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10 • Philanthropy Journal of North Carolina Opinion Money matters May 1995 To survive, nonprofits must be more businesslike For good or ill, nonprofits depend on money. But many have failed to act like businesses and take the steps needed to create a solid financial foundation for themselves. To do the good deeds they were created to do, nonprofits first must meet the payroll and pay the rent and the li^t bill. And as dollars become harder to find, raising and managing money takes even more time and effort. Nonprofits can have a hard time accepting the fact that marketing is an integral part of their job; some even consider marketing and fundraising to be crass pursuits that can detract from their lofty goals. Yet hy failing to balance and integrate the need to raise money with the need to provide services, nonprofits increasingly will find themselves at a disadvan tage. Crafting a strategic plan is essential for any nonprofit, and how to raise and manage money must be part of that plan. Poor planning - and poor man agement and board oversi^t - can create a host of problems. To cite just a few examples: •Yale University recently lost a $20 million gift because it balked at donor Lee Bass’ demand that he pick the professors his gift would support. A general increase in restricted gifts raises many issues for nonprofits, includ ing how to cultivate relationships with donors. • Trian^e nonprofits worry that the merger of the British parent companies of Glaxo and Burroughs Wellcome - which together hand out millions of dollars in the Trian^e - will reduce that corporate giving. Dependence on a few major sources of financial support can set a nonprofit up for a big fall if it Ms to anticipate the day when those sources might decline or even disappear. EDITORIAL • A recent Carolina Poll found that nearly four of every 10 North Carolinians doubt that their charitabie contri butions are being put to the uses for which they were intended. At the same time that nonprof its are being asked to do more with less, they also must overcome widespread skepticism about how they handle money. Nonprofits these days are feeling besieged. Not least of their worries are the anticipated cuts in spending and services by government at the federal, state and local levels. Rather than panicking, nonprofits shouid seize the opportunity to put their houses in order. Cieariy, many nonprofits are working hard to soiicit doilars and volunteers, and to form partnerships with one another and with business and government. Through their own efforts and the support of funders who are con cerned about organizational capacity, nonprof its are strengthening their abiiity to raise money and to manage and invest it wisely. These efforts can serve as models for other nonprofits. Rather than bemoaning the onset of the Repubiican “revolution,” the dramatic growth in restricted gifts, the dependence on major donors, and the skepticism with which nonprofits are perceived, nonprofits should do evei^hing in their power to he as businesslike as possible. The nonprofits that will survive and suc ceed- like their counterparts in the business worid - will be those that can reshape them selves to be more practical, more flexible, more entrepreneurial and, above all, more focused on serving their customers in the most effective and efficient way. Final shot New economic strategies key to fitting poverty A wide range of theories have been advanced to explain the steadily decreasing quality of life in inner city communities. Yet one perspective has held sway in recent public policy debates: that a deteriora tion in individual responsibility and family moral values, rooted in liberal social welfare policies and programs of the 1960s, is pri- marUy responsible for the rising rates of concentrated and consis tent poverty, joblessness, family James H. Johnson Jr. is direc tor of the Urban Enterprise Corps at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. Walter C. Farrell Jr. is professor of educa tional policy and community studies in the Graduate Program in Urban Studies at the University of Wisconsin-Milwaukee. This article is excerpted from a paper presented in March to a congres sional breakfast seminar of the Consortium of Social Science Association. II of the nation's assets, includ ing the resources of government, commu nity-based organiza tions, the business sec tor, the philanthropic community, and espe cially our colleges and universities, must be mobilized if we are to deal effectively with the poverty problem in the U.S. disruption, out-of-wedlock births, and gang-and drug-related lethal violence in U.S. inner cities. Based on this view of underlying causes, policy makers, with widespread public support, have instituted a set of what some woidd consider paternalistic and punitive public policies to “change welfare as we know it” and to foster normative behaviors among the inner city poor. We believe that the foregoing assessment of the underlying causes of contemporary poverty is a misspecification of the prob lem and that policy prescriptions proposed ani'or recently imple mented are aimed not at reducing poverty per se, but rather, at reducing dependency on the social welfare system. The cur rent debate is generally devoid of consideration, discussion and analysis of the role that conserva tive policies, implemented over the past 15 years at both the fed- Look for JOHNSON, page 11 Self-scrutiny Nonprofits must improve accountability The greatest threat to the not-for-profit sec tor is the betrayal of public trust, the disap pointment of public confidence. The over whelming proportion of non-profits are honor ably, if not always efficiently and properly, run. A significant problem for the sector, however, is created by the tew organizations that are willfully dishonest or that engage in illegal practices, and by the unethical individuals act ing within reputable organizations. But a much more ejdensive problem is posed by the far larger number of organizations that are sloppily and inattentively run. Because the raising of donated funds is crit ical to all not-for-profit organizations, those who are in charge of the fundrais ing are usually positioned in the most influentM roles in the orga nizations they serve. It is no accident that all of the recent notorious scandals in the not-for-profit sector have revolved around chief executives to whom their boards and colleagues deferred because of their proven JOEL . FLEISHMAN Joel Fleishman is president of Atlantic Philanthropic Service Co. in New York. This article is excerpt ed from the Maurice 6. Gurin Annual Lecture on Philanthropy that he delivered in March in Chicago at the annual conference of the National Society of Fund Baising Executives. anagement practices in much of the not-for-profit sec tor, while superior to those in the public sector, are of consid erably lesser quality than those in the for- profit sector. skills in fund raising, and it was their skills in fund-raising that were used to rationalize the practices that ultimately brought them down. I urge the members of the NSFRE, there fore, to make your organizations’ fidelity to the highest standards of over-all accountability an obligation of equal wei^t to your express com mitment to the highest standards of fund-rais ing itself. 'The two are utterly intertwined, and you and your organizations will succeed at both or at neither. How might you fulfill that responsibility? Exert yourselves in shaping the kinds of persons chosen to serve on the boards of your orga nizations. Exert yourselves to raise standards of accounting, planning and stewardship in your organizations. Exert your selves to have your organizations report more fully to public authorities and to the public itself. Management practices in much of the not-for-profit sector, while superior to those in the public sector, are of considerably Look for FLEISHMAN, page 11 Philanthropy Jonmal Of North Carolina ^ ^ePkilanihropy Jmnuil of North Carolina Is a monthly publication ol 'He News and Observer Foundation, a 501(c) (3) private foundation funtted PublishingCo., Raleigh N.C, © 'The News and Observer FoundaUoB. All rigjits reserved. EDITOR AND PUBUSHER TODD COHEN - #19) ^-8989 MABXFTlN6Am>DEm.0PMENTmmCf0R MARGUERITE LEBLANC — (919) ASSISTANT Eomm BARBARA SOLOW - (919) 829^921 STAFF WRITERS aiSAN GRAY-(919) m8917 EALENA CAIiEh®EB—(919) 836-^ SUBSCRIPTIONS SIDNEY CRUZE - (919) 836-2876 CONFERENCE OdORDMATOR .is KATE FOSTER - (919) 836-2877 ■ i Good news, bad news Nonprofits must work on their image Despite all the good work it does, the non profit sector has a tough time getting good media coverage. 'The media are as likely - if not more likely - to jump on bad news about non profits as to report the good news. And nonprofits recently received some bad news: Nearly four of every 10 North Carolinians responding to a recent survey hy the Carolina Poll at UNC-Chapel Hill said they lack confi dence that the dollars they contribute to chari ty are put to the use for which they were intended. Sadly, the nonprofit sector has been tarred by a handful of isolated yet sensational scan dals and abuses. Because perception helps define reality, nonprofits must deal with the public’s skepticism. To do their job - which is growing rapidly as government looks for ways to cut spending and services - nonprofits depend on the unwavering support of people who contribute their dollars ABOUT CHANGE and their time to charity. Earning and keeping that support requires that nonprofits be as open and honest as possi ble about what they do. Only recently have non profits begun to appreciate the importance of communicating better with the public and media. The Carolina Poll simply reinforces the need tor nonprofits to make good communica tion part of their daily job and their long-term strategy. In fact, says the North Carolina Center for Nonprofits, which commissioned the poll, non profits can help overcome public skepticism by being more open and communicative. In dealing with the news media, it can be tou^ to know how to handle information that mi^t seem negative. It’s human nature to want to accentuate the positive. In a news release about the Carolina Poll, the N.C. Center highlighted the finding that nonprofits enjoy greater support in North Carolina than in the U.S. 'That finding, howev er, is based on survey data that is not statisti cally significant. Because of statistical margins of error built into both the state and national surveys, the tiny gap that the two surveys found in the support of nonprofits in the state and U.S. actually may have been even tinier - although it also may have been sli^tly larger. Burled deep in the N.C. Center news release was what arguably was the survey’s most sig nificant and troubling finding - the high level of public skepticism about nonprofits. Given the challenges they face today, non profits actually may find it more productive to tell their stories hluntly and directly, regardless Look for CHANGE, page 11
Philanthropy Journal of North Carolina (Raleigh, N.C.)
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