Transcript Leadership, Governance and Giving

Leadership, Governance
and Giving
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The following material was prepared for the AFP
Research Council Think Tank held October 7-8, 2008.
The event was co-sponsored by the Philanthropy and
Nonprofit Leadership Center at Rollins College.
The Research Council is indebted to a generous grant
from the Edyth Bush Charitable Foundation to the AFP
Foundation that made it possible to convene nationally
recognized presenters for the 2008 AFP Think Tank.
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An Overview of the Sector
Dr. Elizabeth T. Boris, Director
Center on Nonprofits and Philanthropy
The Urban Institute
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Environmental Trends
• National economic status
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Financial meltdown/sub-prime mortgage crisis
Federal and state budget deficits
Growing income inequality
Health care crisis
Status of U.S. democracy: trust, engagement
Changing demographics: aging, diversity
Global warming/environmental degradation
Globalization
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Political Trends
• Intense partisanship
• Financial crisis and the war dominate political
agenda and resources
• Limited discretionary dollars for other
programs
• Search for revenues leads to the nonprofit
sector
• Malfeasance in the nonprofit sector leads to
stronger government oversight
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Major Trends in the Nonprofit Sector
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Fast growing part of the U.S. economy
More transparent than ever before
Increasingly visible via electronic media
Heightened Congressional interest
Declining government grants and direct
support
• Growing fee for service revenues leading to
fears of “blurring boundaries with business
sector”
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Nonprofit Policy Trends
Congressional hearings on nonprofits
• Threats to charitable status
• Demands for . . .
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Enhanced accountability and disclosure
Governance standards
Documented efficiency (reasonable costs)
Effectiveness metrics
Evidence of diverse beneficiaries
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Nonprofit Responses to Trends
• Burnout/turnover/financial stress/shut down
• Entrepreneurial activities
• Innovative communications, fundraising,
program delivery, volunteering—via the
internet
• Mergers, partnerships, infrastructure creation
• Advocacy, policy development, lobbying and
political activities
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Attributes of Nonprofit Organizations
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Values Base: trust, integrity, commitment
Mission: promote and enhance common good
Governance: oversight for public purposes
Finances: donations, volunteer labor,
government grants, contracts, fees for
services, events, member dues
• Accountability: transparency, performance
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Major Roles of U.S. Nonprofit Sector
• Social, cultural, religious, economic
– Service providers
– Values guardians
– Employers
– Advocates
• Individual and community engagement
• Civic and political participation
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Scope of the U.S. Nonprofit Sector
• 1.9 million nonprofits in mid 2008 [NCCS]
• 1.5 million registered with the IRS
[Nonprofit 501(c)(3) and other orgs]
• 0.4 million religious congregations
• 1 million registered charitable 501(c)(3)
nonprofits [including public charities & private
foundations]
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A Snapshot of the Nonprofit Sector
The Number of U.S. Nonprofits [501(c)(3) public charities] by Subsector, 2006
Other
18%
Arts, cultures,
and humanities
11%
Growth Over Ten Years, 1996-2006
International
and Foreign
Affairs
2%
Education
18%
Environment
and Animal
related
4%
Human
Services
34%
Health
13%
Arts, cultures, and humanities
72.1
Education
81.6
Environment and Animal related
119.8
Health
28.0
Human Services
56.8
International and Foreign Affairs
Total Nonprofits (n=328,690)
Total %
Change,
1996-2006
Other
103.4
79.6
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Characteristics of Nonprofits (1)
• Diverse types: hospitals, shelters, museums,
rights advocates, research institutes and
more
• Varied sizes: financial giants like Harvard
University and small-budget agencies like
PTAs
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Characteristics of Nonprofits (2)
• Different structures: federated, membership,
etc.
• Varied organization: staffing, revenue
generation
• Innovative: new program and outreach
models
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Economic Impact
• Contributed $666.1 billion (5%) to GDP
• Paid $489.4 billion in wages and salaries
• Employed an estimated 12.9 million (9.7%) of
U.S. employment
• Spent $840.5 billion and gave away another
$74.7 billion for total outlays of $915.2 billion
• The 38% of nonprofits that report to the IRS
held assets of about $3.4 trillion
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A Snapshot of the Nonprofit Sector
Distribution of the Total Expenses of U.S. 501(c)(3) Public Charities by Expenses, 2006
$10 million or more
5.0%
2.6%
Expenses
$5 million to $9.99 million
6.9%
11.4%
$1 million to $4.99 million
1.6%
$500,000 to $999,999
8.5%
1.9%
$100,000 to $499,999
Under $100,000
84.1%
3.8%
28.9%
0.5%
0%
10%
44.8%
20%
30%
40%
50%
60%
70%
80%
90%
Percentage
Public charities
Expenses
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A Snapshot of the Nonprofit Sector
Distribution of the Number of U.S. 501(c)(3) Public Charities by Type, 2006
6.2%
Other
2.2%
1.9%
International & Foreign Affairs
Type
18.5%
Human Services
13.2%
Health
12.8%
Environment & Animal related
33.7%
58.8%
0.8%
4.2%
16.7%
18.0%
Education
2.1%
Arts, cultures, and humanities
0%
11.0%
10%
20%
30%
40%
50%
60%
70%
Percentage
Public Charities
Expenses
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2008 Private Contributions (1)
• Estimated $307.65 billion in 2008, a 2 percent
drop in current dollars from 2007
• The first decline in giving in current dollars
since 1987
• Adjusted for inflation, total giving declined 5.7
percent, the largest drop recorded since
Giving USA has been keeping track of
America’s charitable donations
• Tax itemizers account for about 4/5 of
individual contributions in dollar terms
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2008 Private Contributions (2)
SOURCE
Individual giving
Charitable bequests
Corporate giving
Foundation grants
AMOUNT
% OF TOTAL
$229.28 billion
$22.66 billion
$14.5 billion
$41.21 billion
75%
7%
5%
13 %
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Fundraising Effectiveness
• Giving has been at about 2 percent of GDP
for the last 40 years
• What would it take to move that percentage
upward?
• Research suggests a greater focus on
retaining past givers might yield benefits
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Administrative Expenses
• Research on overhead and fundraising costs
of nonprofits shows underinvestment in the
infrastructure of nonprofits
• Research suggests that a focus on efficiency,
(i.e., the least amount spent) results in below
optimal investment in organizational
effectiveness
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Volunteering
• 26.7 % of the population volunteered in 2006,
or 61.2 million volunteers
• 6.5 % of the population volunteers each day,
or over 15 million volunteers per day
• 12.9 billion hours were volunteered,
equivalent to 7.6 million full time employees
earning $215.6 billion
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Nonprofit Governance
National Survey of Nonprofit Governance
shows boards are very active in:
• Financial oversight and policy 52%
• Planning 44%
• Monitoring programs and services 32%
• Fundraising 29%
• Community relations 27%
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Government Regulation of Nonprofits
• Contracts with government result in oversight
related to:
– Performance measurement
– Overhead costs
– Charitable contributions (especially for hospitals)
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Regulation Shapes Structures
• Recent research reveals that regulation of
nonprofit political activities results in complex
multi-organizational structures of
environmental, business, and social action
nonprofits:
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501(c)(3) charitable activities
501(c)(4) lobbying activities
PAC political activities
527 electioneering
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Trends in Accountability
• Codes of ethics, professional standards,
accreditation
• Governance standards
• Financial efficiency
• Outcome and impact measurement
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New Demands: Be Prepared
• Contingency planning for crises
• Coordination and collaboration with
nonprofits, government, businesses
• Creation of regional, local and national
networks
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Summary of the U.S. Nonprofit Sector
• The U.S. nonprofit sector is large and visible
• Demands on the sector are urgent and
growing
• Resources to meet these needs are often
inadequate
• Efficiency and effectiveness are key, but are
not sufficient
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Summary of the U.S. Nonprofit Sector
• Transparency and accountability must be
improved
• Leadership by board and staff is necessary
• A nonprofit voice at the policy table is critical
• Greater coordination and collaboration are
required
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Questions and Comments
Please send any questions or comments about this
presentation to . . .
Association of Fundraising Professionals
Research Council
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Arlington, VA 22203
(703) 684-0410
Or submit a comment via the AFP website . . .
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