A few weeks ago, Blue Avocado published a great post about the value of Dashboard reports:

Imagine getting a dashboard like this at every board meeting. With a glance, board members could see how the organization is doing and start asking the important questions. The board would also be able to discuss what indicators should be added to the dashboard and which might not be necessary…

It’s hard to imagine driving a car without quick, ongoing access to a speedometer, fuel gauge, or gear position. An organizational Dashboard can be the same, fast way to check in on basics . . . so you can pay more attention to where you’re going.

It was a timely article, because we had just revamped our own dashboards.  We wanted to make sure we were giving the board and staff the most useful metrics about our finances, programs, and other work.  The end result is more useful dashboard for board and staff, but just was useful was a by-product of the process.  It forced all of us to take a step back and consider what information we’re sharing and why.

As the Blue Avocado article states, it doesn’t tell us where we’re going, but it provides critical information that allows us to focus on our work and the road ahead.  A tool that helps you cut through the noise and focus is a great asset.

For more on dashboards, read What Gauges Belong on Your Dashboard? or Seth Godin’s post, Dashboards.

Overhead

There is an interesting debate swirling about nonprofit overhead expenses.  Are they an investment in infrastructure,  money that could be better spent on programs, or something in between? Do donors care?  Should they?  This is Kate’s take:

Here’s my soapbox

I agree that it’s wise to “Do the same due diligence on your donations that you would your investments or your business.” But when I review an investment opportunity, I review based on the expected criteria for a successful business – profitability, market share, and returns. I don’t review their overhead and management costs. So why would overhead be the criteria for a charity?

…Do some due diligence on charities before you donate, just as you would for an investment or business opportunity. Pay especially close attention to how successful the nonprofit has been at achieving its mission. Do they provide information about how effective their programs are and what impact they have on the people and communities that they serve? Do they have a way to measure and communicate progress and/or success?

Join the conversation at Balancing the Mission Checkbook, facebook, or follow the example of Rich Cowles from Charities Review Council and blog about your position.

Late July Harvest

Mergers

• Joining Forces in the Back Office – Lodestar Foundation Resources
• Nonprofit mergers: Putting the best foot forward

IRS Updates

• IRS Releases Final Regulations for Returns of Small Groups
• IRS Training Materials – Governance

Other Resources

• Workshop Resources, Questions and Answers
• Nonprofit Leadership 601: New to Running a Nonprofit: Here’s an Overabundance of Resources
• Turning Crisis Into Opportunity: A Conversation With Two Nonprofit Sector Leaders

Crowdsourcing: What’s Working, What’s Not

A few weeks ago, Kate issued a call for “stories of change and transformation” and in the comments we talked a little bit about how we could leverage the power of our online community and crowd source this. I’ve had a few conversations about tools and tags, but before we jump into tactics, I wanted to ask:

• Is this happening elsewhere?
• Is anyone interested is collaborating on this kind of project?

Let me know in the comments.

On the heels of last week’s post on the Giving USA annual study, we have more data to digest. MCN recently released their Current Conditions Report for June 2009:

Minnesota’s nonprofits continue to be seriously affected by the recession. Nonprofits are bracing for extended impacts from the reduction in revenue they have already seen and expect to continue to see in the coming months and years.

• Organizations relying on state, local or federal government are seeing varying levels of unreliability in payments to them from government, making it increasingly difficult for organizations to plan accordingly. Exacerbating this is the threat of unallotment for many organizations.
• A majority of organizations report an increase in demand for services, yet many are still having to cut back on staff.
• All major nonprofit revenue sources (contributions, government funding, foundation grants, and earned income) are reported to be down from economic affects.
• Small organizations are feeling the worst affects, with far more reporting declines in revenue and cash shortfalls. Small organizations are also the least likely to have available reserves or a line of credit to fall back on.

These findings are echoed by other studies (here and here).  Although the specifics vary from state to state, and among organization type and size, people in our sector are doing their best to meet demands with fewer resources.

We are all trying to prudently cut costs in ways that minimize the impact on our mission and overall capacity. This is a tall order, especially when combined with increasing needs for service. How do you go about making those tough choices?

A Four Step Framework

Our executive director, Kate Barr and Judy Alnes of MAP for Nonprofits wrote an article for MCF’s Winter Giving Forum, Nonprofit Survival: Four Steps to Take Now:

Economic uncertainty and the threat of impending doom are not unfamiliar territory for nonprofit organizations. We’ve lived through multiple downturns and have “right-sized” ourselves time and time again. Philanthropic organizations have done likewise.

But something feels uncharted about this downturn. Perhaps it’s the fact that it has fallen on the heels of a downturn from which we never really recovered. Perhaps the global nature of the economic stress makes us see ourselves in a broader context. In any event, this fire is real and hot.

Then they lay out four steps to help you make decisions:

• Focus
• Identify Your Most Important Work
• Seek and Speak Financial Truth
• Review Size, Scope and Structure

Read the rest of the article for more information on this helpful framework.

Other Resources

• Improving Cash Flow Management In Challenging Times: A Primer from Nonprofit Quarterly
• Our Cash Flow Template and Nonprofit Scenario Planning Tools
• Nonprofit Layoffs and Furloughs: Do Them Right from Blue Avocado

More resources are available at Sustenance in Lean Times, our resource collection.

This Week’s Harvest

• Governor’s Unallotment Plan
• Check out the Nonprofit Quarterly’s Daily Digest – the Nonprofit Newswire
• Strategies for Hard Times: The Case for Sustainable Funding
• Charities Review Council unveiled a draft of their updated Accountability Standards
• Recession Resources for Artists and Arts Organizations

This week, Giving USA released their report on 2008 giving.  As nonprofits can attest, it was a rough year.  According to the study, total giving decreased by 5.7%, with donations down across the board.

• Individual giving: -6.3 percent
• Foundation grantmaking: -0.8 percent
• Corporate giving: -8 percent
• Charitable bequests: -6.4 percent
• Two-thirds of public charities experienced a decline in donations.

However, even in the worst economic climate since the Great Depression, charitable giving exceeded $300 billion.

Over at Tactical Philanthropy, Sean does some excellent analysis in his post How Much Did Americans Really Give in 2008?

So what’s the take away? I would say that the best way to think about charitable giving in 2008 is that it contracted sharply, but that the contraction was less than many people feared and the total amount given was within the range of the level of giving seen over the past few years. Giving as a percentage of GDP was 2.2%, within the normal range and very close to the 2.3% of GDP that was given in 2007…

Charitable giving behaved more or less as it normally does when the economy sours. This is, by most measures, the worst recession in a very long time and so we’re seeing charitable giving get hit. But it is only declining in line with the way it normally behaves.

As a reminder, if this recession is similar to other economic downturns, it will take the philanthropic/nonprofit sector longer to recover than the rest of the economy.  The Giving USA authors commented in a discussion hosted by the Chronicle of Philanthropy that this recession resembles the one in1974 , when took three years for giving to rebound.  However, they cautioned against assuming that this would be an accurate guide, noting the changes in the world and the nonprofit sector.

Related Coverage

• Charitable Donations Fell by Nearly 6% in 2008, the Sharpest Drop in 53 Years
• Charitable Giving Fell by 2 Percent in 2008, ‘Giving USA’ Says

Other Giving Reports

• Foundation Center 2009 Foundation Giving Forecast
• 2009 Giving Forecast by Minnesota Grantmakers
• MCF 2009 Outlook Report

What’s a nonprofit to do? Start contingency planning

During the Giving USA chat, someone brought up the question of budgeting amidst so much uncertainty:

Question from Hazel, animal charity: How can one do any financial planning or construct a budget for the coming year when it may even be worse than last year and no one knows whom we can depend on?

Nancy Raybin:  Agree on different scenarios, e.g. economy gets worse by 10 percent, economy levels; economy gets better by 10 percent. Make some hypotheses about the impact of different scenarios on your animal charity’s activities and what donors are likely to do. Then prepare different budgets for each scenario. Clearly, you know best how animal lovers respond in these times. You must also have a number of donors on whom you can depend. Focus on those.

Sometimes it feels like I’m beating the scenario planning drum all time, but it really is the best advice we can give to help nonprofits plan and adapt in these uncertain times. Download and use our tools to get started.

This Week’s Harvest

• A Nonprofit News Round-Up from Not-For Profit Accounting,  including:
  • Bringing the Stimulus Plan Home: Obama’s Effect on Nonprofit Jobs
  • 7 Things To Consider For Your D&O Policy
• British Charity Mergers Examined
• FASB Releases Standard for Nonprofit M&A

• New York Times:
  • For States, Stimulus Offers Temporary Relief 
  • Economic Stimulus Special Section
• Washington Post:
  • Taking Apart the $819 billion Stimulus Package
  • States Counting on Stimulus Aid to Balance Budgets

Analysis from Center for Budget and Policy Priorities

• Statement by Robert Greenstein, Executive Director, on the Conference Agreement on the Recovery Package
• Economic Recovery Act: Key Provisions (With State-by-State Estimates)

The Nonprofit Angle

• From the Chronicle of Philanthropy:
  • Congressional Compromise on Stimulus Plan Includes Money for Arts, Social Services, and Volunteerism
• The Cohen Report:
  • Reading an Early Draft of the Stimulus Bill Conference Report: Compromise Provisions (Part I)-Spending 
  • Reading an Early Draft of the Stimulus Bill Conference Report: Compromise Provisions (Part II)-Safety Net Tax Relief 
• Washington Post Op-Ed: Where Stimulus Funds Can Make a Difference

Transparency and Accountability

• Recovery.gov
• From ProPublica (Hat Tip: Utne Reader)
  • Will We Be Able to Follow the Money?
  • The Stimulus Plan: A Detailed List of Spending
  • State-by-State Breakdown of the Economic Stimulus Plan?
• ShovelWatch
• ReadTheStimulus.org (Hat tip: A little light reading…readthestimulus.org)
• From the Sunlight Foundation: We Need Online Review of Stimulus Legislation
• Show Me the Spending

The Minnesota Angle (aka Budget Update)

• Minnesota’s stimulus take: About $9.1 billion
• MPR has a special section devoted to news on the Bailout (it complements their coverage of Minnesota’s budget shortfall)
• From Minnesota Budget Bites:
  • Minnesota quick to prepare for infusion of federal funds
  • Revenue-raising options, with their price tags and impact on tax fairness
  • Legislature asks for your opinion about budget solutions at forums around the state
• pubTalk: MN Legislature: Please Fix the Governor’s Budget
• Political Animal (from Pioneer Press): Pawlenty must redo his budget
• Politics in Minnesota does a great daily roundup of stories on the budget and other related news.

Nonprofits and Credit

• Billions in Nonprofit Projects on Hold Due to Credit Crisis, Report Finds
• Charities Set $166-Billion Worth of Construction Plans on Hold
• Credit Crisis Is Leaving Charities Low on Cash

Other News

• NY Times Op-Ed: Soup-Kitchen Accounting
• From pubTalk: New opportunity for “economies of skill”? 
• Half a Million Nonprofits Could Lose Their Federal Tax Exemptions
• POLICY MEMORANDUM: A Scan of Nonprofit Policy Recommendations for the Obama Administration

At this time of year, there are many blog posts on resolutions (mine, Kate’s) and strategies about how to achieve our goals.  PhilanTopic has one that stood out, More Good Advice for Nonprofits.

I suggest you read the entire post, but my favorite suggestion is:

2. Grow your mission. Many nonprofit organizations that were founded between 1929 and 1935 are still in existence. Focus your attention on growing your mission. If you focus on excellence, money will follow. If you focus on money, excellence never happens. As in the best of times, let your mission dictate management decisions.

Grow as in nurture, not grow as in expand.  At a time when we are all fighting the urge to do more with less, let your mission and core competencies be your guide.

Outlook for 2009

This week, the Chronicle of Philanthropy hosted an online discussion, Outlook for 2009: What the Recession Will Mean for Your Organization.

This was a particularly useful and timely discussion.  In the risk of overdoing it, the topic of mission creep came up here as well:

What would be the top five things you would recommend in either assessment/ evaluation or strategic implementation for 2009?

The response?

1. Making sure mission and program [and budget] are aligned. If not, why not?

2. Make sure that core competencies of the org – including staff, facilities, etc are aligned with #1. In good times, orgs sometimes add all sorts of people and programs, and suddenly find that there is an imbalance between what is being done with core mission. Has you mission in fact changed? Ask the hard questions.

If I seem preoccupied with mission creep, it is because we see how it impacts organizations.  An expanded mission may not create a stronger organization. Often it dilutes the services, goals, and focus — which we cannot afford right now.

Check out the rest of the transcript for more information on how the recession may impact your organization’s bottom line.

Giving in Minnesota

For local organizations looking for additional insights, MCF has released its 2009 Outlook Report, which projects foundation and corporate giving for the year.  According to their findings, we should anticipate a decrease in overall giving as compared to 2008:

Overall, grantmakers anticipate giving will drop about four percent in 2009, as compared to 2008. For grantmakers in the sample who give $10 million or more annually, giving is expected to decrease only 1 to 2 percent.

MCF President Bill King also issues a reminder: “This is, of course, a snapshot in time. The giving picture may change with the economy throughout the year.”

• Read the press release

•  2009 Outlook Report

The upcoming Giving Forum will include additional analysis and recommendations.

This Week’s Harvest

• Climate Change on SSIR (Hat tip: Rosetta Thurman)

• Briefing on the Economy and Charitable Giving: December 2008 from the Center on Philanthropy at Indiana University

• Fiscal Sponsors Directory:  Connecting Community Projects with Fiscal Sponsors (Hat tip: PhilanTopic)

• How Small Foundations Can Protect Themselves From a Madoff-Style Scandal

• NEA study: Theaters vulnerable during recession

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!