Do your nonprofits’ board members “stand for your mission”?

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With data gathered from the Nonprofit Finance Fund showing that - for the past seven years – increasing demands on nonprofits outpace their ability to provide services to meet the demands, every board member should be raising the question, “Is there enough money to support the nonprofit’s mission?” Since money doesn’t grow on trees, what’s a board member to do?

Stand for your mission.

Here are some ways board members can help a nonprofit FIND MONEY. (Did we get your attention?)

Advancing a nonprofit’s mission costs money. One way to improve the stability of a nonprofit’s finances is for the nonprofit to truly understand its own costs. Board members can ensure that budgets accurately reflect the actual “cost of doing business” by asking questions, such as, “Are we budgeting for the FULL cost of delivering that program?” If not, adjustments will help the nonprofit develop a more realistic budget.

Board members have the opportunity to overthrow the overhead myth (the misunderstanding that lower overhead costs somehow equate to "better" performance). They can do that by talking openly with donors and grantmakers about the fact that contributions to cover general operating costs are often more useful than restricted grants, and that “overhead” is not bad. Board members: every time you hear someone talk about overhead as a cost to be avoided or downplayed, pull out your advocacy chops and stand for your nonprofit’s mission! Encourage everyone, including nonprofit bookkeepers and accountants, to have a “real talk about real costs.” You can even play this short motion-graphic at your next board meeting, asking board members to spread the message: “If we want our funding to change the world, then we need to change how we think about funding nonprofits’ costs.”

Stay on top of policy developments: In particular, what the OMB Uniform Guidance means for nonprofits that have contracts to provide services on behalf of governments. Why does this matter? Because tons of nonprofits are paid for their work out of money coming from the federal government, (either directly or from a pass-through entity such as a state or local government, or even another nonprofit) – often without realizing it. The new federal rules (referred to as the “OMB Uniform Guidance”) include a mandate requiring that nonprofits receive reimbursement for some or all of their reasonable and necessary indirect costs. This issue is ripe for “board education” because many nonprofits are still unaware of this HUGE (read “historic”) change in federal law. Your state association of nonprofits is likely ahead of the curve on this issue, and already advocating on behalf of all nonprofits. These reforms can make a huge difference: Wouldn’t it be terrific if nonprofits receive a rate of reimbursement that is closer to what it really costs them to provide services? Remember the bit about board members helping nonprofits find money? Here’s how: Board members can ask, “Does the budget include any federal money? If so, what is our indirect cost rate, and are we being adequately reimbursed?” By “standing for your mission” board members can ask questions that will help ensure that nonprofits are reimbursed as the law requires, and as nonprofits deserve. Share background on the OMB Uniform Guidance with your board colleagues, such as, Ensuring the Benefits of the OMB Uniform Guidance.

Finally, most people are surprised to learn that over 1/3 of ALL revenue that flows to charitable nonprofits comes from governments at all levels – federal, state, and local. For human services nonprofits, an estimated 60 percent of government grant and contract dollars comes from the federal level through a state or local government. When government spending on services dries up, the drought directly limits nonprofits’ ability to impact the quality of life in communities. As ambassadors for the nonprofit and often donors too, board members are in a unique position to influence outcomes in the community, simply by talking with others about the nonprofit, and what it is trying to accomplish.

Bottom line: If you are a board member, don’t just sit there, “stand for your mission”!

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