Transcript Civic and Charitable Opportunities in a Law Firm

Preparing and Responding to
a Changing Environment
Diana A. Bucco
President, The Forbes Funds
A Presentation to the
Emerging Philanthropy Conference
26 April 2012
The Forbes Funds
The Changing Funding Formula
Impact of Shrinking Government Funds
for Human Service Nonprofits
In the mid-1980s, government grants
accounted for 53% of nonprofit revenue,
and fees-for-services accounted for 19%.
By 2009, government grants accounted for
22% of nonprofit revenue, and fees-forservices accounted for 7%.
The Economic Climate
Pittsburgh Residents
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From 2000 to 2008, costs of basic goods and services
rose sharply, while the percentage increase in wages fell
significantly short of compensating for the price increases.
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In 2010, uncertain economic times created
unprecedented demands on the sector in its role as
community safety net. Agencies were reporting a 73%
increase in “first-time” households seeking support and a
33% increase in individuals seeking help that did not
qualify for public assistance.
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Residents are in crisis and turning at even higher levels to
the nonprofit sector.
The Economic Climate
Agency Preparedness
Agencies that survive this economic downturn will:
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Require sound business models in addition to solid delivery of
services.
Stay focused on core competencies that are rooted in mission.
Monitor cash flow twelve months out and beyond fiscal year.
Be prepared to make cuts in staff and services, know the threshold
for their organization.
Strengthen and nurture relationships with key stakeholders and
supporters.
Seek out partners and eliminate potential duplication of services.
Tell their story – well. Must be relevant and based on outcomes.
Minimize vulnerabilities - limit debt and use of a line of credit.
Monitor staff workload and performance.
The Economic Climate
Agency Preparedness
Savvy nonprofit leaders have a clear vision and are:
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Planning contingencies and helping their boards act decisively and
quickly
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Revisiting operating assumptions and external trends
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Identifying their strongest performers and rethinking the way the
organization is shaped and operates, working smart
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Communicating lots- internally and externally
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Maintaining morale in creative ways
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Proactively looking at mergers and alliances while still an attractive
partner
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Proactively inviting mergers and alliances to better serve through
“acquiring knowledge” rather than “starting from scratch”
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Staying on top of the issues and their funding
The Economic Climate
Agency Preparedness
Organizations that are the most vulnerable:
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Don’t have a game plan or long term vision
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Consistently operate at the margins
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Are uncertain which of their programs and services have the greatest
impact on those they serve and the demands on organizational
infrastructure to support them
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Don’t have a handle on their financials
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Have an unengaged board
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Take a “wait and see” stance
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Deplete their reserves without action
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Resist change
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Are disconnected from their funders and key external relationships
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Are seen as disinterested or difficult to collaborate with
The Forbes Funds:
What do we now know about investing in capacity building?
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Capacity building is about Change Management
Successful capacity building must be explicitly mission-driven
Effective capacity building does not simply correct weaknesses but
creates systemic change
Capacity building cannot be imposed upon an organization or a field
Successful capacity building begins with thorough assessments
Effective capacity building takes time
About Capacity Building:
From the Literature – “Sound Building Blocks”
Characteristics of a High-Capacity Organization:
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A clearly defined mission
Capable and motivated leadership
Results-oriented programs
Ability to access talent, networks, and information
Creativity to adapt
Management support systems
Diverse resources
The Forbes Funds:
Core Components of Effective Capacity Building (Backer/Kearns)
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Comprehensive “systems” approach
Customized to an organization’s place in its life cycle
Competence-based (smart consumers, well-trained providers)
Timely
Peer-connected
Assessment-based (pre- and post-)
Readiness-based
Contextualized (“What’s going on?”)
The Forbes Funds:
How do we invest in capacity building? And how might you?
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Build Trust: engage agencies in genuine conversations about fiscal
health, board governance, succession planning, etc.
Provide $$$ for infrastructure
Promote lots of learning: conferences, subscriptions, publications,
peer-learning networks, formal educational opportunities
Use research and data; eschew anecdotal experience
Educate the community about the important role of charities in our
lives and the resultant need for giving, volunteering, and advocacy
The Forbes Funds
Supporting Change
About our Nonprofit Leadership
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They’re smart
They Practice Good Management
They Need to Reinvent Themselves
We Need to Listen
The Forbes Funds’ Collaboration Fund
Supported by The Heinz Endowments
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Collaboration is defined as a mutually beneficial relationship between
two or more organizations that includes:
• A commitment to shared relationships and goals
• A jointly developed structure with shared responsibility
• Mutual authority and accountability for success
• Sharing of resources and rewards
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In contrast, a merger is the process by which at least two nonprofit
corporations join to form one legal entity
The Forbes Funds’ Collaboration Fund
Supported by The Heinz Endowments
Exploring Strategic Alliances:
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Program Based Partnerships:
– Two organizations collaborate to do outreach.
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Back Office Consolidation or Shared Services:
– Three organizations share one human resource professional.
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Restructuring/Merger:
– Two organizations come together to provide expanded continuum
of care. A new name is created combining both their names. They
use one of the corporate shells and dissolve the others.
The Forbes Funds’ Collaboration Fund
Supported by The Heinz Endowments
The Collaboration Fund (a pooled fund):
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Share best practices in financial management and
strategic alliances that strengthen nonprofit service
delivery; and
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Provide financial and technical support to promising
collaborative efforts and mergers among nonprofit
organizations.
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Pooled Funds from The Heinz Endowments,
Buhl Foundation, BNY/Mellon Foundation, McCune
Foundation.
The Forbes Funds’ Collaboration Fund
Supported by The Heinz Endowments
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Grantmakers
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Take a long-term view
Think systemically
Be an agent of change
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Create Pooled Funds
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Share the risk and success
National Trends in Nonprofit Collaboration
(Foundation Center and Lodestar Foundation)
*This and the following analyses examine the entire contents of the database. Red bars indicate TFF proposals received for last round of Collaboration Funding.
The Nonprofit Collaboration Database:
Collaboration Focus Area
(Foundation Center and Lodestar Foundation)
The Nonprofit Collaboration Database:
Circumstances Prompting Collaboration
Provided by The Lodestar Foundation
57%
• Advance a shared goal
52%
• Respond to a community need
18%
• Funder initiated or mandated
14%
• Competition for funding, donors, and/or clientele
11%
• Respond to a funding opportunity
10%
• Financial problem or pressures within partner organization(s)
9%
• High or increasing costs
5%
• Parent organization request
4%
• Potential closure on partner organization(s)
4%
• (Potential) departure of one or more executives directors/ CEOs
3%
• Constraining effect of increasingly stringent external standards/requirements
Percentages will not add up to 100% because nominees were able to select more than one category.
Nonprofit Collaboration Outcomes:
Community Impact
Provided by The Lodestar Foundation
23%
• Previously unmet community need now being addressed
15%
• Collaboration has served as a model for others
14%
• Greater coordination of services (less overlap, duplication, fragmentation)
14%
• Increased collaboration with or among other community organizations
11%
• Improved quality of programs and services
10%
• Greater range or variety of services and programs offered
10%
• Increase in number of clients, individuals, organizations served
9%
• Stronger, more effective “voice”
7%
• Improved programmatic outcomes
5%
• Able to serve a greater geographic area
2%
• Retained programs or services in the community
Percentages will not add up to 100% because nominees were able to select more than one category.
Nonprofit Collaboration Outcomes:
Organizational Efficiencies and Effectiveness
(Provided by The Lodestar Foundation)
52% - Financial savings
47% - Fund development
37% - Greater ability to allocate resources to areas of need
37% - Human resources
32% - Improved marketing and communications, public relations and outreach
31% - Greater ability for each partner to focus on core competency
Percentages will not add up to 100% because nominees were able to select more than one category.
The Nonprofit Collaboration Database:
Initiators of Nonprofit Collaborations
(Provided by The Lodestar Foundation)
70%
60%
58%
50%
40%
30%
20%
27%
17%
16%
9%
10%
4%
4%
3%
1%
0%
Executive
Community Board member(s) Other senior
Director(s) /
leader(s) /
17%
management
CEO(s) /
organization(s)
staff 16%
President(s) 58%
27%
Funder 9%
Funder
Parent
Volunteers 3% Interim Director
(government) 4% organization 4%
1%
Percentages will not add up to 100% because nominees were able to select more than one category.
Lessons Learned
(Foundation Center and Lodestar Foundation)
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Innovative models of nonprofit collaboration exist
Collaboration takes time and resources
Funders have a critical role to play in the collaboration process
 Provide resources
 Create an environment that encourages collaboration
 Educate
Language of collaboration is confusing
Collaboration is an effective capacity-building tool
Collaboration is easier when all parties focus on mission rather than operations
The Collaboration Fund – A Pittsburgh Model
Supported by The Heinz Endowments
Purpose:
• Share best practices in financial management and strategic
alliances that strengthen nonprofit service delivery; and
Provide financial and technical support to promising
collaborative efforts and mergers among nonprofit
organizations.
Methodology:
A three pronged approach to help agencies adapt and adjust in this
economy:
1) Informational Workshop,
2) Grantmaking, and
3) Technical Assistance Provider Training.
The Collaboration Fund – A Pittsburgh Model
Supported by The Heinz Endowments
Desired Outcomes:
+ Support a management infrastructure that will assure that
we do not fail the end user
+ Encourage good leadership
+ Create a space for agencies to have these conversations
+ Provide resources for agencies to explore new models
The Collaboration Fund – A Pittsburgh Model
Supported by The Heinz Endowments
Community Approach to Capacity Building:
+ Convening
+ Cohorts
+ Grants
+ Implementation
The Collaboration Fund – A Pittsburgh Model
Supported by The Heinz Endowments
Convening
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Strategic Alliances Seminar, 8/30/11
149 attendees, 102 agencies represented
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Finance Matters Series, 10/6 & 20?11
136 attendees, 44 different organizations
41% Executive Management, 37% staff, 22% Board members
Grantmaking
•Strategic Alliance and Financial Management Cohort
•Strategic Alliance Mini Grants – 18 proposals totaling $350,000
Training
Financial Management Series
25 consultants selected to attend
62% of consultants noted no experience in mergers
Formal Grant Requests March 21, 2007- March 21, 2011 (does not include Innovation Requests)
The Collaboration Fund – Impact on Management Assistance
Grant Requests
Supported by The Heinz Endowments
Type of Request
2007-08
2008-09
% of Total % of Total
Requests Requests
2010-11
2009-10 % of Total
% of Total Requests
Requests
5%
6%
Collaboration
0%
3%
Merger/Restructure
2%
6%
21%
10%
Dissolution
2%
0%
0%
2%
Total
4%
9%
27%
17%
The Collaboration Fund – A Pittsburgh Model
Supported by The Heinz Endowments
Impact
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40+ strategic alliances in 4 years
Only two presented at a time of crisis
Redefined the vision for strategic restructuring among community
leadership (nonprofit, board and civic)
Significant cost savings to the community
Deeper, more strategic service delivery in a time of
shrinking delivery.
The Forbes Funds
“The dogmas of the quiet past are inadequate to the stormy
present. The occasion is piled high with difficulty and we
must rise with the occasion. As our case is new, we must
think anew and act anew. We must disenthrall ourselves,
and then we shall save our country.”
― Abraham Lincoln