High Performance, High Impact Nonprofits: Setting a Standard of Excellence for Long-Term Success

1. High Performance, High Impact Nonprofits: Setting a Standard of Excellence for Long-Term Success A Presentation by the Alabama Association of Nonprofits Before the American Accounting Association GNP Section Meeting March 18, 2011

2. Alabama Association of Nonprofits • Founded in 1996 as a collaborative effort of The Community Foundation of Greater Birmingham, Alabama Power and the United Way of Central Alabama • A simple mission - to strengthen and support nonprofit organizations in serving their communities • Technical assistance and support in: • Professional development • Fee-based management and consulting • Advocacy and public policy representation • Economic development and research

3. Nonprofits in America Nonprofits in the U.S. generate $1.1 trillion every year, which is more than the entire economies of Saudi Arabia and Sweden combined.

4. Nonprofits in America • 1.5 million nonprofits nationally registered with the IRS • 900,000 listed as public charities; 355,000 other than 501(c)3 • IRS approves a new tax exemption every 10 – 15 minutes • Total assets (2007) of public charities: $2.6 trillion+ • Total revenue (2007) exceeded $1.4 trillion • Employing 9 million Americans • Growth rate four times faster than other sectors of economy • 50+ exempt organizations control financial resources at a level which would place them on the Fortune 500 listing • 39 states have associations governing the nonprofit sector

5. A Sampling of Nonprofits in America

6. Total Number of Alabama Nonprofits Source: The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/

7. Total Revenue for AL Reporting Nonprofits Source: The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/

8. AL Nonprofit Revenue Mix All 501(c)(3) Nonprofits Source: The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/

9. Revenue Mix for AL Human Service Nonprofits Source: The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/

10. Revenue Mix for AL Arts Nonprofits Source: The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/

11. Estimated AL Nonprofit Employment Source: Bureau of Labor Statistics QCEW for NAICS Industries: 621, 71, 6244, 8134, 6242, 611, 8132, 622, 6241, 623, 8131, 8133, 6243

12. Estimate of AL Nonprofit Employment by Type Source: Bureau of Labor Statistics QCEW for NAICS Industries: 621, 71, 6244, 8134, 6242, 611, 8132, 622, 6241, 623, 8131, 8133, 6243

13. Estimate of Total AL Nonprofit Wages(in thousands) Source: Bureau of Labor Statistics QCEW for NAICS Industries: 621, 71, 6244, 8134, 6242, 611, 8132, 622, 6241, 623, 8131, 8133, 6243

14. Estimate of AL Nonprofit Total Wages by Type(in thousands) Source: Bureau of Labor Statistics QCEW for NAICS Industries: 621, 71, 6244, 8134, 6242, 611, 8132, 622, 6241, 623, 8131, 8133, 6243

15. Types of EOs

16. Public Charities v. Private Foundations Publically Supported (e.g. United Way) Privately Supported (e.g. family or private foundations) Not Taxed on Income/May Be Subject to Excise Taxes Family or Corporate Board of Directors Not Taxed on Income Community-Based Board of Directors

17. Nonprofit Accountability & Performance Measurement

18. Why Nonprofit AccountabilityIs More Important Than Ever • IRS regulations. State requirements increasing every year • Municipal and state governments are cash-strapped • The economic downturn tightened philanthropic giving • Nonprofit boards are scrutinized for ethics and duties of care • Corporations are looking for stronger ROI for shareholders • ‘Community benefit’ is potentially broad-reaching • Elected officials/general public/media are demanding change • Nonprofits have track records of poor reporting and outcomes

19. Gaps Between Expectations and Performance

20. Overall Confidence in Charities

21. For-Profit vs. Nonprofit Accountability? "Excellent organizational performance is easier to achieve in a for-profit organization than in a comparable nonprofit… It is the absolute amount of capital, the stages at which it is available during organizational development, and the conditions of its acquisition that all work together to create a powerful influence on management behavior and organizational culture." Allen Grossman Bloomberg Senior Lecturer in Philanthropy Harvard Business School

22. Why Measuring is Difficult • Executive Directors spend 30-60% of time fundraising • Boards focus on fundraising vs. performance management • Complexity of funding shifts us away from measuring • Mediocre reporting has been accepted by donors • Meeting client needs takes precedent over tracking them • Great outcomes don’t always equal more donor dollars • Until Sarbanes-Oxley, federal requirements were lax • Lack of a recognized national standard of excellence • We only pay attention when a question of trust arises

23. What We Should Be Measuring • Fund Development and Donor ROI • Mission and Programming Impact and Delivery • Board Governance and Assessment • Advocacy and Public Policy Impact • Fiduciary and Legal Accountability • Community Impact • Pro Bono Investments

24. Fundraising and Donor Tracking

25. Fundraising and Donor Tracking

26. Nonprofit CEO Salaries In 2010 Charity Navigator, 2010 CEO Compensation Study

28. Program Evaluation: Growing Calls for Logic Model Evaluation 1 2 4 3 5 Your Intended Results Your Planned Work

29. Program Evaluation: What Are We Looking For? What Resources Required? What Unexpected or Unintended Impacts Are We Seeing as a Result? How Much Service Are We Delivering? Are the Goals of the Program Being Met?

30. The Community Foundation of Greater Birmingham

31. Board Accountability Are We Ensuring Adequate Resources? Are We Ensuring Effective Planning? Are We Monitoring Our Performance? Are We Ensuring Legal and Ethical Integrity? Are We Providing Financial Oversight? Are We Staying True to Mission & Purpose? http://vantageassociates.com/BODEval/SvyForm.asp http://vantageassociates.com/BODEval/Results/ProGraph1.asp

32. Advocacy and Public Policy: Using North Carolina As a Model of Excellence 13 Orgs. Studied Over 5 Years (2003- 2007) • F0r impacts that could be quantified, the aggregate monetary benefit was more than $1.8 billion. • For every $1 invested in advocacy and organizing ($20.4 million total), $89 in benefits were garnered. • Foundations contributed $17.5 million, or 86%, of all funding for advocacy and organizing. Strengthening Democracy, Increasing Opportunities The Center for Responsible Philanthropy

33. Pro-Bono and Volunteer Impact Source: Current Population Survey , U.S. Census Bureau

34. So Where Do We Go From Here?

36. Standards for Excellence® • 1996 - Leadership Summit on Ethics and Accountabilityin the Nonprofit Sector • 1998 - Standards program launch in Maryland • 2001 to 2003 - Pilot project to replicate the program in five states. • 2004 - Launch of the Standards for Excellence Institute • 2005 - Launch of Standards for Excellence Institute certification program • Today - Working with nine licensed Standards for Excellence replication partners across the US

37. Standards Replication Partners

38. What is the Standards Code? Standards for Excellence: An Ethics and Accountability Code For the Nonprofit Sector 8 Guiding Principles and 55 Standards • Mission and Program • Governing Body • Conflict of Interest • Financial and Legal • Human Resources • Openness • Fundraising • Public Affairs and Public Policy

39. Advanced Professional Training = Long-Term Accountability

40. In Short. . . Accountability is not simply about compliance with laws or industry standards, but is more deeply connected to organizational purpose and public trust.

41. Contact Us Alabama Association of Nonprofits John Stone President and CEO 205.879.4712 john@alabamanonprofits.org http://alabamanonprofits.org