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March, 2009:

Money Managing in Challenging Times

Mar 31st, 2009
by Alan.
2 comments

valueFirst of all, thanks to all those who attended last weeks training.  The resources we talked about will be listed below.

It goes without saying that these are interesting times financially and operationally for the charitable sector.  Like many of you, I went through the economic slowdown that came after the tech meltdown in 2001 but this seems to be of a far greater magnitude.  But if there can be any silver lining in all of this, I think it is a greater focus on the operational side of nonprofit organizations.

I have read more articles about not-for-profit operations, administration and finance recently than I think I have in the last ten years.   And they have been positive.  They have spoken of the need for organizations to look at how their finances and operations are handled, to make sure they have the systems in place to be able to figure a) out exactly where they stand financially and b) what to do going forward as far as budgeting, cash flow and capacity.

While I’m not happy about the pain that will be felt by many organizations and the populations they serve I am pleased that these discussions are taking place and that we will end up with a stronger sector once this crisis passes.

Below are many links to articles and resources on money managing in tough times, divided into three sections.  More resources come out every day, so at best this list will only be complete as of the moment it is published, so if you know of any good resources that are not listed below please add them to the comments section.  And don’t forget to subscribe to the comments to see what others add.

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Nonprofit News Update

Mar 26th, 2009
by Alan.
1 comment

roundupThis edition of my Nonprofit News Update features resources for your nonprofit.  One thing I really like about how this sector operates is the willingness we have to share good ideas, to help out our brother and sister organizations.  Twitter is a fine example of that phenomena.  Just follow some of the nonprofit folk out there and you can learn a lot about what is going on in the sector and where the choicest resources lie.

Along the lines of social networks and sharing reddit and Idealist have come together to bring us IdealistNews, a place to post, rate and comment about news articles the feature charitable issues.  Check it out and see what others think is relevant to the nonprofit sector.

A nice resource for nonprofit boards of directors are these videos from BoardSource.  The eleven videos will walk you through the basic responsibility of nonprofit boards, including financial matters.

Been laid off?  Planning on laying people off?  This Guide to Surviving Layoffs might be a good page for helping you and others get back on your feet.

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Where the Money Went

Mar 20th, 2009
by Alan.
No comments yet

2273635564_840c6966671I work for a nonprofit which is home to several named endowed funds. We are getting ready to send out annual statements for 2008. Unfortunately, all the funds suffered a loss. A lot has to do with the economic state we are in, but how do you think would be the best way to approach this to families who will see the loss and subsequently question it?

You are not alone, I know several organizations that have similar issues. I think you need to be as honest and straight forward as possible with your donors. Unless they have been under a rock they should be aware of the financial situation we are all in and what has happened to investments in just about everything. They may already be anticipating losses in their funds.

I would include as much information as you can in those statements. Were the losses your funds suffered less that what the market lost in general? That would be something to highlight Were steps taken to minimize losses when the managers realized the market was heading south? I would highlight any ‘good’ news as much as you can. It is the donor’s money and they have a right to ask questions, but if we are proactive in giving them information up front perhaps we can forestall some questions. But you will get some so you should be prepared in advance to answer them all as completely as possible. Saying “I don’t know” is bad, and lying to a donor or covering up bad news is even worse.

If mistakes were made in handling the endowed funds on your end, say perhaps the funds were invested a little more aggressively than they should have been, be up front and let them know that mistakes will not happen again. And maybe letting them know what your investment plan going forward would be helpful as well.

What I Learned From the IRS, Part 2

Mar 17th, 2009
by Alan.
No comments yet

logo-irsThe IRS had their Exempt Organization Workshops this month, a day spent going over nonprofit and tax exempt issues.  I picked up a couple of nice tidbits that I will share but first I want to go over two other items.  The first is the IRS’s Winter 2009 Statistics Of Income Bulletin.  It covers all types of tax returns but a highlight of the nonprofit sector:

Charitable and other tax-exempt organizations reported more than $10 billion in gross unrelated business income for tax year 2005. Between 2004 and 2005, total unrelated business income tax liability increased by 49 percent to $543.3 million.

The other item is the answer to another question:

For part 7 of the updated form 990, do we need to list our Executive Director’s and Director of Fiance’s compensation even if the don’t meet the Key Employee salary level of $150,000 or the $100,000 salary minimum for the 5 highest compensated individuals?

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