Two forces are rapidly converging and cannot be ignored

  • 34% of Americans studied have ‘not too much’ or ‘no confidence’ at all in nonprofits. Only 16% expressed a ‘great deal’ of confidence.
  • The percentage of people who feel charities do a ‘very good’ job in helping others has fallen from 34% in 2003 to 25% in 2008.
  • 70% say charities waste a ‘great deal’ of money. Only 11% feel they spend money ‘wisely’.

While this news is alarming, the fact that when asked the same questions about the nonprofits in their own town or community, the responses, while a bit better, are not statistically so, and would fall within the margin of error (3%).

These critical and depressing findings can be found in the April 2009 Brookings Institution report: “How Americans View Charities, A Report on Charitable Confidence“, by senior fellow Paul Light.

Couple this with the following from Strategy and Business, published this month by Booz, Allen Hamilton.

The shifts in global output are striking. The International Monetary Fund projects the world economy will have shrunk by 1.1 % in 2009, with mature economies, including the United States, Germany, and Japan, contracting by 3.4% and emerging economies growing by 1.7%. In 2010, overall global growth is expected to hit 3.1%, but China is forecast to grow by 9% and India by 6.4%. Meanwhile growth in the United States is projected to be 1.5%…

So, if China and the U.S. started even at the end of 2008, the result by the end of 2010 is China’s economy has grown by 10.7% and the U.S. economy has shrunk by 1.9%, a differential of 12.6%. Nonprofits are not immune to cascading effects of this global reality.

The article goes on to say that US companies, if they are going to remain competitive must commit to three things: innovation, strategic approaches and operating models aligned with new realities, and cost containment. The consequences for American business of not responding are self evident.

So, when I couple the negative view of nonprofits in general with the downward pressures on America’s wealth building engine, it’s no surprise that for the first time, I am hearing business people (who are in a fight just to survive), local civic and political leaders (with less and less to work with), and heretofore generous individual donors (whose wealth has shrunk markedly) expressing little patience with nonprofits who do little to innovate, maintain their historic business model, and run up ever-increasing deficits instead of containing costs.

Our field must respond. Why? Because if diminished confidence and a shortage of available resources weren’t enough, shifting consumer economics are driving new behaviors (saving vs. spending, deciding what’s necessary vs. what would be nice to have, becoming more price conscious); demographic shifts are influencing preferences (preferring experiences to presentations, wanting to engage instead of simply attend). While all this is happening outside our organizations, inside our organizations, long periods of denial and excess optimism have conspired to create high levels of stress, and in some cases, outright paralysis across the institution. This stress and paralysis is stifling artistic vitality. Time and energy—human capital—gets spent putting out fires, fighting over limited resources, and deciding who to blame.

Well, the good, and the bad news is that no one is to blame, and that we are all to blame, in assuming for far too long that everything could remain the same, while the world shape shifted on us.

Getting started requires courage. First we must stop the hemorrhaging—confront the brutal truths— and decide what’s most important—what’s mission critical; because without cash and without clarity of purpose, there is no future. Once this hard step is taken, innovation is required—challenging openly and honestly the assumptions that got us here, and finding fresh ways to achieve something worthwhile.

Finally, in achieving these two outcomes, we must build an effective and collaborative culture around the unique value that each stakeholder—artist, trustee, manager—brings to the table. By embracing these three responsibilities—priority setting, innovation, and engagement—we can reclaim our vitality—organization by organization, and in so doing, remain a force in assuring our nation’s rightful place as a major contributor to a better world.

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2 thoughts on “Two forces are rapidly converging and cannot be ignored

  1. John McCann March 19, 2010 at 9:35 am Reply

    Indeed, and thanks Donna for the thoughtful reply…and I believe we are beginning to see the ‘artistic geniuses’ of today being met with innovative managers, committed trustees and in some instances, inspired policy and funding folks who are devising new organizational models, some a far cry from our rigidly structured, free standing non profits who too often have seen their role as merely to produce or present content for consumers to purchase. Collaboration, engagement, participation, all lead to greater value creation, which in turn, should lead to improved confidence and increased giving.

  2. Donna March 18, 2010 at 6:43 pm Reply

    Americans are a generous people. In 2008, Americans gave more than $300 billion in charitable donations. Total contributions for 2009 are anticipated to be comparable. Despite a flagging economy and loss of confidence in both the philanthropic motivation and the competence of non-profits, Americans continue to donate their goods, money, effort and time to various charitable, religious, civic and humanitarian causes. Sharing is a psychologically rewarding enterprise for most humans.

    At over $100 billion, religious organizations are by far the recipients of the greatest proportion of total contributions. Educational donations rank a distant second at less than half that amount. Americans support the institutions that are “closest” to them…the members of their own “tribes”…their churches and their schools. The Arts in recent years have only been able to depend on 4-5% of total giving…approximately $13 billion. Other important causes have fared even worse.

    The ability to analyze and reflect upon our past, present and future through music, drama, artwork and other media is one of the most ancient traits that makes us human. It began in pre-history with a group of primitive people gathered around a winter campfire listening to the tell. It is intrinsic to our very psyches. It is no less important in today’s complicated existence.

    If the arts are to remain viable in a world teeming with technological addictions, perhaps a different strategy must be fostered. The arts must be experienced in order to be fully appreciated and in many cases supported. Although a flat screen can entertain and educate us in many ways, it is no competition for attending a play or viewing a work of art in a museum. For many people in the United States, a trip to New York City to see a Broadway play is financially out of the question. The historic Barter Theatre in Abingdon, Virginia is a shining example of taking fine theatre to the people. Many of the residents of that small community feel that they have a vested interest in the success of The Barter and behave accordingly. Artists from other genre have been welcomed into that unique community and both the economy and culture have benefitted from their presence. The productions at The Barter rival many that I have seen In theatre districts throughout Europe and the Americas.

    In remote Alaska, I have been able to enjoy fine national and international theatre productions because the arts are subsidized by our local oil, airline and financial corporations to name but a few. At a recent “Broadway” production of “The Lion King”, I sat in the darkened Atwood Theatre with others… some who had come from distant corners of our state to this event. My husband and I sat feeling quite ridiculous with throats tightened and tears streaming down our cheeks during the opening scene. We were surprised when we looked around and found that many of the others in the audience were having a similar reaction to the experience. If ordinary people can be made to feel like that about what would seem to be a children’s play, or a work of art, or a novel or even a well-done motion picture, then financial support for these endeavors whether through revenue or contributions should present no significant problem.

    Although I personally dislike the aggressive methods utilized by the more traditional altruistic charities to engender more giving… mail and telephone bombardments and sappy commercials…, they certainly seem to work. Efforts to solicit corporate, state, federal and local funding for the arts, though laborious, must be unified and efforts must be increased. Insurance companies and financial institutions are supposed to be under closer government scrutiny in the future. More than likely, they will be looking for worthy causes to finance, thus, making them a good starting point for funding efforts. Subtle advertising on television, radio and the internet might work to acquire individual support. It must be kept in mind that in 2008, individual people (as opposed to corporations, foundations and bequests) donated 75% of the $300 billion in charitable contributions. Great care must be taken to ensure that all money is spent wisely. In this economy, most people need to believe that they have contributed to a worthy cause rather than to a biohazard.

    If the dire needs of such invaluable treasures as the arts are presented to the American people, they will find ways to support them regardless of the economy. Historically, artists of every ilk have encountered psychological, physical, social and financial obstacles and to the benefit of all, they have been able to produce, regardless. I am quite confident that the artistic geniuses of today will prevail as well.

    Please note: These topics are of interest to me. If I have inadvertently stumbled into a closed

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