Thursday, February 27, 2014

Revised Accountability Standards: Changing to Better Serve You

Last year, we piloted a rolling review of the Accountability Standards to ensure that they remain responsive to the changing needs of donors and nonprofits. Through surveys, focus groups and expert dialogue sessions, we engaged a diverse community of nonprofit leaders, donors, grantmakers and academics, making co-created revisions to help nonprofits and donors usher in a new era of accountability.

As a result, we made minor changes to make the standards even more meaningful and useful for today’s philanthropic and nonprofit sector. Some of the changes include:
  • Condensing the Accountability Standards from 27 standards to 25.
The revised Accountability Standards will go into effect April 1, 2014 and will be applied to each organization on a rolling basis as they start new reviews. Nonprofits – don’t worry, your current review and timeline won’t be affected, but we encourage you to become familiar with the revisions so that you are prepared when the time comes for you to renew. The revisions were done with careful consideration and robust community engagement to ensure that the resulting modifications represent a widely-supported framework of strong nonprofit practices. In the coming weeks, we will publish a series of blog posts to provide a more in-depth look at the changes and how they might affect nonprofits and donors.

Along with the revised standards, we will debut a new and improved version of the cloud-based Accountability Wizard that is more streamlined and user-friendly. Changes include easier navigation through the questions and the addition of tools and resources for each standard. The Accountability Wizard fee structure will also change to .002% of an organization’s annual operating expenses. The minimum fee will remain $100 and will be capped at $3,000. This change allows us to continuously improve our services and increases our capacity to serve more nonprofits in a responsive and sustainable way. It is the first time we've ever changed our fee structure, and we'll be revisiting the changes at the end of this year to see how they served the community.

Charities Review Council works hard to build strong relationships between donors and nonprofits so the whole community can thrive. We are committed to continuously improving and taking steps to ensure that nonprofits and donors have the tools to work together toward the greater good. We are confident that these changes are key steps in strengthening the nonprofit and philanthropic sector.

***Join us for a webinar on Wednesday, April 9 to learn more about these exciting changes and how they will affect you!

Thursday, February 20, 2014

More than Just a Box of Cookies

Though the pending snowstorm isn’t any indication, there is one sure sign that spring is near: Girl Scout cookies are for sale! The infamous bright, colorful boxes filled with Thin Mints, Tagalongs, and Samoas have become such a familiar sight that people don’t often think of the cookie sales as a nonprofit fundraiser.

The Girl Scouts was started by Juliette Gordon Low in 1912 with the goal of teaching girls practical life skills. In 1917, an Oklahoma Girl Scout troop organized a bake sale as a service project to finance troop activities. Nearly 100 years later, the Girl Scouts of the USA command a cookie empire upwards of 200 million boxes sold per year. According to the organization, the primary goal of selling cookies is to teach young women goal-setting, decision making, money management, people skills, and business ethics. But there’s no doubt that cookie sales serve as a primary source of income for the Girl Scouts organization, generating more than $700 million in annual revenue.

Here’s what you should know before purchasing a box of Girl Scout cookies:
  • Girl Scouts of the United States of America is a registered 501(c)(3) organization – view their annual report for important information on their programs, structure and finances. 
  • Approximately 65–75% of the profit from each box of cookie goes directly to the local Girl Scout council, with 10–20% going to the troops. The remaining profit accounts for royalties to the national Girl Scout headquarters. 
  • Your box of cookies is not tax-deductible if you keep the cookies. If you leave the cookies with Girl Scouts as a donation or give the cookies to a different charitable organization, you may treat the purchase price of the donated cookies as a tax-deductible charitable contribution. 
Revenue from the sales of Girl Scout cookies has been around $700 million since 1999, based on sales of 200 million boxes at $3.50 per box (price per box may vary depending on region). This incredible success in establishing a sustainable fee for service program is a model for nonprofits. Organizations with earned income retain all the advantages of pure nonprofits—including tax exemptions, ability to receive tax-deductible donations, and eligibility for nonprofit-exclusive grants from major foundations. Generating income diversifies support, freeing an organization from total dependence on philanthropic dollars. Additionally, earned income is unrestricted and can be used however the organization chooses.

Here are some lessons nonprofits of all sizes can learn from the Girl Scouts:
  • Earned income must always directly serve an organization's mission. To remain tax-exempt, a product or service must specifically accomplish the nonprofit’s goals. The Girl Scouts have established an entrepreneurial program focused on five skills that girls acquire through selling cookies, successfully integrating the fundraiser into their mission.
  •  Make sure your product is competitive in the private market. Over the years, the Girl Scouts have built their booming business thanks to decades of smart organizational choices, like knowing when to outsource baking and empowering local councils to make decisions for their region. People buy Girl Scout cookies over and over again.
  • Be responsive to the changing landscape. The Girl Scout cookie recipes, packaging materials, and sales platforms have all evolved to remain relevant and modern as society changes. 
  • Be thoughtful and transparent about your organizational structure. Avoid conflicts of interest by clarifying philanthropic and business goals. All 501(c)(3) organizations must give priority to the nonprofit's stated mission, using caution when pursuing other business opportunities.
When you purchase your Do-si-dos or Trefoils this year, whether it’s to enjoy a treat or support a friend or family member who is a Girl Scout, remember that it’s more than just a box of cookies. Take some time to understand the impact your purchase might have using the criteria above. As donors and nonprofits, we can take note of the way the Girl Scouts organization has integrated cookie sales into their mission and structure, benefiting the entire community.

Do you know an organization that does a great job of building earned revenue into its mission? Tell us about it!

Thursday, February 13, 2014

Top 10 Signs You Work at Charities Review Council

In the spirit of Valentine’s Day tomorrow, we’re spreading some Smart Givers love with this list of common Charities Review Council staff quirks and characteristics. So with that, you know you are a Charities Review Council staffer if:

10. You look up every nonprofit you hear about to see if it’s on the list of the Most Trustworthy Nonprofits.

9. You love to collaborate with community members, both in person and online (twitter FTW!), and you always do it with 'building the pie,' and 'rising the tide' in mind.

8. You geek out over any news story related to nonprofit and donor relationships…especially if it’s on MPR.

7. You take every opportunity to clarify the intent of the Overhead Ratio and explain the importance of the Diversity and Inclusion Standard.

6. You ask your niece/nephew/brother/sister/cousin at least 10 questions about the cause for which they are selling candy bars/wrapping paper/magazines/wreaths.

5. You find yourself wrapped in a cozy blanket by mid-afternoon most days: lofted ceilings + exposed brick walls + big, bright windows + polar vortex = chilly, but awesome, new office.

4. Your friends and family always let you know when they’ve made a donation to a strong, impactful nonprofit - and you never tired of hearing about it!

3. You look forward to Tuesday staff meetings because it means time for sharing mission moments, sector moments, and halal, gluten-free treats.

2. You use words every day that most people only use once a year, calling it 'governance' when you actually mean 'great ways to lead' an organization.

1. You really, truly love witnessing the magic that happens when great nonprofits and generous donors come together to make a difference in our world.

Yes, we love nonprofits, community building, current events, and sharing ideas. We love working with each other and our highly-engaged board members and volunteers. We love getting to know new people and welcoming them into our Smart Givers family.

(Pssst! Can you relate to this list? Want to get in on the love? You can be part of the Council community by joining one of our committees, participating in a focus group, or volunteering for one of our special projects.)

Friday, February 7, 2014

Examining Accountability in a New Era

If you’ve spent any time on our website, you’ve probably seen words like accountability thrown around. While there is no doubt that accountability is extremely important to a strong nonprofit sector and trusting, generous donors, it’s become somewhat of a buzzword. So what does accountability really mean, especially given the new era of instant, online sharing?

A recent Nonprofit Quarterly article examined accountability from various perspectives, that of the wider public, a region, a class of people, and funders. The article points out that nonprofit accountability is nothing new, but the rise in social media makes donor-nonprofit communication easy and instant, while also bringing issues to center stage very quickly.

“Nonprofits are held accountable by any number of entities: their boards, their funders, regulators, constituents, and the general public. The Internet has added another level of intensity and speed in being called to public account, in that it allows groups of stakeholders that might have been unaware of each other’s opinions to hear one another out and potentially join forces."

It is no longer enough for nonprofits to make their financial statements available upon request, or respond to donor inquires about outcomes and impact. Now it is necessary to proactively prepare for stakeholders to ask tough questions, and to ask them publicly. With platforms such as Twitter, Facebook, Instagram, Blogger, and YouTube, storytelling becomes instant and widespread at the click of a button, allowing nonprofits and donors to engage with each other on a new, deeper level. According to the article, “stakeholders are able to announce and promote themselves and their positions on issues while asking what are often legitimate questions at the same time.”

How to be {newly} accountable to your stakeholders:
  • Be proactive and responsive. Many organizations make the mistake of sitting idly by when their supporters ask questions, make suggestions, or call them out. Be transparent about the good, the bad, and the ugly, explaining your circumstances before you have to defend them.
  • Meet constituents where they are. Get involved in the conversations happening in cyberspace – join Twitter (and login more than once a month!) and Facebook, keep blogs and websites updated with news and events, and make sure you are part of the conversations happening, both online and in person, around you.
  • Align your practices and policies with the Accountability Standards. The standards measure much more than financial activity. They represent widely accepted nonprofit benchmarks covering diversity and inclusion, good governance and management, and impact on the community. For that reason, the Accountability Standards are not only great for building donor trust, but also for building up your organization's internal strength and infrastructure. Use the online review report and the Meets Standards seal to tell your story of accountability in a visual, easily-accessible way.

The new era of accountability presents exciting opportunities and sometimes overwhelming challenges for organizations. The demand for answers and information is here to stay, and both nonprofits and donors have the responsibility to embrace the changing landscape and take advantage of new ways to build strong relationships so we can deliver the greater good, together.