Thanks, but no Thanks

No Organization wants to turn down money, but some grants just aren’t worth the trouble. Many of my clients these days are saying, “thanks, but no thanks” to grants with too many compliance requirements. Their accounting/program departments just aren’t equipped to properly handle the compliance requirements below:

1. Provisions of grant agreements
2. Reporting requirements
3. Programmatic tasks are not met or performed in accordance with established requirements
4. Audit requirements are not met
5. Or other identified non compliance

Non-compliance not corrected in timely manner can lead to suspension of funds, terminations of contracts, inability to obtain future grants and at the highest level--legal action can be taken to recover funds and ruin your organization’s reputation.

What are many organization’s doing to replace those grant revenue streams? Marketing departments are getting more involved with fundraising departments to tap into corporate marketing dollars. Over 52% of companies, in a survey released by EConsultancy and SAS UK,  have increased their marketing budgets in 2011. While a study released by the Committee Encouraging Corporate Philanthropy noted 60% of companies have cut their donation budgets by 10%. In addition, digital marketing is now measureable and companies realize that digital marketing pays big dividends.

This means those marketing folks are going to have to walk down the hall to the fundraising  and IT departments (if your organization is so lucky as to have separate departments) and figure out how to pitch companies for marketing dollars--putting together sponsorship packages, events and an effective online presence.

The 2012 budget season is upon us, as your organization looks to new sources to fund its programs, consider if your organization should look to corporate marketing dollars to replace resource consuming grants.

Happy fundraising!

Is it Time to Switch Your Investment Advisor?

The market has rebounded from the drop in October 2008, and if you were lucky, you rode the storm out and recovered a significant amount of principal. Or, perhaps you jumped ship, changed your allocations from equity to fixed income and missed out on the upswing. Whether you recovered your principal or took it on the chin, there is a very important question to ask within your organization. In the past few months, how often has your advisor been available to your organization by telephone? A good investment advisor calls once per month, at a minimum once per quarter. If your advisor isn’t calling in consider the reasons? And just maybe--it’s time to move on.

Here are some questions you may want to ask if you are interested in making a switch.

·         Is the Company’s results consistent

·         What is the Company’s performance relative to benchmarks?

·         What is the Advisor’s performance relative to its peers?

·         Is the turnover high at the Company?

·         Is there a succession plan for senior management?

·         Does the Company have adequate backup and recovery processes?

·         Is there any ownership incentive for consultants?

·         Are the Company’s reporting capabilities able to meet your Organizations needs?

Not ready to make the change? Satisfied with your current advisor? At a minimum consider dusting that old investment policy off, if your organization has one and make sure your spending needs are in alignment with your investment strategy. Every organization with investment activity or excess cash should develop and adopt a written investment policy, which should address the following:

·         The investment objectives (that is, increase earnings, provide specific returns, or maintain accessible cash reserves).

·         The person authorized and responsible for investments.

·         The maximum amounts for investments and the approval criteria.

·         The types of authorized investments.

·         The desired mix of products (especially those considered to create risk).

·         A goal for the amount of return expected.

·         Approved vendors of investment products.

·         The maximum length of time cash can be committed.

·         The criteria for investments versus debt repayment.

·         The handling of emergency cash needs.

To Bid or Not to Bid

In 2010, I audited an Organization based out of Miami noticed a reduction of travel, conference and related expenses of 32%, by making two changes; 1) centralizing the airfare and hotel procurement for all employees into one position, and 2) using a travel management company to negotiate with hotels for conferences, rooms and food.

No matter how much time you’ve spent on your travel policy there are hidden efficiencies waiting to be realized. The next time your board is looking to reduce expenses ask these questions to find strategies to slash through that travel budget:

• Do you require three bids?
• Is one employee assigned to travel administration and management?
• Does the organization require post-trip evaluations?
• Does the organization use technology such as video and web conferencing when possible?
• Does the organization use a travel management company to control costs? If so, was a careful evaluation made before choosing a travel agency?
• Are senior fares obtained for employees over 62?
• Are off-peak airfares negotiated with?
• Have guidelines been set for tipping?

You may be saying, well a centralized function and internal controls are great in theory, but is that really practical in light of the staff reductions many organizations were forced to make resulting in consolidated positions and employees unable to carry out their current assigned duties.

At a minimum, employees can get three bids and organizations can require documentation of the three bids with no additional use of resources. Travel can be booked in advance in order to obtain the lowest prices and compared against indices such as the Runzheimer Meal-Lodging Cost Index to gauge the appropriateness of travel in different cities. No matter what strategies you employ for your organization, the travel policy should be easily understood by employees.

Gifts In-Kind: Is Your Organization Recording These Transactions Properly?

Has your development department struggled to fill tables at events or complete foursomes at the annual golf tournament? If you are like many NPO's in South Florida and across the country then you answered, yes. According to a 2009 study by the Committee Encouraging Corporate Philanthropy (CECP) companies have reduced their cash contributions by two-thirds. However, non-cash contributions such as, pro-bono professional services, office equipment, office space and other assets have increased.

Non cash gifts are valuable to both NPO's and companies. These donated goods and services would otherwise have to be purchased. According to the CECP study 96% of  companies feel solving social problems is important to their business. In my experience as an auditor, the most common donations in-kind are solicited for fundraising purposes. However, the accounting for these types of transactions has been overlooked. 

For example, XYZ corporation donates cruise tickets to KYM's silent auction. The tickets are recorded as contributions at fair value on the date of donation. When the cruise tickets are sold at auction, the difference between the cash received and fair value on the date of the purchase is adjusted for in the current year's earnings. In significant fundraising organizations these adjustments can be material.

Is your Organization recording these transactions properly? Make those adjustments soon, June 30 is just around the corner.

See authoritative guidance at FASB 958-605-25-2 (Not For Profit Entities-Revenue Recognition-Contributions Received). The survey can be found at: www.corporatephilanthropy.org/research