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What Sets Successful Nonprofits Apart

By | Nonprofit | No Comments

Have you ever read the book, “Think and Grow Rich?” There’s a saying in the book: “Success leaves clues.” The author of this classic self-improvement book suggests studying the lives and habits of successful business people for clues of how they obtained their success.

The same may be said for all businesses, including nonprofits. What clues do successful nonprofits leave behind to guide newcomers in the world of mission-driven business? The answer may surprise you.

Success Metrics at the Five-Year Mark

Experts used to say that they judged a business successful or not by the third year; now that has increased to five years. For nonprofits hitting the 5-year mark, statistics from the NCCS/Urban Institute tell us that just 16% failed to renew their form 990 from 2000 to 2005.

Why do nonprofits fail to renew their form 990? If they fall below the $25,000 income threshold or if they go out of business, they may cease to renew form 990.

We don’t know exactly how many of those nonprofits reflected in the NCCS/Urban Institute statistics went out of business, how many dropped below the $25,000 threshold, or how many simply forgot to renew their form. We, however, know that the remaining nonprofits were alive and growing after five years – fully 84%. That’s a great testimony to survival in an age where many businesses fail quite quickly.

The Key Factor Determining Success

Looking across many of the nonprofits that make it to their 5-year anniversary, one thing stands out. This may, in fact, be the key driver of success for nonprofits.

Successful nonprofits turned passion for the mission into passion for the organization. While passion for the mission was prevalent, it was successfully transmuted into passion for the livelihood of the organization. The organization then received the care and attention as a mission-driven business entity it needed to thrive.

That’s a valuable distinction. Nonprofits are, by their very nature, mission-driven. You can’t imagine a nonprofit without its rallying cry, whether that is to end hunger and homelessness, serve a religious group’s needs, or save animals.

However, thriving organizations also focused on developing as a business. Care and attention were paid to things like technology, which can be used in the service of the nonprofit to cultivate donor relations, encourage good communications, and track grant applications.

The Business of Nonprofits

You can also see several things in common among successful nonprofits. This includes:

  • A healthy, active Board of Directors: The Board of a healthy nonprofit takes a strong interest in the organization’s work. Its members aren’t afraid to roll up their sleeves and engage in some networking or fundraising to help the organization raise money or achieve a goal. Members take responsibility for the actions and activities of the nonprofit.
  • A strategic plan: Growth is directed and managed through a five-year strategic plan that lays out the foundation and direction for the organization.
  • Smart hiring: Recruiting and hiring are taken seriously, with people chosen for their passion for the mission and their skillsets.
  • Investment in technology: From software to track and manage grants to the right CRM system, nonprofit management knows that technology, especially software, can help them be more productive.

How does your nonprofit stack up against this list? Are there gaps or areas of improvement?

Success leaves clues. It doesn’t occur in a vacuum. Those nonprofits who thrive and achieve milestone anniversaries – 5 year, 10 year and beyond – do so when passion for the mission meets a passion for the organization. Together, the two create an unbeatable combination.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Highlights of the 2018 Nonprofit Leadership Impact Study

By | Nonprofit | No Comments

Did you know there are over 1.8 million nonprofits in the United States? How do nonprofits move from startup to leaders? What characteristics do successful nonprofit leaders exhibit and how do they manage with excellence?

The 2018 Nonprofit Leadership Impact Study authored by Nhu Te seeks to answer these questions and more. We think the study bears reading and have included a link to it so that you can read the full report. Here are the highlights.

Nonprofits Aren’t Focused Enough on Donor Loyalty

Most nonprofits spend considerable time, energy, and resources on cultivating new donors. However, it is a truism in marketing that it costs more for acquisition marketing than retention marketing. Increasing donor loyalty is one way to reduce marketing costs while increasing donations into the organization.

According to the report, 45% of the study’s respondents cited “donor acquisition” as an area of concern, while 31% cited “donor retention.” Those two areas go hand-in-hand. Improving retention offsets much of the worry over acquisition since funds continue into the organization with less effort. It’s all about communication and nurturing relationships, rather than leads, for new donors.

Events Are Popular for Fundraising – But Not Necessarily Profitable

What would a nonprofit be without the annual charity dinner, the church carnival, the library book sale? These and other nonprofit fundraising events are quite popular, but are they profitable?

The survey data doesn’t support the assertion that events are as profitable as many nonprofit leaders think. While 86% of the respondents use events as fundraising opportunities, other fundraising activities such as mobile fundraising outstripped events in their ability to raise money. The bottom line? Events may be popular, but they don’t raise quite as much money as nonprofit leaders think they do.

Nonprofits Lack In-Depth Strategic Plans

Plans? Who needs strategic fundraising plans? You do if you’re running a nonprofit. The report found that 74% of nonprofits do not have a strategic fundraising plan. Remember, “Those who fail to plan, plan to fail!” Time to work on your strategic fundraising plan.

Nonprofits Need to Be More Selective When Choosing Their Boards

Serving on a nonprofit board of directors carries a great deal of responsibility. Among their many responsibilities, fundraising should be an integral part of the total package. Yet 72% of nonprofits struggle with making sure that their board members are actively fundraising. They also struggle with keeping board members motivated to help with fundraising activities. Another 53% struggle with finding quality board members who are passionate about the nonprofit’s cause. 52% struggle with establishing clear roles and expectations for each board member.

Nonprofits Aren’t Utilizing Technology to Its Fullest Extent

This point from the study is one that we’ve seen many nonprofits struggle with – using technology. It’s not that nonprofits are averse to using technology. It’s that they are slow to adopt it, especially in the realm of fundraising.

For example, the study found that 80% of nonprofits are not utilizing mobile fundraising in their fundraising strategy. Another 63% of nonprofits estimate that their organization’s digital fundraising falls under 20% of their overall fundraising.

Putting It All Together: Fundraising Is Changing

If you step back and look at the big picture that emerges from the study, you’ll see a few macro trends. First, fundraising is changing. It’s no longer about events, but about using technology such as mobile fundraising and other tech-enabled tools to raise money. Events may continue to be an essential part of awareness and brand-building for your nonprofit, but events aren’t as profitable as everyone seems to think they are. If you continue to run events, keep a close eye on the profit/loss ratio for the event and ensure that you aren’t hosting events just because that’s what you’ve always done.

Technology can be used in so many ways to help with fundraising. From automating grant tracking to using email to keep donors engaged in your nonprofit’s mission and story, smart technology use can go a long way towards helping your nonprofit reach its fundraising goals.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Insider’s Tips to Winning More Grants

By | Grant Management | No Comments

There’s something about seeing a looming grant funding deadline that sets nonprofits into a tizzy. The grant writer polishes off another pot of coffee while the director paces the office chanting, “Is it done yet?” And, at the end of the process, when you click submit or seal the package for the post office, you wonder whether or not it’s all worth it. Will you get the grant?

Seven Common Grant Writing Mistakes – And How to Avoid Them

We’re here to tell you that you can significantly increase the odds of winning more grants by following a few simple steps. These steps aren’t rocket science. They may strike you as common sense. But a recent informal survey among foundation personnel who review grant applications found some common mistakes among the applications they received. By being aware of these mistakes, you can sidestep them and make your grant applications shine.

Mistake #1 – No Preparation

Grant applications should not be written without preparation. Study the granting organization. Review the last three years of winners. What do they have in common? How can you target your grant so that you have a better chance of receiving funds?

Mistake #2 – Late Applications

We know that work can get busy, but that doesn’t give you an excuse for turning in your grant application late. Always be on time!

Mistake #3 – Stuffing the Package

Sure, you want to impress the people who will review the grant application with every proof of your organization’s excellent work. But pick and choose what you would like to present. Too much information overwhelms reviewers and makes you seem disorganized. Refine the enclosures to support the central message of your package.

Mistake #4 – Vague Proposals

Vague language derails many proposals. Be specific about how you plan to use the grant funds and how it aligns with both your mission and that of the foundation providing the funds. The more specifics you can include in your grant application, the better.

Mistake #5 – Budgets that Don’t Add Up

Do the math. Recheck it. Make sure that any budget numbers included in the proposal are both realistic and accurate. The financials should support the logic that flows through the proposal. Err on the side of realism rather than optimism and have someone double check your figures.

Mistake #6 – Caught Off Guard

You get the call you’ve been waiting for – the foundation is interested, and your application is among the top for consideration. Now they have specific questions about the programs outlined in your application. Don’t be caught off guard. Have a comprehensive plan ready to share with foundation directors when and if they call you.

Mistake #7 – Failing to Say Thank You

Even if you don’t get the grant, say thank you. Thank foundation directors and anyone else at the organization who helped you with any aspect of the  grant application. A sincere thank you goes a long way towards making a positive impression for your organization.

Successful grant applications take time and effort and can be stressful.. With these tips, you’ve just stepped ahead of many others who aren’t taking the time to learn more about the grant application process. Good luck, stay focused, and here’s to your success.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

The Importance of Internal Controls for Your Nonprofit Organization

By | Internal Controls | No Comments

He may be your most trusted employee, someone who has been with your organization for years. Nevertheless, no one should be exempt from internal controls. Not even the CEO of your nonprofit should be allowed an exception to the controls put into place to safeguard your nonprofit’s financial integrity.

Although nonprofits tend to attract trusting (and trustworthy) sorts of people, according to figures reported on GuideStar, the median loss to fraud at nonprofits is $100,000. That’s a lot of money that could be better spent helping your organization achieve its mission rather than helping Mr. or Miss Thief buy luxuries.

People are often surprised when learning the identity of the person who committed the fraud. “I never thought she would do something like that!” or “Him? He’s the most loyal employee I know!” are common refrains. Fraud often occurs when people succumb to temptation. It may be spur of the moment or planned, but it doesn’t exist in isolation. Fraud happens because situations are favorable for theft.

Locking the Virtual Door

Would you leave your door unlocked when you leave your house to go to work? Of course not. It’s not that you don’t trust or like your neighbors. You may live in a beautiful neighborhood surrounded by lovely people, but that’s not the point. An open door is an invitation for thieves to come in and enjoy themselves. A locked door discourages casual entry and provides a simple barrier that turns thieves away.

Similarly, your nonprofit must create its own “locked doors” in the form of internal controls.

Internal controls consist of the steps, policies, and procedures enacted around the handling, storage, and recording of money. Safeguarding assets as well as ensuring accurate data (recorded transactions and financial information) are two critical steps to prevent nonprofit fraud.

Guidelines for Internal Controls

The general guidelines for internal controls include a clear separation of duties, accountability, and transparency.

  1. Separation of duties: Different people should be assigned the responsibility of recording transactions, authorizing transactions, and maintaining control over assets. For example, the person who locks the cash box in the safe should not be the same person who records all the transactions. The person who can authorize a return at a charity shop should not be the same person who is authorized to open the register and remove the money at the end of the day. Keeping duties separate ensures that one person alone cannot be tempted to take the money and cover it up by altering the records. It puts into action a sequence of checks and balances against the finances that should catch any mistakes or at least deter people from considering theft.
  2. Accountability: Audits are a great way to ensure accountability. An official annual audit should be supplemented by ad hoc, unannounced audits to discourage fraud. Another aspect of accountability is record-keeping. Clear, consistent recording of financial information is vital for accountability. Make sure that all accounts receivable are updated daily, and that bank deposits are made promptly. Do not leave checks in drawers waiting for deposit day. The same goes for cash boxes; have an additional person present when cash boxes are opened, and petty cash is counted or distributed. Each of these steps improves accountability.
  3. Transparency: All policies regarding internal controls should be documented in writing. Staff must be trained on such policies and reminded of the exact policy if adherence becomes lax. Lastly, enact a confidential reporting mechanism in which people can alert management if they discover fraud. Take all reports seriously and follow up on them promptly.

It may seem like an unnecessary layer of bureaucracy to enact these procedures, but as they say, an ounce of prevention is worth a pound of cure. How much is an hour or two of your time worth? Surely it is worth more than $100,000, the median amount lost to nonprofit fraud every year. Take an hour or two now to enact internal controls and prevent nonprofit fraud.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.