Issue 62
August 23, 2007

NEWSNOTES is a monthly email newsletter published by NEW. It covers resources available at NEW in Ann Arbor as well as items of interest to the nonprofit community in southeastern Michigan. NEWSNOTES is proud to celebrate its sixth year of publication, with delivery to over 1000 subscribers every month! We welcome your feedback and suggestions.

NEW would like to recognize the generous support of its Community Partners:

IN THIS ISSUE

LEAD STORY

Seven Characteristics of Financially Healthy Nonprofits

By Susan Kenny Stevens*

What does it mean to be financially healthy? My colleagues and I have conducted longitudinal studies on the financial health of nonprofits in several states and provinces in the United States and Canada over the past decade and have consistently found these seven characteristics that describe financially health nonprofit organizations.

1. Financially healthy nonprofits have sufficient income to ensure stable programming. The two adjectives in this sentence—sufficient and stable—are the key words here. Nonprofits, like any business, need adequate income to meet program demands. Just as important, healthy nonprofits understand the value of continuity of service. A vibrant organization needs a stable source of income to continue its programming and ensure its credibility with clients, board members and outside funders.
2. Financially healthy nonprofits have a ready source of internal cash—or access to cash—in times of shortfalls. Like any business, nonprofits must have cash to survive. Without cash, payrolls can't be met, taxes can't be paid and services must be put on hold. Some organizations have their own savings surplus or reserve to handle inevitable income fluctuations. Other groups use borrowed money as a temporary solution. Either way, quick access to cash spells the difference between stable, uninterrupted services an crisis conditions.
3. Financially healthy nonprofits engage in income-based, rather than budget-based spending. Most nonprofits aspire to and value a balanced budget. Yet, some have not learned the relationship between having a balanced budget and adjusting the organization's actual expenses to match the income it has received. The spending patterns of organizations do not overspend available income—whether it is budgeted or not.
4. Financially healthy nonprofits retain reasonable positive cash fund balances at the end of the year. In the private sector, surplus (or “profit”) measures business success. A nonprofit's success is not as easily measured. Still, even though surplus does not indicate a nonprofit's success, it is a strong indicator of organizational health and stability.
5. Financially healthy nonprofits accumulate annual surpluses to use as a safety net in years when an unforeseen deficit does occur. Financially healthy organizations hold themselves accountable for developing strategies to handle deficits in years when financial resources are not as great as originally anticipated. They wisely find ways to make up for a current year's deficit by spending less in the following year(s) or by supplementing the shortfall with accumulated surpluses.
6. Financially healthy nonprofits have established—or plan to establish—an operating reserve to finance cash shortfalls and program growth. Operating reserves are a planned strategy for financial performance. They anticipate financial shortcomings and are generally established with board participation to meet those shortcomings. Reserves can be developed through an internally-funded savings plan or by funding depreciation. They can also be fundraised.
7. Financially healthy nonprofits have a board of directors and management that hold themselves responsible for the financial stability of the organization. Although the prevailing opinion is that the board of directors alone is ultimately responsible for the success or failure of a nonprofit organization, in practice, it is often the executive director who feels and takes the responsibility. While some boards and managers may need training to increase their financial skills, lack of skill is no excuse for avoiding financial responsibility. Someone must be responsible!

*Susan Kenny Stevens is Principal-in-Charge of Public Service, at LarsonAllen certified public accountants, consultants, and advisors. She was a featured speaker at the Michigan Nonprofit Association SuperConference, May 2007 in Lansing, on the topic of her poplar book Nonprofit Lifecycles.

This section was reprinted with permission from Chapter 8 “Taking Your Financial Pulse” in All the Way to the Bank: Smart Nonprofit Money Management, by Susan Kenny Stevens, published by LarsonAllenin 2002. Find more guidance in chapters dealing with Working Capital, Managing Cash Flow, Smart Savings, etc.

FEATURED ITEMS

NEW Announces Detroit Office

NEW is excited to announce the September opening of an office in Detroit, allowing NEW to better serve nonprofits in the area. NEW has partnered with the Luella Hannan Memorial Foundation to open this office at Hannan House (4750 Woodward Ave, Suite 308, Detroit, MI 48201, 313-887-7788). Hannan House is a nonprofit center that houses organizations serving older adults in the Metro Detroit area. It also offers quality meeting space to non-tenant nonprofits. Stay tuned for a schedule of regular services that NEW will offer in Detroit!

BoardConnect® Trainings

BoardConect® is a nonprofit board training and matching service that builds the leadership skills of nonprofit and community members. Take advantage of these learning opportunities coming up soon. Each session is $55, but online registration saves $5 and some discounts apply for members of the Michigan Nonprofit Association or the Detroit Regional Chamber.

•Building Your Board
 Wednesday, September 12, 1 p.m. - 4 p.m.
 NEW Center, Ann Arbor

Learn strategies for recruiting, cultivating, and electing new members to your board of directors. Also, get information about Boardconnect’s® matching services and boardnetUSA, a national online database that connects candidates and nonprofits.

•BoardConnect Candidate Training (Detroit): Serving on a Nonprofit Board
 Wednesday, September 26, 1 p.m. - 4 p.m.
 Tech Town, 440 Burroughs, Detroit

Learn about the five main responsibilities of board membership and how to find a match with a nonprofit that is good fit for your expertise. Develop your leadership skills and offer a valued community service through BoardConnect®.

•Rejuvenating Your Board
 Monday, October 1, 9 a.m – 11 a.m.
 The Guidance Center, Southgate

Is your mature board showing signs of fatigue? Do you need a fully engaged, active board? This workshop focuses on methods and strategies to keep the engaged members enthusiastic, rejuvenate trustees with potential, and transition trustees who have reached their limit of service into different roles in support of the nonprofit.

Find more information and register for these and other sessions on the BoardConnect® website. Call BoardConnect® (734-998-0160 x239) to find out how this dynamic team can help strengthen your board with personalized onsite trainings and other resources.

Nonprofit Day

Wednesday, September 26
Lansing Center, Lansing

Michigan Nonprofit Association invites everyone to attend the eighth annual Nonprofit Day, Wednesday September 26. This annual one-day conference focuses on the public policy issues impacting the Michigan nonprofit sector. The theme for this year's meeting is "Looking into the Crystal Ball - Where do we go from here?" This has been another difficult year for nonprofits as organizations struggle to make ends meet and are increasingly asked to do more with less. This situation is worsened with the state of Michigan's ongoing fiscal crisis, leading us to the question of what's next? To address this question, highlights of Nonprofit Day 2007 will include:

• Discussion with legislative leadership on upcoming priorities for the Michigan House and Senate;
• Breakout sessions on what's happening at the Capitol, predictions for ballot measures that may be up for a vote in the 2008 election, practical tips for evaluating advocacy efforts, the legal do's and don'ts for lobbying and election year activities, and suggestions for utilizing technology to further your advocacy efforts;
• Luncheon with legislators;
• Keynote address by Miles Rapoport of the national organization DEMOS: A Network for Ideas and Action.

A full agenda and reservation form are available online. The cost to attend is $40 for MNA members, $55 for not-yet members, and $20 for students. Registration deadline: September 19.

United Way of SE Michigan Opens Funding to New Agencies

United Way for Southeastern Michigan (UWSEM) is pleased to announce the initiation of the Call for Investment, which covers the three-year funding cycle 2008-2011. Their new business plan, called the Agenda for Change, targets three impact areas: financial stability, educational preparedness and basic needs. UWSEM is shifting their focus of funding and resources directly toward these three issues, and asking new and existing partners to consider ways to collaborate on programs and initiatives that will help make progress on the Agenda.

If your organization is involved in financial stability, educational preparedness or basic needs work in Oakland, Wayne or Macomb Counties and is interested in partnering with United Way, you are invited to submit a Letter of Intent (LOI). Find background information and forms online. See the RSVP for a Call for Investment informational sessions to be held at various locations and times beginning August 22nd. Please contact Gina Forston-Yelder at 313-226-9266 if you have difficulties accessing information from the website.

Crain's Detroit Best Managed Nonprofit Contest

Crain's Detroit Business wants to honor nonprofits that have taken specific steps to improve operations and delivery of services. This could include, but is not limited to:

• Collaborations, including mergers;
• Finding ways to do more with less;
• Strategies for diversifying funding;
• Launches of new programs that help the organization better meet objectives.

Public Policy Forum: Importance of Education

Monday, October 8, 9:30 a.m. - 12:30 p.m.
Lansing Community College, West Campus

The Michigan League for Human Services, in conjunction with the Council for Labor & Economic Growth Low-Wage Worker Committee, is sponsoring a Public Policy Forum to underscore the importance of education and training in today's economy. The forum, Fixing the Leaky Pipeline: Adult Education and Skills Training Can Improve Labor Market Success for Low-Income Adults, will highlight successful policies, strategies and initiatives that can increase the ability of low-income adults to access needed education and training.

Find more information and a registration form online. Questions? Contact Mary Logan.

Knight Foundation Proposal Deadline

September 12 is the deadline for applications to the James A. and Faith Knight Foundation. Please check the Foundation's website for details about funding priorities and for a link to the Community Grants online system for applications. Nonprofit organizations in Jackson and Washtenaw counties with missions revolving around women and girls, animals and the natural world, or with capacity building ideas may apply.

Annual Reports Due to State

Each nonprofit organization registered with the State of Michigan should have received the Michigan Department of Labor and Economic Growth's (DLEG) annual report form this month. If you haven't received one, please apprise the Department of your organization's current mailing address. Dissolution of a corporation is automatic if the DLEG does not receive filings for two years. Call 517-241-6470 for more information.

Washtenaw Nonprofits Benefit from WCC Offerings

Washtenaw Community College serves area nonprofit agencies by offering a select group of WCC non-credit classes at no cost to staff members of Washtenaw County nonprofits. After verification of attendance and agency eligibility, participants will be reimbursed for the cost of tuition. Get more information and the list of nonprofit scholarship classes.

Reminders

• The Directory of Nonprofit Organizations expects your organization to be represented! Update your profile or submit a new organization online.
• Foundation Center Proposal Writing Seminar, October 16
• AFP nominations for Distinguished Volunteers due August 31
• Raise money with the Big House, Big Heart Run, September 30
  
  
  

REGULAR FEATURES

The Nonprofit Standard (formerly known as Nonprofit Alert) is published by BDO Seidman's Institute for Nonprofit Excellence and provides financial information for tax-exempt organizations. The July issue included “New Filing Requirement for Small Tax Exempt Organizations for 2007 Returns.”

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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.