How to be an Effective Board Member

Introduction

Becoming a Board Member is a big responsibility and a big accomplishment. This is doubly so if you are young, given that less than 2% of Board Members are under 30 in the United States! The benefits of Board Membership are numerous, including giving you new professional and personal networking opportunities, professional skill development and spiritually – knowing that you are supporting an organization’s growth and development, especially if you are a nonprofit Board Member.

On the other hand, the skills that make someone an effective Board Member do not come naturally. While some organizations have formal Board of Directors training programs, not all do. Read on to learn about the skills required of effective Board Members.

Understand the Role of the Board

The role of the Board of Directors is to set the organization’s strategic direction, assess risks and threats to the organization, plan for the future and to make corrections in order to keep the organization on track. Additionally, the Board of Directors hires the Chief Executive (either the CEO or the Executive Director, occasionally the President) and sets the metrics that are used to evaluate that individual.

The Board is responsible for governance and leadership, but not for the day-to-day operational activities of the organization. This is something new Board Members sometimes struggle with. Your role is to make sure that the Executive Director has the tools they need to achieve the metrics, but they will ultimately decide how best to carry out these goals.

For instance, your strategic plan might include increasing your revenue by 10%. The Executive will be responsible for carrying this out (though the Board is an important contributor to fundraising and finance.) So, you might help by setting up meetings with people in your network or by participating in fundraising events but it would be inappropriate to tell the Executive Director to plan a certain event or direct the way in which they raise the revenue by 10%.

The organizational flow is from customers or clients, to the staff, to the Executive Director or CEO, and finally the Board. If this chain of command gets disrupted, you will have issues. It is important to strike a balance between minimizing risks and maximizing opportunities – because these concepts are in constant conflict.

Perform Strategic Planning

Strategic planning is the process of setting the strategic priorities of the organization. This involves figuring out where you want the organization to go and then to set in place concrete strategies, goals, and ideas in order to decide the future of the organization.

Strategic planning models can be used to help you identify where the organization is right now and where you would like to be. One example is the model presented by OnStrategy, that includes 4 phases:

  1. Determine Position
  2. Develop Strategy
  3. Build the Plan
  4. Manage Performance

You can see my article on Basic Strategic Planning for Nonprofits to help you learn more about the nuts-and-bolts of strategic planning.

 

Hire and Evaluate the Executive Director

Hiring the Executive Director is one of the most challenging aspects of a Board of Directors. The Executive makes a huge impact on the overall success of the organization and choosing the wrong Executive can seriously impede progress to your goals.

One barrier that makes choosing Executives difficult is that many Board Members are mid-level or senior members of their own organizations but have not held that role themselves. This makes sense, given the number of organizations out there – only one Executive can exist at each one. If you’re hiring for a role you’ve never held yourself, the possibility exists that you will select someone based on the wrong criteria.

To avoid this, make sure that you ask behaviorally-based questions that get at the heart of the activities you need your Executive to do, and captures the essence of the job. For example,

  • Tell me about a time when you had to manage a large fundraising project
  • What would you change about our organization over the next 12 months?
  • What is your approach to handling conflict?

You should also share the Key Performance Indicators and the Strategic Plan (if it is public) with potential Executive Directors because these are the metrics you will be evaluating your Executive Director on. Their goals should align with your Board’s goals.

Manage Organizational Risks

Risk management means identifying the potential threats to the organization and then taking steps in order to mitigate their risks. This will be different depending on what your organization does, but some common threads will run through all nonprofit organizations.

For example:

  • Your funding comes from one primary funder. What happens if the funder winds up or stops funding you?
  • One staff member has critical competencies that if you lost, would affect the missing. How do you respond?
  • One of your most important programs has no competitors. What happens if a competing organization starts working in the same space as you?

Identifying these risks on a regular basis will help your organization to respond to them. As the Board, you will not direct the Executive Director how to respond to these risks, but together a collaborative plan can be put in place to make sure an effective response is developed.

Board Members are legally responsible, with a fiduciary duty, for the success of the organization. This means that if the organization gets sued, the Board Members (if they don’t have Errors & Omissions insurance) could be held personally liable for the debts of the organization.

Approve the Budget

Determining the budget of the organization is one of the most important jobs the Board has. In addition to creating the budget (usually based on the previous year’s budget, expected revenues and other data), the Board must also ensure the organization is staying within the budget.

Each meeting, you will review the financial statements in order to discuss where you are above or below the budget. This will help avoid a sudden cash crisis.

Participate in Fundraising

Board Members should be participating in fundraising to help the organization succeed. This can include helping to run fundraising events, providing access to a network of contacts (especially if you are a mid-level or senior-level member of your industry) or otherwise helping the organization to bring in some revenue.

Perform Effective Governance

Governance is the “command and control” or “checks and balances” part of the Board Member role. Good governance includes both the role of the Board of Directors and the organization at large. You’ll perform good governance by making sure the strategic plan is up to date and being reviewed regularly, approving and discussing the budget, and also by creating and enforcing policies and procedures.

Policies and procedures are the rules that set the conduct of both the Board Members themselves, but also of the volunteers, staff, and others in the organization. Examples of policies and procedures that are important for good governance include:

Meeting Attendance. Your Board Members should be required to regularly attend meetings. If they are unable to meet this requirement, they should resign from the Board in order to allow that spot to be filled by someone who is more available to commit to the Board’s requirements.

Term Limits. Most Boards have one or two-year terms, which ensures regular turnover and assessment of who is an effective and high-performer on the Board and who is not. This helps keep the organization fresh and energetic, while also benefiting from the experience and expertise of long-term Board Members.

  • Budget Approval. There should be a formal policy about how often and when the budget is approved. It should be approved at least on a yearly basis, and then reviewed more regularly than that to ensure that the organization is staying within their financial means.
  • Conflict of Interest. A Conflict of Interest policy helps ensure that Board Members do not let their personal interests interfere with those of the organization. For example, if a nonprofit is seeking a facilities management contract, a Board Member who owns a facilities management company should not vote on (or potentially even be present during the session) where the picking of a company is decided on.
  • Auditing. It’s important that organizations receive regular audits, and a policy may be written to ensure the organization seeks regular audits based on the size of the organization. Larger organizations may be required to receive an audit yearly, while smaller organizations may want to get one in order to ensure they are eligible to apply for grants and other forms of fundraising.
  • Board Evaluation. A self-assessment of the Board can help Board Members identify their strengths and weaknesses so they can make changes in the future. Every year or two may be a good frequency for this activity.
  • Board Orientation. Like a Board Evaluation policy, a Board Orientation policy should set out the procedure for orienting new Board Members to the organization so that they can hit the ground running.
  • Review and Writing of Bylaws. Bylaws are the policies and procedures that govern the organization, including things like what are the names, terms, and appointment process for the Officers (President, Vice President, Secretary and Treasurer) and other elements. These bylaws should be reviewed regularly.
  • Personal Giving. Finally, some organizations choose to have a Personal Giving policy that expresses the organization’s wish that nonprofit Board Members participate in fundraising for the organization or make their own annual gift to the organization.

Conclusion

These are a few of the many elements that go into an effective Board Member. Are there elements you think I’ve missed? Do you weigh technical skills or interpersonal skills more strongly in an effective Board Member? Let me know in the comments.

Cite this article as: MacDonald, D.K., (2019), "How to be an Effective Board Member," retrieved on May 24, 2019 from http://dustinkmacdonald.com/effective-board-member/.
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Understanding IRS Form 990

Introduction

Nonprofit organizations in the US are required to file Form 990 with the Internal Revenue Service (IRS). This is a tax document that the IRS requires, that can help you understand more about a nonprofit that you are evaluating or are interested in working with. If you don’t have accounting training, or haven’t served on a nonprofit Board of Directors, you may be unfamiliar with this vital document.

This document is not intended to be professional accounting advice or replace the services of a qualified accountant. Always seek professional assistance to make sure you fill out this form correctly.

Finding The 990

There are a number of resources you can use to find an organization’s Form 990. Many nonprofits post their 990 publicly. For example, the Red Cross For example, the Red Cross includes a comprehensive list of financial statements on its website, including their Annual Report, their Form 990 and their Audited Financial Statements.

Additionally, there are several organizations that maintain databases of Form 990s:

Finally, the IRS includes a Tax Exempt Organization Search which can help you find an organization’s EIN (). This number can be searched to find the Form 990 and other documents.

Sections of the 990

The IRS provides blank copies of the Form 990, but it’s generally easier to look at a completed one to get a sense of the different type of information. There are 12 sections (called Parts) and 15 sections (lettered A through O) that can make up the Form 990.

Part I through XII

  • Part I. Summary
  • Part II. Signature Block
  • Part III. Statement of Program Service Accomplishments
  • Part IV. Checklist of Required Schedules
  • Part V. Statements Regarding Other IRS Filings and Tax Compliance
  • Part VI. Governance, Management, and Disclosure
  • Part VII. Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and
    Independent Contractors
  • Part VIII. Statement of Revenue.
  • Part IX. Statement of Functional Expenses
  • Part X. Balance Sheet
  • Part XI. Reconciliation of Net Assets
  • Part XII. Financial Statements and Reporting

Schedule A through O

These links take you to the IRS information on this schedule.

Form 990, United Way of Central Iowa

Let’s review an actual Form 990. I picked the United Way of Central Iowa, an organization with about 30 million in assets.

Introduction

From the very top of the document, we can see the organization’s name, address and phone number along with the Employer Identification Number (EIN). We see the first date the corporation was incorporated (1918!), the website, and the specific section of the Tax Code that the organization gets its tax-exempt status (501c(3)).

Part I, Summary

In the summary section we see the mission of the organization, “Improve lives by uniting the caring power of community.” We see the organization brought in just under $28 million in 2017, $27,528,063 was from donations, while the organization generated $391,675 in program service revenue, and $72,916 in investment income.

From that amount, the United Way paid out $22 million in grants to other organizations. Line 18 shows the total expenses of the organization, and Line 19 indicates that the organization had a loss of revenue less expenses of $651,210. Even though the organization had less revenue come in than they had expenses go out, the Net Assets or Fund Balances section shows the organization actually finished the year with more money than they had before: they started the year with 33,322,892 and ended the year with $33,624,994 – an increase of $302,102. This difference is made up of line 21 (Total Liabilities) which went down by $76,977 – meaning the organization owes less money, and an increase in assets from $36,596,559 to 36,821,684 (an increase of $225,125.)

$225,125 + 76,977 = 302,102. For this reason, it is unwise to simply look at the excess of revenue over expenses, as collecting a debt or increasing an asset (such as a Temporarily Restricted Contribution becoming “current” or usable) will not necessarily show up as revenue.

Part II, Signature Block

The Signature Block includes a section for the Treasurer or other Officer to indicate that they have reviewed the Form 990 and other documents – and also a space to indicate if there is an Accountant or other paid preparer who may be consulted in lieu of the Treasurer.

Part III. Statement of Program Service Accomplishments

Part III includes a short description of the organization’s mission, followed by an explanation of the 3 programs with the highest amount of expenses, and summarizing total program expenses.  The United Way of Central Iowa has chosen to include their 3 focus areas of Education, Health and Income as their 3 largest programs along with Community Impact Services (which include the 211 helpline and other programs run directly by the United Way.)

Part IV. Checklist of Required Schedules

Part IV includes a checklist. For each box that is checked, you will need to complete the associated Schedules of the Form 990. For example, for the United Way of Central Iowa, they must complete:

  • Schedule A
  • Schedule B
  • Schedule C Part II
  • Schedule D Part IV, V, X, IX, XI, XII
  • Schedule G Part III
  • Schedule I Part I, 2, and 3
  • Schedule J
  • Schedule M
  • Schedule O

Different organizations will have different requirements.

Part V. Statements Regarding Other IRS Filings and Tax Compliance

In Part V, you indicate information that helps the IRS understand your other IRS filings. For example, line 1a notes that they filed 60 forms in total for their tax compliance, while 2a indicates the organization had 84 employees. The other sections include information on income, other financial accounts (like those in foreign countries) and different types of contributions they’ve received.

Part VI. Governance, Management, and Disclosure

In Part VI, you provide information on the size of your Board of Directors (31), and questions about the organization’s finances, governing policies like Conflict of Interest or Whistleblower policies and where financial statements (like the 990) are made available.

Part VII. Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and
Independent Contractors

Part VII describes the Board of Directors, and the compensation information for key employees. Most nonprofit Boards of Directors are uncompensated, but may receive honorariums for travel or other expenses. We can see the Chief Operating Officer Sarah Roy receives $181,000 a year in salary, while Elizabeth Buck makes $158,000 a year.

Highly paid independent contractors are also listed here, if they made more than $100,000 in a year.

Part VIII. Statement of Revenue

The Statement of Revenue indicates in more detail the sources of revenue in the organization. We can see that government grants totalling $178,535 were given to the organization, while other donations included $27,349,528 and non-cash contributions (such as advertising) added up to $334,395. Other forms of revenue (beyond donations) are provided.

Part IX. Statement of Functional Expenses

The Statement of Functional Expenses includes salaries paid to employees, employee benefits, grants (the core of the United Way’s model), expenses used to provide services, and other standard line items like Legal fees, Accounting , Office Expenses and Information Technology.

Part X. Balance Sheet

The Balance Sheet is a statement that includes the amount of assets the organization holds (including cash, savings, Accounts Receivable – people who owe you), and other assets. Liabilities including Accounts Payable are the debts that the organization owes.

At the bottom of this section is Temporarily Restricted Net Assets and Permanently Restricted Net Assets. Temporarily restricted net assets are those that are restricted for a period of time. For example, you may receive a $100,000 donation with the stipulation that it not be spent for 10 years. Once the 10 years are up, it will return to general net assets. You can invest Temporarily Restricted Net Assets and spend the interest generated, but not the capital.

Permanently Restricted Net Assets are those that can never be spent. This means that even if your organization ceases to function, the Secretary of State (or similar official) of your State, will give that money to another organization serving a similar purpose.

Part XI. Reconciliation of Net Assets

The Reconciliation of Net Assets shows the total revenue and expenses along with the changes in the assets detailed above. This is how we wind up at our final total of assets, to know whether the organization is worth more (made more money) during the year than they lost – because the asset values are higher than they were at the beginning.

Part XII. Financial Statements and Reporting

Financial Statements and Reporting tells you whether the organization uses Cash Accounting or Accrual Accounting. In cash accounting, you take into account current cash balances on an immediate basis. If you spend $50 your assets go down, if you receive $100 your assets go up. Accrual accounting takes into account that you may receive revenue today that you can’t spend until next month, and you may receive bills today that are not due until next month – and takes those things into account.

Accrual accounting is the most common form of accounting in the business world and the nonprofit world, but small organizations will likely use Cash Accounting because it is simpler.

Schedules

The different Schedules included on the Form 990 are linked to with instructions at the top of the page. These instructions will help you better understand the information required for each one.

Professional Development

There are a variety of professional development opportunities for those who want to learn more about nonprofit accounting.

Conclusion

The Form 990 is an important form used in nonprofit tax compliance, but also has the opportunity to provide you valuable information on a nonprofit that you are considering working for or are evaluating. I hope this has been a helpful post. Please let me know if you have any questions.

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Develop a Fee-for-Service Program to Diversify Revenue

Introduction

Does your organization have a fee-for-service program? I recently had the opportunity to sit down with a local United Way chapter that was looking to hire a new executive. Some of the things that we discussed included:

  • A review of their financial statements
  • Importance of development of a planned giving/endowment program
  • Improving the organization’s messaging

Additionally – and the purpose of this post – I made sure to discuss the importance of fee-for-service programs in an effort to diversify fundraising. Since its founding, the United Way’s primary fundraising strategy has been workplace campaigns, but in the era of direct donations online right to funded agencies, donations from youth and other tech-savvy individuals to the United Way have been falling.

This is where fee-for-service programs can come in handy. These training sessions and services provide value to the nonprofits while also diversifying the United Way’s fundraising.

Types of Training

As the Director of Online Support at Distress Centre Durham, I led training sessions in topics including:

  • Creating an Online Text and Chat Program
  • Providing Crisis Intervention via Text and Chat
  • DCIB/CPR Suicide Risk Assessment
  • Using the Spousal Assault Risk Assessment
  • Youth Suicide Prevention

These sessions ranged in length from 45 minute “Lunch and Learns” up to full day training sessions designed to Train the Trainer who would go back to their own organization and train volunteers or other staff. Your organization will obviously tailor the types of training that you provide depending on your service.

For example, an organization that works with women fleeing intimate partner violence might offer training sessions like:

  • Working with Abused Women
  • Running a Shelter
  • Providing Intimate Partner/Domestic Violence (IPV/DV) Services via the Phone
  • Intimate Partner Violence Assessment

These trainings may be prepared for other service providers, for individuals in the community like therapists and counsellors, or even over the internet via e-learning. E-learning is an under-utilized form of training in the nonprofit world, and once the course is developed the majority of your organization’s time is spent updating and revising the material yearly.

Board Training

If your organization is a cornerstone in the community like the United Way is, developing a comprehensive Board of Directors Training can be a lucrative revenue source. Even small communities have several organizations, while larger ones will have dozens of Boards. Board Training improves those organization’s capacity to govern their organization while generating revenue for your organization. As Boards naturally have turnover, this can represent a recurring revenue source.

Providing Services to Other Nonprofits

Services are also an option for a nonprofit to expand. For example, I’ve prepared Social Return on Investment (SROI) Reports that demonstrate the value your organization gives over and above the mere dollar donated can be significant in demonstrating your value proposition. A dollar donated to the United Way or another organization that is at the center of the nonprofit ecosystem can go much further than if it is donated directly to the partner agencies.

Here is a one slide from the SROI Analysis that I conducted for Distress Centre Durham’s helpline program:

Other opportunities abound depending on your specific skills and training.

For example, I directed the Evaluation Program for our Basic Helpline Training at Distress Centre Durham. This involved pre-and-post knowledge and attitude surveys that were examined. I built automated tools in Excel to sharply reduce the labor required (so that any student or intern could plug in the numbers and it would spit out the evaluation.) When certain questions were not being answered correctly, the training was adjusted.

You can help organizations develop these kind of tools and to build their own evaluation programs to give them the data that they need.

Train-the-Trainer

Some organizations specifically provide T4T (Train the Trainer) programs. Completing these programs entitle you to lead the training programs. Leaning on my work in suicide prevention, there are several options that you can use to bring Suicide Awareness or Assessment/Intervention Training to your community.

The QPR Institute provides QPR Suicide Gatekeeper Instructor Training for $500. QPR Certified Instructors (who can take an e-learning course in order to get certified) may charge $20 per participant for 2 hours of suicide awareness training.

A similar program is offered by LivingWorks and called safeTALK. safeTALK costs $1000 for the 1-day training program, and the instructors may charge $50-100 per participant for the 3-hour training program.

Finally, Applied Suicide Intervention Skills Training (ASIST) is a 2-day suicide risk assessment and intervention program. The LivingWorks ASIST Instructor program costs $2500 for the 5 days of training, and participants are charged $100-300.

Case Study: The United Way

The United Way has opportunities to reinvent themselves as a critical source of support – and not just financially – for all nonprofits in their community. Going beyond the traditional workplace campaign and volunteer resource center, United Way can become essential. For example, a nonprofit decides they need to improve their fundraising and strategic direction and they contact their local United Way.

The United Way provides them with free Board of Directors e-learning, which helps the Directors learn the importance of a strong outcome and evaluation program. They decide to pay for an SROI Analysis to be conducted on their most valuable program; that evaluation indicates that for every $1 invested in their program, $4 is generated in social value to the community.

Armed with that knowledge, they approach a new funder and get funding for a youth mentoring program. In order to make sure that all their Mentors are equipped the best they can, the nonprofit notes in their application that all staff and volunteers working with youth will receive QPR Suicide Awareness Training.

The United Way generates revenue from the SROI Analysis and the QPR Training, while the nonprofit improves their fundraising by better telling their story. As the Board of Directors naturally changes in composition, those individuals may take their knowledge of Board training to their new organization – increasing your reach.

Conclusion

Does your nonprofit generate revenue with fee-for-service programs? Would you like to? Share below. As well, if you’re looking for information on outcomes or evaluations feel free to contact me.

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Mobile Giving for Your Crisis Line

Introduction

Hi all, after a summer hiatus, I’m back! Mobile giving is all-the-rage these days, especially after natural disasters. We’ve all seen advertisements that say “Text HAITI to 90999” in order to donate $5 to the Red Cross. (That’s a real number.) You might be wondering how you can leverage this concept for your own crisis line or organization.

How Mobile Giving Works

Mobile giving, or donate-by-phone is an easier way to engage your donors. They simply text an SMS short-code from their cell phones, and a pre-determined amount of money is added to their bill. It’s a snap for you and individuals who, in order to donate previously, would have had to sign up with organizations like CanadaHelps, PayPal, or deal with the administrative burden of trying to give you cash or cheques directly.

Advantages

As already stated, mobile giving is easy. Most donors have SMS-capable cell phones and can take the 10 seconds to fire off a text message. In Canada, a mobile giving campaign can be set up that, after the payment of flat service fees, runs automatically. 100% of the money raised is given to your organization.

Mobile giving fundraising messaging is effortless. It can be distributed across social media like Facebook or Twitter, sent in a fundraising letter, or even included on a digital sign. This makes it ideal for almost any time of year, and any type of fundraising.

Disadvantages

There are some disadvantages to mobile giving: namely, if your intended audience does not use a cell phone or does not use SMS texting, they may be more apprehensive. This means that organizations that traditionally solicit funds from an older adult or elderly clientele may prefer fundraising letters or other tangible ways of donating.

Secondly, you have less information provided to you by your fundraising clients. For example, in the simplest mobile giving campaign, you have only the individual’s phone number. This means that giving tax receipts or following up on fundraising is more difficult.

Implementing Mobile Giving At Your Crisis Line

This guide is based on my experience implementing mobile giving at Distress Centre Durham. We elected to run a short, 3-month campaign starting on World Suicide Prevention Day (September 9, 2017). In Canada, all Mobile Giving is managed by the Mobile Giving Foundation (MGF) of Canada, a project of the Canadian Wireless Telecommunications Association (CWTA).

The Mobile Giving Foundation has agreements with each of the major telecoms in Canada so that 100% of the money donated is given to the charities.

After going to the Mobile Giving Foundation website (http://mobilegiving.ca), we navigated to the “For Registered Charities” section of the website. There, we see the MGF Standards of Participation. These requirements which include being a registered charity, being in good standing with the CRA, operating for more than one year, and having a donor privacy policy, are required to ensure that the MGF only runs campaigns with reputable charities.

There is a short questionnaire in order to receive approval by the MGF to submit a more comprehensive campaign application. After submitting the campaign application, we were emailed the application.

In addition to the organizational information, we also had a few choices to make:

  • Donation amount
  • Which short-code
  • Length of campaign
  • Use of widgets
  • Use of MGF built-in technology or an ASP

These will be explored below.

Donation Amount

We had the choice of $5, $10, or $25 per text. We decided to go with $10 as that is a small enough that most individuals would be willing to make that donation without much thought, but large enough that a short campaign would still be effective. You can run multiple campaigns with different dollar amounts.

For example, you could have donors text SPRITE 5 to donate $5 or SPRITE 10 to have them donate $10. This is achieved through the use of keywords and sub-keywords.

Choosing a Short-Code

We had the choice of 5 short-codes to choose from. We decided to go with 41010, each of the short-codes is a similar 5 digit number (e.g. 21212 or 101010). In a campaign like this, your short-code should be memorable and not easily confused with another organization, if there are others fundraising in the same geographical area.

Choosing a Campaign Length

The MGF allows you to choose a 3-month, 6-month, or 12-month campaign. The service fees (which includes a $350 application fee and then small additional monthly fees for each additional keyword/sub-keyword or widget you use) will be based on the length of your campaign. Many of the add-ons are free with a 12-month campaign which makes this very economical.

Using Widgets

Widgets are follow-ups that you may add to your campaign after the individual texts in to donate. For instance, you might text them back with a Thank You that directs them to a contact page, or to another page on your website. Another widget allows your donors to opt-in to receiving up to 3 follow-up messages.

For the Distress Centre Durham campaign we elected not to use any widgets, preferring to keep the campaign simple.

Using MGF Technology or an Application Service Provider (ASP)

An ASP or Application Service Provider is an organization that can help you manage your campaign. They provide additional tools that allow you to track or manage your campaign more easily, for a fee. Distress Centre Durham elected not to use any ASP when running our first campaign as we wanted to see what was possible with the MGF technology. It turns out their built-in features are more than enough for our needs.

Choosing Keywords and Sub Keywords

A Keyword is the word that an organization texts to donate to you. For example, someone could text SPRITE to 21212 to donate $5 to your fundraising campaign. You might decide that if they text PEPSI to 21212 that they will donate $10, and you could establish these as two separate keywords for your 12-month campaign.

A sub keyword is an additional word that is added onto your keyword in order for you to more granularly manage fundraising. For example, while Distress Centre Durham decided on “SUPPORT” as our keyword, we added the sub keyword DURHAM for fundraising we ran within the Region. Since we have other Online Text and Chat (ONTX) community partners participating, they each have their own sub keyword for their area.

Cost of Campaign

The cost of a mobile campaign is minimal. After your questionnaire is approved, the MGF sends you a price list. Most of the add-ons are free when running a 12-month campaign, with the largest fee simply being the $350 application fee. This makes mobile giving an ideal fundraising campaign for even a very small charity.

I would recommend for a 12 month campaign using one keyword, that you set aside $1,000 for the application fee, and other administrative costs (including getting information like audited financial statements or others available) and paying for advertising to promote your campaign.

Conclusion

Did I miss anything? Do you have any other questions? Please let me know. If you’d like to support Canada’s Online Text and Chat (ONTX) Program or Distress Centre Durham you may text SUPPORT DURHAM to 41010.

Cite this article as: MacDonald, D.K., (2017), "Mobile Giving for Your Crisis Line," retrieved on May 24, 2019 from http://dustinkmacdonald.com/mobile-giving-crisis-line/.
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How to Perform Social Return on Investment

Introduction

Social Return on Investment (SROI) is a way of measuring the impact of projects or programs that is especially suited to the work that non-profits do. To see the difference, let’s move from a for-profit to a non-profit mindset. A for-profit’s return on investment (ROI) focuses on money only: for instance, $25,000 investment in supply chain management results in an additional $75,000 in revenue; this means the ROI is 3:1, or $50,000.

Because non-profits don’t often generate revenue, this measure is less useful. Instead, non-profits often track outcomes like the number of clients served. At the Distress Centre, we receive over 7500 calls a year and save approximately 35 lives through emergency intervention. These numbers are useful, but they don’t translate well into a per-dollar figure. For instance, on a budget of $260,000 (a rough estimate), we pay $35 per call, or $7,429 per emergency intervention.

Is $35 per call reasonable? It may appear to be too expensive. What about when we divert an individual from hospital, or prevent a suicide attempt in progress? We have no way to track the monetary benefits of these, until we use SROI.

How SROI Works

SROI works by assigning a monetary value to activities that until now could not be monetized. Some of these are easier to calculate because real dollars are involved (for instance, when you de-escalate someone and they don’t need to go to the hospital, you’ve saved the cost of the police/ambulance and the emergency room service), while some are more difficult (the increased quality of life that one gets from a conversation on a crisis line.)

Value is assigned by a variety of methods that try best to approximate the costs involved. These items that are used to approximate value are called “proxies”, and lists of proxies are available on SROI-related websites.

Performing SROI

SROI has six major steps:

  1. Establish the scope and identify stakeholders
  2. Mapping outcomes
  3. Demonstrating outcomes and giving them a value
  4. Establishing impact
  5. Calculating the SROI
  6. Reporting, using and embedding

These are reviewed in more detail below. The data (charts, financial proxies, explanations, etc.) is reproduced from an unpublished SROI analysis conducted by myself, of the ONTX Chat and Text Program at Distress Centre Durham.

Establish the Scope and Identify Stakeholders

Establishing the scope for an SROI analysis involves identifying the purpose, audience and focus of the analysis. 

The audience for this analysis includes the four pilot Centres, our funding partners (Trillium, United Way and Greenshield Canada) and other services interested in producing a similar analysis of their service. The focus will be on one year of outcomes data collected in the operation of the ONTX project.

Stakeholders, in the SROI methodology, are individuals who experience gains as a result of the service provided. These can be direct gains (such as the reduction in distress experienced by a visitor to the crisis chat service or the savings experienced by not having to use EMS resources transporting a suicidal person to hospital) or indirect gains (such as the career benefits experienced by a responder who delivers the service or the of improved relationships with friends and family visitors may experience.)

In order for stakeholders to be included in the analysis, they must be material – that is, they must experience a benefit as a result of the service.

Mapping Outcomes / The Theory of Change

A theory of change, also known as a logic model, is a cornerstone of the SROI methodology that describes how inputs (the funds and people used in direct service delivery) result in changes (outcomes) that can be quantified to value the service. An example logic model for the ONTX Chat and Text Program is listed below:

Stakeholder Intermediate Outcomes Final Outcome
Visitors
  • Decreased harmful intentions
  • Immediate crisis diffused
  • Decreased suicidal intent
Reduced likelihood of visitor attempting suicide
  • Improved self-esteem, self-control or confidence
  • Less distressed or anxious
  • Options explored
  • Action plan explored
Improved visitor coping skills
  • Decreased isolation and loneliness
  • Improved connectedness
  • Knowing a responder is there for them
Enhanced visitor belonging
Police / EMS
  • Less likely to require ambulance or police service because of a high-risk suicidal caller
Reduced use of 911
  • Fewer responses to suicide deaths because of Responder intervention
Reduced cost to 911/EMS
Medical System
  • Less instances of hospital admission because of self-harm/suicide attempts
Reduced use of public health system

Demonstrating Outcomes and Giving Them a Value

Each of the final outcomes from the chart above needs to be operationalized, which involves identifying concrete elements to suggest an outcome has or will occur. This allows an assignment of financial value to those outcomes in determining the SROI.

Each of the above outcomes requires a financial proxy, or a method of quantifying its value. Some financial proxies are simple unit costs, like the cost of deploying police and an ambulance to respond to a suicidal crisis, while others are more difficult to quantify.

In consultation with stakeholders, a review of the SROI literature (including with other crisis chat services), the following financial proxies were decided upon:

Final Outcome Financial Proxy Calculation (all figures in dollars unless noted) Value per Instance
Reduced Likelihood of Visitors Attempting Suicide One month of life, adjusted with the disability weight assigned to Suicide and Self Harm (Value of a Statistical Life Year (VSLY) / 12 months) x 0.64 weighting $6,900.49
Improved Visitors Coping Skills Cost of two visits to a family doctor/general practitioner 40 per visit x 2 $80
Enhanced Visitor Belonging One week of leisure for the median Canadian income 3922 (yearly leisure expenses) / 52 $75.42
Reduced Cost of 911/EMS Cost of ambulance response for a suicide attempt 600 $600
Reduced Cost of Police Response to Suicide Death Unit cost of two police officers and two paramedics responding for total of 5 hours at median wage 36.53 x 2 x 2 (Police)

25.81 x 2 x 1 (Paramedic)

$249.36
Reduced Use of Public Health System Cost of hospitalization for suicide attempt minus the average cost of an ED visit (998 x 7.74) – 267 – 249.36 $7,208.16

Establishing Impact

The SROI methodology involves totaling the number of outcomes (now quantified as dollar values) against the total cost of inputs required to operate the service. Inputs can include direct service, such as employees, technology costs, advertising and so on.

Because three of the four Centres did not receive funding to hire an independent staff person, a value of 25% on a salary of $40,000 was used. This provides an estimation of the dollar value.

Input Description Value ($)
Distress Centre Durham Staff (prorated to 8 mos.) $15,000 x 0.8333 = $12,500
ONTX Grant (pro-rated to 6 mos.) $257,700 / 4 = $64,425
Community Torchlight Staff (est.) $10,000
Distress Centre Toronto Staff (est.) $10,000
Spectra Helpline (est.) $10,000
Total Inputs $106,925

Number and Dollar Value of Final Outcomes

Based on one year of data (June 29 2015 to June 29 2016), we can see the following outcomes. Only the items directly from the call reports are reported below for this sample analysis. The other intermediate outcomes (such as Less likely to require ambulance or police service because of a high-risk suicidal caller) have been operationalized in the report but are not listed here for space and complexity reasons.

Reduced Likelihood of Visitor Attempting Suicide ($6900.49 x 1,190)

Decreased harmful intentions – 522
Immediate crisis diffused – 301
Decreased suicidal intent – 367

Improved Visitor Coping Skills ($80 x 3,794)

Improved self-esteem, self-control or confidence – 796
Less distressed or anxious – 1831
Action plan explored – 1167

Enhanced Visitor Belonging ($75.42 x 1473)

Decreased isolation and loneliness – 1473

Total

$6900.49 x 1,190
$80 x 3,794
$75.42 x 1473
= $8,626,196.76

Deadweight and Attribution

Next, we have to estimate deadweight and attribution. Deadweight is the percentage of the outcome that would have happened regardless of our involvement. For instance, if a visitor told us that if they couldn’t reach our service, they knew five others they could, it is unlikely that much of the outcome would be lost if they could not access the ONTX pilot.

We have decided to calculate deadweight as a 15% reduction in overall value for every resource a visitor could identify as an alternative to our service. Since the average was 2, we assume 30% in deadweight.

Attribution is the amount of the benefit that is attributed to other persons. Because our service is often the primary intervention we have limited attribution, so for this analysis we will not note any attribution.

This takes our benefit value of $8,626,196,76 and reduces it to $6,038,337.732.

Finishing our Calculation

We take our total benefits generated, divide them by the total cost of the input to find the SROI ratio.

$6,038,337.732 Total Benefit / $106,925 Total Inputs = SROI Ratio of $56.47

For every one dollar invested in the ONTX pilot there is a social benefit of $56.47.

Sensitivity Analysis

Sensitivity analysis is a way of repeating calculations to take into account higher or lower than expected figures. See the table below:

Final Outcome Low Financial Proxy Original Financial Proxy High Financial Proxy Low Value Moderate Value (used for analysis) High Value
Reduced Likelihood of Visitors Attempting Suicide One week of life, adjusted with the disability weight assigned to Suicide and Self Harm One month of life, adjusted with the disability weight assigned to Suicide and Self Harm Two months of life, adjusted with the disability weight assigned to Suicide and Self Harm 1,592.42 6,900.49 13,800.98
Improved Visitors Coping Skills Cost of one visits to a family doctor/general practitioner Cost of two visits to a family doctor/general practitioner Cost of four visits to a family doctor/general practitioner 40 80 160
Enhanced Visitor Belonging One day of leisure for the median Canadian income One week of leisure for the median Canadian income One month of leisure for the median Canadian income 10.75 75.42 301.68
Reduced Cost of 911/EMS N/A Cost of ambulance response for a suicide attempt N/A 600 600 600
Reduced Cost of Police Response to Suicide Death Unit cost of two police officers and two paramedics responding for total of 2 hours at median wage Unit cost of two police officers and two paramedics responding for total of 5 hours at median wage Unit cost of two police officers and two paramedics responding for total of 7 hours at median wage 99.74 249.36 349.10
Reduced Use of Public Health System Cost of hospitalization for 3 days minus the average cost of an ED visit Cost of hospitalization for suicide attempt minus the average cost of an ED visit Cost of hospitalization for 12 days minus the average cost of an ED visit 2,477.64 7,208.16 11,339.64

Based on the low and high values specified we have benefits as follows. The reason we multiply by 0.7 is our deadweight, estimated earlier.

Low
1,894,978.8 + 3200 + 15834.75 = 1,914,013.55 x 0.70 = 1,339,809.485

High
16,423,166.2 + 607,040 + 444,374.64 = 17,474,580.84 x 0.70 = 12,232,206.588

Returning to our original formula:

  • Low $1,339,809.485 Total Benefit / $106,925 Total Inputs = SROI Ratio of $12.53
  • Moderate (already calculated) $6,038,337.732 / $106,925 Total Inputs = SROI Ratio of $56.47
  • High $12,232,206.588 Total Benefit / $106,925 Total Inputs = SROI Ratio of $114.40

Therefore our SROI analysis ranges from $12.53 – 114.40. Given this wide range, it may be safer to use a value of +/- 15% of our middle value, or to explore more carefully the value of the Final Outcome Reduced Likelihood of Visitors Attempting Suicide (which is currently calculated in terms of months of life, adjusted with the disability weight assigned to Suicide and Self Harm.)

Cite this article as: MacDonald, D.K., (2016), "How to Perform Social Return on Investment," retrieved on May 24, 2019 from http://dustinkmacdonald.com/perform-social-return-investment/.
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