All About Nonprofit Fundraising – Guidelines and Resources

All About Nonprofit Fundraising – Guidelines and Resources

This topic in the Library will help nonprofit leaders and staff learn to understand the various/varied elements of fundraising, to recognize the importance of the relationship between an organization
and its potential donors, and to construct and implement a strong fundraising plan/program for their nonprofits. In addition, much of the subject matter in this topic will help nonprofit leaders and staff recognize what it is that they don’t know about fundraising, and how to remedy that situation.

Be sure to also see the following blogs and the many posts published in the blogs:
Library’s Fundraising Blog and Nonprofits.

Sections of This Topic Include

Fundraising Basics – Sources and Responsibilities
Fundraising Laws and Ethics
Fundraising Leadership: Committees, Board and Other Volunteers
Development Staff: Director of Development and Other Staff
Fundraising Software
Donor Communications, Feedback and Recognition
Fundraising Planning (Tying It All Together)
Hiring Fundraisers and Paid Solicitors
Evaluating Your Fundraising Knowledge and Practices
Related — But Sometimes Not Necessarily
Related — Topics (Social Enterprise, Pro Bono, Sponsorships,
Revenue Streams)
General Resources
Library’s Fundraising Blog

Additional Resources

Also consider
Related Library Topics

Fundraising Basics – Sources and Responsibilities

Typical Funding Sources and Advantages and Disadvantages of Each

(Credit to Ellen M. Hatfield of the Twin Cities in Minnesota)

Source	Advantages	Disadvantages
Individuals	· Largest source of giving · Ongoing source one can build · Once a giver, also an advocate · Volunteers are a good source of money	· Costly to develop, small return per individual unit · Hard to generate unless broad-based direct service appeal· Risky for the inexperienced · Need significant assistance from the organization’s board and volunteers
Large-Family Foundations	· Source of large sums of money · Accessible, professional staff · Clear guidelines, process · Most likely to research your request · Board volunteers can help, not always key	· Start-up funds only · Lengthy process · More difficult to access through personal influence· Proposals may be more lengthy
Community Foundations	· Much like large-family foundations · Staff may be sufficient	· Host of foundations within foundations · Most money is earmarked, special funds
Small-Family Foundations	· May fund ongoing operating expenses · Personal influence with board members helps · Guidelines often broad · Not very fussy about grant format	· Hard to access, no professional staff · Often not large sums of money · Without personal influence, may not be possible
Large Corporations / Corporate Foundations	· Can be source of large sums of money · Smaller amounts of money may be ongoing · Often accessible, professional staff · May be tied to volunteer involvement · Business strategy may be clear · Source of cause-related marketing	· Large sums of money aren’t ongoing · Hard to get around staff · Must be within their guidelines · Not likely to contribute if not headquartered locally or have a public consumer base · Often want board representation
Small Corporations	· Very informal approach · Money may be ongoing · Personal connections will suffice · Neighborhood focus will help	· Small amounts of money · Narrow range of interest · Personal contacts are key
Federated Funds (United Ways, United Arts, Combined Health Appeal)	· Steady source of relatively large sums of money · Clear process · Professional staff, can be agency staff driven	· Generally can’t be a start-up organization · Must be social service and fit priority focus · Very lengthy entry process · Very time consuming as must be part of yearly fund raising process, with periodic in-depth review
Government	· Large sums of money possible · Process is set, clear · Political clout helps · May be source of ongoing money	· Application procedures may be long, tedious · May only pay by unit of service, fluctuates · Unspent monies may be returned · Difficult record keeping
Churches and Organizations	· Often looking for group projects	· In-kind services most likely · Need to fit their service focus, neighborhood or religious outlook

Who is Responsible for Fundraising in a Nonprofit?

by Hank Lewis

A Reader Wrote: “I have been looking around your web site/blog trying to find information about the role of employees in fundraising for an NPO. I see some information about the role of board members and volunteers, but I seem unable to find anything specific about employees….”.

It’s a “given” in the fundraising world that: “Everyone at a nonprofit has an impact on the organization’s ability to raise money” … even though not everyone is involved in “Asking.”

Although someone else might have the title, the CEO is also the chief development officer. S/he is the chief advocate for the organization and its mission, and should be the most knowledgeable person about how the NPO is pursuing that mission. S/he is the public face of the NPO, with the most credibility.

The CEO is (and should often be) involved in many of the major solicitations, either alone or with someone who is better suited to do the “Ask.”

Board Members, ideally, should all give to the best of their ability and should be involved in the process of identifying, cultivating and soliciting (other) major donors — but, they aren’t always wealthy, and they
don’t always have wealthy friends.

I refer to “Volunteer Leaders” as the people most involved with the identification, cultivation, evaluation and solicitation of major donors. They don’t have to be board members, but they must be committed
to raising (or helping raise) the needed funds.

Staff members fall into three categories: (1) Those who actually work at advancing and supporting the NPO’s development/fundraising efforts; (2) Administrative and support staff; and, (3) The program staffers who design and deliver the NPO’s services.

In the context of this posting, nothing needs be said about group #1.

The group #2 people have occasional contact with (prospective) donors, and how they treat those folks creates an impression that can/will impact the likelihood of giving.

The folks in group #3 have the most experience with advancing the mission. They design and implement the NPO’s programs, and they know the people being served. They are the best people to be describing how the donor’s money has or will impact people’s lives.

These folks don’t have to be involved in “Asking,” but they should be involved in the process of cultivating/educating prospective and current donors … ‘cause nobody can tell the story the way they can.

One more thought: Everybody should pass on to the development staff any (non-confidential) information they have that might help identify, cultivate, evaluate or solicit (potential) donors.

I hope I answered the reader’s question. If not, let me know.

Fundraising for New Nonprofits

by Hank Lewis

An email asked: “What advice is there for new nonprofits without a funding history? So many groups with a lot of potential just don’t know where to begin.”

The biggest mistake most new NPOs make is the assumption/belief that, because they want to do wonderful things, everyone (read: gov’t, corporations, foundations and “rich people”) will want to give them money.

The fact is that an NPO must prove itself — prove it can do what it says it can, prove it can be fiscally responsible, prove it is actually needed — before gov’t, corps and fndns will be willing to invest in it.

Of course (he says with tongue-in-cheek), that leaves rich people, and all new NPOs think that Bill Gates is going to send them a check — all they’ll have to do is write him a letter, then watch the mail.

Hey, don’t hold your breath on that one.

A major factor for getting money from rich people is having access to those people. If you have personal relationships with the wealthy, then it’ll be easy for you to pick up the phone and make an appointment to go see your “friend” and ask for that big check. The same if you know someone who has those connections and can/will do that for you.

Failing all that, it comes down to the hard realization that, if you don’t know someone with an “in,” you must rely on the tried and true methods for obtaining that initial funding.

If you can’t rely on outsiders (the gov’t, corps, fndns and the wealthy), it’s up to the insiders to make it happen.

For each new non-profit, the specifics may be different, but the general circumstances are pretty much the same. There must be an understanding that if the people who created the new organization can’t/won’t give of their own resources (to the extent they can) then why would anyone else want to … why should anyone else?

Once that is understood, the founders of that new NPO must take an inventory — who of the people that they know might come to care (as much as you do) about the reasons why the NPO was created … and eventually want to support that organization.

There must also be an evaluation of how those founders and the people with whom they have relationships can begin to make a difference. This step is often best accomplished with some expert guidance.

Many new NPOs bring in someone to speak with their leadership, to educate them as to the processes and procedures that are, typically, most effective, and to help them determine what might be most effective for them. Founders of many new NPOs also attend seminars/workshops designed to educate new NPO leaders.

Bottom line for a new NPO is — to paraphrase, “Only when you’ve helped yourself will others be willing to help you.” PROVE you’re worthy, and future funding will be a lot more likely.

Numerous Additional Resources About Basics of Fundraising

Fundraising Laws and Ethics

Laws

Ethics

Also consider
Business Ethics

Fundraising Leadership: Committees, Board and Other Volunteers

Role of the Nonprofit Board Fundraising Committee

One of the biggest misconceptions about the Fundraising Committee is that its members are to do the fundraising for the nonprofit. No, the job of the Fundraising Committee is to ensure that the fundraising is done very well. The actual fundraising should be done by all Board members, with various staff members supporting those Board members.

What’s the Primary Role of Any Board Committee?

The role of any Board Committee is, at a minimum, to ensure “best practices” in the activities, or the function, that the committee is assigned to. Just like people need to do certain things to stay healthy (such as eat, sleep and exercise), organizations need to do certain activities, too. Many people might refer to those activities as “best practices.” (There are many strong feelings about whether “best practices” even exist, but most people would assert that the phrase has more usefulness than not.)

When recurring crises occur, it’s usually because people are attending only to what’s urgent and not to what’s important. Best practices ensure that the most important activities are done. So Board committees should ensure “best practices” are implemented in the major functions in an organization, for example, in Board operations, planning, marketing, staffing, finances and (in the case of nonprofits) fundraising.

What’s the Primary Role of a Fundraising Committee? What Are Its Ongoing Responsibilities?

Notice the nature of the following activities — how they are not focused on very near-term, detailed tasks for Committee members to raise money. The following responsibilities should be included on a work plan for a Fundraising Committee. Notice that the activities are recurring — they should be done on an ongoing basis.

1. Ensure there’s a specific fundraising target

How much money needs to be raised? Usually the amount is the difference between expected revenues and expenses. Usually those revenues and expenses are identified during strategic or program planning.

2. Ensure prospect research occurs to identify how much money might be raised from different types of resources

Good prospect research will look at the nature of the nonprofit’s services and its locale, and identify similar nonprofits and the sources of funding used by them. For example, similar nonprofits might have raised 50% of funds from individuals, 20% from government contracts, 20% from grants and 10% from fees. That profile suggests the mix that the nonprofit might aim for. Good prospect research will go beyond searching a database of foundations to submit proposals to.

3. identify specific, potential sources of funds from a diverse mix of sources

Now the nonprofit is ready to start selecting specific sources of funds from individuals, foundations, government and/or fees. These activities should result in the names of specific sources, for example, names of people, foundations and government agencies, and/or the specific amounts of fees to charge for certain services. (The amounts of fees to charge might be recommended by, for example, a Marketing Committee.)

4. Develop an action plan about who is going to approach what source, how and by when

This responsibility includes identifying which Board members will approach what source, along with what staff members will support those Board members. All Board members should have assignments, not just the members of the Fundraising Committee.

5. Compile the results of items 1, 2, 3 and 4 into a Fundraising Plan that is approved by the Board

The Plan should include more than merely a listing of what foundations to approach. The Plan becomes the roadmap for generating sufficient revenue. It should include realistic expectations from a diversity of sources, and justify how those sources were identified. It should include an action plan (from step 4) that the Fundraising Committee ensures is implemented on a timely basis.

6. Ensure effective administrative systems to track grants and donations

As funding comes into the nonprofit, its various sources and amounts must be closely and accurately documented. Acknowledgements and receipts must be provided back to donors. Grant requirements must be monitored to ensure they are met. In the United States, fundraising information must be included on the IRS Form 990.

Summary — Job of the Fundraising Committee is to Ensure Planful, Strategic Fundraising

So, again, notice that the job of the Committee is NOT to just ask the Executive Director to provide a list of foundations to write grants to. It’s much more strategic than that. And its responsibilities are recurring — Committee members should never say they don’t have anything to do. Members of the Fundraising
Committee should not be picked because they are “big names” or “big pockets.” Popular and rich people rarely want to serve on Fundraising Committees. Many times, they’d rather write a check, than be expected to attend monthly meetings. And foundation officers see right through the “game” of listing big names on a list of Board members. Instead, select members who know how to think strategically, develop a plan and ensure that the plan is implemented.

Numerous Additional Resources About Basics of Fundraising Leadership

Also consider

Development Staff: Director of Development and Other Staff

Does Your Organization Need a Director of Development?

by Hank Lewis

I initially wrote this piece with the idea in mind that many NPOs don’t need DODs, but my wife read it and said I was totally wrong. So, the following is sort of a collaboration … actually, I won’t publish anything she doesn’t approve !!

Ideally, from day one, an organization should have someone who knows/understands the NPO, its mission, its leadership and its hopes and aspirations. This person should have the experience and skills to help the NPO plan for next week and next year.

This person should have input at all levels, should be able to guide/train the board members and the CEO, and should be able to bring to staff an awareness and understanding of how they affect the development process.

A large organization, with a large development staff, must have someone to coordinate the various programs and be sure that they support, not conflict with or duplicate each other. Sadly, the vast majority of new/nascent NPOs don’t have the money to hire a person with the requisite experience and capabilities.

Smaller organizations that live on grants, need a grants officer. If much of a NPO’s income is from events, then an event coordinator is needed. If one person can do both, all the better.

To hire a staff person to focus on one or two activities, and give that person the title of Director of Development, is to lie to that person, to that person’s next employer and to the board and staff of the NPO doing the hiring.

Hiring a person and giving them the title doesn’t mean that you’re actually getting all the experience/expertise that comes with a real director of development.

A DOD is a critical hire for an organization. The right person can greatly help ensure an organization’s future….

Numerous Additional Resources About Development Staff

Also consider

Employee Performance Management Staffing

Fundraising Method: Direct Appeals

Direct Mail Donor Retention

by Jonathan Howard

You know that the key to net gains and year-to-year growth of your direct mail fundraising lies with your donor retention rate. Helping first time donors become loyal friends can generate as much as an 80 percent return on investment.

That’s a pretty great business model. But few nonprofits get it right. Here are some key reasons why American philanthropy’s donor retention stinks.

Stingy thank-yous. I just sent you money to change kids lives or save the world. Now I want swift assurance that my money is making that important difference. Instead, I get a form letter back, focused on the tax-deductibility of my gift from some mid-level employee in the development office. Often these aren’t even personally signed.

Awkward introductions. I’ve just taken one step into your world. Are you going let me know you’re happy to see me, bring me up to speed on your work and dreams and introduce me to other people I’d find interesting? That’s the job of the friendly welcome package that donors … the “package” they should get within two weeks of their gift. But generally don’t.

News I can’t use. My donation is not a license to bore me with “news” about your meetings and big shots, or just as bad, to give me no news at all. I want to know how you help me be more like the person I want to be: compassionate, effective, wise. Donor communications should be all about the donor, not the
organization. The word “you” should appear in every item.

Ineffective asks. Some nonprofits fail at mail because they don’t ask for repeat contributions soon enough or often enough. Others fail because they treat donors like automatic teller machines. Both groups fail because they don’t offer donors good reasons to give again. It’s not “mail” that donors dislike – it’s the lack of sincere respect and regard for them that turns donors off.

The answer isn’t turning off the mail. The answer is using mail to build an honest relationship of head and heart with your recent donors.

Numerous Additional Resources About Direct Appeals

Fundraising Method: Grants — Foundation and Corporate

(adsbygoogle = window.adsbygoogle || []).push({});

Is Your Organization Ready to Start a Grants Program … or Even Submit your First Proposal? (Part 1 of 2)

By Lynn deLearie

In my (May 12, 2011) post, Grantsmanship: The Good, the Bad and the Ugly, I quoted from a 2010 WealthEngine white paper stating that the average cost-per-dollar-raised for grants is 20 cents … an ROI of 500%. With such an impressive return on investment, starting a grants program at your NPO might seem like a great idea…

But, as Hank Lewis wrote in his (May 14, 2010) post, Grants: Free Money – Not Quite !! ,“Grants come with a variety of obligations. Corporations, foundations and government agencies don’t just give it away.
It takes more than mailing applications and waiting for the checks to arrive.”

So, what do you need to consider before starting a grants program?

I advise (potential) clients to consider the following four points before launching a grants program at their NPO:

Financial Readiness Hank wrote in his post, “The vast majority of grantors want to see your audited financial reports and your budgets. They want to know where the rest of your funding is from, and you will need to prove that you are fiscally responsible, can be trusted and that you operate in a business-like manner.”

In my experience, all of this is true. You will need to provide detailed financial information with most of your foundation grant applications. The exceptions may be with family foundations that don’t always require this level of detail.

A good example of what will be required can be found in the Missouri Common Grant Application, downloadable here.

The application requires the following financial attachments:

Internally prepared income statement for current fiscal year

AND A complete copy of organization’s audited/reviewed/compiled financial statements for the last fiscal year which includes two (2) years of financial information

OR An organization’s most recently filed Form 990 plus internally prepared financial statements for the past two (2) years.

Along with these organizational financial records, you will also need to provide a project budget, your long-term funding plan for the project, and often a budget justification. The Missouri Common Grant Application and Budget Templates provide good information on what will be required.

See Is Your Organization Ready to Start a Grants Program … or Even Submit your First Proposal? (Part 2).

Numerous Additional Resources About Grants: Foundations and Corporate

Grants Management

Grants management is about using the grant as the grantor intended, and reporting to the grantor on a periodic basis. The guidelines and procedures for managing specific grants depend very much on the terms of the grantor. The following links give you some idea of what’s generally involved in managing grants.

Designing Evaluation Methodologies to Include in Your Grants

Funders expect nonprofits to say how they will spend the funder’s money and do so in an effective fashion — and be able to prove that they spent the money in an effective fashion. Usually that proof requires an evaluation. Thus, funders often want nonprofits to include in their grant requests, descriptions of how they will evaluate the project being funded by the grants. The reader would benefit from reading:
Basic Guide to Program Evaluation

Fundraising Method: Grants — Government (Public Grants)

Introduction To Government Grants

By Jayme Sokolow

Every year, government agencies around the country provide over $200 billion in grants … for specific services to local communities. Today, there are approximately 2,000 federal grant programs and over 40,000 state grant programs.

But before you get all excited about all that government money, you must really understand what government grants are and who is eligible to apply for them.

What Is A Government Grant ??

A (federal, state, local) government grant is the money awarded to a nonprofit organization (NPO) consistent with a contract between the government and the NPO – where the latter provides the service for which the former pays. (Grants, of course, do not have to be repaid.)

There is an application process for all government grants, and not all applicants qualify. Then, when you receive a grant, you are agreeing to carry out the activities described in your grant application and to adhere to all the conditions of the award. All such grants include various conditions, one of which is always that the grantee must provide periodic financial and program reports on their “contractual”
activities. There Are Two Kinds of Federal Grants.

For a Direct Grant a you apply directly to federal agency … and there is great competition for these, as you (often) compete with many other nonprofits for funding.

With a Pass-Through Grant, a state government receives federal grant money and then passes on these funds to local nonprofit organizations. There may not be a lot of competition for these, and they are likely to be smaller dollar amounts than direct grants.

Examples of Federal and State Government Grants:

• US Department of Education: grants to help prepare underserved students to graduate high school and attend college.

• US Department of Health and Human Services: grants to provide comprehensive sickle cell disease education, outreach, and medical services.

• North Carolina Department of Environment and Natural Resources: grants to municipalities to prepare for natural disasters such as floods or hurricanes.

Who Is Eligible to Receive Federal and State Grants:

Typically, most grantees fall into the following categories:
• Government organizations: State and Local Governments, Native American Tribal Governments.
• Educational organizations: school districts, private schools, institutions of higher education.
• Public housing organizations: public housing authorities, Indian housing authorities.
• Nonprofit organizations: nonprofit organizations having 501(c)(3) status with the IRS, other kinds of NPOs. 392

To get an idea of the volume of federal grants, visit The Catalog of Federal and Domestic Assistance (www.cfda.gov), which lists every grant program administered by the federal government. For grant opportunities at the state level, visit your state government’s Internet site.

Numerous Additional Resources About Grants: Foundations and Corporate

Also consider

Grants: Foundation and Corporate
Grants: Government (above)
Grants Management (above)

(adsbygoogle = window.adsbygoogle || []).push({});

Fundraising Method: Special Events

Special Events: Cost Per Dollar Raised

By Natalie Lewis

A recent email asked: “Do you have an article or statement on what is the standard “special event fundraising equation” used to determine financial success? Obviously, one would set a goal, and if that goal is set, you have been successful. Raising awareness and “making friends” is priceless. But, is there a basic non-profit formula goal such as ‘for every dollar spent to organize, coordinate, market, and produce the event, you would hope to raise two dollars?’”

Sadly, there is no “Special Event Fundraising Equation.”

The cost per dollar raised, or return on investment, is dependent on a number of factors. Since those factors have been addressed in prior postings*, I’ll keep it simple. (See: Special Events)

The first time, or even the first couple of times an organization runs an event, they’d be lucky to break even. Only after an NPO’s community/constituency is familiar with the event can there be any assurance that there will be a sufficient number of people interested in the event and willing to attend.

Over the years, as the event becomes a “tradition.” and the organization knows what works and what doesn’t, do the costs and income become predictable.

As the event “matures,” the gap between costs and “profit” increases. A fully mature event can generate two, three, even four times its cost … but that does not happen overnight.

As to setting a goal for an event, you can only do that after you’ve had a number of years of experience with that event. Setting a goal in the first couple of years would be an exercise in wishful thinking or in self-delusion. And remember, you only set a goal when you KNOW you can reach it. Failure to attain a fundraising goal sends a wrong message to your current and future donors.

Numerous Additional Resources About Special Events

Also consider

Fundraising Method: Annual Funds

The Annual Fund Is Obsolete

By Hank Lewis

After thirty years in the non-profit sector, I often find myself questioning, not what we do, but how we label what we do — and how those labels often limit us. The best example of that concept, I believe, is the label “Annual Fund.”

It seems as if, for as long as there have been formal development programs, there have been “Annual Funds.” Each year, goals are set, development staff gears up for another year of activity, constituents get letters and/or phone calls asking for a gift, development staff worries about making/exceeding their goals and they look forward to the end of the fiscal year, when they can put it all to bed and take a deep breath….

While going through this process, however, we are sending the wrong message, not only to our constituents, but also to ourselves. The message is that we should only ask for one gift per donor per year, and that the donor should only give once each year !

Somehow that seems contrary to what fundraising is all about.

By focusing on the (single) annual gift, we and our constituents lose sight of why the giving is important — what and who it supports. People become focused on the process, not on the reason for the process.

Let’s name the process (of raising money on a fiscal year basis) in honor of a founding member of our organization, after the organization itself, or what the funds support, but no more “Annual Fund.”

Let’s not allow what we call an activity to limit what we can accomplish via that activity. And let’s not stifle the creativity that takes us beyond mere process.

Additional Resources About Annual Funds

Fundraising Method: Major Gifts and Planned Giving

What is a Major Gift ??

By Hank Lewis

Many Non-Profit Organizations (NPOs) use the term “Major Gifts” to refer to those that are larger than the usual range of gifts that arrive in the mail. Typically, $1,000 is the magic number.

But, unless an organization’s budget and/or the amount to be raised via the fundraising process is unusually small, gifts of $1,000 won’t significantly aid in pursuing financial goals.

A Major Gift, which could be a planned gift, is not based upon exceeding a specific dollar figure — as above, but requires:

1• Amounts that will significantly help to attain fundraising goals — 1% or more of the goal would be significant. If your goal is $1,000,000, at $1,000 each, you’d need 1,000 gifts; and, unless you have the prospect base with that many donors who have given at that level in the past, that’s not very likely. Realistically, for a goal of that size, gifts of $10,000 and up are necessary. (We will address the concept,
construction and use of a Gift Table in a subsequent posting.

2• That prospects be cultivated and solicited on a face-to-face basis. Consistent with the concept/practice of “development,” in order to get donors to want to make “major” gifts, there must be a relationship between the donor and the person doing the asking. And that person must also be one of the people, in not the person, doing the cultivating and educating of the prospective donor.

3• Ask amounts that are well thought out and well researched. When asking for ANY gift to a non-profit, it should always be for a specific dollar figure. For a major gift, it should be a figure based on the donor’s ability to give … and you should always be able to give the donor a good reason “why that amount” !! (For discussion in a future posting.)

4• The development and implementation of an individual plan, or strategy for getting each potential donor to the point where s/he is ready to make the gift you want him/her to make.

Numerous Additional Resources About Major Gifts and Planned Giving

Fundraising Method: Capital Campaign and Endowment Fundraising

Capital Campaigns – Part #1 of 14: What They Are

By Hank Lewis

This series of postings (don’t know yet how many will be in the series) is to help you understand and prepare for a capital campaign, so that, when you hire a staff campaign director or engage counsel, their time (and your money) will be used most effectively.

To start, a definition: A Capital Campaign is an intense effort to acquire sufficient commitments to add up to a specific large sum, for a specific valid/urgent purpose.

The word “Capital” refers to the money needed to erect/expand/renovate a building; it includes funding needed for the purchase/installation/overhaul of (major) equipment; and, has come to include funding to create/expand an endowment. (Endowment campaigns will be addressed in greater depth in a future posting.)

The term “campaign” has it’s origin in a military context — although it’s rarely used that way today. It referred to the actual period of time that the troops were in the field, engaged with the enemy. It was/is a period of action/activity that, ideally, had been planned very carefully. In this context, it is the period of time in which most of the needed dollars are solicited/pledged.

The “intensity” of the effort refers to having board members, staff and other volunteers commit the (additional) time and energy necessary to achieve the dollar goal in a specific (relatively short) timeframe. The typical campaign was designed to take 12 months – but it’s gotten a lot shorter. (More on that, later.)

Typically, a capital campaign solicits pledges – significant dollar commitments to be paid over an extended period. Fifteen/twenty years ago, the period was five years, but considering the societal changes and people’s reluctance to commit to that long an obligation, three years is now typical.

The “specific sum,” the goal of a campaign, is an amount that will allow the organization to pay for the (building/equipment) “project” that is outside its normal/ongoing budget requirements. This cannot be an arbitrarily chosen dollar figure voted on by a board or committee; it must be one that has been determined through a very careful/detailed process.

“Valid” means that it the nonprofit organization was asked to justify why the project was needed, the NPO could clearly explain/demonstrate that a real need exists in the community and that the project would address that need.

“Urgent” excludes any project for which the NPO could accumulate the funding over an extended period of time without the need for a special fundraising effort. It would also exclude any project for which there is not a demonstrable need for the service(s) that will be made available because of the project.

Numerous Additional Resources About Capital Campaigns

Fundraising Online Using the Internet/Web

Mobile Fundraising: Practical Advice

By Rick Christ

After some $40 million was raised in $10 gifts through cell phones for the Haiti earthquake response in January, 2010, every nonprofit had dreams of cell phones as mobile donation machines. Even for the Red Cross, those dreams seem to have evaporated.

However, mobile use among Americans has increased dramatically. It’s probably true that among the most passionate, most connected, most generous and successful Americans, smartphone use is even more ubiquitous. What are the implications for nonprofits, most of whom haven’t mastered the internet
yet? Here are some thoughts gathered at the Direct Marketing Association’s recent Mobile Marketing Day:

Text-to-give is NOT a significant part of fundraising.
Most smartphone users view much of their email on their phones, so make sure your email messages will render nicely on Apple and Android devices.
Every page on your website should be optimized for mobile browsers; otherwise, if donors click once and get garbage, they’re not likely to click again from their cell phones.
Mobile is ideal for getting special event attendees to connect with you in a way that will let you continue the conversation after the event.
QR codes let mobile users connect with you after seeing something in print, either at an event, in a publication, or on outdoor or transit media, even your direct mail letter.
Ask for mobile numbers (but don’t require it) on your donation form and newsletter signup form. If you can associate numbers with donors, you can track the impact of mobile communications, and you can reach out to donors via phone when their mail and email start bouncing.
Mobile users can give via their credit cards on a mobile-optimized donation form. Those gifts tend to be as much as 30% smaller than web page gifts sent from a laptop or desktop computer (but that means they’re 70% larger than the gift you wouldn’t get without such a page)
One organization indicated that up to ten percent of cell phone area codes do not match up with the supporter’s zip code, meaning that many people keep their old cell number even when they move.
If you believe in the future of mobile communications, get your own short code — the 5-digit numbers to which you can send a text message instead of having to enter a full 10-digit phone number. Don’t settle for a shared short code.
Apps are expensive and generally not productive unless you have killer content (think National Geographic).

Since the future of mobile is growing, it pays to recognize its potential for your organization, choose one area where you think mobile can be effective for your organization and get started. Your learning curve can match up with the growth of this channel.

Numerous Additional Resources About Fundraising Online

This topics has exploded! It would be extremely difficult to list most of the articles and sites in regard to this topic. Thanks to Jayne Cravens for suggesting many of the following sites!)

Also consider

Using Email and Social Media in Fundraising

Also consider
Social Networking

Fundraising Resources On the Net

Online Donation Services, eg, Credit Card services and Matching Programs

Online Shopping Malls that Donate to Nonprofits

90 companies that provide means for on-line donations

(adsbygoogle = window.adsbygoogle || []).push({});

General Resources About Online Fundraising

Fundraising Software

Fundraising Software Products
Fundraising Software – Comprehensive Directory
Comprehensive Nonprofit Software Listing

Donor Communications and Recognition

A Variety of Thoughts on Donor Recognition

By Hank Lewis

There are many different types of recognition programs, the most effective of which are often the face-to-face variety. Sometimes, the best form of recognition is a handshake offered by the appropriate person.

Another form of recognition that can touch a donor is a personal note from someone who has been impacted by the donor’s gift.

Recognition programs should be tailored to the needs of the programs being supported, the needs of the donors and the circumstances. The potential for these kinds of recognition programs is limited only by the limits of your creativity.

Speaking of Creativity, your website could be a great place to provide donor recognition. I don’t mean a page with lists of names. I’m thinking of the same kind of articles that’d go in your newsletter … about how a donor’s gift made a difference; a photo of a donor being thanked/congratulated by a highly recognizable, highly regarded person; a photo of a donor being inducted into your “honor society.” Again, the potential is limited only by the limits of your creativity.

Caution is urged for the creation of a permanent, wall-mounted, visual display. Use your wall space judiciously. It’s not infinite.

Typically, wall-mounted recognition is reserved for major gifts for capital campaigns, estate gifts, etc.

Many of the wall-mounted, permanent, recognition modules are impressive and well worth the money. But…. only under the right circumstances.

Using impressive wall-mounted displays for everything detracts from their significance.

When getting advice as to the type of recognition you might want to use for a program, don’t rely on vendors. Their advice must, by its very nature, be self-serving…. Not that they’d be dishonest — just that
there’s a built-in bias.

Many institutions divide their gifts along arbitrary lines for recognition purposes:
$1-$100=Friend; $101-$500=Good Friend; $501-$1,000=Very Good Friend;
$1,001-$5,000=Bosom Buddy; $5,001-$10,000=Blood Brother/Sister; etc.; etc.

The problem with that system is that it assumes every donor wants/needs to see his/her name on a list and/or wants/needs everyone else to see his/her name on a list. Some donors might even object to having their names list ed.

Numerous Additional Resources About Donor Recognition

Fundraising Planning (Tying It All Together)

The Planning Study: (Part #1 of 3 — Almost Always The First Step)

By Hank Lewis

Want to create a Major Gifts Program, a Bequest Program, a Special Event, a Recognition Program, a Capital Campaign ??

The most important information you’d want to have is whether your (prospective) constituents/donors will agree with what you want to do, and what would motivate those folks to want to support and/or participate in your activity.

The best way to get the best answers to those questions would be to ask. And, the best way to ask would be by means of a “Planning Study.”

That the “Study” is for “Planning” purposes suggests that you’ve not committed to taking a particular action and/or to creating a specific kind of program – even though you may have!!

When you ask someone to participate in this kind of “Study,” you are asking for their advice and saying that what you do (or don’t do) will be impacted by what they say (or don’t say).

Unlike the obsolete “feasibility study,” with all its “baggage,” a “Planning Study” asks in-depth questions about a broad range of subjects. Then, based on the study’s findings, an NPO will be able to proceed with programs/activities it knows will be supported by its constituents.

And, by the way, the reason the “Planning Study” is “almost always the first step” is because it is a strong means of cultivating the folks you hope will be your leaders and donors … when you do whatever it is that you’d like to do.

When you ask someone’s advice, they’re more likely to look upon you favorably … because you were smart enough to know to ask them ?

To quote an old fundraising saying: “If you want advice, ask for money; if you want money, ask for advice.” And a “Planning Study” is a great way to ask for advice.

Numerous Additional Resources About Planning Your Fundraising

Also consider
Planning (Basics)

Hiring Fundraisers and Paid Solicitors

Who/What Is A Fundraising Consultant??

By Hank Lewis

In the group of attendees for a recent class in Major Gifts Fundraising was a person identifying herself as a consultant, a member of a fundraising-consulting firm, who was shortly to be working with a client organization in the creation of a major gifts program.

This started me thinking. Who/what is a fundraising/development consultant??

My old dictionary defines a consultant as an expert who is called on for professional or technical advice or opinions.

In this context, I should think there’d be heavy emphasis on the “expert” part of the definition. The problem is that I “hear” many people describing themselves as development consultants that clearly don’t have the education/training and experience it takes to be an expert.

Folks that come from various areas “somewhat related” to development
—
i.e., marketing, public relations, special events, etc, even those from totally unrelated fields, feel comfortable hanging out their (fundraising) consultant shingle.

At various luncheons, workshops and seminars, I’ve met people who have worked as volunteers and think they now know enough that non-profits should risk their financial futures on them. And I’ve met folks from other fields, and those out of work, who think that “fundraising might be good to try,” and they want to start as consultants.

So, considering the above, I get the feeling that, to protect the non-profit sector from a “bad rap” and consultants (in general) from having a negative label hung on them/us, there needs to be established some set of criteria for who can/should be a fundraising consultant.

It has been suggested that one must have some sort of “credential” to be a fundraising consultant – that the CFRE (as an example) should be required and should be proof enough that the holder is qualified to be a consultant.

Realistically, however, having the CFRE attests only to the fact that the individual has demonstrated knowledge of the basics of fundraising. That’s not the equivalent of “expert“ !!

Like trusting the health of your loved ones to a physician with an on-line degree; there are many practitioners out there in fundraising-consulting-land to whom you’d not want to trust the financial health of your nonprofit organization.

Should You Hire a Fundraiser?

Also consider
Consultants (Hiring)

If So, How Much Should They Be Paid?

If You’re Asked to Be a Fundraiser

Potential Pitfalls with the IRS

You should carefully consider whether you should hire an outside fundraiser, or hire your own employee. The IRS pays increasing attention to the hiring of independent contractors.
Potential Issues in Hiring Consultants (general information and IRS-related issues)

Evaluating Your Fundraising Knowledge and Practices

To conduct a general audit of your fundraising practices, see

Also consider
Evaluations (all kinds)

Related — But Sometimes Not Necessarily Related — Topics
(Social Enterprise, Pro Bono, Sponsorship, Revenue Streams)

Social Enterprise

Gifts of Other Than Money

Cause-Marketing

How to Start a Cause-Marketing Campaign

Corporate Sponsorships

Building Multiple Revenue Sources (Diversifying Revenue Streams)

General Resources

Variety of Information for Beginners

Variety of Information for More Experienced Practitioners

For the Category of Fundraising (Nonprofit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022September 15, 2022

All About Nonprofit Fundraising

Nonprofit Fundraising e-books:

The Fundraising Series of eBooks

The authors of the below listed eBooks, writing in their areas of expertise,
have a combined tenure in service to the nonprofit community of over
60 years.

The Fundraising Series — Book 1: The Basics: Perceptions
& Realities

The Fundraising Series — Book 2: Special Events

The Fundraising Series — Book 3: Guidance for the New Nonprofit

The Fundraising Series — Book 4 : Major Gifts: Planning and
Implementation

The Fundraising Series — Book 5: Capital Campaigns

The Fundraising Series — Book 6: Grants & Grantsmanship

The Fundraising Series — Book 7: Finding & Getting Federal
Government Grants

The Fundraising Series – Book 1 – The Basics:
Perceptions & Realities

This book is about the acquiring of donated gifts/contributions for
nonprofit organizations. It is not about “fundraisers”– ticket
or product sales. The intent of this book is not to provide a “how
to” for raising money, but to help you develop the mindset necessary
to be successful at “legitimate” fundraising. Order your
book
here.

The Fundraising Series – Book 2 – Special Events

Everyone loves a good event, but not everyone will have the ingredients
to make it happen. This book is designed to help you determine whether
special events are right for your nonprofit; and, how to be sure that
your event is unique/memorable, not just another dinner, luncheon or
auction. Order your book
here.

The Fundraising Series – Book 3 – Guidance
For The New Nonprofit

This book – this entire series – is written and intended
for nonprofit board members, staff and volunteers to help them understand
what real nonprofit fundraising is all about … and what it’s
not. It is the author’s intention to address some of the most
common questions raised by board members, staff and volunteers. Order
your book
here.

The Fundraising Series – Book 4 – Major Gifts:
Planning and Implementation

This collection of essays and blog postings is intended to give nonprofit
leaders and staff an overview of Major Gifts Fundraising that will help
you develop an understanding of what it takes to ensure your organization’s
future. Order your book
here.

The Fundraising Series – Book 5 – Capital Campaigns

This collection of essays and blog postings is intended to help you
understand the elements of and prepare for a capital campaign; so that,
when you hire a staff campaign director or engage counsel, their time
(and your money) will be used most effectively. Order your book
here.

The Fundraising Series – Book 6 – Grants &
Grantsmanship

This book is written and intended for nonprofit staff, board members
and volunteers to help them understand what the Grantsmanship process
is all about, and what it’s not. A realistic (although dramatic)
definition of “grantsmanship” would be, “The cradle
to grave process for ‘conceiving’, ‘birthing’, and ‘raising’
grants.
here.

The Fundraising Series – Book 7 – Finding &
Getting Federal Government Grants

Book Seven in The Fundraising Series, titled “Finding & Getting
Federal Government Grants and written by Jayme Sokolow, Ph.D. This book
is intended for nonprofit staff, board members, and volunteers to help
them research and become successful applicants for federal grants.
here.

January 18, 2022March 29, 2023

Supply Chain Management: Guidelines and Resources

Supply chain management on a white background

Supply Chain Management: Guidelines and Resources

This topic in the Library is written especially for those new to SCM. It also aims to include nonprofits and small businesses in its scope. As you read this topic, think about the activities of a certain product or service that you know about, or are even involved in developing or providing to customers. Before reading this topic, you might read about the Relationship Between Managing Supply Chain, Operations, Quality, Customer Relationships and Customer Service.

Sections of This Topic Include

Also consider

WHAT IS SUPPLY CHAIN MANAGEMENT?

You Are Probably Part of a Supply Chain

What is a Supply Chain?

If you work in an organization that produces tangible offerings (products) and/or intangible offerings (services) to customers, and if you are involved in any the following organizational activities, then you are part of a supply chain:

Strategic planning about what market, products and services are provided by the organization
Estimating what the consumer needs (forecasting demand) will be for those products and services
Making sure there will be sufficient resources (materials planning) to meet that demand
Identifying who will supply those resources (who will be the suppliers)
How you will buy (or procure) them
How you will get the resources into your organization (these are matters of inbound logistics)
How you will build (or manufacture) them
How you will store (or warehouse) all of them (that is, how you will inventory them)
How you will get the products or services delivered to the customer, for example, sold directly or through a retailer (these are matters of distribution and outbound logistics)
How you will ensure the product or service meets or exceeds the customer’s expectations (matters of customer service and customer relationship management)

NOTE: All of the activities and terms in the above parentheses are the typical sequential components in a supply chain.

Other Definitions of a Supply Chain

This is sometimes where readers start to get overwhelmed and confused when reading about supply chains and SCM. If they have heard of the more common topic of logistics, then descriptions of supply chains can seem even more confusing.
However, Intek Freight and Logistics, Inc provides a very useful description of a supply chain, as well as how it differs from logistics:

“To sum up logistics and supply chains, think of a football game where logistics is the game on the field of play and the supply chain is the stadium where the game is played.

From the game perspective of the analogy, the movement of the ball up and down the field of play to deliver a score is logistics.

The stadium, on the other hand, represents all the physical and communication components. Think of the massive amounts of money put into a professional football stadium to deliver the best experience for the buying customers (the fans). There is the stadium itself, plus the communication points between coaches in the box to coaches and players on the field. The communication network allows calls, still pictures and replay videos to execute to the highest levels to score points and have the customers standing on their feet cheering for more.

The feedback mechanism of scoreboards, referees, replay screens, and for those really into the game, radio commentators (providing play-by-play and overall game analysis), give feedback all along the way through a scoring drive to assist in delivering the very best results.”

Here is another perspective: “The supply chain is probably one of the more complex systems that all managers have to be knowledgeable about. Its broad coverage, which includes entire organizations, people, information, various activities and all other resources that play a role in the flow of products or services from producers to suppliers to customers to end users. This complexity, coupled with its dynamic nature, calls for a way to keep that flow going in such a way that facilitates and does not, in any way, hinder the operations of the business. This discipline is called supply chain management.” Anastasia in Cleverism

What is Supply Chain Management (SCM)?

Definitions of SCM

SCM involves numerous management activities and components in the supply chain. Therefore, it is useful to consider a couple of careful definitions of SCM.

The Council of Supply Chain Management Professionals (CSCMP) defines SCM: “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.”
“Supply chain management (SCM) is the discipline that manages supplies and processes through all of the stages of a project, product or business deliverable. Business material has a journey as it moves from one state to the next until it’s ready to be delivered to the customer or stakeholder. Then there’s the logistics of taking the finished product from one place to another. Getting through these various stages efficiently requires control—that’s where supply chain management comes in.” ProjectManager

How SCM Compares to Logistics, Operations Management and ERP

Now you have read the various definitions of SCM. If you have any acquaintance with logistics, operations management and enterprise resource planning, then the four practices might seem so similar as to be confusing. However, they are actually different from each other.

SCM Compared to Logistics?

Logistics is often considered to be the storage and transportation of goods and services. The flow of those resources can be from their input to the organization to the customer, and backwards from those end points, for example, in the case of customer returns. Thus, logistics is a component of the supply chain.

SCM Compared to Operations Management

Operations management is concerned with ensuring high-quality effectiveness and efficiency of a broader range of operations throughout the organization than SCM. For example, operations management puts more focus on meeting strategic goals, coordination of various departments and personnel across the organization, and typically on management of more facilities than those directly involved in SCM.

SCM Compared to ERP

Note that SCM is also different than Enterprise Resource Planning (ERP). The activities of SCM include ensuring timely and cost-effective transportation of goods and materials into the organization, as well as outside of the organization and ultimately to the customer. (These are matters of logistics.)

Thus, SCM often collaborates with a variety of external organizations, for example, suppliers, manufacturers and transporters. As a result, SCM also focuses on the quality of relationships with those types of organizations. In contrast, ERP focuses exclusively on activities within the organization. Its focus is also much more on detailed activities, than on broad relationships.

Also see

SCM Is Best Managed as a System

A system is a recurring cycle of activities, including:

Planning to determine goals and how they can be achieved, and
Then developing and managing resources and activities to achieve those goals, and
Then evaluating whether the goals have been achieved or not, and
Then using the learning from the evaluation to improve the quality of the next round of planning.

Thus, a system is a recurring loop of components (the supply chain) — in a continuous cycle of improvement. SCM is best planned and managed as a system; otherwise, the management tends to be highly reactive and sporadic, often resulting in a patchwork of disconnected and ineffective activities.

SCM is for Any Type of Organization

Service Organizations

The sequence of activities listed in the previous section, You Are Probably Part of a Supply Chain, is referred to as the “supply chain”. Many of the articles about SCM refer to the manufacturing products in larger organizations. However, if you work in a service industry, think about how each of the listed activities applies to your own organization.

For example, if your organization offers consulting services, then your organization still needs strategic planning and demands planning to clarify what types of services will be provided to whom, and what the demand for those services might be.

It still needs to be sure there are sufficient personnel (resources) with certain expertise who can be hired (procured) and provided (supplied) to your organization, as well as what it will cost to get those resources (transported) to your organization. It still needs to plan how to organize and train (develop) them, as well as how to maintain (store) them until they are put into use (delivered) to the clients.

Small Organizations

The managing of the activities through the supply chain — the supply chain management (SCM) — applies to small organizations, as well. The supply chain and the management of the supply chain are likely to be more complex than in a large organization.

However, it could be argued that SCM is just as important to the health of the small organization because, for example, the poor development and delivery of products and services to customers could pose a significant threat to the life of the organization.

In small organizations, there are often far fewer resources to rapidly identify and solve organizational problems, while also attending to customer needs. There is often far less money to hire expertise to help, as well. Problems in the supply chain often result in more dissatisfied customers and less revenue — another problem that small organizations cannot afford.

Nonprofit Organizations

A common misconception is that nonprofits are very small organizations that primarily offer services, and that they are seldom the types of large manufacturing organizations so often written about in the SCM literature.

However, the primary difference between a nonprofit and a for-profit is just that the nonprofit dedicates its financial resources exclusively toward meeting some social need, while a for-profit aims to accomplish a profit that can be allocated back to the owners or shareholders.

Otherwise, many nonprofits provide products to their clients, much as for-profits do. Actually, a small nonprofit is much more like a small for-profit in nature than a large nonprofit. Similarly, a large nonprofit is much more like a large for-profit in nature than a small nonprofit. See
How Nonprofits Differ From For-Profits – and How They Are the Same

Problems With Ineffectively Managed Supply Chains

Many organizations reactively evolve some version of a supply chain over time. They piece together the necessary parts of the supply chain as they need them. They might even evolve to a fairly complete supply chain, but still not manage it as a tightly integrated and aligned system of components that needs to continually be managed and adjusted for maximum efficiency to meet customer demands, while reducing unnecessary costs and overhead. As a result, these organizations expose themselves to experiencing:

Insufficient resources (inventory) to meet customer needs
Excess, costly inventory of unused resources
Increasing stress and conflicts among personnel trying to do more with less
Poor quality products and services
Products and services for which there is little customer demand
Decreasing amounts of customers
High turnover among employees
Decreasing sales and profits

Many Benefits of High-Quality SCM

The overall benefits of proactively, systematically managing SCMs are numerous and can include:

More efficiency in operations, resulting in decreased operational costs
Improved understanding of customers’ needs, resulting in more demand for products and services
Increased focus on the customer, rather than on the organization itself, resulting in improved customer service
Faster product development and production, resulting in increased volume of products and services for customers
Increased sales and decreased expenses, resulting in more profitability for businesses and more community impact for nonprofits

PLANNING YOUR SCM

Characteristics of High-Quality SCM

Before you progress in planning your SCM, it might be useful to get an idea of what high-quality SCM’s look like and operate like. We turn to Intek Freight and Logistics, Inc, this time for a listing of the characteristics of a high-quality SCM.

Consistency – be great all the time
Horizontal and vertical integration – it should be difficult to see where one component of the chain stops and other begins
Technology – continually invest in best technologies
Value network design – inbound and outbound activities all focused on the end customer
Data-driven – the amount of available and useful data is substantial — use it
Proactive use of data – always think about how you can use the data
Customization and flexibility – especially with communications and delivery to customer
Prepare for unexpected – regularly think of potential disruptions to the supply chain and what to do about it
Sustainability – increasingly, stakeholders want to see this value in their providers of goods and services
Compliance – stay up to date and comply with relevant laws and regulations
Transparency – nothing goes unnoticed and everything is communicated
Integrity – governance and executives should ensure ethical activities throughout the supply chain

Develop Your SCM Team Now

The planning and implementation of an SCM system requires sufficient time, energy and expertise, as well as a variety of different perspectives. That means a well-qualified and designed SCM Team of the most suitable members from your organization. The SCM Team would make recommendations to management about, for example:

Goals for the SCM system
Metrics to measure progress toward the goals
The best approaches to train employees about SCM
Criteria to select the best SCM system
The best SCM system that meets the criteria

It is best to draft a job description for the SCM Team to be used when explaining the SCM Team’s role to upper management and suggesting who should be on it. The description also gives guidance and direction to the SCM Team as its doing its job. It is often best, as well, to train the members of the SCM Team about quality management. That might suggest hiring an expert to do that training, as well as to being a resource to the SCM Team as it does its job.

Also see

Use SCOR© Model to Plan Your SCM?

The SCOR model is widely used in planning SCM systems. Your SCM Team choose this approach. The approach includes five overall stages, including:

Planning – includes, for example, decisions about aligning the supply chain with strategic goals, building versus buying, outsourcing, and activities across the supply chain.
Sourcing – includes, for example, decisions about cost-effectively procuring needed materials from the right suppliers, and always getting the materials in good condition
Making – includes, for example, decisions about facilities, activities and scheduling to effectively produce goods and services
Delivering – includes, for example, activities to store goods and services, fulfill orders, and distribute goods and services to the customer
Returning – includes, for example, authorizing returns, transporting defective products, and replacing products or refunding fees

Establish SCM System Goals

Identify Relevant Organizational Goals

Your organization should have done strategic planning to clarify its overall purpose and priorities for the coming years. Ideally, the planning was done proactively and explicitly. The priorities are usually specified in terms of strategic goals.

Strategic goals related to the SCM might be, for example, regarding what products and services will be offered, as well as when and where. Planning might have also specified the value proposition of the organization, which specifies the value that customers get from using the organization’s products and services. Planning might have also specified certain financial goals to achieve, such as reducing expenses by a certain amount or raising revenues by a certain amount.

Also see

Identify SCM Goals and Align with Organizational Goals

Here is an example of an SCM strategic plan that gives examples of SCM goals, including as derived from a strategic SWOT analysis. The article Defining the Supply Chain gives a useful overview of examples of SCM goals and associated objectives. The article mentions goals, including to achieve efficient fulfillment, drive customer value, enhance organizational responsiveness, build network efficiency and facilitate financial success.

The above are examples to help you with your thinking. However, your SCM goals should be derived from your own organization’s strategic priorities. For each SCM goal, associate various milestones, or key performance indicators, of progress that you are making progress toward achieving the goal. (For ideas of goals, consider various metrics for evaluating your SCM.)

Also see

Be Realistic In Your Planning

Especially if yours is a small to medium-sized organization, or if this is your first time in being focused and intentional about quality management, then be very realistic about what you can accomplish. Develop a plan with various phases to be implemented over a realistic period of time. Build in some quick accomplishments in order to sustain excitement and motivation to implement the plan. Be willing to change the plan while implementing your quality management during its first year.

Also see
How to Do to Planning

Decide Any Organizational Changes

A conventional rule in deciding the structure of something is “form follows function.” In other words, the structure of the organization (its design and roles) should be to what is most useful in implementing the organization’s functions (its goals and methods to achieve those goals).

So what departments, teams and employees are now — and should be — involved in SCM, including to use the SCM software? What goals should each department, team and various employees have in SCM? What SMART objectives should be associated with each goal?

Use Push or Pull Drivers to Manage Your Supply Chain?

Push and pull are two different approaches to managing supply chains. It is important early on when planning and designing a supply chain to decide which of the two approaches is best for the organization and its customers.

In the push approach, goods and services are “pushed” through the supply chain to the customer. The push approach starts by forecasting the demand for the goods and services, and then making sure the supply chain effectively operates to meet that expected demand. So the effectiveness of the approach depends very much on the accuracy of the forecasts.

The pull approach starts from relying on actual customer demands in order to forecast the necessary supplies and any changes needed in the supply chain in order to promptly meet those demands. So the effectiveness of this approach depends very much on the supply chain promptly learning and meeting the demands of the customers.

Partner With Others to Operate Your SCM?

There can be numerous types of other organizations that can work with your organization to help operate your supply chain. So your organization must closely manage its relationship with each of those other organizations. This includes clarifying the roles and responsibilities of each, establishing complete and accurate contracts and agreements, monitoring the performance of each, and evaluating the usefulness of each relationship.

RedStag Fulfillment lists some types of partners in this order:

Vendors – that produce and provide raw materials
Producers – that organize, assemble and/or manufacture products and services
Warehouses – that store, monitor and organize products and materials
Distribution centers – that collect, manage and provide products and services
Retailers – that sell products and services to customers via various different methods

Also see

Select the Best SCM Software

What Type of Software Platform is Best?

On-premises

In this type, you install the SCM software on your computer system, as well as maintaining, troubleshooting and updating the software. You would either use one of the free SCM tools or buy or license a tool from a vendor.

This type of software installation works best if you have available ongoing technical skills for installation, troubleshooting and upgrades. You also will need considerably more time to install the software as you climb the often steep learning curve to understand the software and its installation. You are likely to face occasional periods of downtime of the software as problems are solved and upgrades are installed.

Cloud-based

In this type, you subscribe or license the software from a vendor that makes the software available to one or more people in your organization, depending on the licensing agreement. The vendor manages all aspects of the software, including installation, testing, training, troubleshooting and upgrades. This works if you have a suitable budget. Fortunately, the price of SCM software has continued to decrease over the years.

How to Select the Right SCM Software

Questions to Consider When Specifying Your Software Requirements

Itarian lists a variety of questions to consider, including:

Is it suitable for your size of organization?
Are there any limitations to the number of users?
Is it easy to use?
Can it be integrated with your other computer systems?
Is it easy to integrate with other supply chain management solutions that you already use?
What are its security features against hackers’ attacks?
Is the software affordable and fits in your budget?

You should also consider:

What type of SCM software do you need?
What type of technical support does the vendor provide? How reliable is it?
Does the vendor provide training?
Does the vendor include a careful manual for implementing the software?
Does the vendor provide demonstrations that your employees can experience?
What are some of its customers saying about the software?

Specify the Requirements for the Software

Now you are ready to specify what you want the SCM software to accomplish for you. It is best to write a software requirements specification (SRS), while focusing now on the needs of your organization, and not on the particular software tool that you might already prefer. Later on, you will take your SRS to the various SCM software vendors for you to carefully decide if their software will indeed meet your organization’s needs.

Lists of Some SCM Software and Costs to Consider

Free SCM Software

5 Open Source Software Tools for Supply Chain Management

For Small Organizations

Supply Chain Management Software for Small Businesses

For Nonprofits

Nonprofit organizations have supply chains, especially those focused on providing services. There seems to be an increasing number of for-profits organizations providing services. Thus, SCM software for businesses might also accommodate nonprofit organizations, so it certainly is worth contacting software vendors to ask if their software works for nonprofits.

Supply Chain Solutions for Disaster Relief Organizations

Now Select the Best Software For Your Needs

You are in a great position now to begin working with various vendors to get the best software to meet your needs, as specified in your SRS. You might include your specification in an overall Request for Proposal (RFP). You also might bring the members of SCM Team with you when talking to the vendors.

Also see

DEVELOPING YOUR SCM SYSTEM

Redesign Your Organization As Needed for SCM

Consider the goals and objectives that you established during the SCM planning for each department, team and employee associated with customer relationship management. What teams and roles should exist? How should they be integrated with each other? For example, which departments, teams and employees should be collaborating with each other and how? What organizational design would best facilitate that type of involvement and collaboration?

All of the activities within an organization occur within the context of organizational performance management. Thus, having a basic understanding of that overall process will also give you an understanding of the major recurring activities in an organization and the general order in which they occur.
Organizational Performance Management

Delegate SCM Goals to Teams and Employees

Consider the SCM goals and associated objectives that you decided during the planning. Which goals should be delegated to which teams and employees? Make sure that you make the assignments according to the team performance management and employee performance management practices that are formally established in your personnel policies.

Also see
Personnel Policies

Train Your Employees About SCM Systems and Management

Operating a high-quality SCM system requires well developed knowledge and expertise among employees. Depending on the employees role in the system, required skills can planning, organizing, leading and coordinating resources. It can include supervising, communicating and evaluating. It can include planning, monitoring, measuring and analyzing. Therefore, arrange highly practical trainings for your employees — trainings that match their busy schedules and trainings that include practice sessions.

Also see
About Training and Development

MANAGING YOUR SCM

Three Levels of Managing in SCM

It helps to get clearer perspective on managing SCM if you look at it as having the following three general levels that must continually get attention when managing a supply chain.

Strategic Level

Strategic planning involves clarifying the organization’s overall purpose and long-term priorities. Specific to a supply chain, strategic decisions answer, for example, what is our unique value to our customers, what sets us apart from our competitors and what are our values in serving our customers. It also answers what are our strategic priorities for the next few years, for example, to expand marketshare, increase profits, expand community impact or improve quality?

Also see
Strategic Planning

Operational Level

Where the management activities in the strategic level answer “What will we be doing?”, management activities at this level show how we will be doing it. Examples include designing and structuring the organization, getting and organizing the best people to address the strategic priorities. It also includes managing each of the components in the supply chain, as well as the important flows of information, finances, products, values and risk management across the supply chain.

Also see
Operations Management

Tactical Level

This level includes the many recurring day-to-day tasks necessary to operate the components in the supply chain. There are many examples, such as following policies and procedures to work with suppliers, doing timely and cost-effective procurements, transporting goods and supplies to and from the organization, tracking and monitoring resources in warehouses and communicating with personnel across the supply chain.

Also see

Chain of Management Processes in SCM

It is clear that SCM spans different management processes. Predictive Analytics Today suggested items 1-8, below, as being the “building blocks” of SCM.

1. Strategic Planning Process

This involves planning and specifying the strategic supply chain design. This might be done as part of the overall strategic planning process, which would also specify which products and services are provided and to which groups of customers.

2. Demand Planning Process

This involves planning how customer needs (demands) will be accurately and usefully forecasted, and how those forecasts will be communicated especially to the supply planning process.

3. Supply Planning Process

This involves planning how to ensure sufficient resources (raw materials, components, expertise, etc.) to develop into needed products and services. This also includes managing for effective supplier relationship management.

Supply Planning: Processes, Options & Analytics, Oh My
5 Steps to Connected Supply Chain Planning
Who Loves Ya?? Demand Planning or Supply Planning? (Part 1)

4. Procurement Process

This involves ensuring timely and cost-effective purchases of sufficiently needed resources, including finding (or sourcing) the resources, coordinating the most cost-effectiveness purchases, and accurately administrating the purchases.

5. Manufacturing Process

This involves regularly manufacturing goods by combining, integrating and aligning the supplies in a timely and cost-effective manner. It means accurately scheduling these production activities in close coordination with the forecasted rate of sales to customers. It means always conducting careful quality control to ensure products will always meet or exceed expectations of customers. In the case of service organizations, this process would include equipping personnel and materials to deliver services when needed.

Also see
Quality Control
Quality Control Techniques

6. Warehousing Process

This involves transporting, organizing, storing, tracking and monitoring raw materials needed for products. (This in-bound transporting to the organization is sometimes considered to be part of the procurement process.) This can also include doing the same activities for produced products and services. This all must be done in timely, cost-effective and reliable manner.

Also see
What is Inventory Management?
What is Inventory Management?

7. Order Fulfillment Process

This involves ensuring accurate sales order pricing, processing and billing, as well as orderly and efficient packaging — or provision — of products and services to customers. Depending on the nature of the products and services, this can include highly customized and expensive packaging or provisioning. It can also include arranging necessary warranty and optional customer service agreements.

Secrets to Successful Order Fulfillment
Order Fulfillment, Logistics and Supply Chain Management
Order Fulfillment

8. Distribution Process

This involves planning and ensuring timely and cost-effective distribution of products and services to the customers (that is, outbound logistics), including the same activities in reverse order if products are returned by the customers or if customers are not satisfied with the quality of services.

9. Customer Service Management

This includes ensuring high-quality service and support to customers before, during and after your customers buy from you. It includes answering customers’ questions about products and services, and can include handling customers’ complaints.

10. Customer Relationship Management

This involves the ongoing activities to ensure high-quality relationships between the organization and its customers. Thus, this also includes the activities to ensure great customer service management.

Manage These Flows Through Your Supply Chain

When trying to grasp the nature of activities through the supply chain, it helps to see them as different types of flows through the supply chain. That type of perspective can make it much easier in recognizing what needs to be managed and how. The direction of the flows depends on whether you had selected a push or pull approach to your management activities. When reading the following, you might think of the major processes in a supply chain, including:

Strategic processes
Demand processes
Supply processes
Procurement processes
Transportation to organizations
Manufacturing processes
Inventory management
Transportation/distribution to customers

Product Flow

This includes the development and movement of goods and services all the way from suppliers to customers. Thus, the timing of those activities in a particular supply chain component affects the timing of activities in the chain’s upcoming components, as well. The flow and affects are in reverse order in the case of returns from the customer.

Financial Flow

The costs of the supply chain tend to increase as activities proceed through the supply chain. Thus, the cost of a particular supply chain activity affects the available funds for the upcoming activities in the supply chain, as well.

Information Flow

There should be a constant flow of useful and timely information throughout the supply chain. Thus, the accuracy and timeliness of information in a particular supply chain activity affects the quality of information in the upcoming activities in the supply chain, as well.

Value Flow

The value of products and services increases through the supply chain. Thus, the value produced by a particular supply chain activity affects the value in the upcoming activities in the supply chain, as well.

Risk Flow

Risk can be any kind of disruption to activities in the supply chain, for example, breakdowns of machinery, suddenly unavailable materials, poor quality materials, or poor performance of personnel. A sudden disruption in an activity at any point in the supply chain becomes a disruption to the upcoming activities in the supply chain, as well.

Managing Risk Management in Your SCM

Risk management is attempting to identify and then manage threats that could severely impact or stop the supply chain. Generally, this involves reviewing the supply chain, identifying potential threats and the likelihood of their occurrence, and then taking appropriate actions to address the most likely threats.

With the recent increase in rules and regulations, employee-related lawsuits and reliance on key resources, risk management is becoming a management practice that is every bit as important as financial or facilities management.

As written above, risks to the supply chain can include, for example, sudden breakdowns of machinery, unavailability materials, poor quality of materials and poor performance of personnel. Risk management should be applied to all components in the supply chain. Disruption at any point in the chain should be planned for and contingencies should be planned accordingly.

Also see
Risk Management

Managing Safety and Security in Your SCM

Safety and security are major concerns of today’s supply chain managers. The supply chain is comprised of numerous moving parts, ranging in size from unpacking containers, driving transport vehicles to constructing production facilities.

Often, the faster that a supply chain operates, the more products and services that it can provide. However, the faster it operates, the more likely that accidents and major disruptions can occur.

Concerns for safety are increasing as organizations outsource operations around the world, sometimes resulting in facilities and activities that are not as carefully designed and managed as those in the industrialized countries. This results in even more concerns about safety.

Security concerns are increasing, as well. Unfortunately, various terrorist attacks have included bombs and shootings in and around organizations with products and services that have been perceived as somehow being destructive to society. Computer hackers are growing more sophisticated in their abilities to attack and adversely affect computers and their networking. This poses a substantial risk to the operations of organizations and their supply chains around the world.

Managing Ethically and Social Responsibility in Your SCM

The social responsibility movement arose particularly during the 1960s with increased public consciousness about the role of business in helping to cultivate and maintain highly ethical practices in society and particularly in the natural environment.

Increasingly, organizations are being held publicly responsible for how their products and services are developed and provided. The public expects safe and secure working conditions. It expects workers to get livable wages. It expects products and services to be environmentally friendly.

Major public relations problems have occurred with organizations found to be collecting and selling customers’ private data without getting the customers’ permission to do so.

Consequently, the topics of social responsibility and business ethics are increasingly mentioned in publications and conversations about supply chain management.

Also see
Social Responsibility

Evaluating Your SCM Performance

Back in the Preparation paragraphs, you were encouraged to prepare for developing your SCM system by establishing goals for its performance. Goals could include desired results at the organizational level for SCM and for the SCM system itself.

Evaluations of the SCM should include assessing the extent of achievement of the SCM’s goals, as well as the quality of its ongoing operations to achieve those goals.

Evaluations of the SCM system should be done at regular intervals, not just at the end of the year. The more complex the products and services and also the falser that the supply chain operates, the more frequently that the evaluations should occur.

Here are several useful articles with metrics and guidelines to regularly evaluate the performance of your SCM system.

How to Evaluate SCM

Metrics to Monitor During Evaluations

Also see
Evaluations
How to Design Successful Evaluation and Assessment Plans

General Resources

Additional Overviews

Certifications

Top 8 SCM Certifications
The 5 Best Supply Chain Management Certifications

Glossaries

Organizations

For the Category of Operations Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022September 15, 2022

Relationship Between Management of Supply Chains, Operations, Quality, Customer Relationships and Customer Service

Relationship Between Management of Supply Chains, Operations, Quality, Customer
Relationships and Customer Service

It helps significantly to understand the overall context of each of the following topics and how they all are related to each other. Note that the most important driver to determining the activities in an organization, along with the order in which they occur, should always be satisfying the needs and expectations of its customers.

Supply chain management (SCM) is the management of the chain of activities to get outside supplies and materials into the company, produce high-quality goods and services, and deliver them to the customer. Although there are many components in the supply chain, they are aligned to be focused first on meeting the actual, or forecasted, needs of customers.
Quality management (QM) is the management of the activities to ensure that all of the components
of the SCM operate with the highest quality for optimum effectiveness and efficiencies.
Operations management (OM) is the management of the recurring, high-quality organizational activities needed to achieve the organization’s strategic goals, and this includes the parts of the supply chain that occur within the organization. Thus, much of SCM overlaps with OM.
Customer relationship management (CRM) is the management of the activities to ensure high-quality relationships with customers, especially at those points where the customer interacts with the organization. Thus, CRM is sometimes seen as a component of SCM.
Customer service management (CSM) is the management of the activities to ensure the organization always understands the expectations of customers and always meets or exceeds those expectations. CSM is focused first on understanding and meeting the needs and expectations of customers. Thus, CSM could be seen as a component of CRM.

For the Category of Operations Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022March 28, 2023

Introduction to Operations Management of Products and Services: Overview and Resources

Focused women looking at documents in a meeting

Introduction to Operations Management of Products and Services: Overview and Resources

Before reading this topic, you might read about the Relationship Between Managing Supply Chain, Operations, Quality, Customer Relationships and Customer Service.

Sections of This Topic Include

Introduction to Operations Management (OM)

What is Operations Management (OM)?
Various Definitions
What Are Goods and Services?

What is an Operating System?

What Are Operations Systems?
What is a System?
What is an Operations System?
Align With Strategic Planning

Planning Operations Systems

Phase 1: Planning Operations Systems
Product/Service Planning
Capacity Planning
Facilities and Layout Planning
Job and Work Design
Work Flow Management

Planning Operations, Inventory and Quality Control

Phase 2: Planning Operations, Inventory and Quality Control
Production and Scheduling
Supply Chain Management and Inventory Management
Service Design
Quality Control

Managing Productivity

Phase 3: Managing Productivity
What is Productivity?
Methods to Measure and Improve Productivity

General Resources

Also consider

What is Operations Management (OM)?

Various Definitions

Operations management focuses on carefully managing the processes to produce and distribute products and services. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes.

Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of the products or services in the organization, for example, agriculture, mining, construction or general services. Here are some additional perspectives on the field.

“Operations management is chiefly concerned with planning, organizing and supervising in the contexts of production, manufacturing or the provision of services.” — TOPMBA
“Operations management is an area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services.” — Wikipedia:

What Are Goods and Services?

Basically, a product is a tangible offering to a customer, whereas a service is an intangible offering. The former is usually a one-time exchange for value. In contrast, a service usually involves a longer period of time.

The value of a product is inherent in the tangible offering itself, for example, in the can of paint or pair of pants. In contrast, the value of a service often comes from the eventual benefit that the customer perceives from the time while using the service.

In addition, the customer often judges the value of a service based on the quality of the relationship between the provider and the customer while using the service.

Wikipedia mentions that there are certain differences between manufactured goods and services, including that services can have simultaneous (in the moment) production and consumption, are perishable (there is no inventory management), ownership (ownership of the service is not owned by the customer) and tangibility (it is difficult to evaluate). These features make operations management more of a challenge in services.

Operations Management Specific Roles

Chief Operating Officer

“The chief operating officer (COO), also called the chief operations officer, is one of the highest-ranking executive positions in an organization, comprising part of the “C-Suite”. The COO is responsible for the daily operation of the company,[1] and routinely reports to the highest-ranking executive, usually the chief executive officer (CEO)… The COO is usually the second in command at the firm, especially if the highest-ranking executive is the Chairman and CEO. ”

Operations Manager

A useful definition of the role of an operations manager comes from Investopedia:

“Operations management is the administration of business practices to create the highest level of efficiency possible within an organization.
Operations management is concerned with converting materials and labor into goods and services as efficiently as possible.
Corporate operations management professionals try to balance costs with revenue to maximize net operating profit.”

They oversee product development and delivery, inventory and supply chain management, operations staffing and job design, and production. They oversee an organization’s key operations and, thus, they usually have a wide and strategic view of the organization. The specific duties of the role depend on the nature of the product and service that the company produces and provides, for example, in agriculture, industry or construction.

What Are Operations Systems?

It can seem overwhelming to read about the numerous activities involved in operations management. One wonders where they fit into an organization? How are they connected? This is where a systems view is very helpful.

What is a System?

Simply put, a system is an organized collection of parts that are highly integrated to accomplish an overall goal. The system has various inputs, which go through certain processes to produce certain outputs, which together, accomplish the overall desired goal for the system.

For example, an automobile is a system. Its inputs are gasoline, a driver, a steering mechanism, tires, as well as various tubes, pipes and electrical cords. The system’s processes are when they work together to burn the gasoline, resulting in the systems outputs of the tires moving and the car steering as the driver prefers. The overall system’s desired goal is a very useful automobile.

What is an Operations System?

The primary activities in operations management is a system — they are all integrated and aligned with each other. The operations manager’s job is to ensure they are all effectively and efficiently working together in order to produce the desired goal of useful goods and services for customers.

Look at this diagram of a system of an overall organizations. Notice the various inputs that are processed to produce certain outputs and outcomes (desired goals).

An operations system includes, for example:

Inputs — such as expertise, best practices, funding, equipment, facilities and technologies, as well as the customer’s feedback and the overall organization’s strategic priorities
Processes — such as planning (capacity, product and service design, production, facilities, jobs, inventory, quality control, etc.) and managing productivity to produce high-quality products and services
Outputs — high-quality products and services
Outcomes — very satisfied customers

Feedback from customers should be continually collected and considered as an input to the processes of the planning the development and production of goods and services. In that way, the operations system is really a recurring loop of outcomes which, in turn, influence the inputs to the next round of the system.

Align Operations Systems With Strategic Planning

Notice that one of the inputs to the operations system is the strategic priorities of the organization. It is critical that the operations system be closely integrated and aligned with the purpose (the mission) and priorities (strategic goals) of the organization.

Otherwise, the system will not be operating as effectively as it should be. For the system to be operating as efficiently as it should be, there should be closely integrated and aligned parts within the system.

Phase 1: Planning Operations Systems

Product/Service Planning

The planning of products and services (the outputs from the system) includes market research to:

Clarify the needs and wants of potential groups (market niches) of customers, as well as how those needs and wants might be met with certain products and services.
Clarify how the new products and services should best be provided to those target markets.
Identify competitors, as well as potential collaborators.
Suggest the best terms in pricing for the products and services.
Suggest how best to advertise and promote to those groups of customers.

The results of that research produce a specification of the product or service. Various feasibility studies and perhaps a prototype might be done, as well, to refine the description of the product or service. See
Product and Service Development

The specification could be further enhanced by adding information about costs to develop and produce the product or service, including employees, facilities and management. This information is often included in a business plan. (This information is also sometimes referred to as the business strategy.)
All About Business Planning

Capacity Planning

Capacity planning includes specifying how many of the outcomes (products or how much service) will be produced and how often. That includes predicting, or forecasting, the demand for those outcomes. The previous market research will be very useful here. There are a variety of other tools that could be useful,
as well.

A useful planning technique to ensure consideration of many possible influences is scenario planning, including to consider various external driving forces that could have a strong influence.
Driving Force Impacts for Environmental Scanning in Strategic Planning

It also might be useful to hire an expert with knowledge about developing the particular product or service.
How to Successfully Hire and Work With an Excellent Consultant

The results of the planning should produce estimates of the needed inputs to produce the product or service, including types of expertise needed, amounts of certain kinds of materials, what technologies to use, etc.

Facilities and Layout Planning

This is one of the most critical activities in operations management, not just because they underlie and facilitate the activities to very effectively and efficiently produce products and services, but also because facilities and their maintenance are one of the most expensive, as well. Fortunately, there is a variety of helpful articles about how to do this acclivity in operations management.

Relationship Between Plant Layout and Material Handling
Plant Layout and Material Handling
Introduction to Manufacturing Facilities Design And Material Handling
The Ultimate Facility Manager Checklist

Job and Work Design

The Business Dictionary defines work design as:

“An arrangement in the workplace that has the objective of overcoming employee alienation and job dissatisfaction that comes about from mechanical and repetitive tasks in the workplace. Work design is used by organizations to boost productivity by offering employees non- monetary rewards such as satisfaction from a greater sense of personal achievement. Also called job design.”

From Wikipedia:

“Job design (also referred to as work design or task design) is a core function of human resource management and it is related to the specification of contents, methods and relationship of jobs in order to satisfy technological and organizational requirements as well as the social and personal requirements of the job holder or the employee.”

Work Flow Management

“Workflow management is creating and optimizing the paths for data in order to complete items in a given process. Workflow management includes mapping out the workflow in an ideal state, finding redundant tasks, automating the process, and identifying bottlenecks or areas for improvement.”
kissflow

The map depicts the flow of activities through the system, including its input, processes, outputs and outcomes. These are sometimes also referred to as operations management process maps. (This technique is at the heart of the Business Process Re-Engineering approach.)

Phase 2: Planning Operations, Inventory and Quality Control

Production and Scheduling

Production Planning

This is the processes part in the operations system where the inputs are transformed into the desired product or service. Considerations include, for example:

Are there technologies currently or soon available that could expedite the production?
Are there best practices suggested by various experts about the product or service?
Can components of the product be purchased as-is or off-the-shelf?
What components are needed, in total, to produce the product or service?
What are the costs associated with developing and producing the product or service?
What are the estimated demands of customers for the next six months? 12 months? 18 months? These estimates drive the scheduling of the production activities.

This activity also includes developing a detailed map of the activities required to obtain, assemble, integrate and test the product or service before it is provided to customers.

Scheduling

A critical activity in ensuring that the operations system is highly effective and efficient is coordinating (scheduling) the timing of activities to organize, monitor and optimize the equipment, people and production activities. Scheduling has a major impact on the productivity of the system.

Supply Chain Management and Inventory Management

Supply Chain Management

“In business and finance, supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.” Wikipedia

” Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.”

Inventory Management

Inventory includes unprocessed materials, finished products, supplies and works-in-progress. Inventory management is a part of supply chain management that oversees the inventory items from manufacturers to storage to where they are sold. There must be a very careful balance between the size of the inventory of items compared to the actual rate of their sales.

Too many items in inventory means their costs are not recovered in a timely manner from their sales. It also might mean high costs of storage. Insufficient numbers of items means the organization cannot meet the customer demand, resulting in lost revenue.

Service Design

In the past, an organization was expected to provide a product or service to the customer, and then that transaction was done — the activity was done to the customer. The customer was more or less at the mercy of the organization.

Today, that is changing dramatically. Customers have a much wider range of organizations, products and services to choose from, and they can access them instantly. Customers can also access numerous sources of useful opinions or reviews about the product or service even before they buy them.

Thus, it is more important than ever that organizations remain very good at attracting, satisfying and retaining customers. That requires a carefully designed and implemented customer services plan.

Service design “is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its customers. Service design may function as a way to inform changes to an existing service or create a new service entirely.”

Quality Control

Quality management, including quality control, is crucial to effective operations management, particularly continuous improvement. More recent advancements in quality, such as benchmarking and Total Quality Management, have resulted in advancements to operations management as well.
Quality Management

Quality control can be defined “part of quality management focused on fulfilling quality requirements.” While quality assurance relates to how a process is performed or how a product is made, quality control is more the inspection aspect of quality management. An alternate definition is “the operational techniques and activities used to fulfill requirements for quality.”

Phase 3: Managing Productivity

What is Productivity?

In the context of operations systems, productivity is defined as the ratio of the output to the input of the system. The higher the ratio, the more productive the system. One of the most common measures of productivity is output per hour. This is important especially in manufacturing industries.

Methods to Measure and Improve Productivity

Where many guidelines are in regard to increasing employee productivity, Productivity: A Practical Handbook distinguishes between three factors that drive productivity, not all of them around employee productivity, including:

Job-related
Resource-related
Environment-related

The above Handbook is a very useful overview of the many different methods to improve productivity.

Here are various measures, or indicators, to help monitor and assess the levels of productivity.

General Resources

Software / Tools

Organizations and Journals

For the Category of Operations Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022March 23, 2023

All About Financial Management in Nonprofits

All About Financial Management in Nonprofits

Guidelines for nonprofit financial management are included in the book Bookkeeping Basics: What Every Nonprofit Bookkeeper Needs to Know .

New nonprofit leaders and managers have to develop at least basic skills in financial management. Expecting others in the organization to manage finances is clearly asking for trouble. Basic skills in financial management start in the critical areas of cash management and bookkeeping, which should be done according to certain financial controls to ensure integrity in the bookkeeping process.

New leaders and managers should soon go on to learn how to generate financial statements (from bookkeeping journals) and analyze those statements to really understand the financial condition of the business. Financial analysis shows the “reality” of the situation of a business — seen as such, financial management is one of the most important practices in management. This topic will help you understand basic practices in financial management, and build the basic systems and practices needed in a healthy business.

Sections in This Topic Include

The following links are to sections included further below in this Web page.

Basics and Getting Started

Basics of Financial Management
Understanding and Setting Up Your Nonprofit Bookkeeping and Accounting
Addressing Financial Controls and Risk Management

Activities in the Yearly Accounting Cycle

Planning and Cash Management

Financial Planning
Budgeting and Managing Budgets
Managing Program Finances
Managing Cash Flow
Credit and Collections
Budget Deviation Analysis

Financial Statements, Analysis and Reporting

Financial Statements
- Statement of Activities (Income Statement)
- Statement of Financial Position (Balance Sheet)
Financial Analysis
- General Information
- Ratios
Financial Reporting
- Overviews
- Annual Reports

Special Topics

Cutting Costs
Lease Versus Buy
Assessments and Audits of Nonprofit Financial Management Practices
- Various Assessments to Check the Financial Health of Your Nonprofit
- Financial Audits
General Resources (assistance, banking, software, accounting, etc.)

Also consider
Related Library Topics

BASICS AND GETTING STARTED

Basics of Financial Management

Reviewing the Basics of Nonprofit Financial Management

To manage your finances as effectively as possible, you should at least have an understanding of the basic accounting process. To get an overall sense for the recurring financial activities in the typical nonprofit, carefully read the following article.
Basic Overview of U.S. Nonprofit Financial Management

Other sites that you might benefit from are:

Use Fiscal Sponsorship?

In some cases, you might want to pursue finding a fiscal sponsor. For example, if you’re not sure you want to start a nonprofit, or if your nonprofit may not need to exist for long, then a fiscal sponsor may be useful for you. A fiscal sponsor might oversee your financial management activities until your organization is more developed or terminated. See Fiscal Sponsorship — Is it For You?

What Type of Bookkeeping System Should You Use?

Small organizations might use a single-entry bookkeeping system, although some might choose to use a double-entry.
What Type of Bookkeeping System Should You Use?

Also, see the cash-basis or accrual-basis in Basic Overview of U.S. Nonprofit Financial Management

Your Board Treasurer and Board Finance Committee — Critical Resources to Help You Get Started

An active board treasurer can be the most important resource in the long-term financial health of your nonprofit. As a new nonprofit organization, you must get accounting expertise somehow, if you don’t have strong skills in this area yourself. You (or, ideally your board chair) should get someone on your board with accounting skills to be your treasurer. See

Getting an Accountant, If Needed

You might choose to do the basic bookkeeping activities yourself. You should get an accountant initially to help you set up your bookkeeping system, generate financial statements and do some basic financial analysis.

Buy a Software Package to Automate Your Financial Management?

There are a number of very useful software packages that will help you automate bookkeeping, generation of financial statement and their analysis. See

Buy Accounting Software to Help You?
How to Automate Payroll

Getting a Bank and Banker

You’ll need to start a checking account. Probably the best way to find a good bank is to ask for advice and references from other nonprofits, especially other nonprofits that are of the size and nature of yours. If you’re just starting out, you probably don’t have much money. You may be able to get buy with a non-interest-bearing checking out that has no, or minimal, fees. The following link may be useful
Getting and Using a Banker

Understanding and Setting Up Your Nonprofit Bookkeeping and
Accounting

Now that you have a sense for the overall, recurring activities in nonprofit financial management. Let’s take a closer look at what happens in nonprofit accounting. Accounting is identifying, organizing and reporting financial transactions. It’s useful to understand the basics of accounting before reading the next major section on financial planning — that planning requires some understanding of the accounting process. One of the biggest challenges is knowing how to enter each type of transaction in the journal and ledger. The following links are very useful for this challenge. Before reading them, do read Basics of Nonprofit Financial Management.

Quick Overviews of Bookkeeping / Accounting

Bookkeeping and accounting is all about identifying, organizing and reporting your financial transactions. Scan this information to further clarify your understanding of bookkeeping and accounting.

Critical Issues in Financial Accounting Regulation for Nonprofit Organizations

Setting Up Your Chart of Accounts

How to Design a Scalable Chart of Accounts

Deciding to Use Cash Basis or Accrual Basis for Accounting

Deciding Which Expenses Are Direct and Indirect (Overhead)

Cost Analysis to Determine Costs of Activities

The following series gives you a well-structured overview of how to analyze the financial data, especially to associate costs with the activities in your organization. That information is extremely important if you ever need to cut costs.

Deciding How Much to Allocate to Fringe Benefits in Payroll Expenses

What is a fringe benefit rate? | AccountingCoach.com Q&A

Deciding How Much to Document as Depreciation

Addressing Financial Controls and Risk Management

There are certain practices that you should consistently follow to ensure that financial transactions are consistently recorded in an accurate fashion. These controls also help to minimize risk, including employee theft.

Also consider

ACTIVITIES IN YEARLY ACCOUNTING CYCLE: Budgeting (Financial
Forecasting) and Cash Management

Financial Planning

Financial planning works from the strategic and business plans to identify what financial resources are needed to obtain and develop the resources to achieve the goals in the two types of plans. Typically, financial planning results in very relevant and realistic budgets — budgets are addressed later on in this topic. So be sure to consider business planning for each of your products and services.

Budgeting and Managing Budgets

A budget depicts what you expect to spend (expenses) and earn (revenue) over a time period . They are useful for projecting how much money you’ll need for a major initiative, for example, buying a facility, hiring a new employee, etc. They also help track whether you’re on plan or not. There are yearly (or annual or operating) budgets, cash budgets, capital budgets (for major assets, such as equipment, buildings, etc.) and proposal budgets (for fundraising), etc. The following links are about annual budgets.

Meaningful Budget Work by the Board

Managing Program Finances

Usually, there are two major types of costs to consider: indirect costs and direct costs. Indirect costs are what we sometimes call “administrative” or “overhead” costs, for example, costs to run the central facility. Direct costs are those that fund resources which directly produce services to clients, for example, supplies and materials for books provided to clients.

Usually, the lower your administrative costs, the more it looks like your resources are going directly to services to clients. In addition, you may have restricted grants (that is, grants that are dedicated for certain programs), which require you to report monies spent on overhead and directly on the program. Therefore, it’s wise to track carefully how much money each of your programs requires to operate and how much revenue it generates, as well. A major challenge is to analyze how much of the indirect costs are associated with each program.

Also see Basic Guidelines for Nonprofit Program Design and Marketing.

Managing Cash Flow

As a new or small nonprofit, your biggest challenge is likely to be managing your cash flow — probably the most important financial statement for a new business is the cash flow statement. The overall purpose of managing your cash flow is to make sure that you have enough cash to pay current bills. Nonprofits can manage cash flow by examining a cash flow statement and cash flow projection.

Basically, the cash flow statement includes total cash received minus total cash spent. Cash management looks primarily at actual cash transactions. (Note that nonprofits must file a financial statement called Cash Flow Statements or Statements of Cash Flow — this statement is not the same as a cash flow budget.)

Basics of Cash Flow Management — article specific to nonprofits

How to Make Cash Flow Projections

More Basics of Cash Management

Note that cash management activities, whether nonprofit or for-profits, are essentially the same.

Basics of Cash Management

Preparing a Cash Flow Statement

Preparing Cash Flow Projections and Forecasts

Managing Your Bank Account

For a new nonprofit, your check register very likely will be your primary means to record and track cash. Whether yours is a new nonprofit or an established nonprofit, you’ll need to know how to manage your bank account. See

Credit and Collections

Matters of credit and collections are similar between for-profit and nonprofit organizations, other than that nonprofits obviously grant free services much more than for-profit organizations. Consequently,
nonprofits are not nearly as likely to utilize credit and collections procedures.

Budget Deviation Analysis

You learned above that a budget depicts what you expect to spend (expenses) and earn (revenue) over a time period. Budget deviation analysis regularly compares what you expected, or planned, to earn and spend with what you actually spent and earned. The budget deviation analysis can help greatly when detecting how well you’re tracking your plans, how much to accurately budget in the future, where there may be upcoming problems in spending, etc. A budget deviation analysis report might include columns with titles:

Planned for Month

Actual for Month

Difference
(planned minus actual)

% Deviation
(Difference x 100)

ACTIVITIES IN YEARLY ACCOUNTING CYCLE: Financial Statements
and Analysis

Financial Statements

In order to know how your nonprofit is doing, you’ll do some ongoing financial planning and analysis. In this planning and analysis, you’ll likely use your bookkeeping information to produce various financial statements, including a cash flow statement, statement of activities and a statement of financial position.

Statement of Activities (Income Statements)

These statements include much money you’ve earned (your revenue) and subtracts how much you’ve spent (your expenses), resulting in the total of your unrestricted net assets. The statement of activities includes how much money you’ve earned (your revenue) and subtracts how much you’ve spent (your expenses), resulting in how much you’ve made money (your profits) or lost money (your deficits). Basically, the statement includes total sales minus total expenses. It presents the nature of your overall profit and loss over a period of time. Therefore, the Income Statement gives you a sense for how well the nonprofit is operating.

Statement of Financial Position (Balance Sheets)

Whereas the statement of activities depicts the overall status of your profits (or deficits) by looking at income and expenses over a period of time, the balance sheet depicts the overall status of your finances at a fixed point in time. It totals your all your assets and subtracts all your liabilities to compute your overall net worth (or net loss). This statement are referenced particularly when applying for funding.

Financial Analysis (individual statements, ratios, break-even analysis, etc.)

Financial analysis can tell you a lot about how your nonprofit is doing. Without this analysis, you may end up staring at a bunch of numbers on budgets, cash flow projections and financial statements. You should set aside at least a few hours every month to do financial analysis. Analysis includes cash flow analysis and budget deviation analysis mentioned above. Analysis also includes balance sheet analysis and state of activities analysis. There are some techniques and tools to help in financial analysis, for example, profit analysis (yes, these can be used even in nonprofits), break-even analysis and ratios analysis that can substantially help to simplify and streamline financial analysis. How you carry out the analysis depends on the nature and needs of you and your business. The following links will help you get a sense for the “territory” of financial analysis.

General Information

Financial Planning and Analysis — Ratios

There are a variety of ratios that can be used to help determine the current and future condition of a nonprofit. The following links provide explanation and procedures for using those ratios. The ratios are produced from numbers on the financial statements. Note that the usefulness of ratios often are from comparing ratios from different time periods in the same nonprofit or from standards for a type of nonprofit, eg, social services, associations, civic organizations, etc.

The following articles are in reference to for-profits, but the principles behind the ratios also apply to nonprofit organizations.

Overview of major types of ratios and how they’re computed

Financial Planning and Analysis — Break-Even Analysis

The break-even analysis uses information from the statement of activities and cash flow statements to compute how much sales or revenue much be accomplished in order to pay for all of your fixed and variable expenses. Fixed expenses are expenses that you’d have regardless of the level of sales of products or services (eg, sales, rent, insurance, maintenance, etc.). Variable expenses are incurred according to the level of sales of products or services (eg, sales commissions, sales tax, freight to ship products, etc.). Break-even analysis can help you when deciding how much to charge for a service, how much to ask for from donors, etc.

Financial Reporting

The types and frequency of reports depend on the nature of the nonprofit and its situation. Banks might want reports to verify financial strength to pay back loans. Foundations, individuals, or other donors may want reports to verify that donations are being spent as expected by the foundation or donor. The Internal Revenue Service will want certain reports when filing yearly tax forms.

Overview

Basics of Nonprofit Financial Management

Annual Reports

General

SPECIAL TOPICS

Cost Cutting

Also consider
Organizational Sustainability

Lease Versus Buy

Assessments and Audits of Nonprofit Financial Management Practices

Various Assessments and Indicators

Audits

GENERAL RESOURCES

Sources of Online Assistance and Information

Resources for Nonprofits

Software to Help Manage Your Finances

Software for Nonprofits

Getting and Using Banking Services

Getting and Using Accounting Services

You should carefully consider whether you should hire an outside accountant, or hire your own employee. The IRS pays increasing attention to the hiring of independent contractors.
Potential Issues in Hiring Consultants (general information and IRS-related issues)

Have a Treasurer to Help You?

Fiscal Sponsorship — To Help Get Your Finances Started …

Miscellaneous Other Resources

Major Sites of Online Information

Also consider
Supersites

Learn More in the Library’s Blogs Related to Nonprofit Financial Management

In addition to the articles on this current page, also see the following blogs that have posts related to Nonprofit Financial Management. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

For the Category of Financial Management (Nonprofit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

January 18, 2022February 16, 2023

Basic Overview of U.S. Nonprofit Financial Management

Employees going through a financial report

Basic Overview of U.S. Nonprofit
Financial Management

Sections of This Topic Include

Description
Basic Bookkeeping Activities
Financial Statements
Financial Analysis
Financial Reporting

Also consider
Related Library Topics

(This information is referenced from the page Basic
Guide to U.S. Non-Profit Financial Management)

Description

The following basic overview will give you some overall perspective
on the basic processes involved in nonprofit financial management.
Key terms to learn are bolded . You’ll learn more about the key
terms later in subsequent sections when you return to Basic Guide to U.S. Non-Profit Financial Management

The following activities described on this page occur regularly
as part of the yearly accounting cycle. The accounting
cycle includes bookkeeping, generating financial statements and
analyzing information from the statements.

Basic Bookkeeping Activities

Bookkeeping is basically recording various financial
transactions. Bookkeeping activities can often by done by someone
who’s doing basic clerical work in the organization. Often, the
board treasurer can help you develop and carry out your bookkeeping
system.

Fiscal Policies and Procedures Manual (or Accounting
Procedures Manual)

The board develops and authorizes a set of procedures
for how the organization manages its finances, including how the
following activities are carried out by your organization. The
board treasurer usually coordinates the board’s responsibility
for the manual, including its regular review and update. The board
and chief executive should make every effort to ensure compliance
to the procedures in the manual.

Type of Accounting System and Recording of Financial
Transactions

Accounting starts with basic record keeping (or bookkeeping).
When your organization is just getting started, your bookkeeping
system will probably be based on what’s called a cash-basis
accounting system, rather than accrual-basis system.
Many organizations, when starting out, use the cash-basis system
and a checkbook to track transactions. In the “memo”
portion of the checkbook, they note if the amount depicted on
the check is an expense or revenue, and where the amount came
from or is going to. As your organization grows, you’ll begin
using ledgers to track transactions, for example, you’ll post
cash receipts to a cash receipts journal and checks you
write to a cash disbursements journal.

As your nonprofit grows and as you begin using the accrual
method, you’ll likely need more types of journals, for example,
a Cash Receipts Journal, Cash Disbursements Journal, Payroll Journal,
Accounts Receivable Ledger, Accounts Payable Ledger, Sales Journal,
Purchases Journal and General Ledger.

(In an accrual-basis system, you post entries when you earn
the money and when you owe it. Small organizations usually do
not have the resources to use an accrual-based system. However,
financial statements are prepared on an accrual basis. As a compromise,
many organizations use the cash-based basis to record entries
in journals, but get help to convert to an accrual-based basis
to generate financial statements.)

You can do postings using a single-entry or double-entry
method. Double-entry works from a basic accounting equation
“assets = liabilities + capital”. The double-entry method
makes sure that your books are always in balance. Every transaction
has two journals entries, a debit and a credit.
Each transaction effects both sides of the equation.

Each posting might refer to accompanying documents that you
keep in a file somewhere. For example, postings about cash receipts
might refer to invoices that you sent to a clients which prompted
them to write checks to your organization (checks which you posted
as cash receipts). For example, postings about cash disbursements
might refer to invoices that were sent to your organization which
prompted you to write checks (checks which you posted as cash
disbursements.) When you make a deposit to the bank, you’ll file
the bank’s deposit receipt in a file.

Manual or Automated Accounting System

Your record keeping system will be based on a manual system (where
you make entries and total them by hand) or a computer system.
You might even choose to outsource your record keeping system
to another business that manages your bookkeeping activities (along
with other financial management activities) for you.

Soon you may evolve to using a computer-based system, which
greatly automates entry of transactions, updating of ledgers,
generation of financial statements and financial analysis (more
on these later), and generation of reports needed for filing taxes,
etc. The only drawback to using a computer is that you might underestimate
the importance of knowing how your accounting processes really
work — that’s an advantage of doing the bookkeeping yourself,
if only for a few months. You should also generate your own financial
statements and financial analysis at least for a couple of months.
Having this knowledge and experience helps you develop an instinct
for getting the most out of your financial resources.

(We’ll talk more about that back in the topic Basic Guide to U.S. Non-Profit Financial Management, after
we’ve reviewed the rest of the information on this page.)

Accounts and Chart of Accounts

You’ll post each entry according to the category, or account,
of the transaction. Each account will be associated with an account
number. These numbers are referenced when developing your
financial statements (more on those later). You’ll refer to a
chart of accounts which will tell you what account
number to use when you post an entry. You can design your own
chart of accounts, including coming up with your own account numbers.
The chart usually have five areas, including assets, liabilities,
net assets (or fund balances), revenues, and expenses. The account
numbers you come up with should depend on the particular kinds
of revenues and expenses you expect to have most frequently.

However, nonprofits have to report account activity according
to the classifications functional (or programs)
and natural (or supporting). Program transactions are those
directly related to providing services to clients, members, etc.
Supporting transactions are those in common to all programs, for
example, general management costs, etc. It’s not always easy to
know which transactions belong to which category! We’ll also talk
more about managing program budgets back in the topic Basic Guide to U.S. Non-Profit Financial Management, after
we’ve reviewed the rest of the information on this page.

Budgets (Financial Forecasting)

You’ll have an operating budget (or annual
budget), which shows planned revenue and expenses,
usually for the coming year. Budget amounts are usually divided
into major categories, for example, salaries, benefits, computer
equipment, office supplies, etc. You might also have cash budgets,
which depicts the cash you expect to receive and pay over the
near term, for example a month. You also might have capital
budgets, which depict expenses to obtain or develop, and operate
or maintain major pieces of equipment, for example, buildings,
automobiles, computers, furniture, etc. Development of the budgets
is usually driven by the chief executive. In the case of corporations,
the board treasurer can take a strong role in developing and presenting
the budget to the rest of the board. The board is responsible
to authorize the yearly budgets.

You should develop a program budget, that is, a budget
for each major service you provide to clients. For example, a
transportation program, a child-care program. Many nonprofits
have more than one program. It’s critical to plan and track financial
costs for each program. As much as possible, nonprofits should
strive to minimize overhead or administrative costs, that
is, costs to support the resources that support the entire organization
and all programs, rather than just one program. Examples of administrative
costs are rent for a building, office supplies, labor costs for
personnel who support the central office or more than one program,
insurance, etc. It’s wise to develop a program budget that allocates
indirect costs to programs. There are several methods to do this.
We’ll also talk more about these methods back in the topic Basic Guide to U.S. Non-Profit Financial Management, after we’ve reviewed the rest of the information
on this page.

Usually, each month (during trial balancing — more on that
later), you’ll update your budget report to include actual revenue
and expenses. Then you can compare your planned revenue and expenses
to your actual revenue and expenses. This will give you a good
idea whether your operating according to plan or not, including
where you need to cut down on expenses and build up on revenue.

Petty Cash

You’ll have a lot of small, recurring expenses that you’ll
need to pay right away, for example, to buy a computer power cord,
stamps, etc. You’ll probably work from a petty cash fund.
You might establish this fund by writing a check to your organization,
and noting on the check that it goes to the “petty cash”
fund. You’ll withdraw from the fund by filling out a voucher that
describes who took the money, how much, for what and on what date.

Trial Balances

Usually, once a month, you’ll do trial balancing. Often,
the board treasurer can help with this activity. This activity
usually starts by totaling the entries from the journal(s) into
a general ledger. (As your business grows, you may
use other types of ledgers, too, for example for equipment, payroll,
etc.) When using double-entry accounting, you’ll add up totals
on both sides of the ledger to make sure that total debits equal
total credits.

You’ll make sure that the individual postings and totals are
correct by comparing each to its accompanying documentation. For
example, your recording of cash disbursements will be compared
to your bank’s monthly checking statement that indicates what
checks you wrote over the month. Your recording of cash disbursements
will also be compared to accompanying invoices and other forms
of billing to your organization, to verify there was a need for
each check that was written to pay bills.

Internal Controls

You will have various forms of internal controls to ensure
the business is following its plans, minimize the likelihood of
mistakes, avoid employee thefts, etc. There are a wide range of
internal controls. For example, you’ll be careful about whom you
hire. You might have authorization lists about who can access
which areas of the building, types of information, etc.

As mentioned above, you’ll carry over totals to various financial
reports, including your budget, to see if your financial activities
are according to plan or not. To minimize employee theft, the
business’s mail will be opened by one person who logs in each
check that is received. This person will be someone other than
the person who deposits the checks to the bank. Disbursements
of large amounts, for example, over $500, may require a secondary
signature, for example, from the board treasurer.

Another form of financial control is an audit. An audit
is a comprehensive analysis, by a professional from outside the
organization, of your financial management procedures and activities.
The auditor produces a report, with a variety of supplements,
that indicates how well your organization is managing its resources.
Some nonprofits are required to have audits. It’s usually good
practice to have an audit, whether you’re required to or not.

Financial Statements

In order to know how your organization is doing, you’ll
do some ongoing financial planning and analysis. In this planning
and analysis, you’ll likely use your bookkeeping information to
produce various financial statements, including a cash flow statement,
statement of activities and a statement of financial position.

Your cash flow statement depicts changes in your cash
during the year. Your statement of activities (known as
the income statement before) depicts the changes in your assets
over the past year. This statement is particularly useful to tell
you if you are operating with extra money or at a deficit. This
gives you a pretty good impression of your rate of revenues and
spending. It signals areas of concern, as well. Your statement
of financial position depicts the overall value of your organization
at a given time (usually at the end of the year), including by
reporting your total assets, subtracting your total liabilities
and reporting the resulting net assets. Net assets are reported
in terms of unrestricted, temporarily restricted
and permanently restricted assets. Funders often
want to see the statement of financial position. (You’ll learn
a lot more about financial statements, including examples, later
on back in the topic
Basic Guide to U.S. Non-Profit Financial Management).

Financial Analysis

By themselves, numbers usually don’t mean much. But
when you compare them to certain other numbers, you can learn
a lot about how your organization is doing. For example, you can
compare the planned expenses depicted on your budget to your actual
expenses in order to see if your spending is on track.

Another form of comparison is by using ratios. A ratio is a
comparison made by mathematically dividing one number by the other.
For example, nonprofits are expected to keep administrative costs
down in order to make more money available for programs. Dividing
a program’s expenses by your total expenses indicates the amount
of administrative overhead to run your program.

The interpretation of results from various types of comparisons
depends on the nature of the nonprofit. For example, an association
might expect to spend far less on administrative overhead than
would a social services agency during their first year. You’ll
learn a lot more about financial analysis back in the topic Basic Guide to U.S. Non-Profit Financial Management.

Financial Reporting

The types and frequency of reports depend on the nature
of the nonprofit and its situation. For example, if the nonprofit
is in some sort of crisis, the board may require frequent reports.

Your board should require regular financial reports at each
board meeting. When your organization is just getting started,
the chief executive will prepare and present financial reports
to the board. However, as the organization develops, a board treasurer
will likely take a strong role in helping the chief executive
to present financial information to the board. The finance committee,
led by the board treasurer, ensures that financial reports are
complete and helps present them to other members of the board.

The board may require a statement of financial position and statement of activities
at each meeting. They also may request descriptions of finances for each program
or of affordability for upcoming, major initiatives. They may request information
prior to filing taxes. They will certainly need to see any results from financial
audits. You’ll learn a more about financial reporting back in the topic
Basic Guide to U.S. Non-Profit Financial Management.

For the Category of Financial Management (Nonprofit):

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

All About Marketing

All About Marketing

Guidelines for developing, marketing and evaluating nonprofit programs are
included in the book Field Guide to Nonprofit Program Design, Marketing and Evaluation . The vast
majority of the guidelines apply to for-profit marketing as well.

Sections of This Topic Include

Basics and Planning

Basics — and Misunderstanding — About Marketing (below
on this page)
Market Planning

Inbound Marketing

Marketing
Research
Competitive
Analysis
Pricing
Positioning
(including writing your positioning statement)
Naming
and Branding

Outbound Marketing

Advertising
and Promotions
Public
and Media Relations
Sales
Customer
Service
Customer
Satisfaction
Social
Networking

Protecting Ownership of Your Products/Services

Intellectual
Property

Evaluating Your Marketing Efforts

Evaluating Your Marketing
and Advertising Activities

Marketing On Telephone and/or Online

Telemarketing
Email Marketing
Social
Networking
Online
Reputation Management

General Resources

Additional Perspectives on the Basics of Marketing
Additional Information
for Nonprofits
General Resources About Marketing

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to Marketing

In addition to the articles on this current page, also see the following blogs
that have posts related to Marketing. Scan down the blog’s page to see various
posts. Also see the section “Recent Blog Posts” in the sidebar of
the blog or click on “next” near the bottom of a post in the blog.
The blog also links to numerous free related resources.

Library’s
Marketing Blog
Library’s
Public and Media Relations Blog

Basics — and Misunderstandings — About Marketing

What is Marketing?

Before you learn more about marketing in the many links later on below topic,
you should first understand what marketing is, because the topic is so often
misunderstood. Marketing is the wide range of activities involved in making
sure that you’re continuing to meet the needs of your customers and are getting
appropriate value in return.

How Marketing is So Misunderstood

Far too often, organizations try to develop a product to meet customers’
needs without ever really verifying what the customers wanted in the first place.
Instead, those organizations make a strenuous effort to “sell” the
product through rigorous, ongoing advertising, promotions and publicity — through
“outbound” marketing. These organizations may have built a beautiful
ladder – but it may be entirely on the wrong roof! Far too often, that
lesson comes from painful experience.

Experienced organizations have learned that it is not their opinion that matters
most regarding whether their product is needed or not. The opinion that matters
most is that of the customers. These organizations have learned that they might
not know what they don’t know about their customers. That precious knowledge
about the customers comes from “inbound” marketing — through market
research to clarify customers’ needs and what they are willing to do to get
those needs met. If the inbound marketing is done well, the outbound marketing
is particularly easy — and effective.

Inbound Marketing Includes Market Research to Find Out:

What specific groups of potential customers/clients (markets) might have
which specific needs (nonprofits often already have a very clear community
need in mind when starting out with a new program — however, the emerging
practice of nonprofit business development, or earned income development,
often starts by researching a broad group of clients to identify new opportunities
for programs)
How those needs might be met for each group (or target market), which suggests
how a product might be designed to meet the need (nonprofits might think in
terms of outcomes, or changes, to accomplish among the groups of clients in
order to meet the needs)
How each of the target markets might choose to access the product, etc.
(its “packaging”)
How much the customers/clients might be willing pay and how (pricing analysis)
Who the competitors are (competitor analysis)
How to design and describe the product such that customers/clients will
buy from the organization, rather than from its competitors (its unique value
proposition)
How the product should be identified — its personality — to be most identifiable
(its naming and branding)

Outbound Marketing Includes:

Advertising and promotions (focused on the product)
Sales
Public and media relations (focused on the entire organization)
Customer service
Customer satisfaction

(Return to Table of Contents above)

Additional Perspectives on the Basics of Marketing

What’s
“Advertising, Marketing, Promotion, Public Relations and Publicity, and
Sales?”
Makin’
the Marketing Strategy Happen!
Numerous free
online resources
Top
6 Marketing Consultants Share Their Secrets
Get
Everyone on Your Marketing Team — 3 Steps
10 Marketing Musts
Marketing Basics for the Small Business
Small Business Marketing Strategy
Rules
of Marketing: Old vs. New
10 Things
They Don’t Teach You About Marketing in College
How
to Create a Powerful Marketing Message
What Are Some Marketing Mistakes That Companies Make?
Survey
of Marketing Executives’ Priorities
Marketing Can Do Better
Marketing’s
the Engine of a Growing Company
Four
Strategies for Marketing a Grand Opening
Reasons
Not to Combine Fundraising and Marketing Committees

General Resources About Marketing

Good Marketing
Ideas: a collection of marketing ideas and articles aimed at a variety of marketing
forms and business types. Includes offline and internet marketing as well as
non-profit marketing ideas.
Marketing Resource
Center
List
of useful articles
Industry Standard
Marketing Plan Do-It-Yourself Step by Step
Marketing Internet Library

20
Powerful Marketing Tips
Best
Practices and Marketing Case Studies
Question Marketing

For the Category of Marketing:

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

All About Business Proposals: Guidelines and Extensive Resources

All About Business Proposals: Guidelines and Extensive Resources

Sections of This Topic Include

Preparation

What is a Business Proposal?
Should I Just Use a Business Proposal Template?
Guidelines About Style of Writing to Use

First Learn About Prospect’s Organization

You Can Learn a Lot Just From Their Documentation
Meet With the Prospect Before Submitting Proposal?

Write Your Business Proposal

Draft Each Section of Your Proposal
Review Your Drafted Proposal

Submit Your Proposal

Submit Your Proposal
Follow Up to Your Proposal

Samples and Templates

Business Proposal Samples
Business Proposal Templates

Also consider
Related Library Topics

PREPARATION

What is a Business Proposal?

Definition of a Business Proposal

A business proposal is a documented, formal offer to provide a product and/or
service to a potential buyer (a prospect). The proposal can be in response to
a formal Request
for Proposal (RFP) which is a solicitation issued by the prospect that is
seeking bids from providers. The business proposal documents the provider’s
bid.

It typically includes brief description of the prospect’s problem, why you
can solve it better than anyone else, your general approach to solving it and
the approximate cost to solve it. It also includes brief description of your
organization and the people who will be working on the problem.

To get more of an impression of what a business proposal is, it would help
to look at some samples of business proposal samples.
However, do not start selecting a preferred sample to use now until you have
reviewed the guidelines in the rest of this Library topic.

Business Proposals and Business Plans Are Not the Same

In contrast to a business proposal, a business plan “is a formal written
document containing business goals, the methods on how these goals can be attained,
and the time frame within which these goals need to be achieved. It also describes
the nature of the business, background information on the organization, the
organization’s financial projections, and the strategies it intends to implement
to achieve the stated targets. In its entirety, this document serves as a road
map that provides direction to the business.” (Wikipedia).
Also see
All About Business Planning

Other Names for Business Proposals

There are various different terms used to refer to a business proposal, depending
on any conventions used by those requesting and/or offering the proposal. For
example, a business proposal is sometimes referred to as a “bid”,
which, in this context, is an offer of a product or service for a price. When
proposals are written by sales personnel, they often refer to them as sales
proposals. Another phrase used for a business proposal is a contract proposal.
If a proposal is in response to an RFP, then notice the terms used in the RFP.

Should I Just Use a Business Proposal Template?

The more your proposal is customized to the prospect’s needs, and to the culture
and style of their organization, the more likely that your proposal will win
a project with them. Standardized templates are not as likely to match the unique
features of your prospect as would your own customized proposal.

Also, if your prospect regularly issues RFP’s, then it is likely they have
already seen many of the standardized templates, including the one that you
had used for your own proposal. They might expect something more original and
customized from you.

However, if you still are committed to using a template, then you still will
benefit a great deal from reading the rest of the guidelines in the Library’s
topic. If you prefer to review some samples of business proposals now, then
this article provides several, as well as critiques each.
10 Best
Proposal Examples [With Critical Critiques]

Here is a link to numerous other samples, as well.
Business Proposal Samples

Guidelines About Style of Writing to Use

General Guidelines

Unless your prospect requires you to complete an online form when writing and
submitting your proposal,, you can tailor your proposal as much as you would
like. Consider these guidelines:

Your proposal will appear more credible if it is written on your organization’s
stationery, including its logo and coloring.
Standard business writing often uses Times Roman font, 12-point sizing and
1-inch margins. In addition, consider the guidelines in Business
Writing Tips for Professionals.
Number all of the pages and mark them as “confidential”.
If you received an RFP, then write in the same style and format as the RFP.
If you had met with the prospect before writing the proposal, then write in
the style of the conversation that you had.
Avoid the use of jargon — words or acronyms specific to your industry,
product or service. Otherwise, define them before you use them.
Avoid the use of humor. While it can invite a relaxed and casual atmosphere
in communications, there are too many risks that it would be misunderstood
or offensive.
In the case of an RFP, express your gratitude for the prospect’s providing
the RFP to you.
Despite the importance of your proposal, you should still format it so that
it can be skimmed. Use short paragraphs with titles. Do not repeat sentences
or other information. Use graphics and tables to quickly depict numerical
information.
If you submit your proposal online, be sure your prospect could read it
on a small tablet or smart phone, that is, that your proposal can be shrunk
to that size.
Unless you’re convinced that the prospect will not have many proposals to
review, you should limit your proposal to the number of pages that the prospect
could grasp in 5-6 minutes.
Write confidently, but avoid exaggerations. Too much of that will hurt your
credibility.

Polish Your Writing Skills?

As far as your prospect is concerned, the quality of your writing shows the
quality of your products and services. So, if you do not have complete confidence
in your writing skills, then you would benefit from reviewing guidelines in
the following topics. After you have drafted your proposal, you should have
it reviewed by at least one person will strong skills in proof reading documents.
Vocabulary
| Spelling
| Grammar
| Writing
for Readability | Reviewing
Your Writing

FIRST LEARN ABOUT PROSPECT’S ORGANIZATION

You Can Learn a Lot Just From Their Documentation

You can learn a great deal about your prospect’s organization, even without
having met the prospect in person. That learning can help you to match your
proposal and other communications to the culture and style of their organization.
That, in turn, can make your proposal even more persuasive and credible to your
prospect.

For example, look at the prospect’s website, annual report, sales literature
and the Request for Proposal. Some things to look for are:

Completeness – Have they produced the typical documents
that you would expect for their particular stage in organizational development?
If so, then they probably value completeness and accuracy.
Currency – How up-to-date is the documentation? If
it’s up-to-date, then they probably value timeliness.
Scope – Does the documentation include the typical
contents of that particular type of document? If so, then they probably have
good knowledge of standard management documents — and so should you.
Depth – How in-depth is the content of the document?
If it is in-depth, then they probably value thoroughness.
Alignment – For example, does the content between
the documents seem consistent and complementary? If so, then they probably
are fairly clear in their thinking and management.
Authorship – Who has developed the various documents?
If it is appropriate authors, for example, the CEO is not doing the Board’s
documents, then they probably value having clear roles.

So what have you learned about:

How their culture values completeness, timeliness, understanding and accuracy,
thoroughness, clear thinking and management?
How might you customize your proposal and other communications to match
their culture and style?

Meet With Your Prospect Before Submitting Proposal?

If your prospect regularly issues RFPs, then it is not likely that they are
willing to meet with the bidder’s to their RFPs. Instead, they opt to write
very specific RFPs and rely on those to help them to reliably select the best
providers.

Otherwise, it can be extremely useful to first meet with your prospect. The
sections below suggest what questions to ask in the meeting. In that meeting,
don’t forget to use strong people skills including the following:
Interviewing
| Listening
| Non-Verbal
Communications | Questioning
| Building
Trust

Learn More About the Prospect’s Problem

In the meeting, useful questions to ask include:

Why do they want to address the situation now?
What did they see or hear that brought them to that conclusion?
What will happen if nothing is done?
What has been the effect of the problem on the rest of the organization?
What have they done so far about the situation?
What happened as a result of their efforts so far?
How did they conclude that they needed a consultant now?
Respectfully and tactfully ask, what might be their role in causing the
problem?
What do they consider to be success
now? What would the situation look and feel like after the problem has been
solved?
What is the budget for doing the project?
What is the timing, especially any deadlines for completion?

Learn More About the Prospect’s Organization

For example, ask:

How do you like to make decisions and solve problems?
What is unique about the culture of your organization?
How can a consultant best work in that culture?
How do you prefer to communicate? In-person? In writing?
What is your approach to situations, for example, do you refer to “problems”
or “opportunities”?
Do you talk most about the “business” side of the organization
or the “people” side?
What do you know about change management? How would you like to learn?
What is the personality of your meetings?

For more guidelines for this meeting with your prospect, see
How
to Do the First Meeting With Your Client

WRITE YOUR BUSINESS PROPOSAL

Draft Each Section of Your Proposal

There is no standard format for a business proposal. If the prospect issued
an RFP, then notice if it suggests a certain format that you are to follow.
The following sections are typical across the different types of formats. When
writing each section, don’t forget the above Guidelines About
Style of Writing to Use.

Cover Letter

This should be a one-page letter with your company letterhead (logo and coloring).
It is not part of the proposal itself, but accompanies it. Be sure that the
cover letter:

Is addressed directly to the contact information that you were told to submit
the proposal to. An RFP would specify that contact information.
Thanks them for the opportunity to submit a proposal.
Asserts your confidence that your organization can very effectively meet
their needs in a timely manner.
Avoids duplicating information that is already in the proposal.
References the attached proposal by the exact title and date.
Includes your direct contact information.
Includes your original signature (not a copy).

Be reluctant to set a deadline for them to get back to you because that raises
the risk that it won’t match their timelines.

Cover Page

The phrases “cover page” and “title page” (below) are sometimes
used interchangeably because their contents are so similar. Because of duplication
with contents of the title page, it may not be necessary to include a cover
page in your proposal unless an RFP specifies to include it.

Some proposal writers prefer to have a cover sheet that encapsulates the proposal.
It includes the title of the proposal and perhaps the organization’s logo and
color scheme. If a cover sheet is included, then there also is a back cover
at the end of the proposal, and it duplicates info from the cover sheet.
Example
of Cover Sheets

Title Page

As mentioned above, the phrases “cover page” and “title page”
are sometimes used interchangeably because their contents are so similar. The
title page typically includes:

Title of the proposal
Date of the completed proposal
Title of the author
Brief description of the purpose of the proposal (4-5 sentences)
Direct contact information of the key contact in the prospect’s organization
Direct contact information of the person in your organization who is knowledgeable
about the proposal

Examples of Cover Pages

A table of contents is very useful if your proposal will be more than four
pages long. Along with associating page numbers with topics, the listing of
the topics themselves can be used to quickly convey the nature and organization
of the content in the proposal.

It is very handy if the titles can be active Web links, so the reader can conveniently
click on a title and immediately be transferred to that section in the proposal.

Executive Summary

Because the Executive Summary is a summary of the highlights of the proposal,
it is usually best to write the Summary after having written the other sections
in the proposal. Highlights to be sure to include are clear, concise and persuasive
descriptions of:

Your excitement and confidence in submitting your proposal
The prospect’s problem, including its adverse impacts on their organization
Your proposed solution, and how it particularly suits the nature and needs
of your prospect’s organization
Listing of the key benefits of your solution in their organization, including
reference to relevant research and results regarding your solution
Your proposed methodology toward the solution, and how it is relevant, realistic
and flexible to their needs
Your unique value proposition — how your company is the
prospect’s best choice among your competitors

How to Write an
Executive Summary for Your Proposal
How
to Write a Business Proposal Executive Summary
How
to Write an Executive Summary for Your Proposal

Introduction

Some RFPs specify an introduction that briefly describes your organization,
including its mission, strategic priorities, history, successes and why it is
an excellent choice for your prospect’s situation.

This section might not be needed if you plan to include more information, for
example, about your products and services and any personnel who will be involved
in the work with the prospect. In that case, you might instead include a section
later on, such as “Company Overview” (later on below).

Statement of the Problem

Here is where you show that you completely understand the current need that
your prospect has, whether they refer to it as a “problem”, “priority”
or “goal”.

In this section, focus on what you can provide. The next section explains
how you can provide it. Don’t forget to consider any learning that
you got from previously reviewing the prospect’s documentation, as well as if
you had met with the prospect in person, as explained above. In this section,
include brief descriptions of at least the following:

The prospect’s need in terms of the problem or the significant goal to be
addressed
What the adverse effects will likely be if the prospect’s problem is not
solved
How your product or service will meet that need
What overall success will look like after the need was met
Individual outcomes, or benefits, to the organization that together will
comprise that success

In the case of an RFP, your descriptions should closely match — but without
exactly copying — the wording that your prospect wrote in the RFP. Your tone
should convey a sense of urgency to meet the need, and yet strong confidence
in what you can provide.

It can be very powerful to include a testimonial or two now from a previous
client in whose organization you were successful in solving a problem similar
to the prospect’s.
How
to Write a Problem Statement for Business
How to Write
a Problem Statement

Methodology (Outcomes, Deliverables and Timelines)

List Outcomes and Methodologies to Achieve Each

Here is where you specify how you will achieve the what that
you had specified in the above information about the problem. The “how”
is best explained in terms of action plans that are associated with each outcome
that you itemized in the above Statement of the Problem. For each outcome, specify:

Tangible deliverables, for example, documented assessment plans, status
reports, presentations and post-assessment reports.
Who will produce and provide each deliverable.
To whom it will be provided and by when (timetables).

The following article can be very useful when developing and associating action
plans with individual outcomes or goals:
Guidelines
and Resources for Action Planning Phase of Consulting

Organize Methods Into Various Project Phases?

This information is most concisely and clearly depicted in the form of a table.
For complex or long projects, it might be most understandable if you organize
the outcomes and associated methodologies into various phases, for example:

Phase 1 – Diagnostic and Pre-Assessment
Phase 2 – Implementation
Phase 3 – Post-Assessment and Follow-Up

Be Careful About Finalizing Methodologies

It might be that, if your prospect hires you, then further exploration (or
discovery) into the problem
might reveal that what the prospect thought was the problem was actually just
its symptoms.

Thus, there might be a different problem and methodology required than what
was originally described in your proposal. So be sure to specify that your proposed
methodology is in accordance with the current problem reported by the prospect.

Pricing and Payment Terms

Use Detailed or Overall Pricing?

There are different viewpoints about how to derive the pricing in business
proposals. Some experts advise not including detailed pricing, for example,
per-hour pricing. They suggest that your pricing should be based on the overall
value of the outcomes that your products and services will achieve for the prospect.

Others advise that detailed, for example, per-hour pricing, is the most understandable
and, thus, the most credible way to present that information to prospects.

If you have an RFP, be sure to reference how the prospect wants the pricing
information to be described. These articles provide very useful guidelines to
selecting which approach to use.
Consulting Fees and
Rates: How Much Should I Charge?
How to Determine
Consulting Fees
Guide to
Value-Based Pricing for Consultants: 10 Experts Share Their Fee Strategies

Payment Terms

In this section, specify your proposed payment schedule, including:

When you will invoice the client
Which prices are to be paid and when, including any initial and final payment
amounts
How prices are to be paid, for example, in US dollars
Interest and penalties for late payments

Mention any additional payment options, for example, early payments or lump-sum
payments. Mention that your proposed schedule can be adjusted to suit any standard
payment terms used by your prospect.

Terms and Conditions

The decision now is to decide what should be included here in the business
proposal compared to what should be specified later on in a contract if your
prospect selects your proposal. Be sure to reference an RFP if available to
discern what should be included in your proposal. It might require that you
specify terms regarding:

Proposed roles and responsibilities of the prospect’s and your organizations
Terms of confidentiality
Ownership of intellectual property
Licensing and bonding

Different experts would assert that certain information should always be included
in a business proposal and others would assert that the contract is the most
appropriate place to specify terms other than payment terms.
Core Elements to
Include in a Consulting Contract
How
to Do Consulting Proposals and Contracts
Protect
Your Business with Proposal Terms & Conditions

Company Overview

Here is where you impress the prospect with the appropriateness and credibility
of your company’s expertise and resources. Include:

Mission of your organization
Legal structure
Key personnel and resumes
Professional code of ethics
Key awards, presentations and publications
Testimonials relevant to the prospect’s problem
Case studies that more fully depict similar projects, including their problem,
methods and solutions

Signature Pages

Here is where you include the original signature of those who composed the
proposal. Be sure to sign in blue ink, which more readily indicates that the
signatures were not merely copies of original signatures.

Similar to the Terms and Conditions section, if your proposal is including
terms and conditions that typically would be in a contract, then specify the:

Positions
Dates
Agreement that is assumed by the signature, for example “By signing
this document, you agree to the terms and conditions specified herein”

Appendices

In this section, include information and materials that further explain the
information in the body of the proposal, for example:

Resumes
Graphics and charts
Testimonials

In order to accommodate the likely tight schedules of prospects who will be
reviewing numerous proposals, title the Appendices as “Supplemental Information
and Materials” to indicate that it is optional for the prospect to read.

Review Your Drafted Proposal

Have someone else review your proposal, ideally someone who is somewhat familiar
with your product or service. Have them follow this checklist:

If you are following an RFP, does your proposal exactly match the requirements
specified in the RFP?
Are there any spelling and grammatical mistakes? Avoid common
mistakes in vocabulary and grammar, for example, use of “affect”
for “effect”.
Check apostrophes and quotation marks to be sure they are used correctly.
Do your numbers total correctly, for example, in your pricing?
Do the deliverables seem reasonable? Are the timelines reasonable with each
deliverable?
Read the document aloud to someone, and ask them to interrupt where the
document does not make sense or seems repetitive.
Focus especially on condensing the wording. Avoid
These Filler Words in Your Writing.

SUBMIT YOUR BUSINESS PROPOSAL

Submit Your Proposal

Electronic Submission

If your prospect prefers that you submit your proposal electronically, then
attempt to include a read receipt, that is, verification that the proposal was
indeed received by the prospect. Also, print out any response from the electronic
system that indicates that your proposal was received.

If you are concerned about the electronic submission changing any of your formatting
or preferred writing style, then you might also email your proposal. However,
if the prospect is likely to receive many proposals, then they are very likely
to screen out any proposals that do not closely match the requirements specified
in the RFP.

Make Changes to Your Submitted Proposal?

If you prefer to make any changes to a proposal that was already submitted,
then be sure to change the date of the proposal, especially on the title page.
Be sure to notice if an RFP specifies any deadlines for changes to submitted
proposals.

Similarly, if your prospect suggests changes to the proposal, then be sure
to change the date of the proposal. If you expect several changes, then it might
be useful to include a Revision Page in the proposal that specifies the dates
and nature of each change.

Follow Up to Your Proposal

Contact Prospect About Your Submitted Proposal?

If an RFP specifies dates in which the proposals would be reviewed and a candidate
selected, then be reluctant to contact the prospect beforehand. If you do, then
do it only once, so as to not irritate those processing the proposals, especially
if the prospect is likely to be reviewing numerous proposals.

Preparation for Interviews by Your Prospect

If your prospect selects you for a follow-up interview, then you should carefully
prepare. Guidelines to consider for the interview include:

Study the RFP one more time to be sure you understand the prospect’s problem.
Review your proposal one more time to be sure you can concisely answer any
questions they might pose about its contents.
If you had not met with the client before, then during the interview, consider
posing the questions listed above in the section Meet With
the Prospect? It can be very impressive to the prospect that you had thought
of such useful questions.

These articles in the Library will also be useful:
How to
Interview for a Job
P
is for Poise and Persuasion
Tips
On Presenting A Proposal

SAMPLES AND TEMPLATES

Business Proposal Samples

PandaDoc
Sample
Business Proposal
Venngage
Business
Proposal Sample
Free
Business Proposal Samples

Business Proposal Templates

Proposal Templates
Free Business
Template
Business Proposal Form
Free
Business Proposal Template
Free Proposal Templates

Learn More in the Library’s Blogs Related to Marketing

Library’s
Marketing Blog
Library’s
Public and Media Relations Blog

For the Category of Marketing:

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Management Function of Coordinating / Controlling: Overview of Basic Methods

Management Function of Coordinating / Controlling: Overview of Basic Methods

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.
Adapted from the Field Guide to Leadership and Supervision in Business
and Field Guide to Leadership and Supervision for Nonprofit Staff.

Basically, organizational coordination and control is taking a systematic approach to figuring out if you’re doing what you wanted to be doing or not. It’s the part of planning after you’ve decided what you wanted to be doing. Below are some of the major approaches to organizational control and coordination.

Sections of This Topic Include

Introduction – “Controlling” Getting a Bad Rap?
Administrative Controls
Delegation
Evaluations
Financial Management
Performance Management
Policies and Procedures
Quality Control and Operations Management
Risk, Safety and Liabilities
Additional Perspectives on the Management Function of Coordinating

Also consider
Related Library Topics

Learn More in the Library’s Blogs Related to the Management Function of Controlling

In addition to the articles on this current page, see the following blogs which have posts related to the Management Function of Controlling. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog.

Introduction: “Control” Getting a Bad Rap?

Many People Are Averse to Management “Control”

New, more “organic” forms or organizations (self-organizing organizations, self-managed teams, network organizations, etc.) allow organizations to be more responsive and adaptable in today’s rapidly changing world. These forms also cultivate empowerment among employees, much more than the hierarchical, rigidly structured organizations of the past.

Many people assert that as the nature of organizations has changed, so must the nature of management control. Some people go so far as to claim that management shouldn’t exercise any form of control whatsoever. They claim that management should exist to support employee’s efforts to be fully productive members of organizations and communities — therefore, any form of control is completely counterproductive to management and employees.

Some people even react strongly against the phrase “management control”. The word itself can have a negative connotation, e.g., it can sound dominating, coercive and heavy-handed. It seems that writers of management literature now prefer use of the term “coordinating” rather than “controlling”.

“Coordination” Must Exist or There’s No Organization — Only an “Experience”

Regardless of the negative connotation of the word “control”, it must exist or there is no organization at all. In its most basic form, an organization is two or more people working together to reach a goal. Whether an organization is highly bureaucratic or changing and self-organizing, the organization must exist for some reason, some purpose, some mission (implicit or explicit) — or it isn’t an organization at all. The organization must have some goal. Identifying this goal requires some form of planning, informal or formal. Reaching the goal means identifying some strategies, formal or informal. These strategies are agreed upon by members of the organization through some form of communication, formal or informal. Then members set about to act in accordance with what they agreed to do. They may change their minds, fine. But they need to recognize and acknowledge that they’re changing their minds.

This form of ongoing communication to reach a goal, tracking activities toward the goal and then subsequent decisions about what to do is the essence of management coordination. It needs to exist in some manner — formal or informal.

The following are rather typical methods of coordination in organizations. They are used as means to communicate direction and guide behaviors in that direction. The function of the following methods is not to “control”, but rather to guide. If, from ongoing communications among management and employees, the direction changes, then fine. The following methods are changed accordingly.

Note that many of the following methods are so common that we often don’t think of them as having anything to do with coordination at all. No matter what one calls the following methods — coordination or control — they’re important to the success of any organization.

Various Administrative Controls

Organizations often use standardized documents to ensure complete and consistent information is gathered. Documents include titles and dates to detect different versions of the document. Computers have revolutionized administrative controls through use of integrated management information systems, project management software, human resource information systems, office automation software, etc. Organizations typically require a wide range of reports, e.g., financial reports, status reports, project reports, etc. to monitor what’s being done, by when and how.

Delegation

Delegation is an approach to get things done, in conjunction with other employees. Delegation is often viewed as a major means of influence and therefore is categorized as an activity in leading (rather than controlling/coordinating). Delegation generally includes assigning responsibility to an employee to complete a task, granting the employee sufficient authority to gain the resources to do the task and letting the employee decide how that task will be carried out. Typically, the person assigning the task shares accountability with the employee for ensuring the task is completed. See Delegation.

Evaluations

Evaluation is carefully collecting and analyzing information in order to make decisions. There are many types of evaluations in organizations, for example, evaluation of marketing efforts, evaluation of employee performance, program evaluations, etc. Evaluations can focus on many aspects of an organization and its processes, for example, its goals, processes, outcomes, etc. See
Evaluations (many kinds)

Financial Statements (particularly budget management)

Once the organization has establish goals and associated strategies (or ways to reach the goals), funds are set aside for the resources and labor to the accomplish goals and tasks. As the money is spent, statements are changed to reflect what was spent, how it was spent and what it obtained. Review of financial statements is one of the more common methods to monitor the progress of programs and plans. The most common financial statements include the balance sheet, income statement and cash flow statement. Financial audits are regularly conducted to ensure that financial management practices follow generally accepted standards, as well. See For-Profit Financial Management and Nonprofit Financial Management.

Performance Management (particularly observation and feedback phases)

Performance management focuses on the performance of the total organization, including its processes, critical subsystems (departments, programs, projects, etc.) and employees. Most of us have some basic impression of employee performance management, including the role of performance reviews. Performance reviews provide an opportunity for supervisors and their employees to regularly communicate about goals, how well those goals should be met, how well the goals are being met and what must be done to continue to meet (or change) those goals. The employee is rewarded in some form for meeting performance standards, or embarks on a development plan with the supervisor in order to improve performance. See Basic Overview of Performance Management.

Policies and Procedures (to guide behaviors in the workplace)

Policies help ensure that behaviors in the workplace conform to federal and state laws, and also to expectations of the organization. Often, policies are applied to specified situations in the form of procedures. Personnel policies and procedures help ensure that employee laws are followed (e.g., laws such as the Americans with Disabilities Act, Occupational Health and Safety Act, etc.) and minimize the likelihood of costly litigation. A procedure is a step-by-step list of activities required to conduct a certain
task. Procedures ensure that routine tasks are carried out in an effective and efficient fashion. See Personnel Policies.

Quality Control and Operations Management

The concept of quality control has received a great deal of attention over the past twenty years. Many people recognize phrases such as “do it right the first time, “zero defects”, “Total Quality Management”, etc. Very broadly, quality includes specifying a performance standard (often by benchmarking, or comparing to a well-accepted standard), monitoring and measuring results, comparing the results to the standard and then making adjusts as necessary. Recently, the concept of quality management has expanded to include organization-wide programs, such as Total Quality Management, ISO9000, Balanced Scorecard, etc. Operations management includes the overall activities involved in developing, producing and distributing products and services. See Quality Management and Operations Management.

Risk, Safety and Liabilities

For a variety of reasons (including the increasing number of lawsuits), organizations are focusing a great deal of attention to activities that minimize risk, avoid liabilities and ensure safety of employees. Several decades ago, it was rare to hear of an organization undertaking contingency planning, disaster recovery planning or critical incident analysis. Now those activities are becoming commonplace. See

Additional Perspectives on the Management Function of Coordinating

For the Category of Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

All About Nonprofit Fundraising – Guidelines and Resources

Sections of This Topic Include

Additional Resources

Fundraising Basics – Sources and Responsibilities

Typical Funding Sources and Advantages and Disadvantages of Each

Who is Responsible for Fundraising in a Nonprofit?

Fundraising for New Nonprofits

Numerous Additional Resources About Basics of Fundraising

Fundraising Laws and Ethics

Laws

Ethics

Fundraising Leadership: Committees, Board and Other Volunteers

Role of the Nonprofit Board Fundraising Committee

What’s the Primary Role of Any Board Committee?

What’s the Primary Role of a Fundraising Committee? What Are Its Ongoing Responsibilities?

1. Ensure there’s a specific fundraising target

2. Ensure prospect research occurs to identify how much money might be raised from different types of resources

3. identify specific, potential sources of funds from a diverse mix of sources

4. Develop an action plan about who is going to approach what source, how and by when

5. Compile the results of items 1, 2, 3 and 4 into a Fundraising Plan that is approved by the Board

6. Ensure effective administrative systems to track grants and donations

Summary — Job of the Fundraising Committee is to Ensure Planful, Strategic Fundraising

Numerous Additional Resources About Basics of Fundraising Leadership

Development Staff: Director of Development and Other Staff

Does Your Organization Need a Director of Development?

Numerous Additional Resources About Development Staff

Fundraising Method: Direct Appeals

Direct Mail Donor Retention

Numerous Additional Resources About Direct Appeals

Fundraising Method: Grants — Foundation and Corporate

Is Your Organization Ready to Start a Grants Program … or Even Submit your First Proposal? (Part 1 of 2)

Numerous Additional Resources About Grants: Foundations and Corporate

Grants Management

Designing Evaluation Methodologies to Include in Your Grants

Fundraising Method: Grants — Government (Public Grants)

Introduction To Government Grants

What Is A Government Grant ??

Examples of Federal and State Government Grants:

Who Is Eligible to Receive Federal and State Grants:

Numerous Additional Resources About Grants: Foundations and Corporate

Fundraising Method: Special Events

Special Events: Cost Per Dollar Raised

Numerous Additional Resources About Special Events

Fundraising Method: Annual Funds

The Annual Fund Is Obsolete

Additional Resources About Annual Funds

Fundraising Method: Major Gifts and Planned Giving

What is a Major Gift ??

Numerous Additional Resources About Major Gifts and Planned Giving

Fundraising Method: Capital Campaign and Endowment Fundraising

Capital Campaigns – Part #1 of 14: What They Are

Numerous Additional Resources About Capital Campaigns

Fundraising Online Using the Internet/Web

Mobile Fundraising: Practical Advice

Numerous Additional Resources About Fundraising Online

Using Email and Social Media in Fundraising

Fundraising Resources On the Net

Online Donation Services, eg, Credit Card services and Matching Programs

Online Shopping Malls that Donate to Nonprofits

General Resources About Online Fundraising

Fundraising Software

Donor Communications and Recognition

A Variety of Thoughts on Donor Recognition

Numerous Additional Resources About Donor Recognition

Fundraising Planning (Tying It All Together)

The Planning Study: (Part #1 of 3 — Almost Always The First Step)

Numerous Additional Resources About Planning Your Fundraising

Hiring Fundraisers and Paid Solicitors

Who/What Is A Fundraising Consultant??

Should You Hire a Fundraiser?

If So, How Much Should They Be Paid?

If You’re Asked to Be a Fundraiser

Potential Pitfalls with the IRS

Evaluating Your Fundraising Knowledge and Practices

Related — But Sometimes Not Necessarily Related — Topics (Social Enterprise, Pro Bono, Sponsorship, Revenue Streams)

Social Enterprise

Gifts of Other Than Money

Cause-Marketing

Corporate Sponsorships

Building Multiple Revenue Sources (Diversifying Revenue Streams)

Related — But Sometimes Not Necessarily Related — Topics
(Social Enterprise, Pro Bono, Sponsorship, Revenue Streams)

The Fundraising Series – Book 1 – The Basics:
Perceptions & Realities

The Fundraising Series – Book 3 – Guidance
For The New Nonprofit

The Fundraising Series – Book 4 – Major Gifts:
Planning and Implementation

The Fundraising Series – Book 6 – Grants &
Grantsmanship

The Fundraising Series – Book 7 – Finding &
Getting Federal Government Grants