5 WAYS TO GET YOUR BOARD FIRED UP ABOUT FUND RAISINGIt’s common for nonprofits to expect their board members to help raise funds. It’s also common for board members to dread, even fear, acting in this capacity. Asking for donations, after all, means courting rejection. And many board members are simply uncomfortable with this role and feel that giving their time and talent should be enough. But the reality is that board members are essential cogs in the fund-raising process. Therefore, it’s up to nonprofits to make the job as easy as possible for their boards. Here are some tips that should help your board better accept — maybe even relish — its fund-raising responsibilities: 1. Set expectations upfront. Board members are obligated to help organizations implement their revenue strategy, and fund raising is a key factor in the equation. During recruitment, nonprofits should emphasize this duty to prospective board members and clearly explain what it involves. In addition to making personal donations, board members are usually expected to help identify and reach out to prospective donors. They may be asked to work behind the scenes or make face-to-face appeals. Either way, it’s essential that prospective members know exactly what to expect. Otherwise, they may later resent — and resist — being asked to help in this way. 2. Educate about the mission. Board members need a solid understanding of the nonprofit’s mission and vision to articulate it in a compelling manner. Ideally, they’ll receive group training to ensure consistent messages in individual appeals. To make board member education an ongoing effort, offer the board first-hand opportunities to observe the organization’s work and regularly communicate challenges and success stories. Staff members can help by being accessible to board members and working collaboratively with them to refine fund-raising appeals.

Winter 2004 Henry & Horne Online Issue

Nonprofit Services In Today’s increasingly complexenvironment, nonprofit organiza-tions are asked to meet the chal-lenge of managing expandingneeds with limited resources. At Henry & Horne, we recognizethat fact and have made an un-wavering commitment to provideoutstanding personalized serviceto nonprofit organizationsthroughout the Southwest. As part of this commitment, weoffer the following areas of spe-cialization to serve the needs ofthe industry:

• Agreed Upon Procedures • Board Presentation • Compilation • Compliance Audit • Computer Selection and

Installation • Contract Internal Audit • Cost Allocation • Estate & Personal Financial

Planning • Financial Statements • Fraud Analysis • Operational Reviews • Strategic Business Planning • Tax Planning and Consulting • Tax Return preparation • UBTI Issues

3. Offer fund-raising strategy training. Even the most accomplished board members may fear rejection or failure as fund-raisers. Nonprofits can enhance the confidence and abilities of their boards by bringing in fund-raising consultants and tapping into resources such as the Association of Fundraising Professionals. This type of investment in board development can pay for itself in increased donations. Professional training will also help board members grasp the nuances of fund raising — the process of cultivating donors, the reasons why people give and the need to adapt the right mind-set. Coaching can help board members internalize and successfully convey the idea that they’re not seeking handouts. Instead, they’re offering prospective donors an opportunity to be part of something meaningful and exciting. 4. Unleash their creativity. Training goes a long way toward energizing your board about development. Nonprofits can keep their boards fired up by involving them in the more creative aspects of fund raising. Ask your board to brainstorm new development strategies, seek their input on marketing programs and encourage them to share their vision for the organization if money were no issue. Allow board members to contribute in ways that play to their individual strengths, interests and skills. Some will gravitate to behind-the-scenes work, while others will be comfortable in a more public role. 5. Encourage personal appeals. It’s often noted that “people give to people,” not entities. Ask your board to engage in one-on-one appeals to friends and colleagues. It’s hard for prospective donors to turn down a request from an individual they know and respect and whose conviction they admire. A phone call or letter on a board member’s personal stationery can have a powerful impact. Once board members experience this, they’ll

become increasingly comfortable using their name to open wallets. In light of the current funding crunch, the fund-raising role of boards is more important than ever. It’s critical that nonprofits select board members who are capable and willing fund-raisers. Likewise, board members owe it to the organizations they serve to embrace and carry out the role with passion and commitment.

KEEPING VOLUNTEER LIABILITY AT BAY Without volunteers, many nonprofits would cease to exist. But despite the numerous benefits volunteers provide, they also bring inherent risks. Because nonprofits direct and benefit from the actions of volunteers, the organization can be held accountable if volunteers are harmed or harm others.

Most lawsuits against nonprofits involve allegations of negligence, intentional misconduct or strict liability. In strict liability cases, responsibility for harm is considered automatic whether or not there is negligence or misconduct. Nonprofits can also be held liable even when volunteers are acting outside the scope of prescribed duties or accepted procedures.

Getting companies to say “Yes”

Connections are helpful in soliciting corporate donations, but not a necessity. Businesses frequently cite a nonprofit’s clear, compelling mission as the most decisive factor in making donations. Besides making a persuasive appeal, here are some other ways to stimulate corporate giving: Relate appeals to the company’s goals, strategies,

values, service areas or personal interests of key executives. The company may be particularly receptive if a prominent executive has been touched by your organization’s mission. Underscore benefits. Although companies are savvy

about the public relations value of their philanthropy, it’s still important to emphasize the effect their support will have and their return on investment. Companies want to know this information, but would rather not have to ask for it. Target companies where you have a relationship, even

if it’s at arm’s length. It doesn’t hurt to have contacts, but a less-personal relationship can also open doors. A board member who patronizes a business may be able to leverage that connection to secure a donation. Research the company’s giving history and use that

information to match prospective donors with upcoming events or fund-raising drives. Keep in mind, too, that noncash solicitations can sometimes be as useful as cash and possibly easier to obtain.

VOLUNTEERS CRUCIAL Still, most nonprofits have no choice but to manage volunteer-related risks as best they can. Operating without volunteers would not only be impossible, but undesirable as well because of the personal satisfaction volunteers derive and the value they deliver. Nonprofits can use volunteers with greater confidence, however, by adopting certain practices to potentially reduce liability. The Nonprofits’ Insurance Alliance of California (NIAC) offers some suggestions in its booklet, Managing Volunteers: Balancing Risk and Reward.

Develop job descriptions for volunteer positions that outline the nature of the work to be performed and any possible risks the job presents to the volunteer or organization.

Screen volunteers in a manner that reflects

the risks involved. Some positions will pose few risks. In these cases, the screening process can be a basic one that reflects the low risk level. A basic screening process might involve an

application, interview and limited reference checks. On the other hand, positions that carry greater risks should involve a more rigorous screening process that would typically include extensive reference and criminal history checks and verification of driver’s licenses, certifications or degrees.

Apply the screening process consistently

and avoid shortcuts or exceptions, even for

volunteers who have been referred by someone known to the organization.

Avoid dismissing inconsistencies or

unusual findings without further investigation.

Provide appropriate training, supervision

and discipline to volunteers. At a minimum, training should usually involve an orientation session that includes an explanation of the nonprofit’s mission, policies and procedures, and safety considerations. Once volunteers have begun work with the organization, continue active supervision to verify that they understand expectations and act in line with them.

Nonprofits will also want to ensure they have adequate insurance coverage, including supplemental policies that address specific types of exposure such as medical malpractice or sexual misconduct. It’s also a good idea to have legal advisors periodically review policies and procedures pertaining to volunteers to determine if your organization is doing all it can to reduce risks. While risks are unavoidable when using volunteers, nonprofits can enhance the protection of everyone involved by consistently following sound practices that aim to balance the risks and rewards of volunteerism.

To download a free copy of the NIAC booklet, Managing Volunteers: Balancing Risk and Reward, or other publications related to nonprofit risk management, visit http://www.niac.org and click on “members” and then on “publications.”

THE MAKING OF A PRUDENT INVESTMENT policy Nonprofits owe it to their causes and constituencies to uphold sound fiscal policies. An investment policy is key to carrying out this responsibility. To uphold their legal and fiduciary responsibilities, board members will want to ensure that their organizations have solid investment policies to

safeguard assets and set the course for careful management of those assets. Generally speaking, investment policies will include a discussion of some or all of the following issues:

Investment portfolio and performance goals,

Spending policy considerations,

Description of appropriate investments in

terms of risk, potential yield, liquidity and philosophical considerations,

Asset allocation, and

Investment advisor directives.

Specific categories and the complexity of the guidelines vary among organizations based on their needs and characteristics. Policies pertaining to an endowment fund, for instance, would probably differ considerably from those directed at the operating fund. But all nonprofits will want to ensure their policies have the following attributes. A prudent approach to fund stewardship. Board members are required to use reasonable care and good judgment in guiding their organizations. A carefully crafted investment policy will help ensure the nonprofit’s financial viability, in addition to providing protection for individual board members against claims that investments were mishandled. In financial matters, the board has a fiduciary responsibility to try to preserve principal and to act in the organization’s best interests. Board members should keep in mind that an investing strategy or portfolio composition that they’re personally comfortable with may not necessarily be appropriate for their organizations. Sensible return goals. An investment policy should specify a return goal that is consistent with the nonprofit’s needs and financial situation. In setting investment and return goals, consider: How will the funds (both principal and income) be used? When will they be needed? These answers will help determine the rate of return needed and the investment approach. Organizations with small or no reserves — say, less than half of the next year’s budgeted expenses in reserves — will obviously need a more

conservative investing approach than one with a $2 million budget and $1.5 million in unrestricted reserves. The organization with low reserves would probably want to avoid investing in equities, which could risk principal. It might set a goal of preserving principal and earning a return of 2% above inflation. On the other hand, the organization with more cushion could aim for a higher rate of return through a more aggressive investment mix — perhaps 40% equities, 30% bonds and 30% cash equivalents. Parameters for investment advisors. Some organizations prefer to give money managers strict directives on how they should achieve the desired results; others may offer leeway in achieving the return goal through an appropriate mix of approved investments. Most nonprofits will want to forbid advisors from making certain investments that are incompatible with their mission. (For instance, a cancer organization would not want to own a tobacco stock.) Policies should also outline performance expectations and requirements for money managers, such as the frequency and type of reports to be issued. Once the investment policy is established, aim for a quarterly review of it by the board, finance committee or a designated staff member. Without regular monitoring, investment policies can easily veer off course, thereby posing risks to nonprofits and their board members.

Kathy E. Hostetler, CPA Director of Not for Profit Industry Services Group 7098 East Cochise Road, Suite 100 Scottsdale, AZ 85253 (480) 483-1170