posted on: Friday, February 19, 2010

Editor's note: This posting has been revised to correct an incorrect link, noted below.

By Yna C. Moore

A couple of weeks ago, I developed a poll to find out what kind of annual reports from nonprofits are preferred by foundations’ staff. A heartfelt thanks to all who helped spread the word, those who provided their feedback via Twitter or in comments, and to those who responded to the poll – much appreciated!

So far, here are the preliminary results:

• Multi-media (video or audio accessed via a website or a CD/DVD) = 3 votes
• PDF only = 2 votes
• PDF + hard copy = 2 votes
• PDF + multi-media = 2 votes
• Hard copy + multi-media = 2 votes
• Hard copy only = 1
• I do not read annual reports = 1
• Other = 1
• TOTAL respondents = 14

I also received a couple of insightful comments on our blog and via Twitter:

“I think it's helpful when all the information is
available online in an accessible format, whether it's PDF or something else. I
think foundations should publish annual reports as well online!”

- By Elizabeth

“A PDF available on the organization's web site is easily
accessible and can easily be printed out if hard copy is wanted. Multimedia
takes too much time -- I have a stack of DVDs from grantees and would-be
grantees waiting to be viewed -- most never will be.”
- By Benjamin

“PDF + actual data in Xcel db .csv format @NCRP
Foundations! Which types of grantee reports would you likely read?”
- By @tomkaecf via Twitter

This isn’t a scientific poll by any means, and fourteen respondents isn’t a large enough sample to come up with anything definitive. But the question of what gets read and what doesn’t affects tens of thousands of nonprofits all over the country. Now more than ever, nonprofits must be smart about how they spend their very limited time, human resources and funds. This includes determining the most effective and cost-efficient way to get their annual reports to the hands to their current or prospective funders. And there’s no way for them to find out what’s effective and what’s not if funders don’t tell them!

So I’ll keep monitoring this poll until I reach a subjectively determined goal of 100 respondents. According to the Urban Institute’s National Center for Charitable Statistics, there were more than 115,000 private foundations in the country in 2009. So 100 respondents is not even a drop in the bucket! But it’s a start, and I hope it will yield some useful information for nonprofits as they continue to weather the storm of the current crisis.

Please help me reach my goal! Here are some easy and quick ways:

• Tweet it! (updated link)
• Share with your friends on Facebook
• Click on the “Share this” link at the bottom of the poll or this blog post for a bunch of other ways to help spread the word.

I’ll keep you up-to-date with our progress and interim poll results. Thank you!

Yna C. Moore is the communications director of the National Committee for Responsive Philanthropy (NCRP). Follow her on Twitter.

posted on: Friday, February 05, 2010

By Yna C. Moore

Once upon a time, putting together annual reports was pretty straightforward: write about accomplishments and major developments from the past year, print and send them out to a mailing list and hope they get read.

But with the proliferation of new digital media and the rising cost of producing and mailing hard copies, the process isn’t quite as ”simple” anymore. Now, it also involves wrestling with the question: What format should we use?

For most organizations, annual reports serve multiple purposes and have helped with transparency in the charitable sector. But like any other “product,” they’re only as good as their reach and consumption by their intended audiences.

For nonprofits, institutional grantmakers are among the primary target audiences of annual reports, which take considerable time and resources to produce. So the question is – Which format would most likely get read or viewed by foundation staff?

I posed this very question in comments on the Communications Network blog. Blog moderator and head of the network Bruce Trachtenberg’s answer was, we don’t know.

So here’s my (unscientific) attempt at finding out. Why? Many nonprofits are run by overworked staffers wearing multiple hats trying to get as much done with as little budget as possible. Giving these groups a better sense of trends and preferences will help them decide on the most efficient, effective and cost-conscious way to communicate with one of their most important audiences – their funding partners in the civic sector.

I hope that someone or some organization will take on a larger, more “scientific” attempt at gathering, analyzing and sharing the data. It could spell the difference between an annual report that is read or tossed to the bin and never seen.

For now, I invite foundation staffers who read this post to take the poll, or share your thoughts in comments. Thank you!

Yna C. Moore is communications director of the National Committee for Responsive Philanthropy (NCRP).

posted on: Wednesday, August 19, 2009

by Julia Craig

A recent blog post on The Plain Dealer identified the ways in which nonprofits are demonstrating social impact to stay competitive in an increasingly challenging fundraising marketplace. As foundations and other donors tighten their belts, nonprofits must compete for fewer dollars while facing greater need. This is a story that’s been told many times during this recession.

For nonprofits like those in Ohio under scrutiny to demonstrate their worth funders, what does impact mean? Big Brothers Big Sisters tracked participants and found that adults who participated in the program as children tended to be better educated, wealthier, and have stronger relationships than peers with a similar background who were not mentored through the program. This type of study is useful for a nonprofit as it demonstrates to funders that their support contributes to success.

For smaller nonprofits without a national affiliate, conducting such research could be financially infeasible. And what about those nonprofits working on changing the system rather than providing services and individual advocacy?

NCRP’s Grantmaking for Community Impact Project has found demonstrable return on investment for grantmakers giving to advocacy and organizing. In New Mexico and North Carolina, a small sample of advocacy and organizing groups reaped billions of dollars in benefits for their communities. Our mixed methodology captures both quantitative impacts (such as passing a state Earned Income Tax Credit) and qualitative benefits (such as reducing the legal limit of uranium in groundwater). However, there is still debate in the field as to how best to measure impact, and what that word even means.

Sean Stannard-Stockton of Tactical Philanthropy recently sparked a lively debate on high performance and high impact nonprofits. He argued that a high performance nonprofit is directly observable: it is well-run and efficient with strong leadership and good management, while a high impact nonprofit is one that has a sustained impact on its community. This may not be observable except in retrospect. Stannard-Stockton’s post generated a flurry of discussion and dissent, leading John Macintosh of SeaChange Capital Partners to post a rebuttal. He contended that a high performance nonprofit “has a high impact program that is likely to be able to deliver over time under a variety of changing conditions.”

My question is, is impact always about meeting the goals of a given activity or organization? As part of the Grantmaking for Community Impact Project, we asked groups to give us examples of instances when they didn’t achieve their goals but still gained from a given campaign. Many shared stories of not winning a legislative battle, but were able to build relationships with lawmakers, cultivate leadership skills, strengthen organizational knowledge of the legislative process, and feel better prepared for the next opportunity to ensure lawmakers heard their constituents’ voices.

So in figuring out ways to measure the impact of our organizations, let’s not forget about these “soft” successes.

• Nonprofits in Northeast Ohio are being required to provide hard facts to get funding [The Plain Dealer]
• High Performance vs. High Impact Nonprofits [Tactical Philanthropy]
• A Rebuttal & an Example of a High Performance Organization [Tactical Philanthropy]

Julia Craig is research assistant at the National Committee for Responsive Philanthropy and co-author of Strengthening Democracy, Increasing Opportunities: Impacts of Advocacy, Organizing and Civic Engagement in North Carolina.

posted on: Thursday, July 30, 2009

Gary Snyder

I guess I am confused.

The ink is hardly dry on the Principles for Good Governance and Ethical Practice Workbook issued this month and now Independent Sector is seeking to strengthen charities with its StrategicLab Conference in Colorado Springs.

The Principles were not without controversy. It cost the IS and its contributors hundreds of thousands of dollars to turn out. IS president, Diana Aviv, readily acknowledged to the Chronicle of Philanthropy that the implementation of the changes in the Principles could cost the government hundreds of millions of dollars.

Also, there is still some question as to any systemic positive change that has resulted as an outgrowth of the document. Some have concerns about the lack of follow through on the Principles before embarking on other important issues. What is the status of the IS Advisory Committee on Self-Regulation of the Charitable Sector that was an outgrowth of the Principles? What ever happened to self-regulation and taking advantage of well-developed infrastructure currently existing within the sector?

The Principles have had some effect, however. Compromising on its call for self-regulation, the document cried out for government intervention into the sector. As a result, small and medium sized agencies are choking on Internal Revenue Service mandates. Furthermore, IS has called for increased federal government involvement by seeking an agency similar to the Small Business Administration. Obviously the call for such an agency must have been without insight because the SBA is considered to be one of the least respected agencies in the federal government and replete with incompetence.

So here we are at another forum that IS has convened. The StrategicLab meeting is contentious also. The Internet is replete with criticism that there are few Generation Y leaders asked to join in the deliberations. This is similar to the call for more diversity in the development of the Principles. Some then questioned the outcomes given the lack of diversity of viewpoints and now others are suggesting that The StrategicLab is another meeting at which an exclusive group is deliberating on behalf of the entire sector.

Should we be afraid of the consequences or that this is another false start?


Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

posted on: Tuesday, July 21, 2009

Gary Snyder

Much has been written about their weaknesses. I have chimed in with numerous articles about watchdog agencies in the for-profit and nonprofit sectors while trying to be balanced as to their strengths and weaknesses. I have stated unequivocally that there needs to be watchdog agencies, but current overseers need significant improvements in the guidance they provide to donors and investors for their decision-making.

After the recent economic implosion, the for-profit watchdog agencies are frequently cited as having contributed to the downslide. There have been efforts by the government and those in for-profit sector to replace the current big three watchdogs. But that effort was abandoned because the big three are so big that they fall into the category of ‘too big to fail’. Instead, several predictions now indicate that those three may have record profits for many years.

In my most recent article, I was quite critical of the watchdog agencies for the charitable sector. Ken Berger, President & Chief Executive Officer, Charity Navigator and I spoke for a protracted period of time about the contents of the article. He disabused me of some of my notions; he tempered my expectations while I shared with him some additional perceived weaknesses of all of the organizations that monitor philanthropy. I thought it was a thoughtful discussion and one that will continue as we meet at a conference later this year.

I shared with Ken my concern about one overseer that is trusted but is an apparent weak link in the arsenal of transparency and accountability. It is the silent partner that has not received much scrutiny-the accountant and auditor.

Over the past decade we have seen embarrassing headlines about for-profit scandals at Tyco, WorldCom, Enron, HealthSouth, Adelphia and many more and the complicit involvement of their accountants.

The situation in the charitable sector mirrors the for-profit problems. Few remember about a religious nonprofit, RBC
Ministries which raised more than $29 million without reporting any fund-raising expenses. Where were the auditors?

Or, the massive fraud in Roslyn, N.Y. where tens of millions of dollars were stolen along with half of the Long Island school districts. We know where the accounting/auditing firm was. It was not exercising professional care in conducting the audits and as soon as the indictments were announced, the accounting firm closed its doors similar to Arthur Anderson of Enron fame.

Another previously much touted but often forgotten scheme was at the New Era Philanthropy where a much-trusted person scammed 180 (mostly, charitable) organizations and 150 sophisticated money managers out of $400 million. It was only after a sophisticated college employee tore apart New Era’s bogusly constructed tax returns did anyone know of the swindle.

The nonprofit Baptist Foundation of Arizona is another example of lack of oversight by an accounting firm. Executives and legal counsel were found guilty of cheating 11,000 investors out of close to $590 million. The accounting firm Arthur Anderson settled for $217 million.

And more recently, the accounting profession did not tag three Ponzi-related operators that were close to the nonprofit sector in their giving. A close friend of Bernie Madoff, the recently convicted and notorious Ponzi operative, is disgraced financier J. Ezra Merkin. His accounting firm is being charged by New York Law School with using slight of hand techniques by not disclosing material matters such as where investments were made.

And an auditing firm seemingly missed the misdeeds of Thomas J. Petters a $3 billion Ponzi manager who is charged with pumping billions of dollars into a non-existent business that had no customers. Petters companies appear to have been operating without the most basic of business documents -- the certified financial statement or annual outside audit.

Madoff alone took billions of dollars out of over 100 foundations and charities, many from the Jewish community (to name a few: Hadassah, $90 million; Picower Foundation, $1 billion; Carl and Ruth Shapiro Foundation, $200 million; Chais Foundation, $175 million and Yeshiva University $100 million). Many suggest that Bernard Madoff's former outside accountant will undoubtedly plead guilty. Accounting experts say it would have been next to impossible for such a small firm to have properly audited Madoff's multibillion-dollar asset management business.

These are just a few of the more prominent (in terms of dollars) accounting oversights that have blemished philanthropy. The quiet accounting watchdogs are lurking in the background losing credibility for their own profession as well as the entire charitable sector.

We are all concerned about the charity brand image. Charity Navigator and others have a steep climb in resetting their criteria to better evaluate charities. I leave it to the charity watchdogs if they should address the veracity of their accounting/audit watchdog partner in their deliberations. Someone should. It is frequently overlooked and extremely important to the sustainability of the charitable sector.



Gary Snyder, the managing director of Nonprofit Imperative in West Bloomfield, Mich., is author of Nonprofits On the Brink and publisher of a monthly e-newsletter—Nonprofit Imperative, which focuses on the major issues affecting the philanthropic community. He can be reached at gary.r.snyder@gmail.com or at 248.324.3700.

posted on: Thursday, June 25, 2009

By Julia Craig

Last week, First Lady Michelle Obama called on the nation’s philanthropic institutions to seize the opportunity to get involved in economic recovery efforts. Speaking at a luncheon of Washington-area philanthropic organizations and nonprofits, Mrs. Obama told the group that despite government programs such as the Serve America Act that greatly expands AmeriCorps and volunteer opportunities, “Washington can only do so much.”

Mrs. Obama recalled her time as a community organizer and nonprofit staff member working on fundraising and grant reports. She said that multi-year grants allowed her to make realistic budgets and build capacity through investments in technology and staff. She also noted the importance of demonstrating impact in order for funders and community members to maintain interest in supporting the work of nonprofits. Mrs. Obama encouraged the group to take advantage of federal programs designed to increase volunteerism and encouraged funders to come together with communities and nonprofit organizations to develop solutions to the current economic crisis at the local level.

In Criteria for Philanthropy at its Best, NCRP calls on grantmakers to designate 50 percent of their grants as multi-year funding and 50 percent as general operating support. These types of support best allow nonprofit organizations to fulfill their missions and meet the needs of their communities.

Flexible, multi-year support – as Michelle Obama stated – allows nonprofits to plan for the future and respond to changing needs. Given the current economic climate and the difficulty foundations and nonprofits alike are facing, it is more important than ever that philanthropic institutions fund their nonprofit partners in ways that allow them to best achieve their missions.

Has your organization ever received a multi-year grant? How have multi-year grants helped your nonprofit? We’d love to hear your stories!

posted on: Monday, June 08, 2009

Gary Snyder

The financial and leadership crisis we face is resulting in a crumbling charitable world. If handled correctly, these troubling times will be looked upon as a terrific learning experience in years to come. We have a unique opportunity to reset our standards in a very positive way.

The most important thing that we must restore is the confidence of the general public and our contributors. Donors must believe that we are husbanding their resources in a thoughtful and competent manner. Unfortunately only a little over 20% believe that we are vigilant watchdogs of their donations.

We can earn the public’s trust by also being totally transparent, and accountable, with each agency showing that it’s governance is deliberative. The current ‘anything goes’ mindset is unacceptable to stop the sector from spinning out of control.

Those in positions of responsibility must retune our institutional and person goals and values. The focus of this endeavor lay in leadership ---national, local directors and management. The current status quo is unacceptable. The outmoded models of directorships have produced profoundly negative consequences.

There is no silver bullet to guide us out of this quagmire. All roads lead to the need for change. Our donors don’t trust us, the regulators don’t believe us, and our stakeholders doubt we are delivering the goods.

All believe that beneficence, forethought, and self-discipline of our forefathers have gone by the wayside. Part of the problem is the current dysfunctional training apparatus. It must be updated. While we should adhere to the some of the best practices of yester-year; many of the old-fashioned policies and practices must be revamped. We must encourage innovation in order for us to see our way out of this crisis and to restore trust and grow the nonprofit world. At the outset our mentors and teaching institutions must condemn self-enrichment at the expense of those we serve.

In order to avoid controversy, the sector leadership has sat on the sidelines on critical issues and failed to assist in managing the sectors destiny. That has lead to the excesses and abuse in philanthropy. Hiding behind a publicist just has not worked.

It is our responsibility to clean up our own mess and not continue to prevail on the government to regulate out us out of our bad behavior. The charitable sector went hat in hand to ask the government to clean up our house with little consideration for 70% of the sector---the small and medium agencies. With some leadership, the charitable sector is uniquely positioned to restore trust with better board oversight and vastly improved management practices, all of which will instill stakeholder confidence.

We must act swiftly. We must show that we are capable of governing on our own. We must develop our own internal audits that show that the sector leadership is attuned to the new realities. We must show that boards are no longer tone deaf and spineless and that they are attentive to the needs of those we serve.

When that is accomplished we must use our bullhorns and tell our stakeholders, regulators and Congress that we are worthy of their trust and that we have come to terms with the fact that transparency and accountability are laudable roads to travel.



Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.

posted on: Monday, January 05, 2009

By Gary Snyder


Nonprofit organizations continue to get fleeced. This is the first in a series of articles on how charities, and their leaders, are not meeting their fiscal responsibilities.

In 2001, the Congress set up a nonprofit to help veterans start and expand small businesses. The National Business Development received $17 million from the federal government to operate walk-in small business centers for veterans. A recently released Congressional study discovered that only 15 percent a year, on average, was spent running the centers and in fiscal 2008, that percentage slid to 9 percent. In spite of assertions to the contrary by the Veterans Corporation, its claims are being dismissed because there has not been a separate external audit done in two years. Audits are required for organizations the size of the Veterans Corporation.

According to charity watchdogs the average spent on program expense, as opposed to management and fundraising, is 85%. Several veteran organizations such as Paralyzed Veterans of America (used 62% toward charitable purpose), National Veteran Services Fund, Inc (25.1%), American Veterans Relief Fund (7.1%), Disabled Veterans Associations (2.3%) and the Friends of Israel Disabled Veterans (0.1%) are at the bottom of the list and have not met the minimum threshold by a wide margin.

Fundraising efficiency is another focus of charity watchdogs. Stellar fundraising expenses are 10%, but 30% is the most that is acceptable. At the bottom are several veteran organizations that spent in excess of that amount---Veterans of Foreign Wars (60%), Disabled Veterans Associations (96.7%), American Veterans Relief Foundation (83.6%), National Veterans Services Fund, Inc (73.7%).

For every dollar spent on management or fundraising is a dollar spend not meeting the charity’s mission.

Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.