FIVE STEPS TO MAKING YOUR NONPROFIT MORE COMPETITIVE! Peg Jackson, DPA, CPCU Peg Jackson & Associates San Francisco, CA and Alexandria, VA

Agenda Why the nonprofit world is a competitive industry Nonprofit Management: Old Model vs. New Model Today’s economic challenges and their implications for capacity building Five steps to making your nonprofit more competitive Dr. Peg Jackson www.pegjackson.com

Why The Nonprofit World Is A Competitive Industry Compete for funding Compete for the best leadership and talent Management Board Key staff - including IT professionals Compete for the most visibility Compete for strategic alignments and contracts

Nonprofit Operations Old Model vs. New Model The Board is responsible for EVERYTHING Internal controls are vital and must be configured to appropriate technology IRS 990 – NEW VERSION Governance section Sarbanes-Oxley best practices are the platinum standard for management Nonprofits operate in a competitive environment. OLD MODEL Board is window-dressing “Mom and Pop” financial system IRS 990 – file if you feel like it Don’t have to run like a business because we serve poor people Implementing solid business practices means we are selling out to the Establishment.

Today’s Economic Challenges SF Business Times 1/1/10 – Nonprofits mergers on the rise. BERNIE MADOFF!! Impact on the nonprofit world including nonprofits, foundations and universities Overall reduction in individual donations including high wealth individuals Nonprofits often lack the financial acumen to aggressively manage expenses and revenue. Nonprofit scandals such as United Way have made the public skeptical.

What does all of this mean for your nonprofit? Dr. Peg Jackson www.pegjackson.com

CHANGE!!! To be competitive in today’s nonprofit environment, you need to CHANGE Your ideas about how a nonprofit should be run. Your ideas about the role of your board. Your ideas about technology and its role in your nonprofit’s operations. Your ideas about who are your trusted advisors. Your ideas about cleaning house and clearing dead wood. Dr. Peg Jackson www.pegjackson.com

“The only person who looks forward to change is a wet baby “The only person who looks forward to change is a wet baby.” Mark Twain Dr. Peg Jackson www.pegjackson.com

Overview Five Steps to Making Your Nonprofit More Competitive Step 1 – The Board needs to be fully engaged in its new role as the governing entity responsible for everything that happens in the nonprofit. Step 2 – Introduce best practices from SOX and other private-sector sources. Step 3 – Leverage the features from the new IRS 990 that can facilitate a more competitive outlook. Step 4 – Prepare an Enterprise Risk Management Plan that includes a business resumption and emergency fundraising component Step 5 – Tell the world! Utilize your commitment to the new operational model as a marketing tool.

Step 1 – The Board needs to be fully engaged in its new role The Board is responsible for EVERYTHING that happens in a nonprofit. Board Accountability Standards including: TERM LIMITS! Establish Board member requirements and metrics to measure the quality of their work. Volunteers – including board members - can and should be “fired” if they don’t play a positive role in moving the organization forward. Financial support – 100% of your board MUST support your organizational financially.

Step 1 – The Board needs to be fully engaged in its new role Must be financially literate – or at least trained in reading/understanding the financials. Must vote on the Executive Director’s compensation package. Conflict of Interest Policy Audit Committee Code of Ethics Read and approve the IRS 990 before it is filed with the IRS. See new IRS 990 section on Governance Dr. Peg Jackson www.pegjackson.com

Step 1 – The Board needs to be fully engaged in its new role Board members must be recruited with the understanding that they will have a significant role in the welfare and advancement of the nonprofit. How will their business and social contacts facilitate the nonprofit’s goals? How will their business and professional acumen facilitate improvement of the nonprofit’s programs and operations? How will their networking skills facilitate recruitment of top-quality board members? Dr. Peg Jackson www.pegjackson.com

Step 2 – Introduce SOX Best Practices Best Practices from Sarbanes-Oxley include: These two elements are required for all organizations including nonprofits Whistleblower Protection Policy Document Preservation Policy Board and ED are personally responsible for accuracy of all financial reports. Audit Committee (or Financial Review for small nonprofits) Internal Controls – particularly financial systems. IT and databases – quality of interaction and security issues.

The Role of Your Trusted Advisors Insurance Professional Banker and/or CPA Attorney IT Professional Public Relations Professional Dr. Peg Jackson www.pegjackson.com

Step 3 Leverage the Governance requirements from the new IRS 990 Governance Section in the new IRS 990 asks: Does your board have a Conflict of Interest Policy? Does your nonprofit have Whistleblower Protection and Document Preservation Policies? Has the Board reviewed the IRS 990 before it was filed? Did the Board vote on the Executive Director’s compensation package?

Step 4 – Prepare an Enterprise Risk Management Plan Work with your trusted advisors to prepare a Enterprise Risk Management Plan that addresses risk areas in governance, human resources, operations and reputational areas. Leverage the Enterprise Risk Management Plan to reduce Workers Comp claims, insurance premiums and cost of securing financial services.

Step 4 – Prepare an Enterprise Risk Management Plan The Plan is essential in : Identifying and addressing operational risks. Preparing a crisis management plan that includes emergency fundraising. Establishing a framework for resumption of operations. Dr. Peg Jackson www.pegjackson.com

Step 4 – Prepare an Enterprise Risk Management Plan Literature and web resources available to assist in this type of planning. Enterprise Risk Management need not be cumbersome, time-consuming, expensive or labor-intensive! Dr. Peg Jackson www.pegjackson.com

Step 5 – Tell the world! Utilize your changes and upgrades as a marketing tool. Include mention of your new practices in your nonprofit’s literature. State that your Board is committed to ensuring a platinum standard in nonprofit management. Present the following on your website- Post your most recent IRS 990 (leave out the pages with the contact information on donors) Indicate your nonprofit’s commitment to SOX best practices such as Whistleblower Protection and Document preservation.

So What Does All of This Cost??? The five steps can be implemented at nominal or even zero cost. The nonprofit and its board need to assume a more professional viewpoint in terms of strengthening its resolve to adapt and thrive in this new competitive environment! It costs nothing to change your perspective!

CHANGE!!! To be competitive in today’s nonprofit environment, you need to CHANGE: Your ideas about how a nonprofit should be run. Your ideas about the role of your board. Your ideas about technology and its role in your nonprofit’s operations. Your ideas about cleaning house and clearing dead wood. Often the biggest hurdle is resistance to change… but it costs nothing to change one’s outlook! Dr. Peg Jackson www.pegjackson.com

SUMMARY Nonprofits operate in a competitive environment. The quality of your nonprofit’s governance, management and internal controls are integral to effective organizational change. Embracing and leveraging change is key in competitive positioning. It costs nothing to change your perspective! Dr. Peg Jackson www.pegjackson.com

Alexandria, VA 22304 peg@pegjackson.com Peg Jackson DPA, CPCU 6300 Stevenson Ave. #403 Alexandria, VA 22304 peg@pegjackson.com 415.609.5341 www.pegjackson.com John Wiley & Sons, Inc. www.wiley.com Dr. Peg Jackson www.pegjackson.com