Here's a recap of recent events for those keeping score at home:

• The ability of tax payers who itemize their deductions to reduce taxable income and lower their tax bill was a point of debate within the larger context of Congressional action regarding the "fiscal cliff,” our growing national debt and federal budget policy.
• Some in Congress argued that limiting the deduction for higher-earning individuals could provide an additional source of revenue for the Federal government.
• Advocacy by nonprofit coalitions, foundations and fund raising professional featured the importance of individual giving to nonprofit work. Proponents of the charitable deduction encouraged policy makers to avoid limiting our funding sources, already dwindling since 2008. Furthermore, supporters noted the increased need for viable nonprofits in human service roles, a need now growing for a fourth consecutive year.
• In one example of swift action, the National Council of Nonprofits, LANO's affiliate in Washington DC, provided its multi-state network with this sign-on letter urging members of Congress to preserve the existing deduction.

All this action and advocacy seemed to work. So doesn't that mean we won?

Well, before we claim "mission accomplished," note that the tax code debate will continue in Congress this year, and a similar debate is set to be the focal point (see media links below) of Louisiana’s state legislative session that begins April 8.

Nonprofits receiving tax deductible individual donations range from symphonies and art exhibits to soup kitchens and child safety programs. So preserving the tax incentive will continue to be important to many and worth defending; however, we should not pin our hopes on this or any single avenue of nonprofit support.

Richard Dare puts it bluntly in his Huffington Post Blog, "Paradise Lost: Can We Keep Nonprofits from Failing?”

In writing about the national recession, declining revenues and increasing competition for nonprofit donor support, Dare warns that nonprofits risk perishing unless we adapt quickly: "The underlying business model of the nonprofit is too inadequate, and the need for our services is too fast-growing, and society's understanding of the situation isn't all that it might be.”

Perhaps that's not blunt enough. Unless we create a sustainable nonprofit sector, nonprofits may not be there when we need them. That's the issue in a nutshell.

Nonprofits in Louisiana must be ready for more citizens to need our services and for higher expectations of our ability to step in where government has reduced capacity and business has little obvious incentive. Even the foundation community struggles to meet current demand. Just this week I received notice that a state grant maker received requests totaling $750,000, yet had only $250,000 available to invest.

To overcome the foreboding of Dare’s Paradise Lost article, we might observe that a new nonprofit paradigm for sustainability is emerging.

Where collaboration and mutual benefit drive partnership, these will flourish. Where the diverse interests of often segregated economic sectors—business, nonprofit, government, volunteer—can find complementary roles and a common platform, partnerships leading to sustained growth are possible. They may even be inevitable.

Something has to be done to meet the growing needs of people, of all of us, who will at one time or another require or benefit from the services of a nonprofit organization.

Public policies—national, state and local—are important tools that can help, but they can also have consequences that warrant our attention and action. And they are inadequate by themselves to sustain a viable nonprofit sector.

Beyond advocacy, the next step in our growth as mission-centered private companies does not stop (doesn't even pause) with an incentivizing tax status: It requires new forms of partnership; innovative engagement between traditional and non-traditional supporters; experimentation with revenue models, and taking strategic risks to perpetuate our worthwhile efforts.

RESOURCES

• Execute Now! Blog re: Business Model Reform

National Advocacy:

• Nonprofit Coalition Sign-On Letter – attached link hosted by Independent Sector
• IRS Exempt Organization "Select Check”

Louisiana news coverage of the Governor Jindal’s state tax reform proposal:

• Baton Rouge Business Report
• The Times Picayune
• The Monroe News Star

DAD, YOU WERE RIGHT

As a child I thought the aphorism "Life isn't fair" was unnecessarily pessimistic.

It was a favorite chestnut of my father's, and whenever he said it, I vowed I'd grow up one day and prove him wrong.

Well I grew up, but that day never came. Pop's dour wisdom seems watertight.

Mario Morino, businessman, philanthropist and author of Leap of Reason: Managing to Outcomes in an Era of Scarcity, held forth on this theme at last month's meeting of the National Council of Nonprofits.

I attended the D.C. conference and listened as Morino provided a bracing and frank keynote address. His view of prevailing foundation investment strategy would make my father proud.

A funder of nonprofits himself, through the innovative Venture Philanthropy Partners, Morino growled from the podium a litany of complaints about the way foundations work.

"We say that we focus on results and force nonprofits to provide data," he groused. "But then we don't provide the support to effect sustainable change over the long term. It's an unfair expectation.”

Morino framed his discouraging view of philanthropy-as-usual within a larger economic scenario that makes its results particularly unfavorable for nonprofits and the communities we serve.

Drawing from decades of direct experience, Morino summarized the disparity between the shrinking "supply side” and the growing "demand side” of community needs.

Public, private and individual budgets are under tremendous pressure. He predicts even further draconian public sector cuts that will add significantly to individual funding requests in the coming years.

Furthermore, given expanding technology and overseas outsourcing, he predicts that entire populations not previously in the "recipient” pool of our sector's services will need nonprofit programs and support.

Nonprofits will be expected to respond to unprecedented demand from a broader swath of the population at a lower cost and with greater effectiveness.

It's hard to see the fairness in that, even for me.

THE PRICE OF DOING GOOD

Contrasting what seems to be an untenable situation for nonprofits, Morino believes strongly that "what makes positive change are people.”

The benefit of this belief may be in its basic economic premise: A positive attitude is inexpensive.

"It doesn't cost money to be good,” he said. "Being good is a mindset.”

Building on the idea that people—good people doing good work—hold the key to positive social change, Morino implores nonprofits and their funders to invest in bold, innovative leadership.

He feels that courage in the social sector must be cultivated. The spirit of entrepreneurialism, promoted and proven in business, has significant benefit for nonprofits.

"Leaders need to be freed from the shackles of false measures to make real and lasting change,” Mario asserted. The quantitative and qualitative leaps forward we seek for our communities are hamstrung, in his view, by short term needs and short term funding.

Morino calls this a "hand to mouth" existence for nonprofits, and he places much blame on the funding community.

His condemnation was searing: In the worst cases, he said, funders are "cheating the ones who make a difference out of their ability to do lasting good because of a lack of trust, loyalty, relationships, [and] pride.”

My immediate reaction, in defense of a funding community I've come to know and admire, is that to whatever degree Morino's critique rings true, nonprofits must share responsibility.

In pursuit of essential funding, nonprofits are too willing to shift our missions and agree to metric goals we cannot clearly envision realizing—especially in a twelve-month period. Thus, we do our part to promote the "unfair expectations" that Morino feels our funders hold us to.

Whatever the case, Morino and I agree that the demand for short term returns on investment is damaging to funders and nonprofits alike.

Systemic change requires more than onetime and program-specific funding. "Leaps in performance demand substantive, multi-year investments,” Morino said. Funders must understand what it takes to get the job done and fund the full cost of that effort.

He challenged all of us to speak up for a more rational approach to funding—to favor "reasonable evidence" of results over strict metrics, at least in the short term—and to concentrate our precious resources on investments that can make meaningful differences over time.

For the second year in a row, I was struck by a keynote address at the National Council that advocated, in effect, for leaps of faith as essential to advancing nonprofits.

Last year it was Jeanne Bell, co-author of Nonprofit Sustainability, encouraging us to seek something she called "financial logic" in our budget planning and business modeling. Bell's point was that common sense may be a better predictor of investment success than any amount of before-the-fact number crunching.

This year it was Mario Morino calling for "reasonable evidence" rather than quantitative targets in assessing success during and after the fact.

Now, how do I break this news back home?

BAYOU COUNTRY ACCOUNTING

There will be resistance to this, I expect.

We are faced with great needs and insufficient resources sector-wide. We are trained to be accountable when the counting matters most. Where is there room for leaps of faith (or per Morino, "Leaps of Reason") in our current situation?

As a nonprofit with a mission to improve the effectiveness of those who would improve life for all Louisianans, LANO shoulders a load as large as the sector itself.

I struggle to imagine how even the fine heads and strong backs we've assembled might plot, with convenient balance sheets of expense and revenue, a course to certain success.

And yet, success is what I see.

LANO's network of Members and Friends is growing by 100 a month. Our services, products and events are in demand and demonstrably helpful to those who employ them. Our leadership among sister associations nationwide is openly acknowledged at meetings like the one I recently attended.

For these reasons, I am proud of our fine staff and honored to lead (and be led by) them. I wish I could give my staff and our supporters an airtight calculus that guaranteed continued growth and ever-greater investment.

What I have instead is a heap what got us this far: reasonable evidence, financial logic, and faith.

And that's fair enough for me!

RESOURCES

Venture Philanthropy Partners

More information about Mario Morino: Morino Institute

Morino's new book: Leap of Reason: Managing to Outcomes in an Era of Scarcity

Jeanne Bell's publication Nonprofit Sustainability

• Also by Jeanne Bell: Financial Leadership for Nonprofit Executives: Guiding Your Organization to Long-Term Success

For nonprofits filing as public charities, advocacy is necessarily apolitical. Our tax-exempt status depends on it:

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization... may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates. (source)

But in a more expansive sense, nonprofits need not be nonpartisan.

Tax exempt organizations actively promote causes and advocate around issues recognizable along the political spectrum. This is right (and sometimes "left," or even "center!"); and it's perfectly OK. Advocacy for a cause is a common impulse that has sparked many a successful nonprofit venture.

Yet some nonprofits shun even a brush with politics. Their founders, staff and supporters take pains to prevent partisan influence on their work, which they see as diminishing its value or simply beside the point. Some missions do seem to resist easy placement in one camp or another.

We like to think that service organizations, for example those that feed the hungry or shelter the poor, exist in nonpartisan territory and can afford to remain aloof from the political process. Perhaps the need for a given organization is so obvious in the community it's hard to imagine anyone objecting to its calls for cash, or car donations, or to its tax-exempt status.

But is that really the case? To twist a familiar phrase, your organization may not be interested in politics, but politics is interested in your organization.

So long as nonprofits need the support of others, they will be subject to the opinions of their supporters and to the politics of larger communities they serve. This fact requires that nearly all nonprofits learn to engage productively in the political process, whether directly or by proxy, and to gain some comfort with the process.

Professor Kirby Goidel, political scientist at LSU and keynote at LANO's 2012 Public Policy Institute, had this to say (paraphrasing again) about the importance of political engagement by the nonprofit sector: "We get the communities we deserve."

What kind of community do you think you deserve? Or more pointedly: What kind do your children deserve? As we work to make life sustainably better for our communities and kin, what active role are nonprofits called to play?

Fundamental Rights: Advocate, Organize, Vote

These have always been paths to power. My interest is not to promote power for its own sake, which is a corrupting force almost inevitably, but to call for power among nonprofits for goodness sake.

Uniquely, nonprofit interests have the potential to broaden and distribute the benefits of power among a wider constituency. The virtues of democracy are integral to the work of thousands of nonprofits whose interests lay in shared community prosperity.

Often, the unheard voices or invisible experiences of our clients can become powerful changers of policy through organized efforts that hold political systems and elected officials more fully accountable.

So here I go again: Think not what your nonprofit can do for those you serve, but what those you serve can do for democracy!

LANO's mission includes both direct instruction on nonprofit advocacy and indirect influence on nonprofit policy—through engagement and awareness of issues and with partnerships that inform the decisions of those we elect to lead us.

Nonprofits need make no apology for this. It is the right and a responsibility of all in the community to advocate for its most satisfactory present and to preserve its resources for a desirable future.

RESOURCES:

• Register for the upcoming CausePlanet Webinar, Fearless Advocacy with Expert Christopher Kush 
• Join LANO's Public Policy interest group
• From the National Council of Nonprofits:

1. "Nonprofit Advocacy Is Legal, Needed,and Easy” (source page)
2. Also, useful guidance on nonprofit use of the 501 (h) election available to nonprofits to share their lobbying efforts with the IRS

• LANO's own Ashley Herad's national webinar on nonprofit voter engagement
• Donate to LANO's Policy effort
• IRS definition of exempt requirements with links to more info about advocacy

Chicago's Hull House closed its doors for good, leaving behind a legacy and many lessons.

The iconic Jane Addams Hull House inspired me as a student pursuing my Master's in Social Work. It seemed an unassailable bedrock model for serving mankind and making a positive difference in a world of great need. Hull House epitomized the ethic of "going where the client is” and serving the whole, multi-faceted person along with family and community in interwoven programs.

So I was startled to read in The Chronicle of Philanthropy of the Hull House closure after more than 123 years of laudable service (extended coverage link). My admiration from college days accounted for some of my interest, but the implications of this news and the lessons it holds for today's nonprofit community kept me reading and wondering.

Chronicle reporter Maureen West anticipated my chief concern: "Whatever the particular details of Hull House's story, it may be only the highest-profile casualty so far of forces that could reshape urban social-service groups nationwide.”

When even the giants are mortal

My first call was to LANO board member Dr. Keith Liederman, Executive Director of Kingsley House in New Orleans, the venerable social service provider that Jane Addams herself referred to as "The Little Hull House of the South.”

I asked Liederman what the news meant to him. He replied, in part:

"The recent closure of Jane Addams Hull House was a dramatic blow to all of us at Kingsley House. Jane Addams, the founder of the settlement house movement and community-based social work, generously provided her guidance to help launch Kingsley House in 1896 as the first settlement house in the South.

"The loss of [Hull House] provides a crystal clear message to those of us who seek to carry on the great legacy of Jane Addams and other forerunners of our own nonprofits: It is vitally important that our organizations remain deft in adapting and managing through these difficult economic times to ensure our long-term sustainability and continued impact in the communities we serve."

Remain deft. Adapt. Manage. So we must, but how? The answers cannot be obvious if even the giants of our field can fall.

LANO's finance and accounting service provider, Execute Now!, received my next call. Company President Erica Crenshaw shared valuable insights on the Hull House closure, which I excerpt here. Please read her statement in full over at Finance Fundamentals.

Crenshaw sees Hull House's troubles, while exacerbated by external economic forces, as primarily internal in origin. Her summation is unflinching:

"Hull House faced a number of external challenges in recent years, but the primary reason it was forced to close its doors was internally based –a lack of financial leadership. This longstanding organization employed over 300 people, had a peak operating budget of $40M and was overseen by a board of directors comprising numerous pillars of the business community, yet it was still unable to survive. This tragedy could have been thwarted if the board demanded more financial leadership.

"Hull House, like many organizations, took advantage of the bountiful years of easy money, creative financing, and low interest rates. The board approved approximately $3M in loans to purchase buildings and expand their programs throughout Chicago. However, program expansion and access to inexpensive debt were not the organization's core problem – they only contributed to it.

"The crux of the issue came from the lack of good, honest and timely financial information. It has been reported that the Hull House board was not receiving timely financial reports and the reports that they did receive were overly optimistic. The organization faltered because no one in leadership read the tea leaves. It is the responsibility of the nonprofits' leadership to ensure that the right professionals are in place to accurately assess its financial condition, interpret financial numbers and persuade the organization to take the requisite steps to maintain its financial standing."

In tough economic times and always

Honesty is essential between nonprofit leadership and our Boards of Directors. It is the responsibility of Executive Directors to keep volunteer leaders informed of the facts that shape considerations by the Board. It is the responsibility of the Board members to then make decisions accordingly.

Chronicle of Philanthropy blogger, Rick Moyers, agrees leadership is accountable for failing to heed the warning signs of financial collapse and suggests others learn from the Hull House example. From his February 27^th post, Hull House Collapse Is a Cautionary Tale for Boards and Executives:

"Hull House's situation was far from unusual. Thousands of nonprofit organizations are heavily dependent on government financial support, have no operating reserves or are in debt, and are seeing increased demand for services."

The more we sharply focus our human and financial resources to advance what we do best; the more likely we are to survive difficult financial times and be better positioned for growth when the philanthropic economy strengthens.

Nonprofits are driven by a passion to help and desire for positive change. Nonprofits are in business toward these ends, and sound sources of revenue fuel our kind of business as with any other.

In considering what programs or projects are most valuable to preserve (those of high impact, high demand, and measurable results), it is vital to evaluate the financial viability of those services also. If sustainability is important to you, your Board, your volunteers and donors, you must prioritize financial stewardship.

And should we need reminding what's at stake, Erica Crenshaw tells us: "There is a community depending on your existence.”

RESOURCES: Finance Fundamentals (subscribe to the free blog at LANO)

From the Planned Parenthood mission statement, "...to provide comprehensive reproductive and complementary health care services in settings which preserve and protect the essential privacy and rights of each individual; to advocate public policies which guarantee these rights and ensure access to such services..."

From the Susan G. Komen for the Cure Community Health and Outreach statement, "Our community health grants ensure quality care for all by funding breast cancer education, screening and treatment projects for those who need them most."

It was the lead story in the nonprofit world for three days. The revelations began with last Tuesday's news that high-profile funder Susan G. Komen for the Cure would discontinue its grant of more than a half-million dollars annually for breast cancer screening and other services provided by Planned Parenthood, an organization controversial for its abortion rights advocacy.

The Chronicle of Philanthropy, rarely known for "breaking news," kept its updates current. On Friday we watched the story get bigger:

"Susan G. Komen for the Cure said on Friday it was retreating from a decision to cut support to Planned Parenthood."

According to Komen's public recanting, it would continue to fund existing programs, "including those of Planned Parenthood, and preserve their eligibility to apply for future grants..."

Instantly, another round of Facebook comments was posted and internet pages revised. Donors demonstrated opinions through pledges, shifting support in more and less public displays of allegiance.

With surprising speed and across a diverse range of media, a story about one nonprofit's change in grant-making policy became national news.

Whatever your opinion on the merits of this story, the "take home" lessons for nonprofit leaders are many.

Policy decisions: How wise and thoughtful was the deliberation behind a major shift in funding policy? If divisive consequences can erupt even when the focus remains on protecting women's access to life-saving healthcare (on its face, a non-controversial proposition) then how do we mitigate the potential harm of a policy change?

We do so through honest and transparent dialogue; by including diverse opinions and expertise. A nonprofit's use of Board committees and bylaws can help vet major policy decisions. Staff members' perspectives are also important, since they are the ones on the front lines of service delivery.

We may never know the details of Komen's deliberation prior to its initial statement, but was it as comprehensive as it could have been?

Crisis management: Every day we balance service delivery with public expectations. We see our mission as viewed through many lenses: our partners' needs and our available resources; the political landscape; the core purpose of our own charters. Nonprofit missions propagate through its policy, partnerships and programs.

Crises often come when a disconnect—real or apparent—emerges between our mission and its execution. Much grief can be saved by keeping actions close to the mission and making major changes the subject of ample discussion.

ABOUT FACE

It is too early to tell the long-term effect these events will have on the partnership between Planned Parenthood and Susan G. Komen for the Cure. Policy reversals can occur swiftly, while the effects of an about face can reverberate throughout an organization's culture, its workforce, constituents and donors in far reaching ways. At question are both organizations' financial health, fund development, board governance and community engagement.

While politics is everywhere, we can choose its degree of influence. To the extent nonprofits rely on outside funding, we should note that public tolerance for political wrangling is low (a surprise to some in politics), particularly on issues as frightening and indiscriminant as cancer. Some topics are truly "bigger than the both of us," and demand that our better natures prevail.

Whenever nonprofits falter in the public eye, the costs are considerable. Yet, away from the debate, a thousand needs are being met by organizations like Planned Parenthood and Susan G. Komen for the Cure. Imagine how much more good would be advanced by nonprofits if we pursued—and won—increasing trust through transparent and inclusive policy decisions.

RESOURCES

• Philanthropy Today issued their News Update via an 11:26 a.m. email http://philanthropy.com/blogs/philanthropytoday/update-komen-plans-to-maintain-support-of-planned-parenthood/44431?sid=pt&utm_source=pt&utm_medium=en 
• Friday morning Planned Parenthood's homepage: http://www.plannedparenthood.org/about-us/newsroom/press-releases/statement-cecile-richards-planned-parenthood-federation-america-regarding-todays-komen-announce-38686.htm 
• Media Training Guide shared as a part of the 2011 LANO Annual Conference that includes the importance of strategic crisis communications for nonprofits.