Performance Management for Nonprofit Results

What is the main motivation for entering the nonprofit sector?  Some may say that it is for furthering the particular cause they are working on.  Others express an aversion to the ‘rat race’ in the corporate world.  Some enjoy the work environment of a nonprofit.  Still others appreciate the high levels of responsibility and cross-cutting roles they can experience in the sector.  There are a wide variety of reasons.  One thing few people focus on or think about in making the decision is the need for business acumen and strategic planning – considered hallmarks of the corporate sector.  Unfortunately, as the old cliché goes- good intentions do not keep the lights on.  Performance management and measurement are the necessary evils in the nonprofit sector- those ‘business’ skills that ensure organizational stability and advance mission success.  Let’s take a brief look at them.

Employment Growth in Maryland Nonprofits Outpaces Businesses; Nonprofit Sector Employment Increases in All State's Regions

According to a recent study by Johns Hopkins University, Maryland nonprofits are expanding hiring at a faster pace than local businesses. Statewide, nonprofit employment grew 2 percent between 2003 and 2004 compared to 1.8 percent for the state's for-profit businesses. Between 1995 and 2004, nonprofit employment growth exceeded for-profit growth 27 percent to 16 percent. Maryland nonprofit organizations added more than 4,500 jobs during 2004, the latest year for which data are available. Growth was particularly robust in the Baltimore suburbs where nonprofit employment grew 4.8 percent. This suggests a continued suburbanization of nonprofit jobs in Maryland - a trend also evident in other states.

Charities Walk a Minefield of Tricky Gifts

Most gifts to charities and nonprofits come in the form of cash or stocks, but there has been an increasing trend for donors to donate other items of value that can wreak financial havoc on an unprepared organization. Tax write off gifts such as property and land can sometimes end up costing an organization money in the long term- depending on the type of gift. A nonprofit, before accepting a so-called complex gift, should determine whether the gift supports the mission or can be sold to support the mission and examine what type of liability or maintenance is associated with the gift. Some organizations have gone so far to open sister organizations to solely focus on the acceptance and maintenance of this type of gift.

IRS Takes a Tougher Stance

IRS officials have made themselves very clear in stating that they will be cracking down hard on nonprofits who commit financial malfeasance in the coming years. The agency is conducting more audits and examinations of nonprofits every year and is taking numerous additional steps to demonstrate its commitment to improving nonprofit financial responsibility. 100 new employees have been hired to monitor nonprofit finances bringing the total to 905, mostly to beef up the audit section. The new stringent focus and added oversight means that nonprofits, more than ever before, must make sure they are practicing sound financial management and control procedures.

Drowning in Data

Nonprofit organizations across the country are being asked to do a better job on measuring and improving their outcomes and impact on their community. Private and public donors and stakeholders are demanding more and more stringent levels of nonprofit accountability. Unfortunately though, few organizations have an effective gameplan for how they will pay for and manage their programs with performance measures and outcomes in mind. Often, what results are incomplete records and data collection that doesn’t effectively tell the story of the organization. It is of critical importance for nonprofit organizations to have a firm grasp on evaluation and outcome measurement before embarking in new kinds of measurement and performance improvement tactics.

Necessary Evil: The Business of Nonprofits

Good and decent intentions do not by themselves achieve results. Nonprofits succeed in their missions only by applying sound business and financial practices. Nonprofit executives and boards must pay careful attention to the organization’s financial practices, probably more so than they realize when taking on the position. Applying budgeting and forecasting best practices, staying compliant with federal and state regulations and managing grants soundly are all critical functions for the survival of a nonprofit organization. Funding agencies seek more quantifiable measures of progress, and thus are demanding annual outcome measurement reports that can only be produced through sound financial management.

More Young Professionals Jumping From Business to Nonprofit Sector

Nonprofit Human Resources experts are seeing a growing trend of young people in business schools and large corporations switching over to the nonprofit sector. Often, the skill sets obtained in the corporate world prove helpful in overcoming challenges in the nonprofit world- building business plans, conducting audits, developing detailed budget projections and analyses. Also, connections made in the business world are also very helpful as former business associates can become new sources of funding for the nonprofit’s mission. This trend is seen as beneficial to the nonprofit sector, as many organizations can not afford to train employees to the degree that large corporations can.

MacArthur Foundation Announces First Winners Of New Creativity Award For Small Nonprofits

To recognize innovation and effectiveness in nonprofits, the MacArthur Foundation recently announced its winners for the 1st annual MacArthur Award for Creative and Effective Institutions. The Award is an extension of the successful MacArthur Fellows program, which awards innovative individuals in the nonprofit sector $500,000 to pursue their goals. One of the recipients, Chicago Rehab Network, is a coalition of neighborhood development groups which created the landmark ‘density bonus’ system, which allows developers to build more housing in exchange for including more affordable units. The other recipients spanned the globe, and all have demonstrated creativity and innovation in their operation.

Arizona Non-Profits Run Like Businesses

More and more Arizona nonprofits are focusing on effective financial and performance management, proven practices in the for-profit world, in order to improve financial stability and meet the needs of their clients, according to Alexis Walker, CEO of the Volunteer Center of Maricopa County. The most essential element for nonprofits in improving their financial strength is the development of a business plan. The Council strongly agrees with the need for increased sophistication in business planning and forecasting and will be offering a training on the subject on November 6th and 7th, 2006, in Arlington, VA.

Non-Cash Gifts to Charity Reach $37 Bln, First IRS Study Shows

From 2003 tax returns, the IRS has discovered that Americans claimed $37 billion in tax deductions for non-cash donations. The figure came as a shock to the IRS, members of Congress, and tax analysts who were examining the phenomenon. Many in Congress feel that the totals listed are artificially high, and Congress will consider putting in more stringent regulations for the filing of non-cash donations. Increased scrutiny on this issue and other perceived charitable tax reporting irregularities is being led by Senator Charles Grassley, who is urging his Senate colleagues to adopt new provisions on tax write-offs that will curb abuses.

For Gates Foundation and Buffett, Charity Isn’t a Soft Touch

What does the recent move by Warren Buffett to contribute the bulk of his fortune to the Gates Foundation mean to the nonprofit sector? The move created a philanthropic entity with more assets than 70% of the countries in the world. That amount of wealth combined with the entrepreneurial vision of Gates and Buffett should serve to maximize efficiency and allow for the greatest levels of impact.  That change will definitely cascade to smaller foundations and nonprofits, as the Gates Fundation will clearly be at the forefront of public attention for a long time to come.  The overall goal of the Gates Foundation is to achieve true global change for the poorest and most underserved but will have the subsidiary effect of changing the way the nonprofit sector operates.

What Business Execs Don’t Know- but Should- About Nonprofits

Business leaders and executives often play key roles in nonprofits, as board members or executives. Yet many fail to recognize several key differences between management realities in the for-profit and nonprofit sectors.  This lack of knowledge in the nonprofit sector tends to lead to frustration, burnout and miscommunication.  These differences include a lessened command role and function in the nonprofit CEO; a wider range of stakeholders to answer to; a lack of concrete performance measures to demonstrate results, more scrutiny from donors and the public, and lower levels of resources and capacity in comparison to the for-profit sector.

YouthNoise Announces Funding Blueprint for Non-Profits

Many nonprofits are forced to spend a great deal of time, resources and energy to raise the capital needed to run their organization and achieve their mission.  Fundraising is generally a year round, daily activity that consumes much of the capacity of the nonprofit.  YouthNoise, the young person’s social change network, has announced an initial funding round to meet financial needs, similar to an initial public offering. This funding strategy is a model that can be used by nonprofits across the country in order to minizmize their operating expenses.

Corporate Foundations Gave a Record $3.6 Billion in '05

Beyond Philanthropy

BBB’s Methodology Questioned by Some

Policing the CEO is Board’s First Duty

Seeing the Big Picture on Charities

Pittsburgh Cares Receives 2006 Excellence in Performance Management Award

ARLINGTON, VA – At the recent 2006 Foundation and Nonprofit Performance Conference in Arlington, VA, the Council for Nonprofit Innovation presented Pittsburgh Cares with the 2006 Nonprofit Performance Award. Accepted by Pittsburgh Cares' Executive Director Dan Horgan, the annual award honors one nonprofit organization that has achieved outstanding results through implementing and utilizing performance measures and management systems to achieve long-term success, and has gone “above and beyond” the call of duty provide their team and organization with a solid strategy and set of measures to enhance overall performance. As an ever-increasing number of nonprofits turn to performance management to achieve long-term success, best practices and measurement systems are essential in transforming performance into reality.

The Role of the Nonprofit Board in High Performance Organizations

At the recent Council on Nonprofit Innovation Foundation and Nonprofit Performance Conference, Dr. Benjamin Hodes of the School of Leadership and Professional Advancement at Duquesne University, delivered an excellent session focused on the various roles the Board of Directors can play in fostering a high performance culture and enhancing performance of a nonprofit. In his presentation, Dr. Hodes examines the critical areas for board engagement with the nonprofit such as organizational mission, relationship between board and executive, monitoring of programs and finances, fundraising, operational governance issues, and values and ethics.

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Understanding Federal Grants for Not For Profits

Writing effective grant proposals and winning federal grants is the tip of the iceberg in the grants management process for not for profit entities. Winning a federal grant comes with it a great deal of responsibility in the form of hidden requirements and potential penalties. An organization must develop accounting systems to ensure that all costs are recovered from the grant. Paul Calabrese and A. Michael Gellman, senior executives with Rubino & McGeehin, Chartered, CPAs and Consultants, provide a basic overview for not for profit organizations to help guide them through the process of managing federal grants effectively.

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Entomological Society of America Receives 2006 Nonprofit Financial Integrity Award

ARLINGTON, VA – Today at the 2006 Nonprofit Financial Integrity Summit in Arlington, VA, the Council for Nonprofit Innovation presented the Entomological Society of America (ESA) with the 2006 Nonprofit Financial Integrity Award. Accepted by ESA’s Executive Director Paula Lettice, the annual award honors one nonprofit organization that has achieved outstanding results through implementing and utilizing auditing and internal controls and using financial management to achieve long-term success, and has gone “above and beyond” the call of duty to provide a guideline for their financial controls to internal and external constituencies.

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The Hoop Dreams Scholarship Fund

The Hoop Dreams Scholarship Fund (HDSF) was founded in 1996 by Susie Kay, who taught American Government at H.D. Woodson High School in Washington , DC for over a decade.  The organization began as a one-day event, a 3-on-3 charity basketball tournament staged to raise money for academic college scholarships for Kay's students.  Since then, still led by Susie Kay, a committed group of dedicated volunteers, supporters and a small staff has worked to grow the effort into a year-round not-for-profit organization committed to expanding the academic and career horizons of Washington , DC public school students. 
The Council recently had the opportunity to speak with Susie and discuss her perspectives on trends in nonprofit management, how she developed into her leadership role in her organization and the nonprofit community, and other major issues of leadership and management facing the nonprofit community.

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