Leveraging Accountability for Nonprofits
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Nonprofit organizations rise and fall on their reputations. CPA firms working with nonprofits need to understand how to ensure their clients are doing everything they can to safeguard the public trust. This presentation was given at the Massachusetts Society of CPA's Nonprofit Conference in January, 2013. It explains why accountability matters, defines accountability while providing a test for nonprofit organizations to learn their "accountability IQ", and includes nine ways to improve accountability. Whether your a nonprofit organization or a finance professional who works with nonprofits, accountability matters. Download this presentation to learn why, and what you can do to earn and maintain it.
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Leveraging Accountability for Nonprofits
- 1. Leveraging Accountability Jeff Sobers, Product Marketing Manager Blackbaud, Inc. @JeffSobers
- 2. AGENDA Why does accountability matter? Understand, measure and improve Nine ways to improve accountability
- 4. 1. Fraud and fiscal mismanagement 2. Need growing faster than funding 3. Donors expect more than ever ACCOUNTABILITY MATTERS
- 5. FRAUD1
- 6. LOSS OF MAJOR DONORS
- 7. BOARD MEMBERS FORCED TO RESIGN
- 8. FORCED TO PAY DAMAGES
- 11. What do you expect to happen to demand for your services in 2013? INCREASE SIGNIFICANTLY
- 12. What do you expect to happen to demand for your services in 2013? INCREASE SLIGHTLY
- 13. What do you expect to happen to demand for your services in 2013? STAY THE SAME
- 14. What do you expect to happen to demand for your services in 2013? DECREASE
- 15. 31% 42% 21% 5% 35% 36% 20% 10% 41% 36% 16% 7% 44% 41% 12% 4% Significantly Increased Slightly Increased Stayed the Same Decreased DEMAND FOR SERVICES 2008 2009 2010 2011 Source: 2012 Nonprofit Finance Fund
- 16. Do you expect to be able to meet all of the demand for your services in 2013?
- 17. 56% 51% 52% 50% 44% 49% 48% 50% 2009 2010 2011 2012 Were Nonprofits Able to Meet Demand for Services? Yes No
- 19. INFORMATION IS AVAILABLE LIKE NEVER BEFORE
- 20. WHERE DID THE MONEY GO?
- 21. Do you think the nonprofit sector is on the right track or has seriously gotten off in the wrong direction?
- 22. 30% 32% 38% OVERALL Right Track Wrong Direction Not Sure Source: 2010 Harris Poll
- 23. 36% 38% 35% 33% 29% 21% 16% 19% 23% 34% 38% 37% 48% 43% 42% 33% 33% 42% 18 - 24 25 - 29 30 - 39 40 - 49 50 - 64 65+ BY AGE GROUP Right Track Wrong Direction Not Sure
- 25. RECAP: 1. Fraud and fiscal mismanagement 2. Need growing faster than funding 3. Donors expect more than ever
- 31. WHAT IS YOUR ACCOUNTABILITY IQ?
- 32. Does the organization hold staff and board meetings on ethics or take other measures to foster a culture of accountability and transparency?
- 33. Does the organization have a code of ethics and statement of values and post it on your website?
- 34. Does the organization follow a conflict of interest policy and post it on the website?
- 35. Does the organization have board members with financial expertise?
- 36. Does the organization have its financial statements independently audited?
- 37. Does the organization take steps to remain current with the law?
- 38. Does the organization have board members review financial statements, including the Form 990?
- 39. Does the organization have the CEO or CFO sign the Form 990?
- 40. Does the organization file the Form 990 electronically?
- 41. Does the organization post the Form 990 on your website?
- 42. Does the organization post the policies, financial information, and information on programs results on the website?
- 43. Does the organization have a supported policy on reporting suspected misconduct (a whistleblower policy)?
- 44. SCORING SCORE WHAT IT MEANS 12 Great, keep up the good work and pass along your success stories and model policies for others to learn 9 – 11 Good, but there’s room for improvement 6 – 8 You’ve indicated commitment to accountability, but need to move beyond the basics 0 – 5 Time to get serious about accountability. Engage your Board, staff and volunteers quickly to help make the needed changes.
- 45. Didn’t get the score you expected?
- 47. 1 Create a culture of transparency
- 48. 2 Create a donor Bill of Rights http://www.afpnet.org/files/ContentDocuments/Donor_Bill_of_Rights.pdf
- 49. 3 Adopt a conflict of interest policy
- 50. 4 Ensure the Board of Directors can fulfill its fiscal responsibility
- 51. 5 Conduct independent financial reviews and audits
- 52. 6 Ensure the accuracy of the Form 990 and make it public
- 54. 8 Establish and support a policy of reporting suspected misconduct
- 55. 9 Remain current with the law
- 56. REVIEW: 1. Create a culture of transparency 2. Create a Donor Bill of Rights 3. Adopt a conflict of interest policy 4. Ensure the Board can fulfill its fiscal responsibility 5. Conduct independent audits 6. Ensure the 990 is accurate and public 7. Be transparent with stakeholders 8. Establish a whistleblower policy 9. Remain current with the law
Editor's Notes
- There are three components to accountability.
- 2010 Blackbaud State of the Industry Study42% of donors require updates on how their contributions are spent – up from 30-33% in 2006-200815% of organizations began proactive communication on how donations were spent last year – bringing the total to 78%17% of organizations began proactive communication on impact of programs last year – brings that total to 83%
- IRS is demanding more accountabilityForm 990 RedesignIncreased transparency and risk of noncomplianceMore nonprofit audits7,861 in 2008 vs. 11,449 in 2010 (Source: Case Conference)
- Accountability is all about being answerable to those who have invested their trust, faith, and money. Nonprofits must be accountable to multiple stakeholders, including private and institutional donors, local, state, and federal agencies, volunteers, program recipients, and the public at large.
- Nonprofits need to think about how they operate, and put in place savvy strategies to earn and maintain public trust. Without the trust of the public, there would be no charitable sector.
- AccountabilityWillingness to accept responsibility and account for the organization’s practicesProvide assurance to stakeholders of the commitment to upholding the public trustVital to earning support and fulfilling the missionStewardshipManagement’s responsibility to utilize and develop its resourcesPeoplePropertyFinancial assetsThanking and recognizing donorsConveying impactStewardship means you’re doing your job well. Accountability means you can PROVE it!!!
- The following slides contains a brief test to help nonprofit organizations assess accountability.If you work for a nonprofit, answer for your organization; If you work with nonprofits, picture one in particular and try to answer the best you canAnswer “Yes” or “No” for each questionGive yourself one point for each “Yes”Results will NOT be shared during this session.
- Accountability is all about being answerable to those who have invested their trust, faith, and money. Nonprofits must be accountable to multiple stakeholders, including private and institutional donors, local, state, and federal agencies, volunteers, program recipients, and the public at large.
- Train new employees, volunteers and board members about the organization’s principlesProvide refreshers and updates regularlyUtilize the web, intranet, and other internal communications vehicles“Tone at the top”
- Emphasize transparencyFocus on those aspects of donor relations that will enhance accountabilityRefer to sample Donor Bill of Rights (Source: Association of Fundraising Professionals)
- Define conflict of interest and provide examplesSpecify the persons who will be covered by the policyRequire regular disclosure of information related to conflicts of interestSpecify procedures for handling potential or actual conflicts of interest when they ariseThis is unique; get interactive, ask for examplesBoard members been there for too long? Fundraiser for other org? Spouses at competing nonprofits? Own companies that benefit from your mission?
- Legal and ethical responsibility of ensuring appropriate use of assetsShould have financial literacy or other mechanisms for drawing on independent financial expertise
- Avoid conflicts of interest in staff exchange between audit firm and organizationDisclose audited financial statements in a current and easily-accessible wayConsider rotating audit firms or partners every five years
- Have the Board and/or appropriate Board committee review and approve the Form 990Ensure the Form 990 is signed by the Executive Director, CEO, or CFOFile electronically and make it available on the organization’s website
- Utilize the web to share information on the organization’s finances, operations, governance and impact, including but not limited to:Vision and mission statementStatement of values and ethics and conflict of interest policyForm 990 and audited financialsPrograms, their impact, and performance measurementsAnnual reportList of Board members, major contributors, and staff
- Can help the organization’s credibilityProtects whistleblowers and levies criminal penalties for actions taken in retaliation against whistleblowersRequired by ALL entities including nonprofits by the Sarbanes-Oxley Act.
- Designate a Board member, staff person, consultant, or volunteer to keep up to date with the lawEnsure the organization fully complies with all existing laws governing charitable organizations