Financial Times, January 5, 2008: Non-profit Change on the Menu

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By Pamela Ryckman

Thecoming year, with its political upheavals and forecast recession, wouldnot seem the most promising for the non-profit community. Yet theleaders of America۪s most prestigious agencies are hopeful for 2008,even as they struggle with the increasing needs of the country۪s poorand with intransigent issues such as the lack of access to qualityhealthcare. They insist that over the next 12 months theirorganisations will achieve goals of increased penetration and expandedscope.

In spite of this confidence, non-profit heads areconcerned that a widening income gap, exacerbated by an economicdownturn, could increase requests for their services at a time whenfund-raising is difficult.

“People are earning more than thepoverty rate, but not enough to sustain themselves,” says BrianGallagher, president and chief executive of United Way of America. As aresult, his agency has shifted resources toward programmes that stresseducation and financial stability, including job training and savingsinitiatives to help families boost their incomes.

Similarly, theYMCA strives to operate sustainable facilities in low-income or at-riskcommunities. “Fifty-six per cent of our YMCAs serve communities wherethe median family income is below the national average, below povertylevel,” says Neil Nicoll, president and chief executive of YMCA of theUSA. YMCAs have responded by concentrating on immigrants and vulnerableyouth, such as dropouts or children in foster care, and by attemptingto attract a more diverse staff to relate to these groups.

Ifservice organisations fail to minister to citizens in jeopardy,non-profit leaders fear society will suffer the ripple effects ofpoverty. “What are the implications of a family in need?” asksCommissioner Israel Gaither, national commander of the Salvation Army.”If we raise a generation of children who are crippled by poverty, thatcycle continues, which impacts American culture and way of life.”

Accessto first-rate healthcare also remains a priority for the nation۪slargest non-profits. Childhood obesity and diabetes run rampant inpopulations served by United Way and the YMCA, and both institutionsare focused on prevention and early treatment. “Many of thesecommunities have chronic diseases that are disproportionate to theirsize,” Nicoll says. The YMCA now convenes medical staff and publichealth officials across the country to improve the wellbeing ofneighbourhood residents.

While healthcare is a consistent,obvious issue for the American Cancer Society, John Seffrin, its chiefexecutive, feels particular urgency this year. “If we don۪t act, wehave evidence to suggest that cancer will become the leading cause ofdeath by 2018,” he says. “Access to care has reached a moralimperative.”

In pursuing their varied missions, many non-profitsare working to cultivate local grassroots support while also broadeningtheir national and global reach. Simultaneously with the launch ofnational media campaigns, the ACS has trained cancer survivors from all435 congressional districts to explain pressing policy changes thatcould facilitate a cure for cancer. The YMCA works closely with itsinternational branches to learn how to better serve immigrants in theUS. “We need to be much more intentional about how we relate to growingcommunities in this country,” Nicoll says.

The United Way sharesinformation among its decentralised global membership network ofinternational non-profits, and Gallagher stresses the importance oflocal participation in each of the 46 countries where United Wayoperates. “We go to the most respected community-based organisations inthe area, the most qualified experts on the ground, who already havethe trust of local people,” he says. “We help local communities buildcapacity to identify their own issues, to respond to their own needs.”

Non-profitsnationwide must also react to donors۪ recent demands for transparencyand accountability. Leaders are considering new ways to measure theimpact of their organisations and are progressively applying benchmarksor metrics developed in the corporate world. United Way refers to itsservices as “investment products” and uses a balance scorecard toreview programme outcomes, reputation, dollars raised and invested, andoperational efficiency. “We say: Choose United Way and you invest ineducation, financial stability and health,۪ ” Gallagher says. “Peoplecriticise non-profits for talking like businesses, but they do wantresults.”

In addition to quantitative assessments, non-profitsare integrating tactical qualitative feedback for a comprehensivepicture of performance. The YMCA is trying to judge its influence onindividuals۪ lives, instead of looking exclusively at the number ofpeople touched by its initiatives. “We want to measure whether childrenhave developed an ethic of service and a commitment to learning, iffamilies have developed stronger bonds, and whether they give back totheir communities,” Nicoll says. “Are they physically, mentally andspiritually healthier as a result of their contact with the YMCA?”

Similarly,Helene Gayle, president and chief executive of Care, whose aim is toeradicate international poverty, says her organisation has laboured tohone and articulate its vision. “If our goal is to have economicopportunities translate into greater empowerment for individuals, wehave to first define empowerment. We۪ll need to see how it actuallychanges their lives.”

As operations become more intricate,non-profits are using technology strategically to link donors andrecipients. Gifts In Kind International, which works with Fortune 500companies to distribute new product donations to charities, recentlylaunched an internet service through which all relevant parties cantrack each step in the giving process. “It۪s a very robust two-waycommunication between donors and charities,” says Richard Wong,president and chief executive.

As always, fund-raising remains akey concern, and non-profits are broadening their funding sources tocombat the potential effects of a recession. A troubled economy could”make people more inward-looking” and therefore less mindful of thoseless fortunate, says Gayle. “We۪ll continue to diversify so we۪re notdependent on just one revenue stream.”

Still, many contributionscome from people of average means, and the recent growth in the numberof non-profits presents a challenge. “It has become very competitive,”says Seffrin. So agencies must find creative ways to solicit money; TheSalvation Army, for instance, promotes a “virtual red kettle” andencourages businesses to put its icon on their websites during theholidays.

Non-profit leaders also cite a number of factors thatcould mitigate an economic slump. They are buoyed by the nation۪sgrowing number of wealthy individuals and by their propensity to givemore during their lifetimes. They also note a rise in long-termcontracts with corporations and multi-year commitments fromfoundations, and more one-off big gifts.

These institutions alsoexpect positive consequences from a shifting political landscape. “Eventhough this political season is excruciatingly long, it is at leastdriving debate about important issues like income inequality andhealthcare,” Gallagher says.

And non-profit chiefs are morelikely than ever to lobby Washington. “[The Salvation Army] is gettinginvolved with public policy in a non-partisan way. We are apolitical,but all of the issues that face society are impacted by politics,”Gaither says. “It۪s about being a voice for the voiceless.”

FixingAmerica۪s healthcare system is paramount for the ACS. “We believe weknow for the first time what we need to eradicate cancer. It۪s as mucha public policy issue as it is a medical challenge,” Seffrin says. InSeptember 2006, more than 300 members of Congress signed a bill tosupport cancer screening after 10,000 ACS supporters rallied on CapitolHill.

Regardless of politics or the markets, the heads ofAmerica۪s largest non-profits say they have the tools and conviction torealise their objectives in the coming years. They believe certainforces recent advances in science and technology, a global mediaraising awareness of society۪s ills, and high-profile philanthropicexemplars such as Bill Gates and Warren Buffett, among others haveconverged to inspire ordinary citizens to engage in socialtransformation. “We know more than ever about what works,” says Gayle.”Now it۪s our job as the richest nation to start helping the poorest ofthe poor.”

Copyright The Financial Times Limited 2008

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