Tag Archives: finance

Things to consider when making donations

Making donations to charitable organizations can be a very strategic, methodical, and evaluative process. For many, the donations are more than mere “gifts”, they’re actually investments in causes, organizations, needs, and beneficiaries. A key component of the donor-decision process is quality information. When working with our clients on their giving strategies, we advise an analysis of organizations in five functional areas of charitable operations.

Data & Efficiency

Be sure to look at the organization’s finances to determine such things as proper allocation of funds between administration, programs, fundraising, etc. We recommend using Guidestar to review the organization’s 990 provide sufficient data for an initial screening, enabling donors with a good look at financial performance.

Finance & Fund Development

Non-profits have an obligation to act as responsible stewards in managing their financial resources. This includes compliance with financial requirements, sound accounting principles, and fiscal responsibilities. Since non-profits act as the intermediary between donors and beneficiaries, they have an ethical obligation to ensure proper handling of funds to carry out their missions.

Governance

A non-profit’s leadership, represented by its staff and board of directors is responsible for defining the organization’s mission and for providing overall leadership and strategic direction to the organization. Strong boards strive to ensure that their organizations have adequate resources, provide direction for the executive director and key staff and, evaluate their own effectiveness as governing bodies.

Human Resources

The ability of an organization to make effective use of the energy, time and talents of its employees and volunteers is essential to accomplish the organization’s mission. Exercising fair and equitable practices that attract and retain qualified volunteers and employees is just one best practice. Nonprofits have an obligation to adhere to all applicable employment laws and to provide a safe and productive work environment.

Public Information

Non-profits that provide information to prospective donors and other constituents promote informed and responsible philanthropy. This works to their advantage as donors are better able to make decisions when they can learn a nonprofit’s purpose, who governs it, how it manages its financial resources, whom the nonprofit serves, and what progress it has made toward achieving its mission.

Ideally, donors placing their “investments” with organizations are doing so through strong existing relationships. However, whether donors are already engaged with these organizations or have yet to meet their leaders, taking an in-depth look at these five areas will help solidify the receipt, usage, distribution, and recognition of financial contributions.

 

 

Areas to consider when considering funding, community collaborations

As a company, NPcatalyst strives to enhance the impact and visibility of philanthropy. We work with donors (primarily businesses) to create greater connections with their communities, where they contribute time and voluntary leadership. We introduce them to opportunities and community-benefit organizations (and their leaders), thus guiding them to successful community giving initiatives. We also work with community organizations to help create greater awareness, donor relations, development (fundraising) strategies, and recruit new donors and leaders. It’s an innovative approach to building community leadership, pride, and growth.

In daily conversations with donor and non-profit organizations, we frequently receive two questions. First, donors ask how and where the should contribute their money. At the same time, charities ask how they can raise more money from existing and new donors. The answers to both questions have commonalities, such understanding community needs and how donors and charities work together to meet them.

The strategies NPcatalyst creates for both donors and charities involve transparency and greater knowledge of funding and the organizations which receive them. It’s important, for many reasons, to have a keen understanding of how the organization is meeting community needs, how the organization is managing and performing, and precisely how the funds are allocated.

Providing this type of information to donors and, at the same time, leveraging it for greater public awareness, is why NPcatalyst created its HealthCheck system. Through an review of the Form 990 and answers from a 60-question survey, organizations receive a ratings analysis and a best practices tool in five areas. Beyond its ability to promote an organization’s strength and raise funds by ensuring their proper usage, it’s a great way to build upon the weak areas by implementing the recommended best practices. Here’s a close look at the five areas being analyzed.

Data & Efficiency

HealthCheck utilizes the IRS Forms 990 to analyze a non-profit organization’s financial performance in key performance categories. Upon analyzing performance categories, we assign a score as it relates to the organization’s efficiency, capacity, and overall financial health.

Finance & Fund Development

Non-profits have an obligation to act as responsible stewards in managing their financial resources. They must comply with all legal financial requirements and adhere to sound accounting principles that produce reliable financial information, ensure fiscal responsibility and build public trust. In addition, non-profits act as the intermediary between donors and beneficiaries and have an ethical obligation to ensure proper handling of funds to carry out their missions. Questions include:

  • The percentage of board members who make personal contributions.
  • The organization complies with all federal, state and local laws concerning fundraising practices.
  • The percentage of $250+ donors who received a written acknowledgement in the previous calendar year.

Governance

A non-profit’s leadership, represented by its staff and board of directors is responsible for defining the organization’s mission and for providing overall leadership and strategic direction to the organization. Each non-profit board should: ensure that the organization has adequate resources to carry out its mission and provide direction for the executive director and key staff; and evaluate its own effectiveness as a governing body and as representatives of the community in upholding the public interest served by the organization. Questions include:

  • The average percentage of board attendance at board meetings.
  • The organization pursues or is open to new strategic alliances (or collaborative partnerships) to achieve organizational goals.
  • The percentage of board members who have participated in an official board orientation process.

Human Resources

The ability of an organization to make effective use of the energy, time and talents of its employees and volunteers is essential to accomplish the organization’s mission.

Non-profit organizations should place a high priority on exercising fair and equitable practices that attract and retain qualified volunteers and employees. Nonprofits have an obligation to adhere to all applicable employment laws and to provide a safe and productive work environment. Questions include:

  • Employees receive formal performance evaluations.
  • The organization complies with all federal, state and local employment laws when hiring and employing personnel, including withholding and payment of payroll taxes.
  • The percentage of the organization’s employment positions which utilize a clear, current and written job description.

Public Information

Non-profits that provide information to prospective donors and other constituents promote informed and responsible philanthropy. Donors are better able to make decisions when they can learn a nonprofit’s purpose, who governs it, how it manages its financial resources, whom the nonprofit serves, and what progress it has made toward achieving its mission. Questions include:

  • The organization conducts a financial audit.
  • The organization conducts a constituent satisfaction survey.
  • The organization provides board meeting minutes and financials to those who request them.

The more satisfaction donors feel about the contributions they make to community-benefit organizations, the more likely the community’s needs will be met. At the same time, the charities which address those needs will be strengthened, so that others may engage as donors and volunteers. NPcatalyst’s HealthCheck is an outstanding resource  used when building collaborative partnerships between donors and charities.

For more information about philanthropy, collaborative partnerships, and charity research, contact NPcatalyst at http://www.npcatalyst.com/, info@npcatalyst.com or 775-333-9444.