Category Archives: Business Models

Have You Thought About Cyber Insurance?

Dave Blankenhorn

Dave Blankenhorn

 

Having proper insurance coverage is vital in any risk management plan. In today’s world being covered for fire, theft, internal fraud, business interruption and general liability is not enough because one of the major causes for losses is cyber theft. Some businesses and nonprofits are more reliant on their computer sites than others but all need to think about purchasing a cyber insurance policy to cover any losses due to illegal entry in your systems. It is not enough to say I have a protection service as today’s thieves are quite sophisticated and know how to penetrate most of these. Evidence of this is the hacking of government sites and the largest retail chains.

If you buy a policy be sure that it includes coverage not just for a direct hacking event but includes coverage for a “voluntary parting” wherein the insured is induced into sending out information or funds by a fraudulent scheme, trick or false pretense. Some insurance companies have exclusions for these types of actions which negates one of the reasons for the purchase. There are many other gray areas when it comes to cyber insurance coverage which is why it is so important to understand coverage limits, and sub limits that may exist.

Because there are so many variables you might seek out a broker familiar with these new types of policies and is current with the ever changing dynamics of this form of protection. Cyber attacks are not going away so protect your nonprofit accordingly.

Author:  Dave Blankenhorn, Executive Coaches of Orange County, www.ECofOC.org

Book Review: “Give and Take” by Adam Grant

 

Michael Kogutek

Michael Kogutek

 

Adam Grant,Ph.D. is a professor of Industrial and Organizational Psychology at the Wharton Business School. There he is engaged in research and teaching cutting edge ideas about leadership and managerial styles.

In “ Give and Take”, Adam categorizes people at work as givers, takers and matchers. The givers are a breed of people who contribute without any expectations in return. Takers try to get as much as possible from others. Matchers give and take when they see there will be something in return for them. This is an interesting way to frame people!!!

Grant makes a point to define “otherish giving”. Giving selflessly versus giving a bit selfish is what separates successful from unsuccessful givers.

His book contains a large body of research that supports his ideas that giving under the right conditions is the best overall strategy to succeed in business.

I enjoyed the book. He embellishes his research studies with wonderful narrative stories. In the end, he makes a point to communicate how givers can take better care of themselves and risk not being a doormat.

I recommend the book. It was refreshing to learn that one can be most successful without greed and manipulation.

Author:  MIchael Kogutek, Executive Coaches of Orange County, www.ECofOC.org

So you want to go to Rio……

Dave Blankenhorn

Dave Blankenhorn

 

If any of you are contemplating a trip to Rio this summer to attend the Olympics you might consider the risk profile you are willing to take given the state of emergency there. You might also consider the risk of visiting our own Hawaii.

The problem in both areas relate to the mighty mosquito and the virus it carries causing the Zica virus and Dengue fever. These two diseases can cause serious problems sometimes leading to death. The Centers for Disease Control currently have no vaccine or medications to deal with them.

I bring this all up as you normally wouldn’t even contemplate this sort of risk when traveling to some exotic and fun place. Now you will need to focus on the “risk-reward” of such a journey.

It may be a good time to revisit your own non profit’s Risk management plan to see if you have identified the current risks and updated your plans to deal with them. A recent BofA Merrill Lynch CFO poll indicates that most companies have plans in place for data security (91%), disaster coverage/protection (84%), and other types of fraud (77%), operational risk (71%), and succession planning (68%). Hopefully you have addressed these issues as well as the others that could affect your ability to perform your mission.

We are always available to review your current plan or help you establish one if you need help in doing so.

In the meantime if you still want to go to Rio or Hawaii check with the CDC as part of you pre planning. Enjoy.

Author:  Dave Blankenhorn, Executive Coaches of Orange County, www.ECofOC.org

Is ‘Analytics’ Useful for the Nonprofit

Adrianne Geiger Dumond

Adrianne Geiger Dumond

 

Analytics is the tracking of patterns, trends from the analysis of data. Better data analysis in the business community is a major trend for 2016. With all the sources of information now available, it is not difficult to understand the growing need for analytics in the for-profit community. But is it equally important for the nonprofit world to take note?

Most nonprofits collect data, but how useful is it. Is it turning information into knowledge? I know of a data manager who only knows how to enter the data. He has no tools or skills to analyze it. Collecting the right data requires some strategic thinking to ensure that the data is useful.

Quality versus quantity: Is the data we are collecting relevant to our goals and mission? Who benefits from using this data – programs, donors, funders, marketing?

Setting priorities: With the burst of new technologies for data analysis coming on stream, what are the most important targets for the use of our data? Is it to help monitor and evaluate programs – which strengthens the appeal to funders? Is it visual data – graphs, video, pictures, and testimonials – that tell great stories to our donors? Most non-profits will need professional training or outside help to install these capabilities, so it is important to decide what strategy is the most important.

In researching this article I found one website that appeared to be useful for advice and knowledge. The site is for a business model, not for non-profits, but provides an orientation to the data analysis process. It is Tableau Software (tableau.com). I am sure there are others but they sent me an email immediately that explains the process in its free training video.

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org

A New Form of Philanthropy

Dave Blankenhorn

Dave Blankenhorn

 

This past week Mark Zuckerberg, the founder of Facebook, and his wife, Priscilla, announced there intention of pledging $45 Billion (99% of their Facebook shares) over their lifetime to help solve the world’s problems. Rather than doing it the old fashion way of gifting through a foundation they have proposed to establish a Limited Liability Company to be called the “Chan Zuckerberg Initiative” after their new son and use this vehicle to invest funds in organizations that advance “human potential and “promote equality”. The “Initiative” will also invest in for profit companies in fields like education and health care which its owners believe will help achieve their philanthropic goals.

What is somewhat unique in his approach is the idea of showing both a financial return in order to be sustainable and a social one in order to obtain additional funding. To meet the latter goal certain metrics will need to be established to show how many lives were saved or how many were educated etc.

By setting up the LLC he can maintain control of his stock, avoid tax issues and continue to capitalize the LLC from the return on his investments. These funds can then be used to reinvest back into worthy recipients. This avoids the traditional giving dilemma of a foundation where monies are only replenished from its investments in stock and bond markets.

For nonprofits this new approach will be a challenge to managements and boards. They will be accountable in a way not seen before and will need to focus more closely on mission results as well as financial viability. If they can reach their goals funding will become more reliable giving everyone more time to achieve the mission and less on fund raising.

Author:  Dave Blankenhorn, Executive Coaches of Orange County, www.ECofOC.org

 

The Mistakes Charitable Startups Make

Adrianne Geiger Dumond

Adrianne Geiger Dumond

 

Since 2013, the number of nonprofits in this country has more than doubled.[i] An article in the Wall Street Journal, on September 20, this year, and by the same title, explains the risks of starting a nonprofit. Passion and commitment to the cause do not measure up to the time commitment and skills required to launch a nonprofit. I will quickly summarize the main points, but urge the reading of the whole article by Veronica Dagher, a reporter for the WSJ.

The Mistake: Not doing the research to discover how many other charities also provide the services you plan on giving.

The fix: Before starting a charity, get the kind of work experience and specific skills needed to launch. Research and speak with the leaders/Executive Directors of similar nonprofits for direction and possible roadblocks so you know more about the lay of the land – especially for your community. Volunteer at a similar organization, or serve on a Board, or speak with other founders to understand the challenges. Have a business plan and a mission statement ready to go.

The Mistake: Underestimating the time commitment. To gain official, tax-exempt status as a 501(c) (3) a nonprofit must register with the state, and in some cases, local agencies and the IRS. Approval of the status can take months. In the meantime it is difficult to raise money.

The fix: Be patient and truthful with prospective Board members and donors so that they maintain their commitment to your cause and don’t become disillusioned.

The Mistake: The lack of proper insurance that can lead to serious financial consequences. There is the case, cited in the article, where a nonprofit sponsored a bicycle race in which a participant was injured. The incident went to court, the Board had no insurance and was forced to pay legal fees which caused liens to be placed on some members’ property while the suit was pursued.

The fix: Don’t cut corners while waiting for the tax exempt status. Obtain the proper insurance right away, keep accurate financial records, and know where the money is coming from and how it is being spent to keep donors content.

The Mistake: Selecting the wrong Board members. Avoid the temptation to appoint close friends and family to the Board of Directors. They may admire your dedication but may not have the skills and experience you need.

The fix: Find the Board members who have a passion for the cause, but also bring skills for good governance that the startup might not be able to afford early on – attorneys, accountants, management skills, and some knowledge about the nonprofit business. All Board members should be expected to make donations. Some Foundations will not grant money to a nonprofit to which Board members do not donate.

The Mistake: Not recognizing the importance of fundraising. Often new organizations spend more time on program development than on raising money. They may target Foundations as the primary source of funds. Without plans for solid, lucrative fundraising from individuals, also, there will be no programs.

The fix: It is important to establish a donor base initially – contacts, businesses, companies that match employees contributions. It’s also recommended to understand how agencies competing for donor dollars obtain funds. One of the consultants in the article recommends having one year’s operating budget in the bank before implementing programs.

Source: Urban Institute’s Center on Nonprofits and Philanthropy, based on IRS business master file for public charities, exempt under 501(c) (3), May 2015[I]

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org

Success Strategy: The Gift of Accountability

Lois Carson Hunter

Lois Carson Hunter

 

Do you have a “To Do” list that contains some things that never get checked off? I’m sure we’ve all been there, done that! What’s the true impact of this?

One of the classes I took for my coach training referred to these things as “tolerations”. These are things that people don’t deal with and they just keep “hanging” around in your life, mostly taking up space in your head. You’re “tolerating” them and not doing anything about them. They are a form of “clutter”. This can be in the form of physical clutter, such as, the clothes you never mended, the files you’ve never filed, or the book you never finished, the fence in need of repair, etc. They can also be mental clutter, such as, not doing something because you are fearful, the person you’ve never forgiven, the diet you started and went off course, the conversation you’ve been putting off, the new career you want to pursue but aren’t doing what you need to do about it, etc. Sometimes, physical and mental clutter gets intertwined into quite complex tolerations!

Tolerations zap your energy! Having tolerations are like trying to fill a cup full of holes with water. You keep putting water (your energy) in and it just goes right out the holes, so you’re never full. When you start “plugging the holes” by addressing these tolerations or being accountable for what you say you’ll do, you’ll begin to notice you have more “energy”. You actually start being more motivated and productive vs. spinning your wheels with tolerations. You also become “proud” of yourself which increases your self confidence.

Give yourself the Gift of Accountability. Make a list of things you’re tolerating. Each day, select one thing and do it. If it can’t be completed in one day, you have at least begun. Beginning is half done! Continue. Step back and give yourself a pat on the back. Sometimes it helps to have an accountability partner or a coach. ECofOC provides coaches to nonprofit leaders at no charge. You can get more information and sign up for a coach at www.ECofOC.org. Give yourself the gift of accountability!

Author:  Lois Carson Hunter, Executive Coaches of Orange County, www.ECofOC.org

What’s the Difference: Nonprofits vs. For-profits?

Robin Noah

Robin Noah

 

Recently I was asked if there is a difference between operating a nonprofit organization and a for-profit business. I answered with a resounding YES and the following brief overview.

While the aim of for-profit organizations is to maximize profits and forward these profits to their company, the nonprofit organizations’ aim is to provide funding to meet society’s needs.

Nonprofits spend a major portion of their time seeking funding, often without selling a “product”. They need to convince contributors of the value of their mission and how they can spend the contributed money wisely as they move forward meeting the mission of their organization. Additionally they must prove the need to use some of the donated money for administrative costs.

A reality is that nonprofit organizations are often in a struggle to find enough money to survive and to raise funds more effectively.

Unlike for-profit companies that can earn commissions for sales, nonprofits must constantly demonstrate that they use the greater part of their funding for their mission. The Association of Fundraising Professionals (AFP) asserts that a commission on each donation would undermine donor trust by placing self-gain over a nonprofit’s mission.

An interesting fact: According to journalist Tom Chmielewski, The American Institute of Philanthropy suggests that a not-for-profit organization’s unrestricted net assets should total less than three years of its current budget, and that at least 60 percent of its total expenses should be spent on program services rather than on administration and fundraising.

Another interesting fact is that In addition to a balance sheet, a for-profit will prepare an income statement each quarter listing the company’s revenues, gains, expenses and losses. On the other hand, generally speaking, nonprofit organizations do not compile an income statement but instead prepare a statement of activities each quarter. This document simply lists the organization’s revenues minus expenses, plus net assets

To learn more about the differences in the for- profit businesses and nonprofit organizations spend some time on the internet. There is a wealth of information there for interested persons.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

A Guide to Succession Planning

Adrianne Geiger Dumond

Adrianne Geiger Dumond

 

 

Succession planning is one of the hardest activities that non-profits take the time to consider. I was recently given a document that I feel every non-profit leader should read. This is because it provides every single consideration, every step, and many resources for completing the task. It is called, ‘Building the Organizations:Succession Planning for NonProfits’, funded by the Annie E. Casey Foundation. The author is Tim Wolfred of CompassPoint Nonprofit Services (compasspoint.org).

The document is 20 pages, and I would like to just tell you some of the subjects included, in the interest of space.

Three ways of thinking about succession planning:

  • Strategic leader development – assuring the right skills are present for the leadership in the strategic planning process.
  •  Emergency succession planning – the document does an excellent job of laying out first steps, of demystifying the hesitancy that ‘being prepared’ might engender, and providing care for the departing leader.
  • Creating the probability for successors to the Executive Director and other important leaders to emerge from your talent pool.

A Succession Readiness list

  • The importance of sharing knowledge – to increase bench strength
  • The nuts and bolts of Departure-Defined Succession Planning – when a leader announces a departure date ahead of time.
  • Getting the Board on board
  • The Tough Issues
  • Finding an Interim Executive Director

Tools You Can Use – and where to get them

  • Staff surveys
  • Stakeholder Surveys
  • A sample of an Emergency Succession Plan – with steps to how to accomplish the plan (compasspoint.org/et).

I hope this information will encourage you to consider succession planning as vital to the success and sustainability of your organization.

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org

 

Are Nonprofits Addressing the Real needs of its Beneficiaries?

Dave Blankenhorn

Dave Blankenhorn

Is your nonprofit serving individual people in need but not the underlying causes which brought people to your door in the first place?

During the 19th and early 20th centuries philanthropists and charities focused not only on providing cash and shelter to the needy but on education and moral reclamation- on turning lives around and getting people on the right track. It aimed to make its beneficiaries more self- sufficient and give them some tools to become part of main stream America.

This philosophy changed during the 1960’s with the focus shifting from the personal to the systemic, from the moral to the political where it was assumed that people in need were victims of the vast impersonal economy or racism that doomed them to failure regardless of their own individual efforts or inner qualities. With the best of intentions major foundations and philanthropic groups pushed for social action and government based welfare solutions which in turn trapped many into a life of dependency without getting at the basic root cause of individual problems. Trillions have been spent with no appreciable improvement or reduction in the level of need.

However, there has been positive progress to fix this issue. More attention is now being focused on life changing programs that will restore people to society. These center on rehabilitation and education which hopefully will allow people to reclaim their own personal lives and give them the tools needed to become self sufficient and productive citizens.

You might take a look at your nonprofit to see if you are doing what is needed to “fix” the person and not just solve the immediate problem.

Author:  David Blankenhorn, Executive Coaches of Orange County, www.ECofOC.org