Sunday, August 24, 2008

Your Nonprofit Library Second Shelf - Request for Audit Proposals (RFP)

Nonprofit Audits - Request for Audit Proposals (RFP)

Many nonprofits prepare a request for proposal (RFP) or bid to be sent to CPAs/accountants in the community or region. Coming up with a list of those who have performed nonprofit audits or have received the necessary continued professional education for federal nonprofit audits can take a while. Do some research. Talk with other NPOs in your area and see who they are using. Ask if they are they satisfied. Contact the local United Way, the National Association of Nonprofits for your state ( and any other umbrella organizations you may be affiliated with for their advice.

TIP: You want to foster competition for the good of the organization. Seek at least three bids - that may require contacting more than three to file RFPs with you, however. Some states are very specific about how the solicitation is to be made, for instance, by invitation or publishing the RFP in a newspaper(s) of general circulation. There may be no prohibition publishing it on your web site, but give that careful consideration. For me that would be a bit too public.
What are the values of an RFP? My experience in using the RFP process in moderate-sized communities such as Youngstown OH and Atlantic City NJ is that
  1. The bids addressed the audit factors we wanted covered
  2. The cost from the previous year’s audit decreased
  3. The bidders showed they had the training and certifications our funders required
  4. They understood in advance what our requirements are for a contract
  5. The board had an active role in the process
The negatives were:
  1. It was somewhat difficult gleaning from the Yellow Pages and recommendations to whom we would send an RFP
  2. We had to spend hours in preparing both the RFP and the draft contract (we’ll see samples in another issue)
  3. It cost us in time and money preparing and sending out the material
  4. It cost time and money reviewing the responses and making a decision
TIP: You do not have to go out to bid every year. Some organizations go out to bid every 4-6 years, when the previous audit had a significant spike in cost or the quality of the audit declined. It is possible for the auditor to use the same staff or partner to perform the audit and become too “close” to the operations to be independent.
The board of trustees/directors has the ultimate legal obligation for the operation of the organization including an emphasis on the fiscal elements. Utah’s Audit Requirements for Nonprofit Organizations is an example of states that now make it clear it rests with the board:
  1. The governing body of each political subdivision [and nonprofit organization] is responsible to ensure that the political subdivision obtains a quality audit of its financial records.
  2. The governing body may appoint an audit committee with the responsibility of making recommendations to the governing body for selection of an auditor, ensuring that the auditor meets qualification requirements, and ensuring that the auditor complies with professional standards.
  3. If the governing body appoints a separate audit committee, then the governing body shall review the recommendations of the audit committee and make the selection of the auditor.
  4. The audit committee will report its assessment of the auditor's compliance with professional standards to the governing body.
  5. The auditor shall report the results of the audit to the governing body.
  6. The governing body shall respond to the specific recommendations included in the auditor's letter to management. This response shall be remitted with the audited financial statements to the state auditor.
TIP: Check your state law which may have similar language about nonprofit audits. The growing sense of transparency and accountability is not only a concern of the IRS. Your state may also be responding to the protection of the community, consumers and supporters.
BoardSource addresses reasons why audits are required and suggests a rule of thumb on how much revenue could trigger a full audit:
While it is too onerous to demand that all nonprofit organizations undertake a full audit, the board is responsible for assessing the potential benefits and costs of an independent audit. Nonprofits that expend more than $500,000 of federal funds are required to conduct an annual audit. In addition, participating in the Combined Federal Campaign requires an audit at $100,000. Any other charitable organization with $1 million or more in total annual revenues (excluding houses of worship or other organizations that are exempt from filing Form 990) should have an audit conducted of their financial statements and consider attaching a copy to their Form 990 or 990-PF. Smaller charities with revenues of at least $250,000 should choose a review or at least have their financial statements compiled by a professional accountant. The boards of nonprofit organizations that forego an audit should evaluate that decision periodically.
All nonprofit organizations that conduct outside audits, particularly medium to large organizations, should consider forming an audit committee and should separate the audit committee from the finance committee.
The process of issuing this RFP should be directed and overseen by the board with help from staff. Developing such a request will take some thinking. It should reflect what you want done, when you want it done and when a decision will be made. There can be a request for professional references, accreditations, certifications and they should be checked and verified. Membership organizations for potential auditors may also have codes of conduct and ethical standards that you should review in advance.
For a brief article about How To Purchase Audit Services by Joanne Fritz,
What To Expect from Your Auditors,
The board should also develop and approve a draft contract detailing what it wants from the auditor – more on this soon in this blog. Most CPAs and accountants have a form contract. That contract may not address all issues you want such as adherence to your own workplace policies, so it is helpful to have a draft for negotiation purposes. I always included the draft contract as an attachment to the RFP so that the bidders knew when they bid what we wanted.
The RFP can state that the successful bidder will be required to follow your organization's policies on drugs and alcohol in the workplace, no smoking, recycling, anti-sexual harassment, safety in the workplace, use of equipment and equal opportunity employment (within federal and state laws), if you have such written policies. If you want to do this, include a copy of the policies as attachments to the RFP. I had one audit firm’s staff member performing the audit who was hitting on the women at our office who felt harassed. He was replaced immediately.
Tip: The Federal Sarbanes-Oaxley Act does not generally apply to nonprofit tax exempt organizations. But there are several sections do. One provision addresses the creation of a board’s independent and competent audit committee. Another one of those sections is how an organization is to deal with a whistle blower. Review the provisions of SOX that apply to your nonprofit organization.
Your state law may have similar provisions to SOX or rules on handling the RFP process. Here are three examples from state laws:
See the Utah law on preparing an RFP:
The entity shall distribute a "request for proposal" to all auditors who meet the qualification criteria set by the procuring organization interested in bidding for the audit. As a minimum, the request for proposal shall contain the following:
(1) the name and address of the entity requesting the audit and its designated contact person,
(2) the entity to be audited, the scope of services to be provided, and specific reports, etc. to be delivered,
(3) the period to be audited,
(4) the format in which the proposals should be prepared,
(5) the date and time proposals are due, and
(6) the criteria to be used in evaluating the bid.
See Florida’s Single Audit Financial Reporting Package Submittal Checklist:
New (8/18/2008) regulations in Connecticut
Some NPOs require that the auditor provide a draft audit and management letter before the final versions. The audit committee/staff meets with the auditor prior to a final audit to review the drafts to be sure that they cover all aspects. It was my experience that details could be missed in the draft about one funder or other. I preferred to catch errors before a final was completed. In every instance there were errors that were correctable.
The audit committee or the full board should receive the final audit and have a debriefing meeting with the auditor to go over findings and recommendations, if any. I was always present although the auditor and board were offered the opportunity to ask that I not attend. If corrected action is required or suggested, the board should oversee the steps taken and the time for those corrections.
TIP: Some states may consider the opening of the envelopes with bids by nonprofits is a pubic act under the Sunshine law. State law will also dictate whether the review of the RFPs and the final selection are also to be public. It may fall under the limited items for an executive session for the board with the public announcement at the board meeting of the selection.
For a sample Management Letter see
TIP: Copies of the audit should go to requisite organizations that provide funds. The board members should all receive a copy. The organization should have a file for each annual audit. Be sure to list how many copies are needed in the RFP.
A discouraging word – how the failure to have an audit can become big anti-publicity:
Seattle Times, June 23, 2007, No audit at Bellevue Arts Museum since 2003
Nonprofit, Now Defunct, Faces Audit, 9 July, 2008,
See the previous list for the Second Shelf
Your Nonprofit Library Second Shelf – Considering An Audit 
Article by Jeffrey S. Gittler, CPA for Guidestar in August 2011, Roles and Responsibilities of Nonprofit Audit Committee Members  

Saturday, August 23, 2008

Your Nonprofit Library Second Shelf – Considering An Audit

The Alliance for Nonprofit Management asks and answers this question:

What is an audit?


An audit is a process for testing the accuracy and completeness of information presented in an organization's financial statements. This testing process enables an independent certified public accountant (CPA) to issue what is referred to as an opinion on how fairly the agency's financial statements represent its financial position and whether they comply with generally accepted accounting principles (GAAP). GAAP is determined by the American Institute of Certified Public Accountants (AICPA). Board members, staff, and their relatives cannot perform audits because their relationship with the organization compromises their independence.

See the rest of the answer at

For some nonprofits with relatively small annual budgets it may be OK to have an audit committee to perform the annual audit. Members of the committee should have an understanding about budgets, accounting, internal controls and auditing. You will find some very helpful material in this article to place on your library second shelf about this

The board of directors/trustees needs to consider whether it wants an accountant or a certified public accountant to perform the audit. It may be that a donor or grantor has stipulated that the audit must be done by a CPA or a professional called an independent public accountant (IPA) in some areas.

Why do you want an audit? Is it because it sounds like a good idea? Does a donor or potential funder require an audit? Is there suspicion that there may be some hanky-panky? The last issue calls for a different kind of audit. Audits generally do not catch thieves. (See for a discussion of how to approach this troubling sort of possibility.)

Financial audits are performed annually. The incorporation papers or the bylaws should indicate what the fiscal year is. After the review, the auditor issues a written statement that the fiscal position of the organization appears to be accurate. (I am not an auditor so I make it simple). This statement may be "unqualified" -- meaning that the auditor didn't identify any problems or potential problem areas. Or it may include commentaries or warnings addressed to the organization's board and managers. Obviously, every organization would prefer to get a "clean audit."

TIP: When preparing grant applications always include a request for funds to audit that grant. Calculate their fair share of the cost of the organization’s annual audit. If you estimate an audit will cost $1,000 and the grant will be 25% of the annual budget, then make their share $250. Include the audit as a budget line item even if the funder says it will not fund administrative costs.

Many government contracts are now requiring a CPA to audit non-financial activities, to review contract compliance. There may be other funders asking for that as well. That increases the cost of the audit.

Some grant opportunities will require an audit to be filed with the application for funds. What if you do not have an audit to file? For an excellent discussion on this point see Please submit an audit with your proposal from the Nonprofit Assistance Fund.

The board must also decide if it wants the CPA/accountant to complete the IRS Form 990 or 990-EZ and file it. I think that the 990 is a place to put a NPO's best foot forward so give it strong consideration to be a shared document. The 990 is going through revisions as this is written. The revisions will make the 990 more difficult to complete.

The Federal Office of Management and Budget (OMB) has developed circulars that set standards for nonprofit tax exempt organizations receiving Federal grants. The audit is referred to as a “single audit”. There are many CPAs and accountants who have never performed a single audit with these Federal requirements; verify if the accountant hired knows these rules and the Single Audit Act. There will be another article about seeking requests for proposals from auditors.

OMB Circular A-21 - Cost Principles for Educational Institutions

OMB Circular A-110 - Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations

OMB Circular A-122 - Cost Principles for Nonprofit Organizations

OMB Circular A-133 - Audits of States, Local Governments, and Non-Profit Organizations (06/24/1997, includes revisions published in Federal Register 06/27/03) HTML or PDF (33 pages, 127 kb) (This Circular is issued pursuant to the Single Audit Act of 1984, P.L. 98-502, and the Single Audit Act Amendments of 1996, P.L. 104-156. It sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, and non-profit organizations expending Federal awards.)

For further information about an A-133 audit see

What is an A-133 Audit? -

Your state may also have standards for audits if you receive state funds.

IRS Tax-Exempt Organizations Tax Kit -,,id=96774,00.html

IRS Publication 1771 concerning Charitable Contributions - Substantiation and Disclosure Requirements -

Congress enacted the Sarbanes-Oxley (SOX) law in 2002 in reaction to financial scandals by corporations (Enron, Tyco) overseen by the Securities and Exchange Committee. There are only a few sections of SOX that affect nonprofits but one of them is an audit committee.

For a copy of the act see:

The Sarbanes-Oxley Act and Implications for Nonprofit Organizations by Independent Sector:

Sarbanes-Oxley and Nonprofits: Bogeyman in the Boardroom?

The Alliance for Nonprofit Management 29 FAQs about Financial Management -

Hildy Gottlieb of the Community-Driven Institute provides material about the board having a “dashboard (which) provides you with key (fiscal) indicators of critical information, so you can make effective decisions quickly”.

Jeanne Bell’s article in BlueAvocado, Is It Time for an Audit?

Suzanne Coffman’s, GuideStar's director of communications and editor of the Newsletter, article, To Audit Committee or Not to Audit Committee, That Is the Question (Along with "How?")

Basic Guide to Nonprofit Fiscal Management -

Financial Accountability and Audit Committees

Audits from Without Borders

Glossary of Financial Terms

IRS Employer's Tax Guide, Publication 15 -

The American Association of Certified Public Accountants has provided our sector with an excellent Toolkit to help understand the finances and provide guidance for an audit. It provides indicators under some areas and samples for

The AICPA Audit Committee Toolkit: Not-for-Profit Organizations -

The components are:

Download a zipped file of all the tools listed below. The individual documents are formatted in Word

Audit Committee Charter Matrix
Tracking Report (Whistleblowers)
Financial Expertise
Conducting an Exec. Session
Sample RFP for CPA Services
Issues Report from Management
Independence and Related Issues
Discussions with Indp. Auditors
Peer Review of CPA Firms
Evaluating Indp. Auditors
Fraud and the Audit Committee
Evaluating Internal Audit Team
Hiring the Chief Audit Executive
Audit Committee Self Evaluation
Hiring External Experts
Single Audit Act Issues
Internal Control
Resources for Audit Committees
Evaluation of the Auditors Engagement Letter
Unique Transactions and Fin. Relationships

Many of these sections have easy self-evaluation forms to help assess the organization’s work in these areas

One example of what is available is the section on Internal Controls. .

Internal Controls

AICPA has an excellent tool to be used by an audit committee of a nonprofit organization. At the end of the article is a checklist for the committee and executive staff can use to see how the organization is doing on internal controls.

This tool is intended to give audit committees basic information about internal control to understand what it is, what it is not, how it can be used most effectively in the organization, and the requirements of management with respect to the system of internal control over financial reporting.

The Committee of Sponsoring Organizations (COSO) of the National Commission on Fraudulent Financial Reporting Framework discusses five interrelated components of internal controls as follows:
  1. Control environment. Sometimes referred to as the tone at the top of the organization, meaning the integrity, ethical values, and competence of the entity's people; management's philosophy and operating style; the way management assigns authority and responsibility and organizes and develops its people; and the attention and direction provided by the board of directors. It is the foundation for all other components of internal control, providing discipline and structure.

  2. Risk assessment. The identification and analysis of relevant risks to achieve the objectives that form the basis to determine how risks should be managed. This component should address the risks, both internal and external, that must be assessed. Before conducting a risk assessment, objectives must be set and linked at different levels.

  3. Control activities. Policies and procedures that help ensure that management directives are carried out. Control activities occur throughout the organization at all levels in all functions. These include activities such as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets, and segregation of duties.

  4. Information and communication. Addresses the need in the organization to identify, capture, and communicate information to the right people to enable them to carry out their responsibilities. Information systems within the organization are key to this element of internal control. Internal information, as well as external events, activities, and conditions must be communicated to enable management to make informed business decisions and for external reporting purposes.

  5. Monitoring. The internal control system must be monitored by management and others in the organization. This is the framework element that is associated with the internal audit function in the organization, as well as other means of monitoring such as general management activities and supervisory activities. It is important that internal control deficiencies be reported upstream, and that serious deficiencies be reported to top management and the board of directors.

These five components are linked together, thus forming an integrated system that can react dynamically to changing conditions. The internal control system is intertwined with the organizations operating activities, and is most effective when controls are built into the organizations infrastructure, becoming part of the very essence of the organization. There is a self-evaluation tool based on the five components.

©2006-2008 The American Institute of Certified Public Accountants

If the board is going to perform the annual budget, material from the Toolkit could be used for training of the committee.

For the first shelf of your nonprofit library see If You Build It – Then You Have To Read It. The First Shelf.

A related article - Insurance Questions for Nonprofits -

Tuesday, August 19, 2008

A Communication Parable - Which Side of the Door Are You On?

Some 18 years ago my wife and I rented a small house directly on the beach at Pawleys Island SC for a week. We had a spectacular time. Unfortunately the house was destroyed the next year in a hurricane and never rebuilt. That house has become our parable for communication. When we are at a difference of issues, opinions and facts, one of us calls for a time out. And one asks the other, "Which side of the door are you on?"

Here is what happened.

We were discussing the happy memories of the Pawleys Island trip. When we started talking about the layout of the inside of the house we had totally different memories of what was in it and where things were. We both were convinced we were correct.

What to do?

I suggested we each take a piece of paper and draw the layout of the house as we saw it. The result: we both drew the same layout precisely. I was viewing the house from inside and my wife was viewing it from outside the front door.

Problem solved. Communication open. the barrier was down and we gained a new opportunity to communicate. I cannot say how often we have said to each other, which side of the door are you on?

There are times with communication in families and in the workplace when we have to ask, which side of the door are you on?

The door can be a barrier for communication, trust, clarity, enlightenment, opportunities, closure and moving on. Breaking down the barrier opens...well, other doors.

When you reach an impasse with a family member or a colleague, ask yourself if you could be looking at the exact same thing but from different sides of a door, a barrier. Use the opportunity to ask the other if it is possible you are looking at the same thing but from the other side of a door.

I do not want to simplify communication as only one door, one barrier. There can be many barriers and opportunities that are quite complex from life experiences, education, opinions (that can become beliefs or facts for one or both of you), age, race, nationality, gender, disability, religion, age and so on.

But I do want to make available a possible solution to some communication breakdowns that may be easily and quietly fixed. Which side of the door are you on?

Try it.

I hope you have the results my wife and I have found in many contexts: trust, clarity, enlightenment, opportunities, closure and moving on. Of course we increased our love also but that is our story.

Monday, August 11, 2008

Fiscal Sponsorship or Agent: A Yellow Light

There are two alternatives to incorporating as a nonprofit tax exempt organization in the U.S. It can depend on your mission and the activities you will perform as well as whether you will raise funds.

One very unique and successful group that has never incorporated and never raises funds and does not seek grants is Alcoholics Anonymous. If that is the model you are planning, really consider carefully why you think you need to incorporate.

The second example includes groups that have not completed their incorporation process and are raising funds and the group that will raise funds, work on its mission but does not want to incorporate and handle the records and necessary reporting and filing. Both of these alternatives can consider seeking a sponsoring partner, commonly called a fiscal sponsor or a fiscal agent. As you will see there is not unanimity whether it is a "sponsor" or an "agent". I will use the word "sponsor" for this article.

Very frequently individuals are required to have a fiscal sponsor for certain grants, folks such as artists, dancers, painters, film makers and so on. They can find the beginning of assistance from the funder or from articles at the Foundation Center, linked below.

This discussion is not about partnerships between nonprofit tax exempt organizations jointly seeking grants and one of them being the lead agent. Some aspects of what I am suggesting do apply, however.

I give the concept of finding a fiscal sponsor or becoming one a bright YELLOW light headed to red. I become annoyed when I see nonprofit leaders rather cavalierly tell inquirers, oh, just find a group to be your fiscal sponsor. Nor so fast cavaliers.

There are several items I suggest:

  1. Both groups should perform due diligence, that is, investigate the other for fiscal, legal and other problems, wrongdoing or misconduct
  2. Have the fiscal sponsorship in writing detailing the duties and obligations of both parties. It will be a legal document
  3. Be a sponsor only of groups that share a common or similar mission as stated in your incorporating papers and the IRS filing of the 1024
  4. Consider only sponsoring groups that are in the process of incorporating and filing for tax exemption
  5. Have an ending date or ending event in the agreement
  6. Have the respective boards review and agree to the contract and have an approved person sign and date it.

Both the sponsor and the group need to recognize that the sponsor CONTROLS the following items:

  1. Sponsor may charge fees up to 15-20% of the revenue or expenditures
  2. Donations and grants are payable to the sponsoring organization
  3. The sponsor provides the IRS documentation of tax exemption for donations for the group
  4. The sponsor maintains the bank account and all receipts for the group
  5. The sponsor pays all bills based on required fiscal reports and receipts filed by the group
  6. The sponsor receives requisite reports in a timely fashion from the group including for the sponsor to file grant reports and the IRS 990
  7. The sponsor hires any staff and maintains salaries and benefits
  8. The sponsor may provide other services to the organization by contract such as offices and human resources,
  9. The sponsor provides the insurance
  10. The sponsor can be responsible for debts incurred by the organization
  11. And more as agreed by the parties

As fiscal sponsor, is that what you want to do?

As the group seeking assistance, is that what you are prepared to sign up for?

Resource material:

From the Adler and Colvin law firm:

Fiscal Sponsorship Agreement (Model A)

Fiscal Sponsorship Grant Agreement (Model C), short form

Request for Technical Advice (IRS Lobbying Exception) - Effect of fiscal sponsorship on lobbying


The U.S. Bureau of Justice has material about how they handle fiscal agency; they do not call it “sponsorship”.

BJA will award a single grant based on an approved application in each of the U.S. Attorney Districts. However, the selection committee may wish to dedicate funds to more than one jurisdiction or for more than one project. As a result, each task force will need to use a fiscal agent to receive the funds and then make subawards to or enter into contracts with each project or entity that will carry out each component of the strategy. Only nonprofit organizations and units of state and local government are eligible to apply to be the fiscal agent.

The BJA also has the following Tool Box to help solidify what they are looking for.

Tool Box

List of BJA's State Administering Agencies (PDF)

U.S. Attorney Certification Process for the Fiscal Agent and Subrecipients

Sample Certification Letter for Fiscal Agents

The San Francisco Study Center, which rejects the words "fiscal agent" as inappropriate, requires the following at a minimum to provide fiscal sponsorship. Study Center offers its sponsored projects:

  1. Budget development and tracking
  2. Tracking and payment of vendor invoices
  3. Personnel administration including payroll and benefits administration
  4. Maintenance of individualized general ledgers for each project
  5. Contract management, including invoicing and reporting to funders
  6. Individualized monthly statements
  7. Management of organizational insurance requirements

The Foundation Center's article, What to Consider Before Becoming a Fiscal Agent, is a brief look at the topic -

Good information for individuals at the Foundation Center, What is a fiscal sponsor and how do I find one?

The Foundation Center also has material about Where can I find examples of policies, procedures and guidelines for fiscal sponsorship agreements on the web?

The Community Resource Center, Colorado features a discussion about sponsorship by David Barlow, CPA:

Community Technical Assistance Center, Fiscal Sponsorship

I strongly suggest the parties discuss this option with their own lawyers during the yellow light.

I am required to tell you that I am a licensed attorney in New Jersey. I may have given you legal information here but I have not given you legal advice.

Sunday, August 10, 2008

If You Build It – Then You Have To Read It. The First Shelf.

If You Build It – Then You Have To Read It. The First Shelf.

What is it you are building? This issue and others from time to time will feature books and web sites to place in your nonprofit library. That is what you are building, a library, a nonprofit library. What I offer are examples of the some of the best books and web sites available.

You may not need them all but they will give you the start for your library.

I ask readers to consider adding any books or web sites to that day’s listing to supplement what I am suggesting.

The first shelf is a list of paper books to consider for your library, no web sites, but there are links to the books. The links to the books listed below are either to book reviews at CharityChannel or Amazon. I have no business relationship with Amazon; they are simply convenient. I am a virtual volunteer at CharityChannel.

It is my intent on this first shelf to feature material that can be helpful to you if you are:
  1. Thinking about creating or incorporating a nonprofit organization
  2. You have incorporated and are now planning to file with the IRS for recognition as a tax exempt organization
  3. You have incorporated and are recognized as a tax exempt organization and looking for assistance for the first two-three years. That is not to say these books have no value after that. They do. But they have a special emphasis for the beginning years. And they can serve as reminders as your group grows – or stagnates.

Book Shelf 1 – The Beginning:

ABC's of Nonprofits
By Lisa A. Runquist
American Bar Association (2005)

How to Form a Nonprofit Corporation (book w/ CD-Rom)
By Anthony Mancuso
Nolo Press

Starting and Managing a Nonprofit Organization: A Legal Guide
By Bruce R. Hopkins
Wiley, 4th Edition

Complete Guide to Nonprofit Management, Second Edition
By Smith, Bucklin, and Associates, Inc.
Wiley; 2d edition

Nonprofit Law Made Easy
By Bruce R. Hopkins

The Ultimate Board Member's Book: A 1-Hour Guide to Understanding and Fulfilling Your Role and Responsibilities
By Kay Sprinkel Grace
Emerson & Church,

Breakthrough Thinking for Nonprofit Organizations: Creative Strategies for Extraordinary Results
By Bernard Ross, Clare Segal
Jossey-Bass; 1st edition

The Leadership Challenge, 3rd Edition (There is also a Workbook for it)
By James M. Kouzes, Barry Z. Posnerb
John Wiley and Sons (2002)

Streetsmart Financial Basics for Nonprofit Managers, Second Edition (with CD-Rom)
By Thomas A. McLaughlin
Wiley; 2nd edition (2002)

The Cash Flow Management Book for Nonprofits: A Step-By Step Guide for Managers, Consultants, and Boards
By Murray Dropkin and Allyson Hayden
John Wiley & Sons, Inc. (2001)

Nonprofit Organization Management: Forms, Checklists & Guidelines (Unfortunately out of print but your local library or college library may have a copy. At Amazon, click on the link for reading it on "Kindle". Maybe it will appear there.)
By Jamie Whaley, Managing Editor, Jeff Stratton, Research Editor
Aspen Publishers,

You will not find the following topics in this first shelf, although the topics are alluded to: Marketing, Grantwriting, Strategic Planning, Fundraising, Branding, Internet Strategies, Staffing, Long-range Board Development, Enterprise Development, Risk Management, Advocacy, Planned Giving, Evaluating, Faith-based/Church Issues, Community Organizing, Capital Campaigns, Human Resources, and other topics. They will be discussed as we go along.

Good reading ahead.

Wednesday, August 6, 2008

The Mission Statement - The Spiritual Rudder

Some 40 years ago I developed the Camden Episcopal Community Center in the heart of Camden NJ. The center continues in existence serving the community as the Camden Community Center at Broadway and Royden. Back 40 years ago when I sought funding and prepared grant applications, no one talked about mission statements.

The times changed and the concept of a mission statement for nonprofit and for-profit corporations caught on. Looking back on the change, I say it is a great idea. When statements took hold, it was not very clear what it should and maybe not say. I remember the first mission statement I used I wrote myself. It did not dawn on me to include others in the process of creating it and celebrating it. It had some 4 paragraphs of multiple sentences. I have no idea what it was about now.

The idea of a mission statement is now so burned into me that I cannot envision a nonprofit that does not spend the time and energy creating one.

What is it? How do we define a "mission statement"?

I call it the spiritual rudder. It defines the purpose for the nonprofit's existence. It briefly describes the uniqueness of the organization, why it exists, what it will accomplish. It gives the board, the staff, the community and potential funders a sense of what the organization stands for. It keeps the organization focused and under control.

As the rudder guides and forces a boat, ship, airplane or submarine to stay on course when water, wind and weather attempt to move it off course, the spiritual rudder maintains the direction when inside and outside forces attempt to change it. It is strong. It is bold. It expresses the soul of the organization, the spiritual rudder.

Creating the mission statement is not a solo act. It can and should be considered and discussed by the leadership. The board and/or staff can participate in several ways including saying how the members want to proceed. My experience shows that it can be a slow process. That is it can be democratized for greater sharing and dreaming. I have been in a process that took six months and resulted in a universal agreement of what the organization was about. We celebrated the end - which was a new beginning.

We used the statement regularly. It had to be out front. We posted it at staff and board meetings. All or the heart of the statement was a watermark on letterhead. It appeared in all publicity, all grant applications. We created a portable, folding triptych poster display for community events featuring the mission statement at the top center. My last development of a mission statement, except for myself, predated websites and other wonderful ways to position the mission statement.

It was not important whether it was short enough for a baseball cap or too long to memorize. It was more important that it was accurate, honest, forceful and expressed our values.

The statement may have to be revisited every so many years. Organizations grow, slide, shift in focus. New people, changed circumstances may alter the direction with a better way to say the words for the spiritual rudder.

Every corporation, including nonprofits, develop a corporate culture. That culture should be influenced by the mission statement from as early a moment as possible, from the first board meeting onward if possible.

For experienced nonprofits that are considering a mission statement for the first time, the development process should have an effect on the culture and can have positive and negative implications that will have to be managed.

The mission statement is the "bottom line". It is one of the three Ms - mission, management and money.

Some resources for understanding a mission statement, a vision statement, marketing, positioning, and advocacy:

Tony Poderis, The Mission Checklist, and

Carter McNamara’s Basics of Developing Mission, Vision and Values Statements

“So, when you are preparing your Mission Statement remember to make it clear and succinct, incorporating socially meaningful and measurable criteria and consider approaching it from a grand scale. As you create your Mission Statement consider including some or all of the following concepts.

  1. The moral/ethical position of the enterprise

  2. The desired public image

  3. The key strategic influence for the business

  4. A description of the target market

  5. A description of the products/services

  6. The geographic domain

  7. Expectations of growth and profitability”
From Business Resource Software, Inc. Mission Statement

Often overlooked at the beginning of the development of a new organization is communication. Communication includes talking and listening. You will find some guidance through these concepts at Smart Chart 3.0 Free registration required.

Independent Center’s Mission & Market: The Resource Center for Effective Corporate-Nonprofit Partnerships

Ron Meshanko’s article at, What should our mission statement say?

Joanne Fritz’s article at, How to Avoid Mission Creep: 7 Hallmarks of Mission Statements That Stay Put

Joanne Fritz’s article at, Mission Impossible? How to Write Your Mission Statement

Third Sector New England, Strategic Communications Blog Video: What is the difference between a nonprofit’s mission and vision?

Nancy Schwartz, The Nonprofit Tag Line Report

Vince Hyman, Positioning Your Organization for Success

Vince Hyman, Reputation Builders

Alder Consulting, Branding Your Organization through Your Website


The American Institute of Certified Public Accountants is the national, professional organization for all certified public accountants. Its mission is to provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit the public, employers and clients.

And how do you achieve this mission?

Use your mission statement for advocating for your organization and what it is doing. We do not spend much energy advocating for our nonprofits and we should . When you advocate for your organization, advocate with the mission statement involved.

Be at the helm of your spiritual rudder.

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