Monday, June 29, 2009

The Program Effectiveness Dilemma - Impact on the Community

More and more, nonprofits are being asked to demonstrate program effectiveness. To paraphrase Phil Buchanan, President of the Center for Effective Philanthropy, who spoke at our Annual Forum just a couple weeks ago – nonprofits are being asked to show what it’s trying to change, how it’s going about doing that, and how will it know when it accomplishes it.

Of course, although donors and funders are looking for measurements of program effectiveness, the challenge with having a standard about this is that every nonprofit is different – with different goals, constituents, services, and outcomes. We heard this loud and clear in the focus groups we held from both people in the philanthropic sector and in the nonprofit sector. Recognizing this challenge, the Impact on the Community standard focuses on the process of a nonprofit communicating to the public its mission-related accomplishments. The intended outcome of this standard is to start a dialogue between the nonprofit and donors.

The Council believes that knowing whether a nonprofit has accomplished or is making progress toward its mission-related goals is crucial in making a giving decision. The Council also believes that communicating future program goals allows donors to evaluate the nonprofit's alignment with their giving philosophy.

The nonprofit tells the public in its annual report or on its website, using specific objective information, what it accomplished in the previous year in relation to its mission and how it has impacted the community. The nonprofit also relates its goals for the next year.

In addition to hearing from people their thoughts about this preliminary standard, we’d like to hear how your organization evaluates its work. How do you tell the story of what, how and how will you know?

Next up: Financial Transparency

Thursday, June 25, 2009

How Do You Tell Your Story? - Public Information and Annual Reporting Standard

As was mentioned in the previous blogs, we're highlighting one of the new, preliminary Accountability Standard unveiled at the Charities Review Council's Annual Forum on June 17th. Check back every 2 to 3 days for a new post and please give us your comments.

The Public Information and Annual Reporting standard takes the current Financial and Annual Reporting standard and builds upon it. At the heart of this standard is the idea that to build trust with donors, a nonprofit needs to share its story in a clear, meaningful manner. The philosophy picks up on this notion with more detail:

Nonprofits that provide information to prospective donors and other constituents promote informed and responsible philanthropy. Donors are better able to make decisions when they can learn what a nonprofit’s purpose is, who governs it, how they manage their financial resources, who the nonprofit serves, and what progress it has made towards its mission.

The nonprofit complies with the legal requirements for public disclosure of the following:

  • 3 years of the nonprofit’s IRS Form 990, 990-EZ or 990T;
  • The nonprofit’s IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.

The nonprofit also provides the following information in an annual report, by request, or as part of its website:

  • The nonprofit’s mission statement.
  • A list of the nonprofit's board of directors.
  • Annual financial statements prepared in conformance with Generally Accepted Accounting Principles (GAAP).
  • A summary of the total cost of each major program and the nonprofit’s fundraising and administrative costs as defined by either GAAP or as defined by IRS guidance for completing the IRS Form 990.
  • Descriptions of its program, activities, accomplishments and achievements in relation to its mission for at least the most recent fiscal year
  • Description of the communities or populations served, and the geographic area served.

If the nonprofit has a web site, the above information should be found on the nonprofit’s web site, preferably in one place so that the same content can be reliably printed and mailed upon request.

Although the list of things required by the standard may seem longer than the current standard, it’s actually not that much different. What is different is how a nonprofit can share this information. Whereas before the printed annual report was the main vehicle for sharing with donors and constituents a nonprofit’s story, more and more organizations are moving away from that to save costs. The standard recognizes this and the role a nonprofit’s website plays in conveying information.

If your organization has moved away from a printed annual report, we’d like to hear from you. Why was the decision made? How has it changed the way you communicate with your constituents?

Next up: Impact on the Community

Monday, June 22, 2009

Legal Compliance

As promised in the last blog post, today is the first post of the new preliminary Accountability Standards. Just to recap, we’ll be highlighting every two to three days one of the new standards and inviting you to comment on them. Since the standards are broken up in to the same four categories as before – Public Disclosure, Governance, Financial Activity and Fundraising – we’ll take the sections in that order. In addition to getting feedback about the new standards through this blog, we’ll also be heading out for a series of town hall forums across throughout the summer. Keep checking out the Accountability Standards page on our website for updates.

To start off, we’re going to be highlighting the Legal Compliance standard. Like all the standards that will follow, it’s actually two parts – a philosophy statement that gets at “why” this is important, followed by the standard which gets at “what” the standard is looking at.

To uphold the public’s trust in nonprofits and support regulation of charitable solicitations, a nonprofit should at a minimum carry out its actions in the accordance with applicable state and federal charity law. Federal and state regulation of nonprofits is essential to protecting charitable assets and safeguarding the public against charity-related consumer fraud.

For the previous three years (including the year under review), the nonprofit has not violated applicable provisions of state law in which the nonprofit is registered to fundraise or any federal law. If the nonprofit is actively fundraising outside of its home state, it is taking steps to monitor and ensure compliance with other states’ laws regarding charitable registration.

Unlike many of the other Accountability Standards that focus on reasonable expectations of accountable nonprofits that is often a higher bar than what law requires, this standard is strictly focused on whether or not the nonprofit being reviewed has violated any applicable laws. Despite this being what some might view as a relatively easy standard to meet, a lot of times a nonprofit doesn’t register (or doesn’t know that it has to register) in a state where it’s fundraising. (39 states and the District of Columbia require nonprofits to register). We’d be interested in hearing from people what they think of this. Is it too much to expect a nonprofit to register in every state it has a donor, even if it may cost more to register in that state then they get back in donations?

To quickly find out which states require nonprofit registration, check out the Unified Registration Statement website, which is a joint project of the National Association of State Charities Officials and the National Association of Attorneys General.

Next up: Public Information & Annual Reporting

Wednesday, June 17, 2009

Announcing The New Preliminary Accountability Standards

For the last twelve years, the current Accountability Standards of the Charities Review Council have helped strengthen the nonprofit sector and to mobilize informed donors. But a lot has changed economically, demographically, legally, and socially during this period of time and the time had come to update and revise the standards to reflect this.

Over the past year, the Council’s Program Committee has led a process that brought together donors, institutional funders, academics, nonprofit leaders and community representatives to craft a fair set of standards that are sensitive to a wide variety of constituents and will further strengthen an already vital and indispensable nonprofit sector. A preliminary set of the new Accountability Standards were just unveiled today at the Council’s Annual Forum, and we are now embarking on a four-month public input phase where we’ll be heading out across Minnesota and up to Fargo, North Dakota hosting town hall forums to get more feedback before finalizing the new standards this fall.

In addition to these town hall forums, we are going to be blogging too. Starting next week, every two to three days we’ll be highlighting one standard at a time in a new blog post and inviting people to comment and give us their thoughts. We’ll be starting with the standards in the Public Disclosure section first and then moving onto the Governance, Financial Activity and Fundraising sections after that.

Please keep coming back to the Accountability Wizard Blog regularly and we appreciate your comments. Thanks in advance.

Next Up: Legal Compliance

Monday, June 1, 2009

Free Wizard Webinar - June 10th

For nonprofit organizations thinking about going through the Accountability Wizard, I'll be hosting another free Accountability Wizard Webinar next week. Come learn how your nonprofit organization can work with the Charities Review Council’s Accountability Wizard to help build public trust and improve the visibility and reputation of your nonprofit.

Here are the details:

Accountability Wizard Webinar - Free
Wednesday, June 10th
10:00 - 11:00 am CT

There is no cost to attend the Webinar but registration is required. Seats are limited. Register now.