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First Steps During Transition
Transition of leadership has the potential to be challenging for all those involved in a human service organization including clients or those served by the organization, employees, including supervisors and frontline staff, and the other community organizations that work alongside or in partnership with the organization experiencing the change. My first few steps in taking on this role would be to consult with the advisory committee, the management staff, and community partners to thoroughly examen the work currently being complete by the organization and what, if any, areas need immediate attention. If our human services organization goes on to apply for tax exemption this could also help with development of a mission that would support organizational tests under tax-exempt law. A statement of purpose describes the mission of the entity (Hopkins & Gross, 2016).
As the transition to becoming an independent fiscal agent continues, the development of a board would need to be discussed as well as how the organization will independently govern. “[The prevailing view] is that a well-governed nonprofit organization is more effective and more compliant, and that policies and procedures are an indication of a well-governed entity” (Hopkins & Gross, 2016, p. 62).
Models of Non-Profit Organizations to Gain Fiscal Independence with 501(c)(3) Status
Since the human service organization described here is sponsored by another organization it is possible this organization has served as a supporting organization; the organization has operated for the benefit or work of the organization it supports (Hopkins & Gross, 2016).
To gain fiscal independence, the organization could look at establishing itself as a publicly supported organization, either a donative type or service provider type, depending on the primary, one-third, source of the funding being government, for donative, or from a combination of grants, membership fees, and fee-for-services revenue, for service provider (Hopkins & Gross, 2016). Donative type funding may present unique challenges for a developing agency as the human service organization would be required to work under contract rules and regulations that may limit their ability to make independent decisions (Jang & Feiock, 2007).
Further decisions around fiscal independence would be around applying for tax-exempt status. “Although the terms tax-exempt and nonprofit are often used interchangeably, many nonprofit organizations are not tax-exempt, and there are several different categories of tax-exempt entities, all of which are considered to be nonprofit organizations” (Gordon et al., 1999, p. 114). If the human service organization meets the requirements under tax exempt law filing for tax-exempt status would be another step to take in establishing fiscal independence. Tax-exempt organizations include the following: charitable and like organizations, religious organizations, educational organizations, scientific organizations, social welfare organizations, labor/agricultural/horticultural organizations, business leagues, social clubs, fraternal societies, veteran’s organizations, political organizations, etc (Hopkins & Gross, 2016).
Core Value: Respect
Saint Leo’s core value of respect can be applied with the first steps identified above. By consulting with the advisory committee, management staff, and community partners, this allows the incoming director to respect the commitment already being made to the human service organization’s work and mission. Doing this allows the incoming director to consider the input of these same people while making decisions for the future of the organization.
References:
Gordon, T. P., Greenlee, J. S., & Nitterhouse, D. (1999). Tax-Exempt Organization Financial Data:
Availability and Limitations. Accounting Horizons, 13(2), 112-128.
Hopkins, B. R. & Gross, V.C. (2016). The Legal Framework of the Nonprofit Sector in the United
States. The Jossey-Bass Handbook of Nonprofit Leadership and Management (D. O. Renz
& R. D. Herman, Ed). Jossey-Bass, A Wiley Brand.
Jang, H. S. & Feiock, R. C. (2007). Public versus Private Funding of Nonprofit Organizations.
Public Performance & Management Review, 31(2), 174-190.
