Lessons from Bona View Farm – Tractors and Databases

Last weekend we sat on our porch and watched our neighbor mow his 80 acres and the scant few acres we have.  It took him several days to mow, rake and bale the hay.  He had a process and the right equipment. By the end of the weekend we were looking out on rolling acres of freshly mown hay.  But, what’s this got to do with databases?   There are lessons we can learn …

The right tractor – The SKC staff is often asked for our recommendations for donor databases to support fundraising and communications activities.  You may do well with a push mower during the start-up phase by utilizing excel spreadsheets or an Access database.  At some point, you’ll want to step up into a database software that helps you not only manage names, addresses and donor acknowledgement letters, but also is a tool that tracks and analyzes fundraising efforts and links to your fund development plan.  When considering what product to step up to, whether it’s the tractor with the air conditioning  and GPS (Raiser’s Edge) or something mid-range like DonorPerfect - do a three year cost analysis.  Can you afford the fees now and can you sustain the cost over time?  What’s the cost of human effort to implement and maintain?

Follow the contours of the land – There is no one size fits all setup.  Give considerable thought to the database layout and the customized fields.  Who are your key stakeholders and constituents?  How do you communicate with them?  How do you track and analyze their giving?  What information do the end-users (staff and board) need to see in the reports?  Keep your database and the information you collect relevant.   Keep the information in your database secure and respect the privacy of your donors.

Mow often – Use good database “hygiene.”   Develop procedures and protocols for putting data into the system and share with staff and volunteers.  Routinely query new records and gifts added to make sure procedures are understood and being followed.  Reconcile the income recorded in your database with your accounting system each month.  If you follow these three basic recommendations, you won’t be second guessing and wondering whether the information is accurate and trustworthy a few years down the road.

At SKC, we help nonprofits develop tools that support their work.  We see good database management as an essential building block to supporting communications, transparency, and the fundraising success of your organization.   The end product may not be as pretty as a field of freshly mown hay on a crisp fall day, but it’s a critical piece of your organization’s equipment.  


 
Debra Box
Executive Director

Stepping it Up for Your Volunteers

I stood a few yards away at the long check out table, setting up our auction software station, and watched the beginning of the event chaos unfold. Hundreds of guests tittered and complained to each other, decked out in their festive attire, anxious to check in, find their friends and begin their evenings. But the line had stopped. Volunteers with panicked, confused looks on their faces were frustrated and moving very slowly. Too many committee members shouted out directions to the volunteers and the line continued to slowly trickle through the doors as check lists and sign in forms were combed over and drink tickets, auction booklets, and table assignments were scrambled for and passed out to the continually growing line.

What had gone wrong here? How had this wonderful event turned into a standstill of irritated guests, frustrated volunteers, harried committee members and confused staff? Isn’t this your nightmare? As the Client Administrator with Support Kansas City, I’ve had the opportunity to work with committees for many, many events throughout the area and a continual challenge that I’ve seen for most organizations, exactly what caused this event to unravel, is volunteer management.

Special events can be an exhilarating and demanding way to raise financial support, increase awareness about your organization’s mission, and draw in new friends, donors and volunteers. But special events take time. A lot of time, right? With upwards of 3,400 nonprofits with income over $25,000 in the Kansas City metro area, hosting an average of one to two special events each year, there are an estimated 3,000 special events held in our city alone. That’s a lot of events that are going to need many, many volunteers.

While most nonprofits have some paid staff, many do not have the number of staff necessary to plan, execute and carry out these types of events. For many organizations, maybe even yours, the only time you work with volunteers are around special events. So how do you get volunteers engaged, motivated and prepared to help your organization pull off a stand-out event?

• One Team with One Goal: Why are you having this event? Is it to raise money, awareness, friends? All three? Volunteers need to know the main goal of the event; to raise $55,000, increase visibility for your mission in Cass County, or build up excitement by bringing in new friends to meet your staff and fall in love with your mission. Whatever the goal, volunteers want to know what they are working for and how that fits in to your organization’s plan and mission.
• Strong Leadership: One key staff person should lead the volunteers. From training, to logistics the night of, to the end of the event and wrap-up thank-you’s afterward, volunteers need to know who they can go to with questions, who has the authority to deal with problems or emergencies the night of the event and who is speaking up for them in planning meetings and committee discussions.
• Clear Expectations and Training: This will vary depending on the volunteer’s duties, but whether a committee member, auction table watcher, greeter, or check-out table volunteer, everyone needs to know what their roles and responsibilities are before, during and after the event. If at all possible, training should not take place thirty minutes before the event begins. A walk through of the site, written instructions, contact names and numbers, and a clear timeline of the event should be given to all volunteers, tailored to fit their job description.
• Ongoing Open Communication: Many volunteers, particularly committee members and fundraising volunteers have serious financial goals that they are expected to reach for your organization. Calling businesses for silent auction donations, reaching out for sponsorships, these can be daunting tasks even for seasoned volunteers. A weekly update/check-in email sent to key staff and volunteers helps hold everyone accountable and stay on target. If you see a volunteer pulling back, not able to reach their goals or struggling at all, make sure that you reach out to offer support and assistance. “What can I do to help you reach your goals? Is there any information or assistance that you need to be successful?”
• Plenty of Thank-You’s: Volunteers can get burned out just like staff can. Volunteers should be recognized briefly at the event if possible and then receive a thank-you letter and a personal thank-you from leadership. You don’t need to throw another special event just to thank your volunteers, but having a wrap up and debrief meeting after the event to talk through challenges, celebrate successes and make changes for next year is vital to the ongoing success of your event. This is the perfect time to thank volunteers in person, and make them feel appreciated and connected with your organization. The opportunity to talk through the positives and negatives of the event helps volunteers feel heard and engages them in advance for next year.

With some advance planning and a cohesive and focused team atmosphere directed by friendly but persuasive leadership, your volunteers will want to come back year after year. Committing themselves to help your organization’s special event grow and improve, making more friends and more money over the years, these volunteers are the key to your special event success. As much as any sponsoring company, or generous donor, make sure you treat them with respect, and make sure everyone has a chance for some fun. Special events should be fun, right?

Kassie Sands
Client Administrator

Women’s Employment Network – 25 Years of Success!

The third part of a three part series focused on Support Kansas City's 2011 Excellence in Nonprofit Leadership Awards, profiles the agency winner with a budget of less than $1,000,000.

In 1986, Beth Smith and the late Marjorie Powell Allen founded the Women’s Employment Network. They were inspired by a successful women-focused employment program in San Antonio that emphasized self-esteem. Realizing the need for this vital service in our city, they created WEN, the only organization of its kind in the area

WEN has grown significantly in the last 25 years, with over 300 employers that are involved in a variety of ways to serve their clients. WEN plays matchmaker with clients and job posting employers, introducing corporate cultures to their clients through onsite visits, and providing employers the opportunity to volunteer through workshop facilitation, resume review and mock interviewing.

In the words of Cheryl Smith, WEN Board Chair, “Our board believes in the core mission of WEN: helping women help themselves. Our commitment to the women who come to WEN for help is foremost in our minds during our board and committee meetings. With the guidance of the current executive director, the board feels poised to take WEN to new heights.”

WEN leadership is a role model for best practices for nonprofits in governance and accountability. Speaking from personal experience, my first board training was conducted by Beth Smith. Twelve years later, I still draw on the shared wisdom of that experience with the boards I train. We look forward to sharing in WEN’s next 25 years of success!

Watch for WEN’s Annual Legacy Circle event to be held in September and the Fashion Show on September 20th, at the Webster House.


Debra Box
Executive Director

Phoenix Family Housing - A Real Award Winner!

The second part of a three part series focused on Support Kansas City's 2011 Excellence in Nonprofit Leadership Awards, profiles the agency winner with a budget of $1,000,000 or more.

Ten years ago, Cliff & Jonathan Cohen had a vision to provide services for people living in low-income housing communities that would be unique because the services would be on-site and residents would be able to access them immediately from where they live. They founded Phoenix Family Housing. Phoenix Family Housing is unique in that they serve multiple populations – seniors, families, and youth at all ages and stages of their lives. They tailor specific programs and services to meet residents’ needs, directly on-site, at the housing community where their clients live. Currently, Phoenix Family serves more than 4,400 residents at 30 housing communities in 12 cities across Missouri and Kansas.

Phoenix Family Housing has been identified as a best practices agency by U.S. Housing & Urban Development, specifically noting exceptional service delivery and monitoring and evaluation of services delivered to residents living in low-income housing communities. In addition, the Missouri Housing Development Commission selected Phoenix Family as a best practices agency in service-enriched housing communities.

In addition to receiving the Support Kansas City award, Phoenix has a list of prestigious awards. They are a two-time award winner for the Building Bridges program from Boys & Girls Club of Greater Kansas City; University of Kansas recognition for outstanding intergenerational programs; five-tier Crystal Merit winner for best newsletter from Apartment Association of Kansas City and seven-time winner for best on-site youth activities; Harvesters’ Circle of Hope Award for best partner agency; and People to People International recognition for youth mural program.

The Phoenix Family is a leader in providing life-changing services in our community and exhibits leadership in governance and nonprofit accountability. They were chosen by Support Kansas City because of their stellar commitment to both.

Debra Box
Executive Director

And the Winners are....Congratulations to Phoenix Family Housing and the Women’s Employment Network!

The first part of a three part series focused on Support Kansas City's 2011 Excellence in Nonprofit Leadership Awards, including upcoming profiles of the winning organizations.

Every day nonprofits throughout Kansas City provide essential services much needed in our community. They do it without any fanfare or glamour. They have staff and volunteers committed to their mission and to excellence. Support Kansas City is proud to recognize two such organizations this year as we award the Excellence in Nonprofit Leadership awards to Phoenix Family Housing (phoenixfamily.org) and the Women’s Employment Network (kcwen.org). SKC is proud to take this opportunity to beat the drum on their behalf!

An independent panel of judges gathers each year to review the applications and their supporting documents. Each year the decision gets a little tougher. It’s exciting to see the commitment to governance and leadership development in all the organizations represented. At a time when the papers have spotlighted large nonprofits who have struggled with governance and oversight, let’s not lose sight of the fact that important nonprofit practices are alive and well for most of our community!

Striving for excellence in nonprofit leadership is not rocket science, it takes a commitment to good governance and a willingness to implement change. There are many resources available to support change:

Resources:

* Boardsource; www.boardsource.org
* The Independent Sector, Principles for Good Governance and Ethical Practice; www.independentsector.org

Training:

* Nonprofit Connect, Network, Learn, Grow; www.npconnect.org
* Midwest Center for Nonprofit Leadership; www.mwcnpl.org

Just to name a few . . .

If you serve on a board and would like to raise the governance bar, get going, it’s not hard. Start with a conversation with your Executive Director or President/CEO. I have a feeling they have been wanting to have this conversation.


SKC would love to see your nonprofit recognized in 2012!


Debra Box
Executive Director

Nonprofit Accounting - What 's Keeping You Awake at Night?

"What keeps me awake at night?"

That was the question we asked ourselves in developing topics for a lunchtime seminar we held in February. While I am a pretty decent sleeper, I was able to identify a few issues that come across my desk on a fairly regular basis that make me sit up and take notice particularly in regard to compliance issues with the annual Form 990. The Form 990 received a major overhaul by the IRS in 2008 for the first time in 30 years increasing the breath of reporting into organizational policy, governance, disclosure, and compliance. The lists of questions are mind numbing and a simple answer of yes or no will often lead to completing an additional schedule or providing descriptive detail. Gone are the days when the Board Treasurer or Executive Director just signed and filed the 990. There are two issues I often get vague responses on our questionnaire and for which I would like Boards to consider developing strong(er) procedures:

1. Part VI Section B Line 11 “Has the organization provided a copy of this Form 990 to all members of its governing body before filing the form? Describe in Schedule O the process, if any, used by the organization to review this Form 990.”

This is a great time for the Board to discuss the process. Who should review the Form 990? Is it enough for the Board to be emailed a copy once it is approved by the Treasurer or Finance Committee? Does there need to be a formal presentation of the 990 at a Board meeting with documentation in the minutes?

2. Part VI Section B Line 15 “Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision? a. The organization’s CEO, Executive Director, or top management official; b. Other officers or key employees of the organization. If ‘Yes’ to line 15a or 15b, describe the process in Schedule O.” I have seen very few strong compensation policies and processes. Take this question to the Board or Executive Committee and say, this is what the Form 990 is asking. Is our process sufficient or do we need to do more?

These are two issues that a Board can address within their review of Policies and Procedures. Other concerns I have regard the public support percentage on Schedule A and Unrelated Business Income (UBI) of over $1,000. The later was a topic of discussion at a breakout session at the AICPA Not-for-Profit Industry Conference I had the privilege to attend several years ago. There is a tendency to regard UBI as evil and undesirable when there are situations where the cost of filing a Form 990-T and paying the tax is minimal compared to the revenue stream generated. A historic home generates income by renting out the gardens for wedding and receptions. It is not a part of their mission, but the net income generated (after paying the requisite taxes) provides funding for programming and operations in a tough economic times. Are you wondering about public support percentage mentioned earlier? Your Form 990 preparer will complete additional schedules to determine income or revenue that are excluded from the calculation made on Schedule A. If you notice a downward trend in your percentage over time, you need to ask why. If it drops below 33 1/3 % your organization is at risk of losing its nonprofit status. And that should be keeping you awake at night!

Elizabeth Liddle, CPA Client Accountant

Nonprofit Compliance - What's Keeping You Up At Night? - Part 2

This is the second posting in a series of two-part series written by guest blogger Christine DeMarea, Partner at Husch Blackwell and Feb. 9, 2011 workshop host and presenter.

The truth is in this day and age, with donors facing considerable financial challenges; donors are scrutinizing how a nonprofit operates. Without full confidence of the public, nonprofits will be unable to raise funds and further their charitable causes.

Corporate Sponsorship versus Advertising - Issues that should be considered. The IRS will look at the payment made to a nonprofit by a corporate sponsor and decide whether the payment is a tax-free gift (charitable contribution) or a taxable advertising payment. The IRS focuses on whether the corporate sponsorship has any expectation that it will receive a "substantial return benefit" for its payment. If so, the payment is considered taxable to the nonprofit. These rules are set forth in the Internal Revenue Code, section 513(i).

1. Avoiding "Substantial Return Benefit" Classification. In order to avoid this classification, nonprofits should structure their acknowledgement of corporate sponsorships to focus on the support the corporation provides the nonprofit's mission. Acknowledgments that do not cross the line include:
• The sponsor's name, logo, general phone number, locations, and internet address in printed media, or on a nonprofit's website.
• Value-neutral displays of a sponsor's products or services, or the distribution of free samples of a sponsor's products at a nonprofit event. The nonprofit should not endorse the product/service. • A single static internet website link that takes the viewer only to the sponsor's home page - not to a page where a product or service is marketed or sold.

2. What is considered a "substantial return benefit?"
• Providing prices, indications of savings or value, providing endorsements, or inducements to buy a sponsor's product or services.
• Providing a link from a sponsor's name/logo on the nonprofit's website to the page of a sponsor's website where a product or service is sold, or listing the phone number where the product or service can be ordered.
• Providing more than token services or other privileges to the sponsor in return for its sponsorship payment, such as tickets to an event that are complimentary and not otherwise available to the public or lavish receptions.
• Accepting a payment from a corporate sponsor that is contingent upon the level of attendance at the nonprofit event.
• Providing sponsors with advertising or acknowledgments in a nonprofit's regularly scheduled and published materials, such as a eNewsletter, is considered to constitute advertising and therefore the sponsorship payment is taxable income for the nonprofit.

Nonprofit Fundraising Registration - One more thing to worry about. Registration Requirement. Thirty-nine states plus the District of Columbia require nonprofits that solicit donations in their jurisdiction to register with a state agency. They are very complicated, confusing - and unfortunately, expensive. Every state has different requirements, forms and rules. Just figuring which states a nonprofit must register can be a nightmare.

Why Worry About It?
Although these laws have been on the books for year, most nonprofits largely ignored them. For a number of reasons, a nonprofit should determine whether they are in compliance. IRS Scrutiny. In the past, the IRS did not ask for information from nonprofits about whether they were in compliance with sate registration requirements or what states they were registered in. However, this changed in 2007 when the IRS adopted new, different forms 990 and 990-EZ. The new form asks two questions relating to state registration:

1. Part VI, Line 17 - The first question must be answered by all nonprofits. This question asks "List the states with which a copy of this Form 990 is required to be filed." All but three of the 39 states that have fundraising registration require that you file a copy of Form 990. You are required to list every state - you are not allowed to say "all states".

2. Schedule G. If your nonprofit reports payments of more than $15,000 for expenses for professional fundraising services. IRS Penalties for Filing Inaccurate Forms. It is important to file to file an accurate return. Penalties can be harsh. You could be charged a penalty of $20 a day up to the lesser of $10,000 or 5% of your annual gross receipts. Nonprofits with annual gross receipts exceeding $1 million are subject to a penalty of $100 a day up to a maximum of $50,000 penalty. Responsible persons could also be held liable and if you fail to file an accurate tax return for 3 consecutive years, you could loose your tax exemption. An organization is better off explaining why or what actions you are taking to remedy the situation as opposed to trying to skirt the truth with less than honest answers. Remember - the IRS can't take action if you failed to register, it is the state that will need to take action. There is no need to have both the state and federal government pursuing you.

State Scrutiny. States are more becoming more concerned about revenue. As a result, they are becoming more active in pursuing nonprofits who have not registered. Other states are starting to collect fees and giving other states some basis for pursuing nonprofits. (In 2004, NY collected $500,000 in fines. In 2009, Washington sent letters to 39,000 nonprofits. Liability Exposure. If you are assessed a penalty for failing to register, the board members may be personally liable for the penalties. This is a surprise to many nonprofits. Unlike many other debts and liability of a nonprofit, if your organization is fined for failure to register with a state (or failed to file an accurate return with the IRS), your board of directors can be held personally liable for those fines. Many state solicitation laws provide that a nonprofit cannot reimburse its directors, officers or employees for such fines.

You might be asked by Donors/ Funders/Auditors. Many sophisticated donors know about state registration and are starting to ask. You want to be able to answer that you have complied with applicable law.

My Nonprofit is Probably Exempt. It is possible that your nonprofit will not be required to register but you want to be certain. Some facts to consider include:
• Your Website might "do you in" and trigger registration. If you have a "donate" button, this might cause you to fall within a state's registration requirements. There are steps you could take to avoid this.


Christine DeMarea Partner, Husch Blackwell Christine is highly regarded in business and estate planning, and charitable planned giving. She counsels clients on estate planning and tax-exempt organizations, assisting in administrative, legal, tax and compliance matters.