MALICE IN WONDERLAND

Class is in session.

Thought Leaders take your seats. Today we will discuss Giving USA. As Edith said on NPR this morning figures were released for 2010 showing $290.8 billion raised - up from $305 billion in 2009 that was corrected from $303 billion to $280 billion because IRS issued revised estimates and the model was tweaked because the recession was very bad. And now we will march to the new numbers and salute the new flag - until the next IRS correction and then we’ll remodel the model and next year we will raise more money! Patrick: SIT DOWN! Is everyone clear on this? So class the takeaway is more money was apparently raised last year than the year before but over the last four years philanthropy was smacked really hard. Thought Leaders you have to explain this all to your clients and they might care if they can stay awake and if you can convince them that it matters. What Leo? Yes the data are a national model and shouldn’t be used by a single organization to judge their results. It’s sad that one of your clients fired some benighted fundraiser because of this goosy data. That’s awful! Yes Rob: your group, Philanthromax, has algorithms for projecting data in almost real time while GUSA is retrospective – and you and they are $36 billion apart!!! - and you won’t be able to fall back on IRS numbers later. Whom should we believe? If GUSA issued numbers every two years IRS figures would be up to date even if they aren’t right and miss a lot of giving. Nancy we know you don’t believe in the algorithm but please raise your hand first! Thank you. These are verities: a robust stock market gooses giving. Religion books the most; individuals give the most; planned giving is either up or down; foundation and corporate giving is a modest percentage of all funds given. Thought Leaders drink the Kool-Aid. Henry what is it? You don’t like Kool-Aid. Even if it’s giving flavored? Henry, drink the bleeping Kool-Aid!

Board Beyond Belief

By definition a board is a long, thin wooden object.

Take for example the board of the City University of New York (CUNY) arguably one of the best public universities in the country and among urban institutions of its kind, it is without peer. By now as you have probably heard, unless you reside west of Newark, the CUNY trustees withdrew the award of an honorary degree to Tony Kushner after one trustee objected, opining that the Pulitzer prize-winning playwright is rabidly anti-Israel and therefore an unfit degree recipient. He offered this assessment intending it as an aside, an objection to be noted in the minutes but otherwise ignored. Oops.

Instead, proving that even a rubber stamp leaves an impression, the board - without deliberation - voted to deny the award an untoward turn given that honorary degrees at CUNY, as most schools, are normally approved more by rote and less by vote. The ensuing hullabaloo ended only when, we learned, the executive committee of the CUNY trustee board can rescind any decision made by the board. And so in the shortness of time it came to pass. The decision was scrapped, the award reinstated and, I believe, Kushner will show up and add one more to his already full deck of honorary degrees.

There may be fraud and other misbehavior at charities from time to time but it is really a rare event. By far loopy governance is the problem, over and over again. Why otherwise reasonable, mature, and thoughtful people seem to check their brains at the door when they join a charity board has long amazed we who toil in these places. But this example of goosiness is sui generis. Never before have I encountered a board setup that allows a committee of the board to rescind a board action. Though it is true that executive committees can often act for a board between official meetings it is also the practice that any such decisions must be ratified by the full body later.

I can only surmise that because the taxpayer-supported CUNY board is stacked with political appointees through an undisclosed process and with no apparent standards that are publicly stated allowing the executive committee (though chaired by the former president of Yale) a check on irrational behavior is an inherently upside down methodology but it worked. However the inescapable conclusion is that the board is indeed a wooden object. The executive committee decides. Like other boards this one is a parking lot for philanthropists real and potential. They may not be expected to act like a board but by law they are the legal stewards of the University. I guess.

Meanwhile there have been calls for this trustee, who has previously weighed in as Israel's lobbyist on the CUNY board, to step down. Among others the head of the CUNY faculty union has made this demand proving only that faculty unions have no more lock on sense than boards do. Odious as they might be this trustee's opinions are an expression of free speech if not to re-appointment in two years when his term expires.

"Not You Madam. The Attractive Woman To Your Left"

Giving USA ... The Good Gray Lady.

Giving USA, the annual compendium on philanthropy published since 1955 has long been the industry standard. With research and development conducted by its partner the Center of Philanthropy at Indiana University it is thorough, complete and has always maintained that it's the best estimate available based on IRS data. The major criticism of course is that Giving USA doesn't come out until six months after the year's close. Though it's not ho-hum it is sort of historical and less effective than a speedier output. We all live more instantaneously (than we probably should) these days; old information simply has less currency. The Holy Grail of information is expert knowledge, accuracy and speed. Giving USA is two out of three.

For the third, speed, there's an attractive newcomer on view. Philanthromax, the brain work of two Texans and, they say, an army of academics has developed a proprietary algorithm set that reports philanthropic data in what is real time in this business: monthly. They've been in business since August 2009; CEO Rob Mitchell told me their model enables them to to have data back to 1969. I hadn't heard of them until an article appeared in Chronicle of Philanthropy a few weeks ago.

I am not an economist. Like most of you I am an avidly interested consumer of philanthropic data. Long ago I had a second undergraduate minor in economics but decades past lost whatever skills I had to analyze data like this. So I got in touch with Philanthromax. I wanted to know how their monthly estimates comported with actual Giving USA data. Their CEO, Rob Mitchell, responded with this chart. I don't have the skills to vet this. I also asked Patrick Rooney for a response and what I got was a "Key Points" .pdf circulated by the Giving Institute's new executive director Geoffrey Brown. It's SOS, all stuff the members have heard before; it doesn't respond in any way to Philanthromax.

Rob Mitchell also said "we are in the process of building sector (religion, health, arts, etc) and source (individual, foundation, corporation, bequest) and geography (state and region). Because of the way the algorithms work, we can build data for the last 4 decades and more importantly, provide a reliable forecast for the coming months. Perhaps the more practical application is that we are able to build Atlas customized forecast algorithms for individual organizations and groups of organizations. This enables very accurate budgeting and now, for the first time, organizations can make decisions about the timing of fundraising campaigns and promotions that will produce better results.”

Professional skeptic that I am everything here is retrospective – not yet real time. Keep a sharp eye on the 2010 estimate!

Here's the (unverifiable by me) data. Giving Institute's Summer Symposium is coming up. I'd like to hear Rob and Patrick discuss their methodology.

Year		Giving USA		Atlas of Giving		Variance
2006		295.33		295.86		0.18%
2007		314.07		317.53		1.10%
2008		307.65		313.83		-2.01%
2009		303.75		304.79		-0.34%
2010		?		323.86		?

MARILYN HOYT'S LATEST PHILANTHROPY ROUND-UP

With Marilyn's permission:

Lots of national trends emerging as we "climb the wall of worry" out of the Great Recession. Thanks to everyone who shared local nonprofit trends as I worked across the country this quarter.

2008-2009-2010:
In order to maintain consistent grantmaking, many private and corporate foundations set their 5% federally required grant payout based on a rolling 3 year average. So the dates in this hed tell us why we are not dancing in the streets yet. That said, we are seeing grantmaking begin to strengthen this year. An even more hopeful sign is the renewal of new foundation start-ups. From last June to now we've seen the total foundation number move from about 98,000 to 102,000. So....by 2012 when 2008 drops out of the equation for setting grantmaking, we should see more monies being granted overall by more foundations. More trends info at: http://foundationcenter.org/gainknowledge/research/pdf/nrc_survey2010.pdf

Tending wounds stealthily:
Anxious to appear as healthy partners as grants and gifts in all donor sectors excepting government start to grow again, we are still tending the institutional wounds of these past years. Lay-offs and workweek cuts continue quietly...often disguised as "early retirements," or "desire to work part-time." Since senior management is most likely to retain their furlough days while releasing lower paid staff back to full-time work, I'm hearing employees complaining that they don't see enough of their Directors.

Some of us are merging, but more announced mergers seem to falter and fall through. (Unfortunately, the word on the street is that the new merged agency is likely to end up with the grants that only one of the two got before. And whichever one gives up its well-branded name, may find the loss of many traditional donors)

On the other hand, it looks like there is a trendlet of winning additional funds via collaborating to offer more comprehensive and/or higher volume services by working together. (Think about one agency simply subcontracting to the other for services. The form of collaboration saves fortunes of monies in comparison to the endless meetings needed to form genuine -- and likely unnecessary - consensus on all activity by both agencies.)

Failure:
From the Harvard Business Review to our conferences to the airwaves, we are talking about failure. "Failure is the new success." Well -- sort of. If this is an area of interest to you, send your snail mail address to me at hoytmarilyn@gmail.com and I'll send you a mini-library of sane, well-founded articles on how to assess failure, set up a logic model for circumstances in which failure could be acceptable or anticipated, and how to keep it from wrecking your career or your institution.

The Music is Playing
Ever since this quarterly began two years ago, we've been anticipating the huge staff turnover that comes after a big recession. Now the musical chairs are s well underway at the most senior levels. Recruiters, who generally work with positions in salary ranges at $100k+, are hyper busy. A salary survey covering nonprofits in New York, New Jersey and DC sees both increased recruiting and higher salaries. (http://www.nonprofitstaffing.com) And a Crain's New York 3/14/11 notes that that 87% of U.S. workers are seeking a change.

Now is the time to sit down with valued employees and tell them how much they appreciated...and look together to their career future at your agency. Promotions and job changes don't have to start right now, but they need to be anticipated formally in order to retain your most valuable and ambitious staff.

Now is also the time to refresh those operating manuals and simple cheat sheets that show how things are done in your area of responsibility. Operational effectiveness is hard won. Don't lose it with staff change. Likewise, your donor database or even hard copy files should have notes on interactions with donors, their relationships, past delights and squabbles...and, of course, a history of pledges and gifts, asks and reports. Don't leave this all in the head of a bunch of key staffers who may be going (or being pushed) out the door....

Reading that helps us work more effectively: (e-mail hoytmarilyn@gmail.com with your snail-mail address. I'll respond with a mix of e-attachments & hard copies depending on what articles you pick)

Thoughtful round-up on thinking about assessing return on social media investments

January and February articles regarding Women and the Glass Cliff (includes a really interesting stuffy on hiring patterns of women vs men CEO's depending upon the health of the hiring company)

A reminder that when we accept large gifts, we also accept duties of loyalty. This article covers Geoff Canada's testimony in support of Raj Rajaratnam as part of the Galleon fraud court case.

Good charts from a March study on how nonprofits view current finances and the actions they've taken to cope.

Marilyn is at hoytmarilyn@gmail.com.

DISASTER FUNDRAISING: FUNDRAISING DISASTER?

New York Times reporter Stephanie Strom wrote this morning (March 16th) that "[m]any groups are quickly raising money in the aftermath of the disaster without really knowing how it will be spent." If the groups don't know how can the donors?

Where have we seen this before? The so-American impulse to respond philanthropically to the disaster de jour without taking time to follow the thread is once more eclipsing rational judgment. No one can deny the immense loss of human life and of community in Japan; capped by a nuclear meltdown it is surely among the worst events of recent times. I am moved by the profound suffering and by the irony of two major nuclear events in recent Japanese history. But I must admit that my first reaction was not to reach for my wallet.

Charities are in business to raise money and - one hopes - to provide services. The unseemly rush to get in the game - Google "earthquake" or "tsunami" - without much regard for what the government of Japan says it really needs is to feed the notion that every problem can be solved if you throw enough money at it, especially without having to think much about the end result.

It does appear that Japan has the resources to deal with the immediate relief crisis. What I have seen after looking at the story of multiple disasters is that the cameras pan away, the reporters leave, the charities beef up their reserves and the long term, prosaic, not very dramatic work of reconstruction and rehabilitation is generally ignored. Does anyone remember that the earthquake in Christchurch NZ was just a few weeks ago?

Disasters are visual, dramatic and anyone with a mobile phone can text a $10 gift to an established charity. Online there are a plethora of organizations of whom no one has ever heard. Millions of dollars will likely pour in - though it does appear the take will be much less than for Haiti where I have read much of the money raised has not been spent. Watching Bryan Williams last night on a "special edition" of the evening news was instructive. First visuals and stories of horror and then cut to a commercial for being sure you're ready when the moment is right.

I'm ready but maybe not for this moment.

Licensing: Is It Time?

"A License to Shampoo: Jobs Needing State Approval Rise"
--Wall Street Journal

Wall Street Journal reporter Stephanie Simon writes that in 2008 23% of American workers needed a state license to do their jobs. (She was quoting data from Morris Kleiner at the University of Minnesota). Conspicuously absent from a list that includes - as she says " ... cat groomers, tattoo artists, tree trimmer and about a dozen other specialists ..." are "professional" fund raisers.(I put professional in quotes because there is considerable confusion and controversy in deciding who is or is not a "professional)."

The industry's long-time position has been that self-policing is an effective constraint and that licensing is not required. For many years I shared that view. As matters stand right now all the states have some sort of registration requirement for consultants, "professional solicitors" and fund raisers. But no state licenses fund raisers. Yet. Legislation has been introduced in New York state from time to time but has always been killed when the lobbyists checked in.

Putting aside the states' thirst for new revenue sources in the face of shrinking tax collections is licensing fund raisers an idea whose time has come? When I look at professions that are licensed - such as law, architecture, medicine, real estate, securities etc. it is difficult to conclude that licensing assures either competence or honesty. Why would it be any different in this instance? The Association for Professional Fundraisers (AFP) encourages all its members to "certify" by passing an exam and renewing credentials every three years. But only about 20% of the members do so - a datum that has been remarkably consistent since the certification program was introduced a few decades ago.

Medicine requires a state license and board certification for specialties (the boards' pass rate hovers at about 90% so the rigor of boarding is open to inquiry). In law and other fields continuing education credits are a mark of keeping up with one's profession but still voluntary as I understand it. Thus certification or boarding to some extent serves as a form of self-policing and augments licensing which is not a choice but a requirement for professional practice.

So if professional fund raisers were licensed would it make any difference? As a matter of practice I don't think so. Embedded mediocrity would still obtain as it does now. But as a signal to the public that you or I have met some standard external to self-policing licensing might have weight. And as the WSJ article suggests licensing would "... box out competitors."

Given the regulatory environment - and I know New York best as sub-par, bureaucratic legalism without forethought, and the appearance but not the reality of protecting the public from scammers, crooks, cads and other low life - the idea of the charity bureau writing up and enforcing the licensing of fund raisers and consultants in the field is just plain scary. But there are many thousands of men and women in New York alone who work full or part time as "fund raisers," a potential honey pot of dollars likely to be far more remunerative than the tribute collected from tree trimmers, cat groomers, barbers, undertakers and what all else.

The largest cohort of licensees in New York (and everywhere I guess) are of course drivers. In New York City if you believe a driver's license protects the public you best up your meds. I do believe licensing of fund raisers is coming. May the public beware!

WHAT'S AHEAD?

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: http://foundationcenter.org/pnd/

**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: http://mediaroom.bankofamerica.com/phoenix.zhtml?c=234503&p=mediaMention&id=394026

**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: http://www.czs.org/czs/HappyHolidays

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. http://www.nytimes.com/2011/01/16/jobs/16career.html

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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 hoytmarilyn@gmail.com]