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Nonprofit Radio for August 21, 2015: Online And At Risk & Your Board’s Role In Executive Hiring

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Diane Oates: Online and at Risk?

Do you accept donations online? Have a “donate now” button? Are you using crowdfunding sites? You may need to register with lots of states, not just your own. Diane Oates is an assistant attorney general in the consumer protection division of the Florida AG’s office and a former National Association of State Charities Officials (NASCO) board member. (Originally aired July 11, 2014.)

 

Gene Takagi: Your Board’s Role in Executive Hiring

Gene Takagi

Gene Takagi, our legal contributor and principal of the Nonprofit & Exempt Organizations law group (NEO), walks us through this important board responsibility: hiring the executive officer.  (Originally aired July 11, 2014.)

 

 

 


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Hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. I’m your aptly named host. Oh, i’m glad you’re with me. I’d be stricken with dextrose gas trea, if i was forced to stomach the mere hint that you missed today’s show online and at risk, do you accept donations online? Do you have a donate now button? Are you using crowd funding sites? You may need to register with lots of states, not just your own. Diane oates is an assistant attorney general in the consumer protection division of the florida attorney general’s office and she’s, a former national association of state charities officials boardmember that’s nasco and that originally aired on july eleventh twenty fourteen also, your board’s role in executive hiring jean takagi, our monthly legal contributor and principal of the non-profit and exempt organizations law group neo walks us through this important board responsibility hyre ing the executive officer that’s also from the july eleventh show last year on tony’s take two, i’m not speaking to the new york times we’re sponsored by pursuing full service fund-raising data driven and technology enabled, you’ll raise more money pursuant dot com here is online and at risk with diane oats with me she’s an assist, associate assistant attorney general in the ohio attorney generals charitable law section. She had been with the office for eight years. Managing a broad range of cases, including charitable gambling and charitable solicitations. She has handled multiple investigations and enforcement actions and is ohio’s point person for multi state enforcement actions. Diana it’s, welcome to the show. Thanks, tony, for having me on. Thank you very much for holding on. Sorry about that. No problem. I hope you enjoyed the music. Oh, i did, um, let’s. See, so these are laws that non-profits have to comply with. And a lot of these laws haven’t really kept up with the new solicitation methods that that charities have that’s correct. A lot of the laws are are older and do not address any sort of internet solicitations. Ah, there are such guy lines is the charleston principles which charities can follow in determining whether they need to register in a variety of states that they are soliciting online right? And we’ll get a chance to talk about the charleston principles. It’s, it’s, but there’s there’s not only online. But then there’s also the mobile giving world, of course, and that is growing by leaps and bounds. We actually just had a multi state they nasco it’s, the national state association charity officials put out some wise giving tips for charities on how to manage ah, and be wise on the internet when doing any sort of mobile giving or any sort of internet solicitation. So you definitely charity should be definitely protecting their brand and making sure they know who is soliciting for them on the internet. Um, and we’re going to get to that document in the wise giving tips the primary question, i think, is what what is a solicitation? And unfortunately that really varies from state to state, you’re correct. In a lot of states, the definitions might be a little bit different in ohio. Uh, it is when a person asked for anything of value, so it can’t be money can be time, and that donation would benefit a charitable organization or a charitable purpose and that’s that’s fairly consistent across the states. But but there are there are nuances when you start to drill down into well, okay, so sending us mail asking for a donation. That’s, that’s. A solicitation everywhere but as you start to go down, too, email oppcoll having a donate. Now, button on your site, driving people to the donate now button that’s, where it starts to get a little murky across the states. Definitely, and that’s, where the charleston principals come into play, and that’s, where the differences arise, because i believe only two states, tennessee and colorado, have adopted the charleston principles into law. Ah, many other states, including ohio, used them as guidelines for when to determine if a charity needs to register with our state if they have such a thing as it donate now, button or any sort of online solicitation. Okay, so we know that they’re adopted in only two states. Right now. Suppose you’re not in aa one of those two states. Can you just pick up the phone and talk to somebody and ask whether they use the charleston principles as guidelines? I would advise calling either the attorney general and your state or the secretary of state’s office, whichever office has the charity regulator located in it and see how they treat the charleston principles you could call up if you’re in ohio, call up our office, we would be able to tell you we used merely as guidelines to guide us as to whether charity needs to register. Obviously, if you are located in a certain state, if you’re located in ohio and you’re soliciting from there, you would have to register anyways, if you’re not let’s, say you’re located in west virginia, then we would go through the factors with you to see if you would need to register in ohio simply by having a donate. Now button on your website. A lot of times, though, i find clients make a call like that, but ultimately the final responsive to get is always we can’t tell you or we can’t advise you whether to register, okay, that and that might be the response in some states and ohio. I mean, we we would try to help you out as much as possible again, we can’t give legal advice, but i mean, i think we could steer you in the right direction isto whether you would need to register or not looking at whether you are, you know, mailing or emailing any solicitations to someone in ohio, if you are soliciting through an interactive website meaning you can collect donations straight through that website and whether you’re these are the two big factors whether you’re specifically targeting a person in our state or whether you’re receiving donations from a purse from people in our state on a repeated an ongoing basis or substantial basis, that so we would go through those factors and try to work with the charity to figure out whether you need to register here or not. We would definitely do that, ok, maybe ohio’s friendlier than a lot of states that that may very well be, but and i’m not saying it’s not worth the call it’s just that because it definitely is worth the call. As you said, either to the attorney, general’s office or the secretary of state, it is worth the call. This is that sometimes, you know, the ultimate answer should i register falls on usually it falls to the to the charity and, you know, and they’re sort of referred to their legal advisors, but it’s still worth the call because, um, you can you can get a fair amount of help. Definitely. Okay, um, we have just about a minute or so before break. Why don’t you explain what thes charleston principles are just so so everyone’s acquainted with them? Sure, they are guidelines which, uh, charity can follow, too. See if they should register in a state merely if they are soliciting on the internet. So what they need to look at if they are domiciled in a state, they will probably need to register there. And what i mean by domiciled is if they have their principal place a business in that state, if they’re not domiciled in the state, they need to look at there. Ah, non internet activities. And if those alone would cause them to register in that state, like if they’re mailing or calling people in that state, they would need to register if they are just asking for donations through their website. And if they’re either specifically targeting people in that state on their website for donations or they’re receiving contributions from that state on a repeated and ongoing basis for a substantial basis, then they would need to register in that state all about looking at the contacts in that state. All right, we’re going to take this break. When we come back, we’ll find out where we can see the charleston principles. They actually happen to be my subway read. I carry them with me all the time, and i read them every, you know, like, every six months or so, i just go back and read them on ben. Diane and i will we’ll keep talking about what’s a solicitation on, including talking about crowd funding sites to stay with us. Could you tell at the beginning of that interview that i was badly out of breath? That’s because i was late to the studio. This was the one hundred ninety ninth show. Andi was the first time i had been late. I had teo either called or texted sam. He had to play the music. I like one and a half times over by the time i got here i had run from the subway, which which is what held me up. So yes, if you if you thought i was out of breath, you were right. And then i i was looking forward to the two hundred show and hoping that i wouldn’t be late for that which which i was not let’s, do some live. Listen, love before we go to this break st louis, missouri clifton, new jersey i used to hang out at clifton a lot because my grandmother used to work at a big pharmaceutical company in clifton son of a gun. Which one was that? I don’t think it was mark. Well, there was a big pharmaceutical company i don’t think is very big and clifton anymore, but she used to work there and i would go meet her after and then my parents were dropped me off. We’d meet her there, and then she would take me to her house. That was in clifton, and we have another us, your masked we see you, we just don’t know where you are. So could be the nsa, fbi, cia, some other acronym. We’re on to you, and we are we are investigating. Also, let’s go to aa japan, konnichi wa, too, in chino, maya and mexico city, mexico, is with us. Also. Hola, que tal that’s really about the best i can recall from from high school, but that’s not so bad. I mean, i think, it’s, how you doing? Right. Holacracy tall tower, mexico city listeners and there’s more to come. Let’s, go to this break, and then we’ll go right back into this interview with diane oats. Stay with us. You’re tuned to non-profit radio. Tony martignetti also hosts a podcast for the chronicle of philanthropy fund-raising fundamentals is a quick ten minute burst of fund-raising insights, published once a month. Tony’s guests are expert in crowdfunding, mobile giving event fund-raising direct mail and donor cultivation. Really, all the fund-raising issues that make you wonder, am i doing this right? Is there a better way there is? Find the fund-raising fundamentals archive it. Tony martignetti dot com that’s marketmesuite n e t t i remember there’s, a g before the end, thousands of listeners have subscribed on itunes. You can also learn maura, the chronicle website philanthropy dot com fund-raising fundamentals the better way. Welcome back to big non-profit ideas for the other ninety five percent got lots of live listener love, let’s start domestic because we’ve got a lot of foreign listeners, of course, but let’s start domestic bethpage, new york. Many in bethpage don’t know who’s in bethpage do you know each other in bethpage live? Listen, her love to you there. Beverly, massachusetts, new bern, north carolina. I just spent some very nice time in north carolina. Thank you. New bern. Columbus, ohio. New york, new york. Live listener loved each of our live listeners. And, of course, there are more podcast pleasantries, of course, to those listening on the time shift where the iran a treadmill car, subway airplane, wherever you are, pleasantries to you. Nine thousand plus ofyou. Okay. Diana it’s. Um, let’s. See, where can we? What? We find these charleston principles to go and read them ourselves? If we would like to do so, i believe they’re located on the nasco net website. You can go to nasco net dot or ge. Okay. And that’s an a s c o net dot org’s the national association of state charities officials of which you are a boardmember. Yeah. And that’s, the organization that created the wise giving tips documents. So while we’re talking about finding documents, what what’s the full name of that document? Sure, it’s the internet and social media solicitations wise giving tips and the tips are for three separate audiences for charities, donors and fund-raising platforms, and it gives recommendations and tips on how to give and fund-raising wisely online. All right, the internet and social media solicitations wise giving tips and that’s also on the nasco website, right? Correct. Okay, crowd funding the crowd funding sites. Those raised a lot of questions. I get this a lot when i’m doing speaking, what if we are using crowd rise or deposited gift? What do who’s supposed to register them? Right? If you’re a charity again, i would direct the charity to the charleston principles. Usually on those websites, you’re not targeting a specific state unless maybe an event is taking place in a certain state or, you know, your charity is located in that state, so and i think it’s unclear also, whether the fund-raising platforms themselves need to register with states that’s still kind of an open question, okay? And also get questions related. When charity’s air working with community foundations and and the foundation is sort of the past through for the for the donations, the question then is who should be fun? Who should be registering and again looking at the charleston principles if it’s just a passer, entity that’s just doing some administrative work with processing donations, they might not need to register, so i would again and advise those community foundations toe look at the principles right for the community foundations and then the charity’s the same who exactly? Okay, but yeah, as we said, unfortunately, you don’t know for sure, except for two states, whether the state is is adhering to the principles. How come, how come, why is it that more states haven’t adopted them either? Officially, i guess through their legislatures or may be not as an act of the legislature, but just officially through the office that manages the charity registration process in each state, and that is a good question. I am not. I’m not really sure of the answer there, and yeah, i should probably talk to tennessee in colorado and see how they got that pushed through. I’m not sure why more states haven’t actually officially adopted them, okay, dahna because they are really cool, and they’re called charleston principles because i believe it was in meeting of nasco that was held in charleston, south carolina, where they were. These were adopted. I think they were. The discussion started there, yes, in charleston, south carolina, that’s. Why they’re called goodbye, not okay, but maybe not adopted there. Alright, yeah, attorney holding my feet to the fire e used to be an attorney, but so now that now i run roughshod over things. So thank you for being explicit. Okay, what about? We know there’s one state where you don’t have to register. Tell us about that. I believe that. Arizona? Yes. Yes, arizona. I believe they recently did away with their registration statue. I’m not too sure about that, but that is not a growing trend that icy. Definitely. I see that kind of an outlier. Okay, okay. So one point does not one data point does not make a trend. Things that i can’t even make a line from one point. Okay, but yes, arizona has explicitly said charities that are on ly soliciting in our state. I don’t need to register and yeah, they had a statutory system around registration and that was repealed or, you know, largely repealed. Yes. Um, now you made a point earlier that we wanted i want, like, just liketo amplify your home state where your incorporated that we should certainly be registered there. Yes, than any place where you have any principal place of business. Well, okay. So differentiating the inc you’re you’re only incorporated in one state, right? Because you’re not you’re not not-for-profits corporation, and that can only be one state. But you could have places of business. In lots of states, you can have the principal place of this that’s, probably in one state, but then you can have multiple locations everywhere and if you’re, you know, conducting solicitations from those locations and yes, definitely should be registering in the states. Now you’re you’re a, uh an important player in this because you’re a nasco boardmember but it’s so, um, divers, because we’re fifty difference sets of statutes and, um, timetables and fees and things do you do you get frustrated by this process? It it can get frustrating. And we definitely hear from our constituent charities that it is frustrating and that’s why we do have twelve states that are working on a single poor, cracked the website where charities khun go and register and they wouldn’t have to duplicate the process over and over again. Okay, this is the single portal initiative. Exactly. What more can you tell us about what state that is? Or i don’t mean state. You know what? What state it’s in, etcetera. What can you tell us? Uh, well, the single portal project is being headed by twelve pilot states. They include california, illinois, alaska, colorado, connecticut, hawaii, massachusetts, michigan. Mississippi, missouri, new hampshire and tennessee and basically it’s, a project that has three components one obviously is to create a unified elektronik registration system that will allow non-profit organizations and then they’re professional fundraisers to goto one site and fulfill their registration requirements for all states eventually at that site. Um, another component is also to be a public website where anyone can get this information that’s filed, academics could get it tio create analysis of emerging issues and trends. The public can look up this information to make more informed choices about their charitable giving and also non-profits can look up this information to compare thie effectiveness and cost of their professional fundraisers that they hyre and third, this would be a great tool for regulators. They could direct their limited resources away from registration and toward their core purpose of preventing fraud and misuse of charitable funds. Is this ah, envision to be a free site for charities? Um, that is a good question. I not sure about that. I know that this is kind of a three year time period where they’re going to try to get this off the ground rather soon and have it. Build up in phases over the next three years. I am not sure about the fees. I do not know that. Ok, ok. Um, timetable do what stage is it at now? It is at the beginning stages. Thie pilot states created a nonprofit organization in delaware. Teo, help develop and operate the website. And they just decided that the urban institute they chose them to design and build the single portal website. So it’s in the process of being built. And they are also establishing an advisory committee to help with the design and operation of the system. Okay, is it is it funded yet? Or were steven still too early for that it’s in the process of funding and the the non-profit, the multistate registration of filing portal the non-profit that was formed is reaching out to the non-profit community. Now, with grant proposals to help build up funds for this project. Okay, so that’s something to look forward to. Handup so is there not yet a timetable? Like when this should be live? Or maybe not all twelve states, but at least some initial minimum viable version? Um, i think i mean, the goal is to roll. Out the stages in the next three years. So hopefully in the next, maybe two years, the registration sites would be up and running. But please don’t call me that, okay? Okay, we won’t. Nobody listens to this show anyway, diane so you’re fine. Okay, well, we know that arizona standing alone. Not a trend, but are there any other trends that you do see coming up? The big trend icy is internet fund-raising on and that’s. Why nasco did put out this wise internet giving tips the intern fund-raising on the internet is growing. I believe in two thousand three it was about six point four percent of all charitable giving, but still it’s growing lead some bounds year by year. So we were really urge charities. Teo be aware of their presence on the internet and be aware of who’s raising money for them on the internet. A lot of thes fund-raising websites, they download the database of charities from guide star. And then anyone can just go on and start fund-raising for a charity, which is great. But you also want to make sure that no impostors are going out there and claiming that their associate it with your charity and trying to gain access to your donations, so check out the wise giving tips on also the charleston principles those will help you, andi will put, ah, put links to those on the takeaways from the show, which go up on the facebook pages afternoon diane, please leave us with the nasco conference that the charities are welcome to come, too. Yes, definitely. The two thousand fourteen nasco conference is on monday, october six, at the hyatt regency washington on capitol hill in washington, d c the theme this year is the evolving role of charitable regulation in the twenty first century. There are a lot of great panel scheduled i’ll just mention a couple first will be disaster relief and opportunities for collaboration between regulators and the not for profit sector. Um, our luncheon topic is our charities really charitable with our keynote speakers? Thomas kelly, who is a professor at u n c school of law, and john columbo, who’s, professor and interim dean at the university of illinois at chicago school of law and then one panel, i think, is going to be extremely interesting about ratings and evaluating charities. We have three. Panelists are taylor, who is president and ceo of the better business bureau. Wise getting alliance. Daniel bora chop, who is president of charity watch, and ken berger, who is the ceo of charity navigator. And then we also have panels on a messa you bit executive compensation are wise giving tips and then also a single portal update, so it should be a great conference, and you can get more information about the conference at nasco. Net dot org’s, thank you very much. Art taylor and ken berger have been guests on the show when we did the, uh, the altum the myth, the what was it, thea, the overhead myth letter that’s, right? We have the three signers of the overhead myth letter on and those they were two of them. All right, diane, thank you very much. Thank you, my pleasure, diana it’s, associate assistant attorney general in the ohio attorney general’s charitable law section. And i have an update tio what? Diane, i’m just talking about if you’re interested in this year’s nasco conference, that is october fifth of this year and ah, nasco net dot or ge is the place to get more information. I called my mother on the brake and asked her the company that my grandmother used to work for in clifton i was mistaking it was not a pharmaceutical company, but was i t and t international telephone and telegraph? Do they even exist anymore? It and t i don’t i don’t know if they do, but that was where there was a big plant that my grandmother worked at when i was growing up. Tony, take two and your boards role in executive hiring are coming up first. Pursuant, they do full service fund-raising they have web based tools for small and midsize non-profits do you need more prospects? I hear that a lot that that’s a problem. You need more prospects at higher levels and related to that. How do you know who’s capable of upgrade? This is what pursuance prospector platform does. It finds your upgrade ready donors. So you know who to pursue for larger. E-giving trent riker is the ceo at pursuing he has a background in non-profits for about twelve years, he leads this company. They are data driven, technology driven, and prospector platform is one of pursuing smart online tools. You’ll raise more money pursuant. Dot com, check them out new york times i’m not speaking to the new york times, and i implore them to stop stealing my guests. It happened latest incident. Latest incident was just last week. Remember, will mccaskill, the professor from oxford, oppcoll what happened? Okay, i do love scott stein, but not his time. Are we okay? Okay. I don’t mind. Scott stein a little. Well, who? Um it was a phantom sam throwing his arms up. He doesn’t know what happened. All right. Anyway, we’ll mccaskill so he’s on the show last friday. Of course, talking about his show doing good, his book doing good, better. And then on saturday, he’s in the new york times profiling his book doing good, better you believe that? And there was another time it was about two or three years ago and i’m sick of it. It’s happening too often do two points like that make a trend? Absolutely. The video where i explain this in more detail and you’ll see my ire. Is that tony martignetti dot com knock it off new york times do you know about fund-raising fundamentals? That is my monthly ten minute podcast devoted to fund-raising only for small and midsize shops, it’s fund-raising only not on ly for small and midsize shops, large shops could listen to, but i’m not thinking about them when i’m producing the show it’s a burst of fund-raising info i would say it’s only once. A month, i do it for the chronicle of philanthropy. So that’s published on their site and like non-profit radio, i picked the brains of experts and you listen on your own schedule. That one is not live. That is strictly a podcast. Recent ones preparing for your next recession with paul rosenberg from the bridge band group and boosting your plan e-giving with our own creative producer claire meyerhoff there’s info on fund-raising fundamentals at tony martignetti dot com and at the chronicle of philanthropy. Although gotomeeting durney dot com because i need the traffic and chronicle of philanthropy is doing just fine. That is tony’s take two for friday twenty first of august thirty third show of the year. Here is r wonderful. Ah, informative. Smart contributor on the law, jean takagi on your boards role in executive hiring jean takagi he’s with us. You know him? He’s, the managing editor, attorney at neo non-profit and exempt organizations law group in san francisco. He edits the very popular non-profit law block dot com on twitter he’s at g tak g ta ke jin takagi welcome back. Hi, tony in congratulations on one ninety nine. I’m looking forward to two hundred next week. Cool. Yes. I’m glad you’re gonna be calling in for with us. Thank you very much. Thank you, it’s. Very exciting. Really? One hundred ninety nine shows ago. It’s one hundred ninety nine weeks it’s it’s. Remarkable. Um, we’re talking this week about the board’s role in hiring the executive and i’ve i understand that there are a lot of executives in transition. I think so, tony and it looks like some surveys have confirmed that it’s certainly been syrians with some of my clients and even on boards i’ve sat on over the last couple years. And there’s, a great group called compass point out in san francisco there nationally known as one of the most respected non-profit support centers and together with blue avocado, a non-profit online publication, they have a national survey on leadership succession in transition going on just right now. The last time they published the results with in two thousand eleven, and they found that sixty seven percent of current executive anticipated leaving within five years and ten percent. We’re currently actively looking to leave right then, and in two thousand eleven, the economic times weren’t so were so great. So sixty seven percent anticipating leaving within five years that’s a pretty staggering number. So now we’re already three years into that survey into that five year projection. Yeah, and sixty seven percent of two thirds. So if we had held this show off until two thousand sixteen, then it would have been moved. But there’s a new one coming out, you said, yeah, well, they’re they’re just starting the survey online now so you can participate on that. I don’t know the website, but if you, you know google non-profit transition survey executive transition survey, thank you, you’ll get that okay, and its compass point it’s a compass point and blew up a goddamn kottler who you’ve. You’ve mentioned blue vaccaro before i know. All right, so, yeah, two thirds of of ceos were expecting to be in transition within five years and where we’re only three years into it now. So the presumably these people are still looking. What? But boards don’t really spend enough time preparing for this kind of succession, do they? Well, you know, in many cases they don’t, and sometimes, you know, they might stay, they don’t get the chance because their executive director comes up to them and give us in two weeks notice, and now, you know, the board may be used to meeting every month or every other month or even every third month, and now all of a sudden they’ve gotta ramp up their efforts and find an executive to come in in two weeks. That’s going to be really tough to do on dh, you know, again, if we say at any given time, two thirds of the non-profit executives are looking to leave their job, you know, it’s very likely that within your board term, you know, you may have an executive transition to manage, and sometimes with very little notice. So that’s that’s? Why? I think succession planning is just really a core duty of non-profit board. Well, how do we let them get away with this two week notice? I mean, the ones i typically see are you know, the person will stay on until a successor is found, you that’s, not your experience. Well, you know, you’re really lucky if you if you do get that situation, i think most non-profit executives are hired on at will basis. Meaning that there’s, not a contract to stay there for a given number of years. Either party can conception, rate or terminate the employment relationship at any time. And as the average, you know, employee may give two weeks notice to go on to another job there. Many executives who feel the same way that they, you know, they may feel like they own allegiance to an organization. But another opportunity comes up and it’s not going to be held for them forever. And they may want to move on. Um, and they may feel like what they gave the board really advanced notice that they might be looking for something that they might get terminated. So they may keep that information from the board until the last two weeks. Well, because all right, so that i am way in the dark because i would. I just presumed that executive directors, ceos even if small and midsize shops were not at will. But they were but that they were contract. I mean, when i was a lonely back in my days of wage slavery, director of planned e-giving i was in at will employees, which means you can end it. Like you said, you could end at any time and so can they like, if they don’t like the color of your tie one day they can fire you, you’re at will. But but that that’s typical for for ceos and and executive directors. Yeah, i think for smaller non-profits it’s very, very common. Oh, i just always assumed that these were contract positions with termination clause is and no. Okay, but, i mean, you know, it’s, your practice, i’m not i’m not disagreeing with you, i’m just saying i’m okay, i’m learning something s so that’s that’s incredibly risky. So it is. It just put you in that position of saying, well, i need to replace somebody immediately and i don’t you know, as a board we don’t meet very often can we even convene within the two weeks to find the process going? It’s going to be so much better if he had a plan of what happened in case you know, our executive every doesn’t give two weeks notice, and even if the executive says, you know, in your scenario, maybe a longer notice, maybe, you know, in six months, if they do have a contract at the end of my contract, i don’t plan to renew, you know, i think we should go through the process of looking for for a successor and having a plan or thinking about that plan that is just coming up with something on the fly is going to probably result in a much better choice for selection of a leader in the future and that’s going to be critical and how well the organisation operates and how the beneficiaries of your organization are going to do are they going to get the benefits of a strong organization or are thinking is suffer because the organization can’t do it? You can’t advance mission as well. It should. Yeah, i mean, you’re you’re calling it on the fly. I would say two weeks notice for an executive director. Departing is is a crisis even four weeks notice? Yeah, in many cases you’re you’re absolutely right. Okay, i’m right about something. Thank you. You’ve got something right today. All right. So what do we what do we do, teo, to plan for that? Just well, you know, i think the first thing the board has to do is start toe think about the contingencies. So what do we do and then actually want one thought that comes to mind that, uh, that you raised tony is should we get our executive director on an employment contract? If they are and that will employee do we want to lock it in? And they’re sort of pros and cons with that? If you’ve got, like, not the best executive director in the world, terminating somebody on a contract becomes much, much more difficult than if they were at will employees. So, you know, you kind of have to weigh the pros and cons, but, you know, revisiting your current executives director and the employment relationship is maybe step one. Oh, and suddenly he was thinking about, well, do you have a really strong job description that really reflects with the board wants of the executive director and on the basis on which the board is reviewing the executives performance on dh? Maybe the sort of initial question to ask in that area? Is do you actually review the executive director and that the board you absolutely should? You and i have talked about that the board’s is not part of their fiduciary duty to evaluate the performance of the the ceo? Yeah, i think so. I think it’s a core part of meeting their fiduciary duties that really, you know, as a board, if you meet once a month or once every couple of months or whatever what’s more important, you know, then really selecting the individual who’s going to lead the organization in advancing its mission and its values and implementing your plans and policies and making sure the organization complies with the law. Taking your leader is probably the most important task that the board has, because the board is delegating management to the to that leader. Yeah, absolutely. And i think it’s often forgot naralo overlooked that individual board members inherently have no power and no authority to do anything think so, it’s only as a group. When they meet collectively, can they take aboard action? So for individuals to exercise, you know, powers on behalf of the organization that has to be delegated to them and typically the person responsible for everything is that ceo or the executive director. We’re gonna go out for a break, gene. And when we come back, you now keep talking about the process. The what goes into this process, including the job offer. So everybody stay with us. Like what you’re hearing a non-profit radio tony’s got more on youtube, you’ll find clips from stand up comedy tv spots and exclusive interviews catch guests like seth gordon. Craig newmark, the founder of craigslist marquis of eco enterprises, charles best from donors choose dot org’s aria finger, do something that worked neo-sage levine from new york universities heimans center on philantech tony tweets to he finds the best content from the most knowledgeable, interesting people in and around non-profits to share on his stream. If you have valuable info, he wants to re tweet you during the show. You can join the conversation on twitter using hashtag non-profit radio twitter is an easy way to reach tony he’s at tony martignetti narasimhan t i g e n e t t i remember there’s a g before the end he hosts a podcast for the chronicle of philanthropy fund-raising fundamentals is a short monthly show devoted to getting over your fund-raising hartals just like non-profit radio, toni talks to leading thinkers, experts and cool people with great ideas. As one fan said, tony picks their brains and i don’t have to leave my office fund-raising fundamentals was recently dubbed the most helpful non-profit podcast you have ever heard. You can also join the conversation on facebook, where you can ask questions before or after the show. The guests were there, too. Get insider show alerts by email. Tony tells you who’s on each week and always includes link so that you can contact, i guess, directly. To sign up, visit the facebook page for tony martignetti dot com. Duitz gotta send live listener love, let’s. Start in japan with tokyo kiss are a zoo and nagoya. Konnichiwa, seoul, south korea, seoul. Some someone south korea, always checking in love that on your haserot. Moscow, russia, mexico city, mexico, ireland. We can’t see your city ireland’s being masked for some reason, but we know you’re there. Welcome, welcome, ireland, and also taipei, taiwan. Ni hao, nobody from china, that’s, funny, nobody from china today, coming back to the u s, we got cummings, georgia, in ashburn, virginia. Live listener love to you in georgia and virginia. Okay, gene. So now we’ve let’s say, we’ve learned that our exec is departing and let’s not make it a crisis situation, though let’s say this person is generous enough to give six months notice. So, you know, let’s, not make it a crisis. Where what’s our what’s, our what’s, our first step as the board. Terrific. And i’ll just add, even if you don’t, if you know your executive is not leaving any time soon and i think you should go ahead and start this process anyway. Oh, yeah, clearly we should be. We should have a succession plan in place. Yes, we’ve talked right? Okay, yeah. So i think the first thing to do is get a committee together so it might include boardmember some outside experts outside with the board. If you don’t have that internal expertise and just getting different perspectives out there, some of your other stakeholders might be really important in what, you know what you want to look for in an executive in the future. So get that committee together first, get the buy-in of the current executive director. So unless it’s going to be, you know, a succession plan for a termination? Yeah, we’re really unhappy with executive director, right? Let’s not get into that. Yeah, let’s get their buy-in and have them help in the process. Especially with your scenario where they’re giving a six months notice and everything is amicable. Let’s, you know, see? Shoot, who knows better about the organization than the executive director that’s in place right now. So i’m getting there buy-in and help contribution. I think it is pivotal. Does this committee have to be comprised of hr experts? Why? I think having a least one or two hr experts is going to be really helpful. But i i think it’s more than that. It’s, you need program people who understand what the executive you know roll is no respect to advancing the program. You need the fund-raising people to know well, what is the going to do with respect to fund-raising perhaps the seeds, the lead fundraiser and some small organizations as well. So we need thio gather a bunch of different people with different perspectives and expertise to figure this out. And i think that’s a very good point to include a t least a programme expert. Now, could this committee include employees, or does it have to be sure you can absolutely on dh? You know, you might even have have have different subcommittees in there. So eventually this is going to go up to the board. But as the committee’s doing the legwork for determining what? You need an executive director and putting together a job description, and and, you know, perhaps, but the performance evaluation is going to be based on for the future executive director all those things can get, you know, we’d be aided by the contribution from several areas. Okay, okay, what are your thoughts on hiring a recruiter vs vs? Not well, i you know, i think it depends upon what the organization shins resource is our and the organization should understand the marketplace it’s in a swell hiring two great executive director is the competitive thing. So, you know, if you’ve got a lot of resources and you’re able to you want to allocate an appropriate amount of resource is tio what i think again is making one of your most important decisions of the board? I don’t think you want to do this on the cheap at all. I’m just the same way i didn’t want you to do it on the fly or or or in a rushed matter-ness think you want to invest in this, and if you don’t have great expertise inside about on things about, like, doing job interviews and doing background checks on the sex thing, you know how to differentiate between one candidate and another when they all look good on paper and when they’re maybe professional interviewees, but they’re not there, maybe not great leaders. How do you figure all those things that if you don’t know, that dahna an executive search firm could be a great help, and it can just open up the marketplace of potential candidates as well, especially if they, you know, decide to do a regional or even a national search. It really can ramp up who who you’re going to see in front of you and the quality of the candidates that the selection comedian the board eventually will have to choose from. Okay, does the committee now come up with a couple of candidates to bring to the board, or is it better for the committee to choose one and bring that person to the board? How does this work? You know, i think the committee should be tasked with bringing several candidates up on sometimes it may be a multi tiered process so they might go through two rounds of screening, for example, and and at least let the board see who’s made the first cut. And then and then, you know, present to the board, the final, perhaps two or three candidates. If, if you’ve got, you know, the ones that are very close and in quality in terms of what the board want in an executive director, i think that’s pivotal. I wanted to add one. Nothing, though. I’ve seen this done before, tony and i don’t really like it and that’s when. If a search committee or research consultant comes up and says, you know, to the board, tell me what you want in the good executive director everybody, you know, spend five minutes, write it down and send it to me or take it home and email it to me oh, and tell me what you want and then the search consultant collates the the the answers and then that’s, you know, the decision about that’s what’s going to be the qualities you’re going to look for. I think this needs a lot of discussion and deliberation and the value of that, you know, that that thought process and that really difficult thinking and getting all those generative questions out there is going to produce a much better product in terms of what you’re looking for and who you can get and how you’re going to do it. Yeah, you you send this tio use email and, you know, it’s going to get the typical attention that an e mail gets, like a minute or something. You know, it’s it’s going to get short shrift. And your point is that this is critical. It’s it’s, the leader of your organization, you want do you want the contributions of the committee to be done in, like a minute off the top of their head just so they can get the email out of their inbox? Yeah, definitely. We could talk about board meetings and another show, but put this at the front of the meeting and spend, you know, seventy five percent of your time talking about this. This is really, really important, okay, you have some thoughts about compensation, and we just have a couple minutes left. So let’s let’s say we’ve the board has well, i can’t jump there yet. Who should make the final call among these candidates? Is it the board? Yeah, i think it should be the board that makes the final approval, but they they’re going to put a lot of weight based on what? The executive of the search committee, you know, tell them who they’re you know, the recommendation is okay, and i think that toe add one more thing to it is make sure the organization looks good to clean up your paperwork and your programming and even your facilities. Just make sure you’re going to be attractive to the candidate as well. Because if you want to attract the best, you better be looking your best as well. Okay, okay. And the with respect to compensation now, we’ve talked about this before. What? What’s excessive. And there should be calms and things like that, right? So it’s really important to make sure that the board or unauthorized board committee one that composed just board members, approved the compensation before it’s offered to the candidate. Even if you don’t know that they’re going accepted or not, once he offers out there that compensation package, total compensation should have been approved by the board. And you want to do it with using the rebuttable presumption of reasonable procedures unless you know its far below market value. Okay, if you get payed accessibly or if you pay somebody excessively, that could be penalty taxes for everybody. Including the board. Should be careful of that. We have talked about that rebuttable presumption before. Yeah. All right, then. We have to leave that there. I look forward to talking to you next week on the two hundredth great. Congratulations again. And i look forward to it as well. Thank you, gene. Gene takagi, managing attorney of neo. The non-profit and exempt organizations law group, his blog’s non-profit law block dot com and on twitter he is at g tak. Some updates, of course, too live listener love because you were listening to live listener love from july eleventh, twenty fourteen. So that’s a that’s. A little bit at a date, more people have joined us, including wilmington, north carolina, media, pennsylvania. Pottstown, pennsylvania, and spring lake, new jersey. I spent a lot of time very close to spring lake in belmar because my other grandmother, not the grandmother who worked at i t that was my mom’s mom. But my dad’s mom and dad had a home in belmar and i used to go there weeks on end. My parents were thrilled to get rid of me when i was four, five, six, seven, eight years old. Oh, my gosh. Lots of weekends in belmar. And i know that spring lake is a very, very pretty town. Also, uh, what’s the big hotel there where i’ve been for dinner, the breakers. Is that the breakers? That beautiful hotel? Ah, not literally on the water, but pretty darn close right across that little little just across ocean have love spring lake and interesting springlake media and pottstown you’re listening from itunes cool live listen love to each of you also joining us sao paulo, brazil, beijing, china ni hao and belong j portugal live listeners love to each of you now you might have noticed that on that july eleven twenty fourteen show, there was no podcast pleasantries and no affiliate affections. You see how this show is growing and expanding and innovating constantly on one hundred ninety ninth show. The next week was going to be the two hundredth. We don’t have podcast pleasantries and affiliate affections. Now we do so pleasantries out to all our ten thousand plus podcast listeners wherever, whatever you’re doing, affiliate affections love you too all our affiliate am and fm stations i want to waken affiliate affections. I’m just realizing it’s a f f f f f after two dafs squared affiliate affections! I don’t know, maybe that’s too that’s hokey. Besides, i like thea. I like the the ah what is it when all the words start with the same whatever that that i love it’s an alliteration. Thank you saying so. I liked the alliteration, so we’re sticking with affiliate affections. No. After two next week, i told you it was coming. Incentive pay for your fundraisers to fund-raising administrators from the university of pittsburgh. Very senior people share their innovative pay plan for their frontline fundraisers. If you missed any part of today’s show finding on tony martignetti dot com, where in the world else would you go? I i believe that i had said that i was going to stop singing weeks ago, but i must have been misinformed. It’s my show and do whatever i want. And if you don’t want to singing host, get your own show, i beseech you, go ahead pursuant full service fund-raising you’ll raise train car loads more money, and i’m not talking about those two person little flat beds that the people pump up and down like a seesaw to move along the tracks like, you know, oh brother, where art thou? I’m talking cattle cars, container cars, tank cars filled with money pursuant dot com. We’re going to go out with a live version of cheap red wine today. This is the live version from the two hundredth show, which was the week after the show that we just turned the two segments from scott stein came in the studio, brought his elektronik eighty eight keyboard, and he played cheap red wine, our theme music. And since it’s snuck in earlier today, phantom lee, we’re going to go out with it. Here’s. The live version from the two hundred show our creative producer is claire meyerhoff. Sam liebowitz is the line producer show social media’s by susan chavez. Susan chavez. Dot com on our music is by scots. Dine with me next week for non-profit radio big non-profit ideas for the other ninety five percent go out and be great wait can agree on nothing. Wait till our ups from my down wait disappointed in each other. Now tell me, baby, and this love that we found. You know, you used to find me charming, but i can figure out how. And you said, you thought those handsome. But it doesn’t matter now. So came falling for my punch. On just long in time, we’ll allow, because i’m you got her empty promises. A bottle of cheap red wine. What’s not to love about non-profit radio tony gets the best guests check this out from seth godin this’s the first revolution since tv nineteen fifty and henry ford nineteen twenty it’s the revolution of our lifetime here’s a smart, simple idea from craigslist founder craig newmark yeah insights, orn presentation or anything? People don’t really need the fancy stuff they need something which is simple and fast. When’s the best time to post on facebook facebook’s andrew noise nose at traffic is at an all time hyre on nine a m or eight pm so that’s, when you should be posting your most meaningful post here’s aria finger ceo of do something dot or ge young people are not going to be involved in social change if it’s boring and they don’t see the impact of what they’re doing. So you got to make it fun and applicable to these young people look so otherwise a fifteen and sixteen year old they have better things to do if they have xbox, they have tv, they have their cell phones. Me dar is the founder of idealist. It took two or three years for foundation staff, sort of dane toe. Add an email address their card it was like it was phone. This email thing is fired-up that’s why should i give it away? Charles best founded donors choose dot or ge somehow they’ve gotten in touch kind of off line as it were on dno. Two exchanges of brownies and visits and physical gift mark echo is the founder and ceo of eco enterprises. You may be wearing his hoodies and shirts. Tony, talk to him. Yeah, you know, i just i’m a big believer that’s not what you make in life. It sze, you know, tell you make people feel this is public radio host majora carter. Innovation is in the power of understanding that you don’t just do it. You put money on a situation expected to hell. You put money in a situation and invested and expect it to grow and savvy advice for success from eric sabiston. What separates those who achieve from those who do not is in direct proportion to one’s ability to ask others for help. The smartest experts and leading thinkers air on tony martignetti non-profit radio big non-profit ideas for the other ninety five.

IRS Continues Inquiry On Charity Registration Compliance

IRS building courtesy of Foist on Flickr
IRS building courtesy of Foist on Flickr
The IRS form 990 for 2012 has been released, and it continues to inquire about your office’s compliance with Charity Registration laws in the states where you solicit donations.

There have been significant changes to the form and its shorter sibling the 990-EZ.

But the Charity Registration inquiries remain.

Part VI, question 17 asks you to list the states in which you are required to file form 990. That is a basic part of registration in nearly every state. If you’re required to register before you solicit in a state, odds are you’ll be required to include the 990 with your application.

This is the federal agency’s oblique way of gaining jurisdiction–or legitimacy–to inquire about your compliance with state laws. It’s interesting.

Schedule G, part I, question 3 has you explicitly list the states in which you’re registered to solicit, or have been notified you’re exempt.

I hate to nitpick, but you won’t necessarily be notified by a state if you’re exempt there. In a good number of states, you determine exemption on your own and make no filing. In others you must file for exemption and be approved.

Every charity doesn’t submit this schedule with its 990. You file schedule G if, among other things, you spent more than $15,000 for professional fundraising services or reported more than that in fundraising event gross income. (See form 990, part IV, questions 17-19.)

Form 990 is signed by an officer under penalty of perjury. (See part II.)

There are precious few places where our IRS inquires about your compliance with state laws where you solicit donations.

But they’re alive and thriving.

If you want a fuller explanation of Charity Registration, take a look at the article I published in the journal “Taxation of Exempts.”

CMA Section: I am not your attorney or your accountant. Seek the advice of your professional advisors in all matters of IRS compliance.