Monthly Archives

March 2020

Legal and Insurance Challenges for Nonprofits During the COVID-19 Crisis

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During these unprecedented times, with most of the nation avoiding gatherings and crowds and staying home to prevent spreading the novel coronavirus (COVID-19), nonprofits face increasing challenges. Among these challenges are the legal and insurance ramifications of shutting down offices, providing resources for those directly affected by the virus, and ensuring that your volunteers and employees are covered as much as possible when resources are strained.

Nonprofit Leaders Must Rise to the Challenge

Nonprofit leaders must rise to these challenges and lead by example. Remain hopeful, positive, and cautiously optimistic without promising anything. No one can predict, for example, when the restrictions on gatherings will be removed; for now, we must live one day at a time, dealing with what is before us.

Accounting and Financial Issues to Consider Accruals &/or Notes in F/S

Right now, with so many families facing the loss of income created by businesses shuttering and events canceled, donations are likely to slow to a trickle. Consider what your organization may need to accrue or disclose concerning losses/additional expenses or expectations about future revenue streams.

  • Stay on top of employee vacation time as well as sick day accrual (or PTO balance if combined). You’ll need to track these hours/days carefully to know what employees can and cannot use. Sick days may need to be used in a short period if someone becomes ill with COVID-19. Prepare for lengthy absences in the event staff come down with the virus or must quarantine due to contact with someone who has the virus.  Make sure your financial statements to management, board, funders, monitors and auditors reflect the correct liability for this instead of waiting until the end of the fiscal year, as you may have to pay this out sooner rather than later.
  • The Family Medical Leave Act (FMLA) may provide relief for some employees as additional paid time off after they run out of vacation and sick time (PTO). According to Time Magazine, an expanded Family and Medical Leave Act passed allowing for government employees with less than 500 employees who have worked for these companies for at least 30 days an additional 10 weeks of emergency paid leave to care for children whose schools or daycare facilities were closed.
  • A new congressional law passed yesterday for additional paid leave for employers/employees affected by COVID-19 for companies with fewer than 500 employees. This law will grant employees up to 14 days of sick leave at a normal pay rate to either quarantine or to seek a COVID-19 diagnosis or preventive care for themselves. If an employee is caring for a family member that has to quarantine, seek diagnosis or preventative care for COVID-19 the employee will be granted up to 14 days of paid leave after taking 10 days of unpaid leave, at no less than two-thirds of their normal pay rate (up to $200 per day, and $10,000 in total).
    • Full-time employees will be entitled to 80 hours of paid sick time. Part-time employees will be entitled to the number of hours they normally work in a two-week period.
    • Health care workers, first responders, quarantined workers, or those who were caring for afflicted family members, will not be Employers with less than 50 employees or more than 500 employees are also excluded.
    • Companies will have to front the costs for paid sick leave wages provided to employees who must quarantine because they are sick with COVID-19 or are trying to obtain a diagnosis; companies will be reimbursed up to $511 per employee per day. For paid sick leave wages provided to employees caring for loved ones, employers will be reimbursed up to $200 per worker per day. Self-employed individuals are also eligible for the reimbursable tax credits for their lost wages effected by COVID-19.
    • Make sure to track this leave as a separate item so you can easily provide documentation to the government on hours/amounts paid to each employee to later claim reimbursement for both unpaid and paid leave related to COVID-19. Financial disclosures and accrual of these amounts should be considered before issuing financial statements to any of your stakeholders.

Consider Your Volunteers & Vendors

Do volunteers sign a waiver or an agreement noting that they aren’t due any compensation? Do they acknowledge they aren’t employees and therefore aren’t due for worker’s compensation or other insurance? Take steps to protect your organization against inappropriate claims. Most volunteers are treated differently than employees, but not always. It’s essential to know the distinction and what, if any, legal protections your organization has put into place to avoid excess workers comp claims.

If you use contractors to perform work at your organization, identify if you have a contract with that vendor and what is stated in the contract.  If you have guaranteed a certain # of hours or pay to a certain contractor during this time, you may be responsible for making payments to that vendor even if they are unable to perform the work (i.e.: customer facing).  Talk to this vendor ahead of time about any contracts that state a certain # of hours or dollars are guaranteed to them to determine if you can find a solution that works for both parties.

Should You Shut Down or Find Alternative Ways to Work?

If your local or state government urges everyone to remain at home, you may need to shut down or find alternative ways for employees to continue working. Some may still need to go into work, especially if your organization provides an essential service. For example, a community food pantry may be needed more than ever to keep its doors open. You’ll need to weigh all of the risks involved, talk to your insurance companies and legal counsel, and determine for yourself the risks of keeping your doors open.

Determine now who is essential (must come to the physical office location) and who may telecommute. As long as you do not show any implicit or explicit bias in the decision of who can work from home and who cannot, your organization should be fine with the legal ramifications.

Establish communication channels with everyone so that they understand your organization intends to keep them employed. Phone or message everyone; check in frequently. People are unnerved by the changes to their lives, and having a personal connection with their employer can go a long way to calming their nerves.

  • What if you need to reduce staff? Some organizations may be faced with this unpleasant but necessary choice. Hourly workers can receive FMLA paid or unpaid leave, or you can reduce their hours, so they continue to have some income. If you decide to reduce hours for your employees and they do the same tasks as another employee, then look into the possibility of using job share in your state (compensation for hours worked by your org and partial unemployment compensation for hours not worked which are shared with another employee from the state).
  • What if My Employees Work with the Public? OSHA requires that employers provide a safe workplace for their employees. That’s difficult to do now with a virus at large. If you do need employees to come to work, and they must work with the public, take extra measures to ensure their safety. Provide protective gear, disinfectant, and requirements for social distancing.

Cancelling, Rescheduling or Moving Events Online Due to Coronavirus

When the government asked everyone to eliminate events or gatherings of 10 or more people to limit exposure to COVID-19, it put many organizations into a quandary. Many nonprofits host conferences and events that attract hundreds, if not thousands of people. Some host public events to share information and engage the community in their cause. All of this must come to a halt now for the greater good.

But your organization may be left holding contracts with multiple vendors: hotels, caterers, exhibit venues, and more. What are your rights and responsibilities?

  • If you must cancel events, make calls to the vendors providing event services. Many organizations have been surprised by their generosity. Some are offering a full refund, while others are issuing vouchers for services to cover future events. A few are waiving fees, penalties, and payments until the crisis is over. All these gestures can offset financial worries for nonprofits. If a vendor is unwilling to work with you, then read through that contract to understand what rights and responsibilities you have to that vendor. You may need to consult with an attorney to understand all the nuances of the contract.
  • If you have event insurance, understand what is covered under that policy. Event insurance used to be the go-to for nonprofits who worried about cancellations. For example, hosting a conference in the northeast during the winter offered cheaper airfare and hotel fees, but unexpected snowstorms might derail the event. Event insurance was used to cover losses in the event an act of nature forced the event to be canceled. Some insurers have stopped offering event insurance altogether due to obvious reasons. If you have it, and it covers events canceled due to COVID-19, you can take advantage of it to cover your losses. If not, do not rely upon coverage to plan events. Postpone them until the crisis is over.
  • Move events online! Most content from speakers, program participants and event sessions can lend themselves to virtual events. Consider the pros, cons, and costs of moving the event online. For many, there may be significant benefits to offering one speaker per week virtually instead of the ten scheduled for an in-person all-day event. You can leverage the weekly teleseminar and send emails to constituents and participants to remind them to attend, use the transcripts for future marketing and communications, and remain in contact with everyone using virtual technology.

Nonprofit Insurance and What It Might Cover

Now is a great time to call your insurance company and discuss what your policies cover and what they do not. The overview below offers a big picture look, but your specific policy may differ, so it’s always best to speak directly with your insurance agent regarding coverage.

The typical nonprofit organization holds several insurance policies. These may include:

Workers Compensation
Washington state plans to have coverage for unemployment. Keep an eye on state-specific news to see how this shapes up. Workers Compensation policies and Negligence claims right now are an unknown. If people are forced to work with the public, can they sue your organization if it didn’t take “correct” measures to prevent contact that leads to COVID-19? No one knows the answer to this right now.

Unemployment Insurance
Washington state has decided to allow temporary loss of employment for individuals due to COVID-19 to be covered under unemployment during the time they are not able to work at your organization.  Job Share is another option if you are cutting hours for your employees during this time as well; unemployment insurance will pick up the unemployment amounts related to the lost hours if sharing a job with a similar employee at the organization.

Property and Business Insurance
Among these three types of insurance, many are looking at their Property policy and thinking, “Ah, business interruption – that must cover us!” But it doesn’t. Business interruption insurance typically covers situations such as fire or flood that involve physical damage to the property itself. It doesn’t cover forced closures due to epidemics.

Umbrella Policies
An umbrella policy is often used as a gap or “umbrella” sheltering anything and everything in between various insurance policies. Again, it may or may not cover some elements of the current situation, so check with your carrier.

The bad news is that infectious diseases aren’t covered by any insurance (except health insurance for the individual). The size and scope of the COVID-19 epidemic are unprecedented in modern times. The last time the nation deal with massive upheavals due to a virus was the 1918 Spanish Flu pandemic, but that was during a time when even large companies had relatively little insurance compared with today’s businesses. Nonprofits are navigating uncharted waters.

Now is the time to talk to your insurance company about future policies too. We’re all learning from this event that even with the most thoughtful coverage, not every situation can be accounted for nor every event covered. COVID-19 forces us all to consider alternatives to business as usual.

Who would have thought a virus would spark such changes?

If you need any guidance or assistance during these times, Welter Consulting is here for you. We can be reached by phone (206-605-3113) or through our website.

Leading During Crisis: The Nonprofit Response to the COVID-19 Outbreak

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The Nonprofit Association of Oregon sent an email out today to all members announcing they would cease in-person activities to comply with government and health authorities’ requests for social distancing in an effort to halt the spread of coronavirus, also known as COVID-19.

Their email listed several key points for nonprofit leaders to keep in mind during this time of crisis. With Washington state at the epicenter of the United States’ epidemic, and many nonprofits struggling to meet the growing demand for their services, it is imperative that nonprofits leaders lead by example, helping rather than hindering the efforts of our state and national leaders to combat the disease.

The following 9 tips for leaders can help you lead by example during this crisis.

Some of these points are inspired by Marian Saltzman’s article in Forbes and others are derived from our own experience.

Tips for Leading a Nonprofit During a Crisis

  1. Pain is unavoidable: Furloughs, pay cuts – consider what may happen. You may not be able to soften the blow, but you can deal compassionately with others when addressing these issues with your team.
  2. Allow working from home: Even if your company doesn’t currently allow employees to work from home, many in accounting, finance and marketing may be able to telework.
  3. Avoid spreading rumors: Encourage staff to utilize authoritative resources such as the CDC’s website on COVID-19 for updates. Remind your social media team and anyone who works with the public to refrain from commenting on the topic.
  4. Designate a crisis communication person. The director or public relations spokesperson should be coached on what to say and how to say it during this event. Avoid speculation.
  5. Speak positively but cautiously: No one knows when this crisis will end. It could be weeks or months before activities return to pre-COVID-19 normal. Remain positive and encouraging but refrain from giving false hope to people.
  6. Foster connections: Social distancing means everyone remains at home, but this also means we lose our connections to one another. It’s up to you as the leader of your organization to foster connections. Call employees and check in on them. Set up Slack, Skype or other instant messenger channels and use Zoom or another video conferencing system to keep everyone connected. Make sure that even if people are working from their homes, they still feel like they are still part of a team.
  7. Remain skeptical: During times of crisis, the mind responds to every perceived sign of danger, making some people prone to believing rumors and panicking at false information. Stay vigilant for this type of behavior. Remind everyone to remain skeptical of news sources especially social media, which adds fuel to the fire when well-intentioned people spread what they think is helpful information.
  8. Remember volunteers: Volunteers may feel disconnected during this time if they’re sent home abruptly. Check in with them too, and set up volunteer channels on instant messenger. You may not use them as frequently as you use the employee channels, but it’s a good way to remain in touch with everyone.
  9. Provide resources to stay healthy: For those nonprofits who absolutely cannot shut down entirely, provide support and assistance to those who must work. Put hand soap, hand sanitizers, and disposable paper towels near every sink. Sanitize hard surfaces with a bleach-based cleaner or another disinfectant recommended by the CDC. Ask employees to work six feet apart or more, the recommended distance for social distancing from the CDC. Bear in mind that if you work with the public, additional measures might need to be in place to protect the health and well-being of employees. Contact your local health authority or visit their website for specific guidance.

And, by all means, stay at home aside from necessary trips to the grocery store, gas station, or pharmacy.  Although you may not be among those at high risk for COVID-19, everyone is a risk of becoming a carrier and infecting others. We must unite during this time of national turmoil.

“We must hang together,” to quote Benjamin Franklin, or “we will assuredly hang separately.”

Welter Consulting can be reached by phone (206-605-3113) or through our website.

Technology Trends to Make Outcomes Measurement Easier

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“For-profit organizations report income; nonprofits report outcomes.”

This quote, attributed to Peter Fortenbaugh, ED Boys and Girls Club of Peninsula, sums up a perfect response to the claim that nonprofits should act more like for-profits. By their very nature, nonprofits cannot act the same way. They must report on the outcomes of their work. Reporting profits doesn’t matter as much as what they’ve achieved. To do so, nonprofits need to measure and track results.

But how do you go about measuring outcomes and tracking dollars to outcomes?

New technology trends in the world of nonprofits are shaping both how nonprofits track their work and how they measure outcomes. Grantors, funders, and donors demand greater transparency and accountability from the nonprofits with which they work. Tracking and sharing data is one step towards transparency; measuring outcomes is a step towards accountability.

What Is Outcome Measurement?

Outcome measurement in the nonprofit environment measures the effect a specific program has on the participants in that program. It is an approach that measures the social impact of a nonprofit’s work. Unlike for profits which judge progress by profits, nonprofits judge their progress by the impact of their work. Nonprofits may seek to have a positive margin at the end of their fiscal year but margin isn’t the goal of their work. Rather, doing good with the money they have, no matter how they define good, is the goal. Outcomes measurement takes into account this unique difference and focuses on the effect of the nonprofit’s work.

Technology Trends that Support Nonprofit Work and Outcomes Measurement

Several technology trends are likely to help nonprofits track dollars to outcomes. These include:

  1. Unified systems: When systems are unified or integrated, the data each contains may be shared among them. By having a unified system in place, nonprofits can more easily apportion funding towards specific programs and outcomes. They can ensure that budgets apportioned for special projects are spent on that project. More importantly, unified systems make it easy to run reports for donors, grant organizations, and other stakeholders. It takes just seconds to click on a report in a unified system and requires no manual data entry to run the appropriate reports to showcase program outcomes.
  2. Measuring infrastructure costs: By measuring the true cost of infrastructure, the costs can be deducted from program costs, thus aligning the true program costs with outcome measurement. Systems and programs to manage infrastructure costs, tied to accounting and finance programs, help nonprofits measure costs and outcomes accurately.
  3. Donating technology: Technology companies, seeking to make a difference, are donating to nonprofits at unprecedented rates. Pro bono services and equipment donated to nonprofits, but especially to traditionally under-served communities, is a growing trend.

Building a Smart System to Measure Outcomes

As you consider outcome measurement, review your current technology uses and needs. Consider working with a nonprofit consultant to evaluate what your nonprofit might need to better measure outcomes.

There’s a noticeable link between transparency within nonprofits and their ability to generation donations and secure grants. A nonprofit that is able to provide clear, consistent data demonstrating success in achieving most or all of their goals and delineating how their funding was used, is much more likely to get grant funding renewed. Reports to the public that showcase results and money spent to achieve such results also encourage donation. By integrating and aligning software and systems, you’ll be able to gather a complete picture of your organization’s finances, achievements, and outcomes more easily, and provide them to a public hungry for honesty and transparency.

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.

Put Dollars Where They Count When It Comes to Software Subscription Fees

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Software subscription fees can sneak up on you. What seems like a small purchase at one time adds up as monthly charges continue to ding your credit card or bank account. Those recurring charges can slowly and insidiously drain your resources and should be avoided, especially if you don’t use the software frequently,

Review Software Needs Quarterly

It’s a good idea to review software charges quarterly and check with your staff to see who is using which software package. While it may be clear to all that an annual subscription to Microsoft Office is necessary for business, you may not know what other software is being used. Have a team member review subscriptions to ensure that you don’t accidentally cut off something that’s needed by a department or group.

Fundraising Software: a Smart Investment

One area where you won’t want to skimp is fundraising software. Although fundraising software came with a hefty price tag years ago, there are several platforms available that offer plenty of functionality at a low cost.

What should you look for when shopping for fundraising software? To get the most for your money, look for the following features:

  • No contract: Contracts work in favor of the software owner, not the end user. Even though they may look good on the surface by locking in a rate or special features, your organization’s needs may change. Instead of long-term contracts, look for cancel at any time or at least a monthly contract that enables you to leave without cost with notice.
  • No or low fees: Some software offers a free trial and free or low cost fees for nonprofits. Others enable nonprofits to have up to a certain number of users before fees are applied. Read the fine print and look for software with low or no transaction fees.
  • Payment processing with standard rates: Review the fees the system charges for payment processing and compare them to standard rates. Make sure that the software vendor isn’t overcharging for payment processing to make up for giving away the software subscription ‘free.’

Best Features in Fundraising Software

Not all fundraising software is created equal. Each offers unique features and benefits. The right software for your organization is the one that solves the problems your team faces when it comes to managing fundraising activities.

When reviewing fundraising software, look for the following features:

  • Easy integration: New software such as fundraising software should integrate easily with your existing software. If it doesn’t, you’ll end up spending precious resources to make it work. For example, manual data entry gets tiresome quickly if you have to import everything from the fundraising system into the accounting system by hand. Check to make sure that any new fundraising software under consideration integrates easily with your existing platform. If it doesn’t, what might you need to do to make it work? What are the costs, opportunities, and benefits of using it over another platform that does integrate easily?
  • Customization: Can you customize messages to constituent groups? This is important because customizing messages can increase donation and gift size. The more you can speak directly to the interests and needs of groups on your list, the greater the potential opportunity. “Canned” responses that cannot be customized limit your fundraising abilities.
  • Tracking potential: Does the software enable you to track potential donations or just incoming ones? Those that have layered tracking, giving you different views of where potential donations stand in the pipeline, offer greater flexibility.
  • Planning capacity: Lastly, does the fundraising software allow for planning events and donations?

Not all software is needed or needed all the time. Fundraising software contributes directly to an organization’s cashflow and, as such, should be considered an important technology to keep. That doesn’t mean that you can afford to waste money on it, however. Reviewing your current package and considering a new one should be a routine step to maintaining the right fundraising software for your organization’s needs.

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.