By: J Eric Smith

I have spent the majority of my professional career in the nonprofit sector, doing work that I have found intellectually and morally rewarding. All of my nonprofit jobs have involved some mix of communications, marketing, public relations or fundraising work, so I’ve spent a lot of time thinking about the things that we do, and finding ways to explain those things to others, most of whom operate outside of the nonprofit sector. While engaged in such interactive and explanatory work over the years, I’ve been confronted with an interesting collection of misconceptions about the nonprofit sector. Here are five of the most common ones I’ve encountered, along with explanations as to why they’re wrong.

1. “Nonprofits can’t make more money than they spend.” In Business 101, people learn that Profit equals Revenue minus Expense. Therefore, it would seem to a casual viewer that a nonprofit corporation can’t have revenues greater than its expenses, because in that case, the nonprofit would be making a profit, and would no longer be a nonprofit corporation accordingly. This is wrong, though. Bad wrong. Any nonprofit corporation that spent every single penny it earned, as it earned it, would quickly become an ex-nonprofit corporation. The real difference between nonprofit and for-profit corporations is what happens to those surpluses when revenues exceed expenses: in a for-profit corporation, the surpluses are distributed to shareholders as income or dividends; in a nonprofit corporation, the surpluses must (eventually) be applied toward to the nonprofit corporation’s mission. Some amount of running surplus is always required on a year-to-year basis just to meet basic payroll and operating requirements. Some larger surpluses may support organizational mission by being placed in endowments, with interest earnings providing long-term revenue streams. Some surpluses may be designated for specific programmatic needs, and held until such time as the funds must be paid to meet those needs. The tricky part, for any nonprofit, is figuring out how much surplus and reserve is too much surplus and reserve, given the commensurate benefit of funds being spent in real time. If a nonprofit sits on a $1.0 million in liquid assets while providing only $100 worth of services a year, then there’s probably a problem there. But if a nonprofit spends $1.0 million a year while making $1.1 million in the same year, then that shouldn’t be a red flag, in and of itself. In any case, nonprofits must, over the long term, make more than they spend, or they will cease to exist as effective entities. So don’t begrudge nonprofit corporations their positive balance sheet positions and reasonable cash reserves.

2. “Nonprofits should always be grateful for any and all gifts given to them.” Well-meaning community members often organize grassroots fundraisers for nonprofit organizations. Some of these grassroots fundraisers are wonderful, sure, but many of them aren’t. While it may seem great on the surface that a group of concerned and caring friends create an event that collects, say, $250 in a bar one night to give to a certain nonprofit, if that nonprofit supports a community that may be harmed by alcohol consumption, then the association of the nonprofit’s name with the bar event may actually be a negative, rather than a positive. Also, if the event’s organizers expect the nonprofit organization’s marketing department to promote the event, invite the organization’s leadership to the event, and then expect the organization’s development office to prepare and mail donor letters after the event, when you consider the total nonprofit labor, overhead and materials costs supporting the event, the net financial impact of the event is actually very likely to be negative. You should never stage a fundraising event or use a nonprofit’s name to promote an event accordingly without checking with the nonprofit first, and without asking the nonprofit if such an event represents the very best way for you to serve their mission as a volunteer. You should also never seek to provide legitimacy to a dodgy commercial, political or social enterprise by tacking on the name of a nonprofit as an afterthought, or publicly treating a nonprofit as though it should be grateful for whatever you toss in the proverbial begging bowl. If you take the time to put the nonprofit’s needs and requirements first, then everybody will be happier with your contribution when it’s done.

3. “I can take a tax deduction for anything that I donate to a nonprofit.” For straight-up cash gifts, this is generally a good assumption, although once your income rises to a certain level, you may not get 100 cents worth of deductions on the dollars you spend. But that fundraising dinner you went to last night, with the $100 ticket price? You can’t claim a $100 tax deduction, since you received tangible goods and services (food, fun, etc.) by attending, so only some lesser portion of your payment is tax deductible; the nonprofit should tell you how much. And the $100 worth of raffle tickets you bought? Since you didn’t win anything, that’s a donation now, right? Wrong: those tickets were your entry fee into a game of chance, and in the eyes of the government, the chance at the prize is worth the same value as the prize itself, so you can’t claim any portion of that raffle expense as tax deductible. And that time that you took all those clothes to the Salvation Army over the weekend and put them in their collection bin, and you tallied up how much you had spent on them all ($1,000) and took that as a tax deduction? Incorrect and illegal, since the value of an in-kind donation is based on the fair market value of the item donated at the time of donation, not purchase. Also, if your in-kind donation is valued at more than $500, you’re going to need to include an appraisal with your tax filing, and have documentation from the charity that confirms your gift. Or say you donate your car to a charity, and its Blue Book value is $5,000. You can take that amount as a tax deduction, right? Not necessarily: if the charity sells it for $3,000, then that’s all you can claim. The bottom line on all of these examples is that tax deduction rules are more complicated than you might think, and you should always seek guidance from the nonprofits of your choice on how best to support them, while maximizing your own tax benefit as well, and not setting yourself up for penalties associated with incorrect tax filings. Get gift confirmation letters from the nonprofits for your gifts, too, in the tax year that you are claiming them. The burden is on you, not the nonprofits, to prove that you made the gifts when the Internal Revenue Service comes knocking.

4. “I see a specific need not being met in my community, so the best thing for me to do is to establish a new nonprofit corporation to address that need.” Maybe this is correct, sometimes, but not very often, and a nonprofit organization shouldn’t be established as a hobby, especially if it plans to fundraise. You also should never establish a nonprofit corporation to give yourself a job as its Director. That’s just bad form. While there is a wide-spread shortage of funding in the nonprofit sector these days, there is no shortage of nonprofits themselves: the National Center for Charitable Statistics reports that there are nearly 1.6 million nonprofit organizations in existence today (a 66% increase since 1998), while Nonprofit Times noted that the number of 501(c)(3) charities (a subset of the total number of nonprofits) with income levels of over $25,000 broke 1.0 million in 2005. There are, of course, hundreds of thousands of additional small nonprofits that never get to that $25,000 threshold, and are likely having minimal, marginal impacts in their home communities accordingly. The Balkanization of service sectors into restrictively tight missions of a growing number of niche nonprofits ultimately hurts the overall effectiveness of the response within that service sector. If you see a charitable need unfulfilled in your community, your best, first bet is to figure out which existing service provider may have a mission that could allow it to meet the need within its existing, established operational and fundraising infrastructure. Setting up competing, small nonprofit corporations without the ability to actually pay for such provision will generally make it very difficult for any funds raised to have any significant, long-term impact. Again, this is not to discourage people from volunteering their time, talents and treasures, but they’re going to be a lot more useful to a lot more people if you don’t reinvent the wheel by starting a new nonprofit from scratch on a whim.

5. “People work in the nonprofit sector because they can’t cut it in the for-profit sector.” From a strictly monetary standpoint, this might seem to make sense, since salaries in the nonprofit sector are generally lower when compared to comparable positions in the for profit sector, and if people can get paid more for doing the same job in the for-profit sector, then their continued presence in the nonprofit sector must be indicative of their second-tier talents. But this, too, is very wrong, offering a shallow and reductive view of the nonprofit sector that fails to recognize fundamental elements of the charitable experience: altruism, philanthropy, and a desire to serve others. There are obviously myriad reasons why people choose to work in the nonprofit sector, but at bottom line, people who work for nonprofits generally get some intangible, immeasurable benefit from their belief in the rightness of their work and their organizations’ mission, and the value of this benefit in their lives may often be higher to them than the additional monetary value of doing similar work for a less mission-driven organization. They feel that their work has a sense of deeper meaning, beyond simply providing income and dividends to shareholders. Others may simply see their lower-than-for-profit salary levels as essentially contributions back to their employing organizations, increasing funds available for mission. At bottom line, few if any people get Masters Degrees in Social Work (to cite just one sector example) to help them become wealthy. They get such degrees, and enter what are sometimes woefully underfunded employment situations, because they want to make a difference. Some of the most talented individuals that any of us are ever likely to encounter have forged their entire careers and reputations working for and with nonprofits, to the tremendous benefit of their communities and nations. The nonprofit workforce isn’t less effective or less valuable than the for-profit sector is, it’s just driven by a very different set of motivations and inspirations. So don’t pass shallow judgment on those who put something other than money first.

Non-commercial bloggers orbiting New York’s Capital Region: http://indiealbany.com

Article Source: http://EzineArticles.com/?expert=J_Eric_Smith

http://EzineArticles.com/?Five-Common-Misconceptions-About-Nonprofits&id=5425578

Author: Don Midgett

Do it now or do it over – with strategic planning, mission and vision statements come first. Proper building blocks for strategic planning, whether for-profit or non-profit organizations, begins with well crafted mission and vision statements.

“There aren’t short cuts for such important actions,” states Don Midgett, business consultant and author of Mission and Vision Statements: Your Path to a Successful Business Future. “Laying the right foundation provides the accurate guide for strategic and long-range planning as well as day-to-day operations.” In short, do it from the start or do it over later. Some real-world examples of non-profit and for-profit organizations using a vision driven approach to strategic planning are given below.

“I had been through other planning processes and inevitably they would only take you so far” said Tim Logerquist, Association Director for the non-profit Gold Coast Baptist Association in southern California. “As we continued the mission and vision process I was able to align my mission and vision statements with strategies and actions that would yield results. This investment in time and effort up front proved successful to the strategic planning process as we now have initiated strategies with real impact.”

“Visionary businesses excel because they set goals that relate directly to their vision. They communicate the vision and vision-based goals to their customers and employees” continues Midgett. “They come up with strategies and actions to reach their goals and achieve their vision. It is in this way that a for-profit or non-profit organization or business can control its destiny in the marketplace rather than let outside forces determine a business direction.”

An early pioneer in internet consulting, Novo Solutions, Inc. in Virginia Beach, Va. began with the initial mission and vision statements providing affordable, innovative business solutions to small and mid size companies. Now in its sixth year, Novo has begun a process of realignment of its business focus centering on newly revised mission and vision statements which called for changes in their strategic planning.

“Using the model of mission and vision statements as a foundation made it easier to frame our mission, define our market products and understand the benefits of having a visionary, market driven company” said Anne Sych, Novo’s Marketing Manager.

Both time and effort can be used successfully when organizations and businesses see the value in doing “their homework” from the beginning and building on solid plans and actions.

So remember! Don’t do it over – do it now! Create your mission and vision statement today. Begin to lay the solid foundation for your organization’s strategic plan and strategic planning process. To learn more on a vision driven approach to strategic planning, go to http://www.missionvisionstatement.com/.

Article Source: http://www.articlesbase.com/ask-an-expert-articles/strategic-planning-for-nonprofit-and-forprofit-organizations-580951.html

About the Author

Since 1986 Don has dedicated his expertise to helping business owners understand how to use clear, effective mission and vision statements, success goals and strategic planning to grow their businesses. With additional skills in leadership development, organizational dynamics and teambuilding, Don has extensive experience ranging from government agencies, (including a White House Commission for Small and Minority Businesses), new business owners, and to privately and publicly held companies. Don personally helped a prominent government organization turn around a multi-million dollar loss in less than 12 months by implementing a vision-driven strategic planning and leadership process.

Attribution: ‘The Cause’
flickr.com/photos/94261979@N00/69418577

Author: David E. Stevens

Recruitment is the most important activity for association membership development, correct? Not necessarily.

Member recruitment is certainly important. But if you want your association to thrive, membership retention is the more important metric.

Here are three reasons why retention is more important than recruitment:

One: Get retention right, you will have built the basis for recruitment. High retention rates are the signal that you have happy, satisfied members. And happy, satisfied members tend to share the association story with others, automatically creating a grassroots recruitment campaign. The take-away: start with retention, and follow with recruitment.

Two: “A bird in the hand is worth two in the bush” is certainly true for associations and membership organizations. It’s true not only because it takes less effort to keep a member than find a new member, but because it is less expensive to retain a member than recruit a new member. The take-away: recruitment oftens gets the attention, but retention will make your director of finance much happier; ultimately, the membership numbers will make your board happier, too.

Three: A low retention rate is a signal that you have serious underlying problems in your association or membership organization. Recruitment of members is primarily a function of great marketing. But member retention is a function of both marketing, and more importantly, a great membership experience. If you can’t keep your members, then you are wasting money recruiting them until you fix the association. The take-away: if you can’t retain, recruitment will burn through prospects because they won’t join a second time.

The bottom line is that recruitment is important for your association or membership organization. But retention must be your first priority. Get retention right — then move on to recruitment.

About the Author:

For more advice, resources and books about association membership retention and recruitment, membership development, member benefits, event marketing, event registration, meeting planning, non-dues revenue, government affairs, and association jobs, visit the Best Association® Resources & Tools website at http://www.bestassociation.com.

Article Source: ArticlesBase.com – Association Membership Recruitment — or Retention?