Tuesday, March 30, 2010

Why you (yes, you) should care about economics!

Too often, we focus exclusively on giving trends – who is giving how much – to the exclusion of greater economic trends. Pacific Continental Bank’s Nonprofit Economic Breakfast Forum provided a premium opportunity for John Mitchell, Dave Westcott, and Gary McGee to help us understand how various facets of the greater economy and continuing recovery could and will impact giving. My thanks to Dan Hempy, Lisa Faust, and the team at Pacific Continental Bank for convening such a great panel and making this event possible!

This morning’s meeting was in the words of Pacific Continental Bank’s CEO Dan Hempy – “the brainchild of Lisa Faust.” Brainchild is a very apt description. The event brought together CEOs, fiscal managers, executive directors, and other professionals like me to hear three of the area’s most recognized leaders in nonprofit finance to share with us their assessments of how the current recession is affecting nonprofits and insights about how the recovery looks for the sector.

Gary McGee (McGee & Co.) mentioned that according to his research 10 – 12% of nonprofits will come close on breaking even in the current fiscal year. He said that in places like Texas government is contracting with for profit entities to provide services such as housing and other services traditionally seen as the exclusive domain of nonprofits. He didn’t provide local examples. He cited the 2002 Sarbanes-Oxley Act - http://ow.ly/1sL7D – as an important milestone in the fiscal management of nonprofits. He shared that corporate giving now seems to include a greater mix of in-kind contributions and that institutional funders (my words) were less likely to fund administrative, operational, or fundraising costs.

Dave Westcott (The Oregon Community Foundation) described how OCF has managed in the face of the changed economy and described his experience with giving in that same context. Dave said that giving has increased to large organizations and suggested that the increase may correlate with smaller organizations cutting development staff and in some cases entire departments. He mentioned that Oregon ranks second highest in giving in the west. (Follow this link to see information on OCF’s 2009 survey http://ow.ly/1sL6M. Dave observed that, “Operations funding will remain an issue with us in the face of growing need.” He shared his belief that “baby boomers” are the largest, wealthiest demographic ever and offer an opportunity to develop deferred giving programs. Dave encouraged nonprofit leadership to build and diversify revenue by focusing on filling the pipeline for gifts; to work with banks, trusts, community foundations, and other entities to develop these opportunities; and to establish a planned giving committee. He reminded the audience that the next Community Grants deadline is August 1. For more information, visit http://www.oregoncf.org/receive/grants/grant-opportunities

John Mitchell (M & H Economic Consultants) provided a presentation packed with all types of statistics and insights. Here are the highlights and to me the most significant; “looming demographic change and new medical system launched – payroll taxes to investment income for high income persons." John offered the following article, “Taxes Cause Wealth Drain On States” http://ow.ly/1sL1k published in the Wall Street Journal as an example of how changes in taxes can impact charitable giving. His points to ponder included, “Where do new jobs come from? (Jobs, Gates, Vollum, Packard, Knight, Ford, etc.)” and “The Shape of the Upturn? – V, W, L, NIKE (Swoosh). I especially liked his illustration of the NIKE recovery being one that follows the shape of the swoosh: middle then down and then a steady upward trajectory. The list for new jobs sounded like a list of foundations to me, but I didn’t have a chance to clarify the intent of the list. If the intent is to list foundations supporting innovation and entrepreneurism, I’d like to see the Ewing and Marion Kauffman Foundation listed there too. John did mention innovation as being an inspiration for new jobs, so perhaps Kauffman is a fit here. He cited as long term considerations “The Great Recession’s Legacies i.e., regulatory demands and a decline in giving, “Response of High Net Worth/New Income Households Respond to Tax Changes – New Jersey as a Model (See previous link. Notice a theme here?), and “Unfunded Entitlements Coming Home to Roost – Generational Conflict? Competition for You!”

The Forum ended with our three speakers convened as a panel and entertaining questions from the audience. Let me put my Fundraising Savvy to work in developing a new grantwriting or sponsorship program or re-energizing and refining an existing program so that your organization can realize its funding potential.