Nonprofit Financial Stability in Tough Times
Donovan Management, Inc. Special Report
Nonprofit Financial Stability in Tough Times
Interview / Insights
Joe Bert, President & CEO
Certified Financial Group
Co-Founder of the Donor Motivation Program
Altamonte Springs, Florida
Q. Board members of nonprofit organizations are struggling to keep money flowing in this economic downturn. Many can’t wait until their term is over and will leave the strategic question / solution to financial stability to new and fresh board members. After all, who wants to go through another cycle like this one? What advice do you have for the new board?
Bert: First you have to recognize that nonprofits are divided into three categories – those with sufficient staff, limited staff and no staff. The first group has the luxury of thinking strategically and looking out on the horizon for several years and saying, “We aren’t going through this again.” The others are challenged with keeping the cash flowing, and if they can find time, to engage in strategic planning. In the latter group, that has no staff, everything is driven by volunteers.
Nonprofit boards must make plans to be here tomorrow to fulfill their mission. Otherwise they will go out of business. This means making plans for long term financial stability.
Q. What is the key to long term financial stability?
Bert: Recognizing the financial impediments in tough times. Too many nonprofits are in the “business as usual mode”. They rely on special events, government grants and direct mail donors. In tough times sponsorships for events dry up, governments cut back and some donors give less. This causes what I call the SPS — Shortfall Panic Syndrome. What makes matters worse is that most organizations in Central Florida never do get around to focusing on the long term. That’s where planned giving comes into play.
Q. So the key is having an endowment? But if so, how can that help given the low interest rates today?
Bert: At today’s rates, say 1% return, it would take $10 million to earn $100,000 in an unrestricted endowed fund. As rates go up, so do the earnings. The question is, when does an organization get serious and start building up that endowment in anticipation of better rates of return in the years ahead? Again, it is a strategic board issue. Frankly, I think the former chairs of the board would be a good group to convene to start this process as they have organizational history and insight. And, they can devote the time to the strategic planning process because they aren’t attending monthly or quarterly board meetings.
Q. What is the key to getting started on building up a financial cushion, reserve or unrestricted endowment that can fund unplanned, unmet and unanticipated needs of the organization?
Bert: Focusing on the donors you have now. They are the best prospects for future and planned gifts. Put them first. Make their financial planning goals first and foremost. Discuss with them how they want to take care of their spouse, their family and then leave a legacy of giving through a planned gift to your organization. Most folks will not give to their capacity until they are assured that they are not jeopardizing their family’s financial security. This is why comprehensive financial planning generates far greater planned gifts.
Q. How can nonprofits do this with limited or no staff?
Bert: They can’t. It takes an investment of time and money. It also requires letting go and working with professionals in planned giving. Too many groups think they will lose control of the donor once they are working with an outside professional. They say they will run their own planned giving program. Trouble is, they don’t get around to it because of too many distractions. Sometimes this means their donor becomes a prospect for a competing organization which is doing planned giving. You want professionals that put the donor’s interest front and center, period!
Q. What does a good planned giving professional do for the donor?
Bert: Review ways to increase their income and not assume present investment strategies are the correct ones. Second, provide future income for their family. Third, define their giving legacy goal. Last — give less to Uncle Sam.
Q: What programs do you offer to help nonprofits with their donors?
Bert: The Donor Motivation ProgramTM offers to planned giving/development officers and nonprofit organizations, a qualified and charitable-minded catalyst for motivating individual donors to meet community needs while achieving their charitable goals.
We offer a series of presentation services to educate and inform potential donors to view their wealth as a conduit for leaving a legacy based on ‘fingerprints’ of their life values. Our donor motivation team speaks with authority on the impact of philanthropy using insightful examples based on the knowledge and experiences of well-known authors, industrialists and wealthy families from America’s past.
Using layman’s language and illustrated concepts, donors can easily understand how taxes paid under the U.S. Tax Code can be redirected as voluntary social capital instead of as involuntary taxes, and how supporting charity during one’s lifetime leaves not only a legacy, but wealth to future generations.
For more information contact:
Joe Bert, President & CEO
Certified Financial Group & Co-Founder of the Donor Motivation Program
Altamonte Springs, Florida
407-869-9800 / 800-393-9900
www.FinancialGroup.com
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