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Jul 27

Prevention and planning: keys to avoiding and surviving a computer exploit

By Sponsor Insight, Technology

By Chip Heberden, owner and president, Netlink, Inc.

Understanding computer exploits like malware and viruses and how to prevent them, are basic business survival skills these days regardless of your organization’s size.

Just like other technologies, security compromises are getting more innovative.  It pays to be aware of how to prevent infection and if compromised, lessen the risk of damage.

A computer exploit can involve any number of malicious codes that can be designed to capture personal information (name, address, passwords, even financial information), destroy data, or hold your data for ransom!  Exploits such as viruses and malware may use a variety of delivery methods, and cause different types of damage.  The malware designers take advantage of the same technology and processes that we use every day, stealthily working out ways to lure unsuspecting users into executing the code.

Here are two current trends using computer exploits.

Jul 20

When best-laid plans go awry: Prepare with reserves

By Finance, Leadership, Sponsor Insight, Sustainability

By Lauren Kreutzinger, supervisor, VonLehman

In any business, in any organization, even the best-laid plans can go awry.

In the nonprofit sector, this can lead to disaster.

But that doesn’t have to be the case — if you’re prepared. For example, a major grant your organization counted on could fall through. Or your facilities might require emergency repairs. And, as many nonprofits have learned in recent years, even slightly lower-than-anticipated donations can make meeting obligations difficult.

Cash reserves can help cushion the blow of unbudgeted expenses. They may also enable your nonprofit to seize growth opportunities.

Your target number

The ideal reserve depends on an organization’s unique qualities, including its operating structure, sources of funding and types of expenses. But most experts agree that a minimum of three months’ cash can help mitigate the risk of budget shortfalls and unexpected events. But some nonprofits need greater reserves and some may be safe with less.

Generally speaking, the more predictable and steady your nonprofit’s cash flow, the less you need to stash in reserves. To determine the optimal amount, however, talk to your financial advisor.

Unrestricted is best

Reserves must be easily accessible and unrestricted, if they’re to be effective in emergencies. Program-specific donations and grants aren’t much help when you need to pay your office rent or make payroll. To increase unrestricted revenue, educate donors about the inflexibility of such gifts. Although some will insist on targeting their dollars, many are likely to respond when you explain that unrestricted donations can be more valuable to your nonprofit than those with strings attached.

For their part, foundation and government grantmakers traditionally have been reluctant to give unrestricted funds to charities. But according to several recent studies, many are increasing the proportion of grant money available for general operating support. So consider asking grant providers if they can relax restrictions on funds they’re currently providing, and start looking for grants with looser restrictions.

Accessibility is just as important when you’re deciding where to store operating reserves. Avoid investments that might restrict or penalize withdrawal of funds on short notice, such as equity investments or certificates of deposit. Instead, look for the highest interest-earning checking, savings or money-market account, or possibly Treasury bills or short-term bond funds.

Justifying withdrawals

One difficult aspect of managing reserves is to know when to tap them. Using cash to address operational shortfalls or when expenses exceed income is usually justified.

Even if your nonprofit runs efficiently and typically sticks to its budget, unplanned events, such as natural disasters or economic crises, can throw a wrench in the plan. But be careful that such withdrawals don’t become routine. If you’re dipping into reserve funds every month to pay ordinary expenses, it’s time to reevaluate your budget.

Reserves aren’t just a rainy-day fund, though. Many organizations use them to seize opportunities, expand programs and services, and even improve access to credit. Prudence is essential when using reserves proactively. Your board should draw up a policy that defines reasonable uses of reserves and outlines the evaluation and approval process for specific proposals.

Too much is risky

While keeping an adequate amount of operating reserves is critical, it’s also important not to retain too much cash. Money market and other easily accessible accounts typically earn minimal interest. You can almost certainly better “invest” reserves elsewhere — for example, earning returns for your long-term endowment or helping to expand services.

What’s more, charity watchdog groups take a dim view of what they consider excessive reserves, which can negatively affect how they rate your nonprofit, and in turn, how the public perceives its effectiveness. Of course, what constitutes “excessive” depends on the organization. But several years’ worth of expenses certainly merits scrutiny.

A priority

If your nonprofit has been running lean for several years, it’s time to start fattening up your cash cushion. As the economy improves and donors increase their support, make building your operating reserves a priority.

Lauren_Graham_revLauren Kreutzinger is a supervisor at VonLehman CPA and advisory firm in Indianapolis.  Lauren focuses on audit and accounting services for nonprofit and manufacturing and distribution organizations.

 

For more information on this topic or many other tax, business and investment topics, contact your CPA, Business Advisor, or Lauren Graham of VonLehman at lgraham@vlcpa.com.

About VonLehman

Founded in 1946 and with offices in Kentucky, Ohio and Indiana, VonLehman is a leading full-service CPA and business advisory firm. VonLehman provides forward-thinking accounting, tax and strategic business advice to closely-held businesses, nonprofits and governmental entities throughout the Kentucky, Ohio and Indiana region. VonLehman provides clients with the depth of services and resources expected from larger national firms, but with an unmatched measure of personal care and attention. See http://www.vlcpa.com for more information.

DISCLAIMER: The technical information in this article is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS.

Jul 14

Top five mistakes of boards

By Governance, Sponsor Insight

By Zac Kester, JD, LLM, CFRM, at Charitable Allies |

In the past few months I’ve received many calls regarding badly behaving boards, and have become aware of at least two Indiana Attorney General investigations into nonprofits. That got me thinking about the top mistakes of nonprofit boards.

I am not going to round up the “usual suspects” in this article — many nonprofit leaders already know about fiduciary responsibility and keeping good records. Instead, here are the “sleeper” mistakes — the top five mistakes of boards that, in practice, often create more damage than the obvious oversights and might not be on your radar:

  • Failing to monitor programming effectiveness or make course corrections
  • Not wrestling with tough questions
  • Board-level confidences are not kept
  • One person or a small group runs the show
  • Executives and inactive board members who are not held accountable

Are you on a board characterized by one or more of these mistakes? If so, you may want to think about starting a board meeting by analyzing one these issues and discuss how to be more effective.

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Jun 30

Good intentions or intentionality: Which describes your board of directors?

By Governance, Leadership, Sponsor Insight

By Steve Sauer, senior manager, BKD |

Most historians agree the form and function of today’s board of directors began around the advent of the 20th century. English authorities decided the ultimate authority in a company was vested in the board of directors, and the nature and extent of its authority was to be enumerated in the articles of association (or incorporation).

So after 100 years of practice, these boards have evolved into exceptional governing bodies presiding over their organizations … right? Not exactly.

According to a January 2015 study conducted by BoardSource, boards of not-for-profit organizations are not as close as they think to achieve the pinnacle of effective governance. On the contrary, the study reveals that, on average, not-for-profit leaders give boards a B- in overall performance. It would appear, then, that in our age of constant political, economic, regulatory and demographic changes, significant improvements are necessary — even vital to the health of the not-for-profit sector as a whole.

BoardSource, a 501(c)(3) organization dedicated to advancing the public good by building exceptional not-for-profit boards and inspiring board service, supports, trains and educates more than 100,000 not-for-profit board leaders from across the country each year.

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Jun 16

HR outsourcing: How can it work

By Leadership, Sponsor Insight

By Jeremy York, HR field representative, The Synergy Companies | 

Human resource strategy, also referred to as people strategy, is just as important as an organization’s financial, operational, and business development strategies, because a company needs people to achieve its business goals.

Human resources are an integral part of any business, but many times it is one function that falls by the wayside The problem in addressing an organization’s human resource needs often lies in the lack of time, resources or expertise within a company. Many organizations do not have the resources to dedicate a staff member to the HR function, and require employees to assume the tasks. As an add-on, that limits time that can be spent focusing on HR.

Luckily there is a solution — HR outsourcing. HR outsourcing can provide the human resources support and expertise that organizations need to help drive business.

According to the Society for Human Resource Management (SHRM), companies outsource HR in order:

to save money — realizing cost savings through efficiency

to focus on strategy — aligning people with mission, vision, values,

to improve compliance — reducing risks through expertise; and

because there is no in-house HR experience — acquiring an expert to lead the way.

HR outsourcing can also help organizations improve accuracy, increasing quality by lessening workloads and by gaining technology advances that they may not have otherwise been able to afford. All can help the organization drive a better bottom line

The most common outsourced HR functions identified by SHRM include both transactional and strategic tasks such as payroll administration, employee benefit administration, training and development and 401K administrations. These are all tasks that can be time consuming and can require advanced skill to ensure compliance with federal, state and local laws. Many organizations find that outsourcing transactional tasks allows staff to focus on more value-added work that links directly to business goals and objectives while outsourcing strategic tasks allows them to acquire the appropriate expertise to execute HR projects successfully.

Options for HR outsourcing

Several options exist for HR outsourcing, but two of the most common are Professional Employer Organizations (PEO) and HR Consultants. PEOs generally manage all components related to employment and HR (payroll, benefits, tax liability, workers compensation, employee relations, compliance, training/development, etc.) and become the administrative employer or employer of record for employees. PEOs are able to leverage buying power to offer a range of HR services, resources, and employee benefits that small employers may not have the financial capabilities to access. This allows employers to spend more time developing and growing the business without the cumbersome task of managing all of the details of the employment relationship.

HR consultants, on the other hand, take a more “a-la-carte” approach in providing their services. They work with businesses of all sizes and projects of all scopes, both tactical and strategic. Typically HR consultants assist with strategically integrating effective HR processes, programs and practices into daily business operations and usually leave management of HR responsibilities to the client. HR consultants function as a vendor or independent contractor and typically per project or “ad hoc” basis.

Selecting an HR outsourcing option

Determining whether you should select a PEO versus a HR consultant doesn’t have to be a difficult task. Honestly, it’s about what is the right fit for your organization. In order to understand what makes the most sense for your business, you’ll want to first conduct a needs analysis asking such questions as:

  • What are you attempting to gain/achieve by outsourcing the HR function?
  • What does the business need to be more efficient in people management and reduce overall HR administration costs?
  • Are you spending too much time on administrative work rather than high-level, business strategy?

Secondly, you will need to evaluate your current processes and resources understanding the answers to questions like:

  • Do you have HR processes, and if so do they align with best practices?
  • Do you have the in-house HR resources, but lack the expertise for certain projects/tasks?
  • Do you currently have the resources and time to devote to people processes and strategy?

And finally, after reflecting on internal capabilities you will need to determine what work to outsource. Ask yourself:

  • Do you want to outsource all large administrative tasks such as payroll, benefits, workers compensation, 401k, etc.?
  • Is the need to outsource projects on an as needed basis — smaller tasks such as recruitment/ selection, background/reference checks, employee training, compensation reviews etc.?

Going through the process above will assist you in determining what option is right for your business so that you can get the right kind of HR partnership to support goals and objectives.

Because the HR function is fundamental to align your people to your processes, you will want to pay special attention not overlook its impact on the bottom line. Inefficient and ineffective people processes, inexperienced people in skilled roles and noncompliance with legal requirements all have a cost. By ensuring you have a strong HR function in place you can help minimize those costs while simultaneously investing in the business.

jeremy-yorkJeremy York, SPHR, SHRM-SCP, is a Human Resources field representative for Synergy PEO Services.  He provides strategic and generalist HR support to local nonprofit organization leaders and their staffs. Jeremy has over 15 years of human resources experience working as a consultant, director of human resources, and generalist, in the insurance, healthcare, nonprofit, PEO, and other industries.  Jeremy has a bachelor’s degree from Purdue University in Organizational Leadership and Supervision and a master’s degree from Indiana Wesleyan University in Management. He is the current director of certification for the Indiana State Council of the Society for Human Resource Management (SHRM) and serves on the IndySHRM board of directors as the past president.

Jun 09

Proposed changes to nonprofit financial reporting

By Finance, Governance, Sponsor Insight

By Chris Mennel, audit manager, Alerding CPA Group | 

A new proposed accounting standard could dramatically impact the current financial reporting methods for the more than 1.5 million nonprofits in the United States. Financial reporting in nonprofits was largely affected in 1993 by the issuance of Financial Accounting Standard No. 116 and Standard No. 117 – two standards that accountants and bookkeepers have come to know very well.

These standards created the three classes of net assets that are used today (unrestricted, temporarily restricted and permanently restricted) as well as many other financial statement components that small to large nonprofit organizations deal with on a regular basis.

Although these changes have been in place for over 20 years, many non-accountant board members and others continue to struggle with the concepts behind nonprofit financial statements. In an effort to improve the usability of these documents, the newly proposed accounting standard would:

  • Create two classes of net assets (unrestricted and restricted) instead of the current three;
  • Require the Statement of Cash Flows to be prepared under the direct method of cash flows instead of the indirect method;
  • Require all nonprofits to report expenses by nature and function. Currently, only voluntary health and welfare organizations are required to present a statement of functional expenses;
  • Require certain reclassifications within the Statement of Activities in order to present new operating measures; and
  • Provide additional changes to the current presentation of financial statements.
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Jun 02

Nonprofits need knowledge of law

By Governance, Sponsor Insight

By Rebecca Trimpe, writer and editor, Office of External Affairs and Alumni Relations at Indiana University Robert H. McKinney School of Law |

The Indiana University Robert H. McKinney School of Law educates most of the state’s lawyers, and many of our alumni are in positions of leadership in the public and private sectors throughout Indiana and across the nation. McKinney alumni hold leadership positions in a variety of nonprofit organizations, including the Center for Leadership Development, USA Funds, Lilly Endowment, Inc., the NAACP, the Central Indiana Community Foundation and Outrun the Sun.

It makes sense that lawyers are in leadership positions in these organizations, according to IU McKinney Professor Robert Katz.

“The legal system informs almost every aspect of the nonprofit sector,” Katz said. He serves as the school’s expert on nonprofit organization law.

“It defines what it means to be a nonprofit organization, sets their parameters and restricts how they engage with for-profit entities, spells out their governance structures, prescribes how its officials must behave, lays out what they must do to obtain and retain tax exemption and other legal advantages and how these various requirements are implemented and enforced.”

According to Katz, IU McKinney’s Master of Jurisprudence degree could provide those who work in the nonprofit sector with a deeper understanding of how the legal system operates, how to ascertain what the law expects them to do, what they must do to stay on the safe side of the law, recognize when they ought to seek legal guidance and converse more fluently with lawyers.

As the law surrounding nonprofits changes, and the way nonprofits conduct their work evolves, knowledge of the law becomes critical for staff and board members alike.

“Nonprofit and tax-exempt law is constantly developing as a result of new legal requirements by legislatures and agencies, rising expectations of the public, and increased scrutiny from state attorneys general, elected officials, and the media,” Katz said. “In recent years, for example, the Internal Revenue Service has revamped the annual report forms that nonprofits must submit to retain tax exempt status and issued new rules restricting the commercial and political activities of nonprofits and the ability of a nonprofit’s insiders to benefit from its operations.”

Those interested in learning more about the M.J. program, and how it can be tailored to fit individual needs, may contact IU McKinney directly.

rebecca-trimpeRebecca Trimpe is the writer and editor of the Office of External Affairs and Alumni Relations at Indiana University Robert H. McKinney School of Law.  She has 26 years of experience as a professional writer.

IU McKinney is located on the Indiana University Purdue University Indianapolis campus. The law school is named for Robert H. McKinney, a distinguished lawyer, businessman and civic leader who received his law degree from IU in 1952. A founding partner at Bose McKinney & Evans LLP, McKinney also served as chairman and CEO of First Indiana Corporation, parent company of First Indiana Bank (now BMO Harris Bank), until his retirement in 2005.

May 26

In pursuit of board diversity: Join us June 16

By Governance, Sponsor Insight

By Bryan Orander, president, Charitable Advisors |

Many nonprofit boards are striving to increase their diversity. Most recognize that diversity increases effective governance by bringing new perspectives, energy, and new ideas. Sometimes the motivation comes as an expectation of a funder or accreditation body.

While some funders, such as United Way of Central Indiana, place a high priority on diversity and inclusion, the latest BoardSource Governance Index shows slow progress.  Though we tend to think first in racial/ethnic terms, you likely know boards dominated by one gender, a limited age group or common background.

The BoardSource Index highlights two related findings about board diversity:

1) Board composition — size and diversity — is changing, slowly. BoardSource research shows that average board size has declined from 19 members in 1994 to 15 members in 2014 while the percentage of board members of color increased from 16 percent in 2010 to 20 percent in the 2014 survey.

2) Best-in-class boards pay attention to culture and dynamics. While leaders report that 69 percent of board members understand their responsibilities and 81 percent of organizations have written expectations of board members, less than 40 percent are satisfied with the level of board discussion in meetings or overall board member engagement. In addition, 88 percent of board chairs see potential for new board member orientation to be strengthened. These factors tie directly to engaging new members, helping them understand how they are expected to bring their skills and interests, and building effective board teamwork.

The real secret to board success — leadership culture — is difficult to measure. A productive leadership culture requires having the right people on the board, achieving clarity around roles and responsibilities, and educating and engaging board members.

Please mark your calendar for the morning of June 16 and plan to join us and your colleagues for a discussion with a panel of local nonprofit leaders about ways you can “move the needle” on diversity and inclusion in your organization.

This free program is part of the Quarterly Nonprofit Forum, hosted by Conner Insurance at Indiana Wesleyan – North. Linda Kirby of Leadership Indianapolis and Bryan Orander of Charitable Advisors are developing the program and to date the panelist list includes: Yvonne Harrington, Key Bank; Terri Garcia, Southeast Community Services; and Rafael Sanchez, Fineline Printing Group.

The emphasis of discussions will be on both attracting diversity and also helping a more diverse group to work together effectively. You will hear how these panelists have experienced both success and frustration in their efforts to build and lead effective nonprofit boards and community working groups, and participants will have time to discuss and apply these lessons.

bryanBryan Orander is founder and president of Charitable Advisors. After 18 years of for-profit leadership in the Fortune 50 business world and a disability-related nonprofit, Bryan joined a large regional accounting and consulting firm. In 2000, he founded Charitable Advisors with the vision of going beyond traditional consulting to become a connector, advocate and problem solver for the nonprofit sector.

May 19

Combating inequality through applied sociology

By Sponsor Insight

By Dr. Amanda Miller, assistant professor of Sociology, University of Indianapolis |

We read about it in the papers, see it on the news, and maybe are even cognizant of how it affects our own lives, and although America is thought of as the land of opportunity, inequality has been steadily rising.

Inequality is the unequal experiences and opportunities, which frequently lead to unequal outcomes. For example, those who are wealthy live nearly a decade longer on average, than the poorest Americans.

Some individuals might experience disadvantages due to their sex, race, social class or sexual orientation. For others, it is disability status, age or health that requires them to undertake near Herculean efforts, just to achieve the same outcomes as others take for granted. Still others face multiple roadblocks as they strive to achieve the American dream.

Inequality comes in many forms, meaning that its effects can be additive over time.

  • Inequality begins very early in life; children who grow up in neighborhoods with fewer resources are at higher risk of infant mortality, experience poorer health outcomes, and are less likely to complete school.
  • Once enrolled in high school, 64 percent of LGBT teens report feeling unsafe at school as a result of their sexual orientation or gender identity.
  • For those lucky enough to attend college, low-income students who outperform their more affluent peers on exams remain less likely to graduate.
  • Finding a job remains challenging even under the best of circumstances, but studies find that white men with a criminal record are more likely to be hired than African-American men with no record.

Applied sociologists work to research and solve complex problems in our society, including social inequality. The University of Indianapolis Master of Arts in Applied Sociology trains students to be problem-solving professionals who have the critical thinking and research skills needed to thrive in today’s rapidly changing world. At UIndy, students can pursue one of two tracks: Community Leadership or Applied Research and Evaluation.

Students who complete the Community Leadership concentration tend to work in administrative positions for nonprofits, in macro-level community or social service agencies, in city planning, or in other government agencies, while those who complete the Applied Research and Evaluation track go on to work in data collection or analysis for governmental and private research firms or pursue doctoral-level study.

Students, like Amy Yonan, said that the small class sizes are a critical difference.

“I chose UIndy because of the smaller student-teacher ratio, making it a more intimate learning experience. UIndy also offers unique learning opportunities such as short-term trips to Belize and Greece. Since I work and live in Indianapolis, I can still work full time while attending school part time.”

Applied Sociology courses are small, averaging seven students per class. This gives students the opportunity to work closely with professors, both inside and outside the classroom. Students have the chance to work in the community by completing research and service practicums with prospective employers, partner in academic research with experts in various fields, and explore their own areas of interest while receiving a strong core education.

This was the case for Jason Ward: “I was transitioning in my social services career from staff member to manager, and I needed to learn how to more effectively apply social sciences theories. After meeting with the UIndy faculty, I knew they had the proper focus on community leadership, and that they would be attentive and challenging.

New cohorts begin each Fall and Spring with the majority of courses offered in the evening.

If you are interested in learning more about the Master of Arts in Applied Sociology at UIndy, please click here.

amanda-millerDr. Amanda Miller is an associate professor of sociology and director of the Master of Arts in Applied Sociology at the University of Indianapolis. Her research focuses on family, gender and social class. She received her Bas from Indiana University, and her MA and PhD from Ohio State University.

May 12

Key to employee engagement

By Sponsor Insight

By Deb Hunter, advisor, FirstPerson |

Employee engagement is top-of-mind for many business executives. Studies are showing that organizations that invest in their people to create an engaging workplace outperform other organizations, leading to greater profitability.

What exactly does employee engagement mean?

We can define it by the behaviors of actively engaged employees. For example, an engaged employee works with passion and energy and typically feels connected to the outcome of their work. They try to solve problems and initiate improvements. They work with their head, their hands, and their hearts. Sounds like the type of people I want to work with.

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