Newspapers / Philanthropy Journal of North … / June 1, 1994, edition 1 / Page 11
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June 1994 Philanthropy Journal of North Carolina • 11 Winslow Continued from page 10 establish a price for the work. Once the workplan is set and individual staff hours are allocated, we calculate the contract fee, based upon pre-established hourly rates for each staff member that are determined as follows: (MV/260) = (DMV -I- (DMV x OHR)) (1 -t- PMo/o) = DR/8 = HR Translated: Ike market value of the particular staff member divided by the number of working days per year equals the daily market value. Add the daily market value to the daily market value times the over head rate, then multiply the sum by the hoped-for profit margin to arrive at the daily rate for that staff mem ber. Divide by 8 to get the hourly rate. The project hours estimated for all staff members who will be work ing on a particular contract are mul tiplied by each staff member’s hourly rate to produce the total contract tee. It’s a strai^tforward approach. On a contract for the federal govern ment several years ago, our tee structure was scrutinized in detail (including analysis of our direct and indirect overhead costs) by the General Services Administration. This approach to the setting of tees met GSA’s guidelines. Calculating the overhead rate and market value, of course, are among the more complex issues. On many occasions, we have seen non profit organizations pay consultants hourly tees that have no basis in reality - hourly fees that, if analyzed for true overhead costs and estab lished market value, would suggest overcharging by a factor of two or three times. We have spent consider able time trying to define and estab lish the real overhead costs inherent with operating our firm. And we sus pect that the other major firms in the state have struggled with the same question. Boring stuff? Let’s make it more interesting. Want to know your street value on an hourly or daily basis? If you are a typical nonprofit staff member, simply take your mar ket value - that’s what you are being paid in gross salary in your job right now - and apply the formula given above. But be fair in setting your profit margin; most service indus tries average less than 20 percent profit. And tor the sake of argument - and this makes the assumption that you pay for such items as your own office space, equipment, supplies, marketing, insurance (life, health, liability and disability) and support staff from your own pocket — you might use a figure of 0.8 to 1.5 times your market value to establish over head. (A large firm would probably have the hi^er overhead rate, sim ply because of the number of support staff required to manage such an operation.) Chances are your hourly or daily cost is a lot less than you thought it would be. In a perfect world in which all consultants are “ri^t” for a client and vice-versa, what 1 have described would solve a lot of prob lems. Nonetheless, approaching the process of setting tees and hourly rates in a market-driven, busi nesslike manner can only be a good first step in the direction of provid ing value to nonprofit corporations everywhere. Hood Continued from page 10 • Vouchers - This strategy con verts existing public assistance pro grams into vouchers with which recip ients can purchase needed services from nonprofits or private firms. About 50 percent of state social ser vice agencies and 43 percent of coun ties use vouchers for social service, with the most common usage in the day care field. A state program such as the Smart Start child-care initia tive would be a perfect candidate tor conversion to vouchers or tax credits. • Volunteers - Approximately 34 percent of states and 37 percent of counties use volunteers to help deliv er social services, ranging from nurs ing home care to staffing rape and suicide hotlines. • Load-shedding - This is the most complete form of privatization. It means permanently turning over what was once a public service or facility to private operators. In 1992, the city of Pittsburg turned over the city-owned aviary to a group of con cerned citizens. In 1993, the city of Norfolk turned its botanical gardens over to the nonprofit Norfolk Botanical Society. Other cities have put museums, Ubraries, zoos, and farmers markets into the hands of nonprofits. In North Carolina, local officials have pursued many of these strate gies. In 1986, Mecklenburg County turned the publicly operated Center for Mental Health over to the man agers of Carolinas Medical Center for operation. Today the center treats more patients, with a better-trained and larger staff, than it did in the 1980s - and taxpayers pay less for mental health services. Now, county commissioners are considering allow ing Carolinas Medical Center to oper ate some or most of the county health department. In 1992, the Mint Museum in Charlotte was leased to the museum’s private board of trustees. Onslow County is considering contracting out its food stamp distribution system, while a reform plan proposed for Buncombe County last year expected $7.4 million in savings throng cut ting, consolidating, and privatizing various county services. There are certainly Important con siderations in any privatization plan involving nonprofits, such as defining benchmarks for performance, finding jobs for displaced government work ers, ensuring competition for con tracts or'vouchers, and monitoring the quality of services delivered by volunteers. But make no mistake: Governments are going to have to pri vatize if they want to maintain or increase the quality of services and at the same time alleviate the punitive effects of hi^ taxes on families. The good news is that studies demon strate a clear connection between taxation and philanthropy: As the cost of government rises, people have less money and time to donate to non profits. So reducing costs through increased use of nonprofits to provide services can, in fact, make more money available to the nonprofit sec tor to help finance the necessary expansion. Some services simply do not belong in the public sector and can be provided more effectively and effi ciently by other institutions. For that reason, nonprofits have a crucial role to play in the futime of North Carolina communities. Arts Continued from page 3 the rest of the country has a lot to learn from North Carolina,” says Anita McGlynn, executive director of the National Coalition of United Arts Funds, a division of the American Council for the Arts. “The first arts council was started here and in a lot of ways, it’s been an innovative state in this field. “We’ve been dying to hold a conference where we can finally celebrate the accomplishment of the state’s united arts funds.” Not on the conference agenda but sure to be discussed is the recently released report by the National Assembly of Local Arts Agencies in Washington, D.C. The report shows what arts fundrais ers have said all along: Investment in the arts yields economic bene fits. For example, the study reports that for every $100,000 spent local ly by nonprofit arts organizations in communities with populations similar to Wake County’s, an aver age of 4.05 full-time jobs are creat ed. Nationally, the nonprofit arts industry spends $36.8 billion a year, supporting 1.3 million jobs. The report, “Jobs, the Arts and the Economy,” is based on a three- year study of the economic impact of the nonprofit arts industry on 33 communities. Arts in education is another topic that’s sure to draw attention at the conference. “If you look at communities where arts have been a part of the educational system or network, you see a whole lot of the social ills in the county diminish,” says Wilkerson of Asheville. “Studies are showing that the arts are a basic component of education and civilization, and it’s incumbent upon us to reinforce that and to educate a generation of folks who have lost that message.” For information on the confer ence, call (212) 223-2787 ext. 231. For a copy of “Jobs, the Arts and the Economy,” call (202) 371-2830. The News and Observer Foandation Boam) of Directobs Fra* Danieis , pApaA WoidNOf f WttClAW MaRNCUil,^ Board OF Advisers Barto Allen -Joyce Fitzpatrick Coiiftrie Allen Joel Hashman Joyce Adger Barbara Freedman WiamAnlyanir, James QaxJmon QeorgeAuhy - -Marilyn Hartman John Sell Jane Kendall David Baievides Riotuk Lambeth Philip Bumenlfcsl '■ Elizabeti Locke William Bondurant Michael Marscano K«inethBrovm Todd Miller tobertBush Mary Mountcastle Henty Carter John NiWock Julias Chambers Jane Patterson Ray Cope Michad Rose Julia Daniels Shannon St John Gayle Dorman Charles Sanders John Doman' * ■ Donald Sanders Ronald Drago Maty D.B.T. Semans Wsnt»rth Chiigin Patrida Smith Martin lakes:: Sherwood Smith BlucherEhringhauslli William Spencer Meredift Emmett Ronald Swain ElfealKth Feniiess ■ SmedesVoik Masco Continued from page 4 ture company plans to raise money and provide employees to build a Habitat for Humanity house in Richmond, Va. Most companies want the good press that comes with telling how much they give. For example, Ben & Jerry’s ice cream gives 7.5 percent of its pretax earnings to charities. Sunshine Makers’ Simple Green, a biodegradable cleaner, donates 1 percent of sales to a foundation to educate kids about environmental responsibility. Sheri Bridges, assistant profes sor of management at the Babcock Graduate School of Management at Wake Forest University in Winston- Salem, is surprised at Masco’s reluc tance to disclose the percentage. “A lot of people will think it might be pennies on a sofa, or less than pennies,” she says “You don’t have an idea of their magnanimity.” Bridges says the furniture indus try may have come late to the cause- related marketing trend because most firms lack strong name recog nition. And name recognition helps make the arrangement work for the companies. “Most companies who’ve done this have strong, well-known, mass- marketed brands,” she, says. “Johnson & Johnson has done it; American Express with helping the Statue of Liberty restoration; Kimberly Clark and RIF, Reading is Fundamental. But they had names that were constantly in front of the public in ad campaigns, and strong brand identity.” The trend is popular with busi nesses because consumers have become more socially aware and want to reward companies who share their attitudes. Masco spokesman Linda Jones agrees. “We’re aware that our cus tomer base is concerned about peo ple on the planet,” she says. “We’re a citizen of the world. We want peo ple to feel good about buying [the line] because it’s helping someone. We’re very aware of what’s going on and became even more aware after talking to CARE about the suffering that goes on.” From the nonprofit organiza tion’s point of view, linking up with a corporation can mean easy money, says Ann Kaplan, editor of “Giving USA,” a New York publication that tracks charitable giring. The organi zation can receive funds and expo sure for doing little more than lend ing its name. “What do you gain?,” she asks. “A Uttle bit of revenue, a Uttle pubhc- ity. It’s not that lucrative to a chari ty, but I don’t think it’s harmful, either. Assuming you can work the arrangement out efficiently, then you can get money without doing very much.” There is a danger that if the com pany gets involved in a controversy, it can taint the charitable group affil iated with it, says Bridges of Wake Forest. Also, corporations probably will pass up charitable organizations that are themselves at aU controver sial. That means there might be a lot of Interest in groups like the Boy Scouts and Girl Scouts, but perhaps less in organizations like Planned Parenthood. “They want a group that has an overall positive image,” Bridges says. CARE spokesman David Morris says the organization provided Masco with information on the coun tries selected - Cameroon, Kenya, Egypt, Ecuador, Peru and Indonesia - plus background on Kids CARE for Lexington’s line for children. Masco then created designs based on the art and heritage of the nations, with the intention of showing the beauty of the areas. “We want people to not just per ceive these places as the images you see in the media, of starving children with flies in their eyes,” says Philip Johnson, CARE president and chief operating officer. “We want to cele brate the diversity that makes the Earth rich.’’ Three outside companies will make other CARE-inspired items: Sasaki will have tableware; Cannon, bedding and Couristan, area rugs. High Point-based Masco Home Furnishings also has produced a marketing campaign that includes posters featuring children of the dif ferent nations, CARE literature for retail stores, product tags featuring the name of the organization and videos to be shown on airplanes. Schools receive big I A /ake Forest University, I/I / Greensboro College and v V Davidson College each has received $5 million, and a Durham high school has received $1 million. Cliff Clarke, a San Francisco busi nessman and a 1962 Wake Forest alumnus, pledged $5 million to expand the school’s international studies. At Greensboro College, an anony mous donor gave $5 million to estab lish a charitable trust - the largest single donation ever to the college. Thompson Simkins Baker, a 1926 Davidson graduate, gave $5 million - the school’s biggest gift ever - to cre ate a scholarship endowment. The GE Foundation in Fairfield, Conn., gave $1 million over five years to Southern Durham High School with a goal of doubling the number of college-bound students. □Whitney lones INCORPORATED^' Specializing in fund-raising for non-profit organizations “Helping You Translate Visions Into Plans and Goals Into Achievements” ■ Long-Range Planning ■ Campaign Surveys (Feasibility Studies) ■ Prospect Research ■ Capital Campaign Management ■ Public Relations/Marketing ■ Donor Record Management ■ Special Events ONE SALEM TOWER • SUITE 302 119 BROOKSTOWN AVENUE WINSTON-SALEM, NORTH CAROLINA 27101 (910) 722-2371 • FAX (910) 724-7381
Philanthropy Journal of North Carolina (Raleigh, N.C.)
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June 1, 1994, edition 1
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