Nonprofits: Don't Get Caught Naked (Licensing)

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?

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

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

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:

1. 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).
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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

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

 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

1. 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?”

2. 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.

3. Quit copying your peers.

4. Learn how to use email effectively.

5. 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.

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

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

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

9. 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.

10. 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.

11. 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.

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

13. 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.

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

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

16. 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.

17. Take charge and take responsibility.

18. 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

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:

1. The duration of the risk;
2. The nature and severity of the potential harm;
3. The likelihood that the potential harm will occur; and
4. 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:

1. Prior to the termination, obtain written statements from co-workers, supervisors, and managers documenting all threatening behavior.
   
2. 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.
   
3. 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.
   
4. 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.
   
5. 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.

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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.