Standing Beside Alaska's Non-Profits

The Permanent Fund Dividend Initiative

Last month, The Foraker Group released the ISER study on Alaska’s nonprofit sector. The report substantiates many of the hunches we had about our sector. Specifically:

  • There is a higher density of nonprofits in Alaska than for any other state in the nation, approximately 6,000 organizations, one for every 110 Alaskans.
  • The sector has a large economic impact on the State with three and a half billion dollars in expenditures and employing ten percent of the state’s workforce, with four of the top ten employers being nonprofits, our sector has the fastest growth in the state.
  • The sector has a higher level of support from government grants, 57% dependence in Alaska verses 34% averaged nationally;
  • Our nonprofits receive a higher than national level of support from foundations and corporations, and
  • We receive lower than national average financial support from individuals, even though salaries in Alaska continue to be above the national average.On that last point, we have nothing to suggest except again hunches on why individual giving continues to fall behind the national norm.

Those hunches are:

  • In Alaska, our sector has been receiving so much from the federal government, corporations and now foundations, individuals have not been challenged to give;
  • In Alaska where we pay the lowest tax burden in the country and each person receives a dividend each year, we are more accustomed to “receiving” rather than “giving;”
  • And what we believe to be the most important hunch and one we can do something about: In Alaska, we do not have many nonprofit organizations that have the capacity to ask individuals for donations, and even if organizations are willing to ask appropriately, many do not have the right infrastructure to manage positive ongoing relationships with their donors and nurture those relationships for sustainable income.

It was that assumption that led The Foraker Group and the Rasmuson Foundation, along with many other partners, to support the development of legislation to allow Alaskans to deduct a charitable gift from their Permanent Fund Dividend check each year. One truth of charitable giving is that donors must be asked in order to give. If we were to ask every Alaskan to give to an organization of their choice each year, we could accomplish that basic fundraising step. We also know that the easier it is for a potential donor to give, the more likely the contribution. What could be easier than sharing some amount from “found money” like the Permanent Fund Dividend?

In the past, many organizations have supported such legislation. With the exception of the Olympic Organizing Committee’s deduction in the 1980’s, none of these efforts succeeded because the Legislature found it difficult to open that door for only one organization. The requirements suggested to the original bill sponsors in 2006, was to open the campaign to all 501(c)3 organizations with a presence in Alaska that could show they had a volunteer board, local office, and an audit as well as a few other qualifiers to ensure accountability. Our original proposal also required all organizations wishing to participate to submit an application verifying those few, basic requirements.

One may ask why any limits should be set? The reason is simple, based on the facts we know about our sector from the ISER study. Of the 6,000 total nonprofits in Alaska, 4,400 are registered with the IRS and 3,200 of those are 501(c)3 nonprofits and therefore able to accept charitable contributions. We determined that the logistics of managing a campaign with 3,200 organizations would negatively impact both donor desire as well as the ongoing costs for participating organizations. By limiting the organizations to those who met the suggested requirements, we felt that approximately 600 organizations would qualify.

During the 2006 legislative session, sponsors of the original bill took our few basic requirements and added their own requirements. While neither The Foraker Group nor the Rasmuson Foundation supported those additional requirements, we were more interested in opening the door for the remaining nonprofits than negotiating on those specifics. We encouraged individual nonprofits to work with their elected officials to modify those requirements. The bill passed the House with only three no votes. However with the mood in the session last fall, the bill never made it to the Senate for confirmation.

This year, Representative Thomas introduced House Bill 166. A few weeks ago, a much improved, more inclusive (less unwanted requirements) bill unanimously passed the House. We are hopeful that this year, the Senate will make this bill one of their priorities and it will become law. It is not too late for your organization to make sure the requirements are to your liking.

During 2006, environmental organizations were excluded from the bill. In 2007, with an effort from various environmental partners, that exclusion was dropped. We understand that wording regarding the volunteer board may unintentionally exclude some organizations. The current wording states that to be qualified, there must be a governing or advisory board comprised of Alaskans. We understand that some organizations serving Alaska have a majority of Alaskans on their board with a few Alaskan “want-to-be’s”. If that requirement would restrict your organization, we would encourage you to contact your Senator now and ask that the requirement be modified.

Here are the facts as we know them:

  • If passed, the earliest this program would begin would be the fall of 2008;
  • Notice for participation will be widely distributed prior to the application period; (all Foraker Partners will be additionally notified by The Foraker Group);
  • The only requirements involved in that review are the ones listed in HB 166; if your organization meets those requirements and you apply, you will be included in the campaign, (if the requirements are modified by the Senate, those requirements will be used);
  • If for any reason your organization does not meet those requirements in the first review, an appeal process will be utilized;
  • All costs for the state to add this option to our Permanent Fund application as well as the costs to set up the infrastructure to manage the contributions including sending the donations to your organization will be paid in full by the Rasmuson Foundation for the first three years. After the initial period, the ongoing costs, expected to be $90,000 annually, will be shared as a combined overhead by all of the nonprofit participants.
  • The Rasmsuon Foundation will provide funding for The Foraker Group to engage contractors to review the applications of qualified organizations. Because of our commitment to growing philanthropy in the Alaska, The Foraker Group, nor its sub-contractors will financially gain from this contract; the funding will simply cover actual costs;
  • The United Way of Anchorage will be sub-contracted by The Foraker Group to receive and pass-on the contributions. They have been selected because they have the capacity to manage such a donor choice campaign since they currently manage the Combined Federal Campaign for each of the five, independent United Ways in the state. Contributions from this campaign do not in any way impact funding from United Way.

The benefits of this legislation should be clear. It is a new method for Alaska’s nonprofits to ask for individual support. If your organization uses this opportunity to inform donors about your mission and how their support impacts your mission, you should start receiving a new stream of revenue. If you cultivate those donors throughout the year, you may eventually develop a committed annual donor. If we all learn to use this opportunity as a sector, instead of being at the bottom of individual charitable giving in the nation, we could lead the way.

Due to the timing of this article and the potential twenty-four hour rule being evoked, this legislation may have already been addressed. If the legislation has been acted upon, please thank your Senator for supporting this legislation. If this legislation has not been addressed we encourage you to contact your Senator and members of the Senate Finance Committee today. Ask them to support this legislation. If you think certain wording in the bill should be amended, please suggest those changes.

And in closing, thank the Rasmuson Foundation. Their leadership on this issue is not something they did to benefit themselves; they are committed to the success of the nonprofit sector. Your potential success is dependent on becoming proficient in asking individuals to give and then nurturing those donors over time. Let’s build Alaska’s philanthropy.