Archive for March, 2008

We told you so (Fundraising division)

March 17, 2008

The Nonprofiteer has been saying this to anyone who will listen: this is a great economy in which to fundraise.  Now comes proof, as the New York Times reported Friday: the economy may suck, but charities are doing well.

Well, duh!  For the past 8 years we’ve had an administration that has given advantages to the wealthy at the expense of the middle-class and poor.  Result: wealthy people have more money than ever; some of it’s bound to go to charity.  Couple that with an aging population, with Baby Boomers (who’ve also inherited their Depression-thrifty parents’ money) old enough to be concerned about legacy, and presto!  You’ve got a charity bonanza.

Which proves it’s an ill wind indeed that blows nobody good.*


*Often misused as a redundant statement of terribleness–"It’s a bad thing that’s bad"–this old saw actually means, "No matter how terrible things are, SOMEBODY always benefits from them."


Foundation Friday: Pioneering for the government, or swimming in its wake?

March 14, 2008

Interesting piece in last Thursday’s New York Times about a Wyoming jobs program for women focusing not only on training for high-paying jobs but on forging solidarity among the trainees to increase their likelihood of success.

Note that this innovative program depends largely on public funds; less than one-third of its $1.8 million budget comes from foundations. So much for the notion that foundations experiment and create while the government executes; apparently, afraid to risk failure, foundations are happy to have the government do most of the innovating, too.

Or maybe the problem is that foundations want to do more groundbreaking work but can’t because they think the 5% floor on expenditure of assets is actually a ceiling. (Maybe we should create a job training program for foundation Boards and executives? Most workforce development projects struggle with placement, but these people already have the high-paying jobs.)

Either way, foundations could be doing more, and better. And if they’re truly concerned about diversity, advancement programs for women are exactly where they should be doing it.

Dear Nonprofiteer, How do I find out the color of my parachute?

March 13, 2008

Dear Nonprofiteer,

Do you know of any quality books or websites for those in the first or second phase of their non-profit career? I’m specifically interested in fundraising. Thanks!

Signed, Still Wet Behind the Ears

Dear Wet:

There’s less than one might like, probably because the notion of a nonprofit "career" is such a recent one.  Many members of the current generation of nonprofit leaders fell into the work, through their volunteer activities or some other life event, and often as a second career.  Indeed, the idea of charitable work as something you do after (rather than as) your career continues today, in breathless media speculation over how Baby Boomers will reshape nonprofits as they retire into them.

And indeed those old concepts–that you don’t choose charitable work, it chooses you; or that the charitable environment is too other-worldly to require or sustain career planning–continue to affect the way the sector operates.  The recent report "Ready to Lead" notes the extent to which charities are in danger of losing their young employees because of poor pay and lack of opportunities for career development.

So if you can’t see how to move forward in a nonprofit career, Wet, the problem isn’t your vision–it’s the lack of a path.  Still, it’s possible to bushwhack your way to a satisfying career.  Start with the Idealist e-guide to careers in the sector, and then consider some thoughts the Nonprofiteer would include in a Guide to Nonprofit Careers, should she ever write one:

  • Ask yourself first what you mean by "nonprofit."  I presume you actually mean charity (rather than membership association, say, or think tank) but even among charities there are important distinctions.  The hospitals and universities are more like businesses than any of the others; they offer more comfort but make up for it in more red tape.  The biggest social service agencies and arts organizations similarly operate in a "corporate" fashion, which is to say, you can expect and receive a reasonable salary and health insurance, possibly even retirement benefits, and you can be sure that when the money is withheld from your paycheck every two weeks it’s actually going to the IRS and not being used on the q.t. to pay the light bill, as sometimes happens with smaller organizations.  The trade-off is that working in any of these larger agencies takes you (as a fundraiser) further from the mission of service of the organization, and it can be hard to maintain enthusiasm for something you’re only exposed to in passing.  The smaller groups–in social services, in the arts, in advocacy and environmental causes–will put their fundraisers closer to the front-line, but will be less likely to offer you either a living wage or an opportunity to ever be anything but a fundraiser.  If there are only two of you in an agency, and one of them is the founding Executive Director, you’re going to have a hard time moving up. 
  • Beyond the question of big or small (because here, as elsewhere, size matters!), there’s the question of substance: what do you have a true passion for?  This turns out to be a question with a remarkably narrow set of answers.  The Nonprofiteer herself thought she wanted to work in "the arts" until she worked for a music group, whereupon she discovered what she really believed: that music only matters when it occurs in the context of her true passions, dance and theater.  It’s more pleasant to make this discovery before you accept a job.  Don’t go to work for a museum if the visual arts make you yawn.  Don’t go to work for a private school if the notion of private pre-university education inspires you to rants about privileged preppies.  Don’t go to work for a group promoting "fathers’ rights" if you’re a feminist.  (Can you tell these are all things the Nonprofiteer has done?)  Nowhere in the world of work is the concept of "fit" between employer and employee more important than among nonprofits.  Find a subject that arouses your passion, and go work for people who feel the same.
  • Being "particularly interested in fundraising" will make you a bonus baby in the nonprofit world, where (as everywhere else) the thought of asking others for money makes most people cringe.  The Nonprofiteer suggests–with blithe disregard for her original suggestion that the choice of agency size come first–that everyone who intends to raise money for a living work for a big agency, preferably a hospital or university, for at least a couple of years.  Why?  Because in those environments they’ll be exposed in short order to all of the different things "fundraising" can mean, and will find out which they’re best at and which they want to do.  If you start at a small nonprofit, by contrast, you’re likely to think that fundraising=grant-writing, and if you hate that you’ll change your career ambition and become a taxi-dancer or a vet.  The Nonprofiteer herself refused to join a university fundraising office when the opportunity offered itself because she’d been accustomed to being in a position of authority and didn’t want to be "second assistant fundraiser from the left."  (Her exact words.)  What she didn’t realize is how quickly people can rise within university development offices; how readily you can get the chance to do special events for 8 months and annual giving for 8 more and then a stint in the research department before winding up in major gifts, and meanwhile learn the ropes from senior professionals in each of these areas.
  • If and when you’re ready to be out on your own, you leave the hospital or university and go to a small agency–whereupon you discover that small-agency fundraising involves begging for pencils where you’ve been used to plotting strategy for $1 million gifts.  To reduce this inevitable culture shock, ask a lot of questions before you sign up, about the job rather than your salary.  That is, "How much am I expected to raise?  What resources do I have with which to do it?  Do I have a secretary or am I the secretary?  Are you planning any new fundraising initiatives on the Web, and do you expect me to know how to create a Website?" and the like.  Again, here’s where you get the benefit of having worked at a big shop: you know how many things can be compassed by the term "fundraising," and you can be clear with your prospective employer about which of them you can do and which of them you can’t, which of them require volunteer support and which don’t, which of them will take the combined efforts of staff and Board and which don’t, ad infinitum.
  • Bear in mind as you job-hunt that 5 years is a long time in the contemporary work economy, and especially at a nonprofit.  Much of the press coverage of "Ready to Lead" styles as a "crisis" the reported intention of most Executive Directors to move on in 5 years.  (Probably if they didn’t tell themselves it would be over soon, they couldn’t do it at all.)  To which the Nonprofiteer’s response is: them and who else?  So don’t be concerned about finding an agency that will keep you happy indefinitely: pick one that will teach you what you need to know at this point in your career.  As a different sort of guide to the future might also tell you, in these early days you’re not looking for Mr. Right–you’re looking for Mr. Right Now.
  • It’s easier to get decent money on the way in than once you’ve already been hired, so negotiate  hard for your salary up front.  Call other agencies and ask what they’re paying; check on-line for the same information.  Don’t let the agency you want to work for get away with, "But we’re a nonprofit!"–just say, as the Nonprofiteer does to prospective clients, "Everyone I’m dealing with is a nonprofit.  This is what I charge."  There’s no need to be belligerent but don’t take less than will enable you to pay your rent and your student loans (and see whether working at the agency will get the latter forgiven, by the way); if you do, you’ll just be job-hunting again in a year, or you’ll be stuck where you are and bitter before your time.

Good luck, and let us know where you land. 


Board members, and the big money

March 12, 2008

At a recent Board training session, the Nonprofiteer was asked, "Is all this emphasis on donating and fundraising something particular to [this agency], or is it common among nonprofit Boards?"  She was a bit taken aback, though of course there would be no need for Board training if there weren’t questions like that; but she replied (somewhat defensively, truth be told) that all nonprofit Boards focus on giving and getting contributions.  She added that Board fundraising was especially necessary to nonprofit growth: every organization that builds a new building or launches a new program is able to do so only because of the Board’s gifts and efforts to secure others’ gifts.

All of which was demonstrated in spectacular fashion a few days ago, as documented in yesterday’s New York Times article about a $100 million naming gift to the New York Public Library from a member of its Board of Trustees.  While the article concentrates on the "naming" part, and succeeds in suggesting that the Board member/donor is an ever-so-slightly grasping and vulgar creature for accepting the accolade, in its later paragraphs the story makes clear almost accidentally the critical role Board gifts like this one play in the health of charitable institutions.

The library itself has drawn criticism for some other transactions,
like selling the Donnell branch in Midtown Manhattan in November to
Orient-Express Hotels Ltd. for $59 million. The branch will be razed to
make way for an 11-story hotel, with the library taking over the first
floor and an underground level.

In April 2005, the library
decided to sell 19 works from its art collection to bolster its
endowment and raise money to buy books. The sales netted $53 million,
but critics lamented the loss of canonical pieces including “Kindred
Spirits,” a Hudson River School painting by Asher B. Durand.

But here’s the point: if your strategic plan says you need $100 million to grow and serve more people, you can raze a building and sell a canonical painting, or a member of your Board can step up and write the check.  (Yes, the Library did both, but that’s because its strategic plan says it needs $1 billion.)  Those are the choices nonprofits face*; and any Board member who makes the choice painless by making the big gift should be recognized as a hero.

Here’s an idea: maybe they should name the building after him.


*If you doubt that, consider how desperately Fisk University needs to sell part of its collection of Georgia O’Keeffe paintings, and why.

The value of 17 syllables

March 11, 2008

Here’s an elegant idea from the Nonprofit Quarterly: write your mission statement in haiku.  While the emphasis on precision is excellent, and certainly brevity is the soul of wit in nonprofit missions as elsewhere, the Nonprofiteer actually disagrees.  She’s seen too many mission-drafting sessions turn into a search for a slogan or advertising tagline, a statement often more catchy than accurate and even more often neither catchy nor accurate. 

The same risk seems inherent in the haiku exercise; but if your Board is experienced unto jadedness and is resisting the very notion of re-examining the mission, this is a way to make the activity fresh enough to engage them. 

Edifice complex

March 10, 2008

This piece about the construction of new nonprofit theaters prompts the Nonprofiteer to offer a pair of cautionary notes. 

As a theater critic (alternate life) she’s seen a number of fine companies succumb to New Building Disease, characterized by an overuse of high-tech toys (trap doors, lifts, revolves, flies) and an underuse of the imagination that made patrons want to support the theaters in the first place.  The first three to five years in a new space tend to be a theatrical wasteland; so patrons of the house-proud companies mentioned in the Times article might consider subscribing to a good storefront troupe while they wait for the big guys to settle their new plumage.

But–more important to readers here–the Nonprofiteer has seen the way new buildings risk sinking the very companies they’re supposed to anchor.  The risks include:

  • the abrupt onset of enormous fixed costs at institutions whose strength has always been the ability to cut back on expenses if a couple of innovative shows in a row are bombs;
  • collapse of the Board of Directors, let down after the excitement of a successful capital campaign, producing a fundraising lull just when audiences are expecting more, bigger and better; and
  • distraction of artists and administrators alike from their mission of creating art to their entirely new and not necessarily congenial role of running a building.

Of course city governments love the idea of having a theater make a
huge contribution to municipal infrastructure.  If the goal is
gentrification or reclamation of a downtown core, one theater company
is worth dozens of individual artists in lofts!  But municipal
enthusiasm, however intoxicating, isn’t strictly relevant, nor is the
enthusiasm of donors who may want their names on the wall, floor or

Sometimes an arts group’s new space can make a terrific and positive difference in the art it’s able to create: Hubbard Street Dance Chicago’s repertoire exploded as soon as it had a rehearsal space big enough for the creation of new dances.  But that’s the point: the question worth asking about any proposed building project is NOT "Does a fine arts group deserve a beautiful environment?" (who could say "no"?) but "Will that new environment help produce so much more/better art that it’s worth not just the financial but the human and institutional costs?" 

And unless the answer is not just "sure" but "We’ll be able to generate an entire new play series from this black box space alone" (or words to that effect), the savvy arts leader will treat the idea as the snare and delusion that it is, and return to dreaming of scripts and scores instead of bricks and mortar.

Foundation Friday: Foundation as fashion accessory

March 7, 2008

Let’s all of us in the nonprofit sector take a moment to enjoy the fact that in crossing the t’s and dotting the i’s of her fraudulent memoir of gang life, Margaret Seltzer created a phony foundation working to combat the effects of gangs.  She described the foundation on a Website (now shuttered) used for promoting her book.  The Nonprofiteer suspects that the next step would have been a pitch to buy the book as a way of supporting the foundation and its gang-fighting efforts–what’s fashionably known as "embedded giving."

So now it’s official: you can’t have a social problem in this country–even a fabricated one!–without a foundation to address it, and you can’t have a fraud without a charitable connection to whitewash it.  Pop the champagne corks: the independent sector has finally arrived. 

Dear Nonprofiteer, Bingo!

March 6, 2008

Dear Nonprofiteer,

I am a director for a brand new community theatre NFP in Los Angeles.  We’re
coming to the last stages of getting our determination from the IRS, but one
item they keep sending back to us is our intent to use a local Bingo Night
to help us fundraise. 

The Bingo Night is orchestrated by a local restaurant
every Wednesday.  They ask a $20 donation for all patrons who want to play,
and the winners of each card receive non-monetary gifts baskets and tickets
and gift certificates and the like.  The benefiting non-profit each night
receives all the door admission fee over a certain small amount, something
like $200.  Do you know of any precedent that would make this kind of
activity against 501(c)3?  Do you have experience with Bingo-type

Signed, Cards on the Table

Dear Cards:

The Nonprofiteer has never been involved with Bingo fundraising.  But even a cursory glance at IRS regulations as well as guidance in the form of recently-released tax exemption denials makes clear to her that what you’ve proposed isn’t going to fly.  There are at least two problems with it:

  • first, that Bingo often results in unrelated business income, which in turn results in your having to pay Unrelated Business Income Taxes–unlikely to be part of your fundraising plan.
  • second, and much more serious: the rule about charity Bingo (at least in California) is that it be operated by a single charitable entity licensed to conduct the game–not in partnership, and not by any outside vendor.  (This rule is so inflexible that it appears in the California Parent-Teacher Association’s fundraising instructions for local PTAs.)  So a Bingo game operated by a restaurant (or any other outsider) for your benefit is verboten.

Why?  The Nonprofiteer’s guess is that Bingo, despite (or because of) its innocuous appearance, has the potential to serve as an extremely efficient money laundry.  The minute a game is run by an outside agency, there’s a substantial risk that two pools of money (the charity’s and the outsider’s) will flow together into one indistinguishable flood, making complicated the process of figuring out who owes taxes on what. 

So what?  So that’s usually the point: "commingling of funds" creates an opportunity to mix legitimate with illegitimate  revenue.  So naturally IRS bells go off at the prospect of your receiving "all the door admission fee over a certain small amount."  That commingled pool of admission payments could be (though it probably isn’t) a Trojan horse for a much larger amount of unreported or otherwise questionable income.

So you have two choices: you can run a Bingo game yourself, using the theater’s volunteers (no small undertaking, as you’ll see if you review the PTA instructions); or you can donate tickets as prizes for the restaurant’s Bingo game (a legitimate promotional expense on your part in any case) and then–separately–ask it for a donation of a fixed sum, perhaps based on your guess of the value of x weeks’ worth of Wednesday Bingo proceeds.  That way the risk of the Bingo game’s success (and compliance with the laws) is on the restaurant, and the cash is in your pocket.

Don’t let your plans for operating a community theater get stuck on this point.  I’m sure there’s a fair amount of money involved–maybe $10,000?–but the better the deal looks, the more likely that it’s crooked.  Think of some tactful way to explain this to the generous restaurateur, and while you’re at it think of some alternative channel for his charity to you; or let slide Bingo and donation alike, and do bare-stage productions.  Better a show without scenery than a room without scenery, which is what’s waiting for the director of a local community theater NFP who runs afoul of the IRS!

Mixed responses to modest proposals

March 5, 2008

Often the satire on GiftHub goes right over the Nonprofiteer’s head, but she was charmed by the site’s proposal that philanthropies consider for-profit prisons as a species of mission-related investment.  Given the number of American poor people who will experience that particular form of public housing, what could be more appropriate?

But she takes seriously the site’s equally satirical notion that community foundations become payday lenders.  While it wouldn’t be appropriate for them to charge the usurious interest rates currently associated with that market, why shouldn’t community foundations take seriously the need poor people have for short-term loans and their difficulty in securing them?  Why shouldn’t do-good investors, seeing the shortage of short-term financing available at reasonable prices, step into that breach?

So at the end of the second period, the score is: irony 1, earnestness 1.  A draw.

Things We Wish We’d Said (Board Development division)

March 4, 2008

On the importance of term limits for nonprofit Board members:

It’s sad to think how many Boards are just a couple of funerals away from greatness.