Monday, April 6, 2009

Do Nonprofits Need to "Get Real"?

Blog posting fuels debate about the charitable deduction and whether all nonprofits—or just some—need to “get real.”

Once again, Todd Cohen of Philanthropy Journal has posted a provocative missive that’s generated some back and forth. In his latest post, Cohen suggests that nonprofits and foundations “stop whining” about not getting enough (or any) stimulus funds and/or fighting the Obama administration’s proposal to limit the charitable deduction for the wealthiest Americans, “Instead of looking to foundations and government to bail them out, nonprofits need to get their own houses in order,” he writes. “And instead of squealing like stuck pigs over the loss in the value of their endowments, foundations need to dig deeper and invest what is needed to help nonprofit equip themselves to take on the social and global problems they exist to address.”

I sent Cohen’s piece around to about 40 nonprofit sector thought leaders and nonprofit executives because—whether one agrees or disagrees—it raised some interesting issues. The response was overwhelming—and mixed. On the one hand, some folks thought that Obama's position on reducing wealthy taxpayer deductions was justified. As one thought leader emailed: “It embraces the principle of tax equity, by which the top 1.2% of our population who are wealthy would pay more in taxes than their less wealthy citizens—money that could be used to pay for urgently needed health reforms. And those funds in securing health savings for nonprofit employees would be a major financial contribution to the budgets of nonprofits, possibly more than offsetting the loss in charitable giving.”

Still others said they’d like to see nonprofits pushing more on foundations to pony up during these times of economic stress. “With assets of over $550 billion,” one person wrote, “even after the loss in value of their portfolios, they still have plenty to spend so “they should be pressured to give more,” said another respondent. (For a very useful chart of how the Top 100 Foundations are planning their giving for 2009, the Foundation Center has compiled one.) A well-known scholar emailed, saying that we “need to focus our fire on boosting private giving among the fat-cats rather than tearing down the support that has come to charities from government. I'm all in favor of the former but not at the expense of the latter.”

Others, however, were piqued by Cohen’s broad brushing of a sector that includes a number of nonprofits hardly suffering from a sense of “entitlement.” To them, it seemed less focused on the majority of nonprofits—small or mid-sized groups—than on the “bigger national groups fighting in Washington for a piece of the pie.”

One of those responses clearly deserves some air time. It’s from Barry Dym, the executive director of the Institute for Nonprofit Management and Leadership at Boston University's School of Management--a nonprofit intermediary that offers a range of services for mostly small and mid-sized nonprofits.

Yesterday, I spoke with 24 executive directors, all from small nonrprofits, like boys and girls clubs, like urban lacrosse, soccer, and basketball. I went through a check list of things they needed to do: cut all that does not directly contribute to mission; know your cash position ("I go over it in my sleep" said one, followed by knowing smiles by all), think about more leveraged and strategic ways to use your personnel (they described several), develop contingency plans, use more volunteers, and so forth. They felt assured because they had anticipated much of what I suggested. By the end of three hours, I was filled with admiration for these "unsophisticated" nonprofits, who were deeply saddened by the losses their clients were suffering and who uttered hardly a whine.

Who is Cohen talking about? Probably the big, established nonprofits, who, as Paul Light suggests, will try to dominate the sector in coming years by ginning up their marketing engines….

There’s no question that nonprofits have a lot to learn. [The place that I run] works mostly with leaders of small to medium size organizations. Most have built and honed their skills on the fly, which doesn't make the skills lesser but different. And they are eager to learn--no arrogance there. So maybe I'm a little defensive for them.

We all know that the nonprofit sector surges to fill spaces once occupied by governments, unions and the like, and that the space is too large for the meager resources. So they are constantly feeling--being--inadequate to the task. I, though, admire the fierce Sisyphean fervor with which they try. And I'd love to see the philanthropy community come through in a big way--now when they need it most.

Well said.

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