Nonprofit

The Demise of the School Board

In today’s Wall Street Journal:

“More U.S. cities are considering scrapping a longstanding tradition in American education, the elected school board, and opting to let mayors rule over the classroom.

Dallas and Milwaukee are currently mulling mayoral control of the city’s schools, and Detroit is under pressure to try it — for the second time. A dozen major school systems, including New York, Boston, Chicago and Washington, D.C., already have a form of mayoral control.”

What will become of school boards? Is deferring oversight to the Executive a good thing? Is it no longer possible to find local representatives to serve as public guardians for the school district? What is wrong with the current system- the people or the structure?

Sharing Our Competitive Advantage


I attended a meeting for an educational institution the other day. One of the items on our agenda was to discuss our competitive advantage as a school compared to other educational institutions. There was a variety of opinion initially on how transparent we should be about publishing what we believed to be our ‘secret sauce.’ Should we openly share those qualities and programs that make our approach to education more uniquely positioned to be successful than similar schools. The dialogue was collegial and then the Headmaster of the school stated that he would lean towards letting it all out in the public’s view. Why not? We are in the field of education and enhancing the learning process is a core priority. Why not share with our students, parents, community, and even competitors? When completed we will publish our curriculum map and put details behind our course work. If another institution wishes to adopt the exact curriculum map then there will be no security breach.

In reflection, I realized that we are always sharing our competitive advantage on a constant basis. Out customers and fans have an on-going opportunity to evaluate our organizations in action. Word will get around. Think about the airline industry. There are very few differences between the carriers. We all have our favorite (or perhaps it is easier to think of our least favorite). The options are very similar across the board. So far the biggest difference is that the non-legacy carriers have been able to build platforms and business models that allowed for more uniformity (same type of aircraft, fewer fare classes, fewer unions). Our best customers walk around with a megaphone on as Seth Godin says in his book Small is the New Big. They shout about our competitive advantage to everyone who will listen. So perhaps taking a lead from educational institution- being transparent is the new math.

Are We All iTunes Geniuses?


I have been playing with the Apples iTune Genius feature this morning. I spent about 15 minutes listening to songs and albums that were recommended to me because I had purchased or downloaded songs from other artists that were considered to have a high correlation with the recommended artists. I could quickly listen to 30 seconds or less of a song or a handful of tunes from an artist and the select “already have it” or “don’t like it” and another recommendation would appear. From Apple’s perspective I was buying a couple songs along the way- dipping into my song credits (a very nice gift from my sister). I quickly sorted through a dozen artists and twenty albums, many of whom I would not have searched for on my own.

The reality is that we all serve as walking versions of the iTunes Genius in our daily lives. We recommend restaurants, places to visit, airlines to avoid, after-school programs for kids, articles to read, and websites. Conversations turn into the audio version of a Zagat review. A couple years ago I rode the chairlift at an Idaho ski area with a gentleman who had skied all over the world. He asked me my favorite ski run at the resort. Once I answered him, he spent the remainder of the lift ride telling me that which runs across the world’s ski areas I needed to ski. He should have created a website with the wealth of information he shared in seven minutes (and I left the lift trying to remember just one).

I volunteer with a nonprofit organization that runs a significant charitable wine auction as its central fundraising event every year. Due to the importance of the special event and the critical funding the auction provides, a committee from the nonprofit organization travels to different wine regions in the United States (the committee pays its own way) to personally thank vintners who have donated in the past and network with wineries that are considering participating. I know enough about wine to have a reasonable conversation but I am easily lost in the science and nuances of the production. What I do know is that when I go out to dinner and choose a bottle of wine, I lean towards the labels I recognized because I know the individuals behind the wine and more importantly their story. When I bring a bottle of wine to a friends house as I gift I can offer a little detail to why I selected that particular bottle. In that moment I am a genius, at least for a second.

Perhaps I will listen a little more closely the next time a friends says ‘if you like that then you should really consider this.’ The value of getting information from a trusted individual, especially a source that has had a personal experience is powerful. Interesting how quickly I go to the customer review section when considering an online purchase. I do not get very far into the static details listed by the manufacturer. I want to know the opinion of the people who already paid and had a personal experience.

Go forth geniuses and share your information.

Should the Goverment Determine Who a Foundation Gives to and How Much?

A debate is underway about ‘who’ private foundations grant funds to on an annual basis. The question at hand is if foundations are serving the public good or have they become tax shelters for the wealthy? Does a foundation’s grant making serve the basic needs of the public or have the grants become focused on serving only a few? Giving USA provides an annual breakdown of the giving philanthropic giving by Americans (foundations, corporations, individuals). See a report on the most recent data from 2006 philanthropic giving.

Now the debate is part of the Obama Administration’s conversation on reshaping America.

Excerpt from WSJ article:

The report, titled “Criteria for Philanthropy at its Best,” advises foundations to “provide at least 50 percent of grant dollars to benefit lower-income communities, communities of color, and other marginalized groups, broadly defined.” The committee looked at 809 of the largest foundations in the country, whose combined three-year grants totaled almost $15 billion, and concluded that the majority of foundations are “eschewing the needs of the most vulnerable in our society” by neglecting “marginalized groups.”

http://online.wsj.com/article/SB123604548985015461.html

Philanthropic Giving: How much does a tax break really matter?

The Wall Street Journal has an article today discussing the Obama Administration’s budget plans. The proposed plan has a provision that takes the deduction rate for a charitiable gift down to 28% from 35% in 2011 for the wealthiest Americans. The article points to the fact that a $10,000 gift would receive a $2,800 deduction for the highest tax bracket compared to a middle calss family in the 15% tax bracket receiving a $1,500 deduction on the same donation.

Fundraising professionals list ‘a tax advantage/deduction’ at the bottom of the top ten list when looking at the primary motivation of an individual donor. Many nonprofit organizations list information on the tax advantages of making a charitable gift at the end of their fundraising materials. They speak about their programs and services, the people served, their successes. For the most part their is no difference in the tax deduction between qualifiying nonprofit A and B so it does not get discussed at any length.

The proposed deduction change will effect all nonprofit organizations equally, but suddenly the sector is talking about this being a disincentive to donors. The same organizations promote nine other reasons to give to their cause before the issue of deductability is breached. Additionally, the change in tax code is going to effect the larger national organizations more than the local nonprofit enterprise as majority of the largest gifts from the wealthiest individuals are concentrated in organizations that have the capacity and need to accept tens of millions of dollars.

I think those of us in the nonprofit sector need to be clear. If we truely believe that donors are motivated by the needs we meet, the quality and impact of our services, the personal commitment of our staff members, then we need to focus our energies in fullfilling our missions most effectively and efficiently. If we have not been walking our talk and the tax deduction is a major factor in the nonprofit sector’s ability to raise money then we need to take up our lobbying hats and have a say in our nation’s capitol.

WSJ article: http://online.wsj.com/article/SB123595480077405235.html

Lack of Giving


Not surprisingly the NY Times announced that donors are not giving as much to nonprofit organizations as they have in the past. They are holding back. I am working with clients who are experiencing the same downturn in contributions. Donors are recalibrating and making tough decisions.

The new focus in fundraising this year appears to be focused on supporting annual operating needs. The idea is that a $1 given today is worth a $1 (no more or less). The dollar is not going into an investment fund where it may be worth less in a couple months time. A general operating donation will have an immediate impact on a nonprofit organization. The programs and services will continue (at least for today).

With many people concentrating on surviving day-to-day. The mentality of donor’s intentions have shifted. Many nonprofit organizations have already taken the standard steps: salary freezes, vacant positions remaining open, contributions to employee benefit plans being reduced, volunteers filling critical functions. Now true contigency planning is taking place. What if we cannot even hold our special event? What if we run out of operating funds?

So what can nonprofit organizations do to stay in-touch with donors. The most successful strategies I have seen include:

  • Communication: Have board and staff members reach out to donors and supporters. Do not be afraid to call and express your appreciation. One organization recently contacted me four times in ten days using a combination of board and staff members. They were asking for an annual gift but the message was clear that participation and ongoing engagement was critical.
  • Extending benefits: If a donor is not able to give at the same level this year but has a history of donating consistently consider extending benefits that were associated with their historic level of giving. The quicker an organization shows a short-term memory the easier it is to disenfranchise a donor during tough times.
  • Make the donor an insider: I recently received an email that was sent to a select group 48 hours before the same email went to the general membership. This little touch made me feel like the organization had identified me as someone who it wanted to communicate with in advance. The information did not change but the presentation and timing made a difference in my perception of how the charity valued me.
  • Be transparent: Engage your members and supporters. Seek advice. Share the big decisions facing your enterprise. I worry more about the nonprofit organizations who are not communicating and sharing information on their status. Organizations that acknowledge their challenges gain more of my trust.
  • Refine and confirm your identity: A couple of my consulting clients have made a concerted efforts to review their core identity. Being able to speak to why their nonprofit is uniquely positioned to offer the services and programs that are at the core is more valuable than ever. Donors want to invest in organizations that show signs of sustainability.

See the link to the NY Times article: http://www.nytimes.com/2009/02/26/business/businessspecial3/26GIVE.html

What Happened to Trust?


On his PBS show last night Charlie Rose was interviewing John Mack, CEO of Morgan Stanley. Their conversation provided some light into the turbulent days of September 2008 when the financial markets began to plunge and long-standing Wall Street banks folded. No drama in the dialogue that bordered on a clinical. However, a theme that appeared throughout the interview has to do with the notion of trust. For Morgan Stanley and John Mack there were moments during which his firms very existence was at stake. He spoke about living in his office with his leadership team for a three week period. The ability for credit to flow between banks had broken down and yet at the same time he reflected back that the trust among the members of his leadership team grew dramatically. For the rest of their lives the small band of people who lived in the executive suite will forever be bonded by the shared experience.

Today I sit with headlines blaring about our return to late 1990’s levels in the markets. One of Idahos largest employers just announced layoffs numbering close to 2,000 jobs. Nonprofit clients and associates are trying to survive some combination of increased/decreased demand for services and decreased funding. The news is overwhelming and a replay of the same conversations that took place in John Mack’s office.

The real question in my mind is ‘when will we allow ourselves to trust again?’ John Mack has started trusting again. He speaks as if he has weathered the worst of the storm and is ready to ride out the backside with some more bruises. He sounds reverently optimistic. His firm sees trust growing and credit is opening up.

You can almost feel the trust being sucked away from those who are going into their own economic storms. There are also those individuals who feel that the front has passed over them and they are ready for some clouds, wind, rain, and hail but they trust.

If change is constant, perhaps we just need to trust that today and tomorrow will be different.

What happens when the people you are supporting say ‘please stop’?

Reading the New York Times Magazine this weekend I was caught in reflection after completing the Questions For page. It reminded me of a couple points:

  • We get so worried about the message and messenger that we are missing a key ingredient- a expert who can speak about the real issues.
  • Celebrity draws attention. Now what?
  • Despite our best intentions, we need to remember that although the outcome may remain the same, change is going to happen and we need to be able to adjust the ‘how’.
  • Never forget to ask for another opinion.

Checkout the link the complete article:
http://www.nytimes.com/2009/02/22/magazine/22wwln-q4-t.html