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Volunteers: A Valuable Resource

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People who give of their time, skills and resources as a nonprofit volunteer provide invaluable resources to nonprofit organizations. Now is a great time to show your appreciation for your nonprofit volunteers during National Volunteer Week.

National Volunteer Week is an opportunity to celebrate the impact of volunteer service and the power of volunteers to tackle society’s greatest challenges, to build stronger communities and be a force that transforms the world. Each year, we shine a light on the people and causes that inspire us to serve, recognizing and thanking volunteers who lend their time, talent and voice to make a difference in their communities. (Points of Light https://www.pointsoflight.org/nvw/)

The actual value of the time spent by volunteers working in a nonprofit is not reported on IRS Form 990 or 990-EZ, so the exact economic impact of nonprofit volunteerism is unknown. However, a report on San Luis Obispo County nonprofits estimated volunteers provide more than 627,274 service hours annually, and that could be a very low estimate (Beacon Economics).

Additionally, volunteers help fill the gap for vital professional services when budgets are tight and more assistance is needed. Just as in for-profit companies, salaries are usually the highest line item in a nonprofit’s budget. Most nonprofits can’t afford to hire the amount of staff needed to adequately meet operational demands. In addition, some businesses may not have staff at all and depend solely on volunteer help to function. Being consistently short-staffed and overworked can cause burnout, resulting in employees leaving to seek work elsewhere. Hiring and retaining volunteers thus becomes a crucial component in building a successful nonprofit.

Here are a few tips to help nonprofits find and keep the essential volunteers they need.

  • Plan for volunteers before you reach out: There are endless reasons why a person chooses to volunteer. Some want to give back to the community, develop new skills or stay connected with others. Whatever the reason, plan for your volunteer the same way you plan for other staffing. Create a job description to clarify the needs of the organization. This helps create realistic expectations for the volunteer as well as for the organization. However, be flexible as a volunteer may not want to do all of the tasks you’ve outlined, or you might get a person with a totally different but essential skill set that you hadn’t anticipated.
  • Prepare to make a good first impression: Let everyone know when a new volunteer is coming so they can give him or her a warm welcome and the volunteer knows that their service is appreciated.  When setting the first appointment, be clear if you expect the person to start helping immediately or if this is just an initial interview. Have the volunteer application and information on the nonprofit ready to share with each applicant. Bringing in a volunteer is similar to bringing on a regular staff member—that is, treat everyone the same. For instance, if a background check is required for employees, then it should be required for volunteers as well.
  • Provide an onboarding training session: Having a first day onboarding session with a new volunteer is imperative to orient the person to the organization and for you to get to know them better. Be welcoming and positive so the person feels relaxed. Create a designated place to store belongings and to work, and provide and review information in your Volunteer Handbook together.

These few tips are just the start for working with volunteers, but getting off to a good start sets the tone for a successful relationship. To get more tips on working with volunteers, join Spokes for the following April workshops:

  • Preparing Your Agency for Volunteers, Tuesday, April 16, 9-10:30 a.m.
  • Keys to Keeping Quality volunteers: Volunteer Retention and Motivation, Tuesday April 23, 9-10:30 am.

See information below in the newsletter for more information on the workshops.

For Spokes members, go to your Online Resources Library in your membership area to find multiple resources for volunteer recruitment, management, and retention.

Other Resources:

2013 Central Coast Economic Forecast, Beacon Economics. www.Beaconecon.com

Top 10 Strategies for Retaining Volunteers that Actually Work: https://www.givegab.com/blog/top-10-strategies-for-retaining-volunteers-that-actually-work/

Nonprofit Board Governance

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Have you heard these statements?

  • “Nonprofit Boards of Directors must practice good governance.”
  • “The nonprofit is governed by its Board of Directors.”

The topic of nonprofit Board governance can be confusing, mostly because this important concept may not be fully understood. In general, governance brings together policies, systems and structures that provide support to Board members in making good decisions for the nonprofit according to expectations of the public trust.

Right there, you see that the topic can get confusing. It might help to know that governing a nonprofit is different from governing a for-profit organization. Nonprofits serve a public purpose without benefiting any particular individual. Therefore, the basic goal in governance for nonprofits focuses on protecting and furthering the mission of the nonprofit. However, the goal of a for-profit company is to generate income for the company, employee and shareholders.

Nonprofit boards are considered “Stewards of the Public Trust”, which signifies the general public trusts that a nonprofit is fulfilling its mission as stated to the IRS when it was granted exemption status as a nonprofit organization. The Board has three primary responsibilities: Duty of Care, Duty of Loyalty, and Duty of Obedience.

Duty of Care means the Board will make decisions with the same level of care as each member would for their own personal assets (even though board members have no personal assets in the nonprofit).

Duty of Loyalty means the Board puts the needs of the organization and the population that it serves above all other needs, especially the individual’s or group’s personal agenda.

Duty of Obedience means the Board will maintain compliance with all legal standards and regulations required for the exempt organization, including annual filings with state and federal agencies.  

A 2017 study on Boards of Directors showed that 56 percent of nonprofit Boards struggle with weak Board governance. As a result, approximately 52 percent of nonprofits are unable to expand their impact because of a weakness in strategic thinking such as developing a mission, strategy, impact evaluation, or insight by their Board.

What should be noted, however, is that these limitations are most likely not the fault of the Board members. Instead it’s more a matter of “you don’t know what you don’t know!” Without a doubt, those serving on a nonprofit Board have every intention of doing the right thing, making the right decisions, and being a good steward of the organization. But like coming into anything for the first time, Board members need to learn how to effectively govern a nonprofit and serve as a productive Board member. That takes information, training and dedication.

Spokes is always here to assist nonprofit Boards with the development of policies and procedures as well as providing an understanding of the legal and ethical responsibilities of the Board. Visit our website at https://www.spokesfornonprofits.org/services/just-for-board-members/ to learn more about the resources we have available to provide local nonprofit Boards with the management training, consulting and resources they need to better serve our community.

Resources about Nonprofit Board Governance:

Good Governance Policies for Nonprofits: https://www.councilofnonprofits.org/tools-resources/good-governance-policies-nonprofits

Study: Most Nonprofits Lacking in Leadership, Management http://www.thenonprofittimes.com/news-articles/study-nonprofits-lacking-leadership-management/

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].

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