In the nonprofit world, when you think about the list of things that impact your organization’s financial health, what normally comes to mind are things like grants, donations, operational expenses, and employee salaries. But there is another, less obvious variable that can have a strong impact on how your brand, and ultimately, your bottom line. It’s your tagline—a few small words that make all the difference in how your nonprofit is perceived by the public.

According to The Nonprofit Tagline Report from GettingAttention.org, the majority of nonprofits don’t even have a tagline, or they are dissatisfied with the ones they currently have. In the report, only 41 percent of the organizations that had taglines rated them as effective.

Why is this important? Because as any good marketer will tell you, your tagline is a powerful extension of your brand name. It identifies who you are, what you do, and why you are different from everyone else.  Second only to your nonprofit’s name, your tagline is the most frequently used marketing message you use. And that directly translates to how you are perceived by grant-giving organizations, donors, volunteers, and the public.

The Nonprofit Tagline Report is an excellent resource that offers an extensive list of dos and don’ts for developing a strong tagline. Carve out some time to with your staff, volunteers and other stakeholders to evaluate your existing tagline, or to create a new one from scratch. Use this as an exercise to unify your team on your mission and your elevator pitch.

Here are some highlights from the report to get you started. Your tagline:

1. Must be eight words or less
2. Must convey your nonprofit’s impact or value
3. Must be authentic
4. Must make an emotional connection
5. Must be specific to your organization

As you work through the process, check out the Nonprofit Tagline Database for some creative inspiration and to make sure that your new tagline isn’t already in use. Your bottom line will thank you!

For most Americans, the date June 30 represents the early days of summer and the promise of warmer weather. But for many nonprofit organizations, it marks the end of the fiscal year. Like fireworks in July or turkey in November, this milestone also comes with its own set of traditions—most of them financial in nature.

Here is a partial fiscal year end checklist:

• complete next year’s budget
• process expense reports
• make sure that all payments are out and all receivables are in
• complete and print grant forms and financial statements
• prepare your form 990

But before you completely turn the page on your fiscal year, there is one more item you’ll need to check off your list—your annual report.

Unlike the other year-end responsibilities, your annual report allows you the opportunity to break from the routine and get more creative. It is, in reality, a marketing piece, loaded with enormous potential to inspire your donors, volunteers and employees. It is where you describe all that you achieved during the year and illustrate exactly why your mission matters. So why not create a report that really shines?

Here are four tips to help you take this year’s annual report to a new level:

• Write an engaging, executive message. In 300 to 400 words, start with the overall focus of the year. Perhaps you had a theme that tied all of your accomplishments together. Use a conversational tone that is to the point, easy to read, and grabs the reader’s attention. Express gratitude for the people who helped you reach your goals, and briefly describe your aspirations for the coming year. Include a clear and compelling call to action.
• Consider an alternative format. You don’t have to stick with the standard PDF file on your website. Instead, a short video may be a more effective medium for sharing success stories and communicating with your constituents. Click here for an example of a video report from VolutneerMatch.com that really demonstrates all they are doing to build a stronger community. Videos take more time and effort to produce, but are more likely to be seen than traditional formats. You could also condense your report into a postcard (example) or expand it into its own microsite (example) depending on the needs and preferences of your audience.
• Use dynamic visuals. Colorful graphs and charts will more effectively convey the data than running text. Where your revenue comes from, where it is spent, and information from your financial statements are all good topics to communicate with visuals. In fact, your entire report can be delivered as an infographic. A quick search on Pinterest reveals a number of examples that demonstrate how—in the hands of a skilled graphic designer—your annual report can really come to life. Click here to see.
• Tell stories. Nothing is more inspiring than the real-life stories of the people and the communities you have served. Their faces, their words, their experiences are the most powerful tools for engaging donors and showing the impact that your organization is having. In this report from the Girls Inc. national office, participants describe how the program has positively changed their lives, giving donors a clear view of what their contributions mean to people in their community.

If you need more inspiration, here are some additional examples that might spark your imagination:

• Austin Children’s Shelter
• Flywheel
• Austria Solar

In today’s nonprofit landscape, charitable organizations are under tremendous pressure to maintain a high level of transparency in their operations. By sharing information, a nonprofit is perceived to be more trustworthy, more accountable to its constituents, and hopefully, more deserving of donations.

Also part of the landscape, are organizations like GuideStar and the Foundation Center that collect detailed information about nonprofits and offer their findings to the public at no cost. Their goal is to collect and present detailed information about nonprofits in an organized way so that donors can make informed decisions and comparisons to guide their giving. So for the nonprofit, there is a lot at stake when it comes to building a reputation of openness and transparency.

But how do you ensure that you are providing enough information to the public without going too far? How do you ensure your transparency doesn’t backfire? Where is the balance? Here are some basic guidelines that can help:

DO: Post a complete and accurate Form 990 on your website. Besides being a legal requirement, your Form 990 is the single most important tool for building trust and confidence among your constituents.
DON’T: Publicize the names of the donors that are listed on your Form 990—this information is confidential. Your donors have the right to remain anonymous until you have their express permission to share their identities.
DO: Share your Form 1023 that states your organization’s mission. It also lists the name, title, address and compensation of your officers, directors, trustees, employees, or contractors that receive greater than $50,000 per year.
DON’T: Provide the private street address for the individuals you list on your Form 1023. The IRS now allows the use of a mailing address in lieu of a street address in order to protect the privacy of employees.
DO: Disclose the minutes of board meetings as well as meeting notices if your organization operates in a state that has sunshine laws.
DON’T: Share the minutes of your executive meetings as these sessions often include discussions about confidential matters.
DO: Provide all audited financial statements per your state requirements.
DON’T: Disclose your organization’s financial budgets. A budget is merely a plan—a projection for the future that may or may not come to fruition. It is more important to share your year-end financial statements that reflect how your nonprofit ACTUALLY performed.

“I find that when you open the door toward openness and transparency, a lot of people will follow you through.” Kirsten Gillibrand, US Senator

“It is one of the beautiful compensations of life that no man can sincerely try to help another without helping himself.” This quote by Ralph Waldo Emerson eloquently highlights the internal reward that we naturally experience as a consequence of helping others. Perhaps this internal reward is the reason that more than ever, people are looking for opportunities to be engaged on a deeper, more meaningful level with the issues that matter to them. And perhaps it also explains the rising popularity of giving circles over the last decade, particularly among minority donors.

What are giving circles?

Giving circles are a relatively new form of philanthropy where groups of people pool their financial resources together in order to have a greater impact on a specific cause such as education, environmental protection, or women’s health. Collectively, the members decide how the money will be distributed to best achieve their goals. More so than other types of philanthropy, giving circles focus on providing members with a rewarding, hands-on, communal experience through collective decision making and educational activities. This personalized approach to philanthropy appeals to many donors who want to do more than write a check. These donors wish to actively participate in the circle’s grant making functions and build social networks of like-minded individuals.

How do giving circles fit into the nonprofit landscape?

Giving circles may be large or small, formal or informal, and are typically hosted by a nonprofit foundation. For a fee, the host organization provides support such as administrative resources, operational guidance, and instant credibility within the community. More importantly, the host organization lends its 501(c) status, thereby eliminating the need for the giving circle to establish its own nonprofit structure with the IRS. This contribution alone significantly reduces the administrative burden on the members of the giving circle, allowing them to focus more on more fulfilling, mission-related activities.

Should my nonprofit host a giving circle?

Giving circles have the potential to bring value to the nonprofit in a number of ways including: access to new volunteers, a renewed sense of enthusiasm and awareness in the community, and the ability to have a broader impact in its mission. In an article by Angela M. Eikenberry, nonprofit professionals reported that beyond financial contributions, the members of the giving circles and their connections to more qualified leads can improve the overall caliber of the host organization. (Source)

There are however, a number of issues that nonprofit boards need to consider to ensure that hosting a circle is a positive, mutually beneficial experience. Here are some important questions nonprofit leaders should raise:

• Does this align with our mission?

Every nonprofit has an official mission statement that appears on their Form 1023, a document that is submitted to the IRS to achieve nonprofit status. In order to maintain nonprofit status, the organization’s activities must align with its stated mission. Activities that fall outside the scope of the mission (no matter how noble the intention) can put the nonprofit at risk with the IRS with penalties that can range from unexpected taxes to loss of exempt status. In addition, engaging in activities unrelated to the mission statement can jeopardize a nonprofit’s good standing among its constituents.

• What is the full nature of the commitment?

It is important for the leaders of the nonprofit and giving circle to clearly communicate the agreed upon level of support in terms of resources, data management, communication, and decision making authority. Documenting the roles and responsibilities will go a long way to ensure the success of the relationship.

• What are the financial implications?

While many host organizations collect an administrative fee, these typically do not fully cover operating expenses of hosting a circle. In addition, some hosts offer matching funds to either seed a new giving circle or to support a circle on an ongoing basis. These and any other financial commitments should be clearly defined for the benefit of both groups.

The good news for the philanthropic community is that there is a trove of people who are looking for more meaningful giving experiences in the context of their 21^st century lives. Giving circles, when supported by host organizations, provide a unique outlet that benefits the donor, the nonprofit, and the community—a win-win-win all around.

Additional Reading:

• Growing Philanthropy Through Giving Circles: Lessons Learned from Start-Up to Grantmaking, The Association of Baltimore Area Grantmakers
• Giving 2.O: Getting Together to Give, The Stanford Social Innovation Review

Seven Tips That Make Creating a Budget a Little Easier

June 30 marks the end of the fiscal year for many nonprofits. In the weeks prior, these organizations are busy setting the strategy for the year ahead and creating a budget that will help them achieve their mission goals. But creating (and passing) a budget in a timely manner isn’t as easy as it may seem. It requires strategic planning, resources, and project management skills that many organizations fail to employ. If you are in the middle of your budget season, or want to make some improvements to your process next year, here are seven tips to consider that will simplify the process for everyone involved:

1. Give yourself plenty of lead time. Plan to have the final budget approved at least two months before the beginning of the new fiscal year, and give yourself at least two to three months to create the new budget. It is important to allow enough time to carefully research current expenses and contracts, seek competitive bids from suppliers, and bring leaders together for review, feedback, and discussion.
2. Document roles and responsibilities. This is where your project management skills come into play. Develop a spreadsheet to track all of the tasks that are required for your budget process along with the names of those responsible for each task and their deadlines. A formal, socialized document will keep everyone accountable for providing their deliverables according to the project timeline and will keep you on schedule.
3. Engage the right people. Naturally, budget committees should be comprised of financial leaders and senior staff, but your program directors can also provide invaluable insight on how budget cuts or increases will impact the quality of your programs, and ultimately, your organization’s ability to achieve your mission goals. Their input provides a perspective beyond dollars and cents, so it is a good idea to allow program directors to provide budget worksheets that can later be reviewed and vetted by budget committee members. Engaging staff at all levels will go a long way in gaining buy-in and developing good will on your team.
4. Be realistic about revenue projections. Create detailed worksheets that outline the different kinds of revenue by source: earned revenue, contributed revenue, grants, contracts, in-kind contributions, etc. and identify whether these sources of income are reliable or transient. It is a best practice to establish “what-if scenarios” to map out how you will modify your programs if any of these forms of revenue are lower (or higher) than expected.
5. Carefully evaluate expenses. Look at last year’s documents to identify excesses or shortages and how these will be managed in the new fiscal year. Determine fixed versus variable expenses and how your reliable income aligns to fixed expenses. A financial consultant can help you decide if and when a deficit, a surplus, or a balanced budget is the best strategy for your unique, organizational goals.
6. Develop a summary budget. It isn’t always necessary or expedient to provide your board of directors with a detailed budget that gets too deep “into the weeds.” Consider creating a high-level version of the budget where items like auto insurance, liability insurance, etc. can be lumped into a single category. These items can be linked in a spreadsheet to the detailed budget when more granular information is required.
7. Summarize your approach. Provide a summary statement that explains the approach your budget committee took in creating the budget – your assumptions, your expectations, and your plans for dealing with variances. This context will ensure that your budget is perceived as more than just numbers on a spreadsheet, but as a carefully constructed, strategic plan for achieving the goals you’ve set for the upcoming year.

Hopefully, by July 1 your staff will have begun implementing your new budget and will have refocused their attention to executing the new year’s programs. By becoming operationally efficient at creating a budget (or any other administrative task) you empower your team to do more in the communities you serve. Take some time to review your budget process and how these recommendations translate to greater impact for your mission.

In the first few weeks of any new year, there is a ritual among nonprofit organizations that is as regular as the changing of the guards at Buckingham Palace.  Boards of directors come together to map out the year ahead, review budgets, and welcome their newly elected members.  Typically, new members have been selected because of their potential fundraising abilities or their expertise in a particular field. It is the board’s hope that the new director will bring a fresh perspective and help further the organization’s mission. But as power is transferred from the old directors to the new, it is important for the newcomers to fully understand the responsibilities behind the roles they are accepting—i.e., how to effectively guard their posts.

There are three basic principles of nonprofit corporate law that can help serve as a moral compass and govern the decisions of a board member throughout his or her term.

1. Duty of care. Duty of care refers to a board member’s responsibility to act in the same manner that any other “reasonable” person might act in the same circumstances. It implies that a person must make decisions in good faith and use rational judgment. This can also include taking precautions to avoid any reasonably foreseeable harm that might come to others or to the organization.
2. Duty of loyalty. Board members have a duty of loyalty, or a responsibility to always act in the best interest of the organization without any conflicts of interest. This can become a gray area for many board members who own businesses or hold positions in companies that stand to gain from the activities of the nonprofit. It is always a best practice to make any potential conflicts of interest known to the board so that the appropriate approval processes can take place and there is never a perception of self-dealing.
3. Duty of obedience. The duty of obedience refers to a board member’s obligation to remain faithful to the organization’s mission statement. Board members have been entrusted by their constituents to ensure that resources are being used to accomplish the organization’s stated goals and not being diverted to other purposes. The mission statement of any 501(c) organization can be found on their Form 1023.

The first meeting of a new year is an excellent time for boards to dust off their Form 1023 and make sure that all of their planned activities align with their original mission statement. It is also a time for reviewing the legal and fiduciary responsibilities of the board so that they can effectively guard and protect the organizations they serve—just like the guards at Buckingham Palace, but without the bearskin caps.