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The truth about your agency’s budget versus its mission

budget1Full discloser . . . I went out for a few glasses of wine on Tuesday night with a non-profit friend and got back home a little late at night. So what? Who cares? Well, I need to be up and on the road at 5:00 am to visit an out-of-state client, which means I needed to write my Wednesday blog post on Tuesday night. Oooops! So, I’m heading to bed in the next few minutes and wringing my hands about not writing something in the morning. Luckily, my friend said something provocative over a glass of wine and that will the be center of today’s post.

I can see that you’re now curious.  😉

OK . . . so, you’ve probably figured out that we were more than one glass of wine into the evening when I had my epiphany . Regardless, I think his point is still provocative. He said . . .

“For non-profit organizations, it always comes down to the budget in the final analysis.”

I can already see that some of you are saying, “Duh! Really, Erik? How much wine did you drink last night?” However, I know many of you very well, and some of you are saying, “Ummmm, NO! The budget is important, but it always boils down to a question about mission and vision.

When I first heard my friend’s point, I must admit that I was taken back to high school and American History class.  I thought that the debate about budget vs. mission is analogous to the founding fathers putting a series of checks and balances in the United States Constitution.

How so?

Well, the executive director and staff are typically focused on issues of mission. They are always advocating for clients and programming that best meets the needs of the community. Whereas, the board of directors typically uses the power of the various policy documents (e.g. agency budget, strategic plan, etc) to place parameters on staff to ensure accountability and sustainability.

So, who is right?

At the risk of fueling your suspicion that I might have had one too many glasses of wine on Tuesday evening, I point you in the direction of the following classic 1970s television commercial featuring George Steinbrenner and Billy Martin to resolve this conflict:

Which side of this classic debate do you come down on? In the final analysis, does your agency budget trump everything else or does your mission and vision define the budget? Please use the comment box below to share your thoughts and experiences.

Here’s to your health! And, ohhh yeah . . . cheers!  😉

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847

We shall overcome! Celebrating MLK and non-profits 50 years later.

Fifty years ago today, Dr. Martin Luther King, Jr. and the civil rights movement marched on Washington D.C. and history was made. Today, all of us should take a moment to reflect and pay tribute to a great man and a powerful movement. However, I encourage you to also take another moment to think about the role that non-profit organizations played in Dr. King’s dream and the impact his message has on our sector.

First, let’s start in the beginning with this YouTube video of MLK and his famous speech of 50 years ago:

When listening to Dr. King’s speech, I am most struck by how many non-profit organizations today are engaged in the struggle he articulated. His impact is still felt 50 years later, and his legacy is his gift of a “vision statement” for so many non-profit organizations.

The following is a list of non-profit organizations from 50 years ago. Do you know what they all have in common?

  • Alpha Phi Alpha
  • National Association for the Advancement of Colored People (NAACP)
  • Women’s Political Council
  • Southern Christian Leadership Conference
  • The Penn Community Services Center
  • Detroit Council for Human Rights
  • American Committee on Africa
  • SNCC Freedom Singers
  • The Fellowship of Reconciliation
  • The Martin Luther King Jr. Center for Nonviolent Social Change

Yes, these are all non-profit organizations with connections to MLK. If you’re interested, you should click-through to an amazing Blue Avocado article titled “Did You Know? … Ten Nonprofits that Shaped the Life of Martin Luther King Jr.

When you go to GuideStar and type in the words “civil rights nonprofits” a list of 6,1,63 different non-profits come up under the category of Civil Rights and Liberties. While not all of these charities are tied to MLK, they are all connected to the legacy he helped sow.

Fifty years later, we use Martin Luther King Jr. Day to encourage our fellow citizens to use it as a “Day of Community Service“.

As I reflect on MLK’s accomplishments and use a non-profit lens to do so, here is what I see:

  • The man and his point of view was influenced by non-profits.
  • His movement was fueled by non-profits.
  • His “I have a dream” speech is a vision statement for countless civil rights organizations to this very day.
  • His messages and his tactics are his enduring legacy, and these things are still used by all sorts of non-profit organizations.
  • The national holiday celebrating his birthday has transformed into a day of service benefiting countless non-profit organizations.

It is an amazing legacy with non-profit fingerprints and connectivity associated with it. I hope you have a few moments to reflect on all of this today.

Do you have a dream? What is your non-profit organization’s dream? How is your organization’s mission and vision rooted in Dr. King’s iconic “Dream speech“? Please use the comment box below to share your thoughts or just leave a tribute to MLK.

Here’s to your health . . . “Let freedom ring!”

Erik Anderson
Founder & President, The Healthy Non-Profit LLC!/eanderson847

Non-profit Governance: The Work of the Board, part 2

Dani Robbins is the Founder & Principal Strategist at Non Profit Evolution located in Columbus, Ohio. I’ve invited my good friend and fellow non-profit consultant to the first Wednesday of each month about board development related topics. Dani also recently co-authored a book titled “Innovative Leadership Workbook for Nonprofit Executives” that you can find on 

Governance: The Work of the Board, part 2

Acting as the Fiduciary Responsible Agent

By Dani Robbins

fiduciary2Welcome to part two of our five-part series on Governance. The first post reviewed the Board’s role in Hiring, Supporting and Evaluating the Executive. Today, let’s discuss the Board’s role as the fiduciary responsible agent, which is quite different from the fiduciary mode outlined in my favorite Board book Governance as Leadership and summarized in The Role of the Board. Fiduciary responsibility is one of the 5 pieces of the fiduciary mode, which is where governance begins for all boards and ends for too many.

As previously mentioned, Boards are made up of appointed community leaders who are collectively responsible for governing an organization. That includes:

  • Setting the Mission, Vision and Strategic Plan,
  • Hiring, Supporting and Evaluating the Executive Director,
  • Acting as the Fiduciary Responsible Agent,
  • Setting Policy, and
  • Raising Money.

One of my goals for this post is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

What it means to meet your fiduciary responsibility is:

It is the Board’s role to:

  • Read, understand and approve the financials
  • Review, understand and approve the audit, as appropriate
  • Review and sign the 990
  • Understand how the programs tie to the mission and the number of people served in those programs as well as the program’s impact

What that means is:

Financial statements should be prepared by the assigned staff or volunteer and reviewed by Finance Committee, often Chaired by the Treasurer, and then presented, by that Treasurer, to the full Board every time the full Board meets. Members of the Board should receive and review the information in advance and come to meetings prepared to ask questions and continue to ask questions until they understand and are willing to have their name listed as having approved the financials. Once questions have been answered and all members are satisfied, the financial statements should be voted upon and either approved or sent back to committee with instructions to be addressed.

Please do not vote for something you do not understand. When I do this training with Boards, I often say, the Exec will just get fired; Board members will go to jail. I’m only mostly kidding. The Exec will likely go to jail too. Either way, the community and the law will hold you as a Board member responsible.

audit4The audit is prepared by an independent accounting firm in an effort to assess if the organization is operating in accordance with Generally Accepted Accounting Principles (GAAP) and also within their commitments. Different audits are required based on the amount of government funding that is received. The costs of such audits vary depending on the budget size, revenue streams, and also the quality of the financial systems and the need to for the auditor to clean up those systems.

Audits should be bid out, in conjunction with organizational policy, every few years. The auditor that is selected should conduct the audit and also come to the Board meeting to present their findings and answers any questions that Board members may have.

Auditors also prepare and should explain a management letter which includes suggestions on improvements that could be made. Such letters didn’t used to be, but are now regularly requested by funders so it is imperative the Board is aware of what’s included within and have discussed the ramifications of accepting, and also not accepting the recommendations.

Most agencies pay for an audit to be done every year; some less often but still on a specific schedule driven by policy. The audit is submitted with most grant requests, to the national office of most affiliated organizations, as applicable and is given out frequently to anyone who requests a copy. Some organizations post a copy on their website.

The firm that prepares the audit is usually also the firm that prepares the 990, which is the tax return that non profits file each year. The 990 should be reviewed by the Board, prior to being submitted, and should be signed by the Treasurer. It is often signed by the CEO, but it should be signed by the Treasurer or another member of the Executive Committee.

missionFinally, as part of meeting their fiduciary responsibility, the Board should understand how the programs tie to the mission, the number of people served in those programs as well as the impact of that program.

This does not mean the Board needs to be –- or even should be — in the weeds of programming.

It is the CEO’s responsibility to ensure the program’s creation, implementation, management and evaluation. It is the Board’s responsibility to understand how such programs are aligned with the mission and the vision of the organization, the impact of that program on the clients your serve as well as the number of people served by those programs.

Fiduciary responsibility means that the Board –- and not just the Treasurer but the whole Board — is responsible for safeguarding the community’s resources and ensuring accountability and transparency.

What’s been your experience? As always, I welcome your insight and experience.
dani sig

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