Creating Structures that Work Presented by: Kim Klein Kim Klein is the founder of the Grassroots Fundraising Journal and the author of Fundraising for Social Change (now in its fifth edition.) Her latest book, Reliable Fundraising in Unreliable Times discusses how to survive and even thrive in the current economy. Kim is a member of the Building Movement Project an leads workshops on the need for fair and just tax policy.

Why is a board a logical way to govern a nonprofit? Follow the money:

Brief Summary of Board Responsibility If you have 501(c)3 tax status, your organization: Can offer tax deductibility for donations Can apply for funding that is not available to businesses and individuals Can send your bulk mailings for nonprofit rates

Advantages of 501(c)3 status Your organization does not have to: Pay property tax on property you own that is used for a tax exempt purpose Pay income tax on income carried over from one tax year to the next (In some states) pay sales tax

Tax Exemption and Boards A 501(c)3 is given a number of tax exemptions and is allowed to offer tax relief to donors. The IRS has to make sure that these advantages are not misused. Who can be in charge of that for each of the 1.5 million nonprofits that operate in the USA today?

Fiduciary Responsibility  Has to be at least three people  These people cannot have a financial incentive to make any decision  These people have to operate at arms length from the organization  These people make sure that the public is actually served by this “public” charity These people are called “The Board of Directors.”

The Problem with Boards Compare: 1950’s:  Running an organization cost a lot less  Thousands of people, mostly women, could afford to be full time volunteers  Many families could manage with one wage earner

The Problem With Boards Compare: 1950’s 2008 # of nonprofits : 30,000 1,500,000 # of people needed to serve on a 9 per board: 270,000 13,500,000

What Board members think When asked, “what is your biggest complaint about your organization?” Board members said: “All the staff want from me is my money and my friend’s money.” “The ED basically starts every meeting with ‘what have you done for me recently?’” “The only reports that are important to the staff are what we have done with fundraising.” “The only way to be taken seriously is to act really badly.”

Why the board? FIDUCIARY RESPONSIBILITY: Boards are “stewards” of mission

Return to Basics If the board is to help raise money, they must understand some basic principles of fundraising.

Private Sector Giving: 2008 Total Amount Given: $307.5 Billion Individuals $229 Billion (75%) Bequests $23 Billion (7%) Foundations $41 Billion (13%) Corporations $14.5 Billion (5%) This is a 2% decline over 2007, 5% when adjusted for inflation. There was virtually no decline in individual giving. Source: Giving USA

Most People Give Away Money In every country where fundraising and philanthropy have been studied, most people give away money. USA 7 out of 10 adults, Canada 8 out of 10, Brazil, 7 out of 10, Holland 9 out of 10, etc. People are going to give away their money. They will give it to your organization or another one.

People Give When They are Asked And they don’t give when they are not asked. Donors are more likely to remember how they were asked than the name of the organization or the cause to which they donated.

Most Money Comes from People Most donations and half of all money comes from families with incomes of $90,000 or less. This is most people.

Every Board Member Should be Able To: 1.State a one sentence, easy to remember mission or vision statement 2. Name three important accomplishments from the previous year 3.Name three goals for the current year 4.Know the total budget and some budget detail 5.Talk about how the organization raises $.

How well is your board doing?

Fundamental Rules for Boards Board members must: 1. Test the proposition that the organization is worth supporting by asking themselves, “Would I give?” And answering a resounding “YES!” 2. Board members must then take that proposition out into the community and ask “Would you give?”

Getting the Board on Board: the Modern Way Some Possibilities: 1) Eliminate a standing fundraising committee 2) Make everything ad hoc and organize everything as a short term campaign 3)Find ways for every board member to participate 4)Let the reward for work well done be the end of work for the time being

A Champion Someone on the board takes on the task of keeping everyone’s enthusiasm up: Talking to board members privately Heaping praise and appreciation on those who do their work Ensuring that no one does too much or too little Keep people focused on mission

Reward Good Behavior All work is time limited: as little as a few hours to as much as eight weeks. Everything has a beginning date, a goal and an end date. The reward for doing your work is a break.

Identify the problem before solving it Perhaps the problem is: The organization is funder driven The executive director does not wish to share power The organization is conflict averse The board has several nay-sayers Some board members prefer to do all the work

A New Structure Solves structural problems Such as:  Lack of clarity about roles  No clear decision making process  Little or no accountability  Inadequate succession planning  High turnover  Little or no turnover

Alternative Forms Shared leadership model: People carry the weight of leadership more evenly: Rotating Chair Few or no standing committees Serious and documented planning and training for succession Works Best When: Staff use this model also and the organization is committed to leadership development.

Alternative Forms “Chaordic” Model (Wheatley, Senge) No firm structure Structure designed to play to strengths of current members and staff Changes as the players change Change becomes more deliberate over time Requires: reading, reflection, discussion

Accountability Requires: Honesty (wrapped in kindness) Praise for work well done Commitments clearly understood by all parties Sanctions for work not done Recognizing that many good people are not suited to being Board members and no good board member is always a good board member Foundation for Success

What’s Next? What do I/we need to: Think about? Experiment with? Read or study? Talk with others? What is most exciting? What is most scary?

Helpful Resources from Kim Klein Magazine and e-newsletter Grassroots Fundraising Journal Books by Kim Klein Reliable Fundraising in Unreliable Times Fundraising for Social Change Other recommended books: Working Across Generations by Robby Rodriquez, Frances Kunreuther and Helen Kim Accidental Fundraiser by Stephanie Roth and Mimi Ho Order from or your local bookstore