Deciphering Non-Profit Chatter

1. Deciphering Non-Profit Chatter Megan Turak Military Family Network www.militaryfamilynetwork.com

2. Deciphering Non-Profit Chatter Non-Profit Organizations…Which One Is Right for You?

3. Objectives • Identify and understand business types and structures • Conduct detailed investigations using search, tools and other methods of discovery to perform due diligence on an organization • Understand and interpret findings • Evaluate the effectiveness, efficiency and credibility of an organization for better decision making • Locate organizations and resources

4. What Do We Know about Non-Profits?

5. Beliefs, Attitudes and Myths about Non-Profits • Good • Charity • 501(c)3 • Funded by Donations • Tax Deductible • Mission Driven Good Works • Volunteer Based • Credible, Trustworthy, Honest

6. What Is a Non-Profit?

7. A Non-Profit Is a Type of Business

8. Types of Business Structures • Sole Proprietorship: A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities. • Partnership: There are several different types of partnerships, which depend on the nature of the arrangement and partner responsibility for the business. • Corporation: A corporation is more complex and generally suggested for larger, established companies with multiple employees • S Corporation: An S corporation is similar to a C corporation but you are taxed only on the personal level. • Limited Liability Company: An LLC is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Definitions provided by SBA.gov

9. So then, what is a Non-Profit? In its simplest terms, a “Non-profit is a tax-exempt organization that serves the public interest.”

10. What’s the Same? Corporation Non-Profit Organization Articles of Incorporation Officers Board of Directors By-Laws Annual Meeting Staff Clients, Products & Services Revenues Operations, Marketing & Customer Satisfaction • Articles of Incorporation • Officers • Board of Directors • By-Laws • Annual Meeting • Staff • Clients, Products & Services • Revenues • Operations, Marketing & Customer Satisfaction

11. And, What’s Different? Corporation Non-Profit Organization Purpose is generally Charitable, Educational, Scientific, Religious, Literary No Shareholders Registration with other state agencies like charity bureaus Transparency in reporting requirements especially in regards to fundraising operations May be tax-exempt and this may apply to federal, state, local, property and other assets Annual reporting requirements are typically rigorous and require a third party auditor • Any purpose • Shareholders • Financials can be more or less transparent (public company vs. private) • Not tax exempt • Annual reporting requirements are dependent on business

12. Why Is This Important? It challenges us to look beyond the “window dressing”

13. Adopt A Super Sleuth Mindset Look! Listen! Seek! Find!

14. Website • About • Contact Information • Mission • Years in Business • Board Members and Officer Bios • Programs and Services • Financials • Metrics • Endorsements • Testimonials

15. Literature • Brochures • Flyers • Program Descriptions • Press Releases • Media Kits • Newsletters • Solicitation Letters • Grant Proposals

16. 3rd Party Evaluators • Charity Navigator http://www.charitynavigator.org/ • GuideStar http://www.guidestar.org/ • Charity Watch http://www.charitywatch.org/ • Better Business Bureau http://www.bbb.org/us/charity/ • MinistryWatch.com http://www.ministrywatch.com/ • Foundation Center http://foundationcenter.org/findfunders/factfinder/ • Economic Research Institute http://www.eri-nonprofit-salaries.com/index.cfm?FuseAction=NPO.Search

17. Government Agencies • Internal Revenue Service (IRS) http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check • Federal Trade Commission http://www.ftc.gov/ • USA. govhttp://www.usa.gov/Business/Nonprofit.shtml • NASCOnethttp://www.nasconet.org/documents/u-s-charity-offices/ • Office of the State Attorney General or Department of State

18. Military Resources • Legal Services/Judge Advocate General (JAG) • Command • Chaplaincy • BBB Military Line http://www.bbb.org/us/military-line/ • Family Readiness Leaders and Program Managers • Family Assistance Centers of Other Branches of Service

19. Online Resources • Google • Press Releases • News Sites • Message Boards • Facebook • Twitter • Other Social Media Sites

20. Library • Librarians • Reference Desk • Bulletin Boards • Free Resources and Research!

21. Community • Family • Friends • Community Members • Faith-Based Groups • Acquaintances • Local Government Offices • State Representatives

22. Understand Your Findings • Know the organization (Origins, history, etc.) • Mission, Programs and Services • Management Team (Officers, Directors) • Metrics and Goals • Peer Reviews • Community Feedback • Financials

23. Let’s Talk Money!(and other matters) • IRS Form 990 – A ‘MUST REVIEW’ document • Revenues • Expenses • Date of Creation • Staff (Board Members, Employees and Volunteers) • Scope of Operations • 501(c)3 designation • Statement of Program Service Accomplishments • Officers, Board Members and Key Personnel Salaries • Other Activities like Political or Lobbying as well as loans and/or grants to Directors or Key employees • Where does the money come from? And how much is spent on salary and expenses versus programs and services? • Are funds ‘restricted’? • Form provides opportunities for formulating questions to ask organization

24. Let’s Talk Money!(and other matters) • Audited Financial Statements • Prepared by Certified Public Accountants • Contain More Detailed Information than the IRS Form 990 • Both should be in agreement • Contains an Income Statement, Balance Sheet and ‘Functional Expenses’ for 2 years • Functional Expenses are administrative, fundraising and program categories • Notes Section may contain: Organization's Mission, Governing Structure, Description of Services and Population Being Served and Explanations for ‘significant items’, unusual or large items appearing on the financial statements • Subsequent Events Section details happenings after the date of the financial statement that may impact the organization

25. Ask Questions! • How much of a donation goes for general administration and fundraising expenses and how much is left for the program services? • If a “public education” non-profit, large portions of direct mail and telemarketing expenses may be disguising high fundraising costs. Ask! • Ask for specific information, such as how many individuals were served annually ?What were the major program accomplishments during the past year ? • Tax Exempt is not Tax Deductible! “Tax exempt” means the organization does not have to pay taxes. “Tax deductible” means the donor can deduct contributions to the charity on his or her federal income tax return. Request the charity’s tax exempt letter. • Is the Non-Profit is Registered by Federal, State and/or Local Authorities? • Watch Out for Non-Profits Bearing Gifts…This May Increase Fundraising Costs.

26. Case Studies

27. Small Groups • May not have IRS Form 990 or audited financial statements • Balance Sheet and Statement of Income and Expenses • Bank Statement • Project Budget • Get to Know Them: Volunteer, Meet their Leaders, Watch their Work

28. 10 Common Red Flags • An Organization that is Unwilling or Unable to Answer Your Questions • Financials That Don’t Measure Up • Poorly Defined Programs and Services • Poorly Articulated Goals and Achievements • Programs and Services that Don’t Support Mission • Lack of Transparency • Makes Emotional Appeals with Unverifiable Facts • Engages in Confusing Behavior (e.g., similar name, etc.) • Troubling Feedback or Bad Reputation • When It Just Doesn’t ‘Feel’ Right or Seems Far-fetched

29. Where Can I Find Organizations? • Many of the Sources Covered Are Excellent Starting Points • Community • Library • State Representative’s Office • Government and Social Service Agencies • Faith-Based Organizations • Military Base • Businesses • Online • Google - http://www.google.com/ • National Resource Directory - https://www.nrd.gov/ • IRS - http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check • Military Family Network - http://www.militaryfamilynetwork.com/

30. Summary • ‘Non-Profit’ Applies to a Type of Business Structure and is Not A Seal of Approval • Each Non-Profit – Like Any Business - Should Be Evaluated On Its Merits • Get Involved and Ask Questions to Understand What the Organization is Doing • Interpret Findings and Closely Follow the Money on the IRS Form 990 or Audited Statements • Perform Due Diligence to Improve Your Decision Making • There are over 400,000 Non-Profit Organizations with a Military-Focused Mission1 "Sea of Goodwill," MAJ J. Copeland and COL D. Sutherland. Office of the Chairman of the Joint Chiefs of Staff