Wednesday, January 27, 2010

Awesome Day in Trinidad

I've just finished an amazing day with the WorkAbility Americas conference in Trinidad, speaking this morning on innovation and social enterprise, but more important, listening this afternoon to a group of Western Hemisphere nonprofits who provide jobs to people with disabilities.

Always fascinating to see how people do great work in environments that make life in the US seem a breeze.

Much fun, and very, very energizing.

Saturday, January 23, 2010

Should nonprofits be taxed?

We now stand in unprecedented territory. All 50 state governments are in a deficit situation with 2011 and 2012 looking worse (since the federal stimulus funds that many states have used to plug budget holes will run out).

This, of course trickles down to counties and municipalities, nearly all of which have their own budget woes.

Which leads us to our question of the day: Should real property owned by nonprofits be taxed at the same rates as that owned by for-profits? Before you scream bloody murder, think about it for a moment. Take a city like Boston, with many, many hospitals, universities and church facilities (and hundreds of other nonprofits) living side by side with other owners who pay property tax. Some estimates of the percentage of Boston land owned by nonprofits are as high as 20%...meaning that the cost of police, fire, roads, trash, etc for all city properties have to be picked up by only 4 out of 5 owners. Fair?

On the other hand, there is no doubt that nonprofits contribute to the public good in many ways. Does that compensate enough?

And, government is often a key (sometimes mojority) funder of nonprofits--and it certainly doesn't overpay. Does that underpayment for services compensate for the property tax lost?

Obviously, I come down on the side of keeping nonprofit property tax-exempt. But the voices FOR taxation are growing louder. In Camden, New Jersey, a move to tax nonprofits on a per-employee basis just died, but the fact that it was even introduced shows the desperation of some governments to fill their budget gaps.

Here's a few readings on the subject.

Keep yourself informed about this growing (and concerning) trend.

Monday, January 18, 2010

More tech, more $ for Haiti

In yesterday's post, I noted that the majority of funds raised so far by international charities for Haiti relief had come online, as a reminder to all nonprofit s to make sure that they focus much of their fundraising online.

Today, the Chronicle of Philanthropy notes that, as of Friday, nearly $12M of the $150M received came through texting, "an unprecedented amount" according to the Chronicle.

Last night, I was watching an NFL playoff game and the announcers noted at least 4 times that viewers could donate $10 to the American Red Cross for Haiti relief simply by sending a text to 90999.

Wow. How many $10 donations went in right there and then?

And, I would put money on the fact that no 50 year old thought that up. Yet another reminder to empower your younger staff to get tech to help your mission.

Sunday, January 17, 2010

Lessons for nonprofits from Haiti

Before we get to the point of this post, let's get to the real point:

If you and your friends, and their friends, and everyone's families haven't yet given to Haitian disaster relief, stop reading this and do it now.

Then, mark on your calendar to do it again in a month and again six months from now. Go. Now.

OK, you're back. Think back about what you just did or, if you had already given before you opened this post, what you did when you gave. If you're like many people, you just decided, "I'll give to X Charity." Then, you went online, pulled out your credit card and donated. Good for you.

If you're like many others, (including my wife and I) you were unsure which relief agency to support. Which organization will provide the most needed help right now? So, you may well have gone online, looked at different relief groups' websites, even checked them out on Guidestar.

But when all was said and done, you went back online, pulled out your credit card and donated. Again, good for you.

My point? You gave online. You wanted to help, help now, and a check in the mail just didn't cut it.

The data so far support this feeling: as of Friday, according to National Public Radio, over 80% of funds donated to the top 10 international relief organizations had come online. To be sure, a lot of paper checks are still in the mail and haven't been counted, but that percentage is still impressive.

There are two lessons for nonprofits from all this:

First, make sure your organization can accept donations easily online.

Second, a week ago, many nonprofit staff were bemoaning their situation vis a vis the economy. The pictures and stories from Haiti put that in a bit of perspective for all of us.

Tuesday, January 12, 2010

Will businesslike charities become charitable businesses? Part 2

A couple of days back, in Part 1 of this post, I discussed the trendy idea that businesses and charities are inevitably going to merge, and took the position about the nonprofit side of the equation that I simply don't see this happening for a variety of reasons.

But what about businesses: are they becoming more charitable? Will business force out nonprofits by taking over our turf?

Again, no.

There is no question that more and more businesses have figured out that having social outcomes do a variety of good for the community and for the business. They build morale among staff, help develop a corporate culture that attracts people who care and are motivated, and provide a competitive edge to attract customers who also care.

This trend is largely evident in smaller companies who are more flexible, and most evident in smaller companies led by younger owners and managers. New entrepreneurs often try to marry up their entrepreneurial skills with a social or community problem, and are not shy about saying that they need to make money in order to do good. Look at Tom's Shoes, one example that's on television a lot. Great organization, great idea. But if the for-profit side doesn't sell shoes, the charitable side can't donate them.

The thing to remember is that this trend, while incredibly laudable, is still a distinct minority among business. It gets lots of press since it's newsworthy (read: unusual/weird) but it is nowhere near mainstream yet. And, given the behavior of so many for-profits (see yesterday's post) in the recent past, I don't suspect the idea of always doing social good will become the norm in practice for a long, long time.

So, to summarize both posts, more nonprofits are becoming businesslike in their pursuit of mission--but nowhere near all. More businesses are pursuing social good in addition to profits, but nowhere near a majority.

Both of these are good things that we should encourage, not angst over.

Monday, January 11, 2010

Venting a bit....

A story in today's New York Times got me going this morning. It reports that Goldman Sachs, the investment bank, is considering increasing the requirements for charitable contributions from it's top paid employees--you know, the ones who helped screw up the economy and are now getting million and multi-million dollar bonuses a year later.

The article noted that Goldman has long had a requirement that top earners give 4% of their income to charity--and then check their tax returns to assure that there is compliance. Thus, there is no real charity at Goldman, just an enforced policy, like a dress code or the expectation of cheery attendance at a hated boss's birthday celebration.

The key part of the article was whether this policy--of wringing donations out of otherwise unwilling employees from their obscene bonuses--would reduce public anger over the bonuses themselves.

Yet again, these people are clueless about how real people think and act. I must have heard two dozen interviews over the last year from Wall Street types who absolutely do not understand why the country is mad at them for taking crazy risks (on all our behalf) to make money (for themselves). While there were many, many people who contributed to the economic mess, the Wall Street bankers stand out above the rest for their endless and self-serving rationales of why they were not the ones that brought the nation (and much of the world) to its economic knees, then needed tax dollars to bail them out, and now can go back to business as usual (with no oversight, PLEASE--we know what we're doing).

All of which is a rant to get to this question. Is forced charity really charity? Don't get me wrong, I'm delighted that some nonprofits will get what, on my quick accounting, is a ton of money (Goldman has set aside $16.7 billion for compensation this year--calculate 5% of that and you see what I mean), but still, is it charity? Goldman has reported that the firm also put aside $200 million for it's Foundation. I wonder how much of that $ will be given to charity, and how much will be kept in the foundation, invested by Goldman--and who at Goldman will earn investment fees. Pardon my cynicism.

There's a related issue here that has been bugging me for a long time--the courts sentencing people to community service. This sets up a conversation I had with a high school student a few months back where he told me he was busy after school: "doing my community service alongside the felons and DUI guys". His school requires volunteering, but limits the places students can volunteer, the time, and the type of volunteering. The kids get it--this isn't charity, it's forced labor.

A few years back, I was in London giving a talk at a conference and the main topic of discussion at the breaks was the new Charity Act, which paid young people to volunteer as a solution for years of reduced volunteering, particularly by people under 30. All of the attendees from the UK thought this was a great idea. The three or four Americans there smugly noted that we don't pay our volunteers--they actually show up on their own.

Well, sort of.

Sunday, January 10, 2010

Will businesslike charities become charitable businesses? Part 1

One of the more interesting debates in our sector at the moment is the discussion (panic/hue and cry/gnashing of teeth) about the merging of the nonprofit and for profit models of business. Critics and analysts have noted correctly that many nonprofits are acting in a more businesslike manner than 10 or 15 years ago. Then, these observers marry that "fact" with the growing desire of businesses to have a social outcome and become one definition of a social entrepreneur. These two trends are seen as inevitably ending the distinction between charitable groups, often accompanied by much verbal angst and pulling of hair.

My suggestion? Chill out. We are not approaching the nonprofit apocalypse by any means, so let's dissect this discussion a bit to see why in this post and my next one.

Are nonprofits in general more businesslike than 15 years ago? Absolutely. Are all nonprofits this way? No chance. There are hundreds of thousands of sloppily run nonprofits today, and there always will be, just as there are sloppily run for-profits, poorly managed government agencies, and badly managed personal finances.

What has happened is that the expectations of the quality of nonprofit management have climbed dramatically. Take outcome measurements for example, a term that was just gaining traction 15 years ago (with, I might add, much angst-filled commentary about how such measurement would be the "end of the sector" since it took valuable time away from mission). Or, look at the spread of best practice models, standards of excellence (such as the terrific ones from Maryland Nonprofits) and accreditation. And, of course, the online oversight of watchdogs like Guidestar and Charity Navigator. All of these forces have slowly raised the bar on nonprofit management, outcome and accountability.

To which I say, good, good, and good.

And, certainly we talk more about mission-based businesses (a term I've been pushing for 25 years) and using business skills such as marketing and finance. But have most nonprofits moved from being charities to becoming mission-based businesses to going all the way to being businesses with a mission on the side?

No, and it won't happen any time soon. Why? Because nonprofit staff and board have seen the light regarding the key rationale for managing their mission better: They get to do more and better mission as a result. All the business "stuff" that critics worry about is not based on becoming a business--it's about doing better mission. That's what people on the ground tell me and show me all the time. There are just too many people who are too committed to service and mission to let this morph out of control. Will some organizations go too far? Yep, and they already have. But the vast middle of the bell curve on this issue is just doing more and better mission, not turning into some sort of nonprofit Wal-Mart.

Now, how about the for-profit world and their social aspirations? That's also a real trend, and we'll look at that in my next post.

Thursday, January 07, 2010

Are these really the big trends?

Being behind in a lot of things, I just picked up the December 10 issue of the Chronicle of Philanthropy, which lists their 10 Emerging Forces for the nonprofit sector in 2010. While most of the list, at least in my view, is rehashing of things that have been out there for a while, I was glad to see that they've highlighted the need for and increased use of volunteers (although I don't like their alliteration "Volunteers in vogue" sounds like it's just a trendy trend), and the fact that some boards may understandably stall their tech upgrades due to reduced revenues.

All of the trends make good reading and I'm sure at least 6 or 7 pertain to every single nonprofit out there.

In the same issue, the really bad news is the report on the sector from Bridgespan that notes that 97% of charities are feeling the effect of the recession and that more than 40% have laid off staff. These and all the other indicators (demand, funding, etc.) have all worsened since last year.

As we know, the nonprofit sector lags with recessions--and with rebounds. We go down later, go deeper, and come out last. So, what should nonprofits do? We'll talk about that a bit in the next post.

Monday, January 04, 2010

Some wishes and some apologies

Well, Happy 2010 to all.

Apologies for the loooooooonnnnngggggg break in posting, but stuff has been going on here, not the least of which was a bout of breast cancer for my wife, Chris. Thankfully, she's had successful surgery and her prognosis is very, very good. Thanks to all who sent (or thought) good wishes.

One of my 2010 goals is to post much much more, including on some cool stuff I'm involved with regarding nonprofit innovation, the 3rd edition of Mission-Based Management, which came out while I was gone from this spot, and the 3rd edition of Mission-Based Marketing, which is half revised as I write this.

So, you'll see more of me here from now on, and I hope you tune in regularly. I've always got lots to say, and I'm six months behind!

The interesting article from today is about one of my favorite nonprofits, Teach for America, from the New York Times. I'm not quite sure what to make of the headline, except to say it seems misleading. Need to read the entire piece of research.

Books: I just finished SuperFreakonomics and loved it as much as the original. Strongly recommend it.

Back soon....