Download - TM We teach new dogs old tricks SCORE is a resource partner of the U.S. Small Business Administration Serving Medina, Portage, Summit & Wayne Counties

TM

We teach new dogs old tricksSCORE is a resource partner of the U.S. Small Business Administration

Serving Medina, Portage, Summit & Wayne Counties

Your success.Powered by

One Cascade PlazaAkron, OH 44308

[email protected]

330-379-31631-877-AKSCORE

Not-For-Profit BasicsNot-For-Profit Basics

Ref: Not for Profit – 10/27/09

The Key Steps to Buildinga Successful Organization

http://www.akronscore.org/

TM

We teach new dogs old tricks

Part 1 Akron SCORE®

Part 2 NOT-FOR-PROFIT vs. FOR-PROFIT

Part 3 NOT-FOR-PROFIT as a Business

Part 4 Setting Up a NOT-FOR-PROFIT

SCORE’s Mission StatementSCORE’s Mission Statement

Stimulate the Greater Akron economy, which includesSummit, Medina, Portage and Wayne Counties, by using the business knowledge and skillsof our volunteers to successfully guide and lead entrepreneurs and existing small businessestoward their goals. TM

3We teach new dogs old tricks

4

SCORE®SCORE®

■ Resource Partner with SBA

■ 11,500 volunteers — 390 chapters

■ Small Business mentoringand advice– Face-to-face or e-mail counseling

■ Skills in business planning, strategies for growth, and all aspects of business operations

■ Business workshops forstart-up and existing businesses

■ 70+ volunteer Counselors

■ 40+ years of service to the business community

■ 3,000 client services per year– 40% follow-on mentoring

relationships

– 60% existing businesses counseled

■ Satellite locations: Kent State University, Wayne College, Medina Economic Development Corp.

Nationwide Akron SCORE

5

Counseling &Business Workshops

Counseling &Business Workshops

■ Free and confidential

■ Long-term follow-up at a SCORE location, business or a convenient place

■ Skill Sets:

- Accounting- Advertising- Bidding & Estimating- Buy & Sell- Cash Management- Community Relations- Computer Applications- Construction- Credit & Collection

- Education- Engineering- Environmental- Financial Analysis- Franchising- Human Resources- Insurance- International Import/

Export

- Inventory Management- Leasing- Marketing & Sales- Patents- Product Development- Public Relations- Research & Development- Sales- Taxation

6

♦ Business Basics

♦ Marketing on a Mini Budget

♦ Business Plan

♦ Great Customer Service

♦ Leadership & Management

♦ Financial Management

♦ Not for Profit

♦ Resume Writing

– Day & evening workshops

– Various locations

– Customized presentations

– All services areFREE & CONFIDENTIAL

Workshops OfferedWorkshops Offered

TM


NOT-FOR-PROFIT

vs. FOR-PROFIT

Part 2

8

For-ProfitsProduce, market and sell products or servicesto make money for owners and investors

NOT-FOR-PROFIT vs. FOR-PROFITSNOT-FOR-PROFIT vs. FOR-PROFITS

Not-For-ProfitsProduce, market and sell products or servicesto improve the community

9

Characteristics of aFOR-PROFIT Business

Characteristics of aFOR-PROFIT Business

■ Privately or publicly (stock) owned

■ Income/profit benefits the owners

■ Governed by the owners

■ May be bought and soldwith profits of sales going to the owners

10

Characteristics of a NOT-FOR-PROFIT Business

Characteristics of a NOT-FOR-PROFIT Business

■ Community ownership. No private interest. No stock.

■ No one may personally benefit from the earnings(board members, employees or volunteers)

■ Income/profit must go back into the business

■ Governed by a Board of Trustees/Directors (representatives of the community)

■ Can never be sold for a profit. If the organization goes out of business, the profit (if any) from sales must go to another Not-For-Profit

11

Profit must go back into services of the organization

Profit allows the Not-For-Profit organization to operate effectively

Profit allows the Not-For-Profit to reinvest in services

MYTH: Not-For-Profits may not make money.MYTH: Not-For-Profits may not make money.

FACT: Not-For-Profits not only can, but SHOULD make a profit.FACT: Not-For-Profits not only can, but SHOULD make a profit.

12

Not All NOT-FOR-PROFITS Are CharitiesNot All NOT-FOR-PROFITS Are Charities

■ Services organizations (Kiwanis, Rotary, Elks…)

■ Educational organizations■ Religious organizations■ Scientific organizations■ Business leagues■ Chambers of Commerce■ Social clubs■ Labor organizations

Examples of Not-For-Profit organizationsthat are NOT charities

13

NOT-FOR-PROFIT Organizations

Advantages


Advantages■ Tax exemption

■ Deductibility of donations

■ Grants

■ Lower costs

■ Tax exempt bonds

■ Lower postage rate for bulk mailings

14

■ Loss of control

■ Limited purpose

■ Lobbying activities are limited

■ Public scrutiny

■ Not-For-Profit reporting requirements are more extensive than required of For Profits (grant reporting)


Disadvantages


Disadvantages

TM


NOT-FOR-PROFIT

as a BUSINESS

Part 3

16

NOT-FOR-PROFITS are BusinessesNOT-FOR-PROFITS are Businesses

■ Legal entity

■ Must be incorporated in the state

■ Must obtain Federal ID (Federal Tax) Number

17

FOR-PROFIT Laws Apply

(excepting Taxes)


(excepting Taxes)

■ Personnel Laws & Regulations, etc.– Personnel Manual/Personnel Policies

– Job Descriptions– Paid Positions– Volunteer Positions– Board Officers – Salary Schedules

■ EEO (Equal Employment Opportunity)

■ OSHA (Occupational Safety…)

■ Insurance Laws & Taxes

18

■ Occupancy Permit– Zoning

– Facilities must meet local, state & federal regulations

■ Local, State & Federal License & Certifications, Food License

■ Annual Meeting of the Board

■ Annual Audit of Finances

■ Minutes of all Board & Committee Meetings

(continued)


(excepting Taxes)


(excepting Taxes)

19

NOT-FOR-PROFITS

Do Not Pay

NOT-FOR-PROFITS

Do Not Pay

■ Federal taxes

■ State taxes

■ Local taxes

■ Sales taxes

■ Corporate taxes

20

All NOT-FOR-PROFITSMust Pay These

Taxes

All NOT-FOR-PROFITSMust Pay These

Taxes■ Local assessments (water, street cleaning, etc.)

■ Social Security taxes

■ Workers Compensation taxes

■ Unemployment taxes

■ Employee income taxes (withholding)

21

Unrelated Business Income Tax

(UBIT)

Unrelated Business Income Tax

(UBIT)

■ Income from any activity not related to the mission of the organization

■ Income in excess of $1,000

22

■ Owner/Manager inexperience…– in the specific line of business– in management

■ Owner/Manager inability…– to manage tasks– to manage others

■ Costs…– underestimated

■ Cash Flow…– not understood or not watched

INADEQUATEBUSINESSPLANNING

INADEQUATEBUSINESSPLANNING

Why Businesses Fail(9 out of 10 cases)

Why Businesses Fail(9 out of 10 cases)

TM


Setting upthe NOT-FOR-PROFIT

Part 4

24

BEFORE Filing for NOT-FOR-PROFIT Designation

BEFORE Filing for NOT-FOR-PROFIT Designation

■ Put together your Board of Trustees

■ Define the Mission

■ Define the services to achieve the Mission

■ Define the population of service

■ Develop a 3-year budget

25

Define Your Mission(Its Purpose & Key Activities)

Define Your Mission(Its Purpose & Key Activities)

■ Research the community– Who else has a similar mission?

– Is there any other organization/group with whichto partner?

– Who is going to compete with you for money?

– Are others providing the same or similar services?

■ What is your niche going to be?

26

Define your Service(s) or Product Define your Service(s) or Product

■ What are you going to do?

■ How are you going to do it?

■ Where are you going to do it?

27

Define the populationto be served

Define the populationto be served

■ Population (adults, teens, children?)■ Age■ Geographic area(s)■ Income status■ Problems/Needs■ What are the needs of your customer base?■ Where will they come from?■ How are you going to make contact with them?■ Determine qualifications of staff needed to serve

the population

28

Develop a 3-Year BudgetDevelop a 3-Year Budget

■ Determine start-up funding needs

■ Define annual expense needs

■ Define sources of income

■ Determine the sources of ongoing income

29

Filings with Ohio Secretary of State

Filings with Ohio Secretary of State

■ Articles of Incorporation– Defines who you are and what you do

■ Bylaws/Code of Regulations– Defines how the organization will be governed

■ Filings with the Internal Revenue Service– Application for tax-exempt status (501(c)(3)

– File after Ohio Secretary of State applications submitted

GOVERNANCE

TM


Setting up the NOT-FOR-PROFIT

Part 4 (continued)

31

Setting Up the NOT-FOR-PROFIT


■ Number– No legally required number

– Enough to do the work of the Board

– Odd Number

■ No relatives

■ Term limits for members of the Board– Staggered terms

Board of Directors/Trustees

GOVERNANCE

32



■ Committed to Mission

■ Willing to give of their time, talent & money

■ Able to influence others

■ Have community contacts

■ Knowledge of Not-For-Profit board operations

■ Willing to learn

■ Willing to raise money

Expectations of Good Board Members

GOVERNANCE

33



■ Governance of the organization

■ Establishes agency policy, goals & objectives

■ Hires/Fires the Executive

■ Sets salary of Executive

■ Evaluates performance of Executive

■ Evaluates agency performance againstset goals and objectives

■ Decisions of the Board are collective decisions

Duties of the Board

GOVERNANCE

34



■ Board members are going to make the rules — pick them carefully

■ Board is the ultimate boss

■ Board hires and fires the executive

■ You cannot get rid of the Board — only the Board can get rid of Board members

■ No relatives — No friends unless they can contribute specific expertise (be careful)

■ Avoid conflicts of interest/have a disclosure policy & process

Picking Board Members / General Principles

GOVERNANCE

35



■ Try to find people who have experience with Not-For-Profit boards■ Accountants/Not the same person as the auditor■ Lawyers■ Bankers■ Marketing■ Public Relations■ Insurance■ Business■ Mentors & Advisors■ Involved Community Volunteer

Pick people who can contribute expertise

GOVERNANCE

36



■ President

■ Vice President

■ Treasurer

■ Secretary

Officers

GOVERNANCE

37

■ Governance Committees– Finance & Audit

– Planning & Evaluation

– Nominating

■ Operating Committees– Marketing/Public Relations

– Fundraising

– Personnel

Setting Up the NOT-FOR-PROFITSetting Up the NOT-FOR-PROFIT

Board Committees

GOVERNANCE

38

■ Clearly define (in writing) the roles of each in the Bylaws

■ Define the duties of each officer in the Bylaws


Roles of Board & Staff

GOVERNANCE

39

■ Board should meet as often as is necessaryfor the work of the organization– Minimum number: 4 meetings per year

– Could meet monthly — must meet annually

■ Date, time, place established to maximize attendance

■ Agenda and supporting materials sent ahead of meeting


Meetings (written in the Bylaws of the Corporation)

GOVERNANCE


GOVERNANCE

Meetings (written in the Bylaws of the Corporation)


GOVERNANCE

40

■ No governance responsibility

■ Do make recommendations to the Board

■ For specific advisory purposes and projects

■ Retired trustees or members of specific interest groups or skills

■ Persons of influence

Advisory Boards


GOVERNANCE

41

Most boards are Policy boards. However, those boards without staff also become Operations Boards. In this case, Board Members take on the day-to-day responsibilities normally performed by paid staff.

Policy vs. Operations


GOVERNANCE

MANAGEMENT

TM



Part 4 (continued)

43

■ Answers to the Board■ Does not serve on the Board

other than as ex-officio — should not vote

■ Implements Board policy■ Staffs all Board committees■ Implements agency programs

and services■ Responsible for management

issues

Role of the Executive/CEO


MANAGEMENT

■ Conducts or supervisesall daily agency operations

■ Hires/Fires all other employees

– Employees must meet standards of certification/licensure

– Must be citizens or legal aliens– Must be bonded– Professional liability

■ Pays bills

44

■ Start with an accurate job description■ Create an attractive job environment■ Creative classified ads■ Go for the best that will grow the business■ Hire the disabled■ Part-time, part-time job share, part-time older■ Motivating the applicant■ Check previous employment

Hire Great Employees


MANAGEMENT

45

■ Use the job description

■ Initial and follow-up training

■ Communicate the business image, goals and mission

■ Answering the phone

■ How to handle the price question

Train Great Employees


MANAGEMENT

46

■ Pass on the passion and dreams

■ Make the employee feel that he/she is important to the success of the business

■ Give responsibility and authority

■ Monitor job performance

■ Adequate compensation

■ Customer feedback

Motivating & Leading Employees


MANAGEMENT

OPERATION

TM



Part 4 (continued)

48

■ Have a file or notebook of all policies established by the Board

■ Written statement of policy

■ Procedures for implementation

■ Title/position of the person(s) responsible for implementation

■ Date policy was approved by the Board(also in the Minutes)

Policies


OPERATION

49

■ Organization money MUST be separate from any personal money

■ Checking and savings accounts must be organization accounts — not personal

■ Finance committee of the Board oversees organization finances

■ Executive/CEO or other staff prepare budgets for review by the Board

Finances


OPERATION

50

■ Keep written minutes of all finance meetings

■ The organization must operate within the budget. Executives should assure this. Board must review and affirm it

■ Annual Audit — completed by outside accountant chosen by the Board

Finances (continued)


OPERATION

51

■ Fees & Dues

■ Government Fees

■ Government Contract Income

■ Private Contributions

■ Foundation Grants

Budget Income


OPERATION

■ Government Grants

■ Investment Income

■ Special Events

■ In-Kind Income

■ Other Income

52

Budget Expenses


OPERATION

■ Salaries

■ Benefits

■ Taxes

■ Housing Costs(rent, utilities, maintenance, etc.)

■ Insurance Costs

■ Office Costs

■ Public Relations & Marketing

■ Legal Costs

■ Accounting

■ Audit

■ Program & Operating Costs

■ Fundraising

53

■ General Liability

■ Directors & Officers Liability

■ Professional Liability

■ Building & Equipment

■ Health Care Insurance for Employees

■ Business Interruption Insurance

■ Workers Comp

■ Unemployment

Insurances


OPERATION

FINANCIAL SUPPORT

TM



Part 4 (continued)

55

■ Fees charged to persons who receive the benefit(s) of your programs and services– Estimate the annual income from these fees

■ Donations– Donations must be acknowledged in writing– Designated/restricted donations– Undesignated/unrestricted donations– General operating donations– Estimate the annual amount of donations you expect

from individuals


FINANCIAL SUPPORT

56

■ Donations greater than $250 must be provided by letter stating that nothing was given/received in exchange for the donation

■ All donations must be acknowledged in writing

■ Information filed is public information


FINANCIAL SUPPORT

57

■ Grants (Gifts)– NO BUSINESS CAN BE RUN ON GRANTS!

– One-time contributions

– Do not expect to receive these for multiple years

– Foundation Grants (local or national) are most common

– Require a written proposal usually as defined by the foundation

– Sometimes require written reports to the foundation


FINANCIAL SUPPORT

58


FINANCIAL SUPPORT

■ Proposal Writing– 20% success rate is good

– Preliminaries are a must (mission, program, description, budget, etc.)

– Research foundations which fund your mission

– Make preliminary contacts

– Request only what they will grant

– Follow foundation guidelines

– Follow-up

– Foundations share information

59

■ Contracts– Agreements to buy services/products at a specified rate

– Lag time between delivery of service and payment

– Competitive

– Require a written proposal in response to a published RFP

– Time limited — may be renewable

– Can provide ongoing funds but are NOT guaranteed

– Open to public review

– Contain specific list of requirements (do’s and don’ts)

– Materials and products often belong to the government entity


FINANCIAL SUPPORT

60

■ MATCH Requirements– Hard / Cash Match

– Soft / In-Kind Match

■ Government Contracts– Local (City or County)

– State through specific departments

– Federal


FINANCIAL SUPPORT

61

■ Fiscal Years vary (may differ from this)– City and County – January through December

– State – July through June

– Federal – October through September

■ Unit Rates– May / May Not be negotiable

– Definition of the “Unit” varies and may be negotiable


FINANCIAL SUPPORT

62

■ Tax Deductible Contributions

– Must be designated as a charity, 501(c)3 by the IRS (i.e., must have a letter of designation from the IRS on file)

– Charities must obtain at least 30% of their annual funds from public support (donations, in kind gifts, foundations, etc.)

– Must file annual tax return (Form 990) if revenue exceeds $25,000

– Effective May 15, 2008, Form 990-N must be filed electronicallyby organizations with revenue from $1 to $25,000


FINANCIAL SUPPORT

63

MYTH: Not-For-Profit organizations may notengage in lobbying activities.MYTH: Not-For-Profit organizations may notengage in lobbying activities.

Lobbying is permitted by IRS, but limited to an “insubstantial” amount of time and money (5%)

FACT: Not-For-Profit organizations MAY lobby within certain limits.FACT: Not-For-Profit organizations MAY lobby within certain limits.

64

LobbyingLobbying

DEFINITION:

Effort to influence legislation by influencing the opinion of legislators, legislative staff and government administrators directly involved in drafting legislative policies.

(Nonprofit Kit for Dummies by Hutton and Phillips)

65

Lobbying ActivitiesLobbying Activities

■ Promoting specific candidates for office

■ Promoting specific pieces of legislation

■ Writing legislation

66

Non-Lobbying ActivitiesNon-Lobbying Activities

■ Holding candidate forums including all candidates

■ Explaining your mission or services to legislators

■ Asking for general support for the mission and services of the organization

■ Advocating for the needs of your client population

■ Responding to requests from legislators for information

67

ReputationReputation

■ Guard it carefully

■ Think how this or that will look in the newspaper

■ Once tarnished, it will be difficult to restore

■ Concerns– Adverse personnel actions

– Misappropriation of funds

– Deficit spending

– Failure to pay bills of any kind

– Unresolved client concern

68

ReferenceReference

Nonprofit Kit for DUMMIESby Stan Hutton & Frances Phillips

One Cascade PlazaAkron, OH 44308

[email protected] 330-379-31631-877-AKSCORE

TM


http://www.akronscore.org/

Download - TM We teach new dogs old tricks SCORE is a resource partner of the U.S. Small Business Administration Serving Medina, Portage, Summit & Wayne Counties

Top Related