Get Ready, Here It Comes… Increasing the Minimum Wage

On September 1, 2014, Michigan’s Workforce Opportunity Wage Act, Public Act 138 of 2014, will go into effect. The new Act will increase the minimum wage for workers in the state from $7.40 to $8.15 per hour.

In Michigan, one out of 11 workers are employed by nonprofit organizations. Many employees of Michigan Nonprofit Association member organizations are paid at the minimum wage. We also know that nonprofit organizations in Michigan and across the country provide many valuable services and support to Americans who are living in poverty, including the “working poor.”

Nonprofits in the state directly employed 438,000 individuals in 2013. Together the nonprofits in Michigan pay their employees over $4.9 billion per quarter. Our members have weighed in on both sides of the debate around raising the minimum wage.

The minimum wage increase is a policy that will have significant impact for our member agencies and for the state. While our nonprofits provide valuable services, many operate as lean small businesses. And just like small businesses across the country are grappling with the impacts of a minimum wage increase, so will our nonprofits in the coming weeks and months. The key thing to remember is that the debate is over.  Starting in September, nonprofits, along with small businesses and large corporations will be expected to raise the minimum wage payments for their hourly workers.

Wherever you personally weigh in on the issue of an increased minimum wage, as a nonprofit with employees, this increase will initially impact your bottom line. And it will require lots of planning and reviewing as a part of the sustainability for many of your organizations.

Many of you have already begun your strategic planning to address the financial implications that this increase may have on your budgets, staffing and reimbursement levels for direct services. There is no question that the increase in wages will require an increase in revenues and donations, much in the same way that small businesses will have to think strategically about creating more revenue to support the wage increase. We will continue to revisit this subject and share with you some of the strategies that your colleagues are implementing in the field to make this a seamless win-win.

For information and questions on compliance, contact Michigan’s Department of Licensing and Regulatory Affairs (LARA) at http://www.michigan.gov/lara/0,4601,7-154-61256_11407_32352-140972–,00.html. Organizations seeking professional assistance can search MNA’s Consultant & Resource Directory for companies that specialize in accounting & auditing or human resources for nonprofits. The Consultant & Resource Directory is available at http://mnaonline.org/consultantsearch.aspx.

 Submitted by Donna Murray-Brown, President & CEO, Michigan Nonprofit Association

Donna Murray-Brown – Detroit Bankruptcy: What’s the Impact to Nonprofits?

It was July 18th- I will always remember where I was the day Detroit filed for bankruptcy.  I was on business in Sault Ste Marie and remember feeling helpless because I was so far away from my hometown when I heard the news.  While I wasn’t surprised, I was saddened by the news initially because it gave the city of Detroit yet another undesirable distinction: largest municipality to file for bankruptcy.  Later, I remember the sense of anxiety I felt thinking about what this meant for the hundreds of nonprofits serving the needs of those in and around Detroit. What would the impact be of such a drastic and bold measure?

I immediately began doing a bit of research about the impact to nonprofits after the Jefferson County, Alabama filing and then the Stockton, California filing. Although these municipalities filed for bankruptcy, the scope and size of their debt was not comparable to Detroit’s $18 billion in debt.  I spoke with nonprofit leaders in state and out of state to get their opinions regarding their thoughts of what I should be concerned about.

Some of the things I was asked to consider were very logical, such as, if the city of Detroit is not able to pay it debtors, they may rely more heavily on the nonprofit sector to deliver more services than before.  This could be devastating for the sector which has already stretched itself thin from the demand in services from a high unemployment rate, the fallout from foreclosures and the reduction of city services over time.

Then there was learning more about the unsecured creditors.  Were there any nonprofits listed as unsecured creditors?  Detroit Economic Growth Corp was listed as a creditor for roughly $20 million of the debt.  I was certain there were many more nonprofits that were creditors that paled in comparison to the amount owed to DEGC, but would suffer still the same without payment from the City of Detroit.

Over time, things became a bit more complicated, when there were talks about seizing art from the Detroit Institute of Art to satisfy bad debt.  While this might be a viable option for generating cash for a cash-strapped city, it raised more anxiety about the scope of how deep and wide the filing of bankruptcy could be.  At the moment the assets of the DIA seem protected, however, the very threat of such an impactful asset to the community is enough to take the wind right out of its sails.

Being a statewide, nonprofit member-based organization, I was afforded the opportunity to survey members serving residents in the City of Detroit.  I was also able to ascertain some insight to nonprofits that contracted with the city of Detroit for Community Development Block Grant dollars which were unsecured creditors with no real means to extract their funds from the City to keep their programs and services intact.

I learned there was quite a bit of anxiety around the notion of difficulty associated with retrieval of CDBG dollars owed to the organizations.  Additionally, there was a need to advocate on behalf of the nonprofits who are unsecured creditors but may not have legal counsel on staff or available to them to attend the bankruptcy hearings and state their claim.

The prospect of having federal funds not being activated because the city is going through this process seems counterproductive to the outcomes the Emergency Financial Manager seems to be striving for.  While the financial challenges of the city are overwhelming, we in the nonprofit sector realize there needs to be a stronger partnership between public, private, and nonprofit sectors to reach a sustainable city.

So over the next several weeks, I plan to dig deeper and attempt to connect, with the help of others, with Kevyn Orr and his team in earnest.  My specific goal in doing this is to position the nonprofit sector as a partner, one that is used to adversity and has creative ideas to solve some of the challenges the city is facing.  This isn’t just a good thing to do, it is a more efficient and cost effective way of addressing a better financial path for the city.

There seems to still be a window of time to create a partnership that realizes everyone’s goals: a thriving, financially solvent Detroit.

ImageSubmitted by Donna Murray-Brown, President & CEO, Michigan Nonprofit Association

Statement from MNA President & CEO Donna Murray-Brown on the impact of Detroit’s bankruptcy filing on the nonprofit sector.

Below is a statement from MNA President & CEO Donna Murray-Brown on the impact of Detroit’s bankruptcy filing on the nonprofit sector. A longer statement will be forthcoming.

Donna Murray-Brown, president and CEO of the Michigan Nonprofit Association,  sees the bankruptcy as an opportunity “for not just nonprofit organizations but residents to really create the next Detroit” , Although Murray-Brown acknowledged that the demand for services will probably continue to rise, she’s optimistic. “Nobody wanted to be here, it’s a scary thing to be in a city that just filed for bankruptcy, but it’s also an opportunity,” she said. “Kevyn Orr wants to maintain services to residents. This is a time not to acquiesce but to be proactive and figure out the best role for nonprofits.”

Donna Murray-Brown

Statement by Donna Murray-Brown, President & CEO, Michigan Nonprofit Association

Mackinac Policy Conference Review

Last week, the Detroit Chamber of Commerce held its annual Mackinac Policy Conference at the Grand Hotel on Mackinac Island. Donna Murray-Brown and I were fortunate enough to attend the conference this year on behalf of MNA. One difference in the conference this year, was the lack of lawmakers. Michigan legislators stayed behind in Lansing to put the finishing touches on the FY’12-13 state budget.

This year’s theme was on making Michigan and Detroit a place for global competitiveness. To help attendees think about Michigan in a global setting, the Detroit Chamber had two very high-profile foreign affairs experts, Fareed Zakaria and Thomas Friedman. Both had very similar messages, Michigan and the United States can no longer think of itself as the sole “super power” on the global stage – both in foreign policy and economic progress. Both Zakaria and Friedman came to the same recommendations, improve US infrastructure (including wireless deployment), open up immigration policy, and invest in K-16 education. Detroit Public Television has both sessions on their website, you can view each of them here.

Fareed Zakaria and Thomas Friedman were not the only ones touting the need for Michigan to invest in the future. Numerous keynote speakers and panelists also reiterated the point: if Michigan is going to succeed, it must invest in the future.

One slightly low point of the conference was the “Fab Five” panel, where the leaders of Macomb, Oakland, Wayne, and Washtenaw counties, and Detroit Mayor, David Bing discussed regional collaboration. There was much more of the usual bickering around turf and who should pay for what, instead of broader discussion of a vision of what regionalism looks like for the Detroit area, which would have built upon what the other keynote speakers proposed. There is always next year…

 

Submitted by Christina Kuo, Senior Director of Public Policy and Public Affairs, Michigan Nonprofit Association

Students Helping Others Through Service

On March 24, 2012 the Fifth Third Bank and Detroit Red Wings service initiative, Students Helping Others Through Service (SHOTS), came to a close. SHOTS was a program that encouraged southeast Michigan high school students to invest their time, talent and treasure in their communities. Groups of up to 6 students and an adult supervisor registered for the project, committing to at least one service project between October and February. Each month, the groups could submit their project to a panel of judges, and a monthly winner was selected, receiving a pizza party and a chance at the grand prize – iPads and money towards future service projects.

On Saturday, five groups of students gathered from all over Southeast Michigan. Each group had a chance to present their project to the judges. Whenever a group returned to the ‘holding room’, the other groups cheered and greeted them, asking how everything went and learning about new service ideas. Suburban and urban kids, though there to compete with each other, found themselves building new, lasting friendships with students they may not have met otherwise. After all groups presented, the students enjoyed a pizza party, a ride on the Detroit People Mover, and ice cream. Once all the festivities concluded, the groups settled into their seats to watch the Red Wings 5-4 win over Carolina.

Each service project was unique, creative, and led by the students. The Interact Club at Airport High School (Carleton, MI) put together Thanksgiving care baskets for cancer patients. Fellowship of Christian Athletes at Southgate Anderson HS (Southgate, MI) sold colored lanyards to help raise money for breast cancer research, animal cruelty prevention and support for kids with leukemia. Detroit Edison Public School Academy Early College of Excellence (Detroit, MI) collected coloring books and crayons for Children’s Hospital and donated 590 pounds of food to Gleaners Community Food Bank. Students at Davison High School (Davison, MI) handmade 190 Valentine’s Day cards and held a Valentine’s Day party at a local senior residential facility.

But it was a group of young men from Detroit that secured the grand prize. The Loyola Leaders for Others group, based at Loyola High School, baked hundreds of homemade cookies, and distributed them, along with blankets and warm clothing, directly to the homeless in Cass Corridor in Detroit on Christmas Eve. Each student received an iPad, and the group as a whole received at check for $530 to use towards future service endeavors. Congratulations to this great group of young men and future leaders!

To encourage all of the finalists to continue their service efforts, Fifth Third Bank is giving each of the other four groups a check for $253 to help support their next projects. All in all, the 2011-2012 SHOTS program was a great success, and Fifth Third Bank, The Detroit Red Wings and The LEAGUE Michigan are excited to see what wonderful projects happen next year!

Submitted by Heather Jones, AmeriCorps*VISTA, The LEAGUE Michigan

Despite differences, education is central to both State and Federal Budgets

These past few weeks have demonstrated the challenges of creating sound, effective budgets at the state and national level. The Michigan and federal budgets, however, paint two very different pictures of the health of their constituents.

The recession over the past four years has not been kind, but there seems to be a glimmer of hope in Michigan. After several consecutive years of painful cuts, it appears the financial outlook is more optimistic with 2012’s budget surplus. Education funding increased by 0.2%, public safety funding is also set to increase, and the “Rainy Day” fund will grow by an additional $130 million, according to the State Budget Office. At the Federal level, by contrast, the deficit still weighs heavily on programs most Americans take for granted, but rely on – the President offered a 52% decrease in Education, a 35% decrease in Labor, and slight increases for Health and Human Services (3.7%) and the Corporation of National and Community Service (1.3%).

Still, there are some common commitments between the two budgets, such as improving performance and affordability of education. President Obama promotes a ‘Race to the Top’ and links financial aid to universities that keep their tuition under control. Governor Rick Snyder also wants to link increased spending in education to improved performance, best practices, and college tuition restraint. And they are politicians from two different parties.

Despite the other differing priorities of the two budgets, it is clear that superior education for future generations must be a priority for education beyond high school. Whether it is community college, traditional four-year, or vocational – higher education has become increasingly important to achieve personal financial security.

Submitted by Michelle Eichhorst, Public Policy Fellow for Michigan Nonprofit Association

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