Entrepreneurship & The Not-for-Profit

A Special "Thank You" to Lynne Sessions, Director of Community Relations at The Arc Otsego for presenting "Entrepreneurship and The Not-for-Profit: Creating Relevant and Sustainable Organizations" The presentation drew from Case Studies in Cultural Entrepreneurship: How to Create Relevant and Sustainable Institutions, which Lynne Sessions co-authored with Dr. Gretchen Sullivan Sorin of the Cooperstown Graduate Program, Lynne discussed how five, very different, not-for-profit cultural organizations used entrepreneurial thinking to find opportunity in complex situations and the needs of their surrounding communities to create relevant and sustainable organizations. Their unique journeys provided inspiration and ideas for professionals working in a variety of not-for-profit organizations. The January 22nd program featured the following handout:Presentation  Watch some of the presentation here (videos): Introduction and the Idea Value of Cases Cases and Summary ABOUT THE BOOK: Case Studies in Cultural Entrepreneurship:  How to Create Relevant and Sustainable Institutions This book demonstrates the critical role entrepreneurs and entrepreneurial thinking play in reinventing cultural organizations to make them relevant and sustainable for the twenty-first century and beyond.More info.

Policy & Legislative Update

Impacts on Charitable Donations A WIN: After considerable opposition from a variety of interests, the IRS has withdrawn their proposed rule allowing nonprofits to ask for donor's Social Security numbers (here's our overview from December). Besides the unease of donors with giving this information, nonprofits themselves would've had to invest in secure systems to store this data.   TAKE ACTION! With a similar obligation/cost on nonprofit operations, legislation in New York (A03394) has been reintroduced that would require that nonprofits provide a receipt for donations to determine and disclose how that donation would be allocated internally.  For instance, "administrative expenses"  would have to be differentiated from funds "directly...helping with the...charitable work." This bill would require nonprofits to make a near-immediate internal commitment of donated funds, and maintain an internal accounting system tracking donations of all sizes.The publicly available Federal 990 tax return already provides a pretty clear picture of internal resource allocations. For these, and a variety of other reasons, we encourage NYCON members to contact your representatives and/or bill co-sponsors to share their perspective on the merits of this legislation. Ongoing $15 Minimum Wage Discussions On January 7th, 2016, the NY Senate Standing Committee on Labor invited a diverse cross-section of employers and economists to testify on their view of Governor Cuomo's proposal for a state-wide $15 wage by 2021. To be sure, there was some divergence in the viewpoints on feasibility and net impacts.Only 3 of the official 16 members of the Committee attended. An archived video of the (4.5 hour) hearing is available here NYCON prepared a brief synopsis of the comments offered by the respective parties. Click to Read. Other news Minimum Wage Updates: There are at least a dozen bills pending in the Legislature with bearing on NY's minimum wage. They range from simply tying the existing wage to inflation, to allowing counties to recommend a Living Wage. As NYCON has already said, it will be difficult for NY nonprofits to cope with the proposed increase, even if NY attempted to substantially offset an increased minimum wage, as most nonprofits are funded without NY State participation.  Now, it appears that the Governor's budget proposal leaves even the State's commitment in doubt. As a general reminder, the minimum wage in NY is $9 in 2016, with increases (for those only subject to NY, not Federal, law) in the overtime exempt salary levels of "Administrative" and "Executive" positions from $34,125 to $35,100. On that overtime exempt issue, the latest update on the proposed US Dept. of Labor regulations increasing the overtime exempt salary level (as long as the 'duties' test is also met)...is a midsummer 2016 publishing...with a 60 day implementation period. Again, most nonprofits in NY have activities that keep them outside of the Federal rules...whereby they are covered by NY only. NYCON will keep you updated on any developments. Ongoing Litigation on NY Executive Order 38 Leaves Ambiguity for Many Nonprofits  For those of you not subject to (or familiar with) NY's EO 38, it requires nonprofits that annually receive funding from New York State (or passed through the State) of over $500,000, when that exceeds 30% of their total annual revenues, to be known as "Covered Providers," with limits on administrative expenses and executive compensation. The best guidance we can give is to act as though the entirety of EO 38 is still in effect. Here is an excellent synopsis (from the law firm of Greenberg Traurig) of the litigation and the aspects challenged.

The Last Bylaws Pitfalls is...

Our staff attorneys have spent more than a year reviewing hundreds of nonprofit bylaws.Here is what they learned about the most common legal pitfalls! Register Today: The New Legal Bylaw Pitfalls Every New York Nonprofit Should Know [Webinar] Click here. Just Announced! Special Discount on our Nonprofit Revitalization Act Remedial Action Planwill be offered to all attendees! The Next (and Last) Bylaw Pitfall (#5) Is: Having Overly Generalized Indemnification & Insurance Policies   The Problem When it comes to potential exposure to personal liability faced by board and staff members affiliated with nonprofits, many organizations fail to clearly and sufficiently stipulate what guarantees and protections they offer. In some cases, unfortunately, organizations don't even secure appropriate insurance necessary to truly honor their promises.  Virtually all nonprofits should, and do, endeavor to indemnify their stakeholders from legal claims arising as a result of their service to the organization. Such decisions, however, merit requisite due diligence.   Indemnification obligations are generally two-fold:   Coverage of expenses that might be incurred in defending a legal action; Payment of any judgments or necessary settlement fees How do nonprofit meet these obligations? For most nonprofits, only with appropriate insurance coverage can they truly honor their indemnification commitments.  In our experience, many nonprofits needlessly expose themselves, and their stakeholders, to liability and potentially disastrous financial obligations by simply adopting brief, catch-all indemnification and insurance clauses in their by-laws.  Carefully consider the following questions: Does the indemnification and insurance clause expressly require the nonprofit to procure insurance coverage appropriate for its organizational needs and does it provide for procedures to assure that such coverage is maintained and can be adjusted as needed as the organization evolves?  Assuming a nonprofit's by-laws obligate the organization to maintain insurance coverage for purposes of indemnification, are the by-laws clear as to those who are actually indemnified?  Are staff expressly indemnified?  What about volunteers?  If so, are the terms of the underlying insurance policies in sync with the by-laws? Should the nonprofit also guarantee corporate funds in order to indemnify a stakeholder if its insurance carrier were to refuse to pay or if actual damages exceeded coverage limits? Remember, insurance coverage has its limitations.  What discretion should a board of directors have, if any, in authorizing the indemnification of a stakeholder who acted in bad-faith or engaged illegal conduct while loosely acting on behalf of the nonprofit?  (An unfortunate example can be found here.)  Actions to Consider Read More about the limitations of insurance, please read the following recent Q&A  from the Nonprofit Risk Management Center. Scroll to the last question for the important question regarding what D&O insurance covers. You may also want to read the following:  Liability and the Board: What Governing Teams Need to Know What Do You Know About D&O Professional Liability and Governance Exposures: A Closer Look   For more information on NYCON's Members Only Directors & Officers Insurance (and to get a "Quick Quote") click here.

NONPROFITS: Governor's Goals Require More Funding

NONPROFITS: GOVERNOR’S GOALS REQUIRE MORE FUNDING, DETAILS

By FRANK G. RUNYEON

  

January 13, 2016- Albany, NY- Governor Andrew Cuomo delivers 2016 State of the State Address and 2016-17 Executive Budget Address to the people of New York State. (Gov. Andrew Cuomo’s Flickr Account)

The plans that Gov. Andrew Cuomo laid out in his State of the State address and budget lack the details and funding to make them a reality, nonprofit leaders told New York Nonprofit Media. Many expressed optimism that the hurdles could be cleared and were generally happy with the governor’s direction, but warned that poor planning and underfunding could derail his well-intentioned initiatives. 

The governor made a series of spirited proposals earlier this month that could profoundly affect the nonprofit community, including a $28 billion increase in funding for housing, $2.1 billion more for education and a renewed pledge to enact a statewide $15 minimum wage. But the governor’s speech left questions for many nonprofit leaders about how those initiatives would meet current needs, fulfill previous pledges and impact the nonprofit community.

Part of the problem is that nonprofits were essentially left out of the governor’s address, said Doug Sauer, CEO of the New York Council of Nonprofits, Inc., which represents those organizations statewide.

Last year’s State of the State included several references to the nonprofit community, including how nonprofits address hunger, affordable housing, employment for minorities and community development. “There were lots of nonprofit themes,” Sauer said. "This year? Virtually ignored."

"When you look at it, it's devoid of much positive for nonprofits, even though his budget might be doing something,” Sauer said. “It was clearly not any kind of point of emphasis. That's a clear shift.”

Minimum Wage

In particular, the governor did not address the thorny issue of how nonprofits could cope with raising the minimum wage to $15 per hour, which Republican senators and nonprofit groups have said could cause nonprofits to suffer disproportionately because they often rely on state funds to do their work.

"He makes no reference to it,” Sauer said. “Nor does his budget include any money (to address it).”

The “15 and Funding” campaign, which aims to amend government human services contracts to fund the minimum wage increase to $15 an hour, released statements expressing cautious support for the governor’s plans, despite the omission.

“We stand with (Cuomo) in the fight to raise the statewide minimum wage to $15 per hour,” said Jennifer Jones Austin, executive director and CEO of the Federation of Protestant Welfare Agencies, one of the cosponsors of the campaign. “We remain hopeful that the increase will be funded for the more than 100,000 government contracted human services workers employed by nonprofits.”

The Human Services Council, another campaign cosponsor, added a critical note: “HSC is troubled by some aspects of the governor’s proposed budget, but we also have reason to be hopeful.” The organization listed key investments that should be included – but are currently missing – from the governor’s plans. Full funding for human service contracts topped the list.

Nonprofit leaders speculated that the governor’s silence on the issue could be political maneuvering to appease business interests ahead of difficult negotiations with state Senate Republicans – or perhaps the governor simply did not yet have a solution to the problem. Regardless, nonprofits said, they are currently in the dark over how or if the issue will be resolved.

Education

Early learning and child care advocates were alarmed by a lack of funding that they estimate could result in 21,000 kids losing spots in child care programs as organizations redirect funding to meet new federal requirements.

"We're very deeply, horribly concerned about the lack of investment in child care at a time when we have several new standards coming into effect in the state that are going to cost the state something on the order of $90 million – just in known costs,” said Betty Holcomb, policy director for the Center for Children's Initiatives, referring to the federal Community Development Block Grant program. CDBG will require nonprofits to spend what Holcomb estimates will be tens of millions of dollars to fulfill new standards related to inspections, background checks and training. “And that could result in the loss of slots for tens of thousands of children.”

Although they were happy to hear of the governor’s new program to expand prekindergarten to three-year-olds, Holcomb noted that there is no new funding to help the more than 100,000 four-year-olds outside of New York City who still do not have access to full-day pre-K.

While Holcomb said that New York City’s success in fully implementing universal pre-K was laudable, much of that credit goes to Mayor Bill de Blasio for providing funding to create the 68,500 slots needed for the city’s children to attend full-day programs. New York state on the whole will continue to fall short of universal pre-K under the current funding.

“It's a small step forward, but not enough.” Holcomb said. “And it just ignores and fails to fulfill the promise of full-day (pre-K) for four-year-olds.” The governor’s new funding regime for three-year-olds is welcome news, she said, “but that can't be a substitute for what districts are ready and prepared to do."

Other education nonprofits were more buoyant, especially those supporting service-rich “community schools.” Cuomo’s pledge of “$100 million to transform every failing school in New York into a comprehensive, holistic, full-service community school” energized long-term proponents of the schooling strategy.

“We are excited to see the state seize on community schools as a way to strengthen academic success,” Phoebe C. Boyer, president and CEO of The Children’s Aid Society, said in a statement.

However, the $100 million alone would not be enough to properly transition struggling schools to the community school model, said Yolanda McBride, director of public policy at The Children’s Aid Society, which promotes the model and runs two community schools currently on New York’s receivership list. 

"It's a huge undertaking – turnaround is a huge undertaking,” said McBride, explaining that both training and dedicated resource coordinators would be needed to bring together programs and services to properly meet the needs of each school community. “We think there should be additional funding set aside – on top of the $100 million – to do that,” she said.

Housing

Nonprofit housing advocates were happy to hear the governor’s $28 billion pledge for affordable and supportivehousing in New York, but would remain watchful since the particulars of the plan haven’t been hammered out yet.

“His verbal commitment to the 20,000 units is very heartening,” said Giselle Routhier, policy director at Coalition for the Homeless. “But we still have very few details.” 

Such large housing commitments typically are made in a joint plan between the mayor of New York City and the governor before they are announced. There’s some concern that the ongoing spat between Cuomo and de Blasio could impede progress on such a plan, which is expected to be called the New York/New York IV agreement.

”We hope that they can rise above that and acknowledge that this is very much needed to make sure supportive housing can come online quickly,” said Routhier. Housing developers need a concrete plan to have the confidence to seek funding and acquire the property needed to build the envisioned housing. 

“Since both of their commitments are so long-term, we really need that in writing,” Routhier said of the mayor and governor’s multibillion-dollar promises for programs that will span 15 years. “That's really important.”

On the whole, nonprofits were hopeful about the governor’s budget and message – still, they said, they need to be sure to hold politicians to their promises.

“It's not that we're trying to be ‘Debbie Downers’ here,” Routhier said. “It's our job to say what needs to be done to make sure this happens.”

- See more at: http://nynmedia.com/news/nonprofits-governor-s-goals-require-more-funding-details#sthash.ZzOqlHS5.dpuf