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Donors Reserving The Right To Change Their Minds
By Mark Hrywna
Paul Schervish has no doubt that despite the downturn from 1999-2001 and the “Great Recession†of the last several years, the predicted wealth transfer of $41 trillion -- “or whatever that number is inflated to today’s dollars†-- will have occurred during the years predicted (1998-2052). Part of the reason is that, despite 10 recessions since 1950, average real growth in personal wealth has been greater than 3 percent while the $41-trillion projection is based on 2 percent. “It is unclear given the estate tax regulations whether what we predicted would go to taxes is going to occur but it depends upon the decision on the estate tax,†said Schervish, who as director of the Center on Philanthropy at Boston College and predicted the wealth transfer in a 1999 paper with research associate John Havens. Some trends might affect the overall transfer to a degree. There’s been a growing inclination for donors to give away their money before death. Giving to bequests was fairly steady for 20 years, and now the amount going to foundations has grown dramatically, Schervish said. “Which is part of the answer -- people are giving more to their foundations earlier on in life,†he said.
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Finance …
11 lessons from finding fraudThe most disheartening thing about the allegations of misuse of funds in the nonprofit world, which make great headlines and which politicians use to gain votes (when they’re not condemning the deficits they cause) is that sometimes they are true.Speaking during the AICPA’s National Not For Profit Industry Conference, Gerard Zack, whose company Zack, P.C. provides fraud prevention and control services, outlined several cases involving the embezzlement of money at nonprofits, totaling in the millions.Zack said that each case left lessons that can be learned about preventing fraud.* Look at your insurance. What are you really covered for?* Beware a lack of segregation of duties in the purchasing function when one person can identify a need, select a vendor, oversee the services and approve the invoices.* Thieves will find the areas that you don’t monitor.* Be aware of rent payments owed to the association.* It is easy to divert funds intended for an organization and convert them to cash.* One of the classic personality traits of fraudsters is a controlling and manipulative person. This should always be a red flag.* There is a need for controls over "anticipated" revenue.* Be on the lookout for organizations with similar names or initials.* Not all frauds are direct cash frauds.* Collusion with vendors makes prevention and detection more difficult. An employee displaying unusual interest in one vendor is another red flag. * Don’t overlook background checks. Volunteer Management …
6 ways to gauge ROI on volunteersAs the economy remains shaky and nonprofits are told to do more with less, as the population ages and demands and resources change, managers are finding themselves required to think in new ways.One aspect of that new thinking is re-viewing the idea of volunteers as people who only take orders, pushing the broom where they’re told to go.During the National Conference on Volunteering and Service in New York, representatives of the National Council on Aging (NCOA) spoke of volunteers as leaders as a new way to increase capacity. They spoke of an 8 to 1 return on investment (ROI) of a pilot project, engaging higher-level older-adult volunteers to build organizational capacity. The concept involved new thinking as well as new actions.New? Roles that appeared in the top quartile of pilot organizations included senior executives, volunteer coordinators, project leaders or managers, accounting and finance professionals and marketing professionals. Leadership volunteers want greater autonomy and accountability, they said, and higher ROI organizations provided that when they:* Use volunteers to train and coach others.* Trained volunteers to be advocates and ambassadors to the community and other organizations.* Let volunteers develop their own work plans.* Got volunteer input in program development.* Tapped volunteer talent to enhance staff skills.* Managed volunteer performance as if they were staff. Regulation Watch …
7 UPMIFA criteria for nonprofitsIt was 1972 that gave us the re-election of President Nixon, as well as the break-in at the Watergate Hotel (where the best surprise is no surprise). That year also saw Bobby Fisher win the world chess title, the death of William “Hopalong Cassidy†Boyd, and the first of three straight World Series titles for Charles O. Finley’s mustachioed Oakland A’s.It was also the year that gave us the Uniform Management of Institutional Funds Act (UMIFA). UMIFA will join the other 1972 memories in riding off into the sunset, replaced by the Uniform Prudent Management of Institutional Funds Act (UPMIFA).Speaking at the AICPA’s National Not For Profit Industry Conference, John R. Kroll, associate vice president for finance at the University of Chicago, and Louis J. Mezzina, of KPMG LLP in New York, discussed the implications of UPMIFA for nonprofits.Kroll and Mezzina said that UPMIFA specifies seven criteria to guide the nonprofit organization in its yearly expenditure decisions.Those criteria are:* Duration and preservation of the endowment fund.* Purpose of the institution and the endowment fund.* General economic conditions.* Effect of inflation/deflation.* Expected total return from income and appreciation on investments.* Other resources of the institution.* Investment policy of the institution. They also pointed out that while UPMIFA permits pooling of funds for investment and management purposes, the prudence test and application of these factors applies on a fund-by-fund basis.
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