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Nonprofit Mergers

Q: I am a board member of small, all-volunteer river group, and in the past few years, our old standby financial wells have been drying up. One grant manager even suggested a merger with another organization with a similar mission, which totally caught us off guard.  What exactly would a merger entail?

A: A lot of nonprofits all over the country are mulling this merger idea these days.   The economy is struggling while the numbers of new nonprofits are growing. Nonprofits are looking at mergers as a way of cutting costs, increasing their reach and consolidating the services they provide.  And yes—merging is a popular idea with both foundations and private donors, both of whom are beginning to expect more return on their nonprofit investment than ever before.  From the funder’s perspective, a chunk of money will get a lot more done if strategically placed in one organization than it would if it was broken up and dispersed to three or four.  From the nonprofit’s perspective, a merger can mean more manpower, money, experience and connections, which can, in turn, lead to more influence in a community.
So, many experts are claiming that mergers are the future of the nonprofit world. What does that mean for your organization?

For starters, it doesn’t mean that you need to take a deep breath, kiss your hard-earned, beloved nonprofit organization goodbye and run out and merge with another one tomorrow.  Mergers are very appropriate in certain circumstances, and don’t make sense in others.  Also, there are a lot of different ways that two existing organizations can restructure. This article has a great outline of considerations to take into account to decide if a merger is right for you.

•    Mergers
 A merger actually describes the absorption of one organization into another—a consolidation.  This happens most often when there is an overlap in the niche two different organizations fill in a community.  

•    Joint Ventures
A joint venture describes a formal or informal agreement between two or more organizations to undertake a common project or achieve a common goal.  A coalition is a good example of a joint venture, as is a joint grant.  Sometimes contracts are necessary or prudent to lay out the terms of the venture.

•    Parent-Subsidiary
Parent-subsidiary restructuring means that smaller organizations give up some degree of administrative and/or programmatic work to a larger one.  This centralized administration can increase overall efficiency and can free up the time of subsidiary staff and volunteers for more direct program work.  This is a common type of merger these days, with small organizations seeking out a stable “parent” organization to take over some of the more arduous administrative tasks. Similarly, larger and more prominent organizations may actively pursue smaller organizations to expand their reach.

•    Fiscal Sponsorship
Fiscal Sponsorship is a way that a group without nonprofit status can deliver programming without all the paperwork, expense and administrative burden of filing for nonprofit status themselves.  This is done when an established nonprofit organization agrees to serve as fiscal sponsor which allows an organization without nonprofit status  raise money for a certain project or even for administration of the entire organization.  There is sometimes an administration fee attached to this service, which is agreed upon by both parties.

For more information about mergers, here is another great resource that can help guide you through the decision.

Financial Controls

Q: I’m on the board of a very small all-volunteer watershed group.  We’ve begun to realize that nobody really ever knows what’s going on with the organization’s finances except the treasurer and sometimes the board president, depending on who is in the position at the time.  Although we trust the treasurer not to clear out the coffers and run off with the cash (frankly, he wouldn’t get very far), we think it’s time to set up some systems that would make sure the responsibility of tracking the organization’s finances doesn’t rest entirely on one person’s shoulders. Any suggestions on where we can start?

A: Systems are important in a nonprofit, just like they are in your household.  Establishing financial controls for your organization is as basic a necessity as organizing your kitchen cabinets so you can always find the cereal or coordinating a shared bank account with a family member.  But it’s difficult to know where to start—especially when your organization is small.  Here are five of the most important, most do-able financial controls for small groups:

1. The first thing to do is to set the control environment.  This is a fancy way of saying, you introduce and establish the procedures, make sure every single person on the board understands them and why they’re necessary, and get a pledge from everyone that they will observe and respect these procedures. In many organizations the top person might make exceptions for himself or herself about policies, which sets a sloppy or even unethical tone. Let’s say the board president isn’t providing receipts for their cash reimbursements—it lets other board members think they don’t have to follow procedures either, and they start cutting corners as well.  And having procedures that aren’t used is actually worse than having none at all. So, it’s important to set the control environment by emphasizing the importance of ethics and controls at board meetings, and demonstrating that everyone is following the rules, all the time.

2. Define clearly who is responsible for what. It's very easy—especially in a small organization—to assign tasks willy-nilly, based on who is available to do it at the moment. For instance let’s take the simple job of checking the mailbox.  In a small organization, sometimes the board president might get the mail—sometimes the treasurer might do it.  But then when an important check arrives in the mail and it gets thrown on the seat of someone’s car and ends up in the recycling, it’s a lot tougher to track that check down when the fault could lie with one of 3 or 4 people.  Similarly, with invoices: who is in charge of checking the math on the invoice, who is responsible for approving the invoice to be paid? If there is one person whose job it is to check the mail and one person who always checks over an invoice and pays it, you know the jobs will get done, plus it leaves less room for error.

3. Physical controls. Lock it up!  Computers should be locked to desks, and they should be protected with passwords. Put checks in a locked drawer. Among other abuses, there are too many cases where someone comes in and takes checks from the middle of the checkbook.

4. If there's cash involved -- such as at a fundraiser or box office at a performance -- have two people count all the cash together.   Also, have people who are collecting cash put all cash collected into a locked money box or bag at regular intervals, to be counted by two people later.

5. Reconciling the bank statement is obviously very important. As you say, it’s unlikely that your treasurer is going to clear out the organization’s bank account and run for the border, but just like it’s a good idea to have two people responsible so that the mistake one person makes can be caught by their partner.

Ideally someone other than the bookkeeper (or treasurer--whoever handles the money) reconciles the bank account from an unopened statement. That's a strong check on the person who handles the money. In the case of an unstaffed organization, the treasurer generally does everything related to finances and reports to the board. In these instances someone else, such as the vice president of the board, should receive the unopened bank statement, and look it over before giving it to the treasurer.

Other commonly recommended financial controls:

  • The person handling money not allowed to sign checks?Treasurers or bookkeepers should not sign checks. However, in a really tiny organization this may not be practical. One approach is to allow the bookkeeper (or the person who handles the money) to sign small emergency checks, for no more than $100 or $200. If everybody knows this rule, it helps to set a tone of accountability. And again, it will be caught by the person who does the bank reconciliation.

  • Two signatures on checks, or on large checks? This is okay as a policy, as long as you know that banks don't enforce this policy, nor can you hold them liable for a check that goes through with only one signature. Two signatures is a good policy so that someone sees the big checks, but it's more about setting the right tone than about preventing theft.  (A good threshold for how big a check would need to be to warrant two signatures: as much as your largest monthly or quarterly expense—like a rent check).

  • Never have a check issued to and signed by the same person! That one speaks for itself!

  • Keep use of petty cash to a minimum and keep a log of incoming and outgoing checks. It’s also a great idea to keep photocopies of checks received. If you’re receiving cash, keep in mind it’s illegal to photocopy cash, however, you can photocopy an envelope with the amount written on the front and the denominations peeking out the top.

Burnout

Q: I’ve worked for a river group for several years, and even though I love the river I work to protect, I’m having a lot of bad days at work, I’m exhausted all the time, I feel constantly stressed about the sheer volume of work I have to do and the lack of funding to do it! I want to work to protect rivers, but working here is really starting to get to me. Do you have any advice on how I can balance my work with my sanity?

A: I’m really sorry you’re going through this. If it helps, you’re not alone. Because let’s face it: environmentalists work hard—arguably harder than most professionals. For example, a friend of mine who works for a national environmental organization in Washington D.C. was at work the other day when a moderately intense earthquake hit D.C. and shook everybody up a bit.  The Capitol shut down for several hours, businesses all over the city sent employees home to check on their houses, their families, their pets.  But all my friend’s coworkers just kept on working like nothing had happened! My friend is new to the job and called me right after it happened: “What is it with these environmentalists?” she asked. “I thought they were going to be so laid back and easy going, but I think a lot of them are working on ulcers!”  

Putting heart and soul into the work is just part of nonprofit culture.  The stakes are high for people who do it because it involves something they actually care about—in your case, a river you love. Plus, for a lot of people the work is made more difficult because it not only involves program work but fundraising, bookkeeping and personnel management, etc.  It leaves very little time for other things that are important and/or make life worth living:  time with family and friends, exercise, housecleaning, doing nothing, and time spent on the river you’re working so hard to protect!

Oftentimes, when you start a job, you begin the work feeling pretty content—lucky and valued, even! You have a job, and somebody even picked you over a bunch of other candidates to do it! But eventually that euphoric feeling begins to wear off as you begin to get a bit confused, asking yourself, “What are my priorities? How do I manage this workload? How do I navigate my work relationships?”  And a thousand other tough questions, none of which are easy to answer.  After a while you might become resentful of your job, and even your coworkers. You begin to feel isolated and depressed and worn out. Does any of this sound familiar?

Well, that’s what we like to call burnout, and it happens to the best of us. But what do we do about it? Well, the first step is probably just identifying it in you.  It’s also important to know that you have options—you could find a new job, you could change the way you think about your current job, you could talk it out with the person or people who could improve your situation and see if you can’t come to a mutual, respectful understanding.

Since there are as many ways to deal with burnout as there are overwhelmed people in the world, Georgia River Network has an online resource to help out.  

And please --at the very least, talk to someone you trust about your predicament. Take care of yourself!

Special Fundraising Appeals

Question: We want to send out a special fundraising appeal to our supporters around the end of the year, but are wondering what the best way is to go about it. What advice do you have for us?

Answer: That’s great! Special appeals to your supporters are an important and effective way to fundraise. Special appeals are usually done by mail and are a “special” ask for support outside your supporter’s annual membership dues. Special appeals can be sent really any time of year or for any special reason you might have to ask your supporters to contribute to your organization.

One of the most common types of special appeals is the end-of-the-year appeal. People often make special or additional donations to charities around the holidays or at the end of the year for tax purposes. An end-of-the-year appeal is an excellent reminder to your supporters that their investment in your organization is needed and makes a big difference. So, here are a few tips and ideas to keep in mind when planning your end-of-the year appeal:

1.    Give yourself plenty of time. Make a calendar of deadlines, and start with when you want your appeal to land in your supporter’s mailbox, and then work backwards. Many appeals start showing up in mailboxes right after Thanksgiving. That means you probably want to get started right away – Thanksgiving is about a month away! (Not to freak you out or anything)

2.    Make a list. Make a list of who you want to send your appeal to. I suggest sending it first: to your current up-to-date members and donors or anyone who attended one of your events over the last year (free or otherwise); second: to anyone who has been a member, donor, or attended one of your events in the last three years; third: expand the same list out beyond three years until you get your target number.

This can all get pricey, so make a budget, figure out how much each mail piece will cost you, and figure how many pieces you can afford to send and then send them first to the people who have supported you most recently.

3.    Make yourself shine. We all know around the holidays we get way more mail than any other time of year. Your appeal is going to be sitting in the mailbox with catalogs, holiday cards, mail orders, bills, junk mail and other appeals. Make sure your appeal stands out.

At GRN, our appeal comes in the form of holiday card and we spend time thinking about an eye catching front to our card – usually a photo - not just in hopes that we’ll get a donation but that our card ends of on the mantel with all the other holiday cards. Other eye catching approaches we’ve seen include: an annual report listing all the great work the organization has done over the year, a catalog of giving options, and a calendar for the next year.

Fun, holiday colored envelopes, postage stamps, and graphics all are eye-catching. Especially for your end-of the-year appeal, we think holiday themed postage stamps are better than the bulk-rate emblem. If you have time, or have staff or volunteers with time, hand addressed envelopes are way more personal and eye-catching than labels.

4.    Include a remit envelope. A remit envelope is an envelope that is already addressed to you that the supporter puts their contribution in and includes a place for the supporter to write out their contact and donation information to easily send back to you. I don’t suggest putting a stamp on it – a lot of stamps will end up wasted – you should expect a return rate between 5-20% on your appeal, 20% is REALLY good. Also, we like to include a box for the supporter to check and let us know if they want us to count the contribution as a special donation or as their annual dues.

5.    Include a short letter or a note that explains that you are asking for special contribution, in addition to their annual dues, why it’s needed now, how it will make a difference, and how their support has already made a difference.

6.    Organize a note/letter/card signing party with your staff and board. A personally signed note/letter/card from you or one of your staff or board members is way more meaningful and personal than no note or signature or one that has been copied and pasted in.

We wish you the best of luck on your end-of-the-year appeal!

Georgia River Network's Statewide Events Calendar

Save the Dates for GRN's 2018 Events and See Details!

For events across Georgia put on by various groups, browse the calendar below. To have your river event added to our calendar, email us at info(at)garivers.org. 

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grn 2018 card