A Budget Challenge on Three Fronts

Is Michigan a Nonprofit-friendly state and why does it matter? This is our sector’s most important question as we face a three-front fiscal crisis. The three fronts are the budget shortfalls at the federal, state and local levels; challenges in government contracting and granting; and skyrocketing need levels that have not been seen for some time.

Michigan’s current projected budget gap for FY 2012 is $1.8 billion, placing us in the top 20% of the 45 states projecting shortfalls. The Recovery Act Funds are drying up now with the reduction of the $98 billion invested from FY 2009 to FY 2011 to a projected $6 billion for FY 2012. The U.S. Senate is debating on whether to cut $4.7 billion or $57 billion from the current budget for the remaining six plus months of this fiscal year. That debate is largely seen as setting the stage for how the FY 2012 debate will be waged as the Congress and President declare each others’ budget as unrealistic. These budget challenges combined with the stresses placed on nonprofits through the proposed repeals of Michigan tax credits make the public/private partnerships difficult for nonprofits to continue.

An increasing number of nonprofit organizations with federal, state, and local contracts report a strained government partnership. Some report that governments are failing to make payments for services performed under contracts, forcing the organizations to make painful cuts to programs, services and staff. In light of the budget cuts in revenue sharing and other public sources, local government agencies are withholding reimbursements, rescinding agreements altogether, or imposing other financial burdens that harm nonprofits. This challenging relationship is exacerbated by the fact that generally government contracts simply don’t cover the full cost of providing services. This is proven in our own look at the Michigan landscape.

MNA data reveals that 45% of nonprofits experience delays in scheduled government payments. In addition, when organizations were asked to identify specifically where the delay in government funding was occurring: 39% reported delays at the local level, 26% reported delays at the state level, and 16% reported delays at the federal level. We also found that 49% reported raising less financial/in-kind support in 2009 compared to previous years. Beyond budget cuts, nonprofits struggle to provide vitally needed services to a growing population with more constraints and few resources.

The final conspirator is the growing levels of need. Let’s agree to set aside for the moment the effects of the recession including the job loss, record foreclosure rates, and persistently high unemployment rates. There are other huge issues including the unpaid pension and healthcare liabilities on the state’s books. Michigan has a growing need with the aging of the Baby Boomers and the now projected decline—not stagnation, but decline—of population growth and thereby working taxpayers. While Michigan’s 1.9 million who depend on Medicaid are spared the budget axe in Governor’s Snyder’s FY 2012-2013 budget proposal, they are still expected to grow in numbers at an alarming rate that may exceed our ability to provide them healthcare coverage. This will lead to more elderly, children and vulnerable populations looking for help elsewhere, especially local mission-driven nonprofits concerned with the health of our communities.

These are reasons we should care. As a sector, we should begin to call for policy makers to build a fertile landscape for an effective, engaged, relevant and understood nonprofit sector. We need to demand that the state’s policy climate be supportive of the sector that is one of the leading economic engines, employs one in ten workers, and includes the assets our state will need to lead to our economic transformation—education, healthcare, arts & culture, and environmental stewardship. These are the reasons that every Michigander needs to call for Michigan to be a nonprofit-friendly state. It’s what will be at the forefront of our reinvention.

Submitted by Kyle Caldwell, president and CEO, for the Michigan Nonprofit Association.

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Our Greatest Asset is Trust

Among the assets of Michigan’s nonprofits, the greatest is trust. There is no legal requirement for people and organizations to give to nonprofits. There is no mandate by government for every citizen to serve their community by volunteering at a nonprofit. The only way we can compel anyone to support our organizations is through our ability to demonstrate impact, show effective use of resources, and tell the story of the people we serve. In other words, people give because they trust the organization they give to will be good stewards of their gifts. Urgent File Image

During this “giving season” nonprofits across Michigan are reaching out for financial support of their work. This is also a ripe time for less altruistic actors to prey on the good intentions of Michigan’s citizens who want to give. Fraudulent solicitations, misuse of charitable contributions, and ineffective utilization of resources are all threats to trust in nonprofits—threats to our most valuable and hardest to earn asset. As a sector, we have to ensure that we protect the public trust.

MNA is working on several fronts to ensure a high level of trust in the sector. SB 1528 amends the Charitable Organization Solicitation Act (COSA) to increase penalties on bad actors including fraudulent fundraisers. This important piece of legislation is a cornerstone priority of the Michigan Nonprofit Caucus and is currently scheduled to be considered during the Lame Duck Session of the Michigan Legislature.

Nonprofits can help encourage donors to give to their organizations by using the Giving Wisely: Helping Michigan Citizens Be Savvy Donors guide. This guide, available on MNA’s website, helps donors understand the important questions they need to consider when giving their time, talent and treasure to nonprofits. MNA developed Giving Wisely in partnership with the Council of Michigan Foundations, Michigan Association of United Ways, and the Office of Attorney General. Giving Wisely has links to important web resources, provides issues to consider when giving money as well as time to nonprofits, and offers nonprofits the opportunity to demonstrate that they are a good investment.

In a time when seven in ten Americans trust nonprofits more than they trust government or industry to address our community challenges, it is imperative that we live up to those expectations and build our assets–build trust.

Submitted by Kyle Caldwell, president and CEO, for the Michigan Nonprofit Association.

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Know Your Sector

Think you know the nonprofit sector? Did you know:

• Michigan’s nonprofit sector employs nearly 1 out of every 10 workers in the state.
• There are more than 47,000 nonprofit organizations in Michigan.
• The 374,537 nonprofit employees in Michigan earned nearly $14.5 billion in wages in 2009. This translates into an estimated $90 million of personal income tax revenues for Michigan’s state and local governments.

The nonprofit sector has been one of the few engines of economic growth in Michigan in the past decade, and it has sustained this record during the recent recession, according to a new Johns Hopkins Center for Civil Society Studies report.

While the staff at MNA was busy working with Johns Hopkins to prepare this report, another organization was busy preparing the following video to demonstrate the size and impact of the nonprofit sector across the nation. If you work for, volunteer with or donate to a nonprofit, I hope this video is a great reminder of the impact all of us make every day, not just to the organization’s mission, but to the entire nonprofit sector.

Thank you to Philanthropy Reports and Ben Klasky for creating this video and helping the nonprofit sector tell its story! If you want to know more about Michigan’s nonprofit sector, visit our website at www.MNAonline.org.

Submitted by Lisa Sommer, public relations manager for Michigan Nonprofit Association.

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How do you measure your impact?

What do the BP oil spill and the nonprofit sector have in common? They both lack real-time data that would provide a true understanding of their impact. We are all thinking about the devastating effects of the oil spill in the Gulf of Mexico and the impact on the environment and economies of communities along the Delta. From the outset in April, journalists were asking for a clear and consistent answer on how much oil was spewing from the broken well pipe a mile below the Deepwater Horizon Oil Platform. No good answers were given because there was no monitoring apparatus that could measure the flow accurately. Now efforts have been taken to better monitor the well flow and understand the long- and short-term impact of this historic tragedy.

Like the BP incident, the nonprofit sector cannot fully articulate its impact, albeit in more positive terms. Other industries and sectors are able to measure, track and communicate their impact in terms that people can understand and hear about on a monthly or quarterly basis. We track employment, crop yields, manufacturing output, construction, even sports in such detail that our newspapers have dedicated whole sections to reporting on their activities daily. Society has placed a significant emphasis on understanding many parts of our world, but far less on the real impact of the work of the nonprofit sector even though we touch everyone’s life in some way every day.

Flickr user: Pink Sherbet Photography

What do we know about the sector? In Michigan, we know that one in ten who are fortunate to be employed work for a nonprofit. The demand for nonprofit sector services is escalating. We know that while there are significant declines in charitable giving, delays in government payments for services rendered, and overall higher costs to doing business; the overall sector grew 2.7% during this most recent recession, was slow to shed jobs, and provided growing wages to its workforce. All this we know about our sector. However this data is from 12-18 months ago and only touches the surface for what we really need to understand our sector. We cannot tell you today what those numbers might be in real time, nor the full impact of our work—all necessary to make real decisions on how to best deploy our resources for the maximum benefit.

Flickr user: Benketaro

There are important questions we should ask. What is the local impact of nonprofits as a sector? What are the monthly unemployment rates for nonprofit employers? What is costs/benefit ratio of tax exemption to community benefit among nonprofits? As the National Council of Nonprofits CEO, Tim Delaney recently put it, “We have a government that can tell us with precision how many iceberg lettuce heads were pulled out of the ground last year, yet it cannot tell us how many heads of individuals were employed by nonprofits. Why are iceberg lettuce heads more valuable than the people who take care of America’s communities?”

Last week, some stepped up to try to address these questions and give nonprofits a voice in the decisions of government. Rep. Betty McCollum (D-MN) announced Wednesday that she will introduce new legislation that will help mold a stronger partnership between the federal government and nonprofit organizations, especially those who have direct influences in the health care and education sectors (http://www.councilofnonprofits.org/nscsact). The Nonprofit Sector and Community Solutions Act (H.R. 5533) would strengthen America’s communities by making the federal government a more productive partner with nonprofit organizations by establishing
1) better communication with the federal government,
2) better coordination within government, and
3) enhanced data collection.

Just as we witnessed in the health care reform legislation, nonprofits were left out of the bill until the last minute despite being a major employer—rivaling other small for-profit businesses. That is because policy makers did not understand nonprofits as major employers and economic engines in communities. This legislation will begin to establish federal mechanisms for nonprofits to be at the policy table and give real data to decision making.

We will provide updates through our blog on this important legislation as it develops. In the meantime, please use the free tools MNA has provided to tell our sector’s stories. We have updated data on the economic impact of the sector through the recession, survey data on the economic pressures nonprofits face as well as the important role volunteers play in our work, and state data on the important role of philanthropy through our Giving and Volunteering report that shows Michigan residents continue to give despite our financial challenges. Please use all of these as you talk to decision makers about our work. I truly believe that once we better understand our sector and can effectively communicate our impact, our sector will be well positioned to help lead Michigan’s economic turnaround.

Submitted by Kyle Caldwell, president and CEO of Michigan Nonprofit Association.

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Diversity and Inclusion – What’s Now and What’s Next

Examining the current state of diversity and inclusion among Michigan nonprofits is a first step in strengthening our organizations through diverse ideas and people (including board members, donors, staff and volunteers). The report from MNA’s latest quarterly survey, Nonprofit Diversity and Inclusion, is now available on our Web site at www.MNAonline.org/mnrp.asp. 230 nonprofits participated in the study and highlights include: 59% of responding nonprofits have a formal policy regarding diversity and/or inclusion; 95% of responding organizations believed that being more diverse and inclusive would benefit their organization; and nearly half of nonprofits reported needing help recruiting and retaining diverse board members. This study was conducted in partnership with the Johnson Center at Grand Valley State University.

Not only is it important to examine our current commitment to diversity, but to be prepared for the future. The Chronicle of Philanthropy recently published a report called The Future Starts Now. Ian Wilhelm predicts that five major trends will reshape philanthropy in the next ten years:
-A Grayer America, an increasing number of Americans over 65;
-Technology advances, a new way to raise funds and serve people in need;
-Growing influence of Hispanic Americans, challenging our recruitment of Hispanic volunteers and donors;
-Global philanthropy, increasing international donors and “citizens of the world”;
-Charitable business, increasing business as an engine for social change.

Each of these shifts will dramatically alter the existing state of philanthropy and nonprofit organizations, bringing not only new challenges but new opportunities to adapt to the changing needs of our environment. Agile and flexible organizations are needed, are you ready? Does your organization need an iPhone app? Are you ready for multiple-generation issues? Is there a need for bi-lingual advertisements and materials? It’s best to begin preparations now.

Submitted by Allison Treppa, director of marketing and communications for Michigan Nonprofit Association.

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Utilizing Evaluation to Demonstrate Impact

As a former educator; I am long familiar with the pressure to and necessity of measures of performance and program outcomes. I’ve written many objectives, identified measurements, and collected and reported data designed to measure the success of educational programs. Now, as a VISTA Leader, I’m involved in evaluation from a different perspective.

I’m learning that nonprofits are under increasing pressures to evaluate their programs. As a VISTA I was involved in writing grant reports to document results. As a VISTA leader I’m involved in compiling data from the reports submitted by a variety of Volunteer Centers of Michigan.

I’m impressed by the numbers of registered volunteers and partner agencies being reported in the current grant reports. However, these same reports are demonstrating and documenting the difficulty associated with the collection of qualitative information. All nonprofits deal with the issue of collecting demographic information from volunteers. As I work with VISTAs serving at the volunteer centers; the issue of how or when to collect demographic information is common to all. As demographic information is built into the volunteer registration process there is a common dilemma. When the information is made voluntary; potential volunteers are often skipping the questions about age, sex, and other demographic information. However, when the information is made mandatory; the concern is that many potential volunteers will exit the online registration system rather then supply the information and that volunteer’s services are then lost. Volunteer Centers have the additional problem in that often the center is somewhat outside the loop. Volunteer Centers may not be directly connected to the services provided. As volunteers register with centers, information regarding actual service hours becomes problematic. How does the center know whether or not the volunteer actually served hours with a local nonprofit? How does a center develop and measure outcomes when volunteers are working through other human service providers who have different management systems and approach evaluation from potentially very different perspectives?

As a VISTA Leader; I don’t have answers to these questions. In the process of researching the issue; I’ve found many helpful resources. One resource, Measuring the Difference Volunteers Make: A Guide to Outcome Evaluation for Volunteer Program Managers, offers valuable suggestions and tools such as:
• Importance of conducting Outcomes Evaluation
• Volunteer Centers as potential resource and consultant nonprofits as they establish evaluation programs.

Evaluation is necessary to demonstrate impact. Clear, measureable documentation of program outcomes is a necessary part of obtaining funding whether through grants or donations. Developing effective plans and instruments will continue to be an issue for Volunteer Centers and all nonprofits. How is your organization evaluating impact—qualitative or outcomes-based?

Sandra MillerSubmitted by Sandra Miller, AmeriCorps*VISTA Leader for the Volunteer Centers of Michigan. Prior to joining VCM, Sandra served as a VISTA member in Wisconsin for Habitat for Humanity. Sandra is a retired school teacher and counselor and has a Bachelors in Education and Masters in School Counseling, both from Central Michigan University.

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The Value of Volunteers

This week the Corporation for National and Community Service released Volunteering in America 2009, a report on volunteering trends and demographics. It’s important for nonprofits to review and use a report such as this to help with volunteer engagement. Consider how your organization can use the results to motivate and engage current and new volunteers. Do you regularly track time, skills and financial contributions of volunteers? By understanding a volunteers contributions, an organization can share with current volunteers how their support is helping the organization work toward its mission.

Also, tracking your volunteer data will benefit your organization when completing the Form 990. It’s important you include the impact of volunteers when describing accomplishments within the Form 990, but the form also specifically asks organizations, “Provide the number of volunteers, full-time and part-time, who provided volunteer services to the organization during the reporting year. Organizations that do not keep track of this information in their books and records or report this information elsewhere (such as in annual reports or grant proposals) may provide a reasonable estimate, and may use any reasonable basis for determining this estimate. Organizations may, but are not required to, provide an explanation on Schedule O (Form 990) of how this number was determined, and the types of services or benefits provided by the organization’s volunteers.”

Nonprofits should use volunteer data to recruit new volunteers. Educate them on how their gift of time is valuable and helps an organization achieve its goals. It’s important to remember your volunteers are ambassadors of your organization. By informing them of the impact their work is making, it will develop a deeper commitment to the organization

Highlights from the report include:
• 61.8 million Americans volunteered through an organization in 2008
• America’s volunteers dedicated more than 8 billion hours of service in 2008
• $162 billion of service contributed
• Volunteers were more likely than non-volunteers to donate to a charitable cause in 2008, with 78.2 percent contributing $25 or more compared to 38.5 percent of non-volunteers.

Michigan highlights include:
• 2.3 million volunteers
• 325 million hours of service
• $6.6 billion of service contributed

Click here for the Volunteering in America report. You can also check out recent media coverage of the report by USA Today, Washington Post and the Associated Press.

If you’re interested in more data specific to Michigan, click here. We also encourage you to check out the press room for more resources to help you develop your strategies for recruiting and retaining volunteers.

Michigan Nonprofit Association provides additional resources on volunteer data for Michigan. Check out the Snapshot of Giving and Volunteering in Michigan 2009 report.

Background: Volunteering in America 2009 is based on data obtained from the U.S. Census Bureau and Bureau of Labor Statistics through a “volunteering supplement” to the Current Population Survey from 2002 to 2008. Volunteers are defined as persons who did unpaid work through or for an organization. The report includes information for all 50 states, Washington DC, and 198 cities, including 51 large cities, 75 mid-size cities, and 72 additional cities, based on Metropolitan Statistical Areas. This information includes the volunteer rate; the types of organizations through which residents serve; their main volunteering activities; the average hours per year and volunteer rates for age and gender demographic groups, and key trends and highlights.

DianaANote: This post is authored by Diana Algra Diana Algra currently serves as the Executive Director of the Volunteer Centers of Michigan, an association that represents the 27 Volunteer Centers in Michigan. Her community involvement includes serving on the boards of the Capital Region Community Foundation, Sparrow Health System Community Council, and the Capital Area United Way Community Impact Committee. She also serves as a “Lunch Buddy” for the Big Brothers Big Sisters of Lansing program.

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