Some Interesting Numbers

In 2008, as reported by the National Center for Charitable Statistics, there were 947,274 nonprofit 501 c (3) organizations in the United States registered with the IRS, but only 343,169 had annual receipts levels above $25,000, leaving 604,105, or 64%, the overwhelming majority, as small organizations.

Giving Well

In a follow-up to yesterday's post, I found a reading from Seneca in a marvelous book, Giving Well, Doing Good: Readings for Thoughtful Philanthropists, that was complimentary to it.

An excerpt.

“Among the numerous faults of those who pass their lives recklessly and without due reflection, my good friend Liberalis, I should say that there is hardly any one so hurtful to society as this, that we neither know how to bestow or how to receive a benefit…As it is, virtue consists in bestowing benefits for which we are not certain of meeting with any return, but whose fruit is at once enjoyed by noble minds. So little influence ought [the anticipation of return] have in restraining us from doing good actions, that even though I were denied the hope of meeting with a grateful man, yet the fear of not having my benefits returned would not prevent my bestowing them…

“…The book-keeping of benefits is simple: it is all expenditure; if any one returns it, that is clear gain; if he does not return it, it is not lost, I gave it for the sake of giving. No one writes down his gifts in a ledger, or like a grasping creditor demands repayment to the day and hour. A good man never thinks of such matters, unless reminded of them by some one returning his gifts; otherwise they become debts owing to him.” (p. 77)

Needing to Give

A surprising element of the human service charitable sector—who receive much of their funding from government—is realization that there is value on both sides of the individual donor equation.

That to the receiver is obvious, but that to the donor is less so, and this value is important to understand, especially for nonprofit organizational leadership.

The book I’ve been reading, Who Really Cares: The Surprising Truth about Compassionate Conservatism, remarks on this:

“But the value of charity is not limited to those who receive the services that giving makes possible. The evidence in this book shows that charity unleashes enormous benefits not only to the givers themselves but also to their families, communities, and the nation. Everyone understands that charitable organizations create value by providing for the needy. What many organizations misunderstand is who the “needy” truly are. In addition to those in need of food, shelter, education, the needy are also those who need to attain their full potential in happiness, health, and material prosperity—which is every one of us.

“To give away money is an easy matter and in any man’s power,” Aristotle said. “But to decide to whom to give it, and how large, and when, and for what purpose and how, is neither in every man’s power nor an easy matter.” This is a problem almost everyone faces when thinking about charity. Rockefeller solved the problem by hiring a brilliant manager to administer his “scientific philanthropy.” Most of us rely on reputable charitable institutions to steward our donations properly to create the social value we seek. Charitable causes—for the most part, nonprofit organizations in the United State and Europe—therefore have a crucial role in the prosperity of our societies: They are the conduits between those who need services and those who need to give. I’ll go even further: For a nonprofit organization to pass up a donation, or to neglect to raise private donations, is tantamount to leaving a person hungry.

“Do most nonprofit organizations comprehend this? Apparently not. Consider the data on social welfare nonprofit organizations in the United States in 2002. Approximately 35,000 in the areas of human services—services for the poor, the disabled, and so forth—have annual revenues above $25,000. of these organizations, 19 percent do not receive any donations. Even further, 65 percent say they do not spend any money at all to raise funds.”

Technology Helping Charities

Online giving is still in its infancy but developing into a powerful tool when used well, as this story from the Sacramento Bee reports.

An excerpt.

“No longer just a device for idle chatting and "American Idol" voting, text messaging has emerged as a powerful tool for social good.

“In just two weeks since a disastrous earthquake struck Haiti, people across the globe have texted more than $33 million in relief donations through their mobile phones, $5 and $10 at a time.

“Charities have found success in recent years using Web pages, e-mail appeals and social networks such as Facebook and Twitter to solicit donations and volunteers.

“But few anticipated the impact of the Haiti "mobile giving" phenomenon, the most successful such campaign in American history.

"It's astounding what has happened," said Trista Jensen of the Sacramento Sierra chapter of the American Red Cross. "It's like nothing we have seen before."

"Mobile giving" made its debut in the aftermath of the Asian tsunamis five years ago, and was used to raise funds after Hurricane Katrina, said Verizon Wireless spokesman Chuck Hamby in Florida. Those efforts netted about $400,000.

“Since then, "texting has really taken off, and people are comfortable with it," said Jensen.”

Nonprofit Leadership Support

The James Irvine Foundation reports on the support its leadership program has provided during the current troubled financial environment for nonprofits.

Education and training are vital for the nonprofit leader under any circumstances, but especially crucial when the circumstances become trying, and funding sources that provide them are acting on a basic and sound element of philanthropic investing—helping ensure your funds are used wisely.

An excerpt.

“When the financial crisis struck in the fall of 2008, Jan Karlin was in the middle of her two-year grant from Irvine’s Fund for Leadership Advancement (FLA). Karlin had had great success as cofounder and executive director of Southwest Chamber Music in Pasadena. The ensemble had won two Grammy Awards, been on three world tours in the previous four years, and secured federal funding for the largest-ever cultural exchange with Vietnam, sponsored by the U.S. State Department.

“As an organization, we were looking at what we could do next,” Karlin says. “I thought the FLA grant would help move us to the next level.” Karlin used FLA funds to hire an executive coach, take seminars, and boost the capacity of her staff and board to help realize the vision she was creating. “So by the time the recession hit, we had a lot of things in place to be able to weather the recession,” Karlin recalls. “I won’t say it’s been easy, but I don’t think we’re in any danger as an organization.”

“Launched in 2006, the Fund for Leadership Advancement was designed to help the executive directors of selected Irvine grantee organizations improve their leadership skills, so they can be better equipped to take advantage of growth opportunities. The fund was specifically not intended to help organizations respond to short-term crises. But as the recession has unfolded, many FLA grantees are finding that the program’s leadership support is helping them remain focused on the organization’s longer term goals in the face of momentary challenges.”

Deceptive Fund Raising

Fund raisers—often using deceptive or misleading tactics—that take an inordinate amount of the money they collect, leaving little for the nonprofit organizations in whose names they raise that money, and their tactics often corroding the organization's good name in the community, are a bane on the sector.

This story from the New York Times reports on the efforts of the state government to regulate this practice and it is welcome news.

An excerpt.

“The telephone solicitor for the local Police Benevolent Association was polite at first, but when Toby Morse explained that she had decided not to give money this year, his tone shifted. He read aloud her address and wondered how sturdy her locks were. Over the following weeks, she received dozens of phone calls at all times of the day to press her for donations, including one from a man pretending to be a police officer.

“On Wednesday, a year after Ms. Morse reported the harassing phone calls, the state attorney general’s office announced that it was suing to shut down four telemarketing companies in New York that provide fund-raising services for nonprofit organizations.

“The companies…were accused of repeatedly breaking state laws that make it illegal to use deceptive or misleading tactics to do fund-raising. The lawsuit follows a six-month undercover investigation.

“It really leaves a bad taste in the mouth of people who do like to donate,” said Ms. Morse, 40, a state court officer who lives near Poughkeepsie, N.Y.

“The attorney general, Andrew M. Cuomo, said the companies undermined the faith of philanthropically inclined New Yorkers. He noted that the companies, all of which are for-profit, kept 76 percent of the money they ostensibly raised for charity.”

Strategic Planning

For generations the multi-year strategic plan was a standard part of the well managed nonprofit’s resume and indeed, many funders actually required one to be in place before awarding funds.

While that aspect of strategic planning may not change soon, the reality of relying on strategic plans to navigate the future are not as important as well-versed executives in tune with what is going on now, and able to discern short and long-term philanthropic and program trends; an executive perspective always crucial to organizational strategy.

This article from the Wall Street Journal, while focusing on business, concerns nonprofits as well, for the ways of the world today, impacts all sectors.

An excerpt.

“During the recession, as business forecasts based on seemingly plausible swings in sales smacked up against reality, executives discovered that strategic planning doesn't always work.

“Some business leaders came away convinced that the new priority was to be able to shift course on the fly. Office Depot Inc., for example, began updating its annual budget every month, starting in early 2009. Other companies started to factor more extreme scenarios into their thinking. A few even set up "situation rooms,'' where staffers glued to computer screens monitored developments affecting sales and finances.

“Now, even though the economy is slowly picking up, those fresh habits aren't fading. "This downturn has changed the way we will think about our business for many years to come," says Steve Odland, Office Depot's chairman and chief executive.

“Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: "Strategy, as we knew it, is dead,'' he contends. "Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future."

“Companies have long planned for changing circumstances. What's new—and a switch from the distant calendars and rigid forecasts of the past—is the heavy dose of opportunism. Office Depot stuck with its three-year planning process after the recession hit, largely to make sure employees had a common plan to rally around, Mr. Odland says. But the CEO decided to review the budget every month rather than quarterly so the office-supply chain could react faster to changes in customers' needs.”