Nonprofit Risk Management: 5 Frequently Asked Questions

Guest post by Jitasa

For nonprofit leaders, it’s crucial to understand what steps to take when unexpected negative situations arise, which is why risk management is a key part of successful strategic planning. While taking some risks is necessary for your organization to grow, even the risks you take on voluntarily can become harmful without careful management.

Especially when everything is going well for your nonprofit, it can be hard to know where to start with risk management. Fortunately, this guide will help you develop an actionable strategy for your organization by answering these frequently asked questions:

• What is nonprofit risk management?

• What effects can risky situations have on my nonprofit?

• What are the most common types of nonprofit risk?

• How do I conduct a risk assessment for my organization?

• How can my nonprofit mitigate and prevent risks?

Keep in mind that the most effective risk management plans are proactive rather than reactive. Instead of waiting until a risky situation comes up, start while your nonprofit is in a good position, and include preventative measures in your plan as well as mitigation strategies. Let’s dive in with an overview of what risk management is in a nonprofit context.

What is nonprofit risk management?

Jitasa’s nonprofit risk management guide defines risk as “the probability that something bad might occur. This might be due to internal circumstances at the organization itself or external factors that pose a greater social risk.”

Based on that explanation, risk management is the process of identifying, assessing, and mitigating internal and external circumstances that could result in something negative happening to your nonprofit.

What effects can risky situations have on my nonprofit?

Not all risks will affect your nonprofit to the same degree or impact the same areas of your operations. However, risky situations that go unchecked can bring about a variety of negative outcomes, including:

• Financial loss. Whether this takes the form of broken contracts, declining investments, or revenue shortfalls, unmanaged risks can have significant effects on your nonprofit’s budget.

• Legal consequences. These can range from lawsuits against your organization to the loss of your 501(c)(3) status.

• Reduced ability to fulfill your mission. Risks can inhibit your organization’s daily activities in many ways, from lowering fundraising efficiency to directly impacting the services you deliver.

• Reputation damage. According to NXUnite, negative publicity and controversy surrounding your nonprofit can break supporters’ trust and cause them to stop contributing to your work.

Not only do these impacts highlight the general need for nonprofits to have risk management plans, but they also show how important it is for each organization to understand what types of risk are most likely to affect them so they can be prepared.

What are the most common types of nonprofit risk?

Just as every nonprofit is different, so are the risks that will have the greatest consequences for each organization. However, the most common nonprofit risks to be on the lookout for include:

• Cybersecurity violations that can expose sensitive information about your organization, its staff, and its supporters.

• Fraud, particularly financial fraud and fraud by impersonation (in which a scammer sets up a fake online donation page, collects “contributions” under your nonprofit’s name, and keeps the money for themselves).

• Theft of money or technology, which is often (unfortunately) perpetrated by someone close to the organization.

• Non-compliance with federal and state regulations, especially because nonprofits are subject to some rules that for-profit organizations aren’t.

Several of these risks—especially financial fraud and incidents of non-compliance—can happen either intentionally or unintentionally. Be aware of this as you identify potential risks for your nonprofit to ensure you don’t overlook issues that could occur by accident.

How do I conduct a risk assessment for my organization?

Risk assessments allow you to determine what risks could affect your nonprofit and how you should go about mitigating them. There are three basic steps to a risk assessment:

1. Identify the various types of risky situations that could impact your organization.

2. Evaluate how likely each risk is to occur and what its most probable consequences are.

3. Prioritize all of your nonprofit’s risks based on both likelihood and impact.

You can either conduct your risk assessment internally using one of the many checklists available online or ask a third-party nonprofit risk management professional to provide an external perspective on your organization’s situation. Both options have advantages and drawbacks—consider your nonprofit’s timeline, budget, and bandwidth as you make your decision.

How can my nonprofit mitigate and prevent risks?

After you assess your nonprofit’s situation and come up with a prioritized list of risks, it’s time to develop your management plan. Start at the top of your list and brainstorm ways to alleviate each risk if it were to occur—or better yet, prevent it from becoming an issue in the first place.

Here are some common risk mitigation strategies your nonprofit might try:

• Tightening data security measures. Consider implementing two-factor authentication on all of your organization’s essential accounts, encrypting your databases, and investing in a PCI-compliant payment processor to keep donors’ information safe. Additionally, practice good nonprofit data hygiene to ensure important information isn’t accidentally misplaced and left vulnerable.

• Reviewing your fiscal policies. Make sure your organization has procedures in place for requesting, accepting, and tracking various types of gifts, reimbursing expenditures on behalf of your mission, and handling conflicts of interest. This protects against all sorts of fraud and compliance issues, in addition to being essential for sound day-to-day operational and financial management.

• Establishing internal controls. In addition to your major fiscal policies, internal controls are procedures specifically designed to prevent risks. For example, many nonprofits require two signatures on checks over certain amounts to reduce the risk of financial fraud.

• Improving communications. Make sure all of your organization’s essential information is properly recorded and reported, from donations made to project updates. Risks can arise when nonprofit leadership, staff members, and volunteers let communication fall by the wayside, so work to prioritize communication among your team.

Once you’ve decided which strategies to incorporate into your risk management plan, share the plan with your board of directors so they can sign off on it and provide oversight as you implement your ideas. Then, hold training sessions for staff members to establish a risk-prevention mindset at your nonprofit and ensure that everyone knows how to mitigate any risks that may arise as they go about their daily activities.

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Nonprofit risk management is an ongoing process. After implementation, monitor how it’s going for six months to a year to ensure your strategies are working. Then, revisit your plan at least once a year to re-evaluate your risk management priorities and develop mitigation strategies for any new risks that have come up since your last review to ensure your organization remains protected long term.

The preceding post was provided by a guest author unaffiliated with DonationMatch. The views expressed within do not directly reflect the thoughts or opinions of DonationMatch.

3 Ways to Grow Your Nonprofit Through Effective Bylaws

Guest post by Foundation Group

The classic nonprofit struggle of raising funds with limited resources can complicate an organization’s ability to meet its fundraising goals. As a nonprofit leader, you know this means you’ll need to leverage every opportunity to grow your nonprofit.

But before you strategize new fundraising campaigns or marketing ploys, go back to the basics: your nonprofit’s bylaws. These internal operating rules provide a strong foundation for your nonprofit’s growth, especially when they:

• Establish clear governance expectations.

• Maintain operational consistency.

• Allow for adaptability and flexibility.

Aside from their vital role in obtaining 501(c)(3) status, your bylaws can also guide your board’s decisions. Let’s take a closer look at how your bylaws can set your organization up for success.

1. Establish clear governance expectations.

At the heart of every nonprofit is a charitable purpose and a plan to meet that need. To accomplish these goals, the organization’s governance must align with its mission. After all, a nonprofit’s governing leaders are the decision-makers that drive action.

To keep your nonprofit on the right path, establish clear guidelines for leadership and decision-making processes, such as:

• Board member rules. Consider how many people will be on your nonprofit’s board. How will board members be selected and appointed, and how long will their terms of service last? According to eCardWidget, nonprofit boards are the driving force behind both big decisions and the delegation of day-to-day tasks. Your bylaws should explicitly include guidelines for how your board will be structured and how it should approach and delegate decisions to maximize efficiency.  

• Voting procedures. When decision-making for your nonprofit, how will votes be handled? Your bylaws should address what types of meetings can be held, the number of people needed for a quorum, and how many votes will be required to pass an initiative. 

• Establishment of committees. Effective leadership delegates wisely to maximize the efficiency of their efforts. Although your nonprofit may have started with a small group to serve as your board of directors, your leadership team will inevitably need to grow and specialize as your nonprofit grows. Include a provision in your bylaws for subcommittees, giving power to the board for their creation and dissolution so that these teams can be assembled on an as-needed basis without having to repeatedly amend the bylaws.

Your bylaws should also include control provisions that take into account the balance of authority. For example, instead of granting reserved powers to one stakeholder, you might require supermajority votes. That way, you can be sure no one authority figure has significant influence over the organization.

2. Maintain operational consistency.

There’s validity in the saying that practice makes perfect. Once you’ve determined a formula for success, you can continue on that path to carry out your nonprofit’s strategic plan. Your bylaws should provide a clear sense of direction for how the organization will operate. That way, you’ll stay on course by following standardized procedures, such as:

• Bookkeeping. Not only is bookkeeping essential to your nonprofit’s existence, but it can greatly impact your ability to grow since it can guide certain financial decisions.  Determine how bookkeeping data and records will be managed, from board meeting minutes to important financial records. Your nonprofit’s accounting responsibilities are a huge undertaking and will grow in complexity as your nonprofit grows. Whether you hire a nonprofit bookkeeping expert or manage your records in-house, you’ll have concrete expectations for orderly and complete books. 

• Managing conflicts of interest. Having to address a conflict of interest can be a hindrance to your nonprofit’s growth, especially if it interrupts your daily operations and important projects. To smooth over these obstacles, follow the conflict-of-interest policy established in your bylaws. This might include details about how to define and identify conflicts of interest, as well as consequences for violating the policy. 

• Practicing transparency. How does your nonprofit practice accountability with the public? Transparency can increase nonprofit support since your community will be more likely to engage with a credible organization. Your bylaws should clearly define what information and documents are open to the public, as well as any materials that should remain confidential. You might also establish a process for sharing this information with interested parties. 

With a consistent process for important operations, your nonprofit can carry out its strategic initiatives in an organized and smooth manner. 

For example, your bylaws might include a section about bookkeeping that states your organization will keep a record of all actions taken by board directors and committees. According to Foundation Group’s guide to Form 990 filing, recording this information throughout the fiscal year can help ensure your Form 990 filing goes smoothly at the end of the year since you won’t be scrambling to put these details together.

3. Allow for adaptability and flexibility.

If you want your nonprofit to grow, you have to give it the room to do so! Include provisions for amending your bylaws in the future so that they remain flexible with the ever-changing needs of your growing organization. Answer the following questions:

• Who has the authority to propose changes to the bylaws?

• Who will be responsible for approving the changes?

• What percentage of a vote is needed to pass an amendment?

Be sure to include that all changes should remain consistent with your Articles of Incorporation. Any amendments made to your bylaws should enhance your nonprofit’s operations, not compromise its eligibility for 501(c)(3) status. Small adjustments can help your nonprofit pursue new opportunities in the future that weren’t foreseeable when the bylaws were originally constructed.

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The most important way to ensure your bylaws support your nonprofit’s growth is to simply know what’s included! These internal guidelines are official, legal documents that your nonprofit is bound to follow. Your familiarity with them can help ensure you follow them closely and give you the insight needed to adjust them as necessary.

The preceding post was provided by a guest author unaffiliated with DonationMatch. The views expressed within do not directly reflect the thoughts or opinions of DonationMatch.

Nonprofit HR: A Beginner’s Guide to The Basics

Guest post by Astron Solutions

Whether you’re new to the nonprofit world and just getting ready to hire your first staff members, or yours is a well-established organization with a large team of employees, you know that your internal team is what powers your mission. 

And while you wear a number of different hats as a nonprofit leader, one of the most important is being an employer. This is because effectively managing your human resources (HR) is imperative for providing a great employee experience and, consequently, having a well-run organization that is able to meet your beneficiaries’ needs and further your cause. 

In this beginner’s guide, we’ll walk you through the basics of nonprofit HR and help you prepare to level up your nonprofit’s HR strategy. Let’s begin! 

Do Nonprofits Even Need HR? 

Yes, nonprofits do need to have HR practices and policies in place. Even though the setup and tax landscape for your organization looks different from that of a for-profit company, and you raise money for a specific cause instead of selling goods or services to customers, you have one big thing in common: just like a company, your nonprofit is an organization with employees. 

According to Astron Solutions, this means your nonprofit must comply with any applicable employment regulations or policies, which makes having a strong HR strategy in place critical. In addition to complying with the law, an HR strategy also empowers you to keep your employees’ needs top-of-mind, which can positively impact your recruitment and retention efforts. 

There are a number of unique challenges that your nonprofit will face as an employer, including: 

• The mission-driven nature of your organization. In a for-profit organization, the focus is on pulling in revenue, and HR helps to support the organization’s efficiency and profitability. But for nonprofits, your mission is at the heart of everything you do, and it can be much more challenging to tie all of your HR efforts to that mission. 

• Limited resources for HR work and compensation and benefits. Many nonprofits find it difficult to make time for HR responsibilities and to have enough in the budget to put toward employee compensation and benefits. This makes it hard to compete with for-profit organizations for talent. A popular approach to tackle this challenge is to emphasize total rewards in your compensation strategy, where you focus on both direct and indirect forms of compensation. 

• Complex staffing needs. Many nonprofits turn to grants to help fund specific programs or projects. These sometimes leave nonprofit organizations more limited in how they schedule and staff different initiatives as they meet the requirements of funders and work on tighter budgets and stricter timelines. 

In addition to considering your employees’ needs and the challenges your organization is faced with as an employer, think about how a strong HR strategy can empower you to do more for your mission. When you have the policies and practices in place to optimize the employee experience, your employees will be satisfied in their jobs, and your team will be in a position to do more for your beneficiaries.

HR Responsibilities for Nonprofits 

If your nonprofit doesn’t currently have the resources to support an entire HR department or hire an HR professional, consider planning ahead to hire an expert in the near future. For the time being, you could outsource your HR needs or work with a consultant. 

Regardless of what HR looks like at your organization, here are the responsibilities that your HR professional will need to take on:

• Talent management. From writing eye-catching job descriptions to hiring the right candidates to onboarding and engaging employees, there’s a lot that goes into the employee lifecycle. Your HR team will develop the strategies your organization needs to find great employees and retain them. 

• Compensation strategy. Compensation will greatly affect your organization’s ability to attract, hire, and retain top talent. Take a total rewards approach to make the most of limited resources, and ensure that you have a strong communication strategy in place to ensure that your employees understand how performance impacts pay and how they can advance their careers at your nonprofit. 

• Compliance, documentation, payroll, and tax reporting. One of the most important things your HR team will help your organization manage is avoiding risk and documenting and maintaining compliance with all employment regulations, such as employee classification. Your HR team also may be in charge of payroll or be involved in submitting your 990 form to the IRS, though these responsibilities often fall to financial professionals. 

• Culture building. Internal culture plays a big role in how satisfied employees are with their jobs, and your HR team will take on the task of developing a positive, collaborative culture within your organization. For example, your HR team may implement an employee recognition program, lead trainings in diversity, equity, and inclusion (DEI), or promote a healthy work-life balance. 

• Volunteer management. While larger nonprofits usually have a dedicated volunteer coordinator or program manager, your nonprofit may be in the position where your HR team manages your volunteers, helping to recruit and retain individuals for your program and ensure they have a positive experience working with you. 

While your HR team will be primarily responsible for managing all of these different tasks, remember that it will take a concerted effort by everyone at your organization to make your nonprofit a great place to work and to keep it that way!

3 Best Practices for Stronger HR Management at Your Nonprofit

Whether you’re getting started with HR responsibilities for the first time or you’re fine-tuning your current strategy, there are three best practices you can leverage to take your efforts to the next level: 

1. Partner with an HR consultant. Whether or not your organization has a full HR department, a nonprofit HR consultant can be a valuable partner for improving your HR strategy. These experts can take a critical look at your existing HR structures and policies and give you tailored recommendations for how to improve, whether you need assistance with your compensation strategy, employee communication efforts, or another aspect of HR. 

2. Prioritize employee engagement and health. Double the Donation suggests providing opportunities for continued learning and career development, giving employees meaningful and challenging work, and celebrating milestones and special occasions. You also can champion mental and emotional well-being by doing things like encouraging employees to use their PTO, holding seminars on the importance of self-care, or leading weekly meditation sessions. 

3. Solicit employee feedback. HR is all about focusing on the people who make your nonprofit’s work possible. So, if you’re wondering how your employees feel about a certain policy or initiative, don’t hesitate to ask them. Collect feedback in meetings with employees or through anonymous surveys. Then, ensure you’re acting on that feedback to make your HR strategy even more effective. 

Another general best practice is to be open and transparent with your employees and to encourage two-way communication. This will help employees develop trust in and loyalty to your organization, which will lead to better retention rates and better outcomes for your cause. 

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Just like their for-profit counterparts, nonprofit organizations need HR policies and practices in place to ensure they’re being the best employers they can be. Use the tips in this beginner’s guide to kickstart or strengthen your HR strategy, and remember that you can always turn to an expert consultant for assistance. 

The preceding post was provided by a guest author unaffiliated with DonationMatch. The views expressed within do not directly reflect the thoughts or opinions of DonationMatch.

Demystifying Form 990: Everything Nonprofits Need to Know

Demystifying Form 990: Everything Nonprofits Need to Know

Guest post by File 990

Your nonprofit’s federal tax-exempt status is a critical factor in achieving your program goals. But, actually acquiring your status can be challenging. Fortunately, with the proper preparation and data maintenance, your nonprofit can conquer your tax preparation. 

Let’s start your nonprofit tax preparation by introducing you to the most important document in the process: Form 990. Ready to learn more?

FAQs about Form 990

Let’s begin by answering some frequently asked questions about Form 990.

What is Form 990?

Form 990 is an annual form nonprofits have to fill out to retain their tax-exempt status with the IRS. The primary purpose of Form 990 is to inform the IRS of your nonprofit’s financial practices so they know that you’re following its tax-exemption guidelines. 

According to File 990, there are a few variations of Form 990. The most common forms are: 

• Form 990-N, for nonprofits with gross receipts totaling less than $50,000

• Form 990-EZ, for nonprofits with gross receipts totaling less than $200,000 but more than $50,000

• Form 990-PF, for private foundations

Usually, nonprofits file the standard Form 990 if they aren’t eligible for Forms 990-N or -EZ, as the standard form is extensive. However, since the forms are available publicly, your nonprofit can file Form 990 even if you’re eligible for an abridged version if you want more transparency into your finances. 

What information is included in Form 990?

The required information depends on the type of form your nonprofit is filing. That being said, this basic information is required for all types of Form 990:

• Employer Identification Number (EIN), also known as a Taxpayer Identification Number

• Organization name and mailing address

• Contact information for the principal officer

• Website address, if the nonprofit has one

• Confirmation of the nonprofit’s annual gross receipts 

• If applicable, a statement that confirms that the nonprofit has terminated services

For the longer forms, your nonprofit will have to provide more information, such as revenue, expenses, board of trustee and staff contact information, and details about your initiatives. 

Why is Form 990 important?

Your nonprofit should prioritize accurately filling out Form 990 to:

• Comply with IRS regulations. Form 990 is necessary to retain your federal tax-exempt privileges and maximize your fundraising revenue. 

• Ensure transparency: Once your Form 990 has been processed, it will become publicly visible. Then, your donors can see that your nonprofit is financially responsible and will handle their donated funds properly. Also, this can prevent fraudulent activity from your staff or board members.

• Establish credibility: Your nonprofit can use Form 990 as an opportunity to provide additional financial context for your accomplishments.   

• Win grants: Foundations and other grantmaking organizations use your nonprofit’s Form 990 to help make funding decisions based on your financial health.

Essentially, Form 990 enables you to show everyone that your nonprofit is a reputable and accomplished organization.

Tips for Filing Form 990

Once your nonprofit knows which version of Form 990 to file, it’s almost time to get started! However, you should keep the following tips in mind before filing your Form 990:

1. Prioritize data hygiene

Your team requires lots of financial and organizational information to accurately and efficiently file your Form 990. According to NPOInfo, the best way to mitigate any human errors while filing is to adopt data hygiene best practices, including:

• Opting for digital solutions rather than paper documents

• Standardizing data entry and maintenance procedures

• Using a CRM and financial database with built-in data-cleaning features

• Regularly auditing, backing up, and removing duplicates from your data

• Training your staff on how to properly use databases

Properly practicing data hygiene streamlines your filing process and allows you to better monitor your financial health, even outside of tax season.

2. Try e-filing software

Not only is filing your taxes online more convenient than via mail but it’s also required for Form 990. But, it can still be confusing to navigate the IRS’ e-filing tool. Fortunately, you can expedite and simplify your filing process by using an e-filing software solution. Using an e-filing platform allows you to avoid expensive accountant fees, save time, ensure accuracy, and preserve your nonprofit’s data security. 

There are many e-filing solutions on the market, so your nonprofit should set your sites on one that's tailored to nonprofit needs. Ensure that your chosen solution has the ability to file the correct type of Form 990 so you can save time and money on the filing process.

3. Account for in-kind gifts

Did you know that the IRS considers non-monetary assets as tax-deductible? In particular, your nonprofit should claim in-kind gifts on your Form 990 to stay in good standing with the IRS.

It can be difficult to determine the exact value of in-kind gifts without a price tag. You can calculate the in-kind donation’s value for your Form 990 by following these simple steps:

• Ask donors to declare the values of items at the time of donation

• Keep track of your in-kind donations in a database throughout the year so you can easily reference your records

• Determine if you’re required to report in-kind gifts

• Calculate the in-kind donation’s fair market value using comps found online or standardized values of common items based on condition, which may be provided by the IRS

• Add this value to your donation total

By accounting for in-kind gifts on Form 990, you can give the IRS a fuller picture of your financial situation and demonstrate your commitment to transparency and accountability. 

Next Steps

Now that you have all of the necessary resources, it’s time to start filing Form 990! By adhering to nonprofit data collection and hygiene standards, categorizing expenses, and working with a qualified Form 990 e-filing software to facilitate the filing process, you can make your tax season stress-free while enjoying the benefits of tax exemption for years to come.

3 Major Benefits of Strategic Planning for Your Nonprofit

Guest post by Aly Sterling, Aly Sterling Philanthropy

As a nonprofit professional, you understand the value of a plan. Whether you’re running a fundraising campaign or starting up a new volunteering initiative, a clear roadmap for how you’ll achieve your objectives will help set your nonprofit up for success. Your organization might make project plans throughout the year, but do you also have an overarching plan to guide your nonprofit’s operations? 

A nonprofit strategic plan aligns your nonprofit’s goals with its values to create a performance map for future endeavors. Instead of making major decisions on the fly and working on tasks that might not support your priorities, a nonprofit strategic plan gives your organization the clarity it needs to make its mission a reality. 

While creating a strategic plan requires ample time and effort, your organization will be able to work more productively and effectively throughout the year, allowing you to reap the rewards over the long-term. In this article, we’ll explore these major benefits of strategic planning:

• Improved time management

• Better staff and board organization

• Ability to assess results

Creating a strategic plan for your nonprofit requires all hands on deck. By collecting a variety of insights and opinions from your stakeholders and working with your team to set firm goals, your team will be in great shape to grow its revenue, expand its donor base and achieve its major goals. 

Before we jump into the benefits of strategic planning, let’s go over what exactly a nonprofit strategic plan is.

What is a nonprofit strategic plan?

A nonprofit strategic plan is a document that outlines your goals, priorities and projects so you can clearly define how you’ll make strides towards growing your organization. By assessing your nonprofit’s current situation, consulting with stakeholders and formalizing your findings into a plan, you’ll be able to create a dynamic roadmap that gives your nonprofit the clarity it needs to advance its mission. 

With this in mind, let’s take a closer look at the benefits of nonprofit strategic planning. 

Improved time management

Between running campaigns and leading donor stewardship activities, your nonprofit is likely often strapped for time. This is especially true if you’re a small or medium-sized nonprofit that often feels like you have more tasks than staff or volunteers on hand. 

If this sounds like your organization, a nonprofit strategic plan can help your organization manage its time and resources more effectively. According to Aly Sterling Philanthropy’s guide to nonprofit strategic planning, a plan allows your organization to establish priorities and figure out which projects are most pressing to complete. With these insights, you can shape your daily operations around tasks that will push your goals forward and say no to the activities that don’t align with your priorities.

Creating a strategic plan also enables your nonprofit to rework staff responsibilities that conflict with your organization’s priorities. For example, let’s say your nonprofit has experienced low engagement numbers online and struggles with fundraising. Focusing your marketing staff’s efforts on developing a user-friendly website and donation page would then take precedence over spending hours each day trying to hone your direct mail strategy. 

Better staff and board organization

Your nonprofit might have broad goals for the year, but does each team member have a clearly-defined role for how they’ll bring that goal to fruition? By developing a nonprofit strategic plan, you can clearly delegate roles and responsibilities among your staff, board members and upper-level volunteers, making sure everyone is on the same page.

Specifically, a nonprofit strategic plan gives your nonprofit the opportunity to pinpoint specific actions associated with each of your priorities, the point person in charge of each action and other key details. Let’s take a closer look at these elements: 

• Action steps: Based on the priorities your team has laid out, what tasks or projects will help you to meet your goals? Outline the specific steps that need to be taken in as much detail as possible. 

• Timeline/milestones: Map out the associated timeline with each project or task to create accountability. You can also list out milestones that you’d like to hit along the way, as this will help your nonprofit’s team measure progress. 

• Leaders: Who will be responsible for carrying out each project or task? Assign the point people to each action step so your staff and board members understand their role in contributing to your nonprofit’s success. 

• Necessary resources: What resources will your organization need to complete these action steps? This can include people, databases and technology solutions that will streamline your approach and help you improve your organization. For example, if your organization is experiencing low fundraising numbers, you might consider embedding a matching gift database into your donation page. According to 360MatchPro, a matching gift platform allows donors to easily check if they’re eligible through their employers for matching gifts. This way, they can easily double or triple their impact! 

• Future/ongoing actions: Once your staff and board members begin their projects, it’s important to set up a check-in process to assess progress and resolve any issues that might pop up. For example, you could create a weekly meeting where the relevant team members get together and discuss what they’re working on and what they’ve achieved. 

As you lay out these details, maintain them in a document that can be accessed at any time. This way, your staff and board members can reference their roles and ensure they’re each meeting their responsibilities. 

Ability to assess results

Another significant benefit of strategic planning is the opportunity to measure your progress and determine whether you’re meeting your goals. This is made possible through the SMART (specific, measurable, attainable, relevant and time-bound) goal setting process, where you’ll clearly outline how you’ll track progress in a quantifiable way. 

For example, let’s say that after collecting insights from your stakeholders, you’ve determined that you need to bolster your major gift fundraising strategy. Your quantifiable goal could be to increase your total major gift income by 15%. To do this, you might reach out to existing major donors to increase their gift amount as well as prompt mid-level donors with the capacity to become major donors to give a gift at or above that threshold. 

Remember to consistently track your results and check in on whether you’re on the way to meeting your goals. For example, if you’re at the halfway point of your determined timeline for improving your email communication strategy, but less than halfway towards meeting your goal, you’ll likely need to adjust your strategy. Work with your organization’s leaders and stakeholders to optimize your approach or reframe your goals so they’re more realistic.

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Strategic planning gives your nonprofit the foundation it needs to advance its mission. With a clear roadmap for the future, you’ll be well-prepared to push your priorities forward and rally your team around your guiding principles for better efficiency. Work with an expert nonprofit consultant to craft a plan of action that makes sense for your organization and will accelerate your growth.

How to Write Effective Grant and Funding Proposals

Grant writing is a task that requires a medley of skills and talents. Your work needs to be thoroughly researched, and it needs to be compelling.

And of course, for many charitable organizations, it’s an essential process that is fundamental in funding and maintaining their services. So you need to know how to do it well!

The thing is, there is a lot of competition. Grant appraisers might read hundreds of applications for each round of their funds.

This short article will outline how to write effective grant proposals. Whether it’s a cover letter or a formal application, you’ll find essential and actionable tips below.

What Should a Grant Proposal Do?

In short, a grant proposal is an appeal for money. To do that as effectively as possible, you should refer back to these four critical points in the writing process:

• A grant proposal should be precise about a specific project: In other words, a reader should know exactly what you’re asking money for.

• You need to offer an adequate explanation of the need for the project (define the problem): This is where you show your knowledge and research on the social issue at hand. This inspires the reader with confidence that you understand the problem and are thorough with your research and expertise. You should use statistics and facts to back up your argument.

• You need to explain how your project fixes that problem: Tell the potential funder what your project will do with their backing. Don’t forget to add key details like anticipated start and end dates of the project, geographical locations, and targeted outcomes.

• You need to be precise about costs: You need to be exact about how much your project will cost and why it’s going to cost that much. You will also need to provide accounting records for your charity. They need to see they can trust you with their money and understand how the funds they provide will further your mission in a way that isn’t currently possible.

How Should A Grant Proposal Look?

The standard structure of a grant proposal—at a minimum—should look like this:

1. The Premise (Intro)

2. Who We Are

3. a) The Problem

   b) The Solution

4. Costs

Let’s dive a little deeper into what each of these key sections should look like:

1. The Premise (Abstract): Your first task is to neatly surmise everything you’re trying to say in 2-3 sentences. The reader shouldn’t have to read half of your application to figure out what it is you’re on about.

2. Who We Are: After you’ve told them what you’re doing, tell them who you are. This gives a face to your project and lets you state your credentials. Tell them why you should be trusted to put their money to good use.

3. a) The Problem: Here, you should describe the issue your project is working to overcome. Why is this issue important, and why does it deserve their investment?

   b) The Solution: After you’ve stated the problem, you need to articulate how your project is going to change it. Be specific to outcomes and long-term impact where you can.

4. Costs: In a standard letter to a charitable trust, you won’t have the space to give a complete costing report. However, you should have a brief synopsis of how much it will cost with a summary of what the money is going towards.

Applications That Go the Distance

Applications that go the distance will also include the following sections:

• Case Studies: If you can show proof of your work's real impact, you’ll strengthen your case. In short, show them your success to inspire faith in your application.

• Monitoring and Evaluations: If you can tie in monitoring and evaluation into your outcome section, you again show your ability to be thorough and that you’ve done your research.

• Exit Strategy: A grant proposal with real depth is one that looks ahead. As most funding is one-off payments, how will you fund your project when the initial money runs out? What are your plans for sustainability?

Additionally, here are a few other things to consider:

• It’s common for funders to also ask for a copy of a signed account and sometimes your organization's charter. 

• Unless stated otherwise, do not include anything else in your application - i.e. brochures - especially if you’re delivering physical copies to the funder's address.

• Adding anything else not only creates clutter, but is also inappropriate. Funders want to see the four key points illustrated previously. If they want to see anything else, they will ask you. 

Extra Tips For Grant Writers

Beyond the essential grant proposal elements we’ve just gone over, consider these additional best practices:

• Tailor to whom you’re writing: Giant appraisers receive a lot of applications. So do some research into the interests of whom you’re writing to. Why? This will make you stand out from the crowd.

• Use examples and research effectively: Good grants will use research to illustrate the need for their project and use examples to show the success of similar projects to show that it is viable. For example, here’s how to use a Google Grant effectively.

• Investigate: Research is everything. The chances are, you won’t be reinventing the wheel. Someone else will likely have already done a project at least a bit similar. Don’t be afraid to speak to them. Ask them why, how, and where. Ask them how they fund their projects. Ask them what they wish they’d known before. Ask them what their most significant issues were/are.

• Keep it short: Your reader will appreciate you keeping to the point. Writing more to sound more comprehensive isn’t advised.

• Tell Them Where to Find Your Website and Social Accounts: If the appraiser is at all interested in your application, they’re going to want to do some further investigation into who you are. Be sure to let them know where to find your website and your social accounts to make their life easier. And while you’re here, check out this article on how to continuously improve your nonprofit's website.

• Double and triple check: As with everything you write, it’s good practice to carefully edit for mistakes of all kinds, syntax, spelling, grammar, and so on. This attention to detail will reflect on your organization and your passion for your project.

• Tell a story where you can: It’s not enough to convince someone your project is worthwhile with numbers. You also need to captivate hearts, so don’t be afraid to use some creative license and tell a captivating story.

• Be positive: Passion is everything. It needs to shine through in your proposal. You want readers to buy into your positivity.

• Ask for feedback: Most grant applications aren’t successful. Even worthy, high-quality applications are often knocked back. Asking for feedback makes rejection a learning experience. See it as an opportunity to improve. What’s more, by showing a willingness to improve, you could build a strong relationship with the funding body moving forward.

• Adjust and Improve: Following on from this last point, a finished and polished proposal can continuously be improved. Whether it’s reacting to feedback from funders, a change in data or costs, or you’ve found a nicer way to fashion one of your sentences.

• Keep up-to-date records of your applications: There is a good chance you’ll be applying to many funders. Having an excel sheet that tracks your applications will streamline your process. This is important as it will stop your charity from applying to the same foundation twice.

• Collect data during your project(s) for case studies: Sometimes, you’ll be asked to supply a case study. Either to prove how you’ve carried out successful projects before. Or, sometimes charities that have given you money will request a case study of your activity to show what you’ve done with their money.

Wrapping Up

Mastering the process of applying for funding is essential. It requires a medley of skills and can be a lot of hard work.

However, if you follow the steps and advice above, you’ll have a competitive application. Moreover, you’ll find the process rewarding!

If you’re hungry to learn more, then check out these 5 podcasts for charity fundraising advice.

This article was contributed by Harry Prince, Creative Content Manager at Spacehuntr.

Catching a Thief with the Help of DonationMatch

By Renee Zau, Co-founder of DonationMatch

Seven years ago, we at DonationMatch had a brush with the law. It’s a good thing, as it highlighted how our system uniquely protects nonprofits AND businesses and made us even more committed to our policies that minimize fraud. Here’s what happened.

THE CASE

On August 12, 2015, our staff was contacted by an Investigator at the San Diego District Attorney’s Office who told us he was working on a criminal case involving the former CEO of a local nonprofit. The former nonprofit CEO had already been charged in July, 2015 and pleaded not guilty. DonationMatch was linked to the case through system emails sent to the former nonprofit CEO. The investigator wanted to know—did we have information regarding donations that had been solicited and given to the former nonprofit CEO for the nonprofit’s recent event?

The answer was yes, of course—records of all requests, offers, responses, and even copies of donated vouchers and tickets received from our network were automatically saved by our system. Through a subpoena, the San Diego DA’s Office now had access to them, too.

 WHAT DID THEY FIND?

The San Diego DA’s Office was able to see a list of all donations that were given to the former nonprofit CEO by businesses through DonationMatch. Using the contact information saved in our system, he reached out to each business involved to find out whether donated gift certificates had been used, and by whom. As suspected, it was discovered that the former nonprofit CEO had, “…solicited items and gift cards from stores as donations to auction off at fundraisers, but she would instead use them herself.” Some businesses recognized her photo and contact details, even when a fake name was used.

TIMELINE

• July, 2015: Former nonprofit CEO pleaded not guilty.

• August, 2015: DA’s Office investigator contacted DonationMatch and received DonationMatch records regarding donations approved to the former nonprofit CEO’s account, which were subsequently investigated further with each donor company.

• September, 2015: Former nonprofit CEO changed her plea from “not guilty” to “guilty” of grand theft.

• December, 2015: The former nonprofit CEO was found guilty and sentenced.

Ultimately, presumably due to the new evidence discovered, the former nonprofit CEO decided to plead guilty and was sentenced to a year behind bars, five years of probation, and restitution payments totaling $18,000. [Link to NBC News article]

WHAT DID WE LEARN? COULD THIS HAPPEN TO YOUR ORGANIZATION?

Leaders of organizations, especially CEO’s, typically have a lot of independence when it comes to making decisions and working with partners and donors. In the wrong hands, or simply at an opportune time, bad decisions can be made. EVERY organization has the potential to fall victim to crime, but it is the responsibility of all stakeholders to do their best to be alert and ensure there are checks and balances whenever possible and practical.

TAKEAWAYS FOR NONPROFITS:

• Do criminal background checks when hiring, especially when access to bank accounts is possible. The former nonprofit CEO had past brushes with the law.

• Share about current donation solicitation efforts and ways to contact your organization to verify requests clearly on your website.

• Create a shared/group organization email address monitored by staff for event volunteers to use when soliciting donations.

• Let the public know that only those using official organization email addresses should be soliciting donations. This helps to prevent your organization’s EIN and/or name from being used to solicit donations without your knowledge.

• Utilize trackable methods of donation solicitation whenever possible. Come up with a reason for donors to let you know they donated, such as inviting businesses to send their preferred Business Name, website URL, and social media handles to your event committee/shared email address.

• Invite in-kind donors to events: This proactively deters theft and misuse when donors attending will expect to see their own packages presented. It also potentially increases your supporter base.Nonprofits need to address potential fraud in order to protect their organization’s reputation, maintain their ability to qualify for desired donations, and accurately provide tax receipts for donations and in-kind donation reporting on state tax returns.

TAKEAWAYS FOR BUSINESSES:

When we at DonationMatch check a contact’s authority to solicit donations when an account is created, only 85% pass this test. When businesses not using DonationMatch aren’t vetting solicitors themselves, it could mean donated items meant for fundraisers do not show up at events. How do you prevent this?

• Know who is asking you for a donation: If you don’t know them personally, ask for credentials and verify them. Legitimate contacts should be glad you did.

• Use trackable methods to donate: Customize vouchers or gift certificates with recipient organization information and dates, and give them to organizations’ employees or leaders directly. Collect contact information when redeemed. Drop off physical products directly to a charity’s office and let multiple contacts know to expect it.

• Attend events yourself: Not only can you see and give feedback about how your donations are presented, but events are great opportunities to meet others in the community who care about the same causes.

• If you donate to more than one event a month, consider using a platform like DonationMatch that automatically vets all applicants, e-delivers donations you approve to only vetted accounts, and creates trackable gift certificates/tickets/vouchers for you. And if event plans change or (knock on wood) special circumstances arise, it’s easier to know who donated and reach you.

We at DonationMatch were very glad to hear that in this 2015 case, records from our system in 2015 provided evidence to serve justice and help the affected nonprofit recover what it could. Our hope is that with awareness and more vigilance by donor companies and platforms that enable donations, this type of theft will no longer exist.

6 Best Practices for Asking Board Members for Contributions

Guest post by Amy Eisenstein, ACFRE, CEO & Co-Founder of the Capital Campaign Toolkit

When someone joins your nonprofit’s board of directors, they may be expected to give annual monetary donations to the organization in addition to fulfilling their governance duties. 

Securing those gifts can be a source of stress for nonprofit teams, especially because potential strategies can vary widely. Here are a few examples: 

• Including the ask in onboarding agreements when they first join

• Having a “give-get” policy that asks every board member to be responsible for a specific amount of money, whether they give it themselves or get it from other sources

• Asking board members to give a gift of an amount that is personally significant to them 

• Asking for personal gifts of an unspecified amount 

• Discussing board giving in person with each board member

• Tucking a pledge form in the board packet at the appropriate time of year and encouraging members to return them by a certain date

With so many approaches, you might feel like having a specific strategy doesn’t make much difference. However, through our work on many capital campaigns, we have learned that how you approach your board about their annual gifts makes a vast difference in how much board members give and how they feel about their giving.

Let’s explore six best practices for refining your own approach to board member annual giving. 

1. Create a small ad hoc committee on board giving.

The board giving process shouldn’t be driven by staff. That’s a bit awkward for your board members. And unless you have an enlightened board chair who really understands fundraising and how to do it effectively, you shouldn’t just turn the responsibility over to them. 

Instead, your executive director or development director should ask three or four board members to serve on an ad hoc committee to develop and implement a board giving plan. 

The ad hoc group should meet three times over one or two months. The meetings might be organized as follows: 

• Meeting 1: Discuss and agree on board giving goals and the process for presenting the giving process to the board. 

• Meeting 2: Review progress toward the goal and follow up with board members about their gifts. 

• Meeting 3: Review the results of the solicitation process and develop a plan for thanking board members and conducting ongoing stewardship. 

2. Determine a collective board giving goal.

Having a dollar goal for board giving helps board members make informed decisions about what their gifts might be. But because most board members have little or no idea of the capacity of their fellow board members, you must be clear and intentional about the process of determining that goal.

We recommend having your ad hoc committee review the list of board members and, using available information about each person’s giving history and other indicators of giving ability, determine a possible high and low for each member. 

Add those numbers up and you will have a collective giving range for your board. Present those results to the board and invite a discussion to determine a board giving goal.

3. Discuss board giving at a board meeting.

Designate a portion of your next board meeting to discuss board giving to the campaign. Topics to be discussed should include: 

• Relationship of the campaign goal and board giving to annual giving and larger strategic priorities

• Collective board giving goal

• Rate of board participation, with 100% being the ideal

• The process of soliciting gifts

• Deadline for when all gifts should be in

Your goal with these discussions is to get your board thinking about giving collectively. This helps your board members create a sense of accountability among the group and sets everyone up to motivate and encourage one another to meet the collective goal. 

4. Solicit each board member in person.

Following the meeting, members of your ad hoc committee should meet with each board member to make a case for annual giving and discuss the board member’s gift. Each person should be asked to consider a specific amount or a range that is personally meaningful to them. Remember: 100% participation in board giving is ultimately the most important part of the board campaign, even if you have to adjust your goal along the way. 

If it is indeed your policy that each board member has a responsibility to give to (or get for) your organization, be sure to have a plan of action for board members who do not participate in any way. Ideally, this expectation would be set before they join so it is not a surprise.

5. Report on progress toward the board giving goal.

The board chair or chair of the ad hoc committee should track the board giving process and gently nudge everyone to make their contributions before the scheduled deadline. 

They should also send progress updates to the board and push for a timely conclusion to the giving process. Frequent updates will keep the giving goal top of mind and reinforce the important responsibility each board member has to contribute a gift.

6. Celebrate reaching the board giving goal.

Once the board has reached its collective goal and has 100% participation, take the opportunity to celebrate your success! 

For some organizations, that means popping a couple of bottles of champagne after the next board meeting. For others, it might mean something more official. 

You should also recognize the people who served on the ad hoc committee and worked on the board giving process. For example, consider creating special recognition strategies for various roles people played during the board campaign.

Setting the Stage for Success

The way you solicit your board members can set your campaign up for success. If you take it seriously and leverage effective fundraising best practices like the ones above, you can lay the foundation for success for your annual campaign and future fundraising endeavors. 

For instance, when your board feels that giving is important, and when they are solicited in a way that respects them and their generosity, they will feel less anxious about reaching out to your supporters during other campaigns. This will make success with future fundraising initiatives much more feasible. 

If you’re on the board of an organization that is considering a capital campaign, there are a few things you should know. Get Capital Campaign Pro’s free guide for board members!

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Board Member’s Guide to Capital Campaign Fundraising

If you’re on the board of an organization that’s considering a capital campaign, there are things you need to know. This guide will help you understand your own role, and that of the entire board, during a campaign. Download this free guide today!

Amy Eisenstein, ACFRE, and Andrea Kihlstedt are co-founders of the Capital Campaign Toolkit, a virtual support system for nonprofit leaders running successful campaigns. The Toolkit provides all the tools, templates, and guidance you need — without breaking the bank.

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About the Author:

Amy Eisenstein | CEO & CO-FOUNDER

Amy Eisenstein, ACFRE, is CEO & Co-Founder of the Capital Campaign Toolkit. She is a veteran fundraising consultant. With over 20 years of experience in the nonprofit sector, she’s published a number of books, including Major Gift Fundraising for Small Shops. Amy is also an in-demand keynote speaker and an engaging board retreat trainer and facilitator.