Issue 32
December 14, 2004

Please Note: Nonprofit Enterprise at Work offices will be closed December 24 through January 2, 2005. We look forward to serving you in the NEW Year!

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 470 other NEWSNOTES subscribers!

NEW would like to recognize the generous support of its Community 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

Accountability Is More Than a Catchphrase; It Is a Legal Requirement

By Jennifer Acree*

Last November, NEWSNOTES published an article entitled What is the Sarbanes-Oxley Act—Why Should Nonprofits Be Concerned? The article drew on the expertise of leaders in the nonprofit community to discuss the implication of Sarbanes-Oxley for nonprofit organizations. This was just the beginning of a lengthy public discourse about nonprofit management and accountability.

The Sarbanes-Oxley Act, officially known as the Public Company Accounting Reform and Investor Protection Act, was enacted in 2002. This piece of legislation institutionalizes legal accountability requirements for publicly traded for-profit corporations. It calls for whistle-blower protection, guidelines for recordkeeping practices, standardization of accounting practices, and other important measures. In the past year, similar regulations for nonprofits were initiated at the federal and state levels. As a result, these four key legislative events occurred in 2004:

  • April 2004-Iowa replaced previous nonprofit provisions with new regulations.
  • June 2004-The Senate Finance Committee held testimonies to consider amending federal Internal Revenue Services provisions that govern nonprofit corporations.
  • July 2004-The Michigan Senate passed amendments to the Charitable Organizations and Solicitations Act. The bill has been referred to the House Committee on Commerce.
  • September 2004-California passed the Charity Integrity Bill, a new piece of nonprofit legislation.

The Senate Finance Committee: Driving Federal Change

The Senate Finance Committee, led by Senator Robert Grassley (R-Iowa), convened testimonies to consider numerous changes to nonprofit regulation. Whether in the form of amendments or new legislation, these changes would have the greatest impact on annual IRS reporting practices and disclosures. The proposed legislative changes would:

  • Require explanations for anyone at a foundation, including staff, who receives more than $200,000 in compensation. Also, foundations would have to provide a reason for administrative expenses in excess of 10%.
  • Set limits for staff and board expenditures on travel and accommodation expenses.
  • Provide guidelines for performance reports. Organizations with gross receipts of at least $250,000 would have to provide a detailed description of performance goals, measurement methods, and outline the goals for the next fiscal year.
  • Require an independent audit of annual finances for organizations with gross receipts of at least $250,000. Rotation of the auditing firm every five years would be required.
  • Impose organizational board limits of 3 to 15 members.

Michigan Sees Changes on the Horizon

The changes to the Charitable Organizations and Solicitations Act, as passed by the Michigan Senate in July, address issues of charity registration, penalties for violation of the Act, fundraiser activities, and other important accountability measures. Some of the impending changes would:

  • Require annual registration fees for all organizations with contributions of more than $25,000. Fees would be used by the attorney general, with the approval of the legislature, to increase public awareness of the Charitable Organizations and Solicitations Act.
  • Set guidelines for audited financial statements. Organizations with a budget in excess of $500,000 would have to have financial statements prepared by an independent CPA. Nonprofits with contributions between $200,000 and $500,000 would be required to have their statements at least reviewed by an independent CPA.
  • Outline fines and imprisonment penalties for violations of the Act. A violation of certain provisions could be punishable by a suspension and/or revocation of a fundraiser or charity license, and a civil fine of up to $10,000.
  • Require registration and increased reporting and accountability standards for fundraisers.

The Sector is Strong

In order to navigate these changes, there are several resources available to your organization. Currently, numerous advocacy groups in D.C. and Lansing are working to ensure that any new legislation benefits the public, including those who make contributions to nonprofits. These organizations include the Michigan Nonprofit Association, Independent Sector, and the National Committee for Responsive Philanthropy. In fact, the Independent Sector was invited by the Senate Finance Committee to conduct a panel review of the proposed changes. The panel is compromised of twenty-five national leaders in the nonprofit sector, including the Michigan Nonprofit Association’s President and CEO, Sam Singh. Their recommendations are expected to go to the Committee next spring.

Also, The Chronicle of Philanthropy and The Nonprofit Times are following this issue closely. Ultimately, it is important for nonprofits to stay informed about the proposed changes. Educated organizations will be able to more readily adjust to the anticipated changes.

*Jennifer Acree is a graduate student in the MSW program in the School of Social Work at the University of Michigan. Her curricular focus is Management in Human Service organizations. She is currently an intern at Nonprofit Enterprise at Work.

Additional Resources:

FEATURED ITEMS

Education: Looking Forward to Spring Term

As the Fall 2004 workshop term draws to a close, NEW offers a big round of applause and enthusiastic thank yous to the 50 volunteer faculty members who served as panelists, instructors, and facilitators at our events and workshops this term. We would not be able to offer outstanding training for nonprofits without the contributions of these dedicated volunteers.

Another round of valuable workshops is set for Spring 2005; fundraising will continue as the theme. The catalog will be online and in the mail by mid-January. Scholarship applications will be due February 14 and workshops start again on March 11, 2005. We look forward to seeing you at a workshop at the NEW Center next spring--but in the interim, please take advantage of NEW’s other programs.

Upcoming Leadership2Go Session for Executive Directors

Save the date for The Fundraising Machine, Part 2: Preparing for Breakdowns on February 4, 2005 from 8:30 a.m.-10:30 a.m. In Part 1 in early December, you shared information on what is needed to build a fundraising engine. In this session, some "thorny" issues will be confronted, including the challenges of funder and donor relations, emergency gap-filling, and how to make the case for overhead expenses. Registration will begin in January; the location is TBD.

Contact Andrew Steck (734-998-0160) with any questions.

Junior League Grants

The Junior League of Ann Arbor is proud to announce the availability of applications for their annual Flexifund Grant awards. Applications must be submitted by January 31, 2005. Washtenaw County nonprofits are eligible to receive minigrants of up to $1000 to address immediate and specific needs in the community that align with the JLAA mission and values. Request an application by emailing flexifund@jlaa.org. Grant awards will be made in March 2005. Call 734-996-8818 if you have questions or would like more information about the Junior League.

2-1-1 Call line in Washtenaw County

Washtenaw County is in the first phase of introducing a 2-1-1 help line for health and human service information and referrals. Since November 15, 2004, full-time, trained call takers have been using a comprehensive database of community services and volunteer opportunities to offer up-to-date information and referral for Washtenaw County citizens. The service is available 8:00 a.m. to 5:00 p.m., Monday through Friday, by calling the seven-digit phone number 734-477-6211. The easy-to-remember 3-digit number will be available all day every day by late 2005.

The 2-1-1 Initiative will help free up valuable time currently spent by 911 operators fielding non-emergency calls. Local call centers have been in operation in Calhoun (Battle Creek), Kalamazoo, Kent (Grand Rapids), and Ottawa Counties; it is projected that nearly 60% of the state will have operational 2-1-1 call centers within 12 months. The Washtenaw 2-1-1 project is funded by Washtenaw United Way, Ann Arbor-based Huron Valley Ambulance, Washtenaw County, Pfizer Global Research and Development in Ann Arbor and the Ann Arbor Area Community Foundation.

MNA Executive Leadership Fellows Program

The Michigan Nonprofit Association has launched a comprehensive leadership and management program for newer executive directors of nonprofit organizations. Executive directors with fewer than three years experience leading a nonprofit are invited to apply to this comprehensive preparation and planning experience. Over a period of seven months, fellows will attend five two-day seminars covering all aspects of nonprofit management, including organizational self-assessment. Applications are due January 17, 2005; download a copy and get more information from the MNA Web site. The first session begins March 31.

MNA Emerging Leaders Program

Are you an individual with one to five years of professional experience in the nonprofit sector? Are you committed to developing a career in the sector and dedicated to enhancing the professional efficiency and impact of the organization you work with? The Michigan Nonprofit Association’s Emerging Leaders Program may be just what you are looking for. If accepted into the program, you will go to Lansing for a two-day seminar each month from February through May and attend the Nonprofit SuperConference in Dearborn in June. Four classes have graduated so far, and participants give it rave reviews. Applications are due January 10, 2005. Get details from MNA.

Community Events Calendar

Nonprofit organizations are encouraged to promote their events via the calendar at the Ann Arbor Area Convention and Visitors Bureau’s Web site. The Bureau maintains an aggressive event-marketing program that distributes information in the calendar to many media contacts. Great Stuff E-Newsletter, the Weather.com event calendar, and other sites use the AAACVB calendar content to supply their readers with news on where to go and what to do. The calendar is linked from numerous other Web locations as well.

Become a registered user and obtain a password by contacting Virginia Kingsley or Nick Miller (734-547-6855). It is very easy to gain wide exposure for your organization’s activities while avoiding scheduling conflicts with other area events. And it’s free!

MasterMinds Advanced Training Sessions

The Michigan Association of Community Arts Agencies (MACAA) has announced a new series of four advanced training sessions specifically designed for arts and cultural leaders. MasterMinds: Strengthening and Sharing Arts and Cultural Knowledge will begin with Dr. Thomas Wolf, author of Managing a Nonprofit Organization in the 21st Century. He will share his expertise in strategic planning at three locations around the state:
Tuesday, January 11 - Dearborn
Wednesday, January 12 - Grand Rapids
Thursday, January 13 – Petoskey

Other training sessions are scheduled:
April: Marketing and Audience Development
May: Corporate Sponsorship
June: Community Cultural Planning

In these sessions leaders in the arts community will learn about resources to help them meet challenges and keep in step with current trends. Find more details about the sessions and presenters at the MACAA Web site. Scroll down the page for registration information.

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 Calendar

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

 
 
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