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23 posts from February 2010

From Where I Sit: Nonprofit Trends and Useful Information

February 10, 2010

(Marilyn Hoyt is a nonprofit consultant who regularly teaches courses at Foundation Center locations around the country. This post originally appeared on the Philanthropy Front and Center-Cleveland blog.)

Longterm_study_of_market_trends We're all hungry to know what the future holds, even though we may have a gut assumption about 2010: It will not be as tough as 2009 as we slog our way to a "new" normal.

Some informal trends I'm observing around the country:

1. Tough times tend to increase staffing volatility. My husband and I were part of the influx of nonprofit talent that came to New York in the late 1970s as replacements for the nonprofit professionals who departed during the sharp economic downturn that happened mid-decade. This big wave of transition in the sector gave us both terrific thirty-year careers in NYC, so shakeups in staffing aren't all bad all the time. Nonetheless, we need to prepare ourselves and our organizations now for the staffing disruptions that coincide with and follow deep recessions.

If you are seeing a growing number of vacancies in high-profile nonprofit positions (college presidents, museum directors, nonprofit CEOs, etc.) in your area, that could be a signal the transition is under way. Because this shift ultimately will affect all levels of our institutions, now is the time to write down procedures and document work flow so that your organization can accommodate staff changes quickly and successfully. Now is also the time to identify your most valuable employees and allow them to shine. Give them more influence; vary their tasks; let them know they are valued. This can diminish the chances of them leaving.

2. Like many small businesses, a lot of us are analyzing our customers and donors and focusing our mailing lists, meetings, and staff time in directions where potential return on investment is the greatest.

3. Many of us are seeing delayed payments for contract work and fewer grants from both private and public sources. As the magazine Governing notes: "Live within your means. Look to the future. Stop deferring expenses....Set up a rainy day fund."

4. Federal stimulus dollars are still wending their way to the nonprofit sector. The National Science Foundation, NOAA, and U.S. Department of Education are all making major funding for educational activities available to nonprofits. Likewise, state recovery funding is better organized now and easy to find online.

5. This is the time to network, network, network with your colleagues and peers. Many of the larger gifts and other financial resources I hear about are coming as a result of networking.

There's also a lot of information out there. Here are some articles and reports I've found to be useful:

How do things look from where you're sitting? Use the comments section to share your thoughts....

-- Marilyn Hoyt

Transparency: One Size Does Not Fit All

February 09, 2010

(Bradford Smith is president of the Foundation Center. In his previous post, he introduced the center's Glasspockets initiative and made the case for why foundations need to be more transparent.)

Magnifying-glass The Foundation Center recently launched Glasspockets, a free Web portal designed to encourage greater transparency in the world of philanthropy. Among its many features, the one that has raised the most questions is "Who Has Glasspockets?", which profiles the nation's largest foundations according to twenty-two online transparency and accountability criteria. Every one of these criteria was drawn from existing foundation practice: no one foundation meets all twenty-two criteria, but every single criterion can be found somewhere on a foundation Web site.

While we were designing Glasspockets our own staff was the first to ask: "How will a small foundation ever be able to come anywhere near meeting these criteria?" That is a fair question from people who know of what they speak. The Foundation Center staff collects data on 97,000 grantmakers and is more aware than anybody of the difference between the Bill and Melinda Gates Foundation with some $30 billion in assets and the Albert and & Bessie Mae Kronkosky Charitable Foundation with $200 million (though you'd be surprised to see all the great information on their Web site).

When it comes to transparency, one size does not fit all. Many of the tools on Glasspockets measure online transparency, but according to one Foundation Center survey of more than 11,000 foundations, only 29 percent reported having a Web site or issuing publications or annual reports. Communicating what you do, extensively evaluating your projects and programs, using social media, or engaging in community outreach takes people, yet in the same survey 76 percent of foundations said they had four or fewer staff members. In cultural terms there is a long tradition in American philanthropy of not drawing attention to oneself and letting good works speak for themselves. There is also the very real concern of many living donors with protecting their own privacy and the safety of their children and grandchildren.

A considerable number of foundations tell us that their contribution to transparency is to support the Foundation Center, which takes data from their tax returns and other information, adds value, and makes it available to grantseekers through subscription databases like Foundation Directory Online or for free at more than 425 affiliated funding information centers located across the country. In addition to filing their 990-PF forms, nearly 400 foundations send same-year grants information to the Foundation Center electronically, for which they receive free interactive maps and charts for their own use. And more than 150 foundations who have decided to take the online plunge do so by availing themselves of a free Foundation Center service to design and host simple Web sites.

Indeed, this is the raison d'être of the Foundation Center, founded in response to McCarthy-era hearings in which Russell Leffingwell, then chair of the Carnegie Corporation, told congressional skeptics: "We believe the foundation should have glass pockets." Our founders strongly believed that such transparency was the best way to preserve the freedom required by foundations to innovate, take risks, and adopt a long-term approach to addressing the world’s most pressing challenges. In launching Glasspockets, the Foundation Center is highlighting what foundations are already doing to meet the transparency challenge, not defining standards or imposing a code of conduct from on high.

Transparency is an ideal that each foundation has to pursue according to its values and means. It is something to aspire to, beyond compliance with existing regulation, and will be constantly re-defined as foundations experiment, get feedback, and avail themselves of new technologies. However, one thing seems certain: as the practice of philanthropy is being disrupted by the digital revolution, choosing not to be transparent is an option whose days are numbered. If you have a public purpose, and foundations certainly do, the public wants to know: "What are you doing?" Glasspockets shows the many creative ways in which hundreds of foundations are striving to answer that question. But we have only scratched the surface. Let us know what your favorite foundation is doing to tell its story to the world.

-- Brad Smith

Weekend Link Roundup (February 6 - 7, 2010)

February 07, 2010

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

Communications/Marketing

On the Future Fundraising blog, Jeff Brooks explains how irrelevant images in fundraising appeals can "keep [your organization] from raising the funds [it] needs."

Disaster Relief

Writing on the Harvard Business Review blog, Uncharitable author Dan Pallotta argues that the reason people are giving so much money to Haiti relief efforts is simple: "They are hearing about it." And therein lies an important lesson for nonprofits, says Pallotta.

The media is creating a huge market for giving to Haiti. They are building demand for purchasing charity for Haiti on a massive scale. And, small wonder, massive purchasing is occurring. How much do we think would be given to Haiti if the story ended after one news broadcast on the day it happened?

Imagine if we gave humanitarian organizations the freedom to build this kind of demand for a cure for malaria or the end of breast cancer. Imagine if we relinquished our fixation on keeping short-term fundraising costs low and set our gaze on what it would take to "sell" enough charity to solve long-term problems.

I'm not talking about mimicking traditional corporate advertising, with dumbed-down jingles, adolescent humor, or inauthentic feel-goodism. I'm talking about investing massive resources in reimagined creative approaches -- serious, photo-journalistic, perhaps documentary-style educational ad campaigns with all the gravitas and dignity these urgent causes deserve....

Judging by the comments on the post, most people think Pallotta's on to something. Do you?

The New York Times' Stephanie Strom recently suggested that the large sums of money raised by the American Red Cross for Haiti relief efforts -- more than $200 million as of February 1 -- had prompted fresh talk among smaller, less visible aid groups about a disaster response model in which donations would be pooled and distributed to organizations in the best position to deliver emergency relief services in a disaster-stricken country. But on the GiveWell blog, Holden Karnofsky argues that a "top-down pooling of funds" is not necessarily an improvement over the current system. Writes Karnofsky:

We see potential in the idea of different charities' raising funds for different efforts, as long as they make it clear how much they are looking for and why; make it possible to hold them accountable for how they spend the funds they raise; and are explicit about the point at which they'd spend funds on other potentially worthy causes....

In a related post, Allison Fine wonders whether any organization is tracking the expenditure of donations for Haiti relief efforts. "Some entity, somewhere needs to provide an outside accounting of how these private funds [are being] used," writes Fine. "And it needs to start now."

On the Philanthropy Potluck blog, the Minnesota Council on Foundations' Stephanie Jacobs shares her takeaways from a recent conference call devoted to philanthropy's response to the disaster in Haiti.

Diversity

In honor of Black History Month, Rosetta Thurman is profiling African-American nonprofit leaders on her blog during the month of February. Last week, Thurman highlighted the work of Twenty-First Century Foundation president Erica Hunt, Life Pieces to Masterpieces co-founder Mary Brown, and Silicon Valley Community Foundation president and CEO Emmett Carson.

"As nonprofits work to boost census participation and remedy the myopia that prevents us from truly 'seeing' one another," writes Melissa Mendes Campos on the Nonprofit Next blog, "will [the sector] also consider how we might better include those unseen faces and unheard voices in our everyday planning, decision making, leadership, and governance?"

Impact/Effectiveness

The Tides Foundation has launched new a blog "written by and for people interested in creating strong infrastructure for the social change sector."

Philanthropy

Philanthropy 2173's Lucy Bernholz suggests in a recent post that the tax-privileged status of 501(c)(3)s are "being challenged from numerous directions" and wonders whether nonprofits are "prepared to demonstrate their value in the face of changes in corporate and tax law, and, as importantly, changes in the cultural zeitgeist...." Adds Bernholz:

Currently, most of the innovation in the sector is around the edges of our existing corporate and tax frameworks -- we are developing "workarounds" to the 501(c)(3) or commercial corporate model to encourage social entrepreneurs and new investors or donors. This should be our first clue -- it is time to reconsider the entirety of the systems and policies for the production, financing and distribution of social goods and civil society in the twenty-first century....

On the Social Enterpreneurship blog, Nathaniel Whittemore applauds the Foundation Center's new Glasspockets initiative, which, he writes, "helps break down information that foundations make about themselves into more easily navigable and comparable chunks."

Social Media/Networking

On Monday, Pepsi opened the voting for the first round of its Pepsi Refresh Project. Visitors to the site can cast up to ten votes a day for projects/ideas submitted by nonprofits and social entrepreneurs in one of six categories: arts and culture, education, food and shelter, health, neighborhoods, and the planet. Ideas/projects receiving the most votes in each category at the end of the month will be awarded a grant ranging from $5,000 (for individuals) to $250,000 (for organizations). And then the process starts over again. Pepsi, a longtime Super Bowl advertiser, decided to opt out of this year's game and instead, over the coming months, will award millions of dollars to individuals and nonprofits through the Refresh competition.

Guest blogging on Beth's Kanter's blog, GreatNonprofits' founder Perla Ni explains how social media can help arts groups create visibility for their work and mission via GreatNonprofits' Arts Appreciation Campaign.

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

-- Regina Mahone

Financial Ratios, Babies, and Bathwater

February 05, 2010

(Dahna Goldstein is the founder of PhilanTech, LLC. This is her first post for PhilanTopic.)

Bathwater_main The nonprofit sector has been abuzz the last few weeks with talk of abandoning financial ratios in favor of program information to evaluate the impact of nonprofit organizations. The renewed focus on program measures was partially spurred by a joint press release issued by GuideStar, Charity Navigator, GreatNonprofits, and others.

There's no question that program information is essential in evaluating nonprofit performance and impact. But let's not get carried away.

There are good reasons to reject expense ratios as a tool for judging nonprofit performance, and they have been well documented (including here and here). I completely agree. It was, in part, the misplaced focus on expense ratios that led my company to team up with an expert in nonprofit finance several years ago to build a better financial analysis tool for the sector.

Many states require nonprofits to audit their financial statements. But while the quality of prepared and audited financial statements varies widely, much can be learned about an organization's financial health and stability by reading its audited statements and performing a few simple calculations. One can learn, for example, how many months operating reserves the organization has (a recent study showed that 53 percent of nonprofits in the Washington, D.C., area have less than three months, a significant vulnerability in these challenging economic times). Prospective donors also can see how quickly an organization pays its expenses, how well it is able to service any debt it has, and how much money raised in excess of expenses is available for investment in the organization's sustainability and growth. There's a wealth of information available -- if you know where to look.

Not everyone has the time or knowledge to analyze nonprofit financial statements. That's where our financial analysis tool -- and other tools like it -- can help. Based on nonprofits' financial statements, these tools typically produce a series of analyses that provide a detailed view of an organization's performance without presupposing specific financial analysis skills on the part of the person using them.

True, financial evaluation is only one tool in the nonprofit evaluation toolkit. But it's a critically important one as you make your donation decisions. A nonprofit that is doing great work but barely has enough cash on hand to sustain its operations is not likely to be an organization in which you'll want to invest. Or, maybe, if you believe in the organization's work, you'll decide to go all in and give it a larger donation with an eye to helping it survive. In either case, rigorous financial analysis can help you make an informed decision.

As the sector continues to explore ways in which program information can be used to evaluate nonprofits and help drive the more efficient allocation of scarce resources, let's be careful not to throw out the financial baby with the expense-ratio bathwater. And remember: Informed donors are effective donors.

(Original artwork: Patrick Gannon)

-- Dahna Goldstein

Advice for Nonprofits in 2010

February 04, 2010

News that Yale University plans to cut staff and research initiatives to close a $150 million budget deficit and today's 3 percent drop in the S&P 500 should serves as a reminder to nonprofit leaders that it's still too early to run up the "all clear" flag on this economic downturn.

As one well-heeled donor told researchers at Dini Partners, a management and fundraising consulting firm with offices in Houston, Dallas, Austin, and Denver: "The economy is like the Grand Canyon. The free fall is over, but there's a river to be crossed before we climb up the other side."

Dini has released the results of its 2010 Giving Projections survey and the picture they paint is, well, somber. The report also includes some recommendations that, if you're a nonprofit leader, are worth heeding:

1. Focus on board and leadership development.

2. Base your 2010 and future development programs on the foundation of a clear, well-articulated, compelling strategic plan.

3. Visit/communicate with as many of your donors as you can to learn whether it is mission, program, values, community impact, or timing that's most likely to drive their giving decisions in 2010 and beyond.

4. Avoid appeals intended to rescue the operating budget -- and if you resort to such an appeal, make sure it includes a clear statement of steps taken to mitigate the economic pressures on the organization.

5. Be as transparent as you can, especially with respect to financial matters.

Good advice. What would you to add the above?

-- Mitch Nauffts

Readings (and Other Stuff) - Feb. 3, 2010

February 03, 2010

Here are a few items that caught our attention today:

What are you reading?

GEO's Courtney Bourns Discusses Evaluation in Philanthropy

Last month, Patricia Pasqual, director of the Foundation Center's Washington, D.C. office, sat down with Courtney Bourns, director of programs at Grantmakers for Effective Organizations, to discuss the new report Evaluation in Philanthropy: Perspectives from the Field. Co-published by GEO and the Council on Foundations, the report examines a number of approaches to evaluation and offers real-life examples of their implementation.

(Total running time: 16 minutes, 27 seconds)

In her chat with Pasqual, Bourns mentions GEO's definition of evaluation: "Asking and answering the questions that will help you improve your practice as a grantmaker." She also explains why GEO and COF decided to publish the report and highlights some of the practices mentioned in it. For example, instead of using evaluation to hold grantees accountable, GEO urges foundations to use it to encourage:

  • improvement not just proof;
  • contribution not attribution;
  • learning with others and not alone;
  • going beyond the individual grant; and
  • embracing failure.

While the information in the report is geared toward grantmakers, Bourns notes that it can also be helpful to nonprofits:

[GEO] recognizes philanthropy as a system. It requires both sides of the equation: grantmakers and grantees working together....So my recommendation to grantseekers is talk to your funders about what evaluation makes sense for you. What's going to help you gauge your own effectiveness as a grantee? Let your funder know, because they ought to care about helping you answer the questions that will make you more effective....

To download an mp3 version (11.3MB) of the podcast, click here.

And be sure to check out the audio events archive for more Philanthropy Chat podcasts.

-- Regina Mahone

Civil Rights Documentaries

February 02, 2010

(Kathryn Pyle is a regular contributor to PhilanTopic. She wrote about social issue documentaries in an earlier post.)

FreedomRidersposter_72 The next few years will see the fiftieth anniversary of a number of watershed events in the civil rights movement. Two documentary films just released remind us of those troubled but stirring times.

Freedom Riders, which premiered last week at the 2010 Sundance Film Festival, captures what director Stanley Nelson calls the real beginning of the civil rights movement. "Before the freedom riders," Nelson told attendees after the packed screening, "there were isolated actions to break segregation laws in the South, but the freedom riders brought people together from all over the country -- black and white, old and young."

Thirteen young people -- seven African Americans and six whites -- boarded two commercial buses, a Greyhound and a Trailways, in May 1961, in a protest organized by the Congress of Racial Equality (CORE). They were headed from Washington, D.C., to New Orleans, and hoped to pressure authorities in the deep South into upholding federal anti-segregation laws as they applied to public facilities. Many of the riders would be severely beaten, while others were jailed at Mississippi's infamous Parchman Farm prison. Facing mounting international criticism, the Kennedy administration eventually would call out the National Guard to protect the riders from violent mobs in Alabama and Mississippi.

By summer's end, the number of freedom riders would swell to over four hundred and their courage and persistence would finally bear fruit when the Interstate Commerce Commission, in September, stepped in to enforce existing federal laws against segregation in interstate bus travel, handing a hard-won victory to the movement.

"The message of [the film]," said Nelson, "is the power of individuals to make change." The film also highlights the leadership role of a number of women during those terrible weeks, most notably Diane Nash. Nash, a student at Fisk University in Nashville and one of the founders, in 1960, of the Student Nonviolent Coordinating Committee (SNCC), picked up the gauntlet when, battered and frightened, the original group of freedom riders could not continue. Refusing to heed a Kennedy aide's pleas for a "cooling off" period, Nash took responsibility for the protest and led a group of riders from Birmingham, Alabama, to their final destination in Jackson, Mississippi.

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