Archive for the ‘Environmental’ Category

Of water bills, credit unions and self-help

November 7, 2011

Alarms are sounding in the Nonprofiteer’s home town of Chicago today about the first budget proposed by Mayor Rahm Emanuel, which requires nonprofits to pay for water and sewer services they previously received free.  A sector-wide outcry produced one modification—a phasing-in of the charges over three years at smaller nonprofits—but generally the Mayor is keeping a campaign promise to ask nonprofits to bear their “fair share” of municipal costs.

He also seems to be following the lead of the Illinois courts which, as previously noted, are re-examining the nonprofit status of several of the state’s hospitals.  The Nonprofiteer’s colleagues at The Nonprofit Quarterly characterize Emanuel’s move as over-reaching, in that it affects nonprofits other than hospitals.  But the Nonprofiteer has no difficulty identifying non-hospital nonprofits whose water and sewer bills she doesn’t feel like subsidizing: the YMCA of Metropolitan Chicago (which, notwithstanding the social services it provides, is mostly a very successful health club that uses a lot of water); the Art Institute of Chicago (which, notwithstanding the educational programs it provides, is a wealthy institution with very low personnel costs because every art-history major wants to work there); the University of Chicago (whose housing and athletic facilities use as much water as any suburban development and whose property tax exemption is secured by the Illinois Constitution).  And let’s remember that the smallest nonprofits are renters, most of whom get water and sewer as part of their leases from for-profit landlords, and won’t be affected in the least.  So a bit less howling, okay?

Especially as we contemplate this past weekend’s flood of accounts transferred to nonprofit credit unions in reaction to the obvious greed of the largest banks, particularly Bank of America.  (Even a major philanthropist has moved his accounts to protest B of A’s failure or refusal to modify a reasonable number of mortgages).  Maybe if the credit unions get wealthy enough they’ll be able to provide the rest of the sector with the working-capital loans it can rarely get from commercial banks.  Maybe they’ll offer special water-and-sewer-bill loans.

And maybe a little taste of self-help will remind the sector that it’s supposed to be independent.  Political trends come and go but the work we do must continue, and it’s our business to organize ourselves so it can.

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Beyond “Will not!” “Will so!”

October 27, 2011

Kudos to the Nonprofiteer’s nonprofit consulting colleagues Campbell and Co. for sponsoring a study by the Indiana University Center on Philanthropy to determine the impact on giving of increased marginal tax rates and a cap the charitable-giving deduction.  While some of us have been arguing that both of these moves toward social justice should be supported by the nonprofit community, and others have been arguing that the world will come to an end if every penny of tax savings isn’t afforded to the generous rich, these institutions decided to look for the facts.

The facts–as elegantly stated in a Congressional Research Service study that came to the same conclusion–are these:

The estimated effects of the cap and other elements of the budget package depend on whether the proposals are compared with the current tax rates of 33% and 35% or the rates scheduled for 2011, 36% and 39.6%. Compared with current rules, estimated effects are between one-half a percent and 1% decline in charitable giving . . . . When compared with tax rate provisions in 2011, charitable deductions are estimated to fall by about 1.5% if only the cap is considered, but if income effects from the entire budget package are included contributions actually rise 2.5%.  The relatively modest effects of the proposal arise because (1) the effect of caps on the subsidy value is limited, (2) only a fraction (about 16%) of charitable giving is affected, and (3) because evidence suggests that behavioral responses to changes in subsidies are relatively small.

(Emphasis the Nonprofiteer’s.)  To paraphrase: the tax subsidy isn’t much reduced; that small reduction doesn’t affect 84% of charitable giving; and, in fact, charitable giving isn’t all that tied to tax benefit.

So whether we take the IUPUI findings that charitable giving is likely to decline modestly if these tax reforms are enacted, or the CRS findings that it might actually go up, we should realize that everyone who’s hyperventilating about the impact of these changes on their poor struggling private school, museum or hospital should just take a deep breath.   Given that the reforms will support many of the social programs, environmental protections, educational institutions and health care options the nonprofits themselves seek to provide, it’s about time for the community to stop whining and agree to pony up.

An appraising stare down the gift horse’s gullet

August 31, 2010

Jane Mayer’s excellent piece in this past week’s New Yorker about the brothers Koch, oil billionaires who’ve donated hundreds of millions to nonprofits promoting right-wing causes, finally clarified for the Nonprofiteer her unease at Bill Gates’s campaign to persuade billionaires to donate half their estates to charity.  It’s not a question of who has or hasn’t taken the pledge, though that’s an entertaining parlor game.  Nor is it the fact that the generosity of extremely wealthy people may not be what the rest of us have in mind when we hear the word “charity.”  (The Kochs’ “charity,” for instance, is a term of art encompassing donations to all kinds of institutions, predominantly think-tanks churning out rationales for the economic interests of wealthy people and front groups to make it appear that defending those economic interests is the political will of the non-wealthy majority.)

What’s troubling about the billionaires’ pledge remains so even when the receiving causes are unexceptionable.  Gates, for instance, has very generously underwritten substantial efforts by the Global Fund to Fight AIDS, Tuberculosis and Malaria.  Good for him, and for the world.

But.

Even the best-intentioned best-directed private donations are a way for moneyed people to work their will on the public, while the rest of us have nothing but the vote.  And when the level of contributions is discussed in fractions of $1B, it’s no longer charity within a democracy: it’s benevolent dictatorship.

Maybe our country should be giving less to treat AIDS et al and more to eradicate infant and maternal mortality through the UN Population Fund; maybe not.  That’s a decision to be made by the people of the United States, through our government.  It’s really not a decision for a single person.

Why not?  Well, for starters, the “single person” in question is a billionaire, and thus always a man.  That means almost by definition that the highest levels of charitable giving will overlook women, though we constitute more than a majority of the population.  And if that’s the case—if society’s needs are met by individual whim instead of collective decisions about the greatest good for the greatest number—then what, actually, is left of self-government?

Of course, billionaires have plenty of assistance in the task of allowing economic power to trump political will.  The Supreme Court’s decision in Citizens United, holding that corporations are “persons” with First Amendment rights violated by limits on their campaign spending, already put the nation quite a way down that road.  But somehow it’s worse when something that sounds so benign—“half my estate to charity, because I’ve been so fortunate”—actually translates as “I set the agenda for the future of this country, because I’ve been so fortunate.”

What we really want from billionaires is for them to pay a lot more in income taxes: say, the 87% of taxable income paid in 1954,  or even the 70% paid at the start of the 1980s.  And then we as a group can decide where our group’s money goes.  All contribute, all decide.

And what we really want from billionaires’ heirs is for them to pay the 77% estate tax rate in effect in 1941, or even the 70% estate tax rate in effect in 1976.   (And let’s not hear any nonsense about “death taxes.”  The dead aren’t the ones paying.)  Why shouldn’t people who get money by inheritance have to pay taxes on it, just like people who get it by working?

Merely to ask that question is to answer it: no democratic society decides that people who don’t work should be privileged over those who do.  Societies like that are called “aristocracies,” and all those so-called Constitutional Originalists running around hijacking elections by screaming about excessive taxation should take a moment to remember that our Constitution was designed precisely to interfere with the establishment of a government by inheritance.

The Constitution prohibits not once but twice the granting of any title of nobility; but the Framers didn’t rest there.  They fought to cripple and ultimately abolish entail and primogeniture, the primary devices by which English law kept family fortunes together.  Why?  Because they realized that, if you’re founding a republic, it’s really not a good idea to let money keep piling up generation after generation in the same few pairs of hands.

Self-governing societies can’t operate on noblesse oblige, and societies that do aren’t truly self-governing.  As Dr. Franklin said, “A republic—if you can keep it.”

Making your nonprofit a star–or a pigeon

May 1, 2009

It’s not just Susan Boyle and “Britain’s Got Talent”–the nonprofit world, too, is full of ugly ducklings eager to turn into YouTube swans.  So it’s not surprising that two different groups have just announced plans to assist nonprofits in telling their/our stories on video. The first of these is genuine; the second is a concealed ad for fundraising software.

  • Animoto for a Cause (http://animoto.com/cause) is a new program “that will give non-profit organizations and humanitarians the ability to create dynamic, professional-quality online videos from their own photos and music – for free. . . .Animoto for a Cause will donate pro accounts to groups and individuals who are working to improve their community and the world at large, kicking off with more than 20 launch partners, like Help the Children and Susan G. Komen Foundation. . . . Animoto is encouraging all types of community activists to apply for an Animoto for a Cause account – everyone from college fundraisers to large non-profits will be considered . . . . Now organizations can use the service to promote their cause online in a multitude of ways, from posting and sharing videos on websites, YouTube and social networks, to downloading them to DVD for distribution at events.”
  • Meanwhile, an outfit called www.nonprofitnetworknews.com has created a “customizable video for nonprofits to make their wishes come true. The video then links to free nonprofit resources to help them get through these tough times.”  Well, if by “free nonprofit resources” one means “a commercial Website that doesn’t charge you for visiting,” that’s absolutely true.

Hospitals get more in tax breaks than they give in charity care

April 17, 2009

according to Crain’s.

The Nonprofiteer is always eager to trash the big corporate nonprofits, the hospitals and universities, while racing to the defense of the scrappy little social service, arts, environmental and advocacy groups.  But she wonders what this same analysis would produce if the smaller agencies were under the microscope.  Though probably social service agencies give away most of their services (if only through being desperately underpaid for providing them), surely most arts organizations get more in tax breaks than they give away in tickets.  And groups whose focus is policy or advocacy are not in the business of doing services, much less giving them away.

Anyone in the health care industry is a tempting target these days, and for good reason: we have a system that enriches very few at the expense of many.  And at least the best-known and most selective of American private universities seem content to sit on a lot of capital while asking teenagers and their families to fork over huge amounts more.

But let’s make sure we’re measuring nonprofits by what society and the tax code actually expect them to do, which is to contribute to the public interest by advancing knowledge and producing beauty as well as by offering services.  Research hospitals produce cures for diseases; we get our money’s worth from the tax breaks they receive even if they never give out a dime of care.

Providing patients with the health-care they need is a social responsibility.  Hospitals surely have a special role in making sure this is done, but it’s not their responsibility exclusively and their social worth (meaning, the tax freedom they deserve) shouldn’t be measured exclusively on that dimension.

Board members are not hypothetical constructs

July 7, 2008

It’s fairly common among Board development writers and consultants to suggest that nonprofits take inventory of their current Boards and develop lists of what they need and want to add to the strengths of those Boards. Then [goes the conventional wisdom] put your list in priority order, and you’ll be ready to do Board recruitment.

To which the Nonprofiteer responds: what a waste of time. What’s the point of identifying a desired outcome (“Someone wealthy, with lots of connections, who’s eager to do fundraising”) if there’s no way to accomplish the outcome? What’s the point of fantasizing about imaginary people (“Someone wealthy, with lots of connections, who’s eager to do fundraising”) when the point is to find real people and attract them to your cause?

The real process of Board development takes place when an entire Board sits down in a room (with a consultant, if necessary, but just having a strong leader and a good note-taker will be plenty) and says: who do we know? After the obligatory 10 minutes of “We don’t know anybody,” people will start saying, “Well, there is my cousin’s brother-in-law, who owns the copy shop on Fourth Street and has been looking for a Board to join . . .”. It may not be as glamorous as “Oprah” but it has a lot more chance of producing community members who are willing to join and support your cause–and that’s what Board members are.

It it’s so simple [I hear you cry], why do most Boards find it so hard? Because they neglect the essential first step: deciding what it is they truly want and expect Board members–all Board members, not just new recruits–to do. If you don’t write a job description, you’ll find it remarkably difficult to identify anybody who can do the job, and even more difficult to persuade him/her/them to take it on.

Which highlights yet another common error among Boards trying to do recruitment: getting preoccupied with describing the job they want someone else to do. “We want a lawyer, and an accountant, and someone to do fundraising, and someone to write our newsletter”–no. What you want is people who will join you in identifying and assigning all of the tasks a Board must do to keep its agency healthy. Maybe it’s best to use a Board member as your lawyer; maybe it’s better to hire a lawyer. Ditto accountants. Ditto marketing professionals. What you must have is people who understand that they face not one but many tasks, and not individually but collectively–and the people you recruit will only understand that if you do. You are not seeking someone to fill a position; you are seeking someone to share with you the position you already occupy.

So–to summarize–Board members are not hypothetical constructs. They’re actual people who, in conjunction with you and other actual people you will recruit, will perform actual tasks in support of your actual institution. So proceed as follows:

  1. Identify those tasks, and write them down.
  2. Identify people who might be interested in supporting your agency, and then compare their known skills and abilities to the tasks you’ve identified.
  3. Go talk to those people! Even if half of them say “no,” the other half will say “yes,” and you’ll have a set of new Board members–

instead of another set of charts describing the Board members you wish you had.

If this process sounds familiar, that’s because it’s the same process every successful charity uses in beginning a capital campaign–asking the people around the table, “Who do you know?” Board development is fundraising is Board development; the closer your process hews to a successful fundraising process, the more likely you are to create a Board that will do its fundraising job.

And let’s dispense with a favorite nonsensical quarrel: between those who think you have to recruit people with passion for your mission and those who think you have to recruit people who have the ability to fundraise. The answer is “both;” and the other answer is, “No one is born with either.” If you talk to a stranger about your mission and s/he catches fire with it, s/he’s eligible in the passion department, even if s/he hasn’t been a long-term supporter: enthusiasm is contagious, and of course you have it, right? By the same token, if you talk to someone who knows and loves you and says “I’ll do anything for you, but I don’t know anything about raising money,” the appropriate reply is, “Don’t worry, we’ll teach you.”

Raising money is nothing more than stating the case for an institution you love to people with the resources to support it. Board recruitment is nothing more than stating the case for an institution you love to people who will be prepared to do the same thing. Let’s stop complicating it, and preparing for it, and just get out there and do it. [Life is not a dress rehearsal.] Real people–the restaurant owner down the block, the lawyer who spent $600 at your last auction, the retired engineer who organized your inventory down to the last screwdriver–are waiting to be asked.

Dear Nonprofiteer, If a tree falls in the forest, does it make a charitable sound?

May 29, 2008

Dear Nonprofiteer:

The hiking/environmental nonprofit on whose board I serve has been quarreling over our Mission. Trying to expand our offerings, most of which are extended hikes, we find ourselves competing with glitzy commercial providers. We’ve been chasing a leisure demographic that doesn’t like to pee in the woods or sleep in tents.

I have no problem with anyone’s tastes, but I’m getting offended, frankly, by our operating this way as a nonprofit. It’s not that we’re raking in cash. We’re in decline, if customer revenues (so to speak) are the metric. I just don’t think what we’re doing is charity.

At meetings when we contemplate our numbers, all of which have been dropping, we hear two views. One camp (“Granola”) says we should grow by fundraising and start offering fresh-air-fundish outings for low-income children. The other (“Well Heeled”), which dominates the Board, says we need to promote our excursions better, and set spreadsheet goals of bringing in more paying participants.

I’m getting tired of hearing the same arguments as if they were new. Will the discussion ever reach resolution? From your postings, I think you’re more in the Granola camp. I know I am. But is there something fresh to say about the merits of Granola, to persuade the Well Heeled? And if I’m wrong–that is, Well Heeled is right or has a point–tell me how to synthesize what it wants into a real nonprofit mission.

Signed, Strife-Worn in Hiking Boots

Dear Strife:

“Tired of hearing the same arguments as if they were new”? Welcome to the Nonprofiteer’s world! The split you’ve described has two components, in her judgment: the ostensible and the actual. Ostensibly the Well Heeled want your agency to pull itself up by its bootstraps and operate more like a business, but actually the Well Heeled want not to have to do any fundraising. It’s easier to tell staff what to do (“Do better PR on the tours!”) than to do anything oneself, especially when the “anything” is that yucky work of appealing for alms. The Well Heeled don’t like to beg–they think it makes them look like poor people, than which there is no more appalling outcome they can imagine.

This is a mindset that’s hard to change. But if it hasn’t already been said a hundred times (and maybe even if it has), you might quote to the Well Heeled a recent IRS ruling (reviewed yesterday at Charity Governance.com) that an organization was not entitled to its exempt status at least in part because it “is funded almost entirely by fees and lacks the donative element necessary to characterize its activities as charitable.”

In other words, raising money is not an optional activity of nonprofits–not something to be done in case the marketing plan doesn’t work out. Raising money is a necessary characteristic, and its absence will suggest to the IRS that the agency should be stripped of its tax-favored position, with the result that the Well Heeled (as well as the Granola) will have personal liability for owed back taxes. That should get their attention.

Of course, a lack of fundraising isn’t by itself sufficient to result in loss of exempt status–even if you get caught, which is relatively unlikely, as some Well Heeled soul is bound to point out. The real issue is whether the group is organized for a charitable purpose. Fundraising (though the IRS didn’t say this) is a surrogate, because if you can’t explain to anybody why they should consider your organization in their charitable plans it suggests very strongly that what the organization is doing isn’t charitable.

Raising environmental awareness is a charitable purpose (“charitable,” in this context, doesn’t have to mean “benefiting poor people”); but you’d better be prepared to show how each of your activities promotes that purpose. You may be able to do that by subsidizing the cost of the hikes, so people who wouldn’t otherwise become environmentally aware will be tempted by the low price to participate and learn; you may be able to do that by providing supplementary educational materials with each hike; you may be able to do that by promoting hikes only in locations which will be undamaged by your patronage; you may be able to do that by offering low-cost hikes to city children otherwise lacking access to the great outdoors; but you have to do that. And, again, the best way to find out if you’ve done it is to make the case to someone whose charitable money you want, and see whether they fork it over.

The Nonprofiteer’s suggestion: before you try talking again to the Well Heeled, talk to your fellow Granolas and make sure they understand and can present the issue as a business matter: “We are a nonprofit; therefore we have to have a charitable purpose and the ability to demonstrate donative intent; therefore we have to do fundraising, regardless of the success or lack thereof in appealing to wealthy people with our hikes. If we don’t, we’re all going to face a bill from the IRS.”

Admittedly it isn’t fair that Granolas have to learn to speak Well Heeled when the Well Heeled don’t seem to be making much effort to learn Granola. But it should be some compensation that when the conversation is through, you and the other Granolas will have won on substance. Why is the Nonprofiteer so sure? Because she knows you’ll either win or walk away, leaving the Well Heeled holding the bag–a bag full of financial and legal risk. Who says Granolas can’t be practical?

Foundation Friday: Less may be more but it’s probably less

May 2, 2008

The Council on Foundations yesterday announced the results of its survey of 300 members about their plans to respond to the current economic downtown. As he introduced the report’s findings, Council President Steve Gunderson observed, “Philanthropies’ endowments are feeling the same impact as every other American.”

You’ll forgive the Nonprofiteer if she observes that this is a misuse of the faculty of identification. Foundations’ slightly-less-bulging coffers aren’t even analogous to the belt-tightening experience of actual American people, most of whom have no financial cushion of any kind and have experienced no benefit from years of soaring stock prices. Rather, Gunderson’s comment reminded the Nonprofiteer of the days when Al Franken, now a candidate for US Senate in Minnesota, was still just a comedian on Saturday Night Live. His shtick was to begin pointless speeches by saying, “You’re probably wondering how the changes in the tax laws will affect me, Al Franken,” whereupon his name would flash on the screen.

So if you were wondering how the economic downtown will affect us, the members of the Council on Foundations, the answer is that slightly more than half feel the pinch on their endowments but plan to continue or increase their giving to poor people while slightly fewer than half feel the pinch on their endowments and plan to reduce giving.

If now is not the time for all foundations to spend the investment gains of the past decade (well- or ill-gotten as the case may be), when is? But–apparently inspired by all those people in the for-profit sector who are always urging nonprofits to operate like businesses–nearly half of America’s big grantmakers are so focused on today that if today’s income declines because the economy is in a tailspin and charity is needed like never before, that’s cause for weeping and wailing and gnashing of teeth accompanied by a reduction in today’s grantmaking–though economists left, right and center agree that the treatment for reduced economic activity is for those with money to circulate more and not less of it. And at the same time they’re so focused on forever that their argument against making such expenditures is simply that if they spend it now it won’t be there–forever.

So while the report identifies a number of interesting projects to address specific aspects of the economic crisis (including the MacArthur Foundation’s soon-to-be-launched plan to purchase foreclosed homes in the Chicago area and recycle them as low-income housing), it doesn’t suggest any across-the-sector understanding that an economic collapse of this magnitude calls for something other than business as usual, in foundations as in politics.

The report does not say whether foundations planning to maintain or increase their spending on human services, economic development and support for low-income families plan to take that spending from a pot that used to nourish environmental initiatives or the arts. Gunderson noted that in earlier “national and natural disasters” like Katrina, increased foundation spending didn’t come at the cost of other areas; but of course those disasters didn’t hit foundations in the pocketbook and make them feel as vulnerable and impoverished as, well, “every other American.”

It’s important, of course, not to kill the messenger. What the Council on Foundations does in reporting on the inclinations of its members enables the operating part of the nonprofit sector to prepare itself, and for this we’re grateful. The Council’s report offers one more reminder that cultivating giving by individuals–who can certainly feel poorer this year than last, and reduce their giving, but who have a personal attachment to the charities they support–is something charities should begin doing immediately, if not sooner.

Out of bed

April 29, 2008

This article in Sunday’s New York Times about the current decline in consumer spending helped crystallize the Nonprofiteer’s longstanding but inchoate objection to embedded giving, the process of substituting charity-related purchases for actual charity: namely, that it creates no bond between the “donor” and the charity, and no sense of responsibility for continuing support of the charity’s work. So when money gets a little tight, “charity” purchases become a luxury to be trimmed: you don’t buy a (red) t-shirt, you stop polluting the landscape with bottled water–even the brand whose proceeds go to provide potable water in the developing world–, you wear the jewelry you have instead of buying this year’s version of the pink ribbon representing support for breast cancer cures.

Our job as fundraisers is to help people see how their lives are intimately intertwined with the lives of people being served by their money. That’s really quite far from showing them the swag they can score–including bragging rights as well as consumer goods–if they purchase this brand rather than that one.

False economy

April 23, 2008

In the latest issue of her newsletter, nonprofit lawyer Kathryn Vanden Berk reviews the intersection of the age discrimination statutes with nonprofits’ need or desire to move older workers into retirement. (Copy available on request.)

Vanden Berk is too polite to say so, but hidden inside the recent attention to nonprofits’ difficulties recruiting young workers is the simple fact that [we] Baby Boomers won’t get out of the way. And hidden inside that in turn is the slightly more complicated fact that bringing in younger workers is not the cost-cutting measure among charities that it is at for-profit enterprises. Indeed, older workers actually pull down median salaries at nonprofits, because so many of them came into charitable employment at a time when getting paid adequately was a sign of insufficient commitment. (And, lest we forget, because so many of them are women and thus routinely underpaid.)

So the real question is not whether nonprofits CAN remove older workers when it’s time for a change of direction, but whether they WILL. Or will they cling to low-paid veterans not because their experience is invaluable but because donors want to continue providing society’s most important features–social services, education, the arts–on the cheap?