Nonprofit news roundup, 01.30.15

Maine plan would require big charities to pay local property taxes

Colleges, hospitals and other big charities in Maine would be required to pay local property taxes under a budget plan from the state’s Republican governor to cut taxes for families and businesses, The Wall Street Journal reported.

If approved, the plan would make Maine the first state in the U.S. require charities to pay local property taxes, the Journal said.

Laws in every state exempt churches and federally-designated nonprofits from property taxes. Nonprofits say they need that special status because they provide critical programs that governments typically do not provide, the Journal said.

Giving grows, donor retention improves

Giving to U.S. charities, and their retention of donors, grew for the fourth straight year and neared their levels before the economy collapsed in 2008, a new report says.

For every $100 a charity gained in 2013 from new donors, the return of previous doors, and increased giving from current donors, it lost $92 from lapsed doors and smaller gifts from current donors — for a positive gain of $8, says the 2014 Fundraising Effectiveness Project Survey Report.

In 2009, every every $100 a charity gained, it lost $19.

Still, for every 100 new and returning donors, 102 departed without a gift, for a net loss of two, although that was an improvement from a net loss of five donors in 2012 and a net loss of seven donors in 2011, the report says.

The Fundraising Effectiveness Project was developed by the Association of Fundraising Professionals and the Urban Institute, working with donors software providers.

Positive messages seen getting more donations

Charities that support a cause are more likely to raise money over the long-term than charities that oppose a problem, a new study says.

The study, from the David Eccles School of Business at the University of Utah, analyzed financial data from nonprofits’ tax filings over 10  years, measured donor pledges to a registered nonprofit, and examined actual donation behavior in a lab study. It analyzed donations both of time and money.

The study defined a “supportive” message as one such as “Feed The Children,” and a “negative” message as one such as “Stop Child Hunger.”

While negative messages have bee shown to attract attention in the short-term, the study found that supportive messages “prevail over time,” a co-author of the study says in a statement.

The study, “What’s in a Message? The Longitudinal Influence of a Supportive Versus Combative Orientation of the Performance of Nonprofits,” will be included in the February print edition of the Journal of Marketing Research and can be found on its website.

Nonprofits report greater use of management tools

Nonprofits’ use of management tools such as strategic planning, benchmarking and “collective-impact” collaboration is widespread, and nonprofits expect to increase use of those tools in 2015, a new report says.

Relationship-oriented tools are popular throughout the sector, with partnerships and collaboration at the top in use and satisfaction, says the Nonprofit Management Tools and Trends Report 2014 from The Bridgespan Group.

The report, based on 481 surveys completed by nonprofit leaders, says respondents generally find the tools they use to be useful, and that increasing effort to apply them usually — but not always — leads to significant increases in satisfaction.

It also finds that while nonprofit leaders see a need to increase performance measurement, few believe funders will increase support for evaluations.

And it finds that while many nonprofits consider talent management a key issue, 60 percent have not taken advantage of tools that could help assess and develop employees.

Nonprofits and foundations collaborating, see barriers

Collaboration is widespread among nonprofits and foundations, and while they are highly satisfied with their collaborations, they see big hurdles to greater collaboration, a new study says.

Ninety-one percent of 237 nonprofit CEOs and 101 foundation officers surveyed say they are engaged in at least one type of collaboration, and 80 percent viewed those collaborations as highly successful, says Making Sense of Nonprofit Collaborations, the study from the Bridgespan Group.

Collaborations typically involve associations, including coalitions and community collaboratives; joint programs; shared support functions; and mergers.

Funders and nonprofits alike want more formal collaboration, particularly through shared support  services and mergers, the study says.

It also identified barriers to collaboration, and found that nonprofits and funders disagree over what those barriers are.

Nonprofits say they don’t get much funder support for collaboration, for example, while funders say nonprofits don’t ask for that support.

Nonprofits also say the biggest barrier to collaboration is the difficulty of finding the right parters, while funders rate that is the lowest barrier.

And nonprofits say joint programs have the highest failure rate and too often are driven by funder requests, while funders say joint programs don’t fail.

Charitable giving projected to grow

Sixty-seven percent Americans planned to give as much as more to charities in 2014 than in 2013, up from 59 percent who said they planned to give more in 2013 than in 2012, a national survey reported in December.

Thirty-seven percent of roughly 1,000 respondents said the amount they give to charity depends mainly on confidence in their own economic situation, while 12 percent said the amount depends on how people are faring generally, and 16 percent said they weigh a mix between their personal situation and the situation of others, said the survey from the Saint Leo University Polling Institute in Saint Leo, Fla.

Widening tech gap found among nonprofits

A gap is growing between nonprofits that are quickly adopting technology and those that are falling behind, a new survey says.

While 84 percent of 80 nonprofit senior executives surveyed by GiveCentral report their organizations are embracing technology change, the survey says, 27 percent do not have a formal email communication schedule in place, and only 10 percent send weekly email messages to donors.

Another 26 percent still send weekly printed newsletters.

As a result, GiveCentral says in a statement, “nonprofit senior executive are leaving many opportunities on the table to communicate and engage with donors to build stronger relationships and increase giving.”

Schwab Charitable gives $928 million

Schwab Charitable says it gave $928 million in grants to charities for its donors in 2014, up 25 percent from 2013.

Appreciated investments or assets represented 71 percent of contributions into Schwab Charitable, which says it has facilitated roughly $5 billion in grants to over 91,000 charities on behalf of its donors since it was formed in 1999.

Fidelity Charitable gives $2.6 billion

Fidelity Charitable says it made over 620,000 grants totaling nearly $2.6 billion recommended by its donors in 2014, up 24 percent from 2013.

Fidelity Charitable has made over $19 billion in grants to over 190,000 charities, or 63 percent of contributions to it, since it was  formed in 1991.

National Christian Foundation posts growth

Stock giving and the number of new funds more than doubled in 2013 and 2014 at the Raleigh chapter of the National Christian Foundation, while grants it gave set a new record, the chapter says.

Donated stock grew to $7.1 million in 2014 from $3.7 million in 2012, while the number of new funds grew to 100 from 63, and grants it gave grew to $13.2 million from $9.6 million.

Homeless programs in North Carolina get $21.2 million

The U.S. Housing and Urban Development awarded nearly $21.2 million in grants to support 184 local programs in North Carolina that provide housing and services for homeless people. The grants were among $1.8 billion in grants the agency awarded throughout the U.S. to help end homelessness.

North Carolina ranks poorly for residents ‘scraping by’

North Carolina ranks 41st among the states for its high number of low-wage jobs, 42nd for its high number of low-income residents who lack health insurance, and 44th for its high number of low-income residents who lack a four-year college degree, according to  new data in the 2015 Assets & Opportunity Scorecard from the Corporation for Enterprise Development.

ArtsGreensboro awards $18,000 to artists

ArtsGreensboro awarded a total of $18,000 to 12 artists in the region from among 37 who  submitted applications requesting a total of over $90,000.

Tomorrow Fund raises $34,000

The Tomorrow Fund for Hispanic Students raised over $34,000 at its 4th annual Celebrating Immigrants’ Dreams fundraising event on January 15 at Brier Creek Country Club in Raleigh that attracted 180 guests.

The Tomorrow Fund provides college scholarships for low-income North Carolina Hispanic students.

United Way, BB&T offer free income-tax preparation, filing

Households that earned $53,000 or less in 2014 can get free income-tax preparation and filing services on February 27 at United Way of Greater Greensboro.

United Way has teamed up with BB&T Bank for its second annual Family Economic Success Day, which will feature IRS-certified volunteer income tax preparers, plus information and instruction on financial topics.

The BB&T Bus will be parked at United Way headquarters at 1500 Yanceyville, St. and will serve as a Volunteer Income Tax Assistance site for the day.

BB&T also will be offering free credit reports to those who qualify.

Advertisements

Building community by investing in nonprofit capacity

By Todd Cohen

[Note: This was written for Triangle Community Foundation.]

RALEIGH, N.C. — Marbles Kids Museum created a program to train its staff to help develop early literacy skills in visitors to the museum.

Triangle Family Services developed metrics on the use of its space that helped dramatically reduce the “no-show” rate among its clients.

Both Raleigh nonprofits were among 22 in the Triangle that received grants from Triangle Community Foundation to assess their operations, and among 21 that received additional grants to use those assessments to strengthen their organizational “capacity.”

The Foundation’s total investment in the effort, which included learning “cohorts” designed to provide training for participating nonprofits and help them share best practices with one another, was $330,000.

“Running a nonprofit is a business, and one with an extremely important outcome,” Pat Nathan, a member of the Foundation’s board, told 85 guests attending TCF Connect, an event in October at the North Carolina Museum of Art attended by 85 Foundation donors and nonprofits.

A similar event for donors and nonprofits was held in Durham and attracted 40 people.

Building capacity

Building the capacity of nonprofits in the region that work in the fields of youth literacy and community development is the focus of the first phase of a “People and Places” initiative Triangle Community Foundation launched in 2014 that also will invest in nonprofits working in the fields of land conservation and the arts.

The Foundation decided to make capacity-building in those four fields of interest its focus as the result of a two-year effort to assess its grantmaking with advice from donors, nonprofits and civic leaders from throughout the Triangle.

Lori O’Keefe, the Foundation’s president, told donors and nonprofits attending TCF Connect that its dollars for making discretionary grants are limited and its donors want to see the “direct tangible impact” of grants from their funds.

“As much as we want to give from our hearts, we have to invest in organizations’ ability to grow and expand and be successful,” O’Keefe said. “We have to be accountable for what the return on investment is.”

In the fiscal year that ended June 30, 2014, discretionary funds available for grants to community programs totaled $1 million, or the investment income on 15 percent of the Foundation’s $189 million total assets.

“It’s important for us as donors to recognize that for organizations to feed more kids or buy more books,” O’Keefe said, “they have to be able to invest in their infrastructure, much like a business.”

Literacy, community development

Nathan, founder and president of Dress for Success Triangle NC and a former sustainability executive at Dell, moderated a panel that focused on the issue of organizational capacity and included Sally Edwards, president of Marbles; Alice Lutz, CEO of Triangle Family Services; and O’Keefe.

Since Marbles was formed seven years ago through the merger of Exploris and Playspace, hundreds of thousands of children have visited the museum, Edwards said.

“We knew we had such an opportunity to make such an impact in early literacy but didn’t have the capacity to make it,” she said.

So with a grant from Triangle Community Foundation, Marbles assessed its capacity in the area of youth literacy, looking at factors such as its staff and exhibits to determine how it might best improve its organization to better focus on early literacy.

A second grant from the Foundation allowed Marbles to develop and launch a program in collaboration with Motheread, a Raleigh-based national training and curriculum development organization, to train its staff to help develop the early literacy skills of visitors to the museum.

Triangle Family Services, which works to help families experiencing family violence, financial crisis and mental health issues, was looking for ways to streamline its operations.

With five business units spread across multiple locations and operating seven days a week, the agency was using a complicated process for assigning its rooms for clients to meet with its staff.

Triangle Family Services used an initial grant from Triangle Community Foundation to  identify the need to improve that process, and used a second grant to develop and adopt a “systemizing of metrics and measures across all program areas to make it simple and accessible” to assign space for clients, Lutz said.

The result: A reduction — to 5 percent from 18 percent — in the no-show rate among mental-health clients.

Gearing for change

The “People and Places” initiative is part of a larger effort at Triangle Community Foundation to find ways to be a more effective partner to donors, funder of nonprofits and resource on local community issues, Lacy Presnell, chair of the Foundation’s board, told guests at the TCF Connect event.

“When we work together,” he said, “we are stronger and can increase the positive impact we have on our communities.”

In the fiscal year ended June 30, 2014, he said, the foundation received over 220 gifts totaling over $25.2 million, and made over 3,700 grants totaling over $15.4 million invested back into the community.

In assessing its grants, he said, the Foundation found the biggest fields of interest that received funding were education, arts and culture, followed by housing and human services, religious activities, and health care, he said.

Today, with $189.4 million in assets and celebrating its 30th anniversary and the 100th anniversary of community foundations in the U.S., Triangle Community Foundation is “trying to stay in step with rapid growth in the region,” said Presnell, who serves as general counsel for the state Department of Environment and Natural Resources.

Retooling for impact

O’Keefe said the focus of the Foundation’s grantmaking is local, with three-fourths of all its grantmaking remaining in the Triangle, and donor advised funds accounting for nearly two-thirds of the grant dollars that stay in the region.

The Foundation has been retooling, looking for “how to best deploy the flexible funds that have been given to us by past and current donors, and how to put them back into the community for the best use,” she said.

In talking to donors, the Foundation learned that while they were “excited about the programs, they were not always sure how it connected back to their funds and grantmaking.”

And finding that donors already were funding programs in the areas of youth literacy, community development, the arts and the environment, she said, the Foundation decided to focus on capacity-building in those four areas.

Partnering for success

Jessica Aylor, director of community investment at Triangle Community Foundation, told guests at the TCF Connect event that partnerships with nonprofits is one of central roles the Foundation is playing.

“We are taking more of a partnership approach with our programs, trying to strengthen the capacity of nonprofits, giving them grants and putting them in learning cohorts” where they can learn from one another, she said. “Stronger nonprofits end up with greater impact in the community.”

Funding for the Foundation’s “People and Places” community programs that focus on youth literacy, community development, land conservation and the arts is available from Fund for the Triangle, created through gifts to the Foundation by donors “who wanted us to be more strategic in our funding,” she said.

Getting involved

In addition to donating money, said panelists at TCF Connect, donors to Triangle Community Foundation and to nonprofits have many other opportunities to get involved with nonprofits they care about.

Donors can contribute time as volunteers, either working directly with a nonprofit’s clients or in the back office, or can serve on boards, committees and task forces, they said.

At Marbles, for example, a donor could volunteer to help deliver programs or with committees such as one working on a master-planning process to expand the museum’s campus, Edwards said.

And at Triangle Family Services, donors can serve on boards, task forces or a facilities committee that currently is looking at how to get a sump pump for the organization, or can attend a coffee chat with the CEO on the first Friday of each month from 8:30 a.m. to 9:30 a.m.

Donors, nonprofits and local residents also can attend the Foundation’s What Matters event on April 1, 2015, that will feature stories about giving and data on the Triangle, and will focus on “how the region is changing and how to be thinking for years ahead,” Aylor said.

This past April, the What Matters event attracted 500 people and focused on community innovation.

“Community foundations,” she said, “are places for people to learn together and support causes they care about.”

O’Keefe agreed.

“The community foundation field is about connecting resources to opportunities and needs,” she said. “The more we learn together, the more work we can do.”

Nonprofits take on capacity challenges

By Todd Cohen

[Note: I am working with Triangle Community Foundation as senior communications adviser.]

Housing for New Hope in Durham and Communities in Schools of Wake County both found a better way to collect data to help show funders their impact.

Camp High Hopes at YMCA of the Triangle found a more personal way to tell the story of its impact on kids.

And Durham Interfaith Hospitality Network found untapped support among its supporters to contribute some of the funds it needed.

Those lessons were among many that the four groups and other nonprofits learned through a program Triangle Community Foundation launched this year to help strengthen nonprofits that focus on youth literacy and community development.

The Foundation selected 22 organizations to participate in the first phase of the effort, awarding 20 of them about $2,500 each to conduct an assessment of their organizational capacity and inviting two representatives of each organization to participate in a “learning cohort.”

Of the two representatives from each nonprofit, one played a leadership role at the organization, and the other was involved either in youth literacy or community development.

“Funding and resources for capacity building are always the top struggle we hear about from nonprofits in our community,” says Lori O’Keefe, president of Triangle Community Foundation.

“We are attempting to fill this gap that many of these organizations see in their ability to build their capacity and strengthen their mission,” she says. “Having stronger nonprofits means they will be able to have a larger, collective impact on the issues they are working on in these areas.”

Capacity workshops

Participants in the learning cohort attended three workshops on topics that included how to work with consultants; data collection, evaluation and “logic modeling;” and how to tell a nonprofit’s story.

Nonprofits face a broad range of needs involving their organizational “capacity,” and they have a broad range of awareness about those needs, says Micah Gilmer, senior partner at Frontline Solutions, a consulting firm that designed and facilitated the workshops for Triangle Community Foundation.

Participants also shared with one another how they identify their organizational needs, and attended Triangle Community Foundation’s “What Matters” community luncheon in Raleigh on April 2, as well as a special session just for them with Leslie Crutchfield, the keynote speaker at the conference, who talked about the role of innovation and “collective impact” in making a difference on pressing community issues.

Story-telling

Communicating more effectively is a key need among all nonprofits, Gilmer says.

“One thing all of us can do better is being able to tell our story, and being able to talk in real terms about the people we’re touching, the lives we’re changing, and the way our work is connected to the broader challenges our state and our region face,” he says.

A big part of telling that story, he says, is to use data in a way to shows “you understand what the challenges are but also have real innovative solutions that can turn things around.”

Participants in the workshops agreed.

Karen Barlow, development specialist at YMCA of the Triangle, says that in preparing grant applications to support Camp High Hopes, a summer program for at-risk kids, she had used data to show the number of children who can or cannot read at grade level.

What she learned at the workshop on storytelling, she says, was that “you need to tell the story of the kid as much as you can because people are going to identify with him or her.”

At the workshop, led by writer Scott Huler, she says, she also learned that a good story also needs “a main character, a conflict, a climax and a resolution.”

So, instead of simply citing the percentage of elementary school students who are reading below grade level, for example,  her funding requests now might begin by saying that “Louis can barely read,” and then explain how Camp High Hopes addresses that need, and the difference it makes for Louis, she says.

What she learned, she says, was “how to bring your story to life as much as you can,” and how to “write a stronger narrative, or an application with a story,” and “illustrate your program better with a person rather than facts and figures.”

Data collection

Melissa Hartzell, development director at Housing for New Hope, a Durham nonprofit that provides access to integrated services, health care and housing for people who are homeless, was looking for a way to better collect data on its impact so it could give funders a better picture of the difference it was making.

During a conversation at one of the workshops, she says, she mentioned that her agency lacked that data to show the improvement in school among homeless children with access to stable housing.

Based on a suggestion from another workshop participant, Housing for New Hope now is working with the families it serves and the schools their children attend to obtain their test scores.

It will use that information to better tell its story to donors, Hartzell says.

Roberta Hadley, director of strategic initiatives at Communities in Schools of Wake County, says the agency also has been looking for a better way to collect data that show its impact on students it serves.

One of its community learning centers, for example, serves 60 to 65 students after school. While the students all live in the same community, they attend up to 25 different schools, making it a challenge to track data on their performance in school.

Partly as a result of the workshop session on data, Communities in Schools has centralized its data collection and now is working with staff at the central office for the Wake County Public School System to collect data, rather than having staff members at individual learning centers try to gather that data from multiple schools.

Data evaluation

Catherine Pleil, executive director of the Durham Interfaith Hospitality Network, or DIHN, says her agency is moving to a new model for delivering its services, and needed to make better sense of its data on donors and potential donors.

The agency, which has provided emergency shelter for homeless families by rotating where they stay among over 30 congregations, now aims to provide families with stationary housing.

To raise the money to do that, DIHN used its capacity-assessment grant from Triangle Community Foundation to hire consultants Moss+Ross to analyze its database of supporters.

The analysis found that, while the agency has a large database of supporters, many of them may not be contributing as much financial support as they can, reflecting untapped capacity for DIHN to raise the funds it needs to support its new strategy.

Capacity challenges

Gilmer says cuts in government funding for social services has created new capacity issues for nonprofits already facing big capacity challenges.

Not only do nonprofits face often complicated reporting requirements tied to the government funds they continue to receive, he says, but they also need to find ways to diversify their funding base as government support shrinks.

The key is to “communicate why and how they’re doing what they’re doing,” he says. “As folks encounter bureaucracy, don’t lose sight of the human element of what they’re doing. Tapping into new funding sources means in many cases learning a new language to talk about your work that conveys the value for the funders.”

In the face of government funding cuts, he says, it is important “to have a funding community that’s really well informed about the challenges that nonprofits face, and that is responsive to their needs.”

What’s next

Now that the cohort has wrapped up, many of the organizations have applied for phase two funding from the Foundation. That funding will focus on helping to put into effect strategies to improve organizational effectiveness that were identified during the assessment phase. Grantees for phase two will be announced in late summer.

“We are really excited to be working intentionally and strategically in this space, to bring together effective organizations to learn from each other, and to build their capacity as well as their drive to collaborate,” says Libby Richards, senior community programs officer for the Foundation.

“We will use the feedback garnered from this first learning cohort,” she says, “to shape the coming year’s program and look forward to seeing the impact that this investment will have on the nonprofit participants and the community.”

Government-funded nonprofits slammed; fixes seen

Government contracts and grants can create big problems for nonprofits, but proven solutions are readily available, two new reports say.

Among nearly 56,000 nonprofits with government contracts or grants, or both, in 2012, nearly three-fourths reported problems with the complexity of — or time required for — applications and reporting, according to the “National Study of Nonprofit-Government Contracts and Grants 2013: State Rankings” from the Center on Nonprofits and Philanthropy at the Urban Institute.

“Contracting with multiple agencies is a way for organizations to diversify their income and protect themselves from risk, but it also can complicate administration for nonprofits because different government agencies have different reporting application and reporting processes and requirements,” the report says.

A second report, by the National Council of Nonprofits, says that problems in government-nonprofit contracting systems throughout the U.S. are “profound, thoroughly documented and, most importantly, solvable.”

Solutions recommended in the report are “tested, free or relatively inexpensive,” and readily available,” says the report, “Toward Common Sense Contracting: What Taxpayers Deserve.”

Government partnerships diverse

Contracts and grants vary in structure and administration, the Urban Institute report says. Some require nonprofits to share the costs of programs or services the contracts and grants fund, while some limit the types of activities on which nonprofits can spend money.

Restricting spending for program administration or overhead costs is common, the report says, with 50 percent of nonprofits reporting limits on spending for program or overhead costs, and 53 percent reporting limits on spending for general administration or overhead costs.

“These limits can severely undermine an organization’s capacity and effectiveness by restricting its ability to adequately manage its programs or invest in staff and equipment,” the report says.

Previous reports

The new report follows a national survey in 2010 by the Urban Institute that found the recession had had “dire effects on nonprofits’ funding from government and private sources, in a time when the demand for services was higher than normal,” and a second national survey it conducted in 2012 that found that nonprofits still were dealing with many of the same problems as in 2009.

That second survey found nonprofit-government contracts and grants reached roughly 56,000 nonprofits and totaled $137 billion.

The new report provides data on government contracts and grants with nonprofits, problems encountered, and the current fiscal situation of nonprofits in each state, as well as state comparisons.

Problems not ‘anomaly’

The new data from the Urban Institute confirm that the government-nonprofit contracting problems documented in its 2010 study “were not an anomaly” of the recession, the National Council of Nonprofits says in its report.

“The serious problems persist nationwide,” it says. “Nonprofits performing work on behalf of governments still confront policies, laws and attitudes that deny reimbursement for the full costs of providing those services.”

Nonprofits continue to “encounter wasteful application processes and costly reporting regimes that defy logic, consistency or fairness,” it says. “Once contracts are signed and work is commenced, governments often unilaterally change contract terms and conditions mid-stream, regardless of written commitments or the added costs those changes impose on nonprofits.”

And governments “often pay nonprofits late — sometimes more than a year after the nonprofits incurred the costs on behalf of government,” it says.

All those problems “add billions of dollars in unnecessary costs to nonprofits and taxpayers alike,” it says.

Late payments

Forty-five percent of nonprofits responding to the Urban Institute survey reported that late payments by governments are both frequent and “debilitating,” the National Council of Nonprofits says in its report.

On average, it says, past-due amounts owed to each nonprofit totaled $200,548 from state governments, $108,500 from the federal government, and $84,899 from local governments.

‘Complexification’

Seventy-two percent of nonprofits surveyed by the Urban Institute reported the “complexification” of reporting requirements, says the report from the National Council of Nonprofits.

That problem takes a variety of forms, including “duplicative audits, overlapping and inconsistent compliance procedures, retroactive imposition of reporting requirements, incompatible and inconsistent data collection, and a lack of standardization that injects vagaries into an already complex process,” the report says.

“Rarely is it clear to nonprofits if and how the government even uses the information that often is expensive to collect and report,” it says.

Solutions

The National Council of Nonprofits report includes 16 recommendations for policymakers, executive-branch officials, lawmakers, and governments at all levels take steps to spur collaborative solutions to problems with government-nonprofits contracts and grants; improve accountability for full and prompt payments; eliminate “unilateral mid-stream contract changes;” and simplify complex application and reporting requirements.

Todd Cohen

Membership groups suffer job loss from recession

Nonprofit membership organizations in Indiana that count on members for voluntary and financial support have taken a big hit from the recent recession and recovery, a new report says.

Indiana membership nonprofits lost over 1,000 employees and over $15.6 million in payroll, adjusted for inflation, from 2007 to 2011, says “Indiana Nonprofit Employment: Historical Tends in Membership and Related Organizations, 1995-2011” from Indiana University and Johns Hopkins University.

Before the recession, membership groups grew, the report says, with employment at those organizations increasing 8 percent and inflation-adjusted payroll growing 32 percent from 1995 to 2011.

For that period, membership organizations employed 12 percent of all nonprofit employees in the state, on average, and paid 8 percent of all Indiana nonprofit payroll, on average.

Nonprofit membership groups face no for-profit competition because there are no for-profit membership groups, although nonprofit membership industry groups may compete with one another, particularly for members’ time and resources, the report says.

Within each of five membership-group industries — civic and social; business, professional, labor and political; grantmaking and giving services ; social advocacy; and religious — some charities vastly outperformed other nonprofits not registered with the IRS as 501(c)3 charities in growth in employment and payroll.

Employment from 1995 to 2011 grew by nearly half at charitable civic groups, for example, but fell by over a fourth at other civic nonprofits.

And the impact of the recession varies among industry groups.

While employment loss was minimal at grantmaking and social advocacy organizations, for example, jobs have declined steadily at business and professional organizations, which lost over 1,600 employees from 2000 to 2011.

 The report is a joint project of the School of Public and Environmental Affairs, Indiana Business Research Center at the Kelley School of Business, and Lilly School of Philanthropy, all at Indiana University, and the Center for Civil Society Studies at Johns Hopkins University.

Todd Cohen

Board effectiveness tied to ‘cultural forces’ at nonprofits

The success of nonprofit boards, whose role has changed dramatically and become increasingly critical to the success of their organizations, depends on

“cultural forces” on the board and at the nonprofit, a new white paper says.

Those culture forces include capable leadership, a sound organizational structure, attention to fiduciary duties, and a culture that binds board members to one another in a cohesive unit, says the white paper from Commonfund Institute.

“How well a board functions determines, in large measure, the fortunes of the organization it governs,” the paper says. “Mediocre or middling performance may enable an organization to survive, but rarely to thrive, while weak or dysfunctional boards may jeopardize their organization’s very existence.”

Strategy, not tactics

The paper, “Strive for the Best: Building and Maintaining an Excellent Board,” says a board’s role is strategic, not tactical, and that its main task is oversight, or reviewing and assessing management’s success in carrying out its job.

The board should engage in active supervision of management and staff, it says, setting standards that are clear and objective, making sure job descriptions are known and understood, and seeing that senior staff members do a good job supervising the organization’s actual operations.

Because of its fiduciary responsibilities, a board must protect it’s nonprofit’s mission and protect against drifting from that mission in ways its charter does not permit, says the paper, which was written by John S. Griswold, executive director of Commonfund Institute, and William F. Jarvis, managing director.

Purpose and direction

In defining the mission and monitoring progress, the paper says, the board must provide purpose and direction to the staff, while in its oversight duties it needs to stay focused on governance and avoid getting involved in operations.

The paper says policies must be in place so that in case of conflicts of interest — with board members’ own interests, or with the interests of another organization with which board members are involved — the conflict will be disclosed and neutralized.

The structure of a board can help or hurt its effectiveness and is key to improving its performance, the paper says, and smaller boards generally are believed to function more effectively.

Picking board chair, executive director

Selection of the board chair is the single most crucial factor in a board’s success, and board orientation is the crucial first step, the paper says. A particularly useful practice, it says, is to assign an existing board member to serve as mentor to an incoming member.

And arguably the most critical task for the board, it says, is to select, hire, support, evaluate and, if needed, replace the president or executive director.

“Only a high level of board performance can create and sustain the energizing, inspiring and motivating environment in which the organization and its constituencies can excel,” the paper says.

The biggest impact on improving a board, it says, may be rooted in “cultural forces inside the board and organization.”

The most important of those forces is “trust among the board members, the chair and the senior staff,” it says.

Beneficial outcomes of that trust, it says, include “elimination of functional silos and narrow mindsets that can result in turf battles or in refusal to become involved outside the well-defined limits of a particular committee function,” it says.

Trust, recruiting, metrics

The “climate of trust must be created from the top,” it says, “with the board chair serving as the role model and this behavior as the template for committee chairs and committee members.”

Recruitment also is critical for creating a board that can excel, the paper says.

“Effective board members need not be heroic leaders or deep visionary thinkers,” it says, “but they must be thoughtful and authentic individuals who can inspire by example and motivate others in a non-threatening way.”

Also essential for successful boards is creating a “measurement system for the board that is comprehensible, relatively simple and not susceptible to manipulation,” the paper says.

Boards need “reasonably objective methods of assessing their own accomplishments, recognizing areas for improvement and development appropriate action plans,” it says.

So a board should try on a regular basis to “obtain a comparatively objective set of measurements by which it can judge its success against the goals it has set for the organization and itself,” it says.

‘Cultural attributes’

“Excellent boards are built on a clear understanding of their duties as fiduciary and governing bodies” of nonprofits, the paper says.

With that foundation, it says, a board “is positioned for maximum effectiveness when it can benefit from strong leadership by the chair, a properly structured committee system, engaged and committed board members and a sound relationship with senior staff members,” particularly the president or executive director.

“Cultural attributes such as leadership, trust, transparency and candor,” the paper says, “are an essential adhesive that binds the board together and constitutes the indispensable ingredient in the formulate for success.”

Todd Cohen