Smart ideas from Hartsook Companies, Inc.

December 15, 2009

Staff and Board Stewardship Responsibilities: Part II

Would you be surprised to learn that public confidence is at risk or that only one in 10 people strongly believe that charities are honest and ethical in their use of donated funds? Here is an excerpt from California attorney Gene Takagi's Nonprofit Law Blog that illustrates a few common nonprofit governance problems:

1. A failure to understand that a director, individually, has no inherent powers even though he or she certainly has many responsibilities. Of course, the directors collectively as a board have powers. And individual directors may occupy officer positions with certain powers or be assigned specific powers by the board. It's common for certain individuals to wear more than one hat in the organization, and it's important for the individual to distinguish his or her role when acting in more than one capacity. By the way, the board chair serves at the pleasure of the board, not the other way around.

2. The upside-down board. This refers to a far too common scenario where the board believes it serves at the pleasure of the executive, who often is the founder of the organization. Remember, the board should review the performance of the executive, determine the executive's compensation, and, if necessary, replace the executive.

3. Delegation without due care or sufficient oversight. It's perfectly appropriate and necessary for boards to delegate management and certain governance-related tasks to staff, committees, officers, and task forces. But boards cannot delegate oversight. How do boards provide oversight? (A) By adopting and ensuring implementation of policies covering conflicts of interest, document retention and destruction, whistleblowers, executive compensation, joint ventures, gift acceptance, and review of the Form 990 annual information return. (B) By developing a legal maintenance list and budget, and holding the executive accountable for compliance. It's impractical for a board to oversee every single payroll tax payment and approve every single expenditure, so policies must be developed carefully to allow for appropriate delegation with sufficient oversight.

A checklist of financial and governance concerns

At an AICPA Not-For-Profit Executives Forum in Anaheim, Calif., Frank L. Kurre, national managing partner of the Not-for-Profit Industry Practice of Grant Thornton, and Bob Mims, controller and director of investments at Ducks Unlimited Inc., spoke about the concerns that are generally on the minds of watchdog organizations.

Financial issues:

• Transparency.
• Program expense as percentage of total expense.
• Fundraising cost as percentage of fundraising achievement.
• Reserves, working capital or net assets sufficient to cover some amount of annual operating costs.
• Independent audit.
• Fundraising practices and donor privacy.

Governance issues:

• Conflict of interest policies.
• Evidence of adequate board oversight.
• Compensation practices,
• Number of outside directors.
• Number of board meetings.
• Evidence of assessment/evaluation of program effectiveness.

We all know that our best prospects are our previous donors. Now, more than ever, we must make clear to those who invest in our nonprofit organizations, that we - staff and boards - are 100% committed to being good stewards of the funds and the organizations entrusted to us. There is more at stake than the good name of our organization; there are people who depend on us to be there when they need our support and services.

If your organization could benefit from reviewing your existing policies; needs help creating policies; or Board Training, Hartsook Companies can help.

Another Smart Idea...From the Hartsook Best Practices Collection^SM

"We have a 'thank-you call' program. Gifts from one dollar to $1 million are recognized personally via a phone call from a member of our Advisory Board." - Nancy Sylvain, DB & Co., Director Corporate and Foundation Relations, Uxbridge Ontario, Canada

If you are interested in Best Practices and smart ideas, see these additional resources from Hartsook Companies:

• Fundraising Magic - 33.5 Strategies for Turning Board Members into Money Makers by Robert G. Swanson (2007, ASR Publishing). This book shares proven strategies you can implement immediately to give Board members the confidence and tools needed to cultivate donors, solicit gifts and strengthen your organization's position in the community. To order this book for just $19.95 (plus $5 S&H), visit the Hartsook store.

• Bob Hartsook's first book, "Closing That Gift!" is now in its fourth printing. Reviewers have said "impressive...an important hands-on guide...serious fundraisers won't just read this book, they'll use it every day." Available for $15 (plus $5 S&H) through the Hartsook store.

• "Best Practices Coast to Coast," a compilation of best practices from every state in the union.

• "Hartsook Best Practices Collection," our original collection of 250 best practices and great ideas.

For a free copy of "Best Practices Coast to Coast" or the "Hartsook Best Practices Collection", please email Tammy Weinman, tammy@hartsookcompanies.com, or visit our web site. We also invite you to contribute your own best practice by emailing Annette Lough, annette@hartsookcompanies.com.

Performance-Driven Fundraising - Introductory Offer!

Matthew J. Beem, MPA, CFRE, President and Chief Operating Officer for Hartsook Companies, will release his first solo book in early 2010. Produced by ASR Publishing, Performance-Driven Fundraising: Taking Control of Your Success will accelerate anyone's learning curve and serve as a handy, yet entertaining, reference tool for new and seasoned fundraisers. For a limited time, reserve your copy at 40% off the list price of $29.95. To reserve your pre-release copy for just $18 (plus $5 S&H), contact Tammy Weinman at tammy@hartsookcompanies.com noting "Performance Book" in the subject line.

Visit the Hartsook Companies web site for:

• Educational opportunities
• Books/reference articles
• Conference/workshop speakers

Strategies for Success explores smart ideas, connecting with more than 2,000 fundraising professionals bi-weekly. We welcome your contributions or comments. Send to Strategies for Success editor Annette Lough, annette@hartsookcompanies.com. If you'd like a free subscription to Strategies for Success - or its monthly companion, eHartsook on Philanthropy - contact Tammy Weinman, tammy@hartsookcompanies.com. You also can reach her at 316.630.9992.

Our web site is located at http://www.hartsookcompanies.com.