Category Archives: Resources

Leading from the Ground Up: Establishing Ethics and Social Responsibility in USF’s Nonprofit Student Council

By: Brandon Jones, Greg Justice, and Elizabeth Silva,

2017-18 Full-Time Cohort 

The study of ethics – historically known as “Moral Philosophy” – traces its roots to the time of early Greece, having been discussed significantly by Socrates and Plato (01), and mainly, in the pursuit of “justice.”  (No relation.)

Fast forward over two millennia – give or take a few hundred years, and we find ourselves studying ethics in a new capacity.  That is, how do we build an ethical and socially responsible student government from the ground up, paying tribute today’s standards, yet leaving an ethical structure for future cohorts?

The University of San Francisco’s Master of Nonprofit Administration (“MNA”) has within the program a fully autonomous student government – the Nonprofit Student Council (“NSC”).  NSC serves the needs, ideas, and professional development of the MNA student body.  In our official affairs, governing documents, and the spirit of our governance, NSC is building an ethical foundation, providing a respectful and dignified environment for current and future students.

NSC’s Core Values

From the very beginning of NSC’s deliberations, the executive board – the collective six officers pictured right –  has stressed the need for engagement, collaboration, and representation; access and inclusion; oversight and accountability; and, most importantly, diversity, as our guiding principles.  As the governing council for MNA students, we benefit greatly with these values, making sure we do our best to represent every student in a thoughtful and equitable manner.

NSC’s Mission Statement

Our guiding principles are best embodied in the NSC mission statement, memorializing our official commitment to these values.  The purpose of NSC is to, “provide a unified voice for students with a focus on promoting and improving the MNA program at The University of San Francisco. The NSC provides a vehicle for student perspectives, ideas, and a means of promoting events on behalf of the student body. The NSC club will promote co-curricular activities pertinent to the nonprofit field as well as support and encourage collaboration with other nonprofit professionals…”  Again, embedded in NSC’s mission statement is collaboration, representation, and inclusion, all being values allowing for ‘better’ and inclusive governance.

Code of Ethics

NSC has recently initiated the process for designing a Conflict-of-Interest policy, catered to our specific affairs and operations, and will be considering this at the next officer’s meeting.  Besides implementing this best practice, the executive board values an orderly governance system, equally available and protective of all parties.  Despite having a Treasurer and Vice-President for Communications, all financial records and official communications are shared with officers, program and university officials, and most importantly, MNA students. (We have even established a program-wide email listserv, guaranteeing all MNA students – part- and full-time – are well-informed, and have a timely accounting of their officer’s.)

Ethics Officer

Unlike other student governments and organizations, NSC has taken the step to permanently secure the implementation of oversight, access, accountability, and other related practices, with a new officer position.  Appointed just last week, Greg Finkelstein serves as the Director of Standards and Practices, ensuring organizational compliance with governing and ethical protocol.  Finkelstein also chairs the newly formed Standards and Practices Committee, bringing in independent and impartial students overseeing NSC’s compliance.

Structure

When considering any program, service, or obligation, NSC creates an “Officer’s Report,” providing assessments for risk, finance, governance, and overall compliance.  These reports provide an extra layer of administrative and ethical analysis, making sure our values and guiding principles are effectively considered in all matters before the executive board.

The board also recently adopted a 72-hour deadline for introducing and disseminating all agenda items and reports, guaranteeing equal access and consideration to all parties and stakeholders in official affairs.  Further, although our meetings regularly take place physically on our campus, all meetings are also broadcast via Zoom – a webinar platform, allowing all who desire to participate to do so.

Conclusion

Further ethical drivers – such as, risk assessment and governance analyses, leadership and ethics trainings, as well as, organizational socialization – will be the path NSC takes in our ongoing ethics quest.   Despite implementing these best practices and guiding principles, NSC cannot rest on any laurels, as we recognize maintaining an ethical and socially responsible organization requires continuous development, organizational reflection, and ongoing assessment and refinement of the overall governing structure.  

For more information about NSC, please contact NSC@usfca.edu, or visit our website at www.usfnsc.org, or Twitter @usfnsc.

Silva serves as Secretary, Justice as President, and Jones is a contributor to NSC’s development.

What MNA Students Should Know about Donor Advised Funds

 

Image Courtesy of The San Francisco Foundation

By: Jackie Downing & Alexa Davidson

September 15, 2017

The MNA curriculum is rich with information on foundations, but how much do you know about donor advised funds? Did you know that from 2014 to 2015, according to the National Philanthropic Trusts 2016 Donor-Advised Fund Report, the total number of donor advised funds grew by 11.1%, compared to private foundations which grew by 2.6%. Additionally, Donor Advised Fund grants to qualified charities reached an all time high of $14.2 billion, which is a 16.9% increase from 2014 (National Philanthropic Trust, 2016). As greater numbers of donors – individuals, families and companies – choose this low-cost, convenient giving vehicle over the traditional foundation, it is essential that nonprofits leaders understand donor advised funds.

Let’s start with the basics. A donor advised fund, as defined by the IRS, is a fund or account which is separately identified, owned and controlled by the sponsoring organization, and over which the donor(s) (or person(s) appointed by them) have advisory privileges. Like a bank account, the fund bears the donors’ names, unless they choose to name it something else. The account is housed at a large nonprofit, such as a community foundation, university, or the philanthropic arm of a financial firm, such as Schwab Charitable. The donors may recommend grants from the fund to eligible nonprofits. Unlike a private foundation where the “owners” (the trustees) have the authority to make grants from the fund, an advisor to a donor advised fund recommends grants from the fund and these recommendations must be reviewed and approved by the entity that houses the donor advised fund.

If donors establishing donor advised funds are forced to give up some control over the assets in the fund, why then are they so popular? Because donor advised funds offer many advantages over private foundations. For starters, donors contributing highly appreciated property to a donor advised fund can deduct up to 50% of their adjusted gross income for these gifts, compared to 30% for private foundations. Donor advised funds, with fees ranging from about .25% to 1.25% of the fund balance, are generally far less expensive than hiring staff to run your private foundation, especially if it is small. Unlike a private foundation, which must file and publish a 990 annually, disclosing all monies spent on staffing, operations and grants, a donor advised fund offers complete privacy. A donor can give anonymously to any eligible organization. In many instances, particularly at community foundations, donor advised fund donors have the opportunity to consult grantmaking professionals, utilize their services and expertise to learn about grantees, become more informed philanthropists, involve their family in philanthropy, and plan for a charitable legacy after their lifetime.

In addition to these advantages, donor advised funds have a few other positive traits. They are far more flexible than private foundations. They require only one advisor, though most providers will allow a donor to appoint other friends and family to advise on the fund if desired. They do not require a board, board meetings, or any formal decision making process, other than submitting the grant recommendations to the sponsor for approval, which in most instances, donors can do online anytime, day or night. This allows donors to be responsive and generous in their giving, responding to the needs of the community and getting funds to the causes they care about, anytime of the year. Grants are quickly reviewed, approved and paid, generally in one or two weeks’ time. The sponsoring organization conducts appropriate due diligence to ensure that the funds will be used by an eligible nonprofit organization for charitable purposes. Donor advised funds are not designed to live in perpetuity, though most sponsors offer the option of creating a permanent fund after the donor’s lifetime. Instead, donor advised funds typically spend down their assets in one or two generations, with remaining funds going to the sponsoring institution (in the case of community foundations and universities) or directly to nonprofit causes when the donors are no longer living. While private foundations typically spend 5% of their corpus per year and are designed to exist in perpetuity, donor advised funds generally spend well above this, which in a world of great need, is a very important distinction.

When soliciting or accepting a donation from a donor advised fund, keep in mind the following:

Donor advised funds may make grants to eligible causes, including:

  • Domestic 501(c)(3) charitable organizations and 509(a)(1) and 509(a)(2) public c charities, including houses of worship, hospitals, schools, museums, symphonies, zoos
  • Governmental units (if for public purpose)
  • Private operating foundations
  • Some supporting organizations – 509(a)(3) public charities that are not considered disqualified to donor advised funds
  • Foreign charities, using expenditure responsibility (tracking all expenses) or equivalency determination (demonstrating that the organization is the equivalent of a US charity.

Donor advised funds may not:

  • Make grants to individuals selected by or affiliated with donor
  • Make grants which result in benefits for or payments to the donor or related parties
  • Make grants to private non-operating foundations
  • Be used to fulfill pledges or sponsor events
  • Be used pay the portion of a gift that is tax deductible
  • Be given for anything other than charitable purposes

Make the experience positive for donor advised fund donors:

  • Grantees should exercise care when thanking a donor for making a request from a donor advised fund. The thank you letter should not thank the individual donor for the donation, but instead should thank the donor for recommending the contribution.
  • Neither the DAF sponsor nor the individual donor require a tax receipt from your organization.  Any letters are for acknowledgement purposes only.
  • Do not provide tickets, sponsorships, gifts, or any other benefits beyond incidentals (like a coffee mug) to donors. Do not allow donors to split (bifurcate) their gifts, paying for benefits portion personally and the tax-deductible portion with the fund. This is called bifurcation and it is not permissible by the IRS.
  • Do not ask or allow your donors to make pledges. Donors may express their intent to recommend a grant from their donor advised fund to your organization, but they may not commit formally or in writing to a gift without approval from the sponsoring organization.
  • Secure a DAF grant as you would any other gift: Cultivate the donor relationship; Craft a compelling case; Make the ask; Confirm the gift source; Thank and steward the donor. For anonymous donors, ask the sponsoring organization to pass along a thank you letter.
  • For anonymous donors, ask the sponsoring organization to pass along a thank you letter or email to the donor and take great care to treat the donor’s gift with confidentiality.

The rapid growth of donor advised funds in recent years illustrates their widespread appeal. Thousands of everyday Americans who want to be strategic and flexible in their giving, use donor advised funds to support the causes they care about. Donor advised funds should help donors experience the greatest level of satisfaction and joy from the generous support of their favorite causes and charities. Whether at a single-issue charity, a community foundation, or a commercial provider, donor advised funds serve a common purpose:  raising the profile of philanthropy and bringing more resources to worthwhile organizations making positive change.

The authors wish to thank Pamela Doherty, Director of Business Development at The San Francisco Foundation, for contributing her expertise to these recommendations.

NONPROFIT ORGANIZATIONAL ENTREPRENEURSHIP

NPO growth
http://onlinempa.usfca.edu/resources/webinars-infographics/the-rise-of-the-nonprofit-sector/

How many nonprofit organizations are out there?

According to the The National Center for Charitable Statistics (NCCS) there are currently over 1.5 million nonprofit organizations in the United States. More than 188,000 organizations are tax-exempt and charity organizations registered in the State of California. It is difficult to quantify the number of nonprofits in the world as they diversify in the classification due to the financial, governance, and legal national specifications. Generally, we estimate there are about 10M nonprofits – social sector organizations in 196 countries. The largest number of registered nonprofit is in India (2M), followed by US (1.5M) and France (1.3M).

How do I form my own nonprofit organization?

The large number of registered non profits around the world demonstrates the significant impact of entrepreneurship and organizational activism in the social sector. It is also a personal expression of how people want to make a difference in the world and in our communities through innovative and new nonprofit organizations. The MNA program often receives requests for assistance in establishing new nonprofits and tax-exempt 501(c)3 organizations. To support these efforts and to promote sustainable and effective  social sector organizations,  we have created a list of resources to help you establish nonprofit and tax exempt organizations in the United States and the State of California.

Nonprofit Foundation Brainstorming

Begin the process by asking these important questions:

  1. What is the social benefit and charitable purpose of the organization?
  2. What kind of programming or core activities are you planning to do?
  3. Who are the intended beneficiaries?
  4. Are there existing nonprofits with a similar mission, and, if so, have you discussed your ideas with them?
  5. Can your mission be furthered more effectively and efficiently by partnering with an existing nonprofit?
  6. Can you attract sufficient resources to start and operate a new nonprofit?
  7. What is your revenue plan and business plan (including a three-year projected budget)?
  8. Are you familiar with the steps you need to take to start and run a nonprofit in compliance with the state laws and best practices?
  9. Have you considered alternatives to forming a new nonprofit, such as fiscal sponsorship and donor advised funds, or business-social enterprises?
  10. Will you need a an attorney and/or CFO to form the nonprofit and get it running? Read more here.

Establish a Nonprofit in 10 Steps 

Step 1: PRELIMINARIES: Do we really need another organization? Preliminary market analysis and need assessment of other organizations and programs. Nonprofit, for-profit or hybrid? Check nonprofit organizations here.

Step 2: BASICS: What do you want to do? Determine the name, mission and anticipated programming and revenue sources of the organization. Check corporate name availability here. 

Step 3: INCORPORATION: What state will you incorporate? Prepare the documents and forms necessary for the incorporation. Think about the entity type. Follow the application procedure of your state.  Check California tips and resources here. 

Step 4: BOARD: Who should be in your board? People should be invited to serve based on their qualifications and contributions in treasure, time or talent. Generally, boards have a minimum of a president (chair), a treasurer and a secretary. Hold your first board meeting appropriately (RONR) and document it with minutes. Check IRS exceptions here. 

Step 5: BYLAWS: What are the essential documents of the organizations? A corporation’s bylaws includes the fundamental provisions related to the management of the activities and affairs of the corporation. Bylaws should also provide guidance to the board and reassurance of sound governance. You should also prepare other important documents such as the corporation’s policies and conflict of interest (COIs). The bylaws need to be approved by the board. Check the essential text of bylaws here.

Step 6: EIN: How do you obtain an employer identification number? An officer or authorized third party designee (e.g. attorney) may apply to obtain an EIN number for the organization. Check this to apply for an EIN online.

Step 7: REGISTER: What other registrations are required? In California an annual registration is required for nonprofit public benefit corporations to be filed within 30 days after receipt of assets (Form CT-1). It is also required to file a Statement of Information with the State Department (Form SI-100). Check here for the online forms.

Step 8: TAX-EXEMPTION: How do I obtain a tax-exemption status?  Completing the Form 1023 application for exempt status under Internal Revenue Code (IRC) Section 501(c)(3) is a challenging process. Once you complete the federal tax exemption (IRS application) you will need to apply for state exemption (California Franchise Tax Board (FTB) and receive an affirmation of exemption letter from the FTB. Check here the IRS tools and instructions.

Step 9: FINANCIALS: Does the nonprofit need a bank account? Open a bank account and establish check signing procedures. To maintain tax-exempt status and establish a good governance practice in your organization is important to establish a prudent system of checks and balances when dealing with the finances of an organization. Check here for best practices and financial tools. 

Step 10: COMMUNICATION: How do I make a good web presence? A professional website and active social media presence are a must for a serious nonprofit organization. There are a number of free web management tools such as WordPress.com that can be helpful with templates. Integrated contacts, fundraising and analytics are also becoming essential practices for successful, sustainable and effective nonprofits. Check for integrated solutions here.

Beyond these steps: There are other important elements that will be necessary to make your nonprofit effective with its mission. Please look at the additional competencies and resources in various areas of nonprofit management and leadership listed on the INNOVATION page and emphasized in MNA curricula.

Resources & Learn more

Click on the Logos of the Foundation Center and CalNonprofit for more information and resources:

IRSlogo

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CalNonprofits

 

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