011-03-29T11:56:00.000-04:00

Richard Cohen is an excellent, thoughtful writer and I am always pleased to feature his work here. This is a long article, however, it is very instructive. Often we think of "ponzi schemes" only happening in "for-profit" enterprise, when the truth is, nonprofits are ripe for this kind of use and abuse, maybe even more so since nonprofits are not measured by money earned but by services provided. Additionally, boards of directors of nonprofits may not conduct the due diligence of boards of directors of for-profit corporations. Whatever the cause and effect, the real pay off in this article are Richard's conclusions at the end. Bunnie

(This article is reprinted with permission from Blue Avocado, a practical fast-read magazine for community nonprofits. Subscribe free by sending an email to editor@blueavocado.org or at www.blueavocado.org.)

Decline and Fall of the Vanguard Public Foundation
by Richard Cohen

Once acclaimed as a pioneer in philanthropy and an important force for social justice, the Vanguard Foundation is no more. The full story will take years to emerge, but we report here in Part I on some of the clues to its sorry demise. A link to Part II is at the end of the article.

In San Francisco, the Vanguard Public Foundation is out of business, its nonprofit status suspended by the California Secretary of State, its website down, its assets apparently gone. Federal and state court lawsuits involving donors, investors, staff, and trustees question what happened to millions of dollars that flowed through the foundation to progressive causes.

But nonprofits and foundations go out of business all the time, particularly in this nonprofit-devouring recession. What makes the Vanguard Public Foundation worth special inquiries? Is it because of the celebrities associated with Vanguard -- Danny Glover, Harry Belafonte, and United Farm Workers co-founder Dolores Huerta, among others? But the glam factor is not the story.

The Vanguard Public Foundation (not to be confused with the Vanguard Charitable Fund related to the for-profit Vanguard), was lauded in its heyday as a new wave of philanthropy, a generational shift, an exemplar, and a model.

The famous people associated with the foundation are neither the story nor the cause of the foundation's demise. Rather the story may be one of organizational hubris, board narcolepsy, and the disease of our time: the siren song of the get-rich investment plan which, like Bernie Madoff's ponzi scheme, was just too good to be true.

A new generation of philanthropy

Established in 1972, the Vanguard Public Foundation was among the first of the social justice foundations established by the young scions of wealthy families, inheritors of corporate fortunes who were devoted to supporting a progressive, very liberal social and political agenda. One of the first of the "rich kid foundations," Vanguard was heralded as an inspiring model of a new generation's remaking of philanthropy.

Vanguard rose as a leader among some two dozen new progressive public grantmakers that became members of a network called the Funding Exchange. Largely modeled on Vanguard are the Haymarket People's Fund in Boston and the Liberty Hill Foundation in Santa Monica. In 1977, Vanguard produced the bible for these funds, Robin Hood Was Right: A Guide to Giving Your Money for Social Change, re-issued by the Funding Exchange 25 years later.

Vanguard's grantmaking role remained distinctive, putting money into social movement causes, often before they became politically acceptable and often to organizations and actions that were never going to generate mainstream support. Among the often controversial groups that benefitted from Vanguard grants:

Act Now to Stop War and End Racism (ANSWER)
Astraea National Lesbian Action Foundation
Center for Third World Organizing
Emilio Zapata Oakland Street Academy
Free Mumia Abu-Jamal
KPFA (Pacifica Network Free Speech Radio)
National Immigration Project of the National Lawyers Guild
Rainforest Action Network
School of Unity and Liberation (SOUL)
Solidarity Info Services
Southern Poverty Law Center
Young Worker Project

Vanguard was a friend to emerging causes which often went on to become more accepted by the public and more fundable by mainstream foundations. Donors also gave funds to such causes through Vanguard, enabling unincorporated groups to receive donations.

These are the kinds of grants that cause heartburn for the likes of Glenn Beck ("Marxist foundations of the 'social justice' movement") and Bill O'Reilly ("pinheads!").

Are progressive foundations in general suffering?

Is Vanguard's demise reflective of a downturn in these foundations of young (and in many cases, now no longer young) progressive rich people? While just about every public foundation has experienced the downturn while raising money from wealthy donors, the members of the Funding Exchange look healthier than one might expect, even in many cases increasing their grantmaking over a period of many peaks and troughs in the economy. For example, grantmaking grew between 1998 and 2008/9 at Liberty Hill, the Appalachian Community Foundation, Bread and Roses Community Fund (Philadelphia), the Headwaters Foundation for Justice (Twin Cities), and the McKenzie River Gathering (Oregon).

Others have shrunk over the years, perhaps as the big community foundations offered themselves as social justice competitors for donor-advised funds, others perhaps simply due to changes in leadership and management. The Southern Partners Fund in Georgia, Haymarket, and even the North Star Fund in New York City are significantly smaller than they were a dozen years ago, but they still exercise influence in their communities and within the philanthropic sector.

Unlike many of its peer progressive foundations, the Vanguard Public Foundation dissolved into nothing -- other than litigation. Why?

Mouli makes the world go 'round

In 2002, Vanguard leadership met an exceptionally intriguing entrepreneur named Samuel "Mouli" Cohen. In addition to his glamorous background, Cohen reportedly promised to achieve astonishing financial returns using Vanguard's funds as investments.

The Israeli-born Cohen (no relation to this author) and his wife Stacy lived the lifestyle of the rich and famous in a mansion in Belvedere, California. A master of self-promotion, Cohen's multiple personal websites, Facebook page, and press releases reveal him to be anything but modest; he describes himself as a "brilliant visionary," "business tycoon and magnate," "world renowned philanthropist," and "super entrepreneur."

Given the charges and countercharges now swirling around Mouli's relationship with the foundation and its leaders, some of his self-promotion is unintentionally humorous and ironic, particularly this from his Mouli Cohen on Business webpage: "(I)ntegrity is one of the most important characteristics for any investor. Investors, customers, employees and partners will reward you endlessly if you always act with complete integrity, according to Mouli Cohen."

It's hard not to give him one-name celebrity status, like Cher, Bono, Usher, or Madonna; his over-the-top persona demands it. As a philanthropist, Mouli's exploits, mostly known from press releases and philanthropic blog posts that he seems to have generated, didn't sync with Vanguard's values, mission, or funding priorities.

For instance, representative of Mouli's philanthropic activities were support for the European Center for Jewish Students, which works to increase the Jewish population of Europe against the threat of intermarriage and assimilation; a Jewish orphanage in Odessa; facilities development at the Ukraine tomb of a Lubavitcher Hasidic rabbi; and a library and museum in Israel affiliated with the Lubavitcher Hasids. In addition, he claims to be a leader and donor to several organizations which mention him nowhere on their websites, including Camp Okizu, Seva Foundation, and Soroko Medical Center.

Regardless of these differences in philanthropic goals, Vanguard became interested in Mouli for his investment acumen. A self-described technology entrepreneur, he claims to have founded or led business ventures which have generated some $3 billion in shareholder value. One of his more recent activities was a digital entertainment firm called Ecast, which provides services to bars and nightclubs.

The picture blurs

Now the story gets murky with a mix of charges and countercharges, and of course, litigation. Apparently, in 2002, Mouli met Vanguard CEO Hari Dillon and actor/activist Danny Glover. According to complaints filed in state and federal courts, Mouli said he would help the foundation by allowing Vanguard and its individual donors to buy shares in the privately owned Ecast. Dillon and Glover formed general partnerships through which they purchased several million dollars worth of Ecast -- or thought they did. The Contra Costa Times reported that Vanguard donors ultimately put in over $20 million more in philanthropic money and personal investment cash. How much of this was Vanguard money repurposed through Mouli is unclear.

The story gets even murkier. The investors -- now plaintiffs -- say Mouli stated that Ecast was to be acquired by Microsoft, which would generate a return on investment, according to the Times, of 1,000 percent. And according to peHUB Wire, the deal was to buy Ecast stock at $3.50 a share, but get paid off in Microsoft shares after the purchase at $23 per share. But something or other kept putting off the miracle. The Microsoft acquisition reportedly got delayed over EU rules, which generated a need for more fees to cover transaction costs. Then there were reports that Ecast was considering a competing bid from Google, further delaying the deal. Ultimately, there was no Microsoft purchase, no Google bid, and the money disappeared ("stashed" in Cohen's secret accounts and distributed to family members like wife Stacy, according to plaintiffs), and the investors were, one might say, aggrieved.

Mouli's attorney denies it all.

Even Ecast sounds aggrieved, stating that Mouli Cohen left Ecast in 2002, roughly when these dealings began. An Ecast attorney told Vending Times that the firm has had "ongoing" legal problems with Cohen, including two cases filed in 2003 and 2004 against Cohen about "very similar" charges that were settled out of court. If it was true that Dillon, Glover, and the Vanguard Public Foundation investors thought they were buying Ecast stock, they were doing so with a guy who had been out of Ecast's picture for years.

Transforming a social justice foundation into what?

But questions of questionable management and governance decisions at the foundation do not seem to have been limited to this speculative multi-million dollar investment with someone of dubious provenance. Why didn't someone notice the following?

Annual operating deficits: $427,000 deficit in 2003, $1.33 million deficit in 2009 and $1.37 million deficit the subsequent year
Deficit of $1.95 million in 2006, nearly equal to the $1.99 million received in contributions, gifts and grants
In its last publicly accessible Form 990 in March 2007, Vanguard had total assets of $453,000 and total liabilities of $3.59 million
That same 990 showed $1.25 million in loans from officers and directors and $1.8 million in mortgages and other notes

The operating deficit dropped to "only" $1.2 million on its final Form 990, but by then the foundation was living on fumes -- or loans.

By 2007, loans from officers and directors included $5,000 from Danny Glover, $100,000 from board member Susanne Moore, and $600,800 from CEO Hari Dillon. In Vanguard's 990 for the fiscal year ending in 2008, Dillon's loan to the foundation had grown to $1,172,511.

The Vanguard Public Foundation was living on borrowed funds largely from the CEO, whose salary and benefits at the foundation combined do not appear to have ever topped $90,000 annually. But the foundation didn't appear to be thinking about belt-tightening during this period of financial stress. Travel expenses skyrocketed and salaries grew as significant funds were used to send CEO Dillon, senior staff member Gus Newport, and others on "projects."

A grantmaking foundation was turning into an operating foundation, running its own programs instead of making grants to nonprofits. In its last available 990, the foundation lists $3.35 million in total expenses, including the following:

$600,000 from Vanguard's donor-advised funds to the Peninsula Community Foundation
$103,000 from non-donor-advised funds to Gathering for Justice c/o Belafonte Enterprises (singer Harry Belafonte is one of Vanguard's founders)
Only $129,000 in other non-donor-advised grants

In the fiscal year ending March 2007, Vanguard's total expenses were almost exactly what it owed in loans. The foundation was investing, borrowing, and spending itself out of existence.

Oddly, the partnerships established by Dillon to invest money in Mouli Cohen's Ecast scheme made him personally fully liable for the funds. Typically, a general partner would never expose himself to such risk, unless perhaps the deal was a sure thing with a big upside. But the foundation's investments and the donors' additional funds didn't yield a nickel, at least perhaps to anyone other than Mouli Cohen. This left Dillon on the hook. In 2010, Dillon filed for personal bankruptcy, listing assets of $836,000, primarily from the value of his home, secured claims of $721,000 (probably a home mortgage), and unsecured claims totaling a whopping $21.6 million.

Lessons from Vanguard's demise

These are all clues to a story for which we have neither an end nor a satisfactory answer about motivations and choices. More of the Vanguard Public Foundation story will emerge in the months ahead as lawsuits wend their ways through the courts, but some lessons are discernable now:

1. Too good to be true: The lesson of Mouli Cohen, like the lesson of Bernie Madoff, is to be careful about schemes that will make your nonprofit or foundation rich. Mouli's deal was better than anything Bernie Madoff ever pitched. It should have been obvious.

2. Character counts: Dillon and many of the Vanguard people are hard to find now or won't speak on the record, but Mouli continues to issue self-congratulatory pronouncements on his website. It's hard to imagine that the philanthropic values of Mouli Cohen (or his wife, the author of the Kosher Billionaire's Secret Recipe) were any kind of comfortable match with those of the foundation.

3. Non-attentive trust in the CEO is not a healthy governing model: With warning signals in abundance, observers suggest that the board was even a little mesmerized by the CEO and his celebrity friends. And board meetings were reportedly very rare.

4. Give the grants to nonprofits, not yourself: It's so easy for foundations -- even progressive foundations -- to decide they should run their own programs rather than give grants. Whether one agrees with Vanguard's agenda or not, a legacy of giving grants to causes it believed in would have been one to be proud of . . . rather than one dirtied by using the funds on its own activities.

5. Are progressive groups especially vulnerable to disengagement? Some have suggested that Vanguard's moves to turn over some decision making to community leaders left donors disengaged, and resulted in board members who were less attentive to grantmaking decisions and governance responsibilities.

6. Sleepy press, sleepy government: How does a public grantmaker disappear and garner so little attention from the press -- including the nonprofit press -- and no attention from the government? The Internal Revenue Service? The Attorney General?

There are many stories to be found in the rise, decline, fall, and aftermath of the Vanguard Public Foundation, and this article only touches on one of them. Tragic stories have at least as much to teach us as the rosy, jargon-filled stories about themselves that foundations pump out by the thousands. The Vanguard story is one from which we will be learning for a long, long time.

Note: Part 2 of this story was published in the October 5, 2010, issue of Blue Avocado: Here

Nonprofits: Don't Get Caught Naked (Licensing)

2011-03-15T09:03:00.001-04:00

The subject of chapters and affiliates is near and dear to my heart. I have served as a national field director and an executive director in organizations that had chapters and affiliates. I developed handbooks and rules for chapter and affiliate behavior and association. An organization always runs the risk of having chapters and affiliates "fly out of formation." But it is a risk that I think is worth taking as long as the necessary precautions are put in place. At some point there is always the issue of who speaks or acts on behalf of the organization. In this article by Andrew Price, the subject is how does an organization retain its trademark when it allows its members (or chapters or affiliates) to use it without written permissions or guidelines. This may sound esoteric until it's your organization that has members running amok and using your trademark with abandon. In the future I will tell you the story of members who got a grant in the name of the organization without the organization knowing about it. Gulp! Bunnie

Nonprofits: Don't Get Caught Naked (Licensing)
by Andrew D. Price, Esq., Venable LLP

Nonprofit organizations often allow others to use their trademarks – such as their logos – without much control. This was not a major problem years ago when nonprofits were less aggressive in disputing trademarks and had charitable missions that made courts more tolerant. Today's nonprofits are different.

The Wall Street Journal noted the rise in trademark battles among nonprofit organizations in a page-one story on August 5, 2010. As I told the Journal, "The days are probably over when nonprofits just said, 'We'll just get along with anybody who's a nonprofit because we're all trying to do good here.'"

More recently, in November 2010, a federal appeals court, in a case called Freecycle[1], found that a nonprofit abandoned its trademarks because it engaged in what is called "naked licensing." Simply said, naked licensing is when a trademark owner allows another party to use its trademarks without sufficient control. All trademark rights are lost when abandonment occurs.

The amount of control required to avoid naked licensing depends on the circumstances, though Freecycle provides some guidance. The big-picture mistakes of the trademark owner in Freecycle would apply to most trademark owners. In Freecycle, the court found the owner failed to have an overall system of control. Specifically, the owner (1) failed to retain express contractual control over use of the marks by its members, (2) failed to exercise actual control over use of the marks by its members, and (3) was unreasonable in relying on the quality control measures of its members. Thus any trademark owner should establish control in writing, exercise actual control, and not rely on members to control themselves, as discussed further below.

To determine what type of control is needed within this system, it is useful to understand the type of mark being challenged in Freecycle. In Freecycle, the marks (e.g., FREECYCLE) appeared to be traditional trademarks (i.e., marks that identify the source of goods/services); the owner sought to register its logo as such. The marks did not appear to be certification marks (i.e., marks that certify the quality of goods/services) or collective membership marks (i.e., marks that just signify membership in an organization).

Arguably collective membership marks require less – or at least a different type of – quality control compared to traditional trademarks and certification marks. This is because collective membership marks just signify membership in an organization. These marks do not signify that goods/services come from a particular source (like the traditional trademark THE NATURE CONSERVANCY on a magazine) or that a product is of a certain quality (like the certification mark UL on an electronics device, which shows approval by the nonprofit Underwriters Laboratories). This distinction is important in considering how to treat marks used by the members and chapters of nonprofits. It may help to treat such marks as collective membership marks to avoid naked licensing.

Often a nonprofit wishes to allow members and chapters to use the nonprofit’s primary logo as a sign of membership, though the nonprofit does not wish to manage a certification program like UL or a traditional trademark license (e.g., as used in merchandising). In that case, the nonprofit should take three steps.

First, the nonprofit should ensure the mark does not make the impression of a certification mark or traditional trademark, but instead makes the impression of a membership mark. An effective way to convey this to the world is to add the word "MEMBER" (for members) or "CHAPTER" (for chapters) to the mark and apply to register the mark as a collective membership mark with the U.S. Patent and Trademark Office (USPTO).

Second, the nonprofit should change its bylaws and/or policy manual in such a way that will license the mark to members and chapters, and automatically bind them to specific controls for use of the mark. The specific controls would include a requirement not to use the mark other than as a sign of membership (except that chapters could provide limited services the nonprofit expects from a chapter). The controls would also require members/chapters not to change the mark, and to stop using the mark when member/chapter status is lost.

Third, the nonprofit should actively enforce the trademark terms of the bylaws and/or policy manual. (Note that, barring an instance of a nonprofit's members agreeing to be bound by the terms of a policy manual as a condition of membership, only a nonprofit's bylaws are contractually binding on members of the nonprofit – if the organization has bona fide members – so that if the provisions are included in a policy manual, you will want to cross-reference that fact in the bylaws. For non-membership nonprofts, there will need to be some affirmative agreement to the terms and conditions, such as an online click-and-accept feature.)

As a final point, it is important to note that the trademark owner in Freecycle alleged that a 1993 case called Birthright[2] stood for the principle that loosely organized nonprofits, which share "the common goals of a public service organization," should be subject to less stringent quality control requirements. The court in Freecycle said that even if it were to apply a less stringent standard, the trademark owner in Freecycle would not meet the lower standard (and that even a lower standard would still require some monitoring and control, consistent with Birthright). The court did not take the chance to say whether the "less stringent" requirements should still apply to nonprofits in today's world, though the court seemed skeptical.

We would expect a modern court that takes a position on the Birthright issue will say the "less stringent" requirements for quality control do not apply to nonprofits in today's world – especially nonprofits without charitable missions. The party in Birthright provided charitable, emergency services for women with crisis pregnancies. Many nonprofits today are not focused on charity but are more like businesses. Many nonprofits today have the size, professional staff, and resources to manage their trademarks like any for-profit company. Thus nonprofits today should be prepared to be viewed like for-profit companies for trademark law purposes.

Even if nonprofits happen to be subject to "less stringent" requirements, they should be prepared to face aggressive adversaries in trademark disputes. Thus nonprofits should rise to meet basic quality control requirements by establishing control in writing, exercising actual control, and not relying on members to control themselves. In any case, it may help nonprofits to treat certain marks as collective membership marks and take appropriate steps to ensure the marks are treated that way by consumers, the USPTO, and courts – or risk getting caught engaged in naked licensing.

* * * * *

Andrew D. Price is a partner at Venable LLP in the Trademarks, Copyrights and Domain Names practice group who works frequently with the firm’s nonprofit organizations practice. For more information, please contact him at adprice@venable.com or 202-344-8156.

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 a specific fact situation.

[1] FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509 (9th Cir. 2010).

[2] Birthright v. Birthright Inc., 827 F.Supp. 1114 (D.N.J. 1993).

Reflections from Ethiopia: Is Philanthropy Killing Africa?

2011-03-09T08:55:00.000-05:00

I found this article fascinating. It spotlights a very tough but necessary discussion. When does "charity" stifle entrepreneurial effort and economic growth? Is it that saying "Give a man a fish, he eats for a day. Teach a man to fish, he eats for a lifetime"? Todd Johnson seems to suggest that too much NGO involvement can stifle an economy. It feels counter-intuitive, after all, NGO's are often at the front of the battle line against disease and despair. Although it also reminds me of the "micro-lending" that I have taken part in where you put up a small amount of money to loan to an enterprise in a developing country and the business pays back the loan with a small amount of interest, meanwhile allowing the business to flourish and grow. This is one that will be thought provoking and like Todd, I welcome your comments. Bunnie.

Reflections from Ethiopia: Is Philanthropy Killing Africa?

by R. Todd Johnson*, Partner, Jones Day

I just returned from my seventh trip to Ethiopia. After only 120 days spent in Africa, I'm hardly an expert on anything that is happening or has happened there. And yet, I have a few impressions that seem worth sharing, particularly around how business can assist in the elimination of extreme poverty.

While there, I saw some incredibly encouraging relationships and budding opportunities for sustainable business models. For example, products from Stanford's Extreme Affordability course are selling and creating business opportunities for local entrepreneurs. These include the d.light, the Mighty Mitad and, most recently, a budding joint relationship for the production of manual well drilling equipment for rural well drilling businesses targeted for vocational school graduates.

Unfortunately, these are small and isolated examples of business opportunities (outside of the rural staple of subsistence farming and the urban staple of selling retail necessities). More often, instead, I bump into those places where well-intentioned philanthropy produces a long-term, unintended negative consequence. The following are a few examples.

BOGO Should Be A NoGo!

The "Buy-One, Give-One" (or "BOGO") model has become increasingly popular for companies here in the United States, particularly for places like Africa which, over the past decade, has become the "cause du jour." Whether it's shoes, flashlights or computers, you can find many retail products that are produced by U.S. companies (often in Asia) where the purchase price paid by a U.S. consumer includes the cost of sending a second such product to Africa.

"What's wrong with that," you might ask?

On the surface, nothing.

Take shoes, for example. Africans need shoes. In fact, shoes are critical to issues of health, nutrition, education, healthy pregnancies and much more. Take the critical issue of child malnutrition in Ethiopia. Most children there take in too few calories for healthy growth and for healthy education. And when women are malnourished, their under-developed bodies often lead to complicated pregnancies and, in the worst cases, to still-born deliveries after three days of labor and fistulas that leave them incontinent.

So how does that have anything to do with shoes?

Well, let's assume that you could provide the approximately 60 million rural Ethiopians who are living on less than $2 per day with the appropriate levels of nutrition for healthy development, but not shoes. Well, in all likelihood, those Ethiopians would still be under-developed due to the prevalence of worms and other parasites, all of which could be treated with medications, but that would continue to recur if they walk around barefoot through rural areas stepping in animal droppings.

So it's clear -- shoes are important in rural Africa.

Now comes the real issue: Should shoes be donated by Western companies, or should they be produced in country and sold?

This is where the BOGO model, while well-intentioned, appears to me to be hurting a long-term, sustainable solution for Africa.

First, as long as rural Africans have an opportunity to potentially receive free shoes donated by a U.S. shoe company, why would they want to pay for shoes? Second, as long as rural Africans are unwilling to pay for shoes, how can local African shoemakers hope to have a flourishing local business?

The NGO Economy Is Killing Entrepreneurship

Let's face it, we've drifted far afield from the original concept of “charity.” Rather, as a matter of public policy, we instead seem fixated on the idea of tax subsidies for the rich with our tax deductibility system. The result shouldn't surprise us: over time, while philanthropy increases (measured as total aggregate of dollars donated in the form of tax deductible contributions), the world's gap between the rich and the extremely poor grows.

"So what," you might ask? I mean, after all, wouldn't the gap just be much, much worse if there weren't philanthropic dollars flowing to Africa, encouraged by tax deductibility? Just because some people save their charitable giving for museums or building naming rights, doesn't mean that African AIDS orphans would receive more funding if we drew the tax deductibility line closer to charity.

And you would be right, as far as that argument goes. But arguing that we shouldn't be using our tax policy to encourage wealth redistribution doesn't deal with the real learning to be gained from a look at our tax policy, namely that it creates incredible dysfunction of unintended consequences in the developing world by encouraging too much money to Africa in the form of charity and not enough in the form of investment dollars for the creation of businesses.

Outside of direct relief aid and some of the amazing health and education research and development, much (perhaps most) of what is done in the developing world through non-profits and NGO's, could actually be accomplished through a business model, even if it would be harder to raise investment funding. Instead, someone begins selling tax subsidized and donor subsidized water pumps in Africa, because it is easier to raise the funding through tax deductible donations rather than through the rigors of proving out the business model for investment dollars, with the great result of increased deployment of inexpensive water moving technology in the developing world to aid rural farmers, but the negative results of (1) killing the market for future indigenous entrepreneurs attempting to sell water pumps at a profit and (2) locking a potentially valuable distribution channel in a non-profit, making it difficult for other for-profits to use.

And that’s before we ever get to the biggest issue facing the African entrepreneur.

Last year, while in Addis Ababa, I visited with my friend Sammy, an Ethiopian entrepreneur. Interested in how his new venture was going, I've long since learned that if you want the straight scoop from an entrepreneur, you don't ask "how are you doing." They are simply too optimistic to ever provide a meaningful answer. Instead, I asked Sammy about his greatest challenge in his new SMS content platform business. His two word answer? The "NGO economy."

Sammy noted what should have been intuitive to me after so many trips to Africa, that Africans are naturally entrepreneurial -- many have been making something from nothing all their lives, just to stay alive. But what Sammy said next rocked my world.

"Africans don't see a reward system in place for being entrepreneurial. In fact, they view it as a matter of survival, not an opportunity to lift themselves out of poverty. Rather, what they learn at a very early age, is that in order to make good money, they should learn to speak English incredibly well and then maybe, just maybe, they can get a job driving for an NGO. In a few years, if they play their cards right, they might be able to land an NGO job as a project manager and even advance further."

Sammy's point was simply this. As a struggling businessman creating new start-ups, he could not compete with what NGO's were paying for some of the best and brightest. And even worse, he said, "by the time the NGO's are done with them, there isn't an ounce of entrepreneur left."

Add to that, the typical underpaying of talent in the developed world, creating non-sustainable NGO economies in the developing world, and the brain drain that NGO’s create by attracting the best and the brightest away from business to work for NGO’s, you can begin to see some of the dysfunctions that arise from our philanthropic dollars.

And so, it seems right to ask the question:

Is philanthropy killing Africa?

I'd love to know your thoughts.

*Todd is a partner at the law firm of Jones Day, where he founded their Silicon Valley Office and runs their Renewable Energy and Sustainability Practice. The views expressed in this column are solely Todd’s personal views, not the views of Jones Day or its clients, and the information provided as to his affiliation with Jones Day is solely for purposes of identification and may not and should not be construed to imply endorsement or even support by Jones Day of the views expressed herein. © R. Todd Johnson, 2011. The thoughts, ideas and words expressed in this column were originally posted on Todd's Business for Good (sm) blog at www.businessforgood.blogspot.com, and are the property of R. Todd Johnson and may not be otherwise used or reprinted without express permission from Todd.

Communicating With Your Constituents

2011-02-28T08:11:00.000-05:00

by Bunnie Riedel, Host, Nonprofit Conversation

I do a lot of benchmarking and needs assessment studies focusing on communication. Whether you manage a nonprofit or a business, effective communication with your constituents (and prospective constituents) is essential. However, for many, lack of time and resources (both human and financial) are major roadblocks to good communication.

I am fascinated by the results of a recent Focus Group I conducted in Massachusetts. In the group was a sprinkling of small business people but mostly local nonprofits. For the Focus Group, which takes about five hours, I go through a series of multiple choice questions and provide opportunities for narrative responses. We engage in large group discussion and small group discussion. The session is designed to get them thinking about how they receive information, whether they perceive their communications to be effective, what messages they want to deliver and what vehicles of communication they believe work best for them.

Seventy-two percent of the participants spent less than $5,000 per year on communicating with their constituents or prospective constituents. In that seventy-two percent were the small community based nonprofits. Eight percent spent over $25,000 per year, that group included a real estate agency, a tourism agency and a radio station. Emails, phone calls, word of mouth and website were cited as the vehicles most used for communication. However, meetings, phone calls, newspapers and word of mouth were rated high for effectiveness, while email and websites were rated low.

When asked if they thought their communications were effective forty-eight percent answered “Maybe.”

Again, this group was very local, very micro. The opportunities to have meetings and word of mouth work for them as communications tools are greater than one would get from a larger organization, such as a national nonprofit.

They had very important, sometimes critical information to convey, such as availability of social services, assistance for problems, solutions for community building and even their own existence. The group found that obstacles to communicating their messages included an inability to know if the constituent received the message, lack of return phone calls and emails, misunderstanding of what services they provided and competition from too many other messengers (information overload).

Friends, community groups and religious institutions rated quite high as ways they received information about organizations in the community. While newspaper articles, websites and promotional advertising rated quite low.

In mulling over these responses it struck me how the “personal touch” worked in this community and it made me wonder how does one take that personal touch and apply it in the larger sense? Especially if you are talking about a larger regional or national nonprofit. Could it be that our challenge is to find ways to take the tools we assume have a wide ranging impact, such as our websites, emails, Facebook pages, etc. and personalize them? Can we make them work and feel like a community meeting or a person to person communication?

In theory, Facebook edges in that direction, it seeks “friends” and “fans,” people who have affirmatively selected to have some sort of an interest in what your organization is doing. However, Facebook also has a way of de-personalizing messages. Lost in the clutter that is Facebook, important messages risk becoming just more electronic background noise.

How do we create websites that provide intimacy and personal interaction rather than simply act as placeholders for information? Are our websites inviting and friendly? Do any of us really update them enough that people want to keep coming back to see what’s new?

And those email blasts, like Constant Contact, do they behave more like pop ups intruding on one’s communication experience or can we use them almost like friendly handshakes?

I think smaller communities often have an advantage in communication. There’s always the chance that you will run into your constituent at the grocery store or on the street corner and be able to pass on the latest information or affirm the personal relationship. The challenge for all of us is how to create the personal when the geography is so large.

As always, I welcome your thoughts on this article. Feel free to leave a comment or submit an article for Nonprofit Conversation by contacting me through my website http://www.riedelcommunications.com

Thanks for reading!

9 Keys to Using Online Video to Increase Your Nonprofit Marketing Impact

2011-02-22T13:09:00.000-05:00

Video is everywhere these days. Video can compel action in ways that no other medium can. It allows you to tell your organization's in ways you simply cannot do in any other way. Nancy Schwartz provides excellent advice (as always) on how you should approach your online video. I would also like to add that your videos can be shown on the hundreds of Public access television channels across the country and certainly the Public access channel in your community. And...if you need to find a video producer, let me know. I know of several excellent and talented video producers that can deliver a quality video to your organization. Bunnie

9 Keys to Using Online Video to Increase Your Nonprofit Marketing Impact

by Nancy Schwartz, Getting Attention

Online video is big and getting bigger. So much so that it’s rapidly changing the communications landscape. And we have some great models to work from.

Online Video is Getting Bigger – Fast

Here’s the proof, drawn from a recent ComScore study:

Over 133 million Americans watched online video in July 2007 – or 74% of US internet users.
They watched more than 9 billion videos, 27% of them on Google sites including YouTube.

There’s so much nonprofit video out there on YouTube, DoGooderTV and organizational Web sites. Here’s how distribution breaks out:

YouTube captures 40% of the current market – This most popular video hosting site receives 50,000 video uploads and streams some 50 million videos to about 6 million viewers daily.
MySpace, a social networking site, accounts for another 25%.
The remainder consists of major Internet players like Google, MSN, Yahoo and AOL, and niche venues like the nonprofit-focused DoGooderTV, each of which capture a fraction of the overall market. My guess is that audiences for these niche players will grow fast and furious.

So online video is big. But what’s the best way to put online video to work to strengthen your nonprofit marketing?

Pros Share Online Video Guidelines for Nonprofit Marketers

Here are some critical guidelines for jumping into online video:

Online video is an expectation, not an option, for online audiences 25 and younger
Higher ed marketing guru Bob Johnson suggests that online video is an expectation for most 30-and-under nonprofit audiences (definitely for prospective college students).
Keep videos short and sweet – 30 seconds to two minutes max
Video length is a classic case of less is more, advises Alia McKee of Sea Change Strategies Direct. Obviously, a good edit is crucial.She also recommends that online video should complement – not replace – other communications channels.
Know your audiences
This is definitely one of the ten commandments of online video production. You craft your messages and graphics to your audiences. Don’t forget to do the same with your video. The imagery, soundtrack and text you select must appeal to your target demographic. Video is more “in your face” than text or graphics so if you strike out, you strike out big.
Make sure your video is more than moving, talking delivery of traditional content.
Bob Johnson warns against oh-so-deadly talking heads and other staged approaches. Use video to show, not to tell – that’s the beauty of the medium.
Tap that funny bone
Most online videos that succeed in high pass-along rates (and viral distribution is a key strategy to increase views), usually include some humor or satire, say the experts at Online Video Services.Remember how Hillary Clinton grabbed attention when she spoofed the widely-viewed “Sopranos” finale on to motivate participation in her campaign song contest. Not only was she covered everywyere, she was credited with a seldom-seen-before sense of humor.But be careful in being funny. Humor is delicate. and the right timing and broad appeal have to be spot on. Testing humor is a good idea; a bomb can be fatal.
Don’t forget the call to action
It’s great to build awareness and support but you’re stopping short if you don’t include a clickable call to action at the close of your video. This Greenpeace video offers engaged viewers the opportunity to act with a simple click at the very moment they’re processing this very powerful video. Grab ‘em when they’re hot.
Work it: Put your online video to work in multiple versions and venues
Forget the stand-alone gala dinner video that never again sees the light of day. Your organization should milk your video productions for all they’re worth.Your videos, in some form or another, can be projected in your org’s waiting room, at a gala and during programs, as well as distributed online via video sites, your own site,and your blog and e-news. The possibilities are nearly endless, suggests See3′s Michael Hoffman.
Do-it-yourself is fine…for now
As a matter of fact the authenticity of “amateur” video is au courant right now. Just take a look at this video Katya Andresen “produced” as her blog post response to my query.
However, my guess is that amateur video will soon become tedious as the novelty of the medium erodes. Expectations for higher-end production values will begin to increase very quickly. I’ve watched this cycle before, most recently with blogging. Meanwhile, you can produce your own videos for almost nothing with a WebCam or video camera.
Budget $1,000 per minute of finished content for a professionally-shot and edited video
The OVS experts feel strongly that quality counts, cautioning that you get what you pay for. OVS estimates the cost for a professional video shoot, including editing, at $1K for each minute of on-demand finished content. Live Webcasts are much more costly.Another firm – Charity Docs – produces online on-demand (e.g. not live) videos for a flat fee of $2,500.

What’s working best with your online video production? Please share your tips with me as a comment below and I’ll pass them along to Getting Attention readers. Contact Nancy Schwartz

Preparing for Stricter 990 Filing Requirements

2011-02-15T07:20:00.000-05:00

For those of us here in the U.S., it's tax time! Tax time causes a certain amount of angst, whether it's business, personal or nonprofit filings. But new rules at the Internal Revenue Service regarding small nonprofits will potentially derail nonprofit efforts. Whether it's the local Kiwanis Club or the Boy Scout troop, leadership and board members need to know the new rules regarding fundraising and reporting. Lynne Leavitt lays out what you need to know simply and easily. In my own experience, I have found the IRS fairly helpful and easy to work with as long as you are straightforward and honest. It's okay to tell an IRS agent that you don't know the rules or how to do something. Really, if you have a question, pick up the phone and call. Bunnie

Preparing for Stricter 990 Filing Requirements

by Lynne Leavitt, CPA with Brakensiek Leavitt Pleger LLP

From neighborhood baseball leagues to local senior centers, thousands of small nonprofits across the country are at risk for stiff penalties or even loss of their federal tax-exempt status.

Such organizations may not be aware of the recent IRS changes that are responsible for this situation.

A critical redesign of the IRS form known as the 990 now requires nonprofits to reexamine their tax reporting procedures to make certain that anyone filing forms on the organization's behalf is aware of the new tax provisions.

The new 990 filing requirements went into effect at the beginning of 2008 for tax-exempt organizations with gross revenues of $1 million or more.

A 990-EZ, or short form, was required of all other nonprofits with revenues over $25,000.

A progressive lowering of the gross revenue threshold over the past three years has caused significant concern among nonprofit personnel and their financial advisors.

In 2009, the threshold for filing the new 990 long form dropped to $500,000 in nonprofit gross revenues. In 2010, the 990 form is required from nonprofits earning $200,000 or more.

Fees for simply preparing the revised 990 form can easily reach $6,000, a cost that could represent a significant expense to a small nonprofit.

The 990-EZ form, which costs substantially less and saves a considerable amount of time, can only be used by nonprofits under the standard form 990 gross income threshold. Nonprofits with gross revenues under $25,000 are required to file an electronic Form 990-N (e-Postcard) online.

On July 26, 2010 the IRS announced that it is providing a one-time relief for organizations grossing less than $1 million that have tax filing dates before October 15, 2010 and that have failed to correctly file in the past three years, allowing them to retain their tax-exempt status.

This one-time exemption only applies to organizations required to file Form 990-N and Form 990-EZ.
Adding to the challenges now faced by nonprofits, the IRS has hired an additional 100 tax examiners whose job is to audit nonprofit returns in order to ensure compliance with the new requirements.

Clearly, the IRS is not taking the new filing requirements lightly - it has already revoked the tax-exempt status of many nonprofits for non-compliance. When such organizations lose their tax-exempt status, they must shoulder the time and expenses of reapplying.

In the interim, any income earned during that process could be taxed, and donations to the group would not be tax deductible to the donor.

The IRS rationale for imposing these strict new requirements on nonprofits is simple: Past abuses, such as inflated salaries and unsound conflicts-of-interest have raised public concern over governance of these organizations.

On the other hand, a nonprofit with gross revenues under $500,000 may have a volunteer board and the staff may not have the necessary expertise to keep up with esoteric tax-filing requirements, and their accountants may not possess the necessary skills and expertise required.

The new Form 990 is designed to promote transparency and disclosure, thus making the nonprofit's operations open to public scrutiny.

The questions posed are extremely detailed, and will require organizations to draft new disclosure policies and procedures in order to meet filing requirements.

For most nonprofits, the key to staying in compliance and retaining the trust of watchful donors is to become familiar with IRS requirements and to take appropriate measures to ensure that IRS filings are as accurate and detailed as possible.

This may mean seeking out a tax accounting firm with extensive nonprofit experience. In view of the implications for nonprofits who fail to meet the IRS expectations, such action may be the best investment that organizations could make.

Lynne Leavitt, CPA with Brakensiek Leavitt Pleger LLP, has more than 25 years of accounting and tax knowledge with extensive experience assisting nonprofit organizations with all of their financial-service needs.

18 Resolutions for the Small Nonprofit Organization in 2011

2011-02-08T08:01:00.000-05:00

A few years ago I stopped making New Year's resolutions. I guess I finally had the realization that making a resolution at the beginning of the year and failing miserably at keeping it by February or March was not a good thing for my psyche. So my solution was "if you don't make resolutions then you won't have any guilt when you fail at keeping them." Mmmm. That logic doesn't apply to the management of your nonprofit. It is not only healthy but necessary to take time to really look at how you are managing your organization and your fundraising. Pamela Grow always has great advice on grant writing and fundraising and her 18 Resolutions for the Small Nonprofit in 2011 can be implemented any time of the year. Read, consider and "grow." Bunnie

18 Resolutions for the Small Nonprofit Organization in 2011

by Pamela Grow

Resolve to master the art of persuasive copy-writing. No no no, not your typical ‘non-profit speak,’ but persuasive copywriting. Watch infomercials (I’m serious). Take a creative writing course. Read any one of Tom Ahern’s books. As you read what you’ve written, ask yourself “would I care?”

Develop systems. Within your systems, establish small daily or weekly habits – such as 30 minutes daily of foundation research or spending 30 minutes on the phone with donors.

Quit copying your peers.

Learn how to use email effectively.

Resolve to leave your comfort zone. Before signing up for another AFP workshop, consider attending an email marketing seminar or even a Dale Carnegie training.

Establish the processes to build relationships with grant funders – just as you do your donors. A declination is an opportunity for further communication.

Integrate your communications. Online, direct mail, email, social media – it needs to be cohesive.

Via Tom Ahern: “Be different. Be fun. Be authentic.”

There’s more to social media than updating your Facebook status or posting blast tweets on Twitter. Learn how to use social media to engage.

Excel is not a database. Lose it. If you’re keeping your data in Excel, know your criteria for a database, evaluate three providers and select one. Make sure that training and support are key components.

Spend money on training. Yes, when I was a nonprofit employee, with one exception, none of my employers paid for any training. Guess what? I bought books and attended seminars on my own dime. Invest in yourself.

Start a monthly giving program. This one’s a no-brainer – need I say more?

Educate your board on fundraising. This one doesn’t involve hiring a one-time ‘board trainer’ for your next retreat. It involves developing a – dare I say fun? – culture of fundraising within your board. One very simple way to start is by sharing a clip from the Movie Mondays series Top 10 Best Movies for Helping Board Members at the beginning of every board meeting.

Take a hula hoop to work. When the stress gets to be too much incorporate a little joy and movement into your day.

Learn how to re-purpose content for different donor communications channels.

Communicate more. Yes, I know that studies consistently show that donors are turned off by organizations who over-communicate or over-solicit. Trust me, the small, community-based nonprofit organization rarely falls into that category.

Take charge and take responsibility.

Say thank you. Again and again and again. And again. Create a stewardship system and put it in writing.

Unstable Employees, Direct Threats and the ADA

2011-02-01T09:40:00.000-05:00

Nonprofits deal with employee issues just like any regular business. Have you ever had an "unstable employee?" I have. He lasted about one month. About three weeks into the job he shouted at my operations manager, throw his keys at the wall and slammed his backpack to the floor. At that very moment I realized he had to go. These actions confirmed a sense I was getting even the first week of his work for me. The fact that he was still in his probationary period gave me fairly wide latitude. However, what do you do when an employee has worked for you for years and then they begin to show signs of instability? What is your obligation?

Jon Hyman posted advice on this issue to a question by The Evil HR Lady (don't you love that title?). She raised this issue after the Tucson shootings. Hyman provides some excellent advice on how to handle a very difficult situation. Bunnie

Unstable Employees, Direct Threats and the ADA
by Jon Hyman, Attorney, Kohrman Jackson & Krantz

I opened my email this morning to find the following question from fellow blogger The Evil HR Lady:

As you probably know, I’m an avid reader, even though I’ve never lived in Ohio, although I have been to two weddings there, so that must count for something.

I've been reading about Jared Lee Loughner--the Arizona shooter and came across the e-mails written by a class member who thought Loughner was dangerous here: http://voices.washingtonpost.com/44/2011/01/jared-loughners-behavior-recor.html?hpid=topnews

My question for you, the employment lawyer, is given ADA protections, if I notice an employee becoming increasingly unstable, what can I do about it?

I’d love to read your thoughts on this.

Instead of responding directly, I thought I’d share my thoughts with everyone.

The ADA contains a specific exception for employees who pose a “direct threat.” The statute defines “direct threat” as “a significant risk to the health or safety of others that cannot be eliminated by reasonable accommodation.” The ADA’s regulations require that the determination that an individual poses a direct threat must be “based on an individualized assessment of the individual’s present ability to safely perform the essential functions of the job.” Employers must base this assessment on either “a reasonable medical judgment that relies on the most current medical knowledge” or “on the best available objective evidence.” In making this determination, employers should rely on the following four factors:

The duration of the risk;
The nature and severity of the potential harm;
The likelihood that the potential harm will occur; and
The imminence of the potential harm.

Palmer v. Circuit Court of Cook County (7th Cir. 1997) succinctly explains the Hobson’s choice employers face when deciding whether to retain a potentially violent employee. Since I can’t say it any better, I’ll just quote from the opinion:

The [ADA] does not require an employer to retain a potentially violent employee. Such a requirement would place the employer on a razor’s edge—in jeopardy of violating the Act if it fired such an employee, yet in jeopardy of being deemed negligent if it retained him and he hurt someone. The Act protects only “qualified” employees, that is, employees qualified to do the job for which they were hired; and threatening other employees disqualifies one….
It is true that an employer has a statutory duty to make a “reasonable accommodation” to an employee’s disability, that is, an adjustment in working conditions to enable the employee to overcome his disability, if the employer can do this without “undue hardship.” … But we cannot believe that this duty runs in favor of employees who commit or threaten to commit violent acts…. The retention of such an employee would cause justifiable anxiety to coworkers and supervisors. It would be unreasonable to demand of the employer either that it force its employees to put up with this or that it station guards to prevent the mentally disturbed employee from getting out of hand.

To sum up and answer the question posed, employers faced with a legitimate and potentially dangerous employee need not wait for the powder keg to explode. Instead, employers can treat the employee as a “direct threat” and separate the individual from employment.
A few additional practical points to consider:

Prior to the termination, obtain written statements from co-workers, supervisors, and managers documenting all threatening behavior.
The severity of threat is proportional to the duration of the risk. In other words, the more real the risk the less amount of time you have to allow it in your workplace.
Typically, I’m opposed to security escorts of terminated employees. The termination of an employee who poses a direct threat for violence is the exception.
Consider carrying out the termination as late in the work day, and work week, as possible. This timing will create and artificial cooling-off period and help limit the risk that the employee returns to do harm.
Put the local police department on notice. Also consider a private security detail for a period of time until you are reasonably certain the employee is not going to return to cause harm.

Finally, my thought and prayers are with everyone in Tucson as they mourn, fight for their lives, cope with what happened, and start the healing process.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Foreign Money and Political Activity - 3 Things Associations Must Know

2011-01-25T10:09:00.000-05:00

While this article may seem a bit esoteric for the average nonprofit, I felt it important in that it highlights the kind of political activity in which a nonprofit may or may not participate. At some point I may ask Ron Jacobs, author of this article, to provide a primer for 501 (c) (3) organizations on what kinds of activity they can participate in during an election cycle. Suffice it to say that if you are a nonprofit director, you need to familiarize yourself with the law regarding lobbying and campaigns, even what you might consider harmless publications, communications and internal messaging, when it comes to candidates, campaigns and elections. Bunnie

Foreign Money and Political Activity - 3 Things Associations Must Know
by Ron Jacobs, Venable LLP

Since the Supreme Court held earlier this year that the First Amendment allows corporations and associations to play a more direct role in the election process, attacks on such participation are on the rise. Whether an association has foreign members or affiliates has now become another front for those attacks, so associations must be prepared to defend themselves.

For example, the Obama administration and its allies recently have attacked the US Chamber for using “foreign money” in its political activities. The charge appears to be based on the premise that the Chamber raises funds from foreign affiliates. The Chamber has denied these allegations, saying that it has procedures in place to segregate funds from foreign sources and that all of its political activity is funded from domestic sources.

Associations can learn three valuable things from this experience:

1. Associations involved in political activity should be aware of the ban on foreign funds being used to influence federal, state, or local elections. Thus, even though associations may fund messages expressly advocating the election or defeat of candidates using their general funds, they may not raise such funds from foreign entities.

2. To be certain that associations are complying with these rules, they should implement accounting procedures to segregate foreign funds from those funds used for political activities. In addition, employees should be trained on the policies and procedures used to segregate the funds; records should be kept showing such training.

3. Even with such procedures in place, political adversaries may try to make an issue of an association’s foreign sources of revenue (as evidenced by the attacks on the Chamber based solely on the fact that the Chamber accepts foreign funds). Thus, associations should be ready to respond to such attacks and be prepared to defend against a complaint filed with the Federal Election Commission. Although an association’s records showing the segregation of foreign money are not public, they should be kept in an easy to understand format should the FEC launch an investigation.

It is hard to defend against spurious allegations of comingling foreign funds, but proper record-keeping and segregation procedures can blunt the attack and help the association defend a possible FEC investigation.

Ron Jacobs heads Venable’s political law practice. Contact him at RMJacobs@Venable.com or 202-344-8215.

This article originally appeared in the October 14, 2010 edition of Association TRENDS.

Building a Prospective Member Database

2011-01-14T13:35:00.000-05:00

Building a Prospective Member Database

by Bunnie Riedel, Host of Nonprofit Conversation

I recently received a question from a reader regarding how to build a prospective membership database. It seems the organization did not keep good records and he was trying to sort it out. But he also wondered how they could get prospect names for potential membership. If you just don’t have a very good prospect list, there are several things you can do to get started.

Buy a list from a similar organization.

In this instance, the organization was a small community historical museum. I would look at similar kinds of organizations in the community, such as the other types of museums. Are there other types of historical “societies” in the community, such as Daughters of the American Revolution (DAR), railroad societies, antique car clubs, genealogy clubs, etc? Any group, association or organization that may have an interest in history. Can you buy a list of their members? In instances where like minded organizations already have established lists, there is often “list sharing” that goes on.

Some organizations might be hesitant to turn over their lists, feeling somewhat territorial or afraid of losing members to the other organization. I understand that fear, however, I know from practical experience that cross pollinization of organizations has the opposite effect. Between two or three or more organizations that sell or trade lists, memberships or donations actually increase. For example, I support a horse rescue farm and my husband supports the local humane society. Our goal is exactly the same, to help do what we can to alleviate animal suffering and encourage animal adoption. It would never occur to us to choose one or the other, we think both are important.

Partner with a similar organization.

Host an event at your organization for the members of another organization. Think of the example of the historical museum. What if they host the annual meeting for the members of the railroad society or the antique car club? They will have accomplished a couple of things, first they will have built good will with the other organization, becoming real “partners” with them and they’ll have gotten all those members into their museum.

You can easily capture the attendee’s names and contact information by hosting a raffle or drawing and having them write down their contact information and put it in bowl. This is something you see all the time at trade shows, vendors raffling away gifts to those who leave their business cards.

Look at affiliation benefits. Here the museum offers a discount to members of the railroad society on tickets or gift shop purchases. Perhaps you create a coupon that they have to fill out with their contact information in order to get the discount. Or you provide cross membership benefits “If you become a member of the railroad society you will receive a year’s membership in the historical museum for half price,” or vice-versa.

Host a conference together. Or offer discounts on your conference to their members and again, vice-versa.

Trade advertising in each other’s newsletters or on your website. If online, make sure the click-through includes a sign up form.

Buy a table or a booth at similar organizations’ conferences or meetings. Make sure you’re giving something away, even if it’s a discount coupon. Again, capture those names by hosting a raffle or drawing.

Enlist those already affiliated with your organization.

I love “member-get-a-member” campaigns. That’s when you ask your members to bring in new members. If you sweeten the pot, say offer a premium for every member they bring in or offer a contest with a really great grand prize, your success will be better.

Has everyone on your board turned over their address list yet? They should. Or at the very least, they should send a letter to their friends and colleagues asking them to join or support your organization. I would provide your board members with the sample letter, outside and return envelopes.

Finally…

There are a lot of great minds out there that read this blog. Please post your suggestions and comments below.

Facebook and Twitter Safety: How to Protect Yourself and Your Computer

2011-01-03T14:03:00.000-05:00

About a month ago one of my Facebook "friends" had her Facebook account hacked and it sent out bogus messages to all of her friends, including me. Today I was on the phone with a woman who complained her screen was blinking and she thought she had a virus. Even though I religiously check my virus software, I am constantly concerned about catching a computer virus from surfing the net, exchanging emails or Facebooking. Your nonprofit Facebook or Twitter account can be hacked, do as Don McCombie suggests in this article, protect your yourself and your nonprofit! Bunnie

Facebook and Twitter Safety: How to Protect Yourself and Your Computer

By Don McCombie, NoWorriesIT.Net

A virus that hit Facebook hard in 2009 is unfortunately back: the Koobface virus. Koobface, (an anagram of 'Facebook') infected computers will send a message to the user's Facebook friends suggesting a video or website to click on. Once clicked, the virus infects that computer and sends itself to that user's Facebook friend list. To make matters worse, Koobface is also now turning up on Twitter.

Also in 2009, many Facebook users were sent messages containing links to an application which would reveal who their top Facebook friends were. Rumors quickly spread that the application was a virus, dubbed the “Facebook Fan Check Virus”. Shortly after, numerous fixes and virus removal tools cropped up that allegedly removed the Fan Check virus. After an investigation by Facebook, it was determined that the Fan Check application was not a virus, but almost all of the applications to remove it were.

To protect yourself these and other malicious social media viruses, take the following precautions:

1. Make sure your antivirus software is up to date and functioning properly. Most anti-virus programs are updated almost continuously in response to new viruses and spyware. Having a current anti-virus program is essential to staying protected.

2. Use the latest version of whatever web browser you prefer. Like the anti-virus software above, new versions of a web browser will roll out in response to a known vulnerability. If there is a more recent version of your preferred web browser, use it.

3. Don't click on links from 'friends' if the content or wording doesn't seem like something that friend would send. Almost all of the malware that infects social media sites replicate themselves by sending themselves out through the user’s address book. So even though the message may indeed be from your friend’s account, it may not be from your friend at all.

The good news is that Twitter is now scanning for viruses and browsers are using new tools to check URL's against those on a black list which will prevent redirecting users to fake and unsafe sites. Facebook also has its own Security Fan Page (http://www.facebook.com/security) where followers can learn about the latest in social media safety.

Don McCombie is the owner of NoWorriesIT.Net, a network support and security company located in Westminster, MD. Don has been keeping business networks safe from viruses, spyware and hackers for over 15 years. He can be reached at 410.751.7650, or visit the website at www.noworriesit.net.

10 Things Your Last Minute Online Donors Want

2010-12-20T11:40:00.000-05:00

Count me in as one of those who makes last minute end of year gifts. I actually spend quite a bit of time thinking about it, who I will give to, why I give, etc. I am most interested in giving to organizations that do work I am interested in or work on issues I care about. However, even though I already know where my end of year donations are going, I am hoping my these organizations will make it simple for me.

Gail Perry of Gail Perry Associates lays out simple, easy steps you can use (and you can use them right away!) to make those last minute appeals and drive your fundraising up before the New Year. Read, get inspired and then get in there! Bunnie

10 Things Your Last Minute Online Donors Want

by Gail Perry, Gail Perry Associates

Holiday giving is expected to be over $48 billion this year, and at least $6 billion will be online, based on a new study by Convio.

43% of donors will give via direct mail and 21% from online appeals.

And 40-60% of those online gifts will be made in the last two days of the year.

Don’t forget that online donors are wealthier, higher-dollar and younger donors.

Here’s what they are looking for:

1. They want to feel good about their gift.

Remember that your donor is making a personal, emotional statement with their gift. They are not shopping for hardware or bath towels.
Talk a lot about the good they are doing. Put evocative photos on your donation page.
Make your post-gift finish page warm and fuzzy. Send a lovely thank you note that touches their heart.

2. They want to feel connected to the cause.

In the Convio study, 74% of people said they responded most to emotional solicitations that provide info on the people, animals or places in need of their assistance.
Get yourself and your organization out of the way.
Don’t ask for your organization, instead ask donors to help the animals, trees, kids, sick people, students, artists, whoever you are serving and helping.
As I like to say, “You gotta play that violin” and make the emotions stir!

3. They want to know where the gift is going.

They want to know exactly what their gift is accomplishing – and the impact it will have. Lay it out clearly and don’t mess around.
Recap your outcomes and accomplishments for the year, and let them know what’s next.
Be specific.

4. They want holiday gifts that will support your cause.

Help your donors make gifts, and offer easy shopping for nontraditional gifts. Try these opportunities:

“Last minute holiday gifts” – promote gift memberships that your donors can give to others. The World Wildlife Fund sends a “Last Minute Ways to Say Happy Holidays” e-mail that suggests adopting an animal on someone’s behalf online.

“Avoid the crowds and shop at home” – buy from our shop on line and ship to those on your gift lists.

“Holiday e-cards for your family and friends” – a green alternative that can promote your nonprofit AND carry a donation to your cause.

5. They want to be reminded.

It’s ok to remind your loyal donors about the need and how they can help.
They’re busy, busy, busy. And repeating your appeal is always more powerful and successful than a single ask that goes out as a stand-alone effort.
Check out this sample year-end email campaign that had three messages going out the last week of the year:

December 23: a “holiday support” email
December 29: an email emphasizing tax deductible giving opportunities
December 31: a final “last chance to donate” email

6. They want choices.

And all donors have a different vision of how they want to help you and how they want to give.
So be sure to offer them a variety of ways to support you and different giving opportunities all tied to specific results your organization achieves.

7. They want an uncomplicated check out.

Remember that a majority of would-be donors never make it through the process to complete their gifts. Some stats show that 98% of visitors to an organization’s donate page do not complete their gift.
Make your donate page seamless and easy to whiz through.
Check out this list of the 11 Deadly Sins of Donate Page Design from Seachangestrategies.com. Be sure you avoid these common mistakes in nonprofit donate pages:

Cluttered pages
Unintuitive layouts
Unclear directions
Too long, complex forms
Unnecessary fields
No address or phone number
Error messages are confusing

8. They want back up data on your results.

Be sure your web site is up to date and conveys credibility.
Remember that over 65% of ALL DONORS will probably check out your web site before they write a check or make a gift, according to Kivy Leroux Miller of nonprofitmarketingguide.com.
Here’s my list of the Top 10 Things donors want from your website. And be absolutely sure that your call to action is clear, concise and directive!

9. They want to donate quickly.

Make it easy for impatient online donors who are in a hurry. If you make it difficult for them, they’ll be gone – probably to another nonprofit’s site.
Make your home page on your site optimized for donations. Put an extra large “donate now” button right on that page. (Yes, size does matter!)
And try adding a photo on the inside of the button so that it has a human face. (Dogs and children are wonderful.)
Check out Network for Good’s three tips for the best donate button: make it big; put it above the fold, and create a simple, easy-to-use contribution form.

10. They want it simple.

Since they are busy, busy, busy, don’t over complicate your site or the ask. People visiting your site at year-end are there for one purpose only – to give.
Put the ask right up front and make it easy for them.
These strategies will help you bring in lots and lots of online gifts. Before you know it you’ll be zooming past your fundraising goals for year-end!
Happy prospecting and may generous donors flood in to your site and your cause!
Please leave a comment and tell me what you think

Contact Gail at Gail Perry Associates

Want to Avoid Fraud? Look to Your Board

2010-12-13T12:13:00.000-05:00

While we would like to think that fraud doesn't happen as often in the nonprofit community as in the business community, it simply is not true. I still remember the story of the national religious organization whose Treasurer walked off (for a period of time) with $2 million dollars. While speaking to someone who knew the story I asked "How could that have happened?" The response was that the Treasurer had buried the Board in paperwork, creating confusion and a subterfuge to mask her thievery.

In my own experience, I caught an attempt at fraud by an employee who had given her resignation. She had lifted at least one check and might have cashed it had I not discovered the check was missing. Could she have done major damage? Not really, but it was a lesson for me to do better at checking potential employees' backgrounds. Seems she had done the same thing on more than one occasion at her previous job. The following article by Dr. Eugene Fram and Dr. Bruce Oliver provides excellent advice on what you need to do in order to protect your nonprofit against fraud. Enjoy! Bunnie

Want to Avoid Fraud? Look to Your Board:

Dr. Eugene Fram

Here’s a guide board members can use to keep fraud away from your door.
By Eugene H. Fram & Bruce L. Oliver

The board of the Association for Underprivileged Children is meeting in the aftermath of a dreadful situation. The police report summarizes what happened:

Over $50,000 designated for camping scholarships for the Association for Underprivileged Children has been stolen. The perpetrators are John Roe, the Association’s chief financial officer and his wife, Nancy, the camp director. The couple pilfered assets over a three year period. Nancy requested camp expenses, such as athletic equipment, for nonexistent campers. John then approved payment to a shell company operated by Nancy. Both are currently thought to be in South America. The organization doesn’t have fraud insurance. Funding for the current camping program is in jeopardy.

Dr. Bruce Oliver

While the above scenario is fictional, it approximates an alarmingly common occurrence. One estimate, by Harvard University’s Houser Center for Nonprofit Organizations, suggests that fraud losses among U.S. nonprofits are approximately $40 billion a year.

How can nonprofits avoid such traumatic situations? The first step is to make certain that board members have the knowledge necessary to keep fraud at bay. Here are some suggestions for doing just that:

Be sure your board has the following committees:

(1) A finance committee charged with these tasks:

• Review the overall results of a yearly independent audit, conducted by an outside auditor.

• Oversee executive compensation, pension benefits, and other finance activities.

(2) A separate dedicated audit committee containing only independent board members. (Since nonprofit board members aren’t compensated by the organization, all directors are, by definition, independent. However, some directors may have strong social, family, or political links to management personnel. It’s prudent to exclude such people from serving on the audit committee.) The board members on this committee should be reasonably financially competent, with at least one having a strong finance background who is able to overview audit issues in detail. In particular, the committee should do the following:

Conduct a yearly review of conflict-of-interest policies.
Make certain that all employees and board members sign a conflict-of- interest statement.
Assure that new hires are vetted for honesty.
Meet every four to six months. (In times of organizational emergency or stress, meetings may be required more frequently.)
Be sure that a certified audit is completed at least every two years – once a year if at all possible.

Hire an external auditing firm

In the past, it was common for managers to select the external auditing firm with “rubber stamp” approval by the board. In today’s more vigilant environment, the board must be more involved. Hiring an auditing firm should be a partnership effort between management and board. The task is as serious as hiring a CEO and should be given the same amount of time and care.

The board audit committee should review the following information when hiring the auditing firm:

the nonprofit audit experience of those who will be performing the audit
the history and client list of the auditing firm
the proportion of the firm’s clients that are nonprofits
the size of the firm and whether it has the ability to serve a new client well
the estimated costs for each audit
the firm’s suggestion for a financial consulting firm if your organization needs such counseling. (It’s a conflict of interest for an auditing firm to do both auditing and financial consulting.)

Meet with external auditors

When your board’s audit committee meets with the external auditors, the organization’s CFO and other key financial personnel will be present. At some point in each meeting, however, board members need to meet with the auditors in executive session without the CFO, CEO, and other managers. At these private sessions, board members need to ask the auditors, “Do you have anything to tell the board without management present?” This gives auditors a chance to report any concerns that need board consideration, such as unusual travel, entertainment, or other expenses or any transactions that raise red flags. Audit committee members also have an opportunity to raise questions about the professional competence of the organization's internal financial personnel.

Some larger organizations may employ one or more internal auditors. The audit committee should meet with these people several times a year.

Unless specified in the audit agreement, fraud detection is a secondary purpose of the external audit. The main purpose is to assure that information in financial statements is a fair representation of financial activities. However, auditors can -- and often do -- uncover indications of fraud during a routine audit, and it’s their duty to report it.

Develop a conversation with external auditors

In the typical nonprofit, only one or two audit committee members will be able to formulate detailed technical questions for the external auditors. However, to help uncover fraud, every board member should be familiar with six audit- related topics and be able to pose questions about these six topics:

(1) Are internal controls adequate? The organization’s control system needs to be divided into operating functions. Then, each operating function must be performed by someone different so that each person checks the others’ work. For example, a sales associate completes a retail sale, but a sales audit person deposits the cash to the bank account. In addition, all financial people need to take scheduled vacations so that another employee is responsible for the vacationer’s work for at least two consecutive weeks a year. (In the fraud case that begins this article, the transactions between husband and wife shouldn’t have been allowed. At the very least, the transactions should have been reviewed in detail by a qualified independent third party. Proper internal controls would have brought the fraudulent situation to light.)

(2) Are financial records accurate? External auditors must certify that the following records are in proper form: financial statements, management contracts, sales of major assets, bonus payments, and long term lease agreements.

(3) Are activities and expenditures properly authorized? For example, have any extensive changes in plans been approved by the board? Have major expenses been properly budgeted? Have travel costs over a prescribed level been approved by a senior officer? Depending on the size of the organization, do all expenditures over a certain amount require two signatures from senior officers?

(4) Do all reported assets actually exist? This question is especially important to answer if the organization holds any physical assets at a distance from its main offices.

(5) Is the organization performing any activities that might endanger its tax-exempt status? Smaller nonprofits sometimes let licenses or even tax-exempt certificates lapse. It’s vital to certify that such documents are up to date and that taxable income and charitable donations are reported separately.

(6) Is the organization paying its payroll taxes, sales taxes, and license fees on time? Does the organization file its financial reports, like the IRS 990 report, on time? Many fraudulent cases involve failure to report and pay employee withholding taxes.

Trust but verify

Since fraud is such a pervasive cancer in the nonprofit environment, it needs intense board attention. Cases of nonprofit fraud undermine the good work of the organization and the nonprofit sector.

Every board member should know enough about finance to spot suspicious activity when it occurs. Everyone involved in the organization should be alerted to the fact that board members are giving serious attention to the fraud issue. That knowledge, in itself, may deter someone from trying to steal.

Prime Reading for Your Board

Be sure all board members have read the following Nonprofit World articles (available at www.snpo.org/members):

How to Have an Audit without Breaking the Bank (Vol. 20, No. 4)

New Internal Control Guidance (Vol. 28, No. 1)

Nonprofits without Audit Committees Risk Disaster (Vol. 22, No. 2)

Fraud: How to Prevent It in Your Organization (Vol. 26, No. 3)

Make Good Use of the Treasurer and Finance Committee (Vol. 27, No. 2)

Protecting Your Organization against Financial Misuse (Vol. 17, No. 4)

The Audit Committee: Why You Need one, How to Form One (Vol. 6, No. 6)

Setting Up a Control System for Your Organization (Vol. 16, No. 3)

New IRS Employment Tax Initiative: What Does It Mean for Nonprofits? (Vol. 28, No. 2)

Conflict of Interest in the Board Room (Vol. 17, No. 2)

How to Find the Perfect Auditor (Vol. 22, No. 3)

Dr. Eugene Fram (eugenefram@yahoo.com) is professor emeritus, E. Philip Saunders College of Business, Rochester Institute of Technology (RIT). He is the author of Policy vs. Paper Clips, which describes a nonprofit governance model that has been adopted by thousands of nonprofit organizations. Dr. Bruce Oliver (blobbu@rit.edu) is professor of accounting and director of the Saunders Institute for Business Ethics and Corporate Social Responsibility at RIT.

The 1099 Rule and What it Means to Your Nonprofit

2010-12-02T10:30:00.000-05:00

by Bunnie Riedel

My nonprofit expertise includes a healthy dose of public policy advocacy. That said, I have never used this blog for a “call to action” on specific legislation. However, today I must.

Deep in the health care legislation was a buried provision that will wreck havoc on nonprofits and businesses alike. It’s being called the “1099 Rule.” The legislation mandates that all businesses and nonprofits issue 1099’s to any individual or corporation from whom the business or nonprofit has purchased $600 or more in services and goods.

This is a major change in our tax law. Currently, nonprofits must issue a 1099 to an individual or unincorporated business if they purchase $600 or more in services. Say you contract with someone to sell advertising for your summer tradeshow or you bring in a strategic planning consultant to work with the board. You would issue a 1099 to that person if the total payments over the course of a year were $600 or more. However, you wouldn’t issue a 1099 for purchasing the conference space for your trade show or for the cost of renting a conference room.

This 1099 rule would apply to all purchases made over the course of a year. So if your nonprofit purchases $2,000 worth of goods from Staples, you will have to issue a 1099 to Staples. Or say you buy a new computer from Best Buy, you would have to issue a 1099 to Best Buy.

To issue the 1099, you will have to know where to send it. Additionally, you will have to have the Employer Identification Number of Staples or Best Buy or whatever company you’ve purchased goods from.

Perhaps large nonprofits or businesses will be able to assign a staff person or two to track down the corporate address and EIN of their vendors, but smaller entities typically don’t have that luxury.

Nonprofit and business groups have been working to get the 1099 Rule repealed. As of November 29th, that effort failed to pass the Senate. This is the second time the repeal has failed to pass.

The American Society of Association Executives has information on this issue ASAE and it has a sign-on letter your nonprofit can use. I recommend you download the letter, sign it and email it in. All mail to the Capitol is irradiated and takes two to three weeks to reach the member’s office, also, often the irradiation process tears up the envelopes and the letters.

Additionally, I recommend you pick up the phone and call your Senators and Representative.

Senate Contact Information

House of Representatives Contact Information

It's not clear who slipped this into the health care bill, but it certainly was not someone who understood the impact on the nonprofit community (nor on the small business community).

Send your sign on letters and make your phone calls today! Be sure to pass this information onto your board and your members, ask them to sign on to the letter and to make phone calls.

Good luck to all of us! And be sure to use the Comment button to let me know how it goes.

Principles for Good Governance and Ethical Practice

2010-11-26T11:19:00.000-05:00

There are two things I really, really like! Finding excellent nonprofit resource materials and then finding out they are free! While the "Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations" was originally published by the Independent Sector in 2007, the "Priniciples" remain the same.

There are four sections to the guide:

Legal Compliance and Public Disclosure
Effective Governance
Strong Financial Oversight
Responsible Fundraising

You can download the entire document for free at the Independent Sector website. I urge you to download it and share it with your Board of Directors. Consider it a check list for best practices. The following is from the first section, Legal Compliance and Public Disclosure. Enjoy! Bunnie

A charitable organization must comply with all applicable federal laws and regulations, as well as applicable laws and regulations of the states and the local jurisdictions in which it is based or operates. If the organization conducts programs outside the United States, it must also abide by applicable international laws, regulations and conventions that are legally binding on the United States.

A charitable organization should have a formally adopted, written code of ethics with which all of its directors or trustees, staff and volunteers are familiar and to which they adhere.

A charitable organization should adopt and implement policies and procedures to ensure that all conflicts of interest, or the appearance thereof, within the organization and the board are appropriately managed through disclosure, recusal, or other means.

A charitable organization should establish and implement policies and procedures that enable individuals to come forward with information on illegal practices or violations of organizational policies. This “whistleblower” policy should specify that the organization will not retaliate against, and will protect the confidentiality of, individuals who make good-faith reports.

A charitable organization should establish and implement policies and procedures to protect and preserve the organization’s important documents and business records.

A charitable organization’s board should ensure that the organization has adequate plans to protect its assets—its property, financial and human resources, programmatic content and material, and its integrity and reputation—against damage or loss. The board should review regularly the organization’s need for general liability and directors’ and officers’ liability insurance, as well as take other actions necessary to mitigate risks.

A charitable organization should make information about its operations, including its governance, finances, programs and activities, widely available to the public. Charitable organizations also should consider making information available on the methods they use to evaluate the outcomes of their work and sharing the results of those evaluations.

Videoconferencing for Nonprofits

2010-11-15T14:17:00.000-05:00

You've thought about it and whether or not it could work for your nonprofit...video conferencing replacing in-person meetings. How can you properly convey important information when you aren't in the room? Video conferencing has come a long way in the last few years as broadband has been deployed. And if you're not videoconferencing at least some meetings, maybe now is the time to take a serious look at its advantages (economic and social) and whether a video conference model is right for you. Bunnie

Video Conferencing for Nonprofits
by Arron Brown, Editor of Lifesize.com

The downturn in the economy is very much upon us, small, medium and large nonprofits continue to struggle during these drawn-out and daunting times. Nonprofits have struggled particularly, and have come up against their toughest challenges yet. The constant need to tighten budgets and employees has become standard practice within many nonprofits. With nationwide cuts and reduced public activity, many nonprofits have had to act swiftly to ensure that their organizations can carry on with their day-to-day duties as normal.

Many organizations within the nonprofit sector are likely to have their offices spread across Europe and in some cases, the globe. Due to funding and budgets being cut, due to the economic downturn, nonprofits have found it increasingly difficult to travel to their other sectors for important meetings and conferences. However, due to the recent introduction of web based onferencing software this allows the nonprofit to effectively connect with members and donors anywhere in the world, using the internet. This allows them to significantly save on large travel fees, whilst being able to speak to key members of their organization. There are numerous advantages to a non-profit organization when using web based video conferencing, some of which are as follows;

- Cater to the unique needs of staff members; allow staff to be more productive, by being able to work remotely or collaborate with other staff members

- Keep volunteers updated; Train and organize volunteers upon upcoming issues and events within the organization.

- Brief the community; Allow society members to be regularly updated with company news and broadcasts.

While video conferencing is still the most expensive of all electronic conferencing options, costs have decreased substantially since the beginning of the 21st century. This has made it possible for non-profit organizations to use this communication resource more frequently, and still remain within their budgets. This includes the cost of video conferencing equipment, site certifications at conference room sites, and the conference fees that apply during a live conference. In the years to come, more innovations in electronic communications will likely reduce the cost even further, making this resource even more cost efficient for organizations of all types and sizes.

By incorporating video conferencing within a nonprofit organization, they can be rest-assured that their costs will be significantly reduced, not only this but, productivity within the organization will be much more effective. Neighboring communities and societies will also feel much less pressure without the need of travelling hundreds of miles for important meetings and discussions.

Department of Justice Issues Rulemaking Notice on Mandatory Website Accessibility for the Disabled

2010-11-08T09:53:00.004-05:00

Website accessibility is important for nonprofit or nongovernmental organizations. In the United States, our Americans with Disabilities Act (ADA) requires that all governmental or private entities that open their doors to the public be accessible, and that includes their websites. However, the notion of accessibility should be an important subject for nonprofits throughout the world. According to the New York based Disabled in Action, 18% of people have a disability with 12% reporting a severe disability. Internet accessibility is especially important to those who have visual or auditory disabilities. And this becomes even more critical as populations age. So while this article from the law firm Venable is United States centric, I hope it gives our international readers ideas for making their online presence even more friendly to disabled populations. Bunnie

Department of Justice Issues Rulemaking Notice on Mandatory Website Accessibility for the Disabled
by George W. Johnston, James Edward Fagan, III and
Jeffrey S. Tenenbaum

The United States Department of Justice (DOJ) recently reiterated its intent to enforce website accessibility standards under the Americans with Disabilities Act (ADA). The DOJ is focusing on ensuring that covered entities provide ready access for the disabled to their websites. In short, the ADA accessibility rules cover any entities (governmental or private) that open their doors to the public, including nonprofit organizations, places of lodging, retailers, restaurants, medical facilities, banks, local governments, and schools, among others. Any nonprofit with a public website is directly affected by theses accessibility rules. The DOJ has consistently maintained the position that websites operated by covered entities are “public accommodations,” and recent court decisions have supported this view. The courts have reasoned that websites serve as extensions of, and invitations to, the physical structures that serve as more traditional public accommodations.
and Jeffrey S. Tenenbaum

The DOJ has issued an Advance Notice of Proposed Rulemaking (ANPRM) for public accommodation websites and has promised increased enforcement and heightened scrutiny of public and private websites. Through the public comment process, the DOJ seeks input on such matters as barriers to website accessibility, coverage limitations of the ADA, cost of compliance on small organizations and the need for increased DOJ enforcement. While the DOJ will solicit comments over the next several months before it issues final regulations, now is the time for entities covered by the upcoming rules to address any accessibility issues on their websites.

Nonprofit organizations should review their website content and design for accessibility by individuals with disabilities, including visual, motor and cognitive impairments. For example, web designers should be employed to provide text descriptions for visual content that is compatible with assistive technology (braille and screen readers) used by the blind. Web design should be consistent and easy to navigate, and all video and audio should be captioned and should minimize the use of color cues. Online recruitment and hiring capabilities should conform to all ADA standards as well.

In addition, website content should include a full description of how your organization provides full access to the disabled at its physical locations. Architectural and engineering compliance should be fully explained and all online purchasing opportunities should be available to persons with disabilities. Any barriers to, or limitations upon, accessibility should be fully disclosed. For example, a travel industry association should consider counseling its members to provide informative descriptions of access limitations for all facilities it recommends to the public. Similarly, retail industry associations should describe best practices to its member stores that regularly host the public.

Failure to comply with the new regulations may leave a covered entity exposed to damages and other compliance measures initiated by the DOJ, as well as lawsuits by individuals under the ADA. Venable attorneys will be monitoring DOJ’s rulemaking, as well as legal developments in the legislative and judicial arenas.