10th Anniversary of “Forging Nonprofit Alliances”

2008 marks the 10th anniversary of the publication of Jane's book about nonprofit mergers and partnerships: Forging Nonprofit Alliances. We are excited to share that Jean Butzen, from Mission + Strategy = Social Value, interviewed Jane for the Opinion Blog of the Stanford Social Innovation Review.  You can read the full interview here.

Has the book influenced your thinking over the last ten years?  What observations from the book have resonated with you and your work?  Share your thoughts here...and thank you to Jean for the interview!

What’s Hot & What’s Not @ The Carnival

The August 15th edition of the Carnival of Nonprofit Consultants was hosted by Kivi Leroux Miller at Nonprofit Communications.  The theme was "What's Hot & What's Not"  in the nonprofit sector.  Our post, commenting on how nonprofits who work with the elderly, disabled, and other groups
that have traditionally relied on subsidized housing can expect some
big changes in how they are funded as government gets out of the
housing business about, was included.  Thank you Kivi! 

We will be hosting the Carnival here at FIO Partners Perspectives on September 15th.  The theme is the evolution of nonprofit organizations.... stay tuned for more details!

What’s happening in our neighborhood?

Our colleague Kivi is hosting the Carnival of Nonprofit Consultants this week, asking about trends in our part of the sector. In the areas where our practice is most prevalent, health and human services, the watchword is clearly consolidation. We are supporting a couple of mergers, some networks, and some broad based discussions among groups of unrelated agencies about back office sharing of administrative supports.

These trends are largely driven by a sea change in the operation of state governments in regard to health and human services, and given our work in Canada, my sense is that the change is larger than the US. The change is this: governments of developed countries appear to want out of the housing business. By housing business I mean the responsibility that governments have taken over the last 50 years to be the provider of heavily subsidized residential care for a wide array of fragile populations: nursing homes for the elderly, group homes and other therapeutic residences for the developmentally disabled, physically disabled and chronically mentally ill, people with AIDS or other chronic diseases, group and foster care for children who have been victimized by abuse and neglect. This step back also includes the poor, if one looks at the trends on government sponsored affordable housing…all downward.

There seems to have been some “all at once” recognition that the number of vulnerable people who need government subsidized places to live has skyrocketed in the last thirty years and will continue to do so with the aging of the baby boomers. With an array of conservative governments in power coupled with economic downturns and losses in tax revenue, coupled with this recognition, there are, in at least 40 states and Canada, various efforts to redefine the relationship between government and families with dependent members.

For the last fifty years, government has stepped in with a variety of interventions, usually in partnership with the nonprofit sector, to provide alternative housing options when families can no longer take care of their own.These options for families are narrowing as we speak. The impact on families and individuals is large. Families with a disabled child or elderly member, for instance, will be able to receive services to support their own ability to care for their dependent family member at home but will face much larger obstacles to placing that dependent family member out of the home. What this means for nonprofits is the collapse of most government contracting that has focused on providing funding for residential care, a very large and, until now, generous source of revenue.

Coupled with this change is the conviction within many state governments that to appropriately support dependent individuals at home, a seamless array of services is needed…hence the increasing demand for networks. A further related trend that is more nascent is how these community based in home services will be funded. Many states are looking at managed care models involving capitation…a single fee paid to a network for an array of supports. All of these trends speak to the outright survival of segments of the sector as well as the increasing expectation for closer collaboration among those who provide services with continuing relevance. Smaller margins also seem to be in the future with less and less ability to fund much needed infrastructure, pushing organizations into shared administrative models. In our experience, nonprofits have lots to learn to exist within this new reality and it is our challenge to support them in the process of these significant changes.

That’s what’s happening in our neighborhood!

Staying True to Mission

Recently, I have worked with two very different organizations. One organization has been operating for over 20 years offering theatrical productions to raise cultural awareness and support Spanish-speaking playwrights and actors. The organization has sustained itself through the donations of time and energy of those who were passionate about the organization’s mission. The organization received tax-exempt status one month ago. The board is now required to formalize how it operates as a governing board, including asking the paid actors who were members to step down, hiring and providing a salary to the Executive Director, and formalizing the financial management processes to support tax-reporting. The other organization has also been operating for over 20 years – receiving its 501(c)3 status towards the beginning of the organization’s inception. The organization offers programs on a fee-basis – and at the moment, 90% of the organization’s revenues come from program fees. They do offer some scholarships for programs, but offer no other programs on a charitable basis (either free or targeted at low-income populations). In terms of growth, the current management wants to grow by adding more fee-based programs, increasing participants in programs, and expanding the physical space used for programs.

In the first instance, having 501(c)3 status is a major milestone in the life of the organization – by acquiring tax-exempt status, the organization is exempt from paying any federal income tax and it allows individuals and corporations to make tax-deductible donations to the organization and other tax-related exceptions. Achieving the status means that the Board of the organization must hold the organization accountable for staying true to mission – and for not exploiting this new status or using it unethically. In the second instance, it struck me that in the name of growth, the philosophical responsibilities of being a 501(c)3 may have been left behind at some point. If growth solely comes from increasing revenues from programs, is the organization operating as a non-profit or as a business?

I find myself reminding Board members of their responsibilities -- their legal responsibilities to ensure that the 501(c)3 status is not being exploited, their role as stewards that requires them to ensure that the organization’s programs are in line with its mission, and their dedication to ensuring that the mission of the organization is being realized. I am curious though if other organizations or Boards struggle with this issue… how does your organize honor its 501(c)3 status? How does your organization continually stay true to mission?