Links for Organizational Leaders - 1 August 2013

Posted by Matthew Thomas

Here are a few links to articles that may be of interest to organizational leaders.

10 Proposals for Upping your Board's Value-Added Quotient. Rebekah Basinger brings wisdom distilled from the corporate world to the average non-profit or church organization.

Regular bedtimes for kids and the links to better mental performance from the BBC.

The myth of 8 hours of sleep. Fascinating sleep research that tickles my history-geek nerve.

Diet Soda Pop can confuse your body. Seriously.

Vigilantes steal from a city to... fill potholes? What's a government to do?

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Topics: Matthew Thomas, Design Group International

Steward Leadership in Churches: Battling the (Financial) Summer Slump

Posted by Matthew Thomas

Most pastors I talk to confirm my own pastoral experience that attendance is usually lowest immediately after large holidays and throughout the Memorial Day - Labor Day summer months.

While it is disappointing to many pastors that people just aren't as interested in church at those times, they and their church boards often find themselves at increased stress financially because of the lower attendance:

People who aren't present don't tend to give.

For most churches, worship is the context of most of our giving, and for many churches, giving is itself an act of worship. When there are fewer worshippers, giving tends to decline.

Steward Leaders don't want to take the slump sitting down, though, and they are looking for ways around it and through it.

I would like to recommend four things to help combat the summer slump financially:

1. Prepare: Design your church budget around making sure you have a surplus in the better-attended months, so that you have some room to drop during the summer. This will help to improve cash flow no matter what else you do.

2. Educate: Remind the congregation that the work of ministry continues on even without them, and that their offerings provide value to that work.

3. Provide: Create opportunities to give outside the context of worship during the summer. People may miss weekends, but weekday events often still can draw people who take long weekends away. Make sure good, contextualized giving can happen there.

4. Innovate: If your church doesn't already take card payments, set up your church with that capacity, if it fits your target audience. Most card payment arrangements can be set to recur - so that whether at home or away, people who give by debit card or bank draft can continue steady, regular giving.

If you would like help implementing these options, we can begin to assist your organization by providing a organizational financial health assessment. Click the link below to begin yours today!

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Topics: Matthew Thomas, Design Group International, Giving, Offering, steward leadership

Growing your Organization: Using the 22Touch Tool

Posted by Matthew Thomas

Recently, I followed Design Group International CEO Mark L Vincent's lead and began using the 22Touch tool.

22 Touch helps organize your business contacts into lists of people with whom you want to be in contact at varying frequency - 22 times per year, 12 times per year, and 4 times per year. It automatically schedules people and reminds you to contact them through e-mail, phone call, personal notes and dropping by.

I have already found this incredibly useful to help me maintain relationships with people with whom I do business. It also has applications for institutional development / advancement officers, church leaders, non-profit leaders and business leaders of all types.

I have found that the initial setup is quite simple, and now I am tweaking my lists so that I get the right people at the right frequency of contact. The tool helps by matching interests for each contact to relevant articles that give you and your contact something to talk about.

But it only works if the contact is still genuine throughout the process.

Contact us at the link below if you want more details about our experience with 22 Touch!

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Topics: Matthew Thomas, Design Group International

Non-Profit Organizations: Tax Filing Due 31 July 2013

Posted by Matthew Thomas

As explained in a previous post, while non-profits are typically tax-exempt, they still must file certain regular forms with the IRS to maintain their tax-exempt status.

On July 31, non-profit organizations that pay wages, tips or other compensation to employees must file Form 941 or 944 for compensation earned during April, May and June 2013.

Non-Profit organizations that are not 501(c)(3) tax-exempt organizations must also make a FUTA deposit for the 2nd quarter of 2013 if the deposit exceeds $500.00.

See IRS Publication 15 and Publication 15a for more information.

Design Group International can assist your organization with tax and other financial questions. Click on the link below to contact us about how we might work together.

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Topics: Matthew Thomas, Nonprofit Organization, Design Group International, Tax-Exempt

Non-Profit Governance: Your Non-Profit Can Make A Profit

Posted by Matthew Thomas

... as long as the profits do not inure to the benefit of any private shareholder or individual.

This is a great confusion among non-profits and churches. Charities are so accustomed to being cash-strapped and short on funds that it has become normative for them to operate at deficits or at break-even levels.

Actually, your non-profit or church can collect more in revenues than it expends in any given accounting period. (That, by the way, is the definition of "profit.")

The trick is that it cannot use that profit to benefit private individuals.

In reality, healthy, growing organizations regularly bring in more money than they expend. They build a base of assets (real property, moveable property, cash and other investments), with which they can further leverage activities that fulfill their mission and promote their cause.

Moreover, fiscally healthy organizations that have a view toward the long term will work hard to maintain a surplus in their budgets so that they have funds available for more than just this fiscal year or budget cycle. They then have the capacity to meet challenges, obstacles and opportunities with more grace than the more paycheck-to-paycheck type of management.

Steward leaders make every effort to make sure their organization can fulfill its mission over the period of time required to bring that mission to completion. For many organizations, this means building revenues and accrued assets over time so as to leverage those assets and revenues for long-term impact.

Design Group International offers objective financial health assessments to organizations looking to establish sound fiscal footing and steward their resources faithfully. Click the link below to start yours today!

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Topics: Matthew Thomas, Design Group International, Non-Profit Governance, Fiscal Health, Financial Planning, Financial Reporting

Non-Profit Leadership: Difference between Non-Profit and Tax-Exempt

Posted by Matthew Thomas

Most non-profit organizations are also tax-exempt. However, these tax exemptions do not typically free non-profits from paying all taxes. There is a vast amount of utter confusion surrounding the distinction between "non-profit" and "tax exempt". Let's take a look.

Non-Profit means that a business entity is incorporated such that "no part of its net earnings" (the money left after all of its expenses have been subtracted from its revenues, including the sale or trade of the entity's assets) "inures to the benefit of any private shareholder or individual." (26 USC 501(c)) (See http://www.law.cornell.edu/uscode/text/26/501)

There are a wide variety of organizations that fit this definition under the law, and state law governs what kinds of groups are allowed "corporation not-for-profit" status. Churches are often specified as a special type of corporation not-for-profit, but state laws differ.

Tax Exempt organizations are organizations that meet the requirements of the various taxing bodies with jurisdiction over the organization. Most famous in the United States is the Federal 501(c)(3) designation, referring to the third sub-paragraph of subsection (c) of Section 501 of Title 26 of the United States Code.

Nevertheless, there are other taxing bodies involved:

  • States - income taxes, sales taxes, certain excise taxes
  • Local Governments and Municipalities - income taxes, sales taxes, property taxes, other levies

Organizations that are tax-exempt may not be tax-exempt from all of these various taxes. It all depends on how the tax laws are written for each taxing entity. For instance, some churches are allowed a property tax exemption, while religiously-based non-profits for whom there is no worship service on the property may be required to pay property taxes, even though they are otherwise tax-exempt. In addition, tax-exempt organizations may still be subject to tax for income on trade or business unrelated to their charitable, tax-exempt purpose. 

Organizations, then, should take care to make sure they have complied with laws affecting corporations not-for-profit AND the laws (at various levels) regarding tax exemption. Note, too, that no matter what, almost every organization in the United States must still collect and pay payroll taxes for their employees.

We can assist you as you work with your board, executive team, attorneys and accountants to pursue your mission. Click the button below to continue the conversation!

 

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Topics: Matthew Thomas, Design Group International, Non-Profit Governance, Tax-Exempt

Non-Profit Leadership: Taxing Non-Profits

Posted by Matthew Thomas

In the past five years, many municipalities have struggled with tax funding. Declining real estate values, the continuing decline of American manufacturing and the increased costs of pensions and other payroll-related expenses have crippled local governments across the country. This has led some local leaders to look at some hitherto unusual (if not unorthodox) approaches to funding.

Of late, it is not unusual for politicians to propose taxing non-profits that had previously been tax-exempt at a local level. This, along with the parallel issue of ending, or significantly reducing, the charitable deduction on federal income taxes, challenges the non-profit funding model and their means of operation.

For the moment, let's focus on the idea of taxing non-profits themselves.

Providence, Rhode Island, for instance, proposed imposing property taxes on non-profit universities and hospitals in order to cover part of a significant budget shortfall. While the negotiations mostly backed off to be "PILOTS" (Payments In Lieu of Taxes), the drumbeat has continued that non-profits cost city budgets significant amounts of money, and therefore, should pay property taxes. In particular, some challenge that wealthy non-profits (typically hospitals and colleges) should not receive local tax-exemptions at all. Urbana, Illinois, along with its County Board, for instance, has challenged the property-tax-exempt status of both of the hospitials in the city in the last couple of years (with some level of deafening silence toward the state university that is also property-tax exempt).

In all of this conversation, it appears that the old assumptions about the social contract between governments, charitable organizations and the general public have broken down.

  • No longer is it assumed that charitable organizations benefit the community in a complementary way to government, and therefore receive privileges, like government organizations, to be tax-exempt.
  • No longer is it assumed in all cases that charities actually benefit their communities and the public good.
  • No longer is there mutual respect between the two types of organizations that they are working together to make their communities healthy and vibrant.

Now, new assumptions seem to be in place, at least in the minds of some:

  • That churches and charities are leeches on the public services carried out in communities;
  • That churches and charities serve their own interests, not those of the public;
  • That governments are more effective at taking care of public ills than charities and churches are.

It seems now, then, that the onus is on steward leaders of the charitable and religious organizations in local communities:

  • to explain what they are doing, and how it benefits the public;
  • to actually do things that benefit the community, not just their most stalwart members;
  • to deliver upon their vision of community transformation and the amelioration of social ills to bring actual results, rather than just stay busy doing it.

Then cities might again see churches and non-profits as benefitting their communities in a way that complements the services the governments themselves provide.

Then perhaps communities will challenge the arrogance that often grows out of the powers to tax, arrest and adjudicate that has led to the apotheosis of government in the eyes of some.

Until then, charities and churches have some work cut out for them to justify what was once a norm.

Until then, the PILOTS might be the best way for a few larger non-profits to show good faith to governments that once would have supported them.

If your organization is interested in the strategic work needed to reposition in changing times, we would be interested in working with you to do so. Click the link below to continue the conversation.

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Topics: Non-Profit Leadership, Matthew Thomas, Design Group International, Tax-Exempt

Organizational Governance: Structures and Growth

Posted by Matthew Thomas

In a growing organization, the structure will lag the organization as various parts must be implemented to fulfill the organization’s mission. In a shrinking organization, the structure becomes a greater and greater part of the organization until not only does it lead the organization, it becomes the rationale for the whole organization. The organization will often then cannibalize its vision for its own survival.

Breaking through decline to thrive again involves both offering vision and dismantling enough of the structure (often significant chunks of it) to change the patterns back to vision-driven organization, where structure lags. Nevertheless, if an organization never allows the structure to mature, it will never reach its full power and potential.

Design Group International has experienced consultants available to help review and design these essential structures, and guide your organization through the process of developing them. Click the link below to continue the conversation with us!

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Topics: Matthew Thomas, Organizational Governance, Organizational Life Cyle, Design Group International

Organizational Governance: Layers of Documents

Posted by Matthew Thomas

Many people find themselves lost in the variety of legal documents involved in a church or non-profit. There are three major sets of documents every organization needs to have to operate.

1. Articles of Incorporation: This is the filing with the state in which the organization has its main office which creates the legal entity that can, like a regular person

  • Buy, sell and own property
  • Receive income and make expenditures
  • Sue and be sued

Among other things.

The articles state the organization’s legal name and its legal purpose. All further documents must operate within that purpose.

2. Bylaws or Constitution: Some organizations have both bylaws and constitution where the constitution typically has greater authority and less mutability than the bylaws, which are often more policy-oriented and more easily changed.

Nevertheless, many organizations just have one or the other. The purpose of this document is to determine the means by which the legal entity (legal person) can speak. Without bylaws, state statute typically prevails. Important issues that appear in bylaws include:

Membership: who are the members of the corporation? What rights, privileges and responsibilities do they have? What criteria must be met for membership? How are they removed?

Board of Directors: How many? How are they selected? How are they removed? What criteria must they meet to become Directors? How often do they meet? What is the scope of their duties, if not the entire scope of the corporation?

Officers: who are the specific officers in the organization? How are they selected? What are their basic duties? Is there a CEO / Executive Director / Senior Pastor / Senior staff person?

Meetings: how are they conducted? How does voting take place? What constitutes the passage of a resolution?

Amendments: How are the bylaws amended?

Dissolution: How is the corporation to be dissolved? Where do its residual assets go? (If tax-exempt, they must go to other 501(c)3 compliant organizations.)

3. Policies: Policies are the way that the organization is governed. For guidance on writing good policies, see http://www.carvergovernance.com/model.htm

Design Group International has experienced consultants available to help review and design these essential documents, and guide your organization through the process of developing them. Click the link below to continue the conversation with us!

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Topics: Matthew Thomas, Organizational Governance, Design Group International, Boardroom

Organizational Governance: Initial Authority vs. Final Authority

Posted by Matthew Thomas

In the Carver model of board governance, known as Policy Governance, the model’s authors make much out of the concepts of Initial Authority and Final Authority for the board to exercise.

Boards often rightly describe their role as being the final authority, using terms like “the buck stops here,” and “we are the ones ultimately responsible.” This is quite true, and boards that forget this are reminded when things go amiss or the organization slides into stagnancy.

As true as the concept of the board as final authority is (or in some membership systems, the members or the congregation), exercising authority as final authority only, as the last action in the decision-making sequence, will significantly reduce the organization’s capacity to carry out its mission, if not completely remove its capacity to take action to fulfill its goals.

If the board is the final authority in sequence, then staff always have to run to the board with all kinds of detailed proposals, which then the board reacts to in order to process the information. This typically leads to proposals receiving the dissection treatment, and staff often come away frustrated that big new ideas get dismantled and reassembled, but poorly, in committee or board meetings.

When the board acts as the initial authority, it can shape the policies and approach to new projects, short-lived opportunities, and expansion of vision. It also will increase efficiency. By stating clearly beforehand what the values are, what the goals are, and what the priorities are, with clearly defined board and staff roles and limitations on what cannot be done and how reporting should happen, the staff are then free to operate within those constraints and be as efficient and as innovative as the policies and constraints allow. This allows for staff to use their expertise to make decisions and engage opportunities as they arise, rather than taking everything back to the board for final approval. The board still monitors performance, but only to assure compliance with what it has already said. This way, the organization is empowered to solve the big problems for which it was formed in the first place.

Design Group International has Senior Consultants that specialize in governance for non-profits and churches. Click the link below to contact us to continue a conversation about how we might work together.

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Topics: micromanagement, Matthew Thomas, Organizational Governance, Design Group International