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Nonprofits Concerned about Revenue and Staffing

WASHINGTON (AFP eWire - Jan. 6, 2004) - At the end of 2003 the three greatest challenges for nonprofits were revenue, staffing and operating costs, according to a recent survey.

The 2003/2004 J. H. Cohn Not-for-Profit Survey questioned 123 organizations to evaluate sector trends, including fundraising expectations, government funding and concern about the Sarbanes-Oxley Act. J. H. Cohn LLP, based in New York City, is the largest accounting and advisory firm in the Northeast.

While revenue was the No. 1 concern of the nonprofits, the majority, at 58 percent, expected contributions in 2003 to exceed those for 2002. However, only 47 percent had a plan to increase contributions through planned and deferred gifts.

'With trillions of dollars expected to be transferred over the next several years, organizations can take advantage of this opportunity to increase revenue by utilizing instruments such as annuities, charitable remainder trusts and charitable lead trusts,' said Jim Heinze, partner-in-charge of the company's Not-for-Profit Services Group.

Despite recent corporate scandals and the implementation of the Sarbanes-Oxley Act, only 19 percent of the nonprofits surveyed said contributors had asked about the organization's internal controls or accounting policies and procedures.

Sarbanes-Oxley is designed to strengthen standards used by corporations and increase oversight of corporate governance and operations. While most of Sarbanes-Oxley affects only publicly traded companies, a couple of sections - concerning whistle-blower protection and the destruction of documents - do affect the nonprofit sector.

While the percentage of donors asking about internal policies is low now, it could increase in the future, said John Alfonso, a partner in the Not-for-Profit Services Group.

'If organizations are unable to demonstrate that they have strong systems and policies in place, they may risk losing contributors down the road,' he said. 'While this will be another challenge in the quest to maintain and solicit funding, what better time than now to utilize corporate governance in the revenue strategy.' (For more on Sarbanes-Oxley's effects on nonprofits, visit the Public Policy section of the AFP website.)

The report included several suggestions on how to recruit and retain quality staff, especially as nonprofits compete with the for-profit sector, which can often offer higher salaries.

Nonprofits have tended to provide better benefits in the past in an effort to compete with for-profits' higher salaries, but with rising health care costs, this may no longer be viable, the report said. Instead, nonprofits can help build morale by creating employee development plans that allow employees to set goals and action steps; recognizing staff for their dedication, expertise and accomplishments; outsourcing some functions to volunteers and using the money to increase salaries; or identifying ways to maintain attractive benefit programs.

For a copy of the survey, call or email Kendo Scott at J. H. Cohn, (800) 879-2571 ext. 7459.

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