Answers About United Way and Nonprofits

January 29, 2009, The New York Times — The president and chief executive of United Way of New York City abswered selected readers’ questions.

Following is the second set of answers from Gordon J. Campbell, the president and chief executive of United Way of New York City. Mr. Campbell answered selected readers’ questions on how New York City nonprofits are coping with the recession and how New Yorkers can give back and provide assistance to those in need. We are no longer accepting questions for this feature.

I am president of a community-based women’s volunteer organization in Westchester County. We are confronted with a huge increase in demand for basic needs, while grants and donations are harder than ever to come by.

With needs exploding and resources diminishing, how should our organization prioritize which pressing community needs to meet first? How can we maximize our impact in ways that do not require greater expenditure?

— Posted by Lisa Copeland

The challenges you face are, unfortunately, all too typical for nonprofits these days.

It is critical to focus on your organization’s programs and activities and evaluate how absolutely integral they are to your core mission. Some activities, while relevant, must be viewed as ancillary. Focus on your core and begin to jettison those activities that are not absolutely central to mission. These are not easy decisions, but to avoid them is risky.

This process requires objectivity, and a willingness to discard historical or emotional attachments. Many activities are “good” or “useful,” and in times of rising need it is easy to feel the urge to add activities. Instead, I recommend a laserlike focus on core mission.

Create a range of budget contingency projections, including the worst case, and plan how your agency would respond.

Without knowing the particulars of your situation, I suggest that you:

1) Get your board and leadership team to establish or re-establish a clear process for making these kinds of decisions. Who is empowered to make decisions, and when will they be made?

2) Understand your revenues and expenses by program. By program, I mean those that have been identified as core to your mission, the “keepers.” In evaluating program economics, remember to quantify unfinanced mandates that are unavoidable and require outlays. Here, you are trying to ascertain the true cost of a given program or activity.

Doing 1 and 2 above will enable you to create a decision-making matrix: program versus mission match and program as financially positive versus negative (i.e., it costs more than the revenue available to support it). This process can also help level the emotional stress that accompanies these decisions.

3) Plan to use temporarily restricted net assets to support core programs. In some cases you will need to communicate with the funders who made the restricted gifts, and get written permission to redirect the dollars to core program or to remove the restrictions. This may free up unrestricted dollars, which could instead be employed to support infrastructure and other unfinanced expenses.

4) Communicate your need, and know what you are asking for. What is your “call to action”? Contact your local news outlets, speak to your elected officials, communicate with your supporters, and use your board as never before to activate their connections and resources.

There is no “silver bullet,” but taking action now will maximize your odds of remaining viable, reasonably healthy and in position to meet community needs that directly align with your mission.

How does the Wall Street crisis affect donations to nonprofits, especially those for homeless people? Are you seeing a drop in donations, are these substantial, and what do you do to cope with that?

— Posted by Eva

The economic downturn has had a particularly harsh effect in New York City, home to a large low-income population, important economic sectors (finance, insurance, media, fashion and real estate) that have been especially hard hit, and substantial government contracts with nonprofit agencies.

New York City is projected to lose 170,000 jobs through 2010, and its unemployment rate is likely to hit all-time highs. Emergency food providers report a 28 percent increase in clients, and the number of families entering the homeless shelter system has increased by more than 15 percent.

This is a challenging environment for all nonprofits, and United Way of New York City is not immune to the economic downturn.

Over the past several years, we have made funds diversification a top priority. While several years ago corporate employee giving represented nearly 80 percent of our overall revenue, today it represents 60 percent. Other sources of revenue include private individual donors, sponsorships, corporate and private foundations, and government.

However, even with that greater diversification, we still expect our overall fund-raising to be down from last year. Within our corporate workplace campaign, we are witnessing smaller average gift sizes across sectors. But we are heartened that overall participation has been up. Those who are in a position to give seem to understand that now, more than ever, it is essential to keep our city strong and help our most vulnerable neighbors.

Finally, we have taken the step of streamlining our own operations. This has included a work force reduction as well as a number of other nonpersonnel expense cuts.

Addressing the Wall Street Journal CEO Council on Nov. 19, Rahm Emanuel, chief of staff to President Obama, said it best: “You never want a serious crisis to go to waste. … It is an opportunity to do things that you think you could not do before.” Mr. Emanuel, of course, was talking about the economic crisis as an opportunity to tackle issues like health care reform and energy. But his words are equally true when it comes to thinking about the ability of the city’s nonprofits to survive and thrive during these difficult times. Now, more than ever, we need to remain focused on our mission, fine-tune our fund-raising and keep our boards and supporters engaged and motivated. With effective leadership and strong execution, we can weather the storm and emerge stronger on the other side.

The Independent Budget Office projects a long recession that will continue to erode jobs and tax revenues, resulting in large budget deficits well into 2011. There will continue to be an increased demand for services and a decreased capacity among nonprofit human service providers to deliver critical assistance.

I am heartened by the many thoughtful questions about how to give back, volunteer opportunities, and genuine interest in the sector, and I think Mr. Campbell’s answers are thoughtful and provide some guidance to those who have posed the questions.

We really are all in this together, and United Way of New York City, along with a myriad of organizations, must continue to make the case with elected officials on behalf of and continue to provide the programs upon which our most vulnerable residents rely.

— Posted by Fatima Goldman

No single organization — or government agency — can possibly solve the complex problems facing New York City. Only by collaborating and agreeing upon shared goals can we hope to collectively achieve the kind of enduring, communitywide changes that can significantly improve the lives of poor and low-income New Yorkers. This has always been true, but has rarely occurred. Now more than ever, collaboration will be even more necessary during the prolonged recession.

In addition, individual New Yorkers need to speak out, roll up their sleeves and get involved. Recognizing that there will be cuts, it is imperative that all of us communicate with our elected officials to let them know of the urgent need to maintain vital services. Volunteers with professional skills in areas such as accounting, financial management, human resources, strategic planning, fund-raising and technology are especially valuable to nonprofits and the individuals, families and communities they serve.

Someone else on this blog commented on very small charitable contributions being essentially meaningless. I always think of my small contributions made directly to a charity as a way for that charity to demonstrate to other donors that they have support and can prove by numbers that they are valued in this very specific way by showing their donors. Is this approach valid? Does United Way also use the number of donors to an organization when deciding which ones to support? What are the means by which United Way chooses which organizations to finance? How would United Way support organizations it does not finance?

— Posted by David Blaustein

All gifts, no matter how modest, are valuable to a charity. In fact, my colleagues and I in the sector are especially gratified by the many people who make so-called “small” gifts, because often such contributions are substantial in terms of their disposable income.

You are absolutely right in saying that foundations and other funders do look at the number of donors who support a nonprofit, because it is an excellent gauge of the organization’s public support.

Over time, “small” donors frequently become “large” donors, especially when they have an opportunity to become engaged firsthand with the work of the charity.

Please know how valued your contributions are, no matter what the size.

Mr. Campbell, why should a donor give to United Way of New York City as opposed to giving to a specific charity that is a United Way member charity or a charity that is unaffiliated with United Way? Thank you.

— Posted by Pat F

Giving is a personal decision, and only you can decide which charities are important to you.

As to why someone should give to United Way of New York City, I can tell you that the modern United Way is working hard to create sustainable social changes that mean more New Yorkers in control of their finances, more children achieving their potential, and fewer health problems related to poor diet and nutrition. Because we are uniquely positioned at the convergence of community-based agencies, government, corporations, foundations, communities and individuals, we are able to bring together a wide array of stakeholders to work toward shared goals, such as reducing the dropout rate.

We believe that everyone has a role in building a better future for all. If you share our vision of a thriving New York City characterized by income stability, educational success and healthy people, we invite you to be a part of the change.