Thursday, December 13, 2012

Nonprofits and the ‘Fiscal Cliff’: What Lies Ahead?


Nonprofits are scrambling to persuade Congress to avoid making spending cuts and tax changes that would hurt donors and the people charities serve.
But how can your organization make its voice heard during the debate surrounding the fiscal cliff? 
View this live discussion that explains what might happen over the next few weeks and months and show you step by step how to influence budget debates on Capitol Hill and in state capitols across the country.
The Guests:
Tim Delaney, is chief executive of the National Council of Nonprofits.
Patrick Lester is director of federal fiscal policy for OMB Watch. Read Mr. Lester's analysis,Mitigating the Impact of a Temporary Sequester.

New York AG Eric Schneiderman to nonprofits: Show us your campaign money

New York AG Eric Schneiderman to nonprofits: Show us your campaign money

By Teri Weaver, The Post-Standard 


Syracuse, N.Y. -- Attorney General Eric Schneiderman has proposed regulations that would make certain nonprofit groups report their political spending, a change that could reveal the source of millions of dollars in campaign money currently hidden from public view.
The proposal could make most nonprofits -- including 501(c)(4)s -- registered with New York report the breakdown of spending that goes toward federal, state and local elections. If that spending topped $10,000, the group would be required to disclose money donated to the group and spending toward political candidates or issue advocacy in state and local races.
Schneiderman, the state's top law enforcement officer, has the authority to regulate nonprofits. He must hold public hearings on the proposal, but he ultimately has the ability to impose the new rules, The New York Times reported.
The changes are a way around the hidden campaign spending that has flourished since
U.S. Supreme Court’s 2010 Citizens United decision -- especially in 501(c)(4) groups.
Those organizations "have become vehicles for political activity, including funding sham 'issue ads' that attack candidates for public office," according to a news release from Schneiderman. The "501(c)(4)s have become attractive conduits for this sort of activity because they can raise and spend unlimited funds, conceal their funding sources, and avoid paying corporate taxes on donations. In the last two election cycles, election spending through 501(c)(4)s exceeded spending through traditional political action committees."
Under the new rules, nonprofits that spend $10,000 or more a year that way would have to list each expenditure and each contribution of $100 or more, including the contributor’s name, address and employer.
The information would be public, with an exception for donors who specify that their funds can’t be used for electioneering.

As the Times points out, the change could affect lawmaking in New York involving such high-profile issues as hydrofracking, gaming and redistricting.
"The rules would also affect any tax-exempt groups that join expected battles over a proposed constitutional amendment that would expand casino gambling, a top priority of Gov. Andrew M. Cuomo; another constitutional amendment that would alter the state’s redistricting process; and any local ballot measures regarding hydraulic fracturing," Nicholas Confessore wrote in the Times story.
The new rules would not apply to 501(c)(3) organizations, which are already strictly prohibited from intervention in political campaigns, according to Schneiderman.

For online article click here

Major Renter to Students to Pay Millions for Civil Fraud

Major Renter to Students to Pay Millions for Civil Fraud



The founder of a nonprofit group that has rented affordable apartments to a generation of New York City college students siphoned millions of dollars from the agency through a shell company, using the group’s money to fly back and forth to a second home in Aspen, Colo., and to pay for a luxury penthouse in Brooklyn, an investigation by the state attorney general’s office has found.
George Scott, the founder of Educational Housing Services, along with his wife, Yun Suk Scott, and the group’s board of directors, agreed to a $5.5 million settlement to resolve the inquiry, the attorney general’s office said on Sunday. Investigators found that the group’s board had acted with what the attorney general called “stunning” negligence in allowing a shell company, which Mr. Scott created, to charge Educational Housing millions of dollars for unnecessary services. The board was also faulted for approving Mr. Scott’s salary: $718,032 in 2010 and as much as $1.4 million in 2007, amounts the attorney general called excessive.
Most of the settlement, which included no admission of wrongdoing, will go toward reducing the students’ rents and improving conditions of their rooms, the attorney general’s office said.
“Siphoning millions of dollars at the expense of college students is deplorable,” Attorney General Eric T. Schneiderman said in a statement. “We have no tolerance for officers and directors who treat a nonprofit organization as a vehicle for personal enrichment.”
Criminal charges were not expected because the attorney general’s office considered Mr. Scott’s actions a case of civil fraud that was approved by the board of directors.
Mr. Scott founded Educational Housing in 1987 and turned it into the city’s largest provider of student housing other than the colleges themselves, the attorney general’s office said. The group operates several residences in Brooklyn and Manhattan.
Mr. Scott resigned as president last month. His lawyer, Robert S. Wolf, denied any wrongdoing and said Mr. Scott had done much to improve student life in the city.
“No monies were siphoned from E.H.S. and in fact all relevant decisions were ratified by E.H.S.’s board of directors,” Mr. Wolf said in a statement.  
In 2002, Mr. Scott created a separate company, Student Services Inc., to provide cable, phone and Internet services to Educational Housing’s dorm rooms.
But investigators found that Student Services was only a middleman between the nonprofit agency and real cable companies, and that it charged Educational Housing millions of dollars over the years for no meaningful work.
The attorney general’s office depicted the board of directors as a willfully negligent group that allowed Mr. Scott to carry out his ruse over many years. In 2008, the board approved a contract for Student Services, the shell company, to provide services to Educational Housing at “unreasonably high rates” for the next five years, Mr. Schneiderman said.
“The breakdown in corporate governance at Educational Housing Services was stunning,” Mr. Schneiderman said.
The board members were found to have received exorbitant salaries, and some had inflated consulting contracts from the company as well, the attorney general’s office said.
As part of the settlement, the five-member board agreed to resign and pay $1 million from their personal funds. They were barred from ever serving on the board of a New York charity.
Educational Housing has two months to propose new board candidates to the attorney general’s office for approval.
For the online article click here

Wednesday, December 12, 2012

Fiscal Cliff Campaign Update


Countdown to Tax Hikes: 22 Days
Countdown to Arbitrary Spending Cuts (sequestration): 24 Days

Need to Know: (action items in this message)
In this message we’re sharing several media ideas and tools that have been developed and utilized within the network. Please take a look, take action today, and tell us what you’re doing (so that everyone will benefit).

I. Big Picture
The media are reporting that momentum is building for Republicans to agree to a tax-rate increase of some level for upper-income taxpayers, which is President Obama’s top priority. There is also growing speculation that Democratic opposition is lessening on some entitlement reforms, such as raising the age for Medicare eligibility from 65 to 67, and changing the index used for calculating inflation for Social Security payments. The oft-quoted mantra for congressional negotiations is that “nothing is agreed to until everything is agreed to,” so no details are close to being final.

Yesterday, Senators Schumer (D-NY) and Menendez (D-NJ) introduced the “Hurricane Sandy and National Disaster Tax Relief Act” that, among other things, lifts the current cap on charitable giving (50 percent of Adjusted Gross Income) for qualified disaster contributions. Once again, policymakers are relying on incentives for giving to alleviate suffering and expedite recovery in their communities.

Tomorrow (Wednesday, 12/12 @ 3:30 – 4:30 Eastern), BoardSource is hosting a webinar on “The Fiscal Cliff’s Twin Threats Against the Work of Charities,” during which we will be sharing our message about how two parts of the fiscal cliff threaten to create massive new burdens on nonprofits and even more work for board leaders. By making funding cuts without reducing the underlying human needs, the demand on nonprofits will increase whilethe resources for providing needed services will decrease. Capping or limiting the value of charitable deductions will further reduce the ability of charitable organizations to meet the increasing need for services. You can share this with your board members and others so they join more than 350 already signed up to learn why they should raise voices. 
Register now to learn more about these potentially devastating threats and what each of us can do NOW to voice our views.  
Also tomorrow (Wednesday, 12/12 @ 1:00-2:00 pm Eastern), several national nonprofits are hosting a conference call on the charitable giving incentive. Speakers include Fr. Larry Snyder of Catholic Charities USA, Diana Aviv of Independent Sector, and Rand Wentworth of the Land Trust Alliance, among others. The call-in number is  712-432-7300: access code 57668#.

II. Network Status Update (Let Tammie Smith know what you’ve done lately)
  • Letter to Congressional Delegations: 16 (of 42 State Associations/Nonprofit Allies)
  • Action Alerts: 34 (of 42 State Associations/Nonprofit Allies)
    • Number of Alerts: 44 (10 State Associations/Nonprofit Allies have sent 2 action alerts)
    • NOTE: If you want us to send an Action Alert for you, we can. Just let us know.
  • Media Outreach: 7 State Associations/Nonprofit Allies (13 contacts)
    • Social Media: 17 Facebook postings
III. Good Ideas
As powerful as our individual stories are, letters and phone calls to policymakers alone will not carry the day. We need the help, engagement, and attention of the news media in the home towns of the elected officials. We offer the following ideas from around the network with the goal of getting rank-and-file Senators and Representatives to tell their leaders: “I’m taking a lot of heat back home; you’ve got to prevent these arbitrary cuts and refuse to cap or limit the charitable deduction””
  • Targeted Joint Statements: Last week, leaders of 11 Catholic human service agencies in the Cincinnati area issued a joint statement calling on federal leaders to protect the poor and vulnerable there and abroad in fiscal cliff negotiations. The Cincinnati Enquirer picked up the story and informed all of Speaker John Boehner’s constituents of the potential local impact of the automatic cuts if he doesn’t reach a deal to avert the fiscal cliff.
    • Footnote to this story: Our colleague Beth Bowsky, who lives in Cincinnati, had previously shared with the Enquirer the network’s media statement and other materials, perhaps helping to lay the groundwork for the reporter’s interest prior to his receiving the local story from the Archdiocese.
  • Media Statements: Several State Association leaders have issued comments to the press or talked with reporters as they prepare stories. The National Council of Nonprofits issued a Media Statementlast week – intentionally designed as a background piece rather than the usual news release. The Statement provides a summary of the broader context, all designed to garner the attention of editors for the issues presented.
  • Editorial Board Meetings: Jim White, the new Executive Director for the Nonprofit Association of Oregon, participated in an editorial board meeting at the largest newspaper in the state along with two other nonprofit leaders. They addressed the questions raised, and, through excellent pre-meeting planning, covered all of the key points they wanted to make – using facts, stories, and obvious passion for the community.
  • Divvying Up the State: Yes, we want every State Association to be seen as the leader on this issue in the state; but we all know that the local angle is usually the first interest for editorial boards. TheNorth Carolina Center for Nonprofits solved this problem by preparing and sharing materials for their geographically diverse board members to submit to their local news outlets. This week, the Center is following up with any uncovered media markets to ensure that the whole state is covered.
  • Tools You Can Use: By all means, take the materials we’ve prepared and modify them for maximum impact in your state: InfographicMedia StatementMyths vs. Realitiesother resources.
  • Share: Help us develop the best array of ideas and tools for getting the news media across the country to focus on the impact in communities of the arbitrary cuts and proposals to cap or limit charitable deductions. Share with us and your colleagues the press statements, op-eds, talking points, quotes, etc., that you have developed for media contacts in your states.
IV. Why We’re Fighting
We have received powerful comments from nonprofits throughout the country who have gone to the GiveVoice.org website. Here is a sampling (permission given for naming organizations):
  • “We are a nonprofit organization who helps those with cancer at no cost to them or their families.  We rely on fundraisers and donations to stay open with an all-volunteer staff. We are the only organization offering the programs and services in the Tri-State area we live in. We rely on the current charitable giving incentives so we may continue to help those who are newly diagnosed or going through treatments.” We Care Cancer Support Inc., Bullhead, Arizona
  • “Soroptimist International of the Central Jersey Coast services the hardest hit area of Storm Sandy. Many of our members have lost homes. Our neighbors are suffering devastating loss of homes, income, and emotional and physical needs. We must have our contributions so we can carry on our work to help women and girls in our community. We help the local women's shelter, girl scout's camp, sexual abuse rape victims, and the local children's hospital. We also give gifts for girl's who volunteer in our community and give scholarships to women rejoining the work force. Without the incentive to donate, our work will be overSoroptimist International of the Central Jersey Coast, Lakewood, New Jersey

Thursday, December 6, 2012

Insurance Solutions for Today's Non-Profits

ObamaCare: It’s the Law!
Written by: Fred Scaglione

There is a lot of detail we still don’t fully understand about the Affordable Care Act. One thing, however, is finally certain. After a lengthy struggle in Congress; a legal battle that went all the way to the Supreme Court; and a national election which revolved in large part around Republican threats to repeal the legislation on “day one” of a new administration, “ObamaCare” is now the law of the land. And, any reluctance or hesitation to begin moving towards compliance with its provisions is, or at least should be, a thing of the past.

The Affordable Care Act will have implications for almost every individual and all employers in the nation, both for-profit and not-for-profit. Up until now, these impacts have been relatively limited. But, over the coming six to nine months, New York State will begin taking important steps towards the next major set of deadlines that take effect on January 1, 2014. On that date, the law will begin to require certain employers to provide specified healthcare coverage to their employees, or face a series of penalties. And, all individuals will be required to have coverage, either through employer sponsored policies or through insurance that they purchase on their own. To guarantee that all individuals and small employers can purchase reasonably-priced health insurance, New York State will be establishing a “health insurance exchange” where coverage will be available to everyone, regardless of their medical histories. In addition, federal premium subsidies will be available to help cover the cost of health care for low- and moderate-income individuals and families. There are even “small business” tax credits that are available to help smaller employers meet the costs of complying with the law’s new mandates.

So, what will the Affordable Care Act mean for your nonprofit and its employees? That depends on a number of factors.

First and foremost is the determination as to whether you are a “small” or “large” employer – since “large” employers are subject to the employer mandate to provide health insurance coverage or face penalties.
The Affordable Care Act defines “large” employers as those who have 50 or more full-time – or full-time equivalent – employees. It is important to note that the ACA defines “full-time” employees as those working 30 hours per week or more. Consequently, it also calculates both full-time (FT) and full-time equivalents (FTEs) by taking the total number of hours worked by your employees and dividing by 30 (or 120 hours per month). As a result, your agency could have only 40 “full-time” employees who work 40 hours per week, another 20 employees who work 20 hours per week and still be considered a “large employer” because that translates into 66.7 FTEs.

As of January 1st, 2014, “large employers” are required to provide “full-time” employees with health insurance coverage that complies with the ACA guidelines. If they do not provide coverage – and have at least one full-time employee who receives a premium tax credit, through the newly formed Insurance Exchange, to help purchase coverage as an individual -- they will face penalties of $2,000 per full-time employee. (For reasons that seem unclear, an employer’s first 30 employees are excluded when calculating the penalty amount.) For those large employers who do provide coverage – but still have at least one full-time employee who receives a premium tax credit to help cover the costs of insurance purchased individually, the penalty is the lesser of $3,000 for each FT employee receiving a premium credit or $2,000 per full-time employee, again excluding the first 30 employees.

What does the ACA require in terms of employer-provided coverage? There are three key required components of care defined in the law that will affect nonprofits and other “large employers”.
First, generally speaking, these employers must offer coverage to eligible full-time employees that begins within 90 days of being hired. Those “very large” employers with 200 or more FTEs, must automatically enroll employees into health insurance plans – rather than ask employees if they wish to be enrolled – and then allow those who wish to opt-out an opportunity to do so.

Second, the employee share of health insurance premiums that an employer can require is being substantially limited. The maximum employee share of premium coverage for employer-sponsored individual coverage cannot exceed 9.5% of the employee’s gross income. In light of the historic trend towards increasing requirements for employee contributions, the relatively low salary levels which many nonprofits pay for direct care and other employees, and the rising cost of health insurance premiums in recent years, this mandate has the potential to significantly impact a broad range of nonprofit service providers. For example, under this provision, a “full-time” direct care staff member who works 35 hours per week at $10 per hour would have annual income of $18,200 per year or $1,516 per month. Based on this requirement, that staff member’s maximum contribution towards his health insurance premium would be approximately $144 per month. As a result, it is not inconceivable that an agency which had required employees to pay half the cost of their health insurance coverage would no longer be able to do so in these cases.

Third, the law mandates that all health insurance policies – including those provided by employers – meet certain coverage standards in terms of what costs of services are paid by the insurance and what the consumer’s out-of-pocket costs might be. Under the ACA, policies are required to have an actuarial value of 60%, meaning that a consumer’s out-of-pocket costs of healthcare would not exceed 40% of total medical expenses. Since New York State has traditionally required policies sold in the state to meet relatively high quality standards, it seems unlikely that this would have a significant impact on coverage currently being offered by nonprofit employers. However, recent trends towards low-cost but high-deductible policies might well run up against these limitations.

Many of New York State’s nonprofits are likely to fall below the ACA’s “large employer” threshold and, therefore, face no new mandate to provide health insurance coverage to their employees. However, the law still may offer a series of opportunities – and some interesting questions -- both for these “small employer” nonprofits and their employees.

New York State’s Health Insurance Exchange which is expected to be developed as early as October 1st, 2013 – and must by law be in place by January 1, 2014 – is designed to allow individuals without access to small group plans to purchase coverage at a cost which is considerably lower than current individual premium levels. In fact, it is estimated that individual coverage available through the exchanges may reduce premiums by between 60 and 70%.

Moreover, individuals purchasing insurance through these exchanges may be eligible for income-based premium tax credits that would limit their cost of coverage to as low as 2% of income for those with household incomes between 100% and 133% of the Federal Poverty Levels (FPL), and just 9.5% of income for those earning up to 400% of (FPL), or $92,201 for a family of four. For example, a single mother with two children who earns $25,390, or 133% of the current FPL for a family three, would receive premium credits covering health insurance costs above $42.32 per month.

Based on these lower costs and premium supports, many staff at nonprofits may feel that better insurance options are available through the exchanges. However, employees who are offered an employer sponsored plan that meets the maximum contribution criteria of 9.5% of gross income and provides the 60% coverage value outlined above are not eligible for exchanges or premium credits. As a result, it will be interesting to see whether some smaller nonprofits decide to terminate coverage benefits and urge their employees to seek insurance through the exchange/premium credit option.

New York State’s Health Insurance Exchange will also offer “small employers” with 50 or fewer full-time employees an opportunity to purchase insurance. However, due to New York’s current community-rating system, it is not anticipated that policies sold through the Exchange will be considerably less expensive than those currently available to small employers on the open market.

Another feature of the ACA, however, may help smaller employers – those with fewer than 25 full-time equivalent employees – to obtain tax credits to help offset the cost of health insurance benefits for their employers. The credits are available based on a sliding scale to nonprofits whose average salary level is less than $35,000, with the maximum benefit going to those whose average salary is $25,000 or less. While this sounds like it may be a significant benefit for many small nonprofits, it appears that relatively few organizations actually meet these average salary guidelines. Once again, this is driven in part by the calculations used to determine both your number of FTEs – in this case using 2,080 hours per year or 40 hours per week – and your total salary expenses. Based on these formulas, many organizations with staff who work a 35-hour week will see their number of FTEs fall below their actual number of full-time employees – and as a result, their calculated average salary rise above the levels which staff actually receive.

During the course of 2013, we will learn many additional details about how the Affordable Care Act will be implemented and how the State health insurance exchanges will operate. Nonprofits and the individuals who work in them need to begin thinking about what compliance with the law’s requirements will mean and how emerging details affect their plans.
Peter Andrew is President and CEO of Council Services Plus, the insurance brokerage subsidiary of the New York Council of Nonprofits

Oppose Cap on Deductions for Charitable Donations


Help Nonprofits Across the Country Oppose the Proposed Cap on Charitable Deductions
Learn More and Add Your Voice Today!
As New York's statewide association of charitable nonprofits with over 3,000 members, the New York Council of Nonprofits, Inc. (NYCON) is strongly urging our Representatives and Senators to oppose efforts to include charitable deductions in an overall cap on itemized deductions and to oppose any other efforts to reduce current levels of charitable deductions.
Already Doing More With Less...
Community nonprofits, including those considered faith-based, are at the front lines of protecting and strengthening individuals, families and their communities and simply do not have the capacity to bear more burdens associated with ill-advised and sometimes arbitrary withdrawal of federal, state and local governments from domestic programs.

During this recession, the workload of many of the state's nonprofits has increased as poverty levels have risen. Research has shown that nationally the demands on the nonprofit sector have soared since at least 2008, increasing 73% in 2008; 77 % in 2009; 77% in 2010; and 85% in 2011.

Regarding the proposal of including charitable deductions in the pot of an overall cap of itemized deductions, this will not only be harmful to the good work of charities but is unfair.

How Will This Affect Nonprofits?
Consider that charitable deductions are different from the other itemized deductions in that the public, not the individual taxpayer, benefits from the expenditure (unlike with mortgage interest, gambling losses, etc.)

A cap on itemized deductions would be consumed by fixed-cost deductions being the "first-dollar in" such as mortgage interest and state/local taxes, leaving little or no room under the cap for discretionary charitable gifts. Charities in high tax states, such as New York State, are particularly at risk.

In these times, we urge Congress to consider policies that encourage charitable giving, not discourage donations.
We ask you to urge our elected officials to oppose legislation that threatens the capacity community nonprofits to acquire the charitable resources needed to better the lives of people and the communities they live in.

Tuesday, December 4, 2012

Grantsmanship Center is offering free mini-webcasts

Grantsmanship Center is offering free mini-webcasts
The Grantsmanship Center is producing a series of free mini-webcasts. Most are under 3 minutes long and all address a critical aspect of planning or writing grant proposals. Their focus is on planning, developing logical arguments for funding, and developing projects that produce results.

The latest mini-webcast, How to Use Concept Papers, has been released and can be accessed by clicking here, or cutting and pasting the following URL into your web browser (http://youtu.be/YXiAsoeSN0Q).

Additional mini-webcasts on The Center’s YouTube channel include 
  • How to Write a Mission Statement 
  • How to Get a Grant 
  • What’s Most Important 
  • How to Apply for Federal Grants – Understanding Federal Grant Application Guidelines
  • 8 Reasons You’ll Get the Grant
A number of libraries, colleges, and nonprofits are sharing the mini-webcasts as a service to their constituents. Please feel free to do the same.

Now Available: New NYCON Fiscal Tools

New NYCON Fiscal Tools
Now Available: Budget and Cashflow Toolkits


Just in time for next year’s budget and cash flow planning, NYCON has developed a new benefit for our member that will truly be the “best friend” of every fiscal person who uses it. Designed with the needs and resources of the smaller to medium sized nonprofit in mind, NYCON’s Chief Fiscal Officer and staff have designed a “fool proof” tool for developing a streamlined, compliant and easy to understand budget.

The features of the Budget Toolkit include:
  1. Built in instructions on “Getting Started” and “How to Develop Your Budget” 
  1. Built in formulas and linked spreadsheets
  1. Definitions & Glossary on types of budgets, frequently used budgeting terms & more
  1. Templates that your organization can utilize to customize for your own organization’s budget and salary and fringe expenditures.
  1. And more!
COST:

Budget & Cash Flow Toolkit Combo

Members:                    $299.00
Non-Members:              $399.00
*Any nonprofit attending this webinar (our first for this very important tool!) will receive a 25% discount off of the prices above.

Cash Flow Toolkit
Members:                     $29.99
Non-Members:              $59.99
*Any nonprofit attending this webinar (our first for this very important tool!) will receive a 25% discount off of the prices above


Interested in learning more?
Here's a Link to a recording of a recent webinar on these fiscal tools

Monday, September 10, 2012

Business Planning for Nonprofits

From NYCON's national partner National Council of Nonprofts:

True or False: “Business planning is for businesses, and strategic planning is for nonprofits."
Be honest. When you first heard the phrase "business plans for nonprofits," did you think, "We don't do that"? Many people think that businesses do business planning, and nonprofits do strategic planning. Strategic planning remains a core element of capacity building. State Associations of nonprofits report that strategic planning is perennially one of the most popular educational programs they offer. Funders often want to see a strategic plan along with a grant proposal. But increasingly, we’re hearing executive directors say to one another, “Do you have a business plan?” Are business plans for nonprofits becoming the new hot thing? And are they replacing strategic plans – simply by adding dollar signs?

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Business planning is not the same as strategic planning. Ideally business planning will inform and improve a strategic planning process that keeps evolving. Business planning provides a sound financial context for the planning process and forces us to look at our nonprofit in the context of a competitive environment. It is hard work because it grounds big picture ideas in reality. Understandably given the option we might prefer to paint a canvas with a broad vision and fill in the colors, rather than first determine what it costs to buy the paint and canvas, and how to price our painting. (It’s much more fun to paint the picture and let somebody else figure out whether it will sell and for how much!) The problem for enthusiastic and inspired artists (as with board and staff members) is that the canvas gets bigger and bigger – but when the masterpiece is finished, there might not be a market for it.  
 
For us amateur artists, two recent books approach nonprofit business planning from a strategic planning perspective and explain it in a very accessible way, even for those not familiar with business terminology. The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model , a new book by David La Piana and his distinguished colleagues at La Piana Consulting, may just change your attitude towards using the words “business” and “nonprofit” in the same sentence. Also take a look at Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, by the terrific trio Jeanne Bell, Jan Masaoka, and Steve Zimmerman. We think both books are masterful in helping to explain why nonprofits need to pause and take a look at, well…let’s just say it, their “business model.”
 
Your nonprofit is in the business of something, whether it’s recycling computers, helping veterans rejoin the workforce, or preserving open space from development. And in order to pay for talented employees, that new website you dream of, and the internet connection that makes it work, your nonprofit needs cash. The problem is, assuming your nonprofit is like many others, it’s tempting to continually add new projects or improve existing programs to meet changing needs in the community. Just before a nonprofit launches that new program or makes the necessary adjustments, that’s the time to stop and ask, “How much is this really going to cost? And how will it be paid for?” The question should even be asked for services that clients pay for -- or that are paid by third-parties: “Are all the costs of the program paid for?” What we’re hearing is that many nonprofits have not calculated the full cost of running their operations. Consequently, the revenue received, whether through donations or fees for services (or a combination) might not cover 100% of what it costs to deliver those programs. Private philanthropy is concerned about this funding gap and the strain it puts on charitable nonprofits. The Donors Forum has convened a community of practice on the subject of overhead, bringing together funders and nonprofits to recommend how nonprofits can more easily identify and articulate the true cost of their work, and how grantmakers can become educated about the failure to pay full costs, as well as help nonprofits understand how to calculate the true cost of delivering services.
 
In today’s challenging economy, the severe consequences of failing to engage in business planning is laid bare when cash stops flowing. The cash flow crunch is a concern for a huge number of charitable nonprofits. The Nonprofit Finance Fund’s 2012 survey found that only 43% of nonprofits surveyed had more than 3 months of cash reserves – and many had less than one month. Nonprofits that continue to focus exclusively on what they do, instead of also what it costs to do it, will find themselves at risk of closing their doors for good. Here is just one example of the need for nonprofits and board members to focus strategically on business models: a 30 year old charitable nonprofit, dependent on donations to pay the rent and stay afloat, is hit hard by the recession when donations dry up. If the nonprofit closes its doors the community’s poor and disabled will be without access to medical equipment, such as wheelchairs, walkers, and oxygen tanks. For 30 years the nonprofit has collected donated equipment, refurbished it, and trained its new owners how to use it. For free. Now at the brink of being forced to shut down, the group’s executive director, reflecting on what happened, explained his mind-shift towards being more business oriented: “We’re not about money, but we have to be right now.”
 
A solid business plan will take into consideration not only the “vision” and the strategy for how your nonprofit will address needs in the community, but also how everything your nonprofit does fits within a competitive landscape, and how it will fund its activities in a cost-effective way. Done well, business planning is very comprehensive – and requires time. An outside consultant may be helpful to move the process along. The CEO, key program staff, and a few board members are usually tapped for the business planning team so that multiple perspectives inform the analysis of all aspects of the nonprofit’s operations: from mission delivery (programs, services, advocacy) to physical and human resources infrastructure, and marketing, to communications and fundraising activities. A business plan might also include funding projections, and address risk mitigation as well as how outcomes will be evaluated (and the associated costs).
 
The advantage of having a business plan in place – especially when an attractive new idea presents itself - is that some ventures, partnerships, or projects may strategically fit the mission and perfectly support the vision – but may not be successful financially. With the discipline of a business plan as the “enforcer,” it makes it easier to prioritize the activities that make the most financial sense, and to make hard decisions, such as stopping a program that offers little ROI. As champions for our nonprofits’ missions it is no longer enough to know deep in our bones that “the mission is good.” Instead we need to help boards and staff ask hard questions about money, so that the ability of each charitable nonprofit to deliver its mission into the future is protected. We encourage your nonprofit to take a look at the resources highlighted in this newsletter and on the Council of Nonprofits’ website, and we hope that when your nonprofit engages in this process, business planning will feel much more like painting a masterpiece than counting pennies.
Coming soon - a new look for this newsletter and the National Council of Nonprofits
 
Interested in learning more about business planning for nonprofits? Join us for a free webinar on October 18th with Heather Gowdy and Lester Olmstead-Rose, authors of The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model. This webinar is an exclusive benefit for members of our network of State Associations. Contact your State Association for the registration link. Not a member? Find your State Association and join today!
 
This webinar is offered free of charge thanks to generous support from eCratchit


Resources on strategic and business planning (National Council of Nonprofits) 
 
The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model , by David La Piana, Heather Gowdy, Lester Olmstead-Rose, and Brent Copen
 
Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, by Jeanne Bell, Jan Masaoka, and Steve Zimmerman
 
 
 
Tools for business planning, creating a theory of change, a case for support, and building a revenue plan (for purchase from Social Velocity)
 
Congratulations to Valerie Lies, President & CEO, Donors Forum, and Ann Silverberg Williamson, President & CEO, Louisiana Association of Nonprofit Organizations, as well as Tim Delaney, President & CEO of the National Council of Nonprofits, for being named to the 2012 NonProfit Times Power & Influence Top 50 list.
 
The National Council of Nonprofits provides information about the failure of government to pay the full costs of services both on our Government-Nonprofit Contracting website and in Nonprofit Advocacy Matters, our bi-weekly newsletter on public policy and advocacy matters affecting charitable nonprofits. An upcoming edition of Nonprofit Advocacy Matters will include an update on federal reforms affecting indirect cost reimbursements. Subscribe today so you won’t miss the latest on this important issue.
Copyright 2012 National Council of Nonprofits. All rights reserved
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Wednesday, August 8, 2012

Making Sense of Health Care Reform for Your Nonprofit

NYCON's insurance subsidiary Council Services Plus (CS Plus) offers info, resources and direct insurance assistance to nonprofits across NYS. CS Plus only works with nonprofits, and has brought over $1 million in savings to nonprofit clients. Visit www.councilservicesplus.com for more info or e-mail.
Health Care Reform: Are You Prepared?
The United States Supreme Court largely upheld President Obama's health care law, the Affordable Care Act in a mixed decision. The court's ruling, seen as one of the most significant in decade, is a crucial milestone for the law, allowing almost all of its far-reaching changes to roll forward. The decision did significantly restrict one major portion of the law: the expansion of Medicaid, the government health-insurance program for low-income and sick people. The ruling gives states more flexibility not to expand their Medicaid programs, without paying the same financial penalties that the law called for.
The legislation for the Patient Protection and Affordable Care Act (PPACA) will impose significant new responsibilities on employers, some of which are already effective. While further guidance is expected on the application of these requirements, the following provides a summary and timeline of key provisions of the PPACA. As employers look ahead to the implementation of the PPACA, CS Plus will be providing additional updates to provide clients with compliance strategies in connection with various components of the new law.
Summary of the Affordable Care Act
The Affordable Care Act (umbrella term for the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010) was passed by Congress in March 2010 to overhaul the health care system, expand affordable coverage, change insurance rules and create an online marketplace (exchange) in each state for the individual and small group markets.

Most U.S. citizens and legal residents will be required to have health insurance in 2014. Those without coverage would pay a tax penalty based on household income to be phased-in starting in 2014. Federal subsidies will be available to assist those who cannot afford to purchase coverage.

Large employers (50 or more full-time employees) will be required to "pay or play" starting in 2014.

Qualifying small employers (no more than 25 employees) are eligible for a tax credit for offering coverage beginning in 2010. The tax credit increases in 2014 if employers buy from the exchange, and then phases out in 2016.

How Health Reform will Impact Businesses
The Patient Protection and Affordable Care Act (PPACA) impacts businesses in several ways - from the types of benefits offered under insurance plans, to the ways employers conduct their businesses. Some provisions are already in effect and more will be implemented over the next several years.

General Impacts on Employer-Provided Coverage
There are several mandates from the Patient Protection and Affordable Care Act (PPACA) already in effect. View the Timeline below for more information on timing of provisions.

Some of the key mandates are below.
Grandfathering - "Grandfathering" allowed some plans to be exempt from some Health Care Reform provisions.
Lifetime Limits and Annual Limits - Law prohibits imposing annual limits on Essential Health Benefits and any lifetime dollar limits.
Medical Loss Ratio (MLR) Reporting - A Medical Loss Ratio or MLR is the percentage of premium dollars insurers spend to provide covered medical services and improve the quality of health care for their members.
No Pre-Existing Conditions Exclusions - As of September 2010 there are no pre-existing exclusions for children under age 19. Beginning in 2014, this provision applies to everyone, including adults.
Patient-centered Outcomes Research Fee - The Patient-Centered Outcomes Research Tax, also known as the Comparative Effectiveness Research Fee, is a fee paid to the government to fund Patient-Centered Outcomes Research Institute (PCORI) research.
Preventive Services - The Patient Protection and Affordable Care Act of 2010 (PPACA) requires health plans to cover designated preventive services without any member cost sharing.
Summary of Benefits Coverage - The Departments of Health and Human Services, Labor and Treasury recently issued final regulations requiring health plans to provide a SBC and Uniform Glossary that clearly explain benefits and coverage within a standardized template with uniform language.
W-2 reporting - PPACA contains a requirement for employers to report the cost of health coverage under an employer sponsored group health plan on an employees W-2 form. The cost includes both the cost paid by the employer and contributions from the employee.
Women's Preventive Services - The Patient Protection and Affordable Care Act (PPACA) requires health plans to cover designated women's preventive services without cost sharing for the member. Cost-sharing includes deductibles, copayments and coinsurance. Some of the benefits and services outlined in the women's preventive guidelines are already included within the existing PPACA preventive services requirements.
Establishment of Health Insurance Exchanges
On April 12, 2012 Governor Andrew M. Cuomo issued an Executive Order to establish a statewide Health Exchange. State-established health insurance exchanges must begin to operate on January 1, 2014. The Exchanges are virtual marketplaces that allow individuals and eligible employers to purchase health insurance. Initially in 2014, only employers with up to100 employees can purchase insurance for their employees through the Exchange. Prior to 2016, states can limit the size to businesses with up to 50 employees. Beginning in 2017, states can allow employers with more than 100 employees to purchase health insurance for their employees through the Exchange.

How Does Health Care Reform Affect Small Businesses?
In addition to the key provisions outlined, it's important to know that small businesses already have an opportunity to qualify for:
Small business tax credits - In an effort to help small employers offer affordable coverage to their employees, the Patient Protection and Affordable Care Act provides for tax credits for qualified small employers. These credits began in 2010. The credits increase in 2014, but are only available for coverage purchased on an Exchange. The small group tax credit sunsets in 2016.

Timeline
It will take several years for changes to be enacted and regulations written. However it's important to begin to understand what will be happening in the near future versus long term changes.
HC Reform Timeline
To view a larger image of the timeline, CLICK HERE.



If you have any questions regarding this update, please contact Anthony DeCicco, Account Executive, Group Benefits at adecicco@councilservicesplus.com;
or by phone at (877) 501-4277, ext 123.