Issue 4 – 2010

  Best Defense is a Good Offense
Strategies for protecting tax-exempt status, minimizing impact of new fees

Four Horsemen of Agency Success
Organizations should focus on developing infrastructure related to buildings, equipment, staff, and succession planning


Empowering Individuals Empowers a Community
Daniels is living proof of success of human services


Best Defense is a Good Offense

Strategies for protecting tax-exempt status, minimizing impact of new assessments

In these trying fiscal times, local, county, and state governments increasingly are looking to nonprofit organizations to help balance their budgets.

In addition to municipalities seeking payments and user fees in lieu of taxes (see companion article in Issue 4 – 2010 of the Alliance for Children & Families Magazine), there also are recent instances of challenges to organizations’ tax-exempt status.

As highlighted in various news reports and legal analyses published during the past few years, some nonprofits, particularly churches, have experienced financial repercussions when they have chosen to close specific facilities, such as places of worship or schools. These organizations have reported surprise upon receiving tax bills for the time the building stood vacant.

A case originating in La Crosse, Wis., recently resulted in a federal court upholding the city’s taxation—a reminder to nonprofit boards that property tax exemptions depend not solely on ownership, but the actual use of the facility in question.1

Awareness and Board Preparedness

As organizations’ legal and fiscal stewards, board members must stay attuned to these trends.

Every board member of every nonprofit organization must come to understand that tax exemption is a privilege, not a right, says Peter Goldberg, president and CEO of the Alliance for Children and Families. This important understanding should be the foundation of not only governance, but of daily operations.

“Nonprofit organizations have a goodwill account with the American public,” Goldberg says. “The best way to inoculate our field from further financial distress is to keep making deposits in that goodwill account. We cannot rest on our laurels; we have to continually demonstrate our value to local and state governments, as well as to our other stakeholders.”

Proactive Ambassadorship

Protecting organizations from local fees and assessments is best done proactively, Goldberg says. This requires an organizational culture that never takes its tax-exempt status for granted. Moreover, it strongly suggests every board member should be a strong, vocal ambassador for the organization, in good times as well as bad.

An organization should use every available tool to define its impact in the community, recommends Kathryn Vanden Berk, a Chicago attorney who specializes in nonprofit law and authors a column in the Alliance for Children & Families Magazine. She suggests looking for new ways to share outcomes and success stories.

“Many organizations don’t take full advantage of the Form 990,” Vanden Berk says. “It provides the opportunity to describe your programs in detail. Use it. Always assume that stakeholders will review your Form 990.”

Vanden Berk also urges organizations to register with GuideStar and use the free website,, to tell their story.

Specific Definition of Impact

When possible, quantifying the organization’s specific value to the community will help stakeholders to clearly understand the positive impact the organization provides.

Tom Harvey and John Tropman, who author the On Board with Nonprofit Governance column in this publication are proponents of well-researched impact statements.

“We prefer the term ‘tax expenditure’ rather than ‘tax exemption’ because it better reflects the act of society investing in the mission of social-benefit organizations,” Tropman says. “We recommend that, when feasible, organizations calculate the value of their tax expenditures and report this back to the community wherever possible. That number continually reminds trustees, executives, and the broader public of the amount of benefit they are receiving via tax policy.”

Krista Larson, executive director of Alliance member Metropolitan Family Service, Portland, Ore., shares this example: “Our 1,875 volunteers contributed more than 133,000 hours of service last year, a value of $2.3 million to the community. As a local nonprofit, our ability to leverage the skills and compassion of local citizens to help address vital community needs is one of our strongest contributions to the Portland region.”

Leveraging Community Partnerships

Investing in community partnerships also is critical, Goldberg says. “Organizations should always be seeking individuals to volunteer and serve on the board or committees, corporations with which to partner and build relationships, and similar-minded nonprofit organizations to team with on important community issues. Doing so deepens the organization’s roots and provides new forums for demonstrating the organization’s impact.”

In Illinois, Chicago-based Alliance members Children’s Home + Aid, Metropolitan Family Services, and One Hope United, in conjunction with the Chicago Alliance for Collaborative Effort, the United Way, and the Chicago Community Trust, launched the Illinois Partners for Human Service. “We bring together human service providers with residents, business and civic leaders, policy experts, communities of faith, and other constituency groups to problem solve and advocate,” says Nancy Ronquillo, chair of the coalition and president and CEO of Children’s Home + Aid.

After the Economic Recovery

Once they are implemented, fees and assessments rarely are repealed, even after the economy improves. That’s why, as always, the best defense is a good offense.

“The word offense implies competition, but that’s not fully the case,” Goldberg says. “It’s not a competition or a disagreement so much as a need to always be mindful of injecting your organization’s name, ideas, and messages into the community on a daily basis in a proactive manner. Doing so will yield many positive results, not only financial ones.”


1. More information about the case from La Crosse,
 Wis., is available online.

The Four Horsemen of Agency Success

Infrastructure development should center on buildings, equipment, staff, and succession planning

The title for this column alludes to an image from Notre Dame football history that dates back more than 80 years. The Four Horsemen refers to a legendary backfield that could score at will because each player had unique skills that complemented that of the other players. Their strength and success came from combining their talent and actions.

It may seem like a stretch to relate great football players to the four infrastructure requirements of a successful nonprofit human service organization. Nonetheless, that is what we intend to do. In this analogy, each horseman corresponds to a component of nonprofit organization infrastructure that agencies should be attentive to.

Face to the Public

In these difficult economic times, it may seem strange to ask nonprofit leaders to prioritize infrastructure development—both physical and social—as essential to success. However, we believe that such consideration is important.

In the last On Board with Nonprofit Governance column, we talked about examining an organization’s value proposition. This can lead to refusing government funding that doesn’t cover the full costs associated with providing high-quality services. Similarly, the same lens can be used to assess the value of individual donor or foundation support.

Often, providers assume that donors only want to support programs. This is a myth, and if organizations accept such an assumption, the quality of service will be starved by the lack of support for quality.

In this column, we ask senior leaders and board directors to focus on their own organization’s physical appearance and business practices. We encourage them to take a look at what needs to be done to improve and enhance the organization’s face to the public.

Horseman 1: Investment in Setting

Regretfully, the physical settings of many agencies we visit do not look good. They appear decrepit or uncared for. As such, they do not convey the aura of professionalism that clients should be entitled to experience. Potential clients may decide to go elsewhere, causing a loss of income.


Do you have a current (within the last 3-5 years) written succession
plan that has been approved by the board?

Which of the four horsemen do you feel is the most critical for your organization to address in the near future?

Respond anonymously in a quick online survey. Then, view others' responses.

The blemishes we often notice may be fixed at little cost to the agency during a single weekend service project organized by the board, staff, or volunteers. A painting or landscaping project, for example, can be undertaken with minimal investment.

A food pantry in a smaller city in Indiana once asked the University of Notre Dame for some pro bono advice about improving their services and community image. We learned that 75 percent of current clients were Latino. A new sign was built at little cost to welcome people in both English and Spanish.

We also learned that the agency worked with local religious congregations to collect used clothing for families to choose from when they visited the food pantry. The clothes were left out in messy piles, which made selection difficult, as well as demeaning to clients. We recommended some simple solutions for improved organization and presentation. One congregation, upon hearing the recommendations, donated chrome clothing racks. The gift was modest; but the impact was dramatic.

The result of these and several other low-cost projects was that the local Latino community is now a major source of financial support and volunteers.

Lastly, boards can develop a fundraising plan that specifically targets physical infrastructure. Often nonprofits trick themselves into believing that donors won’t support improvements to infrastructure and fail to include such opportunities in their fundraising case statement. Yet, larger nonprofits, such as universities, have thrived on raising funds for their physical infrastructure.

Horseman 2: Equipment Efficiency

All too often nonprofit human service providers resist modernizing their technology. This can limit functionality and be counterproductive to the goal of saving money. When tasks take four or five times longer than they should, or records are not easily accessible, the costs related to productivity, staff resources, and overall efficiency snowball quickly.

As with the earlier discussion about the physical setting in which services are provided, there needs to be both an equipment acquisition plan and a companion fund development plan to assure feasibility.

Horseman 3: Social Development

During recessions, nonprofit human service providers are notorious for cutting travel and training to save money. Short term, this makes sense. However, it is not a good priority in the long run. It is through participation in professional conferences and academic seminars that organizations gain new ideas about how to conduct their business more efficiently and with greater impact.


The authors of this column welcome your thoughts, replies, and suggestions for future column topics. Please submit them electronically.


Members of the Alliance for Children and Families and United Neighborhood Centers of America (UNCA) have the opportunity for key staff to gain new competencies during the annual Executive Leadership Institute (ELI) at the University of Michigan. This quality program is offered at a modest cost.

We hope many boards will commit to allowing the CEO or key middle managers to participate in ELI for three reasons. First, because they will be exposed to best practices that can benefit their agencies. Second, ELI is akin to a mini-sabbatical that allows an executive to step out of the day-to-day stress and unwind. Third, ELI offers a great opportunity to network with peers for future support.

Let us also suggest that nonprofits consider local business schools as a practical and valuable partner in creating knowledge development opportunities. There’s an example of this taking place at the University of Notre Dame Mendoza College of Business, which recently offered a 10-day education program to local nonprofit leaders.

Horseman 4: Succession Planning

Just as our second horseman, good equipment, is an extension of the first horseman, a functional physical infrastructure, so too is this fourth horseman, succession planning, an extension of staff development.

What happens to an organization if a CEO, or one of the people who hold other key positions, becomes ill or decides to move on? Is the board prepared? Many are not. Succession planning is like a will; most agree on its importance, yet do not act to draft one.

Having a board-designed succession plan is helpful during the CEO evaluation process. It forces the leadership to keep focused on the future needs of the organization and the depth of its management structure.

Planning: First Step to Victory

We encourage nonprofit boards to add some of the considerations in this column to their strategic plans. It is good to remember the adage, “Only those with small dreams do no planning.”

The agency that plans succeeds. Add in the unique but complementary strengths of the Four Horsemen and the agency is even better prepared for victory.

For more information related to the first horseman, read an Oct. 3, 2010
article in The New York Times. It discusses four essential leadership types. Additional information about the second horseman can be found in a 2009 article by Ann Goggins Gregory and Don Howard titled “The Nonprofit Starvation Cycle.” It appears in the Stanford Social Innovation Review and addresses the myth surrounding the assumption that donors only want to sup-port programs.


Thomas J. Harvey, MSW, is director of the Master of Nonprofit Administration Program at the University of Notre Dame’s Mendoza College of Business. During his 40-year career, he has led local and national organizations committed to confronting the challenges of poverty, discrimination, and access to health care and human services. He is former senior vice president of the Alliance, and he served as president and CEO of Catholic Charities USA. In 2002, he helped found the Alliance’s Executive Leadership Institute. He has been named as one of the 50 pioneers within the field of social work during the past 50 years by the Council on Social Work Education.

John Tropman, Ph.D., is professor and associate dean for faculty affairs at the University of Michigan School of Social Work. He’s also an adjunct professor at the university’s Ross School of Business. His research focuses on the organizational elements that create high-performing human service organizations, which has resulted in numerous articles and more than 20 books. As a consultant, he works with both individuals and organizations. He’s also a member of the faculty for the Alliance’s Executive Leadership Institute.


 View the archive of On Board with Nonprofit Governance columns.

HT Column

Empowering Individuals Empowers a Community

Alliance Civic Engagement Steering Committee member is living proof of success of human services

Carlette Daniels not only believes that empowering individuals can empower a community—she’s living proof that it’s true.

Several years ago, Daniels, a single mother, was struggling financially. She connected with Alliance for Children and Families member Child & Family Services, Buffalo, N.Y., to apply for a low-interest auto loan through the Ways to Work program. The program, which is a national model operated by Alliance sister organization Ways to Work Inc., provides small, short-term loans to low-income families with challenging credit histories.

“I was able to get my car on the road and obtain a much better job because I was able to travel further, which allowed me to repay the loan in a timely fashion,” Daniels says. “All of a sudden good things started happening.”

This firsthand experience with how human service programs give individuals the footing they need to become economically self-sufficient encouraged Daniels to give back. She maintained contact with Child & Family Services’ Ways to Work office, and staff at the organization encouraged her to become involved as a volunteer.

In addition to becoming a member of the Child & Family Services Ways to Work Loan Committee, Daniels began facilitating life skills workshops for children aging out of foster care.

It was through her experience on the loan committee that Daniels first became acquainted with the Alliance. When one of her colleagues on the committee proposed she join the Alliance Civic Engagement Steering Committee, she jumped at the chance to help develop and guide the Alliance’s civic engagement program.

“I thought it would be a great opportunity for me to give back and become involved on a national level,” Daniels says. “I wanted to hear what’s going on in different states, and hear how other organizations are getting people engaged in the community.”

Authentic Experience Reigns

Daniels says her community-centered perspective is one of the most important ways she contributes to the Alliance Civic Engagement Steering Committee. It’s a perspective she demonstrates daily in her own community.

In addition to her service with Child & Family Services, Daniels co-founded G.I.R.L.S. Sports Foundation, a nonprofit organization that uses participation in sports to promote self-esteem, healthy lifestyles, and teamwork among girls ages 4 to 18.

“I personally have a strong passion to help young ladies because of my struggles and my successes,” Daniels says. “The mission of the organization is to empower these young women to become better members of society.”

Civic engagement concepts seamlessly are incorporated into both Daniels’ organization and her personal philosophy.

“Civic engagement means being actively involved as an individual, and then being actively involved in what you want to accomplish as a whole community,” Daniels says. “I think it first has to start with the individual because when individuals see how they can empower themselves and how they can empower others, it becomes a success story.”

Similarly, Daniels says sharing her personal story is a valuable way for her to support the committees she serves on. Having received services from an Alliance member organization, Daniels has insight into the challenges faced by struggling community members, and she understands how those services can provide a launching pad to self-sufficiency.

Laurie Schaller, senior loan counselor/contract compliance specialist at Child & Family Services says the organization has benefitted in many ways from Daniels’ input. “She has helped us with referrals, and her biggest strength is her ability to come up with fresh ideas. Carlette truly believes that the one loan someone receives can help them break out of the poverty cycle.”

Many Layers of Involvement

When it comes to civic engagement activities, Daniels says it is not just about engaging individuals in the community, but engaging other organizations in the nonprofit community. She also notes that there is no “I” in “team.”

She says, “Nonprofits sometimes miss out on opportunities to collaborate and miss the idea that there could be so much more success if you bring in other people and don’t limit your resources to people within the organization.”

In order to seek out the best available resources and ideas for how to utilize them to help meet the community’s needs, Carlette says it is critical for nonprofit organization board directors to be active players in their hometowns. In addition, the work of the board should not start and end with quarterly meetings; being a board member should be a daily commitment.

That’s exactly why Daniels is such a valuable member of the Alliance Civic Engagement Steering Committee, says Linda Nguyen, director of civic engagement at the Alliance. “Carlette brings her knowledge of programs, nonprofit leadership, entrepreneurship, and a good sense of community assets and needs. Her local experience also provides a unique, outside-the-CEO perspective. She sees the world from a unique vantage point.”