I have been playing with a set of ideas for a book about managing a nonprofit in these uncertain times. A colleague suggested that I start that process by blogging about the central ideas that will form the basis for the book as a way of getting off the dime on this project. So this blog (and hopefully the next several blog posts) is about the central ideas that I want to explore. Read More
I woke this morning just as the sun was rising. It was one of those mother of pearl sunrises with streaks of pink and grey and white. As I watched, the sun inched above the horizon and then, I realized all of a sudden, started to rise at an angle, moving from one window pane to the next. I was startled to see this and startled at being startled. Had I really never noticed that the sun rises, not straight up in the way that it seems to set, but moving on a gently incline from left to right? Of course, I know that the earth revolves and the sun stands still and it would make sense that , as the earth goes round, the sun would rise at an angle. Perhaps the angle is steeper in Maine, where I am now, and that' s why I am seeing this now. But I did have the sense of being reminded of something essential and fundamental and inescapable that is an underlying reality to whatever else is happening in the world.This has been a hard week in which I have had the same conversation with my client CEO's over and over again. These conversations went something like this: "I didn't choose this career to turn away people in need, to cut my staff's salaries, to lay off colleagues of long standing. I didn't choose this job in order to fight with politicians. I can't accept that the work of my lifetime is now in the hands of seemingly helpless, hapless, clueless bureaucrats who have no idea what to do, who seem incapable of thinking clearly if they have less money to spend, who can't set or see priorities or make decisions on principle. I didn't choose this; I don't want this; I don't like this."
The impact of the economic downturn is now a crisis for the nonprofit sector, a seismic shift in our reality. But we have to remember that just as the sun rises, equilibrium will return. New patterns will emerge and we will shift our perspective. Within the seeming chaos of this contraction, are the seeds of order renewed. When it comes, it will be like seeing something familiar in a new way.
Photo Credit: http://www.flickr.com/photos/pearbiter/Read More
When I was In Calgary last week, a client handed me an article on nonprofits in Canada that was actually written in 1998, indicating as she did that its main points about a funding crisis for the Canadian nonprofit sector continue to this day. The crisis is largely made up of the dependence of Canadian nonprofits on government contracting and the actions of Canadian provinces to reduce these ties. As I have more and more conversations with RI agencies who are struggling with the prospect of massive government budget cuts and the potential for bankruptcy, the parallels are obvious. So I have been thinking about what might make a sustainable revenue strategy for a nonprofit organization these days.
Last year, a client asked me to do some research and create a brief history of the sector and an overview of “nonprofit economics.” As a result of that exercise, I saw some connections that I hadn’t noticed before. (I am going to oversimplify a bit.) Over the course of its history, the nonprofit sectors in the US and Canada, as a whole, have known only growth, as remarkable as that may seem. The sector has an uncanny ability to reinvent itself. When individual donors were insufficient, the sector learned to partner with, first, foundations, and then, corporations. When philanthropy was insufficient, the sector learned to contract with government. In the 1970’s and 1980’s, we used to say that a healthy nonprofit’s budget was like a three-legged stool: funds from donors whether individuals or corporations, foundation grants, and government contracts.
Of late, however, there appear to be increasing doubts about that government contracting piece. Since the 1980’s the forms of support from the federal government have changed in several ways: (a) government program managers have been encouraged to promote for profit involvement in government contracting, causing significant entry of for profit entities into traditional nonprofit markets including, home health care, nursing, hospice, substance abuse, and day care; (b) the ascendancy of conservative forces has favored forms of assistance that maximize consumer choice, leading to the proliferation of vouchers to consumers rather than grants and contracts to providers. Nonprofit providers have been forced to compete in the private market for these consumers, and, as a result, must master complex billing and reimbursement systems as well as learning to market directly to consumers. Managed care, involving capitated rates, has become more of the norm in health care and has increasingly invaded the fields of drug treatment, rehabilitation, and mental health.
The Social Enterprise Alliance says on its website that: “Social Enterprise is the next thing.” (www.se-alliance.org). They define social enterprise as: An organization or venture that advances its social mission through entrepreneurial, earned income strategies. This is an international movement that seems to be furthest along in the UK, the Netherlands and Australia. The movement recognizes a very wide range of investments in the common good and acknowledges these investments as made by government, nonprofits and for profits. The social enterprise movement is less concerned about the source of revenue or the type of sponsoring entity and more concerned about the intended impact and the choice making inherent in achieving the organization’s objectives.
I recently had a fascinating discussion with a network of disability providers who were able in about ten minutes to identify an array of possible social enterprise ventures that could be undertaken collaboratively and that could employ their disabled clients and/or generate income to support the work of their agencies. What was interesting and different about this discussion was the obvious fact that these opportunities would only work if pursued collaboratively. So my last email from Michael Gilbert wanted to know if we were working at all on “financial structures that facilitate network centric funding?” Yes, we are working on those models, and, for many in health and human services, they may well be the replacement leg on a new four legged stool: funds from donors, foundation grants, government contracts, and income from social enterprise.Read More