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From the Top: Executive Director Performance Evaluations

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Calling all board members! Did you know that evaluating your executive director is a key board responsibility? Evaluations foster clear communication about the boards’ expectations while giving the executive director an opportunity to weigh in on those expectations. Evaluations are also a critical tool for reviewing and setting the executive director’s pay. They open the door for frequent, honest discussions about your organization’s effectiveness and sustainability.

It’s never too late to start
The best time to establish the performance evaluation is before the executive director’s hire date. This way, the board can outline the standards of success and objectives in advance. However, it’s never too late to introduce an annual performance evaluation. Your board may even find that the evaluation results in a happier executive director who finally has a clear understanding of what success looks like to the board of directors.

Improve understanding to resolve conflict
Performance evaluations are also a useful tool to assess organizational failures or navigate conflicts. As HR professional, attorney, and Spokes Board of Director Jim Dorf says, “If the executive director is not achieving their goals, don’t just hope that things will improve. Once performance problems are observed, write everything down. Sit down with the executive director and set an objectively measurable performance improvement plan. Task a board member to assess the progress over agreed-upon intervals.”
Annual performance evaluations establish trust between executive directors and boards. Since executive directors manage day-to-day operations without oversight, board members can be left wondering what’s going on behind the scenes. Performance evaluations offer a safe space to inquire about daily operational strategies.

Keep it professional
It’s important to remember that the goal of an evaluation is to appraise professional performance, not the person. There is a great risk of bias, prejudice, and discriminatory actions when a board judges an executive director based on their personality or other subjective areas. According to 501 Commons, “An annual performance review can only hold the executive responsible for meeting targets, complying with policies, or achieving results that were agreed upon at least a year in advance. This way, the executive has time to organize resources and meet those targets and is given a chance to provide the board with information to indicate if the results and goals have been achieved.”

Make it a priority
To effectively conduct the evaluation, form a 2-3-person committee or task force – they will be responsible for determining the measurement criteria, establishing the formal process, and communicating with the executive director and the rest of the board. Download a checklist, like this one from Blue Avocado. Edit it to reflect your own measurement standards. Prepare to have a strategic discussion about organizational goals that have been set, met, or are pending.

Performance evaluations take time and effort to implement, but your executive director works hard. Your feedback plays a major part in their continued professional development. If you have questions or need supporting resources, feel free to call Spokes at 805-547-2244 or email [email protected].

Common Legal Pitfalls for Nonprofits (and How to Avoid Them)

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Event season is rapidly approaching, and committee members are busy preparing and planning raffles, selling tickets, and collecting items for silent and live auctions. Unfortunately, many nonprofits overlook common legal pitfalls. Spokes wants to help you avoid this costly mistake. Read this article to learn about registering for raffles, incorporating disclosure statements, and being prepared to pay sales tax.

RAFFLES
Did you register your last nonprofit raffle with the State Attorney Generals’ office? If not, then you broke the law…and you’re not alone. Many nonprofits don’t realize that unregistered raffles can result in hefty fines. In 2017, CalNonprofits conducted a survey and found that 38% of the nonprofit respondents said they were “unfamiliar” with raffle requirements. Only 51% who held raffles filed the required annual reporting form.

The good news is that it’s easy to conduct a raffle legally. Before your next fundraiser, follow this raffle checklist to:
• Submit application CT-NRP-1, your IRS 501c3 determination letter, and a $20 check at least 60 days prior to the event.
• File the Nonprofit Raffle Report no later than October 1 the following registration year.
• Report earnings to the IRS.
• Invest 90% of all funds raised into mission-related projects.

Following raffle compliance guidelines can feel like a lot of extra work, and there is a movement to simplify the requirements. If you want to help, sign CalNonprofits’ petition to support Assembly Bill 2347 to decriminalize small raffles. This bill seeks to:
• Eliminate post-raffle reports for nonprofits that hold small raffles.
• Allow nonprofits to hold 50/50 cash raffles if a single raffle raises small amounts of money and all raffle activity is below a similarly small dollar threshold. (Currently, all 50/50 cash raffles are illegal except for charities affiliated with major league sports teams.)

DISCLOSURE STATEMENT
Every time a donor purchases a ticket for an event, the nonprofit is required to let them know how much of their payment is tax-deductible. For instance, imagine a nonprofit is charging $100 for a gala ticket.
$100.00 = Ticket
$45.00 = Food and entertainment costs
$55.00 = Tax-deductible amount

It is mandatory to disclose the tax-deductible amount. On fundraising solicitations and tickets, add the statement: “The tax-deductible portion of each ticket is $55.00 and considered a donation in support of [organization], EIN # ___-______”

SALES TAX
There is a common belief that “tax-exempt” means that nonprofits don’t pay sales tax. In reality, every time a nonprofit sells or purchases an item – something tangible that you can touch – it must charge or pay sales tax.

Think of it this way: when a donor “buys” a tangible item, the nonprofit is “selling” it to the donor. Therefore, the item transfer qualifies as a sale and is taxable. After the sale, the nonprofit must pay sales tax to the State Board of Equalization (BOE). The nonprofit may charge the donor sales tax or it may deduct the appropriate sales tax amount from the donors’ payment and pass it on to the BOE. Please note that there is extra tax consideration for selling food; for more clarification, read this article: When does a nonprofit organization operating in California need to pay sales tax? or contact the BOE.

We know all these rules and regulations are intimidating. We’re here to help! Spokes has resources and tips for staying in compliance with the law. We will gladly take your calls and emails if you have questions about registering for raffles, incorporating disclosure statements, being prepared to pay sales tax, or other regulations: call (805) 547-2244 or email [email protected] for support.

Volunteer Appreciation Week: Clever Ways to Say ‘Thank You’

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Volunteer Appreciation Week is April 15-21! Now is the perfect time to plan to say thank you to your volunteers. If your organization is like ours, you rely heavily on volunteers as an extension of your staff or human resources. A genuine gesture of appreciation can result in a happier, more motivated volunteer. Here are some options to try out:

1. Surprise your volunteers with a kind gesture – coffee or muffins to start their day or a plant to show you’re thinking about them.
2. Show your appreciation through social media or a newsletter.
3. Send a personalized thank you note to the volunteer themselves or to their employer.
4. Use the power of the testimonial. Ask staff and other volunteers to write notes about a time that their colleague handled a challenge or made a difference. Compile the notes on a poster or book and present it to your volunteers.

Remember, a gratified and well-treated volunteer is a motivated and happy volunteer! If your organization is seeking additional support for its volunteer program, Spokes has several volunteer management classes coming up: Preparing Your Agency for Volunteers: Navigating Volunteer Screening and Recruitment on April 11 and Keeping Quality Volunteers: Volunteer Retention and Motivation on April 18. Join us!

The Best Way to Serve Your Community

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Are you looking to make a difference in your community? Are you passionate about making an impact in child welfare, social justice, environmental protection, and more? Are you new to board service or considering board service for the first time?

We’re Spokes, the nonprofit that supports nonprofits, and we’re here to help make your vision a reality. We think board service is one of the most meaningful ways to give back to your community. But you don’t have to just take our word for it. In this blog post, we’ll share some of the research on why board service is valuable for every entity involved, and we’ll finish by helping you with the next (or first) steps in the journey.

In San Luis Obispo County, more than 90% of local businesses are smaller owner-operated organizations – which bodes well for a local cultural of entrepreneurism, but presents real challenges for succession planning and talent development. It’s nearly impossible for small business owners to provide promising employees with professional development or cross training opportunities. But, there is another solution to develop leadership skills: nonprofit board service.

A recent study, Better World Leadership 2017, confirms that you can develop skills such as conflict resolution, management oversight, public relations, and crisis management while serving as board members for nonprofit organizations.

With more than 1,200 registered nonprofits, you’re bound to find your best match in San Luis Obispo County. However, successful nonprofit board service starts with training to understand the nuances of nonprofit management and governance. And, like all jobs, you should take time to carefully vet which nonprofit organization and mission is the best match for your personal values, interests, and expertise. Our course “Board Training Basics: Excellence in Nonprofit Leadership” on April 14 & 21 from 9 AM – 12 PM is designed to help you do just that. We encourage you to sign up for the course; we’re ready to help you start your board service career right! Reach out at [email protected], www.spokesfornonprofits.org, or 805-547-2244.

Is Your Nonprofit Risk-Aware?

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Life moves fast. In our haste to manage and innovate, we can overlook potential risks. Sometimes while we’re racing to keep up, accidents happen. Spokes is here to remind you to slow down and take a thorough inventory of who and what you need to protect.

Nonprofit board of directors are legally responsible for managing risks that could affect stakeholders and nonprofit property. These risks fall into a few distinct categories:

  • Governance risks – Is the board diligently overseeing the organization? Are they making reasonable decisions?
  • Financial risks – Is the board utilizing financial best practices to prevent fraud and ensure accurate bookkeeping?
  • Legal risks – Is the board adhering to laws and regulations regarding human resources, donations, and grants?

It’s in everyone’s best interest to make a plan for a deep and lasting commitment to safety, reputation and mission-protection. So where do you start?

Know your risks.
We sign up for risks anytime we host an event or launch a new program. Challenges and obstacles are inevitable; some come as surprises, while others can be assumed. Per the SAFE: Sound Advice for Functions and Events booklet, “Good prior planning, which includes safety and emergency procedures, appropriate documentation, and adequate staffing and security can both mitigate risk and reduce insurance costs. Not planning ahead can have a huge impact on both your reputation and your financial stability.” Click here to download.

Also, make a plan to watch Spokes video series Best Practices in Nonprofit Governance at your next board meeting. This short and information-packed series offers practical tips and strategies for protecting yourself and your organization. You can access the videos through your Member Benefits page after logging in to Spokes member portal.

If you’re a fan of checklists, the Free Management Library offers a Checklist of Nonprofit Organizational Indicators so your entire board or committee can track organizational goals and accomplishments.

Are you adequately insured?
Directors and Officers Liability, Volunteer/Participant Accident Insurance, General Liability…there are a wide variety of insurances available to nonprofits. A wise nonprofit will weigh innovative programming and supportive community services with a clear understanding of potential risks. The Nonprofits’ Insurance Alliance of California and Alliance of Nonprofits for Insurance has handy brochures that you can pick up at Spokes for details.

Do you have updated policies in place?
Policies protect and steer the board and staff as they fulfill the organizational mission. They are a reference tool for appropriate action, ethical decision making, and for dealing with potential or actual conflicts. Spokes has templates available for board-related policies, personnel policies, and financial policies. Examples include whistleblower policy, conflict of interest policy, and a gift acceptance policy. Contact us for details.

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