National Study Shows Government's Unfair Business Practices Hurt New York State Charities

Albany, N.Y. – October 6^th, 2010 – The Urban Institute will be releasing a ground breaking national study this morning regarding government contracting and payment practices with human service nonprofits. The report, Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracts and Grants, provides essential national and New York State data on contracting practices.

The study is based on survey data for 2009. It ranks late government payments to nonprofits in New York State as being the 9^th worst in the country. Payments were commonly late 90 days or more despite the fact that New York is the only state in the country with a “Prompt Contracting” law designed to protect nonprofits from late contracts and payments. This finding reinforces data produced by the State Comptroller that shows that 90% of all state payments are late. The study also revealed that the processes of applying for and reporting on state contracts is seen as problematically complex and time consuming by over 70% of the nonprofits.

Other rankings specific to New York State include:

· Ranked 11^th in the list of worst offenders with respect to
mid-term changes to contracts.

· Ranked 20^th in having contracts that do not cover the full cost of the services being performed. Related findings include that 47% of the nonprofits report contracts requiring them to share the cost of full service and over 60% reporting limitations on reimbursement for administrative or overhead expenses incurred.

"Our state’s nonprofits have, historically, been resilient when it comes to putting mission and people first, often absorbing the financial loses and risks associated with doing business with government,” states Doug Sauer, Chief Executive Officer of the New York Council of Nonprofits (NYCON). He further observes, “These are very difficult times for all. Community-based nonprofits are on the front lines of the crisis in human needs that people across the state are facing. Sadly, the inability of our government leaders to responsibly manage their budgets and be fair in their contractual commitments, are now pushing many charities to the financial breaking point. In essence, government appears to be expecting charitable donors, who are also taxpayers, to subsidize its cash flow. ”

The problem has worsened. A recent survey conducted by NYCON shows that the over 80% of nonprofits report that the contracting and payment problems with the State of New York have worsened in 2010 over 2009. To cope with the state´s business practices, over 60% of charities have reduced services or eliminated programs. Most have had to draw on their charitable reserves and/or borrow money.

To help strengthen the partnership between government and nonprofits NYCON, working closely with the Comptroller’s Office and other State agencies, launched an “Ombudsman Program” to help nonprofits navigate the New York State contracting and payments process as well as, over time, improve the efficiency and timeliness of the State’s processing of nonprofit business.

“Not-for-profits are struggling to provide crucial services to New York families,” said New York State Comptroller Thomas DiNapoli. "When state agencies fail to approve contracts and make payments on deadline, they make the problem worse. Many not-for-profits already face significant challenges, and when contracts are delayed and payments aren’t made, the situation gets even tougher."

" We need to fix this system,” stated Doug Sauer. “We call on all parties, including candidates for office, to commit to working together for responsible solutions.”

Complete study available now at www.nycon.org

Report on tax-exempt property in Binghamton clears up misconceptions

The Press & Sun-Bulletin discussed a report that examined the number of properties in Binghamton that are tax exempt. Although the headline may seem to imply some kind of a problem, the article is a fair and balanced perspective. As the article relates:

About a third of the assessed property value in the city is exempt from taxes.

That's according to a recent report compiled by the city's assessor, Scott Snyder.
Total exemptions in 2011 are valued at $625,642,280 or 33.8 percent of a total assessed value of about $1.8 billion in city property, Snyder said.

That leaves a total taxable property value in Binghamton of about $1.2 billion.
Exemptions include churches, hospitals, nonprofits, schools and government buildings. In addition, the city gives property tax breaks for veterans, the disabled and low-income elderly.

Take away the exemptions for veterans, the disabled and low-income seniors, the percentage of total property tax exemptions drops to about 29 percent, Snyder said.
None of that is unique to Binghamton or other upstate cities that serve as county seats.

"The numbers for the City of Binghamton are at or below the other levels I've seen," Snyder said.

Of about 3,600 total property tax exemptions granted, 900 are for low-income elderly and about 1,700 are for veterans.

The city's exemption report is the first of its kind in recent years, said Teri Rennia, a Democrat who has represented the city's 3rd District since January 2006.

What makes it useful is it spells out just how much property is exempt. Over the years, anecdotal accounts have put that amount as high as 50 percent.
Snyder's report dispels any potential exaggerations, Rennia said.

"We've been trying to tell people this information for years. (Property tax exemptions) are not the source of our problems," Rennia said. "I'm glad the numbers are there to back it up." Read more here.

Insights into Donor Motivation and Behavior for the 21st Century" Research Finds Surprising Answers to Those and Other Questions

Russ Reid "Heart of the Donor™: Insights into Donor Motivation and Behavior for the 21st Century" Research Finds Surprising Answers to Those and Other Questions

NEW YORK, Aug. 24 /PRNewswire/ -- A new research study was released Tuesday that may change the way many nonprofits approach their fundraising budgets. The report, Heart of the Donor, Insights into Donor Motivation and Behavior for the 21st Century, uncovers valuable insights on donor behavior and preferences as well as insight into age, demographic and other factors.

The report will be unveiled at the Direct Marketing Association Nonprofit Federation conference at the Sheraton New York City. The research was commissioned and created by Russ Reid and conducted by Grey Matter Research & Consulting. The survey took place in June of this year.

As many would expect, the study finds that today's most valuable donors – boomers and older donors – primarily give through the mail. But those in the 25-54 age range tended to give both online and through the mail. "One thing we find interesting is this nexus in the 25-54 year old group," said Lisa McIntyre, Russ Reid Senior Vice President, Strategy Development. "The donors who will be most important to us in the coming decade seem equally facile with both mail and online."

But according to the study, older donors are more generous.

"The point is this: if the goal of a nonprofit is to effectively target today's best donors, then they should focus significant and smart attention on the donors giving the most money – seniors and boomers," said McIntyre. "For example, the number of donors in the 18-24 group and 70-plus are comparable, but the 70-plus donor gives three times as much."

"Does that mean nonprofits should turn a blind eye to the younger segments?" McIntyre continued. "Of course not. Their value will likely increase as they age. But fundraising expenditures must be weighted according to a strategy that maximizes those who are giving now."

The report suggests that fundraisers should focus their money on the channels that perform the best. While social media is an exciting means of reaching the younger community, the report indicated those who are active there don't use it for donations.

Another striking result of the survey shows that people want to give to charities that spend money on good management. Given a choice, the respondents preferred organizations that hire top-quality managers, even with higher salaries, over hiring less experienced managers and spending fewer dollars on salaries. An even greater percentage would rather support an organization that spends more on fundraising and brings in more money to help the cause than would support an organization that spends little on fundraising but raises less money. "Only 28 percent would opt for efficiency over effectiveness," said McIntyre.

"Nonprofits are under relentless scrutiny for their fundraising costs," said McIntyre. "The questions on costs tell us that what donors want more than anything else is value for their money. Spending money on salaries is fine, as long as your leaders are effective. If you spend more on fundraising, it's fine as long as it effectively raises more money for the work."

The report also focused on the impact of the disaster in Haiti on nonprofit fundraising. 38 percent of Americans gave to help Haiti. 52 percent of active donors – those who regularly give to nonprofits – donated. Very surprisingly, nearly 30 percent of Haiti donors say they did not support any nonprofits in the last year, including 16 percent of fairly determined non donors. Most likely to give to Haiti were African Americans (51 percent), Latinos (53 percent), Asians (59 percent) as were people not born in the US (59 percent).

Four out of ten donors said that if they had not given to the Haiti disaster, the money would have gone elsewhere. Still, 58 percent of donors believe that what they gave to Haiti was unique – it was over and above what they normally give. Haiti was a first-time giving impetus for 3 percent of all Americans, 6.7 million people.

Haiti donations saw massive channel donation differences, with text-to-give having a big impact. While 32 percent of donors said they gave to nonprofits working in Haiti through places of worship, another 22 percent gave online, and 19 percent through texting. Questioned if the limits on text donations resulted in lower donations, 90 percent of text donors claim they would have donated through another channel had texting not been provided.

"The Haiti experience reminds us that emergency donors and everyday donors are different," said McIntyre. "And the best donors will give over and above what they normally do, not instead of what they typically give."

DMANF participants were able to review portions of the study at the conference, and more elements of the study will be released in the coming months.

More than two-thousand respondents participated in the study. It was conducted both by phone and through a pre-recruited online research panel. The study was also conducted in English and Spanish.

Russ Reid, founded in 1964, is part of Omnicom Group, Inc. (NYSE: OMC). Omnicom is a leading global marketing and corporate communications company. Omnicom's branded networks and numerous specialty firms provide advertising, strategic media planning and buying, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 100 countries.

Grey Matter Research is a market research firm specializing in serving non-profit organizations, offering sophisticated qualitative and quantitative techniques to uncover details that make a tangible difference for clients.

Interviews are available with McIntyre, Russ Reid President and CEO Tom Harrison, Executive Vice President Alan Hall, and Ron Sellers of Grey Matter. To schedule, contact Steve Ruppe or Alison Rienas at the numbers above. Go to http://www.heartofthedonor.com/, for additional information.

Survey: More nonprofits view real estate as revenue

The Business Review reported more nonprofits are looking at their real estate and seeing dollar signs, according to a national survey by CB Richard Ellis.

Nearly 300 association and other nonprofit executives who make decisions related to their facilities were surveyed.

This year, 39 percent of the respondents consider real estate as an alternate source of income, up from 34 percent last year. That increase is likely linked to the economic strain nonprofits are facing, the report says.

This year, more 501 (c)(6) organizations (42 percent) say they were looking at real estate as a revenue strategy, compared with 36 percent of the 501 (c)(3) organizations.

A 501 (c)(6) organization is a business league that seeks to improve conditions for one or more lines of business, while 501 (c)(3) organizations are charitable groups.

The responding organizations were most concentrated in D.C., Chicago and New York City. More than a third (38 percent) have been in their current headquarters space 10 years or longer. Read more here.

New Poverty Data

The following editorial from YWCA Executive Director Carole Coppens appeared in The Binghamton Press and Sun-Bulletin:

As an Executive Director at a nonprofit organization in the Broome County community I am saddened by the new Census Bureau data which paints a deeply disturbing picture of growing poverty in this country and in our state. Nationally, the number of people living in poverty grew by 2.6 million in 2008 to 13.2 percent. The State of New York continues to suffer from a poverty rate of 10.3%. Unfortunately, Broome County is keeping up with that pace at a 10.4% poverty rate.

As troubling as the 2008 data is, the reality today is almost certainly worse. The recession started last year, but its impact has been far greater in 2009. The YWCA Binghamton/Broome County has seen the impact of the recession with a growing number of homeless women and children on the waiting list for our Emergency Shelter. This could be a result of unemployment averaging 5.8 percent last year compared with an average so far this year of just fewer than 9 percent, and climbing. Our county economy mirrors the national trend unemployment is up from 7.1% percent in December 2008 to 8.3 percent in July 2009. Past trends show that when unemployment rises, poverty also goes up.

The Economic Policy Institute estimates that assuming an average unemployment rate of 9.3 percent for 2009, poverty would increase this year to 14.7 percent. Higher unemployment will hit children disproportionately hard. Their poverty is expected to rise from 19 percent in 2008 to 25 percent this year, which translates into one in four children living in poverty. Here in Broome County, it will mean that families on the edge will need assistance to ensure they do not fall further into the downward spiral of poverty. Evidence has shown that in hard economic times all types of families struggle. Domestic violence increases, depression takes over and alcohol abuse increases. In turn, placing demands on communities' service providers often financially strapped themselves.

We must not allow poverty to deepen unchecked. On a daily basis the YWCA sees the impact of poverty on families. For children, the consequences of poverty can be long-lasting, leading to poor nutrition, poor health and poor prospects for success in school. Read more here.

ED Group Fundraising Survey Findings

The ED Group implemented a survey around nonprofit fundraising activities to aid EDs in a number of ways. Almost 30 nonprofits participated and give their input regarding how much fundraising they do, what kind of fundraising activities, and even when their events are held. Want to see when most fundraiers are taking place? Take a look at the survey here. This information can be helpful as you plan new events or consider other dates. The results also report how much money is raised and staff involved.

Nonprofits Employ Tougher Measures as Downturn Deepens

The Nonprofit Times has reported on a new Bridgespan survey (carried out in November 2008 and updated this past May) that reveals the negative effects of the economy on nonprofits has accelerated during the past six months.

Some of the key study findings in regards to nonprofits' responses to the downturn are:

• Working closely with existing funders to address challenges 79 percent this past November and 81 percent this past May;
• Redesign programs to achieve outcomes in a less costly manner: 59 percent in November and 67 percent this past May;
• Examine and improve key processes and structures in increase organizational efficiency 48 percent in November and 62 percent this past May;
• Have a clearly defined contingency plan 59 percent in November and 67 percent this past May; and,
• Consciously identify key positions and shift resources to keep these positions filled.

Read the Nonprofit Times article here.

Charitable Giving Declines, a New Report Finds

The NY Times reported that charitable giving fell last year by the largest percentage in five decades, according to a new study by the Giving USA Foundation.

Individuals and institutions made gifts and pledges of $307.65 billion, a decrease of 5.7 percent on an inflation-adjusted basis over the $314 billion given in 2007, according to the foundation, a research organization backed by the fund-raising industry.

Some experts said they were surprised the drop was not even bigger, given that endowments fell by as much as 40 percent, the stock market declined by a similar margin, corporations posted unheard-of losses and unemployment was rising at a fast clip.

“So far, my clients are holding their own, by and large,” said Robert F. Sharpe, a fund-raising consultant whose clients include St. Jude’s Children’s Research Hospital and Memorial Sloan-Kettering Cancer Center.

The Giving USA Foundation study found that the drop in giving accelerated in the fall, as the impact of the economic crisis and the steep decline in stock markets took hold.

“In the first half of the year, it was more or less business as usual for our clients, which is to say pretty good,” said Del Martin, the chairwoman of the foundation and a partner at Alexander Haas, a fund-raising advisory firm in Atlanta. “Then, as we got into the last quarter, we saw corporations begin rethinking their giving in greatly different ways, and we saw individuals begin to revisit their philanthropic priorities.”

Even with the steep drop, charitable giving remained strong. Last year’s giving outstripped all previous years on record except 2007, though the outlook for next year remains uncertain.

Amherst College, for example, had a “banner year” last year, said Megan Morey, the institution’s chief advancement officer. The college received the largest bequest in its history, $23 million, and several donors responded promptly to a new $425 million capital campaign, enabling Amherst to raise a total of roughly $70 million.

But like other nonprofit organizations, Amherst has found fund-raising in the current year tough. Ms. Morey said the annual campaign, which ends in a few weeks, is down by roughly 15 percent compared with the 2007-8 effort. “Over all,” she said, “we’re tracking comparable to what we were in 2007, which I feel good about.”

Giving USA estimated that donations to educational institutions fell 9 percent on an inflation-adjusted basis to $40.94 billion. Colleges, universities and private schools, including Amherst, have also been hit by sharp declines in their assets.

About two-thirds of public charities saw donations decrease in 2008, the foundation said. Most surprising, Ms. Martin said, was the decline in gifts to organizations working to meet basic needs, like food banks and homeless shelters, which are seeing a big increase in demand for their services. Read the full article here.

Nonprofits work to avoid layoffs

As nonprofits continue to be squeezed by rising demand and falling revenue, many nonprofit operations executives are hoping cost-cutting measures will forestall layoffs, a new report says.

Most chief financial officers and chief operations officers surveyed by Bridgespan say layoffs are a last resort and worry that losing staff would mean a decrease in services for constituents.

To keep layoffs at bay, many nonprofits are instituting one or more cost-saving measures:
* Redeploying staff and volunteers to other areas, primarily fundraising
* Renegotiating contracts with vendors, many of which would rather alter terms than lose business
* Cutting staff salaries, benefits and bonuses, and mandating furloughs
* Consolidating operations
* Increasing communications and transparency with all stakeholders
* Grooming volunteers to take on jobs formerly handled by staff
* Soliciting help from board members in fundraising, planning and other areas
* Looking for ways to retain their best staffers

Bridgestar is a program of the Bridgespan Group and works boost leadership in the nonprofit sector.

SeeThroughNY tax spending website is new resource for nonprofits

SeeThroughNY gives New Yorkers a clearer view of how their state and local tax dollars are spent. This site is sponsored by the Empire Center for New York State Policy, part of the non-partisan and non-profit Manhattan Institute for Policy Research.

SeeThroughNY is a web portal designed to become the hub of a statewide network through which taxpayers can share, analyze and compare data from counties, cities, towns, villages, school districts and public authorities throughout New York. You can search government payrolls, contracts, expenditures, and links to additional information and supporting material on other websites. For example, search your village or city to see what member items were awarded or benchmark your village, city or county against others. This is a great resource for nonprofits, and could be helpful in articulating region-specific needs.

Tier nonprofit agencies buck economic downturn

A week ago, The Press & Sun-Bulletin examined how local nonprofits are doing compared to organizations nationally, especailly in light of a Finance Fund survey that showed only 12 percent of nonprofits expect to break even this year and 31 percent don't have enough cash to cover more than one month's expenses. The article relates that nonprofit organizations in Broome County that depend on donations to pay for programs are doing well this year, despite a sagging economy beset by layoffs and job losses. Read more here.