Nonprofit Harvest

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.

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!

We knew that news would not be promising. We were warned that the state budget deficit for the next two years could be as high as 6 billion dollars.

So, what are the numbers?

Although the numbers are not as bad as some projections, they are ugly.  What a weird reaction to be oddly relieved that the gap is “only 5.2 billion.”

Minnesota Budget Bites has a great breakdown of the numbers:

• For the current biennium (FY 2008-09, which ends June 30, 2009) the deficit is $426 million (that’s about half the size of the deficit we already closed during the 2008 Legislative Session).
• For the next biennium (FY 2010-11) the deficit is $4.8 billion (add another $650 million for inflation).  That deficit amounts to about 13% of our budget. That’s a lot. State Economist Tom Stinson says this recession is expected to last 24 months – which would be the longest recession on record.
• For the biennium after that (FY 2012-13) the planning estimate predicts a $4.6 billion deficit (add another $1.5 billion for inflation).

By the way, in case you are confused by the $5.2 billion deficit announced in the media – that adds the FY 2008-09 and FY 2010-11 deficits together.

What people are saying

There is, and will continue to be, a lot of conversation on this issue. A great place to go for up to date information is the Budget Bites blog from the Minnesota Council of Nonprofits.

• Deficits: $426 million now, $4.8 billion soon and $4.6 billion later 

• Predictions of a $4 billion state budget deficit

Here are some additional news stories:

• Officials react to Minnesota’s dire deficit projection

• Budget deficit: Pawlenty remains oppposed to tax increases

• Minnesota’s red ink: $5.2 billion; Pawlenty seeks 10% spending cuts

• As Minnesota reels from a record deficit, leaders offer no specifics on recovery

• Op-Ed from Dane Smith (Executive Director of Growth & Justice)

• Minnesota Revenue Loss Pushes State $5.5 Billion in the Red

• Session of a thousand cuts: Thursday’s budget forecast sure to force painful decisions

• Looming Minnesota deficit offers chance to innovate

You can also visit the Minnesota Management & Budget website to see the state’s financial information, the November forecast, and get up to date on budget planning for FY 2010-2011.

What are our options?

The impact will be huge and felt across the state, in every community and every sector.  This figure represents 14% of the state budget.  Minnesota’s constitution requires a balanced budget, so tough choices will have to be made.

Where do we start?

• Budget Bites calls our attention to an article from 2001, Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the Other During a Recession? from the Center for Budget Policy and Priorities.

• A more recent article from CPBB outlines proposed budget cuts that would disproportionally impact those most vulnerable.

• Scott Russell at MinnPost weighs the relative merits of cutting rates or eligibility for health and human service organizations.

• Post your ideas and suggestions at Minnesota 2010 and elsewhere.

If you tweet or use delicious, I suggest tagging items as mnbudget. Let’s aggregate our ideas!

(My favorite tweet on this topic was from @dbrauer, who writes for MinnPost: “Seriously, we are going to need MPR’s budget challenge for this deficit thing. Stories today made clear cuts alone won’t do it.” For a bit of levity, check out the Budget Hero.)

It’s official, they are using the “R word.” As in recession.

Yesterday, the National Bureau of Economic Research issued a press release determining that December 2007 was the peak month, and that the “subsequent decline in economic activity was large enough to qualify as a recession.”

Does the label really matter, since the actual conditions we’re experiencing are the same?  As Shakespeare put it, “What’s in a name? That which we call a rose/By any other word would smell as sweet” (Romeo & Juliet).

Kate was interviewed by NPR’s Marketplace for their story, Black Friday Not Looking So Black:

If right about now you’re wondering where they’ve been, join the club.

KATE BARR: My initial reaction is, so what.

We called around to get some opinions on how much today’s announcement really means. Kate Barr’s the executive director of the Nonprofits Assistance Fund.

BARR: Maybe if the word had been more openly used back in June or July, we could have gotten a jump-start on some of the discussions about how to allocate resources, how to allocate budgets, how to allocate charitable giving.

Do you think using the word recession would have changed the conversation?

Reactions from around the web:

• Don’t un-start your Campaign because of a Recession
• U.S. in Recession: Minnesota is one of ten states with a 50% increase in unemployment since 2006
• Recession in U.S. Started in December 2007, NBER Says

Other links:

• Obama Must Mobilize Supporters to Help Nonprofits
  
• Philanthropy’s Response to the Financial Crisis
• Accountability Turkey (or what government and business can learn from nonprofits)
• Recession Could Cause Large Increases in Poverty

In a side note, I spent last week at home with my family, as some people are lucky enough to do.  Over lunch on Saturday, I asked my brother (who works at a large bank in NY) how things are going.  What was most interesting about the conversation was the overlap between what we were seeing. Nonprofits in Minnesota, financial institutions in New York, and businesses worldwide are experiencing some of the same financial challenges, in particular when it comes to access to capital. He recommended this recent article in the Economist, Managing in the downturn: Desperately seeking a cash cure.  It’s a fascinating read, especially as the nonprofit world thinks about how to respond to this crisis. What is our equivalent of “disruptive innovation” and “changing the game?”

The economy has impacted the grant-making ability of foundations at the very time their support is especially critical. The Star Tribune published a story today on how Minnesota’s foundations are responding to this challenge.

According to the article: “Grant-making will not be significantly cut — at least for now. But giving is likely to decline or remain flat in 2009, which means it won’t keep up with demand from local organizations struggling for funding.”

Other key points:

• According to Jon Pratt, Executive Director of the Minnesota Council of Nonprofits: Minnesota is more reliant on foundation giving than other communities, “partly because Minnesota is third in the nation in per capita foundation assets.”  There is particular anxiety about next year given local and state government budget concerns.

• John Couchman, vice president of grants and programs for the St. Paul Foundation: “We have less money to give as community needs are bigger than ever.  We’re not alone. Everyone in philanthropy has been hit.”

• Carleen Rhodes, president of the St. Paul Foundation: “The charitable sector is not going to get a bailout, so we need to think about what we are going to do to lift it. All of us need to recognize this is an important part of the economic recovery.”

• Foundation leaders are weighing how they can make the most impact.  According to Bill King, president of the Minnesota Council on Foundations: “We’re asking, ‘What are the most important community needs? What are the best strategies? And where are the gaps [in funding]?”’