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Could Your Website Get Hacked? A Reality Check!

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You might think it could never happen to you but one morning you find out your website no longer exists or it’s connected to a site you’re ashamed to show. Don’t think your small nonprofit would be of interest to a hacker? Well, according to a recent FBI report, there’s been a 270% increase in online fraud and cyber scams in the past two years and smaller organizations and nonprofits tend to be the latest targets. Hackers find these organizations to be less technically savvy and lacking in security measures that protect their websites and other technology, making them an easy target. Not only is it terribly inconvenient to have your business operations taken over by a hacker, it raises multiple ethical and legal issues to consider.

Here are a few reasons to be concerned:

  1. Conducting nonprofit business often requires collecting information protected by law as confidential. A breach in this confidentiality poses a risk for individuals whose data has been disclosed and puts the nonprofit in a position of being subject to liability for the breach.
  2. Many nonprofits use a website URL’s that ends in .org. which can help them rank higher and have better visibility in donor searches. However, this also results in making them easier to find for hackers.
  3. If you do any e-commerce on your website, such as processing donations or event registrations, personal payment information could be compromised or stolen.
  4. Information handled by nonprofits are of interest to hackers including donor information, client records, confidential emails, habits and preferences of donors, patrons,  and other data.

Donor and client trust are imperative for nonprofit operations, having to notify your donors or clients that their personal information (such as medical information, employee records, social security numbers, driver’s license number, etc.) have been compromised could result in serious consequences for the nonprofit.

So what’s a nonprofit to do?

  • Start by attending the upcoming Spokes workshop: “Don’t Get Hacked!” Thursday, March 7, 9-11 a.m. facilitated by Rony Krell. You’ll learn is to better understand the cybersecurity landscape, the costs of data breaches, and proactive strategies you can take to protect your nonprofit. Each participant will receive an actionable cybersecurity checklist to take back and use at your nonprofit. The information will be presented in a way that won’t require any technical expertise to understand the information.
  • Take an assessment of your data to determine what data you store on individuals, where the data is stored, how much you actually need, and data what you could do without. This simple one-page inventory tool will help you think through this process.
  • Determine whether the data you collect and maintain is considered “personally identifiable information” by federal or California regulations. If so, there are several steps you would have to take to inform those affected of a security breach. Look in the resources section below to prepare for this possibility.  
  • Learn how to secure your data and take the necessary steps to make that happen such as making sure you have proper firewalls, virus protection, and regular file backups.
  • Be sure you has an HTTPS certificate that encrypts data transmitted between your website the user’s browsers. If you use laptops, consider encrypting the hard drives to scramble data until an encryption key is used. This won’t protect again hackers but it will protect against anyone who might have physical access to your computer.

All of this might sound complicated but you can easily learn the basic steps to enhance your cyber-security in our upcoming workshop “Don’t Get Hacked!”. Be sure to visit the additional resources for more information and several downloadable tools and resources. 

Additional Resources

FBI Warns of Rise in Hacking

Cyber Security for Nonprofits: Council of Nonprofits 

California Legislative Information on Security Breaches

Your Budget is Your Friend

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If it’s time to create your budget for the upcoming year, congratulations. Your nonprofit budget is your best friend and the source of direction for all of your operations during the year. I know working on the budget may feel like torture, but it is one of the most important documents to support your nonprofit organization. It can actually be exciting to create.

Here are three reasons the annual budget is your best friend.

 

  1. Budgets provide a view of operations through numbers.

For some, numbers are scary, but budgets don’t need to be. Similar to your personal or home budget, your organization budget creates a guide to manage your finances each month. It lets you project how much income you need for operations during the year and identify the source of that income. For instance, you can list income sources as grants, donations, events, or other fundraising. Depending on your organization, you might project income generated from membership, services, or programs fees. After determining your projections for the year, allocate that income to various expenses needed to operate the nonprofit business. These expenses include salaries and benefits (don’t forget all mandatory employee benefits), rent, supplies, costs associated to operate your programs, services, and insurance and so on. Include as many expense categories as necessary to prevent underestimation of overall expenses. In general, it’s best to estimate income conservatively and estimate expenses generously.

 

  1. Budgets are a working document for financial controls.

Once you create your budget, you have to manage it. Each month the budget should be a part of your financial reports which include your Statement of Activities (Profit and Loss statement), Statement of Financial Position (Balance Sheet) and the Statement of Cash Flow. Compare the amounts you budgeted for each account shown on these statements to the actual monthly amounts to understand your current financial position. Hopefully you’ll meet or exceed your income projections while keeping the expenses in range or lower than projected. You might also get the opposite, that is, less income than projected or higher expenses, but you’ll be able to make adjustments to the budget to keep your operations on path. Your board treasurer and bookkeeper should be your helpers in these areas.

 

  1. Budgets guide the strategic operations of the organization.

Use your nonprofit budget to guide your strategic operations. Having determined the goals that will drive your mission for the year, you now have a projected dollar amount to support those goals. Use the budget and current financial statements to monitor your finances and determine if you can meet the goals or if you need to make adjustments. For example, you might have projected adding another employee position. If you find you’re meeting the projected income goals for the new employee, you can move ahead with that goal. However, if the income is not there (or not foreseeable), you might need to adjust the goal. (This doesn’t mean you can’t get the position filled in some manner. For example, you might seek a volunteer to get the help you need. Sometimes, that person might be the one to help you reach the financial projections for the year.) Another example of how your budget guides your strategic operations occurs when you analyze if you have enough income to manage your programs or services, or if you need to seek more private donations and grants. Your budget can even help you project if a fundraising event is feasible or if you should look for money in a different manner. Reviewing budget results each month lets you know how much you’re spending in each expense category and where you might have enough or need to cut back on expenses.

If you need help in the budgeting process with your best foot forward, here are the following resources:

For smaller nonprofits that are entirely volunteer-run, the Virginia Society of Certified Public Accountants offers this handy guide to help you address the budgeting challenges unique to your organization and resources. Budgeting for Small NPOs

For larger organizations, nonprofit consultant and author Joan Garry outlines an innovative strategy to creating a budget that is meaningful and realistic for all the stakeholders within your organization – board, fundraising staff/volunteers, and program staff/volunteers: https://www.joangarry.com/budgeting-for-nonprofits/

These tips are certainly not all of the uses for your annual budget, but you can see how important the budgeting process is. Like a good friend, treat it well, pay attention to it, and it will be your guide to successful operational planning.

Is it Legal to Have an Ex Officio Director on Your Board?

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Do you have an Ex Officio Director on your board? Do you allow honorary directors on your board but don’t require (or allow) them to vote? If you answered “yes” to either of these questions, then you may be operating out of compliance with an important nuance found in California’s Nonprofit Corporations Code.

Fortunately, there are simple solutions to clear up these issues. Let’s explore the rules and steps to ensure that your organization is in compliance:

Non-voting board members cannot serve on California nonprofit boards.
Gene Takagi states, “any person entitled to attend board meetings without a vote is not a board member at all.” Non-voting board members can lead to confusion (do they count towards a quorum?) and can mislead other board members (do their opinions matter if they can’t vote?).

 To fix it: Move non-voting board members onto an Advisory Committee. Or, if you’d like to extend voting rights to these individuals, review your bylaws to make sure you have room for more board members and revisit the process of electing new board members. Your board can vote to bring them on as regular board of directors. If your bylaws state that non-voting board members are allowed, contact Spokes for a Bylaw Review to correct your bylaws today!

Ex Officio Directors automatically hold a position on your board because of a position that they hold outside of the board.
It’s rare to need Ex Officio Director positions in 501c3s. This position is more common in 501c6s, such as Chambers of Commerce, where the CEO /Executive Director often holds a position on the board. For further clarification, the NEO Law Group outlines many scenarios where this arrangement might make sense. However, if your organization labels non-voting board members as Ex Officio, you’ll want to correct this immediately.

 To fix it: Either (1) move non-voting members onto an Advisory Committee, or (2) invest them with the same voting rights and responsibilities of every other board of director serving your organization. To stay in compliance, ensure that your board policies, bylaws, and culture do not limit the actions of Ex Officio board members.

Honorary Director, Director Emeritus, and Advisory Director are misleading titles.
The term “director” is a legal definition that sets forth duties of care, loyalty, and obedience specifically for board members.

 To fix it: Identify new terms to honor these special advisors in your organization. To stay clear on the roles of your organizational volunteers, be certain not to use the word “director” for anyone who doesn’t serve on your board of directors.  

Advisory Boards are actually Advisory Committees.
Only one board can exist in your organization, and that is the board of directors.

 To fix it: Simply update your bylaws and policies so all advisory bodies are labeled as committees.

Staying in compliance with the Nonprofit Corporations Code is critical to your organization’s success. Your board of directors and advisory committees will function more efficiently once you clarify and adhere to these important regulations. If you have questions about board of directors versus advisory or honorary roles, reach out to Spokes for support at 805-547-2244 or [email protected].

Good Strategies for Bad Board Members

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“Jake” was eager to get involved with his favorite nonprofit’s outreach program, so he jumped at the invitation to become a board member. Once on the board, it became apparent that he had his own agenda: he did not understand the organizational mission and goals, wasn’t prepared at board meetings, and became combative when other directors disagreed with him.

Jake was not a good board member, and something had to be done.

It’s an unfortunate situation to find yourself on a board with a troublesome, obstructive person. Often, organizations invite these good-hearted people onto boards because they have community connections, free time, or are simply passionate about the organizational mission. Many don’t realize that board service is a big job which requires an understanding of legal and governance responsibilities, as well as some leadership skills.

Not every volunteer is a good fit for a nonprofit board of directors, and it can be difficult for these individuals to recognize their own shortcomings. In the article, “12 Reasons Why You Should Gracefully Resign from a Nonprofit Board”, Gene Takagi writes, “failure to meet your duties may be holding back the organization from better advancing its charitable mission and serving its intended beneficiaries.” Jake clearly did not understand his role, and his presence was reducing organizational efficiency.

To reduce the risk of inviting a person to serve on your board who doesn’t understand their role, provide them with a clear job description prior to their start date. This reduces the chances that they will be surprised about time, energy, and resource expectations. You can email Spokes for a board of director job template.

A board needs to operate as a whole unit to accomplish its very important work. When one member shirks their duties, the entire board suffers. There are a few ways to work through board member challenges.

  • Meet 1-1
    If you have a “Jake” who keeps the board in disarray, the board chair, and another executive committee member can use conflict resolution techniques to have a personal conversation with the member to try to understand and alleviate the issues.
  • Use term limits
    If personal life challenges or volunteering fatigue are affecting a board member, board service term limits provide a non-confrontational way to ease ineffective or challenging directors off the board.
  • Look to your bylaws
    Your bylaws should clearly state reasons to remove a board member, such as unexcused absences, unruly behavior, or conflicts of interest. If a director can’t accomplish their duties due to a temporary problem, a short-term leave of absence might be a solution. However, if this is disruptive to board business or causes quorum issues, it might be best to ask the person to resign.

Nonprofit organizations need strong board leadership so organizations can provide crucial services for our community. Spokes members who are eager to learn about board service responsibilities can log in on Spokes website to watch the Best Practices in Nonprofit Management video series. We recommend watching them during board meetings for full participation. These short, accessible videos will ensure that your organization is meeting all federal compliance requirements, achieving the highest standards of responsible governance and operating with full accountability to your donors, clients, and employees.

Making A Stronger Case for Donor Support

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Spokes would like to thank Anna Boyd-Bucy, Spokes Consultant and Volunteer Faculty for guest-writing this article. 

“Exactly what should be included in my donor packet?” is a common question. The answer is the same every time: a case statement is the first and most important document in your donor communication toolbox. Designed for a specific audience, your case statement is a compelling explanation of who you are, what you do, and where you are going in less than 500 words.

Assuming that you have a document that includes your mission statement, history, services, key accomplishments, future goals, and testimonials, look it over carefully: does your donor appear in your organization’s story? Fundraising expert Joe Garecht suggests that if not, you should rewrite your case for support this year. He advises, “Great case statements are always donor-centric. This means that they put the donors in the center of the action, and make them the heroes of the story. They talk about how donors are an integral part of the team that make everything possible, and they directly ask the donor to get engaged with the non-profit.”

In order to make the most of your case statement, it’s critical that you know your donor base. Do they watch videos on social media? Are they perusing your website? Donors make the decision to give with their hearts, and videos are a great way to reach their hearts by making a compelling case in a minute or less. Guidestar offers some fresh ideas in their article, Case Statements: Know Your Audience and How to Reel Donors In.

For the purpose of this article, let’s assume that you’re going to continue with the creative brochure route. How do you make sure every current and potential donor understands your case for support?

  • Give board members a stack of brochures to keep in their car. Word of mouth is a powerful tool, and when combined with a physical call-to-action, it’s a win-win.
  • Include a brochure with new donor donation receipts. It’s easy to include your case statement with a donation receipt. Be sure to include a sticky note that says “Welcome and thank you for your first gift, look what you are accomplishing! New donors are more likely to give again if you offer a personal recognition.
  • Pass out brochures at service club presentations. Don’t forget to collect those left behind. We aren’t made of money.
  • Bring brochures to media interviews. Bring one for you and one for your interviewer. It creates a template for questions and provides the interviewer with important facts so they sound knowledgeable.
  • Keep a brochure next to the phone for talking points. You will be prepared to pull up fun facts during impromptu calls with potential donors.
  • Save a brochure on your computer desktop – cut and paste for EVERYTHING. Consistent messaging is crucial to help people remember. (It really works. This is why Nike keeps saying, “Just Do It.”)

Whether you’re starting from scratch or updating your existing case statement, your donors will feel gratified to see themselves included in your nonprofit’s efforts to make the world a better place.

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