February 8, 2008 Many people are involved with helping small, non-profit organizations, in a variety of roles. Organizations range from semi-organized children’s sports teams, to local chapters of professional societies, to well-established charitable service providers. The range of organization and management varies as well, from seat-of-the-pants, one or two people overwhelmed from doing the bulk of the work, to professionally managed with paid staff, and everything in between. Here are some tips to help you and your organization become more effective and successful.
Defining Non-profit
Many people are confused about the concept of a non-profit organization. The terms Non-profit, Not-for-Profit, or Tax-exempt, all mean the same thing and is simply a special type of business entity. An organization that is recognized by the Internal Revenue Service (IRS) as a non-profit, or tax-exempt, business is treated differently than a regular for-profit business for tax purposes. Meaning a non-profit generally doesn’t pay taxes. Some of the tax issues can be complex, so if you have any questions or doubts, contact an accounting professional familiar with non-profit tax issues. Generally, though, if you are a small organization, have received your non-profit status from the IRS (you have to apply for it), and adhere to your defined mission, you’re fine.
The most important thing to remember is that non-profit does not mean for-loss. You still have to make money. The only real difference between a non-profit and a for-profit business is where any extra money goes. For any organization to remain viable, you have to have more money coming in than you have going out. What happens to that excess between what comes in and what goes out is what makes the difference between a non-profit and a for-profit business. In a non-profit, the excess stays in the organization to help it achieve its mission. In a for-profit business, the excess (the profit) is distributed to the owners of the business. It’s that simple.
So, remember, you still have to make money. You have to have more money coming in than you have going out. You just use all the money to help the organization do what it was set up to do.
Planning
One of the most helpful and least used tools for any organization is planning. Instead of just starting to do things, sit down first and plan what you’re going to do. Then on an ongoing basis, sit down for regular planning sessions. The benefits are enormous.
The level of detail of your plans, and the amount of time spent planning, will depend on the size of your organization and what it is you do. If you’re helping with your children’s sport team, and you’re doing the bulk of the work yourself, you might have just a short to-do list that you put together in 15 minutes. More likely, though, you’ll need to sit down with the other board members or volunteers for an hour or two, in several sessions, to develop a plan with enough detail that will give you clear direction and help you guide the organization.
When planning, always start with the end goal in mind. Set the target. Identify specific goals that you want to reach. Again, depending on your size and the nature of your organization, your planning time frame will vary. If you’re just getting started with planning, your time horizon will be shorter. As you become more experienced with the planning, you can extend your time horizon out a little further. For your child’s sports team, your plan might just cover the length of the season, maybe even just three or four months. Most organizations, however, will want to plan two or three years out. Any longer than that, you’re generally talking about larger, well established, and more complex organizations.
So what’s in these plans that you’re making? There’s going to be two parts to the plan; the goals you want to achieve, and how you’re going to reach them. If your working on a two year plan, the goals will define where you want to be, what you want to be doing, two years from now. Say you’re a service type organization that helps homeless people. Your goals might include that two years from now you’re going to be providing two meals a day to 500 individuals a day, up from one meal a day to 100 individuals. Maybe you’re a rugby club, and your goals might include that in two years you’re going to have a paid coach on staff, two full sets of team owned game jerseys, or the funds to begin building your own clubhouse. OK, that might be a stretch for most clubs, but you get the idea.
Once you set these goals, you have to identify how you’re going to achieve them. If you’re going to increase from one meal a day to two meals a day, or go from no team owned game jerseys to two full sets, how are you going to do that? What are the intermediate steps? Who is responsible for doing what? If you’re going to provide more meals, you need more food. You might need larger or better equipped facilities. You might need more volunteers. If you determine that you’ll need 20 volunteers a day, but you now only have 5, you have to determine how you’ll get the additional volunteers. Maybe you advertise more, apply for more grants, or hire a volunteer coordinator. Whatever the steps are to reach those goals, write them down so everyone knows what needs to be done and who’s responsible for doing it.
When you plan, you have to monitor your progress against that plan. You don’t want to wait until the end of the plan’s defined time period to see whether you achieved the goals that you were aiming for. You want to monitor progress along the way, so that if things aren’t going as expected you can make adjustments to get back on track. Or, if things are going as planned, you can focus on the other areas that need more attention, and not waste time on things that are working well.
Another benefit of planning is that you have something to evaluate new or unexpected opportunities against, rather than just trying to figure out on they’re own if they’re a good idea or something you should pursue. Something that sounds like a good idea might not be something you want to pursue when it’s evaluated against your plan. Of course, if it is a good idea, and has been properly analyzed and evaluated, you can change your plans. It’s always better to plan, and change the plan when called for, than not to plan at all. Planning helps you focus, and that’s what you need.
Board of Directors
The board of directors, or the people who are going to run, guide, and direct your organization, is always a fun and interesting topic. Except for the tiniest of organizations, you should have an official board of directors whose job it is to guide and set the direction of the organization. Many times, these are the same people who do all the work, but not always. Again, it depends on your size and the nature of your organization.
The big question is who should be on the board. This can be difficult because the people, or type of people, who should be on the board are not necessarily the people who actually will be on the board, for a variety of reasons. Many times it is difficult, if not impossible, to actually attract the people that you want on the board. One reason is that the people who make the best board members are already on other boards, and they only have so much time. Also, many people may not know about your organization, and many people just aren’t interested in what your organization does. So, what to do?
I always like to start with stating what I want. Identify the people, or types of people, you want on the board. If you don’t start with what you want, you’ll never get them. You might have to take what you can get, but at least identify what you want. If you identify the type of people you want, you can then target them and work towards getting them to help you. If you don’t, you’ll always be stuck with whatever comes your way. Identify the skills and attributes of your ideal board members. Do you need specific skill sets, individuals with lots of contacts in the community, or maybe wealthy individuals who will contribute to your cause? Whatever you need or want, be specific. You can even identify specific individuals you want on your board.
Why would anyone want to be on your board? It’s often a thankless and time-consuming job, so you have to really market it. Don’t lie, or overly sugarcoat it, but state the benefits of being on your board and tell the people why you want them to help you. If you’re passionate about your organization, potential board members will pick up on that and that might be incentive enough to get them to help you. Other benefits include making new contacts, helping a worthy cause, and the fact that it looks good on their resume. Of course, the people who do not need these benefits will be a tougher sell, but a lot of times people will help just because you ask them. You’d be surprised how often people are just waiting to be asked.
One thing you absolutely have to do is define the roles and responsibilities of the board members, and communicate these to your board members. Even if they’re pretty simple, and seem obvious, this is vital to your success. Everyone needs to know why they’re on the board and what they’re supposed to do. You can’t afford to have dead weight on your board. Be tough, and hold the board members to their agreements of their duties.
Meetings
You’re going to have meetings, probably different types. Your board will have board meetings, and you might have staff meetings, volunteer meetings, general members meetings, or some other type of meeting. Many people dread meetings, and for good reason. Poorly run meetings not only do no good, they can do harm. So, run good meetings.
Always, always, always, have a defined agenda. Distribute the agenda prior to the meeting so everyone knows what is going to be discussed. Stick to the agenda. Set a defined meeting length, and assign a time to each agenda item. Stick to the time limits.
Along with the agenda, define the expected results of the meeting, meaning define what will be accomplished at the meeting. A simple expectation is to discuss each agenda item and vote on all items that need to be voted on. Depending on the reason for the meeting and the agenda items under discussion, you may have other expectations of what is to be accomplished.
Board of directors meetings are inherently different than most other types of meetings. The board sets high level policy and direction, so the board meetings are similarly high level. Most of the work of the board is done outside of the board meetings. The board meetings are generally fairly simple. Information and results of outside activities is presented, in synopsis, final discussions of important topics are made, and items are voted on. There should be few surprises at a board meeting. Most of the information should have already been distributed, analyzed, and discussed. Items are clarified, discussions that are best made face-to-face are made, and votes are held. If you’re doing the bulk of your work in the board meetings themselves, you can immediately become more effective as an organization by making the changes outlined above.
Volunteers
For most small non-profit organizations, volunteers are the backbone that allows you to continue operating. Without quality volunteers, you won’t exist as an organization for very long. At least you won’t be able to accomplish what you set out to do. So be sure to take care of your volunteers.
All volunteers should have defined roles, no matter how simple their tasks. Be sure to train all your volunteers, no matter how simple the tasks. Training should include the specific tasks the volunteers will be undertaking, as well as the mission, philosophy, and policies of the organization. Again, no matter how simple the tasks, mission, and policies.
Always assign tasks, rather than just letting the volunteers do what they think is best. You should be flexible, of course, but in order to keep the organization moving in the direction that is defined by the board, the volunteers must be assigned tasks that support the defined goals.
Recognize and reward your volunteers. Some organizations are very good at this, but others take their volunteers for granted and fail to offer the necessary recognition and rewards. This is not usually by design, just from neglect. No matter how busy you are, take the time to praise your volunteers for all the hard work they’re doing.
Don’t overwhelm your volunteers. Some people can’t say no. Don’t let them take on more work than they should. Some people are driven to help, and are almost impossible to hold back. Hold them back. They’ll be more valuable to you over the long term, and their health, mental and physical, is of paramount importance.
Make new volunteers feel welcome. Again, some organizations are good at this, while others assume since they volunteered they’ll figure out what’s going on and find their own way. This is not true. Every single new volunteer should be formally welcomed, told that they are appreciated, and told where they fit in with the organization. The training mentioned above should follow.
Accounting and Record Keeping
Keep records. Keep good records. Protect your self, protect your board members, volunteers, clients, members, and customers, and protect your organization. Don’t rely on your, or anyone else’s, memory. Have proof of what you’ve done. This is especially important with everything having to do with money. As with everything else, your record keeping system will depend on the size and complexity of your organization. You might just have a notebook, receipt book, and bank statements, or you might need a full-blown management system that includes accounting and financial information, sales and customer relations systems, and manufacturing, warehousing, and inventory systems. Use what is appropriate for you.
If necessary, hire people just like any other business. Some of the smallest non-profit organizations hire part-time administrative help. In today’s modern world, you might even find it appropriate to hire virtual administrative help.
Set up controls. This is another area where it is especially important for everything having to do with money. Setting up controls means putting in systems to prevent or detect any sort of wrongdoing or impropriety. For example, if your organization has a checkbook, you want to limit the number of people who have access to the checks and who can write the checks. It’s a good idea to have different people who control the checkbook and have the authority to sign the checks. Or, you might want the bank to send the account statement to someone other than the person who writes the checks or makes deposits. Other controls include separating duties or having one person check the results of another person. Basically, you want to remove temptation and make it difficult for anyone to do anything improper.
Even if you set up good controls, you should regularly conduct audits and check up on things. Not only does this help prevent anything nefarious from happening, it helps to keep the organization on-track and moving in the direction you want to go.
Conclusion
Go out and do good things. Put a little effort into the planning and infrastructure of your organization and you’ll reap the rewards in the long run. Keep the level of effort and complexity appropriate to your organization, and try to keep sight of when it’s time to add more formality to your systems. Best of luck to you and your organization. By: Steve Novak
