Examining Fiscal Risk for Mission-Minded Success

By Whitney Claire Thomey Powerful missions, community advocacy, and life-changing programs can only happen when nonprofits have sufficient financial resources and strong financial management. Sound financial decisions and financial risk management protect critical assets and make it possible for a nonprofit to deliver the services and programs that bring a charitable mission to life. However, … Continued

The World of Nonprofit Finance Risk

by Melanie Lockwood Herman and Whitney Thomey Myriad situations make up the world of nonprofit finance risk. The image above illustrates some of the common preventable, strategic, and external sources of risky financial situations nonprofit finance leaders may encounter. We offer the following recommendations for fortifying your organization against downside effects. Uncover What are the … Continued

Heads Up: Why Fortified Fiscal Oversight is Key to Financial Well Being

By Melanie Lockwood Herman During the past 15 years, I’ve been honored to serve as a volunteer board member for several organizations. My first board role was for a community-based organization in the small village where I live. I had long admired the nonprofit’s historic preservation and conservation mission, and when the invitation to consider … Continued

Fiscal Sponsorships: Managing Risk and Reward

By Glenn Mott and Colleen Lazanich This week we speak with Colleen Lazanich, CEO of CalNonprofits Insurance Services, the only social enterprise insurance brokerage in California. She has more than 30 years of experience across the insurance industry, with more than 20 years specializing in nonprofits. Colleen has worked for carriers, wholesale brokers and retail brokers … Continued

Risk Reporting

When it comes to managing risk, keeping informed can be half the battle. The challenge comes with designing a system of reports. What reports make the most sense for the organization? Who is going to write and update the reports? Who reviews the reports? Are there any action items that occur based on the report? … Continued

Financial Due Diligence: It’s More Than Checking Boxes

Due diligence and risk management are inextricably linked. Many leaders think of due diligence in the context of managing the risks of contractual arrangements, partnerships or new business ventures. Some may see due diligence as a checking-the-box” process that boils down to confirming facts. This narrow view trivializes the process. Effective due diligence requires the willingness to look for indicators that may signal … Continued

Risks of Generating Revenue: Charities Doing Good or Doing Business?

Today’s charities are partnering with for-profits, selling goods and services and adopting commercial business models. Diversification of revenue sources are all the vogue, but such activity can either compliment or sabotage your mission. What risks will your nonprofit take in exchange for that extra revenue? Watch this Webinar if your nonprofit is thinking about diversifying … Continued

Financial Risk Management: A Primer for Nonprofits

Learn about the top 10 financial risks facing nonprofits and how to focus your attention and resources on the areas most likely to materialize in your nonprofit. Learn what policies and procedures are necessary for sound financial management and how to create them. Watch this webinar to: Orient everyone towards a risk management approach to … Continued

Employee or Independent Contractor

By the Nonprofit Risk Management Center What’s the Difference and Why Does It Matter? Misclassifying employees as “independent contractors” can get a nonprofit financial hot water with the U.S. Department of Labor, the applicable state DOL or both. If federal or state regulators determine the nonprofit has mistakenly misclassified employees as contractors, enforcement personnel may … Continued

Year-Round Tips for Sports/Recreation Programs

By the Nonprofit Risk Management Center Sample waivers, check lists and practical help with topics identified here can be found in Playing to Win, A Risk Management Guide for Nonprofit Sports and Recreation Programs. The book aims to help the program administrator and leader, whether in a sports organization or other nonprofit, determine effective, practical … Continued

Financial Risk Red Flags

By Melanie Lockwood Herman The article below is excerpted from the Nonprofit Risk Management Center’s brand-new book, “Financial Risk Management: A Guide for Nonprofit Executives.” To read more about the book and order a copy for your desk or copies for your entire leadership team, click here: The finance-related risks facing nonprofits are far from … Continued

Managing Risk in Challenging_Times

By the Nonprofit Risk Management Center Team  In the past weeks, the financial markets have taken us on a wild ride. At the Center we’ve counseled several organizations coming to grips with the impact of this changing financial reality. As each of us braces our organizations for the anticipated, yet still unknown effects of the … Continued

Fiscal Responsibility and Oversight: Empower Your Board to Lead

By Melanie Lockwood Herman (This article is excerpted from the Center’s brand-new book, Financial Risk Management: A Guide for Nonprofit Executives. Order your copy.) While it is rare in a mature nonprofit for a board member to perform day-to-day bookkeeping or financial management duties (such as making journal entries or signing checks), board members exercise … Continued

Doing Good or Doing Business,‹ Or Both?

By the Nonprofit Risk Management Center  Whether it’s a nonprofit acting like a for-profit, or a for-profit acting like a nonprofit, to survive in today’s environment both nonprofits and for-profits are borrowing ideas from each other. For-profits are eager to appear “mission based” to consumers who may be more likely to purchase products that claim … Continued

Summer Interns: Volunteers or Employees?

By Jennifer Chandler Hauge Now that summer is around the corner, many nonprofits are fortunate to have lined up students or recent grads as “interns.” Such summer help is greatly appreciated by nonprofits but could come at an unexpected cost if the nonprofit is paying the interns and is not prepared to treat them as … Continued

Money for Nothing: Financial Management in Difficult Times

By Melanie Lockwood Herman For many nonprofits that are working to ride out the recession the need to cut costs and operate austerely is painful and ever-present. Yet an unintended downside of near-obsessive focus on the present may be neglect of long-term opportunities. With every available hour and dollar spent on managing with less, too … Continued

An Ounce of Experience is Worth a Pound of Speculation Maybe

By Melanie Lockwood Herman During last week’s Risk Management & Finance Summit for Nonprofits in Philadelphia, attendees heard a variety of messages about ways to consider and manage risk they encounter in their nonprofit organizations. Various themes were explored in plenary and workshop formats. One of the most powerful themes expressed in different ways from … Continued

All Dressed Up

By Melanie Lockwood Herman Invitations to office parties, family get-togethers and school events seem to fill mail boxes and e-mail inboxes this time of year. Although a growing number of nonprofits are experimenting with events for which one is expected to purchase a ticket but “stay home,” invitations to make an appearance continue to be … Continued

Hiring and Performance: Critical Areas of Risk for Every Nonprofit

By Melanie Lockwood Herman I’ve been reading a terrific book this week titled Strategic Risk Taking: A Framework for Risk Management, by Aswath Damodaran. One of my favorite insights in the book is the reference to the work of Glyn A. Holton who posits that two “ingredients” are necessary for a risk to exist. The … Continued

Transparency, Not Whitewash

By Melanie Lockwood Herman When cleaning out a desk recently, I found several dated vials of “Wite-Out®,” a brand of correction fluid, the opaque fluid used to cover typing errors in typewritten documents. Although I haven’t used it recently, I recall that correction fluid was sold under various product names (e.g., Liquid Paper®) and it … Continued

The Right Stuff

By Melanie Lockwood Herman The Tom Wolfe book “The Right Stuff” chronicles the lives of a group of navy test pilots as well as the early years of the U.S. Space Program during the late 1940s to mid 1960s. The film version of the book reinforces the theme that while decidedly human, these pioneers of … Continued

The Missing Piece

By Melanie Lockwood Herman I recently found myself studying several maps of a city known for its circuitous routes and maze of historic cobblestone alleyways. The map provided by the sightseeing tour bus operator was helpful to the extent that the location of stops along the route were clearly marked. The map included in my … Continued

Let’s Dance

By Melanie Lockwood Herman During an episode of a dance-focused reality show airing last night one of the judges praised two dancers for their matched steps and beautifully coordinated routine. Despite the random pairing of competing amateur dancers for the on-air performance, the two young women were able to work together in a way that … Continued

Money Matters

By Melanie Lockwood Herman Savvy nonprofit leaders recognize that the availability of financial resources is key to mission advancement. Money—plus appropriate human resources, strong stakeholder support and a compelling vision—add up to a nonprofit with places to go and problems to solve. And attracting financial support is only part of the picture. Today’s nonprofit CFO … Continued

Set the Story Straight with a Financial Dashboard

By Erin Gloeckner Take yourself back to college math class; perhaps you studied statistics or calculus. You may have been one of the lucky few who aced every exam, but more likely, you had trouble staying awake during lectures. Numbers can be boring, confusing, and overwhelming when you’re not a math whiz. Still, nonprofit leaders … Continued

IN is OUT, and OUT is IN Outsourcing the Finance or Accounting Function in a Nonprofit

By Alex Ricketts Fiscal Outsourcing Outsourcing financial tasks has become a popular trend in the nonprofit sector. Common reasons nonprofit leaders outsource some or all of their financial management responsibilities include: to gain access to expertise the nonprofit doesn’t require on a full-time basis, to reduce the cost of financial management activity, and to enable … Continued

New Audit Standards May Feel Like a Foreign Landscape

Has your auditor given you a call about the new audit standards under Statement on Auditing Standards, No. 112 (“SAS 112”)? Officially known as “Communicating Internal Control Related Matters Identified in An Audit,” the new requirements will be unfamiliar to many nonprofits that receive a management letter identifying “significant deficiencies” or “material weaknesses” in internal … Continued

Financial Sustainability: The New Frontier

By Melanie Herman and Jessica Say Ensuring that adequate funds are available to support the mission of a nonprofit may be the ultimate challenge facing today’s nonprofit sector leaders. The clarion call to “diversify” an agency’s funding sources is often heard, but ultimately hard to achieve. Uncertainty about the ability of a nonprofit to finance … Continued

How to Lose Your 501(c)(3) Tax Exempt Status (Without Really Trying)

It’s easy for a nonprofit organization to maintain its tax exempt status—and can be just as easy to lose it. Each year, the IRS revokes the tax-exempt status of more than 100 501(c)(3) organizations. Organizations recognized as exempt from federal income tax under this section of the Internal Revenue Code include private foundations as well … Continued

Achieving Fiscal Fitness

Achieving Fiscal Fitness By John Gillespie This year could be a make–or break–year for nonprofits of all sizes. Whether this is the year your organization plans to expand or transitions from treading water to gaining strength, it is imperative to take the time to assess your internal staff and procedures as well as conduct a … Continued

A Violation of Trust: Fraud Risk in Nonprofit Organizations

By Jonathan T. Marks, CPA, CFF, CITP, CFE, and Pete A. Ugo, CPA The risk of fraud is a serious concern for all types of enterprises, but fraud can be particularly damaging to a nonprofit organization, for which a damaged reputation can have devastating consequences. The Costs of Fraud in Nonprofit Organizations According to the … Continued