Attention Board Presidents! You might get this call...

After a week of traveling on business (for Sage), I returned to the office Friday to a somewhat confusing voicemail. It was a lovely woman from the City of Austin Health Services department, inquiring about an audit report, and if I could give her a call back.

I thought "hmmm....an audit report? I wonder if they are a fund accounting customer, and somehow got transferred to me instead of support."

So, I picked up the phone, and gave her a call. I introduced myself as calling from Sage, and she, too was equally confused.

Then the light bulb moment hit. She was calling on BookSpring - the nonprofit I'm president of, not Sage. Ahhhh...starting to make sense.

This group had received our audit report, and wanted to know if the board had reviewed the audit. Additionally, she wanted to know if we had an audit committee, if the board meets with the auditor, and if they could have the minutes for the meeting in which we discussed the audit.

Of course my responses were "yes, yes, yes, and sure - let me get them to you Monday since my documents are on my home PC."

If you've been following Austin at all, you might of heard of a well-respected nonprofit called Family Connections. This organization, the board, funders, and supporters were duped by a very smart, very clever executive director who basically took them for all their worth - and fled to another country where she has duality. (http://www.statesman.com/news/local/family-connections-shuts-down-561391.html)

There are three points to this post:

1. Board Presidents: expect to recieve more and more calls like this, particularly from funders and program supporters.
2. All board members: it IS your responsibility to understand the controls your organization has in place. Question, question, question - not everyone brings a strong financial background to a board, but we ALL are financially responsible for it's performance. Contact your local nonprofit membership organization if you need a starting place to ensure proper board governance!
3. Prospective board members: while this level of transparency is expected, does it make you nervous to join a board? If not join, take a leadership role?

I have lots of thoughts and predictions, but I'll save them for another post when they are a bit more formalized (and before I make an ass out of myself).

Until then....

Unemployment Rates Key Indicator for Nonprofit Revenue Futures

Of all the economic indicators, I believe unemployment is the most important one for nonprofits to watch. More important than consumer confidence, stock market, housing market, etc.

Why?

High unemployment rates:

1. Increases in demand for services. A larger population struggles to meet the basic needs for themselves and their family. This puts additional strain on the nonprofits that already serve and underserved population with limited capacity for expansion.
2. Decreases in individual donations. This comes in two forms. First, a smaller donor pool, and second, pressure from the remaining employed to increase gifts to cover the funding short-falls.
3. Finally, Decreases in corporate giving. If employers had to resort to workforce reductions, and employees are their most valuable asset, this means that there is fewer dollars available for charities. Now, not all corporations may operate this way, but in general, I bet this is very, very true.

Let's take this a step further. Unemployment also affects tax bases, particularly for the states. The tax-revenue gaps create budget shortfalls, some very severe.

Because of the short-falls, some states are looking to revoke some tax-exemptions for charities such as state tax, property, etc and/or institute deals to cover fire/water services with nonprofits (such as large educational institutions and hospitals). There is no word if any of this will actually go through, but it certainly may "tax" already cash-strapped service providers.

Tell me I'm wrong....