How To Keep Nonprofits Protected, Preserved, And Positioned For Growth
Attorney Yaida Ford of Ford Law Pros shares practical insight and advice on how to keep nonprofit organizations strong, legally protected, and thriving.
Originally Published Oct. 15, 2018
Whether they’re well-known organizations such as the NAACP, National Urban League, National Action Network, and the United Negro College Fund, nonprofits, large or small, are responsible for promoting causes and missions that deliver tremendous impact to our world.
BLACK ENTERPRISE recently exchanged with attorney Yaida Ford of Ford Law Pros to share insights on how nonprofits can stay protected and preserved throughout the organization. According to Ford, “Nonprofits are extremely cost-sensitive at times but there is a risk to cutting costs on items that will cost the organization in the long run.”
Case in point, Ford recently represented a nonprofit in litigation over a commercial lease that it signed with a landlord. Before officially opening for business, the organization needed a use and occupancy permit from the county. When applying for the permit, the organization’s representative learned from the county’s real estate property clerk that the address contained in the lease was not legitimate. The clerk requested that the organization provide blueprints for the property; however, the landlord refused to turn over the blueprints, forcing the organization to vacate less than six months after moving in. The organization retained Ford Law Pros after the landlord sued the organization for the full rent due under the one-year lease agreement. She successfully dismissed the landlord’s lawsuit, but then the landlord sued again over another issue. “The organization could have avoided the cost of moving in, building out the space, moving out again, and losing its operational capacity for six months if it had sought an experienced commercial realtor or legal counsel during the lease negotiations. Litigation is a strongarm tactic that wealthier corporations will use to intimidate nonprofits. The process ends up costing both sides time and money.
Ford shares five ways to keep nonprofits protected, preserved, and positioned to grow and thrive:
Two letters should be at the top of every organization’s vocabulary: ‘D’ and ‘O.’ These letters signify directors’ and officers’ liability insurance in the legal world. In the era of #MeToo and everything in between, nonprofits should obtain insurance coverage that will protect the organization and its board members’ personal assets if the organization is sued for the errors and omissions of an employee, volunteer, or one of its executive officers. In the last 10 years, 63% of nonprofits filed a claim under their D&O policy compared to 27% of for-profit companies. This suggests nonprofits are much more likely to be sued than for-profit companies. Far too many nonprofits do not utilize D&O coverage, and they are left vulnerable to any potential lawsuit, no matter how frivolous.
Create a well-prepared annual report, and you will expand your donor base and annual gifts. An excellent annual report will focus on two primary areas: fundraising accomplishments and development. Development should include media relationships, partnerships with other organizations, outcomes for the nonprofit’s targeted population, testimonials from staff and members of the target population, data, and research on areas of need within the target population and how your initiatives are meeting those needs. Lastly, the report should mention something about the organization’s internal sustainability (human resources, finance, and other administrative functions) to show how well it is supported or why more support is needed. Once an organization has a solid annual report distributed widely, it will see a boost in its donor receipts. However, ensure that all the data in the report is accurate and honest. If any data is manipulated, this will ruin the organization’s standing in the community.
Succession planning is critical for the longevity of nonprofits. Keeping fresh blood on the board will ensure that the organization is not resistant to change when change is needed and will prevent leadership vacuums, which make it hard for organizations to make effective decisions during times of crisis. Therefore, scout for future leadership on the board of directors early and often. This is referred to as “change management.” An organization will need new leadership with new ideas to keep pace with the changes in culture and technology. What worked for the organization in 2018 will not work in 2020. Boards also need to look for their next executive director while the current one is in place and begin grooming other board members or look outside the organization for someone to take the helm so that the organization can maintain a healthy trajectory for years to come.
Invest enough of your resources in staff development to protect your organization against frequent turnover. The staff working directly with the target population are handling the organization’s service delivery component. If they are not well-trained or lack the resources needed to adequately perform their jobs, this will harm the organization’s reputation and ability to raise money. I recommend sending staff to conferences out of state or even in other countries so they can bring back fresh ideas on service delivery. Investing in staff also conveys that you care about their personal growth, making them more invested in the organization.
Leadership retreats are critical and will avoid burnout in your executive leadership team. Most nonprofits “plow through” the year to meet the needs of their target population. The leadership and staff of a nonprofit do not talk to one another during the year outside of normal meetings. Staff and board members should get together (out of the office) at a retreat setting so staff can be heard. After all, they are the ones who do the work. This will get the board’s attention and will motivate them to find ways to increase funding and other forms of giving.
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