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From the President's Office, May 2008

Dear Friend:

The night sky and the nonprofit world …

What do we do, and why do we do it?

What got me thinking about these questions was a recent editorial by David Brooks in the New York Times. Brooks took time off from the grind of reporting on the presidential campaign to share an essay written by Michael Ward found in Books and Culture. The essay points out that "while we moderns see space as a black, cold, most empty vastness," those in the medieval ages found the heavens "rippling with signs and symbols … anthropomorphic life, dancing, ceremonial, a festival not a machine." Brooks observes that our modern perspective tends to create a world of "all fact and no meaning." We see "economics and politics as the source of human motives."

Today if your day is anything like mine, you'll be thinking about money, and people, and operational challenges. If you're lucky, your day may even include meeting with the people that your organization serves. For most of us it will be another day filled with computers, telephones, and too much to do. It's easy to lose sight of the essential and noble role of nonprofit organizations in our society and the specialness of what we do.

So when you get home tonight, take a moment to slow down, look up at the wonders of the nighttime sky, and take just a minute to reflect on what you do and why you do it. You are making a difference, and the stars are twinkling.


Bob Ottenhoff
President and CEO

IRS Updates, May 2008: Intermediate Sanctions, Instructions for Filing the New Form 990, and Mor

Final Regulations on Intermediate Sanctions

If your organization is still struggling to understand fully the definition and implications of excess benefit transactions, take note. The IRS has issued its final regulations on intermediate sanctions, the penalty imposed on nonprofits that are deemed to have overcompensated CEOs, board members, and other "disqualified" individuals specified in the regulations. Rather than enacting substantive changes to the proposed regulations set forth in 2005, the final document attempts to clarify complex issues with specific examples and to serve as a guide for potentially troubled organizations.

Among other points, it emphasizes that any reasonable attempts at enacting safeguards against excess benefit transactions will be treated as a favorable factor if transactions are later deemed to be excess benefit transactions. Self-identification of excess benefit transactions and the implementation of corrective measures before the IRS becomes involved are also factors that the IRS will take into account when deciding whether or not to revoke tax-exempt status because of excess benefit transactions.

Draft Instructions for the New Form 990

A draft of the instructions for completing the redesigned Form 990 has been released by the IRS and is now open for comments from the public. Enhanced with such features as a glossary of terms and a table for determining how and where to report various forms of compensation, the instructions also include a line-by-line breakdown that guides filers through each question of the form and its attached schedules.

In the interest of increasing clarity and reducing complexity, the IRS is now soliciting comments on all aspects of the draft instructions. The IRS has also included with the draft a list of items within the instructions that the service is especially interested in receiving feedback on. Comments will be accepted until June 1, after which time they will be posted on the IRS Web site.

Requesting a Form 990-T

The IRS has also recently released an announcement outlining the procedure required to request a copy of Form 990-T, the form 501(c)(3) organizations file to report unrelated business income. Forms that were filed after August 17, 2006, are available for public inspection upon request, as dictated by the Tax Technical Corrections Act of 2007. In order to request a Form 990-T, members of the public must fill out a Form 4506-A and mail or fax it to the IRS. More information >

E-Postcard FAQs Updated

Finally, for those small organizations now required to file a Form 990-N, also known as the e-Postcard, the IRS has posted an updated list of FAQs. These questions cover basic information, such as "Who must file the Form 990-N?" and "What information do I need to provide on the e-Postcard?" as well as more specific topics.

Patrick Ferraro
© 2008, Philanthropic Research, Inc. (GuideStar)

Patrick Ferraro is a freelance writer in Seoul, Korea, and a former editor of the Newsletter.

Back to Basics: The New Web Site Essentials

Almost every organization today, from the small one-person nonprofit to the private-sector independent contractor, has a Web site. A Web presence is essential and has been for years. And just like anything that has been around for a while, every now and then things need to be revamped and reevaluated. With the advances in technology, specifically Web 2.0 functionality, nonprofits should revisit their Web sites and determine whether they are up to par with today's savvy, particular Web site visitor.

In order to embrace the advancing technologies, nonprofits should first evaluate their current Web sites to ensure that overall design and layout are acceptable by current standards. Here are some basic questions to ask when evaluating current Web site design and structure:

Leadership: It's Everyone's Journey!

In his book The Hero with a Thousand Faces, the renowned mythology scholar Joseph Campbell describes "the hero's journey," whereby an ordinary person endures extraordinary hardships, becomes transformed in the process, and achieves the status of hero.

According to Campbell, this story is so fundamental to human existence that it pre-dates Greek mythology and to this day continues to be told again and again. Think of movies such as Rocky, Star Wars, The Wizard of Oz, and Mr. Smith Goes to Washington as examples of fictional heroes' journeys that have made their way into our cultural subconscious.

Because Campbell's description of this journey is so appealing, all kinds of leadership forums, self-help groups, and others have adopted his 12-step model to assist executives, managers, sales representatives, teachers, coaches, and others in identifying and embarking on his or her own hero's journey.

All well and good. But I contend that a truly good leader not only maps out a course for him- or herself but knows how to chart a hero's journey for those he or she seeks to lead.

What follows is a real-life personal story that I hope makes my case.

The Fired-Up Board: Preparing Your Board Members for Fundraising

Just think, how much could your organization raise if you had all your board members engaged in fundraising?

If we want to fire up our board members for fundraising, we first need to fire them up about our organization and the good work we are doing in the world. As we know, a board that is not engaged and excited about the work at hand is not going to put itself out for fundraising.

Let's start at the beginning. How do we fire up our board? How do we reawaken their passion for our cause and reconnect them with the reason they care—so they will happily go out and raise friends and funds for our organization?

Give Board Members a Great Experience. The quality of their experience can result in either excitement and energy or inattention and disconnection. We need to give board members such a great experience that they will be engaged enough to tackle fundraising.

Give Board Members Substantive Work. Board members' energy and enthusiasm will be greatly enhanced when we offer them genuine opportunities to deal with issues of real consequence.

They want meaningful engagement in work that matters—not just attending meetings or critiquing the staff's work. We know that if the vision is powerful enough, it will help to pull them into action and trigger their enthusiasm.

Show them a possibility to get really excited about. If you can create this, then you will unleash more energy than you thought possible—from the organization and from each individual board member.

Emphasize Specific Outcomes and Results. The best way to energize a group of board members is to focus them directly on the results they need to accomplish. Give them specific jobs that have clear outcomes and a set time frame. Better yet, let them determine what those jobs are, and make their own commitments to deliver results.

The most important question for each individual trustee to answer is: What do I as a board member need to do for this organization in the next six months? Simplifying our focus to what actually needs to be done eliminates the "all talk and no action" syndrome that might creep into your board.

And what do you really need your board members to be doing? Are they more valuable to you sitting in a meeting, or do you need them to be in action out in the world making friends and connections for your organization?

Create Meaningful Board Meetings. Let's bring the passion back to board meetings. If we want our board members to tackle fundraising willingly and enthusiastically, we need to start with their principal point of contact with our organization—the board meeting itself. The meeting is a key moment that can create either enthusiasm or boredom.

The way we typically structure our meetings and agendas can drive the passion out of any organization. Robert's Rules of Order is a major culprit here. This traditional system may create a balanced, democratic format for running a meeting, but it can also be your enemy. Parliamentary procedure is not known for creating a sense of urgency, enthusiasm, or commitment to correct serious problems in the world. (See “Ways to Liven Up Your Board Meetings—and Your Board” to the right of this article for some ideas.)

Energize Meetings with Mission Moments. Give board members a set of vivid, very personal encounters with your organization's work—and with the lives that are being changed or saved in the process.

Demonstrate, beyond the power of words, the real meaning of our efforts to fill urgent human needs. Mission moments are the most powerful reminder of the reason an organization exists; they are also reminders of the reason a board member is spending his or her time in service.

We all know the power of testimonials and personal stories. Just as donors are moved by real stories to make gifts, board members are moved to action by those same experiences.

Every time there is a significant gathering of board members, bring those who benefit from your organization's work to meetings and let them share their experience directly with your board members. Or take your board members on a field trip to see your organization at work in the world.

Invite Board Members to Share Their Personal Stories. The most powerful conversations occur when board members share among themselves why they care enough to serve on the board.

I always begin my Easy Fundraising for Board Members Retreats with a simple—but very powerful—question. I ask board members to share why they care about this organization.

It is a surprise move: board members are rarely asked to share personal perspectives. I contend it is more important to have them talking about their personal passion for the organization's work than it is for them to hear report after report. You may be amazed to find out what people believe in.

This is the conversation to have over and over with your board members. Help them remember what they all care about the most, and you can quickly reinvigorate even the most routine meeting.

Create a Sense of Community and Collegiality. Social time helps develop healthy relationships, teamwork, and a sense of collegiality among board members. Remember that your board members want to meet each other and make new business and social contacts.

If they are all strangers to each other, how can they work effectively as a group to make wise decisions guiding your organization? Scheduling social time among board members is an absolute must that is too often ignored in the effort to use board members' time expeditiously and wisely. Often the casual conversations that occur during breaks or lunch foster deeper discussions of important issues as well as closer relationships among board members.

When the board members share this sense of friendship, they create a positive atmosphere that fosters trust and respect for each other. When your board members feel they are all in this together, then they will be more willing to put their shoulders to the wheel and raise money.

Name Tags Are Absolutely Essential. Name tags should be required for every board function, if you want to help your board members get to know each other. Providing name tags is simply good manners. There is no excuse for ignoring this essential aid for your board.

Help Your Board Members Enjoy Themselves. Life is short, and volunteer hours are precious. Board members should have an experience of actually enjoying their volunteer time with you. There is no rule that says nonprofit work has to be dreary.

If your organization can offer pleasant social experiences, your board members might come to meetings not just out of duty but also out of enjoyment. And happy board members who are enjoying themselves will work more effectively together as a team.

Fun is not what board members expect—but it brings energy and excitement to your cause.