Stanford Social Innovation Review

Investment Needed in Nonprofit Policy Work

Nonprofits can do a lot more to help shape the public policies that affect their work and constituents. Working to fix flawed policies at the root of social problems is a key role nonprofits should play.

But far too many nonprofits fail to play that role because of concerns that the law limits their advocacy work, and because they lack the resources to be effective advocates, says a new survey by the Nonprofit Listening Post Project at Johns Hopkins University.

Among nonprofits that engaged in any lobbying or advocacy, for example, fewer than 15 percent devoted as much as 2 percent of their overall budget to that work, the report says.

And while roughly half of nonprofits surveyed undertook limited forms of advocacy or lobbying, such as signing correspondence to public officials or distributing materials on policy issues, only a third engaged in more involved forms of participating, such as testifying at public hearings or organizing a public event.

The survey says nonprofits may shy from lobbying, compared to advocacy, because of existing laws limiting their involvement.

Lobbying consists of voicing a position to a legislative official on a specific piece of legislation, while advocacy consists of voicing a concern or information about policy without expressing a position on a particular piece of legislation.

The Johns Hopkins report recommends foundations invest more in nonprofit policy advocacy, that nonprofits be encouraged to get more involved in advocacy, that small and mid-sized nonprofits receive more training and other assistance to encourage advocacy, and that more resources be made available for policy work to “intermediary” groups in specific fields of interest.

“Our nation’s nonprofit organizations are widely expected to play a key role in helping to promote democracy and civic action, and our survey results indicate that they are making strenuous efforts to fulfill this expectation,” Lester M. Salamon, author of the study and director of the Center for Civil Studies at the Johns Hopkins Institute for Policy Studies, says in a statement. “However, financial and other constraints are limiting their ability to do so.”

Compounding the lack of resources, support and expertise for policy work, as well as the concern about legal constraints, are other hurdles nonprofits face, including rising demand for services, ongoing pressure to sustain their organizations, and fears that policy work could result in a loss of funding from foundations, givers and government.

To clear those obstacles, nonprofits should work to educate their boards and funders about the importance of policy work, and to secure their support to equip their organizations to be more effective policy advocates.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Election Critical for Nonprofits, Giving

Nonprofits have a lot riding on the November 4th elections.

The candidates Americans elect to serve in federal, state, and local offices will shape and carry out laws and public policies that affect nonprofits and giving, as well as the people nonprofits serve and the needs that are their mission to address.

Nonprofits should make it their business to make sure voters know where the candidates stand, and to encourage voters to go to the polls.

Over one million nonprofits operate in the U.S., employing over 14 million people and working with 61 million volunteers.

The Nonprofit Voter Engagement Network, which aims to spur nonprofits to work on a nonpartisan basis to engage their staffs, boards, volunteers, clients, and constituents in the election process, says it is “not only legal but well within our missions to encourage voter and civic participation.”

And as a new survey makes clear, nonprofit executives expect the new president to help respond to the urgent issues facing America, and have strong ideas about the policies needed to fix those problems.

Four top priorities a broad cross-section of nonprofit executives identified in the survey by the Nonprofit Listening Post Project at Johns Hopkins University include:

1. Restoring or increasing funds for their field in the federal budget.
2. Reinstating and expanding tax incentives, including those in the estate tax, for charitable giving and volunteering.
3. Federal grant support for nonprofit training and capacity-building.
4. Improving reimbursements under Medicare, Medicaid, and other federal programs to ensure they cover the actual costs of service.

With the economy under severe strain, says Lester M. Salamon, director of the Johns Hopkins Center for Civil Society Studies, “our country needs a strong nonprofit sector more than ever.”

Yet nine of 10 nonprofit executives responding to the survey reported “little improvement in government policy toward their organizations over the recent past, as well as a considerable need for support to meet the challenges the country is now facing.”

And Peter Goldberg, chair of the Listening Post Project Steering Committee and CEO of the Alliance for Children and Families, says that, with government moving “to open the financial arteries of our economy, let’s not repeat mistakes and overlook until it is too late the great stresses and strains spreading throughout America’s vital nonprofit sector.”

Most nonprofit executives responding to the survey also supported policies to:

• Forgive college loans for students who take nonprofit jobs.
• Provide a broad nonprofit investment tax credit to offset the “un-level playing field” for nonprofits in securing capital to pay for technology, facilities, and capacity-building.
• Expand AmeriCorps and other national service programs that work with nonprofits.

Nonprofit executives also want national policy to pay more attention to poverty, provide for university health insurance, and require students receiving student aid for college to perform community service.

What voters decide on November 4th will have a huge impact on nonprofits’ ability to advance their missions of making our communities better places to live and work.

So nonprofits, building on the trust they have established and that is rooted in their good work, need to help their boards, staff, volunteers, clients, and constituents understand about the issues and candidates’ positions, and encourage them to vote.

Todd Cohen, a veteran news reporter and editor, is editor and publisher of
Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Now What?

In the nonprofit sector, the rules governing our tax deductible status result in our sitting voiceless outside the noisy process of selecting leaders and legislators. The trouble is, most of us engage in this work because we are committed to social change. We want to see the world around us become a more humane, just, and supportive environment for everyone. That’s what gets us up in the morning, and that is what motivates us year after year. And the opportunity to do this work is what many of us use to justify our accepting far lower wages, and far higher risks.
As we all know, many in our sector do what we can. We organize and support non-partisan voter engagement work. We highlight and educate the public about public policy questions. And then, law-abiding citizens that we are, we remain silent as the rough and tumble of the fray carries on. Until now: the election is over and the business of governing has begun. Silence is just the opposite of what needs to happen now.
I have watched two other instances where progressives took the reigns of executive power—Jimmy Carter in 1976 in what was largely a reactionary vote to the scandal that was Watergate, and Bill Clinton who raced faster to the center than Mr. Bush (senior) or Ross Perot could manage. In both cases, the idea of a mandate was far from the case. A sea change in the landscape was never discussed. But now, after 40 years of working for progressive change, we have both in Barack Obama’s victory. There is a clear sense of a mandate for change, and there is no question that there has been a seismic shift in the landscape. Indeed, this probably occurred in the months leading up to the election as the subprime meltdown changed everything.
My point is that at least in my lifetime, progressives have never faced such opportunity. Now we have to figure out what we are going to do with it. Let’s start by speaking out loud about what we want. When Carter was elected, I watched in astonishment how many friends and acquaintances were recruited into the administration, and how the public interest sector slowly fell silent. We didn’t want to criticize our friends who we knew were trying the best they could to effect change. What we didn’t know then was that they could not make change inside, if everyone on the outside who supported change failed to speak up. That left only the forces resistant to change speaking out loud.
Let’s not make that mistake again.

Drummond Pike founded Tides in 1976 and is the chief executive officer. He helped pioneer the advent of donor-advised funds in philanthropy, and has long supported grassroots and public-interest organizations through environmental and social change philanthropy. He received the Outstanding Foundation Professional Award in 2004.

Posted by Katie Harrington

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Will Recovery Effort Dilute Obama’s Giving-Sector Strategy?

While mildly optimistic the Obama administration can build a true partnership with the giving sector to take on America’s toughest social problems, a leading scholar of the sector fears the massive job of reviving the failing U.S. economy could limit or even doom the hope for that collaboration.

“My great fear is that the economic recovery will become Barack Obama’s Vietnam War, and will drive out the resources and attention and political capital that could be used for a whole variety of promising possibilities that relate to the nonprofit sector,” says Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University.

Salamon helped organized a two-day meeting Jan. 13 and 14 at which roughly a dozen nonprofit and foundation leaders reviewed recently-circulating proposals on a policy agenda for the giving sector in working with the new administration.

Participants at the gathering, held at the Rockefeller Brothers Fund’s Pocantico Conference Center in Tarrytown, N.Y., included a nonprofit consultant who has been involved in the transition but was not there representing it, Salamon says.

All participants were assured they would be speaking as individuals and not necessarily as representatives of their organizations, he says.

He declined to identify participants but says they represent nonprofit intermediary organizations that have nonprofit and foundation members.

Within two weeks or so, he says, the group should release its recommendations.

While he would not discuss details until the recommendations are released, Salamon says everyone who attended received a policy-agenda document he had prepared that drew on the work of the Listening Post Project at the Center for Civil Society Studies.

That effort has been tracking the views of grassroots nonprofits and collecting empirical data on nonprofits and the operating and policy issues they face.

During the election campaign last fall, the project issued a communiqué that summarized nonprofit executives’ ideas about policies the new president should pursue to address America’s big social problems.

While he would not provide a copy of the eight-to-10-page policy document he prepared, saying some of its ideas likely will be included in the new recommendations, Salamon says that document reflects many of the findings of the Listening Post Project.

Among the issues the document addresses, he says, he lays out three broad areas in which the nonprofit sector should be involved in efforts to fix the economy.

“It’s an incredible delivery system that should be part of the recovery program,” he says.

In the face of proposals for a big increase in federal funds for emergency services, for example, Salamon calls for those funds to flow though groups like local United Ways and community foundations to nonprofits that provide direct services.

He also calls for matching grants nonprofits could match with volunteer hours, a strategy he says could help mobilize citizens in the recovery effort, including those who are unemployed.

Separately, he says, he has suggested to members of the Obama transition team a specific vehicle for handling funds for emergency food and housing programs.

Mortgage relief also is the focus of recommendations in the document for addressing nonprofits’ role in the economic recovery, Salamon says.

The national network of low-income housing groups and housing-finance institutions, for example, could serve as a vehicle to help work out problem mortgage loans, he says.

“These organizations have enormous track records and experience dealing with low-income mortgage borrowers,” he says. “They’ve got experience in how to structure loans for low-income persons that would be an excellent use” of funds distributed through the government’s massive Troubled Assets Relief Program, known as TARP.

The third set of recommendations in Salamon’s document involving nonprofits’ role in the economic recovery address emergency incentives for charitable giving and volunteering “that would help bring extra hands into this recovery effort,” he says.

In one controversial proposal, he says, he calls for temporary suspension of the excise tax on foundation earnings if foundations in return increase their grants to direct-service organizations above the five percent of their assets they are required to pay out.

The document also addresses ideas to support “capacity-building” in the giving sector, Salamon says.

He says he is “mildly optimistic” the Obama administration will develop strategic policies to foster greater collaboration with the giving sector and spur more charitable giving and volunteering.

Having worked as a community organizer, Obama “understands community institutions and nonprofits,” Salamon says, and the incoming administration seems to recognize “the potential of nonprofits to improve policy and improve ways in which we solve public problems in this country that is refreshing and unusual.”

The new administration also has an “apparent openness to a set of ideas that connect to the nonprofit sector very directly” and with a perspective “that really takes account of the actual operations of nonprofits and doesn’t go off on ideological diversions.”

The outgoing Bush administration has had the “ideological perception that the sector is a substitute for government, that government can back off and nonprofits and volunteers and philanthropy can fill the gap,” Salamon says. “It was not truly a partnership.”

The incoming administration, in comparison, has a “better sense of government as a true partner of the sector,” he says.

But he cautions that his appraisal is “still speculation and vulnerable to the pressures that are going to arise and already are arising from the demands of the economic recovery.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Field Building—Does it Matter What Field?

I’ve written a lot about field building and read even more. Nowadays, the word “industry” is often substituted for field. I suppose I could take some credit for this—since a chunk of my 2004 book addressed the issue of philanthropy as an industry—and, as an idea that was ahead of its time, I have some battle scars to show for that work. First problem is, I’m not so sure some of the fields now being called industries actually fit the definition¹ or that I want credit, and two, what we call them is not my point for this post, rather my point is how they get built.

Here’s what I’ve noticed from reading some really good reports on fields/industries/sectors/ecosystems as diverse as women’s studies, microfinance, impact investing, conflict resolution, digital media and learning, philanthropy, and social entreprenuership: the recommendations for building the field, or taking it from a phase of entreprenuerial fragmentation—what Katherine Fulton aptly calls uncoordinated innovation—to organized markets are almost always the same:

1. Infrastructure
2. Intermediaries
3. Networks
4. Standards

Sometimes, the recommendations make a mention of the potential role that regulations can play in transformation (though its usually couched in the philanthropically more polite term—policy change). Sometimes they include a focus on evidence, though usually by the time the “field building” discussion starts there is already a body of evidence.

Now, like I’ve said, I’ve contributed to this body of thinking. And I rely on it. I’m asking the following questions because I’m steeping myself in this question of transformation from disconnected experiments to organized market/system/ecosystem/industry/sector yet again. So here are the questions:

• Do all transitions really require the same actions?
• Are these actions too separate from the content of the market/system/industry to be consistent across so many disciplines?
• Are these actions too separate from the content of the market/system/industry to be consistent across so many time frames? (women’s studies in the 1960s, social entrepreneurs in the 2000s, for example)
• If the same set of actions for transformation are known to be necessary, why do we keep studying them? Why don’t we just “do” them?
• How do we adjust our thinking to account for changes in external conditions?—technology, policy, resources, etc?
• Why do we continue to shy away from the role that rules and regulation can play in each of these transitions?

Am I correct that we know more about building fields than we think we know? And is it really possible that the same basic interventions that worked in the 1960s will work now—is it simply a matter of where, how, with what technology?

These are real questions for me—they will shape or be part of at least two chapters/article I write in 2009. Please help me out here if you can. Thanks.

Notes

1. I cribbed (with attribution) the definition that I used in the book, as well as the examples of an industry’s components and the stages of development and the possible interventions from Michael Porter‘s, Competitive Strategy.

Lucy Bernholz is the Founder and President of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award winning blog about the business of giving and serves as Executive Producer of The Giving Channel on Fora.tv.

Posted by Kelsey Walker

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Why the Social Innovation Fund Matters

On his Facebook page, Brad Rourke has asked why the Social Innovation Fund (explained here) is such a big deal:

[The Social Innovation Fund] makes the government basically a grantmaker, giving away $50 million per year (which is not much as funders go). Sean points out that the original idea was that the government would find these worthy nonprofits and give the money to other funders to then pass on, after a match.
That’s definitely better, but still, either way, here’s my question: How is this in any way different than how things happen already?

Every foundation in the United States is essentially already doing what the White House office will be doing: trying to find the most promising grant recipients.

I do not understand what the fanfare is here, when what really appears to be happening is that a new funder is entering the mix. Yes, that’s good — but not shout-it-from-the-rooftops good.

Brad’s not the only person asking this question. If it is done wrong, the Fund will likely be a bureaucratic nightmare as Jeff Trexler recently suggested. So here’s my argument for why the Social Innovation Fund is a big deal if it is done right.

• The Social Innovation Fund is the first meaningful incentive for large foundations to provide growth capital to nonprofits.
• It provides serious “carrots” to participating foundations, but also empowers itself to “rate” those foundations. This should create the first meaningful incentive for foundations to compete to be viewed as the “best” funders.
• The Fund refocuses philanthropy from supporting programs to supporting nonprofit organizations.
• The Fund explicitly makes clear the role of the government as an “exit strategy” for philanthropy.
• The Fund offers meaningful incentives for the field of philanthropy to embrace a culture of knowledge sharing.

If you read my blog regularly, you can see that the points above are pretty much my wish list for our sector. Here’s why I think each point is true as long as the Fund is run in accordance to the policy recommendations of America Forward and follows the letter and spirit of the bill authorizing the Fund.

The Social Innovation Fund is the first meaningful incentive for large foundations to provide growth capital to nonprofits.
The Fund is providing cash grants to grantmakers. Most grantmakers are stuck with the endowment they have and do not have access to additional funding. But the Fund requires that grantmakers use this money (plus matching funds from the foundation’s endowment) to provide growth capital and capacity building grants to nonprofits. In addition, the Fund sets the government up as a long term exit strategy so that the grantmakers do not need to support the grantee forever (see below on “exit strategy”.)

It provides serious “carrots” to participating foundations, but also empowers itself to “rate” those foundations. This should create the first meaningful incentive for foundations to compete to be viewed as the “best” funders.
While offering the “carrots” above, the Fund also requires that grantmakers make a compelling case that they have an evidence based decision making strategy and provide specific measurable outcomes related to the areas they seek to support. Since the Fund cannot make grants of less than $1 million and it only has $50 million, it cannot select more than 50 grantmakers to work with. Since it is allow to make grants as large as $10 million, the final list will be between 5 and 50 grantmakers. That’s a list that foundations are going to want to be on. Even those that historically have not focused on providing growth capital.

The Fund refocuses philanthropy from supporting programs to supporting nonprofit organizations.
The language of the bill authorizing the Fund presumes that the role of funders helping to support social innovation is to provide growth capital. This isn’t terribly surprising when you realize that America Forward was convened by New Profit, which is one of the leading growth capital funders. This shift from foundations as designers of programs who contract execution out to nonprofits to foundations as providers of growth capital to the performance driven nonprofits represents a fundamental shift in philanthropy and one that I am a big advocate for.

The Fund explicitly makes clear the role of the government as an “exit strategy” for philanthropy.
The Fund become the “venture philanthropy” arm of the US government. But in promoting the Fund, everyone from President Obama on down has referenced the successful scaling of Nurse-Family Partnerships. The government did not care so much about NFP when it was a small, local program. But now that it has gained scale via the intentional providing of philanthropic growth capital from foundations, the 2010 federal budget is calling for $8.5 billion over the next ten years to finance nurse-family visitation programs.
So the Fund begins to make explicit the interest the government has in effective social innovations reaching a scale where the Federal government can step in to provide funding. This model wins with social liberals who love to see the government provide effective social benefits and it wins with social conservatives who love to see the government contract with privately developed and managed programs to execute social benefits. It also wins with foundations who can see that if they expend resources to scale effective programs, the government will step in to provide funding and the foundation can exit the relationship with the grantee. Is there an unlimited capacity for the government to provide funds? No. But government resources swamp private philanthropic resources and effective programs like NFP save the government money.

The Fund offers meaningful incentives for the field of philanthropy to embrace a culture of knowledge sharing.
The language of the bill authorizing the fund requires that nonprofits that receive subgrants from the grantmaking partners be committed to the use of data collection and evaluation and be important contributors to knowledge in their fields. It requires that when making grantmaking decisions the grantmakers consult with a diverse cross section of community representatives in the decisions, including individuals from the public, nonprofit, private, and for-profit private sectors. And it mandates that the Corporation for National & Community Service that will operate the Fund shall maintain a clearinghouse for information on best practices resulting from initiatives supported by the grantmakers and their grantees.

This is important, heady stuff. If executed properly with vision and integrity, the Fund may mark a major turning point in the field of philanthropy. But it is easy to imagine that the fund will not live up to its potential. This is a big project and there are going to be many competing interests clamoring for attention. It could turn into a bureaucratic mess of grant dollars being handed out in a rote manner that relates more to political connections than anything else. This is the nightmare that Jeff Trexler worries we’ll see. I hope he’s wrong. I think the people running the Fund want to do the right thing and recognize the opportunity they have. Let’s all commit to support this important endeavor.

Sean Stannard-Stockton is a principal and director of Tactical Philanthropy at Ensemble Capital Management. Ensemble Capital provides families both traditional investment management and philanthropic planning. He is the author of the blog Tactical Philanthropy and writes the column Tactical Philanthropy for the Chronicle of Philanthropy.

Posted by Jason Chua

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America, Reimagined

PopTech, the vaunted thoughtfest that annually gathers some of the world’s leading social innovators in the coastal hamlet of Camden, Maine, just wrapped up its 2009 conference after mulling an uncharacteristically, un-global theme: America and the challenges it faces domestically in the early years of this new century.

Called America Reimagined, the conference featured more than 50 artists, writers, musicians, technologists, and social entrepreneurs—all of whom are creating or leading bold new civic, economic, technological and cultural initiatives in the United States. The sessions were designed to explore how major forces are reshaping the idea of America, its government’s contract with its citizens, its brand, and its role in the world. “The thing about the kinds of moments we are living in right now is that they are often filled with conflicting and confusing signals,” conference curator Andrew Zolli said in opening remarks.” Is it possible for us as a country, economically and technologically, politically and culturally, to reinvent ourselves?”

Radio host Kurt Andersen, the author of Reset, a book about America’s uncertain future, was the first to consider the question, describing the last 25 years of American life as years in which Americans have been “guilty of magical thinking.”

We took Peter Pan too seriously; we took Bob Dylan’s lyrics too seriously.  We committed to never growing up and we didn’t. I mean, when did adults start celebrating Halloween? When did people over 12 begin eating ice cream with mashed up cookie dough in it? When did adults start wearing blue jeans and sneakers all the time and watching cartoons? Most decades end after a decade, but the 1980s—until last year’s financial meltdown—just kept going, and kept going, and kept going.

The point: America has always moved back and forth between economic booms and busts and between the right and left politically. But this moment in time is different, Andersen says. “It’s a time when all of these cycles are shifting dramatically and simultaneously; when complacency is forced to end; when outdated structures are being inevitably and necessarily challenged, and when change is rapid and difficult to predict.”

But Andersen, like many of PopTech’s other speakers, was optimistic. Andersen said the current economic crisis “is actually a great opportunity for reinvention and for getting ourselves as individuals and as a nation back on track.” If reinvention is to occur, however, it will be catalyzed not by today’s present leaders as much as by the amateurs in society, young people and “new-thinking baby boomers” in the grassroots—people unafraid to take risks, think creatively, and see the world through the lens of possibility.

“This isn’t the end of the world,” Andersen said. “But the ‘80s are over. I’d like to think we’re just waking up.”

Among other highlights so far:

• Alec Ross, a senior social media/technology adviser to Secretary of State Hillary Clinton, told conferees about the ion’s 21st Century Statecraft initiative, uses social media to help nations and leaders empower their citizens and each other. “If you think of the last eight years of American foreign policy, it was about overpowering others in the world,” Ross said. “[We want] to go beyond engaging government-to-government and to connect with people more directly.  If Paul Revere were alive today, he wouldn’t make a ride; he would have just tweeted and the lantern hangers would’ve retweeted.” Ross said he is launching a new social media initiative with Mexican drug-trafficking authorities that aims to engage citizens in their war on drugs.  He described that one of the biggest problems in this conflict is that people fear retaliation if they help out law enforcement.  “So I went [to Mexico]…and we met with NGOs and with Carlos Slim and we came up with a little system where people are able to email or text gang activity.” The system anonymizes their emails to prevent retaliation, and the government can use these tips to respond more quickly, and keep people informed about what’s happening in their anti-drug efforts. “This is just Chapter One of how we can use technology in statecraft.”
• James Fowler, the author of the recent book, Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives, told conferees that humans—like birds and schools of fish—also tend to act in communities of purpose and suggested that online social networks will amplify these natural social tendencies. Humans have always lived in “webs of humanity,” Fowler said, and within these Webs, such physical traits as obesity and behaviors such as smoking tend to spread like viruses. In other words, there is a kind of swarm mentality in social networks, and those people closest to us can affect our behaviors more than we might like to admit. But there is an upside.  When individuals engage in positive behavior, this also can have a ripple effect on the actions of those of their social networks.  “I recently lost five pounds,” Fowler said, “to influence those I loves to do the same. Just think about it, by changing your own behavior, you truly can change the behavior of others.” Social media can help humans influence their communities and have a large positive impact on the world.
• Erica Williams, a 20-something Washington, D.C.-based activist working to help broaden the civic engagement of her peers, urged the older PopTech crowd to put away their stereotypes of her generation. “Call us what you will, the MTV generation, Millennials, the ‘us’ generation,” she said, “but we are not bored or disinterested; our world view is different.” At some 300 million strong, she added, today’s 18-27 year olds “have the opportunity to re-brand civic engagement” and reinvent politics. “My generation doesn’t like traditional politics,” she told conferees. “We are the most ethnically diverse generation that America has ever had. We are post-racial. We came up at a time with 9-11, fighting two wars and a gap between the haves and have-nots that we haven’t seen since the Gilded Age—and a “me” generation that was many of our parents. So we distrust ‘politics as usual.’ It hasn’t worked.”  In the absence of top-down reform, Williams said her generation will always work beyond traditional avenues to get things done, bypassing candidates who don’t deliver, and mobilizing young people directly. “We are re-branding what it means to be politically engaged,” she said.
• Malaysian singer/songwriter Zee Avi, discovered on Twitter, performed several songs she wrote, her fresh lyrics and full-sounding acoustic guitar underscoring the influence that American popular culture has had on the rest of the world. At one point during her performance, PopTech attendee and Personal Democracy Forum cofounder Micah Sifry, tweeted favorably: “Zee Avi, Malaysian singer, sounds like she’s from Northampton, Mass. Is world getting too small?”

Marcia Stepanek is Founding Editor-in-Chief and President, News and Information, for Contribute Media, a New York-based magazine, Web site, and conference series about the new people and ideas of giving. She is the publisher of Cause Global, an acclaimed new blog about the use of digital media for social change. She also serves as moderator and producer of New Conversations for Change, Contribute’s forum series highlighting social entrepreneurs and new trends in philanthropy.

Posted by Jason Chua

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Federal Bailout Spending Creates Public/Private Collaboration Opportunities

We usually think of nonprofit collaboration only in terms of charitable organizations, but does government collaborate as well? I recently learned about an interesting example of a government-led collaboration effort focusing on the American Recovery and Reinvestment Act, more commonly known as the federal bailout. The process of determining how to spend bail out dollars in the Northern Illinois is being led by the Chicago Metropolitan Agency for Planning, or CMAP. CMAP is the official regional planning organization for northern Illinois. From day one, CMAP was having high-level discussions about the best way to use the Chicago region’s influx of bail out dollars in the most productive way with the goal of achieving higher quality results. Recently I attended a presentation where Randall Blankenhorn, the Executive Director of CMAP explained their approach to disperse American Recovery and Reinvestment Act funds. Mr. Blankenhorn made a perfect argument for how it’s critical when presented with such tremendous resources - $14 billion for the Chicago metropolitan region – to leverage that capacity to create more accountability and to experiment with restructuring the delivery of services in the region.

Mr. Blankenhorn explained that as early as November 2008, in the very early days of the discussion of a bailout bill, CMAP’s board approved a set of principles for how the funds should be spent in northern Illinois. One of these principles is: The investments should be partnered for real reform. To prioritize local infrastructure investments that in a comprehensive way look beyond transportation benefits to include land use, economic, environmental, social, and other impacts.  In other words, let’s not look at these issues as silo arenas. Instead, let’s weave the strategies together to create comprehensive solutions and leverage the impact of the investment to re-position the region and its services for the future.

To accomplish its goals, CMAP is partnering with foundations, nonprofit organizations, and public agencies throughout the region in a coordinated, accountable fashion. We are fortunate to have CMAP leading the process for investing American Recovery and Reinvestment dollars here. Do you have examples of good government collaboration you want to share? Post a comment with your own example.

Jean Butzen, Mission Plus Strategy consulting, specializes in mergers and alliances in the Chicago area.

Posted by Jason Chua

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The High Cost of Playing It Safe

Fiscal crises in dozens of states should drive foundations and nonprofitsto pay close attention to what their state governments are doing, and try to influence it where possible.  In a recent report, “Beyond California: States in Peril,” the Pew Center for the States found that all but two states are contending with budget shortfalls, that the shortfall across all states is a staggering $178 billion, and identified 10 states in the most critical condition: California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin. 

Declining to participate in budget and governance reform debates may be the cautious approach legally, and it even may be the right one for a particular foundation or nonprofit philosophically, but there should be no doubt about the risks that we run by staying on the sidelines.

Consider the case of children’s health coverage in California. This year we may see just how quickly many millions of dollars in private philanthropic achievements – in expanding enrollment, pushing for reauthorization of the federal Children’s Health Insurance Program, promoting county-level insurance programs to cover kids not eligible for Medi-Cal or Healthy Families, and more – can be wiped out.

California’s Healthy Families Program provides low-cost insurance to children whose parents work, but can’t afford insurance on the private market.  It has been experiencing record demand as more and more families lose employer-based health coverage in an ailing economy.  State budget cuts threatened to cut off coverage to half a million children late last summer.  In August, First 5 California, an independent foundation dedicated to the needs of children 0-5, albeit one created by a state initiative, put up $81 million.  This was First 5 California’s second round of emergency funding for the program in nine months (in December 2008 they put up another $17 million). To put this in perspective, if private philanthropy had to make a similar commitment across our 50 states, the figure would be a staggering $653 million. 

Now here’s the kicker: this extraordinary $81 million grant still might not have prevented up to 800,000 children from low income working families being kicked off health coverage.  The legislature followed First 5’s lead and passed AB 1422, a bill to provide approximately $97 million in fee revenue to fill the gap. The Governor signed it into law.  This confluence of a large contribution from First 5 and a fee hike is a one-time fix, expiring at the end of 2010.

And sadly, it may only have postponed the damage. On January 8, Governor Schwarzenegger proposed a budget that places the Healthy Families Program on a “trigger list” of programs to be eliminated unless federal funds can be obtained to save it. According to the Governor, if we don’t receive a “trigger” threshold level of additional federal funding for California ($6.9 billion, specifically), the Healthy Families Program would be eliminated.  Even in the best case, in the unlikely event those federal funds do come forward, 204,000 children will still lose their coverage under the Healthy Families program as his proposal would cut eligibility and benefits and increase cost-sharing for Healthy Families.

This situation dramatically makes a point we’ve all known all along – that there is no way private philanthropy can pick up the slack when government retreats.  (That doesn’t mean government won’t ask, of course.  Last year, in addition to looking to First 5 California and local First 5s to step in and save HFP, legislative leaders in Sacramento approached several private foundations and asked them to pitch in tens of millions to save Healthy Families, among other programs.)

Foundations and nonprofit cause organizations need to carefully consider the relationship between their focused strategies and the merits of pushing for long-term change in the broader policy environment. Concerns about dry issues like governance reform or the mechanics of budgeting and accounting can seem far afield from a strategic program focus on, for example, reducing childhood obesity or improving early childhood development.  But the current California budget debacle shows that even the best designed and executed privately-funded initiatives can be washed away quickly by steep cuts to public programs.  And as the Pew Center for the State’s report shows,  California is only one of many states that are facing fiscal crises that will only worsen over the next 12-18 months. 

So what could foundations and nonprofit cause organizations do? They certainly can’t plug such enormous gaps, nor could they have prevented state budgets from tanking.  They could, though, look into what makes deep cuts to programs like health insurance for children the preferred response.  California has other options; legislators could cut other things, and could try to raise revenue to fill the gap.  As yet they have not, largely for structural reasons (supermajority requirements) and political (poor children do not make campaign contributions and their parents aren’t a strong voting block).  Funders may want to join the search for ways to change those incentives.

Much to their credit, funders like The James Irvine Foundation, The California Endowment, The David and Lucile Packard Foundation, the William & Flora Hewlett Foundation and the Evelyn and Walter Haas, Jr. Fund, among others, have been working the past two years to try to address California’s larger governance reform questions, through California Forward. It will become increasingly hard for other philanthropies, here and in other states, to avoid concluding that they will be unable to achieve their philanthropic goals until their state’s government functions again.  As Bob Hertzberg, president of California Forward and former Speaker of the Assembly, recently encouraged a group of grantmaking public charities to do, in such situations we all need to“get in the fight.”

Peter Manzo is President & CEO of United Ways of California, which improves health, education and financial results for low income children and families by enhancing and coordinating the policy advocacy and community impact work of California’s 37 United Ways.

Posted by Samantha Penabad

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Nonprofit Sector Needs to Be Better Understood

The nonprofit sector does not get enough respect.

The sector is big and sprawling, plays an indispensable role in society and the economy, and faces daunting financial and operating challenges.

Yet the sector generally is poorly understood and underappreciated.

A report prepared for Congress last fall by the Congressional Research Service gives a good snapshot of the sector’s magnitude and impact.

Released in November, “An Overview of the Nonprofit and Charitable Sector” features lots of data and information about the size and scope of the sector and how it is funded, and about its relationship with government and key policy issues it faces.

“The nonprofit and charitable sector represents a significant, highly diverse component of the U.S. economy,” the report says.

Noting that President Barack Obama has “turned toward the nonprofit sector while seeking solutions to social problems,” the report says the economic downturn “increased the demand for many of the goods and services provided by charitable organizations, while simultaneously placing the same organizations under increased financial constraints.”

In providing an overview of the charitable sector’s relationship with government, the report says that, in theory, “economics suggests that the government should subsidize activities that are either public goods or have positive external effects.”

And it says it “can be argued that some charitable activities possess these qualities.”

The report also examines the costs to government of providing grants; allowing charitable contributions to be deductible; exempting investment income of charities from tax; and providing property and sales tax exemptions.

It also looks at government’s oversight role.

And it reviews key policy options affecting the sector, including increasing government grants and subsidies to charities; creating an oversight agency within the federal government to gather data, conduct research, and advocate for the charitable sector; implementing policies to help charities and foundations in economic downturns; and changing the itemized deduction for charitable contributions by limiting the deduction, converting it to a credit or making it more widely available.

Among data in the report:

• Over 1.5 million nonprofits are registered in the U.S., nearly 64 percent of them public charities, nearly 8 percent private foundations, and 29 percent other types of nonprofits.
• In 2005, the nonprofit sector overall employed 12.9 million people, or 10 percent of the workforce,
• From 1998 to 2005, nonprofit employment overall grew 16.4 percent, compared to 6.2 percent for overall employment in the U.S.
• In 2004, the charitable sector alone employed an estimated 9.4 million people, or over 7 percent of the U.S. workforce, plus the equivalent of 4.7 million full-time volunteer workers.
• Based on employment, the charitable sector is larger than the construction sector and larger than the finance, insurance and real-estate sectors combined, and it has nearly half as many employees as federal, state and local government combined.
• In 2009, public charities reported $1.4 trillion in total revenue and $2.6 trillion in assets, while private foundations reported $181 billion in revenue and $621 billion in assets, and other nonprofits reported $386 billion in revenue and over $1 trillion in assets.
• In 2008, a broad category of nonprofits known as “nonprofit institutions serving households,” a subset of the overall nonprofit sector, generated 5.2 percent of U.S. gross domestic product, or GDP, representing $751.2 billion worth of output.
• Nonprofits’ share of GDP grew 0.4 percentage points from 1998 to 2008, consisting of wages paid to nonprofit employees, the rental value of assets owned and used by nonprofits while providing services, and rental income from tenant-occupied housing nonprofits own.
• Charities raised $1.2 trillion in revenue in 2005, with fees or private payments for service accounting for 49 percent of overall revenue and government grants and contracts accounting for 29 percent; private contributions, return on investments, and other sources accounted for the remainder.
• Total revenue for charitable institutions grew 68.6 percent from 1995 to 2005.
• During the recession, from 2007 to 2008, charitable giving fell 2 percent in nominal terms, and 5.7 percent adjusted for inflation.

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  Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper that is a program of the Institute for Nonprofits at North Carolina State University in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

  Posted by Samantha Penabad

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Who Elected Us?

California State Librarian and historian, Kevin Starr, authored a piece in the Sunday, January 4, Los Angeles Times that raises an issue that periodically surfaces (beginning with the philanthropic activity of John D. Rockefeller and Andrew Carnegie) about the role of foundations vis-a-vis government in the policy arena.

Posted by Perla Ni

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Your reactions to “A Failure of Philanthropy?”

According to the article “A Failure of Philanthropy,” helping the poor is supposedly a main goal of philanthropy. Yet research shows that most charitable dollars do not go to serving the underserved.  The author, professor Rob Reisch argue that tax incentives and public policy need to change to ensure that more money goes directly to helping the poor.

What are your reactions?

Posted by Perla Ni

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The Public Will and the Public Won’t

A recent article by Rick Cohen points to one of the classic tensions between foundations and government and one of the possible downsides of Warren Buffet’s gift to the Bill & Melinda Gates Foundation:

In President Bush’s proposed budget for the fiscal year 2007, the administration justified proposed cuts in its small schools programme by citing the availability of funds for the same purpose from the Bill and Melinda Gates Foundation. That made a foundation programme, where the decisions are made by a few administrators and the foundation’s two trustees, a potential substitute for a federal government action. …

This happens regularly in the US. In the administration’s 2006 budget, the White House proposed terminating programmes to educate children about the dangers of obesity due to the availability of projects sponsored by Disney and the Nickelodeon channel, again substituting charity for governmental obligations …

Mr. Cohen has it exactly right.  I’ll wager half my tax return that today, in some foundation in this country, you’ll hear an exchange like this one:

Program Officer:  ‘The city has decided it’s going to discontinue funding transitional housing programs, so ABC, Inc. is requesting $100,000 to replace lost city funds.’

Foundation Executive:  ‘Why should we replace lost city dollars?  Transitional housing programs for low-income people are a public responsibility and should be supported by tax dollars.  If we make up the funding gap, we’ll only encourage city officials to stop funding other programs.’

There are several possible outcomes to this discussion.  The foundation might decide to fill the gap for a year, to give the nonprofit time to find replacement dollars.  Or, as often happens, it might decide to hold the line.  It’s then left as an exercise to the program officer to determine how best to communicate the bad news to the applicant, to explain a decision that begs a thousand questions.

I’ll leave it to historians to describe, for a given community, how the line of scrimmage between public and private responsibility fell where it did.  The question then becomes, how and under what circumstances does that line ever shift?

Here’s an example of how that game is played: Elected officials succumb to public pressure to cap or reduce taxes.  Smaller tax revenues mean less public support for safety net programs for the poor.  Foundations yell “foul” and refuse to step into the funding breach, claiming that foundation dollars should be used not for funding basic services, but for testing new ideas, supporting programs unpopular with individual donors, and other like purposes.

Foundations have a few plays of their own in this game.  Many will support nonprofit advocacy efforts to shore up or increase public support for safety net programs.  It’s now elected officials who cry “foul” and threaten to strengthen legal strictures on advocacy funding.

It’s an old contest and the balance shifts this way or that with the blowing of political winds.

Is it the proper role of foundations to plug the gaps created by retreating public funds?  Those who say yes will often argue along Libertarian or humanitarian lines: government should be smaller, say the former, foundations should not leave poor people in the lurch, say the latter.

But consider carefully.  Foundations are the mainstays of advocacy organizations that challenge government, big corporations, and the media on a range of issues.  And they are often the only funders to support causes unpopular with donors, such as services for undocumented immigrants, programs for returning prisoners, and legal services for low-income people.  Do we really want to tie up more foundation dollars in basic services de-funded by government?

Keep in mind that total annual foundation giving in the United States is about $30 billion.  By my estimate, this entire amount would be swallowed up just by the operating expenses of the 50 largest nonprofit hospitals (and there would be another 2,800 such hospitals waiting in line).*  Despite the sector’s sometimes inflated sense of self, foundation giving represents only 3.5 percent of all nonprofit revenues.  Re-purposing these funds—moving them, for example, from advocacy support to direct services—would have a large negative impact on the advocacy community but very little overall positive impact on nonprofit bottom lines.

Foundations that elect to stand firm should, at the very least, help de-funded organizations make the case for restored public dollars and/or help these organizations find new sources of support.  Foundations, in their treatment of grantees, should be setting the example for other funders.  This means making general operating support grants and grants to strengthen nonprofit infrastructure.  It means supporting an organization over several years to help it grow.  It also means never chopping an organization off at the knees by suddenly withdrawing funding.

Still, it’s the poor who ultimately pay for this game of brinksmanship between foundations and government.  Foundations can do little more than soften an often nasty blow.

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* As of 2004; data from nonprofithealthcare.com.

Albert Ruesga blogs on foundations, philanthropy, and nonprofits at White Courtesy Telephone.

Posted by Albert Ruesga

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Ownership Costs and Service Requirements

Presidential campaigns always seem to revive the debate about national service. Candidates, pundits, and we mere mortals again argue about its legitimacy and whether it ought be voluntary or compulsory. What usually gets missed, however, is the message that’s sent when the only price government asks us to pay is taxes and user fees. 

Most of us, I believe, want to live in neighborhoods, in communities, in societies where people care about one another. Whatever our political ideology, we want to see ourselves as compassionate and in some way as serving to help one another. Many of us learn an ethos of service—to be good neighbors, good citizens, good people, through our families and friends, through faith-based and other local institutions; but some of us don’t. 

Our schools have a role in teaching us about service. That’s part of the function of education; its purpose is to do more than try to develop our intellect and the skills we need for economic success.  Part of the role of schooling is to build character, to teach civics, to turn out good citizens, the kinds of people we want for neighbors. That’s why I think it’s as legitimate for schools to require service as it is for them to require reading, writing and arithmetic. It’s a way for them to teach and it’s something for them to teach.

Compulsory national service can also be, I believe, an important, legitimate, and reasonable expectation for citizens made by their government and by one another. If our only obligation is to pay taxes and user fees, then as citizens, we are reduced to little more than consumers of government services, to being government’s customers.  Rather, citizens are government’s owners—and owners know that in spite of your staff, every once in a while you have to roll up your sleeves, get in there, and do some hard work.

Whatever particular form it might take, mandatory national service changes the relationship between people and their government.  Rather than being passive consumers grumbling about what we do or don’t get for our tax dollars, or about the politicians from whom we feel disconnected, we’re more likely to demand accountability from elected leaders who are making decisions that affect how months or years of our lives might be spent in service to society.  As people become more immediately and personally invested in our communities, more engaged in the broader world through our direct labor, we’re more likely to feel vested in ownership of our government and to take it seriously. So, besides learning more about helping one another, actually building stronger communities and serving society, we’d become more active citizens. And that’s a good thing.

Let the debate continue…

Photo: Led by City Year corps members, volunteers paint a map of the U.S. on a playground in Harlem. (Photo courtesy of Jim Harrison)

Mark Rosenman is a public service professor at the Union Institute & University, where he has long worked in various roles. He sees his 20-plus years of initiative to strengthen the nonprofit sector as an extension of earlier professional efforts in the civil rights movement, urban anti-poverty work, international and domestic program development, and higher education.

Posted by Mark Rosenman

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Too Many Nonprofits

People wonder why nonprofits are proliferating these days, and complain that the field is too crowded. But it finally occurred to the Nonprofiteer that the main reason for nonprofit multiplication isn’t Baby Boomer solipsism or a revival of civil society or easy access to technology; it’s something bigger, something so huge and obvious it’s nearly invisible: the exceptional unresponsiveness of our contemporary political system.

Don’t you feel helpless?

We choose a Democratic Senate and House to end the war, and they go on funding it and complaining they can’t get Republican permission to stop. (Just turn the money off! How complicated is this?)

We believe in our Constitutional right to privacy, but the Justice Department and the intelligence agencies felt free to violate it, and the self-same Democratic Congress is preparing to grant immunity to the phone companies that helped them do it. (Could this possibly be because the chair of the Senate Intelligence Committee gets campaign contributions from the phone companies? Could it really be that a Rockefeller needs to sell us out for money?)

We believe we’re a civilized and law-abiding nation, but people are being tortured in our name. (Read that again: people are being tortured on your behalf.  How’s it feel?) The Congress passes a law prohibiting torture; the President signs and then says he doesn’t have to abide by it. A judge tells the Executive Branch to safeguard evidence of torture relevant to future trials; instead, it tolerates destruction of a highly relevant videotape and then tells the judge not to investigate and the Congress not to hold hearings (because they might interfere with the judge’s investigation - no, I’m not making this up).

We believe we live in a representative democracy with three co-equal branches of government but apparently nothing—not Congressional subpoenas, not orders from Federal judges, not elections of an opposition majority - can stop this Administration from doing exactly what it pleases; and no one will even say that these refusals to obey the law constitute high crimes and misdemeanors, let alone pursue the Constitutional remedy of impeachment for them.

The Nonprofiteer - wealthy, independent, with access to a public platform - feels helpless. How much more helpless do her fellow citizens feel? Is it any wonder they choose self-help? And, with the public purse apparently permanently closed to them for such frivolous purposes as buying school supplies, is it any wonder they create nonprofits and ask for charity to support them?

So let’s assume there are too many nonprofits - too many to be efficient, or too many for private charity to support. That’s a symptom of a cause so much more important and frightening that it makes “proliferation of nonprofits” seem like a joke problem, up there with “shortage of cloth napkins.”

And, for a little irony with your despair, consider that funders complaining about nonprofit redundancy represent the very agglomerations of private wealth that have pushed citizens out of the political system and into the third sector to begin with. No wonder it sticks in some of our craws to be expected to herald the new philanthropists and laud them for their bold engagement in grappling with social problems - problems they created for the rest of us themselves.

Kelly Kleiman, who blogs as The Nonprofiteer, is a lawyer and freelance journalist whose reportage and essays about the arts, philanthropy and women’s issues have appeared in the Wall Street Journal, Washington Post, Christian Science Monitor and other dailies; in magazines including In These Times and Chicago Philanthropy; and on websites including Aislesay.com and Artscope.net.

Posted by Jennifer Roberts

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