Wednesday, April 23, 2008

Ewe or ewe

It is very rare that three of my favorite subjects mystically converge. But it has happened. In this article by Scott Russell at Minnpost we see three of my favorite things discussed:
1. Nonprofit transparency.
2. Togo, where I served in the Peace Corps .
3. Sheep. Did you know that when I am not reading 990s I go home and spin yarn?

The New Standards (A semi-official informal announcement)

Have you heard a rumor about new Accountability Standards? Maybe you read an article on April 14th about them by MinnPost's new star nonprfofit reporter Scott Russel. It's all true.

We are in the very beginning of a process to update our standards. Please stay tuned for invitations to surveys about our current standards, to internet discussion groups, and to meetings to discuss the standards. Currently our program committee is developing a set of draft standards to be presented for a public discussion by January 2009. The earliest the new standards will be in use would be late May or June 2009. Prior to the full implementation of the new standards we will be working to phase in currently reviewed organizations and to redesign the Wizard. The redesign will not only enable the usage of new standards, it will also offer new features and improve the existing program. Your input will be crucial to the new Accountability Standards. We will keep you updated about opportunities to participate. It is important to us that the update goes smoothly and we will be communicating more regularly. We plan to conduct the update so that it does not disrupt new reviews and renewal reviews starting late this year.

Tuesday, April 8, 2008

Draft Instructions for the New 990!

Time to read and comment again. Once I get time to read them once through I may post again. But for now, go to the IRS Web site to read and comment on the instructions.

Thursday, April 3, 2008

Executive Salaries and Public Trust

Can the salary of an executive director of a charity lead to an immediate and potentially very serious loss of trust? National Night Out might know the answer to this question. Check out this fascinating article in the April 4th Minneapolis Star Tribune, National Night Out Director's Pay Prompts Outrage. The founding CEO's salary was $270,000 with $44,000 in benefits, according to the 2006 990. We do not have a standard that deals directly with CEO pay. It is in fact very hard to define what is too much.

In all cases, there are important steps that charity managers should take to see that salary decisions are made by a board that is un-conflicted and truly independent, you should also check comparable using salary studies such as the one conducted by the Minnesota Council of Nonprofits.

Past studies have shown that truly excessive nonprofit salaries are rare. In fact low low salaries have made many potential leaders reluctant to become executive directors. See this study by Compasspoint.

While excessive salaries may be rare, every nonprofit must have a good process for determining executive pay that it is covered by active use of a conflict of interest policy. The IRS calls this type of salary determination process "Rebuttable Presumption." Impress your friends and colleagues while protecting your nonprofit by reading a quick explanation on the IRS Web site and then bringing it up in casual settings.

Wednesday, April 2, 2008


The toolbox is open for business. Check it out for a range of resources that can help you to run an accountable, effective, and happy nonprofit. I am convinced that the free resources available to nonprofits are woefully under-used. Organizations who have completed Accountability Wizard Reviews will find material that can help them meet the Charities Review Council's Accountability Standards. We have also added to templates for Wizard participants on our "Useful Documents page."

Even if you have not participated in a review, you may find something in any of these links that will help you serve your donors and meet your mission for years to come. The journey of a thousand donations starts with one good disclosure!

Special thanks to super volunteer Richard Sletten and last summers brilliant team of graduate students from the University of Minnesota's Humphrey Institute: Jocey Hale, Amy Arcand, Kari Anderson, Kim Klose, Brenda Diethelm-Okita and their professors including Melissa Stone and the many other faculty who helped with this work.