September 2008 NEWSLETTER
William Harper Associates Newsletter
This newsletter is a free service to the North American not-for-profit community from William Harper Associates. Its focus, like everything we do, is on helping organizations that do good, do better!
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In this issue:
- FEATURE ARTICLE: Maximizing value from your finance function
- NEWS AND RESOURCES: Altruvest Governance Forum
- FOCUS ON RISK: Five Risks to Watch
- NEWS AND RESOURCES: AFP/RBC Foundation Bursary available
- FROM THE ARCHIVES: Member Polls
FEATURE ARTICLE: Maximizing value from your finance function
Many not-for-profits view the finance function as a part of “administration”, or worse, “overhead”. And, for sure, many NPOs' finance functions do little more than fulfil an administrative requirement. If this sounds like you, then you are likely failing to get full value from your finance function.
A hierarchy of finance function value-added will help to illustrate that many organizations invest heavily in low-value finance activities, while neglecting the high-value:
- Transactional. These are the traditional “bookkeeping” or “controllership” activities of finance. Processing, recording and reporting on transactions. Basic compliance activities, such as filing GST returns or T3010As. Paying employees and suppliers. Clearly, these are required activities, and it would be inappropriate to ignore them, but they don't add much value to the organization for the effort involved.
- Analytical. These are higher-level, “accountant” or “financial analyst” activities. Many organizations have rudimentary capabilities in this area, but are still heavily reliant on manual processes and endless “one-off” analyses. The analytical stage includes management accounting reports, financial statements, budgets and cash flow projections, rudimentary tax and compliance planning activities. At its best, the analytical finance department can rise to the occasion to provide “decision-support” to management. There's value in this, but many Executive Directors say that it is like pulling teeth to get timely, valuable information to support their decision-making. This area is often under-resourced, leading to painful or just plain poor decision-making.
- Insightful. This highest-level category of finance activity – for which I've
coined the term “insightful” – is, sadly, a foreign concept to many NPOs. This
category includes activities that leading for-profit businesses would see as the
purview of the Chief Financial Officer. It includes traditional high-end finance
functions, such as:
- asset and liability management,
- organization-wide cost control,
- outsourcing, and
- corporate finance (or strategic support for transactions such as mergers, spin-offs and reorganizations)
- risk management,
- business process improvement,
- governance, accountability and transparency,
- non-financial measures and metrics,
- business intelligence, and so on
In the for-profit sector, the strongest organizations are positioning the CFO as a key partner to the CEO. In our sector, consider how the ED is supposed to address these issues. With day-to-day administration often spilling onto the ED's plate, not to mention leading both development and program management activities, the ED is already spread thin. And, the skills and experience that are necessary to address these functions are rarely in the ED's realm.
In a companion series of articles (see below), we review some of the top risks that organizations face – one need only browse that list to see that the CFO function should be a key one for our sector.
Clearly, the small association or charity cannot afford – and likely doesn't need – to hire a dedicated CFO as well as the other traditional members of the finance department. But, the prudent NPO and the leading NPO will both need to tap into this skill set from time to time.
NEWS AND RESOURCES: Altruvest Governance Forum
Altruvest Charitable Services is bringing Bill Ryan, author of Governance as Leadership: Reframing the Work of Nonprofit Boards, to Toronto on October 16th for its Governance Learning Forum. This is an important opportunity for senior staff and Board members to hear first-hand from one of today's leading governance experts. I attended the overview session last year, and can personally guarantee that you will find this a relevant, valuable – and enjoyable – session! Check out the details at Altruvest's Website.
FOCUS ON RISK: Five Risks to Watch
In our summer issue, we highlighted Ernst & Young's top 10 strategic risks for business globally, and promised to address them in more detail over the coming months. This month, we comment on five of these risks, and what they might imply for our sector. Keep in mind, however, that our sector is enormously diverse – more so than most – and no brief article can hope to capture all the possible implications of these global trends. Our focus here is simply to elaborate on the identified risks enough to allow you to consider them in your own circumstances. The first five risks identified in the E&Y survey, then, are as follows:
- Regulatory and Compliance Risk – Regular readers of this newsletter will
recognize this risk. As several recent reports have indicated, the CRA is newly
active in regulating charities. And, while CRA's focus right now in the majority
of cases is on education, don't ever forget that CRA is a regulator, not an educator.
There have a been a number of high-profile cases over the summer where CRA has
revoked charities' registrations and aggressively investigated what it perceives
as tax shelter schemes and other abuses. Obviously, not entering into aggressive
schemes is one technique for managing regulatory risk, but don't assume that
operating prudently is sufficient to avoid all regulatory scrutiny and sanctions.
We suggest, as a starting point, that you have a comprehensive picture of your organization's regulatory framework – consider both federal and provincial sector legislation for sure, but don't forget a whole range of other employer/workplace, environmental, and similar statutes. - Global Financial Shocks – Is the global credit crunch and US housing/mortgage meltdown relevant to you? Perhaps not directly. But it is relevant to your bankers and other financial partners, and it may impact how they choose to do business with you. When faced with the significant losses that have reverberated through the financial sector, many financial institutions may become broadly risk averse, and make far more stringent (too stringent?) decisions about their business across the board. If you find your financial affairs suddenly subject to a credit or other review by your financial institution, take it seriously, and make sure you put your best foot forward.
- Aging Consumers and Workforce – This trend is hardly new to the sector and specifically, readers of this newsletter. Much has been written in the sector from a giving perspective for the aging baby boomer, and we have featured articles from consultant Bill Fields on the challenges of Gen Y, including as they deal with boomer volunteers. Demographics can significantly impact charities and associations of all types, not just those dealing specifically with age-related issues and challenges. You should examine all your constituencies – donors, members, employees, even board members – from a demographic perspective, and consider how to deal with trends that are apparent now.
- Emerging Markets – For many organizations with a local, regional or even national catchment, the reality of emerging markets may seem to be not very relevant. And, yet, the dramatic emergence of the economic and political power of the so-called BRIC (Brazil, Russia, India, China) will have far-reaching and significant impacts for all. This could mean opportunities such as offshoring (feasible for even the smallest organization) or other cost-savings, or it could mean challenges, such as local political reactions to unsafe imported consumer goods. But, there will be both macro and micro impacts.
- Industry Consolidation/Transition – The trend of corporate restructuring
is one that we feel should be more prevalent in our sector than it has been. Whether
- seeking operational and communications efficiencies from the greater size of a merged not-for-profit
- looking for improved deployment and synergies from investing extensively in information technology on some shared basis
- improving the effectiveness of programs by strategically realigning offerings among participants
Next month, we will review: Energy Shocks, Execution of Strategic Transactions, Cost Inflation, Radical Greening, and Consumer Demand Shifts.
DID YOU SEE: Our July/August 2008 Newsletter Line Up
Last month's Newsletter included the following items. If you missed any of them, click here:
- Strategic Risks for the Sector
- When is a receivable not a receivable?
- CRA Charities Directorate Activities
- Leverage your core competencies
NEWS AND RESOURCES: AFP/RBC Foundation Bursary available
The Association of Fundraising Professionals' Toronto Congress 2008 is a major professional development opportunity for those with fundraising responsibilities. To assist those who might otherwise be unable to attend, AFP and the RBC Foundation are making available bursaries. You can read about the details, and download an application form, at AFP Toronto's Website.
FROM THE ARCHIVE: Member Polls (from May 2007)
Associations occupy a unique space among organizations, holding a privileged, quasi-insider position with their members. The members have effectively chosen the association to be the focal point of their interest, expertise, calling or passion. This trusted position offers the association a unique perspective on its members, combined with unique credibility and permission to develop and deepen its insights into its membership.
An important tool for deepening and leveraging this insight is the survey, where members' views, thoughts and positions on important matters are explored and probed, catalogued and analysed. Surveys are a powerful and useful tool that should be in the arsenal of every association.
But, that's not today's subject. Today, we will talk about the survey's little sibling, the quick poll or vote. With the member Website (you DO have a member Website, don't you?) or e-mail, the quick poll becomes an incredibly easy, fast and fun way to engage your members, while growing your insight about the membership, without all the effort and headaches of a formal survey.
You've seen polls on various Websites, if you've ever visited a news site or similar broad interest site. For example,
"How valuable do you find these newsletters?"
- Extremely
- Somewhat
- Not very
- Not at all
It took me seconds to ask the question, and even less for you to answer! And, if this were a real poll, I would obtain some useful, if not totally rigorous, information about these newsletter offerings. (By the way, please hit the reply button on this e-mail newsletter notice, and let me know your answer!)
A head-to-head comparison of surveys and polls
| Surveys | Polls |
| Scientific, rigorous | Anecdotal, informal |
| Significant up-front design | Minimal up-front effort |
| Takes weeks or months to complete | Takes days or less to get results |
| Needs a defined level and scope of participation to assure validity | Even modest participation yields interesting results |
| Can be analysed, cross-tabulated and parsed to reveal trends, segment data | The results, generally, are what they are |
| Expensive, time-consuming to plan, run, compile and distribute | Inexpensive, minimal time commitment |
| Results valuable to third parties, members and the association | Results valuable primarily to the association, of interest to members |
| Member participation can be time-consuming, require focused effort | Member participation is one-click easy |
| Valuable, but may not be much fun to participate | Can be fun, provocative, interesting, and can stimulate member dialogue |
As the foregoing reveals, surveys and polls really have less in common than meets the eye. Other than the basic principle of asking your members questions, there is really very little that relate the two.
So, with surveys firmly out of our minds for the moment, let's turn to polls and discuss just what we can accomplish with them.
Benefits of polling your members
Particularly having established that polls can be fast, inexpensive and fun, it may be tempting to use them for all sorts of activities. But, remember that polls are NOT surveys. One of the things you CAN'T do with polls is generate reliable, statistically valid, hard data. But, there are lots of things you can do, including:
| Goal | Examples |
| Obtain a quick, anecdotal gauge of member reaction to an emerging or timely issue, for example, to help judge whether further inquiry should be undertaken; | (Sporting association): "Do you believe that the recently introduced sporting equipment will increase or decrease participant injuries?" |
| Crystallize an expected strong or unanimous reaction to an issue or challenge facing your members; | (Professional body): "Do you think that the introduction of Bill xxx, restricting your right to practice, is an appropriate step by this government?" |
| Use the poll question as a communications tool, in order to ensure your members are aware of something; | "Have you voted on-line in this year's Board elections?" |
| Stimulate interest in a subject in order to improve participation in an upcoming event or activity; | "Did you know that John Doe is speaking at this year's Annual Conference on June 12 in Quebec City?" |
| Demonstrate that you are interested in your members' views and opinions; | "Should your association be offering travel and other personal benefits programs?" |
| Start, maintain or enhance a dialogue with members about a subject of interest or relevance; | (Sporting association): "Should the association be working with the xxx association to pursue changes to the international rules of our sport?" |
| Just plain fun | "Who would you prefer to see featured in the "dunk-tank" on the social afternoon before the Annual Conference?" |
Clearly, some of these questions fall into the "shameless self-promotion" category. You'd be wise to temper any tendency to focus on such questions to the exclusion of other types. But, as an occasional tactic when the news is legitimately interesting, this type of advertising will probably be tolerated, or at least forgiven, by your members.
While some questions are blatant, others may be less so, and the information content may well be valued. For example, a question to start a dialogue could direct members to an on-line discussion forum. This may be an effective means of getting your members' attention in our information-overloaded world.
What to ask?
As some of the above examples show, there are many things that are fair game to ask about. But, remember that asking the question can start the dialogue, so be prepared. If you ask members whether they are satisfied with the upcoming annual dues increase, be prepared for more than just on-line feedback - the phones will start ringing! And, setting or heightening expectations by asking what the association should do needs to be followed up. This is not to say that, because you asked, you need to offer a particular new service, even if the respondents supported it. But, you'd better be communicating the reasons behind your response to requested feedback, regardless of what your course of action is. And, questions asked in anticipation of a strong response can be a loaded gun - be ready if it ends up being pointed at you, with a dramatically different answer than you expected.
The scope of questions to ask is at least as wide as your own organization's scope, and probably considerably wider. As the holder of that uniquely trusted position, your members have given you permission to explore, to learn, to delve into their opinions on a range of subjects. Don't be too shy about stepping outside of your box, so long as you can draw a reasonable connection back to your mandate.
How often?
There is a balance to maintain when it comes to asking anything of your members, and polls are no exception. Particularly when you are "pushing" a question at your members (for example, by sending an e-mail question or notification), you need to show restraint. You should also allow members to opt in or out of the dialogue and, ideally, to specify when, where and how often they want to be communicated with.
On the other hand, a question presented on a Web page is quite unobtrusive. Having a poll as a permanent feature of a site's home page is not uncommon. Indeed, this can be part of a draw to attract members to the site. In this case, the issue becomes how often to change the question, and how and where to present the results.
Suggestion: Polls are better suited to your Web site, where members can participate or not as they see fit. In this case, always have a question on your home page, and update it on some regular basis that reflects your traffic pattern. A small organization could change questions monthly, while only a very large and active site could support a daily question. If you must use e-mail to run polls, be sure, at a minimum, to let members opt out of receiving them. Even for those choosing to participate, a question a month is probably enough, at least until you hear them clamouring for more!
Technology issues
The technology to set up a poll on a Website (or in formatted, "HTML" e-mail) need not be complicated. A simple form can be set up by your Web developer. Where the complication comes in is in compiling and presenting the results, and seamlessly managing the process. Software can range from the fairly straightforward to the highly sophisticated.
There are, however, free options if your needs are simple and you can live with the constraints (usually advertising) the free products impose. As an example, check out MicroPoll.com (or have your Web developers check them out, since it does require some HTML coding).
Coding polls in e-mail messages is a similar process as for Websites. Again, the bigger issue is in compiling and reporting results and managing the entire process.
Of course, a more comprehensive program of polling will inevitably make it worthwhile to invest in more robust products. Like many applications, the price of even sophisticated stand-alone products is not generally excessive - it is integrated applications that need to be thoroughly cost-justified.