Blue Cross Blue Shield of Massachusetts is a nonprofit organization that is a health care insurance entity. The CEO was paid 1.36 million in 2006 and 3.6 million in 2007. The Chairman was paid 1.73 million in 2007. The former chairman received 16.4 million to retire in 2007. Average premiums increased 7.5 percent.

The CEO of Harvard Pilgrim was paid 1.38 million in 2007. The CEO of Tufts Health Plan was paid 1.19 million in 2007.

If the President of the USA can be paid a salary of $400,000 then that should be enough for any executive of a nonprofit regardless of revenues.

Since these organizations are acting like for-profits in the manner in which they run their organization compensations and incur costs should they be stripped of their nonprofit status?

The states should allow access to the nonprofit organizations to have their employees be on the state medicare system for a flat fee per month. This will give the medicare and nonprofit system better pricing options.

The other option is to have nonprofits create a cooperative insurance company that they have better control over for costs and benefits.

Health care insurance and medical expenses should not have to make you bleed money as well!!!

Keeping control of your organization’s costs by having independent contractors could cost your organization a lot more if not done right.

The safest way to know whether your organization should consider having the individual(s) as employees can be resolved by filling out an SS-8 IRS form.  The forms are on line and the questions clear to understand.

Basically the questions are do you control where, when and how the person does they duties.  If you say yes to all three, then hands down they are your employees.  It gets more difficult to answer when the work for an individual is intermittent and/or temporary.  The focus still is on control.  The individual working for more than one entity, or who is compensated based on a specific product outcome, or is the individual who bears all responsibility of other hires they make and is free from direction and control of the hiring organization, is more likely not an employee.

One of the hardest areas of designation is fee for service arrangements with individuals who are paid a percentage of the fees being charged for each person seen.  If the person is practicing under the license of an organization, the individual is more likely considered to be under the control and supervision of the organization.

Mandated health insurance with a combination of sponsored government and private insurance is necessary to prevent bankruptcy of small businesses and individuals due to medical costs. One element of mandated insurance should include catastrophic insurance for those exceptions where regular insurance will not cover.

To a certain degree government has mandated the ability to gain treatment. However, the government has not guaranteed that you will not go bankrupt. This is especially more important because of the number of medical fields that are now selling the debt to third parties, like GE who charge interest on the debt. The transfer of the debt is not base on your ability to pay. The medical establishment gets paid a percent of the bill immediately and closes your account. Affordable health care requires standardization of rates. It also requires the setting of a ceiling of how much any one citizen should pay.

Medicine should be treated on two levels; like a utility service in that rates are set by one entity for all of us; and like an entitlement that government has guaranteed equal access to treatment regardless of an ability to pay.

Solution:

The federal government has specified that 7.5% of a persons adjusted income paid for medical expenses is not deductible on Form 1040 Schedule A. Thereby, setting the standard that anything above 7.5% of a person’s income spent on medical expenses should reduce other liabilities. The other standard the federal government has provided is the creation of the Medical expense flexible spending account with a $5,000 maximum.

Therefore, I would propose that individuals not be held liable for medical expenses, which exceed 7.5% of their adjusted income. Any amount to exceed such should be paid by a portion of a catastrophic health insurance policy that is mandated as a component of health care insurance and then the government as the payee of last resort. However, the cost of the procedures must be set at the government rate for any amount above the 7.5%.

The election process is in full swing for selecting nominees for the various parties. I have not heard any conversation yet from any candidates of the role they foresee of nonprofits in their goals for America. I have heard over and over and over the words “An Agent of Change” and “Making Corporate America Accountable”.

Here are just four questions for your organization and its employees to think about as to which candidate really will make the difference.

As a tax exempt organization you still pay a tax on gasoline and fuel. Exxon made 20 billion in profits. The other fuel companies made comparable profits as well. Government and nonprofits do not have enough money available to heat peoples homes who need it. How does your organization absorb the increases in the gasoline and fuel costs without making cuts?

The government pays farmers, mostly large conglomerates, not to grow food. This policy was to help the small farmers to have fixed prices on food. People are going hungry, cannot afford to buy enough food, and food pantries are unable to meet demand. Most of your employees make less than a living wage and worry about feeding their family. How does paying millions for not growing food help people buy food or make food available to people?

The government has been trying to resolve the credit crunch due to the bad deals that big financial businesses created. The securities were in many ways a pyramid scheme that was dependent upon prying on US citizens and others peoples money. Now the government wants to help the investors pain and change the rules under the guise it will help everyone. What help has the government provided your organization to lower your exposure to cover costs they do not fund? How does the fact that in foreclosures the investors evict paying renters. How does this help the fact that most of your employees struggle to find affordable housing?

Government has mandated educational standards and yet does not allocate sufficient funds to bring schools up to the standard. While there has been an increase in funding that is to be spent in each corner of the USA. Not much for each school to help students. Business demands tax breaks, uses tax loopholes to lower or not pay taxes. The US government spends billions overseas to help the economic growth of other countries and people. How has the standard helped your organization obtain the trained people you need?

We all have a choice. Vote and be heard.

Winter is the time across the country when many cities and towns count their homeless populations. The increase in homelessness in most areas has predominately been families.

Across the country record a record number of homes are boarded up and no longer used for housing.  The number increasing each day due to foreclosure.

Government and nonprofits are using shelters and motels for temporary housing the families and individuals.  These organizations spend million of dollars monthly for  putting people under a roof, usually in mass. These situations do not create permanecy and stability for families.

There are thousands of properties abandoned by its owner, including institutions. The foreclosures occurring over the past year and continuing into the new year bring even more abandoned properties.

Government has the tools to create permanent housing options: seize the abandon properties under eminent domain, issue summons for code violations, issue fines, place liens on properties and ultimately seize property for payment of liens.  Affordable housing has been at a crisis point and government needs to take a hard stand.  The use of local government powers and the courts can make a difference.

The for-profit sector creation of affordable housing is a joke when the definition of affordable housing does not allow  a person with a living wage to afford to own.

Create permanent affordable housing  by creating cooperatives.   Government should gain control of the properties and land; work with nonprofits and the faith base community to fix the properties and then place families and individuals into  permanent housing that can be supported by a living wage.

For the new year replace all conventional light bulbs with compact fluorescent bulbs.

Have the cooling and heating thermostats on timers.

Build breezeways to the outdoors to prevent heat or cool air from escaping from the building.

Have lights on motion detectors and timers.

Use newsprint to wrap gifts.

Buy preused or returns products. Usually save a minimum of 25%. Most of time the item was just not wanted, wrong size or was a duplicate.

Most musuems have a free time, call them and find out. Arrange for your organization to attend during that time.

Credit Unions are nonprofits and owned by their members. These organizations, while functioning as banks, are not making business decisions to maximize investors’ returns. They are making business decisions to maximize their ability to serve their members.

Micro-lending by banks is a profitable area. It is even more profitable overseas. The interest being charged approaches in many cases 80% plus with fees. Micro-lending is projected as an option to help out individuals who are motivated to break out of poverty.

Credit Unions should get into the field and make a difference for many people and provide more reasonable rates. The nonprofit community is especially use to many of its employees sending money to their overseas family members. The nonprofit community knows what it takes to make a difference with those in poverty looking to start small businesses or buying an item. Many individuals in poverty pay cash and do not carry credit cards. Credit history is their word and reputation. Today, traditional banks have lost the “know your neighbor” banking.

Credit Unions are the institutions closest to the true meaning of community banking.

A nonprofit according to the IRS is expected to raise funds to lower the costs of providing their services.  More and more funders and government are requiring a match by the nonprofit to programs the funder supports.

Track the use of donated space and know the market rate for similar space.  Staff out-posted to another location assign a value to that space.

Provided free advertising, assign a value to it and document it.

Provided goods, place a value on them and document it

Volunteer help, use minimum wage and keep track of the hours.  If the individual is doing a credentialed required service use the Department of Labor salary schedule.

Keep track of those travel and transportation costs employees and volunteers provide to the organization.

You will find it all adds up to thousands of dollars.

Outsourcing functions and hiring consultants for specific projects is a double edged sword. 

If a consultant always makes you feel good, have they helped your organization to make tough decisions?  A good consultant should not be afraid to identify problems in the organization that prevent a funder, donor or customer from wanting to associate with the organization.  While a report does not have to include every fact, it is important that a report shows areas for improvement and potential problem areas that should be addressed.   There is no perfect organization. 

If your organization has not had a serious discussion among its Board and Management of its direction in the past five years it is being too complacent.

Look out the window, what has changed around you in five years?  When was the last time your organization evaluated the services it provides, reviewed its referral system, reviewed the characteristics of the population being served, reviewed the funding streams,   and made decisions balancing business needs vs. program needs?

If not in the last three years, the organization is out of touch. 

Health costs are making the cost of an employee much harder for an organization to support.

Make sure employees know the total costs of all insurance benefits, taxes, unemployment and workers compensation paid out by your organization in addition to their individual salary. By showing the increased costs that the organization is incurring each year, it provides for a clearer understanding of why raises are harder to obtain.

Organizations that provide staff with a clarity on costs and a compensation bonuses pool Create a pool of funds as a one time expenditure), makes it easier to control costs. Further, staff whom have the knowledge of what it truely costs to employee staff are more engaged with the organization.  An organization where staff have an understanding where the money is being spent are more committed to that organization when spending is viewed as being distributed fairly.