Tuesday, April 15, 2014

Investment Practice: Safety

Dave Voris, Horizon Bank

Following is the third in a four-part series of articles that Dave Voris of Horizon Bank is writing to provide insights on making wise investment decision in this low interest rate environment.

This third article focuses upon the Risk, or Safety, and the Reward relationships of various investment instruments. To discuss Safety, let’s consider two balance sheets: the balance sheet of the Investor; a.k.a. a Not-for-Profit organization, and the balance sheet of the Borrower; a.k.a. the obligor of the debt instrument.

I use these two, side-by-side examples to highlight the investor’s need to understand any default risk potential from the ultimate borrower, or called Safety of the investment within the context of this discussion. As one considers the risk-reward relationship, remember there is no free lunch. Thus, higher rates of return correlate with higher degrees of risk. This is not necessarily bad as long as the board-approved investment policy defines that higher risk as acceptable. If the debt obligor would default and not repay the funds to the Investors; i.e., the Not-for-Profit organizations which are holding investments, could face a loss of principal.

Since few Not-for-Profit finance staff, CEO’s or Board treasurers have the required time to clearly and intimately study the risk of default, they typically either: a) default to some widely discussed, safe, best practices, such as adhering to the $250,000 limit on deposits in any one bank or investing in U. S. Treasury obligations defined as the risk free investment, or b) follow the suggestions of an implicitly trusted advisor to help guide them through the balance of safety vs. rate of return.

Read the two previous posts at:
Article 1: Summary of Practices from the 2013 AFP Liquidity Study
Article 2: The Importance of an Investment Policy

Questions? Contact Dave Voris at 317-608-2085 or another Horizon Bank - Indianapolis advisor at (317) 608-2128 or 117 East Washington Street.

Tuesday, April 8, 2014

Scorecard Shows Nearly Half of Hoosiers in Persistent Financial Insecurity

In February, Anne Guthrie of the Center for Working Families and LISC published a guest blog on the Indiana Community Action Association (INCAA) website exploring some key issues around employment, the way government benefits can create problems for individuals trying to get ahead, and the general financial well-being of Indiana families. Take a few minutes to scan the article.

Just as interesting for me was the way the Center for Economic Development (CFED)has created a scorecard for each state and worked to present a great deal of information in an accessible way. More

Tuesday, April 1, 2014

Make Your Audit Count

Natalie Hopkins, Alerding CPA

Governance, Fraud, Conflicts of Interest and 990 Reviews are among the hot topics that have circled the not–for-profit world the last couple years. Finance committees, tax preparers, and boards of directors can all provide critical information related to these areas and help an Organization achieve the many goals surrounding fiscal responsibility. However, the annual independent audit process can also be a crucial benchmark that organizations use to measure how they stack up on current issues.
The annual audit process should include, but not be limited to, evaluation of the fraud and control risks present in the organization, assessment of policies and procedures to determine compliance with the organization’s stated policies, testing of internal controls, review of credit card expenditures and expense reimbursements for fraudulent or inappropriate charges, and other substantive testing and fraud procedures. In many instances, a complete audit process will evaluate the laundry list of critical matters our profession has highlighted for not-for-profit organizations to consider and will result in recommendations being made to management on notable items. The audit process should further facilitate a smooth Federal and state 990 preparation process as a great deal of information gathered for the audit is also applicable to the Form 990.
Be sure your annual audit process is adding value by keeping you apprised of the ever changing issues related to fiscal responsibility. In turn, you can keep your focus on your mission and serving the cause. To find out more, contact Natalie Hopkins, Audit Manager at Alerding CPA Group, 317 ­-569­-4181 ext. 244, nhopkins@alerdingcpagroup.com or visit our website atwww.alerdingcpagroup.com.

Thursday, March 27, 2014

Nonprofit CEO/ED Thinking about Retirement?

“I WILL Retire Someday – Preparing Yourself and Your Organization” – Available exclusively to nonprofit CEO/EDs within 10 years of retirement, this free session provides an opportunity to think with a group of your peers plus Bryan Orander and John Wheeler, CPA, CFP to explore how you prepare yourself and your organization for your next adventure. April 23, 2014 from 8:30-10:30am at UWCI conference center. FMI or contact Bryan Orander at Bryan@CharitableAdvisors.com or 317-752-7153

Thursday, March 20, 2014

Use Caution when Pursuing "Business" Activities

By: Zachary S. Kester, JD, LLM, CFRM – Charitable Allies

The modern nonprofit sector is vibrant and adaptable, especially after coming off the heels of the largest and longest recession in modern history. Many charities are pursuing opportunities to ensure stability by providing services for a fee and by selling goods. Consultants even hold seminars on developing earned income streams. Most charities, however, do this at some risk, and should be cautious in how they expand and manage business-related activities.

As recently as this month the IRS has denied or revoked the tax exempt status of charities for their activities being too “commercial”.

The IRS relies on the “commerciality doctrine”, a little-known, entirely judge-made doctrine. The commerciality doctrine prohibits a charity from directly engaging in activities in a commercial manner, especially where the activity is conducted in substantially the same manner as by for-profit organizations.

Read the full article.

Charitable Allies (www.charitableallies.org) is your go-to cost-effective provider of legal services to nonprofit organizations from one question, to employment issues, to a complex merger. Contact Zac Kester, Executive Director, at 317-429-1649 or zkester@charitableallies.org with your questions.

Tuesday, March 11, 2014

"...Run More Like a Business?"

Here's a chance with Bryan Orander, Charitable Advisors

I don't usually respond well when I hear people make simplistic statements like "nonprofits should run more like businesses". When I ask for clarity, they discuss setting aggressive goals; executing effective marketing strategies; building a brand; recruiting the best people; and generally operating in an intentional, well-organized manner. So they are saying that a ten person nonprofit should operate like Eli Lilly & Co? From a practical standpoint, my perception would be that most nonprofits are run as well as or better than small businesses of comparable size.

That being said, here is an affordable opportunity for a member of your nonprofit leadership team to join me and a cohort of other nonprofit leaders and managers to reflect on where your organization is headed and what you need to do to improve your impact, financial and staff management, and operations. We are adapting the 10 week FastTrac Growth Ventures curriculum from the Kauffman Foundation for use with nonprofit leaders and organizations. The first class will be approximately 15 executive directors and senior staff of established area nonprofits. In addition to the FastTrac business curriculum we will also talk the key issues that make nonprofits unique with guest speakers fromn the foundation and nonprofit community.

The host organization for this class is Business Ownership Initiative, a local nonprofit partner of the Greater Indianapolis Chamber of Commerce. The cost is only $495 for 10 Friday mornings, beginning on April 18 and running through June. For more information and registration, go here.

Bryan Orander, President of Charitable Advisors and Publisher of the Not-for-Profit News will be the lead facilitator for this session. www.CharitableAdvisors.com. Feel free to contact Bryan at 752-7153 or Bryan@CharitableAdvisors.com or Jackie Troy at BOI jtroy@businessownership.org with questions.

Tuesday, March 4, 2014

Opportunities to Grow and Explore (March/April)

Considering Retirement? – I WILL Retire Someday – Available exclusively to nonprofit CEO/EDs within 10 years of retirement, this free session provides an opportunity to work with Bryan Orander of Charitable Advisors and a group of your peers to explore how you prepare yourself and your organization for your next adventure. April 23, 2014 from 8:30-10:30am at UWCI conference center. More

Taking your Nonprofit and/or Yourself to the Next Level? – FastTrack Growth Venture for Nonprofits – Be part of this pilot effort as Business Ownership Initiative partners with Bryan Orander of Charitable Advisors, as facilitator, for a 10 week training/peer group experience exclusively for the Executive Directors and Senior Managers of established nonprofits. Lots of guest speakers and experts. Friday mornings from April ... through June ... Only $495. More

Early/New Career/Internships? The IUPUI Nonprofit Expo is the perfect time to learn about dozens of area nonprofits and explore possibilities as volunteers, interns, and staff. Students, alumni, and community members are invited to attend. No charge. More