Dani Robbins

Archive for the ‘Uncategorized’ Category

What Nonprofits can do NOW

In Leadership, Non Profit Boards, nonprofit executives, Organizational Development, Uncategorized on March 29, 2020 at 5:49 pm

The job of a nonprofit executive is to ensure their agency will open tomorrow, or if it shouldn’t, to shut it down.

The list of things we don’t know and information we don’t have is long:

·         How long will this last?

·         How big of an economic hit will it be?

·         What will happen to the people we serve?

·         How can I protect my team and my agency?

·         How many of our donors will be impacted?

·         Will our foundations loosen the restrictions?

·         Will I get the Federal loan?

·         Will I have to lay off staff?

·         Will I get laid off myself?

·         Will I have to shut down this program that I love and have spent no small part of my life cultivating?

Then there’s the much more personal and terrifying:

·         Will I get sick?

·         Will someone I love?

·         How can I pay the mortgage without a job?

·         How can I protect my family?

We are all scared and varying degrees of angry, anxious, grateful, bored and terrified and, sometimes, how we feel changes by the minute.

Moreover, for those of us who have spent our lives in the field, sitting at home doing nothing makes us feel helpless. 

We are not helpless.  We are trained professionals.  Let’s get to work!

We are at an unprecedented point in leadership. Every decision we make will determine what happens tomorrow, even as we are aware that we are all making those decisions with limited information while standing on constantly shifting sand.

Many agencies are looking at cuts. “Leaders should start developing models and anticipate what levels of revenue drops may occur … even “as substantial variances are likely based upon the type of” organizations, relationship with state legislature, and historical financial models.” (The Great Recession Was Bad…)

Where to start? As always, you start with your values, your mission and your commitment to intentional aligned leadership.

I recommend the Board of Directors:

  • Set the priorities for 2020 and 2021
  • Determine the level of saving that needs to be realized
  • Approve the cessation of services that will no longer be offered
  • Determine how long you will continue to pay staff
    • for work that can’t billed
    • for services that can’t be offered
    • who may not be able to work
  • Set severance levels

The CEO:

  • Review your policies including sick time, family leave, and severance
  • Review your insurance, including short and long term disability
  • Make recommendations to the Board for policy revision, as necessary
  • Reach out to every funder and ask for special circumstances
  • Review and apply for forgivable loans
  • Plan out interim leadership for every critical role, including yours
  • Cheerlead
  • Sell the story

The finance team:

  • Clarify the staff that can do billable work (identified as work that will still generate revenue)
  • Identify staff that might have to be furloughed based on work that is unable to be done
  • Assess income that is unable to be realized

The development department:

  • get clarity around if the money that they’ve projected for this year is actually going to come in
  • Clarify if any money that has been pledged is available for operating or if it is restricted to other expenses
  • Consider asking if any and all restricted gifts can be used for operating
  • Consider asking all capital donors if you can use their gifts for general operating this year, as possible
  • Prepare an emergency funding campaign that clearly tells the story and the need for additional support
  • Prepare on-going communication with donors

Once the above is completed, I recommend:

The Board approve a staged step down, as necessary:

  1. easy expense reductions that can happen now
  2. reductions in the next round based on the priorities and the savings needed
  3. Worst case cuts to keep the organization solvent

Other points of note:

  • Pay cuts require a Board vote, even “voluntary” ones. 
  • The CEO should not forgo their own paycheck or lend money to the agency. You can, of course, donate back a portion of your paycheck. If you do, make sure it is your choice, aligned with your family’s circumstances, and follows your donor acknowledgement procedures. Three More Things to Stop Doing
  • If necessarily, individual Board members can lend money to the agency, with an appropriate paper trail.  If you do, I recommend paying yourself back not be your first order of business once the smoke clears.

That’s my list for today. Hopefully, you won’t need it. If you do, I wanted to get a framework out there in case it’s helpful. If you have a framework you’ve developed that you can share, please do. We will get through this, together. We will persevere!

As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

Ten Years of Change, Growth and Nonprofit Evolution

In Uncategorized on January 10, 2020 at 10:33 am

Last October marked ten years for my company.  It was a transformational decade for me professionally, for our sector and our work. 

Professionally, I had the opportunity to

  • build a semi successful consulting firm
  • co-write a leadership book (Thank you Maureen Metcalf!)
  • become a nonprofit thought leader (Thank you readers of my book and blog!)
  • teach at the college level (Thank you Rob Greenbaum and OSU’s Glenn College!)
  • Fall in love with teaching (Thank you students!)
  • Get my dream job (Thank you Anne Kugler and John Carroll University!)

I’ve taught over 250 college and graduate students and had the honor to mentor, coach, encourage and support dozens of nonprofit leaders.

Our sector is facing immense opportunities, unprecedented challenges, old issues and emerging threats. We will have to come to consensus on how we respond to:

  • The loss of charitable deductions, and the gifts that go with them
  • The impact of Donor Advised Funds
  • The possible loss of the Johnson Amendment
  • Big philanthropy
  • Immigration
  • Climate change
  • Hate
  • Guns
  • Violence against women
  • Systemic racism
  • #MeToo
  • Voting rights
  • All of the above and much more

There are multiple and competing issues that challenge our democracy, our souls and our future. In honor of each person who reads this blog, and the hundreds of people and myriad issues for which you get up every day ready once again to take up the fight, I offer the most popular and poignant posts from the last decade:

Strong Boards beget strong agencies which beget strong communities. Here’s how to build your board, support them in doing their work and do your own:

An Open Letter to Board Members I Have Known and Loved is the most popular post I have ever written, by thousands.  I wrote it to honor several of my Board members, especially Bud Rogers, officially Bruce W. Rogers of Akron Ohio.  He is, for me, the quintessential board member. He is my ideal. I learned more from his grace, his leadership and his generosity that I can ever explain. May he rest in peace.

The Role of the Board “Every time I speak on issues related to nonprofits, someone asks “What is the role of the Board?” “The Board is responsible for governance, which includes setting the Mission, Vision and Strategic Direction; Hiring, Supporting and Evaluating the Executive Director; acting as the Fiduciary Responsible Agent, setting Policy and Raising Money. Everything else is done in concert with the Executive Director or by the Executive Director.” The question that follows or should follow is “What is The Role of the Nonprofit CEO? “Leading an organization is a big job that looks much easier than it is. In fact, like all leadership done well, it looks like nothing.”

While we’re at it, here’s one on Becoming a new Board President, the fist in the series Governance the Work of the Board and the most important, exciting and engaging opportunity for Board leadership: Generative Governance.

“If your Board is not fund raising the way you want them to, I submit you do not have a fund raising issue; you have an engagement issue and possibly a Board Development issue.” Not Fundraising? Not Engaged. Alternatively, or additionally, if they are not fulfilling their role, it may be because you’re doing their work. If you are, stop. Here’s how: Five Thing to Stop Doing Right Now and Three More Things to Stop Doing.

For my students, young people everywhere and all of our daughters:

Advice for Graduating Students Joining the Workforce

An Open Letter to College Bound Daughters, including My Own

Discretion and Discernment: A Call to Action on Behalf of Our Young People

Finally, the three posts that are closest to my philosophy of leadership and what I believe about how we can move forward social justice:

Does Your Agency Aspire to Social Justice or Charity?

Agreements, Vibrancy and Abundance

Reflecting on my Pursuit of Social Justice

Thank you for reading. Thank you for your leadership, advocacy and activism.  May you and may I still be standing, still fighting, and still inspired to change the world throughout this new decade. Lead on!

The Implications of Donor Advised Funds on the Charity You Love

In Community Strategy, Leadership, Non Profit Boards, Organizational Development, Uncategorized on February 6, 2019 at 10:09 pm

Donor Advised Funds (DAFs) were created to be a charitable option for those who have or have received a significant influx of funds. They are touted as a way to democratize philanthropy. DAFs have opened up vehicles for giving to midsize donors in a way that family foundations could not. For the first time, donors with sometimes four but more often five-figure gifts to donate could do so, long term.  Of course, they could always do so short term. 

Despite the DAF commercials you may have seen (Wells Fargo wins for the most appalling), it was always possible to donate a significant gift straight to the nonprofit of your choosing.  What wasn’t available was a long-term option, other than a family foundation, which is expensive to start and has significant compliance obligations.

The introduction of DAFs allow a donor to get an immediate tax deduction, while they – in theory – can research where they want to spend their philanthropic dollars, later.

To be clear, it’s called Donor ADVISED Funds for a reason.  The donor can advise the DAF sponsor on where they want the gift to go.  The DAF sponsor usually sends it to the intended destination but reserves the right not to based on the law, the mission of the recipient organization and the sponsor’s internal policies. For example, your local Jewish Foundation will likely grant your recommendation to send a gift to your local Jewish Community Center, but not likely to your local hate group. 

There are a few requirements of the donor.  DAF funds cannot be used to pay a pledge.  In fact, the donor can‘t receive any benefit from the gift – this is standard for any gift you want to deduct. It’s why you can’t deduct the full cost of the gala you went to last weekend but can deduct the cost of the ticket minus the expenses to the charity.  In the case of DAFs, you can’t buy the ticket with those funds at all, since you received a benefit (gala tickets) for your gift.

DAFs can be named for your family, or whatever or whomever you’d like.  You can name it your initials, or for your dog. That makes it difficult for charities to prospect, thank or steward gifts received from those who have DAFs, or even to know from whom their most recent donation arrived. 

Another challenge for our field is that there’s no requirement that money be given out. There’s also no requirement that the name of the donor be released. In fact, there are rules against their names being released. You read that right: a donor can park significant resources in a donor advised fund, which is then owned by the DAF sponsor, to be given out without attribution to the donor, at the donor’s leisure or not at all.  In all cases, the donor gets an immediate tax benefit.

Actual charities may get nothing. The government definitely gets nothing because it goes in and continues to grow tax free. No taxes get paid. The data  suggests that donor-advised funds have a net negative effect.

The only ones who consistently benefit is the donor and the fund owner, which may not actually be a charity at all, and likely will be a for profit company managing a “nonprofit spin off.”  Here’s the Chronicle’s explanation “Much of the criticism is directed at Fidelity Charitable and other sponsors of donor-advised funds that are nonprofit spinoffs of financial-service firms. These organizations typically pay their for-profit parent to manage the money in the funds, which means they have a financial incentive to accumulate assets and hold onto them.”

How it works is this: A donor sets up a donor advised fund, either at a community foundation, or at a for-profit company that manages “a charitable institution.” The word charity is used in the loosest way, meaning under the law it’s a charity, but in reality it provides no services other than as a vehicle to house funds which will be given out at a later date, maybe. It will generate annual fees for the sponsoring institution, often but not exclusively a for profit entity, in perpetuity.

That’s part of the challenge for the nonprofit field, and the government. DAFs take huge amounts of money out of the economy, and out of the charity designation pot each year that actual charities providing real services may never see. Unlike foundations, there’s no distribution rules. Even the DAFs housed in foundations have no distribution requirement.

In other words, you could sell a business for $100 million today and put some portion of that money in a donor advised fund.  You would get an immediate tax deduction and the donation could sit there … in perpetuity.

Those who are fans of Donor Advised Funds will argue that money is given out. They say that even more money is given out because of DAFs. But because most of the giving, the “owning” and the management of donor advised funds is done in secrecy, we don’t really know. The only thing that is reported is the amount of aggregate gifts given to actual charities by the institution. So it’s possible – and even likely – that one DAF giving significant (and actual) gifts is providing cover for the other funds providing no benefit to the community, and only benefit to the donor and the institution managing the DAFs.

A smaller challenge is that many agencies don’t know how to properly thank donors who send gifts from donor-advised funds.  Because they may not understand that the gift came from a DAF, meaning the deduction has already been granted, they may send a letter with tax deductible language. The donor may not notice when the letter comes in but totally notices when they’re trying to figure out their taxes at the end of the year.

To be clear, there is a fairly significant section of nonprofit leaders who like Donor Advised Funds and many leaders do not care from whom the money comes or by what vehicle it arrives, as long as it comes.  Some will say, and they will be right, that if you know your donors, you know who has a DAF and this is not a problem.  Is that true? Sometimes. 

It’s critical nonprofits know from whom they’re receiving gifts.  There are too many instance of charities taking money from people or companies who later embarrassed them, or publicly compromised their principles or values. If you don’t know, you can’t protect your organization.

Still, some leaders love DAFs.  Of course, leaders of community foundations love them.  Community Foundations are a huge holder of DAFs.  I appreciate that and if you insist on starting one, please consider the community foundation in your area. 

There are even some charities who have started managing DAFs themselves.  Many of the big nonprofits have started their own, often aligned with their organizational values and with a requirement that a portion of the funds go to them. Still, the charities and the community foundations don’t come close to the big companies.

As far as charitable recipients, Fidelity Charitable is at the top, coming in at #1 for the second year running and in the second spot for the five preceding years of charitable data. DAFs are so significantly represented that a full 50% of the top 10 recipients of charitable funds in 2017 are sponsors of funds and not community serving, program providing, (actual) charities.  One is a community foundation. 

The six largest recipients of charitable gifts are housing but not spending that money! That money is only benefiting the holder by accruing interest and fees for the institution. It is not immediately, or possibly ever going to an actual charity doing meaningful work in a community.

I fear Donor Advised Funds will eventually preclude our ability to do our work and affect change for our communities.

The DAF debate is happening at the same time that the field and the world is beginning to challenge status quo of philanthropy. 

The following questions are currently being discussed:

When does being donor focused come at the expense of the mission, clients or community?

Should deductions be tied to community need?

Does the current model of philanthropy promote inequity?

How do nonprofits distinguish themselves in a world of social enterprise?

Does big philanthropy reinforce the inequity it purports to address?

What’s your take on DAFS? Are you asking, and how do you answer the questions listed?  I welcome your feedback, insight and experience.  A rising tide raises all boats.

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