Transcript Title of Presentation - Welcome to ASAE — American

Common Trends in Successful Section
501(c)(6) & 501(c)(3) Organizations
John H. Graham IV, CAE
President & CEO, ASAE
February 29, 2008
Washington Nonprofit Legal
& Tax Conference
Washington, DC
Connecting Great Ideas and Great People
Background
 Since 2003, served as President & CEO of the
American Society of Association Executives
(ASAE).
 ASAE is a section 501(c)(6) individual
membership organization of more than 22,000
association executives and industry partners
representing nearly 12,000 organizations.
 ASAE has a budget of about $39 million and a
staff of approximately 135.
Background
 Before ASAE, served the American Diabetes
Association (ADA) for 24 years, the last 13 as
CEO.
 ADA is a section 501(c)(3) organization funding
research to combat diabetes. ADA has annual
revenues of more than $230 million and both
consumer and health care professional
members.
Size & Scope
In 2006, the IRS Exempt Organizations
Division recognized as tax-exempt:
86,563 section 501(c)(6) trade and
professional associations
1,064,191 section 501(c)(3) charities,
foundations, and similar organizations.
Section 501(c)(6) Definition
 IRS defines 501(c)(6) as: “an association
of persons having some common business
interest, the purpose of which is to
promote such common interest and not to
engage in a regular business of a kind
ordinarily carried on for profit.”
 The term “business” includes
professions.
Section 501(c)(3) Definition
IRS defines 501(c)(3) as:
 Eligible to receive tax-deductible
contributions.
 Commonly referred to as charitable
organizations.
 Must be organized and operated
exclusively for exempt purposes.
Key Differences
501(c)(3)s
 Predominantly donorbased, though some
have members.
 Fundraising is mission
critical.
 Political activity is
restricted by law.
501(c)(6)s
 Must be membership
organizations.
 Characteristically
supported by dues.
 May engage in some
political activity as
long as it’s not
primary.
Issues in Common
Governance & Operations
 Historically self-regulating.
 Reports of abuse have heightened the
focus on financial controls and need for
transparency and accountability.
 Codes of ethics and conflict of interest
policies becoming commonplace.
Issues in Common
Reporting
 Most (c)(6) and (c)(3) organizations file Form
990, retooled last summer. Core form is the
same for all; additional schedules depend on
activity.
 Tax-exempt groups pleased with elimination of
compensation and fundraising ratios from
summary page.
 Additional compensation information (for “key
employees”) viewed with concern.
Issues in Common
Additional Scrutiny
 Form 990 retooled to satisfy both tax reporting
requirements and public interest in tax-exempt
filings.
 Increasing interest in executive compensation.
 Continued Congressional scrutiny, particularly
for 501(c)(3) charities and foundations that
accept public contributions.
Issues in Common
Measuring Effectiveness
 Emphasis on defined, measurable goals and
objectives, along with a process to evaluate
success.
 Beyond fundraising $’s, effectiveness for
501(c)(3) groups more outcome-based.
 Input vs. Output model is different for
nonprofit organizations. Successful outcomes do
not necessarily translate as financial.
7 Measures of Success
In 2006, ASAE & The Center,
working in collaboration with
Good to Great author Jim Collins,
released study on what
distinguishes exceptional
nonprofit organizations from
their less successful counterparts.
Included both 501(c)(3) and (c)(6) groups.
7 Measures of Success
1. Customer Service Culture
Remarkable organizations build their
structures, processes and interactions –
their entire culture – around assessing
and meeting members’ needs and
expectations.
7 Measures of Success
2. Alignment of Products and Services
Remarkable organizations have a passion
for purpose, and link their mission to
everything they do - including
development of strategic direction, new
products and services, etc.
7 Measures of Success
3. Data-Driven Strategies
Remarkable organizations gather
information, analyze it, and then use it
to become even better. Research –
whether quantitative or qualitative – is
always put to use, not put on the shelf.
7 Measures of Success
4. Dialogue and Engagement
Remarkable organizations have a closeknit, consistent culture where all
employees not only receive the same
script, but also see the potential to
contribute.
7 Measures of Success
5. CEO as a Broker of Ideas
While CEOs may certainly be visionary
leaders, what’s more important is their
ability to facilitate visionary thinking
throughout the organization.
7 Measures of Success
6. Organizational Adaptability
Remarkable organizations not only
weather crises but also learn from them.
While willing to change, they maintain a
clear understanding of their core purpose
and adapt accordingly.
7 Measures of Success
7. Alliance Building
Remarkable organizations pursue
alliances that fit with their mission and
purpose. They determine with whom not
to partner, as much as with whom they
should partner.
Other Macro Trends
21st Century workforce issues
 Three generations in the
workforce (Baby Boomers,
Gen X, and Gen Y or Millennials)
 Decreasing pool of senior managers over
next 10-15 years
 Younger staff assuming leadership positions
earlier in career
Other Macro Trends
Diversity can’t be
ignored
 With changing
demographics,
managing
diversity is key to
future relevance
and success.
Other Macro Trends
Social responsibility
 Associations
thinking of SR as
good business.
 Definition and
actual practices
are different for
each organization.
Questions?
Speaker Contact Info:
John H. Graham IV, CAE
President & CEO
ASAE & The Center for Association Leadership
Phone: 202-626-2741
E-mail: [email protected]
Connecting Great Ideas and Great People