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Local nonprofits look for new ways to navigate tough economic times

This article first appeared in the St. Louis Beacon, July 20, 2012 - Nonprofit organizations are experiencing a tectonic shift in the way they function, requiring many organizations to experiment with new practices, said Rob Reich at the annual Philanthropic Landscape event on Thursday. The event presented the results of the organization's survey of more than 500 St. Louis area nonprofits, grant makers and community representatives.

Amy Rome, founder and principal of the Rome Group, said there have been many changes in the philanthropic landscape within the last 10 years. The Rome Group is a St. Louis consulting firm specializing in helping nonprofit groups plan for the future by focusing on development, fundraising, and opportunities for growth and success.

"It has been a tough few years for local nonprofits," Rome said in a statement. "But the results of our survey demonstrate, once again, both the charitable nature of the St. Louis community and the ability of local nonprofits to build strong relationships with donors and be good stewards of the resources they provide."

The Philanthropic Landscape 2012 survey was conducted by the Rome Group and the Gateway Center for Giving. The survey was given to 234 nonprofits in all parts of the St. Louis region.

Despite improvements since the recession, nonprofits surveyed cited increasing competition and demand as major issues. In St. Louis, the nonprofit sector has grown by 35 percent, beating both the state and national growth percentage.

"Nonprofits are finding that they have to work harder to reach out to current and prospective supporters and get their story told," Rome said.

Reich, an associate professor of political science at Stanford University, was the keynote speaker at the event. He used the metaphor of a tectonic shift to describe the changes in the philanthropic landscape. He said forces beyond are control are shifting, and these are forces at which we function.

Reich discussed five big trends and five micro trends affecting philanthropy and nonprofits.

The five macro trends are:

  • Local, state and federal deficits, which can lead to decreased support for some organizations dependent on government funding
  • Comprehensive tax reform, which may depress individuals' incentive to donate since the deduction for charitable contributions might not mean as much.
  • Post-Citizens United world in which some nonprofits are becoming political agents, alienating some donors. Politicized nonprofit organizations can be seen as interest groups, and that can taint the trust of donors.
  • Dysfunctional federal political system, which Reich said "needed no explanation."
  • Blurring of the boundaries between nonprofits and for-profit organizations as nonprofits act like for-profits, and for-profit organizations adopt social missions like nonprofits.

Reich also discussed five more micro trends he believes might affect nonprofit organizations.

  • New modes of giving, especially online giving. Reich said the biggest days for online giving are Dec. 30-31 as the tax year closes.
  • Impact investing: By making seed investments in new start up for-profit organizations that support nonprofit causes, nonprofits can attempt to attract investors and donors.
  • Focus on measurable outcomes: Organizations should track what they are doing so donors know where their money has made the most impact. This will keep donors because they are promised outcomes from their donations.
  • New organizational forms that combine traits from for-profit organizations and nonprofit organizations. An organization uses business tools to create revenue, but it is not required to make a profit for shareholders so it can freely provide social services.
  • Inequality can both increase demand for services but also create a potential source of new donors. Reich said more Americans have the resources to become donors..

Along with Reich, Mary McMurtrey, president of the Gateway Center for Giving, believes that online giving is an important vehicle for fundraising, adding that 36 percent of donors prefer to give online. She said social media and online giving are good ways for story telling.
According to the survey, donors first giving priority is human services organizations with education organizations as second priority.

Following Reich's presentation, a panel discussion was held. Panelists included local philanthropists such as Carolyn Kindle, secretary at the Crawford Taylor Foundation; Kelly Pollock, executive director at COCA; Jorge Riopedre, executive director of Casa de Salud; and Rev. Starsky Wilson, president and CEO of the Deaconess Foundation.

Riopedre said nonprofits are no longer looked at as the safety net, but the tight rope. He said he believes Missouri will be one of the states that does not expand Medicaid under the Affordable Care Act, and his organization, along with other similar ones will have to pick up the slack.

In the 2012 survey, the average nonprofit saw a 10 percent increase in demand. Human services agencies reported a 24 percent increase. However, only one-fourth of all agencies say they have been unable to meet the increased demand.

While it is imperative for organizations to experiment with new models of sustainability, Pollock said that it is equally important that organizations have the capacity to fail when testing new practices.

Kindle agreed with Pollock, and said that creating relationships with long-term funders will give organizations the support to try new methods and fail sometimes.

"One of the lessons of the past few years (is) that donors have ramped up their expectations of the nonprofits they are asked to support, and those nonprofits have responded well," McMurtrey said.

The Rome Group and the Gateway Center for Giving conducted the Philanthropic Landscape 2012 survey together. The results of the survey and the presentation given on Thursday are available atwww.theromegroup.com. The Gateway Center for Giving report can be found at www.centerforgiving.org.