Nuts and Bolts: Maintaining Nonprofit Infrastructure

Salaries and benefits, facility costs and maintenance, fundraising expenses, technology upgrades - these are the nuts and bolts of running a nonprofit organization.

Nonetheless, most nonprofits fail to consistently plan for and fund basic overhead costs - for these reasons:

• Government contracts generally allow grantees to use no more than 15% for operations, finances, human resources, fundraising, and facility costs.
• Foundations are just as rigid, allowing on average 10-15% for overhead.
• Nonprofits must prove, based on IRS Form 990 information, that overhead and fundraising costs are low in order to receive funds through United Way.
• Most available grant funding focuses on time-specific projects, rather than ongoing operating expenses.
• According to the Better Business Bureau's Wise Giving Alliance, more than half of adults feel nonprofits should spend less than 20% on infrastructure - and the majority often makes choices based on this assumption.

On top of this, the current recession has forced many organizations to cut back even further in order to maintain programs. A survey of 100 executive directors across the country by the Bridgespan Group found that 56% were planning to reduce overhead spending.

There's nothing sexy about ongoing operating expenses yet no organization can exist without the funds to pay for them. And failing to designate money for overhead can be devastating:

• Your key staff people become stressed out, overworked, and underpaid
• Staff salaries lag behind the market, leading to sticker shock when someone leaves
• Your staff is not trained in up-to-date procedures and technology
• Your buildings, fixtures, and furniture deteriorate
• Your essential technology - computer hardware and software, copy machines, phone systems - dates from the dark ages

But faced with pressure to meet the demands and expectations of funders and donors, nonprofits consistently make do with less, in fact making a point of how little they spend on basics - while under-reporting administrative expenses on 990's and fundraising materials. Thus, supporters and funders don't know what it truly costs to run a successful organization (note that overhead rates in the for-profit world average around 25%). It all becomes a self-perpetuating cycle.

How can nonprofits buck this trend? To begin with, start speaking the truth about the actual costs of doing your good work. Advocate with funders and donors about the importance of basic expenses as the foundation for accomplishing your mission. Evaluate if it even makes sense to apply for a grant, especially given potential reporting and audit costs attached. See if you can negotiate with foundations about their expectations. Factor in realistic overhead expenses in any grant application and all budget projections. Be sure to include line items for technology, facility, and salary upgrades in your annual budget and strategic plan. And work towards developing relationships and strategies with individual donors to encourage and value unrestricted giving. Educating your donors about how investment in infrastructure benefits the organization's clients could be the most important thing you can do to further your good work.

Viva los Volunteers!

2009 was a tough year for the economy and charitable giving - but it was a boom year for volunteering.

A recent study by the Corporation for National and Community Services indicates that more than 63 million Americans - almost 27% of the population - gave their time as volunteers helping nonprofit organizations in the last year. This represents the largest single-year jump since 2003. About 8.1 billion hours of service were donated, valued at approximately $169 billion.

These figures from 2009 defied the expectation that when the economy goes bad, people just want to take care of their own families and close friends.

The largest percentage of Americans - over 30% - volunteer at churches or religious organizations. But social service agencies saw the number of their volunteers go up from 8.4 million in 2008 to 8.8 million in 2009. Note that this study did not measure all the people who volunteer at schools or helping out neighbors.

And note that the most popular volunteer activity (27%) was fundraising!

There are many factors that may have contributed to this wealth of volunteers:

• The president and first lady's emphasis on the value of volunteerism
• A large number of jobless people hoping to gain experience, skills, and contacts (and with the time to do so)
• A growing emphasis on volunteerism, including required volunteer hours for graduation, at high schools throughout the country
• People short on cash choosing to continue to support the causes they care about by giving their time
• Improvements in the way nonprofits recruit and retain their volunteers
• The breadth of the global downturn acting as a catalyst for people to be more understanding about the plight of others

Volunteering is a great way for people to contribute to a good cause while having fun, gaining work experience, and broadening their community. For cash-strapped nonprofits with staff stretched to the limit in these challenging times, volunteers provide absolutely vital services. At the same time, these volunteers are more likely over time to make charitable donations.

With the recovery from the global downturn moving at a snail's pace, now is a good time to evaluate your volunteer program, be sure to thank your dedicated volunteers, double your outreach efforts, and work to increase the number of people actively involved in supporting your good work with their donated time.

Giving Good Meetings

Are your meetings endless and unproductive? Do you dread the approach of your next board or committee meeting? Are commitment, creativity, and attendance dropping? Here are some guidelines for making your meetings more constructive and fun:

• Do a meeting reality check. If you didn't have to be there, would you go to your meetings? Think about meetings you have attended that have been effective, and use them as a role model.

• Don't hold a meeting just to have a meeting. Could your business be accomplished more easily and appropriately via email, or in an executive session? If most of your agenda involves simple reporting, consider alternative methods of communication - or just give your group a month's vacation.

• Avoid Robert's Rules of Order. Did you know that Robert's Rules were developed by an Army officer in 1876? It's not 1876 anymore, and you are definitely not in the army. Robert's Rules are rigid and restrictive. And contrary to popular opinion, there is no legal requirement that requires non-governmental nonprofit organizations to follow them. Instead, work with your Board to develop simple procedures and rules of conduct that are appropriate to your organizational culture.

• Stick to a timetable. After two hours, no one attending any meeting will be paying much attention or at their best. Establish a timeline for your discussions, appoint a timekeeper, stay focused and on task, and get out of there in no more than 120 minutes.

• Provide thorough and clearly written materials in advance. And be sure to remind committee members if they have assignments to complete prior to the meeting. Then pray that everyone will read the notes and come prepared.

• Allow some time for fun. Nothing improves a meeting more than a good laugh.

• Finish with a summary and action plan. Always designate the final 5-10 minutes to summarizing what has been accomplished and coming to agreement on next steps, including a timetable and who has volunteered to do what.

Meetings get a bad rap, but there are good meetings and bad meetings. Take the time to make your meetings fun, focused, effective, and productive - and turn them into important tools towards creating partnerships and community, sustaining volunteers, supporting staff, and furthering the mission of your organization.