Nonprofit 411: Non-Profit Employee Classification Checklist

By Paul Holtzman, Partner, Krokidas & Bluestein

As a non-profit organization, there are many considerations to account for in the way you supervise, retain, PaulHoltzmanand compensate your workforce. From classification of employment status to compensation practices, mismanagement of personnel can be damaging for any organization and the risk is only exacerbated for nonprofits. Below are a few tips to help you navigate the murky waters between volunteers, interns and independent contractors, so that you can ensure that you are adhering to applicable laws and classifying personnel in an accurate and legal way.

They may be a volunteer if…

  • The worker does not receive or expect to receive benefits from their work
  • The activity constitutes less than a full-time occupation
  • Regular employees are not displaced by the volunteer
  • The individual is acting without having been pressured or coerced
  • The services are not the same type as those performed by employees of the organization

They may be an intern if…

  • Their activity is similar to training that would be given in an educational environment
  • The experience is for their benefit
  • The individual does not displace regular employees
  • There is no immediate advantage derived by your organization from the intern’s activities
  • There is a mutual understanding that the intern is not entitled to wages for their time spent; and that they are not necessarily entitled to a job

They may be an independent contractor if…

  • The individual is free from control and direction of the organization, both by design and in fact
  • The service they provide is performed outside the usual course of business of your organization
  • The worker is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in their work for your organization

Nonprofit 411: Size and Success: The Case for Capacity for NPOs

By Kim McCormick, Senior Vice President, McCormick Group

The spectrum of nonprofit organizations (NPO) in the United States ranges from $3+ billion to $250 in annual revenue. The DSC_0303pi-04Ms (1)huge disparity paired with the sheer number (1.5 million) of registered NPOs begs the question, does size matter?

SIZE

Interestingly, there are two conflicting concepts regarding size. Larger organizations have greater resources to make changes, acquire technologies and train staff, however it’s more difficult to shift system wide. Smaller organizations may shift models easily, yet lack capacity and financial resources to make impactful change. Knowing the sweet spot for your organization’s size can help you deliver your mission more effectively. Unfortunately, many NPOs are busy raising money and managing daily operations. Building capacity for greater impact is the stuff of dreams.

Capacity can be measured by in many ways; stating efficacy in relationship to size is but one. NPOs at an effective capacity level raise more money in relationship to their size than smaller organizations. Comparing average gross revenue to size, research shows that the minimum financial capacity for organizational effectiveness is between $1-5M with $10M being the beginning of the sweet spot for strategic growth.

NPOs raising less than $1-3M simply don’t have the capacity to deliver the brand, attract and train quality employees, implement major programs, deeply invest in technology or significantly impact mission. If that is the case, then how can we build capacity? There are several ways, including:

• Raise more money

• Cut staff, programs and services

• Seek collaborative agreements to broaden the footprint, gain economies of scale and reach more constituents

The focus of a collaboration solution to capacity starts with mission, not money, and is centered on ‘what we can do better together.’

SUCCESS

The first step to measuring success requires looking beyond the dashboard to multi-year trends. If a drop is noticeable or the organization is losing impact, volunteers and influence, the reason can usually be traced to capacity. Whether it’s lack of consistent funding, staff, volunteers, lack of “pick your point” there are missing elements that if present would result in positive trends. Additional factors including increased competition, the complexity of managing donors, policy shifts and environmental influences can inhibit success year after year.

Consider the impact of scale. The difference between a $1M versus a $10M organization spending 10% on branding is significant such that to achieve the desired results, the larger organization may only need to spend 7% on branding and have more funds available (in this example $300,000) to invest in strategic objectives. As scale increases, capacities increase simply because of size. There is direct evidence of entities lacking consistent financial capacity and not achieving goals due to weak brand recognition.

Donors relate to an organization on brand, but judge effectiveness on programmatic, fundraising and administration costs compared to monies raised. The larger an organization’s revenues in relationship to their expenses, the more appealing these ratios are to constituents.

Finding success through building capacity can be likened to realizing that you need something, like vegetables to sell at your market. You can either buy land, equipment and seeds, plant and tend hoping your investment pays off; or you can visit a vegetable farmer, get to know her, share resources, create a partnership and start offering high quality vegetables to your constituents quickly and inexpensively. Dream big!

Nonprofit 411: Goodbye Obamacare & Hello Trumpcare? Not so fast…

By Colleen Doherty, SPHR, SHRM-SCP, SVP, Compliance & Client Service, Eastern InsuranceColleen Doherty

From the day that the Patient Protection and Affordable Care Act (aka Obamacare, The Affordable Care Act, or the ACA) was signed into law back in 2010, its opponents have been vowing to repeal it. During the Obama administration, repeal was a moot point given that President Obama could veto any bill that attempted to dismantle his signature legislation. Under the new Trump administration, the repeal of the ACA is a primary objective of the new president as well as the Republican majority House and Senate.  However, a full repeal of the law is highly unlikely given that Senate Democrats will most likely block any attempt to fully repeal the law.

What is an ACA opponent to do?
[Read more…]

Nonprofit, Community, and Business Leaders Celebrate Local Unsung Heroes at Third Annual Light of Dawnn Awards Ceremony

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FOR IMMEDIATE RELEASE

Nonprofit, Community, and Business Leaders Celebrate Local Unsung Heroes at Third Annual Light of Dawnn Awards Ceremony

Nonprofit Workers and High School Students Honored for Their Remarkable Contributions to Their Communities

BOSTON, MA (February 28, 2017) – Nonprofit, community, and business leaders, along with the Jaffier Family, came together at the West End House Boys and Girls Club for the third annual Light of Dawnn Awards Ceremony to honor the life of Dawnn Jaffier. During the ceremony, three nonprofit workers and three high school seniors were recognized for their outstanding work and commitment to serving their communities. Also in attendance were elected officials including State Representative Kevin Honan and City Councilor Mark Ciommo.

“There is no better way to honor the life of Dawnn Jaffier than to celebrate those who have continued to carry on her legacy through acts of goodwill and service to our local communities,” said Mayor Walsh. “I congratulate Juan, Dawnmarie and Tha for being the recipients of this year’s Light of Dawnn Award, a distinguished recognition honoring those who have gone above and beyond to lend a helping hand to others, and who continue to make the City of Boston proud.”  

The Light of Dawnn Awards were created three years ago to honor the memory of Dawnn Jaffier, who in 2014 was tragically killed at just 26 years old. While just a young woman, Dawnn had already made a significant impact in her community through her work with the West End House Boys and Girls Club, Playworks, City Year, and Boys and Girls Clubs of Boston. Upon Dawnn’s untimely passing, her family, friends, and colleagues came together to create the Light of Dawnn Awards so that her legacy may continue to inspire. Each year, three individuals who represent Dawnn’s spirit are selected to receive a Light of Dawnn Award and a $5,000 prize. The Awards are presented by the Highland Street Foundation and managed by the Massachusetts Nonprofit Network.

This year’s recipients are Dawnmarie Salmons, Music Clubhouse Director of Boys and Girls Clubs of Boston: Edgerley Family South Boston Club; Juan Manuel Cantú, Jr., College Success Coordinator at Hyde Square Task Force; and Tha Thai, Boston Team Crisis Coordinator at Roca, Inc.

“Juan, Dawnmarie, and Tha quietly go about their work every day, not in pursuit of recognition, but purely driven by a desire to make a difference in someone’s life,” said Blake Jordan, Executive Director of the Highland Street Foundation.  “It is an honor to shine a light on them and a privilege to do so in the name of Dawnn Jaffier.”

“We are honored to be here today with Dawnn’s friends and family, community partners, and Mayor Walsh to remember Dawnn and further her positive spirit and legacy by honoring this year’s outstanding Light of Dawnn Awards recipients,” said David Shapiro, Chairman of the Massachusetts Nonprofit Network’s Board. “The heart, talent and dedication that Dawnmarie, Juan, and Tha bring to their work day in and day out reminds us of Dawnn’s unique ability to build relationships, community, and to simply be there for so many all in the name of strengthening support, opportunity, and connection.”

Also during the ceremony, three high school seniors were awarded the Light of Dawnn Scholarships for their community work. Now in their second year, these scholarships were created by John Hancock, where Dawnn’s mother is a longtime employee, in partnership with The Foundation To Be Named Later. The scholarships award $5,000 to each student to go towards pursuing a college education.

This year’s scholarship recipients are Justina Riopelle, Sominisha Wright, and Noor Al-saad.

“We thank the Jaffier family, and our community partners, for giving us the opportunity to help honor Dawnn’s extraordinary life and legacy,” said Tom Crohan, AVP & Counsel, Corporate Responsibility and Government Relations at John Hancock. “We honor her best by drawing strength from her inspiring example, and we are proud to recognize Justina, Sominisha and Noor for their commitment to serving others and giving back to their communities.”

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Nonprofit 411: Benchmarking: Satisfy your Board and Gain a Competitive Advantage

By Tyler Butler, BerryDunn

Benchmarking doesn’t need to be time and resource consuming. Read on for four simple steps you can take to improve efficiency and maximize resources. [Read more…]

MNN’s Statement on Federal Travel Restrictions

February 1, 2017

Last Friday’s order imposing federal travel restrictions continues to generate widespread concern and outrage, including among the nonprofit community. At MNN, we are closely following the policy and legal debates as they unfold. MNN members with concerns or questions about the travel restrictions, or other federal issues, should contact Tonja Mettlach at tmettlach@massnonprofitnet.org.

The skills, ideas, contributions, and commitment that immigrants bring to Massachusetts strengthen our Commonwealth each day. MNN is committed to supporting immigration, diversity, and the values upon which our sector was built.

Massachusetts Nonprofit Network Appoints Robert Gittens to Board of Directors

FOR IMMEDIATE RELEASE

January 26, 2017

Massachusetts Nonprofit Network Appoints Robert Gittens to Board of Directors

(BOSTON, Mass) The Massachusetts Nonprofit Network (MNN), the statewide association that strengthens the nonprofit sector through advocacy, public awareness, and capacity-building, is pleased to announce that it has appointed Robert Gittens, Executive Director of Cambridge Family and Children’s Service, to its Board of Directors.

“On behalf of MNN’s Board of Directors, I want to extend a big welcome to Bob Gittens,” said David Shapiro, Chairman of MNN’s Board. “Bob brings with him a wealth of experience in both the public and nonprofit sectors, and we look forward to benefitting from his volunteer leadership as we work to elevate and advocate for the central role of nonprofits in making the Commonwealth a great place to live.”

“We are very excited to welcome Bob to MNN’s Board of Directors,” said Jim Klocke, CEO of MNN. “Bob has been an important leader in the community for many years. His vast experience in public affairs and advocacy will be invaluable as we work to strengthen the nonprofit sector.”

“I am thrilled to be joining the board of the Massachusetts Nonprofit Network,” said Bob. “I am very much looking forward to working with a great group of leaders to support and promote the Commonwealth’s vibrant nonprofit sector.”

Bob has been the Executive Director at Cambridge Family and Children Services since 2016. Prior to his current role, he served as the Vice President of Public Affairs at Northeastern University for 13 years. He served as cabinet secretary of the Commonwealth’s Executive Office of Health and Human Services from 2001-2003 and was commissioner of the Massachusetts Department of Youth Services from 1997-2001. He was First Assistant District Attorney in the Suffolk County District Attorney’s Office from 1992-1997 and Chairman of the Massachusetts Parole Board from 1990-92.

Bob holds a J.D. degree from Northeastern University School of Law and a B.A. in Political Science from Northeastern. He has been a leader in the community as Chairman of the Massachusetts Juvenile Justice Advisory Committee and member of the Governor’s Youth Violence Task Force. Bob has served as a board member of numerous organizations including Judge Baker Children’s Center, Massachusetts Society for the Prevention of Cruelty to Children, and Goodwill Industries.

You can view a full list of MNN’s Board here.

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About the Massachusetts Nonprofit Network

The Massachusetts Nonprofit Network (MNN) is the voice of the nonprofit sector, bringing together all parts of the nonprofit ecosystem – organizations, funders, community and business leaders, and elected and appointed officials – to strengthen nonprofits and raise the sector’s voice on critical issues. MNN understands that strong nonprofits build strong communities. It is MNN’s mission to strengthen the nonprofit community through advocacy, public awareness, and capacity building.  MNN has more than 650 nonprofit members made up of organizations from eight subsectors and located in every part of Massachusetts, from the Berkshires to the Cape and Islands. For more information about the Massachusetts Nonprofit Network, visit www.massnonprofitnet.org.

Nonprofit 411: New Financial Reporting Standards for Nonprofits Aimed at Greater Transparency

By William B. Ford, CPA, and Linda J. Kramer, CPA, MBA
G.T. Reilly & Company

You may have heard that new financial reporting standards are coming down the pike that will affect your organization. The good news is that the new standards don’t take effect for more than a year, giving you plenty of time to familiarize your organization with any new requirements. A review of your organization’s financial reporting practices may be beneficial in preparation for the new standards.

Bill Ford-WEB

William B. Ford, CPA

Linda Kramer

Linda J. Kramer, CPA, MBA

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2016-14, Presentation of Financial Statements for Not–for-Profit Entities. This ASU is the first phase of a two-phase project and is intended to make nonprofit financial reporting more transparent.

Specifically, the new standards will improve net asset classification requirements and information presented in the financial statements and notes about a nonprofit entity’s liquidity, financial performance and cash flows.

The changes are effective for organizations with fiscal years beginning after December 15, 2017, although early implementation is permitted. These amendments should be applied on a retrospective basis. The nonprofit has the option to omit certain information for any period presented before the period of required adoption.

Main provisions

  • The current presentation of three categories of net assets (unrestricted, temporarily restricted and permanently restricted) will be reduced to two categories: net assets without donor restrictions and net assets with donor restrictions.
  • The statement of activities also will reflect two classes of net assets.
  • Cash flows will continue to be presented using either the direct or indirect method with the requirement to reconcile the direct method being eliminated.
  • Enhanced disclosures will be required, including amounts and purposes, for any board-designated appropriations.
  • Enhanced disclosures will be required for composition of donor-restricted net assets at the end of the period and
    for how those restrictions affect the use of resources.
  • Disclosure will be required to communicate how the organization manages its liquid resources available to meet cash needs for general expenditures during the next year.
  • Expenses will be presented by both natural classification and functional classification. This may be done within the statement of activities, as a separate statement, or in the notes.
  • Disclosures will be required concerning the methods used to allocate costs among program and support functions.
  • Underwater endowment funds will be reported as part of net assets with donor restrictions; previously these were reported with unrestricted net assets.
  • Investment returns will be shown net of external and direct internal investment expenses with no disclosure necessary for the amount of the expenses.
  • Release of net assets with donor restrictions for long lived assets will be required when the asset is placed in service, thus eliminating the option of release over the estimated useful life of the asset.

If you have questions about whether your current practices will be in compliance with the new standards, or if you would like assistance with implementation of the new accounting rules, please contact us at 617-696-08900.

Nonprofit 411: Comprehensive Fiscal Sponsorship Helps Foundations Support the Most Promising New Nonprofits

Josh Sattely, Esq., Third Sector New England

How can the philanthropic sector best identify and support promising new initiatives? A different way to ask the question is what’s the difference between a ham sandwich and a new public charity? Not much these days as far as the IRS is concerned as there is no meaningful vetting being done on new applicants filing the Form 1023-EZ.2013100312_04_418682

For those not familiar with the 1023-EZ, it is an ill-advised solution to address the previous astounding backlog of public charity applications sitting with the IRS.  Thought leaders in the field fear this open door policy will greatly dilute what it means to be a public charity and cause a myriad of problems down the road.

So, how can foundations and other mindful donors interested in supporting new and promising charitable initiatives separate the promising wheat from the chaff and ensure these groups are effectively navigating a complex compliance environment? One increasingly utilized solution is fiscal sponsorship, more specifically comprehensive fiscal sponsorship where the charitable initiative is positioned and supported as a semi-autonomous program or business division of an established nonprofit for the duration of the relationship.  

Why does this help anyone you ask?  For starters, when done right, the fiscal sponsor has a seasoned board of directors committed to the success of both their immediate organization and all projects operating under their purview. They vet potential partners not only on mission compatibility but also assess risk profile, and sponsors work closely with the project to ensure continual movement towards sustainability while not inadvertently driving off a compliance cliff.  

Once a fiscal sponsorship relationship is established, projects benefit from the flexibility and experience of experienced nonprofit professionals; the most common supports being financial management and oversight, legal compliance, risk management, and human resources and benefits administration.  A growing number of sponsors also provide additional capacity-building supports such as trainings, coaching and, eventually, succession planning.  Fiscal sponsors are not profit-making centers but need to cover their costs and typically do so via an overhead cost allocation.  To determine if the cost allocation is reasonable, be sure to take a close look at what supports the project receives.  

The fiscal sponsorship incubator approach described above is exactly how the Massachusetts Nonprofit Network (MNN) began its journey. MNN operated under TSNE for its first three years so it could focus on business model development and internal capacity building while TSNE shouldered the administrative and compliance burdens.  Once it had built its own infrastructure, it transitioned to independence and all assets held by TSNE for the benefit of MNN were transferred to the new entity to be deployed in advancement of MNN’s mission.

In sum, well-vetted and nurtured nonprofits change the world.  The turnkey model of comprehensive fiscal sponsorship serves both as a runway for groups such as MNN and as a long-term home for thriving initiatives where the need for independence is less compelling.  Because of this unique relationship, fiscal sponsors have a vested interest in the long-term success of those they partner with whether the legal relationship lasts for a few years or a few decades.

Josh Sattely, Esq., is the Compliance and Legal Affairs Specialist for Third Sector New England (TSNE). TSNE’s Fiscal Sponsorship Program works with 88 nonprofit projects across the country, stewards $27 million in project funds and offers an effective shared services platform adding financial management and risk management, assuring legal and grants compliance and administering employee compensation and benefits for innovative social justice initiatives. TSNE has nearly 60 years of experience in the field of Fiscal Sponsorship and also partners with other nonprofits, foundations, community-based groups by providing a dynamic mix of management and consulting services, training programs, and grants to grassroots networks. Visit their website: www.tsne.org.

Nonprofit 411: Navigating The Crowded Non-Profit Sector

How organizations can set themselves apart to secure—and retain—donors

By Shannon Crowley, CPA, MSA, BlumShapirocrowley-shannon3

Despite the Great Recession and the long process of economic recovery of the 2000s, the non-profit sector has become one of the country’s fastest-growing industries. According to the National Center for Charitable Statistics’ most recent research, the United States is home to more than 1.5 million registered non-profit organizations—marking a nearly 20 percent increase over the last 10 years, a timeframe in which many businesses in the for-profit sector have struggled.

This rapid growth is certainly a sign of success, and—as non-profits employ nearly 11 million American workers and contribute roughly $887 billion to the national economy—it is difficult for anyone to argue against the economic value of a thriving non-profit sector.

However, the unprecedented rate at which new organizations are being created is also creating a challenge. The non-profit sector is more crowded than ever before, making it very difficult for organizations to secure—and retain—their donor bases.

On a local level, there are 33,000 non-profit organizations registered in Massachusetts—each competing with one another for precious dollars from a limited pool of individual donors, corporate foundations and other fundraising sources. In a recent cover story in The Boston Globe, many industry experts argue the field of non-profit organizations in Massachusetts is simply too large to sustain.

However, the organizations themselves, and the tens of thousands of Massachusetts residents employed by non-profits, are doing everything they can to prove those experts are wrong.

And that starts with donor retention.

The Association of Fundraising Professionals reports that, on average, donor retention rates across the non-profit sector are around 43%, meaning less than half of an organization’s 2016 donor base will contribute. In order to grow in a competitive non-profit environment, organizations have to find a way to land recurring donors. To do this, non-profits are employing several strategies. For the purposes of this article, we’ll focus on three:

  1. Differentiating themselves from other, potentially similar organizations

Many potential donors or grant-awarding foundations would love to support every deserving cause that asks for and needs their help. Realistically, though, donors need to choose between hundreds, if not thousands, of similarly operating organizations to which they can lend their financial support. Non-profits, especially non-profits working to support similar demographics, are under enormous pressure to set themselves apart to attract new sources of funding. It’s never been more important for a non-profit to have a very clear, very specific mission.

2. Investing in “fundraising infrastructure”

Fundraising success is entirely beholden to the amount of time and resources organizations are willing to invest. In order to succeed in today’s hyper-competitive non-profit sector, organizations must invest in fundraising professionals, such as high-ranking development officers, and fundraising “infrastructure,” such as top-notch technology and donor databases.

The clear, specific vision makes an organization attractive to donors. Development professionals and in-depth donor databases help organizations find them.

3. Increase efficiency by streamlining their accounting functions

Back-office financial work is crucial to the long-term success of the organization. That said, it’s also very time-consuming. As many organizations are investing significantly more time to their fundraising operations, some non-profit leaders are finding ways to take complex financial paperwork off their desk so they can focus on the organization’s core competencies. This may entail creating new jobs for a full-time accounting team, or hiring a third-party financial organization to take on those responsibilities.

Shannon Crowley, CPA, MSA, is an Accounting Manager at BlumShapiro, the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with over 400 professionals and staff, offers a diversity of services which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services such as succession and estate planning, business technology services, employee benefit plan audits and litigation support and valuation. The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.