The Foraker Group

You may recall that in 2016 the Obama Administration proposed changes to the Fair Labor Standards Act’s (FLSA) minimum salary thresholds for exempt positions.  These changes more than doubled the minimum threshold and impacted many of our nonprofits in the state.  At the eleventh hour, the proposed changes were enjoined by the U.S. District Court in Eastern Texas days before they went into effect.  It didn’t end there, but the changes were halted.

Following new proposed changes and a public comment period earlier this year, the final rule was issued this week for changes that go into effect on January 1, 2020.

Is there an increase to the minimum threshold for exempt employees? Yes.  This federal ruling increases the minimum weekly threshold to exempt positions from $455 ($23,660 per year) to $684 ($35,568 per year).  The exemption for Highly Compensated Employees (HCE) is also increasing from $100,000 annually to $107,432 per year.

Is the increase as significant as the 2016 proposed changes? No, not even close.  In fact, because the changes are less dramatic, they impact fewer Alaska’s nonprofits.  Why? Simply put, minimum thresholds for Alaska Wage and Hour still exceed the federal minimum even with the increase issued this week.  Alaska Wage and Hour applies to Alaska employers with four or more employees whereas FLSA, a federal law, applies to ALL Alaskan employers, including those with three or fewer employees.  There is also a difference between how the federal and state minimum thresholds are determined.  A specific dollar amount per week is established under the FLSA.  However, Alaska Wage and Hour’s minimum threshold is calculated as twice the state’s hourly minimum wage.  Currently, Alaska’s minimum wage is $9.89 per hour, thus the minimum threshold for exempt classification is $791.20 per week under Alaska Wage and Hour.

What does my organization need to do? Although these changes do not impact all nonprofit employers in the state, this is a reminder to verify classifications are correct and that exempt employees meet the three factor test for determining exempt classification: 1) they are paid the minimum weekly threshold, 2) they are paid on a salary basis, and 3) the position satisfies the duties and responsibility requirements.

Are you ready to take what you learned this summer about advocating for your mission and make it part of your organization’s DNA? Join us for Creating Your Successful Advocacy Program: A Step-by-Step Approach on October 29.  Looking for support outside of Anchorage? We are ready to help you build a plan that can guide your work. Give us a call to find out how to schedule an advocacy training in your community.

Register today.

We are excited to launch a new program at Foraker! We believe one of the critical pieces of nonprofit sustainability is recruiting and retaining the right people to advance mission. For many years, Foraker has offered the services that together make up this new program. Now, we are combining our offerings into a comprehensive approach for a one-of-a-kind service specifically designed for mission success.

Leadership Transition will have two components – expanded Succession Planning services for those who are looking ahead at a change in leadership, and Prepare-Search-Thrive – a new approach that guides organizations when they begin the process of changing leaders. Our focus with both components is on critical leader positions regardless of title.

We encourage you to share this information with your board and call us with questions.

“Coming together is a beginning. Keeping together is progress. Working together is success.“ – Henry Ford

We know now that several important items in the state budget survived a second veto by Governor Dunleavy. Still, some critical programs sustained significant cuts. Those include: Public Broadcasting ($2.7 million), Ocean Rangers ($3.4 million), Medicaid ($50 million), Adult Preventative Dental Medicaid ($27 million), Behavioral Health Treatment and Recovery Grants ($6.1 million), Adult Public Assistance ($7.5 million), Nome Youth Detention and Treatment Facility ($2 million), Village Public Safety Officer Program ($3 million), Alaska Marine Highway System ($5 million), rural airport maintenance ($47 thousand), and fund capitalization of the Community Assistance Program ($30 million). And even these numbers don’t tell the whole picture. For example, experts estimate that when considering the loss of matching funds and other contributing factors, the $50 million cut to Medicaid is really a $300 million loss. And we know more is coming our way.

While all of us strategize about how to continue our services and ensure that our communities still thrive, many are experiencing fear and exhaustion. We recently conducted a survey on how Alaska nonprofits are responding to the fiscal crisis. Not surprisingly we saw that many are making significant changes including lay-offs and program downsizing while others are considering merger and new ways of delivering service.  We noticed a few trends and we heard you need support. We’ve created a guide to help you decide what to do next. We hear you.  We are with you.

It’s important to note that part of the budget crisis nonprofits face right now is not new. For some time now, many organizations have been subsidizing the state by waiting for payment for services that were completed in one fiscal year and paid in the next. This delay is unconscionable at any time, but now it seems worse for a few reasons.

First, this marks yet another year of budget cuts that have left our organizations with no margin. It has also put additional pressure on budgets that were already operating in a deficit. We have been doing more with less for so long that doing anything with nothing is simply not possible this time around.

Second, a trend that makes some sense, but we didn’t anticipate, is that groups in the deepest crisis are those led by new staff. Let me be clear, it is not that these new leaders are not qualified to do their jobs – They are and you are. But when you enter an organization and are just learning to navigate a new board relationship and all the other critical relationships you experience, and you are still learning all the factors of running the business, and then you get slammed with a title wave of budget chaos – on a good day this is hard to manage. Multiply that by being new in your job, and the crisis just seems that much worse. Whew! So, let me say this again – clearly. This is not the normal you signed up for, and asking for help is a sign of strength. Know that we continue to stand beside you, and we need to hear from you.

We also need to stand with each other. In the midst of all of this tight rope walking, there are some slippery slopes we need to avoid. I am seeing it and hearing it already, so let’s just call it out so we can navigate our way past the temptations. These are not new ways of thinking, but under stress they amplify. Together they remind me of the idea that sometimes our greatest barrier to success and moving forward is ourselves. Here are four temptations already playing out across our sector:

1. The temptation to live in the silo of our institution. To be clear no organization will ever achieve mission on its own. Change happens when we work together. We have seen just this summer the power of a movement – Alaskans coming together outside of party and politics to say what mattered. The tendency to stay in our silo where it is safe – where we know and where we can have the perception of control—is not the right choice for those we serve. It is also a very lonely and stressful way to work. We need each other. We always have.
2. The temptation to believe it is about one’s self. In this world, and especially with the next generation of leaders, believing the workplace is a place for heroes rather than hosts will surely divide us. To be a host means many things – collective participation and decision making, shared leadership, engagement. It also acknowledges that there is power in the invitation, and we must use that power to invite more, not fewer, people to the table to chart our way forward. We must also let go of the power so that others can harness it and create more and more tables. It is time to be a host and a guest. It is time to welcome less heard voices and perspectives and step back so that others can step up and in. What will it mean to create this space in your board room, with your staff, with your stakeholders? Now is past time to find out.
3. The temptation of scarcity. You have likely heard it, too. It takes many forms – for example, “fighting for the same donor” or believing that we’re all going after a piece of a defined pie and “if you get more, then I get less.” I have been doing philanthropic work for almost 30 years and the people and groups that approach philanthropy with a model of scarcity lose in more ways than not just securing the gift. The mindset of scarcity places the emphasis outside of ourselves and in so doing we miss the opportunity to work on our own areas of improvement and acknowledge where our strengths can lead us. It is true that many outside our sector don’t fully understand how nonprofits generate revenue, both earned and philanthropic but this challenge is not new. Surely we can all acknowledge that there is work each of us can do to improve our donor relationships, improve our communication, and improve our earned income options. That work starts with ourselves – not with someone else.  When we let scarcity drive our need for competition and power we spend a lot of time and energy, but the return is less than zero. Change is happening in many ways including the departure of BP.  These changes will alter the funding landscape in ways we don’t fully understand and will likely add to the scarcity mindset. But allowing this lack of understanding to cause us to enter into a “zero-sum game” with each other only distracts from our true work of creating donor-centered philanthropic structures that engage individual Alaskans in meaningful, not transactional ways. Competition is a recipe to fail. This is the time to get clear on what is driving your economic engine and focus on ways to build from that strength.

As a side note for those primarily generating revenue from grants and contracts with government. Scarcity is at play here, too. This is the time to refine our relationship with the state as a contractual partner in serving Alaska. We are in this work together. They need us to do the work in ways that save both time and money – we need to do it in the ways we know best serves Alaska. None of this is fast, but all of it is necessary.

4. The temptation to stay in reaction mode. With so much coming at us each day, it can be hard to remember that you have a set of goals – that you have a plan. Now is the time to recommit to understanding the difference between urgency and crisis and from using all your energy to react and respond at the expense of having no energy to be strategic. Our bodies and our organizations can only live in a state of high stress for so long before we break. This is the time to make yourself and your team step back. Take a deep breath. Practice “we care.” Take out your plan or gather together and set a vision that can transcend the immediate crisis. We might not know how we are going to get there, but we will never get there if we don’t hold the vision.

The temptations are real: to silo, to focus on one’s self, to preserve our turf, to believe that we are working at odds, and to stay in crisis. But what I know for sure in this very uncertain time is that our missions are stronger when we work together. I also know that we can only move at the speed of trust to avoid many of these temptations – just calling them out will not be the whole solution. It will take us all – supporting each other – countering the effects of this prolonged stress with connection, creativity, and support. Through it all, we are with you today and into the unknown future.

We recently conducted a survey on how Alaska nonprofits are responding to the state fiscal crisis – we heard from many of you that you need support. Here are nine ideas to help guide you. You can use these as a conversation starter with your board and leadership team. You can also call on us. We are ready to guide you.

As you go through these, help your board and staff be as strategic as possible to avoid surprises. And remember – don’t just create the plans, live them!

1. Create or update your strategic plan: Not a new tool for sure, but an essential one. If you don’t know who you are and where you are going, every road will take you there, and every crisis will distract you.
2. Create a leadership succession plan: Attention to leader succession makes all leadership transitions easier on the board and staff while ensuring organizational continuity and mission success. If you want help with this, we offer customized services that match your budget, size, and operational complexity. Our goal for you is to thrive, not just survive during change.

Gather a small team of advisors to look closely at your financial and core practices as you use each of these tools honestly as a team. If you suspect your organization is approaching crisis or is in it, you can use the results to gain clarity and spring into action.

3. Gauge your financial stability: Spot potential financial problems before they send your organization into crisis – or engage the board and staff in a clear conversation on your financial stability with our Indicators of Financial Crisis
4. Engage in scenario planning: While much of this work often is touted as strictly a financial calculation, we strongly encourage you to use the Foraker Nonprofit Sustainability Model to gain a full picture. We are available for consultations to help you think this through. For a resource that focuses solely on a financial framework, take a look at this Revenue Analysis Worksheet created by The Wallace Foundation.
5. Communicate in a crisis: Be ready to communicate changes to your stakeholders (and the media) using our Crisis Communication Checklist.
6. Prepare for staffing changes: Based on your scenario plan (which includes your budget), you might be considering furloughs or permanently downsizing your staff. This is careful work that should be done with your core values as your guide. Having the appropriate policies in place can keep you from making costly mistakes and help in an already unsettling time. Check out our sample furlough policy or contact us to create or update other staffing policies or staffing restructure plans that are right for you.

This work is bigger than each of us, and bigger than our organizations. Staying connected and supported is essential and can also create new opportunities.

7. Meet with other nonprofit leaders: Many of you have indicated that you want to connect with each other. Mark your calendars for existing opportunities like our CEO Connect series and our Advocacy in Action Watch our website for additional ways to connect, or ask us to help by convening a group on a specific topic. As a neutral convener we are happy to hold the space for conversation, connection, and comradery. Let’s practice abundance thinking and action together.
8. Consider new strategic alliances: Is the timing right to think about delivering mission in a new format? Is the current framework for financial stability viable anymore? Is the structure holding you back from greater solutions? We are ready when you and your partners are. Let’s talk about strategic alliances and the options that are most viable to do the most good.

Never before have we seen so many nonprofit leaders create time and space to stand for their mission and for the sector like you have this summer. Amazing! Your voice matters! And I do hope that your actions are our New Normal. Here’s one last action I hope you will incorporate into your mission work every day.

9. Step up your organization’s advocacy game: Are you ready to take what you learned this summer and make it part of your organization’s DNA? Join us for Creating Your Successful Advocacy Program: A Step-by-Step Approach on October 29. We are ready to help you build a plan that can guide your work. Let’s get started.

These are just nine options to take a strategic step and move forward. If your organization needs help or is in crisis, we urge you to seek help. You may choose to tap the expertise on your board, or find another outside resource. You can call us at 907-743-1200. We have experienced staff that can discuss ideas with you in a confidential and judgment-free environment.