pic from PBS HAWAII.ORG

The lack of sufficient improvement in the education system has given rise to charter schools which function as semi-governmental entities.  These charter schools are more accountable to higher standards, creating results and delivering what the market forces want from the education system.   

While district schools have a school committee that is elected by the voters, a charter school has a board and staff that are accountable to the students attending the school, as well as to their parents.  Each student is the customer and the educational achievement of each individual student is the goal.  That is what is called choice.  If the charter school does not adequately meet the needs of the student then the student has the right to go somewhere else.  The end result is that the charter school loses the funding attached to the student. 

Some larger urban district schools have begun to allow students to change their school, but have run into the problem that the schools being saught after are full.  Students seeking slots at charter schools with successful records have found a similar problem. 

The fact that some district schools have turned to setting exams to be admitted to some of their schools seems to go against equal access to an education.  Charter schools are prevented from taking such action and I am in agreement that no student should have to take an exam to get into a public school. 

The one fact that is hard to overcome is that there is not enough room for every student to go to the school of their choice.  The result is a lottery system, and luck plays into whether a student gets what they consider to be the best education. 

“The Race to the Top” should create opportunity to shut down low performing schools and reinvent them with the high expectations of performing schools.  If the statistics show that it takes at least an associate’s degree to obtain a job that pays a living wage, why would anyone allow an educational system to do less?  Allowing students to graduate with a D is not preparing students for college. 

Charter schools represent an opportunity to bring the higher standards to education and hold specific public entities accountable.  It is faster and cost effective.  Choice in the public education system is the fastest way to change it across every state and local educational authority. 

pic from PBS HAWAII.ORG

The “Race to the Top” initiative for education has the opportunity to make a major impact for the long term by learning what states and local educational authorities did with their stimulus money.  The question should be asked:  Will there be more of a lasting effect on education by giving the money to a district school or to a charter school? 

Those that changed the rules by lowering standards to comply or by supplanting federal monies for what would have been state funding or by refusing to participate show what the commitment is to performance and the economic strength of the country. 

The pattern that has been common among charter schools throughout the country is that regardless of the fact that charter school obtain fewer funds than school districts, the charter schools are able to meet or exceed the school district’s academic performance in most cases.  The first and foremost difference is that charter schools are creating brand new school facilities without taxpayers bonds.  It is through fundraising and fiscal management that this has been accomplished.  The second type of school facility is through renting old (private or public) schools, renting office space, renting mall space, renting warehouses or college space.  Charter schools, while pubic entities, are managed by a small group and are able to make decisions fairly quickly to get a facility negotiated and created into a school. 

The other aspect of a charter school is that it is much more open to the community taking an active role in the school.  The board of the school and its leadership actively want parent and student participation.  The charter school has a larger number of volunteer, work-study and internship opportunities.

pic from Hiking Artist

Finding that one idea for your nonprofit to build upon for sustainability is within the organization’s means of finding it.  Create your own solutions.

1. Print out by vendor the total dollar amount you spent in the last two years. 
2. Now check off whether any of these vendors promote recycling the products you purchased.  If the vendor will not recycle you should request that they do so or switch to someone who does.
3. Buy more that is locally made.
4. Come up with your own recycling program. 

Just a few ideas:

• Replace bottled water with a filtered watering system
• Return printer cartridges for a store credit
• Dedicate a location for returnable bottles for the office coffee supplies
• Have paper recycling
• Reuse the other side of the file folder or use a label

You will be surprised the amount of money that is saved each year and the impact the nonprofit has on lowering its carbon footprint.  So if you are not already doing something, what are you waiting for?

pic by Bearman, 2007

The selection of candidates for elected offices seems to have created a new type of citizen calling themselves the Tea Party Voter.  They represent those tired of hearing the same promises and inaction by those elected.  While the voters look to make change in the government many nonprofits are looking to turnover their leadership.

It looks like government should take a better look at nonprofits for examples of how to lead and make change.

The ability to know when to hand over the reins of a nonprofit organization one created is not supposed to be easy.  It is a lot harder when it is not done in a planned manner.  The heart and soul of a nonprofit usually starts with its leadership.  There are a few nonprofits that were started by a community, a group of dedicated individuals or a cause, but in reality they survive with the leadership that represents the passion of why the nonprofit was formed.  The board of the nonprofit has an equally important role to play in the planning of succession.

Nonprofits should not think of succession planning as being unique to their sector.  All corporations, regardless of their corporation type, have to deal with succession planning eventually.

One of the key decisions to this planning is to groom the successor to assure they have the passion and the ability to bring the organization into the next century.  Unless the successor is from within the organization, the first year will be about the individual learning and living the mission of the organization through the eyes of the board, founding leaders and the community they serve. 

Another key decision is the transition between the old and new leadership.  I would suggest that first the day-to-day operations get passed to the new leader of the nonprofit.  Have the previous leader concentrate on courting the nonprofit’s supporters and assuring a role for them as the nonprofit enters into its next stage. 

The use of a merger as the succession plan is an exit strategy to use when the nonprofit is at a loss to replace its founding leader and does not have the heart or the ability to agree to a replacement. 

Planning and implementing change is necessary for the nonprofit to evolve and adjust to the market place.  While it may be hard emotionally to implement, inaction can lead to failure.  A severe recession is what it took to show which nonprofits were prepared to make decisions and which ones were not.  It also showed nonprofits where their true strengths and commitments were.  The advice is to make strategic planning an annual event.  A nonprofit will never know when its importance will be paramount to its survival. 

Strategic planning is something that many nonprofits talk about doing but never do.  Part of the problem is too many people doing the talking and no one strong enough to take the leadership.  This results in many actions related to government filings to not be completed.  Recently the IRS has stated that “Exempt Organizations:  Status Revoked for Not Filing Annual Return or Notice.”
 
Most tax-exempt organizations, other than churches, must file a yearly return or notice with the IRS.  If an organization does not file as required for three consecutive years, the law provides that it automatically loses its tax-exempt status.  Loss of exempt status means an organization must file income tax returns and pay income tax, and its contributors will not be able to deduct their donations.

What must be filed this year depends on the organization’s financial activity:

Financial activity filing requirement
 
Gross receipts normally?  $25,000
Note:  Organizations eligible to file the e-Postcard may choose to file a full return.  990-N (e-Postcard)
Gross receipts < $ 500,000 and
Total assets < $1.25 million 990-EZ or 990
Gross receipts?  $500,000, or
Total assets?  $1.25 million 990
Private foundation (regardless of financial activity) 990-PF

Additional information

So at a minimum check to make sure your IRS filings are in order and compliance with your state is in order.

The lack of filings has created tax liabilities and penalities for many nonprofits.  

pic from Spear

Nonprofits or a business at times are in a moment of excitement or caught up in the excitement of others or the reaction of others and make choices based on external influences.  A nonprofit should always wait a day before jumping into a decision that has not been vented internally with the pros and cons.  The organization may be excited today about a decision and everyone feels good but tomorrow will always come.  Tomorrow ultimately brings the reality of the decision to make everyone feel good as a having been the right or wrong choice for the strength of the organization. 

Nonprofits in the last two years have struggled between using cash reserves, furloughing people or laying people off.  I remind nonprofits that using cash means that the organization is deciding to reduce their ability to have a back up plan if things get worse.  While reducing staff hours or laying staff off is a hard emotional action, an organization’s viability has to be decided first.  It is better to be able to increase hours or hire people back or hire new employees than to go out of business.

In the moment of government cutting or donors reducing their giving there is the clamor that there are too many small nonprofits.  I promote the opposite should happen to really obtain the biggest impact of each dollar.  I think there are too many large nonprofits. 

Small for profit businesses are the strength of the US economy and the thousands of small nonprofits I place under the same umbrella.  The $100,000 plus salaries of larger nonprofits reduces the impact they have on the economy.  Each $100,000 can employ at least three individuals to provide much needed services and bring the money directly back into the economy. 

 pic from Spear

The one thing I hope nonprofits have begun to take away from the recession of 2008-2009 is that diverse funding sources are critical to their long term viability.  Nonprofits that have taken the long term view evolve their business model in ways to be more efficient and measurable, to be able to self-finance a base amount of programming.  The nonprofit industry has reached an evolutionary milestone in the business model.  History shows that a particular model of business must evolve beginning around its 30th year in order to stay viable.  I would state that the current models of 501 c 3’s are celebrating their 35th year.  As the original team retires from these nonprofits, the board should take a very logical long view of the future of the organization.  Where does the organization want to be 5 years from now or 10 years from now?  If the board wants a new leader to figure that out that is fine too, but it needs to be clear when making that critical hire.

pic from Spear.  Check out his pics.

The beginning of a nonprofit starts with a grassroots effort to build adequate support or an overwhelming amount of support that needs to be organized.  It is the same for creating any business model.  The biggest mistake is not taking the time to develop a business plan and a strategic plan to implement the business plan. 

There are many benefits to starting the effort of a business out of one’s home, but eventually there is a need to balance the success of the business and one’s personal life.  It also takes a well-organized, disciplined individual to accomplish work at home. 

The creation of a nonprofit board that is involved in providing priorities and direction can help in the measuring of whether the individual is disciplined enough to balance a work at home effort and the goals of the organization. 

pic from Johnalanbirch

The use of outsourcing companies or consultants does not mean the management team or the board are no longer responsible.  However, make sure the contracts are clear that the outsourcing is found to be at fault and that they cover the costs of any penalty and must document the reason for the error.  Nonprofits should think of the outsourcing operation as an element that must report to the designated management team member.  This team member is then evaluated based on how they would manage any employee or project.  

If administrative costs are above 12% a nonprofit should seriously consider outsourcing administrative functions.  In 1994, the state of Massachusetts signed approximately $20 Billion worth of program services and contracts with nonprofits across the state.  In 2001, the state signed approximately $29 Billion worth of the same contracts, meaning that overall, state spending increased a little more than 30% over those seven years.  Over that same time period, the number of nonprofits contracted by the state increased from approximately 6,400 to 8,600, a 25% increase.  It was during this time period when the government increased spending at a faster pace than industry growth that providers were not forced to be as efficient as possible.  In the years between 2000 and 2001, the economy began to decline.  There is a 7.5% increase in nonprofits, but only a 3% increase in government spending.  The explanation is that social service and nonprofit advocates are pushing for greater, more focused quality care and/or outcomes, and thereby encouraging the opening of new, community focused non-profits.  Meanwhile the state is seeing cuts in revenue.  The end result is a squeeze on the industry forcing non-profits to operate as efficiently as possible.  Nonprofits need to set a ceiling on their administrative expenses to compete better.  Outsourcing provides the means to control administrative expenses easier.