Nonprofits seek boards who can raise big bucks
Boston — Not for profit does not necessarily mean not expensive. Last year America's 900,000 or so charities spent more than $300 billion. Ten years ago, charity was a lot cheaper. About 740,000 nonprofits spent $115 billion, says Murray Weitzman at the Independent Sector, an organization dedicated to preserving philanthropic giving.
In other words, Mr. Weitzman says, we're paying twice as much for only 20 percent more philanthropy.
Though these figures do not take into account inflation, the tremendous rise in the cost of nonprofits has helped aggravate concern that the Oct. 19 stock market plunge would dry up major sources of income.
Even before ``Black Monday,'' though, rivalry for American goodwill was intensifying.
Board members of nonprofit groups have been going out and soliciting donations, says Joy Jones, a lawyer who serves as a trustee of Sarah Lawrence College in Bronxville, N.Y. But these board members have also been working harder to show their organizations how to get the most out of the dollars still coming in. Even without a profit motive, organizations need to be cost-effective, so they look for astute and skilled management professionals.
Yesterday's nonprofit board of ``resource, friendship, and inheritance'' is obsolete, says Mary Steel, managing director of the Volunteer Consulting Group, a nonprofit organization that counsels other nonprofits on how to see themselves as business entities.
While big-name groups like the Rockefeller Foundation do not expect the fall in the market ``to have any appreciable effect on grant programs this year,'' other nonprofits, including colleges, hospitals, and groups that minister to the needy, have already noticed a decline in donations.
Foundations, a major source of nonprofit funds, hold much of their assets in stocks and bonds. Black Monday erased an average of 10 percent of the value of foundation assets, and in some cases more. In general, foundations don't expect to distribute more than the $5.2 billion they handed to various charities last year, unless the market reverses. Still, they don't expect to hand out less.
Many colleges and universities, also dependent on endowments - one-third of which come directly from securities - have seen a slight drop in donations, according to Ketchum Inc., a Pittsburgh-based fund-raising adviser. ``Giving was not as great as in the previous calendar year,'' acknowledges Bonnie Hicks, assistant director of development at Sarah Lawrence. ``Whether it's a function of the change in taxes, or a function of Oct. 19, we don't know.''
Endowment folks tend to see this as only a short-term reaction. ``We have seen a significant decrease in the number of stock gifts,'' says C.J. Menard, assistant director of giving at Trinity College, in Hartford, Conn. But, he adds, while fewer are giving, more are reaching deeper into their pockets.
``The charitable impulse is there ... we just may have to package ourselves differently,'' Ms. Hicks suggests.
Indeed, Robert Thompson, chairman of Ketchum Inc., expects giving to grow 5 to 6 percent in 1988. While this is lower than his initial prediction of 9 percent before October's market plunge, Mr. Thompson expects charitable giving to continue to ``beat the heck out of inflation.'' In 1987, it grew 9 percent, hitting $87 billion.
Packaging may not help smaller organizations, like the Pine Street Inn, a shelter for homeless people in Boston, says Regina Herzlinger, a professor of business administration at Harvard Business School. These ``genuine charities,'' as she calls them, are unable to attract much professional fund-raising talent, and are the least prosperous and most vulnerable during a period of consumer belt-tightening.
Also hit hard are the many struggling theater groups, which have had to cut back on benefit performances and free seats in an attempt ``to put themselves in a position of fiscal health,'' says Kate Rowe, a lawyer at Volunteer Lawyers for the Arts in New York.
In the expensive world of art, ``the number of competing small, medium, and large arts organizations alone is huge,'' she says.
Cutbacks in government programs have only increased competition at the local level, says Karen Rudman, co-director of the Business Volunteers for the Arts, a training program for volunteer executives going into nonprofit management.
In addition, tax reform has given some boards the added chore of defending their nonprofit status. Hospitals, which generate about 95 percent of their income selling their care services, have more recently had to prove they deserve to be called nonprofit.
Brigham and Women's Hospital in Boston, of which Ms. Herzlinger is a trustee, generates $400 million a year in revenues, and, she says, ``would be considered a Fortune 500 company if it were for profit.''