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From the President's Office, April 2007


Dear Friend:

Compensation is one of the hottest issues in the nonprofit sector. Donors rightly want to know how their hard-earned dollars are being managed. Nonprofit leaders are concerned about attracting and retaining skilled people necessary to meet their mission goals. And every so often we learn of an abuse or excess that attracts breathless media attention and political scrutiny, casting a shadow on all of us working in the sector. A newly released report from the IRS's Exempt Organizations Executive Compensation Compliance Project represents an important step toward helping nonprofits report compensation accurately.

The IRS launched this initiative in 2004. Part I of the project involved sending compliance check letters to 1,223 organizations. These letters were sent to a sample of nonprofits whose Forms 990 and 990-PF were missing information in certain categories, indicating that they warranted a follow-up. Part II consisted of 782 examinations, 179 of which resulted from responses to the compliance checks. The initiative looked not only at salaries and benefits but also at charities' reporting of excess benefit transactions (intermediate sanctions) and self-dealing by private foundations.

Why are these efforts so important? First, in light of the scrutiny over compensation, it is critical that nonprofits with paid staff report compensation and benefits accurately. Only by being completely transparent in these areas can we build trust with our supporters and members of the general public. It is then up to us to help these audiences understand why the compensation we pay is appropriate.

Unfortunately, the initiative revealed that "significant reporting issues exist." Many of the nonprofits contacted were confused about how to complete their 990s and found the instructions difficult to understand. Nearly a third had to amend their returns, and 15 percent were selected for further examination.

Although these findings are not based on a statistical sampling of charitable organizations, the IRS is taking the reporting problems seriously. The service is looking at ways to give nonprofits the technical guidance they need to fill out 990s accurately. The IRS is also considering redesigning the actual forms to make them less cumbersome to complete and rewriting instructions to make them less confusing.

The second reason that the project is noteworthy is its scope—to our knowledge, this is the first time the IRS has examined nonprofit compensation on this scale. GuideStar has always been a proponent of effective and efficient government, and we applaud the IRS for undertaking this initiative. These efforts will not only help identify the minority who wish to abuse the system but also enable the majority to follow the rules better by ensuring that they know just what those rules are.

At GuideStar, we firmly believe that the vast majority of people in the nonprofit sector are honest, generous, and dedicated. We recognize that a substantial number of our colleagues toil for very low—or no—wages. Organizations that require large budgets and complex operations to achieve their missions, however, need to offer appropriate compensation to attract and retain qualified staff. To build support and maintain trust, they must disclose their compensation practices and help the public understand why those practices are appropriate.

I hope you will see GuideStar as a resource to help both nonprofits and the public in this area. By providing a neutral platform of nonprofit data, we enable organizations to convey information about their programs and finances—including compensation—to the public. By making information on all nonprofits registered with the IRS available, we provide a benchmarking context for individual organizations' compensation data. By ensuring transparency, we provide reassurance to those who support nonprofits. Good luck with your efforts. Let us know how we can help you.

Sincerely,

Bob Ottenhoff
President and CEO

Developing a Search Strategy: Your Roadmap for Hiring


Navigating the hiring process can be daunting for even the most seasoned managers, particularly if hiring is not their primary responsibility. When faced with an open position, most managers want to hire as quickly as possible and therefore may try to shortcut the process. We have found, time and again, that the organizations that lead the most effective searches have a clearly defined and strategic process outlined before they even post the position. This is what we refer to as a Search Strategy, and this strategy directly affects the efficiency and effectiveness of any search process.

An effective Search Strategy includes defining the position, creating a job description and a job posting, developing a recruitment plan, and planning for the different phases of screening. This article will outline each of these phases in more detail.

Defining the Position

Doing a thorough needs assessment is the first phase in developing your Search Strategy. With key internal stakeholders and decision makers, start with looking at the needs of your organization (or department) fully; what are the key functional responsibilities that need to be included in order for your organization/department to succeed? Next, determine what key competencies are needed in order to fulfill those functional responsibilities. Look at your current staff and map their responsibilities and competencies to your needs. Where are the holes that need to be filled? Is there anyone currently in your organization whose role could be adjusted in order to meet those needs? If not, you will need to make a new hire.

Once you have defined the needs, it is time to define more thoroughly the particular position and identify the profile of your ideal candidate. To ensure an equitable process, gather input by survey or committee from other staff members to help shape the definition of the role. Some questions to consider:

  • What are the key roles and responsibilities for the position?
  • What are the opportunities and challenges presented by the position?
  • What competencies are required for success in the role?
  • What organizational values would an ideal candidate reflect?
  • What kinds of people are generally successful in this organization and in this type of role?
  • What kinds of people are generally not successful in this organization and in this type of role?
  • Where does this position fit in the organization?
  • What is the background of the ideal candidate for this role (e.g., educational background, professional experience, skills, cultural/personality characteristics)?

Creating a Job Description and a Job Posting

It is now time to develop two different documents: a job description and a job posting. A job description is an internal document that will lay out, in detail, the exact roles and responsibilities of a particular position. This will be used during the onboarding phase for the new employee, to set expectations and to help the manager supervise. It will also be useful during evaluations and performance reviews.

A job posting is an external document that is created to motivate candidates to apply to the open position. As such, it is viewed as a marketing tool. Visiting on-line job boards is a great way to see a variety of different types and styles of job postings to inform the creation of your posting. A strong job posting will include:

  • A compelling but concise description of the organization's history, mission, and key programs; communicate what an exciting place it is to work

  • An overview of the position that summarizes the key responsibilities while demonstrating the importance of the role to the overall success of the organization

  • A well-constructed and organized list of key roles and responsibilities; highlight the appealing aspects of the position, such as decision-making authority, participation in strategic planning, etc.

  • A list of the qualifications required; try to focus on competencies, such as "exceptional relationship-management skills, especially working with high net worth individuals"

  • Clear instructions on how to apply

  • A statement describing your organization as an equal opportunity employer

Creating a Recruitment Plan

A strategic recruitment plan outlines the methods you will use to solicit qualified applications for your open position. It includes three key components:

  • Internal Distribution: Send a thoughtful e-mail to your organization's staff. This message should include a brief and appealing description of the role and the ideal candidate and should have the full job posting attached or included in the body. The e-mail provides an opportunity for you to invite internal candidates to apply for the position, if appropriate. In addition, your colleagues are very good sources of referral candidates because they know your organization best and have an idea of what it takes to succeed there. Be sure to thank them in advance for their willingness to distribute the posting to their personal networks and, if possible, consider offering a referral bonus.

  • Distribution to Your Constituents: Next, share the job description with your constituents. Post the job on an appropriate section of your organization's Web site and include information about the position in any newsletters or other external communications. If this is a new position, use it as an opportunity to highlight your organization's growth and development. If appropriate, contact donors, board members, partners, and other contacts; you never know who may be the source of a great referral.

  • External Posting: Broaden your reach beyond your inner circles by advertising the position externally. For most positions, gone are the days of placing a want ad in the local newspaper; these days, it is usually more cost-effective to post positions on multiple on-line job boards. Even so, you should budget at least $500-$700 for external postings. In order to determine how to spend your recruiting dollars most efficiently, research the relevant job boards or publications where you would find similar postings. Ask staff who have similar roles where they would look for jobs. Find out what professional associations people in the field belong to and see if those organizations have a job board or listserv. Remember when evaluating posting channels to consider both flow and quality; most hiring managers would rather have a smaller pool of qualified candidates than a larger pool of unqualified candidates.

Outlining the Screening Process

The goal of the screening process is to assess each applicant across consistent criteria in order to facilitate the most informed and effective hiring process possible. Determining the screening protocols in advance also ensures internal alignment and accountability among all staff involved in the hiring process; be sure to share all relevant materials with appropriate staff to ensure that everyone is on the same page and to allow for any necessary adjustments before the screening process begins.

Screening is a process of gradually getting more and more detailed information about a smaller and smaller candidate pool and generally includes at least three stages:

  • Résumé Screen: Before you review the first résumé, determine what information you want to learn from the résumé. Return to the job description and come up with a list of criteria you are looking for in a candidate. Now, cut this list down to include just those criteria that can be gleaned from a résumé. Use this list to create a résumé-screening worksheet to complete for every application.

  • Phone Screen: Start by going back to the full list of criteria that you developed. Figure out which questions you are going to ask during the phone screen based on the information you are looking for. Types of questions for the phone screen typically fall into three categories: skill fit (e.g., "Tell me about your success managing employees new to the workplace"), culture fit (e.g., "In what kind of organizational culture are you most successful?"), and logistics (e.g., "When would you be able to start a new position?"). Make sure that you are consistent in all of your phone screens in order to prevent possible claims of discrimination and to allow for easy comparisons between candidates.

  • Interview: In-person interview(s) are typically the last step in the screening process. Use the in-person interview to probe for information you did not gain in the earlier stages of this process. Plan your questions in advance, while building in time for the candidates to learn about the role and the organization. Remember that an important part of the interview process is marketing; at this stage, you think that you might be interested in hiring this candidate. You need to make sure that the candidate is interested in working for your organization. For more information about structuring effective interviews, click here.

Communicating with Candidates

It is vitally important that you plan, in advance, how you are going to communicate effectively with candidates at each phase of the process. Remember that every single person who comes into contact with your organization is a potential donor, supporter, volunteer, board member, staff member, etc. Although most hiring managers feel bad telling candidates, "No," candidates would rather hear "no" than nothing at all.

Ready, Aim, Hire!

Once you have a comprehensive Search Strategy, you will be armed with the tools you need to begin the actual hiring process. Taking the time up front to discuss the strategy and develop the required materials will pay off in the long run, ultimately leading your organization to the best possible hires.

Commongood Careers, May 2007
© 2007, Commongood Careers

Commongood Careers is dedicated to helping today's most effective social entrepreneurs hire the best talent. Founded by nonprofit professionals, Commongood Careers offers personalized, engaged services to job seekers and organizations throughout the hiring process as well as access to a wealth of knowledge about careers in the social sector.

Wired Fundraising: April Question of the Month Results


Charity begins at home, but should not end there."
-- Proverb
If the wise and venerable author of this proverb were alive today, he or she would most certainly add in parentheses, "especially if that home has an Internet connection." Thanks to today's technology, charity can be directed from the comfort of one's home to causes anywhere in the world.

Charitable organizations are connecting increasingly with the potential of on-line giving. According to the Chronicle of Philanthropy, in 1999 the nation's largest charities received $7 million on-line, accounting for 1 percent of total funds raised by those organizations. According to the ePhilanthropy Foundation, that figure rose to $4.53 billion in 2005, and the Chronicle of Philanthropy reported that on-line giving represented 10-15 percent of some nonprofits' total fundraising for 2005.

A host of services provide nonprofits with ways to receive donations through the Internet. Although this variety is a boon, it can also be burden for those who don't know where to get started.

So for April's Question of the Month, we decided to dig deeper and ask Newsletter readers about their organizations' experiences with e-philanthropy.

What Readers Told Us

We first asked, "Has your organization ever received an on-line donation?" More than half (63 percent) of participants responded that their organizations had indeed received on-line donations. As an anonymous reader noted, "On-line giving is becoming more and more popular—especially with the generations coming up. We need to provide our donors with safe, secure, and easy ways to give on-line. Additionally, we need to continue to be very timely in acknowledging them in a very personal and meaningful way. Not just through email."