Ferland Final Project Executive Summary

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Apr 3, 2024

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1 Final Project: The Executive Summary Kylie Ferland Southern New Hampshire University OL-445-H3935 Professor Sofoklis Hiotellis February 23, 2024

2 Emerald City Community Economic Development Corporation (ECEED) has spent the last past 3 years, from 2012 to 2014, getting their finances in order. In 2012, their expenses were causing them to operate on a $123,000 deficit. In 2014, their expense allowed them to operate with $410,000 in a net profit. That means that they have reduced their expenses by $453,000. This shows that the organization has had considerable growth over the past three years. One thing to note is that ECEED has noted that each of the three buildings that the own have increased at 5% each year for the liabilities. This has had an impact on the assets each year. ECCED has collected much of their funding from the disability programming fees, development fees, and their school program. The disability program fees accounts for 28.78% of the revenue; the school program income accounts for 25.18% of the revenue; and the development fees accounts for 17.99% of the revenue. The largest expense for ECEED is the employees’ salaries. It takes 68.37% of the expenses. ECEED also has large balances on the real estate notes. This keeps their long-term liabilities high, which eliminates a lot of the room for net profit. When you look at the overall health of ECEED, there is room for improvement. As one looks at the financial statements of a nonprofit, they will see that an organization’s assets will be greater than their liabilities. You will also see that the net assets will be large enough to allow the organization to achieve their goals in the long-term (Scarano, 2022). ECEED does not show this and their financial position is not great in the long-term. The liquid assets are sufficient enough to cover their expenses at the moment, however, the real estate notes will continue to be an issue unless ECEED is able to increase revenue drastically. Even though they have been able to increase their net profit margins, it will be risky if they cannot increase the net assets further.

3 It is recommended to increase the revenues by at least 3% over the next five years to be able to stay ahead of the expenses. There will need to be more done though. here needs to be more fundraising done on the part of ECEED. They cannot always guarantee grants and donations from the community. Fundraising will do two things for the organization. This will allow the organization to raise the money to have a larger profit margin, which will allow them to stay ahead of the increase in expenses over the course of the next five years. It will also allow for great publicity and marketing. This will allow them to be able to get more donations from the local community and the large corporations in the area. If they were to do this, then they can stay ahead of the expenses and possibly expand programing in the future. ECCED will need a strong fundraising plan going into the next fiscal year. ECCED has been able to cut their expenses by 31.61% over the past 3 years, the future of the organization depends on them to increase the revenues each year to be able to cover all expenses and grow the organization. It is important to continue to receive individual contributions. ECCED can do this by adding the option for individuals to donate through the ECCED website. They can also do this by peer-to-peer fundraising. ECCED also needs to increase the corporate donations. They can do this by incorporating a corporate sponsorship program. In a report that analyzed over 128 million households, 600,000 nonprofits, and 80,000 foundations by Cooke and Alfred Group (2020), more than 69% of charitable donations made were individual contributions, 17% were foundations support, 10% were bequests, and 5% were corporate donations. Looking at the financial statements for ECCED, the contributions from individuals, foundations, corporations and the Board of Directors are only 12.96% of the total revenue with the Board of Directors contributing 2.16% of the total revenue and individuals, foundations, and corporations contributing 3.6% of the total revenue. `

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4 When it comes to the individual contributions program, ECCED can target high school and college aged students to hold peer-to-peer campaigns. Many schools have a community service requirement for students to graduate and have families and friends that they can solicit donations from. This makes them the ideal candidates to help run these types of fundraisers. Students can receive 5 hours of community service hours and each student have a minimum goal of $1,000. If the organization can get 20 students to participate are various points in the year, ECCED could see a 40% increase in the individual contributions alone. This program can help contribute to the organization growth because as the program grows, not only will there be an increase in the revenue, but there will also be an increase in the community awareness as well. This is important for all local organizations. New donors are also individuals that ECCED can ask to help with the various volunteer activities that the organization has throughout the year. Because ECCED is not currently soliciting donations on the organization’s website, the organization is missing out on potential revenue through those who hear about the organization through our social media channels and word of mouth. The easier it is for someone to donate to an organization, the more likely they will make donations. According to Double the Donation (2024), revenue from one time donations decreased by 12% in 2022 but monthly donations increased by 11% and they accounted for 28% of all donations given online. Those are the kinds of donations ECCED wants to see. If monthly or quarterly donations from individuals can be obtained, as well as the one time donations, then ECCED will see an increase in the revenue for ECCED. When looking at corporate revenue streams, there is an opportunity to increase the reach with a corporate sponsorship program. The organization can create a standard set of four opportunities within each of the three programs that the organization runs. These opportunities

5 will highlight the attributes that corporate liaisons are interested in. Examples include the STEM programs that are available at the charter school, sustainability at the various housing programs that are run, and possible opportunities for those with developmental disabilities to be able to advance in society. Corporations can sponsor classrooms, events, volunteer days, or anything that they can think of in conjunction with ECCED depending on their level of commitment to the sponsorship. The more hands on, the bigger the benefit for both ECCED and the corporation. ECCED. Corporations will want to benefit from the sponsorship as well. By providing social media posts, press releases, and other recognition about their sponsorship, they will get their name out into the community and people will be trusting of them because they will know that they are doing good work in the community. The packages that ECCED offers should start at $5,000 and there needs to be a goal of 5 new sponsors. This would generate a 50% increase in the total revenue. Corporations that are eager to sponsor the organizations target areas are likely to see a high success rate. With both of these programs running there will be $45,000 more in revenue coming in a single year. These programs can grow over the years which can lead to even more revenue coming in each year. The more ECCED works with the community and the corporations within it, the better the chance of the organization growing and succeeding in the years to come. The governance of ECCED is important for the organization going forward. The Board of Directors govern the organization through oversight, large-scale planning, as well as the overall direction of the nonprofit (Kindful, n.d.). ECCED has a strong governance structure already in place. There is always to improve any structure already in place. This will allow the organization to grow. The Board of Directors is very diverse through all the experiences that they bring to the Board. They come from a variety of backgrounds that will bring experience and knowledge that

6 otherwise would not be available to the organization. It is recommended that ECCED implements committees within the board in the following areas: finance, governance, fundraising, development, and a committee for every program the organization is running. The committees should be assigned based on Board member interests. They should rank their choice of committee and he assigned by the President so that all committees are fully and diversly organized. The full Board of Directors will assign tasks and goals to the committees whose job will be to implement and handle. They will make recommendation to the full board for adoption of policies, activities, and tasks. Committees would allow the Board of Directors to tap into individual talents and expertise of each board member to help the full board make the best decisions. It will also allow the Board to divide the work up into something that is more manageable (The Diligent Team, 2019). The Board of Directors can form any new committee as it sees fit. The initial committees will allow for a vast improvement in the future of ECCED. The committees can generate ideas for special events, sponsors of programs or events, secure donations for various events and programs, and help to sell tickets to various events. By utilizing the strengths of the board members, many of whom are already passionate about the organization and the work that it is doing, ECCED can advance their agenda and ideas. They will also better utilize the board’s time and resources. There are some concerns in regard to Been Scrooge and the fact that he is serving as a board member in the capacity of Treasurer but he is also being paid as the Finance Manager. Mr. Scrooge took over for Mr. Cratchet in manner that is unethical. According to the Personnel Profiles given to me, He worked with the previous executive director to reposition Mr. Cratchet out at the Finance Director and got the board to recommend him as the replacement. This leads to a personal benefit of a board member which can lead to potential issues down the road.

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7 It is recommended that Mr. Scrooge be removed from the Finance Manager position and remain as the Board Treasurer. I am unaware that he has recused himself from any financial conversations that affect him, such as employee benefits and compensation. This means that he is actively fighting for compensation and benefits for himself. Mr. Scrooge currently receives a salary of $50,000 a year for his position as the Finance Manager. He does also make a financial contribution annually as a board member. Board Members should always act with integrity, kindness, and in the best interest of ECCED. The actions of Mr. Scrooge, while helped the organization in many ways, was not in line with these core values. According to the North Carolina Board of Directors for Nonprofits, employees are allowed to serve on the Board of Directors, but cannot vote on anything. This is a conflict of interest (Form123, 2024). However, in the case of Mr. Scrooge he was directly involved in the firing of Mr. Cratchet. The Board of Directors is involved in the hiring and firing of employees and that means that Mr. Scrooge was involved in that. The previous Executive Director was influenced by a board member and did not make the decision fully on the basis of ability. The other issue is that board members are usually only receiving compensation in the forms of reimbursement when it comes to board member meetings and retreats. They are not compensated for their time outside of that (Business Law Section of the North Carolina Bar Association & North Carolina Center for Nonprofits, 2003). Mr. Scrooge is compensated for his work as the Finance Manager, but is also making many of those decisions with his position on the board as Treasurer in mind. While there is no mention of this, there is a great change that he is working on Treasurer stuff while in his capacity as Finance Manager. So he would be getting compensation as the Treasurer as his is getting paid for that time.

8 When evaluating the personnel issue, I looked at the potential legal issues that could arise with us being potentially in violation of the 501(c)3 status. While there are no laws being violated, there needed to be research done as to the ethical violations. It is known that many nonprofits operate their boards in a volunteer capacity. There is also the fact that some board members are brought on as a third-party source. This means that having someone who is an employee, who is also a board member, and an officer of the board can endanger the integrity of board and it can create many potential conflicts of interest (Hardt, 2022). Many board members serving in a double-duty capacity are recommended to be removed from either their board position or as an employee. Mr. Scrooge has been a valuable member of the board since he joined. He has been integral in many things that the board has worked on and even done things to help the organization because he has valuable information and skills. Due to this, I believe that his talents will be better suited to the Board of Directors. He can still work with the Finance Manager to help move the organization forward. The IRS insists that nonprofits operate within an ethical code that requires that nonprofits not be “operated for the benefit of private interests” (National Council of Nonprofits, 2022). It can be seen that the board and the organization is acting in the best interests of Mr. Scrooge and not in the best interests of the organization. By removing Mr. Scrooge from his position as Finance Manager, the organization will show that they want the best for the organization and their clients as well as demonstrating that they are fair and inclusive. They would be able to fill the position with someone who is qualified for it as well as potentially bring in new ideas. Since 2012, ECCED has been a large part of the community. We know that many of our low-income residents face adversity that others do not. As such, I am proposing that we open food pantries and home delivery service for those in our communities. According to research, in

9 2022 12.8 households faced food insecurity (U.S. DEPARTMENT OF AGRICULTURE, 2023). In 2022, 11.5% of all households fell below the poverty rate in the United States (Center for American Progress, 2024). Many of those in our communities have to choose between housing, food, medication, and transportation. I feel like the issue of food security needs to be addressed. For this to be accomplished, we should establish 3 food pantries. One should be located at Charter Elementary School, one at our 50-unit business, and one at the senior living complex. We should also offer grocery delivery for those that are unable to go themselves. This can make sure that those of our clients that are the most vulnerable are able to eat healthily and will not have to worry about the barriers to food. A program such as this aligns with ECCED’s mission, which is to provide a way for people to improve their quality of life. Food is a necessity to survive and should be a basic human right. With food prices increasing, it is becoming harder for people to afford quality, healthy food. The three food pantry and home delivery service can be implemented easily. By utilizing spaces that we already have such as the communities that we have built and the school, we can save money. We can also utilize staff that is available in those locations. The budget for this project should be $300,000. This project will help 250 families and individuals. The cost will be about $100 per person/family per month. Those that struggle the most to get the services that they need will be able to get back into the swing of things and back on their feet. We do not need to purchase additional space. We would need to purchase 2 passenger vans which will cost $750 per month, food for delivery as well as for the pantries at about $6000, and additional staff including a Program Director and a Nutritionist. This program will help to grow ECCED as it is going to allow for additional funding to be available for the organization as well as giving the organization a better opportunity to serve

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10 our clients. With the financial concerns that we are facing, the additional funding opportunities is important for the success of this program and the organization. Staff will have a change to increase their leadership skills and their ability to communicate as the new program is implemented. ECCED will be able to expand the team by hiring new staff to help fill positions. These staff members should be passionate about the program and what ECCED does overall. They should also bring fresh ideas to the table which can help the program grow over time. In conclusion, Emerald City Community Economic Development Corporation has a plethora of chances to grow in the upcoming fiscal year. ECCED should prioritize a few things in order to be successful. The first thing is to locate a replacement for the Finance Director. Due to the fact that Mr. Scrooge is holding that position currently, ECCED can be held liable for potential ethical concerns. We need to show the community that we emit the values that we want to uphold. The next priority should be that the online donation platform and the peer-to-peer campaigns should be created and implemented. Following this we should create our corporate sponsorship packages. The arrival of funding will be critical for this organization as it continues to grow and expand. This will also allow us to get out of the financial rut that the organization is currently in. ECCED Should then focus on creating board committees. Connections for corporate sponsors and large donors are important and needed so the creation of these committees will help the growth of the organization. Finally, after the increase in funding and guidance from the committees, ECCED should continue to expand the programming with the creation of the program for the food pantry and home delivery service says. With proper planning for these programs, ECCED can make sure that the services are properly funded and in the best position to serve our clients successfully.

11 References Business Law Section of the North Carolina Bar Association, & North Carolina Center for Nonprofits. (2003). GUIDEBOOK FOR BOARDS OF DIRECTORS OF NORTH CAROLINA NONPROFIT CORPORATIONS (2 nd edition) A cooperative project of: Business Law Section of the North Carolina Bar Association and North Carolina Center for Nonprofits ACKNOWLEDGMENTS . https://www.ncnonprofits.org/sites/default/files/resource_attachments/ BoardGuidebook_2ed.pdf Center for American Progress. (2024). Data on Poverty in the United States . Center for American Progress. https://www.americanprogress.org/data-view/poverty-data/ Cooke, A., & Alfred Group. (2020, June 23). Giving USA 2020 By the Numbers and Beyond . Alford Group. https://www.alford.com/giving-usa-2020-by-the-numbers-and-beyond/#:~:text=As%20a %20percentage%20of%20total Double the Donation. (2024). Nonprofit Fundraising Statistics to Boost Results in 2024 . Double the Donation. https://doublethedonation.com/nonprofit-fundraising-statistics/#:~:text=Key %20Fundraising%20Statistics%3A&text=21%25%20of%20total%20nonprofit %20giving Form123. (2024). Nonprofit Board of Directors, Officers & Members Explained . Form 1023 Tax Exemption Application Help & 501c3 Instructions. https://form1023.org/nonprofit-board- of-directors-officers-members-explained Hardt, M. (2022, October 31). Can Nonprofit Board Members be Paid Employees? Corban OneSource. https://corbanone.com/can-nonprofit-board-members-be-paid-employees/

12 Kindful. (n.d.). Board Of Directors: Nonprofit Governance And Structure . Kindful. https://kindful.com/nonprofit-glossary/board-of-directors/ National Council of Nonprofits. (2022, December 25). Ethics and Accountability for Nonprofits | National Council of Nonprofits . Www.councilofnonprofits.org. https://www.councilofnonprofits.org/running-nonprofit/ethics-accountability/ethics-and- accountability-nonprofits Scarano, J. (2022, November 4). Statement of Financial Position: What are Nonprofit Net Assets? Araize. https://araize.com/nonprofit-statement-of-financial-position/ The Diligent Team. (2019, January 19). The role of board committees . Diligent.com. https://www.diligent.com/resources/blog/the-role-of-board-committees U.S. DEPARTMENT OF AGRICULTURE. (2023, October 25). USDA ERS - Interactive Charts and Highlights . Www.ers.usda.gov. https://www.ers.usda.gov/topics/food-nutrition- assistance/food-security-in-the-u-s/interactive-charts-and-highlights/

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Ferland Final Project Executive Summary

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