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Michigan Women's Foundation
Women's Road Map
A Technical Assistance Newsletter
July-August 1998

Stopping Incoming Leaks
10 Questions About Working for Your Agency
Boards Exhibit Some of the Best,Worst Habits
Thinking of Forming a Nonprofit Organization?

Stopping Incoming Leaks
by Beth Raps

In the last few years of fundraising consulting to small and medium-sized grassroots organizations, I've noticed more and more ways my clients could be saving money. In fact, I've noticed that my clients might not need me at all if they tried some basic money-saving ideas. Sometimes I feel like saying, "Show me your budget and I'll tell you what your mission is." Though it's a bit bold, it does seem to me that where you put your budget shows where your mouth is. As a consultant, my job is to help amplify my clients' "mouth," their voices. This often demands not just fundraising, but re-examining fund spending.

Leaks of Omission vs. Leaks of Commission

With due apologies to the Church, the simplest way to start looking for income leaks is to think in terms of what Catholics call "sins of commission" and "sins of omission." What are you doing that results in money lost? What are you not doing that results in money lost?

Let's start with commision leaks because these are often easier to see. Once you begin seeing what you are doing, it's easier to see what you aren't doing.

Leaks of Commission

These leaks occur when you give something valuable away for free or for far too little: paid staff time, specialized knowledge in the form of information based on your experience or expertise, use of space, services, products, etc.

For example, an organization produces a publication but doesn't pass its true costs on in their price for the publication. They subsidize not just paid staff hours needed to produce it, but even the printing and postage!. Or they send out copies of a report to anyone who requests it---for free.

Or an organization spends not just hours, but what eventually amounts to days on the phone helping urgently needy people find services they need or responding to questions from organizations who are doing similar work, but never asks for anything in return---not a donation, not a pledge, not a membership, not a subscription, not an advertisement in a newsletter, not an in-kind donation in return, not even a newsletter exchange!

I see two potential objections to what I'm suggesting, two reasons these decisions are not questioned more often. The first comes from the external debate in society contesting nonprofits' rights to tax exemptions and other benefits, including decreased postal rates, if we start "acting like businesses." The second is internal. It comes from our feeling that we are here to serve---whether it's those who don't have enough money to pay for our services, products, information, etc., or those who are colleagues or peers in the struggle.

First, the external objection---acting like businesses. If valuing our work is "acting like a business," then I contend that business metaphors are being allowed to control our minds. Businesses exist to make profits; we exist to fulfill our missions. We cannot fulfill them if we are less than extremely creative about how we spend and raise money. I am not suggesting making a profit on what we do. I am suggesting organizations deal with the real costs involved in doing what we do, and who should pay them.

We have no problem asking people to give us money to help us continue to do what we do that is valuable. This we call fundraising. But what we must realize is that it is also right to pass the costs of what we offer on to the people who want it. One way is to consider asking for a gift, a pledge, a membership, etc. whenever you are asked to give something away - in short, use the request for information, publications, or staff time as an opportunity to fundraise.

Now for the internal objection, that we serve people with little money or no money. How can we in good conscience ask them to support us? We can't. But think again about the rationales we use when we fundraise from those who we don't serve directly. You've begun thinking along these lines already if your organization has approached donors or board members who were not among the people you serve directly. These people have another kind of stake in what we are doing---they want to see our services continue because they believe that the problems we are trying to solve need attention. This is the way you build allies and develop the power base you will need to become ever stronger.

So perhaps there is an opportunity to broaden your base of support even beyond those who you have traditionally gone to. To do so, you may need help figuring out 1) what you offer of value to others beyond your direct constituents; 2) who these "others" are: and 3) what to ask of them in exchange for what they receive.

Take a thoughtful and creative pause from your day-to-day work. Invite several people from your organization, including a combination of staff, volunteers, and board members to a meeting with someone who does marketing, preferably someone who believes in what you do. Ask this person to structure the meeting to help you see what you already offer that would be or is of value to new constituencies. Notice that I am not suggesting you institute any new program, or produce any new thing to sell to these people.

You can also team up with another nonprofit who knows your organization well, respects your work, and whose work you respect. Trade times in which you identify what your organization offers of value and what theirs does. Then talk about who else might benefit or does benefit from it beyond the people you are now serving if those you're serving have little or no money.

The third way to do this is simply to notice who asks for and uses what you offer beyond your direct constituents. Ask staff and volunteers to keep logs of how they use their time. If you are chagrined to find you are giving away time and stuff to people and organizations who could easily afford to pay or contribute to you for it! In fact, you may decide you're not serving enough of the folks you really meant to, and refocus your work accordingly.

Leaks of Omission

Once we understand commission leaks, leaks of omission look very similar. Where committing an income leak means actively giving something away for free or too little, omitting an income leak is simply more passively failing to question an expense. For example, what about that new Web site? Or that board meeting expense line item you've never asked board members to contribute to covering?

Looking more closely, ask why do you have a Web site? Who are you trying to reach? Who are you reaching? How do you know? What is the response rate, and what is the response? Are you getting the responses you want? Refuse to be snowed by technophilic arguments that amount to keeping up with the virtual Joneses. A targeted outreach approach often builds your organization better than a scatter-shot one.

What about board meeting expenses? If you have a class-diverse board, what keeps you from asking board members to contribute as much as each is able to travel, food, and lodging for meetings? This means acknowledging that different members have different abilities to pay. If this is new, you want to go carefully; it is even more delicate politically than looking critically as the Internet, if such a thing were possible.

For other leaks of omission, hold a staff/volunteer brainstorming session in which people feel free to question the expenses side of your annual budget. (This assumes that everyone in your organization a) has a copy of your budget, b) can read it, and c) feels safe questioning it. If these factors are not true, attend to them immediately.) You may be surprised at your own collective creativity in locating leaks of omission.

In the second phase of this process, bring a list of top voter-getters to your board with recommendations for paring them down. This allows board members their own time to examine the budget critically and to see that you are serious about saving money, not just asking them to raise it.

A Questionnaire with Some Suggestions

This questionnaire is structured around budget categories common to most organizations. Most anything our organizations do results in an expenditure, unless it is staffed by volunteers, with supplies and expenses donated or in-kind. This questionnaire presents the chance to examine each of these expenditure categories.

Personnel: Using logs staff have kept for a month (if possible), is personnel time used in your highest priority areas? In other words, do you spend time doing what you most believe you should be doing? What about volunteers? Note that benefits such as sick leave, vacation time, health insurance are not in question. In fact, use time you can save by doing this process to help staff see they should take the time off stated in their job descriptions!

Printing: Easy questions: Have you solicited in-kind donations for larger jobs? Have you considered trading advertisement (in a publication or program-book or on a big banner at an event, etc.) for printing or graphic design services? How could you print less? Does what you print serve your priority purposes, your mission? Does it get read? Do people who use what you print help you pay for it?

Phone: Because they are so detailed, phone bills are a good indicator of how staff time is used and can supplement the staff logs suggested about or serve as a reality check. The questions here: Who are staff and volunteers calling? Why? How much would be saved if callers were not helped ad infinitum but were told that every half-hour conversation actually costs your organization $____? What would happen if you requested something in return for what amounts to consulting by phone?

Postage: Can you have postage donated for larger mailings? Traded for advertising as with printing or graphic design? When was the last time you purged your publication mailing lists? Asked for subscriptions, or donations to cover your costs? Can mailings be shorter, and save both postage and print costs?

Travel/Meetings: If you are traveling to give something of value, such as a speech or workshop, are you asking for reimbursement? If you're told this isn't possible, do you ask that monies be raised to support you coming? If your organization pays for you to give something away of value, are you certain it benefits the constituents you exist to benefit? If you are traveling to participate in a meeting or attend a conference, have you as an organization identified when and whether these are good expenditures, based on your program priorities and mission?

Membership/Subscriptions/Donations to Other Organizations: If you join other organizations or subscribe to their publications: have you as an organization identified when and whether these are good expenditures, based on your program priorities and mission? How have these decisions been made? Should they be reexamined? Who benefits from these expenditures?

Rent: Can you obtain donated space? Can you sublet some of your space? Have you asked groups who use your space to help to pay for your costs? Or to make some other contribution to your organization's ability to keep having space they can use? Can you buy a space? Have you considered what such a capital campaign might to do build your organization beyond simply purchasing your space?

Insurance: Get a "second opinion" periodically by shopping around, and keeping up with laws on what you have to have.

Supplies: Seeing what you can obtain donated in-kind is the main strategy here. But also: Do you really need Post-Its? Do staff use scrap paper? (Do you recycle?) Do folks take home pens, paper, make copies, etc. without realizing just how much on average per person your organization spends on supplies?

For all these items and issues, it is often best to point them out in a meeting with everyone concerned, and with everyone in possession of a copy of your budget. Put in the context of a clear need not only to raise money, but to save money, this can be an eye-opening and motivating experience.

Reprinted with permission from Chardon Press, Grassroots Fundraising Journal, April 1998.

10 Questions About Working For Your Agency
by Suzanne Dibble

Predictions about the future of work declare that people will change jobs and careers at a faster pace than in the past. The nonprofit sector is at least as vulnerable to change as is the corporate world.

If you have any responsibility for staffing your organization, the implications of this trend for you are twofold:

To be successful in the first role, you have to imagine yourself in the second. You have to anticipate the questions that a person you are interviewing might ask. Job applicants want to know whether they would be happy as part of your organization, not merely what their job would be. They want to know whether there could be a Afit@ between their needs and what your organization provides.

Here are 10 questions about the work environment of your organization. You might want to go through them twice, once as a manager and once as an applicant.

  1. Self-description. What does the organization say about itself to customers, shareholders, employers, employees, its board, contributors, funders and others? Are the messages in publications such as annual reports and employee newsletters clear and consistent?

  2. Staffing. How clear are job requirements? Does the organization recruit from a variety of sources to attract a diverse group of prospective employees? How searching are the interview questions? Are tests - written, job simulations, personality tests - part of the screening? Are employees - the potential peers - involved?

  3. Mission/strategy. Is there a clear statement of the purpose of the organization? How long has it been in place? How was the mission statement communicated? Is there a strategy with goals and timetables that supports the mission? Is there a process to monitor it? How often is it reviewed and revised in response to actual operations and environmental changes?

  4. Flexibility. Are there flexible work arrangements that recognize the personal and professional needs of employees? Are there opportunities for flex-time, alternative work schedules, telecommuting or working at home? Are employees given time for professional education and other development? Are there opportunities to have fun at work?

  5. Employee development. What is the philosophy of employee development? What opportunities are actually available? Is there a commitment to a minimum number of hours of training? Does the organization pay attention to Asoft@ skills such as problem-solving, as well as technical skills? Are there mentoring or other support systems?

  6. Job expectations. How do employees learn what is expected of them? Do employees participate in setting expectations? Who has responsibility for monitoring progress? How do employees get feedback on how well they are doing? Does feedback come from customers? Peers? Do employees assess their own performance?

  7. Rewards. Is there an established compensation philosophy? What is it and how is it communicated? How are salaries determined? Are there noncash rewards? Are there incentives for individual performance? Are there team organizations or incentives?

  8. Supervision. What is the role of the supervisors? Are they bosses, leaders or coaches? Do they primarily do the same work as their staffs, or do they spend most of their time and effort on supervision? Do employees provide input on the performance of their supervisors?

  9. Teamwork. Do employees work in teams? How is this reflected in setting and managing expectations? If teamwork is important, what efforts are made to train employees in team development? How are new employees integrated into existing teams?

  10. Respect. Are employees provided with the information they need to do their jobs? Are employees asked for their ideas about improving work processes or serving customers? Are diverse opinions encouraged? Are employees treated according to their contribution and abilities rather than their gender, ethnicity or status (exempt vs. non-exempt)?
Now put both perspectives together. Do you see gaps in the information you provide as manager? Do you notice conditions that could be improved for the applicant's perspective? As a manager, can you imagine what you would like to say but cannot, truthfully, say right now?

Re-reading the list from both viewpoints prepares you for the next step: moving into action. Consider what you might do differently in your organization and what you yourself will think about if you become part of the job-changing trend.

Reprinted with permission from Crain's Nonprofit News, April 29, 1988. Suzanne Dibble is a consultant in compensation and staffing. She is president of Professional Skills Inc. in Lathrup Village.

Boards Exhibit Some of the Best, Worst Habits
By Louise Motoligin

Here are the five worst practices---or prehistoric behaviors---exhibited by well-meaning, informed nonprofit boards today:

  • Hiring a high-priced accounting company at inflated rates to conduct an uncomplicated audit for a small nonprofit then accepting a portion of the auditor's fees as a corporate contribution. This misrepresents the true cost of such as audit. Besides, there is no place for grandstanding in today's nonprofit.

  • Nominating high-profile, non-participating members to use their name on the letter head then not holding them accountable to the same standards as participating board members. This sends a mixed message and devalues the effort put forth by contributing board members.

  • Encouraging board candidates by saying, "Being on our board really requires very little time or effort---just a few meetings a year..." Being on a board requires a dedicated commitment of one's time, talent and treasure.

  • Not listening to prospective board members when they say, "I'll do anything for the organization, but don't ask me to raise money." Developing financial resources---also known as fundraising---is a board member's primary role.

  • Thinking your sole duty as a board member is to give generic management advice to well-educated executive directors. Today's nonprofit CEO's need and want the same sophisticated, topic-specific training provided to Fortune 500 companies.

    Conversely, here are the top five best practices---or exemplary behaviors---exhibited by enlightened non-profit boards:

  • Boards that can claim 100 percent participation in financial support to the organization. This proves its leaders believe in the organization's mission and makes it easier to ask others for support.

  • Board members who bring their sphere of personal or business contacts to help support the non-profit, because people give to people.

  • Boards whose program recommendations are supported by resources for implementation, because ideas are a dime a dozen, but implementation is for real.

  • Board members whose business and personal associates know of their commitment to the organization, because advocacy starts at home.

  • Boards that adopt and enforce a strict conflict-of-interest resolution, because their job is to ensure the public trust.

    Written by Louise Motoligin. Ms. Motoligin is the Director of Major Gifts & Fund Development for MWF. She is also the owner and principal of Collaborative Management Resources, Inc. which provides training and consultation to the nonprofit community.

    Thinking of Forming a Nonprofit Organization?
    Accounting Aid Society presents... A Getting Started Workshop
    How to establish a 501(c)(3) nonprofit organization in Michigan

    Two four-hour sessions that cover:

  • What is a nonprofit corporation?
  • How do you set up a nonprofit corporation?
  • What is the role of the board of directors?
  • How do you incorporate in Michigan?
  • What does the internal revenue service require?
  • How to fill out all state and federal paperwork

    When? Tuesday, July 14
    Tuesday, July, 21, (forms)
    Thursday, September 10
    Thursday, September 17, (forms)
    Tuesday, November 10
    Tuesday, November 17 (forms)

    All sessions meet from 4pm-7pm at:

    Accounting Aid Society
    719 Griswold, Suite 2026
    Detroit, MI 48226

    To register call (313) 961-1840 or Fax (313) 961-6257

    Cost: $20 per person per session

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