Strengthening Nonprofit Governance & Management
 536 N.Jackson Street,  Jackson, Michigan 49201

May 2011

In this issue... (click to jump)

Upcoming Workshops

Wednesday, January 01, 2014 12:00 AM • Does every member of your board understand their legal obligations, basic responsibilities, and duties?
Thursday, April 24, 2014 8:00 AM • United Way Conference Room A/B, 536 N. Jackson St., Jackson, MI 49201
Thursday, May 01, 2014 8:00 AM • Cascades Manor House, 1970 Kibby Road, Jackson, MI 49203
Tuesday, May 06, 2014 8:00 AM • United Way of Jackson Conference Room A/B, 536 N. Jackson St, Jackson MI 49201

Welcome New Members

Wow!  We have welcomed more than **30** new members so far this year!


Welcome - and to all of our members who continue to renew, attend workshops and participate in networking activities - thank you!


Five Internal Controls for the Very Small Nonprofit                   Carl Ho, CPA

Segregation of duties, checks & balances . . . difficult to implement in the organization that has perhaps three or fewer staff, or only a few active board members in an all-volunteer organization. We asked CPA Carl Ho, who works with dozens of small nonprofits, what would be the five most important, most do-able controls for small groups:

1. The first and most important consideration is to set the control environment, that is, to let everyone know, from the top down, that there are policies in place and everyone has to follow the policies. In so many organizations the top person makes exceptions for himself or herself about policies, which sets a sloppy or even unethical tone. Then other people don't think they have to follow procedures, either, and they start cutting corners. The top person can't ask for reimbursement for anything for which they don't have a receipt. The management team members must all use time sheets themselves, get approval for travel expenses, have their credit cards scrutinized.

Emphasize the importance of ethics and controls at staff meetings, and demonstrate that everyone follows the rules, all the time.

2. Define clearly who is responsible for what. It's very common in small organizations, where not as much needs to be written down, for people to say,"I thought she was going to check the invoice." For example, with invoices: who is responsible for checking the math? Who is responsible for approving the invoice to be paid?

3. Physical controls. Lock it up. Computers should be locked to desks, and they should be protected with passwords. Put checks in a locked drawer. Among other abuses, there are too many cases where someone comes in and takes checks from the middle of the checkbook.

4. If there's cash involved -- such as at a fundraiser or box office at a performance -- have two people count all the cash together.

5. Reconciling the bank statement is a very crucial step. It's very unlikely that someone is going to steal from you and run away forever. Reconciling the bank statement means that embezzlement can't go on for very long.

Ideally someone other than the bookkeeper (or who ever handles the money) reconciles the bank account from an unopened statement. That's a strong check on the person who handles the money. But in a small nonprofit there may not be a bookkeeper, and there may be only one person who does everything. In these instances someone else, such as a board member, should receive the unopened bank statement, and look it over before giving it to the bookkeeper or the sole staff person.

There are several controls that are commonly recommended but that you haven't mentioned. Could you comment on them? For example:

Payroll? Payroll controls at small organizations are actually easy because everybody knows everybody, so it's harder to create fictitious employees and pay them. The one area for attention is approval of timesheets for people working on an hourly basis. In these cases someone -- who knows what work they did -- should review and approve timesheets.

Two signatures on checks, or on large checks? This is okay as a policy, as long as you know that banks don't enforce this policy, nor can you hold them liable for a check that goes through with only one signature. Two signatures is a good policy so that someone sees the big checks, but it's more about setting the right tone than about preventing theft.

The person handling money not allowed to sign checks? Bookkeepers should not sign checks. But in a really small organization this may not be practical. One approach is to allow the bookkeeper (or the person who handles the money) to sign small emergency checks, for no more than $100 or $200. If everybody knows this rule, it helps to set a tone of accountability. And again, it will be caught by the person who does the bank reconciliation.

Funders that have Supported our Work this Year!

United Way of Jackson County
The Hurst Foundation
Weatherwax Foundation
Michigan Nonprofit Association

Can you hear me? 

I was recently the guest speaker at the Jackson Rotary and as Monica Moser was introducing me, she shared that I am a avid fan of my kids and have a "collection" of cow bells that I take to football games.

The background to that story is that after games, I would ask my kids if they could hear me - above the noise of the game, the noise of the opposing team, the noise of the crowd.  And their answer was: "No" - the family joke is that if they had only said yes...

It was so important to me that they knew I was watching THEM, and was cheering THEM on, I saw their successes and knew their challenges. I did see that play - and I did see that tackle, that block. So, I started collecting cow bells. I bring about 4 to every game. I have pom poms and an assortment of fan gear. Some may say I take my role a bit too seriously.  But you and I know better.

Yes, they can hear me now. They know I am there and am cheering on each success or encouraging them to get up, brush off and try again.

Since I was at Rotary to promote not only what Nonprofit Network does - but what our members are doing, and their struggles and successes - it occurred to me that it is as important to me to know YOU, our members, can hear me cheering you on, too. 

I may not be able to be on the field with you, but I am here, encouraging you to get up, brush off and try again - and when you make it to the end zone, I have a cow bell in each hand going crazy. 

Above the noise of the game, the noise of the opposing team, the noise of the crowd - I hope you can hear me. 

Our Fall Conference SAVE THE DATE!!  Friday, November 4th

We are thrilled with how the lineup is coming along for our fall conference.  The following speakers have already been confirmed:

  • David Near, Near Consulting Group - Taking your Board to the Next Level
  • Dan Robin, Nonprofit Enterprise at Work - Recruitment and Onboarding for an Engaged Board
  • Diana Kern, Nonprofit Enterprise at Work - How to Engage your Board in Fundraising
  • Jerry Pinney, Jerry Pinney & Associates - The Art of Leadership and The Five Dysfunctions of a Team
  • Donna Mullins, Michigan Department of Human Services - Avoiding Communication Potholes
  • Georgeann Herbert, Detroit Public TV - Storytelling
  • Tamela Spicer, Consultant - Growing Exceptional Events
  • Phil Wezenski, Toy House & Baby Too - Staff and Board Meetings that Everyone Wants to Attend
  • Allison Treppa, Michigan Nonprofit Association - Creating a Communication Plan
  • Dennis Dupre, Detroit Executive Service Corps - Nonprofit Finance and Oversight

And we aren't done yet! Look for registration information to be available soon! 

Cost-Cutting Ideas You Might Not Have Thought Of                          Barbara Haislip, Wall Street Journal

Lower the Cost of Debt

The interest rate being charged on debt is more important than the amount owed, says Charles D. Katz, an accountant in Sudbury, Mass. So, he advises listing all debts owed by your company, starting with the highest interest rate and going on down. Pay the minimums on the lower-cost debts, and pay off the highest-cost debt as fast as possible.

Let Workers Telecommute

Craig Smith, founder and CEO of Trinity Insight LLC, an e-commerce consulting agency in Philadelphia, boosted his company's efficiency with free software that lets employees access their office computers from home. Before these tools, such as LogMeIn, Trinity Insight would have to deal with employee absences for doctor appointments or family illness. That meant key tasks weren't being done in a timely matter. Mr. Smith says, "Having employees being able to get tasks done from home allows the business to run more effectively and allows us to ensure that client needs are being met, while at the same time allowing our employees to have a work/life balance."

Play Hardball

Mr. Andrawes of Personalwine urges the procurement team at his Austin, Texas, company to get bids from three different vendors to ensure the best deal. And he encourages them to ask vendors for 10% off the cost of any item they're purchasing. "Asking for discounts and fighting for lower prices will save you tens of thousands of dollars," Mr. Andrawes says. "It never hurts to negotiate, because the vendors are asking for discounts themselves from their suppliers­, everyone is doing it."

Mr. Andrawes also suggests creating a "profit savings" pool, where the company contributes 2% of any savings on a purchase to its employees.

After using the practice with two of his employees, he says, he cut the cost of wine accessories and office supplies by some $14,000 last year.

Get a Check

For transactions over $1,000, Personalwine's Mr. Andrawes gives a 1% incentive to his sales reps to close deals with personal checks or cashier's checks instead of credit cards. This step saves the nearly 4% transaction fee that merchants must pay credit-card processing companies. "We saved $8,000 in transaction fees last year and it cost me $1,000 in incentives," he says.

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