PhilanTopic

Eye On: Bill and Karen Ackman

(This is the first in a series of short profiles of individuals, couples, and families that have signed the Giving Pledge, the well-publicized effort spearheaded by Warren Buffett and Bill and Melinda Gates to encourage the wealthiest Americans to commit the majority of their assets to philanthropic causes. For more about the Ackmans and the other eighty Giving Pledgers, visit the Foundation Center's brand-new Web portal, Eye on the Giving Pledge.)

Some of Bill Ackman's earliest memories "include my father's exhortations about how important it is to give back." That disclosure is included in the "pledge" letter Ackman wrote on joining the Giving Pledge campaign earlier this year. 'These early teachings were ingrained in me," the letter continues, "and a portion of the first dollars I earned, I gave away. Over the years, the emotional and psychological returns I have earned from charitable giving have been enormous. The more I do for others, the happier I am."

A happy man, indeed. An "activist" investor whose Pershing Square Capital Management (PSCM) has made strategic investments in some of North America's best-known companies, Ackman, 46, has amassed a considerable fortune in his two decades as a hedge fund manager -- and is already busy giving it away, even as he continues to be a force on Wall Street.

But then, Ackman was marked for success from a young age. The son of a successful real estate executive in New York City, Ackman was raised in the wealthy Westchester County suburb of Chappaqua and earned a B.A. (graduating magna cum laude) in 1988 from Harvard College and an MBA from Harvard Business School in 1992. (Cambridge is also where he met his wife, Karen, nee Herskovitz, who received a master's in landscape architecture from Harvard and subsequently worked for the Central Park Conservancy.)

That same year, Ackman and David Berkowitz, a friend from Harvard, co-founded the hedge fund Gotham Partners and, using a wide-ranging investment approach, grew it into a half-billion-dollar concern. The two split when Gotham closed in 2003, and Ackman wasted no time launching New York City-based PSCM in 2004.

From the beginning, PSCM's activist approach to making money was straightforward: identify an undervalued and/or underperforming company using proprietary research, build a large equity position in the company, and use that position to pressure management to make changes -- typically by liquidating assets, closing down non-core businesses, or eliminating inefficiencies -- that improve the company's profitability and boost its share price. Over the years, Pershing Square "targets" have included the likes of Wendy's International, McDonald's Corp., Fortune Brands, Borders, Target Corp., JC Penney, Canadian Pacific Railway, and Procter & Gamble. And while not all of Pershing's campaigns have succeeded in the way Ackman and his partners had hoped, enough have to make Ackman a wealthy and -- in some quarters -- feared man.

Which is all the more surprising given Ackman's low-key demeanor and penchant for progressive causes. Already philanthropically active in their thirties, Ackman and his wife began to think about ramping up their philanthropy as they neared forty and created the Pershing Square Foundation in 2006 as a vehicle to that end. Since then, the foundation has announced more than $145 million in grants and social investments in the areas of economic development, education, health care, human rights, the arts, and urban development. In 2010, for example, the foundation pledged $25 million to support K-12 education reforms in Newark, New Jersey, helping to match Facebook co-founder Mark Zuckerberg's $100 million gift to the city's schools.

Other significant grants announced by the foundation include commitments of more than $6 million each to the One Acre Fund and Root Capital, innovative organizations working to transform the lives of smallholder farmers in parts of Africa and Latin America; $10 million over five years to Human Rights Watch, the highly respected watchdog and advocacy organization; and $25 million to the Signature Theatre in New York City to help ensure that affordable tickets are available for every Signature production over the next twenty years.

And of course, with a little friendly encouragement from Warren Buffett, they were among the twelve new families or individuals to sign the Giving Pledge in April. As Ackman told Fortune at the time:

"While my motivations for giving are not driven by a profit motive, I am quite sure that I have earned financial returns from giving money away. Not directly by any means, but rather as a result of giving money away. A number of my closest friends, partners, and advisors I met through charitable giving. Their advice, judgment, and partnership have been invaluable in my business and in my life. Life becomes richer, the more one gives away."

-- Mitch Nauffts

Last updated: August 6, 2012

On Building Community Online: A 'Flip' Chat With Paull Young, Director of Digital, charity: water

(This video was recorded as part of our "Flip" chat series of conversations with thought leaders in the nonprofit and philanthropic sectors. You can check out other videos in the series here, including our previous chat with Helena Monteiro, executive director of the Worldwide Initiatives for Grantmaker Support.)

There are currently 800 million people living without the very thing most of us take for granted: safe, clean drinking water.

Founded by former nightclub promoter Scott Harrison, charity: water has helped bring that precious commodity to two million people in the developing world. How? For starters, it has perfected the art of collaborating with local partners who know the language and customs of the target population and have mastered the logistical challenges of working in local communities.

The New York City-based nonprofit is also brilliant at fundraising and, largely through innovative digital outreach efforts like its birthday campaign, has raised more than $60 million for water projects in the developing world since it was founded in 2006.

What explains charity: water's phenomenal success? According to the organization's director of digital, Paull Young, it boils down to the following:

1. Be positive. Powerful stories with positive messages are more effective than stories that make people feel guilty.
2. Don't ask for money. What works with direct mail often doesn't work online. Instead of making an ask every time you communicate with your donors and supporters, give people a chance to learn about the "cool stuff" your organization is up to.
3. Give. Raise. Influence. Focus on building relationships with your donors and supporters that enable them to see how they can maximize their ability to give, fundraise, and influence others over a period of years.
4. Do it wrong quickly.
5. Help donors and supporters see their impact. People are more generous if they understand clearly how their money is being used.

Recently, I had a chance to chat with Young before he addressed a 501 Tech NYC event about the organization's birthday campaign, the metrics it uses to evaluate its online fundraising efforts, and a few of the fundraising lessons he and his colleagues have learned over the years.

(If you're reading this in an e-mail, click here.)

 

(Running time: 8 minutes, 8 seconds)

Have a thought or comment you'd like to share? Use the comments section below....

-- Regina Mahone

Weekend Link Roundup (July 28-29, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

"If no one can understand us, if we can't even understand ourselves, how are we going to help communities become more informed and engaged?" asks the Knight Foundation's Eric Newton on the Knight blog. What's more, writing more readable press releases doesn't mean issues need to be dumbed down, says Newton. "You have to be smart to convey difficult subjects in clear, understandable prose. If you can do it, your work will be more effective...."

Fundraising

The Fundraising Detective shares some lessons about what the Olympics can teach nonprofits about volunteering, marketing, and fundraising, including how to give volunteers recognition, how to pass the torch, and how to do more than you ever thought possible.

Philanthropy

On the Philanthropy UK blog, Rockefeller Philanthropy Advisors CEO Melissa Berman argues that distinctions "between 'mainstream/traditional' (i.e., white) philanthropy and 'other' philanthropy, that is, the kind of giving practiced by racial, ethnic and tribal communities," are steadily giving way to a new reality, as African-American, Arab- and Asian-American, Latino, and Native American populations become "an increasingly potent force in American philanthropy." Berman then highlights a few observations and themes to buttress her argument:

• The philanthropic sector faces increasing scrutiny, both from government and activist groups, to demonstrate its responsiveness and accountability to racial and ethnic groups. A legislative proposal in California that would have mandated certain race-based benchmarks and grantmaking ratios, for example, was only narrowly defeated after foundations in the state voluntarily agreed to do more. If the field does not do a better job of addressing these complex issues on its own, writes Berman, it risks being forced to do so by others.
• The growth of philanthropy in communities of color has paralleled major social movements driven by and affecting those communities. The civil rights movement of the 1960s, for example, was accompanied by a proliferation of African American funds; the Native Peoples movement of the 1970s led to new tribal giving structures; the women's and LGBTQ movements had a similar effect. Indeed, says Berman, one could make the case that any important social agenda must be accompanied by philanthropic activity if it hopes to get traction.
• There will most certainly be a greater democratization of philanthropy as a result of the growth of giving vehicles formed by donors from various racial and ethnic backgrounds.
• Communities of color increasingly command the resources and have the capacity to do their own giving -- i.e., philanthropy is becoming something everyone can (and does) do.
• As a result, philanthropy is emerging as a critical expression of a community's own self-determination. We are finally realizing that solutions, as well as the resources to implement them, are to be found within communities themselves.

Professional Development

Rosetta Thurman -- she of the many hats, including nonprofit career coach -- has some advice for young nonprofit professionals wondering whether they are on the right career path.

Social Media

In an era of niche social networks, Geoff Livingston, author of Welcome to the Fifth Estate: How to Create and Sustain a Winning Social Media Strategy, has some advice about how and which social networking sites to integrate into your life "for professional success and personal enjoyment."

Strategy

The term "resilience" is popping up everywhere these days, writes Lucy Bernholz on her Philanthropy 2173 blog. But with all the change happening in the world and the uncertainty that comes with it, focusing on adaptability and being able to bounce back "are the keys to evolution and survival."

In a post on his blog, digital marketing and communications guru Seth Godin cuts right to the chase: "strategy matters more than ever" -- and not "changing your strategy merely because you're used to the one you have now is a lousy strategy."

Transparency

Last but not least, the Packard Foundation is using the blog of visiting scholar Beth Kanter to solicit feedback on its Organizational Effectiveness program. In fact, the foundation has been conducting an extensive review of its OE strategy for some months now and has been sharing information about the process and some of the feedback it has received at a dedicate Web site. Now it is asking for comments on a draft "that outlines key elements of our refreshed strategy." For more information and to share your thoughts/concerns, visit the OE strategy refresh planning site.

That's it for this week. What did we miss? Drop us a line at rnm@foundationcenter.org.

-- The Editors

International AIDS Conference: Next Stop Africa?

(Sarah Johnstone is a program assistant for Africa and the Middle East at the STARS Foundation in London. This is her first post for PhilanTopic.)

As in years past, this week's biennial International AIDS Conference in Washington, D.C., has brought together representatives of communities affected by the disease and key experts in the field in order to "translate recent momentous scientific advances into action that will address means to end the epidemic."

The conference’s underlying theme, embodied in its tagline "Turning the Tides Together," is inclusivity, as reflected by the wide variety of people -- from national leaders, to representatives of community-based organizations, to people affected by the disease -- who have come to the conference to discuss issues surrounding HIV/AIDS. As in years past, the hope is that the conference will serve to catalyze progress in combating the epidemic on the international, regional, country, and local levels.

Indeed, the idea of encouraging "local responses" and "working with communities" to combat the spread of the virus has been garnering a lot of attention and is one of the important themes on a long list of conference objectives.

For those of us at the London-based STARS Foundation, it is exactly this type of approach that we believe to be the most promising in terms of turning the tide in the fight against HIV/AIDS. Through a program of unrestricted funding combined with capacity-building assistance, STARS seeks to empower grassroots and community-based organizations to use their understanding of local situations to create specially-designed programs for their target communities.

One such organization is S.A.F.E., in Kenya, which uses the performing arts to educate, inspire, and deliver social change. S.A.F.E. delivers three programs in three different communities, each of which tackles an issue specific to that community and situation, including HIV/AIDS in and around Mombasa. Although founded by British-born Nick Redding, the organization's programs are locally based and driven. All program staff hail from the community in which they work, conduct any research that is needed in the community, and design and deliver the performances themselves. Because the performances frequently address deeply rooted taboos or issues associated with severe social stigma, the local and contextual understanding of program staff is critical to the organization's success. With that in mind, the shows not only are performed in the local language, they also portray situations that reflect the experiences of the local community as documented in the pre-performance research.

S.A.F.E.'s impressive success is clear proof of the importance of local responses to issues such as HIV/AIDS. But the organizers of the International AIDS Conference have yet to see the benefits of using their event to harness that approach in any of the world's HIV/AIDS hotspots. Consider: According to UNAIDS, there were 33.4 million people living with HIV globally in 2008, of whom 22.4 million lived in sub-Saharan Africa. Contrast that with the 1.2 million people living with HIV/AIDS in the U.S. in 2009. And yet, a review of the previous eighteen conference locations quickly reveals that the conference has been held in just three developing countries -- only one of which was in Africa.

One could be forgiven, of course, for thinking it an excellent idea to hold the conference in the world's richest and most powerful country. There are at least a dozen U.S. cities with the capacity to host such an event, and the U.S. medical research establishment has led the way in unraveling the mysteries of the virus. By the same token, holding the conference in an expensive city in one of the world's most developed countries makes it virtually inaccessible to the poorest members of the global community. Surely, there are very few leaders of community-based organizations in rural sub-Saharan Africa who can afford a week-long trip to Washington, D.C. Yet, these are precisely the leaders -- and communities -- with the most to gain from the conference.

If one of the objectives of this year's conference is to leverage the attention it generates to help end, once and for all, the epidemic in the United States -- a country with more than adequate means to tackle the disease inside its borders without help from others -- surely it makes sense to hold future conferences in countries where the need is greatest and resources are scarce. South Africa successfully hosted the World Cup, the most popular sporting event in the world, in 2010. It's time for the organizers of the International Aids Conference to build on that legacy.

-- Sarah Johnstone

5 Questions for…Eugene Tempel, Senior Fellow, Center on Philanthropy at Indiana University

Over the past twenty-five years, the philanthropic landscape in the United States has changed significantly. As Americans' trust in institutions has declined, restricted giving has become more commonplace, while the number of wealthy Americans interested in establishing their own foundations has increased. At the same time, growing numbers of women and minorities have assumed leadership positions at foundations and nonprofits, while diversity -- of staff and boards -- has become a watchword, if not yet established fact. Over the same period, the Center on Philanthropy at Indiana University has established itself as a premier training ground for current and future nonprofit executives. In June, Indiana University announced that Eugene Tempel, who directed the center from 1997 to 2008, would be leaving his post as head of the IU Foundation, a position he has held for the last four years, to head up efforts to develop a School of Philanthropy within the IU system. Recently, Philanthropy News Digest spoke with Tempel about the new school and the steps he and others are taking to make it a reality.

Philanthropy News Digest: Earlier this year, Case Western Reserve University announced a major restructuring of its Center for Nonprofit Management -- in part because it was having difficulty attracting students to the program. Are there enough students interested in pursuing an advanced degree in philanthropy to support a School of Philanthropy at Indiana?

Eugene Tempel: I think so. For what it's worth, we continue to attract students, even though the amount of aid and fellowships we're able to offer is not as robust as we'd like. Still, what we've noticed over a long period of time with our master's program is that demand far exceeds supply. And the only students who have any difficulty finding a job after they graduate are students who want to be in a specific location looking for a very specific kind of job. That said, I wasn't inside the Case Western Reserve situation, but the Center for Nonprofit Management there was a very complex organization. It was "owned" by four different entities, and that created a number of challenges. Case also turned the center's master's degree into a sixty credit-hour program. Students looking at that were likely to be tempted by some of the thirty-six credit-hour programs out there, many of which are attracting students.

PND: How big an endowment will the new School of Philanthropy need?

ET: We set a goal of $100 million, and we've raised about $68 million of that for programs currently housed in the Center on Philanthropy, including fellowships and sponsorships of students majoring in philanthropic studies at the baccalaureate, master's, and Ph.D. levels who take their programs through the IU School of Liberal Arts at IUPUI and the university's graduate school. We believe that endowment level will be a good foundation. But the school will be largely privately funded, and so it will need to continue raising private funds and seeking other sources of support even after we reach our goal. The key to building the school over time is to continue adding to the funds that are available for its operations, especially funds earmarked for additional faculty hires -- not only faculty who teach but those who do research -- because that's an important part of the school's reputational base and part of what it contributes back to the school and the larger society. Also, we'll need to continue to build resources for the fellowships and scholarships that help attract and support the students who come to learn and work in these programs.

PND: Who or what do you see as competition for the school?

ET: I think some of the top-notch public affairs programs that offer degrees in this area could compete with us for students, but they could also be research collaborators. The Center on Philanthropy already has reached out to most of the people you would find at institutions in this space that are trying to do good work. Indeed, while the center has always aimed to be a leader in the field, we also strive to engage other institutions and involve them in programs we helped start. As those relationships develop over time, they become competitors for students and for faculty. And clearly, some of the institutions out there with strong reputations will compete with us for students. In fact, some of the students who come to us to get their Ph.D. in philanthropic studies decide to go on to doctoral programs in history or a field like that because of the fellowships that are offered elsewhere. At the same time, some of the programs that teach about the nonprofit sector have begun to hire our Ph.D. graduates as faculty and leaders for their programs.

PND: Why did you choose to leave the IU Foundation after only four years to head up this project?

ET: I left a vice chancellor's job once to head the Center on Philanthropy and people thought I was crazy. And when I left the Center on Philanthropy to run the IU Foundation, at least one of your colleagues in the media called me and said, "Are you nuts?" But look, I agreed be president of the IU Foundation for no more than five years. The dirty secret is, I'm already sixty-five, so when they asked me about helping develop a school of philanthropy, we'd already been discussing a succession plan for the person who would take my place at the foundation. As you know, they were able to find Daniel Smith [Ed note: dean of the IU Kelley School of Business] within the IU community, which allowed me to move to the center earlier and dedicate my energies to helping start the new school.

I've been committed to the center since we got the first planning grants and funding from the Lilly Endowment some twenty-five-plus years ago. And even though I didn't work in the center until 1997, I've never been far from it as a volunteer, whether working on an advisory board or helping with a project. One reason I've never left Indiana University is because the center's been there and I've been able to be part of it.

PND: What are the next steps in terms of creating the school?

ET: The proposal hasn't been made to the Indiana Commission for Higher Education yet. That's the next crucial step. All the work that's going on now at the center and in our academic programs continues. Any student coming this fall, for example, will go right into philanthropic programs operated through the School of Liberal Arts and other departments around the university, just as they always have. We think we've planned well, there are no new degrees to be approved, and we hope the commission will consider our application favorably, but ultimately the decision is theirs. If the commission approves the proposal, then we still have the hard work of developing budgets and institutional structures, working with faculty and staff committees -- the collaborative, detailed work it takes to bring a school to fruition. We also hope there'll be funds to allow us to begin recruiting soon for some key faculty positions. Plus, we will continue to work to raise additional funds, so that by the time the school is ready to open its doors -- sometime in 2013, we hope –- we'll have additional funds to add to the endowment.

-- Matt Sinclair

Weekend Link Roundup (July 21-22, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Collaboration

Minnesota Council on Foundations Web communications associate Chris Oien shares a list of free tools that make it easy to collaborate with others, including Dropbox for file sharing and Google+ Hangouts for online meetings.

Communications/Marketing

On the heels of the virtual Millennial Impact conference, Network for Good's Katya Andresen shares a few more key findings from the 2012 report on giving by younger donors on her Non-Profit Marketing blog. Among other things, Andresen reminds us that:

• Millennials prefer to hear from/about causes via social media, e-newsletters and alerts, and Web sites;
• They give online -- and in person; and
• They like to hear about volunteer opportunities from their peers.

You can read or download the report here.

Evaluation

On the GuideStar blog, Mark Miller-McLemore, dean of the Disciples Divinity House at Vanderbilt, argues that "assessment can be meaningful, even if it might not be easily quantifiable." To that end, he shares three guidelines for nonprofit leaders to follow:

• the best action is guided by principles;
• the best action does the greatest good for the greatest number; and
• good organizations are good people doing good things well.

Governance

In light of the report issued by former FBI director Louis Freeh on the Penn State University child sex-abuse scandal -- a report which found that the university's board "failed in its duty to make reasonable inquiry into these serious matters and to demand action by the President" -- James Irvine Foundation president and CEO James E. Canales offers some advice to nonprofit board members in an op-ed piece on the Chronicle of Philanthropy site.

Responding to Canales's op-ed, Allison Fine says that the saddest part of the Penn State situation is that we've been here before, 

and, sadly, we'll be here again, and I wonder what part of the governance process or relationship or even existence is so difficult that so few organizations do it well. Senior executives feeling that they have to "manage" their boards, stop them from interfering and micro-managing, share as little as possible with them are the norms not the exception. And board members more interested in the appearance of service than actually being trained as nonprofit board members (not the same as sitting in a meeting at work!) and learning about the work of the organization and insisting on accountability are the exception not the rule. Are the models for good governance, as Jim writes in myriad pamphlets, books, training courses, etc. so difficult and unrealistic that most organization will simply never be there...?

And on his Nonprofit Communications blog, James D'Ambrosio says that Penn State should follow the advice of a New York Times contributor who recently suggested that the university donate "the next four years of football-related profits...to a fund benefiting the victims of child sexual abuse."

Human/Civil Rights

On Nelson Mandela Day, Idealist.org's Allison Jones shares a video created by Prezence Digital Production that pays tribute to the former president of South Africa. "While the video is meant to be a fun way to explore the life and impact of Nelson Mandela," writes Jones, "it also made me wonder: what role does social media play in moving social movements forward?" We're wondering the same thing. Share your thoughts in the comments section below, or at the Idealist blog here.

Philanthropy

How can foundations really understand what's going on around them? How can they map the ever-evolving topography of funding in their areas of interest? asks Mendi Blue on the Center for Effective Phlanthropy blog. One possible solution, scanning the philanthropic landscape, was highlighted in a recent Grantcraft report. As the report points out, and Blue notes, however, multi-dimensional scanning "is easier said than done."

Back from a well-deserved vacation, NCRP executive director Aaron Dorfman applauds the Annie E. Casey Foundation, which recently announced plans to "cease running its own service programs and instead give out $20 million more per year in grants to high-performing nonprofits." Indeed, the "winner in this scenario," says Dorfman, "will be the families and communities that the foundation and its grantees seek to serve."

Philanthropy 2173's Lucy Bernholz adds "sensemaking" to her list of 2012 philanthropy buzzwords. Originally suggested by our colleague Lisa Philp, who oversees the Foundation Center's GrantCraft initiative, sensemaking "is what buzzword number three (data scientists) do with buzzword number one (data)," says Bernholz.

And in another post on her blog, Lucy does a deep dive on the idea of data as an essential element (think, Periodic Table of Elements) in philanthropic work. "Why does this metaphor work when thinking about data in philanthropy?" asks Bernolz. "Because these raw elements are only the beginning of the story. For data to be useful in philanthropy they have to be known, accessible, and compoundable....If everyone tracks their data separately, calls things by different names, and holds onto them behind closed doors, well, that's like having hydrogen in one room, oxygen in another and being desperate for a drink...."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org.

-- The Editors

Six Common Pro Bono Models

(The following post by the Taproot Foundation's Aaron Hurst was adapted from the book Powered by Pro Bono: The Nonprofits Step-by-Step Guide to Scoping, Securing, Managing, and Scaling Pro Bono Resources, to be published in September by Jossey-Bass. To read the previous post in Aaron's series, click here.)

When we think about pro bono services, we typically picture teams of business professionals doing projects for a nonprofit -- building a new Web site, helping to create a strategic plan for an organization, and so on. In reality, there's an incredibly diverse array of models through which nonprofits can receive pro bono resources. Here are the six most common to help you think about how you can best leverage pro bono to boost your mission.

Loaned employee. An individual employee drops some of his or other duties to pursue a pro bono project. For companies and professional services firms, this typically requires a sanctioned and compensated leave of absence. Pfizer, for example, provides employees with three- to six-month sabbaticals so they can donate their services to nonprofits.

Functional coaching and mentoring. This model pairs a subject-matter expert with an employee at a nonprofit organization who can benefit from his/her functional expertise. Gap Inc. has their corporate HR executives mentor senior HR staff at their nonprofit grantees.

Team-driven projects. Individuals come together on teams to deliver a product based on the needs of the nonprofit partner, with each individual having specific roles and responsibilities. This type of pro bono engagement typically requires a dedicated project manager on the team as well as several specialists. An example: Bain & Company, provides $40 million a year in pro bono consulting advice to nonprofits.

Open-ended outsourcing. An organization makes its services available to a specific number of nonprofit organizations on an ongoing, as-needed basis. For example, a professional marketing association might serve as the general marketing outsourcer for a nonprofit agency. This is also a common approach in law firms that provide ongoing pro bono support to nonprofit organizations.

Signature issue. An organization combines formal pro bono work with other corporate assets to leverage significant internal resources toward solving a specific social issue. Typically, a signature-issue campaign represents a significant and longstanding partnership between an organization and a nonprofit client or clients. Deloitte, for example, adopted College Summit as a signature-issue partner and has provided the education organization with everything from a seat on its board to hundreds of thousands of dollars in pro bono services over the years.

Individual help. Help donated by a single employee is probably the most common form of pro bono service. It could be a photographer who donates a shoot or a facilitator willing to help out with an organization's board retreat. LinkedIn is a great resource for finding this kind of pro bono support.

There is no shortage of highly skilled people able and willing to help nonprofit organizations on a pro bono basis, and the ways they are able do that are limited only by our imaginations. Check back next week for more tips and techniques for scoping projects and securing pro bono services for your organization, and be sure to visit the Taproot Web site for more information about the growing pro bono marketplace.

-- Aaron Hurst

Infographic: What is GrantSpace?

(This post originally appeared on the Foundation Center's Philanthropy Front and Center - Cleveland blog.)

Just how well do you know GrantSpace, the Foundation Center's online learning community for nonprofits? Did you know, for instance, that over 100,000 people visit per month, from over 200 countries? But don't let the numbers alone do the talking. Check out our new infographic to get the full perspective on what you can do at GrantSpace.

(Click the image to view in full size)

Weekend Link Roundup (July 14-15, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Network for Good's Katya Andresen shares a list of thirteen signs your Web site might be out of date. The list, which was originally posted on the Branded Out Loud blog, includes:

• The calendar widget on your site resembles an actual calendar;
• "WELCOME" appears anywhere on your site;
• There are more than eight menu options or drop-downs with their own drop-downs; and
• Stock photos on your site are not connected to your organization's mission, or the photos don't load properly.

Impact/Effectiveness

On the Huffington Post Impact blog, Global Philanthropy Group president Trevor Neilson has three recommendations for nonprofits worried that it's only a matter of time before the economy -- and their fundraising results -- take a turn for the worse: think "different" about fundraising; decide what not to do; and value performance over passion.

Guest blogging on Beth's blog, GreatNonprofits chief executive Perla Ni and Family Independence Initiative vice president Mia Birdsong discuss the importance of listening and responding to feedback from the people being served by your nonprofit. "With a good feedback system in place programs can be held accountable to those they serve," write Ni and Birdsong. "Consumers will see that their voices make a difference when programs are adjusted and measures of success redefined in response to feedback....Nonprofits will benefit from detailed information about program strengths and shortcomings....And everyone wins when programs become more efficient and effective, improving program quality and outcomes."

Leadership

Rosetta Thurman, co-author of How to Become a Nonprofit Rockstar (with Trista Harris), has a few suggestions for young nonprofit professionals on how "to handle slip-ups with maturity in the nonprofit workplace."

Nonprofit Management

In the latest installment of her Social Good podcast series, Allison Fine chats with former Apple creative director Ken Segall, author of Insanely Simple: The Obsession That Drives Apple's Success, about how nonprofits can "create a culture of simplicity in their organizations."

Philanthropy

in an e-mail to Council on Foundation members and colleagues, Vikki Spruill, the council's new president and CEO, shares her vision for organized philanthropy. "Philanthropy has a proud legacy and an awe-inspiring focus on the future," Spruill writes,

but its most critical moment is right now. At a time when our world faces a storm of converging challenges with dwindling resources, philanthropy's positive impact remains a mystery to far too many. Swirling through this storm is a lack of understanding about the role philanthropy plays in society as investor, innovator, leader, and partner. Yet we all know philanthropy is more relevant and necessary than ever. That's why we must seize the imperative to help society better understand philanthropy's impact and contributions. If we can't imagine a world without philanthropy, we need to make sure those outside our sector recognize what an unlivable world that would be....

Poverty

The folks at liberal think tank Demos have posted a series of charts that break down the poverty rate in America by race, gender, education, age, and family type and finds that it's highest among single female-headed households with kids -- a fact explored with great skill and empathy by this article in today's New York Times.

Social Innovation

On the Social Velocity blog, Nell Edgington shares ten great social innovation reads from the month of June. We agree with Nell: Better late than never.

Strategy

On FSG's Social Impact Blog, Rebecca Graves explains why strategic clarity is important for community foundations. "Community foundations wrestle with an incredible array of decisions about how best to support their communities, advance solutions to complex social problems, and craft the right role for themselves," writes Graves. "[And] disciplined strategic thinking is essential to address these challenges. It helps [community foundations] articulate a clear and unique identity, become more aligned in pursuit of [their] goals, and define the right types of growth...."

Transparency

And on the Center for Effective Philanthropy blog, CEP president Phil Buchanan suggests that the philanthropic sector is unlikely to "make real progress on meaningful transparency -- transparency that gets to effectiveness and improvement -- externally until we deal with the challenge of being transparent first at home, with staff and colleagues...."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org.

-- The Editors

Raising Pro Bono

(Aaron Hurst is the president and founder of the Taproot Foundation, a national nonprofit organization that makes business talent available to organizations working to improve society.)

Every year, professionals donate over $15 billion in pro bono services, from marketing and legal help to strategic planning support. That’s four times the amount donated by corporate foundations every year. And it’s a resource that every nonprofit needs to tap if it wants to realize its full potential.

This post is part of a new series designed to help your organization learn how to get its piece of the pro bono pie. Every month, my Taproot colleagues and I will share tips and insights into how to scope, secure, and manage pro bono resources that can help your organization get the support it needs to thrive.

Over the last ten years, the Taproot Foundation has not only provided pro bono services directly to nearly two thousand nonprofits, we’ve been hired to design pro bono programs for a range of leading companies, from Deloitte to Capital One. In the posts that follow this one, we will draw on that experience to provide insider information that helps position your organization to strategically leverage these resources.

We are also working hard to get more companies to create pro bono programs that provide donations of high-quality professional services to nonprofits like yours. Inspired by President John Kennedy's historic call to members of the legal community to use their professional skills in the battle for civil rights in the 1960s, I lobbied President George Bush in 2008 to create a parallel challenge to the business community, asking them to use their skills to help the nation in a time of critical need.

The result was the Billion + Change campaign, which was launched by Jean Case, co-founder and CEO of the Case Foundation and chair of the President's Council on Service and Civic Participation. Billion + Change has already secured pledges of $1.8 billion in formal pro bono resources for nonprofits from more than two hundred companies, and it aims to reach five hundred companies over the next eighteen months.

In my next post, I’ll focus on the most common forms of pro bono service offered today by companies looking to support the nonprofit sector and make a difference. In the meantime, be sure to visit our Web site for more information on how to donate your skills pro bono, find pro bono resources for your organization, or to learn more about the growing pro bono marketplace.

-- Aaron Hurst

Emoti-Con!: Digital Learning Comes to NYC

(Laura Cronin is a regular contributor to PhilanTopic. In her last post, she chatted with Kimberleigh Smith, board president of the New York City-based Paul Rapoport Foundation, about the foundation's decision to spend down by 2015 and what the foundation is doing to help grantees navigate that transition.)

What if a bunch of nonprofits and funders found ways to work together on new projects that furthered their respective missions while also creating outcomes that were larger than the sum of the new parts?

Productive collaboration among organizations is one of those textbook goals that funders love to promote. Many an executive director has heard from a major funder about some like-minded nonprofit she should find a way to work with, sometime in the future. But too often, such suggestions lead to circular conversations, mission drift, and/or wheel spinning.

Lately, however, several New York City nonprofits have discovered that young people's interests are a key that can unlock the secrets of successful, mission-driven collaboration.

Hive Learning Network NYC is a coalition of youth-serving organizations that encourages young people to explore their interests and further their learning through the use of digital media and technology. Fueled by grants from the New York Community Trust, MacArthur Foundation, and others, students from all five boroughs participate in a lively system of out-of-school time (OST) programs that use digital tools to help them dig deeper into subjects they're passionate about, from science and art to creative writing and filmmaking.

All Hive Network member organizations are driven by the interests of kids. Members work to develop programs that help youth become active producers of digital media, rather than letting them just use digital tools to passively consume off-the-shelf products created by adults. In turn, young people's experiences with new digital tools and artifacts helps nonprofits whose missions include serving youth to advance those missions more effectively.

A number of examples of that dynamic were on display at the fourth annual Emoti-Con! NYC digital media festival earlier this month.

According to Kerry McCarthy, program officer at the New York Community Trust, "The Hive Digital Media Learning Fund's grant to MOUSE [a NYC-based nonprofit that empowers students to succeed in the twenty-first century information economy] enabled teens to plan and run Emoti-Con! NYC, which brought together Hive NYC institutional members, educators, and their students to showcase their ideas and creations. And the collaborative continues to connect funders -- including MacArthur, Mozilla, and the David Rockefeller Fund -- interested in working together to help kids find and follow their interests and get excited about learning with digital media tools."

The Parsons School of Design's contribution to Hive NYC is the Parsons Scholars Program, an intensive, three-year summer and weekend pre-college program for students interested in the visual arts. With faculty and graduate students as mentors, twenty young scholars are exposed to all the available tools in the visual media professional's toolkit. Charged with using those tools for social action, the seniors choose an issue for their capstone -- this year it was curtailing gun violence -- and work with a client -- this year its was Beyond Bullets -- to create PSAs, DVDs, and loads of amazing print material that their NGO partner can use to raise awareness about an issue. Except for the fact that they were infused with the passion of students who want to make a difference and break the cycle of gun violence in their own neighborhoods, this year's final products were indistinguishable from professionally produced marketing materials.

New York City-based Global Kids sent a team from Long Island City High School to this year's Emoti-Con!, where it premiered a youth-directed video documentary that explores why LIC High School kids cut school. Many of those involved in making the video described their own first time cutting class, including one young man who said he felt so insulted when a substitute teacher fell asleep in class that he got up and left for the day. The hope, of course, is that honest answers from students will lead to more informed solutions to the city's truancy problem.

Girls Write Now, a NYC-based nonprofit devoted to drawing out the literary genius in young women, added a fresh component to their programming by giving students the tools and training they need to do digital remixes of their literary creations. Through the program, one high school senior is making a trailer for her forthcoming novel, while others have created animated versions of published stories and poems written by the professional women writers who serve as Girls Write Now mentors.

Chris Lawrence, director of Hive Network NYC, said, "The great virtues of Emoti-Con! are that it brings together youth from across the city to share their creations with their peers and professionals, gets them inspired by each other's work, and teaches them about other opportunities for youth across the city." Hive's swarm of thirty-nine partner organizations in NYC includes the American Museum of Natural History, Bank Street College of Education, the Bronx Museum, Make the Road, and WNYC Radio Rookies.

What's the lesson for those of us who may be too old to count ourselves as digital natives and/or are grown-up program officers and executive directors looking for better ways to bring nonprofits and social-change groups together on an issue? Simple: Don't forget to ask a high school student with a smartphone what he or she thinks. You just might get the answer you were looking for.

-- Laura Cronin

 

Philanthropy’s Data Dilemma

(Bradford K. Smith is president of the Foundation Center.)

When McKinsey & Co. released its seminal study Big Data: The Next Frontier for Innovation, Competition, and Productivity, the firm confidently predicted that the world was "on the cusp of a tremendous wave of innovation, productivity, and growth, as well as new modes of competition and value capture -- all driven by big data as consumers, companies, and economic sectors exploit its potential." While the study covered every segment of the economy, from "accommodation and food" to "wholesale trade" and even government, philanthropy -- an industry that, in America, controls over $600 billion in assets and makes close to $47 billion in grants every year -- wasn't even mentioned, most likely because no one thought to include it.

It's not that philanthropy doesn’t have anything to bring to the Big Data party. Think about it. Foundations possess resources, something most people do not. And they possess something even fewer people have, flexible resources. As a consequence they are surrounded by those hoping for their support, an endless stream of the brightest and most committed talent on the planet, people with amazingly creative ideas about how to solve the world's pressing social, economic, and environmental problems. But what's visible to the outside world -- the rare project that is actually approved and whose one-line description eventually makes it on to a foundation tax return and (maybe) a foundation Web site -- is merely the tip of the iceberg. (And a surprising number of foundations don't have Web sites at all.) Moreover, most of the (increasingly digitized) concept notes, project proposals, progress reports, evaluations, research, and strategy deliberations produced by foundations are unavailable for mining within individual foundations, across the field, or by anyone else interested in understanding philanthropy's immense contribution to making a better world.

When it comes to data, foundations have the defects of their virtues. They are endowed, independent institutions with the freedom to innovate, experiment, and stick with challenges for the long run. But their independence too often creates isolation: whatever data they do collect remains locked within thousands of knowledge silos. America's foundations are changing, to be sure, but while many are still focused on catching up with the paradigm shift from giving money away to social investment, the next wave of change is already crashing over them. Either the philanthropic sector masters the technology of managing information and develops the habits of generating and sharing knowledge, or it risks being left behind. Yes, it will continue to do good in the world, but do we really want to settle for being, as Bart Simpson put it, an "underachiever and proud of it?"

That said, getting philanthropy to embrace the era of Big Data need not be a Herculean challenge. Technology is on our side, and by not doing some things we can free up time and resources to start doing others. Here is a partial list of what that might look like.

STOP trying to be unique

At a recent meeting of some of the largest staffed foundations in the country, I was struck by how many said they were developing their own taxonomies with which to classify the subjects of their grants, strategies, approaches, beneficiary populations, etc. Foundations don't compete in the ways that most people think of competition, but they do seek to differentiate themselves from each other. In doing so, they tend to invent their own terminologies to describe and internally align what they do. As a result, philanthropy is much more archipelago than sector, a vast sea of information islands, each with its own language. A colleague at the Foundation Center recently examined 160,000 grant records and identified 82 unique ways in which foundations describe "general operating support." Not only has there got to be a better way, there is a better way. Read on.

START aligning your data with the outside world

While working for the Ford Foundation in the mid-'90s, I found myself arguing vociferously, during one of the quadrennial coding wars that the foundation seemed to engage in, against adopting the taxonomy and codes of the Foundation Center (where I now work). For the record, I repent. Before plunging headlong into developing expensive and elaborate data systems of their own, foundations should look at the systems in use by other foundations and sectors, particularly those with whom they seek to partner and leverage resources. This is beginning to occur. The Gates Foundation now reports grants to the Organization for Economic Cooperation and Development, the Hewlett Foundation converts its grants data into a format compatible with the International Aid Transparency Initiative, and the Ford Foundation has worked with Foundation Center staff to build a "crosswalk" between the two organizations' taxonomies. If philanthropy is really serious about transformation, change, impact, making a difference, and all the other terms we use to distinguish it from traditional charity, then foundations need to align their data with each other and with the outside world.

STOP developing custom grants management systems

Historically, data in foundations has been related primarily to grants management -- processing proposals, cutting checks, getting reports, and closing out files. A number of the large, traditional foundations invested considerable resources in developing their own custom grants management systems when there was little quality software to choose from. In the years since, commercial software has gotten much better and today 11 grants management software vendors have modules built into their products that make it possible for a foundation to export grants data directly to the Foundation Center. Those products include GIFTS, the market leader, and FLUXX, a new cloud-based open-source grants management solution. In the era of Big Data, "interoperability" is a key concept. Having your own unique taxonomy locked inside a custom software platform is two strikes against you.

START going beyond the 990-PF

Although philanthropy often seems like an impossibly diverse sector that ranges from the proverbial husband, wife, and a checkbook to the Gates Foundation with more than a thousand employees, all American foundations have one thing in common: they file a 990-PF tax return with the Internal Revenue Service. No foundation has ever proclaimed great love for the 990-PF and there have been various proposals for its reform. But because the 990-PF is a compliance document not a data collection instrument, the care with which it is filled out varies wildly, and several years can pass between when a foundation’s fiscal year closes and usable knowledge can be produced from it, philanthropy is a $600 billion industry that relies on two-year old trend data. In an effort to make more current information available, more than 700 foundations are now exporting their grants data directly to the Foundation Center on a monthly, quarterly, or yearly basis. And seven foundations -- Mott, Hewlett, Kellogg, Rockefeller, MacArthur, Getty, and the Energy Foundation -- are going a step further by publishing near-real-time grants data in machine readable format.

STOP treating data and communications as two separate things

Years ago, a program officer told me about how he had shocked the room when, after analyzing hundreds of grants, he informed his colleagues that the foundation was doing far less to help the poor than they thought. Back then, there was little concern that such an insight might leave the building and end up in the public domain. Today, in contrast, foundations work in a world where, one way or another, the data they have designed for internal purposes increasingly is made available to others and used to inform narratives that may be different from the carefully crafted ones foundations create themselves. To say this is reality doesn't make it any easier. In general, philanthropy came late to communications, and foundations have labored to move beyond speech writing and to embrace strategic communications. Now, just as the messages are getting more sophisticated and soaring through cyberspace on the wings of social media, foundations will have to make sure their data supports their stories, and vice versa.

START thinking about your data as open

By and large, foundations tend to think of open data and transparency as something they should fund rather than do. There are a growing number of foundation efforts to make government more transparent, create information-driven social capital marketplaces, and so on, but little effort is being made to liberate foundation data itself. For years, the Foundation Center has been painstakingly capturing data from foundation tax returns, cleaning it, standardizing it, and producing reports and (more recently) data visualizations. It is only a matter of time, however, before those tax returns are available online in digital form, making it easier than ever for anyone to grab the data and mash it up however they choose. Even today, there is nothing to prevent industrious data miners from scraping foundation data directly from your Web site.

The time has come for foundations to start thinking about everything they do as data. This post has understandably focused on grants data, the principal "output" of foundation activity. But as I noted at the outset, foundations are sitting on vast stores of information that go far beyond grants data and are potentially of equal or greater value. As file cabinets disappear from foundation hallways and all that information migrates to hard drives and the cloud, philanthropy has an incredible opportunity to answer the question a young philanthropist recently posed to me: "How can we know what other foundations know?" If, and only if, foundations are willing to create the habits and systems needed to more freely share their information with each other and with others will the industry that is philanthropy fully be able to take advantage of the era of Big Data and all that it promises.

-- Brad Smith

Weekend Link Roundup (July7-8, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Civic Engagement

On the Knight Blog, Elizabeth Miller looks at the report The Civic Tripod for Mobile and Games: Activism, Art and Learning, which explores the three dimensions of mobile games that focus on art or neighborhood civics: civic learning, performance/art, and social change. "Learning is inherent in games, since their engagement depends on providing challenges that are just barely possible," the report's authors note. "And when games are tied to physical space,

their action ties to learning about our own neighborhoods -- how to move through them, and to change them. The art of such games is often the physical world itself, with better sounds and graphics than any screen! And the digital side of games draws in the civic, if only because it is so easy to link to more information on how to take action, or how to learn more. In other words, the experiential nature of games pulls mobile experiences on civics into being a mix of art and learning....

Disaster Relief

On her Nonprofit Charitable Orgs blog, Joanne Fritz offers tips on how to help those affected by the wildfires raging in Colorado and elsewhere out West.

Fundraising

Fundraising is a valuable skill that nonprofits cannot afford to underinvest in, argues Joe Garecht on the Fundraising Authority blog. It is also a marketable skill that a good fundraiser can take to another organization if, as the title of his post suggests, "You Aren't Paying Your Development Staff Enough." Writes Garecht:

If your organization's executive director is making $150,000 per year and the top development staff member is making $60,000 per year, your nonprofit is in trouble. Likewise, if your organization is raising $5,000,000 per year and you only have one full-time development person, your nonprofit is in trouble. Under either scenario, you will never raise what you really could and should raise, and

never do all of the good that you really could do, simply because you aren't making a big enough investment in your development [function]....

"It seems that the Great Recession is similar to the Great Depression in one more way -- the drastic drop in large charitable gifts," writes Joanne Fritz in another post on her Nonprofit Charitable Orgs blog. Citing the Chronicle of Philanthropy's  Holly Hall, who found that the decline in large charitable gifts between 2007-10 mirrors a similarly precipitous drop between 1931-45, Fritz writes: "I have trouble with the idea that our tough economic times have been a match for the Great Depression, or that the decline in large charitable gifts will last as long. But I do think that large, monolithic fundraising campaigns of any kind are doomed...."

Governance

Gene Takagi has an excellent post on the Nonprofit Law blog, which he co-authors with Emily Chan, about the roles and duties of nonprofit board members.

Innovation

On the Forbes site, contributor Lori Kozlowski chats with Rockefeller Foundation president Judith Rodin about the meaning of philanthropic innovation in 2012.

Social Media

"Although we often focus our discussion on how organizations can use social media for marketing and fundraising, the best reason for nonprofits and foundations to be on social media is to practice thought leadership," writes Rosetta Thurman in a post on her eponymous blog. "When it comes to foundations in particular, this opportunity can be even more impactful, as they are often seen as conveners, curators and catalysts for change within the nonprofit community." Thurman goes on to single out the Geraldine Dodge Foundation, the Rasmuson Foundation, and the Community Foundation for the National Capital Region for blogging "not just to share information, but to influence public opinion and community collaboration."

And on the First Giving blog, Taylor Corrado highlights six nonprofit branding lessons from the book Made to Stick, by Dan and Chip Heath:

1. Keep it simple -- Don't dumb it down, but get straight to the point.
2. Embrace the unexpected -- In other words, create curiosity.
3. Be concrete -- Provide details, examples, and facts.
4. Be credible -- Testimonials from beneficiaries are more effective than those from board members.
5. Don't shy away from emotion -- Humans respond better to emotions than statistics.
6. Think "story" -- Good stories are unexpected, filled with concrete details, and should always be emotional.

That's it for this week. What did we miss? Drop us a line at rnm@foundationcenter.org.

-- The Editors

‘Fair and Square’ and Philanthropic

The JCPenney Company, which was founded over a hundred years ago by James Cash Penney on the principle of treating customers "fair and square," recently launched a new charitable giving program called jcp cares that aims to build stronger communities across the country.

Through the program, the company plans to support a different cause or charity each month, for at least the next six months, with direct contributions and donations from customers. The first six charities selected to receive support through the program are the USO (July), 4-H and the Boys & Girls Club of America (August), Teach for America (September), the Breast Cancer Research Foundation (October), Share Our Strength (November), and the Salvation Army (December).

As someone not privy to the closed-door discussions that led to the selection of the six charities, I find myself wondering how the company came up with its list. Okay, some of the choices are obvious. This month's charity, the USO, supports military personnel and their families -- an entirely appropriate choice in a month that includes Independence Day. Similarly, Teach for America is an obvious choice for everyone's favorite back-to-school month, and what could be more appropriate than supporting the Salvation Army's Red Kettle campaign in December.

But in an era when companies, like almost everybody else, need to compete for the dollars and attention of consumers, you might expect JCPenney to be a little more creative about how it engages customers in its philanthropy. For example, what about asking customers for nominations of organizations deserving of the company's support via Facebook or Twitter? Or, taking it a step further, being more transparent about the actual selection process it did employ?

The company has said that, from July 23 to July 31, it will donate $1 -- up to $50,000 -- to its July partner, the USO, for every customer that checks in at a JCP location via foursquare. It has also launched a dedicated page on BroadCause where customers can share their personal stories and has said in its press release that it will engage charitably minded customers through the Facebook game WeTopia. I just hope the company has a long-term vision for its corporate giving that goes beyond "clicktivism."

What do you think? Am I being grumpy, or should the company be doing more to engage its customers in its new charitable giving program? Share your thoughts in the comments selection below.

-- Regina Mahone

[Commentary] If Nonprofits Fail

Jennifer Talansky is vice president of knowledge and communications at the Nonprofit Finance Fund, a national nonprofit that provides a continuum of financing, consulting, and advocacy services to nonprofits and funders nationwide. Talansky held previous marketing positions at Credit Suisse Asset Management, Partnerships for Parks, Hearst Magazines Brand Development, and JP Morgan's Private Client Group.

Recently, the Nonprofit Finance Fund released the results of its 2012 State of the Nonprofit Sector Survey. The response to those results has varied widely based on who is interpreting the data. While many who are well-acquainted with the long history of the sector's financial woes saw the results as confirmation of their own experiences, some saw the results and told us, "That doesn't look so bad!" This divergence of perspective about what constitutes a healthy nonprofit sector begs the question: What is an acceptable level of instability -- or even failure -- within the sector?

Nonprofit financial health can be an abstract and technical subject. Let me start with a look at something more familiar. I live in New York City, where there's a pizza joint on almost every corner. Unless she has a favorite or is a friend of the owner, most New Yorkers don't blink if one of these pizza places goes out of business. Heartless as it may seem, it's the kind of economic Darwinism that one grows used to in a city with high commercial rents and an overabundance of almost everything.

Yet, there are repercussions to this kind of churn beyond a more limited pizza choice. The revenue once generated by the shuttered pizza joint supported the owner or group of owners, their families, other dependents, and employees. Its taxes contributed to the maintenance and expansion of the city's infrastructure, including teachers, police, and trash pickup. Perhaps the owners also donated to a local charity, or gave their time to a local business association. And because their basic needs were covered, the pizza shop owners and employees probably did not need to access some of the social safety-net services that a growing number of people in the city have come to rely on. With the failure of that one pizza place, the community lost all the economic and social good that was bound up in it.

Now let's take my example a step further and shift our thinking to the nonprofit sector. Like the pizza place, nonprofits contribute to their local economies in a variety of ways, including rent, the regular purchase of supplies, job creation, and more.

But imagine that the "business" at risk of failing is a domestic violence shelter. And that we're no longer in New York City but instead in a rural community in the Midwest. And that this particular shelter is the only safe haven for women and children within fifty miles. Is it acceptable from a community perspective if the shelter only has enough money to cover the next thirty days of its expenses, as is the case for one in four of the more than forty-six hundred organizations we surveyed? Or that it's like the 50 percent of survey respondents that don't expect to have the resources to keep up with demand for their services in 2012?

One of the more powerful aspects of the survey is its reflection of the collective voice of the organizations working to provide some of the most critical social services in our communities. But we mustn't succumb to statistical numbness: the survey numbers aggregate many individual stories, and each of those stories has local -- or wider -- meaning. For instance, it sounds great that "only" 20 percent of the organizations responding to the survey had to reduce or eliminate programs in the past year. Yet among these nine hundred organizations, 63 percent were unable to keep up with demand for their services. From Georgia to Texas to Montana, this simple fact has serious repercussions for the populations and communities that depend on those organizations and services.

Indeed, consider what a leader of one of those organizations told us: "We have seen a dramatic increase in the need for our services. As available resources decrease across the country, the demand for basic needs continues to grow....Domestic violence is the leading cause of homelessness among women and children in the nation. It takes more than a roof over [one's] head to break the cycle of homelessness, particularly when domestic violence is involved....Our greatest challenge is securing a steady stream of revenue and funding for services and programs."

So when we look at the numbers, it may seem like a small victory that "only" 31 percent of survey respondents finished 2011 with a deficit -- which means the other 69 percent either broke even or ended the year with a surplus. And yet, among the more than twelve hundred organizations that said they ran a deficit in 2011, 39 percent were human services organizations -- precisely the kind of organizations that provide the basic safety-net services that the most vulnerable in our communities rely on -- while another 15 percent work to educate our children.

And as if that's not sobering enough, when respondents filled out the survey in late January, 34 percent of those with a deficit in 2011 were already anticipating operating in the red in 2012. Are the rest of us willing to accept the possibility that, with two (or more) consecutive years of deficits on the books, many of these organizations may have to shut their doors? Do we, as a society, have a plan to replace the critical services they provide? The answers to those questions are unclear, the stakes are high, and, unfortunately, failure is a possibility.

NFF launched its annual sector survey in January 2009, during the darkest days of the recession. The nonprofit financial picture painted in the response to that first year's survey was pretty grim. Our hope, as the economy improved (albeit slowly) in the three-plus years since then, is that we would see a similar positive shift in the nonprofit sector's finances. That has not been the case and any improvements along the way have been modest.

Let's be honest: Business as usual is not working. The business models, revenue sources, and practices that have long been mainstays of the nonprofit sector are no longer adequate to see us through the challenging times that lie ahead. We must consider other approaches that tap new sources of money, generate new cross-sectoral partnerships and ideas, and help identify new solutions to persistent social problems. Because without fundamental change -- change that involves both innovation and more risk taking -- we will see the same disappointing results year after year. And that's a prospect that none of us should be willing to tolerate.

To see the results from the most recent NFF survey and from past annual surveys, please visit http://nonprofitfinancefund.org/survey. For individual stories behind the numbers, the "In their Words" section is likely to be of special interest. And for a more localized look at a particular sub-sector or state, we encourage you to check out our new NFF Survey Analyzer, which lets you easily filter the data in multiple ways.

-- Jennifer Talansky