Health care groups urged to diversify investments

Health care organizations should adopt a new endowment model that reduces their reliance on fixed income assets such as bonds and cash, and increases allocations to alternative investments and other illiquid assets, a new white paper says.

The new model was developed over three decades by educational institutions and increasingly adopted by other types of nonprofits, and shifting to it and reaping benefits from it could take decades, making that shift “all the more urgent,” says Assessing the State of Healthcare, the white paper from the Commonfund Institute.

“It is in the interest of health care organizations, rating agencies and donors that health care endowments evolve toward becoming more like those of other long-term nonprofit institutions,” the white paper says.

Nonprofit health care organizations typically operate with “razor thin margins, or even at a deficit, the paper says, and they get revenue from reimbursement from government, by far the biggest source, and from income from private insurers and self-pay patients, and through support from donations or transfers from endowments they may have.

Any excess of reimbursements and income from insurers and patients over costs represents the “operating margin” for these organizations.

A 2012 Commonfund study found that, among 86 nonprofit health care organizations surveyed, the median operating margin in fiscal 2011 was 4.1 percent, up from 2.9 percent in fiscal 2008.

The increase reflects cost cutting across the industry, with big health care organizations making the greatest progress but smaller organizations catching up.

Large organizations made early progress “because they realized they would have to reduce operating expenses and took steps to change their cost structures to capture greater economies of  scale.”

Smaller health care organizations followed the lead of those bigger organizations, taking “what actions they could to lift their previously low — and even negative — operating margins.”

But because bigger groups can spread cost reductions over a wider base of patients and constituents and weather reimbursement reductions the paper says, they will reap greater benefit than smaller and mid-sized groups with proportionately higher fixed costs.

Those smaller and mid-sized organizations will rely more heavily on endowments to “enhance surpluses and make up for losses,” the paper says.

Most health systems use bond issues to fund construction projects and improvements, it says, and successful bond offerings depends in large part on the bonds earning a high rating from bond rating agencies.

And bond agencies “look not only to the ability of the health care provider to generate cash flow but also to the liquidity of its endowment’s financial assets as a potential backstop source of repayment,” the paper says.

As a result, it says, assets allocations of health care endowments tend, on average, to be weighted more heavily toward cash and fixed income investments than those of other types of nonprofits.

And that bias away from traditional equity investments generally have returned less per year than other nonprofits, the paper says.

“This practice seems increasingly to resemble a luxury that will eventually become unsustainable as other sources of revenue for health care organizations continue to diminish,” it says.

While allocations to fixed income investments and cash total nearly 40 percent of the portfolio of the average nonprofit health care organization, the paper says, health care organizations are better off with more highly diversified portfolios, managed “with prudent regard to liquidity,” to support bond repayment.

For small and mid-sized health care organizations that “lack the ability to spread costs over a wider patient base,” the paper says, “a greater degree of reliance on endowment income appears inevitable, and there is little time to lose.”

— Todd Cohen

A Child’s Place works to equip kids to learn

By Todd Cohen

CHARLOTTE, N.C. — Early in 1989, seeing some children playing in a downtown Charlotte cemetery, a group of women who worked nearby asked them why they were not in school.

The children said they were not allowed to go to school because they were living in a shelter with their mother.

The women, in turn, visited school officials and then First Presbyterian Church, securing contributions, respectively, of a teacher and a Sunday classroom it could use for homeless children.

That marked the birth of A Child’s Place, a nonprofit that today provides services for 2,200 homeless children in elementary or middle schools, or 45 percent of the more than 4,900 enrolled children the Charlotte-Mecklenburg Schools have identified as homeless.

That official count does not include an estimated 1,700 children too young to be in school and an estimated 1,500 middle school and high school students believed to be homeless and who are “skilled at hiding what is their most guarded secret,” says Annabelle Suddreth, executive director of A Child’s Place.

“Homelessness has a devastating effect on children,” she says. “They are more likely to be hungry, sick, fall behind in school, and worry. Most of the kids we work with feel like their housing crisis is somehow their fault. We work to erase the impact of homelessness on children and their education.”

Operating with an annual budget of $2.1 million, a staff of 35 people and 500 volunteers who give an hour a week of time each, A Child’s Place provides a range of services, including providing school supplies. school uniforms and snacks for the evening; helping to fulfill students’ medical and dental needs; and working with roughly 150 government, nonprofit, faith and for-profit partners that help provide housing, food, employment and other services for family members.

Charlotte Family Housing, for example, works with families on a range of housing options, such as providing emergency shelter; a two-year program to get people moved into housing; and transitional housing.

And Elevation Church provides donations that fund a social worker in the schools to work with children, as well as hundreds of volunteers who donate an hour a week to serve as a lunch buddy or tutor a student, while other church members provide a snack, school uniform, school supplies or toiletry items.

The bulk of the annual budget at A Child’s Place pays for 10 social-work teams that work directly with students on a daily and weekly basis in 33 schools with high incidence of homelessness.

From the moment they meet students when their buses arrive at school in the morning, members of those teams make sure any problems or worries the students may have are addressed, while also providing monthly education programs for parents.

A Child’s Place also provides an eight-week summer camp that serves 150 children.

Depending on its makeup, each team costs from $100,000 to $110,000, and the investment is producing results, Suddreth says.

While only 64 percent of homeless children nationally are promoted and only 48 percent read at or above grade level, 97 percent of children served by A Child’s Place are promoted and 81 percent read at or above grade level.

“The schools’ responsibility is education,” Suddreth  says. “We take the responsibility to eliminate all the barriers to getting that child in school and learning.”

Fundraising, Part 9: Independent school partners with parent volunteers

By Todd Cohen

[Note: This article, the last of nine, is from a report written for Blackbaud, which asked me to look at fundraising strategies that nonprofits have found to be effective.]

Annual fundraising at independent schools traditionally has been a “slog,” says Kimberly Kubik, director of institutional advancement at Shady Hill School in Cambridge, Mass.

Geared to a school year that begins in late summer or early fall and ends in late spring, schools see a flurry of giving at the end of the calendar year, followed by the doldrums in January, February and March, and then another flurry of activity at the end of the school year.

To break out of that pattern, Shady Hill School last summer decided to use a model The Fay School in Houston had pioneered several years ago that compressed its annual fund campaign into five weeks.

Co-chaired by two parents, the Shady Hill School campaign tweaked that model, aiming to generate 100 percent participation from parents in 100 days, and raise $100,000 in challenge funding that would serve as an incentive to generate that full participation by parents.

First, the school’s advancement office secured four $25,000 anonymous challenge gifts from four families of current students.

A key element in the strategy was that it was driven by parents, and parents understand how parents think, Kubik says.

“No matter how many times the advancement office sends out a letter, it’s just another letter,” she says.

Guided by the parent co-chairs of its “100/100/100” campaign, Shady Hill School sent a weekly email to its parents that told short stories of no more than a paragraph each about what was happening in the classroom, for example, or with employees, or between teachers and parents.

Each email also included a short message underlining the importance of the annual fund to the school’s programs and people.

And the $100,000 challenge grant, which depended on 100 percent participation by parents, gave volunteer parent fundraisers “license to have conversations with people around annual giving,” Kubik says. “They could first talk about the challenge, and then say, regardless of the size gift, ‘You will help make that $100,000 challenge gift possible and be part of the team that supports the school.'”

That conversation, in turn, led to questions from parents about the annual fund, and why it mattered whether they supported it.

“These people they were talking to had never asked that before,” Kubik says.

The campaign not only met its goal for parent support, raising $1.2 million, including the challenge grant, she says, but it “has created a community that better understands the annual fund and what it’s for, and a sense of teamwork, that we’re all doing this together.”

Development offices “have to be more open to engaging and partnering with dedicated volunteers, listening carefully to their ideas and their awareness of the culture of philanthropy within the parent body,” Kubik says.

“This challenge was all about parents, not alumni, and working as partners to engage, fundraise and create a culture of giving based on an understanding of how the annual fund works and why it is such an integral part of an independent school’s operating budget,” she says.

The icing on the cake is that, having completed the parent portion of the annual fund campaign in December, Shady Hill School can now focus on alumni giving for the remainder of the school year.

On average, alumni participation totals about 9 percent among elementary schools that are members of the National Association of Independent Schools, Kubik says.

Shady Hill School, which has alumni participation of 27 percent and ranks in the top five among NAIS elementary schools, has set a goal for this school year of 35 percent.

“Regardless of where an elementary school is, the beauty of an annual fund being shortened to 5 weeks or 100 days, is that it allows us to focus on alumni,” Kubik says.

The strategy at Shady Hill School for doing that is to increase the number of alumni events to 23 in 2013 from seven in 2010.

In addition to creating opportunities for alumni to “come together and reconnect,” Kubik says, those gatherings include a brief talk by the head of school or a faculty member that includes asking all alumni who are present to share a memory of the school.

“You don’t want to tell donors why they should give,” Kubik says. “You want them to tell you why they should give.”

The series:

Fundraising, Part 1: Basics key as economy starts to recover

Fundraising, Part 2: Health care groups invest in development capacity

Fundraising, Part 3: Human services groups focus on direct response marketing

Fundraising, Part 4: Museums aim to diversify donor base

Fundraising, Part 5: Major gifts a focus of environmental group

Fundraising, Part 6: Direct marketing a key for public society benefit group

Fundraising, Part 7: International affairs group aims to show

Fundraising, Part 8: Faith-based groups count on direct mail

Fundraising, Part 9: Independent school partners with parent volunteers

Nonprofit news roundup, 03.15.13

Nonprofits sought for entrepreneurship competition

The General Administration of the University of North Carolina System is looking for five to seven nonprofits that would like to work with graduate students to address challenges their organizations face either in extending their charitable work into a new service or activity area, or in launching a new activity to generate net revenue to help further their mission.

Nonprofits that are selected will work with graduate students from UNC campuses in a competition that will culminate in the UNC Social Entrepreneurship Conference early in 2014.

Interested nonprofits should outline and submit their proposals to UNC General Administration by April 8 at 5 p.m.

For a copy of the request for proposals and a letter outlining the competition, contact Leslie Boney, vice president for international, community and economic engagement at UNC General Administration, at

Greensboro United Way hosting African American Leadership Series

Education will be the focus of the 2nd annual African American Leadership Speaker Series to be hosted by United Way of Greater Greensboro on March 22 from 9 a.m. to 3 p.m. at the Elm Street Center in downtown Greensboro.

Keynote speaker will be Soledad O’Brien, special investigations correspondent and host of CNN’s morning show, Starting Point.

At the event, Johnnetta B. Cole, director of the National Museum of African Art at the  Smithsonian Institute, will receive the African American Leadership Founding Award, while Edward B. Fort, chancellor emeritus at N.C. A&T State University, will receive the 2013 Lifetime Achievement Award.

Medical Society Foundation receives grant for physician leadership

The North Carolina Medical Society Foundation received $75,000 from The Physicians Foundation to develop the infrastructure of the Kanof Institute for Physician Leadership, which will serve as the umbrella organization for the Medical Society Foundation’s existing NCMS Leadership College and two new educational tracks for physicians in North Carolina, and also will pilot the curriculum of one new track and develop a technology platform to follow leaders and evaluate their impact over time.

Crisis Assistance Ministry gets challenge pledge from five families

Crisis Assistance Ministry, a homeless prevention agency in Charlotte, received a challenge from five families that agreed to give $250,000 to the agency if it can raise that amount by April 8. The families include Margaret and Randy Bigger; Paul Franz; Carol and Joe Gigler; Laura and Mike Grace; and Dick and Connie Keffer. In its most recent fiscal year, the agency served 19,714 households with emergency rent and utility assistance, provided free clothing and household goods to 36,196 individuals, and distributed essential bedding and furniture to 2,766 families.

Urban Ministries of Durham raises $52,000

The Empty Bowls event hosted by Urban Ministries of Durham attracted over 1,200 people and raised $52,000, funds that will allow the agency to serve an additional 26,000 meals in its Community Café. Over 700 locally hand-crafted bowls were distributed at the event, which last year attracted 900 people and raised $30,000.

North Carolina Healthy Start Foundation gets capacity-building grant

The North Carolina Healthy Start Foundation has received a $10,164 capacity building grant from the John Rex Endowment in Raleigh it will use to undertake a comprehensive organizational assessment and set organizational priorities in the next six months.

Established in 1990, the North Carolina Healthy Start Foundation works to reduce infant death and illness and to improve the health of women and young children in the state. The agency’s major initiatives include building the capacity of state and community-based providers and agencies to better address the health and health-related needs of the women they serve, and educating women about behaviors that can lead to better health and healthier babies.

HandyCapable Network distributes computers to school

HandyCapable Network in Greensboro will distribute 120 refurbished computers to students at Peck Elementary School, an effort supported by funds from Cemala Foundation, Ecolab/Kay Chemicals Foundation, and Gannett Foundation.

Cooper to speak at Justice for All Luncheon

North Carolina Attorney General Roy Cooper will be the key speaker at the annual Justice for All Luncheon of Legal Services of Southern Piedmont and Legal Aid of North Carolina on March 19 from noon to 1 p.m. at The Westin Charlotte.

Easter Seals UCP opens center

Easter Seals UCP has opened its Yager Group Multi-Sensory Environment at the Easter Seals UCP Children’s Center on 716 Marsh Road in Charlotte, a facility that is the first community accessible multi-sensory room on the East Coast and is designed to help children with sensory processing disorders.

TROSA names two board members

Nick Tennyson, executive vice president of the Home Builders Association of Durham and Orange Counties, and former Durham mayor, and Matt Springer, founder and managing director of Madrock Advisors of Chapel Hill, have joined the board of directors of the Triangle Residential Options for Substance Abusers, or TROSA, in Durham.

Greensboro United Way supporters honored

Five supporters of United Way of Greater Greensboro were among 43 organizations that received The Spirit of North Carolina Awards for Campaign Excellence from United Way of North Carolina, including Lorillard Inc., for outstanding business campaign for 1,501 to 2,500 employees; Carolina Bank, outstanding financial or banking institution campaign for 101 to 200 employees; Greensboro Housing Authority, outstanding nonprofit agency campaign for 101 to 200 employees; Guilford County Schools for outstanding school campaign for 5,001 or more employees, an award shared with United Way of Greater High Point; and E. P. Pearce Elementary for outstanding school campaign for 50 to 100 employees.

United Way honors High Point University

High Point University was honored with five awards from the United Way of Greater High Point, including the Spirit of North Carolina Award; Gold Status for Employee Campaign Award; Eagle Award for leadership in giving; Chairman’s Award for best practices; and Outstanding Achievement Award.

The school, which was named the city of High Point’s fourth largest contributor for the 2012 campaign, was one of only two universities in the state to receive the Spirit of North Carolina Award in the category for Educational Leadership.

The University’s United Way Campaign raised over $185,000, an increase of 387 percent since 2005 and up from $166,000 in 2011.

Roughly 80 percent of employees contributed, and the campaign was completed in fewer than 45 days.

In addition to the employee campaign, students, faculty and staff contribute over 50,000 volunteer hours in the community and raise funds for community initiatives throughout the year.

According to the United Way’s calculations, the University’s 50,000 volunteer hours are valued at nearly $1.1 million in the community.

Children’s Home Society names new board members

Children’s Home Society of North Carolina in Greensboro named new members to its board of trustees, including, all from Greensboro, Kelly Jones, a former operating nurse; Susan Larson McDonald, vice president of human resources for VF Corporation; Ken Stevens, retired chairman and owner of Heat Transfer Sales of the Carolinas; and Liz Summers, owner of Advancing Leadership Consulting; as well as Wanda Starke of Forsyth County, co-anchor of the WXII evening news; and Alexander “Sandy” Thompson of Charlotte, senior vice president at Wells Fargo Insurance Services.

Council on Foundations, Commonfund Institute team up

The Council on Foundations and Commonfund Institute are combining resources to create a new study of private U.S. foundations that will cover a broad range of topics, including investment returns, portfolio management, asset allocation, spending rate and policy, debt, fees and expenses, liquidity, investment office staffing, consultant use and investment committees. Findings will be gathered using an online survey instrument and will cover the year ended Dec. 31, 2012.

Schwab Charitable partners with NGOSource

Schwab Charitable, a national donor-advised fund, is partnering with NGOsource, a new legal service that assesses whether a foreign grantee can be considered the equivalent of a U.S.-public charity and qualify for tax-deductible donations.

Fundraising, Part 8: Faith-based groups count on direct mail

By Todd Cohen

[Note: This article is from a report written for Blackbaud, which asked me to look at fundraising strategies that nonprofits have found to be effective.]

In the faith-based market, direct mail, online strategies and Christian radio have proven effective in acquiring donors, says Rick Dunham, president and CEO of Dunham+Company, a Dallas-based consulting firm that works with 50 faith-based organizations in six countries.

Effective direct mail strategies are focused on acquisition, conversion and personalization, he says.

Acquisition includes renting targeted lists that are “populated with people we know through profiles that show the kinds of donors that would support the organization,” he says.

Those lists need to be tested through “packages” that may tweak the wording on the envelope or reply card, or try different pieces of packaging “to see what will motivate the donors to actually give,” Dunham says.

Conversions also are important and represent a strategy “where most organizations fall or don’t do well at all,” he says.

“They think that because a new supporter has given them a gift, they’re actually a donor to the organization,” he says. “All it means is they gave a gift. It doesn’t mean they’re a supporter.”

But studies show “you don’t really have a bona fide donor until the third gift,” he says.

His firm’s strategy is for its clients to “have a specific communication pathway we take a new donor on to encourage that second gift,” he says.

Those communications are personalized and include a combination of direct mail and telephone, as well as online communications if a donor’s email address is available.

Finally, effective direct mail requires “ongoing cultivation and retention, using direct mail and newsletters to keep a donor engaged, inspired and supporting the organization.”

His firm’s clients typically send out a mailing every month, with some clients also distributing a print newsletter each month.

Many of those clients also generate “online touch points,” providing online news and information about the organization’s impact, for example, or testimonials of people whose lives the organization has affected.

To develop major donors, nonprofits should use a combination of offline and online contact, and direct mail letters, with the “messaging really geared for a major donor relationship,” Dunham says.

“You assume the individual will continue to support you because they are a major donor and heavily invested,” he says. “So the character of the letter is not to convince them to give but to demonstrate the impact of their giving.”

In their fundraising, nonprofits should recognize that “people don’t care about your organization,” Dunham says. “What they care about is what your organization does and the impact it makes.”

So rather than focusing its communication with donors “around the needs of the organization,” nonprofits should focus on “the potential impact in the life of the individual, and emphasizing and demonstrating that,” he says.

“At the end of the day, we’re all relational beings, and donors have emotional relationships to organizations and causes they represent,” he says. “As with any good relationship, the frequency and regularity of communication has everything to do with building a good relationship, along with the content of the communication.”

Next: Independent school partners with parent volunteers

The series:

Fundraising, Part 1: Basics key as economy starts to recover

Fundraising, Part 2: Health care groups invest in development capacity

Fundraising, Part 3: Human services groups focus on direct response marketing

Fundraising, Part 4: Museums aim to diversify donor base

Fundraising, Part 5: Major gifts a focus of environmental group

Fundraising, Part 6: Direct marketing a key for public society benefit group

Fundraising, Part 7: International affairs group aims to show

Fundraising, Part 8: Faith-based groups count on direct mail

Fundraising, Part 9: Independent school partners with parent volunteers

Greensboro Urban Ministry works to serve homeless

By Todd Cohen

GREENSBORO, N.C. — One in four children in North Carolina lives in poverty, including four in 10 children of color.

In Guilford County, public school officials have identified over 2,600 children who are homeless.

“We’re seeing huge increases in poverty and are trying to help families, particularly with children, to get on their feet,” says the Rev. Mike Aiken, executive director of Greensboro Urban Ministry.

Formed in 1967 to help coordinate emergency assistance that local congregations were providing, the agency now serves roughly 30,000 people a year, operating with an annual budget of nearly $3.9 million and a staff of 30 people working full-time and 30 working part-time.

In addition to emergency assistance, which is its biggest program and includes financial assistance, rent, heat, utilities and food, the agency provides a broad range of services, including a soup kitchen, emergency shelter for adults, winter emergency shelter, family shelter, transitional housing, support to get people quickly into their own housing, and a chaplaincy program.

Its Potter’s House Community Kitchen, for example, serves 600 people a day, seven days a week, while its 100-bed Weaver House night shelter served just over 1,300 single adults in 2012.

This winter, it is housing just over 300 additional single adults at its winter emergency shelters.

And last year it housed 61 families, including 71 adults and 135 children, at its Pathways Family Shelter, which includes 16 efficiency apartments.

Greensboro Urban Ministry also operates Partnership Village, a transitional housing community that includes 32 studio apartments for formerly homeless individuals and last year housed 49 adults.

Pathways Village also includes 24 three-bedroom apartments and 12 two-bedroom apartments that together served 42 formerly homeless families last year.

Another program, launched in 2010 and known as Beyond GUM, or Greensboro Urban Ministry, last  year helped 231 individuals and four families move into their own housing.

Beyond GUM reflects a “rapid rehousing” strategy, known as Housing First, that organizations fighting homelessness throughout the U.S. increasingly are adopting.

“The game plan to end homelessness is to get people who are homeless their own home as quickly as possible and to give them as much or as little supportive services as needed to stabilize their lives,” Aiken says.

In Guilford County, Greensboro Urban Ministry is part of a “continuum of care” known as Partners Ending Homelessness, a network of roughly 50 organizations that work together to coordinate services, including the rapid rehousing strategy.

And rapid rehousing is cost-effective, Aiken says.

The cost of housing a family for a month at the agency’s Pathways Family Shelter is about $2,100 a month, compared to a cost of $1,200 a month for a family to pay its own rent and receive supportive services, he says.

“It’s really a lot cheaper if you can get families and individuals directly into their own homes,” he says. “We don’t need more shelter, but we need more permanent homes for people.”

At Greensboro Urban Ministry, which counts on support from individuals for over half its annual budget, key goal is not to build more shelters, Aiken says, but to help families and individual obtain the resources they need to secure “affordable, safe housing,” and to “provide more case management and supportive services to help more individuals and families break out of homelessness and stay housed.”