December 2000

Not-for-Profit Organizations Can Profit by Investing in the Internet

By John E. Oehler, CPA, Lumsden & McCormick, LLP

Many not-for-profit organizations are becoming sophisticated Internet users. The following are some areas in which web capabilities can reap huge benefits:

Research. A not-for-profit organization can enjoy significant benefits from research conducted over the web. The vast contents of many libraries can be downloaded with ease and speed. Many holdings and archives of resources such as the Library of Congress, collegiate libraries, and trade and news publications and media outlets are accessible. The Internet houses a wealth of information on grant opportunities, foundations, other not-for-profit organizations, resource providers, fund development techniques, and social and demographic trends. Helpful web addresses can be found in numerous published directories or by conducting a keyword search on a search engine.

E-mail. E-mail is more than a novel way of communicating from remote locations without printing, postage, or long-distance telephone costs. For not-for-profit organizations with multiple locations, e-mail improves efficiency by transmitting real-time messages to selected employees without tying up fax lines or generating paperwork. An organization can also establish electronic bulletin boards, newsgroups, and chat rooms to facilitate communication among working groups or interest groups.

Maintaining an e-mail database of board members, donors, clients, volunteers, and other constituents allows an organization to send bulk e-mail to preselected individuals at any time. E-mail is also becoming the preferred conduit for news releases and promotional notices.

Websites. By designing and maintaining a website, an organization can establish its presence within the larger community and post information about programs, activities, job openings, special events, and other information. Some organizations also use their websites to publish their financial data and IRS annual information report (Form 990). Websites can be linked so that someone researching organizations or topics with related missions and programs will learn about other useful sites. These hits increase an organizationís exposure and generate new business opportunities.

Fund-raising. Increasingly, not-for-profits use the Internet to solicit and collect donations. Receiving donations over the Internet requires electronic funds transfer (EFT) mechanisms, for which a third-party EFT operator (charging a percentage fee for transacting credit card donations) is advisable. Despite the obstacles and costs of online solicitation, many organizations find the process rewarding and many donors find it convenient.

A concern is whether electronic requests for money create a responsibility for the organization to register in the donorís home state. According to a recent decision in the U.S. Court of Appeals for the District of Columbia (GTE New Media Services Inc. v. Bell South Corp. et al), a state does not necessarily have jurisdiction over a computer userís contact with websites in other states. This ruling will not be the final word on the issue, however, and many not-for-profits are continuing to encourage Congress to enact federal legislation to prevent the need for costly registrations in states where an organizationís presence is only virtual.

E-commerce. Individuals are becoming comfortable purchasing memberships, merchandise, and subscriptions from not-for-profit organizations over the Internet. The commitment to this type of sales entails other considerations, including EFT, fulfillment, stock management, and inventory.

Career development. The Internet has become a major tool for both recruiters and job-hunters. An organization can post job opportunities on its own website or use an Internet job-posting service that specializes in the position being offered.

Volunteer development. Recruiting board members and other volunteers for not-for-profit organizations can also be accomplished online. A website can display in-depth information about the organizationís needs and opportunities. Once connected, a visitor can read about the organizationís mission, the role of volunteers, the types of volunteer talent sought, and other areas of interest for potential volunteers.

Information technology backup. Many for-profit and not-for-profit organizations use the Internet for off-site backup storage of data files and records. Several providers offer this service at a reasonable fee, usually based on the amount of storage space required. Use of off-site data storage requires appropriate internal controls on the part of the organization and an assessment of the security measures that the service employs.

Purchasing. Some not-for-profit organizations purchase many products and services online. Internet search engines make comparison-shopping easy and cost-effective. Some ďe-tailersĒ maintain records of customersí purchases and send reorder reminders.

Thomas W. Morris

The CPA Journal

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