Category Archives: Financial Management

Are You Prepared? The Breach of Data Security

Adrianne Geiger Dumond



I recently wrote about the benefits of data as a public relations tool – especially when the IRS Form 990 is available to the public. I would be remiss if I didn’t address the possibility of such data being hacked. “The philanthropy community is still catching up to the digital security needs faced by civil society” says two security experts, whose article is noted below.[1]

The article recommends four steps to take to be AWARE of the risk. They are:

  1. Commit to digital security as essential to all work. Although digital security work takes resources and energy, it is critical to keep a focus on its importance. Like fiscal responsibility and good governance, digital security needs to be part of strategic planning.
  1. Take big responsibility for big data. Organizations must take responsibility for stewarding their data seriously, or many people they serve, engaged supporters and institutions may be at risk.
  1. Prioritize “capacity building”. This means addressing the structural vulnerabilities that make it easy for an online adversary to attack the organization. This includes auditing the specific systems the organization uses to store, share, and process user data. The authors point out that individual training programs are not sufficient, since the ground is always changing. It takes focused, structural change. 
  1. See the shared threat as a call for interdependence. Digital security is a shared responsibility among funders, donors, partners, and our own customers and clients. Organizations need to be realistic about the interdependencies and work together to avoid the risks. But lastly, data security relies on a structural, system-wide focus in the organization to avoid the risk.

[1]Tackling Digital Security Across Civil Society”, Josh Levy & Katie Gillum, Stanford Social Innovation Review, April 20, 2018

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County,

Nonprofit Budgets and Forecasts

Dave Blankenhorn


Is the way your organization budgets and makes projections getting the job done?

If not take a look at zero based budgeting and rolling forecasts to improve the accuracy of your results.

Zero-based budgeting (ZBB) is the idea of looking at your expenses from the ground up rather than using your existing figures and adding some percentage. ZBB can reduce general and administrative costs by 10% to 25% if done right.

Another approach to think about is the use of a rolling forecast which allows continuous planning through a number of periods. For instance, if your period is a fiscal year you will always be forecasting 12 months ahead. As one month ends you will add another. You can always add more months.

Rolling forecasts are living documents allowing you to make decisions during the year based on changing information and data. Because you always have 12 months (or what whatever period you choose) you have long term data when you need it or can change your plans for the short term when circumstances demand it.

Rolling forecasts can also give you more accuracy than the traditional budget. By the time you complete a standard budget it is probably already out of date. The rolling budget is more flexible so you respond rapidly to changing conditions. As factors fluctuate you may respond accordingly. The results of adding new expenditures or adding to old ones can immediately be forecast as well as increases or decreases in income.

So if your present system is not what you want it to be give this new approach a try.

Author:  Dave Blankenhorn, Executive Coaches of Orange County, 

The Glossary for Nonprofit Governance

Adrianne Geiger Dumond



Many of us in the nonprofit world use terms and acronyms that may be confusing to newcomers – especially young employees trying to learn about the nonprofit as a business. I recently ran across a very useful tool for educating everyone in this business. The glossary should probably be in every manager’s office.

The Glossary is published by BoardSource and can be found under Nonprofit Board Fundamentals on their website. The glossary is alphabetized and runs five pages and has every term that is ever used in this business.

For example: have you ever wondered what the difference was between a 501(c)(3) and a 501(c)(6)? There are also simpler definitions: For example:

  •  Board Development
  •  Disclosure requirements
  •  Emeritus status
  •  Fiduciary duty
  •   Immediate sanctions
  •   Operational reserves

Possibly the most Important definitions provided for novices are the terms for IRS requirements, which can be confusing. For example:

  • Form 990
  • Form 990 – PF
  •  Form 990 – T
  •  Form 1023
  •  Form 1024
  • Or maybe a ‘Federated Organization’ ?

I recommend every nonprofit have a copy of this glossary – maybe even board members might appreciate the information.

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County,

Have You Thought About Cyber Insurance?

Dave Blankenhorn

Dave Blankenhorn


Having proper insurance coverage is vital in any risk management plan. In today’s world being covered for fire, theft, internal fraud, business interruption and general liability is not enough because one of the major causes for losses is cyber theft. Some businesses and nonprofits are more reliant on their computer sites than others but all need to think about purchasing a cyber insurance policy to cover any losses due to illegal entry in your systems. It is not enough to say I have a protection service as today’s thieves are quite sophisticated and know how to penetrate most of these. Evidence of this is the hacking of government sites and the largest retail chains.

If you buy a policy be sure that it includes coverage not just for a direct hacking event but includes coverage for a “voluntary parting” wherein the insured is induced into sending out information or funds by a fraudulent scheme, trick or false pretense. Some insurance companies have exclusions for these types of actions which negates one of the reasons for the purchase. There are many other gray areas when it comes to cyber insurance coverage which is why it is so important to understand coverage limits, and sub limits that may exist.

Because there are so many variables you might seek out a broker familiar with these new types of policies and is current with the ever changing dynamics of this form of protection. Cyber attacks are not going away so protect your nonprofit accordingly.

Author:  Dave Blankenhorn, Executive Coaches of Orange County,

A New Form of Philanthropy

Dave Blankenhorn

Dave Blankenhorn


This past week Mark Zuckerberg, the founder of Facebook, and his wife, Priscilla, announced there intention of pledging $45 Billion (99% of their Facebook shares) over their lifetime to help solve the world’s problems. Rather than doing it the old fashion way of gifting through a foundation they have proposed to establish a Limited Liability Company to be called the “Chan Zuckerberg Initiative” after their new son and use this vehicle to invest funds in organizations that advance “human potential and “promote equality”. The “Initiative” will also invest in for profit companies in fields like education and health care which its owners believe will help achieve their philanthropic goals.

What is somewhat unique in his approach is the idea of showing both a financial return in order to be sustainable and a social one in order to obtain additional funding. To meet the latter goal certain metrics will need to be established to show how many lives were saved or how many were educated etc.

By setting up the LLC he can maintain control of his stock, avoid tax issues and continue to capitalize the LLC from the return on his investments. These funds can then be used to reinvest back into worthy recipients. This avoids the traditional giving dilemma of a foundation where monies are only replenished from its investments in stock and bond markets.

For nonprofits this new approach will be a challenge to managements and boards. They will be accountable in a way not seen before and will need to focus more closely on mission results as well as financial viability. If they can reach their goals funding will become more reliable giving everyone more time to achieve the mission and less on fund raising.

Author:  Dave Blankenhorn, Executive Coaches of Orange County,


The Mistakes Charitable Startups Make

Adrianne Geiger Dumond

Adrianne Geiger Dumond


Since 2013, the number of nonprofits in this country has more than doubled.[i] An article in the Wall Street Journal, on September 20, this year, and by the same title, explains the risks of starting a nonprofit. Passion and commitment to the cause do not measure up to the time commitment and skills required to launch a nonprofit. I will quickly summarize the main points, but urge the reading of the whole article by Veronica Dagher, a reporter for the WSJ.

The Mistake: Not doing the research to discover how many other charities also provide the services you plan on giving.

The fix: Before starting a charity, get the kind of work experience and specific skills needed to launch. Research and speak with the leaders/Executive Directors of similar nonprofits for direction and possible roadblocks so you know more about the lay of the land – especially for your community. Volunteer at a similar organization, or serve on a Board, or speak with other founders to understand the challenges. Have a business plan and a mission statement ready to go.

The Mistake: Underestimating the time commitment. To gain official, tax-exempt status as a 501(c) (3) a nonprofit must register with the state, and in some cases, local agencies and the IRS. Approval of the status can take months. In the meantime it is difficult to raise money.

The fix: Be patient and truthful with prospective Board members and donors so that they maintain their commitment to your cause and don’t become disillusioned.

The Mistake: The lack of proper insurance that can lead to serious financial consequences. There is the case, cited in the article, where a nonprofit sponsored a bicycle race in which a participant was injured. The incident went to court, the Board had no insurance and was forced to pay legal fees which caused liens to be placed on some members’ property while the suit was pursued.

The fix: Don’t cut corners while waiting for the tax exempt status. Obtain the proper insurance right away, keep accurate financial records, and know where the money is coming from and how it is being spent to keep donors content.

The Mistake: Selecting the wrong Board members. Avoid the temptation to appoint close friends and family to the Board of Directors. They may admire your dedication but may not have the skills and experience you need.

The fix: Find the Board members who have a passion for the cause, but also bring skills for good governance that the startup might not be able to afford early on – attorneys, accountants, management skills, and some knowledge about the nonprofit business. All Board members should be expected to make donations. Some Foundations will not grant money to a nonprofit to which Board members do not donate.

The Mistake: Not recognizing the importance of fundraising. Often new organizations spend more time on program development than on raising money. They may target Foundations as the primary source of funds. Without plans for solid, lucrative fundraising from individuals, also, there will be no programs.

The fix: It is important to establish a donor base initially – contacts, businesses, companies that match employees contributions. It’s also recommended to understand how agencies competing for donor dollars obtain funds. One of the consultants in the article recommends having one year’s operating budget in the bank before implementing programs.

Source: Urban Institute’s Center on Nonprofits and Philanthropy, based on IRS business master file for public charities, exempt under 501(c) (3), May 2015[I]

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County,

What’s the Difference: Nonprofits vs. For-profits?

Robin Noah

Robin Noah


Recently I was asked if there is a difference between operating a nonprofit organization and a for-profit business. I answered with a resounding YES and the following brief overview.

While the aim of for-profit organizations is to maximize profits and forward these profits to their company, the nonprofit organizations’ aim is to provide funding to meet society’s needs.

Nonprofits spend a major portion of their time seeking funding, often without selling a “product”. They need to convince contributors of the value of their mission and how they can spend the contributed money wisely as they move forward meeting the mission of their organization. Additionally they must prove the need to use some of the donated money for administrative costs.

A reality is that nonprofit organizations are often in a struggle to find enough money to survive and to raise funds more effectively.

Unlike for-profit companies that can earn commissions for sales, nonprofits must constantly demonstrate that they use the greater part of their funding for their mission. The Association of Fundraising Professionals (AFP) asserts that a commission on each donation would undermine donor trust by placing self-gain over a nonprofit’s mission.

An interesting fact: According to journalist Tom Chmielewski, The American Institute of Philanthropy suggests that a not-for-profit organization’s unrestricted net assets should total less than three years of its current budget, and that at least 60 percent of its total expenses should be spent on program services rather than on administration and fundraising.

Another interesting fact is that In addition to a balance sheet, a for-profit will prepare an income statement each quarter listing the company’s revenues, gains, expenses and losses. On the other hand, generally speaking, nonprofit organizations do not compile an income statement but instead prepare a statement of activities each quarter. This document simply lists the organization’s revenues minus expenses, plus net assets

To learn more about the differences in the for- profit businesses and nonprofit organizations spend some time on the internet. There is a wealth of information there for interested persons.

Author:  Robin Noah, Executive Coaches of Orange County,

The Annual Report

Robin Noah

Robin Noah

Beyond the 990 and other mandated reports is the organization also requiring an annual report?

While annual operations reports are not required by law they do have value for an organization. An annual report is a “story book” that demonstrates accomplishments and successes in meeting the organization’s mission. The report can also be presented to current and future donors, used to cultivate new partnerships, and recognize important people.

Most annual reports are relegated to the first quarter of the year so that all data for the previous year has been captured.

Basically the report is an accounting of the organization’s work over the past year – and – simple is better than complex glossy reports.

Employees and staff, like to know how well they performed in the previous year. Management wants to know:

  • What was done,
  • Why it was done
  • What difference did it make
  • How did it impact the mission of the organization

To help readers understand how activities helped the organization achieve its goals an overview should be included.

Let’s not forget to do a financial section that clearly explains where revenues come from and how they were spent. Here one can get fancy with graphs, charts and other visuals that help readers see the big picture and understand financial trends.

A short narrative description is essential, explaining in plain English the meaning behind all those numbers.

The challenge is in choosing what to include in the report. This will be dictated by the intent of the report.

Author:  Robin Noah, Executive Coaches of Orange County,

From here to there… Here we go again.

Robin Noah

Robin Noah

By now most organizations have completed (or at least have a draft) their operational goals for 2015, including their annual budget. Recognizing that a budget is a driving force of an organization’s goals it deserves a lot of planning. Budgets function as roadmaps helping guide organizations as they follow in their long term strategic plans, serving as a framework against which an organization can measure financial success and directional movement towards achieving their organizational goals.

Goals are a key component in creating a budget. The budget should be aligned with the stated goals and strategic plans.

Consider these tips for setting strong and realistic fundraising goals:

1) A review of historical trends for each program. Looking at the overall previous year’s performance leads to achievable goals

2) Taking into account income before expenses so that the fundraising goals are within reach; ambitious, but realistic.

Goals historically are a movement from present to future. An organization must ask many tough questions during the development of its goals and the accompanying strategic planning. Critical components are:

  • Collect ideas and begin the process for formulating strategies.
  • Define the current state of the business and the desired end state
  • Planning how the organization can move effectively towards their goals using available resources.

Maintaining a focus on the end results sustains the continuity of the strategic plan from start to finish, helping decision makers discard or archive ideas and information, as well as business methodologies that do not contribute to the ultimate goals.

Lastly the organization’s strategic plan will expressly state the major actions that will lead to an implementation of the organization’s core business objectives. Management will have the guidelines to measure performance to ensure that action plans are meeting the core organization goals that support the organization’s mission.

Good luck as you work on your 2015 operational goals and budgets.

Author:  Robin Noah, Executive Coaches of Orange County,

Reviewing Bank Charges

Dave Blankenhorn

Dave Blankenhorn

Bank expenses can be a costly expense if not periodically reviewed. With shrinking interest rate margins banks are looking at generating additional income from business account analysis fees. If your organization has any volume of debit and credit activity and uses a cash management system chances are that you are on analysis.

The process consists of an Earnings rate credit which is the rate the bank will pay your organization for the collected balances and the fees for service which are then deducted to arrive at a plus or minus figure. The minus figure is then deducted from the account as the service charge.

Each bank sets their own earnings rate credit percentage and has their own schedule of fees and charges. These vary widely from bank to bank. For example earnings rate interest can run from .10% to .75%. On the fee side some banks charge an “administration fee” which can be substantial. Some banks will allow the organization to offset the negative months with the positive ones and settle up either within a six month period or at least quarterly. Some just charge for the negative one month and give no credit for the months the business was in positive territory.

Of course a good banking relationship is also based on other considerations such as donations, sponsorships, credit facilities and good service. However if it looks like your non profit is being short changed it is worth asking why. Banks are very competitive and will carefully sharpen their pencils to obtain a new customer or to keep a good one.