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CHAPTER 15

EVALUATING YOUR POLICIES AND PROGRESS

15.1 INTRODUCTION

15.2 EVALUATION

15.3 EVALUATING YOUR DECISIONS AND ETHICS

15.4 EVALUATING YOUR COMMUNICATIONS

15.5 EVALUATING YOUR MENTORING AND SUPERVISORY SKILLS

15.6 TESTING YOUR SUPERVISORY AND MANAGERIAL SKILLS

15.7 EVALUATING THE STRATEGIC NATURE OF YOUR ROLE

15.8 EVALUATING THE FINANCIAL HEALTH OF YOUR ORGANIZATION

(a) Importance and Definition of Financial Health

(b) Criteria for Measuring Your Financial Health

15.9 EVALUATING YOUR FINANCIAL POLICIES IN SIX KEY AREAS

(a) Governance and Accountability

(b) Liquidity Management and Your Primary Financial Objective

(d) Fundraising

(e) Risk Management

(f) Human Resources

15.10 EVALUATING QUALITY AND OUTCOMES

15.11 USING EXTERNAL CONSULTANTS AND DATA SOURCES

15.12 CONCLUSION

Zietlow, John, et al. Financial Management for Nonprofit Organizations : Policies and Practices, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=5328420. Created from ashford-ebooks on 2025-08-11 02:05:10.

15.1 INTRODUCTION

We have presented a variety of information in this book to assist you as the nonprofit financial

manager or as a board member in being more effective in your position. Much of the information

presented has been tangible: steps, actions, knowledge – facts that a financial manager can apply

to produce positive results in an organization.

Some might say that the annual balance sheet, statement of activities, or statement of cash flows

constitute the “final exam” for the effectiveness of the financial manager. While any of these or

annual shareholder returns may be valid and appropriate measurement instruments in a for-profit

organization, none is the end-all in a nonprofit organization. As we have emphasized throughout,

liquidity target management and cash flow management are the primary metrics. You financial

would not want to assess the overall effectiveness or efficiency with these program financial

metrics. Program evaluation, while a critically important task, is beyond the scope of this book.1

The overarching measure of success for a nonprofit organization is how well it is able to deliver

on its mission. The reviews do not come primarily from the financial statements, but from a

combination of elements, most importantly from the vantage point of the nonprofit's customers

and constituents.

In the simplest terms, if your organization was able to deliver on its goals and objectives for the

year — perhaps as guided by the strategic plan ( ) and/or your organization's balanced Chapter 3

scorecard (also in ) and end the year flush and achieving the liquidity target, a basic Chapter 3

level of success has been achieved. The next step is to evaluate how the actions taken this year

will affect your organization's ability to perform in subsequent years.

Throughout this book we have presented and examined:

How to manage your day-to-day operations

How to achieve short- and long-term financial objectives

How to establish policies and procedures to streamline the organization

The unique requirements of the nonprofit's funding sources

How technology can be best applied in the organization

How to effect and manage positive external relationships

Ways to limit liabilities and protect and increase resources

To evaluate the effectiveness of the financial manager in a nonprofit organization, we need to

evaluate two very different categories:

Tangible results

Target liquidity

Adequate funding

Expense control

Revenue balance

Net asset balances

Interest income

Resources inventory

Assets and so on

Intangible results

Risk taking

Working environment

Flexibility/adaptability

Ethics/integrity

To evaluate the tangible results, a review of the financial well-being of the organization can be

performed by reviewing the financial reports ( ) and calculating appropriate target Chapter 6

liquidity and other financial ratios ( ). In this chapter, we present a checklist of financial Chapter 7

health to supplement those indicators.

We subscribe to the view that the CFO is the organization's “chief accountability officer” as well.

This implies the CFO might take the following steps to foster a shared accountability toward

building and maintaining the organization's financial health:

Frame in terms of your organization's mission, as connection with the communications

mission strongly motivates your organization's leaders – showing how proactively managing

variances allows more money to go to mission-related activities, otherwise (absent additional

fundraising or depleting target liquidity) overspending in one area forces underspending in

other areas.

Build a that lends to collaboration and risk-taking, showing how a lack of necessary culture

information leads to underfunding mission-central activities and overfunding less central

activities.

Guide leaders with appropriate and and well-defined , as you procedures systems roles

develop financial systems, policies, and procedures (along with others in the leadership team),

define staff roles in finance-related activities, and spot opportunities for interdepartmental

communication.

Work with the board to , including the appropriate level for target develop financial goals

liquidity, and , including helping the board or a committee of the analyze strategic alternatives

board ascertain the financial implications of various strategic priorities, setting the priorities,

and then translating the priorities into financial benchmarks.2

The interaction with nonfinancial leaders and staff as well as board members that will come with

carrying out these four steps will build trust and help foster shared accountability for your

organization's financial performance.

As someone involved in managing financial resources, you have taken every care in monitoring

the day-to-day activities of your organization. The previous chapters of this book have provided

information to assist you in doing your job effectively and measuring the success of that

performance. How do you know if you have done a good job? How do you know if your

organization is doing well? Here we present tools for evaluating the less tangible skills and

characteristics that a financial manager brings to a nonprofit organization. Then we profile some

guidelines for assessing policies in the critical areas of governance and accountability, liquidity

management and your primary financial objective, investments, fundraising, risk management,

and human resources.

15.2 EVALUATION

Effective, proficient financial management requires that you are in a constant state of review,

remaining fluid in your procedures and priorities and making changes and corrections where

needed. These areas for self-review may be used to begin evaluating your own performance as

well as the performance of your organization.

Were your decisions appropriate?

Have you communicated effectively with others in the organization?

Are the staff and volunteers performing optimally?

Your organization may have met payroll and paid expenses, but what is the financial health of

your organization in relation to accomplishing its mission and goals?

15.3 EVALUATING YOUR DECISIONS AND ETHICS

“Hindsight is 20/20” is a phrase we are all familiar with in evaluating anything that we have done

in the past. Certainly there will be new information available that would have had a bearing on a

decision you have made. Those considerations are not necessary in evaluating the effectiveness of

your decisions. You cannot foresee all external shocks or dramatic changes, but you can factor in

recurring changes in market activity and seasonal changes, and prepare for potential disasters.

Determining whether you made the decision requires an understanding of what is. right right

Often, we confuse the term as meaning either “yes, the decision was correct” or “no, it was

wrong,” but there is a range of correctness and appropriateness in almost every decision (see

). A continuum might characterize your decision. For example, you could be Exhibit 15.1 risk

wrong either because you did not take enough risk (left anchor) or took too much risk (right

anchor). Or a continuum may best fit your decision context. We see some organizations frequency

that do too few direct-mail appeals per year, others that do too many direct-mail appeals. “Degree

of ” when setting dues, contract fees, tuition/prices, or premiums, serves as a third cost coverage

example of range or appropriateness. Illustrating, did your organization agree to a lower total cost

amount for certain items in order to win a foundation grant?

Exhibit 15.1 Decision Correctness Scale

Within the range of correctness, you can self-evaluate your decisions using these criteria:

Did the decision stand the test of time?

Would you make the same decision today?

What factors, if any, would you have weighted more heavily now than you did then?

Would you have sought the advice of the same individuals?

Were reference materials, literature, or any other information available that you did not

review but would review now?

Were there signals, clues, indicators, benchmarks, reports, or advice that you ignored or

would have considered more heavily?

We provide additional guidance for your decision-making self-evaluation in .Exhibit 15.2

The charts and questions that follow allow you to evaluate your decision-making abilities.

Before beginning the evaluation, reflect over your decisions of the last several months.

Determine which five decisions you plan to evaluate:

_________________________________________________________________________

For each of the questions below (A–E), consider each of the five decisions you just listed

and determine which score most accurately applies in that specific case.

As you answer all the questions below, do not consider new information that was not

available at the time you made the decision, unless it was information which you either

neglected to consider or chose to ignore.

A. Would you come to the same conclusion today and make the same decision?

Decision Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

B. With each decision made, there are generally facts and information that conflict. At the

time you evaluated those inconsistencies and ruled out specific information. Would you rule

out the same information today?

Decision Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score =

Definitely

Score =

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

C. You sought the advice of others and considered their advice or opinion when making your

decision. This information may have been gathered over time and not specifically at the time

you made the decision. You either rejected this individual's advice or used their opinion as a

major justification for the decision. Would you come to the same conclusions today?

Decision Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score =

Definitely

Score =

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

D. You may have reviewed reports, evaluated literature, or done other types of research

when you made your decision. Would you use that same information today as a justification

for your decision or weight it as heavily?

Decision Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score =

Definitely

Score =

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

E. Decisions often have long-term consequences for your organization. A decision that was

appropriate in the short term may become detrimental in the long term. When making

decisions, you need to consider both the short- and long-term impacts. Considering how this

decision has impacted your organization in both the short and long term, would you make

the same decision today?

Decision Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score =

Definitely

Score =

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

TOTALING YOUR SCORE:

Copy the scores from each of the above questions into the table below; then, total your score

for each question and for each decision:

Decision

Question

Total

Score

Average (Total

/5)

_________________________________________________________________________

Total:

_________________________________________________________________________

REVIEWING YOUR SCORES:

For each question and for each decision, there is a maximum total score of 25 and a lowest

possible score of 5.

A score of 25 indicates that you have exceptional decision-making abilities.

A score of 20–25 indicates that your decision-making skills are very good.

A score of 15–20 indicates that your decision-making skills are fair but could use some

improvement.

A score of 10–15 indicates that your decision-making skills are in need of improvement.

A score of 5–10 indicates that your decision-making skills were poor in this particular set

of instances.

GENERAL INDICATORS:

If there is a significant difference between the totals in the score column for each

decision, it may indicate that you are inconsistent in the effectiveness of your decision

making. It may also indicate that you are sometimes forced to make decisions without

having the time to appropriately consider or weigh the information to make an effective

decision.

For each of the questions, if there is a low or high score in a particular area, consider

what was unique in that instance that caused you to make an inappropriate decision;

conversely, in areas where you made a good decision, consider what was unique about

that particular situation.

FOR THE FUTURE:

When making decisions in the future, you can refer to the following checklist before making

your final decision:

I have weighed conflicting information, based on my experience and the integrity of the

information in the past, and have chosen to ignore specific information for legitimate and

appropriate reasons. Or, I have chosen to weight heavily specific pieces of information.

I have considered the opinions of others and, based on my experience of the soundness of

their advice, I am either ignoring their advice or factoring it highly in making this

decision.

I have reviewed all materials that may impact this decision. I have either chosen to

follow the advice gleaned from these materials or, based on my experiences in the past,

chosen to disregard this advice.

I have considered both the short-term and long-term impacts of this decision after

carefully weighing the risks and benefits.

I have taken the time to carefully consider all the information available to me and am not

making this decision in haste without properly evaluating the appropriateness or

legitimacy of this decision.

Exhibit 15.2 Decision-Making Evaluation

Evaluating your ethics, and the influence of your ethics on the organization, is more difficult.

Your conscience is a guide, but not always a trustworthy one – we all have blind spots, and are

capable of being self-deceived. Consider these “everyday lies” identified by Erline Belton, the

CEO of the Lyceum Group in Boston:

Exaggerating or underplaying the truth

Shading the truth – possibly to protect one's self, team, or teammate, or to support one's point

Beating around the bush or throwing up a smoke screen – usually a delay tactic, possibly by

withholding an opinion or not telling a person where they really stand with you, or you don't

say no directly even though that is what you mean

10.

11.

Pretending certainty or expertise – which sets your colleagues up for surprises later when

things don't pan out as expected

Not letting others know your true position – especially when there is controversy or ambiguity

Consciously withholding relevant information – typically as a power play, and as a form of

manipulation of those who should get the information

Perceptions of powerlessness – when teams have strong leaders people may feel they do not

have a legitimate voice, and may withhold valuable information

Perceptions of invulnerability – when successes come easily or consistently, carelessness and

information distortion may also come

Misplaced loyalty or dysfunctional rescuing – especially when there are long- standing

relationships

Failing to give due credit – and so engaging in self-promotion

Deluding yourself, or self-deception – probably the most common source of everyday lies3

The importance of ethics, especially integrity, in the finance function cannot be overemphasized;

in fact, a 2004 magazine survey disclosed that the number-one personal attribute business CFO

chief financial officers (CFOs) look for in hiring entry-level finance recruits is ethics – above

communications skills, computer skills, interpersonal skills, or decision-making ability.

One instrument that you may use to self-evaluate your ethics is the “Moral Competency

Inventory,” or MCI. The four key aspects that are scored are integrity, responsibility, compassion,

and forgiveness. After self-scoring your personal ethics using this set of questions (available from

Doug Lennick and Fred Kiel, and contained in their book Moral Intelligence 2.0: Enhancing

), you may consult with others Business Performance and Leadership Success in Turbulent Times

who know you well to see if they agree with your self-appraisal.

This inventory and its scoring grid interpretations are available from Wharton School Publishing.4

Two cautions as you use it:

It can easily be “gamed” by someone wanting to get a good score. Do not use it for evaluating

others or for comparing scores among people.

Take seriously the aspect of getting a reality check from others, probably from those outside

your organization, to see whether their perceptions mesh with the scored results.

For more on managing ethics and devising ethics policies, refer to .Chapter 4

15.4 EVALUATING YOUR COMMUNICATIONS

Communicating the problems, goals, status, and issues to your management team and staff is one

of your main responsibilities. As discussed earlier, we make decisions based on the information

available to us. The leaders in your organization base their decisions on the financial information

you are providing to them. As one of the individuals responsible for financial management, you

have special skills and abilities that allow you to understand the intricate details and nuances of

the finances in your organization; others do not. One of your major responsibilities is

communicating to others in a manner that matches their ability to understand the financial

implications of their decisions ( ).Exhibit 15.3

Before beginning the evaluation, reflect on your communications over the last several

months. These will include meetings, correspondence or memos, e-mail, text messages,

instant messenger, and impromptu and telephone conversations.

Choose five instances to evaluate that provide a general sampling of your communications

over the last several months:

_________________________________________________________________________

An effective communication interchange requires that the individuals involved have a

willingness to communicate effectively, openly, and honestly. There may be individuals who

do not meet these criteria. At any particular time, there also may be other factors that make a

meaningful exchange difficult (such as if the person you are speaking to is ill or under

considerable personal or work stress at that time). Unless you were insensitive to an

individual's specific problems or situation, do not factor these situations in your answers.

A. Were you respectful and thoughtful in your communication?

Interchange Yes, without reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

B. How an individual ranks in your organization may determine the amount of detail or

summary you provide. Often, upper management does not require communications with

elaborate details, while staff performing clerical-type duties may require specific details.

One of the major skills in communication is providing enough information, without miring

an individual with unnecessary details. In each interaction, finding the balance between

detail and summary is your main challenge. Did you provide the appropriate level of detail

or summary in this exchange?

Interchange Yes, without reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

C. In order for others to accept and consider your opinions, you need to provide them with

your reasoning or logic for coming to a specific conclusion. This requires that you provide

information that illustrates how you came to a particular conclusion or assumption. In this

exchange, did you provide information that allowed the individual to understand your

opinion and point of view?

Interchange Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

D. Your special skills and abilities in the financial arena allow you to understand

terminology specific to the discipline. Others may not have this same level of understanding.

In order to have an effective communication, you need to use the appropriate level of

technical and lay terms to present your information. The use of technical terms and jargon

with an individual who does not understand them would lead to an ineffective exchange. In

this engagement, did you use the appropriate level of terminology?

Interchange Yes, without reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

E. Often, individuals are giving us cues as to whether they understand the information

presented.

There may be obvious cues, such as the individual stating that he or she doesn't understand.

There may be less obvious cues, such as the same or similar question being asked repeatedly

or closed body language. In this engagement, were you factoring in these cues as a measure

of the effectiveness of your exchange and making adjustments in your presentation based on

these cues?

Interchange Yes, without reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

TOTALING YOUR SCORE:

Copy the scores from each of the above questions into the table below; then, total your score

for each question and for each decision:

Interchange

Question

Total

Score

Average (Total

/5)

_________________________________________________________________________

Total:

_________________________________________________________________________

REVIEWING YOUR SCORES:

For each question and for each interchange, there is a maximum total score of 25 and a

lowest possible score of 5.

A score of 25 indicates that you have exceptional communication skills.

A score of 20–25 indicates that your communication skills are very good.

A score of 15–20 indicates that your communication skills are fair but could use some

improvement.

A score of 10–15 indicates that your communication skills or style is in need of

improvement.

A score of 5–10 indicates that your communication skills are poor or your style of

communication is ineffective.

GENERAL INDICATORS:

If there is a significant difference between the totals in the score column for each

interchange, it may indicate that you are inconsistent in your communications or your

style is not always appropriate or effective. There may be other factors that caused this

particular exchange to be effective or ineffective, such as information that was not

available at the time of the interchange or political issues within your organization that

prevent a meaningful exchange.

For each of the questions, if there is a low or high score in a particular area, consider

what was unique in that instance that made that particular exchange effective or

ineffective.

Exhibit 15.3 Evaluating Your Communication Skills

If others in your organization are continually making decisions that have a detrimental financial

impact to the organization, these questions should be considered:

Are your recommendations being ignored? If so, why?

Is there a thorough understanding of the information you are providing? Zietlow, John, et al. Financial Management for Nonprofit Organizations : Policies and Practices, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=5328420. Created from ashford-ebooks on 2025-08-11 02:05:10.

Are your reports, memos, emails, and correspondence easy to understand?

When presenting your information at meetings or answering questions are you using lay terms

or financial jargon?

When you are presenting your opinion, are you thoroughly explaining your reasons or the

facts that you considered when making that decision?

Does your communication strategy or style need to improve?

When you speak to individuals or groups, is their body language open and interested?

Are you respectful and thoughtful in considering differing points of view?

It is helpful not only to diagnose your past communication style and effectiveness, but to also

plan your future communication. When interacting and communicating in the future, you can

refer to this checklist:

I am sensitive to the unique needs of each individual, including their diversity.

I consider the skill level of the individuals in this exchange and am speaking or writing in a

manner that matches their ability to comprehend.

I consider the ranking or position of each individual and provide the appropriate level of

summary or detail.

I present an image and a style that allow others to comfortably question my opinions.

I demonstrate a willingness to be wrong, am open to suggestions and differing points of view,

and am certain that my motives are appropriate and in the best interest of the organization and

my constituents.

15.5 EVALUATING YOUR MENTORING AND SUPERVISORY

SKILLS

As a leader in your organization, one of your responsibilities is to supervise staff, volunteers,

functions, areas, or tasks. One of the ways you can evaluate your own performance is to evaluate

the successes of those reporting to you and the areas for which you have responsibility.

When evaluating the performance of other individuals, there are two main factors to consider and

evaluate:

Your skills. This area includes your skills in effectively managing, supervising, and mentoring

this individual.

Their skills. This area refers to the individual's capabilities, skills, willingness to perform and

learn, and dedication to the jobs, personal growth, and integrity.

Managing staff and coordinating volunteers require a set of skills unique to these particular

disciplines. Some may have exceptional skills in financial management and analysis but may lack

the skills necessary to effectively supervise and motivate individuals who report to them.

Individuals also may be performing well despite being ineffectively managed. Some people may

also have exceptional expertise in a particular subject matter but are ineffective in sharing that

information and in training other staff and volunteers.

Exhibit 15.4 highlights the skill set needed to be an effective leader, supervisor, or manager.

These skills include:

Exhibit 15.4 Effective Leadership

Supervisory and management. These are traditional skills that we often think are the only

skills in managing and supervising others. These skills include the ability to lead with

integrity and authenticity, monitor the activity of others, keep proper records of attendance

and performance, write and conduct performance appraisals, counsel staff, and so forth. Clear

instructions motivate.

Subject matter expertise. A supervisor needs to have a level of competency regarding the

tasks or functions that his or her staff members perform in order to accurately evaluate their

performance. It is not necessary for a supervisor to possess the same or superior skills as all

his or her staff, but he or she must have a general understanding, sufficient to comprehend and

communicate effectively with them.

Negotiation and problem resolution. Regardless of how efficiently an organization may

function, there will be situations where competent staff and volunteers will have conflicting

opinions, goals, or plans. A supervisor will be responsible for resolving these conflicts in a

manner that leaves all parties feeling validated and needed.

Mentoring and training. Above and beyond supervising an individual, a manager accepts

responsibility for the personal growth of the individuals in his or her area. Whether the

organization has formalized programs for career succession planning or training or not, it is

the manager's responsibility to foster excellence in his or her staff and assist them with

advancement, either within the same managerial area or within the organization.

15.6 TESTING YOUR SUPERVISORY AND MANAGERIAL

SKILLS

If you do not have supervisory responsibility for staff or volunteers, skip this portion (Exhibit 15.5

) of the evaluation. If you supervise fewer than five individuals, limit your evaluation to that

number. You may also choose to list a staff member or volunteer who is no longer with the

organization.

Select five staff members or volunteers you supervise.

_________________________________________________________________________

There may be situations, hopefully rare, when you will be responsible for supervising an

individual who may be suffering from severe psychological problems or have an alcohol- or

substance-abuse problem, causing a significant impact on his or her ability to function.

These individuals may pose a physical threat to the staff and volunteers in your organization.

The unique set of skills required to handle this are not typically thought of as a management

requirement. Outside experts may need to be called upon (psychologist or psychiatrist, police

officer, crisis specialist) to either handle the situation directly or give you guidance in

handling the situation. If you are experiencing a situation with this severity, the following

questions will not apply.

A. Have you maintained proper records of your staff or volunteers' attendance, performance,

and job descriptions?

Staff or

volunteer

Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

B. Do you possess sufficient knowledge or familiarity with the responsibilities of a staff

member or volunteer to determine accurately if he or she is performing the job optimally?

Staff or

Volunteer

Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

C. When in meetings or conversations with more than one individual, are all individuals

given equal participation in the exchange and are each individual's opinions, problems, and

issues given equal consideration?

Staff or

Volunteer

Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

D. Assuming that an individual possesses the skills necessary to assimilate new or more

challenging responsibilities, has your training (either formal or informal) been effective?

Staff or Volunteer Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score = 2

Definitely

Score = 1

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

E. At some point you may become ill, go on vacation, or leave your organization. Is there an

individual or group of individuals who has/have sufficient understanding of your job to

assume responsibility for it, if you were to be unable to perform your duties?

Staff or

Volunteer

Yes, without

reservation

Score = 5

Yes, but

with minor

modification

Score = 4

Yes, but

with

reservation

Score = 3

Probably

not

Score =

Definitely

Score =

Score

_________________________________________________________________________

Total:

_________________________________________________________________________

TOTALING YOUR SCORE:

Staff or Volunteer Question A Question B Question C Question D Question E Total Score Average

(Total/5)

_________________________________________________________________________

Total or Average :**

_________________________________________________________________________

* If you are evaluating less than five staff members or volunteers, divide your total by the

total number of staff members or volunteers listed.

** Calculate the total on this row only if you used less than five staff members or volunteers

for your evaluation.

REVIEWING YOUR SCORES:

In this summary section, it is possible that some of your totals will not correspond to the total

scores listed in the scoring grid below, as you may have evaluated interchanges with fewer

than five staff members or volunteers. You can still do the evaluations by using average

scores: Base your evaluation on each question by viewing the average of that column's total

(shown on the last row) to determine your results. For example, divide that column's total

score by three if you had only three staff members or volunteers.

For each question (if you had five staff members or volunteers) there is a maximum total

score of 25 and a lowest possible score of 5.

A score of 25 (column average = 5) indicates that you have exceptional supervisory and

managerial skills.

A score of 20–25 (column average = 4) indicates that your supervisory and managerial

skills are very good.

A score of 15–20 (column average = 3) indicates that your supervisory and managerial

skills are fair but could use some improvement.

A score of 10–15 (column average = 2) indicates that your supervisory and managerial

skills are in need of improvement.

A score of 5–10 (column average = 1) indicates that your supervisory and managerial

skills are poor.

GENERAL INDICATORS:

If there is a significant difference between the totals in the score column for each staff

member or volunteer, it may indicate that you are inconsistent in your supervisory and

managerial delivery. There may be other factors, such as inconsistencies in staff

responsibilities, personal attitudes, political issues, or other unique situations that may

cause this fluctuation.

For each of the questions, if there is a low or high score in a particular area, consider

what in that instance made that particular supervisory and managerial situation unique.

FOR THE FUTURE:

When managing and supervising your staff and volunteers, you can refer to the following

checklist:

All the job cards or descriptions of my staff and volunteers are accurate and up to date.

All my staff and volunteers have received a copy of their job descriptions and have

received a performance appraisal, where applicable.

When faced with a conflicting situation or plan, I have considered the opinions of all

staff and volunteers when determining which situation or plan to approve.

I have trained or am in the process of training an individual or group of individuals to

perform my job in the event I am unable to perform it temporarily or if I decide to leave

the organization.

I have carefully documented issues, meetings, and conflicts, and have taken a proactive

approach to assuring that the staff and volunteers under my responsibility are performing

optimally. I have taken the necessary actions to remove staff or volunteers who are not

performing effectively.

Exhibit 15.5 Testing Supervisory/Managerial Skills

15.7 EVALUATING THE STRATEGIC NATURE OF YOUR ROLE

Proficient financial management requires the CFO and other top financial roles – including the

board treasurer – to be strategic in focus. But how does one assess that? Craig Jeffery, founder

and managing partner of consultancy Strategic Treasurer, has developed a framework that

provides an excellent guide. Given that “strategic” means something “highly important to the 5

intended objective,” a strategic financial manager is one whose objectives clearly support the

organization's overarching objectives. The financial manager is not merely sought out “after the

fact” to procure financing, set up a bank account, or conduct a financial transaction, but is

consulted as key decisions are being formulated and made. Consider how well you or your high-

level financial managers and board treasurer meet these six criteria:

Do you take a partner perspective? “Think like a partner, not a vendor.” Go beyond just

meeting liquidity needs to relating with key operating personnel on an ongoing basis.

Are you developing a successful track record? If you are seen as relevant and effective in the

areas over which you wield control or influence, your purview of the order-to-cash or grant

/donation-to-cash cycle will cause others to tap your expertise. Your credibility is built on

your previous successes and contributions.

Do you use your whole mind? Assist others in their decision making by helping them simplify

complex problems. Synthesize facts, data, and analysis into action- able and sound

recommendations. Helping others see the influence of multiple and complex factors on the

organization as a whole is very valuable. Leverage your intellectual curiosity to gain a better

understand of the “financial/business model” of the organization (specifically, how and why it

derives the financial results it does), then translate to others. For example, Home Depot is

dedicated to transforming its finance function away from a tasking organization and toward a

thinking organization. Your biggest impediment to doing this will be the time pressures

arising from operating activities and an understaffed finance function.

Are you stretching your skill set? Gaining leadership and broader operational acumen will

give you a better shot at gaining a seat at the table when big financial and nonfinancial

decisions are being made.

Are you making your partners successful? Do you engage in teamwork with other top-level

decision makers in your organization? You must make no excuse for a failure to communicate

with others at your level before you or they bring resource allocation proposals to the ED

/CEO (executive director/chief executive officer) or the board.

Are you relevant, translating or devising metrics where possible? Your insights must be

placed at a level at which others can understand, and appropriate metrics need to be in place.

We have discussed at length in this book the advantages of target liquidity as a primary

financial objective rather than striving for breakeven or a small surplus. To stretch your

thinking, might you be able to develop a framework such as Dell's “golden triangle” of

liquidity, profitability (surplus rather than breakeven or deficit), and growth? Your

organization may adapt this to embrace a “golden triangle” of liquidity (including cash flow),

cost coverage, and accountability. Then translate this for your board, other leaders and

employees so they can see the importance of each metric and how their activities may have an

impact on the metric.

You might also consider a revenue and support metric. Home Depot's translation of its sales

objective is that sales would increase $1.2 billion if each customer added just one $1 item to his

or her shopping cart. Some development offices have translated major gifts into the needed calls

and proposals that staff should be developing over time.

The primary revenue sources your organization relies on should be known and understood by all

employees. The same is true for the major cost elements. When important things change,

communicate clearly the change and the strategic reasoning spurring the change. Finally, translate

the views of outsiders so that insiders may understand. For example, guide your employees

toward an understanding of the greater emphasis on accountability and outcome measures coming

from granters, government contracts, and donors.

15.8 EVALUATING THE FINANCIAL HEALTH OF YOUR

ORGANIZATION

The previous evaluations have measured the quality of your specific skills. In this section, you

will assess the financial health of your organization to evaluate how effectively you are

performing in a strategic sense.

(a) IMPORTANCE AND DEFINITION OF FINANCIAL HEALTH. Financial health is

critical for mission achievement. Consider this finding from a typical nonprofit survey: In spite of

the fact that fundraising either was stable or improved for most of the surveyed nonprofits, almost

one in three organizations had to reduce services in order to meet financial challenges over the

previous two years. Two in five human services organizations had to cut services due to financial

shortfalls. And this was in a nonrecessionary period ending in 2005, indicating that even in “good

times” cash flow issues are endemic to the nonprofit sector. Service cutbacks were also the 6

experience of many nonprofits during the 2009–2011 period: between 42 and 50 percent of

nonprofits could not meet the increased demand that they faced. Survey findings also indicate:7

… an increase in laying off staff from 2009 to 2010 of responding organizations from 25

percent to 36 percent and a slight increase from about 17 percent to 18 percent for

organizations cutting salary and wages. In 2011 fewer organizations reported both laying off

staff and cutting salary and wages. From 2009 to 2010 there was a slight increase from about

48 percent to 50 percent for organizations implementing a salary freeze. This increased again

in 2011.…

The good news is that there was only a small increase in organizational closures during that

postrecessionary era. We emphasize again the critical importance of targeting, achieving, and 8

maintaining an appropriate level of liquidity (see ). Growing organizations and those Chapter 2

with an aging physical plant will need to allocate strategic reserves in addition to the six-to-nine

months of expenses they hold in operating reserves.

Defining “financial health” can be somewhat difficult. You may have sufficient resources to

cover your payroll and pay your outstanding invoices, but:

Have you used your resources wisely?

Have you made purchasing or other financial decisions that may have negative short-term

impacts but wise long-term implications (such as ordering a larger quantity of supplies and

being able to take a quantity discount that was offered to you by a supplier)? Or, have you

taken actions that are harmful in the short-term and long-term due to having inadequate cash

on hand (such as not taking a cash discount offered to you by a supplier)?

Has the amount of debt service – loan/bond interest payments and principal repayments (also

include lease payments on leases of at least 12 months in term) – stressed your organization or

limited its financial flexibility for the future?

Has your conservatism in financial matters overly constrained your organization's ability to

accomplish its mission and goals?

Did you fail to take limited risks that might have positioned your organization better for the

future or made it better able to accomplish its mission and goals?

Did you take unnecessary risks that may have put your organization at risk?

Has your organization limited its administrative and programmatic abilities and achievements

by buying in to the “overhead myth” and underinvesting in organizational infrastructure

(fundraising, accounting and finance function, information technology, human resources,

buildings and equipment)?

Has your organization been positioned for growth or replacement of major assets for the next

five years? Ten years? Will the organization's target liquidity be intact at both of those points

in time?

(b) CRITERIA FOR MEASURING YOUR FINANCIAL HEALTH

Your bank may determine that financial health means that you have money in the bank and

have managed your cash flow between your checking and other short-term or long-term

interest-bearing investment accounts.

Your creditors may determine that you are financially healthy if you pay your invoices on

time.

Your contributors may determine you are financially healthy:

If you have the lowest possible overhead9

If you accomplished or achieved your mission and goals

If your expenditures were appropriate and legitimate

Your board of directors may determine that you are financially healthy if your organization

currently has on hand its target liquidity level (or more than that amount), the organization is

positioned well for the future, is balancing the needs of all your constituents, and the finance

function has assisted the organization in successfully meeting its mission and goals.

To determine whether your organization is financially healthy, you must consider all the factors

just mentioned. The evaluation detailed in will further assist you in evaluating your Exhibit 15.6

organization's financial health. The scoring on Item E reflects our opinion that most organizations

are not investing enough in key areas such as accounting, finance, IT, development, and training.

Did you make any financial or purchasing decisions that had short-term benefits but long-

term negative impacts to your organization?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

At any time in the evaluation period did you incur expenses (such as bank penalties or

charges, short-term loan charges) that could have been avoided if higher levels of cash or

credit lines had been available or if expenditures and investments would have been more

appropriately delayed or handled differently?

Yes, often Yes, occasionally Seldom Almost never Never

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

Did you take unnecessary risks?

Yes, often Yes, occasionally Seldom Almost never Never

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

Did you take appropriate and well-calculated risks?

Never Almost never Seldom Yes, occasionally Yes, often

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

Is your overhead or percentage of expenditure on overhead versus programmatic

expenses consistent with other similar organizations?

Below

average

Slightly below

average

Near or

matching

Above

average

Exceeding

average

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

At any point during the evaluation period did you restrict the use of resources that could

have been used more appropriately to accomplish the organization's mission and goals?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

At any point during the evaluation period did your actions put the organization at

unnecessary risk or were you unable to meet expenses?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

At any point during the evaluation period did you allow an inappropriate or illegitimate

expenditure or transaction without taking necessary action to stop or rectify it?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

During your evaluation period, did you ever fail to pay your invoices on time or take

advantage of net discounts and rebates?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

At any time, did you suffer an increase in loan rates or other negative impacts due to a

bad credit rating?

Yes Probably, yes Maybe Probably not Definitely, no

Score = 1 Score = 2 Score = 3 Score = 4 Score = 5

Transfer your scores and total below:

______________

Total: ______________

REVIEWING YOUR SCORES:

A score of 45−50 indicates that your organization tests well and your organization could

be considered financially healthy.

A score of 35−45 indicates that your organization tests well and, while improvement may

be needed in specific areas, is relatively healthy.

A score of 25−35 indicates that your organization did not fare well in this test and there

may be cause for concern or changes in managing your organization's financial resources.

A score of 15−25 indicates that your organization's health may be at significant risk and

major changes are indicated.

A score of 5−15 indicates that your organization is not healthy, and serious changes and

a reexamination of priorities need to occur immediately.

Exhibit 15.6 Financial Health Evaluation

15.9 EVALUATING YOUR FINANCIAL POLICIES IN SIX KEY

AREAS

We have addressed financial policies in some detail in and with greater specificity in Chapter 5

the various chapters in which we discussed risk management, investments, cash management, and

other vital topics. In this chapter on evaluation, we offer some checklists and references for

guidance on evaluating your policies and practices in five critically important areas: governance

and accountability, liquidity management and your primary financial objective, investments,

fundraising, risk management, and human resources.

(a) GOVERNANCE AND ACCOUNTABILITY. Although some nonprofits have adopted a

head-in-the-sand perspective on the corporate sector Sarbanes-Oxley legislation and the future

implications of expanded calls for better governance and accountability, proactive nonprofits are

already adopting better internal controls, governance mechanisms, and accountability structures.

Two best practices that nonprofit boards have adopted toward improving their oversight are:

Conducting periodic training for board members on how to read the organization's audit and

financial reports

Engaging in financial or business planning to better understand the organization's business

model and financial sustainability10

Bond rating agencies that rate nonprofit debt to assess the organizations' creditworthiness from

the perspective of bond investors (Fitch Ratings, Standard & Poor's, and Moody's) are issuing

statements and/or revising their credit ratings criteria for healthcare institutions. Whether or not

your organization issues or plans to issue bonds that might be subject to a third-party rating, the

insights we can gain from the ratings framework motivate us toward better management and

governance. We shall use Fitch as our example of how ratings agencies view your governance as

it relates to financial health and sustainability from a long-term funders' perspective. Fitch

Ratings highlights three aspects that it deems most relevant to nonprofits, which are items for

your organization to consider regardless of whether or not yours is a healthcare organization or

about to request a bond rating:

Appropriate relationships with outside auditors, particularly regarding rotation of audit teams

and limits on nonaudit services

Better internal processes, including audit committee charters and documentable financial

expertise for audit committee members, certification of financial statements (CEO and CFO

both sign off on for-profit statements now), code of ethics adoption, and bonus forfeiture

when financial statements are restated

Internal control adequacy assessment (including whistleblower and compliance procedures)11

Fitch Ratings states “effectiveness of [your organization's] governance and management is an

important factor in assessing an organization's creditworthiness, as management's decisions and

initiatives – subject to the oversight and strategic direction of the governing body (such as a board

of trustees…) – can ultimately determine an entity's long-term financial viability. Fitch generally

focuses its commentary on management and governance practices where their effectiveness

materially influences the rating decision.” Fitch's statement on your board's governance is as 12

follows:

Governance: With a level of analysis tailored to the structural characteristics of the sector,

Fitch reviews the effectiveness of the governing body in establishing and implementing the

organization's policies and principles. Fitch's assessment may involve developing an

understanding of the governing body's mission and strategy, structure, composition,

interaction with and oversight of management, knowledge of industry issues and

performance standards. 13

Last, but certainly not least, you will want to perform an annual review of your finance (or

finance and accounting) committee. , from material developed by CPA and Exhibit 15.7

consulting firm Tate & Tryon, will prove very helpful to you as you conduct your review.

Source: Tate & Tryon, “Nonprofit Finance and Audit Committee Best Practices Checklist Oversight of

External Audit.” Reprinted with Permission by Tate & Tryon. Available at http://www.tatetryon.com/wp-

content/blogs.dir/48/files/2016/06/Nonprofit-Finance-and-Audit-Committee-Best-Practices-Checklist-1.

.pdf

Exhibit 15.7 Finance and Audit Committee Evaluation

(b) LIQUIDITY MANAGEMENT AND YOUR PRIMARY FINANCIAL OBJECTIVE.

How may we best assess our achievement of our organization's primary financial objective, that

of striving to meet an “appropriate liquidity target” over time? Recall that managing cash flow

and the cash position are the keys to accomplishing this, so any measure that shines light on these

items will assist us. Further, we rephrased our primary financial objective as: “To ensure that

financial resources are available when needed, as needed, and at reasonable cost, and are

protected from financial impairment and spent according to mission and donor purposes.” The

question must then be asked: Have we accomplished this?

Borrowing from corporate treasury management best practices, “the treasurer will always aim to

ensure that the organization is funded at all times, the balance sheet is optimized, financial

flexibility is maintained, and value-enhancing decisions are made to the benefit of all

stakeholders.” There are six very important targets (metrics) that you will want to track and 14

manage; we quote Riaan Bartlett in the following listing. Several of these are most appropriate for

commercial nonprofits (hospitals and colleges), but all are usable as-is or with some adaptation to

all nonprofits:

Total cash position

On at least a daily basis, complete visibility of the total cash within the organization

Also know how much cash is immediately available versus not available or trapped (as in

a debt reserve account)

If you lack daily visibility into your total organizational cash, drill down to determine if it

reveals an inefficiency in your cash management processes (inefficient use of technology?

poor cash concentration or pooling mechanisms? poor bank account controls? etc.)

Minimum liquidity buffer

Do we have cash in the right place? at the right time? in the right currency? Can we meet

our payment obligations at all times?

Related to (a), do we have a liquidity buffer that may be tapped in the event of unforeseen

events or during periods where short-term borrowing typically may not be accessed?

Related to (b), is this buffer (ideally) a combination of both cash and an undrawn

committed bank funding facility?

Funding requirement (one of the most important numbers to track for treasurer)

Shows the funding required (including the peak funding)

Drives the funding strategy and the bank and debt investor strategies as a subset of the

funding strategy

The period over which the funding is measured should be at least 12 and up to 24 months

(covers organization's budgeting cycle as well as the bond rating agencies' evaluation time

horizon for your financial profile)

Your target amount required will be a function of factors such as capital intensity (see

; especially consider ramifications of growth on working capital, infrastructure, Chapter 9

and other fixed asset investment), optimal capital structure (see ) and the Chapter 10

competitive environment (see )Chapter 3 Zietlow, John, et al. Financial Management for Nonprofit Organizations : Policies and Practices, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=5328420. Created from ashford-ebooks on 2025-08-11 02:05:10.

ii.

iii.

Avoid overoptimism if you are assuming disposals of assets will reduce the funding

required, especially if the timing of those disposals is not certain

Cash flow at risk

Get used to it: Your “actual cash” will probably never equal what you had forecasted for

your cash position – if your operating cash flows fluctuate periodically, actual cash can be

significantly different compared to forecasted cash, over even a relatively short period of

time

Calculate your “downside cash flow delta,” or per-period change in cash flows or net

available liquidity

The per-period change in cash flows or net available liquidity affects

The funding strategy

Under certain circumstances, your bond issues' credit ratings, your organization's

relationships with providers of capital, and your organization's ability to grow its

operations or, at the extreme, the ability to continue to operate

Estimating the per-period change in cash flows is difficult

You (or your treasurer) must work closely with the organization's leaders and the lead

in your forecasting group, if your organization is large enough to have a dedicated

group

A strong understanding of the cash flow drivers and how sensitive your key risk

factors are to ups and downs in your labor, commodity, product/service, and credit

(interest rate) markets is essential

It seems that low probability–large impact events (“black swans”) are becoming more

probable, but it is difficult to assign probabilities to these events

Projected balance sheet/statement of financial position (see , ) Chapters 6 9

Develop this for at least the next two years with the insights and inputs from #3 and #4, as

well as other operating and financial data

ii.

iii.

Assess this projected balance sheet relative to target financial ratios (target liquidity level

at end of each quarter or six-month period, debt ratio, cash ratio, and perhaps also target

liquidity level lambda) to determine the extent to which your organization's financial

strength and flexibility is expected to remain intact

Be careful: Your organization's balance sheet strength must not only be assessed with

ratios but equally with inspection of the absolute level of debt that is and will be

outstanding

Debt will have to be refinanced in the future (under potentially adverse market

conditions)

If the debt is too high, your organization may experience significant financial stress

Maximum refinancing risk

Determine the maximum amount to be refinanced in, say, any 12-month period

It is important not to set the maximum amount/limit too high based on past good market

conditions, as these conditions can change quickly due to:

Lower investor appetite for debt or short-, medium-, or long-term debt issued by

organizations with a certain amount of creditworthiness

Negative market “supply-side” sentiment towards your organization's sector (e.g.,

human services)

Overall lower available liquidity (funding) in the market due to conditions at that point

in time

All other things equal, the stronger your organization's issue credit rating, the more

refinancing risk you can accept

Market conditions in 2010 will serve as our illustration and allow application of the information

regarding liquidity and risk posture. In this case, nonprofits can again learn from corporate

practice. KPMG surveyed businesses regarding their liquidity and investment policies following

the “Great Recession.” We quote from the study's findings: 15

Of those respondents indicating their organizations had completed a reassessment, 16 percent

revised staff's investment authority so that more of the investment decisions now require

board approval.

Respondents reported that their boards are trying to answer the question, “Are We Liquid?”

Boards asking for liquidity projections…

A forecast horizon from 6 to 12 months

Accounting for all significant cash inflows and outflows…

Along with what could affect those flows in various scenarios…

Then how well the credit facilities would serve to cover shortfalls

Proactive steps the organizations could take if credit facilities prove inadequate included:

Increasing working capital (in advance of period of cash need)

Negotiating new/increased credit facilities

Cost reductions

Treasurers were asked by boards to establish multiple liquidity thresholds and contingency 16

plans within each of these “liquidity bands.”17

Liquidity issues spurred many businesses to create or update corporate liquidity policies to

provide additional clarity regarding corporate objectives, accountabilities, and controls.18

Liquidity policies typically address definitions and scope – key reports, timing and

distribution guidelines – thresholds, limits, and contingency plans.19

Fortunately, there is evidence from the field to further inform your evaluation of liquidity, how it

is measured, of what elements it is composed, whether structures are in place to maintain it, and

how it is used by the organization. A survey of 30 nonprofits by Sloan, Grizzle, and Kim is rich

with insights that you can tap. The survey used the concept of “operating reserves,” defining an

operating reserve as “a fund formally set aside by an organization to be utilized in times of fiscal

stress, also called a rainy day fund or contingency fund.” Nonprofit executives were asked if the

organization had a fund that met this definition. Six organizations (20 percent) reported having no

operating reserve, with the remaining 24 (80 percent of the organizations in the study) executives

stating that they believe their organizations have at least some reserve. Findings regarding the 20

creation or funding of the reserve linked the creation/funding to three major sources including:

Excess funds: Those funds that were determined to not be necessary for the basic operation of

an organization, either from (a) a reserve being created from excess holdings that had been

accumulating for some time and were then transferred to a special reserve account that had Zietlow, John, et al. Financial Management for Nonprofit Organizations : Policies and Practices, John Wiley & Sons, Incorporated, 2018. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=5328420. Created from ashford-ebooks on 2025-08-11 02:05:10.

not existed before or (b) a decision to transfer what they deemed “excess funds” at the end of

a budget year to a designated account that then became their operating reserves. Of the nine

organizations following these two strategies, five indicated that the reserve was created from

several years of surplus and four began with excess revenue from a shorter period, 12 months

or less.

Receipt of special gifts/bequests: Seven respondents (29 percent) stated that a special donation

or a bequest gave them the funds to create operating reserves … [and] only one indicated that

the monies were restricted by the donor to be used to start a reserve fund.

Budgeted reserve: Three organizations' respondents (12.5 percent) indicated that they had

created their operating reserve by including the fund as an expense line item in their budgets,

while five respondents (21 percent) described other processes for creating the reserve

(including creating the reserve by using the proceeds from a property sale by one organization

and reallocating an existing building fund toward the reserve by a second organization).21

Organizations also used a combination of resources for their reserve (liquidity target in our

terminology): sources included cash, short-term investments, credit line, and money available

from a related foundation.22

Regarding how funds are accessed once set up as a reserve, respondents indicated:

A few organizations (about one in six) with reserves have written policies in place to govern

how reserve funds can be used and for what purposes.

Most of the executives expressed accountability to expectations or accepted practices for their

actions relative to accessing reserve funds, with these organizations relying on board

approval, contingent board approval, and executive director direction.23

organization's investments are:

Are investment policy statement (IPS) prescriptions being followed? If overly inflexible or

outdated, is the IPS being updated and revised, with ensuing board oversight and approval to

be recorded in the board's minutes?

Is return sufficient relative to the risk being borne on investments?

Is “safety first” the guiding principle for all short-term investments?

Are appropriate performance measurement benchmarks for short-term cash reserves being

tabulated and used for comparison purposes? The Association for Financial Professionals (

) makes two short-term benchmarks available to its members for monthly www.afponline.org

returns.

Are appropriate performance benchmarks being tabulated and used for comparison purposes

for long-term investments (endowments, pooled investments, annuities, donated securities,

pensions, trusts)?

(Assuming the organization has an endowment): Is the endowment spending policy being

followed, and it is appropriate?

Careful oversight of outside investment managers is also important. Few nonprofits have board

members or staff with sufficient training, expertise, and time to manage properly investments

portfolios. More nonprofits are shifting portfolio allocations toward socially responsible investing

(SRI). If your organization is not doing so, reasons for not doing so should be known by all top 24

managers and the board of directors. Trade associations are excellent sources of comparative

investment return and risk data. If you serve in an educational institution, you will want to access

the National Association of College and University Business Officers (NACUBO's) educational

organization endowment benchmark data: Navigate to and then select the www.nacubo.org

“Research” tab. You may also wish to contact Commonfund – which is itself a nonprofit

organization that invests funds for nonprofits in the healthcare, educational, and foundation fields

– for its annual “Commonfund Benchmarks Study” covering each of these organizational types.

For more training on endowment investing, consider attending the Commonfund's five-day

“Endowment Institute. It is billed as “a rigorous and intensive educational program developed by

Commonfund Institute and designed exclusively for trustees and investment officers who wish to

enhance their contributions to the nonprofit institutions they serve.” The annual conference of the

Association for Financial Professionals also has broad coverage of many financial topics and now

includes a breakfast “nonprofit industry roundtable” at each annual conference (www.afponline.

).org

(d) FUNDRAISING. In working with the fundraising function, be cautious to ensure the

organization thinks through the effect of being opportunistic and reactive to new funding streams;

otherwise the organization's ability to sustain itself may be jeopardized.25

Evaluating your fundraising figures is a three-part process, as noted by Mary Beth McIntyre, Vice

President of Relationship Management, Target Analysis Group:

Drive relevance into your annual analysis by carefully determining at the outset how to

segment (group) your donors; make sure to discuss your needs for usable information in detail

with any outside source assisting you with your review of your fundraising file.

Derive and comprehend clear metrics and use them on an intrayear basis—as you get the

quarterly measures in and study them, use them to reshape remaining-year strategies.

Use your benchmark data (Giving USA, Target Analysis Group National Index, Paradyz

Matera Performance Watch, Campbell Rinker and Industry publication studies) to get a

context for understanding, to gain perspective, and to prioritize goals and inform management.

We highly recommend the relatively recent innovative and thoughtful “Measuring Fundraising

Effectiveness” framework for fundraising evaluation (see ). Once you gain expertise Exhibit 15.8

in calculating these metrics and comparing them to previous years' numbers and possibly a peer

competitor's numbers, you will have a much better ability to appraise and make recommendations

for improvements.

A MORE HOLISTIC VIEW OF FUNDRAISING

EFFECTIVENESS

While there are many measures that an organization may use internally to evaluate the

effectiveness of its fundraising strategy, we propose three primary measures of fundraising

effectiveness for both internal and external use, which together, provide a much more

complete picture of an organization's fundraising health.

Total Fundraising Net

The amount of money available to spend on an organization's mission as a result of its

fundraising efforts. This is the bottom line measure of fundraising success. If it's not enough

to fund the organization's work, then the other two measures are irrelevant. Here's how it's

calculated:

Example: If an organization raised $1,000,000 and spent $200,000 on staff and other

expenses to do it, its total fundraising net is $800,000 ($1,000,000 – $200,000).

Dependency Quotient

A measure of risk, the Dependency Quotient measures the extent to which an organization is

dependent on its top donors to fund its work. It's an indicator of how vulnerable the

organization could be in the face of changed priorities among its top funders. Generally

speaking, organizations would seek to have a lower Dependency Quotient, indicating that

they are more resilient to changes in top donor giving. Here's how it's calculated:

Example: If an organization's top five donors contributed $250,000 during the past three

years, and the total organizational expenditures for the same three-year period were

$1,000,000, then its Dependency Quotient is 25 percent ($250,000/$1,000,000), meaning it

would have to replace 25 percent of its budget if it lost its top five donors.

Cost of Fundraising

A measure of efficiency, the cost of fundraising measures how much it costs to raise money

within your organization. While some calculate it differently, we measure the average

amount that it costs to net one dollar across the entire organization. Generally speaking, ****

organizations would seek to have a lower cost of fundraising, indicating they are investing

efficiently in fundraising. Here's how it's calculated:

Example: If an organization spends a total of $50,000 to raise a total amount of $150,000,

then its cost of fundraising is 50 percent ($50,000 / ($150,000 – $50,000)). Or, stated in

dollars, it spent $0.50 to net $1.00.

* Many organizations have a mix of earned revenue and fundraising (or contributed)

revenue. For the purposes of this measure, we are looking at only the total amount raised,

which does not include earned revenue.

** Fundraising expenses should include both the costs of the fundraising efforts (event costs,

printing, travel, etc.) and the staffing costs associated with those efforts. When generally

accepted accounting principles (GAAP) are followed, joint cost accounting is an appropriate

way to handle some fundraising expenses. When using joint cost accounting, organizations

should take special care to ensure that they understand the full costs associated with each

fundraising tactic and overall fundraising efforts when evaluating the effectiveness of those

tactics and strategies.

*** This calculation could be done using any number of “top donors.” We recommend five

as a reasonable indicator of level of risk, but this could be adjusted to any reasonable number.

**** Because it's entirely appropriate for different fundraising tactics to have different

average costs of fundraising, it's important to look at the cost of fundraising across the entire

organization versus by individual fundraising tactic. It's only when you look at things in

aggregate that you can assess whether or not – overall – the organization is being efficient

with its investments in fundraising. For more on this, read “Understanding & Evaluating

Your Fundraising Strategy: A Toolkit & Conversation Guide for Boards and Leadership

Teams.” Available for download at: https://boardsource.org/research-critical-issues

./measuring-fundraising-effectiveness/#downloads

Source: Association for Fundraising Professionals, BBB Wise Giving Alliance, BoardSource, and

GuideStar, “Measuring Fundraising Effectiveness: Why Cost of Fundraising Isn't Enough,” 2017, p. 3.

Recommended by BoardSource as part of broader fundraising effectiveness evaluation (beyond merely

cost of fundraising). This framework developed by all organizations listed. Used by permission of

BoardSource.

Exhibit 15.8 Metrics for Assessing Fundraising Effectiveness

If you can locate a peer benchmarking group, tap into its expertise. An excellent online source for

fundraising statistics, including some benchmark data, is the AFP's Research and Statistics site:

and statistics/fundraising research. For example, the site includes www.afpnet.org/research

research from the Creative Direct Response Group (Crofton, MD) that indicates best practices for

direct mail appeals: (1) 8 to 12 appeals per year for minimizing the cost of funds raised, or more

frequent mailings if you wish to maximize the amount of funds raised; (2) most nonadvocacy

charities do better using premiums for at least some of their appeals, including a higher return on

investment; (3) the best experiences in gaining deferred-giving donors is based on age and

frequency of giving to your charity, with simple bequests being the most frequent form of

deferred or planned gift.27

Finally, try to assist your ED/CEO in addressing his or her concerns with fundraising. These

concerns were identified by a 2006 CompassPoint Nonprofit Services and Meyer Foundation

survey of CEOs/EDs:

Boards of directors. The key area in which boards might improve was fundraising (70 percent

of respondents listed this), particularly in improving their own efforts and then assisting the

executive and the organization.

Institutional funders. Grantmakers are seen as making the ED/CEO's job more difficult. The

biggest improvements that could be made would be more general operating support (restricted

funding not as helpful) and more multiyear grants.28

Desire to gain more knowledge and skill in fundraising and financial management. Many EDs

/CEOs perceive in themselves a lack of understanding of fundraising or financial management

and would like to gain a great understanding in these areas. As financial educator, you have a

wonderful opportunity to help fill at least one of these knowledge gaps.

(e) RISK MANAGEMENT. A key issue in risk management is the use of internal versus

external performance measures. Benchmarking enables you to make internal comparisons and 29

to match your performance up to similar organizations. If you use a new risk management

product, you may then compare your performance to the internal baseline you have in your

database. Internal data also serve as a basis for comparison when you do new training programs.

External benchmarks match your organization to peers, so you can see how you are doing on a

relative basis. You should maintain data on how frequent and how severe (costly) your claims are,

as a starting point. Higher frequency rates usually point to the need for more emphasis on loss

prevention, such as identifying location of incidence and the need for protective equipment or

safety training. Claims analysis includes a look at the relative amount of medical expense, legal

expense, and claim payout duration. The next step is to identify key cost drivers. Benchmark data

then help to see what cost drivers lay behind your severity rates.

(f) HUMAN RESOURCES. A major concern in the area of human resources is executive

burnout and turnover. With CompassPoint survey data from almost 2,000 executives indicating

that as many as 70 percent of EDs/CEOs are planning on leaving their present positions within

five years (but most of them staying in the nonprofit sector), succession planning is a vital

concern. Furthermore, salary compensation and employee benefits are huge concerns. Salary data

is readily available (for example, navigate to ), and there http://idealistcareers.org/salary-surveys/

is a growing database of benefits data as well.

The buzzword in the for-profit sector today is “human capital metrics.” Companies are trying to

link people measures to key performance indicators (KPIs), in the spirit of the balanced scorecard

approach to performance management (see ). Achieving this linkage requires a close Chapter 3

working arrangement between human resources (HR) and finance, which should be easier for the

typical nonprofit organization since HR is often housed in the finance area. Companies are

attempting to focus more on top performers within their employees and also spend more of their

HR time and budget on high-return-on-investment activities. Incentives, hiring, and training 30

practices in the organization can then be modified based on the numerical measures being

tabulated. The Conference Board survey of 104 HR executives at midsize and large businesses

indicates that 12 percent of companies tie people measures to strategic targets or KPIs, but

another 84 percent of these companies intend on increasing their use of people measures for these

purposes. As people-intensive as service-oriented nonprofits are, this application holds great 31

promise for the future. Care must be exercised in overburdening an already stretched workforce,

however. Working smarter, not harder, should be the intended target. Benchmarks may be set for

human resource expense (HR department costs), total investment in human capital (total HR

expenses plus non-HR staff salaries and benefits), HR expenses by function (e.g., compensation

costs as a percentage of operating expenses), HR expenses by process/programming (e.g.,

operations and maintenance costs as a percentage of total HR), and miscellaneous HR costs (e.g.,

turnover costs per employee leaving, absenteeism cost as a percentage of average wage rate,

healthcare cost per employee).32

15.10 EVALUATING QUALITY AND OUTCOMES

Quality is notoriously difficult to evaluate in service organizations. Yet you are probably aware of

some educational and healthcare providers that are applying “Six Sigma” process evaluation to

their organization's processes and services. Determining what root problems are “critical to

quality” for an organization's outputs is the key part of those applications. The concern here is

“how well a business process, product, or service is meeting the requirements of the marketplace,”

and Six Sigma refers to 3.4 defects per 1 million customer requirements. If quality is an issue 33

for your organization, Six Sigma thinking is worthy of your consideration. The metrics should

naturally follow your application efforts.

Getting the organization's radar on outcome measures and measuring effectiveness or mission

achievement is more difficult. Paul Light, in his study of several hundred high-performing

nonprofits, finds they share one thing in common — and it's an item of great relevance to the

CFO: These nonprofits achieved their standing by “strengthening their organizational capacity to

withstand the uncertainty ahead… [they] have become robust.” Light identifies four pillars of 34

robust nonprofit groups: (1) alertness to what lies ahead (reflect on the “environmental scanning”

we profiled in ); (2) agility, which entails “recruiting, training, retaining, and (if Chapter 3

necessary) redeploying a talented, flexible work force”; (3) adaptability; and (4) alignment of all

the organization's operations toward the mission. The latter is dependent on strategic planning and

“tough conversations about mission.” But we single out Light's insights on adaptability, which 35

mesh most closely with our observations over several decades:

… high performers manage to build reasonable reserve funds in spite of objections from …

donors and frequently challenge the assumptions that underpin their missions by asking

themselves why they exist, whom they serve, and how they will know when they have

succeeded.36

Will your organization swim against the tide of default practice in the nonprofit sector and insist

on having a reasonable target liquidity level along with a long-range financial planning

framework in place, tied to your organization's strategic plan? The mental model paradigm shift

this entails is a sea change but worthy of all of your efforts to achieve it. It likely entails having to

explain to donors and even board members why it is valuable to have a board-designated

endowment with cash reserve set-asides for various purposes. Furthermore, as a primary internal

consultant, you may continue to present in discussions and meetings the “why,” “how,” and

“success metric” issues. You can be vigilant to ensure that metrics being used are actually helpful

in steering your organization toward mission accomplishment. One danger to be aware of: An

organization may fall into a “measures orientation” rather than being oriented toward activities

that are most relevant and facilitating of mission achievement. According to Susan Eagan, 37

former executive director of the Mandel Center for Nonprofit Organizations at Case Western

Reserve University, an organization is effective “when it consistently achieves its mission, or

perhaps put another way, when an organization makes increasing and measurable progress on the

issues it was established to address.” Eagan notes that this requires a , 38 culture of performance

which you may assist in promoting by the reports you help to devise and require as part of the

reporting cycle in your organization:

A culture of performance includes continuous learning within the organization, ongoing

evaluations of programs and projects, being mindful of what works and what doesn't, and a

commitment to innovation – a willingness to try new services and products.39

15.11 USING EXTERNAL CONSULTANTS AND DATA SOURCES

A full discussion of whether and how to use external consultants is beyond our scope, but we note

that outside of fundraising, audits, strategic planning, basic board training, and perhaps IT or ED

/CEO search services, nonprofits make little use of consultants. One unscientific survey found the

median expenditure on consultants and contractors to be $25,000 in 2004. The good news is, 40

you may be able to get foundation or government grants to pay for fundraising, planning, staff

/board training/development, outcomes evaluation, graphic design/copywriting, or IT services.41

If you decide to do your own in-house “self-audit,” you may wish to review these seven areas

(some of which overlap with topics already covered), gaining feedback from your board of

directors, staff, volunteers, major donors, and clients:

Relationship/connectedness

Mission/goals/feedback

Current project assessment

Effectiveness/efficiency/sustainability

Leadership

Volunteer management

Donor direction of gifts42

This list, from consultant Chuck Maclean, is one that you may wish to rotate through—do one or

two each year, based on the time and resources you have to devote to the self-review.

As with other major purchases, talk with peer organizations about their experiences with

consultants to see who might be available and what experiences they (or someone they know)

have had with the potential consultant. While you may not be able to quantify benefits before the

fact, quite often the insights gained from an objective outsider are indispensable. “Where no

counsel is, the people fall: But in the multitude of counsellors there is safety,” as the wise proverb

has it.

15.12 CONCLUSION

None of the evaluations presented in this chapter should be taken out of context or used as the

sole justification or reason for making significant changes in your organization. It is important to

use these evaluations as one of many tools for measuring your performance as well as that of your

organization. There may be unique factors in these evaluations that cause your scores to be

inaccurately high or low. Performing each of these evaluations quarterly or semiannually and

averaging your results after a year or two may also provide a better picture of your performance.

Performing this evaluation on an ongoing basis ensures that you are as effective as you can be for

the organization you serve.

Regarding your organization, we started this guide arguing for financial management proficiency.

We end it pleading for organizational effectiveness. The role you can play in tying these two

ideals together? You can be the strategic financial manager or treasurer, the internal business

consultant, the financial educator, and team player that your organization needs. We close with an

aspiration and a promise from Proverbs in the Bible (applying equally to men and women): “Do

you see a man diligent and skillful in his business? He will stand before kings; he will not stand

before obscure men.”

Notes

1. For more on program evaluation, see Kathryn E. Newcomer, Harry P. Hatry, and Joseph S.

Wholey, eds., 4th ed. (Hoboken, NJ: John Wiley Handbook of Practical Program Evaluation,

& Sons, 2015); and a brief checklist of key elements at http://web.pdx.edu/∼stipakb/download

./PA555/ProgramEvaluationStandards.htm

2. Paul Konigstein, “The CFO as the Nonprofit's Chief Accountability Officer,” The Bridgespan

Group, 2017. Available at: https://www.bridgespan.org/insights/library/organizational-

. Accessed 8/5/2017.effectiveness/cfo-as-nonprofit-chief-accountability-officer

3. Erline Belton, “Truth or Consequences: The Organizational Importance of Honesty,” Nonprofit

11 (Summer 2004). Available at: Quarterly https://nonprofitquarterly.org/2005/12/21

./nonprofit-organizational-importance-of-honesty/

4. Doug Lennick, Fred Kiel, and Kathy Jordan, Moral Intelligence 2.0: Enhancing Business

(Upper Saddle, NJ: Prentice Hall, Performance and Leadership Success in Turbulent Times

2011).

5. Craig A. Jeffery, “Six Essentials for the Strategic Treasurer,” 20 (June Financial Executive

2004): 32–34. Another helpful self-evaluation instrument regarding your financial leadership

is the two-page “Financial Leadership Self-Evaluation” contained in Jeanne Bell Peters and

Elizabeth Shaffer, Financial Leadership for Nonprofit Executives: Guiding Your Organization

(St. Paul, MN: Fieldstone Alliance, 2005): 16–17. It includes Personal to Long-Term Success

Leadership, Priorities, Information Sharing, Board of Directors, Teamwork, Financial

Knowledge, Financial Performance, Investment in Infrastructure, Funder Accountability, and

Culture of Transparency Around Money measures.

6. The Collins Group, . 2005 Washington State Nonprofit Resources Survey: Executive Summary

Available at: . Accessed 4/1www.collinsgroup.com/pdfs/05-WA-nfpResourcesExecSum.pdf

/06.

7. Julianne Gassman, Norman A. Dolch, Ann Marie Kinnell, Stephanie Krick, Regan Harwell

Schaffer, SueAnn Strom, and Amy Costliow, “A Three Year Study of the Nonprofit Sector's

Response to the Economic Challenges in Six Cities Across the Nation,” Baruch College

Center for Nonprofit Strategy and Management Working Paper Series, June 2012.

8. Melissa S. Brown, Brice McKeever, Nathan Dietz, Jeremy Koulish, and Thomas H. Pollak,

“The Impact of the Great Recession on the Number of Charities,” (Washington, DC: Urban

Institute, October 16, 2013). Available at: http://www.urban.org/sites/default/files/publication

. /24046/412924-The-Impact-of-the-Great-Recession-on-the-Number-of-Charities.PDF

Accessed 8/5/2017.

9. The interest on the part of donors or charity watchdog agencies in keeping overhead cost or

fundraising cost ratios down is often dysfunctional: The Nonprofit Overhead Cost Project,

conducted jointly by the Center on Philanthropy at Indiana University and the Center on

Nonprofits and Philanthropy at the Urban Institute, noted that “no organization in our study

was an extravagant spender on fundraising or administration. Yet contrary to the popular idea

that spending less in these areas is a virtue, our cases suggest that nonprofits that spend too

little on infrastructure have more limited effectiveness than those that spend more reasonably.”

Mark A. Hager, Thomas Pollak, Kennard Wing, and Patrick M. Rooney, “Getting What We

Paid For: Low Overhead Limits Nonprofit Effectiveness,” Nonprofit Overhead Cost Project:

(August 2004). Available at: Brief No. 3 http://nccsdataweb.urban.org/kbfiles/311/brief%203.

. The best article on this topic in our view is Jesse D. Lecy and Elizabeth A. M. Searing, pdf

“Anatomy of the Nonprofit Starvation Cycle: An Analysis of Falling Overhead Ratios in the

Nonprofit Sector,” 44, no. 3 (2015): 539–563. Nonprofit and Voluntary Sector Quarterly

Finally, an incisive deep-dive on funder dysfunctions in the nonprofit world is available at

Clara Miller, “The Looking-Glass World of Nonprofit Money: Managing in For-Profits'

Shadow Universe,” 12 (Spring 2005): 48–55.Nonprofit Quarterly

10. Rick Moyers, (San Francisco, CA: Daring to Lead 2011 Brief 3: The Board Paradox

CompassPoint Nonprofit Services and the Meyer Foundation, 2011), p. 7.

11. Andrew J. Demetriou, “Nonprofit Governance Reform: Rating Agencies Join the Fray,” ABA

2, no. 7 (March 2006).Health eSource

12. Fitch Ratings, “Rating Criteria for Public Sector Revenue-Supported Debt,” June 5, 2017, p.

22. Available at: . Accessed 8/5/2017.https://www.fitchratings.com/site/re/898969

13. Id.

14. Riaan Bartlett, “Six Key Numbers Every Treasurer Should Know,” Association for Financial

Professionals Trends and Topics, March 27, 2017. Available at: https://www.afponline.org

. Accessed /trends-topics/topics/articles/Details/six-key-numbers-every-treasurer-should-know

8/5/2017.

15. Jim Negus, “Riveting Attention on Liquidity and Investment Policies,” KPMG, 2010.

16. Liquidity thresholds are formally defined by Jim Negus: “The liquidity threshold typically

represents a formal tolerance level (or band) ‘triggering' management oversight or

remediation. Example liquidity thresholds include maximum credit facilities, downgrade risk

(an adverse rating agency activity resulting in increased funding costs and collateral

requirements, measured maybe by the debt/EBITDA ratio), capital structure ratios (e.g., debt

to equity), short- to long- term debt financing ratios (e.g., <25% short-term financing), and

various debt covenant thresholds relevant to cash, credit or capital markets (e.g., interest

coverage).” Jim Negus, “Liquidity Management in Turbulent Times,” , September 2011. TMI

Available at: https://www.treasury-management.com/article/4/213/1844/liquidity-management-

. Accessed 8/5/2017.in-turbulent-times.html

17. Contingency plans based on thresholds, tolerance levels, and bands are defined as follows by

Jim Negus: “management assigns permitted or required actions (herein referred to as the

liquidity contingency plan) to each tolerance level or band. The liquidity contingency plan

typically guides management through various liquidity scenarios ranging from minimum cash

and liquidity balances, permitted funding sources and mix, equity repurchase and capital

expenditure permissions to available working capital and operating cost reduction strategies.

In addition to serving as a management guide, the contingency plan can assist directors to

quickly ascertain critical liquidity risk thresholds and desired outcomes under normal and

extraordinary times.” Jim Negus, “Liquidity Management in Turbulent Times,” , TMI

September 2011. Available at: https://www.treasury-management.com/showarticle.php?

. Accessed 8/5/2017.article=1844

18. Jim Negus, “Liquidity Management in Turbulent Times.”

19. Id.

20. Margaret F. Sloan, Cleopatra Grizzle, and Mirae Kim, “What Happens on a Rainy Day? How

Nonprofit Human Service Leaders Create, Maintain, and Utilize Operating Reserves,” Journal

5 (June 2015): 190–202.of Nonprofit Education and Leadership

21. Id.

22. Id.

23. Id.

24. For more on SRI, consult The Forum for Sustainable and Responsible Investment (http://www.

). For SRI benchmark data, consult MSCI ESG Research (ussif.org/ https://www.msci.com/esg-

).integration

25. This is the view of Susan Eagan, former executive director of the Mandel Center for

Nonprofit Organizations at Case Western Reserve University (Cleveland, OH), as expressed in

her interview with The Foundation Center at http://fdncenter.org/cleveland/cl interview eagan3.

. Accessed 3/30/2006.html

26. “Benchmarking Understanding How All Data Works Together,” … NPT Instant Fundraising

e-mail newsletter, January 5, 2006, p. 1.

27. Geoff Peters, “Best Practices in Direct Mail Fundraising, Part 1,” Association for Fundraising

Professionals Resource Center, September 19, 2005. Available at: http://www.afpnet.org

. Accessed 8/10/17. Also see Part 2 of /ResourceCenter/ArticleDetail.cfm?ItemNumber=3547

this article at . http://www.afpnet.org/ResourceCenter/ArticleDetail.cfm?ItemNumber=3578

Helpful resources on direct mail RFPs and gift acceptance policies developed by CDR

Fundraising Group are available at . An excellent set http://cdr-nfl.com/blogcategory/resources

of guidelines on developing or reviewing your organization's direct mail acquisition budget is

available at .http://cdr-nfl.com/content/conquering-direct-mail-acquisition-budget

28. Jeanne Bell, Richard Moyers, and Timothy Wolfred, “Daring to Lead 2006: A National Study

of Nonprofit Executive Leadership,” CompassPoint Nonprofit Services and the Meyer

Foundation, 2006. Available at: https://www.compasspoint.org/sites/default/files/documents

. Accessed 8/5/17./194_daringtolead06final.pdf

29. This section is based on Catherine D. Bennett, “Benchmarking for Improved Decision-

Making Capabilities in Today's Public Sector,” PERI Benchmarking Series (Fairfax, VA:

Public Entity Risk Institute, July 2004), 1–4.

30. Craig Schneider, “The New Human-Capital Metrics,” 22 (February 2006): 22–CFO Magazine

24, 26–27.

31. Id.

32. These are taken from a more complete listing included in Jack Phillips, Investing in Your

(New York: AMACOM Books, 2003). Cited at: Company's Human Capital http://www.

. Accessed 8/5/17.workforce.com/2005/07/15/human-capital-benchmark-measures/

33. Dick Smith and Jerry Blakeslee, “The New Strategic Six Sigma,” (September 2002): 45–TD

52.

34. Paul C. Light, “What It Takes to Make Charities Effective,” 17 Chronicle of Philanthropy

(September 1, 2005): 45–46. Also see Paul C. Light, “The Spiral of Sustainable Excellence,”

11 (Winter 2004): 56–64.Nonprofit Quarterly

35. Light “The Spiral of Sustainable Excellence.”

36. Id.

37. This is the view of Susan Eagan, former director of the Mandel Center at Case Western

Reserve University (Cleveland, OH).

38. Interview of Susan Eagan by The Foundation Center (Cleveland, OH), available at

. Accessed 4/1/06.http://fdncenter.org/cleveland/cl interview eagan.html

39. Id.

40. Based on a convenience sample of 91 responses, published in “Survey Results-How Do

Nonprofits Use Consultants and Contractors?” , April 8, 2005. Received Not-for-Profit eNews

via e-mail on April 8, 2005. Accessed 5/25/2005.

41. Id.

42. Charles B. Maclean, “To Self-Audit … Or Not?” self-published (2002). For a self-audit

questionnaire that you can take and also have your stakeholders take, see Charles B. Maclean,

“10+ Self-Audit Tips for Nonprofit Accountability,” 22 (July/August 2004): Nonprofit World

24–25. Available at: . Accessed 8/5/17.https://www.snpo.org/redir/articles.php?id=1319