In 2000, the Community Renewal Tax Relief Act was enacted beginning the New Markets Tax Credit program. This allowed investors to “receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified Community Development Entities (CDEs)” as defined by the IRS. In turn, those investments would be used to enhance the quality of life for those living and working in low-income communities by funding projects led by Qualified Active Low-Income Community Businesses (QALICB).

According to the Tax Policy Center, the most often funded project types by NMTCs are retail, manufacturing, mixed use, health care, office building, and school projects. In return for the QEI, investors collect 39% on the investment over seven years in tax credits as compensation. After its establishment, the Community Development Financial Institutions Fund (CDFI) has given out more than $23 billion in tax credits funding more than 4,800 projects in all 50 states. However, with the program’s growth, there is increasing complexity and decreasing transparency because of a lack of reporting and records through CDEs and investors. This leads to a lack of data available to the public about success and failure rates though records do exist of what is being funded by NMTCs, but the amounts are not freely accessible.

Oklahoma Senator Tom Coburn wrote a report entitled “Banking on the Poor” in which he critiques the uses of NMTCs for projects other than enhancing low-income community life. With very little guidance or regulation from the CDFI on the types of projects that can be invested in, there are a lot of uncharacteristic projects. He mentions reports of NMTCs funding aquariums and bakeries in prosperous areas as well as car museums and movie theaters. He holds this as one of the largest problems with NMTCs: almost any area of the United States can be considered low-income by the standards of the program which could allow funding anywhere.

Coburn also takes issue with how investors are utilizing it for their own gains. The primary investors of the NMTC program are big banks who find ways to work the financial system to receive greater benefits such as larger tax breaks through a process called “twinning” which combine all possible avenues of tax credit from one project for the investor. Coburn writes “it is still difficult to measure if these tax exemptions are truly helping those seeking a hand up or simply subsidizing banks, corporations, and others who are already succeeding.”

We  find it important to note that most of the articles done on this subject cover how good of an opportunity this is for investors, and the articles often come from the investors themselves. Very few discuss the benefits for the invested, though this could be due to an unreported high failure rate. And with projects such as an ice-skating rink and a private island,  we’re not sure that we necessarily trust the low-income community focus of the NMTCs program. We recognize this program is not promising “free money”  to these projects. Investors pitch this program in the hope of receiving tax credits, which is fair. However, making contributions to receive tax breaks for yourself in a program that has no defined success record in actual low-income communities concerns  us, as there is little record of the investment going to QALICB.

In March 2019, legislation was introduced to the U.S. House of Representatives that would extend the New Markets Tax Credit program indefinitely. There is debate about the legislation and many support changes to be made to the existing program in order to have increased transparency and regulation after a report from the U.S. Government Accountability Office brought attention to the lack of records. We would encourage anyone considering funding their projects through the NMTCs program to be careful in choosing  the institutions that stand behind them.

In summary, this program offers a unique opportunity for low-income areas to gain investors to enhance their communities while offering substantial compensation, but the program currently has several pitfalls for projects that are not well-set financially prior to and well-acquainted with New Markets Tax Credits and those that invest in them. Next month we will discuss the opportunities that New Markets Tax Credit programs offer.

Sources:

Coburn, Tom. Banking on the Poor. 2007, 

http://coburn.library.okstate.edu/pdf/NMTC%20Report%20(8.11.14)(2)af16.pdf

 “New Markets Tax Credit 1 | Internal Revenue Service.” Internal Revenue Service, 2010, 

www.irs.gov/businesses/new-markets-tax-credit-1.

McTigue, James R. “New Markets Tax Credit: Better Controls and Data Are Needed to Ensure 

Effectiveness.” U.S. Government Accountability Office (U.S. GAO), U.S. Government 

Accountability Office, 11 Aug. 2014, www.gao.gov/products/GAO-14-500.

Sewell, Teri. “New Markets Tax Credit Extension Act of 2019 (H.R. 1680).” GovTrack, Civic 

Impulse, LLC, 12 Mar. 2019, www.govtrack.us/congress/bills/116/hr1680.

“What Is the New Markets Tax Credit, and How Does It Work?” Tax Policy Center, Urban 

Institute & Brookings Center, 2016, https://taxpolicycenter.org/briefing-book/what-new-markets-tax-credit-and-how-does-it-work

“For sure” is not as predictable as it used to be, that’s for sure!  2020 threw all of us for a loop and as we come into 2021, we hope that things will change for the better.  However, I believe normalcy may be slower than we had hoped. 

As we all attempt to navigate our lives to get back to pre-pandemic status and the recent post winter storm chaos, we can’t help but think of those whose lives have been turned upside down from losing a loved one, a job, a home or a combination of things.  As nonprofit professionals, our clients are still there and that has not changed.  The need is possibly greater than before, and some donors may take pause during this time of uncertainty. 

I do know this for sure:  citizens of this country are the most philanthropic in the world and always step up in times of crisis.  I also know that nonprofits are at the center of crisis management.  This fact gives us unique opportunities to pull together and thrive using resources and expertise to assist in helping our communities realize hope.  This may be from volunteering at a Food Bank, assisting at a vaccination site, or taking calls at a mental health crisis center. 

Being in Austin among strong, passionate nonprofit professionals who exemplify the philanthropic spirit, I’m assured of the work being done to help make this community continue to be vibrant and supported.  Creating and maintaining meaningful relationships with clients, donors and friends continue through these hard times.  Obviously, with COVID-19, these ongoing challenges keep us up at night, just to name a few: 

1. The continued high cost of living
2. Food deserts for the underserved communities
3. Homelessness
4. Inequity of education and healthcare
5. Getting our hospitality industry back to work!

As a native Texan, I am proud to be from a state with a can-do and will-do attitude for those who live here or desire to.  Built on dreams to make the lives of families better, citizens see opportunities, through hard work, beneficial for themselves and those who come after them.   Those values and principles have been passed down through generations and are the backbone of our work.  

Let’s be a light in 2021 for those we serve.  Inspire giving and generosity as we go through this together.  Continue to put our community first and work to improve the lives of others for today, and those who come after.  This I know for sure will be accomplished! 

By: Barbara Marrou, Associate

Why is it necessary to prepare a budget? Isn’t that the thing that takes an enormous amount of time and effort to make, and then is just forgotten until next year? If this is how you feel, then you are not using your budget to its advantage.

A nonprofit’s impact is determined by its ability to make good on its promise to deliver services to its clients. A budget highlights what is important to the organization. It provides guidelines for securing revenue and managing spending to support sustainable operations. A well-planned budget, based on and in support of your strategic and operational goals, will help you fund your organization’s mission and deliver on its promise.

• Why is it important for organizations to have an operating budget that is understood by staff, board, and funders?

Staff – Having a budget that the staff understands – and has helped create – encourages staff to be thoughtful in their actions and requests. Understanding that the budget reflects the major goals of the organization guides spending decisions that will keep staff focused on achieving their department’s goals.

Board – Conveying the budget to the board of directors – and revisiting it often – gives the board a better understanding of the operational needs of the organization. Maintaining constant awareness of the relationship between goals and budget allows board members to be better equipped to address those needs and uphold their fiduciary responsibility.

Funders – A clear budget process conveys your needs to funders while providing assurance that their funding supports the mission of your organization. When funders are presented with a new program idea – supported by a strong budget – they can feel confident that their funding will be well-managed.

• Why is it important to create a “zero-based budget” periodically?

A “zero-based budget” is exactly that: You start at zero expenses and put in your actual needs to operate. Rather than including expenses because “we’ve always done that,” this process supports analyzing and justifying each and every cost. Difficult? Absolutely! But it can be very eye-opening to find things that are not really necessary. You don’t look at previous budgets or last year’s expenses, you ask, “what do we need?” This is not a process to be used every year but certainly every few years to keep out those pesky expenses that sneak in and are overlooked.

• Why is it important to create individual budgets for each program?

Having a firm understanding of program costs, including costs per participant, will strengthen your organization’s position when seeking grants or other types of funding. Developing a budget for each program becomes key to achieving that understanding. One of the best exercises to determine program costs is to develop a “logic model.” A logic model is the process of identifying inputs, resources, outcomes, and impact, and based on the information you gather, it can help determine costs and the revenue needed to support program success. This exercise can help organizations to strengthen their existing programs and successfully create new ones.

Program-based financial information is useful for planning, management, and communications if it is comprehensive, accurate, and used consistently.

• Why is it important to have a structured budgeting process that involves key staff and the board finance committee?

Preparation of a budget is initially a staff project, but it is the board that will set a timetable for budget preparation. After the initial preparation by the executive director and her/his staff, the budget should be reviewed by the finance committee and eventually approved by the board of directors.

Effective budgeting practices are systematically implemented over a specific timeline, and the process of making a budget should be undertaken during the same time period annually. The process can seem to be an overwhelming task initially, but eventually it will become routine and comfort levels will increase. A budget is not set in stone but should be reviewed often and corrections and modifications made to accommodate extenuating circumstances – such as we’re living through now!

The budget is a key communication tool for the board and it serves as the cornerstone for creating accurate and complete financial statements. It is essential that CEOs and executive directors develop master-level understanding of financial management practices – including budgeting – and that they develop the ability to explain ratios and variances. These skills will empower them to lead their organizations through proper fiscal and budgetary planning with fiscal integrity.

If your organization needs help with developing a budgeting structure and process, please call us.

Resource for developing a logic model:

https://www.thecompassforsbc.org/how-to-guides/how-develop-logic-model-0

By: Marion Lee, CFRE

Kenneth Burnett in his book, Relationship Fundraising, said, “Fundraisers are members of a profession that is one of the world’s most powerful catalysts for change.”  Good fundraisers raise money, great fundraisers make caring service possible by developing processes through the lens of relationship or donor-centered fundraising.  They raise life-long friends for an organization.  That friendship begins with an annual fund process-the cornerstone of an organization’s fundraising strategy.

Primarily considered unrestricted funds, the annual fund is a recurring fundraising strategy designed to sustain operations, expand programs and services and/or fill the gap between funding from government sources, foundations and operation costs.  Usually smaller gifts, annual funds build a cadre of donors who grow-up with the organization, investing annually at increasing levels (hopefully) and who eventually become the close friends or investors for capital investments, planned giving gifts or emergency funding in times of crisis. 

Annual fundraising builds a base of friends who are interested and compassionate about the organization’s mission.  These individuals can expand their relationship for a lifetime.  In addition, these friends can add to your volunteer corps, bring other funders to the organization and over time provide security for the future. Annual fund donors make decisions quickly, rarely include spouse or partner in the decision, require some but not a lot of cultivation and will remain with the organization a minimum of five years if communicated with appropriately.

Step into almost any fundraising department and one will find two separate schools of thought on donor relations and annual fund strategies.  Old school proponents rely heavily on direct mail appeals (snail mail), extensive planning, use of committees who meet in-person and personal contact with donors (phone or in-person).  This method is more time consuming and costly. The new wave camp relies on email, social media, building plans in-flight and meetings on the go in a virtual setting with little personal contact.  The new method is less time consuming and less costly.

In reality, a strong annual fund is a combination of old school and new wave that is tailored to the culture of the organization and community donors.  Studies presented by the Nonprofit Research Collaborative demonstrate that 77 percent of organizations with a structured annual fund process meet total fundraising goals. This holds true across large and small organizations.  The Individual Donor Benchmark Report conducted by Heather Yandow, presented in the Stanford SOCIAL INNOVATION Review and Philanthropy Journal, supports the need for creating a replicable annual strategy utilizing email, social media and direct mail appeals that have well-defined metrics combined with personal connections through phone calls and visits.

What Works Well

1. The creation of a consistent replicable strategy that combines online, direct mail, allocation of some small foundation gifts (usually under $25,000), personal appeals, and events
2. Thoughtful well- written, email and text appeals directed to individual donors and small businesses
3. Personalized communications: using donors names and addresses
4. A gift acknowledgment plan that responds quickly to gifts, with communications that are personal, sincere and include a one-on-one component
5. Several small events versus depending on one large luncheon or gala
6. Board member participation by chairing the annual fund and taking the lead (board gifts, signatures, visits, phone calls)
7. Setting a financial goal for Board annual gifts to kick off the annual fund- FIRST!
8. Hand signed letters or very, very good electronic signatures
9. Personalized note on letters or electronic communications
10. Manageable giving levels that encourage raising levels of giving annually
11. Setting realistic goals
12. Tracking gifts and measuring success

Less effective are blanket appeals of any kind that are not personalized (address or signature).  Gifts from blanket appeals net a gift of 1/3 less than a personal appeal and a response rate of .05 percent, while personalized appeals and in-person appeals have a 50 percent donation rate. Additionally, once a donor has made their annual gift, they should be placed on the cultivation list and removed from active solicitation until the next year unless a need or project arises that might have a special appeal to the donor.

In Chapter 17 of Donor Centered Fundraising, Penelope Burke relates a story about a campaign leader who always, regardless of what else was happening, walked donors, volunteers- friends to the elevators and stands there until the doors closed.  It was a long walk, but much was accomplished in building friendships.  Every day, we are caught up in presenting our organization to our donors.  We are driven to make goal, prove value, help our organization realize its vision and serve people – faster, better, with the least cost.  With a strong annual fund, you will have a dedicated group of friends to actively participate in helping you fulfill the organization’s mission but don’t forget – walk your donor to the elevator even metaphorically and wait for the door to close.

By: Hunter Atherton and Aubrey Parke

Lee+ Associates College Interns

In 2000, the Community Renewal Tax Relief Act was enacted beginning the New Markets Tax Credit program. This allowed investors to “receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified Community Development Entities (CDEs)” as defined by the IRS. In turn, those investments would be used to enhance the quality of life for those living and working in low-income communities by funding projects led by Qualified Active Low-Income Community Businesses (QALICB).

According to the Tax Policy Center, the most often funded project types by NMTCs are retail, manufacturing, mixed use, health care, office building, and school projects. In return for the QEI, investors collect 39% on the investment over seven years in tax credits as compensation. After its establishment, the Community Development Financial Institutions Fund (CDFI) has given out  more than $23 billion in tax credits funding  more than 4,800 projects in all 50 states. However, with the program’s growth, there is increasing complexity and decreasing transparency because of a lack of reporting and records through CDEs and investors. This leads to a lack of data available to the public about success and failure rates though records do exist of what is being funded by NMTCs, but the amounts are not freely accessible.

Oklahoma Senator Tom Coburn wrote a report entitled “Banking on the Poor” in which he critiques the uses of NMTCs for projects other than enhancing low-income community life. With very little guidance or regulation from the CDFI on the types of projects that can be invested in, there are a lot of uncharacteristic projects. He mentions reports of NMTCs funding aquariums and bakeries in prosperous areas as well as car museums and movie theaters. He holds this as one of the largest problems with NMTCs: almost any area of the United States can be considered low-income by the standards of the program which could allow funding anywhere.

Coburn also takes issue with how investors are utilizing it for their own gains. The primary investors of the NMTC program are big banks who find ways to work the financial system to receive greater benefits such as larger tax breaks through a process called “twinning” which combine all possible avenues of tax credit from one project for the investor. Coburn writes “it is still difficult to measure if these tax exemptions are truly helping those seeking a hand up or simply subsidizing banks, corporations, and others who are already succeeding.”

We  find it important to note that most of the articles done on this subject cover how good of an opportunity this is for investors, and the articles often come from the investors themselves. Very few discuss the benefits for the invested, though this could be due to an unreported high failure rate. And with projects such as an ice-skating rink and a private island,  we’re not sure that  we necessarily trust the low-income community focus of the NMTCs program. We recognize  this program is not promising “free money”  to these projects. Investors pitch  this program in the hope of receiving tax credits, which is fair. However, making contributions to receive tax breaks for yourself in a program that has no defined success record in actual low-income communities concerns  us, as there is little record of the investment going to QALICB.

In March 2019, legislation was introduced to the U.S. House of Representatives that would extend the New Markets Tax Credit program indefinitely. There is debate about the legislation and many support changes to be made to the existing program in order to have increased transparency and regulation after a report from the U.S. Government Accountability Office  brought attention to the lack of records. We would encourage anyone considering funding their projects through the NMTCs program to be careful in choosing  the institutions that stand behind them.

In summary, this program offers a unique opportunity for low-income areas to gain investors to enhance their communities while offering substantial compensation, but the program currently has several pitfalls for projects that are not well-set financially prior to and well-acquainted with New Markets Tax Credits and those that invest in them. Next month we will discuss the opportunities that New Markets Tax Credit programs offer. 

Sources:

Coburn, Tom. Banking on the Poor. 2007,

http://coburn.library.okstate.edu/pdf/NMTC%20Report%20(8.11.14)(2)af16.pdf

 “New Markets Tax Credit 1 | Internal Revenue Service.” Internal Revenue Service, 2010,

www.irs.gov/businesses/new-markets-tax-credit-1.

McTigue, James R. “New Markets Tax Credit: Better Controls and Data Are Needed to Ensure

Effectiveness.” U.S. Government Accountability Office (U.S. GAO), U.S. Government

Accountability Office, 11 Aug. 2014, www.gao.gov/products/GAO-14-500.

Sewell, Teri. “New Markets Tax Credit Extension Act of 2019 (H.R. 1680).” GovTrack, Civic

Impulse, LLC, 12 Mar. 2019, www.govtrack.us/congress/bills/116/hr1680.

“What Is the New Markets Tax Credit, and How Does It Work?” Tax Policy Center, Urban

Institute & Brookings Center, 2016, www.taxpolicycenter.org/briefing-book/what-new-

markets-tax-credit-and-how-does-it-work.

By Priscilla Guajardo Cortez

I recently attended a nonprofit panel discussion titled Better Boards presented by NXTBoard.  An Austin-based company, NXTBoard provides technology-based solutions to help governing boards achieve success.  The first question posed immediately following the presentation was “How big should my nonprofit board be?”    

The response of the expert panel:  “Well, it depends.”

According to BoardSource’s “Leading with Intent:  2017 National Index of Nonprofit Board Practices,” board size has steadily declined over the past 20 years, with the average board size currently at 15 individual members.  Board Source believes, while there is no “right” size for a board, it is possible for a board to be either too small or too large.

One size does not fit all

Nonprofit organizations in Texas must adhere to the Texas Business Organizations Code, which requires that an organization have at least three directors.  Beyond that, nonprofits have discretion when it comes to composition, ultimate size, and diversity.

When determining the size of your board, nonprofits should consider several factors, including diversity of perspectives and expertise, ease of decision-making, types of issues facing the organization, and opportunities for deeper and meaningful engagement. 

Your nonprofit board may be too small if:

• the expertise needed to make decisions and plan for the future does not exist;
• access to networks that can help expand the organization’s reach and awareness in the community so it can secure the funding and visibility it needs to do its work is lacking; and/or
• it does not operate independently or demonstrate leadership in way that would provide the appropriate level of oversight and balance to the Executive Director.

On the other hand, your nonprofit board may be too big if:

• not all board  members are meaningfully engaged in planning or decision-making discussions;
• board members feel disengaged, disconnected, or not needed; and/or
• the Executive Director is overwhelmed with meeting board member expectations.

There is no magic number to achieve when determining the size of your nonprofit board of directors.  Each nonprofit must decide for itself what the right size is, evaluating the advantages and limitations of large versus small, so it can best accomplish its distinct mission.

By Alexis De Sela

Much has been written and discussed about the critical roles of, and relationship between, the Board of Directors and Executive Director of a nonprofit, and I don’t want to fall into redundancy with this article. However, as we’ve worked closely with organizations in their capacity building efforts, we have seen examples of how this critical co-leadership relationship can strengthen or harm a nonprofit. In this article I would like to clarify Executive Director and Board roles and provide you with my observations of positive and harmful behaviors to help you reflect on and improve the health of your Board/ED relationship.

Understanding roles: It has been long established as best practice by Board relations experts that the main responsibilities of the Board are to:

• Fulfill its legal and fiduciary duties to the organization: duty of care, duty of loyalty, and duty of obedience
• Establish the long-term vision and strategy
• Hire, establish goals, evaluate the performance of, and support the Executive Director
• Provide expertise through active involvement in committees
• Meaningfully contribute to and help raise funds
• Establish and uphold a Conflict of Interest policy

The main responsibilities of the Executive Director are to:

• Lead and manage the day-to-day operations of the nonprofit and ensure implementation of strategy and regulatory compliance
• Ensure the organization’s staff is adequately led, evaluated, compensated, and that all productivity and performance standards are met
• Support the board and provide regular and realistic updates on the state of the organization’s operational health
• Be the face of the organization in the community and maintain positive and mutually beneficial relationships with stakeholders
• Be the chief fundraiser and help develop the board to fulfill its fundraising responsibility

Having established the main responsibilities for each party, healthy Board/ED relationships are complimentary to each other, each fulfilling an important role to achieve optimum organizational health. The most successful nonprofits understand these roles well and maintain interconnectedness and counterbalance. That balance is achieved when the Executive Director is given clear performance goals and strategies and latitude to execute them, and when the Board fulfills its oversight and other duties and provides counsel as industry experts without delving into the day-to-day business of the organization. Co-leading effectively requires a healthy dose of communication, respect, and trust.

If the Board is receiving information, studying updates, and asking questions during Board or committee meetings there should be plenty of opportunity to address emerging issues with the Executive Director openly and professionally. If the Executive Director is performing well, the Board should reinforce the behaviors and continue to build the relationship. If performance is lacking, the Board must address it professionally, respectfully, and formally, if needed, but always allow the Executive to correct performance and fully execute his/her operational responsibilities, unless there has been a serious breach of ethics or compliance, which should be addressed differently.

When the Board Chair or individual Board members don’t understand their roles or choose to ignore them and begin to impose their view of what they believe is best for the organization, or to second guess every move the Executive Director makes, breakdown of trust occurs, and triangulation and unhealthy alliances begin to emerge. Everyone involved begins to calculate and measure their interaction with each other causing the Executive Director’s professional, and by extension, the organization’s operational effectiveness to suffer.

Other unhealthy behaviors include the existence of individual Board member conflicts of interest and refusal to recuse when necessary. Sitting on the Board to gain personal or professional advantage or merely to pad a résumé and holding a belief of personal omniscience is clearly a breach of responsibility.

Unhealthy behaviors on the Executive Director’s part include not sharing important or material information with the Board, not providing adequate support to the Board to help it fundraise and engage in productive committee work and becoming defensive when the Board has legitimate questions. Other non-productive behavior from an Executive Director is sharing too much of the day-to-day information and asking for input and decisions the Board shouldn’t make. Once that door is opened, it is difficult to close it.

Effective communication and trust are at the core of every successful ED and Board relationship. Trust is established when there is absolute clarity around roles and responsibilities and realistic mutual expectations for fulfilling them. Think about your organization and the current state of this critical relationship. What needs to be strengthened? What needs to change? What is your plan for addressing issues to ensure a successful and effective mission-centered relationship?

If you need guidance in having this conversation, we are here to help.

By Marion Lee, CFRE

James M. Greenfield is, for me, the father of modern fundraising processes.  In 1991, Greenfield published Fund Raising: Evaluating and Managing the Fund Development Process which is a must read for anyone entering nonprofit work.  Greenfield began his career in 1962 working mostly within university and hospital systems and managed to publish at least four books on nonprofit fundraising. Most of his work is timeless and even after our 30 + years in fundraising, we often refer to his basic good sense and detailed approach.  We urge you to buy them, read them, and keep them.

In his first book, Greenfield refers to a decision-making process that is guided by what he refers to as the “CRUP test” meaning credibility, relevance, urgency and pragmatism.  Without this process, Greenfield believes that an “organization cannot defend its fundamental arguments for constructing more buildings, expanding its services, improving its quality and financing its future.” According to Greenfield, critical to the success of a capital endeavor is the staff and board’s determination to first closely examine their capital project under the CRUP test instead of diving in looking for “a quick fix, a path to glory or a way to boost their own reputations for success.”

All too true.  Currently there are three traditional phases of a capital campaign which include:

• Feasibility Study: A Feasibility Study allows an organization to solicit input from a group of interested and potentially interested donors and community leaders.  During this phase, lead gifts, leadership and campaign strategy are identified.

• Quiet Phase: The Quiet or non “public” phase of a campaign concentrates on securing key leadership for the campaign. This usually consists of Honorary Chairs, Working Chairs and a substantive Campaign Committee capable of reaching a broad and influential group of potential donors.  The primary role of this phase is to obtain lead individual gifts for the campaign.  

• Public Phase: The final phase of the Capital Campaign is designed to raise the organization’s profile further through the solicitation of a significant number of small gifts from the general community.

We contend that in keeping with Greenfield there is a hidden phase to a campaign that all too often is lost in the headlong rush into the Feasibility Study or Quiet Phase.  The Hidden Phase includes the basic tenents of a CRUP test and is inclusive of good business planning. And, we are finding, that to by-pass this phase will only be regretted later as the lack of groundwork becomes costly in time and lost funding. 

The Hidden Phase 

The Hidden Phase of a campaign involves intense institutional analysis and thought on the part of both the staff and board of directors. This phase may take 9-12 months to complete and, as you will see, builds a partnership with the between board and staff so that at no time in the more traditional phases can anyone say, “Well, I have no idea how we got here or even why we decided to do this.” As a former funder, you cannot image how disconcerting is it to have a board or staff member make this statement, particularly after the organization that they serve has just submitted a request or been granted funding. Here are some of the Hidden Phase steps that should be taken prior to committing to a campaign and entering into the Feasibility Study:

• Define a clear and concise statement of the problem using facts not feelings
• Present the problem to the Board of Directors to gain consensus, approval to seek a solution and request Board engagement in the process
• Assist the Board members in creating the appropriate process (committee, etc.) for them to lead and be engaged in the CRUP analysis
• If this is a building project, conduct a space needs assessment and determine the optimum location. This is also the time to decide whether to buy and build, or to buy an existing building and renovate
• Present the outcomes of the assessments to the Board and gain consensus and approval to move forward by engaging professionals to help find property and design or renovate a building
• Develop architectural renderings and cost estimates 
• Present the outcomes to the Board and gain consensus and approval
• Analyze the organization’s financial status using the past five years so that you can create a business plan to address the potential rise in overhead at the new site and projections for increased revenue
• Present the Board with the financial information and request that they join in determining the following:
  • Organization’s debt tolerance which will then decide:
  • Campaign soft goal
  • When to begin construction (i.e. 70% of goal in gifts and pledges)
• Define basic investment, gift and naming policies
• Create the materials to illustrate the project and communicate a sense of need and urgency

Greenfield says, “Readiness is everything….and readiness is leadership.”  I would like to amend his statement just to say that readiness is shared leadership between board and staff.  This kind of deliberate, thoughtful, inclusive process will benefit the organization by building positive, productive board-staff relations, sound policy, positive self-awareness and eventually, successful capital projects. 

By Covita Moroney, CFRE

A story…

Energized by a fresh, inspiring vision and spot-on strategic goals (carefully crafted at the amazing two-day Board / Staff planning retreat) you hit the office filled with fire-in-the-belly. Determined to bring to life the wonderful vision (after you first check email and voice messages, return a few calls, and sort through the mail) you plan to gather staff and announce the implementation of the organization’s new three-Year Strategic Plan!

Three weeks later, you have finally caught up with the emails and messages. A few minutes before a lunch meeting with the Executive Committee you are searching your desk for the file and notes from the planning retreat. The time has come to start the work, and everyone is looking to you to lead the way to even greater impact. But, where to start? When to start? Who will share the work?

Enter the Operations Plan.

The above story has, to some degree, been lived by us all. This is why, as much as Lee+ Associates delights in facilitating our clients’ work to develop an impactful Strategic Plan, we absolutely LOVE counseling clients when they channel the inspiration into an Operations Plan. Unless and until the goals of the Strategic Plan are placed into an implementation management document — with strategic goals, milestone objectives, and granular action items — only then can an organization succeed in transforming the big vision into reality.

An effective Operations Plan is a management document that does four things:

1. Captures the goals set forth in the planning phase
2. Establishes SMART* objectives that will lead to those goals
3. Holds all players accountable to complete their specific assigned action items
4. Tracks the progress through set start/end dates and team member assignments

Committed to success, our clients have caught the love and embraced the Operations Plan, which can be seen as the “deliverable” of strategic planning. Without this essential tool to put everyone on the same path, doing their part according to the plan, holding all accountable to their commitments and to the calendar, the vision and strategic goals will be difficult to achieve. Without an Operations Plan, the Strategic Plan will likely sit on the shelf.

Most of our Lee+ Associates strategic planning clients are provided an Operations Plan management tool. Out of our commitment to clients’ success, we developed a custom Operations Plan application to manage all levels of the strategic plan implementation. It is a cloud-hosted app, accessible from a web browser (e.g., Chrome or Safari). Clients enter their goals, objectives, and action items – event team assignments can be tracked. Available to any user with a laptop or smartphone, Strategic Plan committee members, Board and Staff are able to log their accomplishments, and view the status of the plan.

Your passion for your organization’s mission is the most valuable asset there is. All of us at Lee+ Associates are cheering for you, and encourage you to channel that passion. Take time to apply a bit of discipline at the beginning of your implementation. Make a Loveable Operations Plan the natural next step after your strategic planning retreat.

*SMART Objectives have five characteristics. They are: Specific, Measurable, Attainable, Relevant, and Time-bound.

By Joyce Penland, CFRE

You’ve no doubt heard the adage about the frequency of capital campaigns: You’ve just completed one, you’re in the middle of one, or you’re planning the next one.  Wherever your organization finds itself, it’s always good to examine your team’s readiness to undertake a significant capital campaign. 

Here are some of “elements of success” that we at Lee+ Associates consider when working with clients that are considering a capital campaign. This is not an exhaustive list but can serve as a framework as you plan and strategize for your next effort.

1. Is your organization perceived as fulfilling a public need that merits support from the public?  In other words, how’s your reputation among your clients, your donors and the community at large?
2. Is there a sense of urgency and understanding on the part of both your internal and external constituents as well as campaign leaders and volunteers of your compelling needs?  Do they share a common commitment to the future of your nonprofit and its mission?
3. Do you have dedicated and influential Board members who will give the campaign wide-ranging and enthusiastic support?  Can they be pacesetters for the campaign?  If not, then examine your Board makeup and take steps to cultivate new members to fill in the gaps.
4. Do you have an Executive Director who recognizes the importance of fundraising and public relations?  Is s/he willing and capable of devoting energy and the necessary time to the campaign?  Start “managing up” if your ED needs training to make public presentations or needs polishing in cultivating, asking and stewarding lead gift donors.
5. Have you recruited a corps of dedicated volunteers to serve as the campaign committee, headed by a capable and influential chair who will devote the necessary time and energy to the campaign?  And will they make stretch gifts to the campaign, setting an example for others to follow?
6. Do you have an experienced, capable development staff in place that is skilled in planning and executing a campaign? 
7. Do you have a history of support?  Has your organization built a broad base of annual support and have you cultivated a sufficient pool of major gift prospects (individuals/corporations/foundations) to be called upon to jump start your effort?  If not, start cultivating them now, asking for their input and listening to their thoughts and concerns.
8. Does your nonprofit have a clear, compelling, urgent, and well-crafted case for support?  Do your needs resonate with supporters?  Can you articulate how the campaign will make a difference to those you serve?
9. Have you considered the timing of your campaign? What’s happening in your community that can have positive and/or negative impact on your nonprofit’s campaign plans?
10. Do you have the budget and technology capable of handling a campaign today? Do you have the processes and procedures in place to produce attractive campaign materials, to adequately record and receipt gifts, to send acknowledgement letters in a timely manner, to conduct campaign events, and to ensure that donors are thanked with the same enthusiasm as they were asked?

Hopefully this list will help guide the necessary conversations you must have with your staff, your leadership, your volunteers, and your donors as plan for future capital campaign endeavors.

If your team needs help, Lee+ Associates has a long history of successfully partnering with nonprofits in the planning and execution of a capital campaign.  Our third-party assessments of your fundraising programs, our educational retreats, our coaching and planning expertise, along with our professional feasibility studies help position nonprofits so that you can remain in tune with your donors and focus your energy on realistic and productive strategies.  Call us today at 210-733-0893 to begin the conversation on your capital campaign.