Interns are a Win/Win

Last week, I shared a few insights and resources that we have gathered over the past nine months as we have been encouraging nonprofits to consider whether they can provide, and benefit from, internship opportunities. Coincidentally, one of our friends, Mike Smith, an attorney who works with nonprofits was on the same track and shared some research he has done around that prickly issue of “Do we have to pay interns?”.  See last week’s article at: http://charitableadvisors.blogspot.com/  Here are Mike’s insights:

Bryan - I saw your blog post on summer interns.  Coincidentally, I’ve been working on a couple of my own blog entries– one for businesses and one for nonprofits – dealing with the question of payment of interns. 

For nonprofits, there are three categories of interns:

·         Employees, who have to be paid minimum wage and overtime compensation.

·         Trainees, a narrow category.  Trainees cannot be paid.

·         Volunteers, a much broader category.  Volunteers can be paid no more than a “nominal” stipend or fee, along with reimbursement of expenses and some benefits.

Only the first two categories are available to for-profit businesses.

These entries have some guidance (useful, I hope!) on the requirements for interns to qualify as either trainees or volunteers.

http://www.indianabusinesslawblog.com/2011/03/business-unpaid-interns.html

http://www.indianabusinesslawblog.com/2011/03/nonprofit-unpaid-interns-1.html

Michael Ray Smith

www.MichaelSmithLaw.com

It's Summer Intern Time!

While nonprofits who regularly use interns may already have their slots filled for the summer, many nonprofits are just beginning to think about the possibilities. Charitable Advisors would love to see more nonprofits use interns so we wanted to share what we learned from a short survey last summer and a seminar we co-hosted last fall with United Way and Indiana INTERnet. Many local colleges and universities will have Spring break in the next few weeks so you want to be ready to reach these students when they return.

Common Questions about Internships

• What's the difference between an Internship and a Summer Job? - An internship is intended as a learning opportunity for the student, in addition to providing a contributing employee for the nonprofit. Positions where the primary responsibility is receptionist, data entry or file clerk, for example, provide little opportunity for learning. Camp and Youth Counselor roles are obviously summer jobs.  
• Do we have to pay interns? - we have been told that 501c3 nonprofits are not obligated to pay interns. Still, most of these students have living or school expenses and an unpaid internship means they must also find a paying job. A third of the respondents to our employer survey thought that paid internships attracted stronger candidates. The Indiana InternNet report showed that $8-10/hr was pretty typical for nonprofits who paid by the hour. Stipends seems to range from a a few hundred dollars a month to a $1000 or more. Most internships seem to be in the 20-30 hour per week range.

Keys to a Successful Internship Opportunity

Last summer I took my first shot, since my big corporation days, at hiring a summer intern and it didn't work out very well - primarily because of me. I have since learned what experts suggest is needed for a good experience on both sides:

• Opportunity to learn - as noted above, data entry is a job not an internship. While every internship will have some elements of routine and clerical tasks, there should still be several on-going opportunities to learn about the sector, the field, or a specific type of work.
• Project-based - the student should be able to point to one or more projects they completed. They take an effort from concept to reality and you don't have to provide direction to them every minute.
• Active and accessible supervision - though you likely won't be your intern's first place of employment, they will need active supervision and encouragement in their work.
• A mentor - a terrific bonus is to have someone besides their immediate supervisor to meet with them several times during their tenure. This could be another department manager or even the CEO.       

Finding an Intern

The mechanics of the process are similar to filling any position - you identify some interested and capable candidates, interview the strongest, and negotiate your terms.

• Do I have to coordinate through the university? - no, but universities can be a terrific resource. You can contact any college or university that your organization has a relationship with. If students will receive college credit, some coordination with a faculty member may be needed. In other cases, the internship is between you and the student directly. When you approach a university internship contact, ask how you would go about finding an intern - don't treat them like a staffing or temp agency who is there to fill your opening.
• What other resources exist for finding an intern? - Two specific resources are:
• Indiana INTERNnet at http://www.indianaintern.net, an on-line clearinghouse where nonprofits, and businesses, can post internship opportunities at no charge and students can post qualifications and apply as well. They added a nonprofit category to their database late last summer. 
• IUPUI Solutions Center - while part of IUPUI, the specific role of the Solution Center is to connect nonprofits and businesses to the university - so they are a great resource for an organization that does not yet have a formal internship effort. They can even help to pay for your intern. Two resources they offer:  
• First steps in hiring an intern from IUPUI. Tips on putting a position description together and more - http://www.iupui.edu/~solctr/internship-assistance/getting-started/
• For some internships, matching financial support through the Community Venture Fund - http://www.iupui.edu/~solctr/internship-assistance/community-venture-fund/ 

8 Rules to Help Nonprofit Leaders Navigate the New Economy

by Rebecca Sive, an advocacy strategist

Again, if you aren't subscribing to the Chronicle of Philanthropy www.Philanthropy.com , you really should be asking your self why. Here is a quick lists to get you thinking (and maybe buying the Feb 10 edition of the Chronicle).

Emerging from the recession and with a generation of social change agents on the verge of retirement, Ms Sive offers some new rules for creating social change, building on the classic community organizing writing of Saul Alinsky:

1) Unless you are willing and able to turn on a dime, find another job

2) Ambiguity creates opportunity

3) Consistency of message is everything

4) Thinking like an entrepreneur is the only fruitful way to proceed - take calculated risks, quickly

5) Get in on the ground floor with young and new types of donors

6) Your board members should be risk takers - By their nature, boards slow things down and try to avoid risk.

7) Staff members should be young and hungry

8) Consensus is not the optimal decision making approach for these times - There isn't always time to get everyone on board and everyone will likely not be in agreement on critical actions.

Tell us what you think, what rules you would add on our blog.

So - Restricted Funds are like, restricted?

I was in yet another conversation with some funders this week as they lamented the shoddy accounting practices that the recession is bringing to light in so many nonprofits and are concerned that board and even staff leaders don't understand what they are ignoring, or even condoning.

Disclaimer - I am not an accountant or attorney, so please take my comments as motivators to ask questions and gain clarity, not as specific financial or legal advice.

The concept of restricted or designated funding - Many board members, accountants, and even staff leaders do not fully understand that in the nonprofit environment, a significant amount of your revenue arrives with specific directions about how and when it will be spent. The organization is required to spend it in that way and often report the results back to the donor or funder. An example would be a foundation that provides a grant for $50,000 for a youth serving organization to conduct a summer camp.

When cash gets tight - If that $50,000 summer camp grant arrives in January, it can be tempting to use the money to pay current bills, but it is the obligation of the organization to ensure the funds are available to hire staff, buy supplies, and rent the camp for the summer.

We have a mission to accomplish - I am surprised by how casual some Executive Directors are about ignoring the concept of restricted or designated funding. While the outside world, including funders, are given the impression that their grant funds are being appropriately managed, in reality, the funds are spent as soon as they come in the door, often on non-program expenses, and that summer camp was likely paid for by the funds from a later grant intended for the next tax prep season. If the next grant doesn't come as expected, the house of cards begin to crumble, and becomes very public when the organization reaches a point where it can't make payroll yet is obligated to still provide months of services it has accepted funds to deliver.

Board member understanding - Sometimes board members are told that borrowing into future program funds is "just the way nonprofits run" and sometimes they are not told at all.

Role of the Finance Committee - The Board Treasurer and Finance Committee really need to take the lead role in stating expectations and understanding where the organization currently stands in this area. If poor practices have been used in the past, acknowledge it, make some changes and start working your way back. If staff is reluctant or evasive about sharing this information, assure them that the intent is to ensure the organization can continue its work, not to find people to blame.

Role of the Auditor - Boards heavily rely on outside auditors to reassure them that everything is "OK". However, I am hearing increasing complaints about audit firms who do not identify issues around restricted funding, other than listing it in the financial statements. It seems you would not have a difficult time finding nonprofits who have spent months ahead in restricted funds who are receiving clean audits.

Role of the Accounting Staff - The accounting staff can be in a tough position on this issue, which is why the board needs to step up and understand it. In some organizations, current bookkeeping or accounting staff do not have professional accounting backgrounds, so they may not have a clear idea of what is appropriate and what is not. In other cases, staff leadership may prohibit them from being candid with the board.

Role of the Accounting Contractor - The Finance Committee needs to ensure that they have a communication channel built with any outsourced bookkeeper or accounting contractor that will allow issues similar to this to be raised. It is part of the "trust and verify" approach that boards need to take.

Wrap-up - If you are board or staff of a nonprofit that needs to make some improvements in this area, please put the focus on the issue and reduce the tendancy to point fingers. In most cases, though the problem is being uncovered on your watch, it has evolved over a period of time and a series of short-term decisons made by a number of people. Funders know this is happening, and may even be aware your organization is doing it before the board is, so include them in the conversation if you see a way they can help.

Bryan