ACE March 2013 Newsletter by Arkansas Coalition for Excellence

Helping Nonprofits Help Arkansas

March 2013

Managing Your Money

Arkansas Coalition for Excellence: Helping Nonprofits Help Arkansas We are proud to work with you to achieve ACEâ&#x20AC;&#x2122;s mission and vision together: Mission: Strengthen Arkansas Nonprofits Vision: A strong, vibrant, united and effective nonprofit sector that is well positioned to meet the diverse needs of all Arkansans. Our Core Values: Best Practices |Inclusive | Unity in Diversity | Connecting & Equipping | Statewide Vision | Regional Approach

IN THIS EDITION 3

Greetings from ACE

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Upcoming Trainings and Events

Member Corner

Advocacy Updates

Consultant Corner

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Nonprofit Salary Survey Benefit of the Month Resources & Other Links Contact Us

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

GREETINGS FROM ACE ACE Members and Friends, There is nothing less sexy than financial management unless, of course, you are a CPA. There is also nothing less threatening to the existence of your organization than the mismanagement of your finances. Thus, for most executive directors of nonprofit organizations, financial management is an acquired taste, and often contrary to one’s natural strengths and talents. However, like most things, a little education, planning and consistency can go a long way in making sure your nonprofit is on the right track. Every article in this issue can help positively impact the finances of your organization. In addition, as a social worker, my education in this area has been long on learning by natural and logical consequences. I’d like to share with you lessons I’ve learned in the field. #1 When you need help with making sense of your agency’s finances, look to your bookkeeper, auditor, board member or even a volunteer with expertise in this field. As the leader of your team, you don’t have to know everything, but you do need to know where you can get what you don’t know. This edition is full of experts we go to when we have questions or concerns. #2 Work with a knowledgeable expert in setting up a system that meets your organization’s needs. The cookie cutter approach doesn’t work with financial management because every organization is different. (See Glen Nishimura’s article in this edition.) #3 Make sure you have someone on your board that is knowledgeable about financial management. The Board of Directors has a fiduciary responsibility whether you have the expertise or not. It’s much better to have it. #4 Financial Policies are a MUST! If you don’t know what the rules and procedures are, then you are asking for trouble, particularly as your organization grows. Even for those large or longstanding organizations, reviewing these policies on a regular basis can identify issues raised by changing laws, technology and organizational structural issues such as changed staffing patterns. #5 MAKE SURE YOU HAVE NOT ONLY HONEST PEOPLE WORKING WITH YOU, BUT ALSO THOSE THAT WILL QUESTION AND SPEAK UP WHEN THEY SEE SOMETHING THAT DOESN’T LOOK RIGHT OR FEEL RIGHT! When you have a visible ethical value about how you steward the public’s trust and money, you are preventing problems before they start. And before you know it, YOU’LL become the expert in your nonprofit’s financial management. Who knows, you might even start to like it. Sincerely, Stephanie F. Meincke, MSW President & CEO P.S. Members – be looking out for a letter from me in a couple of weeks that announces some exciting changes and upcoming events for ACE. Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

UPCOMING TRAININGS, EVENTS & PROGRAMS Beyond Funding: Building Capacity for Your Nonprofit Hosted by: ACE, Clinton School of Public Service, and the UAMS Translational Research Institute Tuesdays, April 2-30 8:30 a.m. to 12:00 p.m. Clinton School of Public Service Cost: $125 ACE Members | $175 Nonmembers (Are you an ACE Member? Click Here) Register Here

Nonprofit Audits in a Nutshell Presented by: Jenifer Holland, Senior Governance Consultant for BoardSource In partnership with the National Council of Nonprofits Thursday, March 28 2:30 p.m. to 3:30 p.m. Conference Call Cost: Free for ACE Members Only (Are you an ACE Member? Click Here) Register Here

Health Care Reform: Where are we now? Where are we going? Presented by: Joshua Osborne and Alexandra Ifrah, Friday, Eldredge & Clark New Date*: Thursday, May 2 9:00 a.m. to 11:00 a.m. Arkansas Community Foundation Cost: Free for ACE Members and Nonmembers *Please watch for e-mails with registration information

Building Capacity with Pro Bono Presented by: Aaron Hurst, Taproot Foundation and Rachael Chong, CatchafireIn partnership with the National Council of Nonprofits Thursday, March 25 2:30 p.m. to 3:30 p.m. Conference Call Cost: Free for ACE Members Only (Are you an ACE Member? Click Here) Register Here

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

ACE WELCOMES BOARD EXPERT, SUSAN MEIER Join us for a rare opportunity to hear and engage with a national expert on the critical issue of board engagement and effective governance. Susan Meier, Principal of Meier and Associates, brings over 23 years of experience in nonprofit boardrooms. As the former Vice President of Consulting and Training at BoardSource, the premier national organization dedicated to nonprofit governance, Susan has worked with over one hundred boards and thousands of nonprofit leaders.

Thursday, May 9 9:30 a.m. to 3:30 p.m. UCA, Brewer-Hegeman Conference Center Cost: ACE Member $65, Non-Member $95 Register Here Sponsored by: Delta Trust Investments, Inc. | Hudson Cisne & Co. LLP

OTHER EVENTS The Summit: Where Volunteer, Philanthropy & Nonprofit Leaders Meet Hosted by: Arkansas DHS Division of Community Service & Nonprofit Support April 18-19 Embassy Suites, Little Rock Cost: $110 Click here for more information

Creating Sustainable Funding For Your Nonprofit Hosted by: Arkansas Single Parent Scholarship Fund Presented by: Terry Axelrod, Benevon Friday, April 19 9:30 a.m.- 11:30 a.m. Cost: Free for ACE Members and Nonmembers Click here to register

Cash Flow from Your 990? By: Reid Smith, Scruggs, Ridge & Company, CPAs Does your organization provide at least 50% of your employees’ health insurance benefits? If so, your organization may qualify for the Small Business Health Care Tax Credit for Small Employers, which is a refundable tax credit based on your health insurance expenses. This tax credit can provide a refund up to 25% of health insurance expenses providing an extra boost to your organization’s cash flow and helping offset the ever-increasing cost of health insurance benefits. A tax-exempt employer with $50,000 in health insurance benefits could qualify for a refund up to $12,500. On January 1, 2014, the maximum amount of the credit is expected to increase to 35% for tax-exempt employers making the credit even more valuable. The amount of the tax credit is determined on a sliding scale based on the number of full-time equivalent employees (FTEs) and the average wages. To qualify for the credit you must have fewer than 25 FTEs with average wages less than $50,000. The tax credit is reduced if an organization’s FTEs are greater than 10 or if average wages are in excess of $25,000. The credit is refundable so your organization can qualify without any taxable Income. However, the amount of the credit is not allowed to exceed your income tax withholding and Medicare tax liability. Tax-exempt employers must file Form 990-T to claim the credit. If your organization missed the tax credit, you can still amend your 990 for previous tax years and claim the credit. For more information regarding your organization’s ability to qualify for the credit or assistance with preparation your 990 please contact Reid Smith, CPA at reid@scruggsridge.com or call 501-315-3503.

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

MEMBERSHIP New and Renewing Members

Member of the Month: Economics Arkansas Economics Arkansas wins Nonprofit of the Year Award

Want to join our coalition of over 300 members dedicated to strengthening the nonprofit sector ? Contact Rebecca at 501.375.1223 or email rzimmermann@acenonprofit.org.

Congratulations to Economics Arkansas for winning the Arkansas Business of the Year Award in the Non-profit category. The announcement was made during the 25th Annual Arkansas Business of the Year Awards at the Statehouse Convention Center in Little Rock on February 26. “Increasing the economic and financial literacy of our population will not only impact students as they each seek their own American Dream, but it will also impact the state’s economic development opportunities. Thank you for recognizing our lifechanging and empowering mission of economic and financial literacy,” said Economics Arkansas Executive Director Sue Owens as she accepted the award, along with a check for $2,500 presented by AT&T. Founded in 1962, Economics Arkansas trains educators to teach economics without the “eeek” to Arkansas students K-12. Economics Arkansas (previously known as the Arkansas Council on Economic Education) has conservatively impacted 75,000 teachers over the past 50 years, which translates into 3.7 million students. Simply stated, they help Arkansas teachers prepare young people to enter our complex economic system as adults with “real life skills.” Today’s children are tomorrow’s workforce, and they cannot afford to leave school without a firm understanding of our economic system. Economics Arkansas teaches the importance of developing human capital along with decision-making skills and financial know-how so they will understand how to manage their resources. In addition, Arkansas students need to understand the global market, its interdependence and our own free market economy. Arkansas students will soon be consumers, producers, savers, investors and voting citizens, so they should be prepared for this role. Economists have said that economics is really the science of decision-making. Why do we make the choices we make every day? As early as Kindergarten, we start making choices that affect our future. Some are mundane: Vanilla or chocolate? Others are more complex: Do I study for a test or watch a movie? Others change lives: Do I stay in school or have a baby? The economic way of thinking helps everybody make better choices. Click here to read more.

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

ADVOCACY UPDATES Congress Acts on Current Spending, Future Budgets The House and Senate enacted a $982 billion spending bill that funds federal government operations and programs through the end of the current fiscal year (September 30), and each chamber has approved its own budget blueprint for the next ten years. The appropriations legislation kept in place the $85 billion in cuts to domestic and defense spending that automatically went into effect under sequestration, but policymakers did make some adjustments to the across-the-board cuts to prevent a few hardships and anomalies that had received media attention.

The 2014 Budget Resolutions approved separately by the House and Senate reflect the fiscal priorities of the two political parties. The House version of the non-binding resolution would achieve balance by retaining the $1.2 trillion in sequestration cuts, adding more spending cuts, repealing the Affordable Care Act, converting Medicaid and food stamp programs to block grants to the states, and revising Medicare. It calls for comprehensive tax reform that removes undefined tax loopholes, but that does not raise new tax revenues. The Senate resolution calls for replacing the sequestration cuts with other spending cuts and tax revenues, including raising $975 billion over 10 years by closing “loopholes” and cutting “wasteful breaks that primarily benefit the rich.” House and Senate budget leaders must now sit down and try to fashion a compromise budget from the radically different texts.

Charitable Giving Incentive: Not a Loophole The debate on the Senate Budget Resolution reiterated a point that most charitable nonprofits have been stressing for years: the charitable giving incentive is not a loophole but an important policy decision that is vital to communities. Senator Ron Wyden (D-OR) explained at a Budget Committee hearing that the charitable deduction should not be considered a “loophole” in the tax code, but a “lifeline” that encourages individuals “to give more than they would otherwise give.” Senator John Thune (R-SD) stressed during the Senate floor debate that the charitable deduction is essential to enabling the private sector to fill the needs in communities that “otherwise would have to be met by government spending.” Likewise, economist Martin Feldstein explained in aWashington Post article, “The full deduction for charitable contributions should be retained, because the money that taxpayers give to charity benefits those organizations rather than the individual taxpayer.”

Volunteer Mileage Rate Legislation Introduced A bill in the House would raise to the business rate of 56.5 cents/mile the rate that volunteers would be able to deduct from their taxes. Under current law, volunteers who drive their vehicles when they perform work on behalf of a nonprofit are restricted in tax law to deducting only 14 cents per mile, a rate that is set in statute and has not been changed in decades.

OMB Extends Comment Deadline The White House Office of Management and Budget is extending the comment period for the Proposed Guidance on Federal Grantmaking until June 2, 2013. The new deadline gives interested parties additional time to analyze the issues and prepare their comments. The proposal is available at www.regulations.gov under docket OMB-2013-0001. See earlier article in Nonprofit Advocacy Matters.

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

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CONSULTANT CORNER Seven Basics of Nonprofits Money Management (and some advice) By: Glenn Nishimura, Arkansas Nonprofit Services We’ve all read the headlines: “Arkansas nonprofit closed by the IRS for failure to pay withholding taxes.” “Trusted employee embezzles $50,000.” “State suspends grant to nonprofit due to questionable financial reports.” The better you understand and manage your finances, the better your chances of avoiding negative headlines. Money management is about understanding your income and expenses, knowing your net worth and producing useful financial reports. The most important thing about a financial report is that it is accurate, understandable, and generates information that helps you make reasonable decisions based on your capacity and resources The Basics Any financial system has the same basic components, whether it is for a family, a business, or nonprofit: - Develop and maintain a recordkeeping system - Track income and expenses - Create a budget - Produce regular financial reports comparing budget to actuals - Get help if you need it - Understand cash flow - Build a reserve Stay in Compliance As a 501(c)(3)nonprofit, you are required to follow certain state and federal rules. These may feel bureaucratic and unnecessary but you are going to have to do it so just get it done, and do them on time. Set up a compliance calendar to remind you when reports are due. - The IRS requires you to file a 990 every year. The timing depends on your fiscal year. - The Arkansas Secretary of State requires nonprofits to file an annual report with them by August 1. - The Arkansas Attorney General’s office requires nonprofits to register with them, file an annual report on the anniversary date of their registration, and file annual information about their fundraising activities by May 15 or 6 months after the end of your organization’s fiscal year. These requirements are subject to certain exemptions. If you have a paid staff, payroll reports are especially challenging and can be a constant headache. Unless you have someone on staff that is comfortable with all the requirements of payroll reporting, you need to outsource these tasks or look for volunteer help. Read more...

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

2013 Nonprofit Salary Survey Columbia Books and Arkansas Coalition for Excellence have joined together to produce the 2013 Arkansas Compensation Report. Thanks to our state participants, members and nonmembers, the State Salary Survey conducted in the Spring of 2013 will be a collection of invaluable data on nonprofit compensation specifically in Arkansas. 100 organizations in Arkansas must participate in order for a state-specific report to be created. What does the full report include?

- Specific market salary information for over 100 positions including median salaries, average salaries and more within your state - Compensation analysis by title, nonprofit type, budget and staff size - Easy-to-use charts and graphs How can the report help you? - Determine the most competitive salary level for each position to support recruitment and retention - Understand how your organization’s pay levels compare with others in your state - Track changes in nonprofit pay levels and trends from one year to the next - Provide hard data to support your salary structure recommendations

The report has been prepared by experts with over 30 years of experience in conducting regional nonprofit compensation studies. With 123 job titles and detailed job descriptions, you will be able to match job titles and actual job content. As a member or non member participant you will also receive a unique organization code that will allow you to find your data in the report and compare it to others across Arkansas When will the report be available and how much will it cost? State Report: National Report: Members who participated – free Members who participated – $129 Members who did not participate – $75 Members who did not participate – $242.90 Nonmembers who participated – $75 Nonmembers who participated – $129 Nonmembers who did not participate – $150 Nonmembers who did not participate – $347

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

BENEFIT OF THE MONTH

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

RESOURCES AND OTHER LINKS From a Funder’s Lens: Red Flags for Poor Financial Management By: Ann Carrithers, Hot Springs Area Community Foundation

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A non-profit receives a large gift because of planning giving. The board and director immediately think of ways to spend it as soon as possible. No plans are made for future or unexpected expenses.

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An agency has a very successful fund raiser for the purpose of adding services. However, the budget is tight, and some of the money is used to meet operational expenses.

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A grant is written to purchase needed office equipment. The grant is awarded. The agency fails to report to the funder at the completion of the proposal. A grant is written for one purpose, but when awarded, the agency uses the money for an emergency that arises. When, and if, extra money is available, endowment building can attract contributors. Although many foundations will not award grants to agency endowment funds, they recognize that the agency that has an endowment fund is stable and is preparing for future financial needs. Funders have guidelines they must meet to award grants, and their resources are usually limited, as well. So what do they look for?

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Accountability.

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Sustainability

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Community support

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Wise use of gifts and grants

Agencies that meet these standards have an excellent chance of building their resources with private and public funders.

Nonprofit Finance Fund For more information on nonprofit financial management check out the Nonprofit Finance Fund’s blog and read the 2013 State of the Sector Survey results.

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

LEADERSHIP TIP OF THE MONTH Every Organization Needs a “Lefty” By: Mike Harbour, Harbour Resources It is not glamorous. It is not exciting. But it is absolutely essential to the success of any organization. What is it? Managing your money. Realistically, there are only two sides to the equation – income and expenses. Managing finances is the bridge that creates the balance between the two. This is tied to the solid principle of building and battling. Every organization needs key players at these two ends of the spectrum – the big picture expanders who are actively growing and building the organization, and the detailed planners who are watching carefully to be sure the growth is done at a controlled pace. No organization will be strong unless it has these two components. Too much growth, and the organization will acquire insurmountable debt. Not enough spending, and it stagnates. Read more...

IN THE KNOW 2013 Nonprofit Salary Survey ACE will participate in a 2013 Nonprofit Salary Survey through a partnership with the National Council of Nonprofits and Columbia Books. ACE members who complete the survey will receive a free copy of the final report. Register today!

The State of Grantseeking – by GrantStation The State of Grantseeking Spring 2013 is the sixth semi-annual informal survey of nonprofit organizations highlighting the current state of grantseeking in the U.S. The survey results will provide up-to-date information to help nonprofits as they continue to adjust to current economic conditions and plan their grantseeking strategies, in addition to giving organizations a benchmark to compare to their own grantseeking experience. Click here to take the survey.

JOBS CENTER Development Director-Arkansas Advocates for Children and Families Director of Development– Mid America Science Museum Development Director– Argenta Arts Foundation Administrative Assistant- Arkansas Advocates for Children and Families

ACE Members can post jobs to the ACE Jobs Board for free as part of their membership. Click here to create your employer account.

Arkansas Coalition for Excellence | 200 River Market Avenue, Suite 100 | Little Rock, AR 72201 | 501.375.1223 | www.acenonprofit.org

Thank you for reading this monthâ&#x20AC;&#x2122;s edition of our newsletter. Questions or Comments? Contact us.

Stephanie F. Meincke, MSW President and CEO smeincke@acenonprofit.org Emily C. Ingram, Vice President eingram@acenonprofit.org Rebecca Zimmermann, Program Coordinator rzimmermann@acenonprofit.org Ivan Martinez, Membership Services, AmeriCorps*VISTA imartinez@acenonprofit.org

Helping Nonprofits Help Arkansas

Located within the Charles A. Frueauff Foundation Offices 200 River Market Avenue, Suite 100 Little Rock, AR 72201 (501) 375-1223 www.acenonprofit.org