How can you meet your goal of 100% board participation in fundraising?

ThermometerIn most successful nonprofits, giving begins with the board. Your organization may have a board policy that stipulates 100% contribution participation. The policy alone is all you need to encourage or remind most board members to contribute, but how do you handle those who don’t? Here are some ideas that other nonprofits have successfully implemented:

Provide board members options to fulfill their commitment
Agree upfront whether board members’ time and talents qualify toward the 100% contribution goal. Allow board members (and anyone else you can find!) to sign up for a monthly giving and/or estate planning programs. Does participation in the nonprofit’s annual event qualify? Sometimes removing ambiguity as to what qualifies and what does not is all you need to meet your 100% participation goal.

Include it in their annual board member agreement
Many organizations require board members to sign a board member agreement, either annually, or upon joining the board. These agreements can clarify roles and responsibilities of board members. Often, they include a 100% participation requirement, and what types of contributions qualify, avoiding unnecessary confusion or surprises down the road. It is frustrating to join a board, only to learn later of requirements that were not mentioned during the recruitment process.

Ask
Implement a plan to personally ask each board member to contribute. Board members are very closely involved in the organization and deserve to be asked on a more personal level than the general solicitation materials sent out by the organization.

Provide context
Celebrate all contributions. This avoids someone feeling ashamed that they were “only” able to contribution $50 when another member can afford contribute $5,000. Emphasize that the amount should be meaningful to them, and that amount is different for every individual.

An annual “give” meeting
Incorporate it as part of a specified meeting every year and ideally, the same meeting annually. During the fourth quarter of the year is common timing as many donors are already in the process of their annual giving considerations. Some organizations “pass the hat,” or distribute contribution agreements while others are less public about it. The methods you use should match the culture of your board.

Report on participation regularly
Some board members might not recall if they have made their annual gift this year. Reporting on overall board participation can provide a subtle reminder to make their contribution. Care should be taken not to turn this into a public shaming of any individuals.

Do nothing
Many organizations set 100% participation as a stretch goal, but do not feel it is necessary or appropriate to follow-up to meet that goal. Again, the culture of your organization and board plays a large role.

Ultimately, consideration of the culture of your organization and your board will direct how you approach encouraging board members to meet your 100% participation goal. Remember that most board members provide valuable resources, time and expertise to your organization. Regardless of the approach you choose, be sure to communicate expectations upfront so there are no surprises.

– Dave Studebaker

Mandatory Audit Firm Rotation – Recent Conversations

During the past few weeks we have had the opportunity to meet with several nonprofits who are contemplating a change in their audit firms. One of the questions asked was whether there is any requirement to change audit firms after a number of years. Here are some thoughts and research on the matter.

The concept of mandatory auditor rotation comes from the Sarbanes-Oxley Act of 2002 (the Act) which dictates requirements for public companies. Enforced by the Securities and Exchange Commission (SEC), the Act requires a public company to rotate audit engagement partners every five years but contains no requirement for the rotation of audit firms. In fact, the U.S. House of Representatives, in July 2013, approved a bipartisan bill that would prohibit the SEC from requiring mandatory audit firm rotation for public companies. The bill would amend the Act to prohibit the SEC from requiring public companies to use specific auditors or requiring the use of different audit firms on a rotating basis. The bill would have to be approved by the Senate, which has not taken up the issue, and signed by the President to become law.
Given the stance taken for public companies, which is that mandatory rotation of audit firms is not a good idea, why does this topic continue to be discussed by nonprofit entities? The discussion likely stems from a deep desire of board members and trustees to hold themselves and their organizations to the highest level of fiduciary responsibility. This high level of responsibility suggests a routine evaluation of all significant vendor relationships, and evaluating whether you are receiving value from your audit firm is a reasonable question to raise and answer.

Many nonprofit entities respond to this desire to refresh their audit relationship by rotating audit engagement partners within the same firm every five or seven years. This is a reasonable response and allows the nonprofit to experience a fresh set of eyes on the engagement without the time spent in interviewing audit firms to achieve this goal.

Our advice – if you are not satisfied with the relationship between your Board or Audit Committee and your audit firm, consider your options which might include a change in service providers. On the other hand, if you believe you are with a full-service, qualified firm but would like to refresh the relationship, discuss with the firm your desire to change audit engagement partners. This small change may be all you need.

As always – let us know if there is anything Eide Bailly can do for you!

By: Peggy Jennings, Partner
Denver office
Eide Bailly, LLP

FASB Continues Deliberations On Not-for-Profit Financial Statements

May 14, 2014 FASB Board Meeting

FASB

FASB

Financial Statements of Not-for-Profit Entities. The Board continued its deliberations about the presentation and disclosure of investment expenses and an intermediate measure of operations in light of the results of staff outreach with stakeholders of foundations and health care entities. The Board decided that:

  1. All not-for-profit (NFP) entities would be required to disclose identifiable, direct external investment expenses and the amount of direct internal investment expenses incurred during the period.
  2. An NFP business-oriented health care entity would be required to present an intermediate measure of operations as previously defined by the Board in this project. Those entities would have the option of also presenting the performance indicator that is currently required by paragraph 954-225-45-4. As a result of this decision, all NFP entities including health care entities would be required to present the same intermediate measure of operations.

3G’s or 3T’s: Your Organization’s Approach to Board Fundraising

salary-negotiation_965853By Ksenia Popke

No matter the size of your organization, getting your Board involved in fundraising is not an easy task. Sometimes the fate of the organization can rest upon the effectiveness of your Board in sustaining the revenue stream needed to get you through the hard times. There are two approaches that have developed over time in staffing your Board and setting fundraising expectations.

#1. The Three G’s (Give, Get, Or Get Off)

It simply means that all board members commit themselves to contribute a certain sum of money to the organization or they must persuade others to do so. If unwilling or unable to accomplish one of these two tasks, then the only option left to them is to get off the board. Some organizations allow boards to fulfill their obligation by in-kind contributions but be aware of what you allow. A strong gift acceptance policy can help you ward off unwanted gifts.

#2. The Three T’s (Time, Talent and Treasure)

This approach differs from the 3G approach as it explicitly recognizes the value of the professional expertise of the Board. Board members are not only required to contribute their time to become fully involved with all aspects of the board’s fundraising, they are also required to contribute their considerable talents. This includes, but is not limited to, their own personal skills and expertise. The value stems from utilizing the talent to achieve the organization’s mission. The organization needs to not only acquire needed expertise but also effectively manage it and put it to use. In addition, they might be required to make a personal donation and, where appropriate, seek additional funds.

Whichever approach your organization takes, be sure not to institute such a policy prematurely. Consider the stage of your development (e.g. grassroots, start-up, well established), other sources of revenue (e.g. program fees, grants, and investment income), fundraising targets, your mission, and expertise your board lacks. In our ever-changing world, many are recognizing that they need more from their Board members than just financial resources. Demands of the current time, including a shifting economic and financial climate, calls for committed individuals to contribute passion, creativity, and professional expertise to help set effective policies and provide leadership, oversight and guidance for continuous sustainability of the organization.

Going Concern “Look-Forward” Period Likely To Be Extended by FASB

At its May 7th meeting, the Financial Standards Accounting Board (FASB) continued redeliberations of proposed Accounting Standards Update, Presentation of FinancialFASB-logo Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption (originally proposed in June 2013).

As a result of these discussions, NPOs should consider the implications of the extended look-forward period and discuss with their lenders and auditors how maturity dates of credit facilities and other debt instruments may need to be adjusted in instances where those dates may affect the evaluation of the organization’s ability to continue as a going concern.

Here is a summary of the decisions made by FASB:

Assessment Date and the Look-Forward Period

  • Management’s assessment of an entity’s ability to continue as a going concern should be based on relevant conditions or events known or reasonably knowable at the date the financial statements are issued (or for a nonpublic entity, the date the financial statements are available to be issued).
  • The look-forward period (that is, the period over which the entity’s ability to meet its obligations is assessed) should be one year from the date the financial statements are issued(or for a nonpublic entity, the date the financial statements are available to be issued). Under current standards, the look-forward period is one year from the date of the balance sheet (for NPOs, this is commonly called the statement of financial position).

Nonpublic Entities

  • The standard will apply to both public and nonpublic entities.

Transition and Effective Date

  • All entities will apply the new requirements prospectively for annual periods beginning after December 15, 2015, and in interim periods thereafter. Early adoption is permitted.

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.

Risk Oversight for NPOs

chess-strategyBy:  Hadassa Penn

Some may imprudently believe that risk oversight is a corporate issue that is not relevant to nonprofit organizations. However, while nonprofits may not have the same goals or stakeholders as a for-profit corporation, nonprofits are charged with accomplishing their mission and achieving certain goals and objectives.

A key to success for a nonprofit organization is an understanding of the internal and external risks it faces. Many times organizations focus on risks in their internal operations and fail to address risks that might come from external forces, such as the economy, change in donor base, decline in need for services and decrease in federal funding.

There are significant advantages of being proactively informed about potential risks threatening an organization’s mission and objectives. For example, top leadership and management can engage in focused discussions surrounding the organization’s core, mission-critical strategies and the major risks that accompany those. Frequently management will come to realize that strategic objectives might be impacted by several risks that may hinder the ability to achieve the objective. From there, they can then focus on the risks that are most likely to prevent the accomplishment of the organization’s mission.

While implementing a full enterprise risk management process may be cost-prohibitive for some, organizations should consider and discuss these critical ERM steps:

1. Identification of the risk (e.g., not enough volunteers in the long-term to support the cause)

2. Assessment of the risk (e.g., determined this risk has a high probability of occurring and a high impact to the organization if it does)

3. Developing a new risk response plan and taking action through executive support, allocation of funds and establishing a risk owner (e.g., a revised advertising campaign to appeal to the specific generation that was not participating)

4. Monitoring (e.g.., as the revised advertising campaign evolved, the response also drew more donations, new ways to develop services appealing to this generation, and brought in emerging leaders to support and sustain the mission, vision and goals of the organization. The organization would continue to expand their strategic objectives to include this initiative in their yearly objectives.)

Read more about Looking at Enterprise Risk Through a Non-Profit Lens.