Ann Arbor Business Monthly November 2015 : Page 1

BUSINESS MONTHLY • ann arbor • chelsea • dexter • manchester • milan • saline • whitmore lake • ypsilanti ann arbor area Volume 11, No. 9 November 2015 $2.00 Nonpro fi ts Depend On Fund Raising To Provide Services By Duane Ramsey Fund-raising is the lifeblood of hundreds of nonpro fi t organizations that are serving thousands of residents in the Washtenaw County community throughout the year. Nonpro fi t organizations play an important service role in society today, acting as intermediaries between donors and bene fi ciaries. They have ethical obligations to ensure proper handling of funds to carry out their missions, according to the Michigan Nonpro fi t Association (MNA). fund-raising Nonpro fi t should be conducted with the highest ethical standards with regard to solicitation, acceptance, recording, reporting and use of funds. Nonpro fi ts should adopt clear policies for fund-raising activities to ensure responsible use of funds for designated purposes while having transparent communications with donors and constituents, according to the MNA. Nonpro fi ts need to have a strong and diverse revenue stream, properly invest, and support their development staff to succeed. USA’s Overview of Giving in 2014. Foundation giving totaled $54 billion, eight percent higher than 2013; bequest giving of $28 billion increased by 15.5 percent; and corporate giving of $17.8 billion for a 13.7 percent increase over 2013. Individuals comprise 72 percent of donations to nonpro fi ts, with 15 percent coming from foundations, 8 percent from bequests and 5 percent from corporations. Individual giving is considered to be more consistent even in economic downturns, according to Gesaman. “We are a resource to nonpro fi ts in Washtenaw County through the United Way and Ann Arbor Community Foundation,” Gesaman said about the MNA and its informal relationships with local nonpro fi t organizations. Locally, NEW provides programs, services and training to nonpro fi t organizations in Washtenaw County. Last year, more than 550 nonpro fi ts came to NEW for assistance. “NEW’s mission is to improve the impact and performance of nonpro fi ts by creating high-quality strategic solutions. NEW’s programs foster mission ful fi llment, make organizations more ef fi cient, and elevate the quality, scope, and sustainability of nonpro fi t services in the community,” stated Diana Kern Vice President of Programs at the NEW Center in Ann Arbor. NEW, a 501(c) (3) management support organization, was founded in Ann Arbor in 1993 to manage the NEW Center as a collaborative Nonpro fi ts (Continued Page 3) INSIDE: October Real Estate Update – Page 4 How Can My Business Make It Through A Lawsuit? – Page 5 Your Full-Season Tax Strategy – Page 6 What Is EMV? – Page 7 JUST BUILD IT! Construction Career Expo – Page 8 Small Business & The Internet By Mike Gould – Page 11 Business Briefs – Pages 12-15 December BUSINESS MONTHLY Real Estate-Buy or Sell? Deadline: November 20 Make Plans Now To Place Your Advertising For 2016 Where Businesses Are Reading–– In the Pages of BUSINESS MONTHLY “The diversi fi cation of revenue for nonpro fi ts today is critical for the sustainability of those organizations and the services they provide to the community,” said Bill Gesaman, director of stakeholder engagement with the MNA. Gifts to nonpro fi ts from individuals, corporations and foundations in the U.S. totaled $358 billion in 2014 (Source: Giving USA Foundation’ s Overview of Giving in 2014). The total contributions from those sources were only about 22 percent of the $1.4 trillion in total revenues for all nonpro fi ts in the U.S. The other 78 percent comes from program service and other development income. Development is the term used to describe the ways nonpro fi t organizations supplement their earned income with donations, grants, sponsorships and gifts-in-kind. It also includes such methods as annual appeals, capital campaigns, major gifts, membership fees, and special events held as fund raisers for nonpro fi ts. The single largest increase in charitable giving was a boost of $13.88 billion in contributions by individuals, according to Giving ann arbor area BUSINESS MONTHLY P. O. Box 460 Hamburg, MI 48139-0460 PRSRT STD US POSTAGE PAID ST JOSEPH MI PERMIT #335

Nonprofits Depend On Fund Raising To Provide Services

Duane Ramsey

Fund-raising is the lifeblood of hundreds of nonprofit organizations that are serving thousands of residents in the Washtenaw County community throughout the year.

Nonprofit organizations play an important service role in society today, acting as intermediaries between donors and beneficiaries. They have ethical obligations to ensure proper handling of funds to carry out their missions, according to the Michigan Nonprofit Association (MNA).

Nonprofit fund-raising should be conducted with the highest ethical standards with regard to solicitation, acceptance, recording, reporting and use of funds. Nonprofits should adopt clear policies for fund-raising activities to ensure responsible use of funds for designated purposes while having transparent communications with donors and constituents, according to the MNA.

Nonprofits need to have a strong and diverse revenue stream, properly invest, and support their development staff to succeed.

“The diversification of revenue for nonprofits today is critical for the sustainability of those organizations and the services they provide to the community,” said Bill Gesaman, director of stakeholder engagement with the MNA.

Gifts to nonprofits from individuals, corporations and foundations in the U.S. totaled $358 billion in 2014 (Source: Giving USA Foundation’s Overview of Giving in 2014). The total contributions from those sources were only about 22 percent of the $1.4 trillion in total revenues for all nonprofits in the U.S. The other 78 percent comes from program service and other development income.

Development is the term used to describe the ways nonprofit organizations supplement their earned income with donations, grants, sponsorships and gifts-in-kind. It also includes such methods as annual appeals, capital campaigns, major gifts, membership fees, and special events held as fund raisers for nonprofits.

The single largest increase in charitable giving was a boost of $13.88 billion in contributions by individuals, according to Giving USA’s Overview of Giving in 2014. Foundation giving totaled $54 billion, eight percent higher than 2013; bequest giving of $28 billion increased by 15.5 percent; and corporate giving of $17.8 billion for a 13.7 percent increase over 2013.

Individuals comprise 72 percent of donations to nonprofits, with 15 percent coming from foundations, 8 percent from bequests and 5 percent from corporations. Individual giving is considered to be more consistent even in economic downturns, according to Gesaman.

“We are a resource to nonprofits in Washtenaw County through the United Way and Ann Arbor Community Foundation,” Gesaman said about the MNA and its informal relationships with local nonprofit organizations.

Locally, NEW provides programs, services and training to nonprofit organizations in Washtenaw County. Last year, more than 550 nonprofits came to NEW for assistance.

“NEW’s mission is to improve the impact and performance of nonprofits by creating high-quality strategic solutions. NEW’s programs foster mission fulfillment, make organizations more efficient, and elevate the quality, scope, and sustainability of nonprofit services in the community,” stated Diana Kern Vice President of Programs at the NEW Center in Ann Arbor.

NEW, a 501(c) (3) management support organization, was founded in Ann Arbor in 1993 to manage the NEW Center as a collaborative for nonprofit resources and incubator site. It opened an office in Detroit in 2007 to provide support to nonprofits in Wayne, Oakland and Macomb counties.

The McKinely Foundation and a diverse group of community members created NEW as a valuable resource for nonprofits that immediately benefited from lower overhead and on-site cooperat ion with other nonprofits.

NEW supports the nonprofit community in achieving their fund raising goals by offering public training and workshops throughout the year to help nonprofit staff develop the necessary skills, according to Lori Kitchen, chief philanthropy officer at NEW.

As part of its Nonprofit Startup Series, NEW offers an in-depth workshop, Fundraising Essentials & Strategies, to help nonprofits build their first development fund. It also conducts Meet The Funder workshops where funders sit on a panel and answer questions to allow nonprofits to hear firsthand from funders about their priorities and decision-making processes.

In addition to its public workshops, NEW offers one-on-one organizational development and fund-raising consulting services. It includes analysis, assistance and recommendations on their current Fund Development Plans and staffing needed to execute each organization’s fundraising goals, reported Kitchen.

“With the help of experts in the field, NEW has created and delivers innovative, high impact services that emphasize collaboration, best practices, new technologies, and centralized functions to increase efficiencies and reduce costs for nonprofits,” Kern stated.

The Huron River Watershed Council, which is celebrating its 65th anniversary in 2015, raises funds using several different methods. With a total revenue of $1.384 million in fiscal year 2014-2015 that ended March 31, its largest revenue source of $700,000 or 41 percent came from corporate and foundation grants.

Other top methods include $287,000 or 22 percent from contracted services, $160,000 or 19 percent from government grants, and the balance of about 19 percent from contributions, membership fees and other income.

“It’s a mix of those top three categories that is the key to our having a diversified revenue stream because those sources can vary from year to year. It’s what got us through the recent recession,” said Laura Rubin, executive director of the Huron River Watershed Council.

Rubin reported that the recent development of their contracted services has been a growing source of revenue for the nonprofit that provides water monitoring services of lakes, rivers and streams for local and state governments. The Council covers 910,000 square miles with 500,000 residents and 72 municipalities in seven counties of southeast Michigan.

The Council is located in the NEW Center where it occupies one of the rare office spaces that overlooks the Huron River, the main waterway in its jurisdiction. The economic impact of the Huron River Water Trail is $33 million annually in Washtenaw County alone, reported Rubin.

Artrain Inc. and The Arts Alliance also operate out of space at the NEW Center. Artrain was actually the first tenant in the building at its present site, according to Deb Polich, president and CEO of Artrain and The Arts Alliance.

As many nonprofits do, Artrain uses a number of different fund-raising methods that include corporate and individual gifts, sponsorships, grants from foundations and governments, and occasional fund-raising events.

Polich said that individual contributions of $50 or $100 are just as important as funds received from companies, foundations and governments. She added that they have utilized the education programs and sources available to tenants at the NEW Center.

Artrain receives funding from the Ann Arbor Community Foundation, Ann Arbor Area Convention & Visitors Bureau, Community Foundation for Southeastern Michigan, DTE Energy Foundation, Michigan Council of Arts & Cultural Affairs, Michigan Nonprofit Association, National Endowment for the Arts, Pfizer Foundation and Washtenaw United Way, among others.

Artrain, which will celebrate its 45th anniversary next February, is dedicated to delivering discovery and through the power of arts and culture, transform lives, communities and organizations on a local, state national and just recently an international level, according to Polich.

The Ark raises from 65- 70 percent of its annual income from sales and concessions at its local events with much of the balance coming from its annual membership drive, according to Marianne James, executive director.

“Individual donors are the backbone of our financial support,” said James who reported that The Ark raised $300,000 from annual and shortterm memberships from about 4,000 individuals in its most recent campaign.

The Ark uses special events such as the Ann Arbor Folk Festival and benefit concerts with corporate sponsorships and grant support for its annual operating costs, according to James.

The Ark, a nonprofit organization based in downtown Ann Arbor, is dedicated to the enrichment of the human spirit through presentation, preservation and encouragement of folk, roots, and ethnic music and related arts.

The MNA also offers a wide range of half-day seminars on nonprofit management and governance, Gesaman said.

The MNA in partnership with NEW presented a workshop about making effective grant requests on October 14 at the United Way of Washtenaw County. Cynthia Adams, CEO of GrantStation who has helped nonprofits raise funds, conducted the workshop.

“We partner with organizations like NEW to serve the nonprofits in a specific area such as Washtenaw County. Together we provide fund development and grant writing education such as this workshop. We have special relationships with NEW and GrantStation which has ties with the University of Michigan,” explained Gesaman.

The MNA’s Michigan Nonprofit Management Manual features a chapter on fundraising for organizations of all kinds. The management manual can be purchased by members and non-members from the MNA bookstore at www.MNAonline.org/bookstore.aspx.

The United Way of Washtenaw County invests in solutions that improve lives by awarding grants to nonprofits for programs and services that address critical community needs. Opportunity Fund grants are awarded year-round by the Community Impact Committee in response to critical and emerging needs.

The United Way has a Volunteer Center which lists agencies and ways individuals and businesses can help by volunteering with them. See www.volunteerwashtenaw.org.

Gesaman reported that MNA represents about 40,000 nonprofit organizations in Michigan and works with 10 management organizations such as NEW in their specific geographic areas.

Kitchen said that NEW and many local nonprofit organizations are members of the MNA. NEW works with the MNA to facilitate many of its programs in southeast Michigan such as the grant-writing workshop, she added.

The MNA is affiliated with the Michigan Campus Compact, a national coalition of more than 1,100 college and university presidents committed to the civic purposes of higher education. U-M is one of the five founding institutions of the Michigan Campus Compact established in 1985.

Read the full article at http://digitaleditions.walsworthprintgroup.com/article/Nonprofits+Depend+On+Fund+Raising+To+Provide+Services/2309835/278789/article.html.

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