Nonprofit Harvest

Unhappy New Year?

Unfortunately, the start of this year doesn’t feel bright and shiny.  We’re worrying about survival and how we can maximize our impact with limited resources. How can we respond to the challenges of 2009?

This is not the first challenging time the nonprofit community has experienced.  However, even if this economic crisis is not different, it feels different.

The folks at Blue Avocado have hit the nail on the head with some outside the box thinking, And Now for Something Different About Nonprofits and the Economy 1/1/09.    I suggest you read the full post, but here are my two favorite suggestion (the bold italics are mine):

1. Declare an emergency. When people have permission to think and act out of the normal grooves, they can be bolder, more creative, energized, or at least more ready to accept changes. So say it out loud: “We are in an emergency period (or we are going into an emergency period). Our funding looks okay through the next four months, but there’s a good shot we’ll get some bad news starting then. We need to start making changes and coming up with some contingency plans that go beyond what we’ve done before.” An emergency doesn’t mean people should panic . . . an emergency means considering the bold and wacky ideas that are either brand new or used to be off the table.

3. Do less with less. Of course there is more need, more demand, and we probably have less money. And we love the gritty heartfelt nature of the cry, “We need to do more with less!” Pause. But it’s not only unsustainable, it probably means you will be able to do even less in the future. If a program’s funding has been cut by 30%, you may need to do 30% less. The best decision may be to be open fewer days a week, hold fewer performances, or stop taking children over 5. On the other hand, working harder might be necessary, at least for awhile, but only if it’s to get to a different business model.

What I like about both of these suggestions is their honesty. We have to be honest with ourselves about what we can accomplish. The same old tactics (not to mention expectations) are not realistic.  2009 will be a time of change, because it must be.

Nonprofit and Foundation Resolutions

Speaking of change, what are your New Year’s Resolutions?  Here’s my response:

Our #resolution? To help nonprofits manage & adapt to changing circumstances - we’re using all our tools, incl social media #npecon #npfin 

To get you thinking, here are some resolutions from others in the nonprofit community:

• 2009 Resolutions for Foundations from New Voices in Philanthropy

• Ten Resolutions for the New Year from Leading By Design

• Cheers to the New Year… and its Resolutions from the Case Foundation

For more resolutions, check out Philanthropy Potluck.

2009: A Year of Action?

Hopefully this will spark some creative thinking at your organization.  However, thinking outside the box is not enough. We must also take action to implement necessary changes.

There is an interesting discussion on facebook about nonprofits ability to act quickly and decisively. What do you think?

State Budget Update

• Pawlenty plans to cut funds for local governments

• Minnesota Budget Bites has the rundown on the unallotments: Ready, set,cut!!

• More from Budget Bites, House asking for your ideas on how to close the budget deficit

Here’s what the Minnesota Budget Project will be saying this session: State policymakers must take a balanced approach to the state’s budget deficit and avoid policy choices, like excessive spending cuts, that make the economic downturn more painful. The deficit is simply too large to take raising revenues off the table.

• Update: Pawlenty announces short-term budget cuts

• MinnPost asks Deficit spending: Why shouldn’t Minnesota do as the feds do?

But some are asking, what good is a balanced budget if it means widespread slashing and burning to eliminate jobs and services, especially in tough economic times?

• CBPP’s article on the long-term impact: Restoring Fiscal Sustainability Will Require Major Changes to Programs, Revenues, and the Nation’s Health Care System

While the long-term problem should not deter policymakers from dealing with the short-term crisis, policymakers will need to demonstrate to the public and the lenders who finance our short- and longer-term borrowing needs that they are prepared to move the budget toward a sustainable long-run path when the economy improves.

We encourage you to share your ideas with the Minnesota House.  You can chime in about the federal budget and spending priorities on change.org and change.gov.

MCN’s Forum on the Economy

On Tuesday, MCN hosted a forum on the Nonprofit Fundraising and Economic Outlook in 2009.

It included updates from the 2008 MCN Salary and Benefit Survey, the 2008 Minnesota Nonprofit Economy Report, a new 4th Quarter survey of nonprofit fundraising, and the state’s November Economic Forecast.

More on the Forum

• Economic briefing for nonprofits offers some optimism, plus reality checks and strategies, for 2009 from Scott Russell at MinnPost

• Notes from MCN’s Economic Briefing from Philanthropy Potluck

•  Nonprofit Survival: A Special Broadcast on MPR’s Midmorning with Jon Pratt from MCN, Jim Farstad of Intermedia Arts and Melissa Brown, director of research at the Center on Philanthropy at Indiana University.

Read the Reports

• Nonprofit Current Conditions Report

• Nonprofit Economy Report

• The Economy and Charitable Giving: Special Briefing November 2008

Other Resources

• Blue Avocado brings you Twelve Blue Avocado Days of Christmas, our favorites:
  • Seven pairs of bad shoes
  • Two unbalanced budgets

• 20 Emergency Funding Sources for Nonprofits from Fieldstone Alliance

• Kristin Giantris of NFF offers advice in the New York Nonprofit Press Dec. 2008 issue.

• Join the Discussion: Service Response

Paul Schmitz, a member of the Transition’s Innovation and Civil Society Team, kicked off the Change.gov discussion on service by asking to find out more about the social causes and volunteer efforts making a difference in your communities.

Consider the Equity Ethic

Last week, Clara Miller wrote a piece in the Financial Times, More from non-profits now means less in future.  In her article, she cautions against the urge to do “more with less”:

Board members, donors and managers in the social sector will need to summon their courage and embrace an “equity ethic” to ensure that they and the organisations they support will be able to stay the course for the people who need them. To do so, they will need to tame one of their strongest impulses: to do more.

Asking how we can do more with less is a familiar refrain. The Chronicle of Philanthropy recently hosted a live discussion on this topic.

Here is Kate’s take:

I think that we need to challenge the basic question. Is it realistic to expect that nonprofits will be able to “do more with less”? I think that many nonprofits need to ask how to effectively “do less with less.” A strategic question is what programs to keep, and to do them as efficiently and effectively as possible, and what programs to exit, close, or transfer to someone else.

Nonprofits are in a difficult position.  Demands are rising, and organizations are struggling to keep pace.  In this climate, how can we have an honest conversation about capacity?

Perhaps, that is also the wrong question.  What are the consequences if we over promise and under deliver? 

Where does that leave us?

For some ideas on how to make tough choices, consider that “If you have to trim, always trim back to your mission.”  Here are some additional sugggestions from Clara Miller’s article:

• Keep an eye on reimbursement rates as the workload increases. The government pays non-profits less than a dollar for each dollar of services provided (such as foster care, health education, financial counselling), and as some non-profits increase their workload, they dig themselves deeper into a financial hole. Non-profit contractors often accept these “underwater” prices because they cannot bear to turn away those in need.
• Raise capital to fund change. If you need to grow, downsize, merge or simply become more efficient, capital is needed in addition to revenue.
• Difficult times inspire creativity. We have seen non-profits invest in technology that streamlines fund-raising, work “virtually” to reduce office space and/or travel expenses, and merge services or operations with like-minded organisations.

NFF also has a resource article, Navigating the Financial Crisis: A Nonprofit FAQ.  It includes information on what constitutes a recession, how the economy might impact the nonprofit sector, and tips for managing your organization during this time.

In The News

• Economic Crisis Calls for New “Social Contract,” Charity Head Says from Chronicle of Philanthropy’s Government and Politics Watch

The severity of the nation’s economic crisis has created an opportunity for charities to transform the way they work with the government as a new administration and Congress take shape, Larry Snyder, president of Catholic Charities USA, said today.

…He said public officials should draw on the expertise of charities to design social programs, exploring “a new way to work together, a more mutual thing, rather than simply government throwing funding out and all of us scrambling for it.”

• Princeton Legal Battle Raises Questions from Give & Take

• The Future of Corporate Philanthropy by Alyson Warhurst for Business Week

• Charity donation decline gives rise to innovation (hat tip: CNM’s post Economic Crisis Spurs Innovation)

• Some charities see good news and bad in the economy from MPR

From the Blogs

• Foundations’ Role in a Tough Economy from Social Velocity

[I]t is not just about foundations.  They are only part (and a very small part) of the resource engine that drives the social sector.  The entire way in which the social sector is capitalized needs to change.  We need to put a financial priority on the solutions that the social sector is coming up with.  Those solutions need to be scaled and made sustainable. And adequate capital (from all sources) is the only way to do that.

• Strategic Philanthropy in Tough Times from Paul Brest

[W]e need to ensure that the best organizations — those that are delivering real outcomes — weather the storm. We’re not going to be able to salvage them from the bottom of the sea after the storm is over. On the other hand, we shouldn’t use precious assets to keep poorly managed organizations afloat either.

• My Social Entrepreneur Identity Crisis… And, Philanthropy is Sustainable from ForImpact’s Daily Nuggets: Blog

• Is Generosity a Luxury Good? from Sasha Dichter

And now for something completely different

I am an avowed social media geek. You, however,  may not be.  So I want to tip you off to something very cool that’s going on. Allison Fine and Marnie Webb have launched GiveList, and trust me, you want in on this:

Times are tight. We know, we know. We’ve all seen the scary headlines. Too many of the scary headlines. And we’re all feeling the pressure in other ways too. But, still, we want to contribute what we can to making the world the better place. The GiveList gives you ideas and inspiration for just that: ways that you contribute without spending or buying. Or maybe giving while buying and spending a little less than usual. There are lots of small things you can do that don’t cost you anything that can make a big impact on communities. And you probably have some thoughts on this. Share it on del.icio.us, via twitter, in your own blog post. Just tag it GiveList and we’ll share help you share your idea with the world.

As nonprofit financial leaders, we offer a unique perspective.  While we’re gathering resources and ideas on how organizations can manage during this challenging time, we can also think about how we all can maximize our impact with the resources we do have.

What are your GiveList ideas?

For people interested in how technology can help us understand and respond to the economy, the Foundation Center is using data mapping to illustrate what foundations are doing:

As you can see from the screenshot, you can sort the data by fiscal year, state, or recipient type.  It’s important to note that this includes grants and PRIs or program-related investments.  (Kate describes the benefits of PRIs in her post, Hidden gems of foundation funds.)

For more information, read the announcement on PhilanTopic.  Their intent is for the map to evolve and accurately reflect foundation giving:

New grants will be added to the map on an ongoing basis to provide the most current picture of foundation giving for programs and issues relating to the economic downturn. Grantmakers are encouraged to send announcements about their grants or PRIs to Matthew Ross at mr@foundationcenter.org.

Do you know what’s happening in your community?  Chime in!

Looking for some additional background on the budget crisis in Minnesota and across the nation?  Here are two useful articles to get you started:

• New York Times article Facing Deficits, States Get Out Sharper Knives.

• The CBPP has a number of useful articles, including States in Trouble Due to Economic Downturn and State Revenues Plummet.

How can you start assessing tough choices you may have to make at your organization? One idea is to think through possible state budget scenarios, and develop corresponding program and organizational budgets.

These resources provide additional information on budgeting for nonprofits:

• Annual Budget Planning

• Nonprofit Budgeting Process

• Annual Budgeting Planning: 10 Step Checklist

• Budgeting Nonprofit Income: Grants and Contributions

• Nonprofit Budgets Have to Balance: False!

• Is Your Budget Broken?

• Two Guiding Principles for Effective Budgeting

Related news

• Pawlenty upbeat about governors’ historic meeting with Obama but worried about the growing federal and state deficits

• Fitch changes not-for-profit hospital outlook to negative (Hat tip: Stephanie Jacobs, from Fieldstone Alliance)