Possible To Cultivate New Funders Motivated By New Mandates?

You may have read about the report the National Committee for Responsive Philanthropy released at the Grantmakers in the Arts conference noting the disparity in foundation support for arts organizations.

According to the report,

“the largest arts organizations with budgets exceeding $5 million represent only 2 percent of the nonprofit arts and culture sector. Yet those groups received 55 percent of foundation funding for the arts in 2009. Only 10 percent of arts funding was explicitly meant to benefit underserved populations.”

Most of this money is going to large organizations patronized by a shrinking wealthy white audience during a time when people are orienting toward community based arts groups.

As I read this, I recalled Scott Walters’ discussion of the difficulty his small arts organization had meeting the deadlines for the Our Town grant process and the questions he raised about the appropriateness of the criteria being employed. I suspect there is something of a feedback loop inherent to foundation grant programs in that they are structured to the needs of the organizations they serve and those they serve tend to be organizations with the resources to meet the criteria of the grant programs.

Foundations may have to expand the number and types of organizations they serve, as the report suggests. But I strongly suspect they will have to also institute changes in their process to better accommodate those with fewer resources than those with whom they currently deal. Otherwise, they probably won’t have very strong participation from a larger, more diverse group.

Of course, most foundations, whether they have an arts focus or not, were set up to serve the interests of their founders. It appears that this has been rather successful. The greatest success in securing support for under served populations may end up being best realized by cultivating/encouraging individuals and groups from those communities to develop their own funding structures whether it is foundations or cultural hui.

The article mentions that current funding practices originated in an 19th century need to prove America was on par with Europe culturally. That need has passed and a new set of practices based on different motivations are required. Existing foundations may end up doing a lot of good after shifting their priorities, but in attempting to overlay new priorities on their founding purpose they may never be as effective as organizations that structure their approach around a mandate to support the arts and culture of under serve communities from day one.

Cultivating a sustained culture of support in areas where it is not currently practiced won’t happen overnight, but aided by technology it may not require 100 years to take root either.

Are Gov’t Caps of Non-Profit Salaries On Horizon?

The Stanford Social Innovation Review (SSIR) notes that the governor of New Jersey has placed salary caps on non profit executives who do business with the state and the governor of New York has started a non profit salary review.

While governments have a right to be concerned over non profit scandals and society might properly have an expectation that a good portion of the funding going to a non-profit organization will be directed toward serving the appropriate segments of the community, there is a inequality in the expectations. In an article linked in the SSIR blog, Doug Sauer, CEO of the New York Council of Nonprofits notes,

““The State government contracts to buy services from nonprofits just as it contracts with the for-profit sector; except that the nonprofit is often expected to unfairly perform at below the actual cost of doing business. Perhaps it is also time to order an extensive review of the executive compensation of ‘taxpayer supported for-profit businesses’.”

Additionally, John Brothers notes in the SSIR blog post that most non-profit executives don’t even approach the $141,000 cap that NJ is imposing.

“According to the 2010 Guidestar Compensation Study, human service executives earned a median annual pay of just over $122K. What is more interesting is that of the over 3,000 nonprofits surveyed, just 0.004% earned more than a million dollars and only 4 percent earned more than $500K, with sizes of organizations peaking in the multi-billions. I would say that this is hardly a national epidemic of nonprofit jet-setting executives.”

You may look at these stories and think that they only apply to social/human service organizations. However, Gov. Cuomo of NY doesn’t make as clear a distinction regarding those organizations that NJ does. While the initial round of inquiry letters went to social service organizations, the fact the NY governor said all non-profits receiving state funding will be reviewed raised the question,

“Does this mean that the task force will examine compensation at hospitals and other health care providers – where CEO salaries of $1 million or more are not uncommon? What about major arts organizations and institutions of higher learning where that is also true?”

This move to evaluate non-profit salaries provides a potential avenue for those who oppose the funding of arts and culture. Lacking the ability to accuse artistic content of being obscene, they can seek to limit funding to organizations whose compensation is perceived to be excessive.

Fortunately, there are a number of objective measures and loads of data one can employ to prove compensation is fair. This situation underscores the need for non-profits to become better organized to advocate for themselves before it comes to that though.

Info You Can Use: Does Friending A Candidate Endanger Your Non-Profit Status

The Non Profit Law blog linked to a really great publication put out by the Alliance for Justice that explains whether your online activity might run afoul prohibitions in your 501 (c) 3 status. This is the clearest explanation of these issues I have read.

“This guide aims to answer the questions nonprofit managers most frequently face regarding the Internet and social media.”

The document covers situations that don’t involve online activity, but really it is the social media element that comprises the uncharted territory that people aren’t clear about. The document makes a distinction between lobbying, which a 501 c 3 non-profit can do and supporting a candidate, which they can’t.

Though sometimes the distinction is very subtle. For example, you can make a post on Representative X’s Facebook account, “Rep X, support the arts by voting Yes on Bill 123.”and that is direct lobbying. If you post a slightly different message, “People of My State, tell Rep X, to support the arts by voting Yes on Bill 123, ” and that is considered grassroots lobbying because it is a general call to others to take some action. If you post, “We love Rep X because she supports the arts and voted Yes on Bill 123,” that is promoting a specific candidate.

Except in some very specific circumstances, you can’t link to a candidate’s website. In fact, you can’t link to any website that promotes a candidate and you are responsible for making sure the content of the site doesn’t change since you first linked to it.

For example, you are doing a renovation and link to the website of the company that is providing you with sustainable wood as a way of proving to your constituency that you are acting responsibly. If the supplier changes their website to criticize a candidate’s stance on logging, your organization might be in trouble.

There are also restrictions on allowing employees to use company equipment, even on their time off, to express support for a candidate.

In answer the question posed by the title of this entry, no, you can’t friend a candidate on Facebook or follow them on Twitter. They are free to friend and follow your organization. Even though etiquette suggests you follow them in return, the IRS suggests you don’t.

About the only time you are safe to have a promotion of a candidate on your website is if you allow Google to place ads on your website and have no control over what they are placing.

There are a lot of other questions answered in the document as well. Since a lot of 501 (c) 3 organizations are associated with 501 (c) 4s which have looser restrictions, they provide some detailed guidance about how closely connected their activities can be. The guide also deals with setting policies for renting your mailing lists, guest bloggers, moderating blog commenters, using photos, hosting videos.

It is clear that there are going to be a lot of nuances specific to the activities of different organizations. However, if you have had questions about what is permissible as lobbying and prohibited as campaign support, and don’t have a tax lawyer immediately available, this is a good place to start to find your answers.

Will Buffet Family Foundation Influence Other Funders?

Non-Profit Quarterly linked to an interview in Fast Company in which Warren Buffet’s grandson talks about his approach to philanthropy as he takes up the reins of the family foundation.

As I read the interview, I vacillated between mild dread where I hoped no one else decided to adopt the approach and feeling that his approach was sensible and might provide leadership that would strengthen the general non-profit infrastructure in the United States.

What made me most uneasy was his focus on quantity over quality.

“The first question, for instance, is “Assuming we are successful, how many people would we reach directly with the funding of this gift?” Proposals gets 3 points for affecting +1 million people, 2 for greater than 100,000, and 1 for less than 100,000. Those proposals with a less ambitious scope can secure a coveted spot on the portfolio team by being particularly unique or cost-efficient.”

While he does allow for funding of smaller efficient and effective organizations, I just wonder if that will get lost in the desire to report numbers served and therefore reinforce the idea that you have fudge numbers and always report success or lose funding.

Where this is coming from for him is wanting to get away from non-profits making emotional appeals and move toward discussing the complex factors which contribute to the problems the non-profit is trying to address.

“In the philanthropic world, the problem is the product, in the business world, the product is the solution.” says Buffett, who argues that NGOs are forced to “sell suffering.” The needless focus on sappy narratives often overlooks sophisticated solutions that can’t be easily marketed with a T-shirt-clad celebrity holding a small child.”

This is where I feel he is most sensible because he is determined to fund every step in the chain to addressing a problem, including the unsexy areas. But to do that, he wants the redundant organizations to either get out of the business, partner with other groups or refocus themselves.

“…rather than dolling out cash to independent, uncoordinated actors with the most heart-string-tugging story, they could take on an entire social problems (like food security or breast cancer) by systematically lining up nonprofits to tackle each part of the causal chain, from federal policy to victim resources.

“If you are an NGO, doing the exact same thing as another NGO, and that other NGO is doing better than you’re doing it, then you are in business for the wrong reason,” Buffett says in an exasperated rant against the individualist nature of charities. Overlapping operations, he says, not only waste money through redundant overhead, but keep brilliant minds occupied with logistical distractions that sap their potential impact.

“We will give you money to execute your mission,” Buffett says, “if you work together and identify the most cost-effective and successful ways to achieve that.”

Meanwhile, looking at the entire causal chain of a crisis is key to revealing missing links in the solution, such as political or logistical hurdles that are essential to success, but not appealing enough to raise dollars.”

Granted, the focus of the foundation he is leading is on agriculture, water and feeding school children rather than arts and culture. However, the practices of a Buffet family foundation is bound to have widespread influence with funders in other areas. It is possible that other foundations may use the same criteria.

Given that the question about whether there are too many arts organizations in existence has been a hot topic of late, it is conceivable that funders are already thinking along these lines.

So let me ask-

-how many arts organizations would seriously discuss merging or refocusing if a major funder told them they were redunant and less effective than another organization?

-how many might consider abandoning major activities that were redundant if the funder offered major support to expand in their areas of strength?

-would the arts in your community be more vibrant if there were groups that focused specifically on different niches within the chain? Such as:

-organization that handed advocacy for the arts with local government
-organization that focused on advocacy for the arts in education in conjunction with other advocacy groups
-organizations that purely perform
-organization that coordinates outreaches to schools by designing programs that emphasize the strengths of the performance and presenting groups

There are more functions that different groups might handle, of course, but this serves as a good example. You might look at this and think about how difficult it would be with all these tasks so decentralized, but think about how more schools would benefit if there was an organization that was making an effort to provide uniform coverage of your entire city/county. How much easier would it be for artists to make a living in the community if there was an organization that was hiring them to do outreaches in schools or connecting artists with students seeking instruction.

All this in an environment made conducive for these activities by groups who solely focused on influencing law and policy in government and school boards. Their advocacy is made credible by the existence of organizations who attract and employ strong performers and other organizations who develop exemplary education/outreach programs and train the artists to execute them effectively.

This approach may decentralize efforts and require a lot of cooperation between different groups, but does improve on the current situation where everyone does a little of everything with different degrees of success provided they have the funding and personnel.  As Howard Buffet acknowledges, there is a lot of unsexy infrastructure that no one really wants to fund that is crucial to the success of non-profit efforts. What a boon it would be if someone would fund all those places at a level smart people would be willing to engage in the work.

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