Association Reserves Are Too Low
....according to a survey of 230 associations and NPOs
During the period February 1 to March 29, 2002, Association Xpertise Inc. (AXI) conducted an on-line survey focusing on a number of governance-related issues in associations and other not-for-profit organizations. The survey is the first in a series being planned by AXI. Referred to as FAQs surveys, their purpose is to collect and share information on selected issues. The desired outcome is that association and not-for-profit staff and volunteers will have answers to some Frequently Asked Questions (FAQs) about what other similar organizations are doing. In that context, the FAQs surveys are short and easy to complete, and they are conducted during a brief time period so results are available close to when participation occurred.
Participants are provided with access to the report on the results. In addition, an article focusing on some of the highlights is included in The Canadian Association e-zine.
This first FAQs survey was focused on governance related issues. Prospective participants were made aware of the survey via AXI’s The Canadian Association e-zine and an e-mail reminder.
At the close of the survey, a total of 230 usable responses had been received. A good cross-section of organizations participated, with no single type of organization comprising more than 30% or less than 12% of the response group. Organizations with a provincial/regional or national scope make up over 80% of the participant group.
Table 1 - Participating organizations by type and scope
|
|
Local |
Provincial/
Regional |
National |
International |
Grand
Total |
|
Health/Social Welfare/Religious/ Educational
Organization |
8 |
17 |
15 |
4 |
44 |
|
Industry/Trade/Business Association |
11 |
27 |
22 |
2 |
62 |
|
Professional/Occupational Association |
3 |
44 |
20 |
2 |
69 |
|
Special/Common Interest Association |
4 |
11 |
10 |
2 |
27 |
|
Sport/Art/Cultural/Recreational Organization |
3 |
21 |
3 |
1 |
28 |
|
Grand Total |
29 |
120 |
70 |
11 |
230 |
The invitation to participate in the survey went to organizations in Ontario and the four western provinces, therefore all of the respondents are from those regions. Provincial/regional organizations are spread evenly throughout the provinces, but not surprisingly, over 85% of the national organizations are from Ontario.
Table 2 - Participating organizations by location and scope
|
|
Local |
Provincial/
Regional |
National |
International |
Grand
Total |
|
Alberta |
9 |
32 |
2 |
2 |
45 |
|
British Columbia |
1 |
39 |
1 |
3 |
44 |
|
Manitoba |
1 |
6 |
1 |
|
8 |
|
Ontario |
13 |
25 |
62 |
6 |
106 |
|
Saskatchewan |
5 |
18 |
4 |
|
27 |
|
Grand Total |
29 |
120 |
70 |
11 |
230 |
There was participation from all sizes of organizations (based on size of budget), and this broad participation is evident within each organization type category as well.
Table 3 - Participating organizations by type and annual budget
|
(in
millions of dollars) |
Under
$.1 |
$.1
to .25 |
$.25
to $.5 |
$.5
to $1 |
$1
to $2 |
$2
to $5 |
$5
to $10 |
Over
$10 |
Grand
Total |
|
Health/Social Welfare/Religious /Educational
Organization |
2 |
6 |
8 |
8 |
3 |
6 |
7 |
4 |
44 |
|
Industry/Trade/Business Association |
6 |
9 |
10 |
15 |
14 |
7 |
1 |
|
62 |
|
Professional/Occupational Association |
3 |
12 |
11 |
10 |
14 |
9 |
6 |
4 |
69 |
|
Special/Common Interest Association |
1 |
3 |
7 |
3 |
8 |
4 |
|
1 |
27 |
|
Sport/Art/Cultural/Recreational Organization |
4 |
6 |
6 |
7 |
2 |
2 |
|
1 |
28 |
|
Grand Total |
16 |
36 |
42 |
43 |
41 |
28 |
14 |
10 |
230 |
The most surprising result was the level of unrestricted reserves. Fifty-one per cent of the organizations reported unrestricted reserves levels of less than 25% of annual revenues. We find these figures very troubling. As stewards of the organizations, boards (and staff) should be growing the unrestricted reserves to a level to ensure that the organization can weather difficult times and meet its obligations. Each organization should have a policy that defines a target level for reserves, and a plan to get there.
Facing the greatest degree of risk are those organizations who, in addition to having low reserves, also have one or more revenue areas that account for 30% or more of their total revenues. A significant portion of their already low reserves could be eliminated with a poor result in any high-revenue area.
Also of interest was the broad range in audit fees and premium levels for Directors & Officers (D&O) Insurance. We would argue that a number of organizations are likely paying too much for these items.
With the increase in the use of technology that captures detailed financial and activity information (databases and accounting software), there should be a reduction in the time and cost of undertaking the financial audit. In our experience, organizations use the same audit firm for a number of years, however that may result in a higher audit fee. Organizations should go out to the market for quotes periodically. Be sure to include audit firms that have experience auditing organizations with your specific database software and accounting software.
The complexity and comprehensiveness of D&O insurance applications discourages many organizations from seeking additional D&O quotes, or pushes them towards using a broker to seek out “the best coverage”. We suggest that organizations approach the market directly to get quotes as brokers may not handle all companies. Most companies will provide a quotation using a common application (however, prior to getting coverage their application will need to be completed). Your legal advisor can assist in comparing prospective policies. Given the fact that a very high percentage of organizations now carry the insurance, the premium levels should be dropping (assuming that NPO claims are still infrequent).
The survey results also indicated that the trend to smaller boards is continuing. In addition, the use of non-members on boards is also becoming more frequent (led by provincial self-regulatory professional organizations).
The number of board meetings also seems to be trending down, however allowable alternative meeting methods have not gained much ground (with the exception of teleconferencing).
There is considerable emphasis and attention paid to governance in associations and not-for-profit organizations. Much of the attention has and is focused on governance approaches, however the resulting impact on the organization in practical aspects of governance is not evident. Change in these areas has been slow.
Our view on this is that many focus on the theory of governance, and typically the implementation (and the way governance transforms the organization to be more efficient and effective) is given minimal attention. As a result, we do not see dramatic improvements in the way the organization communicates and relates to its stakeholders (perhaps the topic of a future FAQs survey) or in the impact on the organizations’ operations (as demonstrated by the results of this survey).
Note: Only participants to the survey who registered their participation have been provided with the URL of the full 11-page report.
NEXT --- Association FAQs Survey 0302 Operations Issues -- participate today and register to get the free report of the results.
Recently I watched an on-line clip of a United Way spokesperson being interviewed on one of the U.S. network news stations regarding their handling of the United Way’s 9/11 fund. It wasn’t pretty! And prior to that, the American Red Cross had faced a similar public grilling over the handling if its 9/11 fund.
At the Olympics in Salt Lake City we saw an international athletic organization squirming in the bright lights of global…well maybe just North American…public scrutiny and derision. While the chaos was unfolding, I was listening to a local talk radio show on my computer, and when they provided an e-mail address, even I was motivated to send a message to the ISU headquarters in Europe.
Also during the Olympics, a couple of female hockey teams in Winnipeg sought to re-schedule their game so the young girls could watch their heroes go for the gold in the women’s hockey final game. The league association threatened sanctions if they proceeded as the rules prohibited re-scheduling of games. Of course, it hit the media and became a hot topic on talk shows and in the coffee room, and the association was ridiculed and criticized for its decision.
These are not rare occurrences…the sad thing is that they occur frequently. Some get coverage in the national media, others get local coverage, and still others are played out within the membership and out of the public eye.
Given my lengthy and significant involvement in the sector, I find watching these scenarios unfold both painful and embarrassing….but are they deserved?
I don’t believe there is a single answer to this question, however some definitely are deserved. In this category, I am tempted to group those organizations that hide behind their governance models. If they were governing the way they should be, communications and relations with stakeholders would not have reached the boiling point.
However, I also believe that many of the situations arise because the board and/or staff believe they are taking appropriate action. Given what they know and understand, they have no problem justifying the course of action to themselves. However, when the situation explodes, their public explanation doesn’t sound so convincing. In other circumstances, the decision may seem routine so the decision makers do not even think in terms of justification.
The problem is that the decision makers are sometimes too close to the details, the rules, the traditions, the trenches to see the big picture and to take into account the variable that is most unpredictable…the people involved.
Whether it is members, the public viewing audience to a skating competition, or the media, the boards and staff of associations and not-for-profit organizations must take steps to ensure that they remain in touch with their constituencies with the big picture clearly in focus. If the purpose and mission of an organization can’t win out over the bureaucracy (by this I mean structures and rules), then that organization is lost!
Yes, it is painful for an organization, and those that believe in it so much, to be raked over the coals. But it may be the best way to bring the organization back on track.
Now….if we could only rein in governments so easily when they lose touch with their purpose and constituency.
That’s my view…what do you think?
Readers
are invited to submit their responses in support or disagreement with the views
expressed in this column. Direct your comments to the editor.
Carol Humphries, Associate, Association Xpertise Inc.
Picture this….it’s a Tuesday evening and the Board of Directors has finally found a time to meet together for its annual orientation. You are one of four new directors who are attending the orientation to being on this Board. It’s a good thing too, since you haven’t been on your Association Board before. A series of speakers present the most important aspects of being a good director to the new Board. There is a lawyer to talk about your fiduciary responsibilities; the Chairman to inspire with the organizational vision and the CEO to fill you in on what’s been done and what is coming up in the next year. There’s even a section to show you how to fill in the forms to claim travel expenses. The only thing that’s missing is where you fit in. So, there are all these responsibilities and roles and regulations.. what’s in it for me, you ask yourself?
Most Board orientations are filled with all kinds of good information but this very basic question, a natural one for any director, is rarely answered directly.
These are five of the top expectations – or even rights that Board directors can expect to have during their tenure:
Board Chairs and CEOs who are involved in presenting Board orientation to directors should include a list of the rights of the Directors…don’t leave these to their imaginations or worse yet, their assumptions.
Carol Humphries is an Associate of Association Xpertise Inc. >.
Nathan Garber, Editor-in-Chief, Nonprofit Boards and Governance Review
In the past fifteen years, there has been increasing interest in organizational governance in both the private and nonprofit sectors. In the corporate sector, it was a number of spectacular scandals that resulted in calls for governance reform. In the voluntary sector, this examination of the board's role has been driven partly by the experience of the private sector, but more importantly by the changing environment in which nonprofits operate. This environment is characterized by:
increased competition for board members;
increased need for self-generated income;
increased expectations for accountability;
increased competition from for-profit services;
increased professionalization of nonprofit managers.
All of these have added complexity to the job of the board member and led to confusion and conflict around the respective roles of board members and managers. Today, we routinely use the word "governance" to differentiate the role of the board from that of managers, but this use of the word is relatively recent, dating back no more than fifteen or twenty years, and the differentiation is still problematic.
In response to the confusion around the role of the board of directors and perceived inadequacy in board performance, many books have appeared, each offering a prescription for board improvement. At the heart of each prescription is the author's view of the board's role and responsibilities, and in most respects, these roles and responsibilities are remarkably similar. In part, they derive from the legal view of board members as fiduciaries, but with few exceptions, these prescriptions are derived from the notion that the board can operate in splendid isolation from the day-to-day realities of the organization - that governance can be easily differentiated from management and operations.
This is easy to do in books, but in real life, the differentiation is not so clear cut. In trying to keep boards out of management, and managers out of governance, we are ignoring the realities of most of the nonprofit sector. In large part, governance, management, and operations are artificial constructs that merge and cross-over depending upon the nature of the organization, the environments in which they operate, and the people who inhabit them. In defining the roles and responsibilities of boards, the history, culture, purpose, community, and people involved are far more important than any governance model.
Many factors and conditions can affect the roles and responsibilities of boards of directors, including:
the extent to which the organization depends upon board members for delivery of programs;
the extent to which the focus of the organization is on fund-raising vs. direct service;
the level of risk involved in the service, and the degree of vulnerability of the clientele;
the stability of income and the ways it is generated;
the stability of the social, political, and economic environment in which the organization operates;
the extent to which the organization is subject to external oversight;
the skills of the executive director and staff;
the diversity of the community and clientele.
Any of the above might have a profound effect upon the roles that the board is required to perform, and the extent to which governance, management, and operations can be differentiated in a particular organization.
As managing nonprofit organizations has become more complex, everyone would like to make it simpler. Directors would like to have clearer responsibilities, fewer and shorter meetings, and less conflict. Executive directors would dearly love to spend less time on board matters and more time on service development. Some authors suggest that the way to do this is to insist that the board confine itself to governance. Such Governance models are appealing as they seem to simplify the board's role. But we should never forget that the images presented are idealized and nearly always unattainable to mere mortals. When it comes to our own boards, it is just as important to look carefully at our own organizational needs and define our board responsibilities based upon the reality of our own situation. In a future article, I'll suggest a process for developing a board job description tailored to your own organization's situation.
Nathan Garber is the Editor-In-Chief of Nonprofit Boards and Governance Review. Principal of Nathan Garber & Associates, he draws upon more than 30 years experience in the nonprofit sector to his work helping voluntary organizations to strengthen their boards and plan strategically.
Nathan
Garber
Principal Consultant, Nathan Garber & Associates
1071 Richmond Street
London, Ontario N6A 3K1
tel/fax: (519)439-3008
email: Nathan@GarberConsulting.com
web: http://garberconsulting.com
------------------------------
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Copyright © 2002 CharityChannel LLC
Roslyn
Chambers
Organizations of all kinds collect and create records in the course of carrying out their business, but when it comes time to get rid of these records, the procedures are less than clear. Depending on the risk-taking personality of the manager, an organization will either go through an occasional wholesale destruction of records or else stash them indefinitely, uncertain about how to manage them or when to get rid of them.
For non-profit societies, where staff and financial resources are at a premium, records management activities are a low priority in the overall business of running the organization. However legislation and business needs dictate that certain records be kept readily accessible for at least some period of time. For this reason, it is well worth the time to establish policies about what to keep and for how long, so that other business of the organization can run more smoothly and efficiently.
Establishing how long something is kept (called retention), is a frequently slippery notion, but one that, once determined, provides control over obsolete records and cost-savings in a number of areas. Sometimes legislative requirements and existing organizational policies have established retention periods for certain kinds of records, but frequently no criteria clearly exist for determining how some records should be kept.
You may be asking yourself what are the practical and theoretical considerations associated with making the right decision about retention of records? How to reduce the uncertainty of what can and cannot be destroyed and when, while also minimizing the amount of time and effort spent in managing them? The amount of time a record is kept varies depending on what it is; its legal and business requirements as well as its historical considerations.
To start you on the path to managing the records retention challenge, here is some basic records management theory. A record is evidence of a business activity, policy, or decision and can come in all formats, from paper to compact disks to videos to other electronic formats. At the time it’s created, a record begins a lifecycle from active to semi-active to inactive.
Active records are the kind you need to refer to frequently – approximately once a month at least. After the time when records are referenced less often, they become semi-active and can be stored elsewhere. In other words, records for daily work will be kept in high-cost office space but less active records can be kept at lower cost locations. Further savings in time and cost are realized by having fewer documents to review when researching a topic.
As for the final disposition of semi-active records, the difficulty comes when deciding whether or not there is a legal or business requirement for keeping a record for a given period of time. This determination process is usually more difficult than it first appears. Some records have clearly defined and straightforward legislation guiding their retention; for example accounting records are kept for 6 fiscal years according to the Income Tax Act (see chart below). Other records, such as special event preparation documentation can vary greatly in the length of time they are to be kept and will depend on the organization, the likelihood of an event being replicated, and the obsolescence of the information.
Personal records have detailed retention requirements according to the Personal Information Protection and Electronic Documents Act (PIPEDA) and the Employment Standards Act. These acts not only address the length of time that personal information is kept, but how it is collected and used. These requirements have been put in place to protect personal privacy. For example, organizations are not permitted to keep information longer than necessary which would be best shown in the interest of an employee or member with a negative situation. A retention period in this case would assist the person in “turning over a new leaf” if there are no further incidents by having the information destroyed after a period of time. It also protects the selling of membership lists that contain numerous facets of personal information to other companies. Many organizations are creating Privacy Statements that outline how this information will be used, and posting it on their web site or in membership packages. By checking with the government agency to which you report, or for whom you create documents, you will discover if any legal requirements exist for records retention.
For other records with no clearly determined retention criteria, you can ask yourself the following questions to figure out how long to keep something. How beneficial are the records and what would be the consequences of not having them? How often has the information been needed in the past? How old is the information needed to respond to the most recent queries?
By answering these questions, you can determine the business requirements for sets of records and establish policies about when and how to get rid of them. Along with any legal or historical considerations, this information is used to develop a retention schedule. After that it becomes an annual maintenance task of deleting obsolete records and either putting them into an organizational archive or destroying them (shredding or recycling depending on the security requirements of the records).
Keep in mind that any retention schedule that exists will apply to records of all media including electronic records such as e-mails and word processing documents. The retention of electronic media is a greater challenge due to the accelerated changes in technology. If a collection of documents is kept in an older version of software, it will be necessary to maintain that software or migrate (move from one software or medium to another) the documents to a newer version of the software in order to maintain the information for its retention period. Other options would be using computer output to microfilm (COM) or paper and saving electronic information in that manner. When an active migration process is in place, it is imperative to have clear procedures on how this process will occur as the authenticity of the information must be maintained.
As recent news stories dictate, destroying information that is involved in litigation can be a costly and potentially disastrous public relations endeavour. Retention requirements may need to be suspended if there is any legal action related to the information in question. This will result in keeping the information for as long as it is required for litigation and then reviewing its retention period after that point.
Overview of Retention Periods for commonly held records:
|
Constitution and Bylaws |
Permanent |
|
Board Minutes |
Permanent |
|
Accounts Payable |
6 Fiscal Years |
|
Accounts Receivable |
6 Fiscal Years |
|
Grant Applications |
6 Fiscal Years |
|
Tax submissions |
6 Fiscal Years |
|
Budgets |
6 Fiscal Years |
|
Fundraising |
6 Fiscal Years |
|
Payroll |
6 Fiscal Years |
|
Personnel |
5 years after completion of employment |
|
Policies and Procedures |
2 years after superceded |
| Newsletters/Advisories | 5 years |
For more information on this topic or any other topic related to maintaining business records, you may contact the Association of Records Managers and Administrators. You will find local chapters all over Canada and other parts of the world. Go to www.armavancouver.org and follow the links.
Roslyn Chambers is a Certified Records Manager and Certified Document Imaging Architech with 10 years experience in the field of Information Management. Roslyn is the current President of the Association of Records Managers and Administrators – Vancouver Chapter.
Donna
Jean (DJ) MacKinnon currently works at the British Columbia Teacher’s
Federation as the Records Manager. Her previous experience includes work at the
City of Vancouver Archives, the U.S. National Archives and Records
Administration, and the Coastal Jazz and Blues Society, and others.
The views expressed in this article are those of the author, and do not necessarily reflect the views of Association Xpertise Inc.
Edmonton-based
Consultant Named an Associate of AXI
90 Attend B.C. Privacy Session; Saskatchewan Sessions Next
AXI
to Attend and Exhibit at Vitalize 2002
AXI president Wayne Amundson is pleased to announce that Carol Humphries has joined AXI as an Associate of the firm. Carol brings extensive experience and education as a CEO, Board chair, facilitator, consultant, advisor, trainer and educator. While Carol works with associations and other not-for-profit organizations in various roles dealing with a range of issues, her particular interests include: how organizations and the people in them learn; visioning and all areas of board work; the cultures of organizations and how associations bring value to their members. Carol is based in Edmonton.
Carol
can be contacted through AXI’s office in Calgary, or directly at:
Box
98 Site 310 RR3
Stony Plain, AB T7Z 1X3
(780) 963-7816
On
Tuesday, March 5th, 2002, AXI and Borden Ladner Gervais LLP held a
breakfast session in Vancouver on Associations
and Privacy Laws: What You Need to Know and Do to be Prepared!
Ninety association and not-for-profit staff and volunteers attended the
free event. In total, over 200 have attended the privacy sessions in Calgary,
Edmonton and Vancouver.
Coming
soon: AXI
will be partnering with a Saskatchewan firm to deliver similar sessions in
Regina and Saskatoon. Invitations
will be e-mailed once the arrangements are confirmed.
Vitalize 2002, sponsored by the Wild Rose Foundation and Alberta Community Development, will be held in Calgary on June 13 –15, 2002. This event is expected to attract 1,400 delegates from approximately 180 communities and over 900 organizations. AXI will be attending and exhibiting at this event which is targeted to staff, board members and other volunteers of not-for-profit organizations from across Alberta.
Facilitation Tools for Staff and Volunteer Leaders
© 2002, Association Xpertise Inc. www.axi.ca
Association CEOs, managers and volunteer leaders frequently facilitate sessions or meetings involving staff, volunteers, members and third parties. The intent of this regular column is to expose readers to various facilitation tools, how they work, and when they should be used.
Needs and Offers
This little known technique has also been referred to as the Itch and Scratch technique. It can be used in a Negotiation setting or a Networking/ Roundtable setting.
To Facilitate
Negotiations or Constructive Dialogue
This tool is very effective in situations where there is conflict or the need to improve relations between two parties (individuals or groups). The focus is on giving and receiving feedback in a positive manner. Because each participant is stating both a need and an offer, the exchange results in a more balanced and productive dialogue.
Prior to beginning, it is important to explain how the process will work, and to lay out ground rules including the definition of the focus of the exercise. As stated above, this exercise is about people not about an issue so the focus will be between two groups [national-chapter(s); two departments; a team and its leader] or two individuals.
Provide a period of 15 - 20 minutes for each group to consider the following and write the results on a flipchart.
· To be more effective, we need the following from you –
· To help you meet your needs, we offer the following –
Have each group present their lists to the other group, but ensure that the non-presenting group holds its comments until the presentation is finished. Once each group has presented, have them discuss their thoughts and reactions. Create action plans to implement ideas, and to address any implementation barriers. Be sure to incorporate a process to monitor progress and report results.
To Facilitate Networking
or Roundtable Discussions
This tool is effective for facilitating discussion in a networking or roundtable discussion.
The focus is on identifying and recording what each participant needs (I need help on…I need leads to information about…I needs suggestion or ideas on how to…) and what they have to offer (Our organization recently did….This is how I solved…. Here is where I found good information on…). Depending on the size of the group and the flow of contributions, you could go through the group a second time to catch those with more to add to the list. Remember, everyone must add an Offer for every Need.
All contributions are recorded, and at the end of the session, each individual leaves the session with some good present or future leads or information.
In a roundtable setting, the results can be used to guide ongoing discussion. By verbalizing and posting the results on a flip chart, attendees receive immediate suggestions and / or contacts to follow-up with after the meeting. Also, in an association or non-profit member or constituent setting, these ideas then become part the meeting discussions and may evolve into a project, article, education or other opportunity to address the need with the organization’s entire constituency.
Clarity...by AXI
© 2002, Association Xpertise Inc. www.axi.ca
The information provided in Clarity....by AXI serves one very important purpose - to provide readers with sufficient understanding of an issue so that they are able to identify potential issues within their organization and then, when necessary, discuss, challenge and question the advice of their internal or external paid advisor related to that issue as it impacts their organization. With that purpose in mind, we will provide information in very clear, non-technical language and we will use the word "generally" and its synonyms a great deal. Much of the complexity of technical and/or legal topics relates to the language used and the need to address every conceivable and obscure exception. This column is for information purposes only, and AXI will not be responsible for any errors or omissions...consult your paid advisor before acting.
Accuracy in Describing Your Organization
Frequently, we hear and see staff and volunteers of organizations describing their organizations incorrectly. Surprisingly, we also see organizations described inaccurately in the notes to the audited financial statements in Annual Reports. If the directors, staff, and professional advisors are getting it wrong, how can we expect the general public to understand the sector? Also, how can an organization fulfill its regulatory and statutory obligations if its key people do not understand the status that determines the obligations?
A common example of the problem arises when a not-for-profit organization is described as “a registered non-profit” or as being “registered as a non-profit”. That is incorrect. There is no such standing or status provided by government or any other body.
The only way to accurately describe the status of your organization is in the context of its incorporation status, method of incorporation, tax exemption status, and if applicable, charity status. For certain types of organizations, the status description could be broadened beyond these areas, but the description should address these areas. In addition, it is useful to include information related to the mission, objects or purpose of the organization.
First, we’ll look at each of the status areas, and then show how they are combined into statements that accurately describe the organization. Try answering the questions as you read, and then see how well you know your own organization.
Incorporation Status – Is the organization incorporated?
This should be easy to answer, but some volunteers and staff do not know whether their organization is incorporated.
Method of Incorporation – Under what statute or enabling legislation is the organization incorporated? What is the accurate description of the type of corporation created?
These questions may have more complex answers, because of the range of options. For the former question, the vehicle could be either provincial or federal corporations or societies legislation, an organization’s own enabling legislation, a broader piece of legislation that creates organizations in the process, etc. With respect to the latter question, the commonly-used “non-profit corporation” is used, however this term contributes to the confusion. What is essentially created, by most legislation, is a corporation without owners (no shares).
Tax
Exemption Status
– Is the organization exempt from income tax, and if so, under what section of
the Income Tax Act?
For some organizations, such as registered charities, tax exemption is clear…because the organizations have been registered by the federal government as charities, the organizations are exempt from income taxes. For other organizations, such as associations, the claim of non-profit status and tax exemption is made by the organizations based on how their organizations are structured and operated.
Charity
Status
– Is the organization registered as a charity, what kind of charity, and does
it have a charitable registration number?
If the organization is a registered charity, is it a private foundation, public foundation, or charitable organization?
Federally
incorporated registered charity
The
ABC Association was incorporated in 19xx without share capital, under Part II of
the Canada Corporations Act.
The Association is a registered charity and as such is
exempt from income tax under Section 149 (1)(f) of the Income
Tax Act.
The mission of the Association is to ........
Federally
incorporated non-profit association
The
ABC Association was incorporated in 19xx without share capital, under Part II of
the Canada Corporations Act.
The Association is exempt from income tax under Section 149 (1)(l) of the Income
Tax Act.
The mission of the Association is to ........
Provincially
incorporated non-profit associations
The
ABC Association was incorporated in 19xx without share capital, under the Manitoba
Corporations Act. The Association is exempt from income tax under Section 149 (1)(l) of
the Income Tax Act.
The mission of the Association is to ........
The
ABC Association was incorporated in 19xx without share capital, under Form 2 of
the Ontario Corporations Act. The Association is exempt from income tax under Section 149 (1)(l) of
the Income Tax Act.
The mission of the Association is to........
Provincially
incorporated under a special Act
The
ABC Association was incorporated in 19xx without share capital, under the ABC
Professions Act of Alberta.
The Association is exempt from income tax under Section 149 (1)(l) of the Income
Tax Act.
The Association is a self-regulatory body that......
Closing
Note
While
our past experiences suggested that the use of incorrect descriptions was quite
common, we were surprised at how common it was. When we conducted research for
this Clarity…by
AXI item, we found that
more than more than 75% of the descriptions included in financial statement
notes were either inaccurate or unacceptably incomplete.
Do
your auditor a favour….send them the link to this article!
This column is for information purposes only, and AXI will not be responsible for any errors or omissions. Consult your paid advisor before acting.
The Tool Shed
© 2002, Association Xpertise Inc. www.axi.ca
The Tool Shed is the place to find the right tool for the right job...and the tools are designed to work in associations and other not-for-profit organizations.
Copyright Assignment Form
When you have materials created by the outside contractors or suppliers, do you have copyright assignments made? When volunteers or members contribute content or products that will be published (in whatever form), reproduced, sold, or otherwise used, do you assume that copyright ownership comes with the material or product?
Associations and other not-for-profit organizations should have a policy, with supporting processes in place, to ensure that copyright is assigned to the organization for all paid and voluntary contributions.
While some may balk at exclusive copyright, there should be no such reluctance to assign non-exclusive copyright to the organization to ensure that its usage of the material is protected.
In addition, the copyright assignment process can also be used to address other issues such as: non-exclusive rights to deal with requests to reprint or reproduce, verification of ownership of the copyright, declarations related to knowledge of copyright infringements or unlawful statements, etc.
The copyright assignment form used by AXI for contributions to The Canadian Association e-zine is a tool that can be customized for your use.
Disclaimer: If revised for your organization’s use, the form should be reviewed by your legal counsel prior to use.
Better Practices
© 2002, Association Xpertise Inc. www.axi.ca
The practices described in this area are described as Better Practices for a very good reason. We have a great deal of difficulty with the term best practices used in any other context than to refer to the results of benchmarking exercises involving real and relevant organizations with tangible results. We offer Better Practices related to areas where we feel that change is needed in associations. The Better Practices are intended to provoke thought, and to encourage organizations to think about what they are doing and how they are doing it.
Governance Evaluation
Good governance is critical to the success of associations and other not-for-profit organizations. If governance is not effective, it can impact relations with members, performance of the CEO, the financial well-being of the organization, and the future development and planning of the organization.
Yet most organizations do little or no evaluation of their governance. The following represents the better practice with respect to evaluating governance:
Board Meetings
What went well and what did not go well?
How could meetings be improved in the future?
Board Performance
Self-evaluation of overall Board performance
Evaluation of the Chair by the other Directors with feedback provided to the Chair.
Evaluation of individual directors by the Chair (with input from Vice-Chairs and CEO) with feedback provided to them.
Self-evaluation by each director, related to their performance and their reasons for serving on the Board
External Evaluation
Stakeholders should seek input (via surveys and other means) from members and other stakeholders to determine their level of satisfaction with the governance of the organization.
When there are clear problems with overall governance, or with the internal dynamics of a Board, an external advisor should be brought in to conduct an evaluation.
Technology Tips
© 2002, Association Xpertise Inc. www.axi.ca
Technology has a significant role in the work of association staff. The Technology Tips focus on how individuals can manage using technology rather than being managed by technology.
Quick and Cheap Data Analysis
Sitting in front of you is a stack of (or an electronic file of):
conference or seminar evaluations
member survey questionnaires
feedback forms
student information and course results
membership recruitment data
issue polling results, or
any other data set related to an activity or program
You want to do some “quick and cheap” analysis. Previously, you may have been able to get a basic report – What was the answer to this question? How many of the participants were from ABC Chapter? What score did that session receive?
However, such basic reporting is of little value in analyzing trends, relationships, etc. What you need is cross-tabulated data, such as how participants rated the value of the service in relation to their years of experience?
You do not want to spend a lot of money getting that information, and the support person would have to do that analysis manually. Or, in most cases, you stick with the basic reporting.
…is a very useful Microsoft Excel feature called Pivot Tables!
A wizard guides you through the process of setting up the Pivot Tables. You can link to a variety of data formats, including Excel spreadsheets, and Access or dBase databases. The table or chart is automatically created and you can add the variables via “drag and drop”.
In the example below, you drag the membership Category and Gender to the left side and the Years of Experience to the top. You then drag the Ratings to the body of the chart or the top left corner, and specify that you want the average with one decimal place. The final step is to drag the “Recommend to a colleague” result to the spot above the table.
You can now see the average ratings by membership category, gender, years of experience, and whether the participant would recommend the session…or any combination or subtotal of these factors.
You can change the factors by simply dragging one factor off the table and another one on. You can create various kinds of charts (bar, pie, etc.) at the click of the mouse.
Isn’t this a lot better than only knowing that the overall rating was 3.5!
|
Plus you can produce the chart for only those who said No or Both Yes and No by making the selection on this drop-down menu.
|
||||||
Recommend |
Yes |
|
|
|
||
|
|
|
|
|
|
|
|
|
Average
of Ratings |
|
Years of Experience |
|
|
|
|
Category |
Gender |
<
5 |
5
- 10 |
10
- 20 |
>
20 |
Grand
Total |
|
Certified |
Male |
3.8 |
4.1 |
4.0 |
4.1 |
4.1 |
|
|
Female |
4.2 |
4.4 |
4.2 |
4.2 |
4.4 |
|
Certified
Total |
4.1 |
5.3 |
5.3 |
4.1 |
5.3 |
|
|
Student |
Male |
4.1 |
3.5 |
4.4 |
4.1 |
3.5 |
|
|
Female |
4.4 |
3.2 |
5.3 |
4.4 |
3.2 |
|
Student
Total |
|
5.3 |
2.5 |
3.5 |
5.3 |
3.5 |
|
Associate |
Male |
3.5 |
4.1 |
3.2 |
3.5 |
3.2 |
|
|
Female |
3.2 |
4.4 |
3.2 |
3.2 |
3.2 |
|
Associate
Total |
|
2.5 |
5.3 |
3.5 |
4.1 |
3.5 |
|
Non-member |
Male |
3.0 |
3.5 |
3.2 |
4.4 |
3.2 |
|
|
Female |
4.1 |
3.2 |
2.5 |
5.3 |
3.2 |
|
Non-member
Total |
|
4.4 |
3.2 |
4.1 |
3.5 |
5.3 |
|
Grand
Total |
|
5.3 |
3.8 |
3.5 |
3.2 |
3.5 |
Reality Check
© 2002, Association Xpertise Inc. www.axi.ca
Sometimes association and non-profit staff, volunteers and other stakeholders lose touch with the bigger picture because they are so caught up in what is happening in the trenches. Our intent in offering the Reality Check feature is to get these individuals to step back and re-think their existing views.
Ethical Conduct and Professional Standards
Is it really about protecting the public or is it just window dressing?
Many organizations have codes of ethics or other conduct or performance related standards for their membership or constituency. However, in some of those organizations, it is more about window dressing to “sell” the profession than the protection of the public.
The indictment and shaky future of a major professional firm in the United States (related to the recent collapse of a major utility) have demonstrated the importance of a profession’s reputation for ethical conduct and professional standards in establishing trust and credibility with the public.
Apart from the millions that have lost invested money, and the thousands that may lose their jobs, every individual in that profession will carry the stigma of the conduct of a few.
Is your organization taking its public protection role and position of trust seriously? If not, then your organization needs a reality check!
Templates Plus
© 2002, Association Xpertise Inc. www.axi.ca
The purpose of Templates Plus is very simple -- to save you from re-inventing the wheel whenever and wherever possible, and if we cannot, to provide templates and resources to make the task easier, faster and cheaper to do.
Membership Plan Template
The
problem with various kinds of planning documents is that a lot of work goes into
creating them, and then they sit on a shelf.
Keep your membership plan short and focused. Make sure the planned strategies are realistic.
Consider including the following components in your membership plan:
A brief look at the previous year’s membership results
Recap of existing membership staffing, resources, programs and tools
SWOT Analysis (consider re-phrasing these questions to better fit your organization)
What strengths does the association have that contributes to recruitment and retention?
What internal weaknesses or impediments keep the membership from growing?
What market opportunities exist to grow membership?
What external threats may hinder the association’s membership growth?
Assumptions
Briefly identify any assumptions that you are using in developing the plan (internal – resources, timing, etc. and/or external – economy, etc.)
Membership
Targets
Make them measurable
Do you have accurate initial numbers?
Will you be able to capture the selected numbers at year-end?
Keep in mind factors that can affect the numbers, such as timing of cancellations or deletions.
Make them challenging
If the targeted membership growth does not push the envelope, then there is no reason to change what you are currently doing
Make them realistic
Both the organization and you lose if you have projected numbers that are not realistic.
Defend your targets now, and it will save you headaches later
Make them useful
Develop overall targets, but also sub-targets by membership category, geographic unit, etc.
Develop targets for recruitment of new members as well as retention of existing members
In 20 to 30 words identify the broad-brush approach that you are going to use to achieve the targets. Focus on the big picture. The strategies should guide the development of the detailed actions.
Description of the specific actions to be undertaken as part of the defined strategy, related to:
Retention
Efforts should start as soon as a new member joins or an existing member renews
Focus on issues related to: membership value, customer service, administrative processing, marketing and communications
Recruitment
Campaigns
Prospects List
Handling of Routine Membership Information Requests
Membership Tie-Ins with events, products, etc.
Chapter/local involvement or role
Web role
Collateral materials
Trade Shows, Advertising, Sponsorships
Membership Budget
revenues and expenses
cost by program or activity so you can track results based on that activity (and develop an accurate cost of recruiting a new member)
listing of the costs to implement the plan, including printing, postage, research or consulting fees.
Resources
Staff
Volunteers
Technology
Other needs
Activity Calendar
everyone needs to know what is planned (not just membership staff) if you want their assistance and participation
helps you avoid overlapping mailings, conflicting messages, etc.
Reporting
what indicators will you be tracking and monitoring?
describe how you will monitor results and track progress
identify the reporting process (how, when and who)
From the Resource Collection
© 2002, Association Xpertise Inc. www.axi.ca
AXI brings you five articles or resources that offer new thought, interesting views, or practical solutions related to association and non-profit issues. Given our intent to provoke thought and discussion, we do not only select articles with which we agree.
Articles and resources for From the Resource Collection are identified and accessed using AXI's Resource Collection.
Do You Have a Volunteer Satisfaction Plan?
Are
Virtual Associations a Reality?
The
Fundamentals of Effective Board Involvement (a
free on-line training program)
Key Elements of a Healthy Organization – An Organizational Checklist
ASAE Component Relations Summit – Compilation of Summit Results – Partnerships between associations and their components will drive the evolution of association management [Editor’s Note: Components is a relatively new term that encompasses chapters and similar sub-groups of an association or other not-for-profit organization.]
According to the Rules
© 2002, Association Xpertise Inc. www.axi.ca
According to the Rules highlights legislative, regulatory and similar issues that affect the operation or governance of associations and other not-for-profit organizations.
CCRA
Policy on Employee Gifts and Awards
Huge Increase in Copyright Levies Proposed
Gifts
and awards are used by some not-for-profit organizations to motivate employees
and deliver a non-taxable benefit to employees.
However, what these organizations are currently doing may not be
allowable as the Canada Customs and Revenue Agency (CCRA) implemented new rules
for employee gifts and awards effective for the 2001 tax year and later.
Employers
will be able to give employees two non-cash gifts per year on a tax-free
basis for special occasions such as, Christmas, Hanukkah, birthday, marriage or
similar events, provided the total cost of the gifts to the employer does not
exceed $500 per year.
Similarly, employers will be
able to give employees two non-cash awards per year on a tax-free basis
in recognition of employment achievements such as, reaching a set number of
years of service, meeting or exceeding safety standards, or reaching similar
milestones where the total cost of the awards to the employer does not exceed
$500 per year.
Cash
and near-cash gifts or awards will be taxable.
A near-cash gift or award is any
item that can be easily converted to cash, such as gift certificates, gold
nuggets, stocks, silver, precious jewels, or precious metals.
If
the combined total of the two gifts (or awards) exceeds the $500 threshold, then
the gift (or award) with the least value becomes fully taxable.
In
determining whether the gifts or awards are under the $500 threshold, use the
total cost to the employer, including taxes paid, even if less than fair market
value.
However,
if the threshold is exceeded, then the fair market value of the award, plus
applicable taxes, is included as a taxable benefit for the employee.
Corporations
that are NPOs are required to use the GIFI for tax years ending in 2002 and
later. You can get information on the GIFI NPO items from the GIFI
guide and GIFI-Short
guide. The GIFI-short guide
identifies which organizations can use the short form.
On
March 19th, the Canadian Private Copying Collective (CPCC) filed with
the Copyright Board its Statement of Position regarding its levies on private
copying proposed for 2003 and 2004. The CPCC is asking the Copyright Board of
Canada to significantly increase the amount of levies currently applicable to
audiocassettes (of 40 minutes duration or more in length), CD-R, CD-RW (rewritable
CDs), CD-R Audio, CD-RW Audio and MiniDiscs. In addition, the CPCC seeks to
extend the private copying levy to recordable DVDs, MP3 players and memory
devices used with MP3 players.
Details
on the proposed rate increases and an on-line petition
Policies and Practices
© 2002, Association Xpertise Inc. www.axi.ca
Policies and Practices highlights sample policies and practices that can be adapted and implemented by associations and other not-for-profit organizations.
A
member who has taken an authorized leave of absence from their employer, in
accordance with provincial/federal legislation for parental/maternity/adoptive
leave, shall be entitled to a reduction in the annual fee to xx% of the annual
fee for the year in which the leave was taken.
Proof will generally consist of a copy of the official correspondence between the member and their employer, outlining the conditions and duration of leave.