Nonprofit  Trends (2)
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Nonprofit Trends (2)

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United Way\'s Center for Nonprofits created a presentation about upcoming trends in 2011 for which nonprofits need to be on the lookout. These trends can dramatically affect an organization\'s funding ...

United Way\'s Center for Nonprofits created a presentation about upcoming trends in 2011 for which nonprofits need to be on the lookout. These trends can dramatically affect an organization\'s funding and business practices. All information contained in this report was based on research that includes sources such as the Pew Report, the Nonprofit Times, and the Journal for Nonprofits.

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  • Decreased tax revenues, increased expenditures such as unemployment, drain coffers.A serious problem for nonprofits that receive government subsidies or reimbursements for federal programsStates will deny nonprofits money while at the same time looking to wring dollars from them
  • Government is seriously questioning tax exempt status Example – Harvard has a 20 billion endowment and many properties which are all tax free. In Boston, many nonprofits banded together and agreed to make voluntary payments to the state in lieu of taxes. A bill before the Hawaii Legislature, for instance, would require charities to pay a 1 percent tax, and Kansas is considering making them subject to sales taxes. Revoking the nonprofit organizations’ exemptions from property taxes is also under scrutiny in several counties in Kansas, as well as in Pennsylvania. And last fall, Minneapolis made charities subject to the fees it charges businesses and residents for streetlights in hope of gaining an additional $155,000, an exercise Jon Pratt, executive director of the Minnesota Council of Nonprofits, describes as “looking under the sofa cushions.” ex: $5,000 per street light in front of your building
  • The easy picking fruit (large grants and donors) is not there any longer, so the focus is turning to John Q PublicWhile some signs of an uptick in giving are encouraging fund raisers, overall giving isn't likely to return to its pre-recession levels until at least 2012 according to the scholars who compile Giving USA
  • Individual Donors Should Remain Your FocusIndividuals remain the single most important source of contributed dollars, even while individual giving fell an estimated 0.4 percent in 2009, to $227.41 billion (this equates to a 0.0 percent change in inflation-adjusted dollars). Charitable bequests were estimated to be $23.8 billion, a decline of an estimated 23.9 percent in 2009 (-23.6 percent adjusted for inflation). Foundation grant making by private, community, and operating foundations was $38.55 billion, according to the Foundation Center. It fell by 8.9 percent (-8.6 percent adjusted for inflation). It is reported that one-half of foundation giving is from family foundations- if you add that to individual giving it bring that us pt 89.5% of all giving.Corporate giving rose to an estimated $14.1 billion, up 5.5 percent (5.9 percent adjusted for inflation). This unexpected bounce takes corporate giving to within 1 percent of its pre-recession level.This tells us the focus is still on the individual, so connecting is important
  • The stock market is up, but giving is still down by 8%
  • Nearly 40 percent of nonprofit organizations currently lack adequate staff to deliver their programs and services, according to results of a national survey released July 14 by the Johns Hopkins University Center for Civil Society Studies. Almost a third of organizations reported net reductions in their work forces over the six months preceding the survey (October 2009 to March 2010). In contrast, 23 percent reported employment gains during the same period, and another 46 percent reported no change despite facing expanded needs.This comes on the heels of earlier cutbacks. In a previous Johns Hopkins survey, 34 percent of organizations reported eliminating staff positions, and 41 percent postponed filling new positions during the six months between September 2008 and March 2009. 
  • Recent studies show that a majority of our nation’s nonprofit organizations have an executive director who is 50 years of age or older and intends to retire or leave his or her position within the next five years.19 The most recent of these studies, conducted by the Annie E. Casey Foundation, revealed that 65% of the surveyed organizations expect to experience leadership turnover within the next five years, and that the executive director at 55% of the organizations was at least 50 years of age.20 These findings are consistent with previous studies which suggested that by 2007, between 61 and 78% of executive directors will leave their nonprofit organizations.21
  • That could be good news for giving: A majority of wealthy people polled by Bank of America and the Center on Philanthropy at Indiana University say they would give more if they knew their dollars were having an impact.Local example – Unum’s local donations to United Way and the Public Schools to create impact in the area of Education. No longer enough to say what you will do with grant money or dollars raised – must show measurable results and then justify the measurements
  • Who speaks for charities? Issues? Some of the most interesting technological advances have come as charities' most passionate supporters take on roles as unofficial fund raisers, spokesmen, and advocates for the causes through social media.A new national survey by the Pew Research Center's Internet & American Life Project has found that, overall, 75% of all American adults are active in some kind of voluntary group or organization, and Internet users — particularly social media users — are more likely than others to be active: 80% of Internet users participate in groups, compared with 56% of non-Internet users, and social media users are even more likely to be active: 82% of social network users and 85% of Twitter users are group participants. "One of the striking things in these data is how purposeful people are as they become active with groups," said Kristen Purcell, the research director at Pew Internet and co-author of the report, in a release. "Many enjoy the social dimensions of involvement, but what they really want is to have impact."Ultimately, the question is if there is a ROI with Social Media and what are the most effective uses of these new tools
  • "As the nonprofit sector professionalizes and the most successful for-profits recruit people with a drive to do something that includes a real public benefit, the culture of the sectors will look more alike. In twenty years the difference between nonprofits and for-profits may simply be their IRS classification.“Here’s another one that you can loosely file under “Government aid to newspapers,” even though there’s no money that taxpayers would fork over to newspapers. Maryland Democratic Senator Benjamin Cardin introduced a bill on Tuesday to allow newspapers to become non-profit organizations to help them survive.Cardin points out that this wouldn’t help big chains facing bankruptcy, falling advertising revenue or some combination of the two. Instead, it’s designed to let the little guys — the community newspapers — survive, he says.Starvation Cycle – as organizations, it is no longer enough to fund programs, but operations must also be funded in order for growth and development to take placeA lot of discussion about the fairness of Charity Navigator. Nonprofits need strong infrastructure too
  • Donors view themselves as investors, so organizations must communicate with, share with, demonstrate for and engage their donorsNew corporate structure called a “social benefit corporation” between a nonprofit and for profit. Can have investors/stock holders. Does not yet exist in Tennessee and not on the legislative agenda yet. Another new designation is a B corporation - a socially conscious, philanthropic, for profit organization that exists for the public benefit – newspapers, schools and nonprofitsProfessionalism – nonprofits using the tools of for profits – six sigma, lean operations, etc. Social entrepreneurship – nonprofits opening for profit businesses to help their clients – earned income Consolidation and disappearance of many national companies. Ten companies that may go out of business during 2011: Saab USADean Foods (makers of Land O’ Lakes, Morningstar and Silk Brands) Office DepotFrontier AirlinesSara LeeBordersGateway (Acer)Dollar ThriftyAnswers Corp.E*Trade
  • Nonprofits looking for engaged volunteers with a passion and ability to leadFundraising is just like a football – when you kick off we receive!In 2006 – Americans gave 296 billion. 15 % of gifts were assets, 85% cash. In 2006 Americans wealth was %15 cash, 85% assets. 85% of giving was from 15% of wealth in country!77 million baby boomers – 85% do not have a defined benefit plan. – In 1980, 67% of workers had a defined benefit plan. Only 5% of GEN X will have a defined plan…How will this affect us?Will not give away assets before we die. Wealth tied up – can’t count on social security, changing econ landscape, etc. But once we die…that’s an opportunity to leave a legacy.This is the first year baby boomers are turning 65, and it is expected soon that the greatest hand-off of wealth between generations is about to take place – approximately 140 to 150 trillion dollars. There is a saying that the first generation makes the money, the second maintains it, and the third spends it. Guess which generation the boomers are – oddly enough, the maintainers. So get the money now while it’s still there More for profits using nonprofits for cause marketing in their advertising – an attempt to do well by doing good.More nonprofits suing each other over brand infringement – Susan G. Komen Race now suing other organizations over the use of pink ribbons. However, this can backfire
  • Fiduciary – observing rules and approving budgetsStrategic – planning for the future, planning for success, planning for failure or disasterGenerative – a board’s most important duty is to ask the hard questions and make the hard decisions, including changing mission or closing doors. This was a big issue for museums in the 80’s and 90’s – but by changing missions, many museums survivedThe Museum of Fine Arts Boston – 10 million annual budget – approached to get 5 million a year if loan art collection to go to Bellagio resort in Las Vegas.

Nonprofit  Trends (2) Nonprofit Trends (2) Presentation Transcript

  • United Way’s Center for Nonprofits
    Trends in the Nonprofit Sector
  • Nonprofit Top “Trends” to Watch (Source: Philanthropy Journal)
    1) Governments in Crisis
    2) Strains in the Safety Net
    3) A Full-Court Press for Modest Gifts
    4) Grim Grants Outlook
    5) A Weakened Charity Work Force
    6) A Sharpened Eye on Charities
    7) Rising Donor-Charity Tensions
    8) Proving That Charity Works
    9) Volunteerism Is Cool
    10) A Stalled Online Revolution
  • Governments in Crisis
    Charities that rely heavily on government grants and contracts will find little relief in upcoming years.
    The National Governors Association's prognosis is bleak: States are in for a "lost decade," it says, thanks to the recession's severity, the projected slow recovery, and future demands to meet neglected needs.
  • Governments in Crisis
    Governments are increasingly eyeing potential “tax” revenue lost to them through nonprofit status
    Increased “fees in lieu of taxes” are becoming more common place
  • Strains in the Safety Net
    • While the economy is improving,
    the recovery from the recession is expected to be long and difficult.
    • Charities can anticipate a continued surge in requests for food, housing, and many other social services as people struggle with job losses and other problems triggered by the downturn.
    • The prolonged financial strains on individuals and families are also expected to lead to spikes in crime, domestic violence, mental illness, and substance abuse.
  • A Full Court Press for Modest Gifts
    As charities face cutbacks in state aid, as well as in grants from foundations and corporations, they are turning more intently to individuals — and focusing most seriously on small and medium-sized donations.
  • Charitable Giving in 2009
  • Questionable Private Grants Outlook
    • Although many foundations and corporations are seeing some recovery in investment earnings, they were hit hard by investment losses in the previous years, and many of the nation's largest foundations and corporations will keep giving at 2010 levels.
    • But as problems like hunger and unemployment continue, they will face greater public pressure to increase their grant making. Some foundations have said they may close at a point in the near future and spend the entirety of their assets in response to financial declines and the growing social needs.
  • Increased competition for a smaller pot of dollars
    • A Philanthropy Journal survey of the top 400 nonprofit organizations (in revenues) reported an expected median decline of 9%
    • The search for money to finance charitable work will grow more competitive than ever, as state governments and private foundations cope with coffers that have dropped sharply in value over the past two years.
  • Weakened Charity Workforce
    • Charities have laid off thousands of employees. Even workers whose jobs seemed protected have received pink slips, as Stanford University, one of the nation's most successful fund-raising institutions, laid off 50 staff members in its development office, and American Lebanese Syrian Associated Charities, the fund-raising arm of St. Jude Children's Research Hospital, eliminated 70 jobs.
    • Many nonprofit employees have left the nonprofit sector.
  • Weakened Charity Workforce
    This is compounded by the fact that many top executives in the Nonprofit sector are predicted to retire (60%) in the next 5 years
  • A Sharpened Eye on Charities
    The Internal Revenue Service is scrutinizing many of the nation's wealthiest organizations, and has undertaken wide-ranging efforts to make sure charity leaders and their boards serve as good stewards of tax-subsidized dollars.
    In Congress, lawmakers continue to seek ways to ensure that nonprofit groups justify their tax-exempt status.
  • Rising Donor-Charities Tensions
    As donors grow more inclined to specify how they want their contributions to be used, cash-strapped nonprofit groups will struggle to honor those wishes.
    Nonprofit organizations are purposefully moving away from designated funds
  • Proving that Charity Works
    Amid growing concern that donors have no way to know whether their giving makes a difference, efforts to improve how individuals pick and choose charities are gaining steam.
    Business savvy donors, led by foundations, government and corporate funders, are pursuing impact funding with measurable outcomes.
  • Volunteerism Becomes Cool
    Volunteerism and national service are getting high-profile attention, with both President Obama and the first lady giving the issue top priority.
    This year brings a shift in the conversation, from how to recruit more volunteers to how charities can better absorb and manage them.
  • A Stalled Online Revolution
    Blogs, Twitter, and Facebook allow nonprofit groups to connect with supporters, volunteers, and donors in a far more interactive, cost-effective way than ever in history.
    Few charities however, have figured out how to raise money using the new social networks.
  • The big picture – trends to watch
    Continued Legislative Reforms
    Impacting Nonprofit Sector
    Increased Taxation/Fees Imposed on Nonprofits
    Intense Media and Public Scrutiny
    Economic Strains
    Continued Discussion on the “Starvation Cycle of Nonprofits”
    “Forced” Collaborations and Mergers
  • The Big Picture – Trends to watch
    • Venture Philanthropy – Whats my ROI? Measurable Outcomes
    • Enlightened and Empowered Donors
    • Blurred Lines Between For Profit and Nonprofit
    • Encroachment of For-Profit Businesses
    • Increased calls for “Professionalism” of Nonprofits
    • Social Entrepreneurship
    • New Corporate/Nonprofit Structures and Joint Ventures
  • The Big Picture – Trends to watch
    Shortage of Nonprofit Staff and Board Leadership
    Increased Emphasis on Planned Giving
    Multi-tiered Fundraising Approaches – (Targeting more than “big” donors)
    “Cause” Marketing
    Nonprofits Protecting Their
    “Brand”
    Technology Revolution
  • Nonprofit Boards -
    • National trends – Governance as Leadership -Board needs to operate in three modes to support org. – NEED ALL
    • Most boards operate in fiduciary mode
    • Many move into strategic
    • Few are generative
    Source: Board Source
    Fiduciary
    Generative
    Strategic
  • Strategic and Generative Planning
    The true gifts a board member gives lie not in the answers to questions, but the questions they ask!