Build a Winning Program

For nonprofits, there might be another lesson here: How can you transform your team from just another mid-major hoping to get invited to the dance into a legitimate contender each every year?  How can you be the nonprofit version of Gonzaga’s basketball program?

Here are some ways to improve your financial practices and lay the groundwork for a sustainable organization.

Recruiting Your Team

In order to be successful, you need the right team members for your organization’s staff and board.  Here are some resources to help you recruit and work with board members:

• Treasurer and Finance Committee – Who to Recruit and How to Use Them
• Recruiting and Vetting Nonprofit Board Members

Coaching and Strategy

A successful coach sets their team up for success.  They draw up plays that have the best chance of scoring, but ultimately trust their players to implement it.  Likewise, boards and staff leadership engage in strategic planning, develop realistic budgets, and put their organizations on the path to success.

• This Scenario Planning Worksheet is a step by step guide to contingency planning.  This resource will help you consider several possible scenarios and get ready to make informed budget and management decisions.

Practice, Practice, Practice

Successful teams spend the necessary time developing and honing their skills. At Nonprofits Assistance Fund, we have a resources and trainings that can help you improve your financial management.

But practice is more than just training and skill development. It’s also about working together effectively, staying in rhythm, building on what’s working and rethinking what is less successful.  Nonprofits need to keep their financial reports, cash flow projections, and other key benchmarks up to date. Without this information, it’s hard to know where to focus your efforts.

• Managing Cash Flow and the Cash Flow Template are resources to help you understand your organization’s cash position . Many organizations have an uneven cash flow. Recognizing when you may need additional capital will help you plan.

Rally Supporters

Successful teams have fans.  So do nonprofits.  Effective nonprofits are able to leverage their volunteers and in-kind donations to save resources and strengthen their organization.

• Blue Avocado has an excellent resource, Tracking Volunteer Time to Boost Your Bottom Line: A Complete Accounting Guide, to help you get the most out of your volunteers, including how to improve your financial position by accurately reflecting the value of this donated time.
• If you’re looking for a good primer about in-kind donations, Alan the Nonprofit Accountant, answers many common questions, including how to record donations at auctions and other events.

For another take on how March Madness can inspire nonprofits, check out Razoo’s March Goodness.

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.

This is an exciting time at Nonprofits Assistance Fund. This week we unveiled our new webinar trainings, which have been in the works all summer.

Photo Credit: jurvetson on flickr

We’re looking forward to having our trainings available to nonprofit leaders across the state of Minnesota, as well as our friends all over the country.

If you have been hoping your friendly nonprofit finance geeks (that’s us!) would visit your neighborhood, the wait is over.  Participate in our webinars and share any thoughts you have about the experience.  We are very excited about this expansion of our training program and want it to be as helpful as possible.  Your participation and feedback will make it a stronger service.

As online learning and communications tools continue to evolve, we’ll do our best to take advantage of new ways to serve the nonprofit community. We’ll continue to ask how technology can enhance our work and deliver services to nonprofits in and outside of the Twin Cities metro area.  If you have ideas for us, share them here, on our facebook page, or contact @NAFund on twitter.

Additional Online Training Opportunities

There are many other online learning options for nonprofit staff and board members.  Here are some interesting opportunities that you can explore to take your work to the next level:

• Foundation Center’s Events Archive (their podcasts are also available on iTunes)
  
• Chronicle of Philanthropy Live Discussions 
• Pro Bono Partnership of Atlanta videos and webinars on nonprofit legal issues
• Arts Enterprise: Art as Business as Art course from UW-Madison and the Artful Manager,  Andrew Taylor (podcasts available through iTunes U)

Reconsidering Your Budget

Last week, Jeanne Bell wrote an excellent article for Blue Avocado, Focus on the Destination, Not the Route (Budget)!   In a nutshell, she is arguing that, especially in an uncertain economic climate, rolling projections and organizational goals are more valuable than an annual budget.

She offers great rationale for why this shift in focus matters, as well as some practical steps to get started, included:

Do a revised projection at the end of the current quarter, and have the management team and the board discuss it. Consider these questions:

• What are the key discrepancies between what’s in the budget and what we now believe is going to happen?
• Given this information, do we need to expect a different financial outcome for the year than what the budget was meant to achieve?
• What changes need to be made in the management of any revenue or expense items?
• What implications are there for the next fiscal year, given the projected financial result of this year?

Nonprofit Harvest: Employee Benefits

This week’s Chronicle of Philanthropy Live Discussion was on Employee Benefits at Nonprofit Groups.  It was a timely discussion, especially given a recent report by the Johns Hopkins Listening Post Project (a summary is available on MCF’s Philanthropy Potluck blog).

The discussion pointed out some useful resources to help nonprofits consider ways to limit costs while still providing benefits and professional development opportunities to their employees:

• Rethinking Benefits for Nonprofit Employees from CommonGood Careers:
• Nonprofit Workforce Action Agenda from Listening Post Project

Recently there’s been a lot of chatter about nonprofit wages in the blogosphere and beyond. Debating these questions is important, but in this age of tight budgets, are there any steps an organization can take to improve employee compensation right now? Especially for lower wage employees who are critical to an organization’s success, but are sometimes left out of this conversation.

Blue Avocado gets to the heart of the matter in the article Low-Wage Workers and Nonprofits:

While raising salaries would be, by far, the best way to support these important staff, doing so isn’t possible for most nonprofits: certainly not in the short term, and often impossible for the long term given business models and funding constraints…

Although the challenge of providing adequate compensation to low-wage employees may seem overwhelming, especially during a financial crisis, the fact is that nonprofits, consultants and funders can consider a number of helpful options without torpedoing the budget.

The article offers a range of options, which fall into three main categories:

• Steps to take relatively quickly at little or no cost
• Intermediate steps
• More far-reaching steps

These ideas are not intended to replace a real conversation about wages, especially one that goes beyond executive compensation.  But they are a place to start. Add your thoughts and suggestions here or leave a comment at Blue Avocado.

Related HR Resources

Not-For-Profit Accounting shares some information from the intersection of HR and accounting.  This post unpacks the sometimes woolly world of employee classifications — exempt vs. nonexempt, independent contractor vs. employee — and provides information on payroll systems.

If you have specific questions about nonprofit account, I suggest submitting them to Alan.  His regular Q&A feature is a great resource for financial managers.

New Resource Collection

Blue Avocado has compiled all of their articles about nonprofits and the economy. Visit this archive for information on financial management, HR, and more.

Harvest

• IRS Form 990 Filing Tips: Part VI, Governance 
• Nonprofit Policy News | May 2009
  • Federal Legislative and Regulatory Developments
  • IRS makes public its 2009- 2013 strategic plan
• Free Foundation Center Widgets
• Charities Loosening Strings on Arts Grants

The first topic was Financing Options, which included information about loans, PRIs, and other financing options.  Coincidentally, at the same time we were hosting a Social Enterprise Network on capital sources and touched on many of the same topics.

This week’s post gathers definitions and resources shared by participants of both discussions. For more details, I suggest you read the transcript at the Chronicle of Philanthropy’s website or Not-For Profit Accounting’s summary.

Program Related Investments (PRIs)

A PRI is a tool foundations can use to provide capital to nonprofit organizations.  It is more like a loan than a grant because it must be repaid or otherwise provide a return for the foundation.  In their PRI Primer, the PRI Makers Network lays out the benefits of these investments:

PRIs give charitable organizations or commercial ventures access to needed capital, typically at favorable terms. In return, the funder benefits in several ways:

• It is often able to recycle PRI payments for subsequent charitable investments.
• The foundation is generally able to count PRIs toward its minimum five percent payout of net assets.
• PRIs allow foundations of every type and size to have greater programmatic impact.

Resources

• The Hidden Gems of Foundation Funds from Balancing the Mission Checkbook

• What is a Program Related Investment? from the Foundation Center

• PRI Makers Network

• Program-Related Investing guide from Grantcraft

• Calvert Foundation

Community Development Financial Institutions (CDFIs)

Community Development Financial Institutions are vehicles to foster economic growth and ensure access to capital in urban and rural low-income communities.  Many CDFI’s focus on affordable housing and economic development activities.  Others, like Nonprofits Assistance Fund and Nonprofit Finance Fund, specialize in providing credit and financial training to nonprofit organizations that serve low-income and underserved populations.

• Learn more about the CDFI Fund

• To find a nearby CDFI, use the Member Locator on Opportunity Finance Network’s website

Loans and Lines of Credit

Clara Miller issues an important reminder that “loans are never a substitute for revenue” and makes an excellent case for when credit makes sense for your organization. For more information you can also read our Borrowing Guide.

Download our Cash Flow Template to help assess whether or not credit can help your organization bridge a gap caused by grant timing, delays in government reimbursements, or other accounts receivable.

Nonprofit Harvest

• Now What?

• Nonprofits Buying Into Franchises from The Nonprofit Times

• State And Local Governments Consider Fees on Nonprofit Groups

The American Recovery and Reinvestment Act (ARRA, commonly called the Stimulus), includes significant funding for nonprofit organizations.  However, assessing whether or not you should apply, and how to do so, can be a daunting task.  Especially given the timetable for submissions and reporting.

Before you apply for any federal funding, I encourage you to read these words of caution and consider whether or not your organization has the infrastructure and administrative capacity for a federal grant.

Jim Schowalter, Minnesota’s state budget director, also offers a few important caveats about the available funds, according to MCF’s Philanthropy Potluck blog:

The amount of stimulus money flowing to Minnesota is equal to 8.2 percent of our state budget; however, our state is facing a 15 percent budget deficit.  This stimulus funding provides a one- or two-year bump to hopefully get us through the recession, but it is not enough to resolve our budget deficit.

While the dollars involved are many, they are not significant enough to create new areas of funding or expand programming, and may not even be enough to stave off cuts to balance our state’s budget.  Much of the money will be distributed using existing infrastructure and pipelines and will go to backfill gaps created by budget shortfalls.

General Resources

• Bulletin on How Nonprofits Can Apply for Stimulus Package Funding from Giving USA and the Center on Philanthropy at Indiana University
• What Do Nonprofits Need to Know About the American Recovery and Reinvestment Act? 
• National Council of Nonprofits Special Reports on Economic Stimulus & Recovery

Minnesota Resources

• Best ARRA Funding Resources – Minnesota from the Foundation Center
• Overview of the Recovery Act from the Minnesota Management & Budget Agency
  
• 2009 Recovery Act Resources for Nonprofits from MCN

New 990 Resources

The IRS has an excellent Resource Library to help nonprofits maintain their tax exempt status, file reports, and meet other requirements.  They recently produced a new mini course to help nonprofits file the 990.

As a reminder, MCN has video training that helps organizations understand the changes to the 990 and Not-For-Profit Accounting can help answer your questions.

This Week’s Harvest

• Surveys: Few NP Mergers And Ready Credit
• Nonprofit Groups in 19 States Report Late Government Payments
• The Funder is Not the Program
• More Than a Third of Family Foundations Are Either Uncertain About Lifespan or Expect to Spend Down

As you can see from the screenshot, you can sort the data by fiscal year, state, or recipient type.  It’s important to note that this includes grants and PRIs or program-related investments.  (Kate describes the benefits of PRIs in her post, Hidden gems of foundation funds.)

For more information, read the announcement on PhilanTopic.  Their intent is for the map to evolve and accurately reflect foundation giving:

New grants will be added to the map on an ongoing basis to provide the most current picture of foundation giving for programs and issues relating to the economic downturn. Grantmakers are encouraged to send announcements about their grants or PRIs to Matthew Ross at mr@foundationcenter.org.

Do you know what’s happening in your community?  Chime in!

Many organizations, such as Nonprofits Assistance Fund, are working to gather and disseminate resources. Our goal is to collect as many of them as possible and post them here.  These posts will be filed under Resource Collections.

Focus on the Economic Crisis

The Foundation Center has created a library of information on the economy.  Their Focus on the Economic Crisis features news items, commentary, research advisories, and blog posts from PhilanTopic. It is an excellent collection of materials, with a focus on research and analysis from thought leaders in the field of philanthropy.

Nonprofit Economy Vitality Center

The National Council of Nonprofits (NCNA) has created the Nonprofit Economy Vitality Center. It is designed as an “ever-evolving resource” with materials on the impact of the economy on nonprofits, statistical data on the nonprofit sector, and coping strategies to help nonprofits continue to deliver services.

The Economy and Philanthropy

The Minnesota Council on Foundations has posted a collection of resources on The Economy and Philanthropy. Although it is geared for grantmakers, many of these resources are useful for nonprofits to gauge the impact of the economy on foundation, corporate, and individual giving.  They also have sections in the side bar of relevant news items and resources for nonprofits.  I also suggest you visit their excellent blog.

Our Call to Action: Building a Collection

I believe that at this time, we have a call to action.  At Nonprofits Assistance Fund, it is our mission to help build financially healthy nonprofit organizations.  Right now, there are many factors undermining our sector’s financial health and viability.  Let’s take advantage of what we do have — tools that facilitate sharing information, as well as savvy and strategic thinkers working to sustain our sector.  I encourage you to connect with me and contribute to this collection.  But I also ask that you work with anyone else who is gathering this kind of information.  For example, you can contact the NCNA and help them keep their collection up to date.  If we are all working in concert to harvest resources, we all have the best chance to make it through the winter.