PhilanTopic

Weekend Link Roundup (December 12 - 13, 2009)

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

Economy

U.S. senators John McCain (R-AZ) and Tom Coburn (R-OK) have issued a report on "wasteful" projects that have received stimulus funds through the American Recovery and Reinvestment Act. Nonprofit Quarterly contributor Rick Cohen highlights several of the senators' bete noirs, including Shakespeare festivals and jazz programs supported by the National Endowment for the Arts, and concludes that while it "contains some stuff we can all learn from," readers of the report should not get caught up McCain and Coburn's "ideological peculiarities."

Fundraising

On the Charity Navigator blog, one donor shares the findings from a recent experiment in which he recorded the number of requests for funding he received from charities December 1, 2008, to November 30, 2009. All of which leads CN to wonder, How many requests is too many?

Todd Cohen argues on his Inside Philanthropy blog that nonprofits are "missing out on digital giving." With the recession affecting everyone's bottom line, writes Cohen, "charities need to do more than throw information...on their Web sites. They need to understand how their givers and prospective givers are communicating...and then develop communication and fundraising strategies to connect with and engage those givers."

Impact/Effectiveness

On his Free the Nonprofits blog, Dan Pallotta commends Charity Navigator, Guidestar, GreatNonprofits, Philanthropedia, and GiveWell for stating in a joint press release that "overhead ratios and executive salaries are useless for evaluating a nonprofit's impact." Pallotta also salutes CN for announcing plans to re-vamp its charity evaluation system, noting that it "takes tremendous courage to put the thing that has sustained you second to the things that can sustain real change in the world."

Journalism/Media

Are journalists storytellers? On his Buzz Machine blog, Jeff Jarvis says that maybe they shouldn't be. By assuming "that our role is that of the storyteller," writes Jarvis, "we risk closing ourselves off from forms of gathering and sharing information that do not end up in the form of stories...."

Leadership

In a series of "Shine While Your Light's On" blog posts, Rosetta Thurman explains why young nonprofits professionals should use Twitter and shares some insights into how she was able to build her personal brand by blogging.

Philanthropy

On the It's Your World blog, World Affairs Council president and CEO Jane Wales gives a shoutout to Steven Goldberg's new book Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress. In the book, Goldberg makes the case for a nonprofit capital market that would "allow philanthropists to know what various nonprofits accomplish, through evaluation and transparency, and not just what nonprofits are trying to accomplish, through anecdotal reporting." Although Wales agrees with Goldberg, she notes that, given "the resilience of human nature," it will not be easy to change people's behavior.

On her Philanthropy 2173 blog, Lucy Bernholz has posted a new draft version of "Disrupting Philanthropy 2.0," a grand summing up of many of the memes she's been tracking over the last few years. Written with former Surdna Foundation president Ed Skoot and Barry Varela, the paper explores, in often fascinating detail, how technology is altering "philanthropic capital flows." Bernholz and company are soliciting feedback on the report via her blog: e-mail (lucy@blueprintrd.com), or twitter (@p2173) (be sure to include the hashtag #DisruptPhil).

Seattle Times' reporter Kristi Heim explains why donating to a charity directly may be more effective than purchasing a charity gift card this holiday season.

"Giving is an act of self-expression, and generosity is a practice," writes Sasha Dichter on his blog. "Each time I decide not to give [to a charity or a homeless person], I'm reinforcing a way of acting –- one that's critical and analytical and judgmental." Do you agree? Feel free to share your thoughts below.

On her blog, Heather Carpenter recaps the 2009 ARNOVA conference and offers a few takeaways on the future of nonprofit research.

Do professional athletes have an obligation to give back to their communities? That question has sparked a fascinating debate on the blog of Athletes for Hope, a nonprofit that works to encourage pro athletes to give more to charity.

Social Media

Last week, Google launched a real-time search engine that incorporates Twitter and Facebook updates on the results page of any query. In conjunction with the launch, Facebook changed its privacy settings. But not everyone is happy with the changes. Writes Brad Stone on the New York Time's Bits blog:

While Facebook has given people more refined controls over who can see particular pieces of information they post, one controversial move is that several pieces of data are now visible to all members on the service: your name, city, gender, photograph, the profile pages you are a fan of, and your list of friends.

For the record, it's easy enough to restore your old settings. On your Facebook profile page, click on Settings | Privacy Settings | Profile Information and use the drop-down menus to change individual settings as you see fit.

In a related post, Lucy Bernholz was quick to point out the ironies of Facebook setting up a foundation as a result of an earlier lawsuit against the company involving privacy issues. "Internet time may apply to product launches, but doesn't seem to apply to creating Internet-fueled, legally mandated foundations," writes Bernholz. "I won't even get into the irony of setting up a new foundation focused on Internet privacy rather than directing the money to any one or a combination of the existing nonprofits that already do that work."

Last but not least, Beth Kanter takes a close look at the Ocean Conservancy's recent social media efforts on Facebook and shares a few best practices. Kanter suggests that organizations getting ready to launch a social media campaign should use "very specific, narrow objectives...and specific metrics" to gain more tangible results.

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

-- Regina Mahone

TED on Sunday: John Doerr on the 'Green' Imperative

With the 15th United Nations Climate Change Conference (COP 15) set to begin tomorrow, this seems like a good time to take another look at what may be at stake. In this emotional talk, legendary Silicon Valley venture capitalist John Doerr argues that there "is a time when panic is the appropriate response" -- and with catastrophic, irreversible climate change only decades away, that day is fast approaching. Fortunately, says, Doerr, he has learned four things about the climate change issue that give him hope: business can be part of the solution; individuals matter; smart policy matters; and the potential for radical innovation in the clean-energy field is almost limitless. As Doerr likes to say: "The best way to predict the future is to invent it." Let's get started. (Filmed: March 2007; Running time: 17:49)

Liked this talk? Try one of these.

• Geoff Mulgan on Social Innovation and the New Capitalism
• Elizabeth Gilbert on Creativity
• Hans Rosling on the Global HIV Pandemic
• Bill Gates on the Importance of Being Optimistic
• Clay Shirky on the Transformed Media Landscape
• Katherine Fulton on the Future of Philanthropy
• Seth Godin on Leadership
• Barry Schwartz on the Paradox of Choice
• Alex Tabarrok on the Benefits of Globalization
• Majora Carter on Environmental Justice
• Al Gore on Climate Change
• Sylvia Earle on Saving the 'Blue Heart' of the Planet
• James Howard Kunstler on the Death of Suburbia
• Clay Shirky on Epochal Change
• Mark Bittman on How We Eat
• Hans Rosling on the Dimensions of Development
• Sir Ken Robinson on Education and Creativity

And for those who can't get enough of TED, check out Jim Simpson's post about a cool hidden feature of most TED Talks.

-- Mitch Nauffts

A Modest Proposal

As we noted last fall, fiscal 2009 promised to be -- and ended up being -- a terrible year for state budgets. And that's bad news for nonprofits that rely on state payments and contracts.

According to The Fiscal Survey of the States, an annual overview of fiscal conditions in all fifty states produced by the National Governors Association and the National Association of State Budget Officers, states are

facing one of the worst, if not the worst, fiscal periods since the Great Depression. Fiscal conditions significantly deteriorated for states during fiscal 2009, with the trend expected to continue through fiscal 2010 and even into 2011 and 2012. The severe national recession drastically reduced tax revenues from every revenue source during fiscal 2009 and revenue collections are expected to continue their decline in fiscal 2010. As state revenue collections historically lag behind any national economic recovery, state revenues will remain depressed throughout fiscal 2010 and likely be sluggish into fiscal years 2011 and 2012. The "official" economic recession, which began in December 2007 and may have recently ended, has significantly affected state spending, as more than half the states decreased their general fund expenditures in fiscal 2009, and over two-thirds of states enacted fiscal budgets with general fund spending lower than the previous year....

Back in January, a coalition of nonprofit organizations led by Independent Sector called for immediate financial aid to state and local governments experiencing budget stress as well as a short-term $15 billion bridge loan program for nonprofit human service organizations that, if implemented properly, would help preserve vital services to 7.8 million Americans in need and preserve some 300,000 nonprofit sector jobs over the next two years.

In February, with the national unemployment rate at 8.1 percent, the House and Senate passed, and President Obama signed into law, the American Recovery and Reinvestment Act of 2009, which, among other things, set aside some $55 billion for state fiscal relief. There was no provision in the legislation for an emergency bridge loan program for nonprofit service providers.

Today the unemployment rate stands at 10.2 percent -- and it could be higher tomorrow after the November figure is released. Meanwhile, financial service firms that received federal bailout money under the Treasury's Troubled Asset Relief Program (TARP) are scrambling to pay those funds back so they can "reward" their executives and star traders with the lavish pay packages and bonuses they've grown accustomed to.

With the White House convening a jobs summit and desperately looking, in the words of Tech Ticker, "for any and all ideas to help get Americans back to work," here's a modest proposal. Let's take $15 billion of the $45 billion Bank of America has said it will return to Treasury by year-end and put it toward the nonprofit bridge loan proposal advocated by Independent Sector and others. As Los Angeles arbitrator James Adler, writing on the Huffington Post, notes: "The key to creating jobs quickly is to utilize existing employers, particularly nonprofits who have seen their resources diminish precisely at the time of maximum need for their services...."

This would seem to be that time, no?

-- Mitch Nauffts

Goldman's Image Make-Over?

In the clip below, Melissa Berman, president and CEO of Rockefeller Philanthropy Advisors, discusses Goldman Sachs' new $500 million initiative to help small businesses with Bloomberg TV's Erik Schatzker and Deirdre Bolton. (Disclosure: Berman serves on the board of the Foundation Center, which publishes Philanthropy News Digest and this blog.)

What do you think? Is the Goldman initiative a sincere effort to help right the U.S. economy? A cynical ploy to deflect attention from the $20 billion in bonuses that Goldman will be paying out in a few weeks? Or something in between?

-- Mitch Nauffts

Readings (and Other Stuff) - Nov. 19, 2009

Here's what we've been checking out today:

• Paul Brest: President's Essay: Forms of Philanthropic Support: The Centrality of Alignment (Hewlett Foundation)
• Podcast: Diversity and Inclusion in the Nonprofit Sector (NonprofitNext)
• Video: An Interview with Paul Polak: Over 17 Million Poor Customers Served (Unreasonable blog)
• Video: Scroogenomics - Wharton Professor Makes the Case for Charitable Giving During the Holidays (Charity Navigator)
• Phil Cubeta: Philanthropedia Q&A (Gift Hub)
• Dirk Smillie: A Perpetual Recession For Papers (Forbes)
• Chronicle Review: Academe and the Decline of News Media (Chronicle of Higher Education)
• The Weakonomist: The Blue Collar Recession (Weakonomics)
• Evan Newmark: Mean Street: Don’t Apologize for Anything, Goldman Sachs (WSJ)

How about you?

Readings (and Other Stuff) - Nov. 17, 2009

Here's what we're reading today:

• Holden Karnofsky: Not Our Last Word on the Kiva Controversy (GiveWell)
• Elizabeth Clawson: What Is Social Impact? (Nonprofit Periscope)
• Robert Frank: Does the Gates Foundation Need a $500 Million Complex? (WSJ)
• Amy Sample Ward: Causes, MySpace & ideablob (Tactical Philanthropy)
• Allison Fine: Redlining Online
• Kari Dunn Saratovsky: The Role of Millennials in Reshaping a Sector (Social Citizens)
• Marc Lacey: Money Trickles North as Mexicans Help Relatives (NYT)
• Miguel Helft: Everyman Offers New Directions (NYT)

What are you reading?

Weekend Link Roundup (November 14 - 15, 2009)

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

Accountability/Transparency

In a recent post on the GiveWell blog, Holden Karnofsky takes the Carter Center to task for its lack of accountability and transparency.

Communications/Marketing

"Listening is everything," writes Katya Andresen on her NonProfit Marketing blog. But how does one make the time to do it? Have any suggestions? Leave your suggestions below.

Last week, marketing expert Nancy Schwartz released the 2009 Nonprofit Tagline Report. "A strong tagline complements your org's name [and conveys] its unique value or impact with personality, passion and commitment," writes Schwartz, adding, that "If you fail to make the most of your tagline, you throw that opportunity away." You can download a copy of the report here.

Impact/Effectiveness

Do donors care about nonprofit impact? Charity Navigator has gotten some surprising feedback on that question and wants to hear from you. After you fill out the three-question survey, read what others are saying here.

International Affairs/Development

Matthew Bishop shares a few thoughts about how former Gates Foundation executive Raj Shah can make the most of his new position as head of the U.S. Agency for International Development.

Microfinance

In his "last word" about the so-called Kiva controversy, Nathaniel Whittemore argues that even though the folks behind the online giving platform "messed up," we should unequivocally support the organization's future efforts. "Kiva is a young organization," Whittemore writes,

and one of the first to really harness the Internet to extend the experience of giving in dramatically new ways. In my mind, they may have goofed on the trust that they have with their lenders, but they have not undermined the trust that we must have in any nonprofit to be committed to delivering the services it promises in the way that most effectively helps the people it's trying to serve. They've changed their communication, they're proactively seeking to rebuild trust with lenders, and at the end of the day, the amount of good that has been done through Kiva remains immense....

Philanthropy

Although the latest iteration of the online America's Giving Challenge campaign extended over fewer days than the inaugural challenge in 2008, it still managed to generate more than 105,420 donations and raise over $2 million for charitable causes. Allison Fine offers her post-mortem here.

On his Wise Philanthropy blog, Richard Marker argues that in order to be effective, donors first have to understand their "culture and values." Writes Marker:

I am a believer in the concept I coined a few years ago: that those of us above a certain age are "guests in this century." The challenge is NOT to get [the denizens] of this transformed world to embrace a culture or values of a century and era now past. That is not a worthwhile enterprise and would be unsuccessful anyway. It is incumbent upon [those of us who are older] to embrace the culture of this world -- or get out of the way....

On the Nonprofit Charitable Orgs blog at About.com, Joanne Fritz shares five suggestions taken from The Art of Giving, the new book by Charles Bronfman and Jeffrey Solomon of the Andrea and Charles Bronfman Philanthropies, to leverage your charitable giving.

On the MCF's Philanthropy Potluck blog, Chris Murakami Noonan recaps the recent joint annual conference of the Minnesota Council of Nonprofits and the Minnesota Council on Foundations. Speaking to conference attendees, Steve Gunderson, president and CEO of the Council on Foundations, said that this is "the era of partnerships" in philanthropy and then listed the four "Cs" that drive effective public/private partnerships: connections, communication, capacity-building, and convening.

Lucy Bernholz singles out two new database applications that underscore the role "data will play as platforms for change": TRASI (Tools and Resources for Assessing Social Impact), a joint effort of the Foundation Center and McKinsey & Co., and KidsData, a project of the Lucile Packard Foundation for Children's Health that aggregates information on three hundred indicators related to the health and well being of children in communities across California.

Social Media

Philanthropy Action's Tim Ogden and Laura Starita have released the results of a survey about the use of social media by mid-size nonprofits. "In terms of fundraising and attracting volunteers, metrics that most nonprofit boards and executive directors highly value, the available evidence suggests that social media is not very effective," writes Ogden. Click here to download the complete report (22 pages, PDF).

Beth Kanter takes a close look at the results of the Philanthropy Action survey and compares it to the findings of a different report released earlier in the week. Her conclusion: It's too early for nonprofits to ditch their social media efforts. Writes Kanter:

It's time to set realistic outcomes, look for strategic efficiencies, and define and share best practices. I don't think it is a good idea to simply dismiss social media. I think it is important to have the conversation, but don't look at ROI in such a narrow [way]. Look at the missed opportunity costs of not participating -- as well as take it as an opportunity to look at everything you're doing and figure out what isn't working and try social media in its place. It also important to keep measuring and improving....

In the first post of a two-part series on "social media for accountability" at the Future Leaders in Philanthropy blog, Zach Wales explains how social media can help board members bring "integrity to their nonprofits, and reinforce everything that made them join the board in the first place."

Technology

On the GOOD blog, William Simpson, vice president for information technology at CHF International, argues that it's time for nonprofit IT heads to start running their departments like a business. And the first step is to ask these five simple questions:

1. Is this technology practical?
2. What is the true cost of this technology?
3. Are we looking at all the options?
4. What existing solutions are there within the organization's global operations?
5. Have we hired the best we can afford?

(H/t: AFP blog)

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

-- Regina Mahone

Weekend Link Roundup (November 7 - 8, 2009)

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

Corporate Philanthropy

On the Reimagining CSR blog, Jessica Stannard-Friel shares examples of "companies identifying CSR activities that are relatively cheap for them to carry out, but relatively high value for the community at large."

Economy

On Friday, the National Bureau of Labor announced that the unemployment rate had jumped four-tenths of a percent, to 10.2 percent -- the highest level in twenty-six years. On the Kaufmann Foundation's Growthology blog, a downbeat Tim Kane puts the number into sobering perspective.

Fundraising

In her new book, Reliable Fundraising in Unreliable Times: What Good Causes Need to Know to Survive and Thrive, Kim Klein suggests that fundraisers need to expand their definition of "donor" to include "someone who gives time, shares ideas about how your organization can succeed, says nice things about the work you do, opens doors for you, [and] expresses gratitude for the services you provide." In addition to sharing other tips from Klein, Joanne Fritz, on About.com's Charitable Orgs blog, offers this advice:

Look for people who have a lot of relationships, who offer to help in all sorts of ways, and who are grateful for your services. Then get in contact with them and stay in contact. Say thank you frequently for whatever gifts they provide, and nurture those relationships....

Using language like "we haven't heard from you" or "we want you back," says John Thompson on the Donor Power Blog, is a sure way to weaken rather than strengthen your donor relationships.

Social networking site MySpace has announced that it is dropping the online fundraising application Causes "due to the lack of activity." Amy Sample Ward argues that this will negatively impact nonprofits on MySpace and their "communities of supporters," while Marshall Kirkpatrick at ReadWriteWeb suggests that it might not matter at all.

Impact/Effectiveness

On the WiserEarth blog, Diane Scearce, a consultant at the Monitor Institute, offers a few things to keep in mind when evaluating network effectiveness in terms of social impact.

Journalism/Media

In a two-parter at the Cohen Report, Rick Cohen looks at the looks at the emergence of online nonprofit news and investigative journalism venues and speculates about whether the Newspaper Revitalization Act introduced by Sen. Ben Cardin (D-MD) can save the industry.

Leadership

Live blogging from Independent Sector’s annual conference in Detroit, Rosetta Thurman shares some questions for emerging sector leaders posed by panelists David Simms, managing partner at the Bridgespan Group, and Michael Watson, senior vice president at Girl Scouts of the USA .

And in a different post, Thurman recaps the breakfast plenary session featuring Jeff Raikes, CEO of the Bill & Melinda Gates Foundation.

Philanthropy

"Got a story about how many times you were asked to give in one shopping trip?" If so, Lucy Bernholz wants to know. Click here to share the "embedded giving" story from 2009 "that made you scratch your head."

Speaking of embedded giving, Philanthropy Action editor-in-chief Tim Ogden says the real problem with the approach is the "near complete lack of transparency (who gets the funds? when? how much?) in the industry."

Guest blogging on Tactical Philanthropy, Charles Bronfman and Jeffrey Solomon, chairman and president, respectively, of the Andrea and Charles Bronfman Philanthropies and co-authors of The Art of Giving: Where the Soul Meets a Business Plan, argue that understanding WHY you give is just as important as figuring out how and where to give. Their post has generated a lively comments thread (thirty-plus and counting), and visitors to the blog can also read an extended excerpt from the book.

Riffing on that conversation, Nathaniel Whittemore at the Social Entrepreneurship blog asks, "Is there such a thing as selfless giving?" Whittemore doesn't think so but does believe that "giving can be much more self-aware -- and in the process, much more fulfilling, sustainable, and effective."

Social Media

Nonprofit marketing guru Nancy Schwartz shares three tips for managing your nonprofit's reputation on social networking sites that she picked up at the recent Communications Network conference in New York City:

• Use what you hear: 1) To better serve your networks by knowing what they're saying to others and to you; 2) to respond to and/or engage critics; 3) to stay abreast of the latest developments in your area of work.
• Overcome objections that listening is unnecessary: Compile and share online conversations related to critical keywords and themes over a week or a month. Provide some concrete examples of how not listening to or participating in those conversations meant that others spoke for (and defined) your organization.
• Use the best free listening tools: 1) Google Alerts and RSS feeds for keywords (org name and URL, issues, leadership names, competitive/colleague org names); and 2) Twitter search/hashtags for real-time tracking.

Schwartz also recommends following Amy Sample Ward's advice about creating a one-stop listening dashboard.

Technology

"Just as we are phasing out snail mail a few decades after email first became popular," writes Kristin Ivie in an interesting post on the Case Foundation's Social Citizens blog, so may "many offline opportunities eventually be phased out as well."

In yet another information-packed post, Beth Kanter reminisces about the early days of the World Wide Web and offers her take on how nonprofits can use Twitter's new "Lists" feature to filter the growing flood of information that comes to us courtesy of the Internet.

Transparency

Building on a recent blog post by Lucy Bernholz, Allison Fine takes a closer look at copyright expert Lawrence Lessig's claim in a recent issue of The New Republic ("Against Transparency") that "there is such a thing as too much transparency in government." While Fine doesn't buy Lessig's argument, she does agree with Bernholz that "requiring too much transparency of foundations may drive them into the dark, back rooms...of donor advised funds." Writes Fine:

Even with their enormous tax breaks, foundations are private entities that more than any other kind of institution have very little incentive to make their operations and programs more open and transparent except out of a noble assumption that by doing so they will be more effective....

Fine goes on to suggest that nonprofits, which are not public or as "private as foundations," should ask themselves the following questions as they try to strike the right balance between transparency and confidentiality:

• Will sharing this information advance our mission?
• How can others build on our content and make it better?
• Will revealing this information improve morale and make staff feel better informed and able to make decisions on their own?
• Will sharing this information better connect us to our network and help us build the relationships that we need to be successful?

Last but not least, on the Social Actions blog, Christine Egger rounds up a number of thought-provoking conversations on the topic of transparency and data standards in the sector.

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

-- Regina Mahone

TED on Sunday: Geoff Mulgan on Social Innovation and the New Capitalism

Two-plus years after the global financial system began to melt down, we find ourselves in a "strange twilight zone" characterized by paralysis and retrogade thinking, argues Geoff Mulgan in this talk from the 2009 TED Global conference. Even as governments around the world borrow trillions of dollars from future generations in an attempt to reignite economic growth, many measures of social and environmental health are deteriorating. Indeed, says Mulgan, director of the London-based Young Foundation, the financial crisis has made plain the fact that economic growth doesn't automatically translate into social progress or human growth. Too much of it goes into boosting unsustainable consumption; too much of it leaves people feeling they aren't allowed to be useful -- and when people aren't allowed to be useful, they soon start to think they are useless. The question is, What are we going to do about it? Mulgan's answer may surprise and inspire you.

(Filmed: July 2009; Running time: 17:57)

Liked this talk? Try one of these.

• Elizabeth Gilbert on Creativity
• Hans Rosling on the Global HIV Pandemic
• Bill Gates on the Importance of Being Optimistic
• Clay Shirky on the Transformed Media Landscape
• Katherine Fulton on the Future of Philanthropy
• Seth Godin on Leadership
• Barry Schwartz on the Paradox of Choice
• Alex Tabarrok on the Benefits of Globalization
• Majora Carter on Environmental Justice
• Al Gore on Climate Change
• Sylvia Earle on Saving the 'Blue Heart' of the Planet
• James Howard Kunstler on the Death of Suburbia
• Clay Shirky on Epochal Change
• Mark Bittman on How We Eat
• Hans Rosling on the Dimensions of Development
• Sir Ken Robinson on Education and Creativity

And for those who can't get enough of TED, check out Jim Simpson's post about a cool hidden feature of most TED Talks.

-- Mitch Nauffts

Sunk Costs and the Need for Social Innovation

(Farnaz Golshani is director of programs and services at the San Francisco-based Tides Center. This is her first post for PhilanTopic.)

I've been thinking a lot lately about the concept of "sunk costs." In economics and business decision-making, sunk costs are unrecoverable past expenditures that, under normal circumstances, should not be taken into account when determining whether to continue or abandon a project, effort, or initiative because costs that are already "sunk" cannot be recovered.

Inevitably, thinking about sunk costs reminds me of my "Saab stories." I purchased a used Saab for $15,000 a number of years ago and then spent more than $5,000 on repairs for it over the next few years -- not to mention the considerable time I spent at the repair shop and the stress I experienced each time the "check engine" light would blink on. But I kept sinking dollars into that Saab, if only to justify all the money I had already "invested" in it.

Organizations and bureaucracies often behave in a similar fashion. Rather than innovate, they choose to stay the course and keep sinking money into existing projects and initiatives simply to justify their previous investments. Indeed, government does this all the time. Two glaring examples -- failing workforce development systems and inadequate treatment of veterans with post-traumatic stress disorder (PTSD) -- are particularly noteworthy, given that we are fighting two wars and the unemployment rate is the highest it has been in decades.

On the workforce development front, the federal government continues to fund WorkSource Centers through the Workforce Investment Act (WIA). In 2009, the Department of Labor had a budget of $53 billion, a good part of which funded WorkSource Center "One-stops," even though the average WorkSource Center only has a 20 to 40 percent success rate.

In contrast, truly innovative workforce development organizations such as Chrysalis, the Delancey Street Foundation, and Rubicon have achieved phenomenal outcomes with the "hardest to employ" -- the homeless and individuals with multiple felonies. Even in this challenging economy, Chrysalis, a workforce development organization based in L.A.'s Skid Row area, helps more than 80 percent of its homeless clients secure jobs each year using transitional employment opportunities.

Sadly, the innovative workforce development models pioneered by these organizations receive only a pittance from DOL, forcing them to rely on variable and much more modest revenues donated by individuals, corporations, and foundations. Adding insult to injury, stimulus funds now going through DOL are simply getting dumped -- sunk -- into existing WIA programs and contractors/agencies already in place. This precludes workforce development programs lacking WIA contracts from receiving stimulus funds, even if those programs have been proven to be more effective.

It also pains me to see the government sinking funds into ineffective treatment for veterans rather than investing in proven models with better track records. The federally funded Veterans Affairs (VA) system offers a largely ineffective thirty-day Post Traumatic Stress Disorder (PTSD) support program that leaves most of the young men and women who complete it with persistently high levels of anxiety and depression and often no recourse other than to turn to drugs, alcohol, violence, homelessness, or even suicide.

There are existing programs that actually help veterans with PTSD develop the coping skills they need to face their anxieties and reintegration challenges. One such program is the Pathway Home for Returning Veterans, an LLC of Tides. Most veterans entering Pathway are referred by other VA hospitals because their PTSD or traumatic brain injuries were so severe that they had attempted suicide or were still suffering from seizures. Through its holistic 90- to 120-day program, Pathway has helped veterans with PTSD overcome their fears, secure jobs, and live healthy lives with their families. Indeed, its graduates consistently attest that the program saved their lives, armed them with the coping mechanisms to deal with anxiety, and even helped their families to better understand their PTSD.

Pathway's successes could not have happened in the VA -- they are the result of innovative partnerships involving nonprofits, the state of California, and donors who are committed to doing right by those who put their lives on the line for our country. Yes, a 90– to 120-day program is more expensive, but the long-term cost of PTSD is far greater when you factor in the social costs of homelessness, violence, long-term medical issues, drug problems, and so many other problems plaguing our veterans.

In his first months in office, President Obama said it was time for the government to invest in social innovation. Most of us in the social sector were delighted to see our efforts and good work finally get some recognition -- even if it meant we had to ignore the fact that the federal government was willing to sink $85 billion into AIG to keep the giant insurer afloat or spend $13.4 billion on rescuing General Motors but was only willing to invest $30 million in social innovation.

That was then. The "official" unemployment rate in the U.S. is now over 10 percent. We continue to put the lives of brave young men and women on the line in Iraq and Afghanistan. It's time for the public, private, nonprofit, and philanthropic sectors -- as well as individuals -- to invest in best practices and proven models of successful social innovation and to stop sinking money into organizations and efforts that no longer work, or never did.

Even I managed to learn that lesson. After four years of waiting in dealerships for more bad news, I finally bought a new car.

-- Farnaz Golshani

Foundations' Year-End Outlook for Giving

Our Research colleagues here at the Foundation Center have issued a new advisory (5 pages, PDF) that looks at how foundation thinking has evolved since the center conducted its last giving forecast survey in January.

Based on a follow-up survey of leading funders conducted in September, the advisory suggests that foundation giving will decline by more than 10 percent this year -- toward the middle of the 8 to 13 percent range estimated by that initial survey -- and that overall foundation giving will decline further in 2010. Indeed, consistent with findings from the January survey, a larger share of respondents expect their giving to be lower next year (26 percent) than higher (17 percent).

Other findings from the advisory:

• More than two-thirds of respondents have reduced their operating expenses in order to shore up their giving or for other purposes, with cuts to staff travel budgets and conference attendance the most common action in the cost-cutting area, followed by freezing or reducing staff salaries, reducing staff training and professional development opportunities, reducing/cutting institutional memberships, reducing the number of publications produced, cutting staff and the use of consultants, and reducing staff benefits.
  
  
• Grantmakers expect the field of philanthropy to become more strategic as a result of the economic crisis, with 78 percent of respondents agreeing with that statement, 7 percent disagreeing, and 15 percent opting for "no opinion."
  
  
• The majority of funders believe that the nonprofit community in general was not sufficiently prepared to weather a significant economic downturn, but most (though not all) expect the sector to emerge stronger from the crisis. Still, skepticism that anything good will come of the crisis abounds, with one funder saying that "in a weak sector like the not-for-profit sector, crisis creates more weaknesses rather than increased strength," and another remarking that nonprofits "will lose good people with years of experience and will not be able to replace them."

What do you think? Will 2010 be an annus horribilis for nonprofits and the nonprofit sector? Will organizations, both good ones and those that are underperforming, fail in unacceptable numbers? Or will most find a way to muddle through and emerge stronger as a result? And what will be the most important quality or compentency for nonprofits in the new Reset Economy?

Use the comment section to share you thoughts....

-- Mitch Nauffts

Pep Talk for a Rainy Day

"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way...."

The opening passage of A Tale of Two Cities is one of the best-known in English literature. Writing seventy years after the events portrayed, Dickens managed, in a few brilliantly turned phrases, to capture the fear, euphoria, and relief of a disillusioned society on the threshold of epochal change.

A hundred and fifty years after Dickens published his book, we find ourselves at a similar threshold. And if, like me, your view of the world is tinged with a healthy skepticism, you're probably thinking it will be a while before the clouds part, our animal spirits are revived, and we're ready to plunge once more into the breach.

If, on the other hand, you've been around the block a few times and, like John Mauldin (Thoughts From the Frontline), prefer the sunny side of the street, this is the best of times.

It's all a matter of perspective, as Mauldin explains in the most recent installment of his weekly missive. "[L]et's review those wonderful days from whence we sprang, so fraught with the advantages of having nothing," he writes, addressing himself to his good friend, the author (Empire of Debt) and financial newsletter (The Daily Reckoning) writer Bill Bonner.

It was the middle of the '70s....Inflation was high and rising. The Soviets were seen as a major threat. Japan was beating our brains out and buying everything, even if nailed down (like Pebble Beach and New York skyscrapers). I had to borrow money at 15% (or more) to buy paper in order to meet customer demands for printing. And guess what? The banks got into trouble and called loans willy-nilly....

There were multiple successive and ever-deeper recessions. Gold was rising and the dollar was seen as a joke. Howard Ruff (a good friend to both of us when we were starting out!) and almost every newsletter writer were telling people to buy gold and freeze-dried food to protect themselves against a near-certain economic, if not apocalyptic, catastrophe. Unemployment was high and rising for a decade.

The correct answer to the question, "Where will the jobs come from?" back then was, "I don't know, but they will." And that is the correct answer today.

In 20 years, no one will want to come back to the halcyon days of 2009. Our kids...are getting ready to live through what will be the most exciting period in human history. There will be a century's worth of change, measured by the standard of the 20th century, just in the next ten years, and then we will double that pace in the next ten after that. Medical miracles will mean our kids and grandkids will live a lot longer than their dads, although I intend to be writing well into my 80s, like our mutual hero Richard Russell.

There will be whole new industries developed in the US. How do I know that? Follow the money. The rest of the world spends a fraction of what we do on research and development. Where do you go if you are looking for venture capital?

Do I care if the Chinese and the "developing" world are far better off, relatively speaking, than the US in 20 years? Not a whit. Good on them. I hope they make discoveries and inventions and grow new businesses that benefit us all. But we are not going into some long dark night. We, and our kids, get to choose how we respond to what is the reality of the day.

Our nation had to almost hit the wall in 1980 before a Volker could come along and force us to take the pain of recession to beat back inflation. And we will have to come perilously close to the wall this time before we take action as a nation. Way too close for comfort. Maybe you are right, and we have a soft depression. I hope not; but even so, the world will be better, far better, in 20 years, with far more opportunities than today....

You are right in this: it is personal gumption that makes or breaks us. There are those who started out with less than we did (hard to imagine but true) and made a lot more. And there are those who started out with far more and made less. But there are very few who are happier than either of us. Or luckier.

Our kids? It is not the times that dictate the man (or daughter!), but the response of the man which dictates his own time. Today promises a brighter future for someone young than any other time in history, whether they are in the US or Brazil or China. They just have to seize it.

And as our kids do just that, and as the millions of kids of those who read us do so, and the billions of kids who are just now getting ready to bust loose all work to achieve their dreams, the world is going to be a far more fantastic place. Smooth ride? Not a chance. We didn't get one; and in thinking through history, there have not been many smooth rides. Why should we think that will get any better? Our kids will just have to live with our generational (and individual) iniquities, government debt and all, and figure out how to master their own fates. But if I had a choice to take the '70s or today? In less than a heartbeat I would choose today. And I bet you would too!

You're right, Mr. Mauldin. Good on you. Thanks for the reminder.

-- Mitch Nauffts

Managing in the Reset Economy

Unless you've been asleep for the last eighteen months, you know the economy stinks and folks are hurting. You've also probably heard that lots of people have been scared into a renewed appreciation for their hard-earned dollars.

This, in turn, has made things tougher for businesses and nonprofit organizations, many of which have cut hours, staff, and/or service offerings in an attempt to stay afloat until the storm ebbs.

In such an environment, managers who have been asked to do more with less are always on the lookout for advice about the challenge, as the Poynter Institute's Jill Geisler puts it, of managing people whose work is...well, mediocre. You know, the employees you might have carried in "fatter" times, even though their work is "uninspired, formulaic, lackluster, average, not awful but never great."

Before you give in to temptation and "jettison" that underperforming employee, says Geisler, ask yourself the following:

1. Have I been clear with this person about roles and responsibilities?
2. Have I communicated our standards of quality and how they are measured?
3. Have I provided regular performance feedback?
4. Have I avoided tough conversations with this person, and instead settled for "workarounds" of his or her performance?
5. Have I provided training to help fill gaps in this person's skill set?
6. Have I enlisted the help of managers or peers to help this person improve?
7. Have I communicated the urgency of the need for better performance?
8. Have I discussed the potential consequences of continued mediocre performance?
9. Are there ways this person is contributing that I haven't taken into account?
10. Might this person have skills that I haven't fully identified?

In an economy where listening and communication skills are more important than ever, the best place to start exercising them is your own shop.

For more advice about what great bosses know about mediocrity, check out Geisler's podcast on the subject here. And if you've got any timely tips for nonprofit managers trying to weather this tough economy, feel free to use the comments section to share them with others.

-- Mitch Nauffts

Weekend Link Roundup (September 26 - 27, 2009)

Here's this week's roundup of new and noteworthy posts from and about the nonprofit sector....

Arts and Culture

Over at the Createquity blog, Ian David Moss offers a detailed examination of Americans for the Arts' 2007 economic impact survey Arts & Economic Prosperity III and its finding that "the nonprofit arts sector is responsible for $166.2 billion in economic activity nationwide." His conclusion: "A&EP III is a serious study, one worthy of our attention and use for advocacy and research purposes. However, some of its potential impact is undermined by the hyperbolic language with which it is often presented to the press and politicians...." (Thanks for the tip, Ian).

Communications/Marketing

In the fourth installment of his "Connecting" series, Philanthropy Journal publisher Todd Cohen argues that stories "capture the indispensable role that nonprofits and charitable giving play in our communities" and can also "teach, inspire and engage." But in order to do so, says Cohen, they need to be clear, authentic, and genuine.

As part of the Case Foundation's Gear Up for Giving initiative, a month-long series of social media tutorials, Marnie Webb, co-CEO of TechSoup Global, lists five ways that nonprofits can build stronger relationships with their supporters:

1. Write them a note. For no reason at all.
2. Show up at their party.
3. Give your supporters something special.
4. Give them something else to do.
5. Ask for feedback and change because of it.

Diversity

For the next three weeks, Rosetta Thurman will profile Hispanic-American nonprofit leaders on her blog in observance of National Hispanic Heritage Month. Last week, Thurman posted the first and second installments in her series, highlighting the affinity group Hispanics in Philanthropy and posting an interview with Ian Bautista, president of United Neighborhood Centers of America.

On the Greater New Orleans Foundation's Second Line blog, guest contributor Martin Gutierrez, executive director of Neighborhood and Community Services, celebrates the contributions that Hispanics have made to the post-Katrina recovery of communities in the Greater New Orleans area.

Economy

"Isn't it time to ask how ideas from the non-profit world can improve business?" writes Seattle Times reporter Kristi Heim on her Business of Giving blog. The economic crisis has proven that "the market is [not] the best judge of success or failure," adds Heim. How then can nonprofits help the business world reinvent itself? Matthew Bishop, co-author of Philanthrocapitalism: How the Rich Can Save the World, offered a few ideas in a recent talk, which Heim includes in her post.

Fundraising

Can money buy happiness? According to a recent op-ed in the Dallas Morning News, it can. On her Non-Profit Marketing blog, Katya Andresen connects the Morning News piece to charity and reminds fundraising professionals that they are not only in the business of doing good; they're in the business of making people feel great.

On a similar note, Gift Hub blogger Phil Cubeta admonishes fundraisers to rise above their own agendas and serve, rather than solicit, donors. Writes Cubeta:

If [fundraisers] want...a seat at the planning table where the big dollars are planned, they too will have to serve not solicit the donor. They do that by letting go of a personal agenda long enough to learn what motivates the donor, to recommend advisory work when needed, and to suggest a mission match and charitable tools when and only when they fit in the larger planning picture....

And on the Donor Power Blog, Jeff Brooks says that you shouldn't believe everything you hear about the imminent demise of direct mail.

Health

On the Robert Wood Johnson Foundation blog, Margaret Stanley, former executive director of the Puget Sound Health Alliance, suggests that they key to healthcare reform may involve forging bonds and achieving consensus among local organizations and stakeholders.

International Affairs/Development

Can microfinance institutions sustain their business models in a down economy? Perhaps, says John Liebhardt on the Global Voices Online blog, thanks to the emergence of social media technology. Writes Liebhardt:

The marriage of microlending and social media works two ways. First it allows a disparate group of people, perhaps the entrepreneurs, to communicate and become organized. Secondly, it allows them to reach out and relay their message with the larger world. Microlending organizations have latched on to this, leveraging technology to make sure potential lenders can put a face to recipients’ stories. Perhaps these personal bonds originate from the Grameen Bank, which began lending funds on the basis of trust and used peer pressure to insure the loans were repaid. Or, perhaps microlenders online use interpersonal connections as a bulwark against compassion fatigue....

"With all the technology supporting these sites, however," adds Liebhardt, one has to wonder "whether these schemes will pass the sustainability test that often separates good development projects from just good ideas....

(H/t: AFP blog)

Katrina

On the Foundation Center's Philanthropy Front and Center–Atlanta blog, Asia Hadley shares what she saw on a recent visit to New Orleans and asks, Where did the money go? As Hadley notes, a new Foundation Center report, Giving in the Aftermath of the 2005 Gulf Coast Hurricanes (2007-2009), attempts to answer that question and, in so doing, reveals "a shift in the focus of service providers and grantmakers from immediate relief to recovery and rebuilding." But as Hadley also notes, less affluent parts of the city still have a long way to go.

Leadership

Writing on the eJewish Philanthropy blog, Steven Windmueller argues that "we are experiencing the greatest institutional crisis since the 1930s" and that "thinking outside the box" may not be enough to lead organizations through the current crisis as the "box" itself has become a moving target. In the "new normal," adds Windmueller, complexity is the name of the game, nothing is sacred, and values-driven leadership must be embraced as an essential feature of successful institutions.

Philanthropy

"From the standpoint of foundation giving, more than half of the impact of the stock market crash has yet to be felt," writes Sean Stannard-Stockton on his Tactical Philanthropy blog. Indeed, says Stannard-Stockton, the

full effect of the financial crises will not hit the foundation sector until next year. When it does, the thing that will matter most to the social sector will be whether the influence of the collective expertise of foundation employees is greatly diminished or whether foundations step up to the plate and find creative ways to get their knowledge into the hands of major donors....

Social Entrepreneurship

The MacArthur Foundation has announced its 2009 fellows. And among the many terms used to describe these talented people, "social entrepreneur" fits best, says Nathaniel Whitemore on the Change.org blog. "[The winners] share a capacity to think differently and look for creative solutions," writes Whittemore, and "an unwillingness to accept the gap between the world as it is and the world as it should be." Sounds like a pretty good definition of a social entrepreneur to us.

Social Media

On the Social Edge site, publisher and CauseWired author Tom Watson explains how this year's meeting of the Clinton Global Initiative became "a virtual boombox empowering women" thanks in part to social media wielded by celebs, bloggers, and journalists from traditional media outlets.

We can all learn from the social messenger framework developed by David Lipscomb, founder and president of communications firm Redpen21, says social media expert Beth Kanter. The idea, writes Kanter, is that nonprofits should not only use social media to listen and engage, but also think about how engagement supports their overall communications goals.

Technology

The Huffington Post has launched a new technology portal. Kicking things off, Robin Caldwell, managing editor at BlackWeb20, weighs in with a post about the "missing faces in technology and innovation." Writes Caldwell:

As we inch closer to Web 3.0, the question of ownership will be directly tied to who has access to the necessary tools to build on the "land." And if memory serves me correctly, the one who owns the land is the one who holds the power.

So why is it that I see the same names and faces -- none of which look like mine -- positioned as thought leaders and innovators in Web 2.0? Why do I see the same faces as representative of the power in technology

I've been informed on more than one occasion that we're hard to find....

[But] we're here. Now you know. And once you know, you're accountable....

And in part two of her forward-looking "Decoding the Future" series, Lucy Bernholz argues that cloud technology and peer to peer networks are on the verge of changing expectations about philanthropic data and the behaviors associated with those expectations. These changes, says Bernholz, "coupled with changes in the public and private sectors, are pushing a transition to a 'social economy' made up of interdependent public, private and philanthropic capital and creators of social goods." Good stuff, as always.

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

-- Regina Mahone

Gen Y and the Recession

Over the past year, young nonprofit workers have watched friends in other industries -- from book publishing to finance -- lose good-paying jobs. Now, with evidence mounting that it's the nonprofit sector's turn in the cross-hairs, many young nonprofit workers are nervously wondering if they'll be next.

So it was a pleasant surprise to come across a recent article by Generation Y expert Amy Lynch in the Cookeville (TN) Times that paints a more optimistic picture of my generation's response to the downturn.

Few of today's 20-somethings, Lynch reminds us, escaped childhood free of financial worries. Also know as Millennials, the oldest members of Gen Y were toddlers during the great downsizing wave of the early 1980s, were in elementary and middle school during the recession of 1991, and graduated from college just in time for the dot-com bust, the Enron fiasco, and the recession that followed the terrorist attacks of September 11. Members of Gen Y "have never experienced a sustained period of financial prosperity," says Lynch, "and they have no memory of job security. They don't even expect Social Security to be there for them later on. In one study, young adults said they believed they were more likely to see an alien spacecraft than ever to receive a Social Security check."

What does that mean in the context of the current downturn? And what qualities do Gen Yers bring to business during tough times? "Try optimism and hard work," writes Lynch. "You'd expect a generation raised on insecurity to be cynical like the Generation Xers who preceded them," she adds,

but that's not so. Prodigious volunteers and politically active (look at the record numbers who voted in this election), 20-somethings tend to bring can-do confidence to big problems. If you think of this group as trust fund babies, think again. In 2006, 37% of Ys between the ages of 16 and 19 held jobs.

Lynch goes on to list four things employers can do to ensure that their young workers weather the financial storm:

• Share information with them freely. Don't let them hear news about your business or your industry from anybody else first. Info is the air Millennials/Gen Yers breath. They respond to lots of info, even bad news, with trust. And trust creates loyalty.
  
  
• Tell the young people in your organization that it's time to be entrepreneurial inside the organization. Ask them to show you how they can be useful and what extra projects they can take on. Expect them to rise to the challenge, and many of them will.
  
  
• Be prepared to follow their lead. Because they're so heavily networked, Millennials/Gen Yers are the people most likely to scout out new trends, ideas, and markets first. Charge your Ys with finding solutions that will see your business through the crisis.
  
  
• Last but not least, put your mentoring programs on steroids. Link Millennials with your most experienced baby boomers. Pairings with professionals who have seen hard times before will enhance loyalty among the Gen Y talent you want to retain at a time when you need it most.

Good advice. Do you know of an organization that has done something creative to take advantage of the talents of its Gen Y employees during this downturn? What other steps can nonprofit leaders take to put the experience of their employees, of all ages, to good use? Use the comments section to share your thoughts....

-- Regina Mahone