Nonprofit Harvest

Let’s Get Innovative

Judy Alnes, Executive Director of MAP for Nonprofits, is on a roll about the importance of innovation.  In her article for MCF’s Winter 2010 Giving Quarterly, she outlines what might come next for the nonprofit sector, finishing with a call for innovation:

1. “Scrub-Down” Won’t Be Enough
2. We Aren’t Going Back From Where We Came
3. Strategic Investments Aren’t Optional
4. We Must Do a Better Job Measuring and Taking the Positive Results to Scale
5. We Have to Innovate and Be Bold

Judy was also our guest blogger this week at Balancing the Mission Checkbook, and her post Ready, Set, Innovate provides a number of resources to help nonprofits embrace the discipline of innovation.

Thinking Differently

To help nonprofits think outside the box, we are offering a workshop Financial Planning in Uncertain Times.  This training is built around our scenario planning tools, which any nonprofit can use to think through how different circumstances – such as changes in the state budget or foundation grants – impact your programs and other operations.

For nonprofits interested in assessing new revenue streams, you can listen to a recording of the webinar Alternative Revenue Strategies and download the Revenue Matrix.

What other tools do you need to think differently? Tell us in the comments and we’ll do our best to find existing resources or develop new materials to meet these needs.

C is for Collaborate, Good for You and Me?

Another hot topic is collaboration, especially as nonprofits try to find new ways to deliver services with fewer resources.  Around Thanksgiving I wrote a blog post What I’m Thankful For – Strategic Collaboration that highlighted some examples of successful collaborations. 

So what does it take to have a successful collaboration? Here are some resources that help make these partnerships work for everyone.

Administrative Alliances

The Nonprofit Times recently published an article, Secret Sauce Of Backroom Collaborations, that identifies three common factors in successful administrative collaborations:

• Standardization: The reason why many nonprofit back room operations are not standardized is because they tend to be put together in support of programs and services that are not standardized. Each has different terms referring to essentially the same thing.

• Replicability: Without an overarching agreement about the service models using the administrative services, it is unlikely that two or more back rooms will have enough in common to maintain replicable processes.

• Scale: Low volumes of transactions will not support the added administrative effort needed to make an alliance work… This “administrative alliance tax” is the reason why small organizations might be better off co-locating rather than trying to build administrative alliances.

Strengthen Your Collaborations

As the Nonprofit Times article mentions, working collaboratively can be hard:

The staff time required to make them happen is almost always “extra” time, over and above the normal demands of day-to-day operations. That means collaboration time is often of a lower priority, squeezed out in favor of more pressing business.

When partners don’t work well together, the goal is muddy, and responsibilities aren’t clear, collaboration can be far more effort than it is worth

The webinar Collaboration: Construction, Repair and Maintenance was designed to help nonprofits consider the pros and cons of collaborating during tough economic times and asses whether collaboration is the right strategy to reach your goal, and how to build a strong foundation.  Listen to the recording to learn more about how to build trust, lead successfully, and make collaborative decisions.

Case Studies

• Nonprofit Collaboration Case Studies: The Charity Lawyer presents four case studies, complete with what worked, what did not, and lessons learned.

• Looking for an example of a successful backroom collaboration?  Check out the MACC CommonWealth.

• Nonprofit Collaboration Database: The Lodestar Foundation, which awards the Collaboration Prize, has created a database of collaborations.  You can search by type of partnership, geographic area, service area, and even challenges faced.

Other Resources

• Mergers – Due Diligence Items: After a conversation with La Piana Consulting, Nonprofit Law Blog outlines the most important things to think through before any merger.

• From the Answer Desk: What do I need to know about collaboration and other kinds of strategic alliances? The librarians at the Foundation Center in Cleveland explain different kinds of collaborations and round up some useful tools.

In my last post I shared some New Year’s Resolutions, and TechSoup had a similar idea with a series of technology resolutions, including #3: This Year, We Will Manage Our Finances Better.  This is a great resource that rounds up available nonprofit financial management and accounting options.  It explains the different products (with links to their TechSoup pages) and even has some resources to help you find the best software to meet your needs. For anyone unfamiliar with TechSoup and their nonprofit discounts, add that to your 2010 to-do list.

Here are a few other things for that to-do list.

Assess Your Hyperlocal Conditions

We can all agree that local conditions vary. I just returned from a brief vacation to sunny Florida, and these words have never felt more true.  Nonprofit Quarterly took used idea as the theme for their Winter 2010 issue.

Local Conditions

There are many factors that impact your nonprofit, such as your funding sources, field of service, and the needs of your constituents.  Let’s think of these as the local conditions. The Minnesota Council of Nonprofits and Minnesota Council on Foundations have updated information on how the economy is affecting funders and Minnesota nonprofits in general. National Organizations such as The Foundation Center, NFF (view information from 2009 or take the 2010 survey), and the National Council of Nonprofits all have good resources that can help you take action.  However, these reports can only take you so far.

Go Hyperlocal

The most useful information is the “hyperlocal” conditions – what is happening on the ground at your nonprofit. As our ED, Kate Barr, says in her article for Nonprofit Quarterly:

“In all forecasts, ‘local conditions vary,’ and the most relevant information is the situation at an individual nonprofit organization. Only by clearly understanding its own financial position, strengths, and risks can a nonprofit develop strategies to respond to the economy and plan for the future.”

How can you get a handle on the conditions at your nonprofit? Our Assessment of Recession Risk and Preparedness for Nonprofit Organizations is a tool designed to help you quickly assess your organization. By answering these 20 questions, you will identify potential risk factors, immediate priorities, and proactive steps to take right away. Keep in mind; this is a first step, not an in-depth organizational assessment.

Whatever is happening on the ground at your organization, the Recession Preparedness Assessment provides useful information to help you better understand what’s happening and develop strategic responses. You can read the full article in Nonprofit Quarterly or download the Assessment from our website.

Re-Set Your Internal Controls

Internal controls are another factor that can impact a nonprofit’s stability. Smaller organizations in particular are often cited for lacking adequate segregation of duties in management letters.  Blue Avocado’s recent article,  Five Internal Controls for the Very Small Nonprofit, is a great starting point to help you strengthen your internal controls.  CPA Carl Ho outlines five main categories that are crucial, and do-able, for even the smallest organizations:

1. Set the control environment
2. Assign responsibilities
3. Physical controls – lock it up
4. Cash, always have two people count it together
5. Reconcile the bank statement

Read the whole article for additional suggestions and examples.  For more on this topic, you can participate in our webinar on February 22nd, Financial Policies for Internal Control.  You’ll receive sample board and management policies and learn how to customize them for your organization.

Know Your True Program Costs

More on everyone’s favorite topic – overhead! (If you missed our past blogs about overhead, and why we think it’s an overrated metric, start here.) Last week the Chronicle of Philanthropy hosted a discussion on Making Smart Decisions About Overhead Costs.  What cannot be said enough is the importance of knowing (and then budgeting for) the true, full costs of your programs and operations. As Daniel Stid of The BridgeSpan Group stated:

It goes without saying (but perhaps we should say it!) that having a clear view of the full direct and indirect costs of delivering a program is essential. We often encounter situations in which clients have failed to budget even for their full direct costs let alone so called overhead.

It has to be said, explicitly, because too many organizations do not know the actual costs of delivering their services.  We have a workshop dedicated to this topic, and I encourage any Minnesotans with questions to attend our April training Calculating True Program Costs.  If you don’t live here, or don’t want to wait until April, check out Nonprofit Cost Analysis: Introduction from the BridgeSpan Group.  It’s a thorough introduction and very helpful, although it may not be the most accessible to those without a strong financial foundation.

Update Your Bookmarks!

Intrepid nonprofit accounting guru and friend of the blog Alan Strand has has moved. Not-For-Profit Accounting remains a helpful resource, but for new content from Alan visit Nonprofit Accounting, a resource from the Nonprofit Center in Washington State.