Our hearts go out to those affected by the powerful hurricanes still impacting southern states and vast fires still burning in the Pacific Northwest. Nonprofits not only help those affected by natural disasters, but also can be impacted themselves. Nonprofit employees’ homes may be ruined, nonprofits’ facilities may be destroyed, and a nonprofit’s “books and records” may be lost. Today’s tragedies remind us all about the importance of making a plan for emergencies – for yourselves, your families, and your nonprofit. You can find many useful tips about disaster response on government websites. For example, the IRS offers a filing extension for nonprofits with deadlines (such as the upcoming September 15th due date for IRS Form 990s) that are impacted by disasters. We’ve created a new online resource that is tailored for nonprofits, "Disaster Recovery: What Nonprofits and Donors Need to Know," that we hope will be useful to nonprofits as well as others wondering how to provide aid. And, as if natural disasters weren’t enough to concern us, frequent news reports about breaches of cybersecurity remind us that in addition to preparing for floods, fires, and high winds, we also need to pay attention to simple steps to protect the future of our nonprofit's data.
We hope this edition’s focus on “shaping the future” will give our readers confidence – despite external swirling forces - to take proactive steps to shape a positive future. In the face of huge challenges, it’s sometimes tempting to succumb to the mindset that “this is out of my hands” – when in truth, it’s the little levers each of us pulls that make big change possible. We hope this newsletter and the timely information your nonprofit gains from its membership in a state association of nonprofits help you identify those levers to pull. Thank you for the work you do every day to advance your nonprofit’s mission. Your state association and the National Council of Nonprofits are pulling with you!
Who’s got the power to shape the future of nonprofit boards? You do!
We always look forward to the publication of BoardSource’s Leading with Intent report because it provides a snapshot of how boards of directors are changing over time, along with smart analysis about what makes boards effective and why various governance practices matter. The results for the 2017 survey show few surprises and largely confirm what has been known: There has been a steady shrinking in the average size of nonprofit boards for quite a few years. Chief executives thrive as leaders when their boards support them. Term limits are now a recognized “best practice.” There is a high correlation between “social time” that board members spend building trust and strengthening their personal relationships, and the satisfaction that board members have in their volunteer service. What’s a little harder to measure, as BoardSource concedes, is the impact boards have on organizational effectiveness. But it’s pretty clear that dysfunction in the board room, and/or confusion about board roles, create potholes that even the most effective organization will fall into at some point. None of this is surprising.
What is a bit surprising, and definitely disappointing, is that the 2017 data also illustrate the lack of progress charitable nonprofits and foundations have made in diversifying their governing boards – in spite of a full-court press on this issue by many national nonprofit thought-leaders, grantmakers, and many others who have been researching and writing about the benefits of a diverse decision-making body. We say only “a bit surprising” because the data are consistent with earlier research presented in Race to Lead, a report focusing on race and leadership in the nonprofit sector.
Especially intriguing in BoardSource’s 2017 data is the difference in the perspectives of CEOs/executive directors (who believe that their boards are not diverse enough) and those of board chairs, who, in comparison, seem complacent about the lack of diversity on their boards. Given that the data also show that nonprofit leaders WANT more diversity, readers may be wondering, “What’s stopping boards from becoming more diverse?” and “How do we get to the desired future?” Leading With Intent, along with Race to Lead, both offer some consistent answers, including: The key to more diversity on nonprofit boards is definitely in the hands of boards themselves!
In an effort to provide practical, useful tips for nonprofit staff and board members who hold this key, see the suggestions in our blog post "10 Steps to a More Diverse Board." Please let us know what you think.
Shaping your nonprofit's future workforce with employee benefits: Retirement Planning
One of the most important investments any charitable nonprofit makes is in its employees. Because nonprofit employers have the same challenges as for-profit employers in attracting and retaining talent, it makes sense that nonprofit employers should look to the same talent development strategies as for-profit enterprises, such as offering retirement savings plans for employees. Nonprofit employers have choices in the types of retirement savings plans they can provide for their employees. Interestingly, there is some evidence that charitable nonprofits are electing to establish 401(k) plans specifically to attract prospects currently working in a for-profit environment who may wish to cross-over into the nonprofit workforce, bringing their 401(k)s with them. Perhaps your nonprofit wants to enhance its employee benefits by adding a retirement savings plan option, but is unsure what is available – or perhaps it would be useful simply to have a resource to encourage your staff members to set aside money for their own retirement. We hope that our guest blog post by the Director of the SEC’s Office of Investor Education and Advocacy, "You Help Others, So Help Yourself by Learning about Your Retirement Options," will answer some questions and provide a ready resource for you to share with staff members, too.
The future of overtime is in your hands
Last summer and fall, you may have heard from your state association of nonprofits that the federal Department of Labor (DOL) had changed federal overtime regulations that would have made many more employees of charitable nonprofits eligible for overtime pay. Those regulations, proposed by the Obama administration, were challenged in court and set aside. The DOL is now reconsidering what the appropriate factors should be to determine which workers are eligible for overtime. The opportunity to explain to the DOL how overtime payments impact YOUR nonprofit and its mission is open only until midnight on September 25, 2017, which is when the comment period for a “Request for Information” closes. As of September 12, out of over 130,000 comments received by the DOL, only 46 were from nonprofits! The National Council of Nonprofits has published background information tailored for nonprofits on this issue and urges nonprofits of ALL SIZES to make sure that the rules reflect your nonprofit’s realities by submitting your comments. If nonprofits are silent, your important perspective will be left out, meaning DOL will base its decisions on feedback from the management of other industries, such as manufacturing, hospitality, finance, and transportation. Also see our article from 2015 on "Taking the Mystery Out of Filing Comments on Proposed Rules" to learn how easy - and important - filing comments can be.
On a September 12 conference call about overtime with the Small Business Administration Office of Advocacy, nonprofits had the opportunity to share their concerns. Those on the call shared that, most significantly, they don't want nonprofits to have an exempt employee salary threshold different from other types of employers because that would depress salaries for nonprofit workers across the board. Also, some acknowledged the “push/pull” of the issue: nonprofit employers can't just "pass along" increased labor costs (since they can't increase the price of goods being sold, for instance) and yet in general there is support for the ancillary social impact of increasing wages/availability of overtime. Nonprofits on the call also shared that many employees value the availability of flex time during a work week. Another commentor suggested that, rather than making rule changes that would significantly increase labor costs immediately, it would be helpful if changes to overtime rules were phased in to allow nonprofits time to adjust (and potentially renegotiate other costs). These are examples of the kind of feedback that, if put in writing, will help the DOL shape the future rules for overtime – rules that have a major impact on nonprofit workplaces and budgets. Make sure the DOL has your story, details, and data. To ensure that your nonprofit’s experiences with the overtime rules are taken into consideration, please follow this link to share your story with the DOL. Your story will make a very real difference in shaping public policies that could impact the compensation packages your nonprofit is able to offer its paid staff in the future.
Investing for a financially healthy future
What is the connection between Wall Street and Main Street? It may surprise you to know that one direct link is when we’re looking at how nonprofits invest in their own future. Let’s say your nonprofit is fortunate enough to receive an unexpected bequest, or has a healthy level of cash reserves. Are those dollars sitting in a bank account, earning barely any interest? Or could the nonprofit put that cash “to work” by investing it? It’s misguided to think that nonprofits can’t – or shouldn’t - invest their assets. In fact, in some cases it could be a violation of a board of directors' fiduciary duties NOT to invest at least some of a nonprofit’s assets. Many charitable nonprofits invest by owning their buildings, or by converting some of their cash assets into mutual funds and stock market portfolios. But, investments can be risky. What’s a prudent board member or executive director to do? Our online resource on investment policies for nonprofits may provide some answers for your nonprofit. And, as always, we’re interested in your feedback. What challenges with the operational logistics of investments, such as compliance with accounting rules or reporting investment income, has your nonprofit encountered that may be symptomatic of challenges for charitable nonprofits across the board? Thanks for letting us know.
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