Print Edition

  Email News Updates

Developing your individual strategic positioning plan

By Gerald Archibald


“No one’s ever achieved financial fitness with a January resolution that’s abandoned by February.”  Suze Orman

I believe that almost all studies regarding individuals making New Year’s resolutions arrive at the same conclusion. That is, most of them are broken during the month of January or may die a slow death over the remainder of the year. The celebration, pomp and circumstance of each New Year brings boundless enthusiasm to individuals around the globe. As Americans, I happen to think we do it best.

However, 2014 presents tax-exempt organizations across many, if not all, service sectors with significant challenges that must be turned into opportunities.

Therefore, I have personally resolved that, no later than June 1, 2014, I will do the following.

I will engage our tax-exempt clients and you, my readers, with the specific objective of developing a strategic action plan to best position your organization for success, outstanding outcomes, and fiscal viability for 2014-16.

In January, Congress passed the Omnibus Budget Reconciliation Bill and Gov. Andrew Cuomo released the NYS 2014/15 fiscal year budget. These two documents provide most tax-exempt organizations with the rules, requirements, and revenues that establish how the business “game” for tax-exempts will be played for the near future.

In the continuing giving spirit of Thanksgiving and Christmas, I offer you the following 10 “gifts of information” for you and your organization to consider in developing your individual strategic positioning plan.

1.  Doing more for your constituents with less government funding.

§  As of Jan. 1, 2014, New York state had about 6 million Medicaid-eligible citizens.

§  Demand for services will continue to increase. Fundamental transformation of tax-exempt service delivery will continue.

2.  Continuation of the dramatic shift in favor of paying nonprofits for service outcomes and quality versus the “previous model” of fees for services rendered.

§  The concept of Pay for Performance (P4P) will continue to spread throughout the health- and human-services sector.

§  Physicians and hospitals have been dealing with P4P for a number of years.

§  P4P is likely to become a standard reimbursement methodology.

3.  Gov. Cuomo’s budget makes it quite clear that 2 percent is the maximum magic number for purposes of additional government funding.

§  We all know that 2 percent does not adequately cover cost increases occurring in many areas (example: health insurance). Therefore, further cost reductions and efficiencies must be identified.

§  An effective and flexible Salary Administration Program will be a fundamental requirement for success.

4. If your organization provides services to Medicaid-eligible individuals, pay particular close attention to the requirements of Executive Order No. 38 covering both executive compensation and caps on administrative costs.

§  In 2015, administrative costs for Medicaid providers must be below 15 percent.

§  Be sure to calculate this percentage in accordance with published regulations.

§  For executive compensation, determine whether or not you need to file a waiver application.

5.  The federal government and the Cuomo Administration believe there is more than enough capacity in New York state to provide health and human services.

§  There is an assumption, in some ways flawed, that fewer and bigger tax-exempts will inevitably lead to more efficiency.

§  Read David Lapiana’s column on “Merging Wisely” —

§  Expect that the “Walmarting of the tax-exempt sector” will proceed at an increased pace.

6.  If you are considering a merger, acquisition, or strategic affiliation, make sure that you speak with your audit firm.

§  Accounting rules for nonprofit mergers and acquisitions were changed recently.

§  Ask your audit firm to describe the challenges associated with the requirements of FASB No. 164.

7.  New dollars for purposes of funding new-service initiatives or transformation of current delivery models will be largely determined based on the success of grant applications from collaborations and joint ventures of multiple service providers.

§  Become familiar with the Vital Access Provider program and the Balancing Incentives program, among others.

§  Private and community foundations may offer an expanded opportunity for grants on the strength of the stock market’s performance.

8.  Pay attention to the demographic changes that are affecting service demands.

§  On average, 10,000 Americans are retiring each day for the next 15 years.

§  The Baby Boom generation and its shift to retirement with inadequate retirement funds will have a dramatic impact on service demands and payment sources.

§  Consider the number of New Yorkers who, after retirement, move to the South for a lower or no-tax state of residence.

9.  By 2020, less than six years away, those nonprofit organizations that will remain autonomous with local decision-making authority will have to continue to develop a significant private-sector fundraising effort. These development efforts will require annual success from both special events and planned gifts.

§  Given the industry environment described herein, make a basic assumption of less money from government.

§  Replacing declining government revenue with private-sector funding and/or cost efficiencies will be key.

§  Identifying new opportunities for revenue sources in this changing environment should always be a primary focus area.

§  Don’t wait until it’s too late to consider partnerships, collaborations, or mergers for purposes of continuing your mission.

10. As a “bean-counter,” I would be remiss if I did not give recognition to the ongoing “efforts” of the accounting profession in making your lives more difficult and complicated.

The New York State Society of CPAs recently conducted its Nonprofit Annual Update training. The topics were as follows:

§  Developing a measure of operations

§  Corporate affiliations

§  What you need to know about IT-cloud computing, payment card industry, identity theft, and mobile options.

§  Accounting for contributions versus exchange transactions

§  Demystifying Executive Order 38

§  Addressing and implementing an effective enterprise risk management (ERM) process

§  Attachments to Federal Form 990 that cause the most headaches

I am hopeful that you will be successful in accomplishing both your individual and organizational resolutions for 2014.


Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at



Thank You For Visiting