In record time, Governor Newsom signed Senate Bill 577 this afternoon, and in so doing, immediately reinstated California Financial Code Section 22050.5. Once again, CDEs and other special purpose entities may make a single commercial loan in California once in a twelve month period without obtaining a California Finance Lenders license, as was previously the case until December 31, 2021.
Introduced by Senator Monique Limón, California Senate Bill 577 (SB-577) will permanently reinstate Section 22050.5 of the California Financial Code, exempting persons engaging in the business of a finance lender from obtaining a lenders license from the California Department of Financial Protection and Innovation (DFPI) if no more than 1 commercial loan is made in a 12-month period. After several amendments to the bill earlier this year, SB-577 passed in the State Assembly on April 7, 2022 and the Senate unanimously concurred on April 21, 2022.
As of yesterday, April 27, 2022, SB-577 was delivered to the Governor's desk for signature. Governor Newsom has until May 9, 2022, 12 days from the date of delivery, to act on the bill. If signed by the Governor, SB-577, as urgency legislation, will go into effect immediately. On and after the effective date, CDEs and other special purpose entities may once again make a single commercial loan in California in a 12-month period without obtaining a California Finance Lenders license, as was the case prior to December 31, 2021. We remain optimistic that CFL 22050.5 will be reinstated shortly.
Until this year, many lenders relied on Section 22050.5 of the California Financing Law (CFL), which exempted persons engaging in the business of a finance lender from obtaining a lenders license from the California Department of Financial Protection and Innovation (DFPI) if they made no more than 1 commercial loan in a 12-month period. Unfortunately, this Section included a provision sunsetting the exemption as of January 1, 2022.
SB-577
California Senate Bill 577 (SB-577) was introduced in the State Legislature in February 2021 to remove the sunset provision from Section 22050.5 of the CFL, thereby extending the exemption indefinitely; however, SB-577 was not enacted and Section 22050.5 has since been repealed. SB-577 was amended by the Assembly on January 12, 2022 to permanently reinstate Section 22050.5, including an urgency clause, which would allow the bill to go into effect immediately upon enactment. We reached out to the Assembly Appropriations Committee, which informed us yesterday that although the committee does not have any hearings scheduled for the month of February, the Committee is working on expeditiously taking up SB-577.
Section 22050(e)
While the Legislature is considering SB-577, many lenders who relied on Section 22050.5 (including many of our clients who are community development entities (CDEs) in tax credit transactions) are apprehensive to make loans in California and are considering the applicability of other exemptions. For example, Section 22050(e) of the CFL exempts persons making 5 or fewer commercial loans in a 12-month period where the loans are incidental to the business of those relying on the exemption. Whether CDEs and other special purpose entities fall under this exemption is debatable depending on one’s interpretation of “incidental to the business.”
With regard to CDEs utilizing New Markets Tax Credits (NMTCs), an argument can be made that the primary purpose of these entities is to ensure the purchase of NMTCs by the investor, who injects critical equity into low-income projects so as to reduce economic inequalities in low-income communities – the opposite of typical goals of commercial lenders deriving significant interest income and/or fees from a loan, especially considering the interest earned on such loans by CDEs is de minimus. However, counsel to the DFPI has let Bergman and Allderdice know that they have yet to opine on an interpretation of Section 22050(e) and have no materials to share for guidance. They further informed us that while the public may seek an opinion, the DFPI does not anticipate providing an opinion before the Legislature makes a final decision on whether to restore Section 22050.5, as the question of whether a single loan is “incidental to the business” of lending is a variation of the broader question of how to address the loss of Section 22050.5.
So what do we do in the meantime?
Critically, counsel to the DFPI has also informed our firm that the DFPI “does not anticipate any action during this legislative session until a final decision is made by the Legislature on whether to restore the [Section 22050.5] exemption.” With this information, we are comfortable advising our clients who previously relied on Section 22050.5 that, provided the State’s usury laws are observed, they may safely elect to defer obtaining a California lenders license until the Legislature makes a final decision regarding reenacting the Section, which decision should be made by August 31, 2022.
SACRAMENTO – California Attorney General Rob Bonta today announced his sponsorship of AB 488, legislation that would provide critical oversight of charitable fundraising on internet platforms. The bill, authored by Assemblywoman Jacqui Irwin and sponsored by Attorney General Bonta, would authorize the California Department of Justice to exercise supervision over charitable fundraising occurring on internet platforms to protect donors and charities from deceptive or misleading solicitations.
“AB 488 would create the framework to oversee online charitable fundraising platforms by providing my office, which already oversees charitable organizations and fundraisers, the tools to match today’s virtual market,” said Attorney General Bonta. “Supervision of third-party online platforms is essential in order to make sure that donations go towards their intended purposes. This measure will give California’s generous donors and charities the peace of mind we all seek as we support one another amidst the COVID-19 pandemic.”
“Over the past year we have learned just how much our society relies on support from the non-profit sector. Whether it’s passing out food to hungry families or grants to the undocumented population, the pandemic shined a light on their tireless work. With online fundraising, there are more opportunities than ever to give to your favorite charity,” said Assemblymember Irwin. “However, it has also opened the possibility for fraudulent actors to operate. AB 488 will update California’s already strong charitable giving laws to provide clear rules for online fundraising.”
The California Department of Justice is responsible for regulatory supervision of charities, trustees, commercial fundraisers, and other legal entities that hold or solicit donations for charitable purposes. In recent years, charitable fundraising on internet platforms has changed the landscape of charitable giving. Internet companies have developed methods for individuals to donate to charities through websites and phone applications that serve as “charitable fundraising platforms.” California’s solicitation laws do not specifically reach these online platforms, resulting in instances of deceit and mistreatment of charitable donations that the Attorney General’s Office is not able to address through enforcement of existing charity oversight laws.
If signed into law, AB 488 would:
Create a level playing field for all charitable giving platforms, regardless of business model, by defining two new groups of entities, “charitable fundraising platforms” and “platform charities” that are subject to the Attorney General’s supervision;
Require covered entities to provide meaningful and transparent disclosures on their internet platforms, promptly distribute donations, and prohibit solicitations for charities not in good standing with the Attorney General’s Registry of Charitable Trusts;
Permit some instances of soliciting for a charity without prior consent if certain criteria that safeguard against harm to charities and the public are met; and
Authorize the Attorney General’s Office to implement regulations to require donor notification and reporting requirements, and to encourage transparency and accountability.
Tuesday, June 15, 2021
ANNOUNCEMENT MADE BY VICE PRESIDENT HARRIS ALONGSIDE TREASURY SECRETARY JANET YELLEN, U.S. SENATOR MARK WARNER, AND U.S. REPRESENTATIVE MAXINE WATERS
Washington – The U.S. Department of the Treasury today awarded $1.25 billion in COVID-19 relief funds to 863 community development financial institutions (CDFIs). The awards were announced today by Vice President Kamala Harris at the White House with Treasury Secretary Janet L. Yellen. The grants will be made through Treasury’s CDFI Rapid Response Program (CDFI RRP) and will provide necessary capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities.
“In serving places that the financial sector historically hasn’t served well, CDFIs lift our whole economy up. We know that for every dollar injected into a CDFI, it catalyzes eight more dollars in private-sector investment, meaning that today’s announcement might lead to an additional $10 billion in investment,” said Secretary Janet Yellen. “The President and the Vice President ran on a very ambitious agenda – ‘Build Back Better,’ unwinding systemic racism, creating an economy that works for everyone. I believe this is what that looks like in practice. By channeling more capital into CDFIs, we are translating those ideals into reality.”
The CDFI RRP grant funds will be used to support eligible activities such as financial products, financial services, development services, and certain operational activities, and to enable CDFIs to build capital reserves and loan-loss reserves. The CDFI Fund designed the program to disburse the funds rapidly in light of the nationwide economic impacts of the COVID-19 pandemic. The CDFI RRP was authorized by the Consolidated Appropriations Act, 2021 (Pub. L. 116-260).
“These awards provide CDFIs with an unprecedented level of flexible capital to help distressed and underserved communities across the country take meaningful steps towards recovering from the debilitating economic impacts of the COVID-19 pandemic,” said CDFI Fund Director Jodie Harris. “CDFI RRP awards will enable CDFIs to help businesses keep their doors open, help families make ends meet, and help maintain important community facilities during this difficult time.”
CDFI RRP award recipients are headquartered in 48 states, the District of Columbia, Guam, and Puerto Rico. The award recipients include 58 organizations that committed to direct their awards to investments in Native American, Native Alaskan, and Native Hawaiian communities; they received a total of $54.6 million in awards.
In addition, 28 organizations that primarily serve Puerto Rico received $47.3 million in awards, and 90 minority depository institutions received a total of $133.9 million in awards.
CDFI RRP awards will reach a wide variety of low-income communities across the United States impacted by the COVID-19 pandemic. The awardees include CDFIs that serve rural, major urban, and minor urban markets. Primary geographic markets served by CDFI RRP awardees include:
Major urban areas: 339 organizations receiving $478.7 million in awards
Small urban areas: 277 organizations receiving $414.2 million in awards
Rural: 245 organizations receiving $353 million in awards
A CDFI can be a bank, credit union, loan fund, or venture capital fund. The CDFI RRP award recipients include:
Loan funds: 463 organizations receiving $571.3 million in awards
Credit unions: 244 organizations receiving $401.8 million in awards
Banking entities: 149 organizations receiving $267.1 million in awards
Venture capital funds: seven organizations receiving $9.4 million in awards
CDFI RRP Award Resources
About the CDFI Fund
Since its creation in 1994, the CDFI Fund has awarded more than $3.9 billion to CDFIs, community development organizations, and financial institutions through the Bank Enterprise Award Program, the Capital Magnet Fund, the Community Development Financial Institutions Program, the Financial Education and Counseling Pilot Program, and the Native American CDFI Assistance Program. In addition, the CDFI Fund has allocated $61 billion in tax credit allocation authority to Community Development Entities through the New Markets Tax Credit Program, and closed guaranteed bonds for over $1.7 billion through the CDFI Bond Guarantee Program.
For more information about the CDFI Fund and its programs, please visit www.cdfifund.gov.
This article was originally published on The Nonprofit Times.
Mark Hrywna | March 9, 2021
Federal legislation that would increase the cap on the temporary Universal Charitable Deduction (UCD) and extend it through 2022, allowing non-itemizing taxpayers to get a deduction for their charitable giving, was reintroduced today into both house of the U.S. Congress.
The Universal Giving Pandemic Response and Recovery Act would increase the cap on the UCD from $300 for individuals and $600 for married couples, to one-third of the standard deduction, or $4,000 for individuals and $8,000 for joint filers. The bill also would eliminate the exclusion of gifts to donor-advised funds (DAF) from the current UCD.
The bill was introduced by eight senators — four Republicans and four Democrats — many of whom sponsored the bill in the previous session of Congress: James Lankford (R-Okla.), Chris Coons (D-Del.), Tim Scott (R-S.C.), Amy Klobuchar (D-Minn.), Mike Lee (R-Utah) and Jean Shaheen (D-N.H.). New in this 117th Congressional session are Susan Collins (R-Maine) and Catherine Cortez Masto (D-Nev.), another member of the key Senate Finance Committee along with Lankford and Scott. In the House of Representatives, the measure was introduced by Rep. Chris Pappas (D-N.H.) and Rep. Jackie Walorski (R-Ind.).
“Incentivizing all taxpayers to give to charity – regardless of their income or whether they itemize – ensures that nonprofits doing critical work in our communities will receive the resources necessary to help as many Americans as possible,” Brian Flahaven, chair of the Charitable Giving Coalition, said via a statement. “Our nation’s charities continue to fight to keep their doors open, and while the government relief over the past 12 months has been most welcome, we recognize that there is still more that can be done,” he said.
Small-dollar donations have helped keep the nonprofit sector during the COVID-19 pandemic. According to the Fundraising Effectiveness Project (FEP), donors who give $250 or less rose by 19% in the second quarter of 2020 over the same period in 2019, after a sluggish start to the year even before the pandemic.
This update was originally published on the National Council of Nonprofits website on March 8, 2021.
Now is the Best Time to Apply for a PPP Loan
Act by Tuesday, March 9
Through March 9, the Small Business Administration and Paycheck Protection Program lenders are processing loan applications ONLY from --
Nonprofits with fewer than 20 employees;
For-profit businesses with fewer than 20 employees, including “those that have been left behind in previous relief efforts,” like businesses owned by sole proprietors, independent contractors, and self-employed individuals – many of which are owned by women and people of color, non-citizen lawful residents, and individuals with delinquent federal student loans.
This exclusive small-employer PPP processing window is designed to provide more equitable relief to ensure that lenders give smaller employers the attention they need to work their way through the application process. If you think your nonprofit may be eligible for an initial PPP loan or a second draw loan that Congress authorized at the end of 2020, immediately contact a lender. Learn more at SBA.gov. You can still apply after March 9.
Senate Passes $1.9 Trillion COVID Relief Legislation
The Senate passed a revised version of H.R. 1319, the American Rescue Plan Act, by a party-line vote of 50 to 49. The final vote came on Saturday after a 27-hour straight marathon series of votes on amendments and motions. The Senate rejected most of the 35 amendments, including one by Senator Sanders (I-VT) to raise the federal minimum wage to $15/hour, and another by Senator Paul (R-KY) to strip language in the bill (Section 5001) that expands nonprofit access to Paycheck Protection Program loans. The Senate-passed bill now goes back to the House for quick passage, which is expected on Tuesday. Democratic leaders hope to have the bill on the President’s desk before unemployment benefits for 18 million individuals expire on March 14.
Big Picture Details in the American Rescue Plan Act
The Senate-passed version of the American Rescue Plan Act would, among other things, provide additional funding for COVID-19 vaccines, treatment, and testing; approve $1,400 stimulus checks for most taxpayers; increase the child tax credit and earned income tax credit; and extend the tax credit for nonprofits and other employers that provide paid sick leave and paid family and medical leave through September 30, 2021 (the credits are currently set to expire on March 31). The Senate measure also retains House language providing more funding for the Paycheck Protection Program and the Shuttered Venue Operator Grant program, childcare providers, the Corporation for National and Community Service, arts and humanities organizations, food assistance, housing and homelessness prevention, and assistance for nonprofits providing services to survivors of domestic violence and sexual assault.
As for changes the Senate made to the House-passed version, the increase in the federal minimum wage was removed because it violated the Senate budget rules that enabled the Democratic majority to pass the bill by a simple majority. Another major change is that the Senate bill extends unemployment compensation benefits (including relief for reimbursing employers) through Sept. 6, maintains supplemental payments at $300/week (down from $400/week in the House-passed bill), and exempts the first $10,200 in unemployment benefits from income taxes for individuals with total earnings of less than $150,000 per year.
Treatment of Nonprofit Priorities
Below is an updated breakdown of the progress on some of the policy priorities identified in the nonprofit coalition letter to congressional leaders:
Paycheck Protection Program (PPP) Loans. The bill would add $7.25 billion to the program and allow some larger nonprofits to apply for PPP loans for the first time by expanding eligibility to nonprofits with more than 500 employees that operate at multiple locations as long as no more than 500 employees work at any one location. In a win for performing arts nonprofits, the bill would allow them to apply for funds under both the PPP and Shuttered Venue Operators Grants program, although the combined amounts would be limited. Due to Senate rules, Senators were required remove a repeal of a rule that makes some nonprofits ineligible for PPP loans if they are affiliates of national organizations, although the impact on nonprofits is seen as minimal. The bill makes no changes to the PPP Second Draw requirement that gross receipts decline by 25%; nonprofits have sought the repeal of this restriction. The PPP application deadline is still set at March 31; nonprofit organizations, business groups, and accounting professionals continue to press for extending the sunset for several more months to give employers more time to apply.
Federal Unemployment Coverage. The COVID relief package would extend through September 6, 2021 various federal benefits for unemployed workers, including a provision that would prospectively increase the federal coverage of the unemployment costs of reimbursing nonprofits from 50% to 75%. The bill also provides continued coverage for self-employed workers and staff of religious and very small nonprofits. Currently, all of these benefits are scheduled to expire on March 14.
Aid to State, Local, Tribal, and Territorial Governments. The Senate bill would provide $350 billion in aid, but impose new restrictions on how governments may spend the funds. Permissible uses include providing “assistance to households, small businesses, and nonprofits, or aid to impacted industries,” funding government services that were cut due to declines in revenue brought on by the pandemic, and making “necessary investments” in water, sewer, or broadband infrastructure.
Charitable Giving Incentives. Neither the House nor Senate bill includes expansion of charitable deductions, but lawmakers in the House and Senate are planning to introduce legislation this week to increase giving incentives for taxpayers using the standard deduction to financially support the work of charitable organizations in their communities.
This article was originally published on the Good Morning America website. The original post can be accessed here.
As a teenager, Ceyenne Doroshow, the founder and now-executive director of Gays and Lesbians Living in a Transgender Society (G.L.I.T.S), said she was rejected by her family because she identified as a woman.
Things got so tough that, at one point, she said she thought about ending her own life to stop "the discrimination and pain."
Eventually, Doroshow said her family's rejection of her gender identity left her with no choice but to run away from home and live a life of homelessness.
"I found more peace in the streets than I could ever find at home," she said. "As a teenager, where would that leave me? It would leave me open to all the elements of the world, people that were not good for me."
Doroshow is not alone in her struggles.
One in five transgender people have experienced homelessness during their lives, according to the National Center for Transgender Equality, and more than one in 10 transgender people have been evicted from their homes because of their gender identity.
A 2018 Human Rights Campaign report revealed that 41% of Black transgender respondents reported experiencing homelessness at some point in their lives, a rate five times higher than that of the general U.S. population.
Multiple factors contribute to the elevated rates of homelessness in the LGBTQ community, including family rejection, violence and ongoing discrimination.
Black women advocates for the transgender community, like Doroshow and Kayla Gore, have set forth on a mission to fight housing insecurity by providing safe homes for LGBTQ youth.
Building tiny homes
Gore, who identifies as a Black transgender woman, is the co-founder of My Sistah's House, a grassroots organization dedicated to providing emergency housing and resources to transgender people in need.
Gore, who partnered with her friend Illyahnna C. Wattshall to start the organization in 2016, said that seeing many transgender adults face discrimination when seeking help from homeless shelters led her to create a new housing option.
"My Sistah's House started from us letting people stay in our homes because we knew that housing wasn't right," said Gore. "I feel personally connected to this issue because I'm a person who's experienced homelessness."
"I'm a person who has tried to access shelters during my time of homelessness or helplessness and they have not been safe places for me," she added. "Here in Memphis, there are no shelters that are specifically for Black trans women, other than My Sistah's House."
The grassroots organization began a project in January to build 20 tiny homes in Memphis, Tennessee, for transgender people. The project's goal is to provide transitional housing for residents and help them eventually own their own homes.
Overwhelmed with a high number of applicants amid the COVID-19 pandemic, Gore said she wanted to provide a more permanent solution to the LGBTQ housing crisis rather than just "putting a Band-Aid on it."
"Housing is a human right," said Gore. The Tiny Homes project launched in January aims to build 20 tiny homes for LGBTQ people, particularly people of color.
"Once you provide housing for someone and a space for them to dwell and thrive, it eradicates a lot of things in their lives," said Gore. "Housing is a human right."
One tiny home has already been built and two more are under construction thanks to the money collected through the organization's GoFundMe campaign. As of now, it has raised more than $300,000.
"Being able to provide [homes] for a community of folks who've never had houses is a phenomenal way to start a transition out of homelessness," said Gore, who has already notified three people that they'll be receiving the homes.
"It's an unbelievable feeling, a good feeling," she said when describing how excited and relieved the recipients were when they received the news. "Three down, 17 more to go!"
'I am creating this with a sense of excellence'
Doroshow, motivated by her passion to help and uplift others, created G.L.I.T.S. house in Queens, New York, which is the first Black transgender-owned housing community in New York City.
After working for a series of nonprofits and agencies, Doroshow said she noticed gaps in the systems that excluded the LGBTQ community, especially Black transgender women.
It was then that she founded G.L.I.T.S. to bridge the housing gap and provide resources for the LGBTQ community.
"I can create within my own realm, I can be governed by my choices and my dream which is to take care of people," said Doroshow when describing why she created the organization. "I want to make sure people can grow, and they can be educated, and they can get all the love and power."
Ceyenne Doroshow is the founder and executive director of Gays and Lesbians Living in a Transgender Society (G.L.I.T.S), the first Black trans-owned housing community in New York City.
Doroshow noted the importance of creating the organization to not only provide support for the residents, but to also show the world positive images of the LGBTQ community to combat prejudice mindsets and discriminatory behavior.
"By building these relationships, we're able to change the world," said Doroshow.
The building has 12 units and three new tenants are moving in. All prospective residents are required to fill out an application to gain admission into G.L.I.T.S. The building also houses a sub-unit utilized for social events and educational courses where residents can receive certifications.
"I am creating this with a sense of excellence," the founder said. "When [residents] leave this place, they're able to sustain and create themselves in their own light, and that's what I want."
One of the new tenants, a singer and songwriter who goes by his stage name, Nadiv, moved into the building a couple of weeks ago after reaching out to Doroshow.
Nadiv, a Virginia native, had previously had a difficult time finding a safe place to live.
"A lot of the programs out there geared toward us aren't really effective," he told "GMA." "It puts you in a situation where you're surrounded by people who are on drugs or in dangerous spaces."
"It's like they don't really put in effort to get you in a safe space, they just put you in a space," he added.
Nadiv moved to New York to continue his music career and is thankful Doroshow was able to provide him with a home.
"She's everything rolled into one," said Nadiv as Doroshow held back tears. "She's mommy, auntie, homegirl ... she's inspiration at its best."
"I look up to her and she means the world to me," he added.
Doroshow said she and her staff have a goal of helping residents achieve success and follow their dreams. Some, after living in the home, have gone on to pursue careers in law, medicine and politics, among other fields.
"Success means education, sustainability and growth," she said. "My legacy is to build a higher ground for us and to see all my young ones live their best lives."
If you are struggling with thoughts of suicide or worried about a friend or loved one, help is available. Call the National Suicide Prevention Lifeline at 1-800-273-8255 [TALK] for free, confidential emotional support 24 hours a day, 7 days a week. Even if it feels like it -- you are not alone.
Hello, 2021!
Essential Updates:
West Coast, East Coast, and Federal
It’s time for our annual tax-exempt west coast, east coast and federal updates. Amid COVID-19, we want to ensure you are up to speed on essential changes in tax-exempt law.
California
Attorney General – 2021 Initial & Annual Filing Updates
Effective January 1, 2021, the Attorney General’s office has introduced the following changes for California charities:
The Form CT-TR-1is a new form for charitable organizations whose total revenue is under $50,000 each year. The form is to be filed alongside the RRF-1, Annual Registration Renewal Fee Report, and takes the place of the IRS Form 990-PF. Note this form is not applicable to private foundations, which will need to continue filing the IRS Form 990-PF.
The Form CT-1, Initial Registration Form, now requires organizations to provide all DBAS used by the charity.
The Form RRF-1has been revised and now requires organizations to provide additional donation disclosure information.
Franchise Tax Board - 2021 Form 3500 Updates
The Franchise Tax Board introduced the following changes also in effect as of January 1, 2021:
The Form 3500 Exemption Application will no longer require filing fees. The Franchise Tax Board will also be releasing a revised version of Form 3500 this year, with the 2020 version still available through online request.
The Form 199Exempt Organization Annual Information Return will also no longer require filing fees.
Secretary of State - 2021 Expedited Services and Electronic Filing Updates
As a result of the ongoing pandemic, the California Secretary of State has both suspended and expanded various services offered through the agency:
Expedited and preclearance service requests are suspended until further notice. Stay up to date with their latest customer alerts available here.
For more accessible filing, the agency has expanded their online services; in fact, the Secretary of State has prioritized online submission over non-electronic filings, including the filing of Articles of Incorporation. Organizations should continue using wet signatures for all documents submitted to the agency, including documents that are e-filed.
2021 Second-Round California COVID Relief
With small businesses still combatting losses associated COVID-19, California has provided them with the opportunity to regain financial strength:
Though its first round of applications have closed, the California Small Business COVID-19 Relief Grant Program will begin accepting applications for its second round from February 2-February 8. The grant program, administered by Lendistry, will provide eligible applicants with grants from $5,000 to $25,000 in an attempt to strengthen small businesses and nonprofits impacted by the pandemic.
New York
Department of State - 2021 Forms & Filings Updates
For our east coast clients, the following changes occurred at the top of the year in New York State:
The CHAR 500, the annual filing form for charitable organizations, submitted with the New York Charities Bureau, is now also to be submitted to the New York Department of State. Submission instructions have yet to be released by the Department of State, but charities should continue submitting their documents online with the Charities Bureau.
Organizations who are registered as 501(c)(3) are now required to provide additional donation disclosure information. This change is specific to 501(c)(3) organizations that make in-kind donations reaching or exceeding $10,000 to 501(c)(4) organizations, whose lobbying efforts exceed $15,000 in a calendar year.
Federal
Internal Revenue Service - 2021 Electronic Filing Updates
New this year from the federal level, the Internal Revenue Service released the revised form:
Form 1024-A, the application for Section 501(c)(4) tax-exempt status, may now be submitted online. Though mail-in submissions are still being accepted, the form will be transitioning to online submission only come April 5, 2021. Additional year-round updates on federal tax-exempt organizations are available on the IRS website.
COVID Relief - 2021 Paycheck Protection
Program 2.0
Relief has been reintroduced for small businesses nationwide with the second federal protection program:
Applications for the Paycheck Protection Program (PPP) 2.0 are now open. Funded through the Economic Aid Act, the $248 billion package has expanded eligibility to include additional small businesses, such as nonprofit housing cooperatives.
Program priority will be given to organizations who did not receive either the 2020 PPP loan or whose initial PPP was not forgiven. Applicants applying for a Second Draw PPP are eligible only if they (i) have utilized the full amount of their First Draw PPP; (ii) have no more than 300 employees; and (iii) prove at least a 25% reduction in gross receipts from 2019 and 2020.
Each loan will be calculated through a methodology developed by the Small Business Administration and Department of the Treasury. For first Draw applicants, the maximum loan amount is capped at $10 million, and at $2 million for Second Draw applicants.
Organizations interested in the program need to apply before the March 31, 2021 deadline.
2021 Tax Credit Updates
New Market Tax Credit (NMTC) - Extension
The New Market Tax Credit (NMTC) program, aimed at community and economic development, has been extended as follows:
The NMTC program received a five-year extension. Ending in 2025 and totaling $25 billion, the program this round will provide $5 billion annually to support the growth and expansion of housing, social services and healthcare facilities in low-income neighborhoods throughout the United States.
Low-Income Housing Tax Credit (LIHTC) – California State Budget
Action towards assisting unhoused and low-income communities will continue in California under the LIHTC program as follows:
In his proposed state budget for the 2021-2022 fiscal year, Governor Gavin Newsom included allocating an additional $500 million to Low-Income Housing Tax Credit (LIHTC).
The proposed budget also includes an additional $1.75 billion to continue supporting the state’s unhoused neighbors and to establish short-term mental health centers amidst the pandemic.
This article was originally published on the California Office of the Governor’s website on November 30, 2020. The link can be accessed here.
Billions in immediate, temporary tax relief will support businesses impacted by COVID-19, including an automatic three-month extension for taxpayers filing less than $1 million in sales tax and interest-free payment agreements to larger companies with up to $5 million in sales tax and expanded interest-free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions.
In partnership with the Legislature, California will provide $500 million in new COVID-19 Relief Grant funding for small businesses.
Additional $12.5 million added to the California Rebuilding Fund launched last week
SACRAMENTO – As the federal government fails to provide additional financial stimulus support to main street businesses, Governor Gavin Newsom today announced that California will provide temporary tax relief for eligible businesses impacted by COVID-19 restrictions. The temporary tax relief entails an automatic three-month income tax extension for taxpayers filing less than $1 million in sales tax, extends the availability of existing interest and penalty-free payment agreements to companies with up to $5 million in taxable sales and provides expanded interest free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions. The total tax relief, if fully utilized, is estimated to have billions in impact. These efforts are informed by recommendations made by the Governor’s Task Force on Business and Jobs Recovery.
“California’s small businesses embody the best of the California Dream and we can’t let this pandemic take that away,” said Governor Newsom. “We have to lead with health to reopen our economy safely and sustainably while doing all we can to keep our small businesses afloat. With this financial assistance and tax relief, California is stepping up where the federal government isn’t. By providing potentially billions in immediate relief and support, our small businesses can weather the next month as we continue partnering with the Legislature to secure additional funding and investments in small businesses in the new year.”
Small businesses are drivers of economic growth – creating two-thirds of new jobs and employing nearly half of all private sector employees. California is home to 4.1 million small businesses, representing 99.8 percent of all businesses in the state and employing 7.2 million workers in California, or 48.5 percent of the state’s total workforce.
The COVID-19 pandemic has presented a significant challenge to small businesses, employers and employees. An August Small Business Majority survey data found that 44% of small businesses are at risk of shutting down. Data released through the Census Current Population Survey found that minority-owned businesses are disproportionately impacted: the number of active businesses owned by African-Americans dropped by 41%, Latinx by 32%, Asians by 25%, and immigrants by 36%.
“California’s small businesses continue to struggle as a result of COVID-19, and this latest round of action at the state level will help bridge the financial gaps that are vexing our state’s mom-and-pop business owners and nonprofits while we wait for congressional action, and as we prepare for additional legislative action at the start of the year,” said Senate President pro Tempore Toni G. Atkins (D-San Diego). “From widening access to grants, low-interest loans, and tax deferrals, to modifying fees incurred by restaurants and bars, these are critical supports for the small businesses and services that keep our communities going. Now, we need our federal partners to do their part and pass a federal stimulus so these businesses and nonprofits can survive 2020 and the year to come.”
“While we wait for Congress and the White House to approve an economic relief package that responds to the current surge, California has a chance to help nonprofits, small businesses, and communities now,” said Assembly Speaker Anthony Rendon (D-Lakewood). “I thank the Governor and the Senate for their partnership.”
Today’s announcements build on the state’s ongoing business support throughout the pandemic, including the Main Street Hiring Tax Credit, which authorizes $100 million in hiring tax credit for qualified small businesses. The credit is equal to $1,000 per qualified employee, up to $100,000 for each small business employer.The application opens tomorrow, December 1. A full list of existing state support for businesses can be found here.
Building on the state’s ongoing support throughout the pandemic, which can be found here, the Governor announced the following immediate support and relief:
Tax Relief for Businesses Impacted by COVID-19
In April 2020, the Governor, through Executive Order, allowed taxpayers to apply for penalty and interest relief for 90 days for any taxpayer reporting less than $1 million in sales on their tax return. Through November 22nd, some 9,287 plans with almost $149 million in tax relief have taken advantage of this program.
The Governor will direct the California Department of Tax and Fee Administration to do the following:
Provide an automatic three-month extension for taxpayers filing less than $1 million in sales tax on the return and extend the availability existing interest and penalty free payment agreements to companies (with up to $5 million in taxable sales)
Broaden opportunities for more businesses to enter into interest-free payment arrangements.
Expand interest-free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions.
$500 Million for New COVID Relief Grant for Small Business
The Governor announced the creation of a $500 million COVID Relief Grant administered by the California Office of the Small Business Advocate (CalOSBA) at the Governor’s Office of Business and Economic Development for small businesses that have been impacted by COVID and the health and safety restrictions. Funds would be awarded to selected intermediaries with established networks of Community Development Financial Institutions to distribute relief through grants of up to $25,000 to underserved micro and small businesses throughout the state by early 2021. Non-profits would also be eligible for these grants. CalOSBA is establishing the program and will make it available to small businesses as soon as possible – for updates on availability visit here.
Increase Funding for the California Rebuilding Fund by $12.5 million.
Last week, the Governor announced the opening of the California Rebuilding Fund which makes available $25 million to help impacted small businesses rebuild from the economic crisis and keep local economies strong. This program is built to be a resource in the market for the next year as businesses pivot and recover.
An increase of $12.5 million would allow the Fund to be fully capitalized. The additional funding will help the 3rd party administrator of the fund raise $125 million to make more low-interest loans to small businesses with less access to loans from traditional banking institutions.
This article was originally published on the Nonprofit Quarterly’s website on November 25, 2020. The link can be accessed here.
Author: Daniel Lee November 25, 2020
We are at a moment of profound national reckoning. With more than 200,000 Americans now dead from COVID-19, the virus’s disproportionate impact on communities of color, and the continued murder of Black people by police and vigilantes (too often without legal consequence or prosecution), these interrelated national crises have laid bare the deep injustices that continue to define this country. We are seeing just how urgent the need is for massive structural change, while experiencing firsthand the limitations of relying on government to bring that about.
In these remarkable times, corporate foundations, like all funders, cannot remain on the sidelines. The new reality is that business and social issues are intertwined, and companies have an inescapable role to play in our democracy—an obligation to engage and lead, not follow. But even if corporate foundations and other funders feel an urgent desire to take action on social justice issues, they may not know where to start. Many are looking across their projects and portfolios, wondering how to pivot to meet this moment. For the Levi Strauss Foundation, the answer has been to intensify our investment in communities of color and build their power to organize by supporting local grassroots leaders who are tackling longstanding inequities and fighting for transformative change from the ground up.
Supporting grassroots leaders is uncharted territory for most grantmakers. While recent years have seen a surge in conversations in philanthropy about how to build and sustain social movements, the funding remains strikingly anemic—and only a tiny sliver comes from corporate foundations. Between 2003 and 2016, the median corporate foundation directed just 3.2 percent of its grantmaking to social justice.1 Most of that funding was funneled to nationally branded nonprofits with established profiles—not perpetually underfunded grassroots leaders operating outside most foundations’ radar. As a corporate foundation dedicated to social justice, we’re determined to change that. And we think our recent work offers a roadmap for other corporate foundations and funders looking for new ways to catalyze social change.
From Grasstops to Grassroots
In 2010, our foundation launched the Pioneers in Justice initiative, a five-year program to support a cohort of emerging social justice leaders as they assumed the leadership helm of local legacy nonprofits. These original Pioneers were leaders of established “grasstops” civil rights organizations in the San Francisco Bay Area, many representing affiliates of national brands such as the ACLU. The program was so successful it became our hometown strategy. The lessons learned and insights gained were captured in a reflection I wrote for the Stanford Social Innovation Review in 2014.
In 2015, hoping to build on that inaugural Pioneers initiative, we selected a very different set of leaders. Eager to move our work even further into the heart of marginalized communities facing deep injustice, we chose seven community-based leaders of color working day in and day out to tackle inequality in the San Francisco Bay Area and beyond. The leaders we chose—Kris Hayashi of the Transgender Law Center, Pastor Michael McBride of Faith in Action’s Live Free Campaign, Vanessa Moses of Causa Justa :: Just Cause, Zach Norris of the Ella Baker Center for Human Rights, Aparna Shah of Power California, Terry Valen of the Filipino Community Center, and Miya Yoshitani of the Asian Pacific Environmental Network—were seasoned community organizers and grassroots leaders in the truest sense. They are each working deep inside their communities, building bases, and growing movements in order to drive systemic change in the areas of gender equality, climate change, criminal justice, LGBT rights, racial equity, immigrant rights, and gun violence.
But as we quickly learned, working with grassroots leaders is dramatically different from working with leaders of legacy nonprofit institutions. Indeed, it requires uncomfortable honesty, radical empathy, and a kind of flexibility not often practiced in philanthropy. But for us, this work was also transformative: partnering with this new group of Pioneers had an impact not only on the Pioneers initiative itself but also on our foundation’s operating model and on our parent company. For corporate foundations and other funders thinking about entering similar work, a few of these lessons are worth highlighting.
Five Key Lessons
Take a risk. Programs like Pioneers 2020 aren’t about making safe bets and tracking short-term returns on investment. They’re longer-term plays that start with funders envisioning the world they want to create, then considering what it will take to move the community, the nation, and ultimately the world to that place. This approach will not be popular with everyone; it will inevitably involve some risks. Corporations and their foundations are particularly prone to view the terrain of justice and social movements as risky, but these risks diminish when the corporate sector widens the aperture of “stakeholders” to include not only shareholders and customers but also local community—particularly the most vulnerable people within it. At the start of Pioneers 2020, our board had the usual questions and concerns about measurable five-year outcomes. But they also agreed that we needed to be thinking about our impact on society with every decision we make. As our board president Jennifer Haas said, “These leaders were doing important work that falls well within our mission, and they needed support. So, I didn’t see it as risky. I saw it as the right thing to do.”
Start with trust. This is especially critical when those involved hail from groups or sectors that don’t typically engage with one another. But we learned this lesson only in hindsight. As grassroots leaders working on social justice issues like structural racism and income inequality, the new Pioneers came with a healthy critique of capitalism, philanthropy, and anything that seemed “top down.” Just as we were learning to work with grassroots leaders, they were learning to work with us—and early on, there were many moments when our frames and perspectives clashed. Several months into the program, we began actively creating opportunities to build relationship and community between the Pioneers and our foundation, and among the Pioneers themselves. Only after creating space for everyone to listen and understand one another’s perspectives did trust kick in. This called for a willingness on the part of both the grantees and the foundation team to be open and vulnerable. It’s obvious only in retrospect—you need time and trust to even begin to understand each other. Without these, any effort to bridge worlds like this can’t find its footing.
Hold program design lightly. Pioneers 2020 began as a replication project, following a buoyant first phase. But we learned quickly that predesigned roadmaps and theories of change don’t apply to this deep, emergent, and sometimes messy work. To the Pioneers, and increasingly to us, trying to replicate our original model felt overly prescribed and not matched to the moment. So, we shifted tactics. A year into Pioneers 2020, we set aside our original design and started asking the Pioneers: What do you need in order to advance social change? How can we best help you? In supporting leaders where they were, rather than following a blueprint, our strategy shifted, as did the focus of our grants. So many funders come at their grantmaking with a rigid theory of change; they control the program and set the frame. But these approaches are counterproductive to generating social justice wins—and funders often don’t know what is needed in grassroots communities. Going back to the drawing board with our theory of change one year into the program meant embracing emergence, uncertainty as well as a new level of vulnerability. By shifting from fitting leaders into a predesigned program to asking these leaders what they needed and then investing responsively, we changed this formula.
Leverage foundation networks. Working with grassroots leaders requires more than administering grants and running a program. Mentorship is not enough; sponsorship is what’s needed to elevate traditionally underrepresented groups into spaces of visibility and leadership. Throughout Pioneers 2020, foundation leaders and staff actively worked to unlock new resources and networking opportunities for the Pioneers, helping show other funders and influencers just how critical, timely and effective these seven leaders and their movements were. Importantly, so did our board members. Grassroots leaders and foundation boards don’t typically interact, but, as we learned, it is vital to bring these worlds together. One of the unusual features of Pioneers 2020 was also among its most valuable: creating opportunities for the Pioneers and our board members to form authentic relationships. Welcoming social justice leaders regularly into the board space—and introducing them more widely around the foundation and company—created a new funder/grantee dynamic built on common values and commitments. The bonds and connections that formed between Pioneers and board members were among the program’s most important outcomes, enabling a level of honesty, insight, and mutual empathy that would not have otherwise transpired.
Be open to transformation. Partnering with grassroots leaders is not top-down but side-by-side work, with the advice, influence, and learning flowing both ways. These grassroots leaders had a frontline perspective our leaders and staff were eager to learn from, and we welcomed that wisdom. One of biggest surprises of Pioneers 2020 was how deeply the Pioneers influenced not just the program but our foundation and our company. Pioneer Mike McBride’s experience and insights helped inform Levi Strauss & Co.’s groundbreaking anti-gun violence platform and bring communities of color to the center of that discussion; Pioneer Kris Hayashi and his staff helped inspire and shape our company’s first trans-inclusion policy. In one way or another, all the Pioneers inspired us to take on the issues of our time with greater vigor and authenticity.
Conclusion: Funders Must Step Up
At the outset of Pioneers 2020, these incredible grassroots leaders were doing outstanding local work and were poised to break through onto larger stages. Today, they are working at the forefront of their issues and movements, gaining broader visibility at the state and national levels, and rapidly deepening their progressive impact. In turn, they have inspired us to do more, and to change how and who we fund, and to take new moral stands. They have changed the way we bring our voice, our influence, and our values to bear on fueling social justice.
But this is only the beginning. We need more corporate foundations funding leaders at the grassroots level to ensure that these movements succeed. We need all funders to seek out grassroots leaders and organizations that are not on their radar and listen to what they need. It means redefining what “corporate responsibility” might look like. I fiercely believe that every institution in society must align toward social justice—no matter how uncomfortable at the outset. In this “movement moment,” it is time for all of us, as funders and human beings, to ask ourselves hard questions about who we are willing to stick our necks out for, who we are willing to fund, and who we are willing to be changed by. What we stand for matters—but who we stand alongside matters even more.
Note
Based on new National Center for Responsive Philanthropy analysis of Candid data on corporate foundation giving from 2003 to 2016, conducted for the Levi Strauss Foundation.
Daniel Lee is the executive director of the Levi Strauss Foundation. To learn more about lessons and outcomes of this project, visit Pioneers 2020: Funding the Frontlines of Social Justice.
Since the official designation by the United Nations in 1975, March 8th has been considered International Women’s Day. The annual celebration can be traced back to February 1908 in New York City, when garment workers went on strike and marched through the city protesting unjust working conditions and unequal pay. The day was quickly recognized in Europe in the early 1910s, and German campaigner Clara Zetkin transitioned the day into an international movement advocating for universal suffrage. In Russia, International Women’s Day was established in 1913, and related protests in March 1917 directly led to women gaining the right to vote that year—one year earlier than Britain and three years earlier than the United States.
1. Radio Station Pleasantly Surprised by Listeners’ Estate Plans
KEXP, a public radio station in Seattle, is reeling from planned giving donations as many of its listeners move to include the radio station in their estate plans. The majority of KEXP’s supporters fall in the mid-30s to mid-50s age range so it comes as a surprise to the station that so many listeners are planning their estate plans with KEXP in mind. KEXP has retained supporters spanning decades of annual giving since it began as a college station in the early 1970s.
Last year a loyal listener left a $10 million bequest to KEXP, making it the largest gift the station has ever received. Known as Suzanne, this donor previously made a gift to the capital campaign for a new KEXP facility in 2015. Following this gift, she was invited to lunch with KEXP’s executive director, where they discussed the campaign for the new facility and Suzanne’s relationship with the radio station at that time. Fast forward to last year when Suzanne made the unexpected donation of $10 million to KEXP, making it among the largest donations ever given to a single public radio station. Following this donation, KEXP received a $20,000 bequest from a first-time donor. This gift prompted the creation of the formal planned giving operation now officially known as the Reverb Society.
The new planned giving club is promoted just a few times a year and with minimal marketing. A KEXP fundraiser says the fundraising team sees the planned giving club as a slower and drawn-out process that will develop over time. Fortunately, Suzanne’s unprecedented gift activated other donors who subsequently informed KEXP of their planned bequest commitments to the station in their estate plans. While KEXP continues to receive unsolicited calls from lawyers and estate planners, the radio station can continue to revel in the influx of bequest donors and the progression of their newly launched giving club, the Reverb Society.
2. Arkansas Bill Seeks to Provide Transparency of Public-Private Partnerships
Introduced by Arkansas Senator Kim Hammer, Bill 231 would permit state oversight of business deals made by nonprofits that work with public entities, such as support foundations for universities and other public institutions. The bill would grant the public transparency of copies of documents including contracts and loan agreements made by such foundations. This legislation is endorsed by the Arkansas Freedom of Information Task Force, composed of attorneys, public officials, and journalists. An attorney from the task force insists the bill presents an appropriate balance of the public’s right to know about the work of private foundations, and that it makes it clear that it applies to private entities. Another task force member cites the documents in question are already subject to the state’s Freedom of Information Act (FOIA).
However, this bill comes as The Arkansas Democrat-Gazette was just denied documents they had requested from university support foundations. Although the IRS Form 990 is publicly accessible, it presents expenses with few details. When the Arkansas Democrat-Gazette was unsuccessful in obtaining documents from the Razorback Foundation (a private foundation assisting University of Arkansas in the search for a new head football coach), the newspaper probed further into the separation between the school and support foundation. In addition to finding 22,000 emails between foundation staff and the university, the newspaper found the University of Arkansas promoted the foundation membership program and also let the foundation renege on millions of dollars of capital campaign commitments. A system spokesperson from the University of Arkansas said the system opposes Bill 231 “as it is written”, and claims that defining foundation records as ‘public’ would negatively impact private fundraising for university projects. The university gave no explanation to back up this claim. Robert Steinbuch, a law professor at the University of Arkansas at Little Rock who helped write Bill 231, claims this storyline is common. Support foundations like the Razorback Foundation exist to help universities, but the two entities must be maintained as singular and separate.
3. Rising Costs Call for Innovative Models as Healthcare Professionals Turn to Startups
Startups are popping up across all industries, and investors are now searching for innovative technology companies to take on the challenges of the costly U.S. healthcare system. Investors are looking to reverse the spiraling costs in the $3.5 trillion healthcare market, and are referring to startups as potential models to reduce costs and deliver quality services. According to the Centers for Medicare and Medicaid Services (CMS), healthcare expenditures comprise nearly 18% of the gross domestic product, with hospital care and physician services rising higher than average in recent years. Panelists at last week’s Association for Corporate Growth’s 11th Annual Healthcare Conference advocated for innovated strategies to be used to find companies that achieve cost-savings and improved patient outcomes. Oak HC/FT, a $1.1 billion healthcare venture fund is searching the healthcare landscape for innovations that reduce the “social determinants” of poor health among vulnerable populations.
With new technologies specifically addressing these populations and their need for increased housing, transportation, and nutritional care, hospital admission rates could drop drastically. For example, SafeRide Health, a medical transportation startup, could reduce hospital admission rates among dialysis patients by providing necessary transportation throughout their entire treatment, rather than interrupting treatment due to a patient’s lack of transportation. Ankur Agrawal, a partner at McKinsey & Co.’s healthcare systems and services practice, encourages healthcare professionals to adopt a “fee for value versus fee for care” model which would control the costs of services by aligning incentives for insurance payers and doctors to deliver care based on overall quality of the services provided. Agrawal identifies the main drivers of the healthcare system as physicians and not consumers, thus differentiating this industry from others and proving it difficult to compare with other industries’ startups. The question of how to rein in healthcare costs and produce improved patient outcomes lies in diverse and innovative models that may be incomparable to existing startups due to the structure and influential players of the current healthcare system.
4. Transparency Law Comes for California Charter Schools
Following the successful teacher strikes in Los Angeles and Oakland, on March 5th, 2019 California Governor Gavin Newsom signed into law a bill that will require charter schools to follow the same transparency rules that apply to public schools. Among other issues, the topic of charter schools emerged from the recent teacher strikes. Senate Bill 126 will require more transparency from charter schools, including holding open meetings and adherence to the California Public Records Act. Newsom’s predecessor Jerry Brown vetoed similar measures while in office, and Newsom says that the bill “made common sense…Sometimes people claim they are for transparency for everybody else, but not for themselves. In this case its transparency for all of us.” Newsom was joined by the California Teachers Association (CTA) and the California Charter Schools Association (CCSA) in supporting the implementation of stronger oversight of charter schools. CTA and CCSA have historically battled one another, so it comes as an accomplishment for both of them to sign on to the new bill, sending the message that the two groups are reaching a new phase of dialogue on the issue of school transparency. The law will go into effect in January 2020, although it makes no mention of the proposed moratorium on charter school expansion brought by the Los Angeles Board of Education.
5. The Significance and Detriment of the “Founder’s Syndrome” Label
Nonprofit governance literature uses the term “founder’s syndrome” to explain the challenges that nonprofits face once the founder has carried out all major efforts to initiate and launch their organization. Any illness stemming from the organization typically tends to fall on the founder, and Elizabeth Schmidt, author of this article, affirms that the board of the organization should address the symptoms of founder’s syndrome from a mission-centric point of view in order to mitigate governance issues and to avoid stereotypes and blaming of the organization’s founder. Schmidt identifies the four main symptoms of “founder’s syndrome”; the sense of grandiosity of the founder’s organization to serve his or her ego, the inability to delegate responsibilities; the inability to make smooth transitions in and out of positions; and the unwavering dedication to the original vision of the organization. Although some founder situations do fit the diagnosis, these conditions of governance are also found in non-founder-led organizations. Founder’s syndrome literature draws from commonsense notions and anecdotes, reinforcing stereotypes of nonprofit leadership, Schmidt claims.
The literature surrounding founder’s syndrome suggests potential psychological problems of founders, coupled with the irony of denial being a major part of the syndrome, as it is impossible to defend oneself without exhibiting some form of denial. Studies have been done to measure organizations’ governance practices and attitudes among founder-led and non-founder-led organizations, which produced inconclusive results. Schmidt does not find substantial evidence in the data that “founder’s syndrome” is true and accurate and believes that targeting founders with the syndrome label reflects the worrisome trend of a “one-size-fits-all” mentality that emphasizes “best practices” that do not always lead to better governance. Instead, governance should be emphasized in the mission of the organization, as should the board’s duty of obedience to the mission.
Overall, the founder’s syndrome diagnosis is overly broad and nears on a stereotypical, simplification, and exaggeration of an organization’s governance, not to mention the blame placed on founders for all past, present, and future issues tied to their organizations. Belief in the “founder’s syndrome” produces a distrust that could subsequently prevent founders from appropriately addressing and implementing ideas and practices to solve some of society’s problems, thus doing a disservice to the individual founders, the organizations themselves, and society as a whole.
On this day in history…
On March 1, 1971, a bomb exploded in the bathroom on the Senate side of the U.S. Capitol building, causing hundreds of thousands of dollars in damage, although it left no casualties. The Weather Underground, a leftist anti-war group claimed responsibility for this event and other bomb attacks in the early 1970s. The group’s political goal was to create a revolutionary party to overthrow U.S. imperialism and the Weathermen (as they were commonly known) cited their actions and placement of the bomb “in protest of the U.S. invasion of Laos.” (Photo taken from The Washington Post)
1. False Promises Made by Loan Forgiveness Program
Launched in 2007, the Public Service Loan Forgiveness (PSLF) program provides young adults with the opportunity to have their student loans forgiven if they work in the government or nonprofit sector and make regular minimal loan payments throughout a ten-year period. This program is intended to encourage recent graduates to enter the government or nonprofit sectors, both of which are known for low paying jobs. However, a 2018 U.S. Government Accountability Office (GAO) report found that only 55 of the 19,000 people who completed the ten-year requirement had their debt forgiven.
In 2017, three borrowers who were working for 501(c)(6) legal organizations and one borrower working for a 501(c)(19) veterans association filed a lawsuit to defend their access to the PSLF program after their approval letters from FedLoan Servicing were rescinded with little or no opportunity to appeal the decision. Those who qualify for the PSLF program use an income-based repayment plan that do not cover all accruing interest. So, while they make minimum payments, their balances continue to grow and it comes as a great shock when their debt is not forgiven by the PSLF program. The three borrowers who worked for 501(c)(6) organizations won their case and now have grounds to petition the US Education Department to reinstate their eligibility for the PSLF program. There is currently a total of 890,000 people who have been approved for the PSLF program. This issue will keep growing until the US Education Department fixes the program such that it doesn’t leave graduates in worse financial circumstances than when they first took out their loans as well as cause a shortage of applicants for the future who are wary of the program as a result.
2. Nuances from Storytelling Model Measures Social Impact
Social enterprises are value and purpose-driven business models and when examining the concept of “social impact” among social enterprises, one method to diversify and leverage participant voices lies in the practice of storytelling. Commonly known as Social Return on Investment (SROI), this method presents the story of change affected by the activities from the perspective of the stakeholders. SROI is a given when discussing an organization’s social impact. SROI For a social enterprise to engage its stakeholders, maintain existing funders and initiate new connections for future activities, it is crucial that the organization’s social impact is understood, measured, and communicated well amongst all parties involved. Varying greatly from traditional surveys and questionnaires measuring social impact, storytelling sticks out as an effective method to qualitatively measure social impact. Storytelling fosters a sense of belonging and pride for stakeholders in the value and the purpose of the organization, in turn leading to significantly higher SROI.
The GlobalGiving Storytelling Project uses storytelling to create a databank of organizations that are making a difference in the presentation of community voices around the world. This project strives to create better feedback loops for measuring the social impact of organizations directly through the impacted communities. From 2010-2011 Kenyan and Ugandan scribes were able to collect 57,200 stories from over 5,000 community voices. Storytelling allows for human stories to shared, which gives a sense of dynamism and excitement that traditional datasets fail to provide. As seen in a case study in India, it is easier to share experiences in an informal, semi-structured way and valuable insights and first-hand opinions are leveraged through the storytelling model, which is not seen in either surveys or questionnaires. However, this method for measuring impact is also resource intensive and more time-consuming than traditional data collection. Storytelling is most effective at measuring social impact if it is used in conjunction with more traditional quantitative methods, thus providing a rich layer to impersonal data points by complementing the personal, micro-level impact with the big picture analysis of the social impact.
3. Nonprofit Theaters Preserve and Educate Communities
While companies like Netflix and Amazon continue to monopolize the technology and entertainment sectors, small movie theaters are counteracting this monopoly with the transformation and reopening of small theaters under nonprofit ownership. After closing in July 2015, the Osio Theater in Monterey, California was able to reopen in May 2016 with the support of $76,000 from a local crowdfunding campaign. On March 9th, this small independent movie theater will hold a grand reopening as it transitions into a nonprofit-owned theater. Membership will be available at varying levels—ranging from $10-$25 per month for individual membership and $2,000-$3,500 for businesses. Membership structures for nonprofits like the Osio Theater help to maintain historic buildings and typically provide alternatives to mainstream theaters by screening independent films, documentaries, and foreign language cinema. The new mission of Osio Theater is “to make film and digital media education programs available to all Monterey County K-12 students” while retaining cultural diversity in the local arts community. While theater and nonprofit video stores continue to pop up, these organizations can serve as models to preserve culturally rich landmarks and to provide on-the-ground opportunities for local neighborhoods to engage and strengthen their communities.
On February 27, 2019, Oregon Governor Kate Brown signed SB 608, the nation’s first statewide rent control law. The bill was declared as an emergency and is in effect immediately while housing advocates expose the problematic shortfalls of the much-needed law confronting the housing crisis in Oregon. SB 608 imposes a cap on rent increases to seven percent per year plus the cost of inflation. This essentially allows landlords to increase rents up to a total of ten percent per year, which is actually a higher rate of increase than seen without the rent control bill in recent years. The cap of a seven percent increase is very high compared to some cities in California that limit rent increases at the cost of inflation, usually averaging 3% in the past five years. Exceptions to SB 608 include rental units constructed within the last fifteen years, subsidized units such as Section 8 housing, and units vacated by tenants on their own accord. The bill has provisions related to no-cause evictions, but Portland tenant advocates identify loopholes in the bill such as no-cause evictions allowed during the first year of tenancy as well as weak language surrounding qualifying reasons for which a tenant may be evicted.
Although the bill helps to mitigate sudden price increases that have forced Oregon renters almost immediately from their homes, it does very little to increase long-term neighborhood stability. In response to the passing of the bill, Portland Tenants United (PTU) continue to call for the restoration of local control over rents, citing these loopholes and overall inefficacy of SC 608. A tenant organizer claims the bill “does more to protect landlords from strong tenant protection than to protect tenants from landlords.” Until housing is deemed a basic right, housing advocates and renters will surely persist in their demand for more drastic and local initiatives to ensure renters and neighborhoods maintain stability and affordability in the face of sky-high values presented by the current housing market.
5. Business Succession Plans to Build and Retain Community Wealth
As the “baby boom” generation nears retirement age, many business owners from this generation encounter themselves at a crossroad regarding succession plans for their businesses. Often called the “silver tsunami”, the business ownership succession wave is on the rise as baby boomers close in on their retirement plans. Business owners in the Adirondack North Country region have been turning to a helpful community organization for tools and resources for creating appropriate succession plans.
Since 1955, the Adirondack North Country Association (ANCA) has been supporting economic development in the area by employing a “local first” approach to community wealth building and focusing on “self-reliance for goods and services through locally owned, import substituting (LOIS) businesses.” This year, ANCA created the North Country Center for Businesses in Transition—a virtual “center” that provides matchmaking services and planning tools to clients looking to purchase an existing business or to start a new career path towards business ownership, by providing these clients with resources on employee ownership models and opportunities. The center plans to hold monthly workshop series to share insights and offer skills and resources to help local businesses in transition. This effort is supported by more than fifty organizations and community leaders in the Adirondack North Country region. Coordinators and community liaisons at ANCA focus on selling in the open market, intergenerational family transitions, and business conversions to a worker ownership model. ANCA’s current goals are to transition 240 businesses and preserve 1,440 jobs in the next three years.
ANCA highlights the importance of employee ownership and cites benefits to the new law put forth by New York Senator Kirsten Gillibrand, known as the Main Street Employee Ownership Act; employee ownership strengthens companies by increasing productivity and sales, prevents layoffs and rewards workers with greater job stability through locally rooted jobs. As retirement looms over baby boomer business owners, resources like the North Country Center for Businesses in Transition are likely to gain more clients who are looking to transition their businesses and further reel in the advantages of employee ownership enacted by the Main Street Employee Ownership Act.
On this day in history…
Andy Warhol, American artist and leader of the pop art movement, died on February 23, 1987. Known for his silkscreen paintings Campbell’s Soup Cans (1962) and Marilyn Diptych (1962), Warhol’s image has been commercialized and reproduced all around the world since he first exhibited his work in the 1950s. In 1968, Valerie Solanas, a radical feminist writer, shot Warhol at his New York studio. Earlier in the day of the attack, Solanas had been turned away from Warhol’s studio after she asked him to return her script. The script was supposedly misplaced. Warhol was seriously wounded and hospitalized where surgeons opened up his chest to massage his heart and stimulate movement. Warhol continued to suffer physical effects for the rest of his life before dying in his sleep from a sudden post-operative irregular heartbeat in 1987.
1. Accountability Demanded for HBCUs to Thrive
New legislation is being introduced regarding equitable funding and capacity building for the future of Historically Black Colleges and Universities (HBCUs). HBCUs often struggle to maintain their institutions due to typically smaller endowments, higher rates of students receiving federal aid, and less access to federal funding programs. In 2017, President Trump signed an Executive Order directing federal agencies to work more closely with the delivery of federal grants and contracts to HBCUs. However, many HBCU groups claim this Executive Order lacks appropriate enforcement mechanisms, which is a concern that led to the HBCU Propelling Agency Relationships Toward a New Era of Results for Students (HBCU PARTNERS Act). The HBCU PARTNERS Act calls for agencies to be held accountable to the Executive Order and respective funds intended for HBCUs by requiring such agencies to annually submit to Congress their plans to strengthen HBCUs’ capacity to participate in federal grants, contacts, or cooperative agreements. Agencies will be responsible for identifying federal programs in their jurisdiction in which HBCUs are under-represented and will further develop plans to improve HBCU engagement in such programs. According to David Sheppard, senior vice president of General Counsel for the Thurgood Marshall College Fund, “public universities receive 43 percent of their revenues from grants, federal contracts, or appropriations on average, while HBCUs only receive approximately one percent.” Many HBCU Presidents are advocating for more financial support and claim inequitable funding to their institutions. Within weeks the HBCU PARTNERS Act is expected to pass the House of Representatives. Although HBCUs represent just three percent of American higher-education institutions, they serve more than a fifth of Black college students and providing equitable funding access to these institutions is critical for Black communities across the country.
2. Board Disputes as Nursery Management Changes Direction
Thirty-seven years ago, Sister Ann founded the Bay Area Crisis Nursery, which offers space for parents in crisis to drop off their children for a limited time of respite. During a recent board meeting, Board President Lynne Vuskovic, a banker, decided the board would transition to managing the nursery in a more business-like manner. The announcement of Sister Ann’s departure from the nursery came in the third quarter newsletter of 2018 and included no specific reason for her departure. Sister Ann was offered retirement which she declined, and was then placed on paid administrative leave. A dive into the recent history of the nursery provides appropriate context for Sister Ann’s removal. Evidenced in the nursery’s IRS 990 forms from the past two years, the nursery has been losing money every year including a loss of $183,000 in 2016. In the 2016 annual report Sister Ann noted the financial situation of the nursery was grim due to substantial financial loss and the parting of many employees from the nursery staff. Research into the nursery’s financials shows a reliance of almost ninety percent on individual donations since the nursery does not receive any government grants, contracts, or any other type of sponsorship. However, Sister Ann’s departure still came as a surprise despite these factors that led to the unfortunate financial situation of the nursery. Sister Ann and her order are now calling for the entire board of directors to be replaced and for her return to her former position at the nursery. This dispute will continue as both parties proceed with legal counsel. Vuskovic vocalized her hopes for Sister Ann’s legacy to be celebrated and for Sister Ann to remain visible and connected with donors, while Vuskovic carries on her plans to run the nursery “as a business.”
3. Mega-Donors Shift Power Dynamics within the Nonprofit Sector
A new wave of mega-donors is emerging and raising concerns surrounding the power dynamic between donors and recipient organizations. Mega-donors are tied to large-scale philanthropy since they have more resources than the average donor, thus allowing them to deal with complex and transformational philanthropy. For example, small donors may donate to a food bank while ultra-wealthy donors may be involved with tackling the broader issue of food insecurity. The value of large donors goes beyond the size of their gifts; mega-donors’ social and political capital comes along with their donations, as evidenced by a new form of strategic philanthropy combining research and advocacy to intentionally utilize donations to change public policy. However, there is a power shift when donors combine their wealth and influence with an investment mentality. With their money, large donors can set societal priorities primarily reflective of their personal interests. The rise of large-scale donors carries risks, as expected, so it will be crucial for organizations to weigh power dynamics to ensure the nonprofit sector remains a key component of democracy. If mega-donors grow to be considered threatening to these organizations, then the time is past when individual organizations, both big and small, are able to direct their own course and stability. Policy changes in the nonprofit sector may become necessary to ensure both small and big organizations maintain their agency and as to not alienate wealthy mega-donors from the sector, either.
4. Organizations Adopt New Model to Solve Human Resources Issues
Many small nonprofits and foundations are facings challenges related to human resources, and the arrival of the Professional Employer Organization (PEO) model has relieved these organizations of the time-consuming and costly human resources model from the past. Organizations that have struggled to ensure compliance with ever-changing regulations and to compete for top talent are now turning to PEO as an attractive solution to their HR problems. PEO allows employers to outsource HR risks, lower HR-related costs, and free up staff time for mission-related activities. HR duties have traditionally diverted time and funds from an organization’s mission to fix errors related to noncompliance or issues concerning employee benefits, thus further distracting the organization’s leaders from urgent matters related to the organization’s activities. PEOs use a “co-employment” model in which the employees of a nonprofit technically become employees of the PEOs too. With a much higher aggregate number of employees, PEOs use their greater buying power to offer a variety of options and to negotiate discounts on a variety of benefits from gym memberships to healthcare insurance. PEOs handle payroll, employee benefits, and completes official filings and compliance. PEOs consolidate benefits information and provide access through a single portal in which an employee can easily gain access to items ranging from external benefits to internal records. Current PEO models that are used by many nonprofits include ADP Total Source, Namely, Zenefits, and numerous others. There are pros and cons to the PEO model, depending on the size, type and needs of organization using PEOs. One size does not fit all in this case, and organizations should definitely assess their profile and needs before adopting the PEO model. However, current employers using PEOs appreciate the ease of the human resources burden, assured compliance with the law and the capacity to compete for qualified employees.
What you didn’t know about Valentine’s Day… It wasn’t always hearts and love songs.
On February 14th around the year 278 A.D., a Roman priest by the name of Valentine was executed. This event occurred under the reign of Emperor Claudius II, also known as Claudius the Cruel, who banned all marriages and engagements in Rome due to his difficulty in recruiting soldiers to join the military. Claudius believed that Roman men were unwilling to join the military because they were too attached to their wives and families. Valentine, being a holy priest, continued to perform marriages in secret. Upon discovery of this, Claudius ordered Valentine to be condemned to death by clubbing and execution. In honor of his service, Valentine was named a saint after his death.
Policy Brief: Impacts on Los Angeles County from Commercial Property Tax Reform, by The California Community Foundation (December 2018)
“How to Raise Billions for Schools and Services by Reforming the Commercial Property Tax System”
Commercial Property Tax Reform Exposes Underutilized and Underassessed Land
The most significant property tax reform in forty years is coming to the November 2020 ballot in California. The reform measure involves Proposition 13, the commercial property tax system in place since 1978, and is expected to generate new revenue for cities, counties, schools, and special districts. Proposition 13 reform calls for the market-value reassessment of commercial and industrial properties on underutilized land, but does not impact residential property taxes. Revenues are expected to amount to more than $3.6 million in Los Angeles County alone, composing 32% of predicted statewide revenues. As evidenced in a multi-year study carried out by the University of Southern California’s Program for Environmental and Regional Equity (USC/PERE), revenues are predicted to total nearly twice the amount received from current property taxes on such properties. Funds will be allocated for local purposes including infrastructure, public safety, parks, libraries, affordable housing, health care, and homelessness services. The study executed by USC/PERE shows wide disparities of assessed land values in LA County; land assessments vary from company to company as well as within a single company. For example, in Carson, CA, two major commercial property owners’ plots are currently assessed at $1 per square foot (fair market value from 1975), while new commercial owners’ properties are assessed at $46 per square foot. Therefore, it is clear that the underassessment of properties results in a large loss on land value, not to mention property tax revenue that could be benefiting local communities. The majority of revenues from land reassessment will come from long-held properties, including some dating back to 1975. Commercial property tax reform will lead to more efficient land use where it is currently vacant or in low-level uses, higher density housing around commercial strips and transit lines, and significant revenue to be allocated for local purposes, critically including low-incoming housing and homelessness services.
2. New Market Tax Credit Drama in Oregon
There is controversy surrounding the Oregon-based nonprofit, Ecotrust, and how it secured a new market tax credit for the failed reopening of a small-town sawmill. Ecotrust sought a new market tax credit to reopen a sawmill called Rough & Ready Lumber in Cave Junction, Oregon, promising the revival of the town’s single largest employer. Less than twenty months after Ecotrust received the investment to reopen from the state agency, Business Oregon, the sawmill business and all the promised jobs were gone. According to the Oregonian, Ecotrust inflated the value of the project by $5 million. After the failed reopening, owners of the sawmill essentially sold the property to themselves—they composed 99% of the owners of the corporation to which it was sold. This “sale” was counted as an investment in the property, making the project large enough to justify the new market tax credits investment. If the sawmill had reopened appropriately and successfully created jobs for the town, perhaps the creative financing might not have been pointed out by Business Oregon. However, in August 2018, Business Oregon issued a memorandum detailing the ways Ecotrust had misrepresented the deal and called for $1.3 million to be reinvested in another project or simply returned to the state. Ecotrust just last week agreed to reinvest the money in a new project involving the purchase of a warehouse in a low-income area of Portland. Although the investment of the $1.3 million into this new project yields far fewer jobs than what was intended with the sawmill reopening, there is much less risk involved in this project than in the sawmill project. Overall, Ecotrust has publicly defended the sawmill investment and its use of new market tax credits, as seen in detail on its website. Ecotrust heralds itself as a “catalyst for radical, practical change”, and what is worthy to take into account is how much risk is tied to its undertakings, along with how much accountability nonprofits have when projects using tax credits are unsuccessful. To what extent should nonprofits be held accountable for failed endeavors, especially when owners are skirting rules meant to benefit low income communities?
3. Senator Wyden Blocks Nomination of Elizabeth Darling; Citing Discriminatory Policy
Originally nominated in March 2018 to a commissioner role in the U.S. Department of Health and Human Services (HHS), Elizabeth Darling now faces a roadblock to becoming the commissioner of the Administration of Children, Youth and Families (ACYF) at HHS. This hurdle comes from Senator Ron Wyden (D-Oregon), a member of the Senate Finance Committee who moved to block the nomination of Darling to the ACYF commissioner role. Darling, CEO of OneStar, an Austin, Texas-based nonprofit that works to promote partnerships, philanthropy, volunteerism and service to drive innovative community solutions, did not comment on the hindrance to her nomination and the fact that it has yet to make it to the Senate floor after being nominated and re-nominated just last month. A contentious debate has ensued over Darling’s nomination and the policies she would oversee as a federal commissioner. The Trump administration granted a waiver of federal rules to South Carolina foster care agencies, allowing agencies to place children only with Christian families. This agency and others affected by the change in federal rules continue to receive federal funds to place children in South Carolina only in Christian households. Senator Wyden has spoken out about his critique of the change in policy, saying this policy is discriminatory and will deny adults the opportunity to foster children on religious grounds, making them victims of another discriminatory policy set up by the Trump administration. Darling holds a legacy in the nonprofit and community service sector, elected as one of the charitable sector’s Power & Influence Top 50 in 2014, 2015, 2016. As Darling attempts to move her position in the nonprofit world into the governmental sector, it will be crucial to pay close attention to her transition and how it aligns with discriminatory changes to federal policies, as well as the vocal resistance to such policies made by Wyden and other members of Congress.
4. Immigrant Worker Co-op Franchise Model Grows Despite Challenges
Worker cooperatives have been booming in recent years with public and philanthropic support directed towards the funding and legislation of co-ops. Worker co-ops are valuable for those who are commonly exploited by the mainstream economy, since the cooperatives pay higher wages and tend to generate higher profits via increased productivity. Additionally, co-ops are credited with building community wealth and political power, in addition to fostering broader movement building. Since many cleaners work in exploitative home service industries, there is a compelling need to scale cleaning and other domestic worker co-ops. Araceli Dominguez, resident of Staten Island, New York, is the founder of Brightly®, a worker-owned cleaning cooperative. Brightly® was developed by the Center for Family Life (CFL), a Brooklyn-based social service program that has been developing worker cooperatives since 2006. Since then, CFL has developed twenty-one worker cooperatives, where 87% of co-op member owners are immigrants and 85% are women. CFL brings together franchising and worker co-ops to create a new nonprofit cooperative franchisor called Coopportunity, which has begun licensing co-op franchises in the cleaning industry under the trademark Brightly®. Coopportunity aims to connect well-developed worker co-ops to new areas through collaborations with local partners. Brightly has the goal of launching at least one Brightly co-op franchise in each state, with experienced members training and developing the new co-ops. Currently, there are twenty states in the United States without a single worker cooperative. There are reasons that worker cooperatives are not the dominant business model—difficulties attracting capital, the unknown of what a worker co-op constitutes, and as noted by Emma Yorra, author of this article; “any business model built on guaranteeing living wages already faces an uphill battle.” Brand recognition was also noted as a challenge that co-op models face in initiating and sustaining development, not to mention thin margins of profit in domestic work industries. Nevertheless, worker cooperatives and the franchising of these businesses are on the rise, and in September 2018, Brightly® was approved as a franchise in the state of New York state, becoming the first U.S. worker co-op to be so recognized.
5. New Startups Strive to Expand Benefits for Gig Economy Workers
The gig economy is rapidly expanding as startups such as Icon, Steady, GreenLight, and Trupo are developing financial, retirement, and benefit products for gig economy workers. These startups are exposing how it may be less costly to provide gig workers with benefits through startups than traditional benefits given through standard employment. For example, Laurie Rowley is developing the Icon Savings Plan to enable gig economy workers to build retirement accounts as they move among jobs and employers. Rowley is piecing together a retirement plan for the modern mobile workforce that is “radically less expensive than a 401k plan, and much easier to use.” Steady, founded in 2017, offers a range of ideas to gig economy workers regarding income supplement activities, aiming to provide support for people pulling together different sources of income through the gig economy. GreenLight is a new company that helps employers working in the gig economy by assisting them with managing tax and regulatory compliances as well as onboarding and payroll for independent contractors. Greenlight also hopes to expand medical insurance coverage to gig economy workers, while Trupo, launched in 2018, offers short term disability insurance to freelance workers. Prominent gig economy businesses Lyft, Airbnb, and Uber are developing education, workforce, and ownership opportunities for their workers. These efforts are driven by entrepreneurs who firmly believe their products will strengthen the gig economy workforce structure. Although these programs are fairly new with some still navigating through development stages, these efforts show how rapidly the gig economy is developing on its own through private sector entrepreneurs and gig economy firms, which provide exciting opportunities for gig workers as their economy is transitioning to benefit and sustain the workers themselves, and not just users and consumers of the gig economy.
Did you know?
On February 11th, 1990, Nelson Mandela was released from prison after twenty-seven years. In June 1964, after already serving shorter prison terms for incitement and leaving the country illegally, Mandela and other African National Congress (ANC) leaders were convicted on charges of sabotage and sentenced to life in prison. Mandela spent the first eighteen years of his sentence at the infamous Robben Island Prison where he led a civil disobedience movement that resulted in drastic improvements to the harsh prison conditions. The anti-apartheid leader was moved out of Robben Island Prison in 1982 and continued his sentence in various hospitals, prisons, and under house arrest. In February 1990, Mandela met President FW de Klerk, who made a claim for Mandela’s release after lifting the ban on all political organizations including the ANC. Mandela initially rejected De Klerk’s offer for his release and asked for a two-week extension for the ANC to prepare for his release. De Klerk refused Mandela’s request and Mandela was released from Victor Verster Prison on February 11th, 1990.
The ever-widening wealth gap was evident as the country watched working class families suffer from the longest government shutdown in United States history. The shutdown revealed how financially precarious working-class families are as they find themselves unable to buy groceries and pay bills. Wes Moore, CEO of the Robin Hood Foundation, a New York City nonprofit committed to fighting poverty, asserts that charities that supported workers during the government shutdown must be active players in fighting the inequality seen in today’s society. Alternately, Ruth McCambridge questions whether the philanthropic community can effectively develop tools to restructure today’s societal inequalities in America. Ms. McCambridge raises the question of the role of class in the nonprofit sector, since almost all organizations look to corporations and foundations for funding. For example, Ken Griffin, a major donor to the Robin Hood Foundation, recently purchased the most expensive home ever to be sold in New York for $238 million. His new home is just around the corner from a new homeless shelter site. In this juxtaposition of class and power, Ms. McCambridge questions the usual narratives of philanthropy, and whether philanthropists and foundations are equipped to reverse the socioeconomic patterns that support and reproduce inequality. As she critiques the role of philanthropists and large foundations that have the power to direct social reform, she raises the question: Is it possible to ever resolve the cognitive dissonance between the super wealthy, such as Ken Griffin, and those in need? With the possibility for large foundations and philanthropists to use their financial means to provide and promote ideas for political change, Ms. McCambridge cites Joan Roelof: “the nonprofit world is also a system of power that is exercised in the interest of the corporate world” (see “The Third Sector as a Protective Layer for Capitalism” (2006)). Roelof questions whether the potential for radical alternatives to the current system has been opposed by the ‘third sector’, that is, the philanthropists and large foundations that fund a major portion of the nonprofit sector.
2. Candid: A Collaboration Between The Foundation Center and Guidestar
On February 5, 2019, a new organization, “Candid,” was formed by the merger of two important corporations in the nonprofit and philanthropic sector, The Foundation Center and GuideStar. These two nonprofits combined forces after seven years of discussions and preparations. The Foundation Center, founded in 1956 as a public information service on philanthropy, maintains the world’s largest database of global grantmaking. Its new partner Guidestar, released and expanded the first searchable electronic database of all tax-exempt organizations registered with the IRS. Together, they formed “Candid”, and both boards agreed to build on their organizations’ complementary capacities to “keep users front and center” as they collaborate to combine thirty different business systems, retaining all technology, data, and organizational processes and cultures involved in these systems. The recently announced merger is still underway as CEOs of both organizations work together to establish a new structure for Candid by engaging both boards and organizational structures. It will be key for Candid to work on its ability to function as a platform and place of collaboration, in addition to keeping prices accessible to its users. Overall, the seven year long merging process has gone well because of the project’s long-term support from major philanthropic institutions such as the Bill and Melinda Gates Foundation and the Fidelity Charitable Trustees Initiative. However, some critics of the merger have already expressed concern about the possibility of a de facto monopoly. Time will tell how this new entity will impact and potentially alter the nonprofit sector.
3. Instagram To Facilitate Charitable Giving
As social media continues to grow and unveil new features, Facebook and Instagram look to support nonprofit organizations by adding user friendly fundraising tools for both individuals and charities to utilize in their social media profiles. Facebook is in the process of developing details surrounding the new donation button, which will be embedded in Instagram stories—posts that expire twenty-four hours after they are uploaded. Once clicked, the donation button will link a user directly to a charity’s donation page, thus allowing users to navigate easily through an organization’s social media profile directly to the donation page. According to Facebook, users will be able to select an organization from a list of charities that Facebook has preapproved. This is not the first time Facebook has supported charitable giving; this latest development of the Instagram donation button is likely a result of the success Facebook has had since 2015 when the company first launched a donation button that made it easy for people to collect donations on their birthdays for causes they deeply care about. Facebook says the company will cover all operation and credit-card processing fees to ensure that 100% of donations go directly to the organizations. As social media platforms expand their reach to support and promote certain causes, nonprofit organizations may see an influx of donations through social media sites, as seen on Giving Tuesday in November 2018, when nonprofits raised $125 million solely through donations made on Facebook.
4. Nonprofits Benefit from Cloud Technology Must Keep Security in Mind
Cloud technology has become routine storage space for data for many nonprofit organizations, including some who may not even realize they are using the cloud. For example, accepting online donations can mean that an organization is using cloud technology. Whether they know it or not, most nonprofit organizations are already using the cloud, so nonprofits will need to focus on what exactly is happening to their data stored in the cloud. Related to the cloud is artificial intelligence technology (AI) that finds insights in cloud-stored data to further benefit organizations using the cloud. The cloud makes all innovations in AI, machine learning, and performance management possible at an accessible scale and affordability, according to the Vice President of Blackbaud, a South Carolina fundraising technology firm. Essentially, cloud computing is the ability to rent capabilities rather than spend heavily on capital, people, and security, therefore leveling the playing field for small organizations. By offering these advanced capabilities that were typically only available to large organizations and companies, small organizations may also reap the benefits of this technology. Although the cloud and AI technology have become widely used technology systems, now passing their initial stages of development into a more innovative and expansive phase, nonprofits must stay vigilant about protecting their data and systems.
5. How to Resist a Food Desert with Nonprofit Grocery Stores
The term food desert was coined by the U.S. Department of Agriculture to indicate low-income communities where there is no grocery store within a mile radius in urban areas, or within a ten-mile radius in rural areas. Nonprofit grocery stores are slowly beginning to develop to serve both urban and rural low-income communities located in food deserts. It is difficult, however, for a nonprofit grocery store to succeed since the grocery business is low margin, competitive, cash and debt intensive, and fluid with openings, closings, and mergers of stores constantly happening. For example, City Square, a Christian community development organization, together with Oak Cliff, a small advocacy group, are committed to serve south Dallas communities by opening a nonprofit grocery store in 2020. These Dallas organizations look to another Texas nonprofit, Mission Waco, for guidance as they prepare for the store opening. In order to start Jubilee Food Market, Mission Waco offered Opportunity Advancing Social Innovation Stock (OASIS) shares at twenty-five dollars each. These shares were quickly bought up by eager donors and community members, allowing Mission Waco to easily raise the funds needed for the initial costs of start-up and operations for the first year of Jubilee Food Market. After two years of operations, Jubilee Food Market plans to rely heavily on donations and grants. Another nonprofit grocery store, Good Foods Market in Washington DC, highlights the importance of community surveys and residents’ purchase decisions in the creation and sustainability of the grocery store. There are many challenges facing the viability of nonprofit grocery stores in food deserts, but with community support and creative business plans these unconventional grocery store models have the potential to change the lives of many low-income families lacking access to fresh and healthy food options.
DID YOU KNOW? February marks Black History Month, a nationwide celebration that remembers the significant role African Americans have played in shaping U.S. history. To learn more about the man behind this holiday, Carter G. Woodson, and why the month of February was chosen, check out this article. But first, here are this week’s nonprofit headlines!
1. Bay Area Efforts to Confront Affordable Housing Crisis
The national affordable housing shortage occurring in the United States presents many people with the reality that full-time employment does not always guarantee quality housing. Renters across the country are faced with an extreme shortage of affordable housing as well as gentrification and displacement threats, all of which are especially prevalent in the Bay Area. When federal government support for housing is “a third of what it was in the 1970s” nonprofit corporations and social benefit organizations begin to take on the housing crisis themselves. Martin Levine announces The Chan Zuckerberg Initiative (CZI), a $500 million effort dedicated to developing and preserving affordable housing in the Bay Area. CZI funds are known as the Partnership for the Bay Area’s Future which aims to stabilize housing for 175,000 families in the next five years. These funds will be directed towards nonprofits to buy buildings in surrounding communities as a method to maintain existing affordable housing, and are also allocated for the construction of new affordable housing units. Levine highlights how these new investments will need public-private partnerships to help them move towards their goals, and that these efforts should not substitute government effort to create and maintain affordable housing. It is also reported that Microsoft committed to lend $225 million to the preservation and construction of middle-income housing as well as an additional $250 million to low-income housing in the region surrounding its Redmond headquarters. In the face of a national housing crisis, will the involvement of nonprofits and major corporations in both the preservation and construction of affordable housing be enough to leverage concrete changes and improvements to public policy?
2. Movement for Community Schools as Teacher Strike Seeks Charter School Cap
Los Angeles Unified School District (LAUSD), the second largest school district in the nation, is fresh off of the recent teacher strike and Angelenos are wondering about the resurgence of community schools as a response to teachers’ demands. As the School Board now faces a vote on a resolution asking the state to establish a charter school cap, Steve Dubb raises the possibility of fighting charter schools with community schools. The community school movement has existed for over one hundred years and maintains the core idea that schools should be neighborhood hubs that bring together families, educators, government agencies, and community groups to provide opportunities and services to young people who need it most. One of the demands that came from the strike calls for LAUSD to convert thirty schools in high-need areas into community schools. This will include investing $400,000 in each school over the course of two years. Data published by the Learning Policy Institute and the National Education Policy Center show the overall impact of community schools to be highly positive and effective for low-achieving students in high-poverty schools. In fact, a charter school can be a community school but in general the majority of community schools function out of regular public schools. Charter schools in Los Angeles have historically been funded by wealthy philanthropists. As the teachers’ strike continues to heat tensions around the charter school movement, this raises the question of funding and whether the wealthy philanthropists who supported charter schools will extend their support to community schools.
3. Millions Invested to Bridge Data Science and Social Impact
Technology companies are looking to extend data science into the social sector with the hopes of providing new technology platforms that support an organizations’ fight for human prosperity, community health, and inclusive growth. Founded in 2011, DataKind provides a network of more than 30,000 volunteer data scientists and engineers who work on more than 250 social impact projects around the world. DataKind focuses on providing new technology platforms to support nonprofits and social organizations that often lack such data science tools. The Mastercard Center for Inclusive Growth and The Rockefeller Foundation will invest $50 million over five years to build data science for social impact and have already initiated their investment with $20 million directed towards DataKind. A major goal of DataKind is to bridge the gap between technology companies and social impact organizations where data science tools are needed and where data scientists can channel their skills towards social good. This investment is meant to spark a new generation of leaders with the ability to use data science to promote social causes, through the implementation of data research, skills, and new technology platforms.
4. The Gates Foundation Cuts Back on Paid Family Leave, Citing Work Disruption
Just three and a half years after changing the paid parental leave policy from sixteen weeks to one year, The Gates Foundation is now cutting down the parental leave period—this time to six months. In 2015 when the jump to one year of paid parental leave was made, the foundation cited the commitment to healthy children and strong, stable families. It was also announced that parental leave would be offered to both men and women, with the goal of promoting gender equity and inclusiveness in the workplace. Now, the Gates Foundation is noting the disruption in work productivity that has been caused by staff members utilizing the one-year period of paid parental leave. Reasons to cut family leave in half include not just work disruption, but the difficulty of identifying and hiring replacement talent, and the possibility that there are not enough experienced temporary workers to fill the need. Additionally, the Gates Foundation refers to the difficulties regarding knowledge transfer to temporary employees, thus resulting in greater work disruption and inefficient transitions. According to a 2017 study by the Urban Institute, The United States is one of two countries without a national paid family leave policy. In this same study, researchers found that a high percentage of both Democrats and Republicans are in favor of requiring employers to offer paid leave to new parents and family caretakers. Recently elected Governor Gavin Newsom pledged to increase California’s paid medical leave from six weeks to six months, a benefit that could go to one parent or be shared by both parents. Without a national paid leave policy, and with just four states implementing paid family and medical leave as of 2018, workers may look to their employers, specifically prominent institutions like the Gates Foundation, to establish and maintain adequate paid family leave and to advocate for a national paid family and medical leave policy.
5. The Potential of Social Donors to Give Regularly
Many nonprofits identify donors purchasing event tickets or sponsoring a friend or colleague in a fundraising event as “social donors.” Social donors are often assumed to be difficult to maintain as regular supporters of the charity they donate to. However, a study conducted by OneCause, a fundraising and technology company, with the collaboration of Edge Research, highlights the intricacies in retaining social donors and ensuring they have an easy, positive, and repeatable giving experience. The study compiled data from a survey that was sent to one thousand social donors in October 2018. The study concluded that social donors want to know how their money makes an impact on the organization’s cause since their initial gift’s influence will certainly affect their decision to give annually or monthly in the future. Three main variables in social donor giving identified in the study were the importance of recognizing the charity’s name or mission, having an enjoyable giving experience, and feeling motivated to make another, similar donation. An obvious factor towards retaining a donor is making the process of giving as easy as possible. In addition to facilitating the process, it is noted that a personalized follow-up often triggers subsequent giving. Across all generations, social donors prefer organizations to contact them by email. Despite the omnipresence of technology, there is oftentimes a gap in communication that occurs when donors receive a substandard response lacking information about how their gift mattered. A major downfall is when social donors are never contacted again after they first give, thus causing nonprofits to completely miss out on potential donations. Personal connections with social donors should be utilized as a method to keep donors engaged with the organization and interested in giving again. Contrary to commonly held beliefs that social donors contribute sporadically, this study finds that one in four social donors is open to the idea of regularly supporting an organization through sponsorship or event ticket purchases.
That’s it for this week’s Friday Five! Can’t get enough of the Friday Five? Follow us on Twitter, like us on Facebook, and send your questions about the nonprofit world to info@b-alaw.com. See you next week!
DID YOU KNOW? This past Monday, January 21, the country commemorated Martin Luther King Jr. Day, a federal holiday remembering the birth of social activist and civil rights leader Martin Luther King Jr. Officially declared a federal holiday in 1968, Martin Luther King Jr. Day falls on the third Monday of January every year, sometimes falling on King’s actual date of birth. Born in Atlanta, Georgia, on January 15, 1929, King was the second child of pastor Martin Luther King Sr., and former schoolteacher, Alberta Williams King. King emerged as the primary leader of the civil rights movement in the United States in the 1950s and led the country in nonviolent protests until his assassination on April 4, 1968. Throughout history, the nonprofit sector has been and continues to be influenced by the work and vision of Dr. King. In an article from the Chronicle of Philanthropy, thirteen nonprofit leaders weigh in on how charities today can work to advance the goals of social justice and racial equality professed by Martin Luther King Jr. in the 1950s and 60s. To read the article in full, click here. But first, check out these nonprofit headlines!
1. Nonprofits Under Regulatory Scrutiny for Accounting Errors
According to a recent article in the Nonprofit Times, state charity regulators are cracking down on nonprofits failing to correctly allocate joint costs and valuations of non-cash donations, or “gifts in kind,” in their financial statements. Some have accused charities of blurring accounting categories when calculating total spending in order to exaggerate their program expenses and disguise fundraising costs. Many states are alleging that as a result of this inaccurate allocation of joint costs, organizations have made “materially false statements in the financial documents they submit as part of their required state reporting.” To illustrate this point, the article discusses the common use of program resources, such as educational pamphlets, in direct mail solicitations in order to justify the categorization of postage costs as operational or program expenses rather than fundraising. Under current accounting rules, organizations are able to classify costs of activities related to fundraising as “program expenses” as long as a “call to action” is included in such activities. Yet with complex accounting language often leaving room for multiple interpretations and confusion, charities can easily find themselves in tricky positions. “Nonprofit employees are often tasked with applying these complex principles to allocate millions of dollars in expenses without a full understanding of the rules, and their allocations are often not closely reviewed or questioned during the independent audit review process,” the article explains. To read more about generally accepted accounting principles and common mistakes to avoid when allocating funds, visit the article above.
2. Nonprofit Hospitals With Nowhere to Turn Begin Soliciting Patients
The next time you visit your local hospital, your doctor might end up calculating more than just your heart rate. An article published this week in the New York Times reports that more and more hospitals are conducting “wealth screenings” of their patients in order to identify and target potential donors for the hospital. These screenings use software to gather patients’ public records such as past contributions to charities and political campaigns. Once large potential donors have been identified, it is common for hospital executives to visit these patients’ rooms and provide them with extra amenities over the course of their care. Other hospitals instruct doctors to take note of patients who express appreciation for the care they have received in order to add these patients to the list of potential donors. Both of these are strategies of what are commonly referred to as “grateful patient programs.” This uptick in wealth screenings and grateful patient programs arose in part due to a change in a federal health privacy law in 2013 that removed restrictions on hospitals targeting patients for funding. According a survey conducted in 2016 by the consulting firm, the Advisory Board, 68 out of the 108 hospitals surveyed were found to have grateful patient programs. Yet this increase has evoked heightened concerns of the ethics of such programs. Many argue that patients will now worry that the quality of their care could be dependent upon their willingness to open their checkbooks and offer a donation in addition to their own medical costs. Others contend that wealth screenings have been used for years in the fundraising strategies of universities and other nonprofits and, therefore, their inclusion in hospitals should not be vilified. However, according to the article, many ethicists maintain that they present a unique issue for the healthcare system. Nancy Berlinger, a bioethicist at Hastings Center, claims that “eeding health care is different than choosing to go to college or going to the opera.” “When you are sick,” she says, “you need a trusting relationship to be formed and focused on your health. There is a vulnerability there that is not present in other nonprofits.” To learn more about the debate surrounding grateful patient programs and how these ethical questions might apply to your nonprofit’s fundraising strategy, click on the link above.
3. 11 Philanthropic Trends Already Shaping 2019
Leaders at the Dorothy A. Johnson Center for Philanthropy have compiled a list of trends in philanthropy predicted to shape the nonprofit sector in 2019. One of such trends, as identified by Michael Moody, the Frey Foundation Chair for Family Philanthropy, is the increasing overlap of business and charity. While this blurring of lines between the for-profit and nonprofit sectors could lead to confusion and less clearly defined societal roles, it has proven to lead to impressive innovation. Another trend presented by Moody is the correlation between wealth inequality and giving inequality. According to him, as the wealth gap intensifies in the country, “it appears that patterns in giving may follow this dramatic bifurcation.” Tamela Spicer, Program Manager at the Johnson Center, mentions the declining religiosity in Americans as another significant trend that could affect philanthropy in 2019. With religious organizations receiving a lower share of donations in the country and traditional methods of giving significantly changing, we are beginning to see how “nonprofits’ understanding of how faith and spirituality impact giving needs to expand.” The Executive Director of the Johnson Center, Teri Behrens, outlines a final trend to expect in 2019: a decline in foundations focused on long-term change and an increase in those with a defined endpoint. While reasons for this shift vary greatly from foundation to foundation, these “limited-life foundations” have been on the rise for nearly a decade now. To learn more about the trends expected to define the sector in 2019, click on the article linked above.
4. Is a Virtual Workforce a Good Option for Your Nonprofit?
Tighter budgets have pushed more and more nonprofits to explore the shift to a virtual workforce as a strategy to save on administrative costs and create happier and more productive employees. In fact, “according to the Nonprofit Technology Network (NTEN) 2018 Digital Adoption report, 41% of employees at the nonprofits surveyed were working exclusively outside the organization's office delivering programs and services, working from home, or telecommuting.” The survey also found that only around one in nine nonprofit employees split their time between the office other work environments, and less than half of employees work exclusively at the office. In an article from the Forbes Technology Council, Tal Frankfurt, Founder and CEO of Cloud for Good, makes a case for why this trend represents a move in the right direction. Still, while there are many benefits in moving to telecommuting, Frankfurt urges nonprofits to keep a few things in mind during the transition. First, ensure that you have the right people for an at-home work environment. Working virtually can lead to a significant boost in productivity only if you have the self-motivated individuals willing to put into the extra effort to connect with the other members of your organization to get work done in a non-traditional work environment. While technology has made the vision of a virtual workforce possible, it will only get you halfway. According to Frankfurt “just like with any workforce, fostering a welcoming, virtual culture takes intention and time.” To learn more tips on creating a virtual workforce and determine if it is a smart option for your organization, check out the article above.
5. GoFundMe Launches Campaign to Aid Federal Workers During Shutdown
Whether it was to support a classmate’s fund for a volunteer trip abroad or to help ease the burden of a friend’s rising hospital bill, most people have either heard of or donated to a GoFundMe campaign since the popular crowdsourcing platform emerged in 2010. According to an article from TechCrunch, with the partial government shutdown currently on day thirty-five, GoFundMe has recently decided to move from platform to fundraiser by launching a campaign of its own. The goal of the campaign will be assisting the hundreds of thousands of federal workers now looking at their second missed paycheck since the shutdown began. The campaign will be supporting a number of nonprofits, including #ChefsForFeds, a program serving free meals in Washington D.C., and the National Diaper Bank Network, an organization providing essential supplies for parents during the shutdown. Earlier this week, the platform’s CEO, Rob Solomon, emphasized the nonpartisan nature of the campaign. “This is not about politics. This is lending a helping hand to someone in need,” he said in a recent announcement. Between the launch of the initiative and the publication of the TechCrunch article reporting on it, GoFundMe’s campaign has raised over $94,000 from over 1,170 donors with an average donation size of $80. To learn more about GoFundMe’s decision to take a more direct role in fundraising and where the campaign stands, check out the link above.
That’s it for this week’s Friday Five! To read about the National Day of Racial Healing, also celebrated this week on January 22, 2019, check out this article from BoardSource.
Can’t get enough of the Friday Five? Follow us on Twitter, like us on Facebook, and send your questions about the nonprofit world to info@b-alaw.com. See you next week!
DID YOU KNOW? The Women’s March in 2017, which included marches in Washington DC and cities across the country, marked the largest protests in American history. On January 21, 2017, the day after President Trump was inaugurated, hundreds of thousands of protesters gathered in a kind of “counterinauguration” movement to express resistance to the President’s election. The event included a variety of speakers and performers that addressed crowds in DC before beginning their march to the White House. Many praised the movement for bringing together supporters of a range of causes, from reproductive rights, to immigration rights and racial justice. Begun as a simple Facebook post, the event rapidly gained national attention and amassed turnouts so large in some cities that marches had to be cancelled for safety reasons. The number of protesters in last year’s march dropped significantly from 2017. This year’s Women’s March is set to take place tomorrow, January 19th, and while it seems unlikely that it will attract crowds similar to those in 2017, recent controversies within the administration, including the recent partial government shutdown, might bring more people. For more information on this year’s march as well as some of the recent controversy surrounding the movement, check out this article from the New York Times. But first, check out these nonprofit headlines!
1. Nonprofits to Collect Funding for National Parks Recovery Efforts During Shutdown
With the partial government shutdown still in full swing, countless government-funded organizations are finding themselves more and more strapped for cash and with fewer places to turn. As many services are likely to remain closed entirely until the shutdown is over, some nonprofits are looking to the future. Last week, the National Park Foundation, the organization that serves as the official charity of the National Park Service, announced a new fundraising campaign to help national parks fund essential recovery services once the shutdown officially ends. The Parks Restoration Fund was launched after concerns arose about the harm the lack of funding is causing the country’s national parks. According to an article in The Hill, the Trump Administration’s decision to leave the parks open to the public with nearly no staff to provide essential services has left many parks trash-ridden, and in some cases even more permanently damaged. In fact, the same day the National Park Foundation began its efforts, a photo of a tree cut down in California’s Joshua Tree National Park went viral, sparking further calls for funding. Will Shafroth, the President of the National Park Foundation, said in a statement that the public’s “love for their national parks is palpable” and that “once the government reopens and rangers have determined what needs to be done, this fund will help repair damage where it’s needed most.” CalNonprofits is currently collecting information from nonprofits regarding how the government shutdown has affected their organizations in order to learn how to best advocate on their behalf until government funding is restored. To fill out the survey and have your voice heard, click here.
2. National Council of Nonprofits Outlines Nonprofit Legislative Agenda
In a publication late last year, the National Council of Nonprofits released an open letter to federal legislators that outlined a nonprofit legislative agenda and recommended actions that would create a stronger and more effective nonprofit sector. A recent post in the Nonprofit Law Blog from the Law Professor Blogs Network that mentions the letter reminds us of the open letter’s continued relevance for the sector. The letter was addressed to the chairs of the congressional tax-writing committees: Chairman of the Senate Finance Committee, Charles Grassley, and Chairman of the House Committee on Ways and Means, Richard Neal. The letter begins as follows: “Tax policy does far more than just define the nonprofit sector as tax exempt; whether intentionally or not, it also can promote fairness or its opposite, pick winners and losers, and support or ruin well managed operations trying their best to improve the lives of others.” After discussing the relevance and severe effects of tax policy on nonprofit operations, the letter continues on with a call to protect the Johnson Amendment and to challenge various provisions of the 2017 Tax Cuts and Jobs Act, which imposed new taxes on tax-exempt organizations and significantly reduced tax incentives for most Americans to participate in their typical level of charitable giving. The letter ends with a strong plea for the withdrawal of Form 1023-EZ, a form meant to help streamline the application process of organizations seeking charitable tax-exempt status with the IRS. According to the letter, the council argues that this form represents an abdication of IRS duties “to protect the public by screening out unqualified or unscrupulous individuals who seek charitable tax-exempt status.” To learn more about the nonprofit legislative agenda as outlined by the National Council of Nonprofits and read the letter in its entirety, click here or check out the link above.
3. Creating a Self-Funding Business Model
Every nonprofit, regardless of size, shape, or model, has had to worry about the uncertainty of future funding. In a recent article, nine members of the Forbes Nonprofit Council offer several methods to help struggling nonprofits build a more self-funded model in order to remove part of such uncertainty. One of these methods, as outlined by Ronald Tompkins of 82nd Street Academics, is diversifying funding streams to ensure a dominant secondary source of funding, especially if a government contract is your primary source. His own organization’s targets for funding sources are “40% contract, 40% fee for service, 10% gifts, and 10% grants.” Another suggestion from Aaron Alejandro of the Texas FFA Foundation encourages nonprofits to take advantage of automated online giving and social media scheduling tools in order to plan asks ahead of time and carry them out on a consistent basis. While such social media tools are still relatively new to the philanthropic world, Alejandro predicts that this platform can only become more effective as giving technologies continue to improve. Finally, according to Steven Moore of M.J. Murdock Charitable Trust, “almost every nonprofit generates something of value as a byproduct of their service to the community and making that available for sale can cover a portion of revenue needs.” While this may look different for every organization, with possibilities including selling physical goods in a store to creating digital resources and selling them online, every nonprofit can identify at least one route to a potential earned income stream. To read more advice from those who have made their own self-funding models, visit the link above.
4. Community Impact Tours Used to Prompt Giving
According to a recent article in the Nonprofit Times, community foundations have increasingly been serving as community educators as well as partners for peer organizations. In just one of these cases, The Heart of West Michigan United Way in Grand Rapids recently began using their bus tours, originally designed to orient new board members, as a fundraising tool. They have begun inviting company campaign coordinators to participate in such tours with the hope of educating them of the community need and encouraging them to share this information with their co-workers. Some larger companies have even begun requesting private tours. Their tours typically consist of a short breakdown of the services they provide, a video presentation, and at times a beneficiary testimony. Two workers at the United Way of Greater Topeka in Kansas, Angela Romero, Vice President of Resource and Development, and Brett Martin, Vice President of Community Impact, also articulated the value of community impact tours as a new tool to spread messages and boost fundraising. According to the article, “the pair attended a storytelling conference in California and found the idea of tours is fairly new, even among nonprofit professionals seeking ways to share stories.” Yet a common thread among nonprofits employing tours is their lack of a strong ask for funding. While an eventual goal of these tours is that participants will ultimately decide to support the organization’s mission, the primary focus of the tours “remains experimental with the hope that participants share what they see with peers.” The funding benefits will hopefully follow suit. So, if your organization is looking for a creative and inexpensive way to spread the word and increase giving from company partners, you might want to consider bringing supporters to the frontline of your operations. To read more about community impact tours and how United Ways are using them differently across the country, click the link to the article above.
5. Using Behavioral Economics to Identify Giving Patterns
Identifying the specific reasons that make people decide to donate to charity as well as those that make them not donate, can help organizations get a better sense of who their donors really are. Reasons people give might include generosity, guilt, reciprocity, or duty, while reasons not to give could come from inattention, distrust, or insufficient income, among many others. According to an article published recently in the Stanford Social Innovation Review, while people decide to give to charity for a variety of reasons, two trends remain constant: “donors rarely give as much as they would like and they are rarely able to articulate consistent, evidence-based approaches to choosing the recipients of their aid.” Charities struggling to find the motivation behind their donors’ giving patterns can find answers by applying behavioral economics to charitable practices. An interdisciplinary science that uses psychology, economics, and several other fields, behavioral economics can help determine whether donating practices are impulsive or deliberate. Ultimately, the article finds that “some donors prefer to give impulsively and embrace strategies that encourage intuitive, quick actions that make them feel good,” while “other donors want to be more deliberate with their giving, and the right tools can help them follow through on those intentions.” It is more than likely that your organization has supporters that fall into both categories. Thus, developing fundraising strategies that appeal to both types of giving practices will be necessary to appeal to your entire donor base. To read more about applying behavioral economics to charitable giving and how it can help your organization, check out the article above.
That’s it for this week’s Friday Five! To read about some of the highlights from the historic Women’s March of 2017, check out this article.
Can’t get enough of the Friday Five? Follow us on Twitter, like us on Facebook, and send your questions about the nonprofit world to info@b-alaw.com. See you next week!