I had the privilege to attend the 2012 Association of Small Foundations Conference in San Francisco, 6-8 October, attended by more than 1,000 people – trustees, staff and advisers to small staffed foundations and some donor advised funds. I had the opportunity to lead a session on the ‘old or maybe the new old normal’ – ‘What you should know about government cutbacks to non-profits’.
I was joined by Colin Lacon, president and CEO of Northern California Grantmakers, Chris Hoene, the incoming executive director of the California Budget Project, and Barbara Garcia, Director of Health at the San Francisco Department of Health.
The session took the state of California as a case study, as their state budget is in the deepest crisis in the US – next in line is my home state of Illinois. In fact the California state budget deficits over the last five years have cumulatively totalled $145.9 billion, and there has been a $20 billion reduction in state spending on human services over that same period. As we discussed, this is a frightening time. Clearly NGOs have been deeply affected and private donors are trying to determine how best to act given this ‘new normal’.
The NonProfit Finance Fund’s State of the Sector Survey of 4,500 human service organizations indicated increasing demand for services, delays in payments, waning cash reserves and a bleak outlook for 2012. Sadly their findings also revealed that only one in five of the NGOs surveyed said they felt comfortable talking with their donors about cash flow concerns and only 6% said they were comfortable talking about debt. Nearly three-quarters of these leaders said they could not count on their boards to leverage their relationships to raise money and 40% said their boards don’t understand the basics of their organization’s financials.
We discussed what donors can do to mitigate the ‘pain’. What about engaging in public policy reform, supporting organizing and advocacy to hold government accountable to the most marginalized in our society? What about capacity-building to assist NGOs in training board members on fiscal issues and fundraising, engaging with regional associations of grantmakers in public policy reform that protects the citizens of your state or city, or even considering providing PRIs (programme-related investments) as bridge loans given the long waiting period for reimbursements from the government?
Amidst the sessions on strategy, next generation, increasing board effectiveness and impact investing, the looming reality of loss of government funds was acutely on the minds of the attendees. The climate in which we are now living demands that donors become highly strategic in their giving given this new normal.
Betsy Brill is president of Strategic Philanthropy, Ltd.