Issue 12
March 19, 2003

NEWSNOTES is a monthly email newsletter published by Nonprofit Enterprise at Work. It includes items of interest to the nonprofit community in Washtenaw County and the surrounding areas, as well as resources available at NEW. Encourage your friends and colleagues to join over 210 other NEWSNOTES subscribers!

NEW would like to recognize the generous support of its partners:

IN THIS ISSUE

LEAD STORY

Take Time to Understand the Real Revenue Problem

On March 13, NEW hosted a special workshop entitled "Coping with Cutbacks" featuring Emil Angelica, author of the book by the same name. Underwriters of the session were the Ann Arbor Area Community Foundation and Washtenaw United Way. Executive directors and board chairs were invited to explore innovative ways to turn the challenges of today's financial landscape into opportunities to thrive. We thank Mr. Angelica for sharing a brief overview of the presentation for this month's NEWSNOTES.

Take Time to Understand the Real Revenue Problem
By Emil W. Angelica

"Sometimes slower is faster," a Lao friend once told me. This is a concept that many leaders in our nonprofits need to consider as they tackle today's problems of reductions in revenues. There is a tendency to move too quickly to thinking about solutions when faced with a problem. This can lead to solving the wrong problem or developing strategies that are not necessarily the best.

When I work with NPO leaders facing funding reductions, I often caution them to consider several factors to better understand the problem before brainstorming solutions:

1. Are funds restricted or not? Determine which of your revenues have been restricted in their use by funders. If the money is restricted for use in a specific program you cannot use it to cover shortfalls in another program. Only general operating funds or fees and undesignated donations are flexible and can be shifted to support other programs. This can limit your options.
   TIP: Start by developing a program budget that allocates restricted money first and then applies unrestricted dollars to support remaining priorities.



2. What is the real scope of the reduction? Don't take the problem at face value. Does the revenue reduction in one area have an impact on other programs through either direct or indirect costs? For example, an organization operates three programs, and they each share in the cost of a receptionist or an intake position. If the organization loses the funding for one of the programs, the remaining two programs will need to cover the full cost of the receptionist, thereby increasing the cost of operating each program.
   TIP: This may be a time to look at the service delivery model that you are using to see if there is a less expensive alternative, or consider contracting with a partner organization for intake services so that you can continue to provide adequate intake for your programs.



3. What is the impact on management? Some grants will allow for a certain percent of the grant to be applied to cover the costs of management or administration. As a program grant is reduced or eliminated, there may be a corresponding reduction in the funding available for administration. This can be problematic if other grants have similar constraints.
   TIP: Again, start by budgeting your most restricted dollars, enabling you to meet contract and grant requirements and then move to those that are more flexible.



4. What about your overhead rates? If you lose revenue for one or more programs but do not reduce your overhead costs, your rates allocated to the remaining programs will increase. This can be problematic with stakeholders, who may designate an acceptable range on overhead rates, or who do not want to see increasing administration costs while programs are declining.
   TIP: This is a time to make certain that any costs that can be directly associated with one program are allocated to that program rather than to general administrative cost. For example if you are raising funding for a specific program, evaluating one program, or preparing program specific reports for regulating agencies, see if part or all of these expenses can be allocated directly to the program costs.

These are just some of the reasons to spend some time up-front clarifying the specifics of any revenue shortfall and its implications on your organization. This added attention to problem clarification can keep you out of trouble with key stakeholders, lead to solutions that work, and perhaps even save you time in the long run.

Emil Angelica, M.B.A. is a senior consultant with Amherst H. Wilder Foundation Services to Organizations. He has more than two decades experience in the nonprofit sector. His consultation experience includes planning, evaluation, organizational development, fiscal management, board development, strategic planning, and fund-raising planning. He has also served as the executive director to a nonprofit organization and as director of his own consulting agency. He has published several articles on nonprofit funding issues and has conducted workshops and keynotes on cutback-related topics. Emil earned his M.B.A. in Finance and Management from New York University.

Other Resources:
From Mr. Angelica's presentation:

• "Coping with Cutbacks" slides (74k pdf)
• Organization Life-Cycle Stages handout (15k pdf)

Workshops available from Nonprofit Enterprise at Work to help your organization cope with cutbacks. All sessions are 9 a.m. to noon at NEW, $50. Register online.

• Community Needs Assessments that Work, Thurs. March 27
• Achieving Strategic Agility: Introduction to Long-Range Planning, Tues. April 15
• Your Development Effort: What's Right? What's Wrong? What's Next? Wed. April 16
• Closing the Gaps in Your Marketing Message, Thurs. April 17
• Building a Better Budget, Wed. April 30

FEATURED ITEMS

Nonprofit Excellence Awards: May 7

Please join us for the 8th Annual Nonprofit Excellence Awards reception and awards ceremony on Wednesday, May 7, 2003, from 5:30 to 8:00 p.m., in the Morris Lawrence Building of Washtenaw Community College in Ann Arbor. RSVP by April 23, 2003 to NEW 734-998-0160.

The Nonprofit Excellence Awards recognize management excellence, interagency collaboration, technology innovation, and community outreach. This year, NEW introduces a new award, Excellence in Management-New Organizations, to recognize the unique strengths of young nonprofits.

For more information, please visit our Web site.

Board Builders: Sliding Fee Structure Introduced

Board Builders has moved to a sliding scale fee for organizations participating in the board matching program. New annual fees for Board Builders are as follows:

If the organization's annual budget is…	the annual fee is…
less than $100,000	$100
between $100,000 and $500,000	$125
between $500,000 and $750,000	$150
between $750,000 and $1,000,000	$175
above $1,000,000	$200

Boards of all sizes and styles are invited to learn more about recruiting new board members by contacting Liz S. Peintner, 734-998-0160.

Education and Training

NEW's Spring 2003 Managing for Nonprofit Excellence workshop series is in full swing with sixty timely, affordable workshops. With state budget cuts, a changing economy, and donors making tough choices about giving, skill-building is more important than ever! NEW workshops will help you creatively meet new and ongoing challenges. Please register in advance either online or by calling 734-998-0160.

See a list of April workshops.

Nonprofit Reference Library: Employee Manual

If your organization lacks an employee manual, take advantage of one you can easily adapt for your own use. Nonprofit Enterprise at Work's Employee Manual is available for $25. It covers topics from employment classifications and policies to compensation and employee benefits. A copy of the manual on disk is included. This manual was recently updated to include the Washtenaw County's new nonsmoking policy. Contact Ann Gladwin, 734-998-0160 or order a copy on line.

Consulting: Tools and Links Page Added to NEW Web Site

NEW has added a helpful Consulting Tools and Links page to its Online Consultant Directory. The page features links to additional nonprofit consulting service providers and consultant directories, as well as a variety of online resources about working effectively with consultants. In addition to consulting-specific links, the page also includes locally and nationally based Web sites featuring information on a wide range of nonprofit management topics.

Major Gifts Program Offered

The Association of Fundraising Professionals (AFP) Greater Detroit Chapter, is pleased to announce plans for its 2003 Professional Advancement Day. The event "Major Gifts in a Minor Economy" will be held on Tuesday, May 13, 2003, 8 a.m. - 3 p.m., at Lawrence Technological University (21000 West Ten Mile Road, Southfield, MI 48075). The keynote speaker will be William B. Hanrahan, Chair of the AFP Foundation for Philanthropy, and CEO of Community Counselling Service Co., Inc. The theme for the day-long conference will focus on major-gift fundraising — from research to recognition — in today's current economic environment.

Ticket prices for the event are $75 for one organization representative and $65 for each additional individual from the same organization. The event will include a continental breakfast, lunch and exciting presentations surrounding the topic of major gift fundraising. This day will be worthwhile to the fundraising beginner as well as to the seasoned professional, and all organizations, small or large, will learn useful, practical and transferable fundraising skills for today's current market.

Please call 248-478-6076 to register.

A Conversation Between State Policymakers and Nonprofits: May 9

Partnership In The Era of Term Limits is a forum inviting nonprofit leaders and legislators throughout Michigan to talk about their common interest to effectively address Michigan’s human service needs. The conference will be held Friday, May 9, 2003, 8:30 a.m. to 3:30 p.m. in Grand Rapids on the downtown campus of Grand Valley State University. Registration fee is $40 (includes luncheon). Afternoon site visits will take conference participants to several urban sites that showcase exemplary public-private partnerships and faith-based initiatives in action. More information and registration forms are available from Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership. For additional information contact Jerry Lindman, 616-331-7224.

New Microsoft Software Discount Program for Nonprofits

Effective immediately, Microsoft will dramatically enhance its Software Donation Program that is offered through DiscounTech. Enhancements include more product variety, increased number of software titles available per organization, and greater savings through substantially reduced DiscounTech administration and distribution. Learn more about this enhanced Microsoft Software Donation Program!

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