If you picked up a paper today, odds are you’ve seen reports of an interesting survey by Giving USA Foundation and the Center on Philanthropy at Indiana University that found that overall charitable donations increased by 3.9% in 2007 (or 1% after adjustments for inflation), bringing the total donations made by Americans to a record-breaking $306.39 billion.  While the news that giving in 2007 remained steady compared to previous years is reassuring to those worried about the impact of a weakening economy, the verdict isn't out yet on 2008.   

The survey found that corporate gifts and individual giving showed small declines after adjusting for inflation, but foundation grants rose 10.4% to $38.5 billion and charitable bequests were up 6.9% to $23.1 billion, contributing to the majority of the overall increase.  The survey also found strong growth in contributions to international organizations that provide relief, economic aid, exchange, and other programs. Donations rose 16.1 percent to 13.22 billion dollars and the study’s authors believe that was due to an increased awareness, especially among people born after 1981, of global issues.  Additional statistics and findings can be found here.

However, as gas prices continue to rise, the housing market remains somewhat stalemate, and job growth is minimal, the question of the impact of a poor economy on the nonprofit sector will continue to linger.  As Stephanie Strom of the New York Times points out in her story today, despite the survey's findings, there are signs of of a decline in giving. 

We’re curious to hear your thoughts—do the survey’s finding reassure you about the status of giving in a poor economy?  Or are you still concerned about this year's economic impact?

Steve Butz is a man on a mission.  Today’s official announcement of his latest endeavor, the Superstar Foundation, is proof of that.

Starting in September, the Superstar Foundation will put cash grants directly into the hands of high-performing social service workers.  What does that mean? Direct social service workers from effective organizations who are doing exceptional work will be recognized. With cash.  Cold, hard cash.  The first couple of years will consist of 5 grants at $2,000 a piece and Steve’s goal is to grow the foundation to where 30-40 recipients per year will receive $10,000 grants.  

We’ve talked about the problems young leaders in the sector feel when it comes to earning potential and other financial concerns, and now there is even more incentive to stick with the industry and improve performance.     

Visit the Superstar Foundation website for more information and check out the  announcing the foundation.  

And be sure to pass the word on to all the Superstars you know.

It’s been a long time coming.  The IRS is giving charities’ annual tax form, Form 990, a makeover—its first in 20 years.  

Starting next year, the new forms, which charities must make available to donors and other interested parties, includes a summary page that will spell out comparative financial information—both revenues and expenses—over a two-year timeframe, gives a synopsis of the charity’s mission and accomplishments, as well as outline the organization’s governance and operations, compensation for top executies and trustees, an details fundraising efforts.  While some of this information was included in previous versions of the form, the new format puts all of this information up front.  Donors who have questions where their money is going will have a better sense as to where their money is going with the pertinent information available to them right on the Form 990.

Another new item to the form is that if a charity reports more thank $15K in gross income from fundraising or spends more than that amount soliciting donations, the organization will have to answer a slew of questions and disclosures about its activities, including methods and compensation for fundraisers.

The IRS' goal seems to be an attempt to raise the stakes of accountability.  For that, we think change is good.

Joining other cities like Denver, Baltimore and Chattanooga in their request to reduce the number of panhandlers on the street, San Francisco recently began implementing what they call “homeless meters.”  Rather than throw your spare change in a cup or an outstretched hand, the city is asking you to insert that money into one of many designated meters around the city.  Designed to stop the chain of panhandling by taking away the source and  to educate the public about better ways to help the homeless population, the money in the meters will then be given to several nonprofit organizations in the city.  

While many cities have collected only a minimal amount of money when looking at the overall budgets spent on homeless-related services and programs, what has changed, however, is that many cities have cited a decrease in the number of panhandlers on the street—one of the main goals of the programs.   In fact, Denver’s Department of Human Services claim that they have seen a 92% reduction in panhandling in the downtown district since the meters were installed.  Advocates believe these programs can really make a difference in the way homeless people are served in their communities.

Slogans on meters include “Be a part of change.  Don’t give change“ and “Give your change to make a change for homeless people.”  Drop a quarter in a homeless meter in Baltimore, and see the needle move from “despair” to “hope.”  It appears as though a significant emphasis is being placed on educating people about more thoughtful giving.  

We hope organizers put the money where the slogan is. 

If the goal is to make a real change and educate the community about giving, the money has to go to effective and accountable organizations.  Otherwise, the true value of such programs is wasted.

We’re curious to hear your thoughts.  Will homeless meters and other similar programs really “change”  the way people think about charity? 

Governor Schwarzenegger recently launched the California Gang Reduction Intervention and Prevention Program (CalGrip). The $48 million dollar effort – funded by state and federal money will focus on combating local gangs across the state through job training, education and intervention programs.

Doug Luffborough III is well aware of the problem. In 2001 he started Turning the Hearts Center (THC), a non-profit organization in Chula Vista dedicated to empowering youth and families. For the first year, the organization ran without any funding, dependent on the hard work and dedication of Doug and a team of committed volunteers. Today THC has seven full-time staff and 30 committed volunteers, serving over 400 people in the San Diego Community, in one-on-one meetings and weekly classes.

We had a chance to catch up with Doug this week to learn more about Turning the Hearts and get his thoughts on the CalGRIP initiative.

The ETOlutionist: You had a difficult childhood, growing up in Worcester, Mass, without a father, in and out of gangs, and eventually in your senior year of high school living on the street with your mother and siblings. How did you manage to overcome these circumstances and proceed to earning a master’s degree from Harvard Graduate School of Education, a fellowship degree for the Center for Social Innovations at the Stanford University Graduate School of Business, Executive Program for Non-Profit Leaders and receive a personal invitation from President Clinton to the White House?

DL: A strong, disciplined mother, a commitment to my faith and perseverance were the primary factors in my success.  Even at my lowest times, I never gave up on my dreams of attending college. After graduating from Northeastern University, and later, Harvard University, I knew I had to help others in difficult situations to show them that who they have been destined to become is not dictated by external factors but to the degree that they believe inwardly that they were born to win!

The Etolutionist: Tell me about the programs you offer related to preventing gang violence and involvement.

DL: This January we started a new program called G.A.M.E. = Gang Awareness through Mentoring and Education - it is a gang reduction, prevention, and intervention group mentoring project.  The goal is to work with high-risk of joining and/or actual gang members between the ages of 13 to 21.  Over forty youth are currently enrolled in the program, many referred by the San Diego Probation Department and the Sweetwater Union High School District.

The program just received a CalGRIP grant award through the state to grow and further develop the work we are doing. One major challenge is dealing/working with active gang members who are rivals in the streets, but who are expected to be peacemakers when they come to group.  The other challenge is keeping, and retaining participants long enough to track and record positive outcomes.  It is critical that we track the behavior and achievements in real time, which is why this February we signed on to use Social Solutions ETO platform.

The ETOlutionist:  Can you share some thoughts on the CalGRIP initiative – what aspects do you expect will be beneficial? Are there any areas of the initiatives that you think might need improvement or to be revisited?

DL: Overall what is most helpful with using ETO on our CalGRIP initiative is the opportunities to case manage the services being provided and gather real time information that can be used to quickly provide proactive alternatives for positive solutions.  Creating pre and post assessments to show changes in behavior over time will provide us with information that we believe can curve gang involvement.  One area that might need improvement or revisited would be adjusting program design and service offering that maximize the optimum outcomes and minimize rivalry confrontations.

The Etolutionst: What is the make-up of the enrollees in the program currently?

DL: Right now 90% of the youth we serve are Hispanic, around 70% are gang affiliated.  Youth range in age from 13 to 21 years old.  100% are male.  Expansion of G.A.M.E. in the future will include services for women as well.

The Etolutionist: Can you expand on how tracking behavior, achievement and outcomes will help you expand?

DL: What gets measured gets done.  We provide weekly one-on-one sessions and group meetings as well as provide work-readiness classes, GED classes, youth development sessions, tutoring, and parenting services to the youth in G.A.M.E.  We need to track outputs and the relationship between activities to positive outcomes that can be measured over time.  This is where the ETO technology comes into play. It provides us with real time information that can highlight areas of success as well as areas that we need to work on.  Ultimately we expect ETO to prove that the work we do with gang members helps them lead productive and meaningful lives in our society and inevitably leaving the gang mentality and life style.

The ETOlutionist: You are in the early stages of implementing technology for performance management. How do you plan to get staff on board with this and committed to using it.

DL: Using ETO will be a mandate at THC – not a choice. All of the staff will be required to use it everyday, and we even hope to open the platform up to those we serve, so that they can enter feedback on the programs. This will be particularly helpful in deciding which programs need to be tweaked. Our weekly staff meetings include discussion on ETO – what is working, where people need help or training. It’s not looked at as another software application but part of the culture.

The Etolutionist: Thank you for taking time to participate in our blog interview today. We hope to check back in with you in the future to hear how the organization is progressing.
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Join Doug and Social Solutions in a discussion about managing the performance of gang prevention services in a webinar on Thursday, May 29th.  Find more information and sign up here.

gang prevention CalGRIP Doug Luffborough nonprofit accountability Turning the Hearts Center

Dave Butz (pictured below) was included in an article in the Baltimore Sun about how increasing gas prices may impact local Meals-on-Wheelsorganizations. Butz has been volunteering with Meals-on-Wheels for over two years and says he’ll continue to be involved –no matter how high gas prices get.

Meals on Wheels is of course not alone in facing tough times related to high gas prices –
Organizations all across the country are facing similar situations. A sampling of articles from local newspapers shows just how far reaching the crisis is.  

An Arizona Republic, “Economic slowdown pressures aid groups” article shows the economic strain impacting the Salvation Army, the United Food Bank and St. Mary’s Food Bank.

 The Greensboro News Record “Gas prices strain nonprofits,” reports on hardships facing the Guilford Child Development – which operates buses to carry kids between their homes and 11 childcare centers throughout the county.

In Indiana, the Tribune Star recently published an article about its local Red Cross chapter feeling the strain with a decrease in response from people to the recent natural disasters – which the executive director says may be the result of rising food and gas prices.

In tough times, it’s perhaps more important than ever for non-profits to make sure they are using funding and resources in ways that will have the most impact. We’re curious to hear about ways that performance management may have helped your organization stay focused on its priorities during difficult economic times.  

nonprofit, Dave Butz, gas prices, Baltimore Sun, Meals on Wheels, Salvation Army

We're seeing a lot of attention paid to nonprofit hospitals this week.  A state legislator in Boston is proposing that caps be put in place on executive pay at nonprofit hospitals in the Boston-area.  According to today’s Boston Herald, fourteen top executives at nonprofit hospitals raked in million-dollar-plus pay packages, a sharp increase from just a few years ago.  The article outlines a handful of CEOs at local hospitals who have received over $1 million salary, whereas only one executive in 2004 received a salary  of comparable weight.  State Senator Mark Montigny is raising this issue, proposing that salaries are capped at $500,000 at nonprofit charities whose annual revenues exceed $1 billion.  Nonprofit executive pay has been a part of discussions on accountability for years—regardless of the industry. 

Executive pay isn’t the only being discussed this week when it comes to nonprofit hospitals.  The Wall Street Journal addresses the controversy surrounding the revenue nonprofit hospitals bring in, where the money is being spent, and the tax breaks they receive.  According to the paper, the net income of the 50 largest nonprofit hospitals nationwide was more than $4 billion in 2006, up from less than $1 billion in 2001.  So why the extraordinary growth?  And where is this new-found money going?

That’s where the controversy lies.   The article questions how much money is being spent on free treatment to those in need, or what the hospitals are expected to provide in order to qualify for the tax breaks.  The WSJ points out Northwestern Memorial hospital, that, in 2006, spent $20.8 million on charity care or less than 2% of its total revenue.  Ironically, the hospital’s former CEO received a $16.4 million payout.  The article points out that other hospitals in the same area spent roughly 14% of their revenue on charity care.

The article continues to discuss the tax breaks hospitals receive and the disparities over executive pay and how the revenues of hospitals are distributed, leading to the ultimate question—if nonprofit hospitals bring in so much revenue, receive millions in tax breaks, and don’t deliver on the requirements of benefiting the community—why are they nonprofits?  That question, of course, is left open-ended as there are many hospitals who are providing charity work and the benefit to community requirement set forth for tax reasons is loosely defined, it is hard to say who isn’t making a difference.  

What do you think of the news relating to nonprofit hospitals this week? Should salary caps or tighter restrictions on tax breaks be in place?

As we encounter popular, visible fundraisers, such as this week’s American Idol: Idol Gives Back, we must not forget the importance of measurement in the effectiveness of an organization.  Many people and viewers alike assume an organization is credible, and therefore effective, because they see it on TV or because it is advocated by a celebrity (or talked about in today's NYT). Although these organizations often are able to raise significant funds due to visibility, unfortunately, it is not often the case that they are better just because they are bigger or flashier.

Through our own research, we've found that the organizations supported by this year’s Idol Gives Back represent reputable and moderately effective organizations. But although they are decently efficient at raising as well as allocating funds as compared to other organizations in the space - we must not take this as the norm, we as donors must still be careful to investigate before we pledge money to a cause.  We must seek out organizations using measurement tools to evaluate programs because as with any nonprofit, measurement will only help enhance the good the organization is already doing and help ensure that the organization will meet is goals and ideals.

As donors, we must be smarter than to take tear jerking stories as proof that an organization is using funds as wisely as it should. If we hold these organizations accountable, ask them what they are using the money to do, ask them to show us their measurement system and proof that the programs are working, out money will be better spent.  As a society, if we continue to give blindly, to donate based on photo montages of hungry children we see on TV, we will continue to idle if not take a step backward.  But if we do our homework as donors and support the organizations who are measuring their efforts and relating them to their outcomes, increasing their effectiveness and making the most social change, we will advance the mission of the organization and thus improve the society in which we live.

In a time when hundreds of thousands of nonprofits are asking for support, we must take our job as donors seriously.  We must demand transparency from the social programs we care about both in our communities and across the airwaves in order to foster the effectiveness that will benefit those causes that need it most.

American Idol, Idol Gives Back, measurement, nonprofit, effectiveness, transparency, donors

We talked about ethics in our last post – it’s quite the issue these day in the world of nonprofits. Tuesday’s topic du jour - fraud. 

A recent NYT piece outlined a report by the Certified Board of Fraud Examiners which estimated that the overall cost of fraud to nonprofits was at $40 billion for 2006, or some 13 percent of the roughly $300 billion given to charity that year.  The piece states that if in fact $40 billion was lost to fraud, then the corporations and foundations who gave in 2006 might have just as well burnt their benjamins – it was the same amount.

And we know this report lumps all the organizations together.  But does one bad apple spoil the bunch? In this case, maybe.  How do nonprofits expect donors to give when 13 percent of the donation ends up paying for some employee’s vacation or sports car?  Who do they know who to give to when the report tells us that almost all nonprofits encounter some fraud. The report also told us that ethics or no ethics, most givers don’t have very much faith in the way charitable organizations spend their money.

In the case of all this fraud, accountability might just hold us over. If we don’t have faith in these organizations, why don’t we question them? If we ask them measure their efforts and clearly show us the outcomes, and we like what we see, we might just take that leap and hand over the cash.  Rather than tattling, let’s be the bigger guy . Let’s show nonprofits what they can do to stay good apples and show donors what they need to demand in order to feel good about giving.

A somewhat disturbing study today out of the Ethics Resource Center that brings up a whole other topic of accountability in nonprofits.  We talk about making programs effective, using measurement and evaluation to really know what is going on in your organization.  But what happens when accountability is lacking in the people—not just the organization?

Along with government and business, the Ethics Resource Center has researched rates of observed misconduct at nonprofit organizations since 2000, and the most recent numbers are show the highest rates of misconduct in 2007 than in any other year.  Over half of respondents reporting that they have witnessed an act.  We need to say it again.  Over half.  The study also fond that nearly a quarter of respondents observed their co-workers putting their own interests above those of the organization.  Just over 20% reported observing managers or executives lying to employees.  When it comes to ethics, nonprofits are usually held in a better light than corporations and government.  However, these numbers put nonprofits in the same ballpark.

This study isn’t the only popping up lately showing holes in accountability.  As The Chronicle on Philanthropy points out, recent findings that nonprofits lack the ability to deter theft and fraud and that insider deals with boards are becoming more prevalent, are pointing out holes all over the place.

We talk about accountability in many forms.  But regardless of the form, accountability starts from the bottom up.  Its a shift in culture.  A new way of thinking.  And based on this study, a new way of acting.  

We’d be interested in hearing your thoughts.  Do this recent studies have you concerned for the future of organizations?