Wednesday, May 29, 2013

Why you need to understand indirect costs

By Henry Flood, from {Centered}: April 2013 (Vol. 6, No. 4) - Indirect Costs‏

Grants do something for you, but they can also do something to you. They fund programs and benefit your clients. But they can also come with conditions and cost burdens that will affect your organization's cost of doing business. These include the added administrative responsibilities of tracking where and how funds are spent, particularly if you receive funds from multiple sources.

So while grants may feel like gifts when you receive them, they are not. A key question every grantseeking organization must ask is this: What will it cost to accept grant funding from one or several sources?

The true cost of grant-funded programs

Some applicants for grants assume that grant money will pay for everything they need to operate a program, but experienced grant managers know better. The true cost of grant-funded programs includes anything and everything necessary to keep the organization itself up and running. When an expense is essential to the running of the organization but the benefit is shared among all of the programs or functions of the organization, it is defined as an indirect cost. Tracking and recovering these costs are among the biggest challenges any grant administrator will face.

Because indirect costs inevitably benefit - or impact - all grant-funded programs, they should never be ignored. Pretending they don't matter, or assuming they will somehow magically be paid for, can jeopardize an organization's fiscal health. Calculating the full cost of a program is a prerequisite to determining its relative importance within the organization as a whole, to preparing accurate budget forecasts and financial statements, to setting fees for program services, and - perhaps most importantly for grant administrators - to requesting reimbursement from grantmakers.

Direct vs. indirect costs

A direct cost is a cost that can be identified with a particular cost objective, grant, contract, program, or activity. Examples of direct costs include program or project staff salaries and fringe benefits, consultant costs, materials, supplies, and travel.

An indirect cost represents the general expenses an organization incurs in doing business. These costs are not readily identified with a specific grant, contract, project, function, or activity, but are necessary for the general operation of the organization and the activities it performs. Such costs benefit all programs or activities across an organization.

Examples of indirect costs include salaries and fringe charged to the administration of the organization, organizational (not program) audit services, accounting services, liability insurance, internet technology (IT) services, and space utilization benefiting several activities.

The keys to managing indirect costs

Every nonprofit corporation or governmental entity is a public enterprise that must add up its debits and credits and account for costs. Although they are not governed by the bottom line in the same way commercial enterprises are, nonprofits in particular must remain solvent through retained earnings.

How then does an organization manage its cost of doing business? By having a sound indirect cost policy and a business management system that is able to estimate, track, and ultimately recover its indirect costs. How to establish such policies and systems is the subject of The Grantsmanship Center's forthcoming publication, "What You Need to Know About Indirect Costs."


Henry Flood is The Grantsmanship Center's Senior Advisor for Grants Management. He has had more than 35 years of experience in grant acquisition and management, consulting, and teaching, and he has secured more than $30 million in grant funding for cities, towns, nonprofit corporations, and Native American tribes. This article is excerpted from the forthcoming publication, "What You Need to Know About Indirect Costs," part of our Grants Management Series. If you'd like to be notified when it's available to purchase, just emailroger@tgci.com using the subject head "Notify Me When Indirect Costs Article Is Available" (no text necessary).

Monday, May 27, 2013

Sunday, May 26, 2013

Economic Impact of the Arts - Well done Phoenix!


A well done shout out to the City of Phoenix for producing a YouTube clip all about the importance of the arts in their downtown and community!

Wednesday, May 22, 2013

The Search for a Living, Breathing Strategic Plan


Introduction
            Many organizations have strategic plans, but do they have good ones?  Will the plan be used to and referred to regularly or will it sit on a shelf?  As Arts Administrators, we need to be able to identify strong and weak concepts plus evaluative components within existing strategic plans to enable us to use that knowledge when strategically planning in our own organizations.  “Many so-called strategic plans are little more than statements of goals and objectives.  Knowing where you want to go is only half the challenge; you must also decide how to get there.” (Burns) 

            The following is the review of three non-profit arts organizations of various genres and budget sizes.  “One size does not fit all.  Every organization is unique in its history and culture, and, it is to be hoped, in its mission.  Every plan should reflect that uniqueness; there is no standard model appropriate for every organization.” (Taylor)  With that said, good and bad planning is possible at all budget sizes therefore in analysis section of this paper a discussion will occur on how techniques from each organizations’ strategic plans could be combined to create templates for strong, future planning that would produce a living, breathing strategic plan.  

Review Standards
            In order for a strategic plan to be successful, the plan needs to be a living, breathing document.  To me this concepts means there are certain criteria that must be present:
  • Is the organization employing qualitative and quantitative measures to gage success?
  • Are the goals realistic?
  • Is the success of a variety of areas / departments being measured?
  • Are specific people assigned / made accountable through implementation?
If the above subjects are well defined and evaluated within a strategic plan, with the additional of regular review, an organization should be successful in building and flourishing.

Organizations and Reviews
This section includes a brief description of the three organizations being analyzed and a review of each individual plan according to the standards outlined above.

Chemung County Historical Society (CCHS)
            The Chemung County Historical Society is a non-profit organization located in Elmira, NY whose purpose is to celebrate the history of Chemung County.  Their organizational budget is $500,000.  The mission statement affirms: “The Chemung County Historical Society seeks to deepen our audiences understanding of the past and the role of history in our futures. To achieve this the Society uses diverse and evolving collections to engage audiences through interactive and dynamic exhibits and educational programs, community outreach and partnerships, publications and research services. We believe these efforts will provide a better appreciation of our community and our place in state and national history.” (http://www.chemungvalleymuseum.org/index.asp?pageId=261)

CCHS Strategic Plan
            The CCHS Strategic Plan focuses on six main goals each with detailed multiple strategies.  These goals focus on the areas of (1) Finances, (2) Public Programming, (3) Facilities, (4) Public Awareness, (5) Collections, and (6) Organizational Development to be addressed between 2006 and 2010.  For each goal multiple strategies are stated and with the strategies various action steps, timelines, responsibilities, and sometimes the funding sources are denoted.  While each of these items is important to have a living, breathing plan the flaw in CCHS’s plan is in the consistency and detail of these functions.

            The plan outlines a large variety of areas / departments to be developed and while there are many qualitative descriptors used throughout CCHS’s plan, no measures are ever identified in any of the strategic action steps.  Since general descriptions are only given of the outcomes they seek to achieve it is hard to gage if the goals are realistic.  As the goals are so general it is hard to understand what the organization would describe as success.  It is also interesting that only some strategies have funding sources identified.
 
The next issue is the consistency of how the timelines are described.  Some have very specific due dates while others state ongoing and still others state done.  As this plan is already in progress it causes wonder as to why all dates prior to 2009 do not have a “DONE” noted by them.  There are responsibilities for each action step specified but the date question calls into question if these parties are actually being reviewed and held accountable.  At the time the plan was shared their Executive Director had commented that she was in the process of updating the plan for accreditation purposes.  It would be best if updating and review was an organizational process instead of an individual process to ensure continued growth and implementation.  The final section, a chart helping to label priorities, seems to be incomplete.

Overall the CCHS’s Strategic Plan shows good concepts but poor strategies to track implementation, success rates, and accountability.

Thunder Bay Symphony Orchestra (TBSO)
            The Thunder Bay Symphony Orchestra is the only professional non-profit orchestra between Toronto and Winnipeg, Canada.  The organizational budget is $1.4 million.  The TBSO’s mission statement is listed neither on their website nor in their strategic plan outline.  As Gregory Kandel in the article Keeping the Plan and the Planning Alive, “Successful planning begins at mission level and then is re-tested periodically against mission.”  Therefore there is curiosity over what the organization’s mission statement actually is.

TBSO Strategic Plan
            The TBSO Strategic Plan Outline identifies five main goals with multiple objectives for each.  These goals focus on (1) being valued and reaching a wider audience; (2) presenting concerts of high artistic standards; (3) financial stability; (4) developing and strengthening community engagement partnerships; and (5) board, staff, and volunteer optimization.  The plan was developed to focus on the 2008-2009, 2009-2010, and 2010-2011 concert seasons.  The 2010-2011 season will mark TBSO’s 50th anniversary.  TBSO presents their plan in a chart that for each goal identifies multiple objectives, actions, lists the responsible individual or individuals, states when the action will take place, and identifies success indicators for each objective.

            The success factors indicate both qualitative and quantitative measurements.  Most success indicators show yearly incremental increases between three and five percent which seems very realistic.  Where stakeholders are sited, in most cases TBSO has identified additional involvement of one or two parties a year.  In one case 100% response is sited; gauging how realistic this could be is hard without additional background knowledge.

            The goals being addressed are varied and within the objectives multiple departments are cited.  While at first glance it is hard to see this in the outline, diversity is present and may be clearer in another section of the plan.  The timelines for these goals are general as related to years in which they will be accomplished but are specific in citing years where research or planning will occur as compared to when implementation will happen.  Therefore the progression of strategic planning can be seen across the span of the three years the plan has been written for.  The responsibilities for the goals and timing are very clear with multiple individuals or groups involved with most objectives.

            Overall, the TBSO Strategic Plan Outline helps to give the reader a very clear idea of where TBSO is going and how they will be getting there.  While the success indicators are very clear how the organization as a whole is evaluating the progression of plan is not identified in the outline.  Hopefully how implementation is being tracked is discussed in another section; otherwise accountability needs to be more clearly evaluated. 

Rockwell Museum of Western Art (RMWA)
            The Rockwell Museum of Western Art is a non-profit organization functioning as a Private Foundation supported by Corning, Inc.  The RMWA contains the largest collection of Western Art on the east side of the Mississippi River.  The organizational budget is $2.2 million.  The mission statement states: “To preserve, interpret and enhance the museum collections, emphasizing American Western and Native American art and culture.  To foster a deeper understanding of these cultures and aesthetic traditions through dynamic exhibitions and educational activities that attract interest from a broader public.”  (http://www.rockwellmuseum.org/Mission-and-Vision.html)

RMWA Strategic Plan
            The full RWMA Strategic Plan is over 500 pages long.  The organization was not interested in sharing the full plan and instead provided an overview of their four strategic goals and a summary statement of the proceeding plan.  The strategic plan for the years 2008-2010 focus on four strategic goals: (1) capitalize on the collection, (2) expand interpretive offerings, (3) grow and diversify funding, and (4) enhance business operations.  The overview of the four goals (provided in two formats) varies in detailed format of the stated goals.  Goals I and II each have a statement of intent followed by one strategy statement and then supporting objectives, Goal III has a statement of intent and then three supporting strategy statements each with listed objectives.  Then Goal IV contains one strategy statement then five very detailed objectives each with a specific timeline.  The plan refers to their measurable indicators as “Key Business Drivers”.

            The overview of the current plan does have quantitative and qualitative measures but there are very few.  The only quantitative measures stated are specific attendance goals and then the qualitative statements of increasing customer satisfaction and financial growth.  In all areas the plan leaves the reader looking for more detailed information.  It would like to be thought that in 500 pages of text these would be described more but it is curious that they aren’t qualified in the overview better.  As the goals are fairly general it also makes one question if they are actually realistic.

            There seem to be a variety of areas / departments that can be assumed while reading the overview but they are not clearly stated or identified.  Accountability is also not clearly identified in the overview.  Also while the plan is stated to be for 2008-2010, some of the objectives in Goal IV have dates in 2007.  While reading the summary of the past areas of focused in the review section, from personal involvement with the organization, I know that many of these items have never been accomplished.  For example a development employee has never been employed by the RMWA.  Therefore with lack of clear descriptions and personal knowledge it is hard to believe accountability is being followed through in the full 500 page version of the plan.  In the summary of past achievements, it was nice to see that successes that were not in the strategic plan but happened organically were noticed and created new thinking for future planning.

            In general, after reading the overview there is concern for the full version containing the detail needed to be effective if the summarization is highly lacking the needed elements to create a living, breathing strategic plan.

Analysis of the Strategic Plans
            In some ways these three plans were very similar and in others very different.  For the sake of identifying qualities of a living, breathing plan, this analysis will highlight the strong concepts from each of the plans that if combined would be positive elements to apply in the creation of an organization’s own strategic plan.

            Unlike the other plans, the Rockwell Museum of Western Art started their plan with their mission statement.  Focusing first on a mission statement helps and organization to keep their reason for being at the front of their minds, and it aids in planning to build a stronger future around that mission.  All three organizations had a variety of goals but the goals of the Chemung Valley History Museum were written in a way that helped to give various areas / departments the most ownership of the plan and helping to hold each accountable.  The layout of the Thunder Bay Symphony Orchestra’s strategic plan made it most clear who was accountable for completing which sections of the plan.  TBSO’s strategic plan was also most precise in identifying when the objectives of each goal should take place and included a clear timeline for planning, researching, and implementing new strategies and concepts. 

            In the area of successful indicators the TBSO was the only organization to employ specific qualitative and quantitative measures for all objectives and action steps.  In this area of planning they really shined.  Through reading a clear picture of progress over a three year time frame was obvious and pragmatic.  The reader could easily see realistic levels of success being gradually increased each year.  As Burns says “Strategic planning is the process an organization uses to determine its goals and ultimately to measure its successes.”

            The CCHS was the only organization to discuss how aspects of their plan would be funded.  While this may not be needed in every strategic plan the use of this aspect did show forward thinking when new projects were initiated and start-up funding would be needed.  While the other two organizations were mostly building on their existing projects or starting slow implementations of new projects that would be incorporated, if an organization is to be starting a large scale project from scratch it is important to acknowledge and strategically plan for where the funding would be coming from in advance.

            While all of the organization may be open to flexibility and expanding upon opportunities when they occur, the RMWA was the only organization to include a review section discussing things that were not planned for but were successes during their last cycle of planning.  It is nice to see that sometimes things that will help us the most can be found while working on other plans and it is important and be flexible and take advantage of these opportunities when they present themselves.  Just like in life, we cannot always plan for everything.

Conclusions
            While none of the plans analyzed were perfect examples of living, breathing plans there was much to be learned from them, their comparisons, and contrasts.  By combining the strong techniques of each a template could be seen to help guide arts administrators in creating successful plans of our own.

Bibliography

Burns, Mike. (1994). Off the shelf: how to ensure that your strategic plan becomes a valued tool. National Endowment for the Arts, Retrieved from http://arts.endow.gov/resources/lessons/BURNS.HTML.


Chemung County History Museum. (n.d.). Retrieved from http://www.chemungvalleymuseum.org/index.asp?pageId=261.


Kandel, Gregory. (n.d.). Keeping the plan and planning alive. National Endowment for the Arts, Retrieved from http://arts.endow.gov/resources/lessons/KANDEL2.HTML.


Rockwell Museum of Western Art. (n.d.). Retrieved from http://www.rockwellmuseum.org/Mission-and-Vision.html.


Taylor, Ed. (n.d.). Trick or treat (or why plan?). National Endowment for the Arts, Retrieved from http://arts.endow.gov/resources/lessons/TAYLOR.HTML.


Thunder Bay Symphony Orchestra. (n.d.). Retrieved from http://www.tbso.ca/sustain/index.htm

Sunday, May 19, 2013

Researching Foundations to Help Organize Your Development Needs



Organizations should help themselves to organize.  Whether you have a development department, one person, or just development needs doing  a write up on the foundations you will be applying to or even might consider at some point will be helpful to your organization.  By keeping a record of who a foundation is, your contact person, their priorities, what is and what is not eligible for funding, the process to apply, and even items as simple as the website for the foundation you will save a significant amount of time when you are ready to write the grant proposal.  Below is an example of a foundation overview sheet.

Contact Information:

The Community Foundation of Elmira-Corning and the Finger Lakes


307B East Water Street


Elmira, NY 14901

Sara E. Palmer, Program Officer (receives initial proposals)

Telephone: (607) 734-6412


Fax: (607) 734-7335


Email: sep@communityfund.org


Website: http://www.communityfund.org

Brief History:


A tax-exempt public organization, The Community Foundation of Elmira-Corning and the Finger Lakes, Inc. enables people with philanthropic interests to easily and effectively support the issues they care about in their community, either immediately or through their estates.  With the social and economic health of the Chemung Valley and surrounding Finger Lakes Region as their focus, they maintain an in-depth, holistic knowledge of their community and where the most urgent needs lie.  They address these needs through grants and technical assistance to non-profit organizations, as well as through scholarships to individuals.

One of only 700 community foundations in the US, the Community Foundation of Elmira-Corning and the Finger Lakes, Inc. was established in 1993 through the merger of the Chemung County Community Foundation (est. 1977) and the Corning Community Foundation (est. 1972).  The organization is governed by a volunteer board of directors.

During the 2007-2008 Grant Cycles the largest gift was for $150,000 to the YWCA of Elmira and the Twin Tiers.  The smallest gift was to Reading to Roos for $100.  Most gifts were for between $3,000 and $8,000 and 117 requests (excluding scholarships) were granted.  Individual scholarships ranged from $200 to $18,550.

Funding Priorities:


Eligible


The Community Foundation is a public charity that encourages funding requests from non-profit organizations in the Twin Tiers whose programs:


·         Offer creative responses to the community’s most pressing needs and concerns

·         Are preventative and farsighted rather than remedial

·         Maximize the impact of relatively modest grants
·         Increase access and opportunities for people from low-income or underserved segments of the community

·         Involve cooperation or collaboration among program providers

Applicants must be registered 501(c)(3) organizations located in and serving the citizens of Chemung and/or Southeastern Steuben counties, New York.

Proposals from faith-based organizations will only be considered if: (1) service benefits all, regardless of religion; (2) service provided is not religious in nature; and (3) there is no proselytizing associated with the service.


Not Eligible
Organizations may not submit more than one application for funding at a time.
The Community Foundation generally does not make grants from unrestricted funds for the following:
          Annual campaigns, special event fundraisers or sponsorships
          Religious purposes
          Political or partisan purposes
          Activities taking place before grant decisions are made
          Trips for schools or clubs
          Deficit funding or debt retirement
          Individuals (except through scholarships for education)

Process and Timeline:


The Foundation accepts applications twice per year. Organizations submitting a proposal for $5,000 or more in funding must submit a letter explaining the program to be funded and the amount requested – a letter of intent – four weeks before the application deadline. An electronic letter of intent form is available on their website; www.communityfund.org.

Letters and applications must be postmarked by the following dates to be considered:
Letter of Intent Deadlines                    Application Deadlines                         Notification
March 2, 2009                                                 April 1, 2009                           mid-June 2009

August 3, 2009                                                September 1, 2009                   mid-November 2009

All applications must include the following sections. They appreciate clarity and brevity in your responses.

1. Data Intake Sheet
          Available on their website
          Completed in blue or black ink  or type; scanning or reproducing

2. Project /Program Description
Using no more than 4 single-sided pages, describe the funding need.
The following items must be addressed:
          A description of the activity or service and how it relates to the organization’s mission. For technology support, describe how the technology will improve program delivery for your organization.
          The process and timeframe for developing the project/program or purchasing the equipment.
          A list of the key staff, board members, consultants, and service providers involved in the project. Briefly describe their roles.
          Identify external support from the community. Include any in-kind support related to this application.
          If applicable, identify target audiences and special populations to be served.
          A description of how the project/program will be announced to the community.
          Evidence that the program/project or technology purchase will be evaluated and measurable outcomes will be set.

3. Project Budget
          Must be completed in their format, provided on website
          Completed in blue or black ink or type; scanning or reproducing

4. Support Materials
          Names of current board of directors and their occupations
          If filed, latest copy of the organization’s IRS 990 form
          3 References – please include name, title, relationship to the organization, and contact information
          Detailed copy of the latest annual operating budget
          Resumes of key project personnel and contractors
          Other support materials, such as brochures, VHS tapes, etc.

Wednesday, May 15, 2013

Example of a Request for Proposals

When a nonprofit wants to recieve bids from a consulting firm it is typical to send out Request for Proposals (RFP's) to several consulting groups.  Below is an example of an RFP requesting help in creating a strategic plan.


RE: Request for Proposals and Application       
FROM: LMNOP Philharmonic


Background on the LMNOP Philharmonic

The LMNOP Philharmonic is one of the oldest orchestras in the country and is nationally recognized as one of the top orchestras of similar budget size.  Each year the Philharmonic presents five symphonic concerts and five pops concerts in the historic Grand Theatre in downtown Our Town, XY.  Programs also promote a strong regional presence, with annual concerts taking place in Middletown, Beach Front, and Plainsville, XY.  The LMNOP Philharmonic also provides community outreach services, such as a free concert on the beautiful Erie bayfront at the end of each summer, and a series of free ensemble performances held during the lunch hour throughout the summer. 

Organizationally, the Philharmonic has always demonstrated a strong commitment to educational activities.  The first youth concert on record took place on December 13, 1945.  Sixty plus years later, the program has grown to include two sell-out youth concerts, reaching a total of 4,400 school-age children.  The Junior Philharmonic is also an active part of the local community. In addition to weekly rehearsals that take place from October through May of each year, Junior Philharmonic musicians present multiple concerts - two stand alone concerts, two ensemble concerts, a tour to regional schools, and a performance with the LMNPO Philharmonic for a selection during a regular season performance.

A volunteer chorus is maintained to provide vocal accompaniment for two concerts each season.  A roster of 75 paid musicians, six full time employees, and three part-time employees is maintained to present these services to the community.

Reason for Planning
As the LMNOP Philharmonic approaches our 100th Anniversary season during our 2013-2014 season, our board of directors recognizes the need to have a strategic plan to carry us through that historical landmark.  The LMNOP Philharmonic has lacked a strategic plan during recent memory as we recovered from significant financial difficulties and strived to maintain our day-to-day services.  A measure of financial stability has returned and the organization feels it needs to become stronger through growth and vision rather then cutbacks.  In 2007 we hired an artistic leader who can help us grow and prosper in conductor John Musical.  Maestro Musical has signed a contract to be with the LMNOP Philharmonic through at least our 100th anniversary season.

More recently a new executive director was hired in August 2010 so the time is ripe to engage our constituencies in charting a new vision and path for the LMNOP Philharmonic.  Also strongly related to the need for a strategic plan and vision statement is the LMNOP Phil’s desire to have an Endowment Campaign around our 100th Anniversary.  A strategic plan and vision for the future will help formulate a case for support for the Endowment Campaign and identify specific growth projects that will be in need of funding.

Type and Key Elements of Planning Process Desired
The LMNOP Philharmonic is interested in an experienced consultant who will lead us through the following 10 Steps or similar steps:

o   Step 1: Initiate and Agree on a Strategic Planning Process
            o   Step 2: Clarify Organizational Mandates
            o   Step 3: Identify and Understand Stakeholders, Develop and Refine Mission and
                              Values, and Consider Developing a Vision Statement
            o   Step 4: Asses the Environment to Identify Strengths, Weaknesses, Opportunities, and
                              Challenges
            o   Step 5: Identify and Frame Strategic Issues
            o   Step 6: Formulate Strategies to Manage the Issues
            o   Step 7: Review and Adopt the Strategic Plan
            o   Step 8: Establish an Effective Organizational Vision for the Future
            o   Step 9: Develop an Effective Implementation Process
            o   Step 10: Reassess Strategies and the Business Planning Process

The LMNOP Philharmonic realizes that we are seeking a professional consultant because we are in need of guidance; therefore, we are open-minded to a proposal that shows variations on what we believe is needed and justifies those variations strongly.

Description of Resulting Plan
The LMNOP Philharmonic is interested a four year strategic and organizational development plan covering July 1, 2011 – June 30, 2015.  This would carry us through our 100th anniversary plus one year. 

Timeline
The LMNOP Philharmonic is interested in having the planning process and initial interviews commence January 2011 with full constituency participation in March/April 2011 and completion of plan by May 9, 2011 for adoption by the Board of Directors at the May 19 Directors meeting and presentation to stakeholders at the June 28, 2011 annual meeting.

Application Procedures
·         Please provide a brief proposal outline addressing the 10 Steps the LMNOP Philharmonic feels are needed in this process (or your variation on them) and how your company would facilitate this process.
·         Please provide an approximate outlined cost of services.
·         Please provide three client references for organizations you have consulted with in the past.

Please submit your proposal to:
Joe Smith
123 Sesame Street
Our Town,  XY 12345
Joe@LMNOP.org

Proposal deadline: October 29, 2010.