Category: Finance

As the year-end approaches, and since most non-profits use the calendar year for their tax returns, I wanted to highlight a few important aspects of a charity’s CFC application, and its financial management practices.

First, in terms of applying to the CFC, there are three size categories with different levels of financial reporting required. These size categories apply to all types of CFC charities: local, national, and international and are based on the financial size of the organization – with the requirements more stringent for larger non-profits.

The size categories are:
   •  Revenue greater than $250,000; an audit is required to be submitted
      with the CFC application.
   •  Revenue is less than $250,000 but more than $100,000. The charity
      must use the accrual accounting method and have an audit done
      annually by an independent CPA, but this is not submitted with the
      CFC application.
   •  Revenues less than $100,000, the non-profit must make financial information available in a timely manner, but accrual accounting is not required.

Full requirements for the 2013 CFC application are found at: opm.gov/cfc.
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§ Organizations with $250,000 or more in annual revenue, as reported on the IRS Form 990, are required to submit an annual audit of fiscal operations by an independent certified public accountant in accordance with Generally Accepted Auditing Standards (GAAS). The audited financial statements and IRS Form 990 must be prepared using the accrual method of accounting and cover the same fiscal period that ended not more than 18 months prior to January 2013 (i.e. ending on or after June 30, 2011).

Include as Attachment C a copy of the auditor’s report and the organization’s complete audited annual financial statements. The audited financial statements must include all statements and audit notes as required by GAAP. The Independent Auditor’s Report must include the signature of the auditor or the auditing firm.

The organization must certify that it accounts for its funds in accordance with Generally Accepted Accounting Principles (GAAP) and has an audit of its fiscal operations completed annually by an independent certified public accountant in accordance with GAAS.*

§ [For] Organizations with total revenue of at least $100,000 but less than $250,000: the certifying official must certify that the organization accounts for its funds in accordance with GAAP and has an audit of its fiscal operations completed annually by an independent certified public accountant in accordance with GAAS. The organization is not required to submit a copy of the audited financial statements with the CFC application. However, the information must be provided to OPM or the LFCC upon request.*

§ Organizations with total revenue of less than $100,000: the certifying official must certify the organization has controls in place to ensure funds are properly accounted for and it can provide accurate timely financial information to interested parties. It is not required to submit financial documentation with the CFC application or maintain its financial records in accordance with GAAP.

* Note that GAAP requires the use of the accrual method of accounting. No other basis of accounting is acceptable under GAAP. The cash basis, modified cash basis, modified accrual, and any other methods are not acceptable. (Emphasis added by author.)
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If your non-profit has been just under the $100,000 size and has now grown to above $100,000 it has two new requirements in terms of financial management:
      It will need to have an audit performed by an independent CPA and
      it will be required to use the accrual method of accounting.
It can be argued that this transition is more significant to an organization than at any other level, so it is important to plan for it, and budget for it.

All CFC Applications Require a Full/Complete 990 to be submitted, even if your non-profit (i.e., religious organizations) is not required to submit a 990 to the IRS or can use one of the shorter forms (990-EZ). The CFC application requires at least a pro-forma 990, signed by the authorizing official, as if it were to be submitted to the IRS. With modern tax preparation software, this is not usually hard to do, but more information is required for a complete 990, even if the full 990 is not submitted to the IRS. Just remember to have your tax-preparer prepare a pro-forma 990 in addition to the one required by the IRS.
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We’ll be taking a break until January 8th. All of us posting to the Fundraising Blog wish you and yours a healthy, happy….
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During his 25-year career in the Federal sector, Bill Huddleston, The CFC Coach, served in many CFC roles. If you want to participate in the Combined Federal Campaign, maximize your nonprofit’s CFC revenues, or just ask a few questions, contact … Bill Huddleston
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There is a philosophy, widely subscribed to in the n-p sector, that views nonprofit start-ups as having a responsibility to the sector and to society to prove themselves viable before looking to raise funds from (too far) outside of the founding group.

Just because they may have a valid purpose, and may come to serve a real need in society, doesn’t mean that they are viable. The broader community should not be asked to fund a start-up until the founders have proven that the NPO can-and-will survive.

Many (most) foundations operate on the premise that there are too many needs and too many needy people to waste resources (money) on those NPOs that can’t survive.

Unless a new NPO has a “guarantee” of sufficient income from government support, fees-for-service and/or a huge endowment, there will, at some point, have to be a reliance on fundraising.

If a group of “founders” can’t or won’t (financially) support and get those people close to them to support their own organization, why would any individual or foundation want to risk their resources on an organization that’s not proved its viability?

There have been too many organizations where the “founders” have bragged about giving of their time, effort and heart; but they steadfastly refuse to commit their own funds.

That is the stage in the life cycle of an NPO where they are most likely to fail — where they (the founders) won’t give, but expect others to support what they consider important !!??

There’s no rule that says that every NPO has to survive, or should !! As “rich” as society might be, there are limited funds available for NPOs, and only those that prove themselves viable, should get some of society’s resources.

An NPO that cannot prove its viability (probably) shouldn’t be seeking broad support … and probably shouldn’t survive.
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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at [email protected]
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

Once you have decided to apply for a federal grant, you must focus your nonprofit organization’s people and resources on the application process, which is likely to take at least a month. However, first you should determine whether you have all the requirements in place to apply.

This financial checklist will define (suggest) the steps you need to take before you can apply for a federal grant.

□  Is your organization incorporated?

□  Has the Internal Revenue Service classified your organization as a tax-exempt entity?

□  Has your Board of Directors formally decided that it is appropriate for you to seek and accept government grants?

□  Is your Board of Directors aware that you intend to apply for a specific federal grant?

□  Are your organization’s financial records audited annually by an independent outside public accountant? Was the most recent auditor’s report a “qualified” report?

□  Have you reviewed the grant guidelines to determine the financial requirements? Can your organization meet them?

□  Is there someone in your organization who can put together the financial components of the grant application – the budget and budget narrative?

□  Is your organization aware of current federal grant policies and procedures that relate to the use of government funds?

□  Do you have the organizational financial policies, procedures, and practices in place to use government grant funds legally and ethically?

□  Is your organization prepared to be audited by a federal agency before a grant is awarded or at the conclusion of the grant period?

There are two basic components of any federal grant. One is programmatic and the other is budgetary. Before you apply for a federal grant, you should ensure that you have the ability to properly manage and disperse federal grant funds.
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Dr. Jayme Sokolow, founder and president of The Development Source, Inc., helps nonprofit organizations develop successful proposals to government agencies. Contact Jayme Sokolow.
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Have you seen The Fundraising Series of ebooks ??
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

It’s common, especially for new or small nonprofits, to combine the responsibilities for fundraising and marketing into the same Board committee — after all, both functions include “getting the word out.” That’s what they have in common. But they have much more that is not in common.

Part of a Fundraising Committee’s job is to ensure that the right words are customized to each appropriate funder — to one group of stakeholders. However, part of a Marketing Committee’s job is to ensure that the right words are customized to many different groups of stakeholders, e.g., current and future clients, collaborators, community leaders, suppliers, researchers, educators, etc. (Strong relationships with many stakeholders often results in more donations.)

Combining the two Committees often results in doing neither role very effectively. So to do Fundraising and Marketing very well, they should be done separately. Here’s why:

Responsibilities of a Good Marketing Committee

The Committee follows this general sequence during the year. It might seem like a lot at first, but it’s actually working smarter, rather than harder.

Responsibilities of a Good Development/Fundraising Committee

The Committee follows this general sequence during the year.

In my June 6, 2011 post, I introduced “A Four-Step Process for Effective Grantsmanship,” including: (1) prospecting for foundation funding, (2) cultivation, (3) grant proposal development, and (4) grant management and stewardship.

So far, I’ve provided a lot of introductory information on foundation and corporate grants, organizational readiness, grant management, and information on the first step in the four-step grantsmanship process: prospecting for foundation funding.

This is my first post on the third step in the process: Grant Proposal Development.

For those new to grantsmanship and grant writing, this step may be the most daunting. But it doesn’t have to be.

As I always tell my clients, grant writing is really about following the rules. Many private and corporate foundations publish grant guidelines, and they want all applicants to follow their guidelines… to the letter. Follow the guidelines, present your proposals in the appropriate and complete format, and include all required attachments.

A growing trend among grantmakers is the adoption of a common grant application. This allows applicants to prepare a single application for a number of potential funders. A list of common grant applications is provided online at the Foundation Center (http://foundationcenter.org/findfunders/cga.html). I have used the Missouri Common Grant Application (http://www.centerforgiving.org/MissouriCommonGrantApplication.aspx) and think it provides a good grant proposal template.

For foundations that don’t provide grant guidelines, I recommend using a common grant application format, like that provided by the Foundation Center, or the format below … that I have adapted from the Missouri Common Grant application:

Cover Letter – the cover letter is a great way to personalize your request. It is written from an individual (typically your NPO’s Executive Director) to an individual (typically the foundation manager or trustee). The cover letter can also include more qualitative and heart-felt information about your clients. I will write more about Cover Letters in an upcoming blog post.

Executive Summary – This is probably the most challenging section to write as it needs to succinctly summarize your NPO’s ask of the foundation, and often in only 100 – 200 words. I recommend writing this section last as you will have the best understanding of your complete proposal.

Contact Information – This is boilerplate information. I typically include name, address, phone and website of the NPO, as well as name, phone and e-mail address for the executive director and contact person for the proposal (if different from the ED).

General Organization Overview – More boilerplate information here. Include the mission and history of your organization, as well as a brief description of your major programs and accomplishments.

Stay tuned for Part 2, in my next post I will outline the following three sections of typical grant proposals: Program Description (this is the heart of your proposal), Financial Information, and Attachments.
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Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grants programs, and helps them secure funding from foundations and corporations. Contact Lynn deLearie.
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

To be a successful fundraiser, you must know not only how your organization raises money, but also how it is spent. You must know and understand your organization’s budget so that you can explain to others the costs of operation and how the money to cover those costs is to be generated.

Nearly all non-profits are, by their nature, limited in their capacity to increase earned income, and many are unable to produce any fees-for-service because they serve groups that cannot afford to pay. Those limitations are why non-profit organizations must be fundraisers.

Understanding your organization’s capacity to produce earned income, knowing where such income does or could come from, and maximizing it, are essential to developing a successful fundraising campaign. If your prospective donors believe you could be producing more earned income, they will be far less likely to give of their limited philanthropic resources.

No matter what your role in a fundraising campaign—be it organization director, development director, campaign chairperson, or volunteer solicitor—to operate at optimum effectiveness you need to be convinced your organization is maximizing its potential to produce earned income—within the confines of its mission. That last part is very important. There are things non-profit organizations simply cannot do which are second nature to businesses seeking to improve their bottom line.

At the Cleveland Orchestra, when we were subjected to questions regarding our profit-making capabilities, we responded half-jokingly that we could not increase our productivity even if we played a Beethoven symphony faster than it was played 200 years ago. We could not speed up our assembly line, nor could we reduce the number of violinists required through automation. If the “widget” we produced was symphonic music, we could not cut costs by turning ourselves into a chamber orchestra and still produce symphonic-music.

On the other hand, we did need to demonstrate constantly improving efficiency in other areas of our operations. For a non-profit, being perceived as a lean, mean fighting machine is critical to optimizing the results of a fund-raising campaign. But budget cuts must not come at the expense of maintaining and improving service to the community and program quality. A non-profit that cuts back on the quality of its services will diminish its fund-raising appeal.

Before You Ask For Money, Know Your Organization
To summarize: There is no faster way to lose prospective donors than by being unable to answer questions and, thereby, remove objections to giving. You need to know the organization’s reason for being, its goals and objectives, its beneficiaries, and its operational and financial efficiencies.

Know those things, and you know the organization. That knowledge will do more than prepare you to answer questions. It will give you the confidence and composure to pick up the telephone or knock on a door, and ultimately to sit in someone’s office or living room and ask for money.

Knowing the organization is crucial to fund-raising, but without commitment, knowledge is worthless. There is a terribly hollow ring to words spoken in support of a cause if belief and understanding do not accompany the words.

Knowledge and commitment are the two strongest tools a fund-raiser can have. Without knowledge, you cannot present your case to prospective donors. Without true commitment, you will not maximize the results of your efforts. If you are to raise money for an organization, know that organization, understand its needs, and be committed to its cause.
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If you have a question or comment for Tony, he can be reached at [email protected]. There is also a lot of good fundraising information on his website: Raise-Funds.com
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Have you seen The Fundraising Series of ebooks ??
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

And that’s a good thing !!

Special events have evolved. Gone (for the most part) are the rubber chicken dinners — with a dais or a two-or-three-tier head table on stage, featuring the board or the event-committee-and-lead-sponsors sitting and eating dinner while the rest of the guests stare up at them.

That model was fairly universal, in city after city across the country.

It took an enormous amount of time and cajoling to get everyone lined up backstage for the grand entrance; it asked a lot of the event’s emcee, who had to introduce each person as they walked on stage; it took a lighting crew to man the spotlights that followed each honored guest to their appointed place; and it “required” that the audience stand up and applaud for each person being introduced.

Imagine doing that for 30 to 40 people, and having to prep the emcee with the correct pronunciation of each name. No wonder so many events ran for hours and hours with fewer and fewer attendees left at the bitter end. Trying to do too many things in one evening is a sure way to send people home early.

Thank goodness the lesson has been learned, and the dais is gone (or should be) and events are timed to last no more than 2 hours (the sitting/attention span of most adults at the end of the day).

Events have grown up along with their focus. They don’t include every favorite activity of every board and staff member, but now take the needs of the paying guests into consideration.

Honoring too many people (more than 2 or 3 is too many), with too many talking heads, can be deadly. A fast paced program with videos about the honorees is far more engaging than hearing presenter after presenter go on and on about the person who has yet to get near the stage to be recognized.

The special event three-course plated-dinner is no longer the model. A two-hour reception in an exciting location with great food and networking is fast becoming the way to go.

When the invitation comes for next year’s event, will people remember being talked-at all evening or will they remember a program that was short and sweet … and fun?

Before planning that special event, think about your potential audience and what they want. Isn’t it time to shake it up and have everyone talking about your organization and your event? Make it happen … be creative, and make your event “special.”
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Have a comment or a question about creating or expanding your special event?
Ask Natalie. With over 30 years in conference and event planning, she can help you turn your vision into reality.
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Have you seen Natalie’s ebook on Special Events ??
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

The question was asked, “Can anyone tell me what characteristics make a publication a good development tool? What can I do to begin to pull together the various publications so that they help garner parent, student and donor support and further the continued growth of the school?”

First must come the understanding of what development is all about !!

By definition, it’s the building/enhancing of relationships that, eventually, lead to fundraising. But, what many people in the n-p sector forget is that development is also (much more) about the needs of the (prospective) donor than it is about the needs of the institution.

People give because something about their relationship with an institution makes them feel good; and, just as important, because the actual giving makes them feel good. If you think about it, if it made them feel bad, they wouldn’t give !!

So, the role, then, of publications is to market the “good feelings.” Tell the world how Mr. X and/or Ms. Y felt good about being part of a program, about volunteering, about giving.

Sure publications must provide information, but to support development and public relations activities, they must do so in the context of “how people benefit.”

The emphasis being on “people.” Write about how students benefit from giving programs and how parents feel good about seeing their kids benefit.

Don’t write about how the school needs this or that. Write about how “your support will allow/permit/enable student to get this wonderful benefit” — don’t ever phrase it as: “without your support the kids won’t/can’t have this wonderful benefit.”

A poster above your desk would help to stay focused — i.e., “It’s about the Needs of the Donor!!”

Another mistake that many NPOs make is the need to produce/include a brochure for every need/circumstance. No one reads them; they take up space and detract from your message about people. Brochures, full of dry information, might be good to have on hand as supplements — for when they are requested.

Finally, the most important document a NPO can have is their Case Statement — an internal (narrative) document that discusses the institution’s history, accomplishments, current and planned/desired activities — with rationale, and what will be needed (in the way of funding) to make that future stuff happen.

Once you have that (sometimes cumbersome) document, and update it periodically, you never have to reinvent the wheel. Anytime you want/need to write another publication/solicitation, you already have a clear statement of who, what, when, etc. etc.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at AskHank
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Have you seen The Fundraising Series of ebooks ??
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

Strong proposals depend on good data, and using good graphics in your grant proposals is an effective way to get your data to stand out and be remembered by reviewers.

Make your Data Stand Out
According to Mike Parkinson and Colleen Jolly (referenced in my last posting), there are five steps you should take to make your data more memorable:

Step 1: Provide real numbers.
One of the most convincing ways to sway reviewers is to provide clear, accurate data to support your themes and major points. Because reviewers are busy and easily distracted, you want to turn data into numbers that they can remember without much effort.

Step 2: Turn data into quantitative graphics.
Consolidate your data into bit-size chunks that can be read and understood easily. Examples would be bar charts, area charts, line charts, and pie charts. To see examples of quantitative charts, visit http://www.billiondollargraphics.com

Step 3: Use visual embellishments.
You do not want your bar and pie charts to look like a generic chart rendered in Excel. Use visual embellishments – such as striking colors and pictures – to make your points. For example, if you were using a bar chart to illustrate how your technical solution will save money, you might use stacks of dollars for your bars.

Step 4: Tie the graphics to the text.
Too often proposal graphics have no action captions and are not explicitly tied to the proposal narrative. Your text should reference graphics (“See Step 5 below”) and each graphic should have an action caption that makes a point and ties the graphic to the proposal narrative (i.e., “Our solution will save you 14 percent in year one of the contract”). Your table of contents should list all graphics, and they should be numbered for ease of identification.

Step 5: Use Action Captions
First write the action caption and then develop the graphic based on it. Every graphic should have an action caption that makes a major point. Starting with the action caption will help you create a graphic that communicates something essential to the reviewer.

Use Good Informational Design
When you design your graphics, follow Parkinson and Jolly in using these principles of good informational design:
  • Simplify your graphics so that there is one clear message.
  • Use the colors and imagery your customer prefers. Visit their Web site for
    information.
  • Develop a style template for your graphics so that they are consistent
    and have a professional look.
  • Use white space to break up or highlight information.
  • Integrate your graphics with your text so that they convey the same
    message and reinforce each other.
  • Design your graphics to tell a great story about your organization. Keep in
    mind that your reviewers may be visual learners. Your graphics
    may be more important to them than your text.

Good graphics promote understanding and persuasion. Develop effective graphics to visualize your data, and your grant proposals will become more competitive.
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Dr. Jayme Sokolow, founder and president of The Development Source, Inc.,
helps nonprofit organizations develop successful proposals to government agencies.
Contact Jayme Sokolow.
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Have you seen The Fundraising Series of ebooks ??
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In anticipation of THANKSGIVING,
we will not be publishing next week.
The Fundraising Blog returns on Nov 27.
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If you’re reading this on-line and you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting. If you’ve received this posting as an email, click on the email link (above) to communicate with the author.

Every nonprofit must have its own set of policies that cover all areas of service and operation; and, those policies must be written based on the circumstances and needs of that organization.

First, you need to have policies in place to “regulate” what your organization will do with all gifts – cash, stock, in-kind, bequests, etc. — whether all or only certain (types or percentages of) gifts will go into endowment, capital needs and/or operating expenses.

Then, for naming opportunities, you need policies for what you would be willing to name, and what you wouldn’t – and whether the namings would be permanent and/or if some/all would have terms of a specific number of years.

Organizations should also have in place policies specifying from whom the organization will/will not accept support; who you would (not) honor or memorialize; and, a statement as to how you’d decline gifts that include elements or restrictions that would conflict with your other policies.

Once the policies are in place, and there is a list of naming opportunities approved by the board, they shouldn’t need to be involved in approving each naming. Typically, the Development Committee of the Board, in conjunction with the Chief Development Officer, make the decisions as to who will be offered which “opportunity” … at what “price.”

“Namings” for support of operating expenses tend to be of the names-on-a-list or on-a-plaque variety. “Opportunities” for endowment, depending on the size of the gift, can be names-on-a-list, names-on-a-plaque, or the naming of a (part of a) program that the gift endows.

Those for capital projects range from names-on-lists, names-on-a-plaque, names on equipment to names on (parts of) buildings.

For bequests, since an NPO doesn’t receive the gift until the donor has died, namings must be discussed/negotiated with the donor while they’re still with us !!

Those discussions/negotiations tend to be very business-like, and focus on what’s important to the donor. After all, s/he is not going to name you in his/her will unless:

  1. S/he already feels strongly about your organization (or one of it’s programs);

  2. Through the process leading to naming you in his/her will, s/he develops
      that strong feeling for your organization (or one of it’s programs); and/or,

  3. Your organization can offer him/her the (kind of) naming opportunity
      that will satisfy his/her needs.

If you’re going to “sell” a naming, just be sure that the price is commensurate with the value of the “opportunity.” Remember, the “price” of a “naming” is based on the market value of that naming – a price that has little-or-no relation to the cost of creating, building or purchasing whatever is being named.
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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at [email protected]
=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you seen The Fundraising Series of ebooks ??
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If you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting.