About Bob Bob serves as President and CEO of GuideStar and serves on the boards of Vision TV, Grameen Foundation USA, and the AAFRC Trust for Philanthropy. More...
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Posted By Bob Ottenhoff on August 1st, 2011, in these categories: Fundraising | Nonprofit PracticeI recently spoke in Richmond at the Virginia Fund Raising Institute conference. VFRI is a cooperative effort of all of the Association of Fundraising Professionals (AFP) chapters throughout Virginia. These chapters organize annually to coordinate the VFRI in order to advance philanthropy through education and fellowship.
I like speaking to fundraisers because they deal mostly with people outside of the organization. They’re the ones that need to articulate the value proposition of their organizations and try to convince donors to part with some of their hard-earned money. Fundraisers face reality in the eyes of their constituents every day: How is our organization perceived? Do people value our work? What could we be doing better? As I frequently remind my staff, we don’t get a vote on determining how we are doing – it’s our users and stakeholders that do.
The title of this year’s conference was “Navigating the New Normal,” and that gives you some idea of what was on the minds of these Virginia fundraisers. I presented a session along the lines of the same theme, focusing on how big changes in society (such as more demand for data and more skepticism about institutions) and trends in philanthropy (such as more donor engagement and the power of the Internet) are changing the scope of work for fundraisers and in many ways making their jobs more difficult. Hanging over our heads was the down economy and the cloudy prospects for the year ahead.
As part of my session, I introduced them to Charting Impact, our new effort we recently launched with Independent Sector and the BBB/Wise Giving Alliance. We are urging every nonprofit to take the time to commit some serious effort towards answering the Charting Impact questions and spending time with their board and major stakeholders to discuss the answers. The five questions are:
1. What is your organization aiming to accomplish?
2. What are your strategies for making this happen?
3. What are your organization’s capabilities for doing this?
4. How will your organization know if you are making progress?
5. What have and haven’t you accomplished so far?
To test the value of these five questions at VFRI, I broke the room into small groups and asked the participants to test out the questions using their own organization as an example. The response was overwhelmingly enthusiastic. The fundraisers found the questions “valuable,” “meaningful” and “exactly what we need to be successful fundraisers.” One person told me it helped him more than any other session that day in learning what he needed to do in order to raise more money. If you haven’t done so, I hope you will take a look at Charting Impact and let me know what you think.
I ended the day with a quote from Andrew Watt, President and CEO of the Association of Fundraising Professionals, and coincidentally the keynote speaker at the conference. Commenting on Charting Impact, he said “Donors don’t support a cause
because of its efficiency; they support a cause for the impact that it secures for society – for all of us. Charting Impact will help to focus nonprofits – and their boards – on how to communicate who they are, what they achieve and how they achieve it, skills that all of us need to develop.”
Fundraisers: what other tools do you use to showcase your organization’s impact?
Posted By Bob Ottenhoff on June 29th, 2011, in these categories: Fundraising | Nonprofit PracticeAre the newly released Giving USA numbers good news or bad news?
The Good
It is good news that philanthropic donations from individuals, foundations and corporations increased 3.8 percent to $291 billion in 2010, or little more than 2 percent adjusted for inflation. After two bad years, it is good to know that we’re starting to experience an increase, albeit a small one.
It’s good news to realize that Americans gave $291 billion to philanthropy despite the terrible toll that the Great Recession has taken on employment and retirement accounts. It is indeed an extraordinary act of generosity. Even more remarkable is that giving remained at about the 2 percent level of GDP, where it has been for years.
The 2010 numbers are good news if your nonprofit is engaged in international affairs, since giving this past year increased by over 15 percent. This is a category that includes development and relief activities, including more than a billion dollars to Haiti relief. 2010 wasn’t so bad for education and the arts, either, with increases over 5 percent.
The Bad
However, it’s truly sobering to think that after peaking at over $310 billion in 2007, giving plummeted nearly $19 billion in 2008 and 2009. It took Giving USA two revisions of its numbers in order to recognize the full extent of the fall. No wonder our economic survey last summer reported that 8 percent of all organizations feel that they are on the brink of going out of business.
At this point, philanthropic giving is looking a lot like the state of my 401k account. As Patrick Rooney, Ph.D., executive director of the Center on Philanthropy, pointed out, at an average growth rate of 2 percent, it will take at least six years just to return to 2007 levels. More proof that my theory of a “new normal” is going to be here for a while in the nonprofit sector.
The Ugly
If you run a human services organization, 2010 wasn’t a good year at all with a decline in contributions of 1.5 percent (in inflation-adjusted dollars). If giving to Haiti disaster relief were not included, giving to human services would have declined by 4 percent.
Ruth McCambridge and Rick Cohen, in an interesting piece in the Nonprofit Quarterly, recalled the days of the 1962 study titled “The Other American” and pointed out that we are seeing a class divide where the groups that do well in charitable solicitations are those with higher income social connections. Ruth observes that there is a crisis among human service or social safety net groups, with declining charitable giving coinciding with decreases in government support for those that need it most.
In the end, the Giving USA statistics remind me a lot of the characteristics of GuideStar’s economic surveys and the country’s general recovery from the Great Recession. The recovery is uneven and unfair. Some are doing quite well (corporate profits are better than ever; the stock market has regained 90 percent of its value since 2007) while others are suffering greatly (high unemployment; high mortgage defaults). In the nonprofit world, the recovery is also uneven depending on what your organization does and where it is located. Averages can be deceiving.
We have long known that people think globally and act locally, which is why community philanthropy may be a real solution for organizations that continue to struggle for funds and increased demand for their services. These trying times may require a new approach. If you haven’t connected to your local community foundation you may want to consider it. Community foundations offer a powerful and personal approach to giving – they simply know the nonprofits in their areas the best, and they can funnel donations to those organizations in the community that need it the most. Check out GuideStar’s DonorEdge Learning Community, a group of community foundations who are the model of effective local philanthropy.
What do you think of the Giving USA numbers? Are they good news or bad news for your organization?
Posted By Bob Ottenhoff on December 30th, 2010, in these categories: Economy | Fundraising | Government | GuideStar | Nonprofit PracticeI spent some time yesterday preparing for an upcoming radio interview on nonprofit trends for 2011 with Lindsay Nichols of the GuideStar team. We identified three big issues that we think we will influence much of what goes on in the nonprofit sector in the year ahead:
- The economy: GuideStar released a report in late November that suggests that the free fall from the Great Recession is over, but the recovery is still uneven – with
 the speed and extent of the recovery depending on the geographic location, size, and type of the organization. Meanwhile, demand for nonprofit services, particularly vital social services, continues to increase.
- State and federal government financial issues: I recently wrote a blog about how nonprofits are being affected by drastic budget cutbacks in government budgets. Since then there have been a number of frightening reports predicting we could see a number of government bankruptcies this year. With government being the largest source of nonprofit revenue, this situation could get a whole lot worse before it gets better.
- Technology: No surprise to those working in the nonprofit sector: technology continues to change, modify and transform how we raise and donate charitable contributions. Network for Good recently published a new study about just how vital online and mobile giving has been to the nonprofit sector lately, with particular success seen after disasters such as Haiti or 9/11. At the same time, Apple has denied nonprofits to accept donations via their apps, which is causing some major discussion in the field. I recently blogged about this topic as well: http://ceo.guidestar.org/2010/12/15/apple-has-it-partly-right-nonprofits-should-be-vetted/.
Aside from these three major environmental trends, there are two other issues slowly evolving that could end up having a huge impact on the sector in 2011:
- IRS tax-exempt status revocations: As a result of the Pension Protection Act of 2006, there are about 400,000 nonprofits in danger of losing their tax-exempt status because they have failed to file annual returns with the Internal Revenue Service (IRS) for fiscal years 2007, 2008, and 2009. GuideStar has distributed multiple press releases about it, the latest in October. This will be a HUGE game-changer in 2011.
- Tax implications: Bloomberg Businessweek recently interviewed Dan Moore, GuideStar’s Vice President of Nonprofit Programs, as part of a story on how estate tax changes may affect charitable giving. In addition, when President Obama and Congress begin tackling the federal government deficit next month, look for the charitable deduction to be up for serious debate. Both of these two tax issues could have a major impact on how and when people donate to charity.
It will, as always, be an interesting year!
Posted By Bob Ottenhoff on December 20th, 2010, in these categories: Fundraising | GuideStar At GuideStar, our efforts are focused on revolutionizing philanthropy and nonprofit practice by providing information that advances transparency, enables users to make better decisions, and encourages charitable giving. At the end of the day, we want nonprofits to be as effective as possible, and we want donors to be able to easily determine which organizations with missions they care about are the most effective.
Whether you use GuideStar to make your year-end personal charitable contributions or to award a major grant, we hope you’ll consider the value of GuideStar’s contributions to improving the nonprofit sector. It is in the spirit of this commitment to philanthropy that I humbly ask for your small donation to continue our important work. Your donation allows us to continue to offer most of our information to users at no charge, a vital part of our mission as a nonprofit ourselves. Please check back here as I provide continual updates on our progress, and our steps forward on behalf of philanthropy nationwide.
I also want to extend my personal thanks to everyone who has dug deep and already contributed to GuideStar. I know times aren’t easy for anyone right now, and the fact that we are worthy of your donation is a resounding endorsement of everyone’s efforts at GuideStar.
As always, thank you for your time and energy on behalf of the sector and the causes you care about, and may the blessings of the season be upon you.
Posted By Bob Ottenhoff on December 15th, 2010, in these categories: Disaster Relief | Donors | Fundraising | GuideStar Have you been paying attention to the recent brouhaha over Apple’s long-time decision to ban donations on the iPhone via nonprofit apps? The New York Times recently weighed in and quoted Jake Shapiro, executive director of Public Radio Exchange, an online nonprofit marketplace for licensing and distributing public radio programming, as saying, “One of Apple’s major objections has been that if donations were to go through its payment mechanism, it would have to be in the business of managing and distributing funds and verifying charities as well.”
We think Apple is right to be concerned about the importance of vetting nonprofits. Individual donors as well as professional grantmakers are very concerned that their contributions go to legitimate, legal nonprofit organizations and not bogus or non-deductable charities we often read about.
There’s no doubt that Apple’s ban has upset nonprofits and donors alike. Care2, a huge online community of people passionate about making a difference, has started a petition urging Apple to reconsider, and nonprofit social media guru Beth Kanter has pledged to switch her business from Apple’s iPhone to Google’s Android.
But that doesn’t mean nothing can be done about it. GuideStar has a long history of providing trustworthy, vetted data to a variety of institutions: Facebook Causes, giving portals, corporate programs, large private foundations, financial institutions, donor advised funds, United Way chapters, you name it – if you want to verify a nonprofit, we can do it.
Can Apple afford not to work with the philanthropic sector? When asked for comment, Apple spokeswoman Trudy Miller told us what she told The New York Times, “We are proud to have many applications on our App Store which accept charitable donations via their Web sites.” But how much philanthropic giving are they not supporting when donors are unable to give via their iPhone apps?
Giving USA Foundation and the Center on Philanthropy at Indiana University estimate total charitable contributions from American individuals, corporations, and foundations at $303.75 billion in 2009, even despite a record-setting economic recession. And no longer are we seeing giving coming only from older and wealthier donors. Fundraising Success Magazine notes, “Historic philanthropy patterns of America’s affluent donors are giving way to a more complex and disparate population that represents our country’s patchwork communities. The systematic and predictable giving methods by the rich no longer dominate our donor bases. Diverse communities are emerging with new giving patterns and objectives.” iPhone apps are poised to tap into new donor bases if given that opportunity, particularly among the younger and minority demographics.
We’ve already seen this younger donor base in action: Network for Good’s new study points out that after the Haiti disaster, most giving was online and on mobile. A study conducted by Convio, Edge Research, and Sea Change Strategies, and published in March 2010 found that—a little more than a week to two weeks after Haiti’s deadly January earthquake—17 percent of donors who were ages 19 to 29 reported that they had sent a text message to make a gift and another 37 percent said they thought about making a text-message contribution. Among donors ages 30 to 45, 14 percent said they gave by text message and an additional 27 percent considered it. By contrast, only 3 percent of people ages 46 to 64 and 3 percent of people who are 65 or older reported sending a text contribution to relief efforts. And the results were astounding: just using text messaging capabilities, Americans donated the 30 million dollars in 10 days for Haitian relief efforts.
People want a way to help the causes they care about, and they want to be able to do it easily via their mobile devices. Apple is a leading platform of mobile apps. GuideStar is the premier source of vetting nonprofit information. I think this could be the beginning of a beautiful friendship.
Posted By Bob Ottenhoff on December 14th, 2010, in these categories: Donors | Fundraising | GuideStar | Nonprofit PracticeLast week another 17 families announced they were taking the Giving Pledge and committing to giving the “majority of the ir wealth to philanthropy.” This follows an earlier announcement in August when a group of 40 families took the pledge, a long-term charitable project launched by Warren Buffett and Bill and Melinda Gates. Thanks to Darin McKeever of the Gates Foundation for pointing out the website for the Giving Pledge – www.givingpledge.org – which has copies of the letters that each of the families has written. Check it out; it makes for some fascinating reading.
Among the more interesting pieces is that of Warren Buffett. Here’s my favorite quote from his letter: “I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.”
And a few more excerpts from his letter:
Millions of people who regularly contribute to churches, schools, and other organizations thereby relinquish the use of funds that would otherwise benefit their own families. The dollars these people drop into a collection plate or give to United Way mean forgone movies, dinners out, or other personal pleasures. In contrast, my family and I will give up nothing we need or want by fulfilling this 99% pledge.
Moreover, this pledge does not leave me contributing the most precious asset, which is time. Many people, including — I’m proud to say — my three children, give extensively of their own time and talents to help others. Gifts of this kind often prove far more valuable than money. A struggling child, befriended and nurtured by a caring mentor, receives a gift whose value far exceeds what can be bestowed by a check. My sister, Doris, extends significant person-to-person help daily. I’ve done little of this.
Some material things make my life more enjoyable; many, however, would not. I like having an expensive private plane, but owning a half-dozen homes would be a burden. Too often, a vast collection of possessions ends up possessing its owner. The asset I most value, aside from health, is interesting, diverse, and long-standing friends.
My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery. (For starters, the odds against my 1930 birth taking place in the U.S. were at least 30 to 1. My being male and white also removed huge obstacles that a majority of Americans then faced.) My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well.
The reaction of my family and me to our extraordinary good fortune is not guilt, but rather gratitude. Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others.
I think Mr. Buffet’s comments are honorable, and as I’ve mentioned before, I think the Giving Pledge is a great thing for the nonprofit sector. It increases public attention of the vital work the nonprofit sector provides and the need for financial support. By increasing visibility, the Pledge helps to encourage people to think more about philanthropy and their own giving commitments. I like the fact that Mr. Buffet’s priorities are applicable to all of us – not just the super rich.
However, I can’t stress enough how important it is for these donors – for all donors – to take a few minutes to think about priorities and goals before they give. Asking a few questions before investing can ensure that the billions being donated are going to the most effective nonprofits – which can in turn make the sector that much more successful.
Posted By Bob Ottenhoff on October 26th, 2010, in these categories: Economy | Fundraising | GuideStar | Nonprofit PracticeWhen I first started writing this blog about the BBC, I had the world’s economy on my mind. But then a controversy over Juan Williams erupted adding a new twist.
With our economy stuck in neutral, it’s been interesting to follow the policy debate raging over what to do about it. Some pundits are encouraging another government stimulus plan in order to help prime the pump of development; others think the last plan was a horrible mistake and have turned it into a potent campaign target. It seems likely that gridlock will prevail and we’ll get neither more stimulus spending nor any significant changes in government spending.
Meanwhile, in the United Kingdom, the Conservative party leadership has proposed a massive cut in government spending of $127 billion over four years. The Wall Street Journal termed the U.K. a “global test case in the argument of choosing austerity over stimulus to repair the economy.”
One of the cuts that caught my eye is the one to the British Broadcasting Corporation (BBC). In return for a deal that guarantees a continued license fee for the next six years, the BBC agreed (or caved to government pressure, as the New York Times put it) to a freeze on its income and the assumption of new expense obligations previously handled by the government. The license fee obligates TV watchers to pay nearly $230 for every household with a color television set. The New York Times estimates that the license fee brings in $5 billion per year, and makes up nearly all of the BBC’s budget. The Guardian estimates that new additional costs and the license freeze will mean in effect that the BBC will experience a 16 percent cut in real terms.
The guaranteed revenue stream has helped the BBC become the best public broadcaster in the world and one of the world’s most powerful media companies, public or private. So although any cut is painful, the BBC has successfully fought off commercial competitors and critics who wanted to see the fee reduced or eliminated, as well as ensured itself six years of predictable revenue─not a small feat in a world of financial chaos.
Unlike the BBC, American public broadcasters rely primarily on voluntary contributions and local support for the bulk of its revenue. Our federal government contributes a measly $400 million or so for the entire system of over 1,000 public radio and TV stations. Most state governments provide some type of support, although these appropriations are under fierce attack at the moment in many places.
Last week’s firing of Juan Williams has brought some angry calls by politicians urging the elimination of federal government support. What these critics fail to understand is that American public broadcasting is primarily a collection of locally controlled and financed institutions, with relatively weak national organizations. This is both a strength and weakness. It is nearly impossible to destroy public radio because of its de-centralized nature. But the challenges in cobbling together funding from many local sources within a membership organization context─unlike the BBC’s license fee─means it will never have the domestic or international influence that the BBC enjoys.
Since there is no chance of a national license fee, the decentralized approach is not our only alternative─it may indeed be the best way to serve a country as diverse as ours.
Posted By Bob Ottenhoff on October 22nd, 2010, in these categories: Donors | Economy | Fundraising | GuideStar | Nonprofit Practice Here at GuideStar we try hard to listen and learn from people working in the nonprofit community. Every day GuideStar is in contact with hundreds of people like you at nonprofit organizations through emails and phone calls, answering questions, giving tips, and helping you meet the challenges of your important jobs. Another way we try to stay on top of issues is through our economic surveys which we share with the sector. Now, we are expanding our approach through a unique partnership. This week we launched a new economic survey in partnership with the Association of Fundraising Professionals, Blackbaud, Inc., the Center on Philanthropy at Indiana University, the Foundation Center, and the National Center for Charitable Statistics. By partnering with these institutions, we’re reaching out to new participants, expanding the audiences that will see the results, increasing the survey’s overall impact—and cutting down on the number of surveys you’ll be asked to take this fall.
We invite you to be part of this inaugural survey by answering the questions at the 2010 Nonprofit Fundraising Survey website: http://www.nonprofitfundraisingsurvey.org/. The survey will take about five minutes of your time. The questions in this month’s survey are about changes in giving. A summary of responses to date will be visible as soon as you hit “submit,” and you can go back later to check again. Data collected will be reported in the aggregate, with no reference to individual participating organizations. Results will be published jointly by the participating organizations throughout the year, with further analysis to help guide you and your colleagues in this new era for fundraising.
On another note, last week, the Chronicle of Philanthropy reported that charitable giving to the nation’s 400 biggest donor-funded nonprofits fell 11 percent in 2009, the steepest drop since the Chronicle began tracking those numbers 20 years ago.
The United Way and the Salvation Army, which saw decreases of 4.5 percent and 8.4 percent respectively, actually got off relatively easily. Other top 10 organizations like the Y (17.2 percent) and Food for the Poor (27 percent) reported much bigger drops. Experts don’t expect charities, which are as battered by the recession as any other industry, to do much better in 2010 than they did in 2009; most fundraising directors say they’re expecting growth of just 1.4 percent over last year.
These results track with GuideStar’s own most recent economic survey, released in August, which showed that 40 percent of respondents saw a further decline in contributions in the first five months of 2010 compared to the first five months of 2009. At the same time, a majority (63 percent) saw an increase in demand for their services. As I said before, there’s no doubt that the nonprofit sector continues to face an incredibly difficult philanthropic environment
One academic researcher responded in the Chronicle that our interpretation of the survey results was too bleak. Here is our response which was published Sunday in the Chronicle:
In a letter to the editor (“The Nonprofit World’s Finances Are Not as Bleak as a New Study Suggests,” September 23), Lester Salamon commented on GuideStar’s 2010 Economic Survey, taking us to task for what he felt was an overly grim picture of the effects of the economic downturn on the charitable sector.
We at GuideStar stand by our interpretation of the data resulting from our economic survey. While we are pleased for each nonprofit that has moments of good news, the data is clear in its conclusion that many continue to face great challenges, and most have a long way to go to achieve the success they experienced before the recession.
One important aspect of our findings with which Mr. Salamon disagrees is the impact of the decline in charitable giving. Although it may be statistically correct that “such giving accounts overall for only about 12 percent of nonprofit revenues,” when you start to actually look at individual organizations, you see a different picture.
Charitable revenues, when viewed in the aggregate, are dominated by a relatively small number of very large health-care providers, universities, employee-benefit trusts, and the like that derive most of their revenue from program services. For the 4,102 respondents to the GuideStar survey that gave us sufficient information to track back to their Form 990 filings, the median dependence on charitable contributions was 44 percent; for those with annual revenues under $5-million, about a third of respondents depended on charitable giving for 75 percent or more of their revenues.
There is another aspect of the GuideStar survey, however, that is difficult to convey in numbers. There were 7,014 usable responses, and nearly 3,000 of the respondents made comments about how their organizations were doing.
Although 69 percent of survey respondents reported that their 2010 budgets had increased or stayed about the same, this is not necessarily an unalloyed sign of good health. Consider these typical comments from organizations that didn’t cut their budgets in 2010:
“It was better than 2009, but not as good as 2008. We do feel that we’re no longer in free-fall.”
“Cash flow continues to be the problem. We will survive but we may have to cut programs and positions.”
“We have increased revenues by about 50 percent but most is one-time stimulus funding and will not likely continue.”
“Due to decrease in donations, we had to rely on credit to continue operating and now we are in debt.”
“We are struggling financially due to the decrease in contributions.”
“We are operating out of our reserves. We have about six months left and we will fold if no money comes in.”
To be sure, not all the comments are negative, and many of them show resilience as old organizations learn new strategies for raising funds. But the overall tenor of the comments from organizations we are in direct contact with suggests a sector that is nervous and uncertain about what the future holds.
If we report that things are better than they are, the individuals and institutions that are in a position to help may not step up to the plate.
We hope you find these surveys helpful as you make your plans for the remainder of 2010 and 2011. One of the characteristics I like best about my nonprofit colleagues is their optimistic, can-do attitudes. We are resilient and determined. This continuing economic downturn is difficult, but not impossible. What makes us stronger – and more creative and innovative – makes us better. Good cheer to all.
A few weeks ago, I had the pleasure of renewing a high school friendship with Jonathan Bradford. I thought his work with a nonprofit organization in Grand Rapids, Michigan, was so fascinating that I wanted to share it with you. Not only is he making great progress against formidable odds, his story reflects the challenges many nonprofits face today.
Bob: What does ICCF do?
Jonathan: The Inner City Christian Federation (ICCF) is a not-for-profit housing development and housing service corporation. Our chief products fall into two primary categories: The finance and production of affordable rental or owner-occupied units and the provision of housing counseling and education services that enable people to realize housing success thereby go on to pursue broader life goals. A bit more detail:
- Real Estate Development – ICCF has developed about 515 units of housing, nearly all of it single family detached. We arrange the financing using various combinations of financing from local banks and investors or loan/grant programs available from all levels of government. We then construct the building(s) most often ourselves because we are a state-licensed residential building contractor. For larger multi-unit projects we may go out to larger commercial contractors. We are also a U.S. Department of Housing and Urban Development (HUD) and Michigan State Housing Development Authority (MSHDA) certified property manager, so we also provide property management of our rental units.
- Housing Counseling and Education – Whether for our own residents who are in or going in one of our properties, or for clients referred by one of several other non-profits or local banks, we provide a broad array of learning opportunities around topics related to home maintenance and home management. For example these include classes on plumbing repair, furnace maintenance, or landscaping on the one side and family budgeting, and insurance/tax matters and parenting on the other. We also operate a five unit emergency shelter for homeless families. This is a building that we designed and constructed about 21 years ago to provide 30 day crisis intervention shelter for families. Because it is not a dormitory model and has instead five fully furnished and equipped efficiency apartments, it was the first shelter in Michigan that was designed to enable adolescent and adult males to stay with their families. Until five years ago, a common demand profile would run at 50 to 75 cases per year and many of them would be in some way related to the borrower having too much debt (i.e., over-leveraged). In the most recently completed fiscal year we saw about 780 families and roughly 80 percent of them were at risk of losing their houses because of economic interruption: loss of employment, overtime pay, bonuses, or more rarely divorce or death of bread winner.
Bob: I understand you have a for profit subsidiary. How does that work?
Jonathan: Yes, in 2003 we launched a mortgage brokerage called Providence Home Mortgage (PHM). Using our own capital or that which was lent to us at very advantageous rates, we started PHM as an antidote to proliferation of predatory lenders in our community. PHM is just a broker. That means we are doing the leg work for larger lender/servicer companies who in turn represent larger investors. We are to larger lenders what a local Chevy dealer is to GM. In our nearly seven years of operations, we have had three strong years, two marginal years and two bad years; overall we have not broken even yet. Clearly a large part of the reason for that is the housing finance crisis of the last 3+ years. We are rather proud of the fact that we have been able to weather this storm thus far.
Bob: How important is government revenue to you and what has happened to it the last few years?
Jonathan: At any given time we have at least 10 different “purchase of service” contracts going with the City of Grand Rapids, Kent County, the State of Michigan, or the Federal Government (mostly HUD). Most years these contracts will comprise about 45 percent of our revenue. So you see it is very important.
Over the last five years it is safe to say our government contract revenue has increased a good 30 percent. Nearly all of this is related to the foreclosure crisis. We receive funding from two different sources for foreclosure counseling and three sources for the acquisition, rehab, and resale of formerly foreclosed houses.
Bob: What do you see as your biggest challenge in the next few years?
Jonathan: There are at least two. The first and biggest challenge is to stabilize philanthropic revenue thereby enabling us to continue to attract and retain top talent. The world of housing is so volatile and constantly challenging right now such that this will continue to be a daunting task. The second challenge is much more nebulous: As is the case in many cities, there is a significant “back to the city” movement in Grand Rapids. In broad urban planning conceptual terms, this is most welcome because economic diversity is key to long term urban health. Indeed, ICCF wishes to be a part of this effort, but we are committed to doing so in a manner that ensures the interests of current residents are protected while also creating genuine value and attractiveness that will benefit all.
Bob: How do you measure success?
Jonathan: In the fact that ICCF places as much emphasis on high quality real estate development as on services that empower our residents toward new levels of independence and accomplishment success measurement comes in two forms. In real estate we must accomplish the construction or reconstruction of the building(s) in a manner that the market accepts, i.e., it is sold or rented with minimal delay at a price that covers our costs net of grants and/or tax credit equity, etc. True success also demands that we design and construct the building(s) in a manner that is truly respectful of both the resident and the neighbor or passer-by. This in turn requires care in aesthetic design, energy efficiency, and construction quality. Success in services to our residents and clients is fundamentally about their realization of goals that we have helped them set. It could be to retain the house they already have, or acquire a better house at a lesser cost than their current arrangement. It could also be the gaining of skills that will help them better maintain and retain their house or quite simply live for a short time in a place more safe than a the basement of an abandoned house or under a bridge.
 Jonathan Bradford in front of ICCF's headquarters
Bob: In this picture you are standing in front of a pretty fancy building. Is there a story here?
Jonathan: There are actually several stories here. The building is the former D.A. Blodgett Home for Children which as of September 2007 became ICCF’s home. It was built in 1908 as an orphanage. In 1948, when foster care had replaced institutions for the care of children, the building was given to a private physical rehabilitation facility called Mary Free Bed Hospital. Because of the polio epidemic in the 40’s and 50’s they needed more space. They actually removed the entire facade of the building and grafted four different ugly utilitarian additions on the front of the original building nearly obscuring its extraordinary neo-classical Italianate beauty.
When Mary Free Bed left the building for a new facility in 1976 it was home to a few small businesses for 12 years or so. In 1988 it was abandoned and in the early 1990’s was briefly considered as a site for a charter school. After being left to rot for 16 years the City of GR issued demolition orders in mid-2004. We acquired it late that year and persuaded the city to give us a year to raise the funds and put a historic rehab project together. We started demolition of the 1950’s additions in January 2005. After a total recreation of the original facade and a historically considerate adaptation of the interior into offices and classrooms we moved in just in time for the big housing implosion of the fall of 2007.
Although we wouldn’t presume to have the answer to Sigmund Freud’s famous question, we do applaud the approach that Cynthia Gibson and Bill Dietel take in their provocative article “What Do Donors Want?,” in a recent issue of Nonprofit Quarterly. At GuideStar, we have long known that the majority of donors give according to their hearts. They look for nonprofits that align with their own sets of values, and they look for the nonprofits themselves to prove that they are worthy of the donations. That’s what makes the nonprofit sector so interesting – there’s something for everyone.
We think it’s important that nonprofits make that emotional connection for donors. But in a crowded marketplace, with multiple nonprofits working towards the same mission and providing similar programs, we also believe it’s the high-performing nonprofits that, in fact, deserve these generation donations. And that’s a distinction that we have to make.
In fact, many donors who are solely motivated by strong personal interests─religion, education, health and friend─will probably continue to be the vast bulk of donors. But even here data can play a role: one person told me he gives to the same organizations every year, but uses GuideStar to make sure everything is still okay.
And it must be said: sometimes it is the most passionate donors who seek data. In our experience, an increasing numbers of donors who are determined to solve a problem or make a difference are the ones most likely to want to know about the results of the organizations they support. If a person’s goal is to, say, provide low income housing or end malaria, these passionate donors want to make sure the organizations to which they send their hard earned money actually know how to make a difference. During the Haiti earthquake crisis we were flooded with phone calls from people not about whether to make a contribution, but which organizations had the capabilities and experience to actually deliver. Passion often demands data.
Above all else, we know that we need to understand better what drives charitable giving in order to understand better how to drive that giving to high performing nonprofits. We recently partnered with Hope Consulting to conduct and market test research on this topic to better understand and inform the philanthropic sector on the behaviors, motivations, and needs of individual donors, foundations, and those who advise them. We hope to use the findings of this research to help shape our core offerings of nonprofit data and information to the world.
As President Obama recently remarked at the Millennium Development Goals Summit in New York, New York, “Guided by the evidence, we will invest in programs that work; we’ll end those that don’t. We need to be big-hearted but also hard-headed in our approach to development.” In other words, the job of providing data to donors is tough, but somebody’s got to do it.
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articulate the value proposition of their organizations and try to convince donors to part with some of their hard-earned money. Fundraisers face reality in the eyes of their constituents every day: How is our organization perceived? Do people value our work? What could we be doing better? As I frequently remind my staff, we don’t get a vote on determining how we are doing – it’s our users and stakeholders that do.
