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Many of the nonprofit organizations we work with have long relied on public sector grants and contracts to deliver needed services. Stated another way: many of the nonprofits we work with have neglected private, individual giving (not to mention social enterprise and earned income programs).

This article from the Chronicle on Philanthropy suggests that financial advisors — by no means soothsayers of philanthropy but gurus of tax law — are predicting that new taxes on the wealthy will incentivize additional giving from donors this year.  Regardless of the “truthiness” of this prediction, organizations that are heavily reliant on the public sector must look for ways to diversify their funding… and fast.

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“Charitable giving fell again last year, reflecting the continued impact of the economic downturn on donations. The Giving USA Foundation, a research organization governed by fund-raising professionals, estimates that individuals and institutions gave away $303.75 billion in 2009, a decrease of 3.2 percent on an inflation-adjusted basis. Other surveys have reported steeper declines, and charities anecdotally report that fund-raising was more difficult last year than in 2008 when the crisis began. For instance, a survey by Target Analytics of direct-mail fund-raising by 79 organizations found those revenues had fallen by a median 4.8 percent, with fewer than one-third of the participants reporting increases. A recent survey released by the Association of Fundraising Professionals found that individual giving had declined 4.9 percent last year to $217.3 billion, while the Giving USA survey found such giving to be virtually flat.”

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Innovation, Innovation, Innovation. Have you heard that term enough from the federal government and the foundation world? Having just come off a whirlwind of activities to develop four Department of Education’s Investing in Innovation Fund application, I know that we have.

A recent survey by John’s Hopkins Center for Civil Society Studies, which conducted a survey of 417 organizations, found that over 82% reported “implementing an innovative program or service within the past five years.”

While innovation can be a critical way to attract new sources of revenue and may lead to outcome-related improvements, nonprofits must not lose sight of their core areas of competence. For example, a mental health provider might look to create an innovation related to integrating physical and mental health, but might have less success, if they chose to focus innovations strictly on physical health care delivery.

The survey further found that while foundations and other grant-making agencies continue to increase demands on evaluating performance, technical and financial constraints severely limit the extent to which nonprofits can carry out these important activities. Respondents called for better tools to measure qualitative impacts, less time consuming measurement tools, greater help from intermediary organizations in fashioning common evaluation tools and training for personnel in how to use these tools.

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When I was thirteen years old, my father, a physician, told me a story about one of his patients. He said that he was treating a young woman in her early twenties who had recently arrived from Somalia. Like tens of thousands of Somalis in the early 1990s, she had fled her country after a devastating civil war made its way into the nation’s capital of Mogadishu. The young woman had lost one of her arms during a mortar attack, and in addition to malnutrition, she was anemic, and suffering from both malaria and an acute respiratory illness.

The story of this young woman and her plight hit me hard. I read all that I could about Somalia; its rich cultural history and its years of turmoil and oppression. I was moved to action. With the help of my parents, friends and teachers, we organized a fundraiser at my school for a nonprofit organization that helps Somali refugees find housing and coordinates care for those recently arrived. In all, we were able to raise almost $6,000 for the charity. A small sum by most standards, but it would be enough to help improve the life of a young woman like my father’s patient.

This leads me to the point of this newsletter – one that I’m constantly reminded of when I listen to the radio, read the paper or watch the T.V. – we are moved to act or intervene not by any statistics that we might hear but by the human stories that we are told.

Nick Kristof, a columnist at the New York Times, has frequently written about a concept in social psychology  called “psychic numbing,” a phenomenon by which, as Kristof puts it, “one death is a tragedy and a million deaths a statistic.” To be clear, data and statistics are important and are instrumental as nonprofits gauge their own progress, develop goals and report their impact and effectiveness to funders. However, to really move people and compel them to act, serve on a board, work as a volunteer or open their checkbook to provide a gift, we must remember the importance of stories.

Of course, not all stories are equal. Here are a few tips for a good story:

1. Keep the stories positive. People want to be cheered up by stories of success and transformation.
2. Storytelling needs to focus on an individual, not a group. In fact, experiments have shown that empathy begins to fade when the number of victims reaches just two.
3. Make “the ask” tangible. The success of microlending organizations like Kiva.org in recent year is in part attributable to the satisfaction lenders get in seeing their donations in action.

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As if nonprofit service providers did not have enough to worry about, now some states and local municipalities are proposing to tax, and levy fees (a.k.a. tax) on nonprofits in an attempt to balance their checkbooks.

This report indicates that states like Hawaii and Indiana are moving aggressively to impose taxes and fees, arguing that  nonprofits need to do their part to pay for the government services they consume.

But this argument misses the big picture. As Lisa Maruyama, chief executive of the Hawaii Alliance of Nonprofit Organizations, puts it “We’re [nonprofits] effectively providing interest-free loans to state governments, which have been very slow to pay what they owe us, and now they’re asking us to pay more.”

With the economy and the state budget, such as it is, in California, we wouldn’t be surprised if similar proposals arise at the state and local levels. California nonprofits should be ready to rally if such a proposal makes progress in Sacramento or in their local city councils.

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We frequently lament the slow speeds that quality data about charitable giving is collected, analyzed and passed from researchers to nonprofits. The best data, available from Giving USA, is generally 18-24 months behind any given period of time. This makes the data more difficult to use when creating strategic, business and development plans for future years.

Well, some researchers at Boston College’s Center on Wealth and Philanthropy have developed a model that will provide some baseline data on charitable giving, on a quarterly basis, that is modeled on economic trends. While it’s difficult to predict the accuracy, the optimist in us wants to believe their findings.

According to the researchers, the IGM estimates US household charitable giving for calendar year 2009 will total between $216-218 billion (current dollars), representing a decline of between 4.8 percent and 5.7 percent from the 2008 total of $229 billion.

Preliminary projections for 2010 are somewhat rosier, offering the possibility that total household charitable giving could return to the pre-recession (2007) level of approximately $234 billion, in the best-case scenario, or, on the low end, decline an additional 3.9 percent from the 2009 estimates, to a total of $212 billion by the end of 2010. These 2010 estimates will be lower if unemployment remains high throughout 2010, and higher if the recovery is stronger than expected, the researchers add.

The full report is available here.

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One trend we heard repeatedly about at the Center on Philanthropy & Public Policy’s 10th Anniversary Forum on Philanthropic Leadership were “giving circles”.  Technically speaking, giving circles are a form of philanthropy in which groups of individuals pool resources to donate to their communities… a concept that has been around since the proverbial philanthropic Stone Ages.

But, these circles have expanded over the last decade. They have grown not only in size and number, but also in scope. No longer,  are groups of donors and focused causes the domain of only the wealthy.  Today’s New York Times had an excellent article on small fundraisers, both their organization and objectives, and is available here.

A great resource for learning more about giving circles is available from the Forum of Regional Association of Grantmakers. A summary of their full report is available here.

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Here’s an excellent  new report out from United Way of Greater LA.

“which examines the possibility of L.A. heading in two different directions – one filled with promise, and the other filled with peril. The report paints a portrait of L.A. County with demographics and trends. It documents the growing divide between the haves and have-nots in L.A., in areas such as education, the economy, housing, homelessness, employment, civic life, community health and crime. “

Key Findings:

• 30 percent of adults 25 or older in L.A. County did not complete high school
• In California, 46 percent of poor families have a full time worker
• 84,000 people are homeless each night in L.A. County
• Birth outcomes in the County are better than the national rate

Reports like this — which communicate comparative outcomes — in a compelling, high-impact story are not only great examples of the kind of advocacy work that agencies do, but also provide invaluable statistics and data for grant writing, direct donor appeals and developing a case for agency need. Covering a broad spectrum of topics from education to health to housing and jobs should be read by every nonprofit in Los Angeles.

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This year, NPO Solutions attended the 10th anniversary forum of the Center on Philanthropy and Public Policy, a research center of the University of Southern California’s School of Policy, Planning and Development (and the alma mater of yours truly).

The two-day conference was chock-a-block full with some of the most influential minds in the field of philanthropy, including

James Ferris of the Center on Philanthropy and Public Policy

Sonal Shah, Deputy Assistant to the President and Director, White House Office of Social Innovation and Civic Participation

Bob Ross, President and CEO of the California Endowment

Fred Ali, President and CEO of the Weingart Foundation

James Canales, President and CEO of the James Irvine Foundation

Sean Stannard-Stockton, CEO of Tactical Philanthropy

To name just a few! Full list of participants is available here!

Over the next few weeks, we’ll be posting more about what we learned at the conference and how nonprofits can apply this knowledge to amplify their impact and raise more funds.  Stay tuned…

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Many out there have heard that several of the largest funders in Southern California have turned to a new investment strategy that targets outcomes not just targeting change for specific populations, but for entire geographies.

The most prominent among these — The California Endowment’s Building Healthy Communities investment — has as its approach a strategy to link policy and systems change with sustained community-level investments. Earleir this year, the Endowment announced its  focus of philanthropic assets on ten outcomes in sixteen communities across the state (for those of us in Los Angeles, these clusters include Boyle Heights and the Figueroa Corridor/Vermont, but the full list is available on the California Endowment’s website).

Now, after a long an intense strategic planning process — First 5 LA — has announced its plans to follow a similar strategic approach to philanthropy. Its stated focus is on reaching four goals of (1) healthy births, (2)reducing childhood overweight, (3) increasing children’s safety from abuse and neglect, and (4) assuring children are ready for school. But, it is not the focus of the outcomes that is as interesting to us as is the focus on specific geographic clusters — yet to be announced — that may have important implications for Los Angeles’ nonprofits in a range of health and human service industries.

Today, First 5 announced that it will hold a webinar this Thursday, December 3 to talk more about its stated strategic direction. And, while we’re unclear as to whether the specific communities in consideration will be announced, we’ll be sure to listen in and provide any information that arises from the conversation to our readers.

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