When the IRS examines a 501(c)(3) application, one of the major issues they are looking for is any potential conflict that exists. This conflict of interest could exist between the nonprofit organization and its board members, directors, trustees, or key employees. In my experience working with clients who are applying for their 501(c)(3) status, I have seen many situations arise in which a conflict of interest presents itself and may jeopardize the approval of the application. Even if this issue does pass the initial review completed by the IRS, if the conflict of interest is not addressed and dealt with appropriately, it could jeopardize future compliance with the IRS as well as damage the organization’s reputation; which, in turn, will damage funding.
Conflicts of interest in nonprofit organizations must be addressed very seriously whether they seem small or large. How an organization manages conflicts of interest that arise will determine whether an organization is frequently involved in legal problems and public scandals or actually accomplishing the organization’s mission. Conflicts of interest can arise whenever an individual, who has authority or decision-making power in a nonprofit organization, will privately benefit from a transaction, agreement, or activity of the organization.
One simple example of a conflict of interest is a board member with voting rights who will also be employed by the organization for other duties. The board of directors are responsible for reviewing and approving a nonprofit organization’s budget which would include the salaries and compensation of employees and independent contractors. If one of your board members will receive compensation then an obvious conflict arises if this board member has the authority to set his or her compensation. There are multiple ways to deal with this issue, some more extreme than others. For example, one solution would be to remove the board member from the board of directors altogether. However, such as drastic step does not need to be taken. A typical solution to such an issue would be to have this board member abstain from voting on his or her’s individual compensation. This in turn allows the board member to remain on the board and receive compensation for their duties as an employee, while avoiding a dangerous conflict. Although this issue may seem obvious, many board members do not see some of the more discrete conflicts of interests that arise throughout the lifecycle of their organization.
A useful way to discover if a conflict of interest exists during a decision-making process is to check and see if a decision will benefit any of your director. Of course, this will require all of your directors to be upfront and honest about any aspect of the decision that may benefit them.
Another asset to your organization is your conflict of interest policy. When you organization applies for its 501(c)(3) tax exempt status, the IRS requests that you adopt a conflict of interest policy and submit it with your application. However, you should always remember that this policy serves as a guideline and cannot replace careful consideration and an ethical approach to any decision made by a board. Each member of your Board should be required to acknowledge acceptance of the conflict of interest policy on an annual basis, and the policy should be reviewed at the initiation of all Board meetings. This will serve as a key reminder to every decision maker about their responsibility to disclose and avoid any conflicts of interest.
Nonprofit board members and executives must not only be able to recognize potential conflicts of interest, but they must determine when these conflicts present areas of concern and what to do about them. This can be a great responsibility and should be taken seriously – your organization’s tax exempt status and your future funding depend on it.
A Webinar about Developing & Submitting a Killer Nonprofit Grant Proposal!
Over $50 billion in grants is given away each year to charities, churches, and schools nationwide. Are you getting your share of this sum? If you haven’t yet started submitting grants for funding, now is the time to get started!
No matter what your program does, there is most likely grant funding for it; the key is knowing how to prepare a killer grant proposal that will relate your need to the most appropriate funding sources.
We invite you to spend a valuable hour with CharityNet USA and learn how growing your organization’s projects and programs can be possible through nonprofit grants!
Topics of Interest:
•An Overview of Nonprofit Grants
•Identifying Projects to Fund
•Different Types of Funding Agencies
•Elements of a Grant Proposal
Learn how to get the funding your organization deserves by attending our FREE webinar on Thursday, June 3, 2010 from 3:00 p.m. – 4:00 p.m. (EST).
Many nonprofits do not take the time to hash out an estimated budget for their programs before embarking on the grant proposal process. However, establishing a budget is an essential step in the operation of every organization, regardless of whether or not they are seeking grant funding. Without conducting some research regarding costs and making financial calculations, a nonprofit cannot accurately determine how much money they need in order to achieve their goals, and therefore do not know the amount of funding they should request from foundations.
“This online course is designed to help with the basics of developing a project budget, and it is geared for those who have general knowledge of proposal development. (Beginners might want to take the Nonprofit Proposal Writing Short Course.) When you complete this course, you will know:
The basic components of a project budget
Different types of financial documents often required for proposals
How overhead costs and fringe benefits may be incorporated within the budget
How to access resources on the Web, which provide templates of project budgets”
You do not need an accountant to prepare your nonprofit organization’s budget; however, if you have little knowledge about project budgeting, hiring an accountant can be useful the first time around. If you do choose to prepare your own budget, the task does not have to be overly complicated or time consuming if you use free online tools and resources like the Proposal Budgeting Basics course,
Here are a few additional resources that will aid in preparing your organization’s budget:
Nonprofit Guides provides a sample budget, proposal cover letter, letter of inquiry, proposal, and other helpful examples.
The Cleveland Foundation’s website offers a Grantee Toolkit including sample templates for a project budget request.
Radio and television have undergone significant changes since they were first introduced and so have the public service announcements they host. Public Service Announcements originally began airing in the 1940’s during World War II as a means of boosting morale. Over time, they shifted away from a national propaganda focus and began to highlight special national issues concerning all Americans, especially in the nonprofit marketing area.
One of the most noteworthy achievements for nonprofit public service announcements was the creation of the National Ad Council. Ad Council campaigns are non-commercial, non-partisan, non-denominational, national in scope, and sponsored by a national nonprofit organization or federal government agency.
Some of today’s most easily reciteable sayings were formed and distributed by the Ad Council such as “Friends Don’t Let Friends Drive Drunk” or “Only You Can Prevent Forest Fires.” Ad Council PSAs are not just memorized; they also rally the populace into action. Some of the most notable messages to make lasting and positive social change include:
Applications for Big Brothers Big Sisters mentors soared from 90,000 a year to 620,000 in nine months, a seven-fold increase in the number of inquiries to Big Brothers/Big Sisters agencies.
Over 68% of Americans say that they have personally stopped someone who had been drinking from driving. The old saying “One more for the Road,” has been replaced with “Friends Don’t Let Friends Drive Drunk.”
Safety belt usage is up from 14% to 79% since our Safety Belt campaign launched in 1985 – saving an estimated 85,000 lives, and $3.2 billion in costs to society.
Since 1972, The United Negro College Fund campaign has helped the organization raise more than $2.2 billion to graduate 350,000 minority students from college with the help of the “A Mind is a Terrible Thing to Waste” slogan.
Destruction of our forests by wildfires has been reduced from 22 million acres to less than 8.4 million acres per year, since our Forest Fire Prevention campaign began.
The amount of total waste recycled increased 24.4% from 1995 to 2000, and 385.4% from the 1980s after the launch of the Environmental Defense campaign.
The role of PSAs in nonprofit help was greatly affected by deregulation of the broadcasting industry in the 1980’s. Before 1980, broadcast licenses were assigned to television or radio stations that were expected to serve as a “public trustee” by airing PSAs (in addition to meeting other requirements). Now that legal forms to have a broadcasting license are disappearing, the national criteria for public service announcement spots required no longer exists. While all station must have some form of public service announcements, there is no standard about how much time is required for public service announcements.
The average TV station will air 200 public service announcements for nonprofit organizations per week. The demand for those spots inevitably is higher than the slots available. Television networks are most concerned with the content, presentation, and preparedness of the organization when deciding who receives the coveted public service announcement space. It is important to research what the specific criteria are for public service announcements before submitting any finalized scripts or ads.
While the standards of public service announcements may no longer be uniform, it is clear that they are still an effective. The Ad Council’s statistics in particular demonstrate that generating awareness and education can change behavior. Most nonprofit organizations will find the biggest amount of success when they start with the head quarter’s city. For assistance writing a public service announcement, contact CharityNet USA today.
Have you ever really wanted to let your community know about an important issue that’s near and dear to your charity or non profits heart but didn’t have the funds to get the awareness out? If you’re like many non profits in today’s economy trying to get the most out of your advertising dollars, it might be time to look at some low cost ways to raise awareness of your charity.
Word of Mouth
Spreading the word by simply telling your friends is the easiest and cheapest non profit marketing way to inform the community about your programs. Word-of-mouth non profit marketing encompasses a variety of subcategories, including buzz, blog, viral, grassroots, cause influencers and social media marketing.
Talking among friends and acquaintances has a personal connection within communications that traditional advertisements formally lack. It is believed that product information communicated in this way also has an added layer of credibility. Research suggests that individuals are more inclined to believe word of mouth non profit marketing than more formal forms of advertising methods. The listener or “receiver” of word-of-mouth information tends to believe that the speaker or “communicator” is speaking honestly and is unlikely to have an ulterior motive. In other words, they are not being paid for their opinion or good will feelings towards the charity.
Another important opportunity to create buzz about a social topic is to post comments on discussion boards at Facebook, YouTube, MySpace, and Digg. Blending your message with the people most likely to need it on social networks is a faster way to generate viral growth about the benefits of your charity or root-cause you are organized to promote. With the increasing use of the Internet as a research and communications platform, word of mouth has become an even more powerful and useful resource for consumers and marketers.
Public Service Announcements
A public service announcement (PSA) is an advertisement broadcast for public interest, which is intended to modify public attitudes by raising awareness about specific issues. The most common topics of PSAs are centered on issues connected to health and safety. A typical PSA is part of a public awareness campaign to inform or educate the public about an issue such as smoking, dangers of gangs, protecting the environment, or compulsive gambling.
Public Service Announcements have often been a popular choice for non profit startup because radio stations and television stations are required to devote free time to causes that benefit the public good. With the deregulation of television stations and broadcast, in general there are no longer uniform standards about how much time must be allotted for public service announcements.
Public Service Announcements are generally in 60-, 30-, 20-, and 10-second scripts to conform to advertising standards. It is important to use the right format when writing your script or it may not be acceptable to the station you are presenting it to.
BizCentral USA is a great resource for helping non profits set up materials to supplement word of mouth campaigns and public service announcements. Call us today for more information about how our non profit business review can help you make the most out of your advertising efforts.
CharityNet USA, a full-service resource center for non profits and charities, is excited to announce their new non profit website, specifically designed to better equip those seeking services to start-up or grow their organization. The new non profit website includes interactive tools and non profit resources sure to meet the needs of charitable organizations nationwide.
“Our new website is designed to help people find the non profit resources they are looking for–quick and easy,” said Efrain Rodriguez, CEO of CharityNet USA. “We want to see non profits succeed, so we’ve included a lot of new functions to better steer charities in the right direction.”
CharityNet USA’s redesigned non profit website contains a wide variety of information for those interested in starting or growing a non profit organization. A few examples of tools and non profit resources included are:
Non Profit Webinars: Web visitors can sign-up for upcoming live webinars and have access to on-demand webinars in the Non Profit Webinar Seriessection.
Free Non Profit Development Review: Existing non profits can find out their strengths and weaknesses as well as identify growth opportunities in a one-on-one consultation.
Non Profit Blog Access: Web visitors can find advice and information about a variety of non profit topics written by experienced non profit consultants.
Non Profit Startup: Registered users will have instant access to exclusive articles, non profit magazine subscriptions, fundraising ideas and email promotions.
Non profit services offered by CharityNet USA all include product descriptions, FAQs and competitor price comparisons, allowing for quick product research in one spot. Services include: 501c3, accounting, bookkeeping, capacity building, fundraising, grant writing, marketing, strategic planning and web design.
“We believe that by better supporting the service and resource needs of such vital organizations they can alleviate the burden on organization officials, thus allowing for more time dedicated to direct mission fulfillment,” said Melanie Swift, Director of Non Profit Services for CharityNet USA.
About CharityNet USA
Founded in 2004, CharityNet USA serves as an all-encompassing resource centerfor non profit organizations and charities nationwide. Their mission is to provide affordable services, valuable non profit resources and flexible solutions to organizations, enabling them to successfully start-up and grow. For more information visit: http://www.charitynetusa.com/.
So, you have started this amazing new organization which is going to assist a cause that is important to you, right? Now the important question comes in. How are you going to find the money to run your organization? Are you going to apply for grant funding¸ ask for donations, or conduct fundraisers? Honestly, your answer should be at least two and if the program requires it all three. You cannot rely solely on any one form of funding to operate your organization and develop your programs.
While grant funding can be an important part of funding your organization you cannot rely solely on this funding to get your organization up and running. Unfortunately obtaining grant funding is not a quick process which can be done in a couple of days. A lot of thought and consideration must be taken into account when you are developing a grant proposal to be sent out. The grant funding process can be a long drawn out process. First, you have to write a grant proposal and research foundations that are willing and interested in funding your programs. This is unfortunately where many organizations develop their first hang up. Most new organizations have no clue how to write an effective grant proposal. This leaves hiring a professional to complete the job for them, which unfortunately will cost money.
However, barring the obvious financial constraints that grant writing can put on an organization let’s talk about other reasons why grant funding might not be the route you initially want to go. Since, the current economic recession it has become more difficult to obtain grant funding. Foundations no longer have the money to fund as many programs as they used to. That by no way means that there is not funding out there at all for you organization, however, it has made the process very competitive. You must research and find organizations which have a history of funding the same type of programs which you are implementing and share the same mission and goals for humanity. Also, you must research and have specifics on how your programs are going to run, who are you going to help, what need are you addressing, how much money exactly are you going to need to run your program for materials, administration, facility expenses, etc. Grant funders like to see who and what their funding will specifically be going to, in fact, most grant funders require that the organizations they providing funding to give them reports on how their specific funds were used. Many organizations also have in house grant fund auditors that will physically require a meeting to go over where their grant funding has gone to insure that the funds have be appropriated properly.
Time constraints are also an important thing to look at when asking for grants. Obtaining grant funding is entirely dependent upon the foundations you send your grant proposal to. So, if their due date for proposals is November 15th and your grant proposal is completed and ready to send and its only March do not expect to receive grant funding from this foundation anytime soon. Most grant funders like to receive all grant proposals by a certain date and then they make their decisions on who they want to fund. Another way to think of this process for example is to think of applying for colleges. Most colleges have an application deadline and can only take in a certain number of students. Take Harvard as an example. Harvard is one of the most prestigious colleges in the United States and it can be argued that they are one of the most prestigious colleges in the world. Unfortunately, not everyone who applies to Harvard gets accepted, in fact, their acceptance rate is only 7% of all students who apply. The world of grant funding can draw many direct correlations to the college application process.
Another important thing to think about when asking for grants is that grant funders prefer to see that there are other sources of capital coming into the organization to help with the programs that have been initiated. In other words, grant funders like to see that an organization is sustainable, meaning they are able to continue their programs once grant funding is gone. This is by far one of the most important things that a grant funder is looking for they want to see that the vital program initiative that you have helped bring to realization continues once they have supported your organization by sending you their support. How are you going to show that your organization is sustainable? First, you need to show that you have broad support throughout your community through fundraising and individual contributions. Begin developing fundraising efforts not only to raise funds, but to get your organizations mission and purpose out to the public as a whole. The more public awareness you develop the higher chance you have of obtaining donations to truly help your specific programs. Nothing is more moving to a grant funder than actual proof of how your organization is currently helping your local community, and not just reciting how you intend to help your community when you actually start your programs.
Grant funding can be an amazing way to get funding for your vital program initiatives in one lump sum, however, be prepared that the entire grant writing/funding process does not happen overnight. There are many organizations which are out there to aid organizations is writing and researching potential foundations which would be interested in funding the program which you have developed. Even in today’s recession there are billions of dollars from foundations and the government that are being distributed to nonprofit organizations. You can be in line to receive some of this funding, but be prepared to work for it they do not just hand it out.