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Learning From Philanthropy’s Past: An Interview with the HistPhil Blog

Maribel MorayStanley KatzBen SoskisIn today’s Social Velocity interview I’m very excited to be talking with the co-founders and editors of the new History of Philanthropy blog: Benjamin Soskis, Stanley Katz, and Maribel Morey.

The HistPhil blog launched this past June and focuses on how history can shed light on current philanthropic issues and practice.

Because how can we hope to create social change without understanding the results of efforts that came before us?

Ben, Stanley, and Maribel are all academics with specialities related to history and philanthropy. Stanley is on faculty at Princeton’s Woodrow Wilson School and has also taught at Harvard, Wisconsin and Chicago. Benjamin is a Fellow at the Center for Nonprofit Management, Philanthropy and Policy at George Mason University and a consultant for the history of philanthropy program of the Open Philanthropy Project. And Maribel is a professor of history at Clemson University and is currently writing a book, From Tuskegee to Myrdal, which describes how and why white Americans in big philanthropy transformed from proponents of segregated education to advocates of racial equality.

Nell: Stanley, you write, in your inaugural post for the HistPhil blog, about the tendency of philanthropy to get swept up in “new” approaches that actually aren’t all that new. Is there really anything new in philanthropy right now? Are there any structural or cultural developments or approaches in philanthropy that are significantly different than in the past?

Stanley: It is hard to separate rhetoric from reality in the current environment of philanthropic hype.  From my perspective, the current boasting that all is new in philanthropy (see the recent New York Times “Giving” section), is pretty uninformed (naïve?).

One of the most common claims, repeated frequently in the New York Times piece, is that philanthropists are no longer simply trying to alleviate the “symptoms” of distress, but in fact are aiming to remove the underlying causes of social and physical problems.  This attempts to distinguish what the large foundations are doing from what the traditional foundations did in the 20th century (and of course no one is making this claim more loudly than Judith Rodin of the “new” Rockefeller Foundation.)

But the emphasis on the elimination of problems by identifying their root causes was the innovative claim of the founders of the first American foundations, best articulated by Andrew Carnegie and John D. Rockefeller, Sr.  So from this point of view there is not much new in the current aims of big philanthropy.

But what is actually new, and there is a lot that is new, is the determined focus on short-term, measurable, results — this is the mantra of the genuinely new “strategic” philanthropy.  The older foundations of course aimed to be effective, but they defined effectiveness much more loosely and measured it less precisely than current large foundations. This is an enormousdly important attribute of the current mega-foundations, and all the other foundations that have jumped on the “strategic philanthropy” bandwagon.

The current foundation rhetoric also makes use of a wide range of business metaphors, none more important than the notion that philanthropy is best thought of as “investment” in change, and frequently characterized, using the language of hedge funds, as “bets” on successfully producing change.  Much of the current language of philanthropy is drawn from venture capital activity, and the new philanthropy can also be thought of as “venture” philanthropy.  This is a new attitude.

The original philanthropists knew they were adapting the then modern techniques of business organization and management to their grantmaking, but they thought of philanthropy as different from business.  That distinction seems to have eluded much of the current generation of philanthropists.

But I need to say that I am a little uncomfortable with these large generalizations, since not all current philanthropists speak or act as I have just suggested — nor did the earliest generation of philanthropists.  But there is something new in the philanthropic air.  The question is whether that air is as salubrious as its current advocates claim.

Nell: Stanley, philanthropy got its modern day start in the missionary work of Europeans and Americans in third world countries. What, if any, parallels do you see in philanthropic work in developing parts of the world today?  

Stanley: Here the important fact is that the Rockefellers (John D. Sr. and Jr.) originally intended the Rockefeller Foundation to be a missionary foundation, operating mostly (possibly entirely) in China.  For a variety of reasons, in particular the influence of their advisor Frederick T. Gates (a minister who had turned in a secular direction), they abandoned the missionary focus in favor of a secular focus.  Their work in China, and especially the founding and support of the Peking Union Medical School, continued to have a missionary flavor, but their work in Africa and other tropical areas was more early medical philanthropy than missionary philanthropy.  They turned to the eradication of tropical diseases both because they were attractive to current medical research capacity, and because it was politically safe to engage in medical experimentation abroad — a lesson that Big Pharma learned from them later in the century.

But the emphasis of the large foundations, beginning in the 1960s, with grant-making in the underdeveloped world, was quite different, and unrelated to any neo-missionary instinct.  Many of the large American foundations at mid-century thought they could assist the process of decolonization and local self-determination by supporting a wide range of development activities in what was then called the Third World.  They later came to be attacked by neo-Marxists for allegedly supporting US and Western imperialism in the developing world, but that is a big subject all in itself.

Ironically, there is now a burgeoning effort by American evangelical business people to invest in private development projects, especially in East Africa, and this is a throw-back of sorts to much earlier notions of philanthropic support of development.  But it needs to be contrasted with the massive Gates Foundation public health efforts in Africa and elsewhere — an effort purely “strategic” in its inspiration.

Nell: Ben, historically, philanthropic giving has not grown above 2% of US GDP, why do you think that is and do you think there is any hope of changing that?

Ben: The answer to the 2% conundrum is the holy grail of the nonprofit sector, and I don’t pretend to have any certain answer about it myself. It’s worth noting, though, that 2% of GDP is still pretty good relative to other developed countries (in fact, by many measures, it’s one of the best rates). But it’s still confounding why it hasn’t budged for more than four decades. There’s obviously a tangle of causal factors at play, and I’ll just offer a few possibilities that have occurred to me in the course of my research, without making any claims that this is an exhaustive list.

Given the persistence of that rate, it makes sense to look for some equally persistent characteristic of the American nonprofit sector that has also remained unchanged over that long timespan. A recent article in the Chronicle of Philanthropy can give us a clue to a possible candidate. As part of their Philanthropy 400 ranking of the nation’s largest nonprofits, they note how little the list has changed from when it was first tallied in 1991 (especially when compared with the churning of the list of the largest for-profit companies). In part by dint of habit, and in part because of the power of the institution’s “brands,” Americans have tended to stick with a handful of large charities—through scandals, evolving social needs and changing fads.

As I pointed out to the Chronicle reporter (though my observations got a bit lost in translation; Josephine Shaw Lowell, a founder of the American charity organization movement, wouldn’t have suggested that bigger is better, only that a degree of centralization in charity administration was necessary), we can trace this development back to the turn of the last century, when charity reformers instituted a process of centralized, bureaucratized and professionalized giving. That is, from the late 19th century-scientific charity movement onward, individuals were warned that their disparate giving was too often haphazard, scattered, wasteful, and overlapping, and so were encouraged to hand over the administration of charitable resources to a centralized institution. The community chests and the United Way came out of this impulse; Catholic Charities succumbed to it as well.

It’s very possible that the development toward more centralization and professional administration has bolstered American giving by providing citizens with more confidence and by making decisions about where to give easier. But I think we also have to wonder whether it imposed a sort of cap as well, since it might have removed some of the immediacy, intimacy and individuality from the charitable exchange that could push individuals to give beyond an initial comfort point (which very well might be around 2%).

The Chronicle suggests that we might see more disruption in the list in the coming years, or at least that some of the big names, like the United Way, might be ceding ground. If that is the case, and if some of the space they occupied is filled with smaller upstarts, it’s possible we might see some movement beyond 2%.

Another possible factor worth considering for the persistence of the 2% rate is the declining role of religion in determining charitable allocations. I don’t only mean that the percentage of total giving going to religious institutions has been steadily declining over the last few decades. But also that giving itself has, for many Americans, become an increasingly secular activity.

Again, we can trace this back to the early 20th century, when charity reformers sought to “secularize” giving by stripping it of any sectarian taint and endowing it with a degree of rationality; the indiscriminate giver in their rhetoric was often an easily-duped priest. But it is also possible that the religious impulse to give is more easily able to push past the equilibrium of 2% and to ask individuals to make even deeper financial commitments.

Yet another factor preventing giving from crossing that 2% barrier might be media coverage of nonprofits. As I quipped in an article on the subject in the Chronicle last March, borrowing from Woody Allen, the coverage is generally pretty weak—and the portions are too small. That is, the media grants the sector relatively little attention, and when it does, it seems to suffer from what New York Times reporter David Clay Johnson has called a “Madonna-whore” complex: alternating between feel-good human interest stories and stories focused on nonprofit abuse. But stories that chronicle the difficult and important work many nonprofits are doing on a daily basis—they just don’t have the journalistic juice to make it into print. As the former nonprofit beat reporter for The New York Times, Stephanie Strom, told me, “A nonprofit just doing good isn’t news because everyone knows nonprofits are supposed to do good.” This might be changing, with a number of important online journalistic ventures out there, but I think there is a deep deficit in public knowledge about what nonprofits are doing—and this deficit could sap the public’s willingness to give more.

You also have to combine this media deficiency with the general conceptual muddle that has emerged with the blurring of private and public lines of funding social welfare provision in the last half century. Not only do American givers and tax-payers have to contend with a federated system (to say nothing of international structures of governance), in which various jurisdictions take up differing responsibilities for addressing social ills and needs. But we also inhabit what political scientist Jacob Hacker has termed a “divided welfare state,” in which public and private lines of responsibility for social welfare are increasingly blurred. Obviously, there’s opportunity in this blurring. But as scholars such as Lester Salamon have pointed out, it also can represent a sort of existential threat to the nonprofit sector’s distinctive identity and mission, which in turn might be restricting American’s willingness to dig in and give more.

Finally, it’s worth pointing out another powerful strain in the American charitable tradition—the devaluation of monetary gifts themselves in favor of the “helping hand.” At the turn of the last century, even while scientific charity reformers were attempting to rationalize giving, they were also trying to preserve traditions of neighborly assistance. The fact that such assistance could not be easily quantified and rationally appraised was regarded as a mark of its worth. And in many senses, it was considered a higher form of giving than monetary contributions. That idea is still with us today; and it’s possible that by focusing too much on the 2% rate, we miss other forms of voluntarism that have had more variability and elasticity over the years.

Nell: Maribel, during the Gilded Age great wealth concentrated among a few brought large philanthropy (Carnegie, Rockefeller, etc.) but also contributed to a subsequent progressive period (as the pendulum swung back against that excessive wealth). Do you see parallels between the Gilded Age and today, and do you think we are heading for a more progressive period? And what role do you think philanthropy will or won’t play in that?

Maribel: Indeed, many late nineteenth- and early-twentieth century Americans looked at Andrew Carnegie’s and John D. Rockefeller’s wealth (and even their philanthropy) with some suspicion.

Reflecting these Americans’ anxieties, for example, the United States Congressional Commission on Industrial Relations called John D. Rockefeller Sr. and his son in 1915 to defend the independence of the Rockefeller Foundation. As many scholars have noted, the Rockefellers had established a division of economic research in 1914 within the one-year-old foundation; and a few months later, the Ludlow massacre occurred at the Rockefeller’s Colorado Fuel Iron Company where women and children died when the state militia assaulted the strikers’ tent camp.

In response, the organization decided to organize a study on industrial relations under this new division and selected a close working friend of John D. Rockefeller Jr. (William Lyon Mackenzie King) to direct it. From the perspective of the American public, it was hardly easy to trust that gilded age tycoons who had undermined the rights of workers in the process of accumulating their wealth would have the interests of the people in mind when they funded social scientific projects to study the American populace. From this perspective, the Rockefeller Foundation was the playpen of industrialists who had defined interests in society and their policy-oriented social scientific research would be—far from disinterested—an extension of those interests.

And far from ignorant of Americans’ suspicions about gilded age levels of wealth, Andrew Carnegie himself discussed it head-on in The Gospel of Wealth (1889). Aware that Americans might find socialism an attractive alternative to capitalism, for example, he pitched philanthropy as the better form of wealth redistribution.

Today as then, Americans are confronting and discussing the great influence of leading philanthropists in public policymaking and of wealth inequality more broadly. However, I am not convinced that we are necessarily heading for a more progressive period.

I say this because I don’t see contemporary Americans reflecting the same level of angst about elite philanthropy nor with the broader topic of wealth concentration. Congress isn’t questioning leading philanthropists as it did with the Rockefellers in the early twentieth century nor do leading philanthropists seem threatened by Americans’ potential voting patterns, as Carnegie had been.

One key explanation might be that these earlier Americans entertained a vastly different meaning of American democracy than their successors today. For them, American democracy promised economic opportunity (or rather, freedom from class divisions) and an equal voice over public concerns. Today, it seems that the general American public and their representatives in Congress aren’t as convinced of this definition of American democracy. With a narrower understanding of American democracy, it might simply be more difficult for contemporaries to see how wealth inequality and elite philanthropy in public policymaking are democratic threats.

Philanthropies committed to resurrecting a more progressive period might just need to focus on ways to revive this earlier (dare I say, more robust) definition of American democracy and help empower Americans to fight for it.

Photo Credit: HistPhil

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10 Great Social Innovation Reads: October 2015

social changeOctober brought some great discussions in the blogosphere, including a forum on whether regulations around donor advised funds should change, concerns that we are working too hard, the need to better retain donors, and a debate about whether social media is (or can be) an effective fundraising tool. Round that out with examples of successful crowdfunding and volunteer skill crowdsourcing, and it was a good month.

Below are my picks of the 10 best reads in the world of social change in October. But, as always, let me know what I missed. And if you want a longer list, follow me on Twitter, LinkedIn, Facebook or Google+.

And if you want to see past 10 Great Reads lists go here.

  1. Donor advised funds (DAFs) have come under fire in recent years. There was an interesting discussion in October at the Boston College Law School Forum on Philanthropy and the Public Good about whether regulations on donor advised funds should be changed. In advance of that forum, history professor Lila Corwin Berman provided an historic perspective (on the HistPhil blog) including the fact that “donor advised funds fundamentally changed the balance of public and private power in the United States starting in the 1970s.”

  2. John Hopkins University professor Lester M. Salamon released a new book in October, The Resilient Sector Revisited: The New Challenge to Nonprofit America in which he lays out a framework for understanding America’s nonprofit sector. An excerpt from the book in the Nonprofit Quarterly examines “The 4 Impulses of Nonprofits“, as he describes it: “The nonprofit sector has long been the hidden subcontinent on the social landscape of American life, regularly revered but rarely seriously scrutinized or understood.” His book is an attempt to do just that.

  3. The Association of Fundraising Professionals and the Urban Institute released their annual Fundraising Effectiveness Survey Report with some startling data, like: nonprofits retained only 43% of their donors in 2014, and for every $100 a nonprofit brought in they lost $95 to lapsed and reduced gifts. So the challenge for nonprofits, says AFP president Andrew Watt, is to get better at retaining donors: “Donors do not simply choose a few charities to support and stick with them every year. Donors are remarkably inconsistent in their giving, whether it’s because they lost interest in a cause, were giving because a friend or family member asked them, or did not like how the charity was treating them. The charitable sector’s challenge is to figure out how to better inspire and retain donors from year to year.”

  4. And speaking of fundraising, Nonprofit Tech for Good donated $800 to 32 nonprofit organizations via the nonprofit websites and shared some important lessons for other nonprofits trying to fundraising effectively online. But Derrick Feldmann cautions that social media fundraising is not the panacea many board members might think. The new “Social Good Team” at Facebook might disagree because they have big plans for social media and the nonprofit sector.

  5. Kickstarter, the crowdfunding website, re-incorporated as a public benefit corporation in order to put their social good mission above profit, and then partnered with the United Nations to raise money for Syrian refugees.

  6. While we’re on the power of the crowd, in his ongoing Fixes blog, David Bornstein profiles, a crowdsourcing site that connects human right activists and skilled volunteers. As David Keyes, one of the leaders, describes the platform: “Amazon says that you don’t need to be a bookstore to sell a book and Uber says that you don’t need to be a taxi service to drive a taxi. I realized that you don’t need to be an N.G.O. to fight a dictator, or a political leader to help a human-rights activist. Millions of people around the globe have the skills to help, and they’re currently not being utilized. If we could build a bridge between these communities, more people could be helped than we ever thought possible.”

  7. And in more solutions news, South Los Angeles, once an urban food wasteland, is becoming a hub of food activism with a focus on startup, affordable eateries that are committed to building a strong, healthy community.

  8. Companies are already getting ready for the holiday season mix of commercialism and philanthropy and Amy Schiller worries that Bloomingdale’s “Icons w/ Impact” marketing campaign highlighting celebrities, fashion and philanthropy is a worrisome shift in philanthropy. But I’m hoping that the HistPhil blog will chime in with a reasoned, historical perspective.

  9. Poor strategy will get you in the end. The breast cancer nonprofit, the Susan G. Komen Foundation came under fire a few years ago for some poor strategic decisions (like aligning with Kentucky Fried Chicken and pulling funding from Planned Parenthood), and it looks like those decisions have dramatically affected their fundraising.

  10. Phil Buchanan from the Center for Effective Philanthropy has a problem with our workaholic culture. He and his organization have learned from the Millennial generation’s more balanced (than Gen X’s or the Boomer’s) approach to work and life, and he suggests we do the same: “The millennials don’t care that this is what we might have done at that stage of our careers. In fact, they look at us and are quite clear they don’t want to be us — they don’t want to make the same mistakes!” Amen!

Photo Credit: Museum of History and Industry, Seattle

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Networks, Social Movements, and Civic Tech — Oh My!

Last week I was in Miami for the Independent Sector conference, one of the largest gatherings of nonprofit and philanthropic leaders in the country. I really enjoyed it, in particular a few sessions that really got me thinking. Rather than give you a play-by-play of the conference (which you can get by viewing the Twitter feed) I wanted to share some big ideas that came out of the conference for me.

network entrepreneursNetworks Are Critical to Social Change
I am obsessed lately with this idea of a network entrepreneur, so the session “Connecting with the Right Kind of Network” where a panel of 7 network entrepreneurs explained how they used networks to varying degrees to move their social change goals forward was fascinating. Anna Muoio from Monitor Institute kicked off the session with her research on how social change networks operate (her wheel of network types is on the right). Then network entrepreneurs like Julieta Garibay from United We Dream, Tina Gridiron from Lumina Foundation, Clayton Lord from Americans for the Arts, and Sean Thomas-Breitfeld from The Building Movement Project, among others described their work to bring people and organizations together to work toward common change goals. These network entrepreneurs demonstrated how effective networks, as opposed to siloed organizations, can be in creating large-scale, systemic change. I’ll have more on this, because (as I said) I’m obsessed.

campaign financeOur Political System is Broken
Trevor Potter from the Campaign Legal Center gave a riveting plenary about our broken money in politics system. He took us through some scary facts (like the one to the left) about how challenged our democracy is right now, including the fact that presidential campaign fundraising more than doubled from 2004 to 2008, only 158 families account for more than half of the donations to the 2016 election so far, and 59% of Americans think our political system is broken. Depressing, but also an incredible opportunity to create change.

But Smart People Are Working To Fix Government
And there is hope! As I have mentioned before, “civic tech” (using technology to improve government and civic engagement) is a burgeoning field. The “Civic Tech Lab” session at the conference showcased 6 different civic tech solutions. They included TurboVote, which makes it easier for people to know where/when/how to vote; Textizen, which allows local governments to better communicate with and serve their citizens; and Open Referral which makes local social service data more accessible and usable. There are some really exciting innovations in this space.

freedom to marryState-by-State Change Is a Solution
And finally, most exciting, was the “What Winning Looks Like” session from Freedom To Marry, the nonprofit organization instrumental in the state-by-state strategy to legalize gay marriage. Their incredibly innovative digital approach helped to change public opinion and make gay marriage legal across the country. Especially in a time when the federal political system seems so broken, their approach to social change can serve as an example of how an alternative state-by-state strategy can work to change minds and laws. In fact, since Freedom to Marry is going out of business (because they have achieved their mission, how cool is that?) they will relaunch their website later this month with tools and resources for other social movements to use in their own efforts. I love it!

Lots of interesting things to chew on. You’ll hear more about these big ideas soon because I’ve convinced several of the amazing changemakers I met at the conference to participate in upcoming Social Velocity interviews. So stay tuned!


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Advocating for the Value Nonprofits Create: An Interview with Tim Delaney

UntitledIn today’s Social Velocity interview I’m talking with Tim Delaney, President and CEO of the National Council of Nonprofits, the nation’s largest network of nonprofits.

The National Council of Nonprofits helps nonprofits identify emerging trends, engage in critical policy issues, exchange proven practices across state lines, and advance their missions through advocacy. Previously, Tim served as a partner at a large law firm (helping prosecute the impeachment of a Governor and leading the firm’s government relations practice), Solicitor General and then Chief Deputy Attorney General (leading his state to win several cases in the U.S. Supreme Court), and founder of the Center for Leadership, Ethics & Public Service (championing ethical leadership and civic engagement).

Nell: Historically, “advocacy” has been a dirty word in the nonprofit sector. Organizations have been afraid of getting into trouble with the IRS for pursuing too much lobbying behavior. But that seems to be changing. What are your thoughts on how involved in advocacy 501(c)(3) organizations can and should be?

Tim: Yes, it’s perplexing that using words like “advocacy” and “lobbying” could get a nonprofit employee’s mouth washed out with soap. But seriously, advocacy is not just a right for nonprofits that is protected by the First Amendment; it’s a profound responsibility and effective tool to advance nonprofit missions.

Nonprofits provide a way for Americans to come together to solve problems, large and small. And they often do so through advocacy: simply standing up and speaking out for something they believe. Americans came together through nonprofits to advocate successfully in securing the right of women to vote (via suffragist groups), establishing Social Security (spearheaded by Townsend Clubs), desegregating schools (leadership by NAACP), securing civil rights (Dr. King delivered his “I Have a Dream” speech and undertook much of his work as President of the nonprofit Southern Christian Leadership Conference), and so much more.

But advocacy is not just for social movements. Advocacy includes standing up for your nonprofit’s right to be paid reasonably for services it provides under a government contract. Advocacy includes telling the story of your nonprofit’s impact to a reporter. We see advocacy as the answer to one key question: who can I talk to today to advance my nonprofit’s mission?

A barrier many nonprofits run into comes from what I call the “3 As” –uninformed academics, accountants, and attorneys who advise nonprofit boards by passing along false lore that there “might be legal problems” if a nonprofit does “too much” lobbying. Nonprofit staff come back from advocacy training fired up, but boards extinguish that passion based on false lore. After hearing stories like this from across the country, we’ve decided to turn advocacy training around. The traditional approach of “it’s legal” sought to counter the false lore, yet too often it led people to focus on arcane issues more remote than the fine print on your airline ticket or apps that you never read. Therefore, we now focus on “why” advocacy is essential to mission advancement and “why” nonprofits need to be engaged at the state level to protect against government attacks on tax exemptions, nonprofit independence, and charitable giving incentives.

As part of our effort to get nonprofits past those old barriers, we’ve joined together with Alliance for Justice, BoardSource, Campion Foundation, the Forum of Regional Associations of Grantmakers, and Knight Foundation to create Stand for Your Mission, a free website that provides nonprofit board members with information they need to be effective advocates in advancing nonprofit missions.

Nell: The National Council of Nonprofits has been on the forefront of the movement to get government to recognize the importance of funding nonprofits’ indirect costs. The recent OMB ruling mandating a minimum 10% indirect rate on most government grants and contracts with nonprofits seems like a watershed moment, but 10% is still pretty low and many nonprofits don’t understand the implications or how to benefit. What are your plans at the Council of Nonprofits to continue to move this issue forward?

Tim: As you noted, the 10% of modified total direct costs is just the minimum. For tens of thousands of nonprofits, just getting to 10% will make a huge difference. In its most recent State of the Sector Survey, Nonprofit Finance Fund found that 57% of nonprofits are being paid indirect cost rates of 9% or less. And Urban Institute found that of nonprofits reporting a problem, a quarter said that governments were paying them zero for indirect costs.

Now compare those paltry sums against research from Bridgespan showing that a more accurate range is about 25 to 35%. Certainly each case is different, but being reimbursed nothing or just 5% year after year when your real legitimate costs are always higher is debilitating, eroding effectiveness. Delivering sustained impact is impossible. So getting those nonprofits up to just the minimum will enhance sustainability to make a difference in their communities.

Importantly, 10% is just the floor. If a nonprofit is properly allocating costs and documenting its indirect costs, it can receive reimbursement for whatever those costs are, whether they are 20, 30, or even 40%. Getting paid for the true costs of delivering services can reduce burdens on nonprofits to fundraise for the difference, which frees funders from having to subsidize governments and allows nonprofits to dedicate more time to missions instead of diverted to filling funding gaps.

Seeing the OMB Uniform Guidance go into effect is just the beginning and underscores the importance of nonprofit advocacy. The mere issuance of OMB’s mandate doesn’t mean that the tens of thousands of local, state, and federal employees scattered across multiple departments, agencies, divisions, and offices will follow it or apply it properly. First, they need to become aware of it (which still has not happened), then receive training (same), and apply it consistently (same). Plus, states and localities often have contrary laws and policies on their books, requiring advocacy to change them to conform. OMB’s mandate involves a giant systems change, but the federal government still has not informed the system of what is required and the need to change policies and practices to abide by it.

David Thompson and Beth Bowsky on our team have been conducting dozens of in-person presentations and webinars across the country to ensure nonprofits are aware of their rights and how to advocate for proper implementation of the Uniform Guidance. Plus, we have been working with multiple state and local government associations to spread the word, and written numerous published pieces, including an overview, “Know Your Rights … and How to Protect Them,” that highlights potential compliance challenges.

In addition, we’re creating a series of short training modules for nonprofits to better understand their indirect costs. The key is for nonprofits with government grants and contracts to stand up for their rights to fair indirect cost reimbursement and to let their local state association of nonprofits and us know when governments are not living up to their obligations. Working through our network gives a nonprofit cover (so it isn’t fighting alone and having to worry about backlash) and strength in numbers to protect those rights.

Nell: This issue is also part of the larger movement to overcome the Overhead Myth in the nonprofit sector, the idea that “overhead” (or indirect costs) are bad and should be limited as much as possible. How close are we to truly overcoming this myth both among nonprofit donors and nonprofit leaders (who often keep themselves in these handcuffs)?

Tim: We still have a long way to go. OMB’s Uniform Guidance is a huge step forward because the federal government has now expressly acknowledged that indirect costs are legitimate and necessary. The sector needed a powerful external validating voice to overcome decades of treating mythology as orthodoxy. It’s inspiring to see that many private grantmakers have now adjusted their own policies or started to re-examine their past policies that unfairly limit payment for indirect/overhead costs.

However, the anti-overhead culture is deep seated and will take a long time to root it out. That’s true on both the funding side and the nonprofit side, given the powerful disincentives against claiming full costs. Nonprofits were forced to keep overhead artificially low by underinvesting in their infrastructure, staff training, and many other necessary expenses. Until we get so-called “watchdog” groups and reporters to stop using overhead ratios as false proxies for nonprofit efficiency (and get them to stop reporting overhead ratios as if they are a problem), and until all nonprofits are communicating with donors about their impact and what it truly costs to deliver that impact, everyone will still have work to do.

Nell: In both of these areas (advocacy and overhead) and in many others, nonprofits are treated like a second-class citizen. How do we get to a place where the critical role nonprofits play in our economy and in solutions to social challenges is recognized, and nonprofits are fully supported with the tools they need to be successful?

Tim: First and foremost, nonprofits must embrace our role as the place Americans come to solve problems and resolutely assert our role as advocates for the people and our communities. We often are on the front-line of vexing social challenges, giving us front-row seats to see the problems and the solutions. Who are we to hoard knowledge of solutions that could help our fellow neighbors? With the knowledge we hold and the clout we have (10% of the American workforce), we deserve a seat at policymaking tables. We need to proudly stand up, step forward, claim our space, and speak out for government to leverage its resources to solve problems at their source.

We need to tell the full story, not just of how many people were fed or acres preserved, but also the economic impact of the sector as a whole. For instance, CalNonprofits (the state association of nonprofits in California) published Causes Count about the economic clout of California’s nonprofits, and Donors Forum (the state association of nonprofits and grantmakers based in Illinois) released research on Social Return on Investment, showing the economic and social value of dollars invested in nonprofits.

As for being “fully” supported, that’s much more difficult. According to Nonprofit Finance Fund, last year – for the second year in a row – a majority of nonprofits didn’t have the resources to meet demand for their services. That’s going to be tough to turn around, especially as many nonprofits continue to be sliced by government budget cuts. Even as studies boast that individual giving is getting back to pre-Recession levels, that doesn’t make as much of a difference as most people think. Despite the focus on individual giving, it makes up only 9.3% of the sector’s overall revenue. Foundations are an even smaller percentage: 1.9%. Government grants and contracts make up a much larger portion – 32.3% – of the sector’s revenues. That’s why our focus in this area is so important.

Photo Credit: National Council of Nonprofits

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A Monster List of Social Change Blogs

social changeIt is (almost) Halloween again, so it’s time for my annual Monster List. I’m posting early this year because I’m gearing up for the Independent Sector conference at the end of this month.  While past Monster Lists have focused on social change books, or conferences, or tools (you can also see lists from 2014, 2013, 2012, and 2011), today’s list is about social change blogs (and online sites and social streams).

There are some incredible ones out there. Some have phenomenal long-form thought pieces, some have a really unique perspective, some are really cantankerous (I love that!), and some aren’t even blogs, but rather online aggregators or forums. Some post daily and some only post once a month or once a quarter.

But what they all have in common is that they will really make you think.

As with all of my Monster Lists, not everything on the list is directly related to social change. Rather, everything on the list has something to offer social change leaders, whether that was the creator’s original intent or not. I firmly believe that we have to get outside our normal walls and normal haunts in order to be inspired, find new solutions, and see things differently. I regularly check the places on this list because I think they have something unique and important to say. And they each help to move my own thinking and writing forward.

But I know there are many more places out there, so please add your favorites to the list in the comments.

Photo Credit: Fred Gwynne and Yvonne DeCarlo in The Munsters 1964 by CBS Television

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3 Signs of a Bad Nonprofit Strategic Plan

nonprofit planningI’ve been leading several strategic planning processes lately, and as we wrapped up the last planning meeting for one of my clients (who had been encouraged to create a strategic plan by a funder) my client announced:

“I have to confess that when we started this process 6 months ago I inwardly rolled my eyes because I thought it would be a pointless process, full of silly buzzwords and with little value. I have completely changed my mind. I can already see how this new plan is making us smarter, more effective and more sustainable.”

Yep, I completely get it.

Strategic planning, when poorly done, is just a joke. But, when strategic planning is done well, it can completely transform an organization.

And there are three key places where a bad strategic plan falls short:

  1. Your Strategy Isn’t Big Enough
    To create an effective strategic plan you have to start with the big picture. You must analyze and articulate who your target audience(s) are and your theory of change. Then you must look externally to understand the needs, the competitive landscape, the funding, the changing factors in the marketplace in which you operate. Nonprofit leaders sometimes mistakenly think they are creating an effective strategic plan when they sit in a room, look around at their fellow board and staff members, and ask each other what they think they should do. It is also a mistake to think that in such a rapidly changing world you can simply develop a status quo strategy. In order to stay relevant and sustainable you have to understand how you interact with the forces outside your walls and outside your control. And here’s a little secret: the more you think about the bigger world out there, the more excited your board and funders will be by the plan. Your nonprofit doesn’t exist in a vacuum, neither should your plan for the future.

  2. Your Strategy Isn’t Small Enough
    But the other danger is to get too big and neglect the small part — the execution and monitoring of the plan. It’s great to have a bold vision and ambitious goals for the future that flow from an exciting theory of change. But that’s not enough. How will you implement it? How will you break down tasks, and responsibilities? What’s the timeline? And what is your process for determining, on a regular basis, whether the plan is actually coming to fruition? A good strategic plan, one that will actually transform your organization, requires operational detail and a process for monitoring it over time.

  3. Your Strategy Ignores Money
    There is no effective strategic plan that neglects to answer how you will finance it. That’s why a good strategic plan devotes one of its goals to money. How much will it cost to deliver on all of the goals of your plan? How will revenue (and capital if you need it) flow to meet (or exceed) those expenses? A good strategic plan forces nonprofit leadership to become financially savvy (when they may not have been before) and begin to use money as an integral management tool.

How does your nonprofit’s strategic plan stack up? Is it big enough, small enough, and well financed? If you want to learn more about what a strategic planning process looks like, check out my Strategic Planning page or download the Strategic Planning benefit sheet.

Photo Credit: ESO/H. Dahle

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Why I’m Excited About the Independent Sector Conference

independent sector conferenceLater this month I will be heading to Miami for the annual Independent Sector conference. I haven’t been to this conference before, so it’ll be new for me. And I’m excited about it for a number of reasons.

First, former CEO of Independent Sector Diana Aviv spent the last six months on a “listening tour” talking to nonprofit leaders around the country to get a sense of the trends and challenges they face. She recently announced her departure from Independent Sector to lead Feeding America. This will be her last chance to report on what she’s learned and where the sector should focus moving forward. She’s gathered the data, and she’s on her way out, so I imagine she will have lots of interesting things to say.

Because of Aviv’s listening tour, Independent Sector has organized this year’s conference around six key trends she found shaping the sector: 1) Disruption from inequality and environmental degradation, 2) Greater ethnic diversity and new generations of leadership, 3)Technology transforming learning, gathering, and associations, 4)Swarms of individuals connecting with institutions, 5)Business becoming increasingly engaged in social and environmental issues, 6)New models for social welfare and social change.

Beyond these trends, I’m also excited about the conference because it will be one of the first large, national discussions about the Performance Imperative. Launched by the Leap Ambassadors earlier this year, this new definition of a high-performing nonprofit has certainly been shared and discussed widely (including on this blog), but this is one of the largest presentations of the PI among so many nonprofit and philanthropy leaders. It will be interesting to hear what they have to say about it.

The schedule also includes some fascinating breakout sessions, like the one where Hewlett Foundation’s Daniel Stid and GuideStar’s Jacob Harold will discuss nonprofit cost structures and why we need to Pay What It Takes to Get Results. Amen! And philanthropic visionary, Lucy Bernolz’s Future of Philanthropy session should be eye opening.

Finally, this conference will be an incredibly impressive gathering of 1,000+ thought leaders and social changemakers. There are so many people on the attendees list that I’d love to meet. Perhaps I can convince a few of them to participate in a future Social Velocity blog interview.

So that’s where I’ll be the last week in October. If you can’t make it, you can view the livestream here, or follow the Twitter stream #ISEmbarks2015. I’ll be Tweeting and blogging from the conference, as time allows. If you are planning to be there, let me know, I’d love to see you!

Photo Credit: Independent Sector

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10 Great Social Innovation Reads: September 2015

social changeIn September there was some surprising good news about climate change. Yes, you read that right. We are perhaps, slowly, starting to address that problem (mind blowing, huh?). And in other news, there was a call for funders to help nonprofits become better fundraisers and some tools to help nonprofits use data in that pursuit.

Add to that concern about what digitial technology is doing to our humanness and critiques of Teach for America, proposed changes to philanthropy policy and an emerging “network” entrepreneur, and it was a very interesting month.

Below are my picks of the 10 best reads in the world of social change in September. But let me know what I missed. And if you want a longer list, follow me on Twitter, LinkedIn, Facebook or Google+.

And if you want to see past 10 Great Reads lists go here.

  1. If the world of social change is getting you down, if the challenges we face seem insurmountable, look no further than the New York Magazine where Jonathan Chait sees hope in the battle against climate change. As he puts it: “The willpower and innovation that have begun to work in tandem can continue to churn. Eventually the world will wean itself almost completely off carbon-based energy. There is, suddenly, hope.” Wow.

  2. Writing on the Blue Avocado blog, Aaron Dorfman from The National Committee for Responsive Philanthropy takes foundations to task for wanting their grantees to be financially sustainable, but not helping them build that capacity, “Why don’t more foundations invest in helping their organizing grantees develop independent funding streams? Here – as with many issues grantees face – even a little targeted capacity-building support would go a long way.” Yes, yes, a thousand times yes!

  3. One of the ways nonprofits can build fundraising capacity is by learning to use their data more effectively to raise money. To help in that effort, The Chronicle of Philanthropy put together a helpful toolkit of articles and case studies.

  4. And speaking of fundraising, the ALS Foundation continues to amaze me. In September, they released a nice infographic to the many donors of the 2014 Ice Bucket challenge reporting where their $115 million in donations went. Great donor stewardship and transparency!

  5. There seems to be a growing concern about what technology is doing to our humanness. Callie Oettinger writes “While social media has made sharing easier, allowing us to connect with the rest of the world, I often think about what would happen if people stopped trying to connect with the rest of the world and instead spent their time 1) creating value and 2) sharing value, rather than…creating crap and sharing crap.” And MIT professor Sherry Turkle released a new book, Reclaiming Conversation that argues we must “acknowledge the unintended consequences of the technologies to which we are vulnerable [and] make corrections and remember who we are — creatures of history, of deep psychology, of complex relationships, of conversations, artless, risky and face to face.”

  6. A new series launched at The Washington Post about the newest buzz phrase in the world of philanthropy, “effective altruism.” This is the idea that you should “optimize your donations to ensure that they are as “high-impact” as possible.” It is a fascinating and controversial idea.

  7. To counter the hype about “social entrepreneurs,” Jane Wei-Skillern (who wrote one of my favorite articles ever about networked nonprofits), David Ehrlichman, and David Sawyer introduced a new concept they call “network entrepreneurs.” As they put it, “Where social entrepreneurs often struggle to scale their own organizations despite heroic efforts, a network entrepreneur’s approach expands far beyond the boundaries of their own organization, supporting peers and partners across sectors to solve the problem. Not surprisingly, the potential for impact increases exponentially when leaders leverage resources of all types—leadership, money, talent—across organizations and sectors toward a common goal. And as a result of this work, we celebrate the change-generating network itself above any single person or institution.”

  8. I know I keep talking about how much I love the new History of Philanthropy blog, but this month was a perfect example of the tremendous value they bring the social change sector when Jeffrey Snyder explained how old and new philanthropy to support K-12 education differ. Fascinating. And it’s particularly interesting in light of Dale Russakoff’s new book that describes how Facebook founder Mark Zuckerberg’s $100 million donation to Newark public schools in 2010 hasn’t accomplished a whole lot.

  9. And that wasn’t the only educational reform effort that came under fire in September. Samantha Allen of the Daily Beast chronicled a growing chorus of critiques of Teach for America.

  10. Philanthropic visionary Lucy Bernholz released a list of proposed changes to philanthropy policy that will keep up with changing times. As she put it: “It’s time to recognize that the tax code is no longer the fundamental policy frame shaping philanthropy and nonprofits…it should be obvious that tax privilege is only one factor that Americans consider when thinking about using their private resources for public benefit…The tax code was the 20th century policy infrastructure for philanthropy. Digital regulations will provide the scaffolding and shape for 21st century associations and expression — aka, civil society.”

Photo Credit: Evan Bench

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