Are indirect costs the same as administrative costs?

Question: I am interested in your thoughts on something. I know we’ve always said that the indirect costs are not the same as G&A. However, when we submit the proposal we have to include the statement of functional expenses from the audit which breaks out G&A and also 990 which breaks out the G&A. I assumed they compare the indirect cost proposal to those G&A figures, so I’ve always made sure they match. Is that not the case?

Response: The proper answer is that indirect does not always match general and administrative, but in many cases it will.

Sometimes there are direct costs that are minor and for practicality get combined with indirect (copies as an example).

Sometimes there are indirect costs like accounting or insurance that may be required to a much greater extent, for a specific program, so those are directly allocated.

In the absence of those unusual situations indirect will equal general and administrative

A dozen ways to reduce the risk of theft

Business man pulling a big green dollar sign concept on background

It happened again just a few weeks ago. This isn’t the first time a center has been victimized by employee theft. And usually it is the bookkeeper or accountant, someone you trusted. Often they are not small thefts, but larger ones that have been going on for awhile before being detected. So what can you do to prevent or at least find and end such theft?

Most centers depend on their auditors to protect them against theft. However, unless you are spending at least $750,000 in federal funds you are not required to have an annual audit. Even if you do have a review of financial statements, that is not an engagement to investigate fraud. When auditing financial statements, the theft might not be found, depending on the level of sophistication of your financial person.

Remember that the person holding the financial position in the organization has an understanding of the audit process and its inherent limitations. They may be able to divert the center’s assets into their own pocket through several deceptive practices. It is your responsibility as the executive director or a board member, to make sure that your practices limit the possibility of theft. Here are some important practices that will offer protection:

  1. The executive director or board treasurer should receive bank statements directly from the bank and review them. Look at each check. Are some made out to a staff person that don’t seem right? How was the check endorsed? (Some staff create an account for themselves with an innocent-sounding name, but they have to endorse the check to deposit it.) If cancelled checks are not returned by the bank, arrangements can generally be made for online access enabling the key officer to view scanned images. After this review, the bank statements and checks can be given to the accounting department for reconciling to the books. The completed reconciliation should then be returned to the key officer for review and approval.
  2. Review credit card bills including the original receipts. Employees have been known to use cards for their own utility bills, for example. If you see the original receipt you will see the address. If the original receipt isn’t available, request it from the vendor or the credit card company.
  3. Employees have been known to add some of their own items to their cart at the office supply store. Someone different from the person who ran the errand should put away the supplies, checking them off the receipt.
  4. Make sure that someone other than the accountant picks up the mail and opens/directs it. This is where late payment notices are hiding, and where donations may be received and pocketed rather than deposited. If the receptionist or the executive director reviews the mail they can log in the donations and stamp checks for deposit only.
  5. Regularly check payroll. Verify the names. Notice whether the amounts withheld agree with what is sent to IRS. Check the hours. Make sure your withholding is sent on a timely basis. Thefts can occur by siphoning off payroll related funds.
  6. Do not allow the controller or bookkeeper to sign checks.
  7. Occasionally verify the names of all the suppliers.
  8. Do not sign checks which have not been completely filled in.
  9. Require that checks that were cut in error are saved and filed, so that you know if a check is missing. Typically the signature is torn off the check and the original, not the copy, is kept to insure that a missing check can’t be used.
  10. Require employees with accounting functions to take annual vacations and have others perform their duties.
  11. Prepare and carefully review monthly financial statements in detail. Especially look at significant variances from prior year or budget to the current year.
  12. Carry insurance for employees in sensitive positions. Consider fidelity insurance, bonding, and directors and officers insurance to protect the organization.

These steps cannot prevent all fraud, but should allow you to find most of the sources of fraud and take appropriate action. When you have routine policies and practices like these in place, the likelihood of fraud is greatly reduced.

One more note. You are required to report any fraud to your funders immediately. You will want to make sure your board is informed, and that you have turned the investigation over to law enforcement at the local, state and/or federal level for appropriate prosecution of anyone guilty of theft, fraud or abuse of funds.

What are some interview questions for candidates for the Executive Director position?

We are seeing a lot of Executive Director positions open up as the Baby Boomers retire. Here are some potential questions for the interview, and a few tips as well.

Interview Questions for candidates for Executive Director

  • Tell us a little about yourself and why you feel you would like this position.
  • How did you learn about this job opening?
  • Why are you leaving your current employer? (Or why did you leave?)
  • What do you know about this organization, and what would you like to know?
  • What are three words that describe your ideal working environment?
  • Tell us why you think you would be a good match for this organization.
  • What is your personal experience with disability? (If they do not have a visible disability and do not bring up having a disability, you can’t ask more at this point.)
  • Describe your experience with promoting human rights.
  • What professional achievement are you most proud of?
  • What is one area of weakness and how are you addressing it?
  • What is your experience supervising staff? What do you find is the most difficult part of being a supervisor?
  • Have you ever had to lay staff off? What did you do and what do you wish you had done?
  • Tell us about your strategic or long-range planning efforts with organizations where you’ve worked. What is your approach? Who is involved?
  • How would you describe your management style?
  • If you get this job, what is the first thing you will do?
  • What financial records would/do you provide to the board and how often?
  • Have you ever had to investigate a complaint against a staff member? What was your process and how did you feel about the resolution?
  • A board member is quoted in the newspaper saying something inaccurate about your organization. What do you do?
  • What is the best/most effective community partnership that you developed in your professional life?
  • What excites you about this position?
  • What questions do you have for us?

Tips for your interview process:

  • Allow at least an hour for each interview. Ninety minutes might be better. That gives you a little time to make notes and discuss impressions before the next candidate arrives.
  • Introduce the interviewers to the candidate and shake hands all around. (If the board members aren’t aware, it is appropriate to shake hands even when the candidate has limited use of them.)
  • Make sure the candidate has water or coffee.
  • Provide the board committee with the printed questions and room to jot down the candidate’s comments and to make their own observations.
  • Don’t try to fill in silence or finish sentences. Let the candidate say all they want to say about the question.  If they don’t say enough, follow up with, “Can you tell us about a time when you applied what you just said?”
  • Ask followup questions if you are unclear about the meaning of a statement.
  • It is nice when several people take turn asking the questions.


Privacy and Confidentiality

What are the privacy rights of the people you serve? Can they expect staff to keep visits and personal information private? Do you need consumers to sign a release of information? If yes, when?

Some centers seem like tight-knit communities, where everyone knows everyone else, and sometimes everyone else’s business. It isn’t unusual for a consumer to ask staff, “Hey, has Joe been in lately? I haven’t heard from him. Is he okay?”

While Centers aren’t usually privy to health or medical information, the same type of privacy is expected for a CIL’s consumers as what you think of when you consider HIPAA (Health Insurance Portability and Accountability Act). You don’t have the right to share or talk about a consumer’s personal information without their permission.

This includes not sharing with other staff or volunteers unless they have a need to know and the consumer grants permission. The records are confidential — both paper and electronic — and should be locked or safeguarded. Privacy includes not sharing with other members of the same consumer group, or with their friends or relatives without the consumer’s written permission.

The permission is usually in the form of a written release of information form, which specifically indicates who can receive information, what information can be shared, and is signed by the consumer and kept in the Consumer Service Record.

I’m retiring. How can I assist my successor?

We have talked about succession planning before — how an executive director can assist the board in a transition to a new executive director. I’d like to drill down to a very specific role that the out-going ED plays — transitioning responsibilities and relationships to the new person filling that role. (And if the ED leaves against their will, the board and new ED must still do all these things.)

The first thing you need to know is that the world will not automatically change the name of the responsible person just because you announced your retirement and the new pick. You actually need to contact each of the places you access and make sure your successor can access them before you leave. Think of all your key responsibilities, and how the new ED can assume them.

Let’s start with money. Do you have access to read your QuickBooks reports on line? How about your bank statements? The website you use to draw down federal money? Your successor needs his/her own user name and password for each of these, and needs to know what duties are separated with other staff and board for good fiscal practice.

What about reporting access? Since your program progress reports (704 reports) are due this week, some of you discovered first hand how difficult it is to change the name of the person submitting the report. There are a number of centers, unfortunately, that haven’t submitted yet. I hope you have access, but if you don’t you need to start working on it NOW. You can start with the help desk on the site. If you are new, you also have to be approved to do this by your Project Officer at the Independent Living Administration. Many states also have an on-line submission of program information.

What is your access to community communication? Does the incoming ED have access to your website, your Facebook page, the Twitter feed and any other communication you are engaged in? It is good practice to send an email to key community contacts and give them the new ED’s name, phone number (even if it is the same) and email address. CC your new person, so they have all those addresses and can shoot out a greeting after they are in the position. Write a separate note with the information for your Board of Directors and another to all staff. While they all probably know, it gives everyone equal access to the contact information for the new person and makes a nice handoff as you exit.

Who else needs to know that the person in charge has changed?  ILRU maintains a directory and would like to be informed when you change anything included in the directory, including the name and contact information of the Executive Director. Your Project Officer at ILA/ACL needs to know, as do any other funders for your organization.

The first time I served as an interim executive director, I spent the last few weeks writing down every single thing I needed to access. By making notes in real time, my list was quite comprehensive. Once the new person began working, I overlapped just a couple of days so that we could go through that long list (four typed pages in the end) of things they would need to know and got them set up on all the lists and websites with their own user name and password when applicable.

How does a center determine eligibility?

Question: At a recent staff meeting, staff were asking for clarification about our Eligibility Statement on our consumer intake form and what exactly they were certifying by signing. I am embarrassed to say that I did not have a good answer for them, but promised to look into it.

Our intake eligibility statement reads:

Eligibility Statement:In accordance with Department of Education 34 CFR. Parts 364, 365, 366, 367 Subpart D, Paragraph 364.40 this statement of eligibility is necessary. By the signature of the staff below, it is certified that the applicant has met the basic requirements specified in Paragraph 364.40.

These are: The individual applying for services experiences a significant disability.  

Can you shed some light on this? I don’t even know where to begin to look for paragraph 364.40. 

Reply: The statement does need to change because we are no longer under the Department of Education (34 CFR) but are now under the Department of Health and Human Services, Administration on Community Living, Independent Living Administration (45 CFR). The CFR is the Code of Federal Regulations. You can find it with a search for 45 CFR 1329. Do look at the one from .gov and not the version posted by other entities – I have found they are not always up to date. SO an important hint — if your policies reference 34 CFR you need to update them.

45 CFR 1329.4 is the new regulation section with definitions, and states:

Cross-disability means, with respect to services provided by a Center, that a Center provides services to individuals with all different types of significant disabilities, including individuals with significant disabilities who are members of unserved or underserved populations by programs under Title VII. Eligibility for services shall be determined by the Center, and shall not be based on the presence of any one or more specific significant disabilities.

Note that the Center is to provide services to people with significant disabilities. All that is required for eligibility is that you ask the consumer if they have a significant disability. If the answer is yes, then they are eligible.

The technical definitions of significant disability is found in the same section of the regulations, and states:

Individual with a significant disability means an individual with a severe physical or mental impairment whose ability to function independently in the family or community or whose ability to obtain, maintain, or advance in employment is substantially limited and for whom the delivery of independent living services will improve the ability to function, continue functioning, or move toward functioning independently in the family or community or to continue in employment, respectively.

I want to emphasize this definition. It is important that centers are consistent in assuring that the people they serve, and the majority of the people on their board, are those with significant disabilities as required in the law and regulations. On occasion, when I am working with a center board, I ask if the majority of their board members have a significant disability. What happens next is very disturbing. Sometimes there is a scramble for board members to think of what their disability is because, frankly, they have not been meeting this requirement. If the board member doesn’t see themself as part of the disability community, I would challenge that they probably don’t have a significant disability.

Staff that do too much?

Question: 

I’m looking at the ILRU website hoping to find an existing training on Boundaries … topics like doing things for consumers rather than empowering them, stepping on consumers’ toes, respecting consumer privacy, etc.

I’ve been having some difficulty with peer advocates maintaining appropriate boundaries, so I’m going to do an advanced training with the group. Before creating training materials, I’m seeking on your website hoping something is there as I know you provide high-quality trainings.

I like to start with some philosophy, because the Rehabilitation Act, the first paragraph of Title VII begins with that.  It reads: The purpose of title VII of the Actis to promote a philosophy of independent living (IL), including a philosophyof consumer control, peer support, self-help, self-determination, equal access,and individual and system advocacy, in order to maximize the leadership, empowerment,  independence and productivity of individuals with disabilities,and to promote the integration and full inclusion of individuals with disabilities into the mainstream of American society…

That language – “a philosophy of consumer control, self-help,self-determination … in order to maximize leadership, empowerment, independence and productivity” – state our goal clearly in terms that emphasize the individual’s control of their life and decisions.

We also have a four-part series of videos around the history and how that philosophy came to be. Each is about 20 minutes and works well as part of a staff meeting. You can find these at https://www.ilru.org/il-history-and-philosophy-orientation-for-il-staff

As you move from philosophy to action,  an Introduction to Consumer Service Records, IL Plans and Service Coordination is always a good foundational piece https://www.ilru.org/introduction-consumer-service-records-independent-living-plans-and-service-coordination-for-cils

You might help them think about scenarios in their own lives, or give sample situations for discussion and learning. A scenario promotes discussion and gets everyone’s thoughts as you address a hypothetical situation. Keep them open-ended so that your discussion can cover multiple possibilities. Here are a couple of examples:

Sue is 31 years old and living at home with her parents. She would like to move out on her own, and you have worked with her to develop a budget to make that possible. “I don’t know how to tell my mom,” she confides. “Will you talk to her?”

You are giving a couple of consumers a ride home from your annual dinner. They ask you to drop them off at a local bar. And then they ask you to join them. What do you do? How do you separate your activities as staff from your activities as a friend?

Dad calls you about his adult son, Joshua. “Josh has been coming over there every week for a couple of months now. Is he making any progress?” What do you say?

I am sure you can think of other examples. Your own written policies and procedures should then mirror your philosophy and specifically state that the individual is in charge of their decisions. When it comes to helping staff understand boundaries, no tool is greater than their own experience as people with disabilities. 

Those things should get you started. Reach out again when you are ready for more.

Tips for bringing a new CIL ED on board

I would probably customize a training plan based on what the new executive director already knows. If s/he has worked for a center in the past, s/he may not need history and philosophy but might need board and finance training. There is training for almost every item in the E.D.’s job description. You can search the website for a topic, or contact me and I will help you find what you are looking for. I like everything to be in the context of philosophy so I have included that.

 The Rapid Course on history and philosophy is three parts and found at http://www.ilru.org/training/foundations-independent-living-series or if they don’t love that read and test format, the short films at http://www.ilru.org/il-history-and-philosophy-orientation-for-il-staff are great.

The financial management workshop (15 hours) at http://www.ilru.org/training/financial-management-workshop-for-cils-regulations-and-beyond is great for financial regulations. The topics are broken down so the person can watch what is the most useful, in any order.

For the IL regs, the first item on this page. http://www.ilru.org/training/20th-annual-silc-congress-path-forward-greater-independence

For board recruitment, http://www.ilru.org/training/attract-and-retain-your-best-cil-board-members

I also suggest searching Board Cafe and Non-profit management for board related training as well. There is a lot out there in the mainstream that is useful.

There is also a monthly call for new executive directors. Be sure to let me know so I can sign them up for that call.

 How is that for starters? A new E.D. can request anything specific from me any time so make sure they have my name and number. 

Are Resource Development Costs direct or indirect?

First a refresher — while fund raising costs are not typically allowed with federal dollars, the Rehabilitation Act specifically requires centers, and allows SILCs, to conduct Resource Development.  Rule number one, always call your activities to increase your resources (including funds) Resource Development. If you are a SILC this must be addressed in your State Plan for Independent Living.

Rule number two — it is wise to identify and track these costs separately. We suggest this because it is easy to spend more than you bring in if this office is not effective, and you want to know that so you can improve your efficiency if needed.

If you have a separate cost center for resource development, treating it as a direct cost, it must include that cost center’s fair share of the indirect costs based on your indirect cost rate proposal.

Some of you included resource development totally as an indirect cost. If so, then the answer to the question is that resource development costs are indirect, and should be allocated back across your cost objectives.

So, as is so often the case, the answer to our question is “It depends.” And it depends on what you said you would do in your approved indirect cost proposal.

Who can we count in Peer Support or other group classes?

Question: I have a question about peer support groups or groups where we teach IL skills. For example, a small group where consumers can connect with one another or learn about resources (e.g., housing), or teaching skills such as money management. These are not community outreach services, but consumer groups. It was my understanding that people attending these groups would need to be consumers of our center and have a CSR. I’ve recently been told this is not the case and those groups can be open to anyone in the community who wants to attend. We are starting to increase the number and type of groups we offer and I want to confirm this as this has implications on how we move forward.

There is not a prohibition or a requirement around who can attend, but there is regarding who “counts”.  The answer varies based how you want to count them. You need to set up the structure for your groups in your policies and procedures, and centers vary greatly on how they treat this.

I like to see people with disabilities, with or without a Consumer Service Record, attend events and be part of the disability community that gathers at a center, so that is my bias.

To count the individual as receiving peer support or independent living skills training they do need a goal (which can be a goal set by and accepted by the group) and a CSR. But there is no prohibition to others attending and “auditing” the group, so to speak. You can’t count them as receiving the core service on your Program Progress Report, but they enhance the overall involvement of the disability community. They might be some of the peers offering support, even if they don’t have a goal to receive it.

If you have folks that dominate meetings and exclude others – then you might want or need a policy to help the meeting include everyone. One approach could be to only have folks attend who have CSRs.