1. Standards for Excellence Institute Day 1

2. Kendall Sorenson-Clark KSC Solutions www.kscsolutions.com kendal@kscsolutions.com 301-934-1613

3. www.kscsolutions.com

5. Why Care about Ethics and Accountability? Public Opinion Easily swayed / high expectations / Limited confidence Looking for easy answers Competition for Funding How do you set yourself apart? Federal and State Regulatory Scrutiny Demonstrate the ability to self regulate

6. Americans are Active Donors, Volunteers, and Advocates 6 There are 209,128,094 adults in the U.S. who are 18 or older.* Approximately 163, 119, 913 or 78% of adults volunteer, donate or advocate with a philanthropic organization.** *Source: 2000 U.S. Census **Calculation based on 2008 DonorPulse Data; Categories are not mutually exclusive *citation: “Harris Interactive Donor Pulse Webinar February 24 2009. Donor Pulse http://www.HarrisInteractiveDonorPulse_SocialMedia_22409GEN.pdfhttp://www.HarrisInteractiveDonorPulse_SocialMedia_22409GEN.pdf

7. Nonprofit Engagement 7 *citation: “Harris Interactive Donor Pulse Webinar February 24 2009. Donor Pulse http://www.HarrisInteractiveDonorPulse_SocialMedia_22409GEN.pdfhttp://www.HarrisInteractiveDonorPulse_SocialMedia_22409GEN.pdf Among the adult general population:  42% Volunteered in the past year  72% Donated in the past year  Low Spending donors: Less than $1000 (72%)  Medium spending donors: Between $1000-$5000 (21%)  High spending donors: $5000 + (7%)  50% Advocated in the past year, people who look at least one action to express their opinion about an issue.  More engaged adults have higher favorability and views of sector (perhaps because they have made a bigger investment in the sector)

8. Charity research performed by donors, what they care about, and want 8 *citation: “Wise Giving? Most Donors Spend Little Time Researching Charities.” June 29 2010. Hope Consulting. http://www.hopeconsulting.us/money-for-good  35% of donors in 2009 did research before their donation  65% did none at all

9. Charity research performed by donors, what they care about, and want 9  56% who did research spent an hour or less  44% only looked at simple facts and figures *citation: “Wise Giving? Most Donors Spend Little Time Researching Charities.” June 29 2010. Hope Consulting. http://www.hopeconsulting.us/money-for-good

10. Charity research performed by donors, what they care about, and want 10  15% want a full report  85% care about nonprofit performance *citation: “Wise Giving? Most Donors Spend Little Time Researching Charities.” June 29 2010. Hope Consulting. http://www.hopeconsulting.us/money-for-good

11. Adjusting their Giving 60% will change their giving if nonprofits do a better job on areas important to the donors. 11 *citation: “Wise Giving? Most Donors Spend Little Time Researching Charities.” June 29 2010. Hope Consulting. http://www.hopeconsulting.us/money-for-good

12. Public Opinion Who does the best job of providing services to people in need? (N=1,557)  62% Religious/Charitable/Community Organizations  28% Government NPR-Kaiser-Kennedy School Poll Attitudes Toward Government May-June 2005

13. Public Opinion In general, do you think the nonprofit sector in America is on the right track or has pretty seriously gotten off in the wrong direction?  37% Right Track  22% Wrong Track  37% Not Sure Question asked of US Adults who volunteered, donated or advocated in the past 12 months Harris Interactive, Donor Pulse February 2009

14. Public Opinion Based on what you know, please rate your agreement with the following statement: Most charitable organizations are honest and ethical in their use of donated funds.  64% Strongly agree or somewhat agree  22% Somewhat or strongly disagree  14% Neutral Question asked of US Adults who volunteered, donated or advocated in the past 12 months Harris Interactive, Donor Pulse February 2009

15. Competition for Funding Increase in the Number of Nonprofits In 1998 there were about 1.1 million nonprofit organizations In 2010 there were over 1.5 million registered nonprofit organizations registered in the United States. Source: National Center for Charitable Statistics

16. Federal and State Regulatory Scrutiny US Senate Committee on Finance Hearings on Charity Oversight and Reform US House of Representatives Committee on Ways and Means Hearings on the Tax Exempt Sector Internal Revenue Service Joint Committee for Purchase/JWOD State Attorneys General, proposals in 19 states

17. Why Care about Good Governance & Management

18. Standards for Excellence A History 1996: Volunteers started developing the code 1998: Maryland Association of Nonprofits Launched its own Standards for Excellence Program 2001: Began replicating the project nationally 2004: Launch of the Standards for Excellence Institute 2005: Launch of National Standards certification program 2007: First organizations to earn the Seal of Excellence through the Standards for Excellence Institute

19. Standards for Excellence® Replication Partners 2011

20. Standards for Excellence®

21. Standards for Excellence What are They? 8 Guiding Principles and 55 Benchmarks Mission and Program Governing Body Conflict of Interest Financial and Legal Human Resources Openness Fundraising Public Affairs and Public Policy

22. Mission and Program Defined Mission Statement Evaluation Program Service Standards

23. Governing Body Roles and Responsibilities Board Composition Board Conduct

24. Conflict of Interest Disclose Everything Define Interested Parties How Decisions Are Made? Conflict of Interest Policy Conflict of Interest Statement Disclosure Forms

25. Human Resources Personnel Policies Volunteer Policies Employee Evaluation Employee Orientation

26. Financial and Legal Budgets Audits Financial Reports Financial Impropriety Written Financial Policies Legal Compliance

27. Openness Annual Reports Board Key Staff Financial Data Program Data Mission Public Access

28. Fundraising Fundraising Activities Donor Relations/Privacy Acceptance of Gifts Fundraising Personnel

29. Public Affairs and Public Policy Public Policy Advocacy Public Education Promoting Public Participation

30. Standards for Excellence An Organizational Tool A model for nonprofit organizations to implement accountability in their management & governance practices A framework with a clear statement of the organization’s commitment to best practices A self-regulatory tool to ensure public confidence and public support A demonstration of the organization's commitment to public service

31. Most Challenging Benchmarks Conflict of Interest Policy/Statements (61%) Program Evaluation (55%) Advocacy Policy (51%) Confidential Means to Report Impropriety (47%) Financial Policies (46%) Gift Acceptance Policy (43%) Board Development (39%) Employee Orientation (39%) Internal Review of Legal, Regulatory Requirements (36%)

32. The Standards for Excellence® Voluntary Certification Program

33. Introducing: Tiered recognition Easier to navigate Go at your own pace Start at level one or three Each tier builds on the previous!

34. Tier One: Essentials Adherence to Basic Legal, Regulatory, and Governance Practices Benefits Lower initial cost Responsive to limited time and resources Formally recognizes achievement and your organization’s progress towards full Standards for Excellence certification. Informal recommendations from program staff for future improvement and application to next tier.

35. Tier One: Essentials Application process Submission of the Tier One application package and checklist and application fee. Completion of a free online self- assessment and orientation is also required. Program staff will complete the formal review of the application. Organizations can remain at this tier for a term of three years

36. Tier Two: Enhanced Enhancing the Foundations of Nonprofit Management and Governance Benefits Discounts for quickly moving through the tiers. Ability to state completion of the Standards for Excellence Enhanced Tier. Additional informal recommendations from program staff for future improvement and application to next tier.

37. Tier Two: Enhanced Application Process Prior completion of Tier One. Submission of the Tier Two application package and checklist and application fee. Completion of the free online self- assessment. Program staff will complete the formal review process, with final approval by the Ethics Standards Committee. Organizations can remain at this tier for a term of 3 years

38. Tier Three: Certified Standards for Excellence Seal Holder All 55 Standards are included in the third tier Benefits Earn and display the Seal of Excellence State that their organization is “Certified Under the Maryland Nonprofits’ Standards for Excellence”, “Awarded Maryland Nonprofits’ Standards for Excellence Seal”, or “Approved Under Maryland Nonprofits’ Standards for Excellence” or “is a Standards for Excellence® Accredited Organization.”

39. Tier Three: Certified Application Process Can apply directly for Tier Three, or previously complete both Tiers One and Two. Submission of the application package and checklist and application fee. Review Process Program staff will first review the application. Anonymous peer reviews will evaluate the application second. Lastly, the Ethics Standards Committee must approve the staff and peer reviewers’ recommendation for certification. The Standards for Excellence certification will be awarded for three years.

40. Submit application to Standards Institute Is the application complete? Undergo 2 nd review by Peer Reviewers Have the standards been met? Undergo 3rd review by Ethics Standards Committee Should this organization be approved? Phase IPhase IIPhase III The Review Process

41. Characteristics of Certified Nonprofits

44. Mission and Program Main Topics A. Defined Mission Statement B. Organizational Evaluation C. Program Evaluation D. Program Service Standards

45. Organization’s Written Mission  Does your mission communicate: –Values? –Purpose? –Activities?  Are organization’s activities consistent with mission? Keep the mission front and center! Defined Mission Statement

46. Revisit the Mission  Every three to five years  Question if mission was accomplished  Is mission consistent with current programs?  Has context changed (social, demographic, environmental)? Organizational Evaluation

47. Program evaluation should consider:  Quality  Quantity  Outcomes related to costs/program efficiency  Outcomes for program participants/program effectiveness Program Evaluation Helpful Tool: A logic model

48. Program service should consider:  Treat the people with professionalism and respect.  Policy on confidentiality:  Grievance procedures  Assess satisfaction of program participants Program Service Are your clients happy with your services?

50. Governing Body Main Topics A. Roles and Responsibilities B. Board Composition C. Board Conduct

51. Does your board have an annual work plan? Board Responsibilities Long Term & Short Term Planning: Goals and Objectives Staying on Mission Evaluation/Reflection

52. Board Responsibilities Setting Policy Financial Personnel Volunteer Fundraising

53. How often should your board review financial statements? Board Responsibilities Annually approving the budget Assess finances through internal financial statements Review/approve annual audit Review allocation of resources

54. Board Responsibilities The Board & the Executive Director: Hire and supervise Executive Director (includes annual evaluation) Set Executive Director’s compensation

55. Board Responsibilities Reviewing the Organizations Compensation Structure Appropriateness of overall salary structure Consider developing a compensation philosophy statement Review comparable salaries

56. Small Group Activity Discuss the process for evaluating the Executive Director for your organization.  What are some of the questions you ask?  Do you talk to other staff? Write down common themes to share with the full group

57. Board Composition Main Topics A. Committed Individuals B. Employees on the Board C. Number of board members D. Term limits E. Diversity F. Compensation

58. Board Composition Commitments of Board Members Committed to the mission Possess skills to accomplish the mission

59. What are some challenges to having staff as voting members of the board? Board Composition Employees as Voting Board Members Permitted by law and by the Standards Employees must: Abstain from votes related to employee salary or benefits Abstain from votes related to evaluation or performance

60. Board Composition Size of Board Minimum of 5 Preferably more than 7 Unrelated Board members

61. Setting Term Limits Typically: 2 three-year terms Or 3 two-year terms What are the benefits to having term limits? Board Composition

62. Board Diversity Representative of community served Race and gender often considered Other social or demographic characteristics: Area of expertise Age Geographic area Income status Program participant status

63. Board Composition Board Members and Compensation No compensation for board service Reimbursement for expenses permitted Payment for contracted services permitted with adherence to conflict of interest policy

64. Board Composition Worksheet Take 10 minutes and complete the board composition worksheet based on your own board of directors. (Fill as much information as you can) Discuss in your group what you learned about your board from viewing the matrix

65. Conduct of the Board Main Topics A. Responsible for its own operations B. Clear Expectations C. Attendance D. Board Minutes

66. Conduct of the Board Responsibility for its Own Operations Education & Training Selection of New Board Members Development Periodic Evaluation of Performance

67. Conduct of the Board Establishing Expectations Clear, written expectations Reviewed by all board members Acknowledgement of Expectations Board evaluation consistent with expectations Specific job descriptions for officers, committees sometimes useful

68. Conduct of the Board Frequency of Meetings No less than four times per year Telephonic or internet meetings appropriate if acceptable under law

69. Conduct of the Board Board Participation By laws or board job description should address Attendance Participation Process to address noncompliance Removal of board members

70. Conduct of the Board Meeting Minutes Maintained in a central location Signed by prepared Presented for approval at next board meeting Provided to all board members

72. Conflict of Interest Policy Criteria for Conflict of Interest Policy Written policy For Board, Staff, and Volunteers Should include: What is a conflict? Disclosure procedures Decision by uninvolved board members Board approval

73. Conflict of Interest Statements Elements of a Conflict of Interest statement Annual disclosure of interests Should be signed at the organization’s initial affiliation and annually thereafter

75. Financial and Legal Main Topics A. Budgets B. Audits C. Financial Reports D. Financial Impropriety E. Written Financial Policies F. Legal Compliance

76. Annual Budget Board Approved Two Types Operating Budget Capital Contain same categories as the Form 990 Expenses and Revenues

77. Annual Budget Audit Budget > $500,000 Financial statements accurately reflect finances of the organization Recommended if budget exceeds $500,000 Management Letter

78. What are some indicators of good financial performance? Financial Reports Should be prepared at least quarterly Reported to board Budgeted vs. Actual revenue and expenses

79. Reporting Financial Improprieties Foster a culture of openness Methods for reporting improprieties Board Representative Suggestion Box Ethics Hotline

80. Financial Policies (Board Approved) Investment of Assets Internal Controls Unrestricted Net Asset (Reserves) Purchasing Policies

81. Legal Compliance and Accountability Assess need for insurance coverage General Liability Insurance Directors and Officers Insurance Board makes decision not to insure

82. Compliance with both state and federal law General liability and directors and officers coverage Periodic internal review of regulatory requirements Legal Compliance and Accountability