nonprofit Z-A

Charitable Tax Deductions – a Non-Kneejerk Perspective For Social And Human Service Nonprofits

2011-02-01T08:42:00.000-08:00

Last month, several proposals have circulated that involve eliminating tax deductions for charitable donations as part of the larger strategy to address the federal budget deficit. The Obama Administration supports, not for the first time, a re-design of the charitable deduction towards a tax credit. More detail on the proposals can be found here and here and one interesting economist's view here.

This discussion provokes kneejerk reactions from nonprofit colleagues and many well-meaning liberals who can’t believe that along with cutting social programs and nonprofit funding streams, now we are also planning to dis-incentivize charitable donations, causing more financial trouble for struggling nonprofit service providers.

Many observers in the last few weeks have written about the inherent “goodness” of charity, how it aligns with Christian principles, and how people should share their wealth and act charitable with or without tax deductions. Most people do in fact give without much regard for tax implications. I agree that they should. And data suggest that limiting the tax break does not reduce giving in the long term. But that’s not even the issue.

Publicly subsidized philanthropy is one of those issues that might find you on the opposite side of the opinion spectrum, if you do a little bit of homework.

The issue is one of political and economic theory. But first, let’s get the current system straight:

A taxpayer with an annual income over $250,000 has a 35% federal income tax rate. This person itemizes deductions on his/her income tax return, in order to minimize the income that is taxed at that rate. So s/he deducts her mortgage payment, business expenses and a charitable donation. The percentage that this taxpayer can write off for their donation is the same as their tax rate, so 35% for the high-income taxpayer. The $5000 check to the symphony orchestra creates a write-off of $1750, and tax savings of more than $600.

As a result, the federal government loses income tax revenue, currently estimated to be at $237 billion for 2009-2013.

A donation made by a lower income taxpayer can only be written off at the lower percentage that equals his or her tax rate, and the 70% of taxpayers who do not itemize their deductions cannot write anything off.

So, if you make $60,000 a year, and deduct your $100 public radio pledge, along with your year end donation of $200 to the local food bank or women’s shelter, this lets you write off exactly $75, resulting in tax savings of about $18. If you are part of the 30% of taxpayers who itemize, that is. I have to conclude that these smaller donations are apparently made for the sake of the cause, not the tax break.

Ok, so now we get how the system works, and it already doesn’t look that great or fair anymore…..However, part of the “homework” is also understanding the role of philanthropy in the context of the mainstream US economic philosophy. That is, the belief system that is based on “government is bad”, and so are taxes, and if you haven’t realized the American Dream, it’s probably your own fault. If you are wealthy, on the other hand, you should have as much say in how your wealth is spent as possible. Taxes give that say to the public (and its representative, the “bad” government). Donations leave it up to the donor. Philanthropy supports the current economic paradigm.

What the current charitable deduction arrangement does then, is put what otherwise would have been tax revenue in the hands of the wealthiest Americans, so they, not the federal government can decide, which causes the “shared” portion of their income supports. So instead of using income tax dollars to fund social programs (or socialist causes, as some would call them, aimed at the – god-forbid - redistribution of wealth, benefiting the poor), the dollars are used for the causes chosen by the richest Americans.

So what are those causes? The list of recent top donors kept by the Chronicle of Philanthropy, shows they gave to either universities/colleges, hospitals or other large health care organizations, as well as a few foundations. The database (of gifts $1 million and over) shows for 2010, that 201 gifts were made to colleges and universities (the biggest starting at $200 million); 36 to health (many of which are university hospitals); four (4) to human and social service organizations (totaling $9 million), six (6) to community foundations, one (1) to children and youths.

So this is the distribution of shared income when left to the (in this case, very) wealthy. If we look at this from an economic perspective, an often heard argument for continuing the tax subsidy states that the public benefit of these donations outweighs the loss to the US Treasury. However, because of the plutocratic bias of the donations, they do not create public goods [1] that are accessible to everyone, but rather goods whose beneficiaries are -- wealthy people . Philanthropy perpetuates the current economic model and its ugly side effect, the ever widening inequality of income and wealth.

Philanthropy is publicly subsidized plutocracy. I would not fret as much about the fact that the wealthy are funding “causes” that benefit the wealthy by itself. However the subsidy (i.e. the tax deduction) eats into the tax base that should benefit all citizens, and provide the underprivileged with the same chances at health, education and economic opportunity.

Instead of kneejerk reactions to the “threatened” tax deduction, nonprofits and their advocacy groups should engage in a discussion that reflects the social justice values of our sector, and that argues for differentiation in the definition of "charitable". A re-design of how we incentivize philanthropy could start there, include equal treatment of donors regardless of their income, and lead to a new system that benefits those affected by poverty, rather than those who are already wealthy.

[1] The goods created are not public goods, because to be public goods they would have to be non-rivalous and non-excludable. Universities and health systems exclude people who are unable to pay for their services.

Beware of the Experts

2010-12-20T15:04:00.000-08:00

Grant writing season has slowed to its annual wintery slump, allowing more time for some of the other services we offer through Z-A. In addition to several board strategic planning sessions, resource development trainings, and preparing next semester’s grant writing course at WNMU, we completed two applications for tax-exempt status for new organizations this month. I hadn’t done any of these in a while, and so as my clients and I were working our way through IRS Form 1023 (Application for tax-exempt, charitable status, aka 501(c)(3) status), I occasionally checked for online resources, hoping to find some templates or guidance, especially on the narrative portions. I found that pickings are slim. There is one website which gives a few hints, and provides one sample narrative. Then the site urges you to buy the author’s book, which promises more samples and links to narratives.

So, why does nobody want to share his or her insights on tax-exempt applications for free? Why are there not more sample narratives? Even the great new nonprofit sharing site IdeaEncore does not feature IRS application templates yet. What’s the hold-up?

My suspicion is that those “professionals” that assist start-up nonprofits in preparing their IRS applications (and file their articles of incorporation, and write their by-laws, and draft their policies, etc.) are making a good profit of it, and wouldn’t want this little secret to become public: It’s not rocket science. You can do it.

One of the client organizations that I worked with had hired a lawyer to file their articles of incorporation with the New Mexico Public Regulation Commission. This requires completing a one-page form and mailing it to Santa Fe. The price tag: $800. When I took over to help this small organization prepare their 1023, I found that the $800-lawyer had made the one mistake that will inevitably result in your tax-exempt application being turned down: He had failed to include the language required by the IRS into the Articles of Incorporation (relating to tax-exempt purpose and dissolution). He had also not included the charitable mission statement into the articles, but instead entered a sentence that in no way reflected any charitable purpose whatsoever.

During the same week, the CEO of another organization that I work with realized that her board would not have enough time to review the annual IRS Form 990 before it was due to be sent off. The contracted CPA had prepared a draft with numerous errors. Part VI of the form (the part with the questions on governance and disclosure) had all the wrong checks, and some of the numbers were questionable as well. I recommended that the organization apply for an extension with the IRS, so that the board would have enough time for due diligence. The CPAs response: you can’t file for an extension. My question: What is this person getting paid for? It turned out this CPA firm is not using the Internet for anything. (of course you can file an extension, and you should, if you ran out of time: IRS Form 8868 is available on the IRS website, can be mailed or filed electronically, and buys you three months)

These two examples illustrate the capacity gaps in the rural nonprofit sector and with those professionals nonprofits rely on. Often, rural nonprofits are run by people with marginal skills or little knowledge of how to start and run an organization. Nothing wrong with that… it’s the nature of the grassroots. Often these community leaders have even less confidence in their ability to figure things out on their own. So they hire the “expert”: a lawyer, or a CPA.

That’s when the trouble starts, because many of these “experts” have no knowledge of nonprofits either. Someone who is a lawyer or an accountant does not necessarily know nonprofits by virtue of his or her title or degree. In rural areas, CPAs have little access to professional development opportunities, and lawyers take all kinds of work, without specializing in something as marginal as nonprofit law. And apparently, some of them are quick to charge without taking any time to do their homework. (ok, disclaimer: there are of course, excellent firms in rural areas as well, including southwest New Mexico. But you have to look for them, and make sure they have experience with nonprofits.)

My advice: If you are starting a nonprofit*, educate yourself as much as possible, write your own drafts of organizing documents and other policies, with the help of templates, instructions and toolkits available on the internet. Maybe buy the book mentioned above. Call your peers (other nonprofits in the area), and ask for samples and templates. IRS Forms 990 are easy to find on Guidestar. 1023s are also documents open to public inspection, while not as widely available online. But you can request a copy of the 1023 from any organization of your choice, if it received its exempt status after 1987. Or you can request it from the IRS, using Form 4056-A.

If after all this research you are still unsure about your documents, find a vetted consultant and ask them for a cheap or free review of your drafts. Demand up-to-date knowledge and excellence if you do hire “experts”. Always closely review their work. And, once you are successful (as in, the IRS sends you a tax-exempt determination letter), share your templates. I will do that as soon as we get the IRS letters for our two clients. Look for it on IdeaEncore soon.

* the point in time at which people seem to not get enough advice is when the decision is made to start a new nonprofit in the first place. Often, this decision is not based on enough deliberation about purpose, need, market, funding and sustainability. But this would be the subject of a different blog post.

43 EX-Charitable Nonprofits- Watch who you donate to!

2010-10-21T09:09:00.000-07:00

As of last Friday, 43 nonprofit, tax-exempt organizations in Grant, Hidalgo and Catron County, New Mexico apparently lost their tax exempt status with the IRS. (I have appended the local list below.) There are just as many nonprofits going out of business in Luna County. The total number of New Mexico organizations on the IRS list is over 2400. All of these groups didn't file their annual tax return, the IRS Form 990, in three years. By July, 292,000 organizations nationally had failed to comply, causing the IRS to extend the deadline one last time, to October 15th.

Be aware, this information is based on a list published by the IRS of all organizations in the US that were at risk of revocation, and on the assumption that these organizations did not follow up by last Friday. Some of them might have filed after the list was published, but I expect that most of them have had their status revoked now. We'll see the final numbers over the next few weeks. So what does this mean?

For donors: if you donate to one of these organizations, you will not be able to deduct the donation from your income for tax purposes.

For the organizations: They will have to pay income tax. If they wish to regain their tax-exempt status, they will have to start over and file a Form 1023 and pay a fee of $850 to apply for exemption. They will also lose their "good standing" with the NM Attorney General, who keeps a list of all "kosher" nonprofits, which is made accessible to the donating public.

For communities: We may lose some organizations that truly had benefit and a charitable purpose. But I suspect that these are few and far in between. The annual tax return for small organizations is a quick online postcard, not exactly a big onerous burden. If you can't comply with that, I am not sure how valid your organization is, frankly.

For the IRS: the agency will be able to clear their database of hundreds of thousands organizations who have seized to exist, or lack the capacity for compliance with section 501 (c) (3) of the tax code, for whatever reason. The IRS will probably experience a slight increase in applications for exemptions, as the organizations that goofed, but still exist, try to regain their status.

For social scientists and third sector researchers: This is significant, because "dead" organizations skew the statistics on the sector. IRS Forms 990 are public documents, and constitute the only solid primary data source on the sector as a whole. The Pension Protection Act of 2006 mandated that more than 714,000 organizations with gross receipts less than $25,000 need to file the new Form 990-N. This was an effort to keep better track of organizations, and researchers will welcome the results, I assume. I am curious, and hopeful that all over the country people are analyzing the impact of this "cleansing" on their data, and on their states and communities.

The researchers at the Urban Institute's National Center for Charitable Statistics have started this summer to review the non-filers, trying to categorize major groups and detect trends.

Many of their findings are true for our rural area. Nationally, a lot of civic associations are losing their status. In Silver City, this includes the Kiwanis Club, the Women's Club, and the Knights of Columbus. To my knowledge, these are active groups accepting donations on a regular basis. We are also loosing a Humane Society, the Scott Nichols Foundation, and two nonprofit incarnations of the WNMU Campus Ministry. Maybe they need some capacity building? Here's the list:

AMERICAN LEGION (Lordsburg)

BECAUSE HE LIVES MINISTRIES

BIG ALS OUTDOORS ADVENTURES

COLD SPRING PARK PROPERTY OWNERS ASSOCIATION

COPPER THISTLE PIPES AND DRUMS

FRIENDS OF THE OWLS INC

GILA TRAPPERS INCORPORATED

GLENWOOD AREA CHAMBER OF COMMERCE

GRANT COUNTY ASSOCIATION FOR RETARDED CHILDREN

GRANT COUNTY COMMUNITY SERVICES

GRANT COUNTY SOCIAL SERVICES COUNCIL

GRASSBANK INCORPORATED

HIDALGO HUMANE SOCIETY

HBNM

INSTITUTO PAZ EN LAS AMERICAS

INTERNATIONAL ASSOCIATION OF LIONS CLUBS (Lordsburg)

KIWANIS INTERNATIONAL INC (Silver City)

KNIGHTS OF COLUMBUS

KNIGHTS OF PYTHIAS OF NEW MEXICO

KNIGHTS OF PYTHIAS OF NORTH AMERICA SOUTH AMERICA EUROPE ASIA AFRICA &

KUSINARA

MIMBRES MUSEUM RESEARCH CENTER INC

MOUNTAIN STATES ASSOCIATION OF CYTOTECHNOLOGISTS

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES ASSOCIATION

NATIONAL ASSOCIATION OF LETTER CARRIERS

NATIONAL SOCIETY OF THE DAUGHTERS OF THE AMERICAN REVOLUTION

NEW MEXICO FEDERATION OF BUSINESS AND PROFESSIONAL WOMENS CLUB

PARENTS ANONYMOUS OF SILVER CITY NEW MEXICO INC

PUBLIC LANDS ACTION NETWORK

RAINBOW MTN MED

SILVER CITY BASEBALL CLUB

SILVER CITY WOMENS CLUB

SILVER CITY-GRANT CO HOME BUILDERS ASSOCIATION

SILVER GOLF CLUB

SOL CENTER FOR PERFORMING ARTS INC

SOUTHWESTERN HISPANIC ROUND TABLE

THE BOB PAYETTE MEMORIAL ANIMAL FOUNDATION INCORPORATED

UNITED CAMPUS MINISTRY AT W N M U

UNITED CAMPUS MINISTRY AT WESTERN NEW MEXICO UNIVERSITY

UNITED VETERANS CENTER 806 BLACK ST

Starting off on the right foot, or: 8 ideas for recruiting board members

2010-09-11T16:56:00.000-07:00

The big federal grant writing season is over, and there is some time before the smaller winter season starts. Much of my time this month is actually taken with spending a grant award from a proposal I wrote for the Silver City based Wellness Coalition in 2009: The now extinct Compassion Capital Fund Program, which provides capacity building to nonprofit organizations through sub-awards, training and one-on-one technical assistance.

I am providing the one-on-one TA piece to four different nonprofits, and in particular their boards and executive directors this month. I am helping with amending by-laws, training new board members, putting together an application for 501(c)(3) status, coaching staff through a complex grant proposal, training the ED on board roles and responsibilities, tailoring sample policies, reviewing marketing materials, advising on an innovative fundraising campaign, and, with every one of these organizations, providing advice on board attendance, retention and recruitment.

On the latter subject, here’s the type of laments I keep hearing, over and over: How do we make them show up? Our board president has not been to four meetings in a row; our board has not had a quorum in several meetings; our board members are so old I don’t know if they are alive (someone really said this!); our board members won’t participate in any fundraising activities; the XYZ committee has not done a thing in a year; our board members have no clue about their legal duties; there are too many potential conflicts of interest bogging down out board; an organization similar to ours in California has 28 board members, and we can’t even get our five to attend meetings.

The last comment illustrates the particular struggle nonprofits in rural, low-income areas face, as described previously here. We lack the large pool of highly educated urban lawyers, educators, doctors and other professionals that typically serve on boards. The few that we do have are in high demand, and often feel compelled to serve on three or more boards.

I have come to the conclusion that most of our governance gaps are caused at the moment we recruit new board members.

As I am counseling clients on these issues, some patterns and strategies emerge. Some of these are at the idea stage, and have not been tested at a large scale, while some have been successfully tried in organizations I work with. All of them are based on the premise that an effective and engaged board originates with recruiting the right people, and that we need to go past the traditional recruitment strategies. And on the premise that if in a rural area, expertise is rare, go for enthusiasm.

1. Don’t talk your friends and family into joining your board.

They’ll join to do you a favor, not because they believe in the mission.

2. Recruit people who are users of your services.

They believe in your mission, and they can testify about the need for the services.

3. Recruit young people.

They bring enthusiasm, and the ability to learn, as well as innovative ideas. They’ll be motivated also by adding a civic engagement to their resume.

4. Recruit retirees as a potential source of expertise.

Just don’t make them your only type of board member.

5. Don’t downplay the board’s roles and responsibilities in the recruitment talk.

Be honest about what you expect. Educate about legal duties before someone joins. Talk the wavering candidate out of it.

6. Don’t beg.

Market serving on your board as an opportunity and a privilege.

7. Don’t accept candidates who serve on more than one other board.

A director can’t do justice to more than one or two organizations, both in terms of time and loyalty. Be careful about recruiting people who show any signs of over-commitment.

8. Train the new members.

Make new board member training mandatory, even if they say they have governance experience. In the training include your by-laws, the organization’s mission, history, financial status, and policies. Then have someone from outside the organization give them the “Basic Roles and Responsibilities of Nonprofit Boards” training.

Clearly, in our community, the standard “1 banker, 1 public official and a few close friends” -type board of directors is not working. I’d be curious to hear from other rural nonprofit professionals about innovative board recruitment.

It's Better Over Where?

2010-09-07T13:25:00.000-07:00

As I am reading the late great Tony Judt’s “Ill Fares the Land” (jumping up and shouting YES! every couple of pages…) , out comes another book comparing European social welfare states with the American model: Tom Geoghegan’s “Were you born on the wrong continent?”

Based on Geoghegan, I was born on the right continent, but must have temporarily lost my mind and moved to the wrong one. How could I leave a place providing guaranteed vacation time, free education, free child care, free nursing home care and generous unemployment payments?

I have lived in the United States for many years now and “the country” has been good to me. I have been able to pursue a diverse career of my choice, changing jobs and locations in a way that would have made me an outcast on the German labor market. I have been able to make a decent living (in large parts thanks to that free German education putting me ahead of Americans, financially and in terms of basic skills), raise a family and live in a beautiful place of my choice. Working in the nonprofit sector, my work has made real change in local communities, people and policies in a way that would not have been possible in the more static German welfare and political system.

The country has been good to me. So I will not join too loudly the choir of people on all the social media networks and the press who took the publishing of Geoghegan’s book as another opportunity to complain about how terrible this country is. I feel more at home in Tony Judt’s camp: Looking at the welfare systems through his vast historical perspective (a European who lived in the US by choice, like myself) many of the paradoxes on both sides of the ocean make more sense. For example, he reminds the reader that neoliberalism hasn’t always ruled American political thought and decision making: “ …, much that was best in American legislation and social policy over the course of the 20th century – and that we are now urged to dismantle in the name of efficiency and “less government” – corresponds in practice to what Europeans have called ‘social democracy’.” He explains why even in countries like Germany, middle-class support for the social democratic model is now waning. And he chastises our generation with having missed a great opportunity: After the fall of communism, “we sat back and congratulated ourselves upon having won the Cold War: a sure way to lose the peace. The years from 1989 to 2009 were consumed by locusts.” Thirty years of erosion of social policies in the US have made the country more unequal “ … - in incomes, wealth, health, education and life chances - than at any time since the 1920s.”

And here’s a big point (one of several) on which Judt and Geoghegan “agree”: Poverty (Geoghegan) and inequality (Judt) corrupt society, endanger democracy, and ultimately undermine the economy: “Inequality is corrosive. It rots societies from within.” Judt explains the emergence of the social democratic systems after two world wars in Europe partially as a way to avoid another catastrophe. Geoghegan shows that poverty carries a tremendous cost to US society and economy.

Here's a West-German Cold War quote a fellow German expatriate reminded me of “ Geh doch nach drüben!” which is what German conservatives used to say if someone in post-war West-Germany was too lefty, meaning, go to Communist East Germany. The reviewers that have praised Geoghegan’s little book are now getting the same comment: “go there, if you like it so much better than the home of the brave and the land of the free….”

Meanwhile, I am running out of the benefits my European free education provided me: A large portion of my salary goes towards the private education of my younger children, because where we live, school districts are too underfunded to provide a solid public education. Our teenagers go to the local college to make up for what high school does not offer. This means, I am putting away no money for my retirement, let alone a graduate education for our children. The secondary education they get here does not adequately prepare them for the (free) higher education programs in Europe. So, is it “Geh doch nach drüben” time? should we move our family back to Europe?

We have not made that decision. Maybe the question is not, where is it better, or, where would we be happier. One of the challenges for us 21st century homeless cosmopolitans might be to find a way to be at home in both worlds. Not only from an individual perspective, taking advantage of the best of both worlds and avoiding the worst. But also from the perspective of ambassador between the worlds, showing our fellow citizens on both sides of the Atlantic what is dear to us and worth transferring to the other side. The freedom of making creative choices in one’s life and one’s community from the US, and the solidarity of social democracy that affords everyone the chance to do so, from Europe. Judt the European and Geoghegan the American do a good job bridging the Atlantic for this discussion. Everyone should read their books.

Policy Peptalk

2010-02-12T13:40:00.000-08:00

I am enjoying teaching nonprofit management as part of a political science degree program. And not just because it neatly integrates my education with my profession. But because it makes a lot of sense.

As Leslie Crutchfield and Heather McLeod Grant have aptly explained in Forces for Good, successful nonprofits operate in both spheres of nonprofit activity: advocacy and service. Operating in just one of those spheres seems to limit impact over the long term. I can confirm this from my private practice. In particular when it comes to trying new approaches, service models and practices, I have seen those nonprofits fail that did not align their new service approaches with policy and advocacy activities at the state and/or federal levels.

I think this might be especially true for nonprofits operating in states like New Mexico, where there is not much philanthropic involvement in social innovation. We have to rely on government for paving the road to innovation with funding.

In this week's session of POLS-380, Intro to Nonprofits, we talked about the regulatory and policy environment nonprofits operate in. We came up with a list of developments that are currently influencing the sector:

Increased regulatory pressure around the public trust (as manifested in new Form 990)
Trends towards taxing NPOs at state and local levels (property tax and municipal fees)
Federal tax law related to charitable donations, deductibility, estate tax law, regulations for foundations
Federal laws related to lobbying
Federal policy developments and attached funding streams around Social Innovation, replication of successful practices and Capacity Building
Changes in priorities and funding streams at both state and federal levels for specific fields (such as disabilities, health services, education)
State fiscal crises
Larger policy developments and how they affect the sector: Health Care Reform, Recovery Act, Jobs Bill
Hybrid corporate forms: LC3s (low-profit, limited liability) and B (benefit) corporations

Unlike some fellow bloggers, who see these developments as threats and occasion to proclaim the impending demise of the 501(c)(3), I think most of these can be opportunities for the nonprofit sector:

The new 990 puts more emphasis on the role of boards as keepers of the public trust. With 990s becoming more accessible though Guidestar and nonprofits’ own websites, this move towards transparency and accountability can only be welcomed.
The much blogged about blurring of the lines between sectors (LC3s etc., which in fact only exist in a handful of states so far) should be seen as an opportunity for nonprofits to point out their special advantage: Rootedness in the community through community-based boards, combined with public accountability controls most for-profit corporations are not subjected to.
State funding cuts are the one real and dangerous threat to nonprofits at the moment (an excellent analysis of how state fiscal woes affect nonprofits was recently published by the Nonprofit Quarterly). So are, I imagine, declines in philanthropy dollars as experienced by nonprofits in more philanthropy-heavy areas. Not much opportunity to be found in being the bearer of the bad news to vulnerable populations, having to cut them off from services due to state funding cuts. The only opportunity lies in learning to become better advocates for ourselves and the people we serve.

As we are teaching this nonprofit class, apart from knowledge, we try to instill sector consciousness and a sense of pride in our future nonprofit leaders. A consciousness based on the ethics of accountability to the community and the public trust that come with being a community-based 501 (c)(3). And we also try to get across that unless you are able to communicate the value and advantage of your nonprofit and/or charitable organization and its work in a variety of policy environments, you will probably not have much impact.

Ecosystem's not changing in rural nonprofit America

2010-02-10T12:01:00.000-08:00

Here is my response to Lucy Bernholz's recent blog post: In a Changing Ecosystem, Whither Nonprofits?:

While I have enjoyed reading Lucy’s posts for a while, I always struggle to find them relevant or applicable beyond the bi- coastal philanthropic consultant blogger and professional conference attendee worlds.

In rural NM, where I work with social innovators, we too closely watch policy developments. Sector “agnostic” sounds buzzy, but the sector relationships we are concerned with now are strictly between government and nonprofits: state funding cuts affecting nonprofit service providers and cuts in state subsidies to low-income residents are the development that worry my clients in these weeks. All the blogtalk of social capital markets, social investors, tactical philanthropy, hybrid corporate forms… remains inconsequential blogtalk to us.

Foundations in New Mexico have been close to irrelevant regarding social innovation for many years now (with a few exceptions, such as the NM Collaboration to end Hunger), and this year in particular they have resorted to distributing minuscule grants to a very few nonprofits, with no social impact expected. Corporations in New Mexico so far have not stepped forward to provide leadership in any cross-sector innovative projects. I imagine this is true for many non-coastal and rural states.

So… our questions are different from the ones that Lucy is asking: How can social innovation happen through rural nonprofits that are 90% dependent on government contracts, and are mired in vendorism? How can we develop effective networks across sectors, while building the capacity of individual nonprofits? How can we participate in federal initiatives such as the Social Innovation Fund, that are already set up to work through large intermediaries, i.e. foundations, in the absence of a wealthy, progressive foundation community?

Not much bathwater left in our tub, Curtis!

Scott Brown lies

2010-02-05T08:00:00.000-08:00

Upon being sworn in, at his first press conference as a US Senator, Scott Brown, R-Mass. yesterday said: " The stimulus bill has not created one job." What a stinking lie, Mr. Brown.

Just in our little corner of the world, the American Recovery and Reinvestment Act has had profound impact in many areas. At Z-A, we have submitted roughly 18 million dollars in grant proposals on behalf of local government and nonprofits in 2009. Some of them are still pending. Of the 10 million in Z-A originated grants awarded so far, the ARRA grants have created at least 7 positions in Southwest New Mexico.

This is only counting the job-creating ARRA funds that Z-A, one small rural grant writing outfit, was involved in. Not counting the many grants submitted with the help of our great Southwest Council of Governments, not counting the 750K received by our regional Community Health Center, not counting the funds received by the public school system, and not counting the secondary economic impacts of this influx of dollars.

According to the federal government, NM has been awarded 2.3 billion in ARRA funds as of Dec 31. 534 million have been received to date, creating 4582 jobs.

Mr. Brown was elected riding a wave of anger, selfishness and lies. Apparently he intends to continue on this successful path.

Syllabus for Introduction to Nonprofits

2009-12-15T17:00:00.000-08:00

The Syllabus for Introduction to Nonprofits has not been officially approved yet, but I don't expect any major changes. I tried to accommodate most of the very helpful comments.

This will be a class offering a broad fairly comprehensive overview, with time unfortunately not permitting a lot of depth.

From the Syllabus:

Students will gain a general understanding of the roles and functions of nonprofit organizations in the US and in New Mexico. In the first half of the semester, the course will cover the legal, regulatory, policy and ethical aspects of the nonprofit sector, as well as the major nonprofit theories. The second half will cover issues of organizational development and management, including resource development, financial management, HR, strategic planning, collaborations, program development and volunteer management.

We will suggest additional resources and literature on each of the topics. And we will take a lot of notes that will inform the development of the future WNMU Nonprofit Management Certificate and degree programs.

Charlie Alfero and I will co-teach the class, with the help of some wonderful guest speakers.

No quizzes, no exams, but a bunch of empirical research and writing assignments are expected. As is attendance and participation in the class/group work: To cut down on sleep inducing lecture time, Charlie has thought up a group exercise that will be continued throughout the semester, at each session: we will create a mock nonprofit - based on a community priority setting exercise, go through the start-up stages, put together a board, a strategic plan, work on developing a program, an organizational budget, and discuss most of the class topics (see below) as they apply to our class-created nonprofit organization.

We are hoping for a diverse group of students that will allow for peer learning. Some new to the nonprofit world, some with practical experience in a few areas, and some bringing expertise from the business and government sectors.

The course will be beneficial to people already in the NPO workforce who feel they never got the big picture, and educational for Social and Political Science students trying to understand the role of nonprofits in our society, as well as informative for anyone aiming at a career in the sector.

Here's the schedule (starting January 12, each Tuesday 5:30-815 pm)

Session	Date	Theme
1	Jan 12	Introduction
2	Jan 19	Ethics
3	Jan 26	Governance
4	Feb 2	Nonprofit Theories
5	Feb9	Policy and Regulatory Issues
6	Feb16	Social Innovation and other functions
7	Feb 23	Strategic Planning
8	Mar 2	Organizational Stages
	Mar 9	Spring Recess
9	Mar 16	Management
10	Mar 23	Revenues and Resources I
11	Mar 30	Revenues and Resources II
12	Apr 06	Financial Management I
13	Apr 13	Financial Management II
14	Apr 27	Volunteerism and Volunteer Management
15	May 4	Program Development
16	May 11	Program Management
17	May 18	Collaboration

More input on our class "Introduction to Nonprofits"

2009-12-11T09:15:00.000-08:00

Thanks to all of you who have left comments here. All this is very helpful, and we will try to cover all of your items. Stay tuned for the class outline, I will post it here shortly.

Following are some more ideas and suggestions I received via email, and i wanted to share them here:

DC:
Sounds fabulous and just what I am looking for. I would like to see covered in this class: successful grant language, non-profit sustainability, the nuts and bolts of a non-profit organization's infrastructure, successful staffing and daily function of the n-p, dos and dont's, and basic accounting issues -- i.e. what to watch out for. I will sign up!

FM:
I would suggest some focus on the following regarding nonprofit finances:

1) Planning to make a profit on events rather than planning to break even
(The event was fun and we made some money too!)
2) Planning out and creating a reserve fund for the organization
(The crisis is being handled through our reserve fund!)
3) Having a system in place for handling cash
(There is no money missing or unaccounted for!)
4) Having a checks and balances system for handling the nonprofit's funds
(The opportunity for embezzlement is not an option!)

NP:
Two areas I suggest some discussion around:
1) Ethics in nonprofit organizations
2) Nonprofit organizations modeling after successful for-profits in these areas: accounting, board development, marketing and human resources.
I also wonder if you will discuss the term “social profit” replacing the term “non-profit”.

EB:
I recently wrote a response to a sociological piece that highlighted the success of a collaborative effort between university, for-profit and non-profit sectors....essentially, my critique was this---non- profits must be in the business of putting themselves out of business. This would be what a piece of what I'd like to see in the course....not letting bureaucracy (and the money from those who have helped to created the problems non-profits are addressing) get the best of us.

AJ:
Having been through all the struggles of setting up a new non-profit, I do have a couple of ideas for you. First of all, walking people through the process of incorporation in NM and getting federal non-profit status would be helpful. I found it extremely daunting! Most of all, once that was done, I wish the state and the feds would send out a list of what is expected of non-profits once they’re created: reporting obligations, obtaining CRS numbers, and rules re: issuing non-taxable transaction certificates. I have had to stumble my way through all of these things and wish I had had access to a course such as the one you are planning! Good luck with it.

NC:
I have three major issues. I'm sure you know all of them! But I'll put them out there anyway...
1. Make sure the nonprofit organization is needed. Identify the constituency and determine what it's lacking. This is a chicken and egg question: which comes first? And there's no doubt that the need/target group may shift over the life of the organization. But I still think needs assessment is a vital first step.
2. Be realistic about funding. Develop a business plan and stick to it. Do not guess about revenues (amount and source).
3. Create the ideal Board of Directors. The mix of skills and temperaments both to recruit the Exec. Director, oversee the operation, solicit funds, and represent the mission.

EZ:
Given the usual requirements, i.e., knowledge of IRS requirements, audits, etc....I think I might recommend the "philosophical" piece. Maybe not so much a philosophical view, but, the visionary aspect and other reasons that someone would consider entering the nonprofit management sector.

Introduction to Nonprofits

2009-12-01T09:14:00.000-08:00

This spring semester, Western New Mexico University will offer, for the first time, a class on the nonprofit sector. It will be provided at the Junior (300) level through the Sociology and Political Science Departments. It's open to anyone from the community who wants to attend and beef up their understanding of the sector.

The class is the first step in a process to develop a nonprofit management certificate program, and ultimately a master's level degree program.

It is also an example of a community education institution responding to a community need.... in this case, the difficulty nonprofit employers are experiencing in hiring competent staff, paired with the realization that the sector employs 10% or more of the local workforce, and there is no relevant training available locally. Look around and add to that the average age of nonprofit leadership in our area, and it will become obvious that we'll need to prepare the next generation for the sector.

Fortunately, there are hundreds of nonprofit management degree programs all over the country, and we don't have to reinvent the wheel. As I am putting together the curriculum, however, I would like to hear from NM nonprofit workers, employers, volunteers, and board members which specific skills and knowledge areas they'd like to see covered. Please submit comments to this post. I will post more details on the curriculum shortly.

PS: The class will meet on Tuesdays from 5:30-8:15 p.m . , Silver City campus, starting January 12th, 2010.

wrappin' up 2009

2009-11-29T12:02:00.000-08:00

This is the one time during the year I will brag. All year I enjoy the work I do, the tailored capacity building and proposal preparation services Z-A provides, and the satisfaction of our nonprofit and government customers. I am proud of the programs we helped develop, the jobs we helped create, and any other "lasting" outcomes of our work, visible all across our communities in Southwest New Mexico.

Towards the end of the year, however, we tally up the balance of the year.... so we can assign a dollar amount to it all.

Here it is for 2009:

Grant proposals prepared: 17
Grant proposals funded: 8 (47%)
Grant proposals still in review: 2 (equaling $5.3 million)
Total $$ requested: $18,101,165
Total $$ funded: $8,813,489 (49%)

For comparison, total proposals funded in 2008 amounted to $4,072,428; with a funding rate of 87%. In 2009, we roughly doubled the funds coming to our communities through our shop, largely due to the American Recovery and Reinvestment Act.

2010 was a good year. Thanks to all the Z-A clients who are already hard at work implementing the awarded programs!

Vendorism vs. Innovation

2009-11-24T17:40:00.000-08:00

So the recent academia buzz about Social Innovation has taken hold in government quarters this spring. The White House Office of Social Innovation (if somebody can locate its website, let me know) and the Social Innovation Fund (SIF) are the manifestations of the Obama administration’s belief in the ability of the nonprofit sector to come up with new grassroots answers to old problems, and the willingness of the government to invest in dissemination and scaling of high-impact programs.

That’s as much of a definition as you’ll get from publications about these two new institutions. The SIF will be run out of the Corporation for National and Community Service, and work with grant makers to identify community organizations that have projects worthy of scaling.

But haven’t foundations tried it all before? As Steven Goldberg demonstrates in his book, “Billions of Drops in Millions of Buckets” philanthropy’s support of innovative nonprofit work has failed to produce any meaningful social change. Grants are too small and spread too thin, and there will never be enough private funds to spread high impact models to any significant number of people in need.

Or, as Thomas Luce said at the National Philanthropy Roundtable annual meeting last year““We have lit enough pilots that we ought to have a furnace somewhere.”

Despite efforts at renaming philanthropy, and consultants, writers and bloggers selling strategic, catalytic, targeted and high-engagement philanthropy and impact investing, I fail to see how these re-definitions of the same thing will make any difference for significant numbers of people served by the sector.

Anyway, should it really be the function of private donors and foundations to solve all problems of inequitable societies, by throwing more money at them?

Philanthropic giving only accounts for 12.3 % of nonprofit revenue nationally, and government accounts for 29.4 %. (NCCSS, 2008) Maybe there is potential for a bigger scale impact if government funds provided to the nonprofit sector are re-organized to be more strategic? Such as with SIF….it’s a good idea, but if it happens within the parameters of the current system, I have doubts:

I think the biggest barrier to innovation is the government itself. I sound like some libertarian, anti-big government wacko. What I mean is that the systems that have evolved at federal and state levels are forcing social service nonprofits into a vendor role. Government –nonprofit relations have been reduced to, in many cases, the submission and processing of reports and invoices, and the regular contract renewal process. Services are provided in compliance with binders full of standards and regulations. All services are reimbursed based on billing units, not based on positive outcomes for recipients. There is no incentive nor time nor creative space for innovation.

And, at least in New Mexico, there are no effective communication channels between nonprofits and state entities. So the problems of the out-of-control bureaucracy, the failure to improve clients’ lives, or any ideas for improvements outside of the current system are simply not discussed. In NM, the communication between government and the nonprofit sector happens mostly between the larger nonprofits with lobbying capacity and the legislators, usually aimed at creating additional funding sources, benefiting the bottom line of already well-funded corporations. Innovation?

There are a few examples of funding agreements that were designed to encourage local problem solving and development of innovative, integrated community-based service systems . One example I know of are the local behavioral health collaboratives in New Mexico. They were born out if the notion that locally coordinated services might be more effective than throwing money down various silos. Local collaborative have formed in each judicial district of the state to build effective local systems of care for mental health and substance abuse services. They are not directly supported by state funding.

At the state government end, a “statewide entity” was formed, and contract management and billing was outsourced to a for profit company. The state began to merge all grant announcements into one “super-RFP”. Sounds like a good idea? The organizational chart on the NM Behavioral Health Collaborative website illustrates how the attempt at streamlining the system went haywire at the government end.

Then the NM State Legislature decided to put their money where their mouth was and approved “Total Community Approach” (TCA) funding for six judicial districts. The funds were to be used to create or improve local systems of care to reduce the suffering caused by substance abuse and mental health problems.

In Judicial District 6, the TCA funds were used to fill the gaps in the continuum of care of small, rural and economically desolate Hidalgo County, starting with universal prevention all the way over to intensive outpatient treatment and everything in between. Providers came out of their silos, started working together to assure multi-point access to seamless service provision, and effective prevention messages. They created new programs, including a youth organization and an adult drug court. They are just starting now to talk about effective tracking of services, referral follow-up and evaluation of outcomes, supported by a professional evaluator. The scale is really small: Hidalgo County has 5000 people. The TCA network is onto something good, but it is certainly not close to proving it yet.

Meanwhile, the state end of the program has morphed into another bureaucratic monster. Providers have to submit monthly narrative reports, reporting on the cost reimbursement, enter claims into a web-based system and prepare a monthly invoice that includes fee for service units and deliverables. The TCA Coordinator spends 80% of her time managing the billing process, and the rest of her time liaising, or should I say, struggling, with the State Behavioral Health Division and Optum Health Care, the for profit company that “manages” the contracts this year.

In one or two more years, legislative TCA funding will expire. It remains to be seen if the project will manage to reach a stage where outcomes are measured effectively, and where enough funding is available to sustain the evaluation, cooperation , quality improvement and dissemination functions to make the whole thing sustainable and replicable. They could have gotten there a lot sooner, if the coordinator and the providers hadn’t been so busy wrestling with the ever changing billing company over each providers’ invoice and monthly report.

Early nonprofit theories explained the existence of nonprofits as a response to government failure. Now it is widely believed that nonprofit and government sector are complementary. Interdependence theory sounds really good- in theory: the nonprofit sector provides community-based services , while government assures sustainable funding streams.
Other recent theories are emphasizing the role of nonprofits as innovative societal forces. I am not arguing with the notion that the best ideas often come from the communities that are tackling the problems.

But I would suggest that the current system of nonprofit revenue generation from government grants and contracts constitutes a barrier to innovation.

What, to my knowledge, has not been looked at –neither by the research community, nor by the new social innovation institutions, are the factors that prevent innovation. Although, groups like the Nonprofit Finance Fund have been laudably outspoken about how the current nonprofit financing system sets organizations up for failure. More questions to explore could be:

How we can improve government –nonprofit relations and funding mechanisms to allow room for creativity?
How can reimbursement systems incentivize outcomes over units of service?
How can service provision and innovation be paired, and made mutually supporting functions?
How can we create avenues of communication between the two sectors?
How can we build capacity of individual nonprofits to develop, test, disseminate and assist in replication of effective models?

The Challenges of the Hired Hand

2009-09-26T22:40:00.000-07:00

Those of you who have sat on proposal review committees have learned to detect the hired hand grant writer, right? Using just the slightly wrong terms, a certain awkwardness in how facts are strung up and a somewhat wooden project design? Lots of standard propoleese words?

Several rants exist on the internet about the disservice done to whatever good cause or whatever cozy researcher position by hiring the under-qualified “grant mercenary” to write your R01. But these are not my clients, nor my causes, and somehow I can’t drum up all that much compassion for the PhD tenure professor who can’t get it together to justify their own research project, especially given four cycles a year, and RFPs that haven’t changed in years.

Our clients are those that run small (budget between 30K- less than 5 million) social and health service providing organizations and local government entities in rural New Mexico. They make between nothing and 60K/year, and they work an average of 60 hrs/week. Their battle is an uphill one, all the time, and they are truly mission-driven. Their budgets never have enough room to hire that “development person” on a permanent basis, and so they call me. 3-5 week before deadline. Frantic.

I think we do a pretty good service to these clients. Many of them I have worked with for years. I know their mission, their services, why they are needed and who they benefit. I know the budget gaps, the organizational capacity and the organization’s needs. I don’t have to make stuff up. Or, let’s say, not very much stuff. There’s no way you can convince me that one of the large national grant writing firms can do the same kind of tailored and detail-oriented service for these local clients.

In the past I saw some of the projects funded by my grants morph into something completely new and unintended, or, fail miserably. As a consequence, I have tried to improve my ability to be realistic about what we promise in the proposal. So after the client gets funded, they don’t hate me for the whole duration of the project, struggling to live up to an impossible plan. Knowing your clients well helps with that reality check too.

Sometimes we work for statewide associations, larger nonprofits, or state government. The picture there isn’t much different at the individual level, although you wonder why improvements couldn’t be made at the institutional level, building the agencies’ capacity to write their own proposals. It doesn’t happen though, so they call me too. 5-3 weeks before deadline. Frantic.

With these projects it’s much more challenging to avoid hired-hand syndrome. Their scopes are larger, the budget bigger, the partnerships more complex, the issues not necessarily close to my expertise. And the politics are usually a nightmare.

Many times during the 3-5 weeks, as I am frantically trying to educate myself on whatever the issue is, I am asking myself, why don’t they write their own $#@! grant? Why don’t they have all this info stored somewhere other than their heads? What do you mean you don’t have last year’s proposal anymore?

And then I send the first draft, and very few edits come back from client staff, the very people who should straighten out all the obvious hired hand phrases and the output projections that are completely fictional. Too few edits, and I think….these people put way too much trust in me. And who are they going to blame if this doesn’t get awarded? Not themselves.

What it boils down to is effective communication, asking the right questions of the right people, in the communication style appropriate to the person. Making it very clear what you don’t know, and what you won’t do. And hoping that your client has the ability to follow up, meet internal deadlines, and focus on at least one good editing session. Tony Poderis has some good pointers on how to work with a grant writer effectively.

As challenging as all this is, it’s what makes me tick. Every new project is initially a confusing unorganized mess of information, facts, and knowledge. Once complete, and the submit button is pushed, it’s a well-organized case for a worthy project. And, if funded, it changes lives.

Once a New Mexico House Representative, upon hearing that I am a grant writer, sighed and said, that there are so many good grant writers who write grants for bad projects or organizations, and they get funded. I told her that I have turned jobs down, because I felt that the organization was too dysfunctional, or had unethical practices. The hired hand does discriminate.

I read all my reviewer comments on unfunded proposal, and I try to learn from them. I haven’t found hired hand complaints in written comments (which doesn’t mean reviewers haven’t thought or said it). But I don’t feel bad about being the hired hand. I provide a service by doing work that that would otherwise not get done. I help decrease the rural resource gap. And sometimes I make stuff up to get my client the award. Get over it.

oh my board.....

2009-09-15T12:51:00.000-07:00

The rural resource gap is mirrored in a number of other rural gaps, or divides. Rural nonprofits are much less savvy at creating or influencing policy (something Kellogg has been addressing now for several years),then there's the gap in the workforce (see my previous post), and the gap in access to academic research resources. However, the governance gap is the most obvious to me in my daily work. While non-rural nonprofit boards all over the country are seemingly much more on top of their responsibilities, in NM we seem to think that governance is insignificant to an organization’s health.

Over the last 18 months no less than three large nonprofit community organizations in Southwest New Mexico experienced a Board of Directors erupting into conflict over the departure of the executive staff person. While each of these conflicts had their own causes and characteristics, together they are a symptom of one ailment: Local nonprofit boards ill-prepared to fulfill their duties. Two organizations now have seemingly stabilized, but one lost all of its government contracts and is now defunct. These conflicts were not healthy processes leading to stronger organizations. They left deep scars on individual relationships, resulted in loss of staff, and left the community with a perception of incompetence and needless in-fighting.

And many of the other boards in the area are not exactly collecting laurels….some more observations from the last few months: a board going below the number of directors set in the by-laws, another board either ignoring or somehow missing the fact staff that have been committing Medicaid fraud for a number of years, (this organization is on its way out, too) and many other boards watching idly as their staff struggles with dramatically shrinking resources as a result of the recession.

And finally, despite a wealth of information available on the new IRS Form 990, and its implications for nonprofit governance, not one area board (that I know if) is gearing up for a thorough review of their organization’s 2008 Form 990, due for most organizations in November.

Oh,…let’s mention the other side of it too: Executives who are condoning and enabling weak boards. I understand the temptation here, and how it is more convenient to run the show without the directors breathing down your neck. It’ll bite you in the butt at some point though. Guaranteed. I also see executives with good intentions, but no understanding of what it means to work for a board. They, along with their directors, should attend the next “Basic Roles and Responsibilities of NP Boards” training in the area.

I also worry that the recent local board conflicts discourage our community members from serving on the boards of crucial community organizations. Serving on a board can be a fulfilling, educational and rewarding way to volunteer for your community. Especially younger people underestimate how much this service adds to their resume, and how much they can learn: from leadership to financial management, supervision and teamwork, fundraising and policy, all are important workplace skills.

So, how can erupting and dysfunctional boards be avoided? Directors serving on boards may ask themselves: Are we as individuals and as a group prepared to guide this organization through an executive transition? Do we have the knowledge and leadership skills to be guardians of the mission in such times? Are we ready to put loyalty to the organization before our own egos, ideas and interests? And are we engaged enough to work with the executive (whether incoming or outgoing), supporting and supervising him or her? Are we ready to put in the extra hours needed to revise the organizational budget and make the needed decisions to steer the organization through the recession?

In times of economic crisis we cannot afford community nonprofits to fail those most vulnerable residents who are depending on their services. People serving on boards must recognize their responsibility, hone their skills, or get off the board.

Article - Nonprofits in Rural America: Overcoming the Resource Gap

2009-09-11T09:53:00.001-07:00

check out this small study from Bridgespan. In addition to the rural financial resource gap, is someone going to look at the other rural capacity gaps, such as work force, governance, etc.?

Article - Nonprofits in Rural America: Overcoming the Resource Gap

Shared via AddThis

my colleague Carol Miller responded:

Thanks for sending the link. I have been tracking foundation impacts on rural and frontier communities for about 20 years and am attaching a couple of items.

Max Baucus has been the spokesperson for the philanthropic divide identified by the Big Sky Institute in 2005. Here is an interesting 2006 speech from Max.

I am also attaching a 1990 article by Karl Stauber, longtime foundation president at a number of foundations. Karl’s article describes how yo-yo funding has hurt rural America.

My current position is that rural America is not dying, it is being killed through both intentional and unintentional policies.

The New Mexico Nonprofit Workforce, or the lack thereof….

2009-09-11T09:30:00.000-07:00

Why do the lack of skills in our workforce make it so hard to run a nonprofit organization in New Mexico?

In my consulting practice, I hear managers complain almost every day about their staff: Nonprofit employees come to their CEOs with the most trivial questions, questions that seem to have very obvious answers. Changes in service provision, implementation of electronic data bases, accurate reporting of services are incredibly difficult to implement. Staff in direct contact with the public or clients lack the most basic communication and courtesy skills. Senior managers waste precious time and resources with bickering and finger-pointing. Clerical staff is unable to compose a coherent written sentence or work a spreadsheet. The list of complaints goes on and on.

Employers find that very few people have leadership skills, dedication, a sense of responsibility, or are able to make appropriate, independent decisions. Few employees communicate areas of improvement or innovative ideas to their supervisors and colleagues. Instead they sow discontent by complaining to the wrong people. Often employees are barely able to follow the simplest instructions, and in most cases they will not go beyond what is directly asked of them.

Which leads one to think that not many nonprofit employees seem to have chosen their jobs based on a passion, a skill, or the dedication to a social justice issue. Low pay in the nonprofit sector further contributes to the lack of job loyalty, resulting in turnover rates that make it almost impossible to maintain quality services.

And critical thinking, questioning systems and thinking up hare brained, innovative new solutions to old problems are needed at all levels of nonprofit work – whether your job is in philanthropy, governance, management or direct service provision.

The nonprofit sector can’t function with a work force that just does what they are told (if that). The sector needs creative, independent thinkers, team workers, diligent administrators with bureaucrat obsessive compulsion and passionate hearts. Certainly nobody’s in it for the whooping paycheck. At least not in rural New Mexico.

The opposite of the medal reveals those few that do have the required management skills, leadership ability, passion and creative, critical minds. They exist in the sector, we all know a few of them and they all have one thing in common: they are burning out.

What are the reasons for this ailing workforce?

1. My suspicion is that the seeds for the minimalist work ethic are sown early on – in elementary and high school, and maybe in college, too. Skills taught there seem to be “ how do I get away with as little work as possible, without getting into trouble?” resulting in an attitude of “ I am not going to go one step above and beyond what was asked of me”. Elementary students who are filling out piles and piles of worksheets each week are literally taught to think inside the box only. They are also not acquiring any team work skills that they’ll need later.

2. Independent thinking is not encouraged in a hierarchical organizational structure. There is always someone to blame, either above or below in the hierarchy, so there is never a sense of “this is my responsibility”.

3. The specific skill set needed to work in a nonprofit environment is unattainable through comprehensive formal educational programs in New Mexico at this time. As a result, the skilled leaders we do have are all self-taught. Many of them have a direct service background and find themselves to be managers and leaders at some point. Many of them are now close to retirement age.

4. The new generation of younger staff rising up in the nonprofit ranks consists of very few people, with insufficient educational background and experience, and they do not have many opportunities to pursue professional development opportunities. Many analysts predict a major nonprofit workforce crisis once the baby boomers start retiring. I think we are already in crisis.

So what do we do? I’d like to invite ideas and start a discussion. Here are some initial thoughts:

Education Community:

· All: Create programs that encourage independent thinking, curiosity, and a sense of responsibility.

· High schools: Incorporate nonprofit management careers into career fairs and other high school student career pathway planning events.

· Higher Ed: Offer certificate and graduate programs in nonprofit management. Incorporate service learning programs and nonprofit internships.

· Raise the bar.

Nonprofit Employers:

· Become an AmeriCorps site! AmeriCorps and VISTA are the number one pipeline programs generating dedicated nonprofit workers.

· Create a budget for professional development that is appropriate to address the needs of your work force.

· Educate funders about your budget needs for workforce development. This is your chance to make the case for an increase in administrative overhead, and to advocate for capacity building dollars.

· Assess new employee skills and create professional development plans for employees at all levels. Tie bonuses and salary increase to additionally acquired skills and their application.

· In budgeting and resource development, make salaries, benefits and professional development a priority. Fight the poverty mentality in the nonprofit sector. Otherwise you will always compete with fast-food restaurants and other low-pay employers.

· Revisit your organizational chart for opportunities to flatten hierarchies. Examine your organizational culture. Get rid of barriers to independent thinking and action. Create accountability structures that provide more support than control. Create incentives for innovation, responsibility and quality improvement.

· Work with the education community, funders and other nonprofit employers, start identifying the workforce needs of the sector, and pool educational and financial resources to address them.

· See your organization as part of the nonprofit sector. Help market the sector as a career choice, and the workforce as one striving for excellence, professionalism and outcome –based achievements.

· Raise the bar.

Employees:

· Choose your place of employment wisely. Understand what it means to work in the nonprofit sector, and which attitudes and skills will advance your career.

· Be prepared to make your work a large part of your life. Nonprofit work is much more than job…. It’s a passion and dedication for social justice, and it means endless work towards making a change for those fellow humans and common causes that fall through the cracks of the government and the business sectors.

· Have pride in your work. Raise the bar.