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Some days more than others, we need to remind ourselves that nonprofits are a hallmark of a healthy democracy and a thriving economy. Today is one of those days. In other countries nonprofits are referred to as non-governmental organizations to indicate their separate relationship from the government, since it is the IRS that deems the reality of our existence in this country, we are framed from a tax perspective. In either case, our role is essential in the depth and breadth of our services that the government either will not or cannot provide and inherently will fail in a market-driven economy. The rationale for our existence in a thriving economy is also long – just look around at how each of your communities operates. Ask yourself, who is doing the work and I imagine you might surprise yourself to see nonprofits as a backbone to almost every area of your life. I say backbone because sometimes, we are working quietly behind the scenes to hold up and support both for-profit and government endeavors – in our best efforts, we are working as solid partners in mutually beneficial ways.
So why talk about nonprofit’s essential role in democracy and our economy now? Honestly, I am not sure we can talk about it enough right now. As the election year heats up and policymakers from every perspective seek to scare, influence, and shake some of the fundamental principles of our sector, the imperative that each of you feel empowered and confident to stand for your mission in the public policy space is essential.
The sector is wildly diverse in its missions and perspectives. As part of our democratic process, I guarantee that for almost every issue you love and cherish there is a nonprofit that seeks to support their mission in opposition. And yet, for as diverse as we are in our missions, budgets, scope, and scale, we are held to the same rules. I want to call out three today because again the public discourse and some in power are seeking to shift our very structure for their political advantage. This is the time to stand strong.
Next Step Action: This is the time to review your bylaws. Understand your own rules. If you have members, understand why you have them and how they serve your mission work. Be clear and have a plan for how the board will create a slate of “the right people at the right time to move the mission forward” regardless of how the next step of elections occurs.
2. Know the opportunities and limitations of your public policy voice. Too many 501(c)(3) organizations are confused by what they can and cannot do in the public policy area and as a result simply opt out completely. At a time when nonprofits are subsidizing government because agencies are unable to pay their grants and contracts on time, and when the burden to do more with less is ever mounting because of increased demands for services with shrinking operating support and workforce shortages in every corner of our sector, your voice matters. The one rule however that you must abide by if you are a charitable 501(c)(3) nonprofit is something called the Johnson Amendment which among other things keeps your nonprofit nonpartisan by enforcing the rule that you DO NOT endorse or oppose a political candidate. We have written extensively on this topic before when it was under the threat of repeal, but those threats remain and in a deeply divided political landscape the temptation to endorse a candidate can feel very tempting. We urge you to reconsider any small or large steps in that direction and to be mindful that this is one of the few spaces in our democracy that is politically neutral on purpose.
Next Step Action:
3. To be sure, our tax status designation is not a business model. Every nonprofit organization should make a profit because when they do it means more mission will occur. The IRS has several rules to ensure that money goes right back to mission including the requirement of voluntary board service, annual reporting of income and expenses through the 990 tax form, and a clear definition of unrelated business income which incurs taxation. What drives each nonprofit’s economic engine is really one of two things: Either it is earned income derived from a fee-for-service model in which it is direct or third-party pay or charitable contributions. Each organization has its strengths and “dabbles” as we say in the other. The IRS requires all nonprofits to pass the “public support” test to varying degrees which means that no nonprofit is simply earning all its revenue. Still, the vast majority of our nonprofits are engaged in earned income practices to support and advance their missions as seen in this graphic produced by The National Council of Nonprofits.
And yet, we continue to see local lawmakers be confused by this activity and too many who try to impose both property and other taxes on our sector because we earn our income. What is missing in their equation is the mission impact we have in the community including but not limited to saving the same government time, staff, and money for providing the services in the first place. This is an ever-present concern, but the escalation of these taxation battles across our communities over the last five years is taking up enormous resources that could be better spent delivering mission.
Next Step Action:
In a country and state so divided it is easy to point out the areas where we are at odds, let’s also never forget that each of our contributions to improving people’s lives, strengthening our economies, and deepening our commitments to the fundamental principles of democracy are what hold us together.
Be strong. Have confidence. Use your mission voice.
Laurie
The classic vicious cycle in nonprofit operations is the need to raise more money to hire more people but needing people to raise more money. It is an easy scarcity trap to fall into regardless of your organizational size, topic, or geography. Scarcity thinking dominates nonprofit and fundraising culture. It drives us to believe there is not enough time, money, energy, or people, leading us to the inevitable conclusion that we are competing with one another. Countless nonprofit boards and staff believe this false narrative and because it is so pervasive it is easy to find evidence to be right. And yet, we must resist the scarcity trap if we are going to be truly successful.
The alternative is an abundance mindset, one that asks you to think about what is possible rather than what is not. This way of thinking reminds us that there always is enough time, money, energy, and people for the things that truly matter. To embrace this mindset requires an understanding of what matters most which takes thinking and planning about what is within your locus of control.
To be clear, having an abundance mindset does not mean that the playing field is flat with equal access and that there is no competition built into grantmaking. It just means that your energy isn’t in all the places it is normally placed -which is on someone else or some other group. Funders are also subject to scarcity thinking, which at times looks like they are purposefully fostering a Hunger Games landscape. But let’s remember the funders that are creating those spaces (which is not all of them by a longshot) are caught in the trap too. They need reminding as much as everyone else. To shift our mindset requires us to shift our perspective on the idea of competition.
In so many cases, it turns out that our greatest competition is not external but instead it is our ability to easily explain to the right audience at the right time in the right way, why our mission matters. And again, there are some systemic and proven barriers to making our case but even when we have the privilege to do it, we mistakenly elevate our work by lessening that of others. Making our case should never be about dissing the work of a similar group, instead, it needs to focus on why our mission makes a difference in our communities and how that work is in sync with the larger landscape including all the other groups. Simply put, the scarcity trap puts our energy in the wrong spot—outside us. This hinders our ability to raise more money in multiple ways. The donor, who likely also cares about the thing you just dissed, is turned off by your negative message, the message that your mission can solve any systemic issue alone falls flat, and your actual ability to follow through on your promise is shaken by your inability to see the bigger picture.
Here is a quick and real example to demonstrate how a shift in thinking can make a difference:
A local government has an annual funding opportunity. In prior years, the nonprofits showed up on the appointed hour to present their written proposal in two minutes. The body would deliberate and following the meeting would process the requests. One year, as the nonprofit leader approached the dais the funding body instead asked them to spend their two minutes talking about why their group was more important and better at what they are doing than the other groups on the docket –asking them to say why arts was more important than health or less important than recovery, etc. The scarcity landscape stage had been set. You might expect me to say that under that kind of pressure and power dynamics, the groups obliged the request, but, to their enormous credit, they refused. Instead, they quickly organized and one by one at the podium the arts leader spoke up for the recovery leader and the recovery leader spoke up for the health leader, etc. They leaned into abundance and the whole community benefited as a result.
Fast forward, I have shared this story enough times across our communities that other groups have rallied in similar circumstances with positive results. We don’t have to accept the power and privilege that comes with setting a stage of competition if we choose to show up differently – together.
An abundance mindset reminds us that this work is bigger than us, that we have a role to play to make it better, and that if we succeed it isn’t just our organization that “wins” but instead what “wins” is the positive impact for the community. In this way, we say, “money goes through your organization, not to you” because donors are not giving you money, they are funding the results of the mission within the community.
Abundance thinking of course is not magical thinking. No wands or wizardry are present in this work but small shifts in our actions, words, and context will help us move to what we can do rather than have us spinning on what we can’t.
Unfortunately, too many scarcity traps exist to name them all. We’ve created a top ten list to see how small shifts toward an abundance position can make a remarkable difference in your organization’s efforts to generate the revenue your mission needs to thrive and not just survive.
A shift in any practice will not change the reality that as a country we are seeing a dramatic shift in philanthropy. Still, plenty of evidence shows that when the people leading this work (board, staff, volunteers) shift their thinking, words, and actions, the positive results are very real not just for those who are doing the work, but also for those who are donating to it, and those who are benefiting from it in our communities. The choice then is to lean into the vicious cycle we were all taught to believe or shift our context toward a more productive space for everyone. Which will you choose?
Laurie
P.S. Want to learn more about fundraising planning? Check out this blog: Where’s the Magic Wand for Fundraising? Or sign up for our upcoming class on understanding a fundraising plan.
Major developments are underway in federal grantmaking!
The Office of Management and Budget (OMB) has announced significant revisions to the Uniform Guidance, promising big changes in how organizations access federal funds. For many nonprofits, this will mean easier application and reporting processes and more funding for indirect costs/overhead.
Join a free webinar, Thursday, May 30 from 11:30 am to 12:30 pm Alaska time, as OMB officials Deidre Harrison and Steven P. Mackey discuss the latest revisions, implementation timelines, and real-life implications for charitable nonprofits. Register to save your spot.
We want to hear from you! What are the greatest barriers you face in your ability to meet your mission? What would strengthen your capacity? We’re conducting research with four other states – Washington, Oregon, Montana, and Idaho – to gain a comprehensive look at the sector across the Northwest. Foraker will share the survey trends with funders and use the redults to reflect on our strategies to better meet your needs here in Alaska.
Your organization’s participation will allow us to provide you with an analysis of how your nonprofit compares to others in the region in these categories:
To receive the analysis after the survey closes, please provide your email at the end of the survey (optional).
Your contact information and answers will remain confidential – only the trends that emerge will be reported. The survey will take less than 30 minutes to complete. We’re requesting that the survey be completed by the executive director (or their designee) or in the case of an all-volunteer organization, by the board chair.
Take the survey here. The deadline to participate is May 17.
The Foraker Group seeks an adaptive individual with high emotional intelligence and an interest in joining a fun, collaborative team as a Leadership Transition Guide. In support of nonprofits experiencing a change in leadership, the Leadership Transition Guide leads multi-phased consulting projects using a holistic approach and is part of a team of organizational development staff, consultants, and recruiters who partner with Alaska nonprofits through well-managed leadership transitions. In addition to managing a portfolio of leadership transition projects, the Guide will collaborate internally to continually improve our service. The ideal candidate will have a passion for supporting the advancement of nonprofits and growth of people, a strong ability to act strategically, excellent communication skills, and a commitment to the values of diversity, equity, and inclusion. Learn more here.