10 Trends for Charities and Foundations to Watch in 2010
University Center for Civil Society Studies, says his
research has found that many charities have yet to
cut back on their service—even though they have reduced the size of their staffs. “Belt-tightening has its
limits,” he says, “and at some point starts to damage
Continued from Page 7
BEHIND THE TREND:
Trimming charity ranks. More than half of non-profit employers cut jobs between the summers of 2008
and 2009, according to a Chronicle survey this fall of
staffing trends at more than 1,000 nonprofit groups. Of
the total, 850 groups reported new job losses of more
than 6,000—or 4. 2 percent of their work forces.
Doing more with less. Of the 400 most-successful
fund-raising charities polled by The Chronicle, 186 organizations said they had either cut or frozen salaries
in the past year, declined to fill vacant positions or add
new ones, furloughed employees without pay, or laid
off employees due to the recession.
Hiring outlook. Despite the wave of layoffs, 28
percent of nonprofit organizations in a survey released
last spring by the Bridgespan Group said they expected to hire people to fill senior-level positions this year,
largely due to retirements. And layoffs of rank-and file
employees appear to be tapering off: Only 9 percent of
charities said they expect to trim more workers next
year, according to The Chronicle survey. And 19 percent said they plan to hire in 2010.
A Sharpened Eye
on Charity Pay
The Internal Revenue Service is scrutinizing many
of the nation’s wealthiest organizations, and has un-dertaken wide-ranging efforts to make sure charity
leaders and their boards serve as good stewards of
In Congress, lawmakers continue to seek ways to
ensure that nonprofit groups justify their tax-exempt
Scandals from 2009—most notably the Bernard
Madoff investment debacle that left nonprofit and other investors out some $5.1-billion—could lead to new
scrutiny of trustees and managers. And public and
government outcry over high pay and bonuses in the
financial world will probably continue to provoke anger in many quarters.
“Currently, nonprofits—from private schools to hospitals to nursing homes—can pay huge executive compensation and spend millions on new buildings with
essentially no repercussion other than outsiders raising their eyebrows,” a November editorial in the Des
Moines Register said. “Congress needs to ensure the
public is getting its money’s worth” from the tax subsidies charities enjoy.
BEHIND THE TREND:
Examining compensation. The tax agency is soon
expected to release the early results of an investigation of how much colleges pay their top officials, and
already the IRS has started auditing some institutions to learn more about that issue as well as how
they manage endowments and relations with outside
The IRS also has signaled it is looking into whether the federal rules that govern how all charities establish compensation levels are adequate—or whether they lead to a gradual escalation of pay that goes
against the federal government’s desire to make sure
nobody gets an undue financial benefit by working at
States too have expressed growing interest in regulating pay. Massachusetts in September announced
plans to tighten its oversight of compensation practices at nonprofit health-care groups.
Justifying subsidies. Congress continues to look
for ways to ensure that nonprofit groups provide sufficient public benefits to justify their tax subsidies. In
particular, versions of the health-care legislation lawmakers are considering would add new requirements
that nonprofit hospitals conduct a “community health
needs assessment” at least once every three years.
As donors grow more inclined to specify how they
want their contributions to be used, cash-strapped
nonprofit groups will struggle to honor those wishes.
Organizations probably will continue to explore ways
to use restricted endowments for more-general purposes.
“Donor-intent skirmishes are busting out all over,”
says Neal B. Freeman, chairman of the Foundation
Management Institute, which advises donors. One of
the reasons, he says, is that “the economic downturn
has tipped the balance of power back toward donors
and away from grantees. In the tradeoff between prestige and resource, the leverage is now shifting to resource.”
BEHIND THE TREND:
Clashes with family members. Prolonged economic stress means charities can expect conflicts similar to those that arose at Brandeis University this year
over plans to close its Rose Art Museum to the public
and sell some of the museum’s artwork. The move, designed to ease financial problems, drew an angry rebuke from the family of the original benefactors. The
university has since backed away from the idea.
Taking battles to court. One of the highest-profile
challenges to a donor’s will is expected to be decided
in 2010, as animal-rights groups wage a battle against
Leona Helmsley’s foundation—worth more than $5-
billion. They say it has violated the hotel mogul’s intentions. The bad economy is likely to cause other
charities to go to court. For example, an Ohio probate
judge said in October that the Cleveland Museum of
Art could use the investment income from four endowments to pay its construction bills, even though the
funds were originally established to purchase art.
Pleas for general support. More charities will
push grant makers and philanthropists to offer financial support that recipients are free to spend on administrative expenses and other costs, instead of solely for specific charitable programs.
Amid growing concern that donors have no way to
know whether their giving makes a difference, efforts
to improve how individuals pick and choose charities
are gaining steam.
That could be good news for giving: A majority of
wealthy people polled by Bank of America and the
Center on Philanthropy at Indiana University say
they would give more if they knew their dollars were
having an impact.
But if the evaluations aren’t done well, they could
complicate life for charities, few of which are eager to
jump through additional hoops.
BEHIND THE TREND:
Fresh approaches to evaluation. Charity Navigator, the nonprofit watchdog, is changing the way it
rates organizations and next year will revamp how it
evaluates charity finances so that low administrative
costs aren’t the primary consideration.
It will also start giving high marks to charities that
are open about their programs and finances and plans
to spend 2010 devising a new way to measure the results of charity programs.
Charity Navigator joins Give Well, GreatNonprofits,
and Philanthropedia, three groups that have recently
developed new ways to give donors more information
on nonprofit performance.
Explaining overhead costs. This month those
four organizations and GuideStar, another group that
provides information on charities, mounted an effort
to tell Americans to stop seeking out groups to support
based solely on how little they spend on overhead and
to look instead at an organization’s results.
Proliferation of financial advisers. Arabella
Philanthropic Investment Advisors, the Philanthropic
Initiative, and Rockefeller Philanthropy Advisors each
have recently hired more employees or plan to do so in
the coming year as more and more donors seek advice
on how to steer their money to the best charities.
Nonprofit groups like Root Cause and New Philanthropy Capital are stepping up the services they offer
to financial advisers whose clients want to know how
to direct their charitable gifts.
Volunteerism and national service are getting high-profile attention, with both President Obama and the
first lady giving the issue top priority. ServiceNation, a
coalition of community-service advocates, now counts
more than 250 members—up from 105 a year ago.
Next year brings a shift in the conversation, from
how to recruit more volunteers to how charities can
better absorb and manage them. A coalition of more
than 20 nonprofit, government, and business leaders,
for example, will continue work in 2010 on the Reimag-ining Service project, which is exploring the issue.
BEHIND THE TREND:
Mixed signals. Interest in national-service positions, which pay a stipend, has mushroomed, thanks
partly to the tight job market and a new idealism
among young people. Applications for AmeriCorps, the
flagship national-service program, jumped 184 percent
in the 2009 fiscal year.
However, the recession could impede efforts to promote a big jump in overall volunteer rates.
A recent National Conference on Citizenship study
found that 72 percent of recession-weary Americans
said they had cut back on volunteering and other civic
Federal aid. The Serve America Act, passed this
year, sets the stage for AmeriCorps to start growing in 2010 as part of a plan to triple the number of
participants—currently at 75,000—by 2017. However,
Congress has not yet allocated the money.
City efforts. Local volunteer campaigns will expand next year under the Cities of Service program
announced by Michael Bloomberg, mayor of New York,
and 16 other mayors in October. The coalition now includes 46 cities and continues to recruit new members.
A Stalled Online
An array of online tools and networks such as blogs,
Twitter, and Facebook allow nonprofit groups to connect with supporters, volunteers, and donors in a far
more interactive, cost-effective way than ever in history. But few charities have figured out how to raise
money using the new social networks.
Some of the most interesting technological advances have come as charities’ most passionate supporters
take on roles as unofficial fund raisers, spokesmen,
and advocates for the causes they support.
BEHIND THE TREND:
A wave of experimentation. A survey of 200 non-profit groups by Weber Shandwick, a public-relations
company, found that 51 percent of charities are regularly using Twitter and other social-media tools, while
85 percent said they plan to use them more frequently.
New tools. Social-media companies continue to
search for ways to make it easier for charities to raise
money using their technology. For example, You Tube
this year started allowing charities to embed written
messages and links to their Web sites in videos.
Supporter-created campaigns. The widespread
use of social-networking tools is making it easier for
supporters to raise money on their own. The 93 Dollar Club—a Facebook effort set up by Carolee Hazard
in August, when she was trying to decide what to do
with money she received from a woman whose grocery
bill Ms. Hazard had paid—has so far raised more than
$31,000 for a California food bank.