Archive for the ‘Nonprofit Governance’ Category

Kony 2012 and Charitable Giving as Part of an Estate Plan

Kony 2012 is the flavour du jour. We all know its basic premise: to make Joseph Kony, the corrupt leader of the Lord’s Resistance Army rebel group once present in Uganda, famous. If Kony becomes enough of a talking point, especially in Washington, it could bring about more U.S. involvement in the campaign for his capture and prosecution before the International Criminal Court in the Netherlands.

The Kony 2012 video, with almost 100,000,000 hits on YouTube, sends a powerful message. By its end, it’s hard to fight the urge to dig deep into your pockets and donate to the Kony cause. However, this Forbes article from the beginning of March can make you think twice about more than just giving fifty bucks to the movement – it considers the implications of including charitable contributions as part of your estate plan.

The article notes the immediate backlash concerning the legitimacy of the video’s efforts. There’s been questioning of Invisible Children’s (the NGO behind the video) spending tactics, support of military action, and neo-colonial approach to the issue. To make things worse, Invisible Children co-founder Jason Russell got in trouble with the law mere weeks after the Kony 2012 video went viral. How can you support a movement when one of its main proponents seems unable to handle himself, let alone the logistics of the campaign?

The Forbes article also mentions Charity Navigator and GuideStar, two websites that, using respective sets of criteria, help you evaluate what charitable programs are most worthwhile to contribute to.

Here are some other ideas on how to ensure that you are making the right choice when it comes to picking a charity to include in your estate, and some guidance on how to incorporate these donations into your estate plan.

First, when it comes to selecting a charity it’s important to look beneath the surface and make an informed decision.  As the Kony 2012 story indicates, nonprofit websites and glossy fundraising brochures often hide stark facts that might make donors nervous.  Ratings systems, such as the ones mentioned above, are a great way for donors to dig deeper.

Another way to do this is to look directly at an organization’s IRS filings. The IRS recently increased filing requirements for nonprofits, requiring more organizations to file 990 forms.  These forms filed with the IRS are public record and give donors greater access to important funding-related considerations such as the organization’s mission statement, financial information, and information on the board of directors.

Our Nonprofit practice works with a variety of nonprofit organizations and private foundations on issues ranging from entity formation and obtaining 501(c)(3) status to nonprofit governance and due diligence on behalf of foundations.

Second—regardless of whether your estate plan includes charitable donations—it’s incredibly important to have well-contemplated estate planning documents in place.  As part of our Estates & Trusts practice, we work with clients to create wills, trusts for children, durable powers of attorney, and advanced directives.

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What Your Nonprofit Can Learn From the “Three Cups of Tea” Scandal

In the early 1920s, America’s faith in the presidency was rattled by something called the “Teapot Dome” scandal, in which President Warren Harding’s administration accepted bribes from the oil industry.

Flash forward to April 2011.  America’s faith in the nonprofit sector is currently in limbo—in something that’s been dubbed the “Three Cups of Tea” scandal.

Author and philanthropist, Greg Mortenson, made waves in the nonprofit sector and media by founding 170 schools in Pakistan and Afghanistan through his Central Asia Institute and documenting his travels and experiences in his popular book Three Cups of Tea.

A recent investigation by 60 Minutes and writer Jon Krakauer revealed that that Mortenson had fabricated parts of his story.  Even worse, 60 Minutes visited 30 of the schools supposedly built by his Central Asia Institute and found half empty or otherwise not receiving support from the Institute.  And according, to a May 5, 2011 article in Slate, additional stories of “ghost schools” have emerged after the program aired.

The scandal has already attracted the attention of Montana’s attorney general (Central Asia Institute is incorporated in Montana).  As Montana Attorney General Steve Bullock said in a statement:  “I’ve been in contact with attorneys for the Institute and they have pledged their full cooperation in addressing our concerns. While looking into this issue, my office will not jump to any conclusions – but we have a responsibility to make sure charitable assets are used for their intended purposes.”

So what are the lessons learned for nonprofits and for donors?

Charity Ratings Aren’t Perfect. 

The Central Asia Institute had garnered high ratings from some large charity websites.  According to the Wall Street Journal, CharityNavigator.org, a ratings website, had previously awarded the Institute four stars (the website’s top rating).  The Institute’s ratings have since dropped and a “donor advisory” has been issued since the scandal broke.

“Like financial markets, ratings are supposed to have a predictive value,” Perla Ni, founder of GreatNonprofits, told the Wall Street Journal. “But we’re still in our infancy. There are going to be scandals in nonprofits, just like any industry.”

The takeaway for donors is obvious—it’s important to look beneath the surface and make an informed decision, based on more than a rating.  Nonprofits should learn not to be content with a high rating but should work to cultivate good donor relations—and base their operations on strong governance, transparency, and accountability. 

Using IRS Filings as PR Tools.

As noted by Guide Star, the IRS’s 990 requirements present an opportunity for organizations to “capitalize on the opportunities created by the increased transparency. If unprepared, they may be unnecessarily subjected to potentially damaging external risks.”   The 990 is no longer merely a tax-exemption compliance measure, but can now be leveraged by organizations as a tool for reaching out to potential donors.  990 forms filed with the IRS are public record, and the recent changes to the 990 requirements gives potential donors greater access to important funding-related considerations such as the organization’s mission statement.  For example, many potential donors might not be aware of an organization’s mission statement, which was previously buried on page three of the 990.  Following the new changes, however, potential donors won’t be able to miss the mission statement, which now appears prominently on page one.

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit www.guidestar.org .  

Consider an Independent Audit.

Self-reported numbers by staff members are obviously not as trustworthy as numbers prepared by an independent audit.  According to an article in the Chronicle of Philanthropy,  “[t]he Central Asia Institute did not have an audit even in 2008 when its net assets exceeded $10 million, it spent more than $5-million, and it generated a surplus of more than $8-million.  The board’s decision to forgo an audit until fiscal 2009, combined with the problem of the small size of the board and the financial self-interest of the charity’s founder and executive director, raise suspicions that it failed to exercise appropriate oversight and might have misused charitable assets.”  While audits are often mandatory for larger organizations, smaller organizations may want to consider retaining an independent firm to conduct an audit, simply for transparency reasons.

It remains to be seen what will come out of this scandal and the investigation to follow.  But the lessons are clear.  Whether your organization is large or small, trust matters.   Although controversies like this one and the Bernie Madoff scandal before it erode the public’s trust in the nonprofit sector, the only way to address this is for organizations to proactively re-earn this trust.

The Ultra Vires Doctrine and Nonprofits: Know Your Plan and Stick to It

It is a well-established principle that the directors of a nonprofit corporation must serve the corporation in good faith and act in the best interests of the corporation.   Any conduct that falls short of this standard runs the risk of being nullified under a doctrine known as “ultra vires.”

The term ultra vires literally means “beyond strength”, or “beyond power.”  In the context of nonprofit corporations, the term is used to describe the manner in which those acting on behalf of a nonprofit are bound to adhere to the organization’s bylaws and articles of incorporation.

Nonprofits often draft bylaws and articles with a focus an organization’s promotion of a specific goal.  Ultra vires helps keep that focus by nullifying agreements and conduct outside of the scope of these documents.  In order to receive tax-exempt status with the IRS, a nonprofit’s articles of incorporation must limit the corporation’s purposes to one or more of the exempt purposes set forth in Section 501(c)(3) of the Internal Revenue Code:  “religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals.”

If the articles include a purpose statement that does not fall within one or more of the exempt purposes, the corporation may fail the 501(c)(3) Organizational Test, which may result in a denial of tax exemption.  Because this risk of exemption denial is there, many organizations include in their articles of incorporation a “catch-all” clause that contains language such as:  “Notwithstanding anything herein to the contrary, the purposes of this corporation are limited to exclusively to exempt purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code.”

Some attorneys recommend a very broad purpose statement in the articles of incorporation.  The reason for this is because, with a broad purpose statement, there is a lower risk that someone acting on behalf of the organization will have his actions voided under the ultra vires doctrine.  Another reason for wording your purpose statement in broad terms is to avoid the need to amend the organization’s articles and/or bylaws every time the organization adds a new program or takes a slightly new direction.

However, your organization may want to employ a more specific purpose statement in its articles or bylaws.  One reason for doing this is to solidify the organization’s mission and to prevent future boards from straying from the organization’s original intended course.

In any event, nonprofits should choose their purpose statement carefully, taking into consideration the goals of their organization and the specific needs the organization seeks to address, as well as the legal issues discussed in this eBulletin, including the ultra vires doctrine.   You should consult a nonprofit law attorney when dealing with these types of questions.

Please feel free to contact Elliott & Davis, PC with all of your questions about nonprofit formations and management.  Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at: www.elliott-davis.com.

Dodging a Bullet: More Than 200,000 Nonprofits Avoid Losing Exemption Thanks to IRS Extension of Filing Deadline

After several weeks of tense speculation that as many as 400,000 nonprofit organizations were set to lose their tax-exempt status, the Internal Revenue Service (IRS) is offering a time extension to more than 200,000 small charities that missed the May 17 filing deadline to file their IRS Form 990.

A 2006 law required nonprofit organizations with receipts of less than $25,000 to file IRS Form 990 for the first time in 2007. If charities fail to file for three (3) years, they will lose their tax-exempt status.

According to a May 18 press release from the IRS: “The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.   So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.”

Speaking on the upcoming guidance that the IRS plans to issue, IRS Commissioner Doug Shulman said “The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact…Filing a tax return for the small organizations is easier than you’d think. It just takes a few minutes to fill out the electronic notice Form 990-N.”

Organizations that have questions or concerns regarding 990 filing procedures and the automatic revocation process should check out the following list of Frequently Asked Questions (FAQs) provided by the IRS.

Although many nonprofits may be unhappy about having to file additional tax forms such as the 990 and at the costs associated with the new requirement, there are certainly good reasons for the new requirement.

As Suzanne Garment and Leslie Lenkowsky of the Center on Philanthropy at Indiana University note in a recent article for the Wall Street Journal, the primary purpose of the filing requirement is to make sure that tax-exempt organizations are, in fact, “doing good” in some way.

Garment and Lenkowsky go on to argue that the IRS can and should continue vetting organizations to make sure they are operating charitably, but they express fear that the IRS and state regulators may feel pressure to deny exemptions based on public anger over “eccentric” tax-exempt organizations (the authors cite as examples a nonprofit women’s roller derby league in Oregon and an organization called “The Red Nose Institute,” which sends red clown noses to U.S. troops overseas).

As the authors recognize, the “IRS and state regulators have sought mostly to ensure that charities behave charitably, not to pass judgment on the relative value of their activities.”  It will be interesting to see if that role begins to shift in the years ahead.

Finally, because it’s always best to plan ahead, we would like to wrap up by highlighting some of the key considerations involved in preparing a 990:

  • Know your mission. Your organization should have a clear understanding of its mission and be able to articulate its mission in a manner that helps maintain its exempt status and attracts new donors at the same time.
  • Know your board. Your organization’s board should be engaged, informed, and independent.  They should be aware of and abide by all rule related to conflicts of interest, self-dealing and private inurement. Board meeting minutes should be duly recorded and kept on file by someone in your organization.
  • Know your budget. Your organization should ensure appropriate use of assets and should develop and implement policies and practices that address executive compensation, support independent financial audits.
  • Know your lawyer. If the advice here seems like a lot to take in, the good news is you’re not alone.  Most smart nonprofit organizations rely on the advice of skilled nonprofit lawyers to help them with these questions and in the preparation of 990 forms as well as other IRS documents. Please contact a nonprofit lawyer before attempting to prepare your 990 or any other documents related to tax, accounting, or governance. Our firm would love to start a new relationship with you today!

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit www.guidestar.org .

Please feel free to contact Elliott & Davis, PC with all of your questions about 990s, as well as nonprofit formations and management.  Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at: www.elliott-davis.com.

Volunteers Wanted: How Your Organization Can Boost Programming By Promoting Volunteerism

Chances are, if you’re reading this, you’ve served as a volunteer in some capacity at least once or twice.    And if modest salaries and grueling hours are a norm within your nonprofit, there’s a chance you feel like you’re volunteering all of the time!

In any event, volunteerism is part and parcel to most successful nonprofits.  Without volunteers to canvass neighborhoods, stuff envelopes, and share their time with the communities served by nonprofits, there’s a good chance many nonprofits would be forced to go under.

Winston Churchill expressed the volunteer spirit nicely when he observed that “[w]e make a living by what we do, but we make a life by what we give.”

The purpose of this post is to look at current trends in volunteerism and provide you with information that your organization can use to further your mission by enlisting the help of volunteers.

One-Time “Day of Service” Emerges as Trend in Volunteerism

With Kermit the Frog as its spokes-amphibian, Disney launched a new volunteering campaign dubbed “Give a Day, Get a Disney Day” in which volunteers who dedicate their time were given a one-day pass to a Disney theme park.   Participants were able to search through volunteer opportunities on the Disney Web site and manage their volunteering accounts.  The campaign, which has now come to an end, was successful—reaching its ultimate goal of finding 1 million volunteers.

According to a recent article in the NonProfit Times, Susan Ellis, president of Energize, Inc., in Philadelphia, said the Disney giveaway and other days of service “validate that you only have to do the minimum” and that, however well-intentioned they might be, they could be sending the wrong message.

With days of service increasing in popularity, the question becomes one of quality versus quantity.  Some might argue that efforts to promote volunteerism need to be more sustainable—focusing more on fostering long-term commitments to a cause rather than generating large turnouts.   But, on the other hand, many nonprofits would welcome any new volunteers—even if they were only there for a day and only to get the free Disney tickets.

How to Grow Volunteerism in Your Organization

Regardless of where you stand in this debate, your organization, like most nonprofit organizations, is always looking for more volunteers.  So what are some practical tips you can use to attract and retain volunteers?

First, figure out what roles you need to fill with volunteers.  Depending on the nature of your activities/programming, this could be anything from picking up trash on sidewalks to performing surgeries at no cost.  The task of determining which positions will be filled by paid staff and which will be filled by volunteers is not an easy one.  Clear communication and full participation among all board members is a key part of this process.

Second, once you have identified roles for volunteers, the next step is recruitment.   There are many different strategies that could be employed here.  Larger nonprofits that can afford it may want to consider using an advertising campaign as a tool to attract volunteers.  Smaller nonprofits with tighter budgets can still draw a lot of attention to their volunteer opportunities by using free social media tools such as Facebook.  Organizations both small and large may also want to consider teaming up with other nonprofits and for-profit organizations by taking part in a “day of service” program or other coordinated volunteer efforts.

Finally, once you have attracted volunteers, you will need to devise a strategy for retaining them.   Incentive programs such as the “Give a Day, Get a Disney Day” program are good at attracting volunteers, but they might have limitations in terms of retaining volunteers.  Organizations interested in retention will want to spend some time discussing different ways to recognize and reward volunteers.   Some ideas include: volunteer gifts, recognition in a newsletter or website, volunteer appreciation dinners, or other special events.

Some Good Economic News (Finally!)

On a somewhat different note, there’s good news coming out of the Chronicle of Philanthropy earlier this month.  According to a new poll of more than 500 donors, donors are showing increased confidence in their ability to give to charity as the economy shows signs of stabilizing.    Almost half of donors surveyed said they would give at least as much as they did in 2009.   According to the survey, the majority of donors said the economy was the main influence on their giving.   The most robust outlook for nonprofits was in the faith-based sector.  According to the survey, donors to religious charities scored 94.9 on a 100-point scale, compared with a score of 88.4 for nonprofit groups as a whole.

Innovation in a Tough Economy: Hope for the Nonprofit Sector

There’s been a lot of talk over the last year about the impacts of the current recession on the nonprofit sector, and I’ll be the first to admit that I’ve chimed in from time to time with my two cents through this eBulletin.  A great deal of this conversation has taken a “how to do more with less” approach to the current situation.  And although this conversation offers a lot of valuable lessons that nonprofits can use to help stay afloat in the current economy, it only tells part of the story.

As many nonprofits know, the picture is much more dynamic.  At the same time private foundations and governments are being forced to tighten their belts, the rough economy has, quite noticeably, created an increase in demand for certain services offered by nonprofits.  This increase in demand opens up new channels of charitable giving that may not have been open prior to the recession.  Whether it’s an individual donor who feels inspired to help neighbors who are forced to get by on less, or a corporate charitable giving program that steps up its philanthropic efforts in response to a tragedy, someone is making sure that these newfound needs do not go unmet.

The “how to do more with less” story also overlooks the fact that there is light at the end of the tunnel.  The current recession will not last forever, and it’s important to focus on the broader picture of how we are going to transition out of this recession and what the new landscape will look like for you and your organization.   The purpose of this Nonprofit Law eBulletin is to highlight some examples of opportunities and strategies that will help your organization thrive in both the short run and the long run.

Recession Rule Number One: Adaptation is Everything

It may seem as though grant money—whether through private foundations or through government support—is simply becoming increasingly scarce.   This is not entirely true.  Although some sources of funding are shrinking overall, many others are just reevaluating their grant making strategies in light of society’s changing needs.   We have recently seen many foundations emphasize funding to meet basic needs in light of the recession.

But let’s say your organization does not run a soup kitchen or a homeless shelter.  How do you compete for grants when foundations are shifting their attention to providing basic needs to those struggling in the current economy?

One solution might be to re-frame your organization mission in light of recent social and economic changes.  Take the field of animal advocacy, for instance.  With more grant money going to meet basic human needs—food, shelter, health care, etc.—it may seem increasingly difficult for an animal advocacy group to secure much needed funding.  But organizations such as Foreclosurepets.org have found a way to bridge the gap between helping animals find homes and helping people faced with economic uncertainty.  The website serves as an online forum where people facing foreclosure can find a home for their pet.

Even if your organization’s programming doesn’t have a direct link to the effects of the recession and its economic effects, there are still opportunities for you to tap into other pressing social needs such as the access to health care and environmental sustainability.  The bottom line is to find a way to meet society’s most urgent needs through your organization’s activities—a strategy that not only help you do more good for the communities you serve but will also open you up to more funding opportunities.

A Lesson in History

If you look back at the Great Depression of the 1930s and other economic recessions, you will see two very promising patterns that should offer encouragement not only for the nonprofit sector, but for the economy as a whole.

First, and most directly, there is the simple fact that when times are tough, the nonprofit sector has historically risen to the occasion and helped those in need.  According to a 2005 paper from the National Bureau of Economic Research, charitable giving by religious organizations appears to have risen during the Great Depression.

Second, research suggests that there is generally more innovation during recessions, which can be seen in an increase in startup companies.   According to a 2009 paper from Ewing Marion Kauffman Foundation, about half of future Fortune 500 companies were founded during a recession.  This historical fact not only suggests a brighter future for the economy in general ; it’s also a sign that we are likely to see increased innovation in the nonprofit sector as well.

The Way Forward?  It’s Innovation

When Bill Gates talks, people listen.  And for good reason: he has run one of the most successful technology companies and currently serves as co-chair at one of one of the largest private foundations.  The Microsoft founder and Co-Chair of the Bill & Melinda Gates Foundation recently issued his second annual letter.   In the letter, Gates argues that innovation argues that investments in science and technology are essential to achieving a wide variety of charitable ends ranging from global health to public education.  Gates argues that, in order to make private donations and government aid (both of which are often limited) more effective, we need to encourage new innovations and technologies that will facilitate the daily operations of nonprofit organizations.

All I Want for Christmas Is… a 990?

It’s that time of year again.  Yes, we realize the holidays are here, but (being the hopeless nonprofit lawyers that we are) we actually had tax and governance issues on our minds!

Although the holidays will provide a much-needed break for many of us, nonprofit organizations everywhere will find themselves spending these last few weeks of 2009 and the early part of 2010 thinking about the tax, accounting, and governance issues involved with transitioning into a new year.

The most noticeable change for organizations in recent years is probably the newly revised IRS Form 990, “Return of Organization Exempt from Income Tax,” which nonprofit organizations began filing for the 2008 tax year.   In this post, we hope to share with you some ways to capitalize on the IRS’s recent 990 requirements by helping you find the right questions to ask yourself as an organization.

Although there’s a tendency to see any additional paperwork as a negative, there are actually some good reasons for your organization to embrace the new 990 as an opportunity to further your mission.

As Joel Wilson noted in an article for Guide Star, the IRS’s new 990 requirements, with the right preparation, organizations will be able to “capitalize on the opportunities created by the increased transparency. If unprepared, they may be unnecessarily subjected to potentially damaging external risks.”

The new IRS requirements mean that the 990 is no longer merely a tax-exemption compliance measure, but can now be leveraged by organizations as a tool for reaching out to potential donors.  990 forms filed with the IRS are public record, and the recent changes to the 990 requirements gives potential donors greater access to important funding-related considerations such as the organization’s mission statement.  For example, many potential donors might not be aware of an organization’s mission statement, which was previously buried on page three of the 990.  Following the new changes, however, potential donors won’t be able to miss the mission statement, which now appears prominently on page one.

So what are some things your organization should think about when preparing its 990?

  • Know your mission. Your organization should have a clear understanding of its mission and be able to articulate its mission in a manner that helps maintain its exempt status and attracts new donors at the same time.
  • Know your board. Your organization’s board should be engaged, informed, and independent.  They should be aware of and abide by all rule related to conflicts of interest, self-dealing, and private inurement. Board meeting minutes should be duly recorded and kept on file by someone in your organization.
  • Know your budget. Your organization should ensure appropriate use of assets and should develop and implement policies and practices that address executive compensation, support independent financial audits.
  • Know your lawyer. If the advice here seems like a lot to take in, the good news is you’re not alone.  Most smart nonprofit organizations rely on the advice of skilled nonprofit lawyers to help them with these questions and in the preparation of 990 forms as well as other IRS documents. Please contact a nonprofit lawyer before attempting to prepare your 990 or any other documents related to tax, accounting, or governance. Our firm would love to start a new relationship with you today!

In general, it very important that all nonprofit publish their 990s in some manner.  This may be done in one of two ways—either by making 990s available via the organization’s website or through GuideStar, a service that enables nonprofits to disclose various information.  For more information about GuideStar, visit www.guidestar.org .

Please feel free to contact Elliott & Davis, PC with all of your questions about 990s, as well as nonprofit formations and management.  Elliott & Davis is a full service law firm with expertise in the areas of nonprofit law, civil litigation, corporate law, real estate law, estates & trust, immigration law, entertainment law, civil rights law and domestic relations law.  For more information about these or any of our other practice areas, please visit our website at: www.elliott-davis.com.

Happy Holidays!

How to Cope with the Struggling Economy by Embracing Trends within the Nonprofit Sector

Despite some recent positive signs, it’s no secret that the economy is still in bad shape.  It’s also no secret that the current economic recession has taken its toll on charitable foundations and nonprofit organizations.  The purpose of this post is to share with you some recent trends in the nonprofit sector that may represent valuable opportunities which could help your organization avoid feeling the effects of the recession.

Social Networking

Everyone is talking about it—but how can nonprofits make use of social networking in carrying out their charitable purpose?  Here’s one example.  A new video sharing site launched this month, called World Flix, is using the power of online video to bring personal messages from places like Uganda and Haiti directly to the laptops of prospective donors.   Donors can browse video messages, viewing messages and making donations in just a few clicks.  World Flix’s founder, Laika Grant Mann , is excited about the prospect of using online video sharing as a fundraising tool.  As Mann told the San Jose Mercury News, “[…]by bringing together video clips, grassroots organizations and online donor pools, World Flix can be the means to changing the world through micro grants one video clip at a time.”

So which social networking tools should you use?   The answer depends largely on your organization’s mission.  If your message contains strong visual components, online video sharing sites such as YouTube would make be a good fit.  If you are concerned with expanding your range of contacts, consider using Facebook or LinkedIn.  If your organization wants to provide regular updates to others, a blog or a Twitter account would help you achieve this.

Which tools are members of the nonprofit community currently using?  The nonprofit resource group, idealist.org, recently published results from its survey of idealist.org users’ social media habits.  The survey found that 27% of respondents were on Twitter, and 21% were on MySpace.  55% of respondents actively post to these networks, compared with 44% who were passive observers.  Between 51% and 48% of respondents indicated that they read blogs.

Cause Related Marketing

Chances are, if you don’t own a Livestrong® bracelet or a (RED)™ branded product, you know someone who does.  Cause related marketing continues to grow in popularity and is showing no signs of slowing down.  According to a report from IEG, a company specializing in sponsorships, North American companies are expected to spend a total of $1.55 billion on cause-related partnerships in 2009.  This amount represents a 2.2 percent increase from 2008.

In the current recession, cause related marketing could be especially beneficial to basic need charities.  According to a recent article in the Philanthropy Journal, basic need charities such as Share our Strength, an anti-hunger group, have had particular success with cause marketing.  Share our Strength has seen its cause-related revenue jump 15 percent through partnerships with companies such as AT&T and Hickory Farms.

Cause related marketing is a great way to boost your organization’s revenue by reaching out to charitable consumers in a way that resonates with them.  How can your organization take advantage of cause related marketing?  You can start by taking a look at the Foundation Center’s introduction to cause related marketing, which is full of valuable information and resources.

Micro Giving

When it comes to fundraising, many nonprofits tend to “think big,” pursuing large grants from private foundations and governments.  Recently, however, there’s been a trend toward “thinking small.”  This small-scale “micro giving” takes a couple of forms.

First, many nonprofits are forging strategic partnerships with retailers that allow the retailer’s customers to make very small donations to the nonprofit in a convenient manner.  For example, Petco, the large pet supply chain, created a program that encouraged customers are able to “round up” their purchase to the nearest whole dollar.   All proceeds from the program went to local spay/neuter focused animal welfare organizations.

Other nonprofits are partnering with social networks such as Facebook that enable users of the social networks to make small donations online to a charity of their choice.  Facebook allows users to give online “gifts” to one another, with the majority of the nominal fee, often around $1.00, going to the selected charity.

Although a July 14 info graphic in the Economist observed the good news that charitable giving among wealthy individuals has not been hurt by the recession, if your organization is like most organizations, not all of your donors are wealthy.  Micro giving provides an extraordinary tool for reaching out to these donors where giving is convenient and affordable to them.

Conclusion

Despite the tough economic times, it is clear that there are still a variety of opportunities for your organization to generate more revenue and expand your capacity.  Which of these trends holds the most opportunity for your organization?  The answer depends on many factors, including your organization’s needs, goals, and expertise.  As always, we are happy to consult with you about any questions you might have.