5 Steps To A Nonprofit Pilot Program

Does your nonprofit have an interesting idea that hasn't yet been tested? Before you throw caution to the wind and test your idea in real-world conditions, it's a good idea to run it as a pilot program first to iron out any potential problems.

Alex Neuhoff and Andrew Belton in their report, “Putting Clients at the Center: A Planning Guide for Multi-Service Organizations,” produced by The Bridgespan Group, outlines five questions to ask when designing a pilot program:

• Where and how will you start? Do you want to focus on a specific client base, or specific region? If you plan to narrowly focus the pilot, be sure you’ll be able to generalize the results across your organization.
• How will you evaluate the pilot? Look at process, program activities and outcomes. Decide if you want a more comprehensive (and expensive) outside evaluation, or if you’ll do it in-house.
• How much will the pilot cost? The cost usually comes out to additional costs of your approach, investments in infrastructure, and management of the pilot. You can break these down into one-time “setup” costs and ongoing costs related to the new program.
• How will you pay for it? Will you chase additional grants or pay for it from your financial reserves, or a combination of the two?
• How do you use what you’ve learned? What challenges and unforeseen developments have the pilot uncovered? How do you scale up the pilot to an organization-wide program?

Telling Your Nonprofit's Story

One could argue that the key to fundraising is presenting a story that is relatable while also telling potential donors what they can do about the particular situation.

So what's your nonprofit's story?

In his book “Winning The Story Wars,” Jonah Sacks suggests the use of what he calls core story elements, the components that will become part of the story strategy. Seeing members of the target audience as heroes in the making and recognizing the organization’s need and ability to mobilize them with a compelling story and inspiring message makes donors feel as though they can make a big difference.

The core story elements are:

• Brand Hero. This is the embodiment of the primary audience the organization seeks to reach.
• Brand Mentor. This is the embodiment of the brand.
• Brand Gift. This is the creative wild card that makes the brand special and makes the brand hero believe higher-level values can be pursued through a relationship with the brand.
• Moral of the Story. This is the core message that underlies, sometimes subtly and sometimes overtly, every story the organization tells.
• Brand Boon. This is the contribution to the world that the brand hero will ultimately make.

Report: Nonprofit Used State Funds For Perks

A nonprofit funded by the state of New York is being accused of paying for excessive executive perks, according to a report issued by the office of state Comptroller Thomas DiNapoli. The findings are now being referred to U.S. Attorney Preet Bharara's office for review.

Phoenix Houses of New York, which operates a number of residential and outpatient rehab programs in New York City, Long Island, and upstate New York, is alleged to have provided $223,000 worth of inappropriate perks while under contract with the Office of Alcoholism and Substance Abuse Services (OASAS). This includes allegedly paying $91,050 for executive bonuses, $40,447 for fringe benefits, and $35,996 for vehicle leases from July 2009 to June 2010.

The report also alleges that Phoenix Houses failed to report $290,000 in Medicaid revenue to OSASAS which would have reduced the amount the agency's payments to the nonprofit.

"This was money intended to treat people struggling with substance and gambling addiction, not to subsidize unwarranted perks for high-salaried executives," DiNapoli said. "My office will work closely with U.S. Attorney Bharara's office to ensure that those abusing the public trust are held accountable."

Auditors and investigators also discovered that one employee allegedly made $4,000 in "improper" purchases of Wal-Mart gift cards used for alcohol, cigarettes, and other inappropriate items. The employee allegedly covered up these purchase by submitting falsified receipts.

Based on the finding, DiNapoli recommends that OASAS should strengthen controls to monitor Phoenix Houses' contract compliance, recover the alleged improper funds, and recover executive overpayments if they are determined to not be justified.

A call to Phoenix House for comment was not immediately returned.

You can read the full report on state Comptroller's Office website.

Pennsylvania Law Would Let State Decide Nonprofits' Tax-Exempt Status

A proposed law in Pennsylvania would fundamentally change how nonprofits receive tax-exempt status, shifting the process from the judicial system to the state Legislature.

HB 724/SB4 passed the state Senate in a 30-20 vote last month and also received approval from the House Finance Committee. Since the bill would amend Pennsylvania's constitution, it must pass both houses in consecutive legislative sessions before going to voters for final approval.

The proposed law has generated enormous controversy in the state, according to an article in The Pittsburgh Post-Gazette. While supporters say it would provide consistency in what defines a tax-exempt charity, detractors, including Pittsburgh Councilwoman Natalia Rudiak, believe it's an effort by large organizations to shift decision-making away from communities which are increasingly trying to get nonprofits to contribute more.

Rudiak told The Gazette that she is also concerned that there is not a single public hearing to discuss the proposed change.

Those supporting the bill include large nonprofit hospitals and universities such as the Hospital & Healthsystem Association of Pennsylvania, and the Association of Independent Colleges and Universities of Pennsylvania. In a Jan. 28 memo to his colleagues, Republican Sens. Mike Brubaker and Joe Scarnati said the legislation became necessary once the Pennsylvania Supreme Court denied tax-exempt status to a camp in Pike County because it didn't provide relief to the local government as mandated by a 1985 court decision.

"By elevating its own judgment above the will of the General Assembly, the Court has created uncertainty as to the qualifications for public charities in Pennsylvania," the senators wrote.

You can read the full story in The Pittsburgh Post-Gazette.

S&P: Pensions A Burden For Nonprofit Hospitals

Pension liabilities will be continue to be a burden for nonprofit hospitals rating service, Standard and Poor's (S&P), reported Monday.

While there are other factors contributing to the financial problems of the sector, large pension funding demands are the biggest factor according to a report in Reuters. S&P credit analyst Liz Sweeney said in a statement that the promises of these retirement benefits could be a "drag" on nonprofit hospitals for several years despite improvements in the investments used to fund retirement services.

"Low discount rates have hampered the improvement in funding levels despite a rebound in asset values during the past two years," said Sweeney.

Retirement benefits are just one of the many challenges nonprofit hospitals are facing. S&P noted that as pension gaps continue to grow in state and local governments, employers are putting more money into healthcare systems that have redesigned pensions, which could leave less funds for other projects.

"We believe that health systems will continue to implement plan changes to seek the next level of cost savings within the context of organization-wide expense reduction measures," S&P reported.

Changes from the Affordable Care Act, increasing stress on Medicaid and Medicare, and increased healthcare demands in general, are also increasing the financial difficulties for nonprofit hospitals across the country.

You can read the full story in Reuters.

The Donor Research Checklist For Small Nonprofits

What's the best way to ensure a successful fundraising campaign? Some would argue that donor research should be on the top of that list, and they would have a point. More information about donors means your fundraisers will have a better idea about how to approach them.

While large nonprofits usually have full-time researcher on-staff, it can be a little bit harder for smaller organizations to find room in their budget for donor research. That's why Ann Rosenfield, executive director of The WoodGreen Foundation, offered some tips to help these organizations reap the benefits of this research without breaking the bank. 

She wrote the following checklist in the Winter 2013 edition of Advancing Philanthropy:

• Hire a researcher, even if just for a while: This will enable managers to focus on the technical aspects of fundraising while research crunches the numbers.
• Pay for a research database service: This allows for quick look-ups of prospective donors recommended by the board, events, and potential board members.
• Remember that information on foundations is free: This information is easily accessible online on such sites as Foundation Center.
• If possible, use data analytics: This allows the organization to see how analytics work and keep track of these findings on a spreadsheet.
• Identify new prospects: Having a researcher means being able to seek out new prospective clients who will give.
• Don’t forget that the organization’s small size is actually a strength: The small size of is an asset in that it allows research to be done on a more personal level.