Issue 20
November 20, 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 280 other NEWSNOTES subscribers!

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

Ann Arbor Area Community Foundation DTE Energy Foundation
Ford Motor Company Fund The James A. & Faith Knight Foundation
Pfizer Global Research and Development The Power Foundation

IN THIS ISSUE

LEAD STORY
FEATURED ITEMS
REGULAR FEATURES

LEAD STORY

What is the Sarbanes-Oxley Act — Why Should Nonprofits Be Concerned?

Recent scandals in the corporate world have undermined public faith in institutions and created a demand for financial accountability and sound ethical practices. To help prevent another Enron debacle, the Sarbanes-Oxley Act was signed into law in July 2002 to regulate what boards of publicly traded companies must do to oversee financial transactions and ensure auditors’ independence from their clients.

Misdeeds by a tiny fraction of nonprofits, too, have shaken public trust in the sector as a whole. Attorneys general in New York and California have taken preliminary steps toward applying Sarbanes-Oxley to large nonprofit organizations. “Although nonprofits are technically not required to comply, it is important that they recognize the implications and understand how they will be affected,” says Richard Larkin of BDO Seidman. Clients, funders, employees and the public at large will be taking a close look at your nonprofit to see if all activities are aboveboard. Questions may soon be added to the IRS Form 990 regarding whether a nonprofit has conflict of interest and Audit Committee policies.

BoardSource and the Independent Sector have collaborated on a report The Sarbanes-Oxley Act and Implications for Nonprofit Organizations to inform us about the law and to help anticipate future impacts on the sector. All nonprofits can begin to adopt certain provisions of Sarbanes-Oxley immediately, not only because it may be required in the future, but because it is sound business practice. The aim is to keep the activities of your organization, especially accounting procedures, as transparent as possible.

Some highlighted recommendations from the report:

Audits (may not apply to smaller nonprofits):

  • Conduct an annual audit.
  • Have an Audit Committee with members separate from the finance committee
  • Allow the board and the Audit Committee to meet without management present.
  • Rotate the auditor or auditing firm every five years.

Financial Statements:

  • The Chief Executive Officer and the Chief Financial Officer should fully understand the financial statements of the organization and make sure they fairly present the financial conditions and operations of the organization.
  • The board has the ultimate fiduciary responsibility for approving financial reports.

Insider Transactions and Conflicts of Interest:

  • Do not provide personal loans to directors or executives.
  • Institute and enforce a conflict of interest policy.

Disclosure:

  • File the annual Form 990 with the IRS in a timely fashion.
  • Have available for public inspection an exact copy of the original Form 990 and all schedules and attachments filed with the IRS.


Two provisions of the Sarbanes-Oxley Act do apply to nonprofit groups currently.

  • Whistle-Blower Protection: Develop, adopt and disclose a formal process to deal with complaints and prevent retaliation against those who illuminate impropriety within the organization. It is illegal to punish whistle-blowers, and all organizations have the responsibility to take reports of fraud or abuse seriously.
  • Document Destruction: Have a written, mandatory document retention policy. This helps limit accidental or innocent destruction. It is illegal for an organization to alter, cover up, falsify or destroy any document to prevent its use in an official investigation.


Appropriate compliance with the Sarbanes-Oxley Act can help nonprofits if used as a tool instead of a burden. The internal controls and policies that are promoted by the Act will enable your nonprofit to be accountable to your board of directors, your clients, your donors, and the public. NEWSNOTES will keep you posted on any future developments within the state of Michigan.

Resources:

FEATURED ITEMS

Leadership2Go Executive Director Series:
Executive and Staff Compensation

You know better than anyone that nonprofit organizations run on a tight budget. Don’t let this stop you and your staff from earning the salaries you deserve. Come speak with other area executive directors about how their organizations handle compensation and benefits. Compare national, state, and local statistics and discuss hot topics such as bonuses, asking for a raise, benefits and the relationship between executive director evaluation and salary.

Our panelists for this session will be:

  • Ken Fischer, President of University Musical Society
  • Dohn Hoyle, Executive Director of Washtenaw Association for Community Advocacy
  • Cassie Mann, Co-Managing Director of the Ann Arbor Civic Theatre
  • Ruth Zweifler, Executive Director of Student Advocacy Center of Michigan

Panel, Q&A, and Networking
FRIDAY, DECEMBER 5, 2003
8:30-10:30am at the NEW Center, Ann Arbor
$10, pre-registration is requested but not required!
Continental breakfast provided

The 2003 Leadership2Go Executive Director Series is made possible, in part, by the generous support of the Sarns Ann Arbor Fund and the Bill and Molly Dobson Fund of the Ann Arbor Area Community Foundation, and Pfizer (made possible by Peter B. Corr).

Education and Training: Upcoming Workshops

The Managing for Nonprofit Excellence workshop series is winding down for the Fall term, but you still have a chance to take the following:

Call 734-998-0160 or register online. The Spring series is in the planning stages. Look for a catalog of offerings in February.

Nonprofit Resource Library - New Acquisitions

Check out titles added to the collection in the last few months at the library online bookstore. Books circulate for three weeks. Don’t be shy about coming in to the NEW Center, Room 103, to browse the shelves. Contact Ann Gladwin, agladwin@new (734-998-0160) with any nonprofit-related questions.

Junior League Accepting Grant Applications

Applications are being accepted for the Junior League of Ann Arbor, Inc. Flexifund grant program. The JLAA will be awarding up to $5000 in grants in early February to local non-profit charitable organizations working with an immediate and specific need in the community.
Applications can be made for up to a $1000 grant by obtaining an application form either by written request or on line at www.jlaa.org. Applications must be received, via hard copy, in the mail by December 15, 2003. Past recipients are welcome to apply. Questions should be directed to Flexifund@jlaa.org.

The Junior League of Ann Arbor, Inc. is an organization of women committed to promoting voluntarism, developing the potential of women, and improving the community through the effective leadership and action of trained volunteers. Its purpose is exclusively educational and charitable.

Technology: Free Fundraising Software

Third Sector Systems is offering free First Chair fundraising software to nonprofits across the United States. Visit their Web site to order a CD with fully functional database software -- not an evaluation copy or a trial copy that expires, but software you can use to manage your contacts, fundraising, correspondence and membership.

We first heard about this offer in an announcement from TechSoup. Keep apprised of new developments in nonprofit technology by subscribing to the email newsletter TechSoup...By the Cup.

Washtenaw County Nonprofit Joint Purchasing Program

All organizations need office supplies replenished from time to time. Perhaps your organization needs new furniture, computers, or an uncomplaining photocopier. Washtenaw County has many suppliers who offer their products or services at a reduced rate to local nonprofits. Take advantage of this cost-saving relationship. Contact the Purchasing Division (734-222-6760) for more information.

Preparing for Successful Grant Proposals

Gain a disciplined approach to proposal development and turn yourself into a grant winner. Take Preparing for Successful Grant Proposals, a 2-day course offered by the Indiana University Fund Raising School.

  • When: December 3 and 4, 8:30 am – 5 pm daily
  • Where: Madonna University, Livonia, MI
  • Cost: $425 for Michigan Nonprofit Association members, $475 for not-yet-members (IUFRS published tuition: $580)


This class offers useful information for newcomers and experienced professionals wanting to refresh their skills. It provides in-depth discussion and activity on the proposal development process. Learn how to find the right funder, create a budget, gear your proposal to the funder and create a thorough evaluation component.
See the course description on the MNA Web site. For more information contact Mike Corbin, 888-242-7075, Ext. 2412.

REGULAR FEATURES

Nonprofit Bulletin Board

Visit NEW's Nonprofit Bulletin Board to post and view notices about free resources, fundraising opportunities, and other items relevant to the southeast Michigan nonprofit community.

Events Calendars

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Ann Arbor Area Convention and Tourist Bureau calendar of events. E-mail Nick Miller to request a password to submit an event.

 
 
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