Non-profit network–optimism, obstacles, and opportunities

Don't recede during a recession

Spent the week meeting with about 350 non-profit leaders, representing more than 120 non-profit organizations (Nopes), about surviving the current economic crises. It was an exhausting and invigorating experience. It was an attempt to give these executives and fundraisers a reality check. As a serial non-profiteer I know that adapting and changing is not a core competence for this sector. But the world has changed and hunkering down to endure this period is essential. Chronicle of Philanthropy estimates that a 100,000 non-profits may close early next year. One thing is certain, this crises has hammered all organizations across all sectors. 

Consider these impacts on philanthropy and fundraising:
  • 66% of all charitable giving comes from individuals 
  • Every 100 point drop in the S and P 500 equates to a $1.5 billion drop in individual philanthropy. That translates to a $12 billion loss this year!
  • Very wealthy will continue to give but "middle class" donors will significantly reduce or stop giving. 
  • Planned giving will increase as a % of overall giving. During the depression planned giving was 40% of all charitable gifts.
  • Government grants, corporate, and foundation giving will drop precipitously. $10 trillion in market value and equity lost this year.   
  • Competition for gifts and attention will increase.  

In short the pie has shrunk and is shrinking from every side.

For the non-profit organizations I met, individual giving represented less than 15% of their income.

The conversations were an interesting blend of resilience and denial. These leaders are passionate about their work and that keeps them going. But their emotional connection to their work often blinds them to the changes that should have been and now need to be implemented. This is especially true when the demand for their services is increasing exponentially. They compartmentalize their focus on surviving and their drive to serve. In times like these, a recipe for disaster. 

Our discussions ran the gamut from commiseration over apathetic Boards, to a how-to on lay-offs, to new models of coopetition, to random expressions of fear, and searches for sources of optimism…

One thing that seems to be giving false hope, at least in the short term, is the Obama factor, which has two facets. First, the belief that Obama's leadership will improve the economy, bolster government, and non-profits financial prospects will rise. While Obama's leadership will make a difference, there will be no financial influx to non-profits in early 2009 when many NPOs will face grim realities. Second, the idea that the Obama online fundraising machine is a model that every non-profit can adopt to raise new money. As I explained, NPOs are missing one key ingredient, the ingredient that made Obama online fundraising  work—-OBAMA! Not to be so cynical but NPOs gravitate to mirage like solutions all the time. We'd rather add than subtract.

The recommendations flowed from these sessions and here are some of the top ones:
  1. Prepare for less and create budgetary scenarios that should start with a 10% to 25% cut as the starting point.
  2. Return to the mission of the organization, to the reason the NPO exists. Consider paring back or lopping off efforts that have been the products of mission creep and mission drift.  
  3. Increase communication to your Board to your donors. Tell them the truth and engage them in the effort to preserve what is important.
  4. Develop a new elevator pitch that reflects the new reality, that shows that the NPO is responding to community need vs the NPO's organizational need. No one cares that the NPO has to cut back, everyone is cutting back. What is the NPO doing to re-focus and respond? 
  5. Develop an investment/investor approach to current and new donors. Donors increasingly want to know that their gifts have a return on investment (ROI) not just keeping the lights on and the staff paid. What does a gift do for the community, for the constituents? 

In short, the world has changed for NPOs as well and they have to adapt to survive. They have to act quickly and urgently NOW to evolve to fight another day. Consolidation, partnerships and new forms of collaborating have to be explored. It is the greatest time to do what needs to be done. As the incoming Chief of Staff Rahm Emanuel said when he was appointed, "Let's not waste this crises." Make this crises the moment of change, the time to start the new chapter, and the chance to make our organizations better. 

NPO networking
If you are looking for an opportunity to meet new people, help the community, fulfill your personal sense of responsibility, and advance your career—jump into a non-profit volunteer post. They need help more than ever. Just make sure you align the opportunity with your values and your passions. Given the above context, can you imagine how grateful a NPO will be when you call to  volunteer? A few tips on how to make this work for you:
  1. Pick a NPO and a mission you really care about
  2. Conduct due diligence on the NPO to insure compatibility
  3. Ideally align the position with your career interests and the NPO's greatest need 
  4. Make sure you understand the expectations  of the volunteer position to meet and exceed them

Volunteer opportunities in California, Secretary of Service and Volunteering Karen Baker and I met last week and her office has put together a fantastic resource for residents of California to find opportunities. Outside of CA there are similar resources. It helps to know what causes, issues, constituencies you care about most. 

There is no more powerful form of networking that connecting with people who have an unconditional commitment to a common goal and NPO. 

We all have to do our part. We all have to engage with the causes and issues we care about. We can not retreat during a recession. We need to connect and strengthen our sense of community. The power of WE is an unyielding force. Reach out and help the NPOs that mean the most to you and the returns will come back to you and all of us in many ways.  

Thanks for reading. John

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1 thought on “Non-profit network–optimism, obstacles, and opportunities”

  1. John —
    Thanks for another truly inspiring post! Last week I attended the Massachusetts Conference for Women, and the opening keynote speaker set the tone for the day and the year ahead when she quoted Marian Wright Edelman. “Service is the rent we pay to be living.”

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