Managing Non Profit Midterm

NTEE

National Taxonomy of Exempt Entities

The key roles nonprofits play in our society

Perpetuator of democracy Economic stimulator Community stimulator Advocate Innovator Service provide

The difference between mission and vision statements

What an organization does (action and result) Who it does it for (audience) What you want your organization to become

Ad hoc committee

committee created for a special purpose

Term Limits

legally prescribed limits on the number of terms an elected official can serve

intermediate sanctions

tax law sanctions may be imposed on persons who improperly benefitted or resided over an improper transaction resulting in excess benefit.

Quorum

the minimum number of members of an assembly or society that must be present at any of its meetings to make the proceedings of that meeting valid.

social profit

to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders.

altruism

unselfish concern for the welfare of others

The three main functions of a nonprofit leadership

1. Direction 2. Oversight 3. Resources

The two defining aspects of a nonprofit organization - purpose and profit

1. Purpose "An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes: Religious Charitable Scientific Testing for public safety Literary Educational Fostering national or international amateur sports competition The prevention of cruelty to children or animals 2. Use of profit Prohibition of private inurement: Nonprofit organizations cannot distribute profits to those who control it, like directors and officers Mission and Vision statements

The four steps to create a nonprofit

1. Research and organize 2. File for state corporation status 3. Obtain federal tax exemption determination 4. Register for charitable solicitation

Board of Directors/Trustee

A board of directors is a recognized group of people who jointly oversee the activities of an organization

Public-private partnerships

A contractual arrangement between a public agency (federal, state, or local) and a private sector entity, wherein both parties assume substantial financial, technical, and operational risk.

Nonprofit Organization

A group organized for purposes other than generating profit and in which no part of the organization's income is distributed to its members, directors, or officers Nonprofits organizations are Important to our community and they help provide services, goods and resources to meet community needs.

Benefit corporation

A new legal tool to create a solid foundation for long term mission alignment and value creation. It protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO.

Standing committee

A permanent committee that meets regulary

Bylaws

A set of governing rules adopted by a corporation or other association.

Millennial

According to the Pew Research Center, millennials were born between the years 1981 and 1996.

Fiduciary responsibility

An ethical and legal obligation to perform a person's duties in a trustworthy manner.

Fiscal Sponsorship

Arrangement that allows for a project, organization, or individual lacking tax-exempt status to utilize said status of a legitimate nonprofit.

Nonprofit products and services

Arts & culture Art institutions art preservations arts education Education and Research Environment and animals Animal nonprofits include humane societies, wildlife sanctuaries, fisheries, veterinary organizations and zoos health human services

ALICE

Asset Limited Income Constrained Employed

Who determines a nonprofits mission, policies, and procedures

Board of Directors

How business leaders like Carnegie, Rockfeller, and Geoff influenced philanthropy (1860-1920)

Carnegie was perhaps the first to state publicly that the rich have a moral obligation to give away their fortunes. In 1889, he wrote The Gospel of Wealth, intelligent philanthropy could eliminate the root causes of social problems; traditional charity only responded to surface suffering. Recommended that his fellow businessmen return their surplus wealth to the population in ways that would "do them lasting good" Their ideas and money sustained charitable, educational, and religious institutions, but their companies became important to the effort to improve society.

Challenges in managing a volunteer program

Competition Autonomy Time Obedience Information

The three types of volunteer recruitment

Concentric circles recruitment - Concentric Circles Recruitment is the idea that people who already have a connection to your organization are more likely to volunteer than those that don't. Warm-body recruitment - Warm Body Recruitment. Warm Body Recruitment, also called Mass Recruitment, is used when you are trying to recruit for a position that can be done by most people, either because it doesn't require special skills, or the skills can be learned in a short period of time. Targeted recruitment -Targeted recruitment, as the name suggests, is recruitment targeted at a specific group. These groups could be people with a specific skill set, from a certain demography, of a certain under-represented group or ethnicity, etc. Examples could be targeted recruitment of under-represented groups such as females, Hispanics, African-Americans, native Americans, etc.

Key similarities between modern nonprofit structures and the voluntary associations of Colonial America

Corporations, trusts, philanthropy, and volunteer service were common Self-governing, with decisions made by members who delegated power to governing boards No owners or stockholders Exempt from taxation Could accept donations, to be used for charitable purposes

The differences between the cost savings and cost effective benefits of volunteerism

Cost saving is the amount of money you would have paid someone to do what the volunteer is doing. Cost effective is all the other benefits that volunteers bring to the table. For example, a volunteer who is doing tax preparation for low-income people at the United Way - the hourly rate you would pay a CPA to do this work is the cost savings. The cost-effectiveness is the skill set, knowledge, expertise, social network, and all the other intangible things that individual is bringing to the organization.

Responsibilities of the Board of Directors

DIrection Oversight Resources Duty of Care Duty of Loyalty Duty of Obedience Provides leadership and strategic direction Establishes guiding policies Secures resources to achieve mission, vision, and goals Ensures effective use of resources Oversees Executive Director performance Helps maintain effective ongoing relationships Ensures and enables accountability

Duty of care, loyalty, and obedience

Duty of Care: requires that a nonprofit board member participate actively in governance and oversight of an organization's activities. This includes attending board and committee meetings, reviewing and understanding the organization's financial documents, helping to frame strategic plans, identifying and managing risks as well as opportunities, and taking prudent steps to advance the organization's mission and goals. Duty of Loyalty: requires that a nonprofit board member act in the best interest of the organization at all times. This includes identifying and disclosing potential conflicts of interest before joining the board, and when they arise. Duty of Obedience: requires that a nonprofit board member work to ensure that the organization complies with applicable laws and regulations, acts in accordance with its own policies, and carries out its mission appropriately.

Challenges of the hierarchical nonprofit model

ED/CEO has a better "working knowledge" of organization's operation than the Board ED/CEO typically has more sector-specfic expertise than Board In some organizations, ED/CEO has voting power on the board A reputable study found that in most nonprofit organizations, ED/CEO sees him/herself as the most accountable entity... so does the board

The nonprofit sector can compensate for the government's limitations

Experimentation Responding quickly Serving specific interests

Governance

Governance is the process of providing strategic leadership to a nonprofit organization. It entails the functions of setting direction, making policy and strategy decisions, overseeing and monitoring organizational performance, and ensuring overall accountability.

Local nonprofits and the services they provide

Habitat for Humanity of Frederick Co. Habitat for Humanity provides families in need with affordable home ownership. Partner families work side-by-side with volunteers from the community to build, renovate or repair their homes. United Way of Frederick County UWFC have a vested interest in making Frederick County the best place to live, work and raise families and believes that everyone-no matter where they have started or ended up - should have the opportunity to be great. Provide ALICE report which demonstrates over one third of Fredrick County households can no longer afford to live in Frederick County. UWFC investments and programs are aligned to support and increase health, education, and financial stability of ALICE households. Religious Coalition for Emergency Human Needs the Religious Coalition for Emergency Human Needs has been providing those most at risk in our community with emergency shelter for homeless adults and families, healthcare assistance to the uninsured, utility assistance, homeless prevention programs and food assistance through local food banks.

Why nonprofits are nonpartisan

It is the law of the land - and good for the nonprofit community and those we serve - that charitable nonprofits must remain nonpartisan. Section 501(c)(3) of the Internal Revenue Code expressly directs that charities and foundations shall "not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." There is both safety and power in that limitation. If individual organizations came to be regarded as Democratic charities or Republican charities instead of the nonpartisan problem solvers that they are, it would diminish the public's overall trust in the sector and thus limit the effectiveness of the nonprofit community. nonpartisanship respects the diversity of political opinions among nonprofit staff, volunteers, and the people served. Nonpartisanship also strengthens an organization's ability to advocate across partisan lines and have access to diverse community leaders and funding sources.

Johnson Amendment (1954)

It prohibits non-profits to endorse or oppose political candidates, this includes religious groups.

Board committees

Large boards typically create committees that focus on individual subjects (e.g., audit, compensation, litigation, nominating), increasing the board's efficiency.

Nonprofits play a crucial role in perpetuating democracy

Nonprofit organizations represent the primary vehicle for these free- doms and for the realization of any democracy that is "of the people, by the people, and for the people." Nonprofits have an obligation to represent their constituents' needs to the government, media, and public at large. they provide opportunities for civic engagement and volunteerism, nonpartisan voter education and mobilization, public education, advocacy

The differences between outcomes and outputs

Outputs are services or programs that nonprofits provide. Outcomes are goals or metrics the nonprofit is using to gauge success. For example, a nonprofit that provides education programs for at-risk youth may provide SAT study sessions (output) and monitor SAT test scores (outcome) or college admission percentages (outcome) to determine success.

How tax-exemptions is determined

Primary Purpose test: The purpose of an organization determines in part whether it can qualify as tax -exempt, and if so, what category of exemption is applicable Organizational Test: The organizational documents should include a statement of purpose (to include the mission) and a dissolution clause. Operational Test: Organizations should exist for one or more exempt purposes, and avoid private inurement and political campaign activity. Private Inurement Doctrine: No part of the organizations net earnings may inure to the benefit of any private shareholder or individual. The standard of reasonableness is applied to salaries and like transactions Public Policy Test: The organization must operate in conformance with federal public policy Legislative activités law: Charitable organizations may engage in legislative activities to the extent that lobbying is not a substantial part of their overall functions Most categories of nonprofits that are eligible for tax-exempt status must apply for recognition through the IRS

501(c)3

Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. Grants from governmental entities and private foundations often require 501(c)(3) status, so the status is necessary to receive such funds. This status also gives the organization the public legitimacy of IRS recognition, an important factor when grant makers are determining funding.

Examples of social entrepreneurship

Social entrepreneurship is important because it provides a framework for businesses to find their own success in the pursuit of helping others. It's a constant source of motivation for employees, especially for Generation Y, which is increasingly skeptical about the traditional corporate work environment. Scott Harrison Lack of clean and accessible drinking water is a big problem globally. Inaccessibility to safe drinking water is what millions of people worldwide face every day. After a moment of clarity in Liberia, club promoter Scott Harrison decided to make it his mission to change. He headed up a non-profit organization charity: water. Since it began, the charity has delivered clean drinking water to more than a million people in 17 different countries around the world.He is perhaps one of the most successful social entrepreneurs of all time, with his organization growing more than 100% in the first quarter of 2011, despite a major economic crisis that paralyzed many similar ventures. , "Water as a for-profit startup that has no profits." They give away 100% of their profit to the countries that need clean water. Muhammad Yunis He has quite literally written the book on social entrepreneurship, sharing his expertise in micro-finance and social capitalism through some books. He is the founder of Grameen Bank, an institution that provides microcredit loans to those in need to help them develop financial self-sufficiency. It was founded in 1983 and the bank has brought in a net income of more than $10 million. Notably, his work with the organization landed him a Nobel Prize in 2006.

The importance of bylaws

The Bylaws of a nonprofit are the legally binding rules by which the organization is governed. They set forth the structure of the organization and guide the Board of Directors ("Board") in the conduct of its business. In essence, Bylaws are the operating manual for a nonprofit. Like an operating manual, all too often they are only referred to when something goes wrong. A nonprofit that is exempt from federal income tax, as defined under Internal Revenue Code 501(c)(3), is required to submit a copy of its Bylaws along with its application for tax exemption under IRS form 1023 (Application for Tax Exemption). A Board can protect itself from legal challenges by adhering to its Bylaws. While Bylaws are not necessarily public documents, nonprofits that make them available to the public increase the accountability and transparency of the organization.

The two things a mission statement should define.

What an organization does (action result) Who it does it for (audience)

Give-or-get

Your board members agree to either donate (give) a certain amount of money every year, paid for out of their own personal resources. Or they agree to raise the equivalent amount from others (get).

Volunteers

are individuals who provide services without any expectation of compensation, and without any coercion or intimidation.

Commensurate

corresponding in size or degree; in proportion

Eleemosynary enterprise

describes things that are related to charitable giving, especially when you're talking about assistance to the poor. Donations are usually tax deductible.

Private foundation

is dedicated to carrying out a charitable mission. However, a private foundation is not a public charity because, instead of receiving public support, it is funded and controlled by an individual, family, or corporation.

Constituent/Beneficiary

it is a person who either actively or passively receives services from a nonprofit. For example, for the library, our constituency is Frederick County (our service area) and our beneficiaries are the people who use the library.

Incentives used to recruit and retain volunteers

make good first impression make their effort worth their time Flexibility Go above and beyond Show appreciation Give volunteers a boost

Inurement

providing an employee benefit, such as salary, that is greater than the value of the employee's work

Social entrepreneurship

pursues innovative ways to solve pressing social problems

An effective volunteer program

recruitment and screening procedures orientation and training thoughtful task assignments adequate supervision ongoing motivation appropriate recognition evaluation as needed program assessment