Don’t Overlook Insurance For Cyber Losses

A recent survey showing a snapshot of risk awareness among US nonprofits shows that organizations are not protecting themselves against a multitude of risks, including cyber risk. The computer age has brought a dangerous new exposure to an organization that needs to be assessed. Ralph Coldiron of Energy Insurance Agency shares why nonprofits are more vulnerable to cyber risk and how we can protect ourselves.

Who is at risk for a data breach?
Any nonprofit organization that handles confidential information, has a computer network or handles personal identifiable information is at risk. Many organizations don’t have the financial capacity to have the most up-to-date software and firewalls, so they’re even more likely to have their data breached which poses a threat both to your finances, your members, and to the organization’s reputation.

Why would organizations need cyber-liability insurance?
It’s no longer a matter of whether you’ll be breached, it’s a matter of when – and many organizations are not aware that their standard insurance coverages typically don’t provide any cyber-liability coverage. They won’t cover damage to or loss of intangible assets, so there goes your donor list or any other valuable data you’ve collected, which can throw a wrench into your organization’s operations. Additionally, standard insurance coverages often don’t cover sensitive information getting into the wrong hands, in which case the entity that los the data is liable for any damages sustained by the victim. If your nonprofit doesn’t have the reserves to cover such a suit, you may want coverage to protect against lawsuits brought by third parties. A cyber-liability insurance policy accounts for the unexpected and protects the nonprofit’s assets.

How do you choose the right coverage?
Cyber-liability insurance is often industry specific and varies based on the organization’s type of risk and level of exposure. If you collect any sort of sensitive information, it’s absolutely worth it. Many cyber-liability products offer a menu of insuring agreements, so you can choose the coverage that works for you. Working with an experienced insurance agency and agent can get you the best coverage for your organization.

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Filed under Information and Technology, Risk Management

Does Your Nonprofit Need to Register to Raise Money for your Mission?

Yes!  Before conducting any fundraising activity, Kentucky law requires a nonprofit organization to register with the Kentucky Office of the Attorney General, Consumer Protection Division. There are 92 pages on the Attorney General’s website listing charities who have registered.  Given the number of nonprofits registered with the IRS in Kentucky, there are certainly some organizations who may not be aware of this law or have not updated their registration.  If this includes your organization, don’t delay – now is the time to ensure your nonprofit is compliant.   And the good news is the Attorney General’s office exists to help.

Also important to consider is that with the emergence of online fundraising, an organization not paying close attention to its donor list can find itself subject to the charitable solicitation laws (including registration) of another state.  Unfortunately, there is no single national registration application that works in every state, though 36 states (including Kentucky) do accept a unified registration statement.

It’s important to take the time to understand the law and follow the steps required to be sure your organization is in compliance so that your nonprofit is in great shape to raise the needed funds to accomplish your mission.

Resources:

Kentucky Office of the Attorney General

NOLO Resources

National Council of Nonprofits Resources

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Filed under Fundraising, Transparency and Accountability

Donor Acknowledgement – A Single But Critical Step

The donor acknowledgement or thank you letter is one of your organization’s most important communication pieces.  This is only one piece of the overall donor cultivation process, but a well-crafted thank you letter is an important step to creating lifelong, loyal donors.

Acknowledgement can also be a legal requirement.  Nonprofits are required by the Internal Revenue Service to formally acknowledge single financial donations of $250 or more and must also confirm whether or not any goods or services were received by the organization in exchange for the donation.

It is a best practice to receipt and acknowledge all donations to your organization, regardless of the amount.  Certainly, a great letter can continue to tell your organization’s story, set your organization apart and is an important step towards getting the next gift to support your mission.

Below are four thank-you letter best practices to ensure your nonprofit makes the most of this important communications opportunity:

 1. Send a thank you letter.  For every gift. Every time.  Regardless of the amount.

Also, if using an online donation processing partner,  don’t let the emailed receipt be a substitute for a personal connection with donors.  A more personal gift acknowledgement should also be sent by the organization.

2.Make it prompt!

A thank you should be sent promptly after the donation is made – within 48 hours if possible.  Nothing is worse than a supporter wondering if an organization even received their gift at all.

3. Make it personal.

Address the supporter by name in the greeting line, and write directly to the supporter.  Kivi Leroux Miller suggests thinking of the best thank you letters as like “Hallmark cards – They feel personal, even though we know they were written for thousands of others.”  Keep your letter warm, friendly, personal and short, just like a greeting card.

4. Share progress.

Supporters want to know that they matter to your organization and that their contributions make a difference.  Show them – through photos, statistics, or compelling stories – how their gift is bringing about real change.

Share with us – what tweaks to your thank you letter has your organization found successful?

Other Resources:

IRS Charitable Contributions: Substantiation and Disclosure Requirements

Nonprofit Thank You Letter Dos and Don’ts

How to Craft a Killer Thank You Letter

KNN Resources:

29 Days is a Long Time

KNN fundraising resources page

Generating and Diversifying Revenue Webinar

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Annual Reports

It’s that time of year for many nonprofits – developing the annual report.  This can be one of your organization’s most important communications pieces and keeping your constituents updated is a recommended nonprofit management best practice.  It’s a way for your nonprofit to tell its story and share important information regarding activities and performance in ways your supporters will understand and appreciate.  But how you best communicate this information is not always an easy decision.  Printing and postage costs have caused many nonprofits to give serious consideration to the format of their annual report.  One large nonprofit found that only half of the 29,000 printed annual reports it sent were even opened, let alone read!  Below are some suggested ways to keep your costs down and still share your accomplishments:

  • Create a visually appealing, easy-to-access report, but publish it as a PDF document on your website.  Even better, publish an ePub version so people can flip through the virtual pages on their tablets.
  • Want to impress your supporters?  Use a short video to share information about your programs; videos are impactful because they allow organizations to convey stories with more emotion.  They can also be used as TV spots and community presentations, making it more cost-effective.
  • E-mail the link, and mail printed reports on demand only to those who request a paper copy.
  • Worried that not all your supporters utilize e-mail?  Mail them a postcard with the PDF link to the electronic copy.  Include your contact information so they may request a printed copy should they want one and then print in house, on demand.
  • Utilize a new format, such as postcards or other smaller, more affordable options.

Whether looking for ways to tweak your annual report or are doing a report for the first time, check out these resources containing ideas and thoughts about making the most of this important communications tool:

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Board Meeting Minutes – How Much is Too Much?

The minutes of a nonprofit’s board of trustees meeting are the official, legal record.  Over the years, we’ve seen this range from a few paragraphs outlining the key decisions of the board to minute by minute documentation of every word spoken at the meeting.  Obviously there has to be a happy medium.

Recording your meetings, documenting a closed session of the board and open records laws are just some of the things your organization should consider to be sure you are following the law, protecting the organization and protecting the trustees.  Also, caution board members against keeping their own “unofficial” copy of meeting minutes back at the office in a file folder.  History has shown that these simple notes scribbled on your agenda can be used in legal proceedings.  Check out these resources to be sure your nonprofit’s minutes are on target.

KNN Resources:

KNN Governance

Other Resources:

Board Meeting Minutes

Should the Board Hold Executive Sessions?

Nonprofit Legal Guide to Meeting Minutes

Taking Minutes of Nonprofit Board Meetings

Kentucky Open Meetings and Open Records Laws

Let us hear from you: who takes the minutes at your board meetings – staff or the board secretary?

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Voter Engagement

September 25 is National Voter Registration Day!

With everything else your organization is working on, why should your nonprofit get involved in voter engagement?  Our friends at Nonprofit VOTE share several reasons why the nonprofit sector is critical to voter engagement:

  • A Working Democracy Is Critical to Nonprofit Goals and Missions:  Nonprofits are more likely to thrive in an environment where government is held in high esteem and people are more likely to participate in the process.
  • Wide Gaps in Who Votes Undermine Democracy and Our Nonprofits:  For the past three decades voters have been disproportionately of higher income, older or more partisan in their interests.  How would our world be different if everyone participated?
  • Voting Benefits the People Who Participate:  People who vote are associated with a host of positive civic, health and social factors. Compared to non-voters, voters are more likely to volunteer, contact their elected officials, and stay informed about local affairs. They are more likely to contribute to their neighborhood’s “social capital” and live in communities where neighbors are in contact with one another.

Many nonprofits work regularly with underrepresented populations – those we serve and sometimes our own employees.  There are small simple steps nonprofits can take to encourage voter participation – even as simple as encouraging employees and volunteers to register to vote. Yes, nonprofits must remain strictly nonpartisan. But that doesn’t mean we must roll over and play dead to avoid speaking out during an election cycle. Nonprofits have the opportunity during this and every election season to advance our missions by calling attention to the issues that matter to the people and communities we serve.

Resources:

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Filed under Public Policy and Advocacy

Youth Serving on Nonprofit Boards

Youth serving on nonprofit boards is an issue that comes up from time to time and while I always try to shoot you straight, I am going to be blunt here:  I have mixed feelings about it.  I desperately see the need for many organizations to incorporate the perspectives and experiences of different generations and target audiences, especially when the organization serves these folks.  But I also see the potential legal issues and concerns.  As a parent, I am not sure how I’d feel about my minor child being legally responsible.  Being even more blunt:  as a nonprofit executive, I’m not sure how I’d feel about a minor being part of my annual evaluation process – some adults with extensive work experiences struggle with this.

This is one of the those topics where I’m not sure there is a best practice.  Since there is no law addressing this issue in Kentucky, I think each organization must look at their unique situation and determine what works best for them.  But I do think it’s critical to point out that simply putting a young person (or woman, or African-American or consumer) on your board won’t solve your engagement issues.  Most all of us have served as the “token” something at one time or another and it rarely leads to the desired outcome.  Committee service, advisory councils and other strategies may be just as, if not more, effective in getting youth engaged in leadership roles in the sector.

One thing I am certain of is that using a tool to assess the skills, diversity and expertise needed for your board is a best practice.  And I believe it’s key to strengthening your organization.  If you’ve ever attended one of our Boards 101 workshops, you’ve heard me talk about “warm body recruiting.”  Simply filling the seats, getting a quorum, getting “big” names for the letterhead and/or website will not build the kind of board your nonprofit wants, needs or deserves.

Resources:
Youth Board Members

Young People on Nonprofit Boards?  Good Idea, But Know the Law

Board Service by Young People

Let us hear from you – how do you feel about this issue?  How can we successfully engage youth (and other audiences) in our decision-making?  And make it meaningful?  What things have worked, not worked at your organization?

Danielle Clore

Executive Director, KNN

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