Nonprofit University Blog

I do NOT believe for a moment that breeches of ethics and displays of questionable to unsavory to downright illegal behavior are more plentiful in the nonprofit sector than the for-profit sector.  But they do evoke a very different response for me.  Sad to say, whenever I read of an ethics violation in the corporate world—of which there have been far too many examples in the last 10 years—I now  just shrug my shoulders, and admit to saying, “That’s  to be expected,” and then move on.  (I know! That is so, so horrible! And so stereotypical! And so unfair.  I get it!  I am ashamed!)  But whenever I read of such a wrong doing in the nonprofit sector, I get infuriated.  I rant and rave.  (Fortunately, for those around me, most of it is done internally.)  And it festers within for far too long.

Trust me; I get it!  There are no more or fewer ethical folks in the for-profit world than in the nonprofit world.  I just expect more of folks in the nonprofit sector.  Foolish of me, I know.  But what can I say?

And so here we go again!  City Year—the nonprofit that is so regularly hyped as exemplary, lauded by Presidents, current and past.  Could those associated with it do wrong?  Alan Khazei is co-founder and former CEO of City Year, founder and as of a two months ago, CEO of another nonprofit, Be the Change an organization that builds coalitions of nonprofits to seek legislative change, and current Massachusetts Democratic senatorial candidate.

The Boston Globe recently discovered that while he was still CEO, he hired his brother, a Hollywood writer, to start, write for and create the media strategy for the Los Angeles office of Be the Change, paying him $40,000.  One problem—well actually, two, but let’s stick with the one, first:  he failed to inform the board of this arrangement, despite the requirements of Be the Change’s conflict of interest policy.  And when called on it by the Globe he defended his decision saying he and his brother are very close, his brother is very talented and it wasn’t that much money.

And so here we go again!  City Year—the nonprofit that is so regularly hyped as exemplary, lauded by Presidents, current and past.  Could those associated with it do wrong?  Alan Khazei is co-founder and former CEO of City Year, founder and as of a two months ago, CEO of another nonprofit, Be the Change an organization that builds coalitions of nonprofits to seek legislative change, and current Massachusetts Democratic senatorial candidate.

The Boston Globe recently discovered that while he was still CEO, he hired his brother, a Hollywood writer, to start, write for and create the media strategy for the Los Angeles office of Be the Change, paying him $40,000.  One problem—well actually, two, but let’s stick with the one, first:  he failed to inform the board of this arrangement, despite the requirements of Be the Change’s conflict of interest policy.  And when called on it by the Globe he defended his decision saying he and his brother are very close, his brother is very talented and it wasn’t that much money.

I don’t know what I find more bothersome:  his violation, as the CEO of the organization, of the organization’s conflict of interest policy, or his truly lame, weak explanation as to why he did what he did.  No other writer in Los Angeles is as great a writer as his brother? Conflicts only occur once you reach a certain financial threshold? Being close to someone is the new employment criterion?  Really, Al?  And you want to be the next senator from Massachusetts? With the heritage of Massachusetts’ Senators—on both sides of the aisle?  (Second problem:  why don’t nonprofits simply forbid nepotism?)

Next example:  Lynn Stout, the Paul Hastings Distinguished Professor of Corporate and Securities Law at UCLA, is being publicly criticized by her own dean and chancellor for her criticism of a $10 million naming rights deal UCLA has accepted for a new Institute for Business Law and Policy.  The donor Lowell Milken , UCLA’s 2009 Public Service Alumnus of the Year.

Most people of a certain age would immediately recognize the name Michael Milken and understand Stout’s questioning of UCLA’s thinking—for accepting the gift (and, from my perspective, giving the award).  But Lowell?  Well, he’s Michael’s brother who, though caught up in the junk bond scandalwith his brother, wasn’t prosecuted and managed to escape jail.  He was, however, barred by the federal government from ever again working in the securities industry.  Stout questions the ethics of naming a business law institute after someone who clearly violated what most would consider basic business ethics, and wonders what kind of message that would send students.  Her chancellor, who says the decision was “thoroughly” vetted, and dean, who notes that Stout accepted Milken money to fund a conference, so why raise the ethics flag now, are not fans of her thinking.  A number of her faculty peers are in the dean/chancellor camp.  Money talks at UCLA, ethics walk?  Remind me not to hire a lawyer graduating from UCLA’s School of Law.

Swinging back to the east coast, and in our own backyard, is the deal that our very own School District of Philadelphia brokered to buy-out the contract of School Superintendent Arlene Ackerman.  Nearly a $1 million dollar buy out, approximately six months after her contract had been extended until June 2014.  (This in a school system with a dropout rate that ranges from 50%-62%, depending on where/who you read or talk.)  Okay, that stupidity aside, the problem is how they made the payment.  The School District only had a little more than half of the total to ante up.    So, they got anonymous, private donors to come up with the remainder.  Imagine, private donors bailing out the government! And nonprofits needing those private donors’ dollars even more as their government dollars shrink with the sinking economy!   And what promises—spoken or not—have these donors extracted?

It gets better.  These anonymous gifts are being passed through a nonprofit—Philadelphia’s Children First, Inc.  Sitting on the board of this nonprofit?  Arlene Ackerman! Also on the board?  Dr. Leroy David Nunery II, former Chief of the office of Institutional Advancement and Strategic Partnerships at the School District of Philadelphia and now Interim Superintendent of the School District of Philadelphia!  Rest of the board? Four out of nine are attorneys, each practicing at one of the major law firms of Philadelphia.  With one exception, they all seem to have extensive experience serving on nonprofit boards.   And just what is this nonprofit getting in return? Taking a percentage, as is not uncommon for pass through agencies?  Getting a promise for something down the road?  I weighed in the recent Philadelphia Inquirer article.

I’m sick to my stomach with the smells emanating from these stories and more.  It just isn’t that hard to be ethical, adhere to standards, protect the reputations of individual nonprofits and that of the sector as a whole.  So why do so, so many people, and the organizations driven by them, have such a hard time finding that solid, moral ground?

I keep hearing that economic recovery depends upon the return of small businesses to a position of strength.  While nonprofits are, by no means, the largest part of the economy, we are an important factor that everyone seems to want to ignore.  And that just isn’t right.

According to a  Small Business Administration report released in February, there were 27.3 million small businesses (defined as business with fewer than 500 employees).  The nonprofit sector stands a tad below that at approximately 1.5 million.

A 2009 Congressional Research Service report had this to say about the economy of the nonprofit sector:

• In 2005, the nonprofit sector employed 12.9 million people, or 10% of the workforce.  (By contrast, the SBA reports that small businesses employ about half of those employed in the US.)

• From 1998 to 2005, nonprofit employment overall grew 16.4 percent, compared to 6.2 percent for overall employment in the U.S.

• Based on employment, the nonprofit sector is larger than the construction sector and larger than the finance, insurance and real-estate sectors combined, and it has nearly half as many employees as federal, state and local government combined.

• Nonprofits’ share of GDP grew 0.4 percentage points from 1998 to 2008.

A 2011 report from the Urban Institute reported that in 2006, the nonprofit sector contributed $666 billion to the economy, accounting for 5% of the GDP, 8% of the economy’s wages, and nearly 10% of jobs.  Not too shabby for a sector that everyone likes to write off as insignificant.  Imagine the state of our current economy without our sector.  It would be in worse shape than it already is.

So, I ask, why are small business being coddled (which I absolutely do not begrudge) and nonprofits being penalized.  To whit, a rash of actions—some being considered, some already taken—to increase the financial burden of nonprofits.  Here are but a few of my current favorites.

The United States Postal Service, hit hard by the decrease in personal correspondence, on-line subscriptions to magazines and print marketing, is, understandably hurting.  The cost of mailing a letter has increased multiple times over the last decade.  Now, the USPS is considering doing away with the special rate for nonprofits.  Donors, and others, already complain about how much money nonprofits spend on fundraising, mailing letters, sending gifts, etc.  The mailing the letter part was actually a mild expense thanks to the nonprofit bulk rate.  Do away with that, and the cost to raise money will go up.

I lost count of how many of the proposals for reducing the deficit included doing away with the tax break for charitable donations.  Contrary to the knee jerk reaction of many, this would not just have an impact on the million dollar giver, but could effect the small donor—the one who gives $25, $50 or $100—who itemizes her/his taxes.   So, the government earns a bit more income in tax revenue while the nonprofits struggle to keep their doors open.

Practically every major jurisdiction, and a good number of the smaller ones as well, have or are rethinking the property tax exemption for nonprofits.  A number have rescinded the exemption for large nonprofits; others are asking for “volunteer” payments for services used or, as Boston has done, asking for a “discounted” tax payment.

Chicago will soon start charging nonprofits for sewer and water.  California, however, wins the prize.  It is using a law that has been on the books since the 1940s, and taking the retraction of the property exemption to new heights.  The law allows each county assessor to determine whether a nonprofit is exempt or not based on his/her evaluation of just how much a nonprofit does for California residents.  The more a nonprofit does, the more likely to receive an exemption; the nonprofit perceived as doing less for the residents of California doesn’t fare as well.

Headquartered in California but do most of your work in states outside of the golden one or internationally, you’re likely to end up having to pay taxes.  But not always.

The David & Lucile Packard Foundation (which I love), gives just under 1/3 of its dollars to nonprofits in California, and yet it receives an exemption.

Stanford University, with one of the two best schools of business to integrate nonprofits, making me a huge fan, also is exempt, despite the fact that 55% of its student body in 2010 was from out of state.  

Variety, the children’s charity, is headquartered in Los Angeles; there are three chapters in California and 40 throughout the rest of the United States.  Wonder what its County Assessor said?  Besides the obvious of where you do your work, how do you measure “benefit” to California?  The Packard Foundation, Stanford and Charity the children’s charity all bring great benefit to California, regardless of where they do their good works.

Instead of thinking of ways that make it harder for nonprofits, how about we start valuing them for what they do for our communities and our economy.

Why does the scrutiny always get focused on the charities instead of the funders?  Are the latter immune from wrong-doing or questionable-doing?  And I am sure in far too many circles, the mere fact that I’m suggesting that a funder might do wrong is blasphemous and minimally cause for tar and feathering.  After all, look what happened to Rell Grrls  when an employee tweeted about Comcast!  But two different articles, read hours apart, just got me thinking.

Go get the nonprofit!  The New Jersey Division of Consumer Affairs is in the public comment stage on a proposal that would require nonprofits to provide the means for a donor to designate funds for a particular program.  The agency’s concern?  That if a nonprofit has used a specific program as its “come on” in a solicitation pitch, a donor must be able to restrict her/his gift to that program.  No longer would you be able to tell the story of the family fed through your food cupboard and only ask for unrestricted gifts of $25, $500 and $100; you’d also have to add the option of designating the gift to the food cupboard.  (Should this get accepted, it would only apply to nonprofits who “received” $250,000 in the previous fiscal year.)

You go New Jersey! How to make a challenging situation—raising unrestricted dollars, dollars that could pay the electric bill or buy new computers or fix the plumbing or the roof, all of which are essential to distributing food from the cupboard) even more so!   While I have not read the history leading up to this proposed requirement, I can only guess:  some individual gave a gift to a nonprofit and didn’t feel as those that gift was used as s/he wanted, so s/he complained to Consumer Affairs.  And maybe that happened10 times—or even 100 times.  Given the approximate 40,000 nonprofits in New Jersey, we are talking about  .25% of the nonprofits in the state.  And there is nothing to say that these .25% did something wrong; it’s just that the donor didn’t like it.

So, now let’s look at the funders.  How does this just not stop you in your tracks?  “The United Way of Buffalo and Erie County has decided that it will stop charging a 13 percent processing fee on all contributions designated by the donor for a specific charity. ….  In total, the elimination of the fee will free up an additional $220,000 for local charities this year.”  Kudos to the United Way of Buffalo and Erie for reducing its fees and allowing more money actually to go to charities—the purpose for which people gave in the first place.  But this United Way is not the one that charges a “processing fee;” just the only one I have heard of that reduced its fee and told the story publicly.  Every United Way I know charges a processing fee, which is not to say they all do.  Do the donors know that?  Most I talk to have no clue!  Hello, Consumer Affairs?

A day or two after reading about Buffalo and Erie, another United Way reported that it had collected $48 million in its most recent campaign and would distribute half directly to nonprofits and half through its Community Impact Fund.  But how much did it really raise?  I’m betting (and the odds here are 50-50) that the $48 million was what was left after it took out its processing fee. Were all of those donors given the option to designate 100% of its gift to a specific charity or program?  Or were they told we will give 100% minus the processing fee to your designated charity?

Look, I get it.  United Way is in exactly the same boat as all of the rest of the nonprofits:  it, too, must raise or earn operating dollars.  It is the struggle all nonprofits have:  United Ways around the country can no more do their work without computers and electricity and buildings.  Yet, how sexy is it to brag to your chums that you just paid the mortgage for “Nonprofit X?” Much better bragging rights (for donors seeking that) to say, “I just paid to provide dentist visits for ten deserving children.”    So, I am totally sympathetic to United Ways’ need to raise or earn its operating costs.  And, I assume, that the United Ways, and every other funder that raises money to distribute to nonprofits, such as community foundations, throughout New Jersey would be subject to the law/regulation cited above, it passes.  But that is not the point.  Transparency is; as is fairness.

Sometimes we lump the givers and the getters into the same pool, such as the fact that we all have to file some version of Form 990 once a year.  But sometimes—and this is particularly true when it comes to lowering the microscope on practices, questionable or otherwise—we set them apart, suggesting that one is better than the other.

We recently got a request from a smart executive director who wanted to enroll in our Certificate in Nonprofit Management.  She thought it would be a good thing for her, as she could learn new things, get a refresher on old things and expand her network.  But, she didn’t know how to justify this to the Board.  Her request:  did we have any data that showed the benefit of pursuing this professional development opportunity?

What?  Isn’t what she enumerated justification enough?  If need be, however, there is plenty of research out there that demonstrates the value of providing professional development opportunities for employees:  it correlates with greater job satisfaction, improved job performance, improved morale, and more.  But what really got me going is that I know that this woman’s board is predominantly made up of  people from the for-profit world, the world where professional development is as expected and accepted a practice as saying “hello” each morning to your colleagues.  So, why would they be resistant to such a suggestion?

And then I started thinking of all of the practices routinely accepted—no, more than accepted, actually expected—and seen as beneficial in the for-profit world that fail to thrive in the nonprofit sector.  And I have NO answer to the question “Why”?  Except that the nonprofit sector, once again, is seen as a second class citizen and not deserving of all of the rights and privileges of first class citizens!

My examples of expected practices that float easily in the for-profit world and struggle in the nonprofit sector:

1. Professional development:  as noted above, almost de rigueur in the for profit world, is a luxury in the nonprofit world.
2. Interim chief executive officers:  how many major, successful for-profit companies have experienced the benefit of an interim CEO? One who comes in and turns things around, rights the ship, whether that ship was on the verge of sinking or merely needed a subtle move to get out of a shaky current?  Some organizations do need a major overhaul, while others just need a change in perspective, style or personality, for example.  In the for-profit world, an interim CEO is often welcomed as an indication that the board of the organization is doing its job, whether that means it is replacing a CEO no longer right for the times, buying some time to do a good permanent hire, bringing in someone to make needed but painful changes.  Yes, it makes some investors weary, and it is one of the things that stock analysts point to as potential investment risk.  But there are also times when those very same analysts will say that an interim CEO is positive for the company’s bottom line.  I’ve yet to see any advisor or analyst categorically say “No, do not invest in a company being managed by an interim CEO.”

Yet, in the nonprofit sector, far too many funders have policies (and practices that are so entrenched they may as well be policy) that categorically forbid funding an organization led by an interim CEO.  Never did understand that policy, as hiring an interim is one of the signs of an organization looking to improve.  Members of nonprofit boards of directors whose for-profit companies may be being lead, now or in the past, by an interim balk at the notion of putting in an interim CEO at the nonprofit for fear of “what it will say to our donors.”  What? Like we are in charge? We saw a wrong and we righted it? Our executive director left on short notice and we wanted to buy time to hire well? We are losing our founder/long-serving executive director and we need space and time to figure out the new normal before we can hire correctly?  How is it that something seen as so good in one sector is seen as a sign of weakness in another?

1. Competitive salaries:  I almost do not know what to say here as it all seems so obvious!  Regardless of what sector of the economy in which those employed work, all are working to make the communities in which we live and work better.  We need banks and law firms and gas stations just as much as we need social service, education, health care, and arts organizations.  While employees don’t all want the same kinds of jobs, all want to be able to have a quality life style.  Why, oh why, oh why do we think those working in the for-profit sector deserve access to a better quality of life than those working in the nonprofit sector?  Why is competitive compensation such an expected part of the for-profit world and seen as anathema and an affront to the nonprofit sector?
2. Executive and senior level coaching:  This spring, my son, in his last semester of college, started looking for a job post graduation.  He had a conversation with his uncle, CEO of a Fortune 500 company, and asked him, among other things, how to differentiate offers from similar types of companies.  My brother’s immediate response was look for a mentor;  best advice he gave him.  One of my big laments about the nonprofit sector is that we do a lousy job at mentoring, and an even lousier job at providing coaching.  Mentoring is free, and yet we still see it as an intrusion on our time to serve our mission.  Coaching admittedly costs, but it is an investment in the future of the organization and the sector.  For-profits get this ROI and are willing to spend both time and money for the return it inevitably brings. Why don’t we?
3. Strategic planning:  No one likes doing it, but at least the for-profit world doesn’t spend as much time trying to avoid doing it as doing it.  Those in the for-profit sector understand the value and importance of it, the benefit it brings to the organization and its employees, the commitment  it demonstrates to investors.  Strategic planning is taking control of an organization and its future; it is giving it direction, goals and differentiation from the pack; and it is giving the organization and its employees’ confidence.  Without that plan, an organization is blowing in the wind, and anyone who has spent time in a wind tunnel knows that is not a position of strength!  And yet, too many nonprofits see strategic planning as an imposition and a diversion from mission.  With a goal of producing 10% more wickets, that wicket factory is not diverted from its mission, but rather 110% focused on it! With a strategic goal to open 100 more stores over the next three years, that bank is not diverted from its mission but singularly focused on achieving that expansion and doing so in the most cost effective and efficient way.  And yet, more often than not, nonprofits come to the planning process kicking and screaming, cursing the funder who made the strategic planning the stick for the funding carrot, complaining that their board members—many of whom have done strategic planning in their corporate lives—don’t want to give up the time for this insignificant work.  Really?

What will it take for nonprofits to understand that their singular focus on mission may too often prevent them from seeing the trees for the forest? What will it take for nonprofits to embrace what is good about the for-profit sector, and fight for its installation?  And what will it take for board members from the corporate world to stop treating the nonprofit sector with any less care, attention, nurturing—and value—than it does their for-profit world?

It’s late afternoon and I’m sitting on the porch of my sister’s slice of Northern Michigan heaven, working on my computer.  My niece, a freshly minted Ivy League MBA, joins me and asks me if I’m done working.  Almost, I respond, trying to finish a blog post I started before I left on vacation.  But I confess that it no longer inspires me.  “Write about bonuses,” she says.  “How do you feel about bonuses?”

Having just been joined by my sister, an elementary school teacher in an urban public school district, and my brother-in-law, an international attorney, I let the question slide.  In a funny turn of events, my niece had just found out that in the fellowship position she will start in September, working for a nonprofit that supports high-impact entrepreneurs, she is eligible for a 10% bonus.  How much money that meant was up for grabs:  10% of the salary the nonprofit was paying or 10% of the total salary she will earn, paid half by the nonprofit and half by her MBA alma mater?  To put this in perspective, 10% of half her salary would be just a tad more than what I net every two weeks!

So, what didn’t I say in response to her question?  What do I think about bonuses in the nonprofit sector?  They offend me, to be quite blunt.  But they offend me wherever they are offered; they just are offensive and difficult in the nonprofit sector.

Let’s begin with the offensive piece.  In teaching, as the semester starts to draw to a close, it is not uncommon for a student who suddenly realizes s/he has missed a test, not done a paper or chosen not to come to class on a regular basis to approach a professor and ask if s/he can do extra credit to try and bring up her/his grade.  My response is always the same:  you can’t do extra credit until you’ve done the work of the basic credit.  The extra credit comes in doing what is expected of you, but in an extraordinary way.  It is doing work that warrants an A instead of work that warrants a C.  The choice is the student’s.

It should be the same for an employee.  The employer should provide the expectations of work and employees should make the choice as to how to fulfill those expectations.  Those who do A work should be rewarded.  If the culture of an organization is to reward with money, fine; but not with a bonus.  They should be rewarded with a pay raise in the coming year.  If we truly want to thank an employee, support an ace staffer’s good work, we should provide a thank you that keeps on giving, rather than one that is over and done.  A bonus doesn’t increase an employee’s base pay on which each subsequent salary determination is built; only a raise does that.  A bonus doesn’t add to the calculations for retirement contributions; only a raise does that.  A bonus doesn’t say we have faith in your future performance, and appreciate your past; only a raise does that.

By the same token, those who do less than A work should also be given a message of money.  They should not receive raises or, worse, they should receive decreases in salary.  They should be given a plan for improvement and/or they should be let go.  While controversial, Jack Welch’s notion of forced ranking is not just a method for removing an organization’s worst performers; it is also a morale booster.  Those extra-credit achievers, while liking their own rewards, are still annoyed, at best, by the continued employment of those who do not pull their weight or just do C work.

So, go ahead:  if you are a money-based culture, reward.  But do it properly, if you can.  Which brings me to my second problem with bonuses in the nonprofit sector:  finding the money to pay them.  In the eight plus hours since my niece suggested the topic of bonuses, I’ve been playing with that donor ask, and I’ve not come up with a good one.  We all know how hard it is to raise money for the basics of operations—rent, lights, heat, building repairs, etc; thus, we can pretty accurately predict  how the ask for bonuses would go.  If raised income isn’t going to supply the source for bonuses, that leaves earned income.  Unfortunately, though, too few nonprofits have strong enough earned income streams.

Which brings me to my third and fourth problem with bonuses:  they contribute to the great salary disparities so often seen in nonprofits and they can assuage a lot of guilt.  Too often organizations limit the availability of bonuses to the upper tiers of the organization chart.  Yet it is these very tiers that not only offer higher salaries relative to the other tiers but also salaries that tend to be more competitive in the market place.  Bonuses only widen the compensation gap between the top and the rest of the organization and, in so doing, create morale and other problems.

For too many board members, bonuses are a panacea for poor salaries and guilt.  Rather than give a few people a supplemental income boost once a year, organizations should be working to improve their compensation systems for everyone (while simultaneously not being afraid to weed out the under- and non-performers.)  Why, if a nonprofit is willing to adopt the for-profit practice of bonuses, isn’t it first and foremost willing to adopt the for-profit practice of providing competitive, livable compensation?   Before we give the extra credit, let’s give the basics.  Got extra money?  Put it there!

I don’t like being considered second best.  Yet, when I hear people looking to the nonprofit sector as the top choice for their “encore career” (don’t even like that term!), that’s what I hear.

Oh, now that you have done the real work of your life, go to the nonprofit sector.  Forget that thinking!  We are not second best.  Not good enough for the first choice of a career, but okay for the encore—the light, flip, “everyone can do it at the drop of the conductor’s baton/lifting of the curtain” piece, while many are leaving the hall and only some of the audience is staying around to pay attention.

That is NOT what this sector is all about.  Don’t get me wrong; I love the fact that folks are finally seeing the light and recognizing the hard and good work the nonprofit sector does.  But all of this hoopla and rejoicing because baby boomers  are turning to the nonprofit and public sectors for their encore careers leaves me a bit annoyed.  Where is the hoopla, rejoicing, celebration for all of the people who have spent their first and entire careers in the nonprofit and public sectors?  Where are the kudos for and people profiles on those who sacrificed the big bucks for their entire careers to improve society?  Oh, not there!

But the headlines abound on folks finding encore careers in the nonprofit and public sectors.  Apparently, “feel good” and “doing good” are part of what makes an encore career an encore career.  Encore.org—a truly great website for anyone looking for that encore career or looking to hire someone seeking an encore career—describes an encore career as combining  “personal fulfillment, social impact and continued income, enabling people to put their passion to work for the greater good.”  The banner on the website says “[en]core careers combine purpose, passion and a paycheck.”  Elsewhere on the website, it talks of “purpose-filled careers in the second half of life.”  According to encore.org, the top five places to find an encore career are education (a nonprofit), government, health care (frequently, but not always a nonprofit), environment (again, frequently, but not always a nonprofit) and the nonprofit sector overall.  Yet how many of us combined purpose, passion and a paycheck in the first half of our lives? Kudos, please?

According to the 2008 MetLife Foundation/Civic Ventures Encore Career Survey (Civic Ventures publishes encore.org and, among many other interesting things, offers the really neat Purpose Prize), over half of the 80 million baby boomers are currently in or looking to be in an encore career as described above.  What’s hot?  Top of the list is advocacy on behalf of a cause in which the boomers believe;  almost another third want to work with children and youth, followed closely by   preserving the environment and teaching.  Community safety, fighting poverty, religion, the elderly and health care round out the list of desired mission-based work.

With 76 million people making up the baby boomer generation, it is no wonder that a cottage industry of supports for encore careerists and has sprung up, such as encore.org .  In 2008, IBM partnered with Bridgestar to provide its employees with a new option to its midlife career transition offerings:  transitioning to nonprofits.  The Encore Career Institute recently announced that it had raised $15M from venture capital firms to provide on-line education (through UCLA) to baby boomers to equip them for their encore careers, regardless of where those careers will be.

The American Association of Community Colleges has the Plus 50 Initiative which is designed to change the way community colleges around the country respond to the learning and re-tooling needs of the plus 50 generations.

This is all truly wonderful, and as a baby boomer, I am delighted to know of all of the supports that will help me in my next career.   But I am still not happy.  For what really worries me about the encore employees is whether they will take jobs from the lifers.  From the first Bridgespan study that revealed the need for 640,000 executive directors over the next decade, people have been looking to the encore (though it wasn’t called that then) careerist to fill the void.  Thinking is they’d have “better” (meaning business) skills; they’d know how to run a business.  And knowing how to run a business is absolutely a crucial responsibility of a nonprofit executive director; but “getting” and living the mission are equally important.  You can teach people the skills needed to run a business; you cannot teach passion for a mission.

We are not the leftover sector—the part that comes when everyone has enjoyed the real show, the part that you can take or leave.  And the employees of the sector who have dedicated their careers—dedicated their lives—to work in the sector that improves the quality of life for all deserve just as much, if not more, attention than those who are doing it as the sign off to their careers.

I have been saying it for years:  don’t throw them into the deep end without first teaching them to swim.  It is true of both children (that’s a joke) and nonprofit board members.  Don’t ask and pressure them to fundraise until you have taught them how.  Makes perfect senses, but it is amazing how frequently this doesn’t happen.

I don’t know the drowning statistics, but I do now have fundraising statistics.  Cygnus Applied Research conducted a survey of donors that included almost 3,500 current or recently-resigned board members.  Of these past and present board members, 46% came from organizations with professional fundraiser(s) on staff, while the remaining board members’ organizations had no paid fundraising staff.

Sadly, when it comes to teaching board members to fundraise, there is little difference between organizations with professional fundraising staff and those without.   In both groups, more than half of the organizations provided little fundraising guidance.  (You might forgive the organization lacking in fundraising staff for this failure, due perhaps to a lack of personnel or inside experience, but what is the excuse for a staffed organization?)

Why is something that seems absolutely like a no brainer apparently so hard for so many organizations to understand?  You can’t ask people to do what is for so many one of the most uncomfortable things imaginable without providing them any training, insights, guidance, the basic do’s and don’ts.  The state doesn’t tell children turning 16 (and increasingly 18),  “Okay, get behind the wheel of a car and drive!”  We don’t hire new employees and say, “Okay, go operate this unfamiliar piece of equipment,” and then walk away and leave them on their own.  Why, then, would we do that with board members and their job as fundraisers?

Perhaps the most surprising finding is how few organizations in either category require board members to make a personal gift to the organization:  only 52% of organizations with staff and a paltry 27% of those without staff.  Depositing a check does not require fundraising staff, so what is the deal here?

Over the last 10 years, as more and more funders have been asking, “What portion of your board gives?” I cannot help but wonder under what rocks the fundraising staff and executive directors (as they tend to know what is the “right” or best practice) of the remaining 48% and 73%, respectively, have been hiding?  Without the expectation of a personal gift, it is no wonder that only 47% of organizations with fundraising staff and 29% of those without require board members actually to participate in fundraising.  Yet the fact that only 55% of the staffed organizations and 42% of the unstaffed organizations require board members to “attend special functions such as fund-raising or donor-recognition events” defies rational thinking.

Clearly “require” doesn’t mean require, but merely “suggest” or “we hope you will.”  And the lack of support offered by these “requiring” organizations underlies that statement.  Almost 60% of the board members surveyed said there was no orientation for new board members.  How, then, is a new board member supposed to learn about the organization, its mission, its programs?  How, then, is a new board member supposed to learn about the general responsibilities of being a board member and the particular ways they translate to that particular organization?  When, as we far too often see, an organization assumes board members know what the job of board member entails, they get board members either doing nothing or doing the wrong thing:  teach nothing, you get nothing in return.  Not surprising, 94% of the organizations in both categories had no budget for professional development for board members!  No money, no training.

I’d like this to be a call to arms and not a “misery loves company” refrain:  “See, we are just like the majority of our peers!”  In this economy, and going forward, individual giving must play a key part in an organization’s diversified revenue strategy.  In all organizations, regardless of the existence or not of a staffed development function, board members must play a significant role in securing those individual dollars.  Something so vital to the sustainability of an organization should not rest on crossed fingers and wishful thinking; rather, it should be built upon a comprehensive and on-going program of education and support.

How do you say this without coming off like a spoil sport?   I really am not in love with all of these “jump on the bandwagon” campaigns and new websites that let you buy whatever you want -from your routine shopping at Sam’s Club to your jewelry and shoes to your home redecorations at special online sites–while giving some percentage of the purchase price to charity.

On the surface, this sounds great.  How could I possibly be against that when I call myself a champion of the nonprofit sector?  I truly must be the biggest, baddest, meanest curmudgeon ever if I am suggesting that all dollars are not equal, that dollars are dollars and we shouldn’t question how we get those dollars—provided it is through a legal process.

And these processes, as far as I am aware, are 100% legal.  That’s not the issue.   Here is my issue:  the buyer doesn’t get to pick the charity; the sponsor–the store, the website, etc.–has, more often than not, picked it for you.  Clearly, I am not talking about the websites and Facebook pages where a person can designate a charity of his/her choice.  No, this is the lazy person’s way to give to charity, the person who isn’t first and foremost driven by giving back and helping, but who does it as an afterthought, a serendipitous benefit of shopping.  And these are the sponsors who want the mileage for being a “good civic partner” and “caring about our community.”  Better something than nothing, I should be saying, right?

Sorry, I can’t go there.  For one, I hate it when the choice of charities is taken out of my hands.  When I look at the charities selected by these “shop and give” programs, most are those with the loudest reputations, the biggest names.  But that doesn’t necessarily correspond with the best run nonprofits, the ones doing the most important work in the community, the ones having the greatest impact on the quality of people’s lives, the ones using their donated dollars most wisely – and perhaps the ones with the greatest needs.

All of that bothers me.  I hope that some of the company sponsors of these programs would be upset if they knew that some of the charities they are highlighting, endorsing and supporting aren’t abiding by best practices — both best nonprofit and best business practices.  But my bet is most of them haven’t taken the time to really investigate the “give worthiness” of the charities they are supporting.

They are just happy to be linked with the name, the brand, the aura, the perceived goodness to the community of these nonprofits.  How can you not like the American Red Cross?  I think it would be perceived as un-American.  But since going through eight or nine CEOS, both interims and permanent , in fewer years, added to its scandaasl post-9-11 and post-Katrina, and I’m not giving them a penny, whether I buy something to do so or not.

And I know that the average American goes apoplectic when it comes to how s/he thinks nonprofits manage its money.  Nevertheless, they buy away and donate those dollars without giving a thought to how or how well those charitable dollars will be used.  Yet, I watch time after time as young people stand in the middle of six lanes of traffic collecting money in cans for this charity and that, and cars stop, throw in coins and bills.  Yet there are even more cars that never stop, some of whose occupants, no doubt, are wondering where that money really goes, how much the charity will use for its mission work.   Yet attach giving to shopping, and it giving becomes a whole other game.

I also can’t help but wonder how seriously the sponsors’ commitment to doing good, giving back, the value of the nonprofit sector, etc., is?  Are they doing this because they, too, have read the research that shows, year after year, people prefer to buy products that are associated with a nonprofit  (hence the pink ribbons on everything from bras to canned goods), to work at companies that support good work in their communities?

I am increasingly fearful of our “take no responsibility” society.  Don’t be responsible for buying a house larger than you can afford; just live in it until it is taken away.  Don’t be responsible for spending beyond your means;  just live that life until you have to declare bankruptcy.  Don’t be responsible for taking care of your children if doing so interferes with your life style; do it until the child gets taken away from you, or worse, mysteriously dies.  Don’t do your own homework and identify what is important to you, what organization supports your values, protects your money/donation as you would your own, is really changing lives.

For many, it makes them feel good simply to be able to say, “I give to charity.”  It doesn’t matter to whom or for what, but simply that they gave and they did “good”.   I just keep thinking it would feel even better if the person knew that his/her donation—whether given directly or indirectly—was  going to the most important work and causes in his/her community.  But me, I like my charity pure:  i want to make and receive donations for all of the “right” reasons?   Do you?

Funny what we will and won’t do, to what we can and can’t adjust.  A voracious reader, I love my e-books.  I can take as many books as I want wherever I go to fit my mood, whatever it is, and I don’t need to schlep an extra suitcase.  I will not, however, read a newspaper on line.  Couldn’t figure out why, what was stopping me, until recently.

It was the May 5 issue of The Chronicle of Philanthropy that helped me to understand why.  Online, I am stuck reading one story at a time.  But with the print version, I can jump from story to story on the front page and see what piques my curiosity.  All in one glance; no scrolling, not going forward or backwards, all right there in front of my eyes.  And I love jumping from story to story because often the juxtaposition of stories is more interesting than any one story in and of itself.

Take the issue of The Chronicle, noted above.  Sub-headline on the lead story, top of the front page:  “60% of big charities say Internet fund raising is stronger so far in 2011 than a year ago, ….”  Jump down right below and the headline reads, “Most Donors Intend to Give More in 2011, ….”  Last headline is “Ore. Crafts Novel Way to Crack Down on Overhead Costs.”  And sandwiched in between all the stories (and a picture of a bicyclist hoisting his bike standing on the beach) is a box graph title “Why Donors Stop Giving.”  [Reasons?  Changed priorities 41%), asked too many times to give (32%) and own financial position changed (30%).]

Glancing at all of these headlines, I got a very good sense of what I would find in the article—with one exception—and what is top of the mind of nonprofits these days.   The story that wasn’t revealed by its headline, however, was the most interesting.

Just how was the state of Oregon cracking down on it the overhead costs of nonprofits? The solution was amazing to me.  In fact, I didn’t believe I had gotten it right after the first reading.  So, I read it again, and again, and yet again—several more times.  The state Senate has approved a bill that would ban charities from receiving gifts that are eligible for a state tax deduction if those charities spend less than 30% of their expenses on their programs and services.  Did you get that?  Did you have to read that statement multiple times in order to really believe it was saying what it said?  Was Oregon’s Senate really saying that if you spend $.31, $.40 or $.50 of every dollar on programs and the rest on what I can only assume they would label “overhead” costs you are deserving of receiving gifts from donors who, in return, may claim a state tax deduction?  Excuse me?

I’d love to meet the donor who would be thrilled to know that $.70 of every dollar s/he gave to a nonprofit was going to pay the electric bill, or the copier or for new office equipment.  I don’t recall getting any appeal letters recently with pictures of a hot water heater or blackboard or phone bill.  I get that you can’t deliver programs and services without the necessary infrastructure supports in place, and I’m willing to fund them as well as the programs and services.    And  I know that it is an ongoing struggle to try to educate donors to this dual funding need—programs and overhead.  But I would never give my money—tax deductions or no tax deductions—to an organization that a)needs to spend that much of its funds on overhead and b)thinks it is okay to do so.  And I would never vote for a legislature who would support such a notion.   Perhaps Oregonians should take a look at the budgets of their State Senators.

I can only imagine the front page headlines a year from now if other states’ legislatures take their lead from the Oregon Senate and actually pass legislation suggesting that it is a “nonpunishable” offense for nonprofits to spend $.71 of every dollar raised on overhead and $.29 on programs and services:    “Why donors stopped giving?  Irresponsible nonprofits. “New Study Find Most Donors Intend to Give Way Less in 2012.”  “Bottom drops out of internet giving as donors discover the true costs of nonprofits doing business.”

I usually don’t play favorites within the nonprofit sector.  I advocate on behalf of the entire sector, not one part.  But everyone doesn’t’ play the same way

Arts and culture groups:  you are not the only part of the nonprofit sector that enriches our communities!  If I read one more article, op-ed piece, blog post or tweet that touts the singular benefits that arts and culture organizations bring to a community, I am going to scream.  Why do you push the rest of the sector out of the limelight and grab it all for yourself?

When an arts and culture organization hits the headlines because someone within the organization embezzled from the organization, all nonprofits are taken down a notch.  When a “world class” arts and culture organization makes news because it is filing for bankruptcy, the question mark of fiscally responsibility hovers every nonprofit, regardless of its mission and model (world class, statewide, community-based, etc.)  You are good, don’t get me wrong; but so is the rest of the sector.  I regularly reap the benefits of your great work; but I do as well from contributions from the rest of the sector.

Of the almost 1 million public charities registered with the IRS (as of June 2011, according to the National Center for Charitable Statistics), less than 10% are arts and culture organizations.  Surely, arts and culture organizations don’t mean to suggest that the remaining 90+% add nothing to our communities?  Let’s begin with what we can easily measure.   Whereas the 90+% of the sector reported a total of $1,418,422,523,927 in annual revenue, the arts and culture subsection’s share was a mere 2% ($28,763,467,805).  Not shabby, but not the bulk of the economic impact, either.  Health care nonprofits (physical health, not mental) contributed 56% to that total, education nonprofits almost 17% and human service organizations just over 8%.

Every time there is a financial crisis in this country, regardless of the magnitude, funders reassess their priorities and retarget their dollars to put them where they can do the “most good.”  One of the perpetual tragedies of such reassessments is that the funding of arts and culture always gets moved to the “not a necessity” column, while the more tangible components of Maslow’s hierarchy of need—food, clothing, shelter, security–move to the “necessity” column.  And yet, arts and culture are as vital a part of our survival and successful navigation of tough times as the food we eat, the shelter we seek and the job we secure and maintain.  It is not an either or but a both and; we need it all for our lives to be truly enriched.

The success of the nonprofit sector rests on the successful synergy of its parts, not a scale of value and importance.   Folks are reluctant to go to arts and culture organizations in neighborhoods with too many vacant buildings and vacant lots.  And if your head is hanging low with worry about your next meal or how to get medical treatment for your child, you will not notice the sculpture, mural or street performance.  People prefer going into communities that have been tended to by community development corporations and neighborhood gardens.  A night at the theatre or a stroll through a gallery is far less enjoyable when shared with those who are hacking and sneezing away or expressing the demons that live within them.   The neighborhood clinic and mental health center take care of that.  While the tour of the historic house and garden becomes much more enjoyable by those visitors who can read the signage and learn about the preserved specimens and original furniture because they have benefited from a literacy and/or GED program.  A walking tour of public art is probably less pleasant when participants are trying to avoid panhandlers and those just hanging on the corner.  Fortunately, the rich subsection referred to with the catch phrase of social service, encompassing addiction services to homelessness services, jobs training to financial literacy training support those working to get (back) on their feet.

Each subsection of the nonprofit sector makes its contributions, has its impact felt and enjoyed because of the work of the rest of the subsections that make up the rich and wonderful nonprofit sector.   None is better or worse, greater or lesser societal benefit.  One works because they all work. We are truly all in this together; we sink, we swim, we succeed together.