Issue 19
October 16, 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 270 other NEWSNOTES subscribers!

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IN THIS ISSUE

LEAD STORY

The Board's Role in Monitoring Organizational Effectiveness

By Deb Kocsis and Sue Waechter, Cornerstone Consulting Associates

How much information is enough information? Board members who have been surprised by a financial crisis or subjected to a line-by-line review of the financial transactions know that the answer to that question isn't simple.

When the board creates a process for monitoring the organization, a healthy balance is struck between these two extremes. The possibilities of a surprise financial crisis or the line-by-line transaction reviews are reduced if not eliminated altogether.

One of the easiest ways to grasp the benefits of a monitoring plan is to consider the operation of a car —a task that nearly all of us have experienced. When you climb behind the wheel of your personal vehicle and proceed down the road, do you stop every ten miles to measure the gas level in the fuel tank, or do you glance at the fuel gauge on the instrument panel? Do you stop every twenty miles to open the hood and check oil level and coolant temperature, or do you rely upon the oil pressure and engine temperature indicators on the instrument panel?

We readily accept the use of indicators when we drive our car because we have learned to trust the indicators on the instrument panel. Besides, few if any of us are certified auto mechanics. Our time is better spent on preventive maintenance, from changing our own oil to taking the car in to a master mechanic.

And so it is with the board's duty of care: the board must accept the use of indicators in governing the organization, and learn to trust the information provided by those indicators. Where indicators do not exist, the board must carefully create them and then examine them at every meeting. By examining the indicators, the board can see trends emerging and evaluate the validity of the indicators. Over time, the board learns to trust that the selected indicators are indeed providing an accurate picture of the overall health of the organization.

How
Leading indicators — those that provide information about future events — are more helpful than trailing indicators — those that provide information about events that have already occurred. Wherever possible, the board should stay focused on the view through the front windshield, rather than the view in the rear-view mirror. Good leading indicators are harder to develop than trailing indicators; that’s why trailing indicators tend to be used more frequently. Yet it's worth the effort to develop and refine leading indicators that truly serve the board in its duty of care.

Ten to twelve indicators are typically sufficient for monitoring the health of a nonprofit organization. Consider indicators in the following areas:

Programs and Services

• program outcomes measured for all of organizations' services
• program outcome data no older than 365 days
• specific indicators designed to monitor program outcome data

• ninety days' expenses available in cash reserves
• summary of revenues vs. projections
• summary of budget vs. projections
• financial audit no older than 365 days
• IRS form 990 no older than 365 days
• number of grants submitted; number of grants approved

• plan no older than 2 years
• accomplishment of goals no more than 30 days beyond target date
• specific indicators designed to monitor implementation of plan

• position description reviewed within last 365 days
• performance reviewed within last 365 days

• attendance at board meetings

• Checklist of Nonprofit Organizational Indicators from the Free Management Library.
  
  
• The Nonprofit Good Practice Guide. See the section on accountability and evaluation.
  
  
• The BBB Wise Giving Guide is published quarterly to help donors make informed giving decisions. See their Standards for Charitable Accountability.
  

FEATURED ITEMS

Education and Training: Board Development Topics

Nonprofit Enterprise at Work (NEW) is offering several upcoming workshops on recruiting and developing effective boards. Use the links to see a description of each, then register online.

• Wednesday, October 22, 2003—Recruiting a Dynamic Board
• Wednesday, October 29, 2003—Matching Your Board with Your Organization’s Life Cycle
• Thursday, October 30, 2003—Meeting Mechanics: Should You Make a Motion or Just Vote?
• Tuesday, November 4, 2003—How to Be a High-Performing Board
• Wednesday, November 19, 2003—Healthy Board and Staff Relations

Onsite Board Training

NEW's Onsite Board Training program offers hands-on training for your Board of Directors facilitated by our experienced staff. Choose one of our five training modules to fit your board’s unique needs:

• Board Basics
• How to be a High Performing Board
• Recruiting a High Performing Board
• Board Survival Skills: Crisis-Free Transitions
• Board and Staff Relations

Directory of Nonprofit Organizations in Washtenaw County

Visit this up-to-date online resource of over 300 organizations to find your colleagues, your competition, or local services for your family. The focused search option allows you to narrow your search. Is your organization’s information current? Use update entry to make changes.

Technology: Get Discounts

TechMarketplace, a project of TechFoundation, partners with computer companies such as Dell to provide 501(c)(3) nonprofits with discounted technology products and
services. Find discounted computers and servers, online technology-training courses and other merchandise.
TechFoundation publishes TechGrants Newsletter which reviews current grant programs and new ideas on fundraising for technology at nonprofits. The newsletter is free and available to all nonprofits.

Southeast Michigan Census Council

How much does your organization or agency know about the community or the neighborhood you’re serving? Take advantage of the detailed profiles of the demographic, socioeconomic, and housing characteristics compiled by the SEMCC for every city and township in the metropolitan area, and for each of the 39 sub-communities (neighborhood clusters) in the city of Detroit. Find a goldmine of data on the general population (numbers and race), social characteristics (national origin, education), income and poverty, labor force, and housing for your area. Order your own copies of relevant areas for $30 or visit the Nonprofit Resource Library.

Conference: Diverse Donors - Opening Doors

East Lansing is the site for this conference on Tuesday, November 18 from 8 a.m. to 2 p.m. The day will feature Diana S. Newman, author of Opening Doors: Pathways to Diverse Donors and co-founder of the original Leave a Legacy program, a community-wide collaboration to encourage people from all walks of life to leave gifts to the charities of their choice. The coming demographic shift in the US population will have tremendous impact on nonprofit organizations in services provided, clients served, composition of boards and staff, policies and strategies, and fundraising practices.

Hosted by the Capital Area Chapter of the Association of Fundraising Professionals and Michigan Nonprofit Association, the conference aims to dispel myths and expand our understanding of traditions of giving associated with diverse populations. Register online.

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