Breakout Round III
Scenarios
Assignment

Context
In this round we want to explore what a national support organization might provide to a broader membership. Because of the diversity of models and purposes in the current membership, we want to explore three different models. Your team will be assigned to work with one of these models.

Model A: The member organizations in the field focus on EITC Tax Preparation Services for the lower and middle income demographic. That's their core work; their primary work. But they all also offer an array of Asset Building services as add-ons. The national membership organization is called the National Community Tax and Asset Building Coalition.

Model B: The member organizations in the field focus on Asset Building for the lower and middle income demographic. Helping these people build assets is their core work. Asset building includes an array of financial services and products. Each member organization also operates an EITC Tax Preparation Service Unit. The purpose of this unit is to serve as one of the primary attractors for finding new customers. The national membership organization is called the National Asset Building Coalition.

Model C: The member organizations in the field focus on EITC Tax Preparation Services for the lower and middle income demographic. That's their core work. It's also their only work. They don't offer any add on services. The national membership organization is called the National Community Tax Coalition.

Objective
For the purposes of this exercise, please assume that the model your team works on is correct, and that all of the members of the national organization work within, and buy into, that model.

Each team build models to answer the following questions:
1. In your model, how does the National Organization address and support system-wide funding? Come up with at least two or three options.
2. In your model, how does the National Organization address and support shared operations and infrastructure across the membership? What types of operations are shared and what are left up to the local organizations to do their own way?
3. What kinds of financial training and education does the National Organization offer to its members and to its members customers?
4. Summarize the benefits that each member gets from the National Organization.

Then, stepping out of the exercise, tell us which of the ideas generated from answering these four questions would you recommend for implementation over the next 18 months?
Team One Report - Scenario A

We just followed the instructions for Model A. The national organization gets funding through national fundraising efforts, affiliate dues, user fees from coalitions and client fees.

This organization creates a shared infrastructure, including national branding, marketing and media campaigns. Volunteers may be recruited nationally, but they must be placed locally. NCTC must maintain the primary role for advocacy.

The national organization must do training and education through conferences, teleconferences, web-based training and developing materials for site managers and volunteers. These operations must be run year round.

We don't know if we were describing NCTC or something entirely new. We could create Asset Building Systems as a private company owned (perhaps) by NCTC. ABS, Inc. would then have franchises across the country. The local CEP would continue serving its clients and would be a partial owner of the local ABS franchise. This organization has to think like a for-profit business.

Team Two Report - Scenario A

We focused on Model A. We talked about the different infrastructure that should be shared - centralized data collection, centralized IT and technical support, quality support, software development and assessment, financial product development and advocacy.

The national organization would be funded through a funder consortium, and some of this funding would be passed down to local organization. States would fund local tax preparers as well.

We will develop video and Internet-based training to share best practices and training resources. The national organization will share best practices, will perform and distribute market research and industry analysis, and will develop and share low cost financial and IT products.

In the next 18 months, we can start to centralize data collections, develop new financial products, publicize a menu of available technical assistance, and for a funder network.

The national organization will accredit the local organizations, but leaves the local organizations free to pursue its core local concerns. Tax preparation is generally not the primary focus of a local organization.

Many local organizations providing any kinds of services face these same challenges, yet funders have a very difficult time investing in infrastructure. We need to do a tremendous amount of education with funders to demonstrate the value of this kind of work. We need to demonstrate the value of these centralized resources.
Team Three Report - Scenario B

We were the national asset building coalition.
The core work is asset building, and tax prep is the point of entry.

For funding we would establish a fee for service. We would get federal funding - finally - and work with national institutions. One would be on the business side, business partners, and also donations. We would negotiate reduced costs with some vendors, like computers. We would generate fees from products. If we go to a franchise model, we could generate franchise fees for services.

Shared operations and infrastructure - a mix of asset building products and services. We want to customize software to improve on Taxwise. Maybe we will look at tracking software to track people's financial paths. There would be standardized forms and procedures. There would be a tax help free phone line.

Training and education - a national model of volunteer training. We will develop training in organizational management and a track for leaders on how do you operate these programs successfully. There would be national IT training. You would conduct a serious review of the financial education curriculum, and recommend best practices. Really what we need are the effective teaching tools. Local groups would customize their outreach, and choose from a whole range of services and products.

We indicated with red stars the initiatives that seem feasible in the next 18 months:
Clarify from IRS that can we charge fees.
Negotiate reduced cost on equipment from vendors.
Develop a stored value card with a national infrastructure.

Develop volunteer training - maybe in 2 or 3 years - make headway with national online training. There are good training models that already exist. We were able to take Fred's model and customize it to our needs. You could have IRS certification online. The IRS approved our test.

Best practices - there are 4 or 5 primary curricula available. Fannie Mae and Citibank each has one.

Does this feel like the right thing to do? I think so. It requires broad agreement that this is where we need to go. Everyone is so focused on their local community so we need consensus on a national scale. There are things that local groups need to do and agree to, bank and financial partners. A Dell or the IRS would need to endorse this.

Team Four Report - Scenario B

We were Model B - the national asset building organization. We discussed how we would attract new customers - which are the local organizations. Local affiliates would pay fees to the national organization. There will be shared operations to take care of technology, branding, messaging. We would serve all stakeholders at national level.

We'll get powerful members of the community to be on our board. We will have a strong national management structure, and we will develop a web community. Locally they will customize the advertising.

We will have training and education models and practices for professional development

Local affiliates will get an increased a customer base, and this will increase the credibility of the national organization. They will have access to standard products and services. They will also have access to funding streams.

Is the board the NCTC? Yes. Are they paid a fee? It's a volunteer board. We hoping that by getting bank presidents on the board we won't have any trouble get funding.

We are struggling with the idea of a fee for the affiliate organizations. They're nonprofit organizations, so they have a hard time finding funds. Smaller cities will have even less access to fees. Linking to government and larger banks seems completely feasible.

Can you charge members according to the fees they charge? Yes, you could pay a variable fee for technology, for example, and you would buy only the services you need.
Team Five Report - Scenario C

We had a heated debate that spun out of control! We had model C which focused just on tax prep. We talked about funding options. The first is similar to today where we look wherever possible to get funds. The second idea was a fee for service franchise model. It would be more restrictive than a for profit franchise model. There would be less autonomy. Anyone who would sign up for a franchise would be subject to a lot of pricing standards. It would be a more top down franchise model.

Then we realized that we were struggling because we were talking about operations and funding at the same time.

So there are two models: a bottom-up model and a franchise model. Could both models coexist? It's an interesting idea. We've seen nonprofits have earned-income ventures as well as wholly-owned subsidiaries. So the business model that charges fees could be an earned-income venture.

We talked about fees being free for people below a certain income and then increasing above that level.

One of the challenges with the franchise is to operate at break even but you're setting the prices before you see the revenue. So maybe there are partnerships to fill the gap.

The franchisee would get an office in a box. New organizations would buy in and there would be more standardization. But there is a lot of individuality in organizations across the country today so it may be that existing organizations may not want a franchise model because they want more local control.

There are also cooperative models where members buy in to a smaller set of standardization.

We didn't focus too much on the franchisor -- the NCTC. But it would spend a lot of money on fundraising and maintaining relationships at the national level.

We know a couple of examples where the members own the co-op which provides the infrastructure services. It's a way to get out of the us-vs.-them of the franchise model. A co-op could have for profit members if it wanted to.

Team Six Report - Scenario C

We had option C which was only doing tax prep services. The first benefit we looked at was money for the system. Our ideas were what if we worked with the IRS so that we would get reimbursement for every return prepared and not rejected. We'd charge $20 per return which would be $40M for the field. We talked about Federal grants and State reimbursement, maybe $5 per reimbursement from the state. It's just for the Federal return, not the state return.

We'd develop national corporation partners and have membership dues in line with CPA organizations.

Shared operations and infrastructure would include web-based training and a help desk. We'd standardize the tech platform and we'd use year-round marketing tools to recruit volunteers. We'd look for national recognition, incentives and an awards program.

The training available through a national entity: wherever a group is in its operation, we'd work with them on site management. Train the trainers for basic tax preparation. We talked about technology and volunteerism support. We also wanted to help develop networks of peers and developing training scholarships for travel and groups to learn and share effective practices.

The national entity would do the network with large institutions and chambers of commerce. They might do a one-day visioning process for a state chamber or group of universities on how they could provide resources.

We didn't talk about whether we were going to do fee for service or not.

Anyone who can't form their own strategic partnerships at the local level should go out of business. A national organization should form strategic partnerships at the national level with large organizations.