88 posts categorized "Governance"

Less Hassle and Still Charitable: Why Projects Choose Fiscal Sponsorship

August 21, 2019

Fiscal_sponsorshipOne of the big trends we've noticed in both philanthropy and international development is increasing interest in funding different and new types of organizations. For many foundations, traditional public charities are not their first choice for investment. Instead, they are turning to international networks and partnerships that bring together diverse stakeholders, innovation platforms, funder collaboratives and re-granting funds, social enterprises, and short-term projects with a handful of staff.

As a result of this, we’re seeing many funders and project leaders consider the fiscal sponsorship model, which typically entails a project or small startup being "sponsored" by a larger tax-exempt organization with an aligned mission. The larger organization handles governance, financial management, and administration for the project it has agreed to sponsor, while the project (in many cases) pursues an independent strategy with semi-autonomous staff and its own advisors.

Since the Transparency and Accountability Initiative (TAI) transitioned to a U.S.-based fiscal sponsor in 2016, we have been repeatedly asked for advice by both project leaders and program officers. We’ve also watched as the fiscal sponsorship sector has grown. In the international development field, we’re even seeing the demand for fiscal sponsorship expand to other countries, most of which do not have legal frameworks in place to accommodate such a model.

Here in the U.S., the law currently supports a variety of models. In the model used by TAI, the sponsoring organization assumes responsibility for all tax filings, financial reporting, and legal compliance, including ensuring the charitable mission and activities of the project it is sponsoring. Typically the project is expected to contribute to the sponsoring organization’s overhead, abide by its policies, and report to its management and board. The exact terms of the arrangement usually are spelled out in a memorandum of understanding (MOU). The MOU often allows the project or startup to have its own steering committee to direct its strategy.

We are frequently asked about fiscal sponsorship and wanted to share some of the things you should consider before taking the plunge. (Nonprofit leaders may also want to consider how some of these factors are shaping organizational structures in their own fields.) Based on our own experience and what we’ve heard again and again from other projects that have gone this route, below are the top factors in deciding whether to pursue a fiscal sponsorship arrangement:

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Most Popular PhilanTopic Posts (July 2019)

August 02, 2019

It's August, and here on the East Coast the living is...steamy. Not to worry. Our most popular posts from July will cool you down and make you smarter....

Interested in contributing to PND or PhilanTopic? We'd love to hear from you. Drop us a note at Mitch.Nauufts@Candid.org.

An Engaged Board Is a Fundraising Machine 

July 03, 2019

Table-clipart-board-director-11Is your board pulling its weight in terms of fundraising? An active, engaged board can be a huge difference-maker for a nonprofit. We choose board members, after all, for their skills, connections, and potential to boost fundraising revenue — and they usually will, as long as we make an effort to encourage them to put those skills and connections to work.

Here are a few tips to help you do that:

Boost your board's fundraising capacity. You selected your board members for their knowledge, acumen, and abilities, but you still need to familiarize them with your brand, help them engage with your team, and make sure they're aware of your organizational needs and fundraising plans. The best way to do that is by boosting their engagement with staff and distributing tasks based on their specific interests and abilities.

Get and stay connected. If you're only seeing your board members during board meetings, you are missing out on much of what they have to offer. Be sure to invite board members to any community events you hold or workshops you host. An invitation to tour your facility or join you for an on-site visit where they can meet your volunteers and clients also is a good idea. Not only will it help them feel more connected to the organization, it will give them opportunities to network in the community as well as material for stories they can share in support of the organization.

While not every member of your board will be willing or able to take advantage of every invitation, many will, and doing so will help strengthen their rapport with each other and your work. Updating them on a regular basis about your work, your successes, and your ongoing funding needs also will help them feel like they are connected and an integral part of the overall effort.

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How to Find Your Most Engaged New Board Member

May 23, 2019

Board-meetingThere are nonprofits that enjoy a celebrated status in their communities. Powerful people clamor to be on their boards, and they earn those seats with significant contributions and meaningful introductions. And then there are most nonprofits. Their boards work to attract qualified board candidates but often end up wondering whether they should make do with less.

What are these nonprofits to do? The good news is that it is possible to recruit board members whose commitment to your cause more than balances out their lack of connections or personal wealth.

Now, it doesn't hurt to have a few well-connected (and deep-pocketed) people on your board. But having too many can be a problem. Increasingly, nonprofits are looking to solve the challenge of board member engagement. They struggle with board members who don't do much beyond showing up for meetings, or who write a big check to the organization once a year and then drop out of sight. But when it comes to that long-term project or software integration the organization desperately needs, the one that requires board members willing to do research and outreach until the goal is met? Fuggedaboudit.

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New Tax on 'Excess' Executive Compensation Poses Challenge for Tax-Exempt Organizations

March 18, 2019

Tax_puzzleThe ability to attract and retain high-quality executives is an important component in the success of any tax-exempt organization and the fulfillment of its mission. A new provision of the Internal Revenue Code added by the Tax Cuts and Jobs Act of 2017 will have a "sea change" impact on the cost of compensating such individuals. Under the provision, "excessive compensation" paid to executives by a tax-exempt organization will subject the organization to a substantial excise tax liability. The penalty may be viewed as an attempt to level the playing field, inasmuch as the tax consequences associated with the payment of "excessive compensation" paid by for-profit employers, in particular by for-profit public companies, to their senior executives can result in the loss of a tax deduction for excessive compensation payments.

What Is the New Excise Tax?

Effective as of January 1, 2018, "applicable tax-exempt organizations" are subject to a 21 percent excise tax on the sum of (i) compensation paid by the tax-exempt organization (and certain entities related to the tax-exempt organization) for a taxable year to a "covered employee" that exceeds $1 million, and (ii) any "excess parachute payment" paid by the tax-exempt organization to a covered employee.

Which Tax-Exempt Organizations Are Subject to the Tax?

Any organization that is exempt from federal income tax under Internal Revenue Code section 501(a), such as public charities (e.g., United Way), exempt farmers' cooperative organizations, certain state or local governmental entities, and certain political organizations, are subject to the tax.

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Board Diversity: Moving From Awareness to Action

February 26, 2019

Board-diversity-bubbleThe lack of board diversity in both the nonprofit and for-profit sectors is hardly news. And a growing body of reports, articles, and data clearly shows that boards not only are not diverse, they're not even moving in that direction. Indeed, an annual survey of boards of directors of nonprofit organizations published by BoardSource found that 84 percent of board members are white, while 27 percent of boards surveyed reported not having a single member of color.

The survey conducted by my own firm, Koya Leadership Partners, affirms these trends. Of the hundred-plus boards we surveyed, 68 percent of all board members identified as white, while just 24 percent identified as a person of color. We wanted to understand why boards aren't changing, so we decided to ask.

Here's what we learned: 96 percent of boards believe that diversifying the board or executive committee is a key objective, but only 24 percent have taken steps to increase diversity. Clearly, there is a serious gap between intention and action.

Alarmingly, our survey found that most boards aren't even taking simple steps to increase inclusion and advance diversity such as developing a written diversity and inclusion statement, with only 11 percent of the boards we surveyed saying they had done so. Another key finding was related to board recruitment, with effective recruitment strategies emerging as a serious challenge for boards, which often struggle to fill board seats with candidates who contribute to the overall board diversity.

The good news? Closing the diversity gap is far from impossible. In fact, there are a number of steps any board can take, starting now, that will help move it toward real diversity and inclusion. Here are four:

1. Assess your own board through the lens of diversity. If your board has never ordered up a self-assessment, now is the time. Board assessments are an excellent first step to understanding the various talents, skills, perspectives, and experiences board members bring to table and are invaluable in helping board and senior leadership identify what is missing. You can find useful examples of a board matrix online, or you can make one of your own that lists each board member next to their demographic characteristics, experience, skills, and relevant attributes. Many boards find this to be a useful exercise that helps everyone better understand who and what is represented on the board, as well as who and what is not.

2. Recognize that becoming more diverse and inclusive requires culture change. Adding new board members who bring diverse backgrounds and perspectives is critical. But it's not enough. Many boards will also need to undergo a more holistic cultural change process that includes honest assessment, education, and a commitment to changing every aspect of board culture so that it truly embraces inclusivity.

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Weekend Link Roundup (February 23-24, 2019)

February 24, 2019

Gw-life-mask-frontA weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Democracy

"The key to improving the voting process," writes Adam Ambrogi, irector of the Elections Program at the Democracy Fund, "is straightforward: expand accessibility while also prioritizing security."

Giving

Have women's motivations for giving changed over time? Andrea Pactor, interim director of the Women's Philanthropy Institute at the Lilly Family School of Philanthropy; Hillary Person, a former development director at the Pensacola State College Foundation; and Dyan Sublett, president of the MLK Community Health Foundation, take a look at the data.

Governance

On the NCRP blog, Rick Moyers, former vice president of programs and communications at the Eugene and Agnes E. Meyer Foundation and a board member at BoardSource, reminds readers that while "[d]iversity is only one aspect of a larger conversation about equity and power," many boards aren’t ready to have that conversation. With that in mind, there are four things senior leadership should look for to determine whether their board is ready for deeper work in pursuit of equity.

International Affairs/Development

GiveWell has announced a call fro proposals from outstanding organizations operating in Southeast Asia and, in partnership with Affinity Impact, a social impact initiative founded by the children of a Taiwanese entrepreneur, will  provide three grants — one of $250,000, and two $25,000 grants — to organizations that are operating programs in global health and development in any of the following countries: Bangladesh, Cambodia, East Timor, Indonesia, Laos, Myanmar, the Philippines, and Vietnam. More details here.

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Weekend Link Roundup (February 9-10, 2019)

February 10, 2019

Homepage-large-fc-and-gs-are-candid_tilemediumA weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Climate Change

"Someday, perhaps, an entire nation could be powered by renewable energy, but that day is too far off to deal with the climate threat," say Joshua S. Goldstein and Staffan A. Qvist in a new book called called A Bright Future: How Some Countries Have Solved Climate Change and the Rest Can Follow. Instead, Goldstein and Qvist tell Marc Gunther, countries should be looking to nuclear as the short-term answer to the problem. For many in the environmental community, that is a non-starter. Gunther explores the dilemma.

Governance

Writing on the Center for Effective Philanthropy blog, Kim Williams-Pulfer, PhD, a postdoctoral researcher at the Indiana University Lilly Family School of Philanthropy, shares some thoughts on nonprofit boards and the diversity imperative.

International Affairs/Development

On the OECD Development Matters site, Benjamin Bellegy, executive director of the Worldwide Initiatives for Grantmaker Support (WINGS), shares his thoughts on how philanthropy can best contribute to the 2030 Sustainable Development Goals agenda.

Journalism/Media

Journalism and the news media in the U.S. are in trouble, the traditional business model for news threatened with extinction by the consolidation of eyeballs and ad dollars on a few mega-platforms. Forbes contributor Michael Posner looks at the conclusions of a new report funded by the Knight Commission on Trust, Media, and Democracy and finds that while the report diagnoses the problem well, "its recommendations do not go far enough."

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Weekend Link Roundup (November 24-25, 2018)

November 25, 2018

Givingtuesday3A weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Arts and Culture

What role might foundations play in addressing Adverse Childhood Experiences (ACES), a significant risk factor for a variety of health and social problems across the lifespan? John Mullaney, executive director of the Nord Family Foundation, has been thinking about that for some time now and, in a post here on PhilanTopic, shares his thoughts.

Climate Change

Thirty years after The New Yorker published "The End of Nature," Bill McKibben's seminal article about the greenhouse effect, McKibben returns to the pages of the magazine with a look at what we have learned in the decades since about climate change, extreme weather, and their impact on human society. You will not be encouraged.

Education

On the HistPhil blog, Leslie Finger, a political scientist and lecturer on government and social studies at Harvard University, considers some of the implications of foundation grants to state education agencies.

Fundraising

It's not enough for nonprofits to simply thank their donors, says Vu Le, who shares twenty-one tips designed to help you and your organization be better at recognizing and appreciating the people who support your work.

On the Bloomerang blog, Terri Shoemaker, chief strategy officer at Abeja Solutions in Phoenix, Arizona, pays tribute to "the small donor. The little ones. Those generous folks that give when they can to a mailing, online, or even to your very specific appeal on social media."

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Weekend Link Roundup (November 10-11, 2018)

November 11, 2018

11-10-2018-malibu-fire-pchA weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Civil Society

On the twenty-ninth anniversary of the fall of the Berlin Wall, Richard Marker reflects on "the fragility of civil society, the brevity of memory, and the destructive hubris of leaders motivated by xenophobic rage."

Criminal Justice

In the New York Times, Michelle Alexander, author of the acclaimed The New Jim Crow, hails "the astonishing progress that has been made in the last several years on a wide range of criminal justice issues." But she warns that "[m]any of the current reform efforts contain the seeds of the next generation of racial and social control, a system of 'e-carceration' that may prove more dangerous and more difficult to challenge than the one we hope to leave behind."

Environment

The world is drowning in stuff, writes Elizabeth Seagran, PhD, a staff writer for Fast Company. Isn't it time for nonprofits and foundations to do the environment a favor and just say no to all the cheap swag they hand out at conferences and events?

Giving

Nice post on the Charity Navigator blog about philanthropically minded celebs who have turned giving into an art.

Governance

On the GuideStar blog, Bill Hoffman, CEO of Bill Hoffman & Associates, LLC, a Tampa-based consulting firm, shares six things individual nonprofit board members can do to support their CEO's success.

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Nonprofit Boards and Risk

October 11, 2018

RiskWhile most nonprofits know they need to be forward thinking in order to create change, many are (understandably) focused on the day-to-day delivery of programs and services and don't know how to proceed. It's a challenge to strategize about future plans or consider taking on new activities and programs with broader impact when resources are limited and the organization's staff and leadership already have their hands full. Which is why it is especially important for nonprofit boards to weigh and be willing to recommend taking calculated risks. Is yours?

What follows are some commonsense tips for nonprofit board members who are ready to help take their nonprofits to the next level.

Think data. A good strategic planning process should focus resources on the programs likely to have the greatest impact on the groups served by an organization, and data needs to be at the heart of that process. Every program (as well as every internal department) generates data. Making time to identify trends and patterns in that data in order to be more strategic and identify risk is the first step on the road to creating impact.

Assess current risks. In Green Hasson Janks' most recent nonprofit report, Board Governance: The Path to Nonprofit Success, one of the firm's principals, Mark Kawauchi, notes that "a significant percentage of nonprofits are not incorporating and addressing risks in their strategic plans." Mark goes on to suggest that nonprofits with sufficient resources should conduct a comprehensive risk management assessment that incorporates both the organization's operations and its programs.

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How to Recruit, Engage, and Retain Millennial Board Members

October 03, 2018

Millenials_on_boardHere's a well-documented fact: in the nonprofit sector, most boards are lacking in diversity, especially when it comes to people of color and women. (We wrote about the former, and how to change it, a couple of months ago.) We also know that more diversity on a board tends to bring positive, lasting results to the organizations governed by those boards. There's another population that is often overlooked for board service, however, one that is well positioned to bring new and different perspectives to nonprofit board deliberations. I'm talking about millennials.

According to BoardSource, 57 percent of nonprofit board members are over the age of 50, while only 17 percent are under 40 (about the age of the oldest millennial). While work experience and years of service often translate to effective board service, so, too, can the fresh perspective and ground-level experience that younger professionals often possess. In our work at Community Resource Exchange, we see the value that young people bring to nonprofit boards. For example, one of our clients recently was looking to re-engage and strengthen its board, and it did so by recruiting a group of twenty- and thirty-something program participants to join the board. In no time, the new board members were able to provide their (significantly older) colleagues with first-hand knowledge of the organization's programs and share their deep understanding of social media and cultural trends. In this and many other ways, the fresh perspective of the younger board members reinvigorated the older board members and energized them to engage with new ideas, emerging technologies, and the increasingly important role of social networks.

This is precisely the kind of value-add nonprofits should seek out in board members. All too often, though, boards are seen solely as a source of funding for the nonprofits they serve. The proper role of a board of directors is much more than that. Boards are tasked with setting the direction of the organization, ensuring that it has adequate resources, and providing fiduciary oversight. They support the strategic direction of the organization by helping to set that strategy, making connections to ensure its successful implementation, and monitoring activities, outcomes, and goals. When we move beyond the narrow conception of board service as fundraising and see it for the important governance role it is, then the value of having millennials on a board is even easier to see. By introducing younger perspectives and experiences into board deliberations, governance tends to become more creative, flexible, and plugged into our rapidly changing world. And who wouldn't want that? Ready to get started? Read on!

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Weekend Link Roundup (July 14-15, 2018)

July 15, 2018

France_WorldCupOur weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Education

In the twenty-first century, are private secondary schools antithetical to the public good? On the Aeon site, Jack Schneider, a scholar of education history and policy at the University of Massachusetts Lowell, considers the arguments for and against.

Environment

Ireland has announced that it will completely divest itself of investments in fossil fuels over the next five years, becoming the first country to make such a commitment. Adele Peters reports for Fast Company.

Governance

According to a new report from the Indiana University Lilly Family School of Philanthropy, nonprofit boards "that include a higher percentage of women tend to have board members who participate more in fundraising and advocacy. [And members] of these boards also tend to be more involved in the board's work." You can view the full report (58 pages, PDF) here and the executive summary (8 pages, PDF) here.

Health

A little bit of good news. A report from the Blue Cross Blue Shield Association finds that the rate of opioid use disorder among its members declined last year to 5.9 per 1,000, compared to 6.2 per 1,000 the year before, while the decline in opioid prescriptions being filled by doctors has fallen 29 percent nationally since 2013. Christopher Zara reports for Fast Company.

Higher Education

Forbes contributor Josh Moody tries to answer the question: Why are there so few women at the top of the Ivory Tower?

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'Skin in the Game' and the Importance of Board Giving

June 19, 2018

Skin_in_the_gameWhen we engage with new clients, we always begin with the imperative — up front and with clarity — that in order for a campaign or fundraising project to be successful, 100 percent board participation is required. Board members, as the legal stewards of an organization, must lead by example. And the impact of their participation goes well beyond the individual gifts themselves.

Nonprofit organizations rely on their boards for many things: governance and budgeting, guidance, community involvement and, of course, fundraising. Though some boards downplay the fundraising aspect, we believe it's essential that each board member be an active participant in ensuring the financial health of the organization on whose board they serve. The boards that waffle on this target by not articulating a clear expectation upfront are the ones that most often fall short of their fundraising and leadership goals. In fact, the majority of successful organizations report high board giving rates, while studies have found that board giving is more positively correlated with overall fundraising success than any other single factor.

Many boards have mandatory giving policies. According to a recent BoardSource survey, 68 percent of nonprofit organizations have a policy requiring board members to make a personal contribution on an annual basis. Some boards have a "give or get" policy that allows board members to either give a personal gift or to raise funds from family and friends equal to the amount of the required gift. We prefer a "give and get" approach, obligating a board member to lead with a personal investment and inspiring others by saying "join me," rather than outsourcing that responsibility to others.

Not every board has a policy that requires board giving. For those that do, the process is straightforward and requires a simple call to remind board members of their obligation. The process of new board member recruitment and orientation should include an early and candid conversation about fundraising expectations and financial obligations. Board leadership must set a good example by giving first and publicly announcing their gift as a way to encourage others.

Of course, board members may feel unmotivated to give, for any number of reasons. They might not understand why their contribution is necessary. Compared to major gifts, annual gifts from individual board members might seem inconsequential. If board giving is not a precondition of board membership, some board members may feel uncomfortable broaching the topic and will avoid asking because they feel embarrassed; they don't want to feel like they're pressuring their fellow board members, or stretching them beyond what they are able to do. Others may feel that contributing their time is sufficient and a gift isn't necessary. (While time is valuable, the giving of actual dollars by board members is important to the financial health of nonprofits and creates a culture of giving that may not develop otherwise.) 

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Tips for Finding the ‘Perfect’ Board Member

April 25, 2018

Man-wearing-a-leather-jacket-holding-a-clapperboardOne of the questions we get a lot from our nonprofit clients is: How do we find passionate, engaged, committed board members? Putting together a high-functioning board isn't just about recruiting the "right" people. It's about having the proper mindset and a good plan. Here at Envision Consulting, we often describe the search for the perfect nonprofit board member as a bit like looking for romance, complete with angst-ridden courtships, elaborate proposals, occasional heartbreak, and, with a little luck, true love at the end of your search.

Still with me? Here are some tips to make your search a lot less Romeo and Juliet and a little more The Wedding Singer:

1. Have a "Wish List." You're more likely to find board members who add value to your organization if you understand (and can articulate) beforehand what it is you're looking for. Broaden your wish list beyond skills/expertise (yes, every board should have a CPA) and financial clout (believe it or not, wealthy board members don't always equate to well-resourced nonprofits). Think about the personal characteristics, perspectives, experiences, and networks a candidate is able to bring to your organization. When we have this conversation with our clients, they often tell us they want board members who are available to participate in board meetings and organizational events, have the ability to think strategically, and hold themselves (and others) accountable — the kind of intangible qualities that are difficult to quantify but can have a huge impact on the success and productivity of a board and the broader organization.

2. Fools Rush In. It takes two to tango, right? Too often, nonprofits are overly focused on finding the perfect new board member and neglect to properly "court" candidates by listening to their concerns and answering their questions — only to be shocked (shocked!) when the relationship doesn't pan out. Good board candidates will want to evaluate your organization as much as you want to evaluate them — and they're likely to be selective about which boards they agree to join. Beyond just making a good impression on the candidates you're interested in, you also may need to address how you plan to provide (in an authentic way, of course) the experience the candidate is hoping to gain by joining your board. We strongly encourage our clients to tell candidates in detail about the orientation process and other ways they support new board members.

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