Category Archives: Risk Management

Finance Directors: The Forgotten Nonprofit Professional

cash_handsThe recent Blue Avocado study of finance professionals at nonprofit organizations serves as a great reminder of how important and yet overlooked this role is. As the study report notes, the “tenures and experiences of executive directors (CEOs) and development directors” get most of the attention.

Meanwhile, toiling in the background are a group of professionals that are, the study shows, typically highly trained and inclined to stay with the nonprofit longer than either its CEO or development director. They’re getting a bit of short shrift in return, it appears: Their biggest stressors include when other nonprofit staff don’t comply with basic financial procedures (like turning in timesheets) or when they don’t have enough time to do everything on their plate (other job duties having often been heaped there).

Let’s take a moment to reflect on the key part the finance director (or CFO) plays in an organization’s fundraising efforts, doing everything from:

  • explaining to staff and board what the cash flow and overall financial situation is
  • helping plan future budgets for projects or grant applications
  • collecting on reimbursement-based grant money
  • keeping track of a myriad of individual donations
  • preparing budget figures for follow-up reports to foundation grantors
  • making sure the nonprofit survives its audit with reputation unscathed, to
  • much more.

Given all that, it might be worth checking in with your CFO to see whether the typical stressors are grinding away at him or her — and try to eliminate at least some of them (turn in those timesheets, folks!) in order to enhance the likelihood of a good long tenure with your organization.

That Fingerpainting Wasn’t Worth a Penny Over $49,000!

stjohnFrom the tabloids to the blogosphere to MSN to NPR, there’s hardly a news source that doesn’t  find this story irresistable. The elements alone are the stuff of sitcom, even before we get to the action.

Exhibit A is a wealthy Manhattan couple, Michelle and Jon Heinemann, whe are all too easy to poke fun at if only for the fact that they named their children Hudson Cornelius and Hyacinth Cornelia.

Exhibit B is the “posh” (that adjective came from the British press) kindergarten that little Hudson Cornelius attends, the Cathedral School of St. John the Divine, with tuition rates of $39,000 a year.

Exhibit C is a fingerpainting that Michelle, an artist, helped the divine little schoolchildren create for the school’s fundraising auction. She intended to place the winning bid on it herself, for $3,000, and apparently arranged this with the school before she went on vacation.

Now, for the action: The school apparently decided that its power over the absent Michelle’s bidding didn’t stop at $3,000. So when a first-grade teacher named “Ms. Bryant” threw herself into the bidding with great enthusiasm — or, according to the Heinemanns, with a wink and a nod from the school — it countered with proxy bids for the Heinemanns until the bidding topped out at $50,000. (Collective gasp.)

The Heinemanns may not want to spend $50,000 on a fingerpainting, but they may be about to spend that amount on lawyers. They’re suing the school for $415,000, a figure they derived from the costs of placing young master H.C. in another school. You can  read the details about that in the various tabloids. Let’s talk now about why the school’s actions were — if we’re to believe the basic gist of what happened — just plain dumb, and a reminder to every nonprofit not to get into the same type of trouble.

First off, if the school was really told that its bidding-proxy power stopped at $3,000, then failure to honor that is a major breach of trust. And even if that memo got lost somewhere, bidding a fingerpainting up to $50,000 just doesn’t pass the smell test, no matter how wealthy the bidders.

But let’s say it all seemed okay to the school in the heat of the moment, and no one rethought it until what must have been a rather awkward phone conversation with the Heinemanns. (“Uh, good news! You outbid the competition for the fingerpainting!”)

The school had a couple of perfectly viable options here. First, it could have offered the fingerpainting to the second highest bidder (“What, Ms. Bryant? You don’t want the fingerpainting for $49,000 after all?”). Okay, maybe the third-highest bidder. Oh, that was probably the Heinemanns. Come to think of it, the better option would probably have been to ask the Heinemann’s to pay the $3,000 that they thought they’d agreed to. And by the way, making them happy would have increased the chances of higher donations down the line.

The priceless lesson that the school hopefully learned here is that a nonprofit that gets into activities like auctions is acting somewhat like a business — and business customers expect to be treated with great deference, not as the walking checkbooks that nonprofit donors sometimes complain of being treated like. For more useful tips on how to run a fundraising auction, see The Volunteers’ Guide to Fundraising (Nolo).

Lost-and-Found Booth Crucial to Special Events!

Whether at a carnival, benefit concert, or other special event, participants will probably lose or forget things. Just ask me — I left my sweater behind at the “Free for All” series of concerts on the UC Berkeley campus just last weekend. (The late summer weather was too hot to even contemplate the existence of sweaters!)

I knew perfectly well that leaving the sweater on the concert hall seat was my own fault. And yet, irrationally,  its loss made me sad enough to feel less excited about the event overall.

But wait! There’s a happy ending: The efficiency with which the event volunteers rounded up my sweater and later made it available to me were so impressive that I have to write a blog about it.

Here’s what they did, which your nonprofit may well want to emulate, in order to turn other sad faces into happy ones:

1) Assign volunteers to check the venues for lost items after each concert.

2) Have those volunteers drop off lost items at the information booth.

3) Display a big sign on the information booth saying “LOST AND FOUND” so that participants could easily find where to look.

4) For straggler items (like my sweater) that didn’t make it to the booth by day’s end, designate a location where items would be kept, and a person to call to ask about them.

Your event may not be as big as the Cal one, but if it is, you may want to take the added step that they did: Draw up a written list of all the lost and found items, so that when people like me call, saying, “Um, it’s a black sweater, I can’t remember the brand,” they can easily read down the list of descriptions instead of pawing through a pile of stuff.

Soon, I hope to be reunited with said sweater.

How Will Donors Know That Your Charity Isn’t Just Another Fraud?

Nonprofit fundraising scams are always in the news, but I feel like there’s been an uptick in the last couple of months — the church in Oakland that makes its students spend evenings in local BART (subway) stations soliciting donations for questionable purposes; the woman in Canandaigua, New York who was charged with raising money on the false pretense of having cancer; and ABC reports about fraudulent charities trying to make money off recent tornado disasters.

It’s enough to scare off any donor.

Which raises the question, what is your nonprofit doing to make sure that any and all of its fundraisers and other representatives can prove that they’re legit? Here are some ideas:

  • Be very clear about your group’s identity. Display its name and logo on your website, brochures, and any solicitation sheets that you might, for example, send out with people soliciting donations on the street or of friends. If you are the local chapter of a national group, say so, and indicate where they can find your group online or in the real world.
  • Be transparent about your group’s use of money. Your website, for example, should contain clear explanations of where and how funds will be spent. Also include a link to your group’s IRS Form 990.
  • Give official materials to staff or volunteers who will be doing public solicitations. The more they carry in the way of pamphlets, log0-bearing paraphernalia, and so on, the more convincing they’ll be. Of course, these can be faked; but at least you won’t have to compete with the low-quality fakes.
  • Be aware of local scammers. It’s not uncommon for scam charities to use names that sound generic, or very close to the name of a real group. Watch the news and neighborhood events for such fake groups, and be ready to assure people that they aren’t you.
  • Advise solicitors to welcome questions. Having a stranger question whether you’re a fraud can be unsettling. But your fundraising team should be trained for this, and be happy at the opportunity to distinguish your group from the scammers.
  • Don’t incentivize immediate donations. Some groups reportedly pay their street solicitors based on a percentage of contributions brought in. Unfortunately, that means that potential donors are discouraged from double-checking on the group and deciding later whether to make a donation. This arrangement leads to uncomfortable donors who may just say “no” if pulling out their credit card on the spot and handing it to a stranger seems too risky.

This problem may have been worsened with the down economy, but it’s never going to go away. The best you can do, in the words of yet another nonprofit, is to “Be prepared.”

Kids and Nonprofit Volunteering

Today’s issue of Blue Avocado includes an article I wrote on working with young people as volunteers. It offers tips on dealing with risks and potential liabilities, and details my own deep, dark past as a child volunteer. (Well, not so deep and dark. But certainly long ago . . . .)

Check it out at: