Category Archives: Financial Management

Are Mergers and Acquisitions an Answer?


Adrianne DuMond

Adrianne Geiger DuMond

Many research articles on the internet recently are exploring the growing interest in Mergers and Acquisitions (M&A) for non-profits. They tend to compare the rate of M&A’s with the for profit world, which grew in the latest economic downturn. Findings suggest that the rate for non- profits is much lower than for the profit world. But there have been enough successful efforts that the case studies are now available. ( See ‘Leaders Matter” by the Bridgespan Group, March, 2014).

In the collection of articles in the above issue of ‘Leaders Matter”, a particular series called ‘Mergers that Make a Difference” summarizes how certain non-profits overcame the stumbling blocks to merging. Some of the hard tasks were:

  • Sourcing funds for due diligence to proceed;
  • Identifying the toughest issues, such as, positions for key staff in the new formation, the roles for Board members, brand identities, and cultural differences.
  • Taking the time to think through and plan for these important issues and not sweep them under the rug.
  • Getting outside help; not just for financial issues but for the people challenges as well – organizational structure and branding. Skilled facilitators can add real value.

While these issues loom large in a struggling economy, and may be a necessary process for a struggling non-profit on the verge of folding, some findings are showing positive results that even a thriving agency may wish to consider.

What has transpired to make mergers and acquisitions appear more favorably to non-profits?

  • Funders are more likely to consider the benefits of collaboration. In the past they looked for projects, especially new ones. Now they are willing to consider the increased benefits to the community as an important criterion.
  • When successful, mergers may help to expand a non-profit’s mission, program capabilities, outreach, and revenue.

A good detailed description of this transformation can be found in the ‘Stanford Social Innovation Review’ of March 4, 2014. They also outline other forms of collaboration which I will address next time.

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


Nonprofits to the rescue…

Robin Noah

Did you know that the fastest-growing part of the U.S. economy is not business, at least not the commercial kind. It’s the nonprofit sector. In the past decade, the number of nonprofit groups has grown by 25 percent to 1.6 million. They now account for 5.4 percent of gross domestic product and 10 percent of jobs (

No wonder the nonprofit sector is receiving more and more interest as government resources continue to shrink. More and more expectations are being created for social problems to be resolved by nonprofit organizations even though their funding is also shrinking year by year. Nonprofits are becoming a much greater factor in the overall economy; being recognized as a critical segment of the social change we are experiencing.

Just look at the demands for your services. Has there been a significant change? Are you keeping financially secure or are you concerned that you will not be able to provide services? Where will 2014 take you?

Funders, public and private, seem to be more interested on the outcomes, end results and return on their investments than they are in the mission. The funding challenge is greater than ever and Nonprofits need to become smart, to be articulate in presenting their results to the public and to their funders. This environment requires that nonprofits craft a compelling, thoughtful argument for why a funder or donor should give to their organization.

Nonprofits need to be on the operations edge, to report their results in language that is common to funders.

Nonprofits need to consider creating a broader spectrum for securing the overall financing necessary to achieve the mission goals, to develop financial strategy plans instead of fund development programs.

It’s also time to take a step back, check in and evaluate how aligned with their mission they are, what the level of their core competencies is and if their fund creation programs are compatible with today’s financial environment. Is it costing more time and money to generate needed revenues?

Stepping back is about bringing the organization to the forefront of its operations; to ensure that they are taking advantage of all their opportunities to better connect with donors and stakeholders, cultivate awareness and create organizational operational efficiencies.  This is not the end all – be all, but it is a start in the right direction.


Dave Blankenhorn

Dave Blankenhorn

Outsourcing some of your operational functions can be a good way to save staff time, reduce costs, and gain added expertise. This is particularly true in areas such as I.T., marketing and human resources. Outside firms can free you up from mundane tasks so that you can focus on your client’s needs.

However you need to be careful in the selection of an outside provider knowing that they will have access to your confidential information. If you are considering outsourcing or are already doing so you should develop a policy to measure vendor security and stability. This is an important process given the expense and reliance given them.

The policy criteria should include;

– Financial condition. Obtain last three years FYE statements hopefully audited by an outside party.

– Management qualifications and continuity- be comfortable with the expertise and stability of the key people.

– Internal security- see how they manage the security of the information given them. Ask for internal audit results and their Privacy Policy.

– Search legal records – Find out if they are any ongoing suits and if so what they are about.

– Check references carefully- Find out if what they were promised is in fact being delivered. Ask if the quality and quantity objectives are being met.

Finding the right outside firm can be a great boon to your nonprofit. The selection of the right one is an important decision which needs to be made only after understanding that they can provide what you need and will be there in the long run.

Author:  Dave Blankenhorn, Executive Coaches of Orange County,

Capitalizing-As Important to a Nonprofit as Your Program is to its Beneficiaries

Dan Charobee

Dan Charobee

When you capitalize a company, you either put in your own money or OPM (Other People’s Money); when you capitalize a nonprofit, you put in your own or other people’s money, time, or effort. I met with a director recently that came from a prominent business sector position and started a nonprofit that solves a service delivery problem for a larger national organization. After a period of time, they were running into the problem of having critical program managers leave due to lack of funds for establishing adequate payroll.

It is not surprising to hear that this founder was looking to go back to the business sector to personally make ends meet. When I asked whether the program provided enough benefits to continue to exist, “absolutely” was the response. The program had been gaining in funding, was becoming recognized by funders and donors at a growing rate, but was in jeopardy because everyone was an unpaid volunteer. And, while they were dedicated, they leave to find work that supports them and their families.

Having worked with international, national, and regional nonprofits, I found that a very large segment of the workforce is in the nonprofit sector. The sector, not only provides valuable services, but also provides employment to many people.

So, here is my personal story about capitalizing an organization, project, or program. In a leadership program, I was challenged with starting a local program for an international organization. The basic challenge was to get members – all either paid or unpaid. I chose unpaid, thinking that payment would be a hindrance and focused on quality member prospects. I went after the best and brightest, knowing that they would draw others along with them. My first reality moment came when I talked to my best prospect and said “we could really use you in this organization”. She proceeded to open her purse and brought out her checkbook. I learned a lot after saying “I don’t want money, I want you.”

She said that she loved the project, but had the money, not the time. We all feel it is easy to ask for help and think about the physical act of helping. At the same time there are so many people and organizations that want to help that have the funds, but not the time.

Author:  Dan Charobee, Executive Coaches of Orange County,

Best Practices

Dan Charobee

Dan Charobee

It’s morning. You walk in, and “BAM”, there it is. Someone did something that will shape your day, week, month; even year. And, it’s not in a good way. So, you begin as a firefighter, with damage control, thinking “how could this have happened”?

Having recently worked with an exceptionally gifted executive going through damage control, I found the OneOC presentation by Jennifer Farr, CPA, MBA of Mayer Hoffman McCann P.C, listing Best Practice Policies Disclosed in Tax Return so compelling that I wanted to share them with you:

  • Executive Compensation – Board reviewed comparability data (compensation survey)
  • Conflict of Interest Policy – including procedures for determining whether a conflict exists; Require directors, officers, and key employees to disclose potential conflicts annually
  • Fundraising Policies – ensuring solicitations meeting federal/state law requirements and solicitation materials are accurate, truthful, and candid

They come from, of all places, the Tax Form 990 that 501(c)s fill out each year. And like most questions on forms, they are answered and forgotten until next year. Jennifer put them in her Best Practice pocket and so should you. She consults nonprofits on finance and tax issues; hinting that they represent major red flags possibly launching an audit for organizations that don’t meet better standards. This can be a painful and possibly status ending experience for an organization.

Making them an integral part of your culture avoids most fires that take you off mission for an uncomfortable time period. So, outside of your finance office, here is the list of relevant questions:

  • 12a Did the organization have a written conflict of interest policy?
  • 12b Were officers, directors, or trustees, and key employees required to disclose annually interests that could give rise to conflicts? 
  • 12c Did the organization regularly and consistently monitor and enforce compliance with the policy? 
  • 13 Did the organization have a written whistleblower policy? 
  • 14 Did the organization have a written document retention and destruction policy? 
  • 15 Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?

Each, in itself is a developmental concept well worth the time and effort, making sure your organization stays on mission. Combined, they may make you less of a firefighter, but a better overall service delivery agency.

Author:  Dan Charobee. Executve Coaches of Orange County.

Technological Planning- Dashboards

Dan Charobee

Dan Charobee

High end project, revenue, and enterprise dashboards are an integral part of upper management large scale organizations. Managers and executive directors are able to judge the direction, capabilities, and progress of a highly efficient organization. Now, spreadsheet and database users are finding ways to take program activities and results to new levels of information sharing.

Here is how to build your own or select one that meets the size and scope of your organization:

  • Spreadsheets are available on almost every computer or over the internet. Microsoft’s Excel is one of the most recognized, but some prefer others. Most feature tabbed spreadsheet pages to enter numbers and formulas. With a little sophistication, users enter data on one sheet and compile sums, averages, percentages, and list counts (and more) in charts and graphs on a dashboard sheet. Today’s programs allow sharing of entire workbooks by multiple users along with annotations and comments.
  • Databases typically handle larger amounts of active data, such as client lists, donors, suppliers and payments; databases are usually easier to update, but require a high level of sophistication in formatting, reporting, and outputting information. The two most widely known are Microsoft’s Access, and dBase, by dBase.
  • Contact Management (CRM) focuses on relationship communications and results. Newer versions of ACT! (by Sage) and Goldmine (by FrontRange Solutions) offer comprehensive systems that include goals, traditional and digital communications, and progress dashboards. Constant Contact and MailChimp (and others) specialize in online digital communications as well as dashboards to show progress.
  • Financial Management software like Quickbooks (by Intuit) and Peachtree (by Sage) include dashboards of a nonprofit’s financial conditions, budgets and status.
  • Project Management specialty programs, managed with software like Microsoft Project, provide timelines, Gantt charts, and costing out activities.
  • Donor Management – Specialty donor management programs such as Raiser’s Edge (by Blackbaud), provide overviews of funding campaigns as well as working with individual givers.
  • Mission Management –Newer dashboard planning systems such as WePlanWell (Ibosswell, Inc.) focus on an organization from mission to objectives and activities, providing EDs, managers, and team members various levels of communication to succeed in their mission.

Visualizing current and future outcomes of ongoing activities can be a powerful way to keep your team on track. It also provides upper management and funders with a dashboard look at your progress, direction and speed in accomplishing your mission.

Author:  Dan Charobee, Executive Coaches of Orange County,

Nonprofits and Conflicts of Interest…

Robin Noah

When was the last time you had to deal with a conflict of interest in your organization? Do the board members recognize when a conflict is present? When was the last time the board reviewed the organization’s Conflict of Interest policy? Do you need a written policy?

Having a written conflict of interest policy can help the organization resolve conflicting issues with the best interest of the organization.

Consider that the new IRS Form 990 asks, specifically, for disclosure of potential conflicts of interest. It not only asks whether the organization has a written conflict of interest policy, but they also want to know if there is a process for managing conflicts and how the organization determines whether board members have a conflict of interest. In other words do you have a written policy and a methods and procedure directive?

The purpose of a conflict of interest policy is to protect the interests of the organization when it is contemplating entering into a transaction or arrangement that might benefit the private interests of an officer or director of the organization or might result in a possible excess benefit transaction. Additionally it needs to state that the policy is intended to supplement, but not replace, any applicable state and federal laws governing conflicts of interest applicable to nonprofit and charitable organizations.

Every nonprofit organization needs a written policy governing conflicts of interests AND it should be reviewed annually.

The policy should 1) require those with a conflict (or who think they may have a conflict) to disclose the conflict/potential conflict, and 2) prohibit interested board members from voting on any matter that gives rise to a conflict between their personal interests and the nonprofit’s interests.  Sometime you need to also write the process for reaching a decision.

Andy Robinson and Nancy Wasserman have written a book –The Board Member’s Easier Than You Think Guide to Nonprofit Finances that I found highly informative. It addresses the issues of conflicts of interest in a practical easy to read style. Readers will get a lot of ideas regarding issues that confront nonprofit organizations

You can round out your information at

Author:  Robin Noah, Executive Coaches of Orange County,

“It will never happen here…”

Robin Noah

Crisis management, small business failure, business turnaround, and other similar terms are not popular topics in the business world. Terms such as these rank very low on the search engine popularity lists. Failure to thrive is something that few entrepreneurs or business gurus want to talk about.

At the same time, business failure statistics tell us that over 5 million businesses shut down every year; most of these because they did not include crisis management in their business planning.

Part of crisis management is preparing for things that we hope will never happen. One of the worst possibilities is an employee or volunteer becoming violent. The thought of this happening is almost too terrible to imagine, but it must be done to ensure your nonprofit is prepared.

David Deakins, director of Massey University’s Centre for Small and Medium Enterprise Research found that an organization’s vulnerability increased if a crisis was caused by natural disaster, rather than an internal issue. The survey also found that a written plan did not necessarily make the organization more resilient, experience in dealing with the consequences of a crisis was more important.

However, having a plan to manage disaster and crisis will identify those areas or occurrences where planned action is the best approach. No organization is too small for a crisis. From bankruptcy to disgruntled customers or employees or volunteers seeking revenge, even the smaller nonprofits should be prepared to handle and manage a crisis.

Your best bet is to develop a crisis management plan that includes emergency notification procedures, assessment of the immediate safety of the workplace, proper notification to those in danger, process for investigation of the incident, resources, handling the media and other situations that are exclusive to your organization.

The organization should also have continuity plans that in addition to crisis and disasters identifies threats and impacts and ensures that the nonprofit is able to withstand the disruption that a full-fledged crisis can inflict.

Plan the best strategy that can get you out of that crisis… and …be well prepared for any unforeseen event that may come your way.

Author:  Robin Noah, Executive Coaches of Orange County,

Should You Pursue that Funding Source?

Bob Cryer

Bob Cryer

Karen Davis at writes in her April 2012 newsletter “Nonprofit opportunities are vast and varied. You have to decide if you will apply for that grant, open a ticket booth at Saturday’s market, do a phone-a-thon, send that mailer or join “on-line popularity contests” that require you to entice your customers to vote for you, and, while it’s not often thought of this way, ask individuals for donations”.

“With most nonprofit income opportunities, one size does not fit all. Some opportunities provide too little return or no return for the effort. Other funding options confuse current donors. (“I participated in their fundraiser, why are they asking me for a donation?”) Still others don’t fit with the strategy at the heart of the nonprofit’s efforts. At worst, they provide little money plus a lot of distraction from the key essential actions the nonprofit needs to do to succeed. To maximize income, nonprofit leaders must discern which opportunities are worthwhile and which to skip. They must do so with imperfect information, as flaws will continue to exist in all our crystal balls.”

Is there a way to make funding decisions to maximize your returns? Absolutely. Establish “Pursue or Not Pursue Criteria” to apply consistently to each opportunity encountered. Used regularly, criteria will help you to maximize funding and save time. With them, you can examine opportunities quickly. Criteria will also allow you to say “no” gracefully to presenters (by referring to the criteria.)

While the goal of funding decisions is first about funding, these decisions also impact your nonprofit’s other bottom lines. Well-designed criterion can guide you to options that provide more bottom lines for the buck. Those “Pursue or Not Pursue Criteria” can lead your nonprofit to more income, more coherent operations, more community, and more mission.

Author:  Bob Cryer, Executive Coaches of Orange County,

Instructive Statistics on the Nonprofit Sector

Larry Tucker



A few of us coaches from the Executive Coaches of Orange County recently attended OneOC’s terrific workshop “Nonprofits by the Numbers”. On the agenda were presentations by:

The program was introduced by a very enlightening video prepared by Philanthropy Reports that emphasized the size and importance of the nonprofit sector in the U.S. Some interesting teasers: 


  • There are 2 million nonprofits in the United States (Estimates from some other sources are lower depending on the definition “nonprofit”.)
  • One in 10 Americans work for a nonprofit.
  • $300 billion is donated annually to nonprofits. 
  • Nonprofits generate about $1.1 trillion a year.
  • 6.5% of Americans volunteer for nonprofits.  

The presentations were loaded with important information. Some figures stood out for me: 


  • The number one reason people are motivated to donate to charities is the organization’s mission. (Not a surprise!) A close second is personal experience. This simply reconfirms that finding the right donors is the key to effective fundraising.
  • 57% of nonprofits have enough cash to cover 3 months or less of expenses. This is certainly an indication that many nonprofits teeter on the edge of existence on a daily basis.
  • The average cost of medical insurance per employee increased from $783 per month in 2011 to $907 per month in 2012, a 16% increase, prompting some nonprofits to freeze wages in return for maintaining the same level of health care coverage.  

My “takeaway” from this session: The nonprofit sector in the U.S. and Orange County is not only a critical “industry” for the millions of beneficiaries of these organizations, but an important part of our national and local economy.

 Author:  Larry Tucker, Executive Coaches of Orange County,