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Industry Outlook: Nonprofits

Utah’s nonprofits are collaborating with the business community in unprecedented ways. Here, leaders from that industry explain how that collaboration not only bolsters the services they can provide, but enriches and strengthens the entire community.

A special thank you to Kate Rubalcava, CEO of the Utah Nonprofits Association, for moderating the discussion.

PARTICIPANTS:

Stephen Acker, Fit 2 Recover

Andrea Alcabes, Jewish Community Center

Catherine Barnhart, English Skills Learning Center

Chris Bray, United Way of Salt Lake

Kristy Chambers, Columbus Community Center

Chris Conard, Play Works Utah

Mircea Divricean, Kostopulos Dream Foundation

Janine Donald, Splore

Brandie Evans, Rocky Mountain Care Foundation

Maria S. Farrington, Holy Cross Ministries

Luis Garza, Comunidades Unidas

Wendi Hassan, Cache Valley Center for the Arts

Shawn Jimerson, Urban Indian Center of Salt Lake

Sonya Martinez, Neighborworks Salt Lake

Kevin Murray, Holland & Hart, LLP

Jared Perry, Make-a-Wish Foundation

Rita Wright, Springville Museum of Art

 

What role do you think businesses play in the success of the nonprofit sector?

FARRINGTON: I think all of us look for business and corporate representatives to sit on our board, to bring a dimension of the business that we’re looking at, to bring a dimension of the problem, the challenge that we see in our community. Needless to say, we look to the corporate and the business section for financial funds.

MARTINEZ: In addition to board representation, there is also opportunity for committee representation and one-time projects. Most of us are strapped in terms of capacity, which means the skill set that is brought from the business sector helps us actually with capacity building, which doesn’t always require a check to be written.

ACKER: At Fit 2 Recover, one of the things we are most proud of in the last year is we created an interior climbing wall in our gym. It was done with the help of the Petzl Foundation and Momentum Indoor Climbing. What they gave us, in addition to their expertise in that area, is access to their network. So the ways in which we knew people all of a sudden grew significantly. This is an area that we want to be able to communicate with, but we didn’t have any access until they became our corporate partners.

CHAMBERS: We look to them for their financial acumen—to sit on our boards to assure that we are sustainable over time and have an understanding of what that financial stewardship needs to be.

CONARD: It’s important for the business community to know that nonprofits are community organizations and we have a pulse on what’s happening in the greater community. The more that the business community helps to bolster the nonprofit community, the stronger the business community is going to be in return. So it’s almost an investment in their own business to contribute to nonprofit organizations and strengthen our community.

WRIGHT: That’s one of the myths that we’ve been dealing with—making sure our business community knows we’re interested in partnering. We’re not there to compete. We are looking for those complementary interactions that we can encourage so we build one another up.

DIVRICEAN: I was recently at a CEO summit at Montage in Deer Valley. They had a panel of new startups, and they are doing extremely well. Every single one of them partner with a not-for-profit, and because they did that people have buy-in and they are thriving. They are doing tremendously—great sales and revenue. So the more the businesses open up to their partners in the not-for-profit community, the more successful they will become. Because everything is changing in today’s environment. We need to realign, they need to realign.

MURRAY: From the perspective within a corporation, we look for opportunities to partner with nonprofits. I would just suggest to you all that we look for those opportunities to make those one-on-one connections. Sometimes we’re not the best at going out and searching what’s out in the community.

PERRY: We don’t always just want corporate dollars; we want corporate expertise. Our stats are generally pretty lean, and we also have a mission that we are trying to accomplish. So our org chart is usually centralized to make sure we’re solving those community problems. But we don’t have legal staff. We don’t have financial experts. Those are the things we are really looking for the business community to help us with. We benefited from Holland & Hart filing trademarks, those kinds of things. So we’re not always just going to come and ask for money, but, really, we need some expertise.

As nonprofits, we have some of the same issues that businesses do, like increasing our revenue, marketing and taking a program to scale. What are some of the critical business or organizational development issues that are facing your nonprofit?

FARRINGTON: Cyber security for us is really important. You have that little “donate” button on your website. Yet we don’t have a robust enough staff for that kind of information. We just don’t. So we were able to reach out to a corporate partner who has a tremendous system, and we’re able to benefit from their knowledge.

BARNHART: A lot of us are pretty reliant on federal grant funding, which looks to be precarious at times—and sometimes disappears altogether. And yet I hear at the same time that we can’t be very reliant on corporate funding, so it’s kind of squeezing organizations from two ways.

HASSAN: When things do contract, as we saw in 2008, every source of our funding contracts. So we have a bit of a greater disadvantage perhaps than the business community—because at the same time our funding contracts, the social services nonprofits’ needs tend to go up. So finding those things that we can do best and keeping “scope creep” from taking over when there are so many needs and so few resources can be an issue.

When things do loosen up, as they seem to be doing now, making sure that we are still not taking on more than we can accomplish, that we are finding that niche that we can fill, that we are leveraging and making the highest and best use of our limited time and people is a continual challenge.

ACKER: One challenge that most of us face is that our growth is in a step function. When we hire one person, it’s a big, big deal. So what does that person do? Well, they fill that fundamental need that we think we have—like information technology, for example. Then we do have to go peripherally to the business community to pick up outside expertise, whether it’s in law, trademarks or whatever that happens to be. So our problem is we grow in steps, rather than a smooth path that would occur if we had a larger staff and resource base.

MARTINEZ: I just want to echo Maria: technology, technology, technology. We just can’t afford the robust systems. Maybe there’s a middle ground fix, but we don’t have the technology expertise internally to even figure out what can we afford. So we are often dealing with half systems or almost-there systems.

JIMERSON: One of the things we’re facing is that move toward a more appropriate business model. Sometimes culturally as nonprofits, we get in our own way because we carry around this change-the-world mentality. People come to us for these jobs to help them and make a difference. And that’s great energy you want to capture, but it doesn’t always mesh very well with the expectation of proper time management, handing down responsibility, handing up responsibility, finance, policies and procedures, and all those things that make a business function well for the sake of the business, not the individual, and, operationally, ultimately we want people to focus on the mission.

CHAMBERS: As you compare a nonprofit to a regular business, the complexity of our revenue stream is so much more significant because there is unpredictability to it. You are relying on grants. You are relying on certain federal funding. You are relying on donors who may or may not give one year to the next. So it makes it an interesting environment in which to work, because you need to do a lot of contingency planning. But what it does is force us to be really innovative in our approaches to things because of that scarcity of resources and using those resources to their highest and best use.

What I really, really enjoy about the nonprofit world is we have to look outward, right? We have to look outward to draw people in to make our missions work, and that forces us, really, to work with the private sector, government sector, philanthropists, the business community. It just brings everyone into a central cause and a purpose. It’s exciting when that all works.

CONARD: There is a shift in that we have to be thinking about diversified revenue streams. We have to be in an entrepreneurial mindset or we are not going to survive going forward. While nonprofits, I feel, are moving in that direction, I wonder if philanthropy and foundations are antiquated. What I mean by that is we need more funds and investments for marketing dollars. The funds that are tied strictly to programs won’t allow us to shift toward a more entrepreneurial mindset in our business operations. So if I were to ask something of corporations, of foundations, it would be fund the marketing plan, fund the IT, fund those things that will fundamentally make my program stronger and help us go to scale long term.

What do you want the business community to know about your philanthropic needs and how they can help you achieve those long-term goals, maybe doing something really outside of the box that may not be something you can seek traditional funding for?

DIVRICEAN: The view of what a not-for-profit is is changing. The shift is dramatic. Somehow the people that benefit from your programs, they expect free services, but at the highest quality level. But people that fund you, people that support you, they look at you as a not-for-profit. And because of that, they want you to have certain financial principles. Pay for your staff has to be lower for some reason. The resources are very different.

So the people that do want to support us look at us totally differently than the people that benefit from our services. I feel it every day. I am being held at a highest level of standards by the people that benefit from the programs, and they pay half or nothing for their services. However, the people who support us, they expect you to do as much as you can with volunteer work, pay your staff almost nothing, and so on. That is the shift that is happening, and it’s unfortunate. It is a survival game, to some degree, because you have to somehow educate your donors to give you the support you need in order to provide that awesome service.

BRAY: What I have found is that funders are on three different levels. The smaller funders want every single dime to go to programs—they want that 100-percent rule. As they get more involved and they are on your board and they understand your cost centers, they move to this other area where they understand the importance of paying your staff a livable wage and that retention is key to your nonprofit. If you’ve got churn, it’s like any other business in that you are not going to be able to deliver on your mission.

And then the ones that are really exciting for us to work with are those that can say, “OK, I get that it’s important to have these different cost centers, but I want to make population change and I want to work not with your nonprofit, but with other similar nonprofits in the sector. And how can we get to population change, how can we end poverty, how can we end homelessness, how could we end inequity within our communities, how could we make sure that every high school senior graduates and goes to college or is able to fulfill their dream?”

Those are big, complex systems and questions, and we find more and more funders are really interested in that and want to have conversations with a group of unlikely partners around nonprofits. It’s a cross-sector partnership, because they really understand that we can’t do this by ourselves. We need business, we need government, we need nonprofits. We need every sector in order to make sure that that happens for our community.

EVANS: That’s the vital part in bridging the gap between a nonprofit and a corporation—all of us have a different need and you have to find the right fit for your organization. And they have to fit equally, so it’s beneficial to both parties. It’s not always about money or time, but it may just be a skill set where we have this grand marketing plan, but with no experience in that kind of marketing world, having someone that knows about it. It’s just finding the right fit and making sure you’re both on the same page with that.

BARNHART: Just like businesses, we need investments; not a one-time thing, but say, “I’m going to take you on and invest in you.”

ALCABES: Labor costs are an issue. I employ 250 people in the summer, from the 16-year-old camp counselor to the CFO to myself, and we have to balance between our mission-based values of respect and paying people a living wage. Also mentoring them. I don’t expect somebody to be a camp counselor or a lifeguard for the rest of their life, but I want them to leave the JCC with a feeling of what it means to work, not to be abused, to have a good experience and to feel that they were respected and paid, and they understand what’s expected of employees. Some of them are high school students, so you’re really starting at the ground level. At the same time, you are trying to mentor some of them through middle management and upper management positions. You’re trying to attract talented people. You’re competing with even public employees and you can’t offer comparable wages. And you’re sort of depending, to an extent, on people feeling the passion of what you’re doing.

HASSAN: We sometimes have a cart-before-the-horse approach in nonprofits, where we have to compete so hard for funding that often the vision for that funding is defined by the funder. We might try to pretzel our programs into what might fit and be competitive for that funder. And then we have a competition between what we know needs to happen in our communities and what the funders will fund. We find ourselves going off and chasing the money, when what we really needed to do was this other thing over here.

The proliferation of nonprofits is somewhat due to this as well, because when we have an idea, in order to get funding for it, we think we have to start a new nonprofit to get that grant, instead of finding somebody who is already doing it and lending our labor there. Because that organization probably can’t get more grant funding just because we’re coming and helping or expanding something. So we feel like we have to create something new.

ACKER: There is an interesting trend that will affect what we’ve been calling business and what we’ve been calling nonprofit. I suspect the trend is that nonprofits will become B Corps (Benefit Corporations), in which we have a responsibility for a social return on investment as well as shareholder return on investment.

In the case of Fit 2 Recover, at this point, 30 percent of our revenues are fee for service. As we increase our overall revenue, we want to see that number move closer to 50/50. And the argument is, our grants are associated with programs as distinct from our infrastructure requirements. And if we can use that balance of our own return on our investments, we’re able to be more appropriate and aggressive when we have access to the program requirements.

So the thing we need from the corporate world is success in managing the risk of changing our business model. Because, yes, we have a lumpy revenue stream based on grants, but we have to have some sort of a reliable monthly income so we can pay all of our folks. How do we manage those two things? It’s moving toward this idea of multi-stream sources of revenue, partly associated with our services that we’re paid for, as well as those that we can ask for and support a partnership for.

DONALD: It’s changing the focus from our functional expenses—how much is going to programs, admin, fundraising—to really what are the outcomes of the nonprofit. What’s the quality of service? How many people are you serving?

At Splore, I am the only person who does fundraising and marketing. Everybody else in the organization is focused on programs. I’m writing grants to support our programs. Our programs could absolutely not run without their grants. But my time is classed to fundraising and admin, and I think that this model is really antiquated and it’s not a measure of how successful an organization is. We’re being held to a standard that definitely hamstrings.

PERRY: We’re getting CEOs that are telling us, “How do I get my employees involved?” So you look at the best places to work right now, and the companies that are named the best places to work are companies that give back and involve their employees in that. So we’ve got to be able to find ways to involve that element, which is good, into our model of operations for fundraising. Our corporate giving has gone up dramatically over the past year because we’ve been able to involve corporations as a partner, not just asking them for funding or understanding what our programs are, but by saying, “How can they partner with us and how can we engage their employees?”

CHAMBERS: One of the trends with philanthropists is there is more outcome, evidence-based information required from the nonprofit, including social impact reporting and other initiatives coming from the United Way and other agencies. But we’re seeing more and more, as we present ourselves to corporate funders, to philanthropists, that we need to apply for corporate funding based on our quantifiable impact—how many people served, for instance. Sometimes those measurements are not showing the full picture. But yet corporations are coming out with more prescriptive ways of wanting to measure success and requiring funding be contingent upon that.

Imagine an awful scenario where nonprofits no longer exist in our communities. What would our communities look like if they didn’t have our services?

ACKER: Without the nonprofits, we would have a sterile, cold and isolated world. Most of us have smaller organizations in which we have a very strong and intimate relationship with the people with whom we work, and we have shared values and common goals. That’s such a rewarding thing from the perspective of somebody within the organization.

My concern is if all of the nonprofits went away, all the ways in which we could, from very disparate places in our society, invest in a common social good would evaporate. And that would be a terrible cost. I would hate to see that loss.

FARRINGTON: If there were no nonprofits, our government—municipal, city, state, federal—would have to become more robust. They would have to really be able to expand their mission. I’m telling you right now, it’s not going to happen.

For example, in Park City education, up until this year there were very few full-day kindergartens. For poor people who are working two, three jobs and undergirding that tourism industry, what are they going to do with children? They have to have a job, but children cannot stay home by themselves. So nonprofits were able to help them understand that and set up a model. We’re able now to get out of that; it is a school system. That is state funded, federally funded. They are going to have to really belly up to the bar on this.

HASSAN: It would break my heart if all of the arts nonprofits went away. The building I work in is a 93-year-old theater that was built by the town’s industrialists. They actually built their first theater on the top two stories of a bank. So this was something that they relished, that they thought was a pillar of the community, that they wanted to use to augment and complement their business efforts.

GARZA: I’m particularly concerned about justice, equality and how different populations will struggle. There is a big, big disconnect between the government and different communities and how those are covered. The work that we do is really, really focused on facilitating the access, facilitating that connection. I definitely don’t see that happening in the next few years or decades, until the government and other sectors really step up and make sure we have equality and more justice in terms of how services are delivered and access to everyone who needs them.

ALCABES: We are a community-based program and part of what we do is we make it possible for people to exist in a community and be a part of something larger than themselves. It’s not built around a particular need or a disability, it’s all of the above. In fact, we have no idea how many Jewish people are members, but we know it’s a very small minority of our members. What we offer is a community where everybody gets to be who they are. And while you can’t quantify that as a need that, say, government or industry or redistributing wealth could fulfill, still it’s what makes being a part of where you live really your home. It’s a connection to other people; it’s that human interaction that we all need.

BRAY: I would love nothing more than for us not to need a nonprofit because every social issue is taken care of. Until that happens, I see nonprofits in four areas, working in ways that other sectors aren’t. The first one is that we would lose an incredible opportunity to leverage funding. Most nonprofits leverage state or business funding, oftentimes seven to one or 12 to one, and it’s incredible the amount of leveraging that can happen.

Also, we speak for vulnerable populations. They would not, many times, have a voice if the nonprofit sector was not out there advocating for them and helping them understand things that are maybe not popular or that are not driven by votes, but are really important to understand in our world. The third one is the ability to nimbly move to address issues. Nonprofits move faster than any other sector that I’ve seen. They are not oftentimes weighed down by the heavy bureaucracy that happens in other sectors.

The fourth area is volunteer opportunities. We help people get engaged in our community. We get passionate about what we want to work, and it helps balance us and it connects us to our society.

BARNHART: Our organization serves a purpose by teaching people English, but a bigger purpose that it serves is it brings together two communities that wouldn’t normally come together: the welcoming community of people who live in Utah and these newly arrived immigrants and refugees. And that’s the magic. It’s great that people are learning English, but it’s integration that’s happening, it’s communities united, it’s everybody getting to know a different part of the community that they wouldn’t normally interact with.

For people who want to get involved—maybe they are thinking about volunteering in their community or giving back to an organization, or maybe they have some capital to deliver to an organization—what should they know? What are the first steps they should take to get involved in our sector?

MARTINEZ: First, that person needs to know what they, themselves, are interested in, what they are worried about. The second thing is nonprofits. They need to hear from, go onto a website or meet somebody from a nonprofit that is very clear and cogent about what they’re doing, where they are, how they, themselves, measure their product.

BRAY: I would like to plug two organizations shamelessly. One, if you’re interested in being a board member, Utah Nonprofits Association has a LinkedIn page where nonprofits can list their board member opportunities, and people wanting to serve on boards can go to that and connect with someplace they are passionate about.

The other shameless plug I would like to do is for 2-1-1. They are a great resource that lists volunteer opportunities. You can either dial 2-1-1 or you can search on the website. And maybe thirdly, UServeUtah. If you Google UServeUtah, that’s an easy link to find just a wide variety of places to serve and volunteer and be involved.

EVANS: The biggest thing is there has to be something they feel passionate about. Whether it’s that they drive that same freeway on-ramp every day and it’s dirty and disgusting and they want to make a change, or there is an illness that they want to get involved in finding research dollars for.

If they find that passion, that’s what makes them a successful fit for us. Nonprofits don’t have a lot of money to hire workers. We rely on volunteers. And we are way more successful when it’s something that that person feels extremely passionate about, because it makes that hard work worth it. You don’t feel like you’re being run to the bone because you feel like you’re making a difference.

GARZA: When you volunteer, when you get involved in boards, you should see it as an investment in the community. We’re investing in something better. It should be a partnership, “I want to be part of a solution and I want to be part of that bigger picture of how my community can be better,” and seeing that as a specific investment and not a handout.

EVANS: I have this talk with my husband all the time, because he is very much from the corporate world. I’m working in a nonprofit and I volunteer for other ones. He’s like, “It’s so much time. What are you getting paid for this? Why are you doing this?” The biggest one that takes my time is an organization that we volunteer for, for my daughter, who is sick. We may not find a cure for her right now, but there are discussions that my husband and I have been forced to have, because she is sick, and maybe in the future she won’t have to have that discussion with her husband, her children won’t have to have that. So it’s working toward a bigger goal. It might not be an immediate payoff, but in the future it might be a huge payoff.

MARTINEZ: Think outside the box. It doesn’t have to be a project like painting a preschool classroom or cleaning up a garden. Do you have an expertise? Are you a professional in technology or design? Nonprofits always need help with their websites and social media. So think beyond what can I do this one time, once a year, every six months. Is there an expertise that you have, that you’re passionate about? What are you good at and what is important to you from a community perspective, and how can you connect those? Because I guarantee, even if you find a nonprofit that maybe you don’t think that you fit with well, the projects they have may fit well with you. So think outside the box.

HASSAN: I want to put in a plug for thinking beyond your passion. Explore your community. There might be something happening or a need you didn’t even know existed that you are not passionate about yet, because you don’t know.

PERRY: Do some homework as well. Look at program expense ratios, look at 990s, look at how a nonprofit is run. Be careful, because there are some nonprofits that maybe aren’t quite as trustworthy as others. Ninety-nine percent of them are fantastic, but do your homework a little bit. There should be indicators that say, here is an organization that’s worthy of time and money and resources.