How-To Wise Counsel for non-profit ministries and their constituents (edit, back)
08/30/2008
Non-profit organizations are a central part of ASI, comprising a major segment of ASI’s membership. And the professionals and business people who are ASI members often get involved with non-profits as volunteers, supporters and board members.
Thus it is important for us to understand ways that we can optimize the operation of a non-profit organization. We must best serve our ministries so they can best serve others.
To address this issue, Inside ASI recently spoke with two gentlemen well versed in non-profit management.
Harold Lance was a trial lawyer for 32 years. He’s also a longtime ASI member and former ASI president. After retiring from law, Harold served as president of Outpost Centers International for nine years. He lives in Ukiah, California.
Stan Smith is a business owner living in British Columbia, Canada. He has been actively involved in several supporting ministries, including the development of Fountainview Academy, a 70-student boarding school in BC. He is also ASI vice president for finance.
ASI: Let’s start right at the beginning. What is the first step someone should take in establishing a non-profit?
Harold Lance: Fundamentally, the idea to start a non-profit must answer the basics of who, what, why, where, when and how? If the basics can’t be answered, than that’s where the process should stop.
Stan Smith: As the Bible says, in the multitude of counselors there is wisdom. A decision to start a nonprofit organization should be followed by consultation with the appropriate accounting and legal professionals to set up a good structure and establish systems for managing money and administrative functions. And also, seek guidance from those with experience in ministry.
Articles of incorporation and by-laws can seem a bit tedious and inconsequential. Why are they important?
Lance: The articles of incorporation are the fundamental document that defines the scope of the ministry. They need to be carefully crafted to define the intended purpose of the organization. For example, is it to be aligned with the Seventh-day Adventist Church? Are its officers and directors to be Adventist Church members? In the event of dissolution where will the assets go? Many poorly drafted corporate documents have resulted in regret when issues arise that were not anticipated.
Let’s focus on those who will lead and direct an organization. What should we consider when selecting a board of directors?
Lance: Since the ultimate control of the organization is in the board of directors, this becomes the most important decision in the success of the ministry. So ask yourself, do these people have integrity, good judgment, practicality, experience, successful career histories, availability, connections, cooperativeness, freedom from conflicts of interest, generosity?
Smith: Many non-profit organizations look for directors who are potential donors or who may have prominence in important circles, assuming this will assure them more rapid growth in achieving their objectives. While those assumptions may be true, the most important criteria are what Harold just mentioned. An organization whose board members exhibit those characteristics will also achieve healthy growth and support.
Lance: And people with means often have goals that may or not be what the ministry founders had in mind. Money may come with a price.
And what about selecting leadership, like the president and so forth?
Smith: Leaders who have the full spectrum of abilities required for the job usually don’t exist. What we often see as successful leadership is usually the result of a talented team. Leaders need to be chosen and evaluated on the basis of their ability to bring together a team that can achieve the required results, and also their capacity to influence those around them in a consistent, effective and humble manner.
Lance: More ministries fail due to lack of leadership at the officer level than for any other reason. Of all leaders the president is the most important. The skill of the president to see the larger picture and to inspire others to follow and carry out the vision is critical to success.
Money is always a chief concern. What are the key factors to an organization’s financial stability?
Smith: One of the most important but often neglected key factors is adequate and realistic planning. Financial instability is frequently the result of a failure to recognize events and circumstances that could have been identified and prevented through a strategic planning process.
The startup of a non-profit organization is usually driven by a vision or conviction. At times this perspective can result in a carelessness or disregard for the principles of business. There may also be the assumption that God will take care of problems that could have been avoided with better planning. However, the laws of business are as much God-given principles as are the laws of health or nature, and obedience to them will bring a blessing.
Lance: The ability to keep income and spending in balance is critical. Timely and accurate records must be available to management—the spenders—who in turn must function under both a budget and defined policies that have to be approved by the board of directors.
If income has failed to keep up with needs, the management team and board must make prioritized budget adjustments. Openly sharing financial information with the officers and board members will assist in enlisting responsible help.
Directly tied to finances is having active supporters. How does an organization develop a base of such supporters?
Smith:Tell the story of your ministry often, and with sincerity and conviction. Most of all be transparent and truthful. Financial support comes when individuals identify with the organization’s vision and strategy and believe in its integrity. In addition to promoting your organization widely, find those people who already share your ministry’s priorities and vision and build close relationships with them.
Lance: Rarely do the founders of an organization have the resources to carry out their vision. So where does help come from? Others besides the founders must be convinced that the ministry’s purposes are worthwhile and achievable. Credibility doesn’t just happen; it’s earned. It’s a daunting task for a ministry to survive long enough to earn respect and support. It’s almost like trying to lift yourself by your boot straps. Not easy!
In order for someone to make a decision to help a ministry financially, he or she must know about its activities and be persuaded that it is practical and worthwhile, that leadership is capable and trustworthy. Brochures, articles in journals, personal contacts, interviews—all can catch the attention of potential supporters. Good planning includes good promotion that’s appealing and truthful.
Last question: how should an organization deal with disappointing developments?
Lance: When disappointments and troubles come, and they will, how a ministry deals with them will be key to survival and continuing support. Too many ministries, when faced with disappointing circumstances, fail to react positively.
Certainly the best way to deal with disappointing developments is to avoid them in the first place. Good managers and board of directors will see most problems before they get out of hand and will deal with them in ways that minimize loss.
It may seem awkward, but when public embarrassments occur, ministries with a plan in place to mitigate damage are more likely to survive without scars. Integrity, good judgment and fairness are the best weapons against bad news.
Smith: We should expect disappointing developments. The greatest people in the Bible had incredibly tough times. It has been said that the brick walls we face in life either prove our dedication, or stop those with inadequate commitment. Frequently in the work of ministry we put our faith in people, systems and money and not enough in the role of Providence. Remembering evidences of how God has inspired and helped in past times of difficulty encourages us to request and expect his guidance in the present.
Gentlemen, thank you so much.