In this month’s Social Velocity interview, I’m talking with Ruth McCambridge.
Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at The Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.
If you want to read interviews with other social changemakers in the Social Velocity interview series go here.
Nell: The Nonprofit Quarterly sometimes serves as a watchdog for the nonprofit sector. For example, shortly before his death last year, Rick Cohen took the nonprofit sector to task for not standing up against anti-refugee legislation. But in some ways the sector’s hands are tied because of real or perceived rules against too much political activity. What is (or should be) the nonprofit sector’s role amid an increasingly polarized, gridlocked political system?
Ruth: The nonprofit sector’s hands are by no means tied and pretty much everyone knows that. We who work in 501(c) 3s do have to avoid partisan political activity and be a little careful when it comes to direct lobbying, but this leaves a whole world of political activity in which nonprofits can be and are involved, and there are plenty of powerful examples of political activism by nonprofits.
Look at the way that planned Planned Parenthood Action (a 501(c)4) has mobilized around this election season. Four years ago, in fact, the Sunlight Foundation found it had the highest ROI of any electorally focused PAC.
This response you speak of, of not being allowed to be political is, it seems to me, a convenient and patently obvious cop-out. It’s not that nonprofits do not know they can be involved in these kinds of issues, it is that they are employing a facile excuse for not doing what is right.
What is perhaps most disturbing about this dynamic – what most exposes the true nature of the excuse – is the tendency of some nonprofit infrastructure groups to mobilize nonprofits only on the most institutionally self-interested causes, resisting any limitations on fundraising, for instance. The fact that these campaigns are launched in favor of refugee rights to a safe harbor is not attractive to those who expect integrity from the sector.
Of course, there are issues that combine long term institutional self-interest with the interests of communities – for instance, recently a few statewide nonprofit networks have stood up for a living wage requirement and have accompanied that with work on rate adjustments, but in general, nonprofits, specifically those which are not expressly organized around advocacy, need to consider how to use their institutional power for what is right and stop playing coy in the face of current intense political scrums around issues of basic human and civil rights.
But let’s get back to the NPQ as watchdog idea. We have been hearing this increasingly over the past few years, but we have always tried to afflict the comfortable so maybe our voice has just become louder. We have many more readers than this time last year – I know that!
Nell: The mainstream media is sometimes criticized for holding the nonprofit sector to an unfair standard compared to the private sector. Do you agree with that criticism, or is the nonprofit sector not analyzed enough?
Ruth: That unfair standard coin has two sides. The nonprofit sector is more trusted by the public than government or business and that means that people expect more from us in terms of consistency of ethics. When we violate those higher expectations – yes – we may look like we are being held to a higher standard because the contrast between what they want and expect to see from us and what we give them is sometimes so starkly disappointing. This, by the way, causes some of the obsession with executive salaries that are seen as overly high. There is a sensitivity to wage justice in the context of mission and other compensation of staff that is easy to play on because people just expect us to act from the highest possible ethical position.
Nell: As a journalist, what is your take on the state of journalism and its role in democracy given the 30% decline in the number of journalists over the last decade. What will become of journalism and its role in democracy? And what do you make of the emerging breed of nonprofit newsrooms?
Ruth: Journalism is a changing form, and I would be talking far above my pay grade to suggest that I knew exactly what it was evolving toward, but it has always been clear to me that the role of journalism is central to democracy – to the ability of a populace to act in an informed manner and thus it is as important to democracy as the right to associate, which is at the basis of our nonprofit sector.
In a way, this commonality of purpose links the two, and so it is no surprise that there are now more nonprofit journalism outlets springing up – entities that are not placing profit above mission. That makes sense.
Just as interesting are the conversations around how people choose who can be trusted to inform them and on what basis, and who is going to pay for the long term investigative journalism that always has to be central to the mix, and what part open data plays in breaking stories. Other interesting trends are the evolution of citizen journalism, collaborative journalism and niche journalism. It is unendingly interesting.
Nell: In your interview last Spring with Douglas Rushkoff he had some very interesting things to say, one of which was that the nonprofit business model is superior because it more equitably distributes wealth than the for-profit model. Do you agree with his assessment, or what is your take?
If we do not want to encourage the pillaging of the earth and its peoples by the few – I guess I do agree.
Photo Credit: Nonprofit Quarterly
October was a bit of a whirlwind in the world of social change. Continued concerns that philanthropy is not positioned to truly impact wealth inequality, a confusing pivot by Charity Navigator in the Overhead Myth movement, some case studies of networked approaches to social change, and a great blog series on nonprofit financial health all made for some interesting reads.
Below is my pick of the top 10 social change reads in October. But, please add what I missed in the comments.
- There seems to be a growing discussion around whether philanthropy, which results from wealth inequality, can actually be effective at remedying that inequality. Writing on the openDemocracy blog, Michael Edwards takes the Ford Foundation and other foundations working on wealth inequality to task for not seeking to reform the underlying systems that feed that inequality. As he puts it, “Imagine what would happen if we re-configured the supply of money for social change…It would mean the wholesale transformation of institutional philanthropy, since for Ford and others like it an assault on privilege is essentially an assault upon themselves.” And in an interesting and related development, this month head of the Ford Foundation Darren Walker joined the corporate board of Pepsico, which some argue contributes to the obesity epidemic and ultimately economic inequality. But David Callahan argues that Walker could serve as a positive force to push Pepsico to “do better.”
- For only the second time in its 26 years The Chronicle of Philanthropy‘s annual Philanthropy 400 list ranks a nonprofit other than the United Way Worldwide as the biggest fundraiser. This year Fidelity Charitable, which houses donor advised funds, took the #1 spot. And some think this is a bellwether for philanthropy. But Jim Schaffer has some issues with the list and how it ignores the deeper complexities of philanthropy.
- If you are looking for data about where the social sector is going, this month provided lots of it. From Fidelity Charitable’s report on the future of philanthropy, to a new study from the Alliance for Nonprofit Management on nonprofit board chairs, to new data from the Urban Institute on the nonprofit workforce.
- In a head-scratching move, Charity Navigator, one of the proponents of the campaign to overcome the Overhead Myth wrote a blog post arguing that nonprofits that keep their overhead percentage to 15% or less are “excellent.” Many, took them to task.
- On the eve of the presidential election, Kiersten Marek from Inside Philanthropy offers some predictions about how philanthropy focused on women’s and children’s issues might fare under a Clinton presidency.
- In what has become an incessant drumbeat, ProPublica again criticizes the American Red Cross, this time for a botched response to the Louisiana flooding this summer.
- As I mentioned earlier, I’m a huge fan of Twitter, but it’s struggling. NPR tech writer Laura Sydell wonders if becoming a nonprofit might be the answer for this social network that is playing a growing role in social change efforts.
- Using networks for social change is a hot topic lately. Talia Milgrom-Elcott provides a case study for a networked approach to growing STEM education, and R. Patrick Bixler, Clare Zutz, and Ashley Lovell provide a case study on using networks for regional conservation. But Jake Hayman, writing in Forbes argues that philanthropy actually dis-incentivizes nonprofits to pursue a networked approach.
- In a not-to-be-missed blog series, the Nonprofit Finance Fund provides a great tutorial on “Best Practices for Nonprofit Financial Health” (part one, part two, and part three).
- And if you wonder why you are here and what your role is, look no further than Steven Pressfield who writes: “I believe that life exists on at least two levels. The lower level is the material plane…The higher level is the home of…the Muse. The higher level is a lot smarter than the lower level. The higher level understands in a far, far deeper way. It understands who we are. It understands why we are here. It understands the past and the future and our roles within both. My job, as I understand it, is to make myself open to this higher level. My job is to keep myself alert and receptive. My job is to be ready, in the fullest professional sense, when the alarm bell goes off and I have to slide down the pole and jump into the fire engine.”
Photo Credit: Peter Griffin
Change is certainly happening within the nonprofit sector and the philanthropy that funds it. From efforts to make philanthropy better at addressing inequity, to movement away from the overhead myth (and other myths), we are witnessing important shifts in how we tackle (and fund that tackling of) social challenges.
But I’m hungry for more.
And more could emerge from honest and transparent conversations about what is holding the social change sector back. There are some key hurdles facing the sector, and we have no hope of finding solutions to those challenges unless we start some no holds barred conversations, like:
- What keeps nonprofits from creating more sustainable business models?
Everyone understands that nonprofits are sorely under-resourced and struggle to find sustainable financing for their work. But few are trying to really understand how we change this reality sector-wide. A few funders have commissioned research on the state of money in the sector, but it’s not nearly enough. I would love to see a real, solutions-oriented conversation about a problem that everyone (nonprofit leaders, boards, funders) knows exists.
- Why do we hold nonprofits to a different standard than for-profits?
Because the nonprofit sector was borne out of the charitable impulse, we continue to see it as more holy than and separate from the for-profit sector. Therefore we are uncomfortable with nonprofits being too political, raising too much money, or spending too much on infrastructure. As a stark example, the nonprofits working for reform to our fairly dysfunctional political system have many fewer resources for and many more restrictions on their efforts than the for-profit lobbyists that the nonprofit reformers are fighting.
- Why won’t we treat nonprofits as equal partners in the economy?
Related to this, because the nonprofit sector emerged as a side-note to the business-driven economy, nonprofits have always been viewed as secondary to, and thus less valuable and important than, the private sector. But you simply cannot have one without the other. The nonprofit sector often provides the research and development, worker support, quality of life and other services that fuel the success and profits of the private sector. Without the nonprofit sector there would be less profit and a weaker economy. So we have to recognize the critical (and equal) role that nonprofits play in creating a strong economy. And we have to begin investing equally in the success of those nonprofits.
- Why are nonprofit boards largely ineffective?
Another truism of the nonprofit sector is that boards just don’t work. I have yet to meet a nonprofit leader who doesn’t have at least some frustration with her board and many are resigned to their board’s deep dysfunction. It is extremely difficult to corral a group of volunteers, to be sure, but instead of accepting that challenge as a rule, let’s figure out how to fix it. Perhaps greater standards and regulations, perhaps compensation for their efforts — I don’t know what the right answer is, but let’s analyze the root causes of this inefficiency and change it.
- How do we direct more money to efforts that result in social change?
There is much debate about whether donors want to give based on the results a nonprofit creates. But if the government is going to continue to off-load social interventions to the nonprofit sector, we don’t have the luxury of letting the funders of those nonprofits give solely based on emotion, reciprocity, or duty. You may not believe in “effective altruism” (the idea that philanthropy should flow to the most effective social interventions), but the fact remains that with mounting social problems and a resource-constrained and gridlocked government, a growing burden for addressing social challenges is falling to the nonprofit sector. Nonprofits will only be able to rise to this challenge if the solutions that work have enough resources to actually work. So let’s recognize the tension among increasing social problems, less government involvement, and lack of money and figure out how to fix it.
It’s time for bigger conversations. We have to openly face the challenges standing in the way of social change and figure out a way forward together.
Photo Credit: Paul Thompson
A lot of the conversation in September centered around inequality, philanthropy and data. When do data and philanthropy address inequality and when do they actually reinforce it? And if you add to that discussion about whether donors really care about impact; concern about the distracting, addicting influence of social media; and a call for philanthropists to be more supportive of nonprofit organizations, September was a very interesting month in the world of social change.
- Equity has certainly become the new buzzword in philanthropy. But some are skeptical that philanthropy, as it currently operates, can actually impact it. Writing in The Guardian, Courtney Martin argues that in order to truly achieve equity, philanthropy must fundamentally change: “If we really want to reinvent philanthropy then we are going to have to look at the underlying historic and structural causes of poverty and work to dismantle them and put new systems in their place. It’s also about culture – intentionally creating boundary-bashing friendships, learning to ask better, more generous questions, taking up less space. It’s about what we are willing to acknowledge about the origins of our own wealth and privilege. It’s about reclaiming values that privilege often robs us of: first and foremost, humility. But also trust in the ingenuity and goodness of other people, particularly those without financial wealth.”
- Marjorie Kelly argues that the key to addressing wealth inequality is to return to the old model of worker ownership.
- And speaking of wealth inequality, The New York Times slices and dices U.S. income data over the last couple of decades to understand how inequality varies by state over time.
- According to Cathy O’Neil’s new book, Weapons of Math Destruction, the increased availability of data may actually be worsening wealth inequality. Journalist Aimee Rawlins reviews O’Neil’s book, which paints a very unsettling picture of how data is being used to lengthen prison sentences for people with a family history of crime, raise interest rates on a loan because of the borrower’s zip code, and otherwise reinforce our broken system. But perhaps data can also help address wealth inequality. The Salvation Army and Indiana University’s Lilly Family School of Philanthropy have released a new tool for mapping poverty in the U.S. The Human Needs Index (HNI) uses Salvation Army service data from communities across the country to track human need across seven areas. The idea is that with an improved ability to map need, philanthropy can more effectively address that need.
- One of the biggest uses of data in philanthropy is to prove the impact an intervention has, but Matthew Gerken argues that donors aren’t actually interested in impact. New research from Penelope Burk’s Cygnus Applied Research might disagree.
- Andrew Sullivan, the formerly prolific blogger, has had an epiphany about our addiction to social media and writes an amazing long-form piece about our “distraction sickness.” If you worry that our always on culture is leaving something to be desired, read this.
- Last month many were bemoaning philanthropy’s slow and weak response to the devastating summer flooding in Lousiana. Well, it looks like crowdfunding has come to the rescue.
- Long-time funder Elspeth Revere, retired from the MacArthur Foundation, writes a scathing critique of philanthropy’s unwillingness to fund nonprofits effectively and sustainably. As she puts it, “The challenges facing America and, indeed, the world require philanthropy to be as effective as possible. Nonprofit organizations are philanthropy’s partners in addressing these challenges. They have unusual flexibility to take risks and pursue solutions to our most pressing problems. As grant makers, we need to focus our attention and philanthropic resources on building strong leadership and solid, sustainable, and diverse institutions that address the problems and opportunities we care most about.” Amen!
- Jyoti Sharma, president of the Indian water and sanitation nonprofit FORCE, worries that a current focus on social entrepreneurship as the solution to world ills leaves much behind. As she argues, “Do we need to see social entrepreneurship as a “non”-nonprofit? Should we instead promote hybrid models that plan the social change effort with both charity and revenue streams? Should we encourage community entrepreneur networks where charity funds are used to support entrepreneurial efforts from within a beneficiary community that help solve their social problem? Should we advocate for governments and corporates to join hands with nonprofits in planning, delivering, and monitoring welfare services? Equally, should we set ethical and social responsibility standards for entrepreneurships and applaud them for their contribution to society?”
- And finally, the Nonprofit Tech for Good blog pulls back the curtain on social media with their “12 Not-So-Great Realities About Nonprofits and Social Media.”
Photo Credit: Ixtlilto
In today’s Social Velocity interview, I’m talking with Aaron Dorfman, President and CEO of the National Committee for Responsive Philanthropy (NCRP), a research and advocacy organization that works to ensure America’s grantmakers are responsive to the needs of those with the least wealth, opportunity and power. Before joining NCRP in 2007, Dorfman served for 15 years as a community organizer with two national organizing networks, spearheading grassroots campaigns on a variety of issues. He also serves on the board of The Center for Popular Democracy.
You can read other interviews in the Social Velocity Interview Series here.
Nell: What is your take on recent concerns about donor advised funds locking too much philanthropic money away from directly reaching nonprofits? Is the recent growth of DAFs a good thing or a bad thing, or is it more complicated?
Aaron: It’s definitely complicated.
On the one hand, I’m sympathetic to how much easier DAFs have made things for donors. I do some of my own charitable giving through a small DAF, and I love the convenience of it. I have no doubt that other donors also find DAFs to be a very helpful development in philanthropy.
However, many of the concerns raised by critics are also valid.
There is little or no evidence that DAFs have contributed to an increase in overall charitable giving, for example, and there certainly isn’t any evidence that the funds have boosted giving to historically marginalized communities. So, if there has been no increase in overall giving, then what DAFs have done is to delay the giving.
Another concern is that DAFs provide donors with significant tax advantages over private foundations – but at the cost of transparency. Most DAFs don’t accept unsolicited proposals, and reporting by sponsoring institutions doesn’t identify grants with individual funds. Practically speaking, that means that most of these funds are inaccessible to most nonprofits. They’re traditionally housed at community foundations, but they’re not directly open to receiving proposals from community-based nonprofits, though proposals may be steered there by foundation staff acting as gatekeepers.
We found this to be true in a recent in-depth assessment we conducted of the Oregon Community Foundation. This was especially the experience of nonprofits serving and/or led by communities of color, who already have the hardest time accessing mainstream philanthropic support.
The lack of access by community nonprofits is even more troubling when you consider the fastest growing of the DAFs: the funds located at the giant financial industry warehouses like Schwab, Fidelity and Vanguard. There, no one is putting nonprofit proposals in front of donors who might be interested.
The lack of adequate reporting reinforces this problem of access: since the IRS does not require DAF sponsors to report which funds made which grants, grant seekers cannot take advantage of reports to identify potentially like-minded donors. (DAF sponsors have begun making greater amounts of information available about their grants, but what they provide is of limited help to grantseeking nonprofits because they don’t identify which funds made which grants.) This is further compounded by the fact that at present the major foundation database (Foundation Center) doesn’t systematically track giving by the likes of Vanguard, Schwab and Fidelity, most of whose funding simply doesn’t appear in the database.
Nell: Some people have argued that since philanthropy itself is built upon an inequitable market economy it can serve to reinforce that inequality. Is there a disconnect, or can we expect philanthropy to appreciably contribute to greater equity? What do you make of the debates about philanthropy that redistributes wealth and philanthropy that simply reinforces power and economic imbalances?
Aaron: There is no question that philanthropy can and has done both of these things.
When the Ford Foundation provides support for grassroots community organizing, or for litigation to protect and expand civil rights, that’s an example of philanthropy clearly contributing to greater equity.
When Atlantic Philanthropies, The California Endowment and other funders supported advocacy that contributed to the passage of the Affordable Care Act (Obamacare), that, too, was a case of philanthropy appreciably contributing to a more equitable society.
These are just a couple of examples of funders who understand their goals and their vision for society to be disruptive to the status quo; funders who understand the role unjust economic systems have played in the issues they would like their dollars to help overcome. The “disconnect” between market economics and progressive philanthropy is not impossible to overcome, and many of the more than 200 grantmakers that have signed on to NCRP’s Philanthropy’s Promise initiative are leading the way in showing other funders how to do just that.
However, when certain foundations support elite universities, when they invest only in white-led cultural organizations that emphasize European-American culture, or when they invest in advocacy to privatize public education at the expense of low-income communities – then you have some clear examples of how philanthropy reinforces inequality.
There was a great series of articles published recently in The Nation that explores these ideas, and what the future of philanthropy might be for those of us who hope to see a greater philanthropic contribution to fairness, equity and justice.
Nell: You have written before about philanthropy’s historical role in funding social movements. What do you make of philanthropy in the Black Lives Matter movement? How involved has philanthropy been, and how involved do you think philanthropy should be?
Aaron: There is a paradox here. Philanthropy has always under-funded social movements. However, philanthropic funding has also been essential to the success of social movements. We documented this in a 2014 paper Freedom Funders: Philanthropy and the Civil Rights Movement, 1955-1965.
The Black Lives Matter movement has thus far received very little support from institutional philanthropy. A group of foundation staff members have formed Funders for Justice as a way to learn together and to accelerate the flow of funding to the movement. They’re making headway, but the movement is still receiving very little support. Some individual donors, mostly younger and working through the Solidaire Network, have been able to move money more quickly to the movement.
The Hill-Snowdon Foundation, a small family foundation based in D.C., has been a real leader on this. They dipped into their corpus and have devoted new resources to creating the Making Black Lives Matter initiative and are attempting to organize their peers in philanthropy to invest in black-led organizing and in the Movement for Black Lives. The foundation is a past winner of the NCRP Impact Awards, which recognizes smart philanthropy that empowers underserved communities and achieves real results.
Also, Black professionals in philanthropy have been organizing through the Association of Black Foundation Executives and its Philanthropic Action for Racial Justice initiative.
I should add, too, that movement leaders have rejected some philanthropic support that was offered to them because it came with too many strings attached. In some respects, it’s been a good thing that the movement has not been dependent on philanthropy, since foundation support so often serves to rein in radical social movements.
Nell: The nonprofit sector has historically stayed away from advocacy work, but that seems to be changing. What role do you think nonprofits can and should play in advocacy, and will there be more of a push for that in the future?
Aaron: Advocacy and community organizing are among the best ways for foundations and nonprofits to leverage their limited dollars in pursuit of their missions. By changing public policies and/or the regulatory framework, we can transform society and build the kind of nation we all want to inhabit. Any nonprofit or foundation that is serious about achieving its mission must understand how advocacy fits into their overall strategy.
NCRP has challenged grantmakers to devote at least 25% of grant dollars to funding nonprofit advocacy and organizing, but fewer than 100 of the largest 1,000 foundations in the country meet that benchmark. The number of serious advocacy funders is increasing, but slowly.
Nonprofit advocates bring the voices of people and communities to policy makers. They are a greatly needed counter balance to the growing influence of corporate lobbyists, who often advocate only the narrowest self-interests of their industry. I think many, many people in our sector understand this and that we will see an expansion of nonprofit advocacy in the coming years, and that an increasing number for foundations and high net worth donors will provide ever-increasing resources for that advocacy work.
Photo Credit: NCRP
I’m excited to be heading to Pennsylvania next month to speak at the 2016 Nonprofit Day Conference. My keynote address for the conference will be “The Future of the Nonprofit Sector.” I wanted to share an abbreviated version of the speech with you here via the Social Velocity Slideshare library.
In my mind, there are some fundamental shifts happening in the sector that will be important to watch. They include:
- Increasing competition in the space
- A greater demand for results and social change
- An increased use of advocacy to achieve that change
- A move to more “networked” approaches
- Less “starving” nonprofits of their operational needs
- And (of course) a move from fundraising to financing
These are interesting times, and they hold tremendous opportunity, I think, for the social change sector.
Since I was on vacation in late July and early August, I’m combining the last two months of great reads into one. The summer of 2016 certainly was a dark one. From continuing police violence against black men, to the shootings of police officers in Dallas and Baton Rouge, it seemed we were becoming a nation truly divided. And tremendous flooding and devastation in Louisiana that was largely ignored by the media was heartbreaking to watch.
But, there were also moments of hope. From new research showing that donors are increasingly interested in investing in what works; to philanthropic leaders calling for better partnerships among the public, private and nonprofit sectors; to a way to move the conversation away from “overhead,” the summer months made for some very interesting reads.
Below are my picks of the 10 best reads in the world of social change in July and August. But let me know in the comments what else I missed while I was out.
- More police violence against black men and the shootings of police officers in Dallas and Baton Rouge arguably broke the country’s heart in July. Ira David Socol traced Americans’ growing fear of “the other” over the past few decades and how it has contributed to where we are today. And Pew Research offered some data about how Americans see the Black Lives Matter movement. While Heinz Endowment President Grant Oliphant called for an end to the violence, in an incredibly moving series of blog posts where he wrote: “We are called — by everything our diverse faiths teach us, by everything we believe about ourselves and our country — to come together as one people, whether we bravely wear the blue or have come to fear those who do. We are called by all that is good in our hearts to see ourselves in all the fallen, all the lives lost, all the families grieving, all the communities struggling to make sense of their brokenness. We are better than this violence. Deep down in our souls we know this. We are so, so much better than this.” And President Obama gave an incredibly moving speech at the funerals for the Dallas police officers, where he encouraged us all to, “With an open heart…worry less about which side has been wronged, and worry more about joining sides to do right.”
- But the Black Lives Matter Movement is not just aimed at addressing police violence, the Movement recently released a K-12 education platform designed to fix “a U.S. public-school system…so broken that college is never an option for many young people of color.”
- Amid these deepening divides and a growing wealth inequality, Andy Carroll from Exponent Philanthropy argues that philanthropy can no longer be expected to solve everything. Rather, we need partnerships among the public, business and nonprofit sectors to address our growing challenges.
- And then there was the tremendous flooding and devastation in Louisiana. Despite the fact that it was the largest natural disaster since Hurricane Sandy in 2012, the media and philanthropy largely ignored the disaster.
- Curtis Klotz from the Nonprofits Assistance Fund offers a phenomenal graphic to use in changing the conversation from “nonprofit overhead” to “core mission support” at your nonprofit.
- And speaking of how nonprofits use money, FASB (the Financial Accounting Standards Board) just released some significant updates to their standards for nonprofit accounting. The changes impact net asset classes, investment returns, expenses, liquidity and availability of resources, and presentation of operating cash flows. Every nonprofit leader should understand these important changes.
- Founder of Family Independence Initiative, Mauricio Lim Miller argues that just as businesses constantly use technology to understand consumer behavior, nonprofits should tap into technology to “let the people they serve dictate what works best.” And Melissa Chadburn might agree with Mauricio’s premise that fighting poverty requires a better understanding of the causes of that poverty given her scathing piece, “How Well-Meaning Nonprofits Perpetuate Poverty.”
- Penelope Burk’s annual fundraising study revealed that more donors are interested in results than ever before. Five years ago, only 16% of donors surveyed gave based on a nonprofit’s results vs. a whopping 41% this year. And research from MobileCause shows that Millennials and GenXers are now the vast majority of the U.S. workforce so if you want to reach them as donors you better be online and mobile.
- Ever the trailblazers in foundations interested in building nonprofit capacity, the David and Lucile Packard Foundation unveiled a fabulous new online Knowledge Center with tons of resources for improving nonprofit organizational effectiveness.
- Jim Schaffer questions how “philanthropic” the digital giants Amazon, Facebook and Google actually are. And Lucy Bernholz warns nonprofits of the dangers of trusting Facebook’s new fundraising offerings.
Photo Credit: radness.com.au
Something really interesting could emerge out of new federal rules about overtime pay. My hope is these new rules force a better conversation between nonprofits and their funders about the real costs of creating social change.
This coming December new Department of Labor rules will go into effect doubling the salary threshold for guaranteed overtime pay, from about $23,000 to $47,476 so that employees (in any sector) who make less than that threshold will be guaranteed overtime pay whenever they work over 40 hours a week.
This new rule has a potentially enormous impact on nonprofits, which (because of their resource-constrained nature) often underpay and overwork their employees. Many have pointed out what a burden this will place on an already strapped nonprofit sector, which often tries to squeeze ever more productivity out of staffs that are already working well over capacity.
As the National Council of Nonprofits argues, nonprofits receiving government contracts signed prior to this new ruling will be forced to deliver the same services at a higher cost:
“Nonprofits with government grants and contracts at any level of government (local, state, tribal, or federal) will now be put in the position of having to comply with new federal requirements that impose new costs not known when those grants and contracts were signed. Unlike businesses that can raise prices, or governments that can raise taxes or curtail public services, nonprofits with government grants and contracts may find themselves contractually bound to maintain services at increased costs that may not be expressly covered by existing written agreements.”
Certainly in the short-term this new overtime rule puts nonprofits in a really difficult position.
But I wonder if in the long-term this new rule could shine a light on the impossible situation in which many funders put nonprofits. With a new ceiling on just how many staff hours a nonprofit can get out of a dollar, I wonder if nonprofit leaders will be forced to stand up and say “Enough is enough!”
Writing in The Atlantic about the potential impact of the overtime rule change on nonprofits, Jonathan Timm seems to think the solution is for nonprofits to simply charge funders more for their services, as he put it:
“If nonprofits truly care about the well-being of their staffs, one easy place to start is simply to write higher salaries into budget proposals. Likewise, government and philanthropic funders could be a lot wiser in how they dole out money: Scarce public-service dollars can impose a state of financial stress on the people who put them to use.”
Ahhhh, if only it were that easy…
But at its core, that is the problem. Nonprofit leaders are wary of calculating and articulating the full costs (including all staff costs) of their programs, and government and philanthropic funders are unaware of and unwilling to pay those full costs. But with growing demands on a nonprofit sector already stretched to the brink, something has to give. Perhaps this new reality will force a conversation about what it really costs to address the social challenges we face, and how we must effectively and adequately support the nonprofit sector we have charged with addressing many of those challenges.
The problem has always been that nonprofit leaders are so committed to the work they do and so empathetic towards their clients that when budgets and staff are tight, those leaders simply work longer and harder and ask their employees to do the same. But with these new rules that can no longer be the case.
Program budgets will have to grow to reflect the real costs of those programs (including all of the countless staff hours previously hidden by free overtime). And funders who want more and more services at lower and lower costs will be forced to reckon with the actual costs of the programs in which they want to invest. These new overtime rules will force the “real costs” conversation that many in the nonprofit sector have been encouraging, where nonprofits calculate and report the full costs (including the actual cost of staff time to deliver the work) of the work that they do.
So instead of being a negative change, perhaps these new overtime rules could actually serve to propel nonprofits and their funders toward calculating, articulating and investing in what it really takes to create social change. Call me an optimist.
Photo Credit: Dave Dugdale