Thursday, February 3, 2011


Friend and colleague Marilyn Hoyt sent this along yesterday. With her permission ...

Where are we now?

I. Trending up slowly

The Financial Times talks about the LUV Recession. Europe is the L, descending fast and then stabilizing and running flat. North America is the U, descending fast, stabilizing flat and now coming up. Asia is the V, descending and rebounding. The nonprofit sector always comes down later in a recession and then climbs back later too. I think we are all aware that we are in a slow traipse back from the abyss.

**New foundations grew by 5000 in the last half of 2010. This is great news. We now have more than 100,000 foundations, even after the mergers and spend-outs that marked 2009 and '10. And many foundations are beginning to report that they'll increase granting activity in 2011. To catch new RFP's, foundations and staff changes in your areas of interest, be sure you are signed up and have flags set to generate automatic mailings from Philanthropy News Digest:

**Corporate foundations are still struggling. However, corporate honoree galas are a bright spot in corporate giving. Have you recruited to your board to generate access to honorees? (See attached two 2010 Boston College studies on how corporations are thinking about CSR and the role of philanthropy in their policies and practices)

**Annual giving is really lumpy--recovering in some regions and not in others. Keep asking! And keep thanking! A person who sends $100 in response to a direct mail piece is worth getting to know.

**Major gifts, including mega gifts for spunky "new" ideas are popping up all over. Tough to manage at a time when we are trying to stabilize fundamental operations. Be sure to bake indirect costs into any major gift and any grant...."feed the baby" as my colleague, Eric Siegel, at the New York Hall of Science always reminded. Spotted by Cathy Sharp who works on Haitian issues as head fundraiser for H.E.L.P, here's the latest Bank of American/Indiana University study on high net worth individuals:

**Government overall is really stressed. BUT there are contracts, subcontracts through partner agencies and even restricted grants flowing at good and sometimes even unprecedented levels. Network like crazy and watch the blogs/newsletters/conferences/e-broadcasts in your field to avoid missing them. And if you don't have the core competence to compete, but do have the right service demographic, build a consortium of colleague organizations to make a competitive proposal. Build synergy to compete.

**Earned income is an increasing part of the income "pie" for many institutions. It's an area of income that's grown a lot across the sector during this rough time. Expenses needed to earn this income are also an increasing part of the expense "pie." It is unclear whether increased activities in this area are generating income to cover both their direct and indirect costs. Be smart. A new dollar earned is not a win if it cost $1.33 to bring in. (Cause related marketing? See the Cone study attached.)

II. Don't drive on 4 flats. Address damage to your institution even as you move ahead

Zombies and institutional failures, plus "faking it through extremis" (like closing a whole institution for a year in order to remodel one wing) are showing up everywhere....These news stories remind all of us to assess the damage to the fundamentals of our institutions and be sure that they are mended all along the way (Attached, 2 studies: 2010 NPO Job Loss report and 2010 October Guidestar projecting upturn)

**Since 2008 nearly 200 churches have been foreclosed on by their banks

**The business models of selected sectors, like orchestras, are under tremendous stress and we are seeing musician strikes, chapter 11 filings and even chapter 7 liquidations. If you are in a sector where this happening, it's worth some analysis. ("...never send to know for whom the bell tolls. It tolls for thee." John Donne)

**Universities, historical societies and some art museums continue to sell off collections in order to cover operating costs, and attornies general in several states including NY are looking into this departure from the American Association of Museums code of ethics. In some states, including NY, bills prohibiting this practice are under legislative consideration

**Likewise, endowment invasion is drawing attention by attorneys general in a number of states including NY. Legal firms are noting a rising business in "work outs" to review endowment contracts and identify which can legally be invaded

**Because traditional fundraising methods are not covering fundraising needs, there is a rush to unproven fundraising methods such as social media and heroic major gifts and endowment campaigns. We can look before we leap! Talk with your colleague network. Use Chronicle of Philanthropy and studies listed on the Foundation Center website to do the research.

------If your organization does not have a group of regular major donors and a broadstroke foundation directory online search shows only 4 foundations giving endowment grants for organizations like yours in your region, there is no endowment campaign.

-----Likewise, if your organization and even your sector has not traditionally won a high % of income from major gifts, this is a 10 year process, not help for next year.

-----Big bucks from the internet? A really mixed bag. Let me know if you are interested in data coming out on social media -- myth/vs facts. I have 2 good hard copy reports I'll be glad to mail you.

**More small liberal arts colleges are failing than we've seen for some time. And State universities are increasing a 10 year trend toward private fundraising to make up for government losses. Some states, again like NY, may dare to raise the idea of closing some schools. Department closings are already underway across the sector. Looks like tenure may be a tradition under challenge. Adjuncts, on the other hand, are beginning to recognize their importance and seek better pay and more work.

**Hospitals are closing, and another round of mergers appears to be underway in many large cities.

**Personnel benefits are under siege in the private, nonprofit and government sectors.

III. Fending off the next tsunami

**Anyone who works with corporations knows something of the web of subsidies, grants, tax credits, payment stretch-outs, tax deductions and outright grants received by the for-profit sector. This is a huge piece of their business model. However, because there are so many ways this is done and so many of them are obscure, public and even policymaker awareness of this support is low. On the other hand, the nonprofit sector's tax exempt status is uniform and visible. This is making our sector a target during hard times.

**Clawbacks aimed at nonprofits by starved governments are on the rise. We need to be proactive. Whether via direct use fees, taxes, abolishing nonprofit status or reducing/eliminating tax deductoins for our donors, we are under siege now and will continue to be.

**We are suddenly discovering that we've done a great job of talking about needs and our responses, but not done a good job of sharing the key elements that make this possible...nor even that every donor and contractor receives a "discount" on the cost of their desired services via the investments of other donors and contractors. We are the only sector that provides such incredible value to our donors and contractors. Here's one of the best "make the case" example I've seen....not a separate mailing or communication, but the case including in a communication prepared routinely -- the Brookfield Zoo holiday greeting. We all need to do what Brookfield Zoo (the largest public attraction in Illinois, as well as one of the great conservation organizations worldwide) did after they had to ultimately go to the State legislature and pass a law to avoid an onerous sales tax on admissions. Here's how they move forward in all their communications now:

IV. Thinking about your own next moves

**Many of us are recognizing that our own institutions will not be able to increase our department budgets or our salaries for some time. Although we understand that continuing important work with a place we love (and perhaps have seniority as a buffer against possible additional cuts), some of us want to move on.

**Many board and managers and employees have lost faith in each other through this period and some of us are being forced out

**Recruiters are seeing sharp rises in search contracts

**Job listing sites are also seeing sharp rises

**I am seeing a sharp rise in good, capable colleagues who take a new job and either leave or are out on their ear in less than six months.

**We need to be mindful of the realities of these recent years. Is the job you are looking at viable? Or is it an amalgamation of 3 jobs? Or are all the staff and financial resources needed to support it gone? Or is the institution convinced that things should be back to normal "right now" and it's your job to meet that goal? Where, by the way, do goals come from? If you aren't a part of setting your goals, you don't want that job.

**For those of us who've decided that as long as we are working all the time and kind of miserable, we might as well be working all the time and miserable at a higher salary -- so we are going for CEO. Here's a GREAT article on this topic from the New York Times on this subject.


Still reading? Here attached is some mind candy -- reports that rise well above the din and get you thinking. Open those that interest you.

2010 - May lecture on Zakat -- Muslim Giving in America

2011 -- Governing Magazine, what every department head needs to know

2010 -- Deloitte Survey of Worker Passion

2010 - January IUCN Gender and climate change training manual

This is not a time that makes us feel like great professionals. But actually we are. We are likely the best nonprofit professionals the planet as ever produced. Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better. Samuel Beckett.

Find Marilyn at]

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