The Zone of Insolvency: How Nonprofits Avoid Hidden Liabilities & Build Financial Strength (Hardcover)

by Ron Mattocks (Author)
Key Phrases: fundraising ratio, fund balance, deferred revenue, Zone of Insolvency, New Era, Chasing Windmills (more...)

Editorial Reviews

Product Description
Written by Ron Mattocks, Zone of Insolvency shines a bright and urgent light on the real issue of creating financial strength across the whole spectrum of nonprofit organizations. This insightful book uniquely shows you how to rise above "business as usual" with workable solutions to launch your organization out of the Zone of Insolvency and into financial viability.

From the Inside Flap

Zone of insolvency

How Nonprofits Avoid Hidden Liabilities and Build Financial Strength

Would you know if your nonprofit is in the Zone of Insolvency and understand the related legal responsibilities and liabilities of operating in financial distress? Approximately one-third of nonprofits—more than 450,000 organizations—function perpetually in the Zone of Insolvency, i.e., in financial distress, and approximately seven percent are completely insolvent. What is the impact of hundreds of millions of dollars given to charitable organizations that operate in perpetual financial distress? Do board members have an inherent obligation to keep nonprofit organizations in operation regardless of their financial condition, or theirmission effectiveness?

Written by Ron Mattocks with the knowledge and authority that comes from many years of leadership and consulting in the nonprofit sector, Zone of Insolvency shines a bright and urgent light on the real issue of creating financial strength across the whole spectrum of nonprofit organizations. This stirring book confronts the brutal facts of financial self-examination in nonprofits and equips professionals with a framework for thinking about their organizational options that will lead them to move beyond resigned acceptance of perpetually living in the Zone of Insolvency.

Required reading for nonprofit managers, board members, and volunteers, Zone of Insolvency takes an honest look at the fundamental obstacles facing the nonprofit sector through case studies of organizations including:

• United Way of America: Business or Charity?

• American Red Cross: Aggressive Stance Against Fraud

• Allegheny Health, Education & Research Foundation: Toxic Growth

• United Way National Capital Area: Rights of Ownership

• Electronic Industries Alliance: Dissolution Celebration

A rousing wake-up call to nonprofits of every size and background, this insightful book uniquely shows you how to rise above "business as usual" with practical, workable solutions to launch your organization out of the Zone of Insolvency and into financial viability.

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: Wiley (April 11, 2008)
• Language: English
• ISBN-10: 0470245816
• ISBN-13: 978-0470245811
• Product Dimensions: 9.1 x 6.1 x 0.9 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars See all reviews (2 customer reviews)
• Amazon.com Sales Rank: #199,020 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

2 of 2 people found the following review helpful:

5.0 out of 5 stars Sandwiched Between Solvency and Total Insolvency, June 1, 2008

By	John W. Pearson "John Pearson Associates" (San Clemente, CA, USA) - See all my reviews (REAL NAME)

Recently, the CNBC "American Greed" TV series launched with a memorable episode that wounded and embarrassed nonprofits (Harvard, Penn State, and dozens of evangelical ministries) a decade ago. "The Con Man" was John Bennett. CNBC reported, "Some said he was a visionary and a godsend. His New Era Philanthropy foundation doled out $100 million nationwide. Was it too good to be true?"

Yes. Could it have been avoided? Maybe. Will it happen again? It's not likely if you follow the well-researched and documented counsel in Ron Mattock's new book. "The Zone of Insolvency," writes Mattocks, "is a period of corporate financial distress, sandwiched between solvency and total insolvency."

Mattocks puts a spotlight on the alarming number--up to 450,000--of nonprofits that are operating under financial distress, the Zone of Insolvency, and how the courts have expanded board member legal responsibilities and liabilities in these cases. It's fascinating and scary reading. He gives key lessons from the success and failure stories of 10 organizations, including: United Way of America, New Era Philanthropy, Baptist Foundation of Arizona, American Red Cross, and others. The book is organized into four parts: perspective, naming the disease, symptoms and the cure.

You'll get hooked reading the first 10 chapters (10 nonprofits in trouble) and you'll be comforted with his practical suggestions for executives and board members. He includes sample board policies for avoiding or escaping the Zone of Insolvency--and every chapter concludes with "Five Great Questions for Your Next Board Meeting."

The author says every board must ask itself, "Do we exercise a healthy dose of skepticism in carrying out our fiduciary responsibilities?" And how about this one: "If we decided today to close this organization, would we complete the close-down with net assets remaining, or net liability?"

This important book expands on the themes in my Board Bucket and Budget Bucket, two of the 20 buckets in my book, Mastering The Management Buckets: 20 Critical Competencies for Leading Your Business or Non-profit. Caution! Some board members may get cold feet and resign from your board after reading The Zone of Insolvency. That's not necessarily a bad thing.

2 of 2 people found the following review helpful:

5.0 out of 5 stars A lot of great Information in one book, May 20, 2008

By	Eugene K. Goodell - See all my reviews (REAL NAME)

The book is logically laid out and well indexed. The author sets the scene by briefly taking the reader through case studies of ten non-profit organizations who dealt with challenges to the solvency of the enterprise. He identifies the responsibilities of each organization's board of directors and how each either fell short or rose to the occasion.

Each chapter is presented in a bite size format, coming quickly to the main teaching point and facilitating a quick return to any portion for further thought and future reference. A check list is provided at the close of the chapter to drive home the key points and enable their customization and/or application to your particular area of responsibility.

After a thorough portrayal of the various pitfalls a non-profit can and frequently does face, the final section presents various cure scenarios covering the analysis and assessment of a non-profit structure. These include a discussion of courses of action that will, first, prevent/avoid failure (insolvency); second, enable the honest assessment of the situation to recognize that failure (bankruptcy) is possible or even probable and third, in the worst case, guide the dissolution of the organization with no further or minimal damage to its distributed assets.

This is a very valuable work that can serve as an excellent textbook and discussion guide in both academic and business seminar environments and as a desk-side reference for all who serve in any oversight capacity for a non-profit enterprise.