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Do You Know the Five Signs that Identify an Agency Worthy of Your Donation?

When making a charitable donation, everyone wants to feel secure that their dollars will be directed to the intended purpose. Whether the funds come directly out of pre-tax income or are from a charitable fund set up for that purpose, no one wants to learn that the funds have been used ineffectively or misused. Unfortunately, there are too many stories in the media about agencies that show little impact for their efforts or have misdirected donor gifts.Following are five key indicators that suggest an agency is in good standing and deserving of your charitable gift.

  1. Transparency – The agency has filed all required documents and is in good standing with all official oversight agencies. Personnel expenses are in line with the standard in the field.
  2. Reliability – The agency has an established service record of continued service and relatively low turnover in top staff.
  3. Income Diversity – The agency has a diversified mix of fundraising efforts (grants, fundraisers, program fees and/or general solicitation) so the agency is not overly dependent on one source for its operations income.
  4. Client Impact – The agency has established a clear and effective means of measuring or tracking results of their services on the client base.
  5. Accountability – The agency periodically does a self-assessment to review the agency’s goals and associated accomplishments.

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Enhancing Your Funding Strategy: The Case for General Support of Agency Operations

Philanthropy is about using funds to change the world. Not too long ago, donors were happy to give funds to agencies without requiring an accounting for every program penny. Unfortunately, recent scandals in the non-profit world uncovered situations where funds were grossly misused or directed to purposes other than advertised. The result of such scandals was a “more control is better” philosophy and a tendency toward highly-controlled and targeted giving.

But, highly-controlled and targeted giving emphasizes programs over operations and seriously impacts the ability of the agency to have the desired impact the donor expects. Shifting the dollars away from operations has caused serious and unexpected consequences.

Think of it this way: you pay your mortgage and you pay your operating expenses to keep your house in good working order. If you pay your mortgage and ignore your operating expenses, you’re going to have serious problems. Eventually the house collapses around you. That is what is happening with our agencies.

What we need now is to swing the pendulum into a middle ground between programs and operations. We need to pay the mortgage and take care of operating expenses while carefully monitoring and choosing among those expenses.

Choosing an Agency to fund:

When deciding to fund operating expenses, be sure to choose an agency with an excellent reputation of demonstrated effectiveness, measurable outcomes and impact in the community. A grant-worthy agency will have some means in place for capturing program delivery and impact. Once the agency is in focus, then consider these five areas for funding general operations:

Choosing what Overhead expenses to fund:

  • Operating Systems–fund technology to improve agency efficiency and effectiveness
  • Building Maintenance–if the physical plant is run-down, target a building maintenance fund to upgrade the working environment. It will help employees feel good about their workplace and better focus on what’s really important – changing the community
  • Capacity Building–fund the design and/or enhancement of reporting systems to help the agency assess and evaluate the impact of their programs
  • Staff Training–fund programs to help retain valuable employees and improve their ability to carry out the mission of the agency
  • New Staff Positions—Provide support for a full-time fund developer or a much-needed administrative support person to allow the Executive Director to focus on program delivery and impact in the community.

There is something between “no control” and “more control is better” that will enhance the impact of donations while keeping the agency from collapsing.

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Expanding Your Foundation’s Board–Five Key Questions You Need to Ask.

Consider the following situation: you and your wife established a family foundation as part of your estate planning process and now, 10 years after establishing the entity, you are considering expanding the board to include your adult children. There seems to be a great benefit in sharing this experience with your children and giving them the opportunity to work with each other on something that is bigger than any one of them – making the world a better place. It could be a great time for your family to come together as, no doubt, each of the younger family members has been busy establishing their own careers and family units.

But where do you start? Here are the key questions to ask before you move forward:

  1. Purpose: Will you set a clear mission for the foundation or are you willing for the new members to add different funding priorities?
  2. Control: As issues surface, are you willing to be only one vote at the table after the Board expands?
  3. Inclusiveness: What will be the rules for inclusion on the board – only the children? Such exclusivity might send the wrong message to spouses. If you include the spouses, will everyone have one vote and is that fair to the unmarried members? Once seated at the Board table, will spouses continue on the board after a divorce, should that occur?
  4. Management: Will there be criteria for eligibility for the Board positions – training and/or active participation requirements; or will membership be a right of birth?
  5. Transparency: Will all decisions for the foundation be brought before the expanded Board or will some areas be reserved for founder-only decision-making?

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Is Your Family Foundation Exercising Proper Governance?

What would the IRS find if they visited your family foundation office?

Serious abuses in family foundations have brought a harsh light to bear on grant-making practices. One need only look at the new IRS form 990 to recognize the trend toward requiring greater accountability with regard to Board operations and process.

Accountability now means more than ensuring that the required legal documents are filed and financial accounting is in order. The grant-making activity must be carefully managed to demonstrate to any outsider (IRS, state attorney’s office; press/media) that Board members have ably fulfilled their stewardship responsibilities.

Eight steps to ensure the exercise of proper governance:

  1. Develop a clear focus for the foundation’s philanthropy
  2. Establish a review process for Board consideration of grant awards with Board minutes reflecting all decisions
  3. Establish evaluation criteria against which applicants are judged and deemed worthy of award
  4. Identify the performance criteria for each grant recipient
  5. Require the recipient agency to commit to the expectations associated with the grant
  6. Create a reporting system to track the performance of each grant recipient
  7. Visit grant recipients, or have grantees visit the Board meeting to report on progress
  8. Train Board members so that they understand their role and responsibilities

Establishing the habit of operating in this manner may be a challenge in the beginning, but once implemented, will protect the family foundation from all levels of unwanted attention.

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Strategic Philanthropy: How to Ensure a Successful Outcome for Your Philanthropic Investment

Disappointment and frustration with the performance of the non-profit sector have led many philanthropists to want to ensure that they receive a philanthropic “bang for the buck”. There is a call from all sides of the philanthropy field to urge donors to focus on Strategic Philanthropy, sometimes called “Impact Philanthropy”. What underlies all of the catch phrases is an admonition to all who would give – clarify your goals and ensure measureable outcomes.

Of course, developing a philanthropic strategy that ensures positive social outcomes requires high-level research and engagement into the particular field-of-interest.

Here are eight critical steps for honing your strategy for giving.

  1. Identify the change you want to create
  2. Decide where you can have the greatest impact
  3. Base your strategy on proven methods
  4. Research existing programs to avoid “reinventing the wheel.”
  5. Consider leveraging an existing success with the addition of a complementary service
  6. Determine how you will measure outcomes
  7. Be willing to adjust your strategy if first-results suggest a change-of-course
  8. Be patient. It takes time to change the world.

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