Tag: News

Why Rural Philanthropy Should Ensure Access to Quality Back Office Services

Does every nonprofit need a separate, fully functioning back office capable of handling all of the accounting, HR, and regulatory requirements that are now a part of day-to-day nonprofit survival? Perhaps not. If your nonprofit is new, small, or has proven itself to be less than agile or consistent in such matters, one choice may be outsourcing some of this work to a trusted administrative partner. The question is, do such partners exist in your area? Do their services meet your needs? Are they affordable? Will they teach you capacity while serving your needs?

At the University of New Mexico’s Anderson School, “We realized there were a lot of nonprofits that were not meeting the requirement to function in this state,” said Leslie Oakes, chair of the Accounting Department. “There were huge grants…from Kellogg going to nonprofits in some rural regions and there was no one there that could really help them. So they couldn’t get that grant renewed because they didn’t have the accounting to show that they had monitored the grant correctly.”

Janice Moen is one of Oakes’ former students, and when she graduated, Moen and Patrick Wilkins, chief financial officer of the United Way of Central New Mexico, began teaching financial training classes for nonprofit staff. They soon found that in many cases, education only addressed part of the problem: “They walk into the training. They are all excited. They’ve got their coffee. They’ve got their muffins. They sit down. They are all happy. […]  And then we start telling them, here’s the things you need to do fiscally. Here’s your responsibility,” said Moen.

Wilkins added, “All of them were committed to understanding, and then after about 15 minutes, they realized, ‘Oh gosh, I’m the executive director and I’m responsible for fundraising and for doing the program and I also keep the checkbook.’ We are talking about all these regulations and how to file a 990 and proper bookkeeping and restrictions, and all the things that are unique to nonprofits. […] The color would go out of their faces. None of them were accountants and they thought they could come take this class and get some tips and tricks. Then they realized they didn’t know what they didn’t know.” So, in 2011, Moen founded NonProfit Back Office Resources, which for a modest fee helps nonprofits set up financial systems and sometimes even actually runs them, complete with checks and balances.

Association with the university reduces the organization’s cost through access to interns. Oakes says such students are not in short supply:

I taught a writing class last spring and I asked them, “What does it mean to be a professional in your community?” We have students that come from the reservation, from little towns up north and they were talking about how being a professional means giving something back to your community. To be an honored person, who behaves respectfully and gives something back. I don’t think you would hear that from the usual accounting group in Milwaukee or Chicago or Dallas.

NPQ has long advocated for more back office support to nonprofits, and even to groups that are not themselves incorporated but need a nonprofit fiscal sponsor. However, making use of such a model does require a few things both from the nonprofit making use of it and the organization providing the service:

  • The nonprofit needs to do due diligence to ensure the entity with which they are considering contracting has a stellar reputation for dependability, accuracy, responsiveness, and ethics. There are many cautionary tales of things going awry both in fiscal sponsorships and back-office relationships. One of the more recent was in the death of FEGS, which outsourced its financial work—ironically to a social enterprise owned by FEGS—only to so lose sight of its financial position that it made the choice to close the agency, which had a $250 million budget.
  • Having someone else do your books and accounting does not relieve a nonprofit organization of the responsibility to take financial leadership. When it works, the relationship is more like a respectful partnership that strives always to develop systems that are ever more informative to the board and the exec at the nonprofit. This requires a kind of on-the-job training mode of interaction rather than a vendor/contracting-agency relationship.
  • The best of those doing this back office work are grounded in an understanding of the realities of the variables in a particular field. They have enough knowledge to be able to point out to an organization when a practice needs changing and enough skill to help them to make that change.

But this intimacy in the work also can be costly to the contractor. Foundations, like a Kellogg or any of the others that still invest in small powerful community-based efforts, might consider whether they may wish to make a parallel investment in back office service.—Ruth McCambridge

Looking for Nonprofit Leaders among MacArthur Geniuses

The John D. and Catherine T. MacArthur Foundation announced the 24 winners of the MacArthur Fellows awards, known widely in the public as the “genius awards.” Each of the genius award winners will get $625,000 over five years to be used however they might wish. Cecilia Conrad, a vice president of the foundation and director of the fellows program, described the winners as creative in their fields “with the potential for more. We kind of want to catch them before they really make it.”

There is always a strong element of nonprofit or civil society leadership reflected in the array of genius grant winners. In this year’s list, three of the notable winners should be quite recognizable to NPQ readers: Juan Salgado, the president and CEO of the Instituto del Progreso Latino in Chicago, known for innovative workforce development programs; Ta-Nehisi Coates, a writer for the Atlantic and known for his articles and books on racial justice issues; and Gary Cohen, founder of Health Care Without Harm, addressing the toxic waste and other polluting agents caused by American hospitals.

For NPQ readers, a number of MacArthur genius winners have been or become prominent players in the nonprofit arena. A few of them include:

  • Historian, literary critic, Harvard professor, and racial justice activist Henry Louis Gates (1981)
  • Director of the Middle East studies at Johns Hopkins University’s School of Advanced International Studies, known for his enthusiasm for George W. Bush’s invasion of Iraq, the late Fouad Ajami (1982)
  • Federal tax and economics expert, first director of the Congressional Budget Office, and appointed by President Obama to the Simpson-Bowles Commission on fiscal reform Alice Rivlin (1983)
  • Industrial Areas Foundation (IAF) organizer Ernie Cortes and Ashoka founder Bill Drayton (1984)
  • Founder of the Children’s Defense Fund Marion Wright Edelman (1985)
  • Founder of the Overseas Development Council, the Worldwatch Institute, and the Earth Policy Institute Lester Brown (1986)
  • Progressive educator and supporter of the “small schools” movement Deborah Meier (1987)
  • Founder of the Hispanic Housing Development Corporation in Chicago Hipolito (Paul) Roldan, and founder and director of the Joint Center for Political and Economic Studies in Washington, Eddie N. Williams (1988)
  • Champion of youth-led media and founder of Youth Communications Keith Hefner (1989)
  • Founder of the National Center for Neighborhood Enterprise Bob Woodson and founder of the Tacolcy Economic Development Corporation focused on restoring Liberty City Otis Pitts (1990)
  • Monsignor William Linder Jr., founder of the New Community Corporation in Newark (1991)
  • President and executive director of the Southern Mutual Help Association in rural Louisiana Lorna Bourg (1992)
  • Paul Farmer, who established the international health organization known for its post-earthquake work in Haiti, Partners in Health and Amory Lovins, the energy policy expert who headed the Rocky Mountain Institute (1993)
  • Carolyn McKecuen, founder of the Take Our Daughters and Sons to Work Foundation (1994)
  • Disaster relief specialist Frederick Cuny, who disappeared while on a mission to Chechnya in 1995 (1995)
  • Bill Strickland, founder of the Manchester Bidwell Corporation that provides job training to youth and adults in the Pittsburgh area, Martin Eakes, a Ford Foundation trustee and founder of the Center for Community Self-Help, Dorothy Stoneman, founder of YouthBuild, and Bob Greenstein, founder of the Center for Budget and Policy Priorities (1996)
  • Founder of the Native American Community Development Corporation and the Blackfeet National Bank—and namesake of the class action litigation that challenged the U.S. government on its management of Indian trust lands—the late Elouise Cobell (1997)
  • Founding president of the Asian Pacific American Legal Center and former chair of the California Endowment board Stewart Kwoh, founder of the Center for Public Integrity Chuck Lewis, and urban critic Mike Davis (1998)
  • Founder of the Freelancers Union Sara Horowitz (1999)
  • Former policy director of the National Council of La Raza and currently director of President Obama’s Domestic Policy Council Cecilia Muñoz (2000)
  • Executive Director of the New York-based NGO Human Rights in China, vice chairman of the steering committee of the World Movement for Democracy, and founder of the bilingual China Digital Times Xiao Qiang (2001)
  • Former senior fellow at the New America Foundation and award-winning journalist writing about social welfare policy, Katherine Boo (2002)
  • World Bank president Jim Yong Kim (2003)
  • Katherine Gottlieb, Alaskan nonprofit health care provider (2004)
  • Founder of Sustainable South Bronx Majora Carter (2005)
  • Founder of the Institute for OneWorld Health Victoria Hale (2006)
  • Esther Duflo, economist, co-founder of the Abdul Latif Jameel Poverty Action Lab (J-PAL), and professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology (2009)
  • Emanuel Saez, economist at the University of California Berkeley, a research partner of Thomas Piketty on issues of economic inequality (2010)
  • Maurice Lim Miller, founder of Asian Neighborhood Design, founder of the Family Independence Initiative, and appointed by President Obama to the Council for Community Solutions, and Laura Poitras, filmmaker of Edward Snowden’s NSA revelations and escape from the U.S. (2012)
  • Ai-Jen Poo, executive director of the National Domestic Workers Alliance (2014)

By virtue of this list, it seems that the MacArthur Foundation has recognized nonprofit leaders who merit their fame. A couple have had some downturns in their work, notably Pitts, and there are some whose fame others would suggest is a bit overdone, but the overall list is one of nonprofit leaders who largely merit the recognition that they have received. To the extent that these leaders have stayed and continued their work in the nonprofit sector and for social change, the MacArthur Foundation’s genius awards may be said to have helped advance the nonprofit sector as a whole.—Rick Cohen

Update: Will Foundations Pay Attention to Ag Sec Vilsack on Rural Philanthropy?

Earlier this month, Agriculture Secretary Tom Vilsack stunned the audience at the National Rural Assembly with his very personal disappointment that rural philanthropic grantmaking by the nation’s foundations had declined over a period of time when overall foundation grantmaking had increased nationwide.

Usually, the press doesn’t talk much about the public policy connections of philanthropy unless it is the announcement of some sort of hyped public-private partnership, like the foundations that have tied into federal initiatives such as the Social Innovation Fund, Promise Neighborhoods, or the Education Department’s Race to the Top and i3 programs. Vilsack’s statement was quite different, a charge that despite whatever projects might be getting funded here or there, philanthropy was seriously shortchanging rural America.

The Gazette, a Cedar Rapids, Iowa newspaper, published an editorial that took notice of the former Iowa governor’s observations about foundations. Written, sources tell us, by Lynda Waddington, who apparently attended the Rural Assembly, the Gazette’s editorial was as straightforward as Vilsack:

Despite the good works provided by a robust network of community foundations, rural areas in Iowa, as elsewhere, struggle to compete for grants and support from most national philanthropic groups…Despite concentrated efforts to turn private not-for-profits’ attention to investments in rural places, the results of such labors have been disappointing… In fact, there has been a decrease in rural investment—even as philanthropic groups have increased giving, overall…There’s a compelling case to be made, as Vilsack and others have publicly asserted, that answers to some of our biggest collective issues—climate change, clean energy and global food security—will be found not in a city center, but farther afield.

The Gazette editorial quoted the widely respected Charles Fluharty, president and CEO of the Rural Policy Research Institute based in Iowa City, commenting on the USDA study that found the trend of rural grants declining and the per capital value of rural grants at half the level of urban grants. “Even the USDA has said that their figures are extremely conservative,” Fluharty said. “In fact, most people in the foundation community believe the percentage of rural giving is between 1 to 3 percent of the total outlays for all national foundations.”

While Vilsack did not specifically reference the 2011 memorandum of understanding signed by the USDA and the Council on Foundations to spur new philanthropic investment in rural, the Gazette editorial did: “The agreement was part of the third and final national philanthropic conference to specifically target rural America. Despite a great deal of optimism following the agreement, foundations haven’t followed through.”

While the editorial outlines some of the impressive efforts that the state of Iowa has undertaken to generate more philanthropic giving through community foundations and through the disbursement of casino tax revenues, the issue still comes down to the role of national foundations. It concludes, “more must be done to educate national grantmaking organizations that rural areas not only matter, but also can be unique and critical partners in solving today’s most urgent issues…The message local nonprofits need to spread, and national philanthropic groups must hear, is that our rural areas are keepers of opportunities with widespread positive potential. Let’s get to work.”

That takes the discussion back to the national level, and specifically to the foundation trade association, the Council on Foundations, that signed the 2011 memorandum of understanding with Vilsack and the USDA with great self-congratulatory fanfare. Since that time, there has been a turnover of leadership at the Council, from Steve Gunderson, a former Republican member of Congress who had represented a rural area of Wisconsin, to Vikki Spruill, who came to the Council from the Ocean Conservancy and had headed FoundationWorks and the Philanthropic Awareness Initiative, both efforts to improve foundations’ strategic communications and outreach. How might the Council on Foundations respond to the Vilsack critique?

If it were up to us, we would hope to see the following from the Council:

“Yes, Secretary Vilsack, you’re right. Despite several conferences and shiny publications, philanthropy is still selling rural America short. And beyond that, with multiple issues on foundations’ plates, rural philanthropy may well have slipped off the center of the radar screens. But we can do better and we will, because we agree with you about what rural America not only needs, but merits as support and investment from foundations. As a trade association, we cannot tell and direct our less than 2,000 members, much less the tens of thousands of foundations that are not members, about how they must use and prioritize their grantmaking. But we can be much better advocates for—and with—rural America to raise the visibility and importance of rural in the views of foundations that don’t think much of rural, but should. As a learning network, we can pledge to use our members to surface and promote the best ideas they have in providing grants to rural communities for housing, economic development, environmental protection, land conservation, renewable energy, and sustainable food production. We can raise the visibility of these grants as well as initiatives that promote regional rural philanthropy such as Colorado’s Rural Philanthropy Days which have yielded foundations making demonstrably new and larger grant commitments to rural communities. And we can invest in foundation affinity groups—rural foundation task forces or funding collaboratives—that will carry the message of the importance, relevance, and potential national societal impact of rural grantmaking. Yes, Secretary Vilsack, philanthropy’s attention to rural America hasn’t been what it should have been, not to mention what the Council hoped it would be after we signed that memorandum of understanding with the Department of Agriculture in 2011. But we pledge that going forward, the energies and commitment of the Council on Foundation will include making rural grantmaking a high priority and ensuring that it will not again slip off the radar screen of national philanthropy.”

Despite Vilsack’s statement and despite coverage in the Gazette, it doesn’t seem to be the case that the foundation community has taken note and responded.  It should.  Whatever one thinks of the Obama Administration’s rural development policies, there is little question that Tom Vilsack has been a dedicated advocate for rural America.  When he departs as a new administration comes in after 2016, a decent, caring, authentic man will have left the helm of the federal government’s rural development bureaucracy.  He deserves a better response from foundations than studied silence.—Rick Cohen

Another Gates Education Experiment Grinds to an End, Leaving Questionable Results Behind

As any observer of philanthropy knows, not all philanthropic investments in education are wins, and while the philanthropies and foundations can walk away from these sometimes-massive investments with maybe a mea culpa, the districts are often left with the detritus. In 2009, the Bill and Melinda Gates Foundation announced that it was launching the Empowering Effective Teachers initiative. The objectives of the Foundation’s investment were to “to bring district leadership, school board leadership, and teachers’ union leadership to the table to develop a plan to transform teacher effectiveness policies and practices [and] radically reorganize their practices and policies to ensure that every student is taught by an effective teacher.”

Now, as the end of the seven-year time frame for the program approaches, the Tampa Bay Times is looking at how the program has worked in one of the districts that partnered with the Gates Foundation:

A seven-year effort to put better teachers in Hillsborough County schools is costing the system millions of dollars more than officials projected. And the district’s partner in the project, the Bill & Melinda Gates Foundation, is spending $20 million less than expected. The numbers, found in recent reports, differ significantly from what was commonly understood about the high-profile partnership, known as Empowering Effective Teachers. The district was to raise $102 million for its part, much of it by aggressively pursuing grants from local corporations and other entities. Gates was to kick in $100 million, for a total of $202 million. But as the project stands in its final year, the district’s contribution will total $124 million in money and labor, while the Gates organization is paying only $80 million, the reports state. What’s more, the district has put the total cost of the program, so far, at $271 million.

The plan developed for implementation in the Hillsborough district in Florida included many of the features that educational reformers have seen as critical elements for a 21st-century school system: creating a teacher evaluation system that would facilitate the firing of “bad” teachers, replacing a salary structure that is based on longevity with one that ties teacher pay to educational effectiveness, and evaluating teachers in a system that uses standardized test results as a major component.

After seven years of effort, and with the Gates Foundation’s funding reaching an end, Hillsborough’s efforts show how challenging this prescription is to implement:

The original proposal and a 2010 timeline called for the district to fire five percent of its teachers each year for poor performance. That would amount to more than 700 teachers. The thinking was they would be replaced by teachers who earned entry-level wages, freeing up money to pay the bonuses for those at the top. But the mass firings never happened. While an undetermined number of teachers resign out of dissatisfaction or fear that they will be fired, only a handful of terminations happen because of bad evaluations. Also, while the initial proposal sought to pay teachers based on performance instead of seniority, the actual pay plan does both. Teachers receive pay bumps at three-year intervals and, if they score highly in the ratings system, they get bonus pay. Evaluators were supposed to serve two-year stints, then cycle back to the classroom. Instead, many stay three and four years. Critics say they become bureaucrats and not true peers. But [Anna Brown, who manages the Gates grant for the district] said that with more experience, they are better qualified to do the job.

Brown says dismantling the whole scheme now is unrealistic since one of its primary features, performance pay, is state law. But seven years later, there is little evidence that student outcomes are better because of this investment: “Most of what has occurred so far is procedural, putting systems in place to improve teaching and, in turn, future student achievement. Measuring that achievement in a meaningful way has yet to happen.” The district’s graduation rate has not significantly improved and does not compare with other metropolitan districts in Florida.

The story of Hillsborough’s experience looks very similar to The Prize, Dale Russakoff’s look at efforts to improve the schools in Newark, New Jersey. What now remains to be assessed is whether this lack of student progress is a result of not fully implementing the reformers’ game plan as designed…or a demonstration that this plan is seriously flawed.—Martin Levine

Dubious Veterans Charities a Pervasive Problem Nationwide

Florida businessman Neil “Paul” Paulson’s campaign to replace Buddy Dyer as mayor of Orlando, Florida serves as yet another example, available almost daily, of how easy it is to screw around with veterans’ charities.  A former lawyer who gave up his law license while under investigation by the Florida Bar, Paulson also has his own veterans charity, “Help the Vets,” which might as well also be under investigation.  Paulson is an Army vet, according to the Help the Vets website, which uses a 1990 picture of him wearing fatigues.

Help the Vets says it exists to provide services not available through the Department of Veterans Affairs, to veterans with severe physical injuries or amputations.  The website cites one Iraq war veteran who lost both his arms and his legs due to a roadside IED who will receive educational support for the nonprofit later this year for educational services not supported by the VA, and a second veteran, from the Afghanistan conflict, who lost both his legs due to an IED, but will receive support from Help the Vets after his subsidization for home health care services from the VA runs out.  The website also indicates that in 2014, Help the Vets provided free gym memberships to 1,230 vets, distributed $258,000 in allopathic medical care vouchers (not covered by the VA), paid the entry fees for 53 veterans entering the Orlando Marathon, Half Marathon, and 5K races (Paulson is a director of the Orlando Marathon), provided hotline and home therapy services to disabled veterans, and helped raise moneys for other veterans-related charities.

Nonetheless, there are questions about the Help the Vets charity, including its proud announcement of 1.4 percent of its expenses for administrative costs.  In the Sentinel article, Sandra Miniutti of Charity Navigator commented on the charity’s small, four-member board, one of who is Paulson’s son, suggesting something less than arm’s-length board oversight. She also mentioned the charity’s receipt of $770,000 in Mexican vacation vouchers which Paulson said, without revealing names, were distributed to veterans, and Help the Vets’ use of a telemarketer that kept $1.16 million of $1.3 million raised in charitable donations.  Paulson appears to have another charity, the Breast Cancer Outreach Foundation, which uses telemarketers like Help the Vets does.

Like the reaction of national veterans service organizations to the sudden appearance of Michael Arends and the Veterans for a Strong America group, a local Orlando veterans organization, the Camaraderie Foundation, claims to have never heard of Help the Vets until Paulson began his mayoral quest.  Paulson says that the head of Camaraderie supports Dyer’s candidacy, which somehow explains its statement about the invisibility of Paulson’s veterans charity.

GuideStar’s profile of the nonprofit indicates that it is known by several names—Help the Vets, Military Families of America, American Disabled Veterans Foundation, Vets Fighting Breast Cancer, and Veterans Emergency Blood Bank, with the contact listed as “Dr. Neil Paulson.”  The entire story of Help the Vets ought to raise donors’ antennae, but Paulson and Help the Vets aren’t alone as veterans charities of questionable provenance.

Earlier this summer, the Chicago Tribune discussed the telemarketing fundraising of VietNow, a Rockford, Illinois charity that raised $1.4 million in 2014, but only delivered seven percent of the donations in direct service to veterans and their families. A Rock Island, Illinois charity called Illinois Vietnam Veterans delivered only five percent of its $20 million fundraising haul between 2003 and 2013 in direct services.  Our awareness of VietNow stretches back to 2003 when the Illinois attorney general took VietNow and its telemarketing firm all the way to the U.S. Supreme Court on charges that the fundraising fees were excessive to the point of being fraudulent.  Top charity associations such as Independent Sector at the time defended VietNow and its fundraising contractor, even filing a brief on their behalf, as having engaged in protected free speech, even if mere pennies of assistance ever reached veterans.  It should be of little surprise that the VietNow “services” to veterans consisted largely of fruit-baskets for some hospitalized vets and a handful of scholarships to a few kids.

The propensity of too many people to set up charities ostensibly serving veterans—unnecessarily, because there are already legitimate and capable organizations doing so, ineffectively, because so many rely on troubling, hugely expensive telemarketing fundraisers, and often unaccountably, because no one seems to be keeping a close eye on the proliferation of groups—is a problem that leads to groups such as VietNow, Helping the Vets, and Veterans for a Strong America.  America’s military veterans deserve much better than this.—Rick Cohen

In Defense of Traditional Philanthropy as “Effective Altruism” Looms

In Africa, as elsewhere, “traditional” giving has taken something of a bashing since the launch of the effective altruism, a.k.a. strategic giving, movement—what Kayode Samuel calls “strategic philanthropy that delivers large-scale impact in a sustainable context.” Like many effective altruism adherents, Samuel pushes hard for streamlining philanthropy in Nigeria through the creation and consolidation of foundations, mainly corporate, to invest in social transformation by addressing local realities and providing support to development initiatives.

While there is a place for this kind of giving and social investment, Samuel and other proponents of strategic philanthropy do not give enough credit to so-called “traditional” philanthropy, which is not always giving for its own sake but does fulfill serious economic and emotional needs. A case in point is the practice among the Igbo people of Eastern Nigeria wherein wealthy individuals train selected apprentices in trade and other crafts and set them up in business once they attain the required level of proficiency. In addition to providing economic empowerment, this kind of philanthropy enhances awareness of people’s interconnectedness and upholds values of community, sharing, and reciprocity by encouraging beneficiaries to pay forward the kindness that they have received. Through this practice, hundreds of young men and women have become self-reliant members of society who might not ordinarily qualify for strategic assistance from philanthropic foundations.

Nigeria (about which Samuel writes), like the rest of Africa, has a long, embedded history of giving. The foundations that form the vanguard of its public philanthropy today are merely reflections of, and coexist with, more ancient, communal forms of philanthropy like age grades and other community organizations. Foundations arguably have more money at their disposal than their antecedents, but there are important reasons why they should not be favored over traditional giving.

  • As Samuel rightly points out, many of these foundations are based in and focused on Southwest Nigeria, which automatically limits access to their services by people from other parts of the country.
  • Almost all foundations are offshoots of corporate bodies with specific interests like basic service provision and entrepreneurship development. Again, this limits access to beneficiaries who share these interests and meet the criteria for support.
  • The very fact of approaching situations of need looking to make large-scale impact, occasioned by the business logic of maximizing efficiency while reducing loss, is a further barrier to foundations helping society’s most vulnerable.
  • Because foundations are organizations with policies and procedures that must be upheld, they are far less flexible than the average man or woman giving to persons in need. The sophisticated business machinery of large foundations can substitute humanity for efficiency. Systematization, while sometimes necessary, is not always helpful.
  • Traditional giving is not the preserve of “flamboyant moneybags,” as Samuel calls them; giving and sharing are a part of daily life for ordinary men and women throughout Nigeria.
  • There is just not enough publicly accessible knowledge on the scale and practice of traditional philanthropy to allude that it is not sufficiently strategic or transformational, both relative terms.

In my view, social transformation ought to be a joint effort. Just as there are different needs, there are different ways to meet them. If more individuals would do more (good) consistently, there would be less work for foundations. The more people give, the more people will be helped, resulting in farther and deeper overall transformation.—Titilope Ajayi-Mamattah