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

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

Videoconferencing for Nonprofits

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.

7 Quick Steps for Writing Grants

I have to make a confession, grant writing is my least favorite thing to do.  So when I come across expert advice, like the tips below from Betsy Baker, I cheer.  The first one about not creating new programs so you can slam your organization into a grant is the best!  Creating a new program in order to get a grant may actually cost you money in the long run in terms of staff time, resources, etc.  Following guidelines is critical.  I hope these and the rest of Betsy's quick steps are useful to you.  Bunnie

7 Quick Steps for Writing Grants
by Betsy Baker, Your Grant Authority

Sometimes I get into some pretty deep stuff about what I’ve learned during my last 16 years in fund raising and the tricks and tips I’ve used to secure boatloads of grant money. But sometimes I delve so deep to give my clients “insider” information that I forget to start with the basics. So, here you go, what is elementary to me is not for the grant writer that at this time is just poised for success and I promise not to leave you behind:

1. The grants you write should directly support your mission – Don’t go chasing those grant dollars that don’t apply to you and don’t crank up a new program just to get the money. Believe me when I tell you that it’s not worth it.

2. Determine programs that you can get funding for – Some of your programs are going to be more attractive to funders than others. Determine the program that the funder likes and match your application to those preferences.

3. Identify potential funding – Research and homework are essential for success in this step. Carefully comb through the grant funder’s requirements and preferences before submitting an application that doesn’t fit their criteria.

4. Acquire guidelines from the grantor – Guidelines are there for a reason! Follow them carefully and submit your application according to their instructions.

5. Write the application in compliance with the guidelines – Duh! But do you know how many applications are rejected simply because the potential grantee didn’t know how to follow simple instructions? Be sure that yours isn’t in the “reject” pile for that reason.

6. Submit the application – Again, follow the directions given. If it states that the application must be in their hot, little hands by 5:00 p.m. on August 3rd, that doesn’t mean 5:05. I’ve heard horror stories from writers that have written their fingers to the nub only to not be able to get the application in on time. Bonus tip for you – start the application in plenty of time!

7. Administer the program well if funded – Once you find out that you’ve gotten the grant, start thinking about next year’s application. Give them no reason during the funding period not to fund you again. Spend the money exactly how you detailed in your budget and regularly report progress of your goals and objectives to the funder.

You can contact Betsy at http://www.yourgrantauthority.com/

Who Pays Your Bills? What Foreign-Supported Nonprofits Need to Know about the Foreign Agents Registration Act

The Lobbying Disclosure Act put quite a few regulations on nonprofits and associations regarding reporting of lobbying activity.  Frankly, I disagree with how the Act was written in that it doesn't take into account small nonprofits who may not have the staff or resources to fully comply with the stringent reporting requirements.  However, one key aspect of the Act is aimed at foreign nonprofits and associations and requires registration as well as disclosure of finances and activities in the pursuit of lobbying our elected officials or administratively appointed positions.  The following article needs to be read by all foreign nonprofit entities with a presence on Capitol Hill.  The penalties are stiff and not reporting correctly could cause foreign nonprofits to lose their ability to lobby.  Bunnie

Who Pays Your Bills? What Foreign-Supported Nonprofits Need to Know about the Foreign Agents Registration Act

by D. E. Wilson, Jr., Esq. and Andrew E. Bigart, Esq.,Venable LLP, Washington, DC

Lost in the media frenzy surrounding the arrest of 12 Russian spies by the FBI in June 2010 was the fact that the spies were arrested – not for stealing state secrets or trading technology – but for failing to register with the U.S. Department of Justice (“DOJ”) under the Foreign Agents Registration Act (“FARA,” 22 U.S.C. § 611 et seq.). This statute requires U.S. persons to register when they engage in certain political or quasi-political activities on behalf of “foreign principals.” The media’s obsession with Anna “Sexy” Chapman aside, the real lesson from the recent arrests is that U.S. persons – including trade associations, charities and other nonprofits – that engage in political or quasi-political activities on behalf of foreign principals must comply with FARA or risk similar public embarrassment and possibly criminal penalties.

What Is the Foreign Agents Registration Act?

FARA ensures that the U.S. Government and the people of the United States are informed of the identity of foreign persons attempting to influence U.S. public opinion, policy and laws. The statute requires persons representing foreign principals to register with DOJ for engaging in any of the following: (1) political activities; (2) public relations; (3) political consulting; (4) publicity activities; and (5) information-services. The statute defines the term “foreign principal” broadly to include foreign governments, political parties, individuals, and corporations.

Many nonprofits are surprised to learn that there is no FARA exemption for nonprofit, tax-exempt entities. Rather, FARA provides limited exemptions for raising funds for medical assistance and charity, and activities promoting bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts. In addition, FARA provides an exemption for persons registered under the Lobbying Disclosure Act of 1995 (this exemption does not apply to the representation of foreign governments or political parties).

Persons required to register must provide DOJ with information on the nature of the relationship with the foreign principal, the work to be performed for the foreign principal, and, on a semi-annual basis, submit a report of the activities performed on behalf of the foreign principal and funds received from, or disbursed on behalf of, that foreign principal. Penalties for failing to comply with FARA can include a fine of $10,000 or imprisonment up to five years.

Why Should Nonprofits Worry about FARA?

The recent arrest of the 12 Russian spies under FARA underscores that DOJ will take action against persons who fail to comply with the statute’s requirements. For example, just days after the arrest of the Russian spies, DOJ obtained a guilty plea from a former U.S. congressman who failed to register under FARA for lobbying on behalf of an Islamic charity.

The issue of nonprofits and registration under FARA has become a hot topic in the blogosphere. DOJ has apparently opened an inquiry into whether two U.S. nonprofit organizations, B’Tselem and Americans for Peace Now, have violated FARA by failing to register as foreign agents. The investigation was launched in response to information provided to FARA by a group opposed to the political positions of the two nonprofits. Similarly, there are numerous websites devoted to whether the Council on American-Islamic Relations is a foreign agent that must register under FARA. The list of websites purporting to expose foreign agents goes on and on. In each case, the FARA hook is that the nonprofits receive a substantial proportion of their operational funding from foreign sources or act at the direction of a foreign parent or government entity.

The FARA registration requirements extend to trade associations that focus primarily on economic – as opposed to political – issues. For example, any trade association or export council that represents the interests of a foreign person or country may be subject to FARA. In this regard, several large international trade councils – such as the Korea-United States Exchange Council – are registered under FARA. There are, however, many other trade associations and export councils that appear to represent foreign interests that have not registered.

How to Ensure that Your Nonprofit Complies with FARA

Determining the types of activities that trigger the need to register under FARA (or the Lobbying Disclosure Act exemption) is a challenge, made even more difficult by the dearth of DOJ guidance on the subject. To avoid the possibility of criminal sanctions or public embarrassment, U.S.-based trade associations, charities and other nonprofits that receive funding from foreign sources or that are affiliated with a foreign parent should review their operations and funding to determine whether they qualify as a foreign agent of a foreign principal under FARA. This is especially true for any nonprofit that engages in U.S. lobbying or political activities.

If registration is required, legal counsel should be consulted for guidance on preparing and filing the required registration forms.

Mr. Wilson is a partner in the Washington, D.C. office of Venable LLP and a former Treasury official. Mr. Bigart is an associate in the Washington, D.C. office of Venable LLP. For more information, contact the authors at dewilsonjr@venable.com or aebigart@venable.com, or at 202-344-4000.

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.

Assessing Associations' Identity Theft Red Flags and Risks

Here's the second half of the article I posted a couple of weeks ago by Thomas A. Cohn and Jeffrey S. Tennenbaum at Venable, LLP.  Assessing Associations Identity Theft Red Flags and Risks This would be a sample worksheet to help you assess your risk.  It's probably be helpful to you to re-read the above article before beginning this one.  We hear so much about identity theft these days and certainly no database is safe, but it is incumbent on nonprofits to do everything they can to keep people's most sensitive information safe.  Bunnie

ASSESSMENT OF ASSOCIATION’S ACCOUNTS/SERVICES, METHODS FOR OPENING ACCOUNTS, METHODS FOR ACCESSING ACCOUNTS

[Association] allows customers to open and access accounts and conduct transactions in-person, by mail, by telephone, and online [modify and change accordingly, both here and on following charts, to eliminate any irrelevant charts or portions thereof]. The risk of identity theft relating to the type of account, and the means of opening and accessing accounts and conducting transactions, are assessed below:

IN-PERSON


Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

BY MAIL

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

BY TELEPHONE

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts

The overall risk rating for account opening, accessing accounts, and conducting transactions in person is [low/medium/high].

ONLINE

Accounts Offered Interaction IDT Experience Risk

Large corporate accounts

Small corporate accounts

[insert any other distinct types of account]

Sole proprietorship/ individual accounts


[Note: In determining the association's risk regarding accounts/services and methods for opening and accessing accounts/services, you should review all types of accounts/services offered to customers, and note any restrictions on accounts/service availability that might mitigate risk. Also, review all methods for opening and accessing accounts/services and any restrictions that might mitigate risk.]

ASSESSMENT OF ASSOCIATION'S PRIOR EXPERIENCES WITH INFORMATION SECURITY BREACHES AND/OR IDENTITY THEFT CONCERNING CUSTOMER ACCOUNTS

[Association] had [number] data security breach[es] in XXXX, 200X [if true, and modify number and response accordingly]. No customer account information was accessed, and no customer accounts were accessed. In response to this breach, [Association] ______________________ [e.g., monitored accounts for a period of X months and instituted additional identification checks for accessing customer accounts to conduct transactions].

To date, [Association] is aware of [number] occurrence[s] of identity theft, concerning unauthorized access to our customer accounts, either in account opening, account access, or transactions conducted. In response to these occurrences, [Association] ______________ [issued a full credit to each affected customer, and instituted additional identification checks for accessing customer accounts to conduct transactions]. [if true, and modify number and response accordingly].

[Association] maintains all regulatory alerts and business guidance on the Identity Theft Red Flags Rule (16 C.F.R. Part 681) (the “Rule”) issued by the Federal Trade Commission (“FTC”). Based on the above risk assessment and all applicable FTC alerts and business guidance, [Association] assesses the risk to its customer accounts from identity theft to be low. Because these are accounts for which there is not a foreseeable risk of identity theft, these accounts are not “covered accounts” within the meaning of the Rule.

[Note: In determining the association's risk regarding prior experiences with information security breaches and/or identity theft, you should include a description of any past experiences, including the steps taken by the association to prevent any further experiences. Also include other factors such as regulatory actions/findings; legal actions; insurance coverage; and/or independent analysis of any third-party vendors.]

CONCLUSION

While [Association] is a “creditor” within the meaning of the Rule, its customer accounts are not “covered accounts” under the Rule. Based on the above risk assessment, [Association] determines its overall risk regarding identity theft to be low. [but see Note below, if overall risk is medium or high] Because [Association] does not offer accounts for personal or household purposes, and because its customer accounts have experienced few occurrences of identity theft, when viewed in relation to either the total number of accounts or the total number of annual transactions, these accounts do not face a foreseeable risk of identity theft. Therefore, they are not “covered accounts” within the meaning of the Rule.

Because [Association]'s customer accounts do not fall within the scope of the Rule, [Association] is not required to establish any specific Policies or Procedures in order to comply with the Rule. [Association] will conduct a similar Risk Assessment annually, in order to determine whether any changes in identity theft threats have caused its accounts to be considered “covered accounts” under the Rule, and thus to require enactment of such Policies or Procedures.

[Note: The risk assessment should reach an overall conclusion as to the association's risk regarding identity theft. The above conclusion is drafted with a low overall risk assessment, and hence no Rule coverage. However, if the overall risk assessment is medium or high, then the association may conclude that such risk is in fact "reasonably foreseeable" and therefore proceed to develop and enact the Policies/Procedures required by the Rule.]

SIGNED:

NAME/TITLE:

DATED:

* * * * * *

For more information, please contact Thomas A. Cohn at 212.370.6256 or tacohn@Venable.com or Jeffrey S. Tenenbaum at 202.344.8138 or jstenenbaum@Venable.com.


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.

Trade Association Settles FTC Charges of Misleading Advertising

Associations are as responsible for the advertising claims they make about services and products as for profit industry.  While many association "products" are training, peer professional networking, legislative advocacy, etc., some nonprofits also have services or products they sell to the general public.  Once they cross that line, they need to make sure they can support any statements about those products or risk the Federal Trade Commission stepping in.  See below.  Bunnie

Trade Association Settles FTC Charges of Misleading Advertising


by Jonathan L. Pompan, Esq., Venable LLP, Washington, D.C.

On January 26, 2010, the Federal Trade Commission (“FTC”) announced it had entered into a voluntary settlement, subject to final approval, with the Indoor Tanning Association (the “ITA”) over allegations that the ITA made misleading representations in its advertising and marketing for indoor tanning. Under the consent order, the ITA is restricted in the claims it may make in its future advertising, must send a notice to its members and recipients of its advertising materials, and must adopt a record keeping program.

The proposed order is significant in several respects. First, it makes clear an association’s obligation to adhere to advertising and marketing law. Second, the order illustrates how an association’s own advertising claims can result in obligations to disclose material risks. The FTC accused the ITA of failing to disclose facts related to health and safety risks that would be material to consumers in their purchase or use of the advertised product in light of the representations made. Third, the order focuses on point-of-sale and other consumer-facing advertising by the association that falls squarely in the commercial realm. The order does not cover representations made in non-commercial settings or contexts, such as communications to legislative or executive bodies.

Many associations advertise and market to develop and defend markets important to their membership. To help minimize legal risk, trade association staff should be well-educated in advertising and marketing law to ensure that their advertising claims are truthful and not misleading. In addition, claims must be substantiated, particularly when they concern health, safety or performance.

Association staff and legal counsel should consider the following pointers:

• Sellers are responsible for claims they make about their products and services. Third parties – such as advertising agencies or website designers – also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

• Stick to claims that can be supported. The type of evidence needed will depend on the product, the claims, and what experts believe necessary.

• Avoid disclaimers and disclosures that are difficult to notice, read or hear. However, a disclaimer cannot remedy a false or deceptive claim.

• Product and service demonstrations should show how the product will perform under normal use.

• FTC guidance suggests that association endorsements “must be reached by a process sufficient to ensure that the endorsement fairly reflects the collective judgment of the organization.”

• Certain regulated products and services trigger specific laws (e.g., Textile and Wool Acts, various consumer financial products and services) and regulations. Moreover, certain forms of advertising are subject to specific guidance (e.g., FTC Guide on Environmental Advertising, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising).

• Competitors may challenge advertising claims under self-regulatory programs, such as the Council of Better Business Bureau’s National Advertising Division, as well as under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).

• Obtain appropriate insurance for advertising and marketing activity.

* * * * * *
Jonathan L. Pompan, an attorney in the Washington, DC office of Venable LLP, represents nonprofit organizations and others in regulated industries in a wide variety of areas, including advertising and marketing law compliance, as well as in connection with Federal Trade Commission and state investigations and law enforcement actions. Prior to joining Venable, Mr. Pompan was an in-house counsel at a trade association where he reviewed advertising and marketing in advance of publication. For more information, please contact Mr. Pompan at 202.344.4383 or jlpompan@venable.com.

For more information about this and related industry topics, see www.venable.com/associations/publications.




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.

General Principles of Nonprofit Fundraising

I kept looking at this article and everytime I would go back over it and read it again, I'd find a tidbit that I thought was spot on. For instance, how many nonprofit board members really don't understand the IRS designations and what they mean for the organization? And the information about organizations that form a 501 (c)(3) arm, like the American Pharmaceutical Association, to make contributions more attractive to donors is excellent. Being in the DC area, there are a lot of nonprofits that are formed as 501 (c)(4), so they can conduct lobbying, but many of those organizations fail to understand the benefits of forming an additional 501 (c)(3). This is another one of those good articles to print off and pass out at your next board meeting. Enjoy. Bunnie

General Principles of Nonprofit Fundraising
by Terry Scott Boykie, CSO, ABS, Inc.

Charitable Nonprofit Organizations

All charities are nonprofits, but not all nonprofits are charities. The Internal Revenue Code defines more than twenty categories of nonprofit organizations under Section 501(c). Examples include labor organizations [501(c)(5)], fraternal societies [501(c)(10)], cemeteries [501(c)(13)], pension trusts [501(c)(18)], veteran's organizations [501(c)(23)], and charities [501(c)(3)].

Colloquially, the terms "nonprofit" and "charity" are often used interchangeably. Technically, a 501(c)(3) organization is a charitable nonprofit organization as opposed to a labor nonprofit, a fraternal nonprofit, a business league nonprofit, etc. To avoid confusion, many charitable nonprofits say, "We are a 501(c)(3)."

Those nonprofit groups that want to raise tax deductible contributions seek classification by the IRS as charities under Section 501(c)(3) of the Internal Revenue Code. They also register with their respective state governments, and most do not pay sales, real estate, income or capital gains taxes on their investments. Because the tax deduction for a charitable contribution is so attractive to potential donors, nonprofit groups that are classified by the IRS as other than 501(c)(3), often establish ancillary 501(c)(3) charitable nonprofit organizations as a base from which to raise funds. Example: The American Pharmaceutical Association established The American Pharmaceutical Association Foundation.

The vast majority of charitable nonprofits form a corporation in order to limit their board members' liability in case of litigation. In reality, 501(c)(3) organizations are special business corporations that operate for the benefit of the general public; they have special tax dispensations under the assumption that their work can not be accomplished at a profit by a commercial business corporation.

There are direct parallels between charitable nonprofits and commercial businesses: each has incorporation papers, a board of directors, a vision of what is to be accomplished, products or programs/services, budgets, staff, a physical plant, a public image, and a need to plan long range for programs, personnel, and funding. They are more similar than dissimilar, and their operations are about 80% parallel. (That is not surprising when one realizes that Benjamin Franklin borrowed the business corporation model and modified it for charitable nonprofit use when he established the first charity after the Revolutionary War.)

When a business corporation wants to raise money by obtaining a bank loan or selling more stock, it produces a business plan to prove its management ability to potential investors. Charitable nonprofits generally call their business plan a long range strategic plan; it demonstrates to key donors that the organization can manage well and convinces them that a gift to that particular organization is an "investment" in the betterment of society.

Boards of Directors

A charitable nonprofit's directors are volunteers who govern the organization in the name of the general public. The board approves the work (programs) and the budget of the group, and it is responsible for seeing that the funding is there to achieve that work. Therefore, a key component in successful fundraising is the selection of board members who are willing and able to raise money. During long range planning, a strategy is drawn up to recruit people for the board who have direct connections to funders identified as likely to give support. While some charitable nonprofits hire staff to assist in raising money, the principle underlying charitable fundraising is that it is done by volunteers who first have made their own donations to the group and now are requesting similar contributions from others. A skilled development (fundraising) staff can greatly facilitate board fundraising.

Non-Board Volunteers

Volunteers appear in a variety of places in charitable nonprofit fundraising. Organizing volunteers requires a decision by the board to commit a board or staff member and a budget line to recruiting and training volunteers for fundraising. Well trained volunteers equipped with high quality material about your work can make effective solicitation calls or produce a variety of events. The key to keeping volunteers involved is offering a permanent liaison to the volunteer corps who is knowledgeable about fundraising goals and about the organization and who is available to volunteers when needed. Volunteer fundraisers respond best when they have job descriptions, specific goals and timetables, and know how the money they raise will be spent.

Competition for Funding

Many charitable nonprofits collaborate in program work, public education activities, and legislative liaison. Some even coalesce in united fundraising drives. However, the majority of philanthropic organizations raise money for themselves alone. Competition between charitable nonprofits for financial resources is an integral part of the philanthropic field and will not disappear in the foreseeable future. Only a group which has an endowment large enough to fully generate its annual budget can be classified as a non-competitor for funds.

The Energy Behind Fundraising
Long Range Market Plan

Unless an organization has a "golden goose" to whom it can turn for short range donations or an asset against which it can borrow, there are no "quick fixes" in the charitable nonprofit world. Traditional funders (foundations, corporations, etc.) usually avoid an organization in crisis because, to them, the need for fast cash means that the group has not planned well for its needs and has not developed alternate sources of funding over time to backstop emergencies. Cold as this may seem, it is a reality of the contributions marketplace.

Successful fundraising is based on the fundamental marketing principle that a contribution is part of a satisfying mutual exchange which takes place between the donor and the organization. The charitable nonprofit facilitates that exchange by carefully analyzing the contributions marketplace and planning to build bridges directly to the funding that seems ideal for their programs. Most of those bridges are board members, senior staff, advisors, and special friends of the organization. Their efforts are augmented by clear, logical material that describes the needs of the group's constituents, the organization's work, its cost, and its projected results. When the exchange happens, the philanthropy receives the funds, and the donor receives the satisfaction of knowing that he/she has helped to provide a service or program for the group's primary constituents.

The strategic organizational market plan comprehensively re-defines the organization for a specific term...usually three to five years...and it acts as an operational blueprint. It analyzes the needs of constituents, offers programs to suit those needs, projects costs and reliable income, provides a specific fundraising plan for each program, and provides sub-plans to recruit human resources, communicate effectively to the world about the group, implement itself over time, and continue to evaluate constituents' needs and responses to the organization's current work.

Nerdy Meets Needy

Happy New Year to all! Here's hoping you were able to have time with family and friends and are now refreshed to take on the challenges of a new year. Before the holidays, I made a brief mention of the Nerdery Overnight Website Challenge. The folks at Sierra Bravo are tops on my list for their creativity, their good humor and their service to nonprofits. Mark Malmberg, Communication Manager, explains the challenge and what it brings to nonprofits in Minnesota. And, I've already heard that there are others out there doing similar work. As I get that information I will share it, meanwhile, enjoy this article and the useful links. Bunnie

Nerdy Meets Needy

by Mark Malmberg, Communication Manager

Nerdery Interactive Labs, a division of Sierra Bravo Corporation

Have there been tougher times for nonprofits? The services these organizations provide are arguably in greater need than ever, yet many are struggling just to make ends meet – and too few can afford to invest in websites capable of building online community.

In the first two years of The Nerdery Overnight Website Challenge, volunteer web pros have donated more than half-a-million dollars worth of professional services to 23 Minnesota nonprofits. Here at Nerdery Interactive Labs, a division of Sierra Bravo, we consider this a good start for our annual 24-hour nerdathon, but we also know that there are plenty more good nonprofits with not-so-good websites.

Nonprofits in Minnesota have until January 8 to register for the next Nerdery Overnight Website Challenge, which returns to the Twin Cities for the third time March 20-21 (one nonprofit is already in, with a Golden Ticket). Volunteer interactive pros come not only from our staff at The Nerdery, but from ad agencies we partner with, as well as freelancers, friends, and peers from the Minneapolis-St. Paul interactive community at large. Looking for ways to use their time and talent to give back, these passionate teams of volunteers band together and compete for little more than bragging rights.

In our day jobs here at The Nerdery – when we’re not just giving it away in the wee hours – we spend our normal waking hours serving as the web development partners (OK, nerds) of more than a hundred ad, design and marketing agencies nationwide.

It takes more than a bunch of well-meaning insomniacs to pull off an event like ours, and we’re blessed with sponsors who are incredibly committed to doing what they can to help. Nonprofits this year will receive complimentary education in design and web applications, business analysis or project management from event sponsor New Horizons of Minnesota, which will become Benchmark Learning on January 1. They also get one-year complimentary web-hosting subscription on event sponsor VISI’s ReliaCloud service. In-kind sponsors include Arthouse, Chipotle, Peace Coffee, Pizza Luce’ and Red Bull.

We’ve heard from others around the country who’ve asked our advice on how to go about gathering a small army of web nerds to help nonprofits in their community. This makes our day. Finding worthy and needy nonprofits is the easy part. Finding enough nerds to make a difference is the greater pre-Challenge challenge – and one not as easily resolved overnight. But whether or not anyone else carries this forward elsewhere, let us make our intentions clear:

We’re coming.

Here are a few stories about the nerdy helping the needy:

http://blog.nerdery.com/2009/04/yea-corps-gets-pie-in-the-sky-from-overnight-website-challenge/

http://blog.nerdery.com/2009/04/students-today-leaders-forever-like-jet-fuel-at-overnight-website-challenge/

http://blog.nerdery.com/2009/07/district-202-renewed/

http://blog.nerdery.com/2009/05/overnight-website-challenge-gives-people-faith-hope-that-theres-still-good-in-society/

http://blog.nerdery.com/2009/03/webchallenge-pictures-posts-and-videos-roundup/

A Grant Contract Isn't a Suggestion

I saw this article on Charity Channel and knew I had to "reprint" it! The truth is that you really do need to expend grant funds just as you promised you would. It may be tempting to apply grant funds to pressing needs, but if you want to get a second or third grant, the grantor has the right to know exactly where you spent every dime. Additionally, even if it is a one-time gift, the grantor has the right to ask for re-payment of funds if the money was not spent as was promised in the grant application or contract. Read and heed. Bunnie

A Grant Contract Isn't a Suggestion

by Rebecca Shawyer, Director of Grant Administration at Brazosport College

Throughout my career I have noted that far too often, program staff and administrators discuss and debate the meaning of the words "grant contract." What does this term really mean? Is it really a binding contract? Why can’t we buy that new computer we need? After all, we have grant funds left over.

Sadly, in the past I have found that some of my colleagues honestly believed that once grant funds have been received and deposited into the agency’s banking account, they were free to dip into them for any expenditure associated with the relevant grant project. As grant professionals, we know differently; and, it is our job to educate our colleagues before there is a problem.

So, what is a contract? The dictionary lists a variety of definitions for the word contract. Two that pertain to grant contracts are as follows: (1) “an agreement between two or more parties for the doing or not doing of something specified”; and, (2) “an agreement enforceable by law.” (Source: http://dictionary.reference.com/.)

“An agreement between two or more parties for the doing or not doing of something specified.” Hmm, this sounds quite clear. It doesn’t mention the possibility of loop holes or wiggle room. It clearly states “for the doing or not doing of something”. So why do program staff, accounting offices, and administrators offer think that it is acceptable to spend funds in ways not included in the grant contract?

I think that the answer is quite simple. Grant professionals oftentimes find themselves playing the role of a compliance officer because they failed to educate their organization and colleagues about the strict nature of any grant contract. It is our responsibility to take the time to fully explain contractual limitations prior to the signing of a contract.

I believe that this educational process should begin at the time grant proposals are being developed. In fact, I have found that it is crucial that everyone (including the president or CEO) clearly understands that the written proposal including its implementation plan, outcome objectives, evaluation plan, and budget will become an addendum to any future grant contract awarded. This is true for private foundation, corporate donor programs, and government agency awards.

Thus as I lead my college’s grant development teams, I consistently and constantly remind them that our eventual performance will be rated on that which they state will be done in the proposal narrative. In order to facilitate the development of ambitious but attainable goals and objectives, we develop a progressive program logic chart that clearly shows the relationship between program activities, minimum process objectives, staffing plan, equipment and supply purchases, and anticipated outcomes.

As we develop our grant applications, their attention is focused upon three primary issues:

The proposed program plan – With a contract award, the granting agency or foundation will expect that the proposed plan detailed in the application will be implemented as described with a minimum of changes. It will be assumed that as professionals, the program team has developed and proposed an implementation plan and strategies that are based on recognized and best practices in their field. If the team proposes to achieve that which is not truly attainable, it is likely that the organization will not be able to meet its contractual obligations if an award is received. If this happens, the organization could be endangering future grant awards and be putting itself in a position that requires the repayment of grant funds.

The budget – The budget needs to be realistic, accurate, and well thought out. After a contractual agreement has been reached, many funders will allow only minimal changes to the budget. Funds must be used for expenditures specifically listed in the proposal. For example, if the requested budget allocates $25,000 in salary expenses for direct service personnel, the agency may not pay administrative fees with these funds (unless the funder provides prior written approval of the change). For this reason, program teams should give as much attention to how the requested funds are being distributed as they give to the rest of the proposal. If funds are not properly allocated, the organization could find itself without adequate funds to cover key costs required for optimal implementation. If this happens, the funding agency will expect the grantee to find the needed funds elsewhere.

Equipment and supply purchases – Without prior written approval, equipment and supplies (such as computers, laptops, furniture, inkjet cartridges, etc.) cannot be paid for with grant funds unless they were included in the proposed budget. Additionally, if it was proposed that computers be purchased with the grant funds, these same funds cannot arbitrarily be switched to pay for new furniture.

After all, a grant contract is not a suggestion. Any grant professional that has ever survived a funder’s audit knows that it is in fact “an agreement enforceable by law.”

Contact Rebecca Shawyer at Rebecca.Shawver at BRAZOSPORT.EDU

One Little Club, One Big Impact

Part of what I like doing with this blog is highlighting Nonprofit efforts. When I read Deborah Graham's piece on the Grafton Garden Club, I got dizzy. The programs of the club are amazing and even more amazing is that they are doing all of this with a $20 membership fee (and some additional fundraising). I also love the attention being paid to young people, getting them engaged in the club's activities early on, maybe creating our next generation of nature lovers. This piece makes me want to move to Grafton and join the club! Bunnie

One Little Club, One Big Impact

by Deborah Graham, Grafton Garden Club

Started in 1931, the Grafton Garden Club is a non-profit, 501(c)(3) organization whose purpose is to promote interest in, and knowledge of, gardening; to provide scholarships for students from Grafton, Massachusetts furthering their education in one of the following fields: agriculture, botany, forestry, horticulture, landscape architecture, plant and soil sciences, or environmental science; to award grants to educators in the Grafton Public School District and the horticulture Department of the Blackstone Valley regional Technical High School to be used for projects and creative efforts designed to motivate the student’s interest in plant and soil science, botany, horticulture, and the environment.

The Grafton Garden Club meetings and programs are aimed to inform and entertain. In the upcoming year (July 1, 2009 to June 30, 2010), the Club plans on participating in the Farmers Market on the Grafton Common, presenting a slideshow on Indentifying Mushrooms, and then organizing a Mushroom Foray where a mushroom identification expert checks over what everyone gathered, and taking a trip to Newport, Rhode Island to visit Whitehorne House and Rough Point gardens. And that’s just in September!

The Club has scheduled a presentation on How to Create a Period Garden in October. Christmas in Williamsburg in November prepares attendees for the Williamsburg Christmas Centerpiece Workshop in December. Also in December is Grafton Celebrates the Holidays where businesses and organizations in Grafton come together and present family-friendly activities. The Club will be offering bird feeder workshops for kids while also displaying the results of the Williamsburg Workshop. Also in December, the Club decorates the local Willard Clock Museum (this year there will be an “updated” look with Victorian Decorations to match the Christmas Victorian Tea for Club members).

There is Gardening with Native Plants program in February and March is a Xeriscape (Drought-Tolerant) Gardens presentation. In April, the Club is planning a Vegetable Gardening Panel Discussion. Also April is the 5th Grafton Garden Club Presents: Grafton Community Day. This is when Grafton gets a Spring Cleaning. Businesses and residents pull together and form clean-up teams and attack public areas of the town that need trash pickup or weeding, or maybe a splash of color. When the Grafton Garden Club decided to undertake this new project, the first public area to receive a face lift was one of the Welcome to Grafton signs on a major route into town. Where once there was a lonely sign, now there is a tree and an undergrowth of perennials and color welcoming visitors and returning residents.

In subsequent years, other areas of the town have received plantings courtesy of Grafton Community Day, including all three libraries in town, the Grafton Common, the Municipal Center, and other public areas. All this was accomplished through donations specifically for Grafton Community Day and the efforts of the businesses and residents of Grafton and the members of the Grafton Garden Club. Last year, we partnered with the Grafton Land Trust and managed to get even more people involved with the cleanup effort and the celebratory lunch and kids activities afterwards.

May brings the main fundraiser for the Grafton Garden Club’s funds for scholarships and grants. The year ends (usually) will the Annual Meeting and Members Lunch/Tea/Supper where a presentation is given about all the activities of the past year and the upcoming activities planned for the next year.

Membership in the Club is currently $20/year. More information about the Club and the meetings and programs can be found at http://www.graftongardenclub.org/. For any questions, you can email info@graftongardenclub.org.