Do you value your volunteers?

Volunteers are an asset to any organization. Most nonprofits literally could not exist without them. These are the too-often unsung heroes that prop up your programs and provide the most effective community outreach there is…leading people to support your mission through their dedication to it.

But did you know they are also a monetary asset? Their hours can be the nearest thing you will ever find to a pot of gold at the end of the rainbow. It's one of the first things I ask for when preparing a grant proposal for a client if it isn't recorded in the financials or annual report.

Many grant applications also ask for the number of volunteers supporting your mission, or the number of volunteer hours contributed annually. Many smaller entities can't answer that question because they don't track that number.

This is why you should.

In 2014, the average value of a volunteer hour was reported by Independent Sector to be $23.07 an hour nationally and well over $24 in some states. While your state might be above or below the average, it's still evident that these good people save you a lot of money vs. having to hire help.

Most grantors feel that excessive paid labor expenses detract from the impact of their support.

Grantors understand that some programs require paid staff. Any program that needs degreed or certified staff will have labor costs.

However, if you are paying a social worker with a masters to hand out paper and crayons and act as a room monitor for an early childhood learning program or hiring paid staff to do that, it's not seen as a wise use of funds.

If  your program description shows that the licensed or degreed expert is designing and evaluating a curriculum to be taught by trained volunteers, the grantor knows that you are budget and value conscious, and the kids are going to get the maximum amount of hands-on help and the necessary supplies at the lowest possible cost per student.

Ideally, you should have a volunteer coordinator that not only assigns and recruits volunteers but makes sure they actually show up and knows what they did, where and for how long. That means you should be classifying their input as either program or administrative for budget purposes.

The value of a volunteer hour can also positively impact your bottom line. By recording their value, you may be able to meet the requirement for matching funds for grants requiring them, or increase your book value net worth.

For instance,  if you have them build a shed, the materials might cost $500, but the value of the volunteer labor could push that value to $2000.

That can help you qualify for grantors that have a minimum balance sheet requirement. Check with a qualified nonprofit-savvy accountant for the proper journal entries.

So there you go. You always knew you were happy to have volunteers, and now you have a reason to love them even more.

BTW – volunteers are not supposed to be practicing their trade or craft as volunteers and then getting a donation slip to offset the cost to their businesses. See the guidance for in-kind contributions at http://www.irs.gov/pub/irs-pdf/p526.pdf, page 7, middle column, example  #3 and #4.

Should you use a templated proposal?

It depends on what you are calling a template.

Periodically I have people ask me to write a template for them to use to reply to RFPs or LOIs (Letters of Inquiry or Introduction). What they seem to see as a template is a one-size-fits-all canned response, like a sales letter, that they can send out shotgun-style to multiple grantors.

In some cases, they will send me to their "about" or Facebook page and tell me to use that wording verbatim, but "put it into a grant format."

It would oh-so-easy for me to just add a couple of paragraph headers and collect a few bucks and move on.

The problem with that is the client would probably never win a grant with it, and here's why.

All Requests for Proposals (RFPs) and all grantors are different.

It follows then that there will be differences in the verbiage in your application. While they may have a similar macro-focus their goals will be different.

Take youth program funding for instance. That's a macro-category. To one funder that may mean providing money to purchase tablets or laptops. The next one may see it as providing after-school care.

If you send out your canned LOI, but none of your programs address laptops or after-school care, you just wasted your time.

What CAN be templated or reused.

When I think of a template I think of the headings in an application or proposal. Things like program descriptions, statistics,  board member biographies, prior year outcome reporting, annual reports and organizational history tend to stay fairly constant for at least a year, and these can be pasted into a proposal.

Most RFP's have sections for these things. Statements of need can utilize statistical reporting such as population, race, age or gender percentages, income profiles of the targeted populations, etc. That wording can be pretty much left as is for as long as they are accurate.

Other things will have to be written so that they apply to the specific grantor.

   

Program descriptions and goals tend to stay pretty much the same, but sections of them may need to be highlighted or even extracted to show relevancy to the grantor's goals.

Board members, key personnel and their bios usually don't change much for at least a couple of years  but should still be reviewed and any additions or subtractions noted such as promotions or a change in title.

   

Notice that I don't include the executive summary as a static document. If the proposals are slightly different the executive summary will also change. That's why it's called a summary. Sections of it might not change, but it should still reflect the proposal you are submitting.

I distinctly remember one summary I read that was still talking about funding for an event that had happened several years in the past. I do a lot of these documents, and I always verify that all, and I mean all, of the information is up-to-date and applicable to the grantor.

So the answer to the title question is a qualified maybe.

If the grantor or the request you are sending, say for assistance with a capital campaign, is exactly the same you could get away with sending out nearly the same proposal or LOI to several grantors during the year. If not, you may need to do a substantial rewrite.

BTW - Do be sure you have the right grantor's name in your executive summary or request for funding. I remember one person who used a foundation's name in the original LOI, and then hit "send to all" to seven different funder  prospects. Awkward!

Questions or comments?  Drop me a line at rightwords@ida.net

Does your organization need fee-based income?

Contrary to what many startup nonprofits think, you may need something to "sell" to stay in business and accomplish your mission. That something is usually a service.

As can be seen, the 144 million 501(c)(3) public charities are receiving 75% of their program costs from some form of fee-based income to accomplish their missions.

Most fledgling organizations seen to think that their ticket to success is to "get grants". In reality, even if you include government grants, less than 25% of public charity funding comes from the much vaunted "free money" fountain.

The 13.6% "private contributions" segment comprises giving by individuals, foundations and businesses, and that pretty much covers the impact of non-governmental grant funding.

Using product development strategies

For profit businesses seeking to bring a product to market spend months and years doing market and development research, building prototypes and trialing the product in test markets to establish the viability, i.e. the profit potential of their products.

As a nonprofit you need to adopt that mindset if you hope to be competitive in the fee-for-service world.

If you are considering non-grant funding, ask yourself at least these 5 questions:

1.     Is there a need for our programs and on what scale?
2.     Can we prove that our solutions are more effective, faster,  and/or less expensive?
3.     What are the costs for development and sustainability (the program budget)?
4.     What non-grant funding is available to support these services?
5.     Do we have the infrastructure already in place to administer your programs on a level compatible with the grant requirements? 

Suppose your mission is to provide meals to low-income families.

If your goal is provide foodstuffs to feed 20 people at a local church every Friday, you can probably garner enough local, i.e. private support to sustain the mission.

Let's say that your goal instead is to start and operate a food bank that can provide food to serve 10,000 meals a month. You are going to have to qualify for funding from any one of several government programs or through national associations or foundations.

Any of those sources will require that you meet standards regarding sanitation, storage, recordkeeping and various other volumes of red tape, all of which cost money to manage before you give away a single loaf of bread.

On that scale, you are going to have to pin down the specifics. Winging it and hoping for the best isn't a good strategy to win government funded contracts or grants.

One other consideration for our hypothetical food bank is that to compete for fees, you pretty much need to have your infrastructure already in place. You can't get your determination letter on Monday and acquire enough funding to arrive at your end goal on Friday.

 

How does funding availability impact your mission design?

Let's say that you have determined that the foodstuffs for a meal costs $2.00 in actual food-related  costs, plus another 75 cents in overhead costs. That means that you will need to raise $27,500 a month every month just to acquire the food, store it and distribute it. Any other overhead (rent, utilities etc.) not directly related to the food will add other costs.

If you are an approved vendor for say, the government's Summer Food Service Program (SFPS) lunch program, the reimbursement rate per meal served averages about $3.45. If the meal is a breakfast however, the rate is under $2.00.

In short, the type of program you offer has to fit the available funding. You might WANT to furnish breakfasts, but if the funding isn't there, you may be forced to offer lunches or dinners instead.

Accepting fee-based income isn't for everyone, but it is certainly something to consider as a significant part of your revenue planning.

Update on multi-state nonprofit registration

For Mari, Laura, Peter and anyone else who commented on my various blog posts or passages in "Climbing the Nonprofit Ladder to Success" concerning whether they have to register and disclose their donors to raise funds in states other than their own:

A recent issue of Don Kramer's newsletter Nonprofit Issues discusses a recent California 9th Circuit Court of Appeals decision regarding providing donor information to register in that state.

Unlike myself, Mr. Kramer is an attorney (for more on Mr. Kramer see: http://www.nonprofitissues.com/about-nonprofit-issues), so his information is a lot more credible and up-to-date than mine.

Again, I want to stress that if you only raise funds in your state, this might not concern you unless you are incorporating in one of the states that does require disclosure of major donor information from your 990.

Even then, for most fledgling organizations, the donor disclosure is dependent upon the aggregated  amount of the donations, meaning that as a start-up it probably will not affect you. 

Still, California courts tend to establish early precedent for other jurisdictions, so should you decide to register there, in New York, or you are conducting broad-based internet appeals it would behoove you to consult your legal team to be sure that you are operating within the applicable law.   

What you need to know about business grant competitions

While all grants are competitive, some truly are competitions.

For instance take the Chase Bank/LinkedIn program, Mission Main Street. One of the comparatively few funding competitions dedicated to existing small business owners, this now four year old program has a voting component that requires applicants to receive at least 250 votes to remain in consideration for the award.

Although that requirement is largely dependent on how many of your friends, relatives, and social media followers you can get to vote for you, you really need to read ALL the rules before applying.

For instance, this particular opportunity requires applicant firms to have been an existing business for at least two years prior to the contest opening date.

Even more important than reading every word of the fine print is understanding why business entities offer these funds in the first place. This truly a case of knowing the needs of your audience.

While corporate boards may have members interested in philanthropy as a general concept, their business motives are not purely altruistic.

This type of RFP is about marketing.

Banks typically have a love-hate relationship with businesses and communities. Nobody admits to liking the banking industry, but everyone understands that it is a necessity.

That means that the more people that banks and corporations can persuade to view their industry in a positive light, the more likely they are to remember that bank or company later.

The Chase opportunity requires that you get 250 unique votes  on your proposal by June 19 on the bank's voting page to move on to the final award round.

Just for kicks, I searched on competitors from Texas, just because it’s a big state. Only two out of 25 had more than the required 250 votes. Nevertheless, everyone who visited the voting page now knows that Chase offers small business a chance at a pretty good chunk of money.

That's a pretty good subliminal message.

Another consideration is that banks need successful businesses to become depositors, and hopefully bring their employees and customers along. What better way to introduce prospective customers to the bank than through a contest?

In short, when replying to the essay questions, it isn't going to hurt if you indicate that you already have a good customer base or several employees of your own and show that you want and are able to increase those numbers.

Whether you are a for-proft or a nonprofit, it is important to understand what your grantor needs to accomplish by awarding funds to your organization. 

Cancer Charities Fraud Fallout – Will it affect you?

Current news is bad news for online and small scale charitable giving programs.

When four cancer charities were charged with fraud, one of the disturbing facts published was that most of the actual money that was donated came from small donors, $20 or $30 at a time.

The total amount, as charged in the settlement was reported at more than $187 million. The published terms of repayment apportion repayments between the main defendants, but give no specific date for final payment. Consumers will likely not receive more than pennies on the dollar, since the proceeds of the scam have been spent.

Another disturbing fact was that although these charities (all tied to one family) had been under scrutiny for several years, their websites and fundraising activities were not shut down

.

Charity related fraud is one of the FTC's most often reported offenses. That puts all charities in a bad light.

There were indications that these charities weren't on the up and up, and donors who regularly decline telemarketing calls until they have vetted the charity in question through sites like Charity Navigator soon saw that something was amiss.

It's apparent from the amount of money in question that most people didn't bother to check them out at all.

   

The problem is that going forward, most people still aren't going to do that. They are simply going to say no to any and all fundraising calls.

There were red flags for those who did the research, particularly the amount of in-kind donations and fundraising costs, but most people aren't going to do that. It just isn't worth their time for a measly $20 or so.

Smaller nonprofits seeking to expand are going to bear the brunt of that public distrust. Larger organizations can withstand temporary revenue downturns but the little guys and startups can't. Given that very new charities depend mostly on individual donations, they may well be the real losers.

How can you counteract the bad press?

It goes without saying, or should, that you need to establish as much publicly available legitimacy information as you can.

•          Have a well done and informative website in addition to social media accounts.
•          Make your contact information easy to access, including a phone number.
•          Have an IRS determination letter and corporate documents.
•          Have good board and executive staff bios online
•          Have unrelated board members with online profiles on the board of directors.
•          Have audited financials on hand to back up your 990 filings.
•          File long form 990's even if you qualify to use the e-postcard
•          Keep detailed and accurate records of your donors.
•          Limit your large-scale fundraising costs. Frankly, if you are only getting 15 cents on the dollar, they aren't worth your time anyway. That's only viable when you are talking about millions of dollars in donations.
•          If you are truly new, have a business and strategic plan, complete with financial projections.
•          Track your results and impact and be prepared to provide that documentation when asked. 
•         Where possible, provide names of people or agencies that you partner with or who have received assistance from your charity.
•         Register your charity with one of the ratings sites, like Charity Navigator or GuideStar. (Although they may not actually rate you, since rating criteria are often based on minimum revenue amounts, often over $1 million, just the fact that you proactively offered up your information helps interested donors make decisions.)

Eventually, the bad PR will fade, but it's going to remain important to avoid even the appearance of impropriety or mismanagement. You can do that by being as business-like and professional as possible. 

Don't be this person.

An email from a prospective client reads like this:

"I am looking for someone to tell me how to start a nonprofit.  I need to put my business degree to work, and I like to help people, so I think that starting a nonprofit would give me the best of both worlds."

Of all the reasons to start a nonprofit, this is the least likely to succeed.

I'm not sure exactly why people think that the best path to financial or professional success is to start a nonprofit, but apparently a lot of them do.

In "Climbing the Ladder to Nonprofit Success" I wrote this:

"How do most nonprofits start? The founders find each other through their mutual interest in a problem."

Notice that nowhere in that quote do I say "to make a living." Not that making a living is a bad thing, but it's not a good reason to start a nonprofit. 

Nonprofits should exist because there is a societal problem that can be addressed on some level by a consortium of people with ideas to solve or mitigate the problem.

There are a lot of pitfalls in starting any business. Finding operating capital for the initial year or two, finding good people to move the business forward, marketing, managing growth, and dealing with setbacks are common to any new venture.

Add in the unique challenges of running a nonprofit, and you can multiply all of those challenges by ten.

In "Climbing the Ladder to Nonprofit Success" I try to give an unvarnished, down and dirty look at the world of startup nonprofits from that first meeting of minds through the next two or three years.  It's still a free whitepaper, and I offer it to anyone who asks for guidance in starting a nonprofit.

I also offer an inexpensive service designed to measure the viability of a specific group or nonprofit idea from a financial and organizational viewpoint.

Those resources aren't going to help win the race if you start from the wrong gate.

The person who wrote that email doesn't understand the differences between the motivation behind a startup for-profit and a nonprofit. I can help someone with either concept, but if they don't start with the right expectations, nothing I say or do is going to overcome that handicap.

Don't be that person. If you need help in deciding between the two business models, give me a shout. I'm happy to help you find the right gate.