Ten Fascinating Facts About California Nonprofits

The California Association of Nonprofits recently released Causes Count, a report on the impact of the nonprofit sector throughout the state. Here are ten fascinating (and sometimes surprising) facts I gleaned from the report to share with you:

     1) Nonprofits represent a significant part of the California economy: 15% of California's Gross State Product (a measurement of the state's total economic output) comes from the nonprofit sector.
     2) There are 170,783 nonprofit agencies in the state: Of these, 72,000 are 501(c)(3)s - charitable organizations operated exclusively for exempt purposes and eligible to receive tax-deductible contributions in according with IRS tax codes.
     3) Almost 1 million people work for a nonprofit organization: This means that 6% of all state jobs are in the nonprofit sector, with the largest percentage in health care and education.
     4) The nonprofit sector is the 4th largest industry in the state (based on number of jobs): That's more than construction, finance, and real estate. Nonprofit job numbers are topped only by the leisure/hospitality industry, retail businesses, and manufacturing.
     5) Just about every nonprofit relies on volunteers: Whether large corporate-style agencies or small grassroots organizations, all nonprofits utilize volunteers and all of them have more volunteers than paid staff.
     6) Volunteers contribute $24.7 billion in unpaid volunteer labor annually: That's the equivalent of 450,000 full-time employees. A whopping 86% of these volunteers say they love what they do.
     7) And they're not just stuffing envelopes: More than half of these volunteers do significant work in the areas of fundraising and deliverance of core programs.
     8) Plus 400,000 people sit on nonprofit boards: That means one out of every hundred people you know contributed time and expertise as a proud member of a Board of Directors.
     9) That brouhaha about nonprofit mismanagement and excessive overhead costs has very little basis: On average, nonprofits spend 89% of their total budget on program expenses, with just 10% designated to management and a mere 1% to fundraising. Of the folks polled by the California Association of Nonprofits, 80% were confident that California's nonprofits deliver quality services and operate ethically to serve the public's benefit.
     10) Nonprofits pay taxes: Contrary to popular belief, nonprofits actually pay a significant amount in state and federal taxes - $37 billion annually, largely in payroll taxes.

Looks like good work turns out to be darn good for the economy and for the state.

Two Essential Words: Thank You

Have you thanked anyone this week? If not, it's about time you did. Expressing your appreciation for your staff, board members, volunteers, and donors is an essential element in building organizational capacity and sustaining relationships with the folks who support your work. Here are some basic guidelines:

• Thank everyone: Yep - I mean everyone, including the donor who contributes a mere $10 and the volunteer who puts in an hour of time and the board member you can't stand and the staff person who is slacking. Do it not only because it's prudent practice - donors who receive prompt thank you letters give more, volunteers who are thanked are more likely to return for more hours, board members and staffers who are appreciated work harder. Do it because it's the right thing to do.
• Thank promptly: When someone donates, your acknowledgement should be sent out immediately - no more than a week after receipt of the donation. If a donor has to call to check and see if you received a contribution, you have really blown it - and you run the risk of losing future donations.
• Make it personal: It might sound downright old-fashioned, but an actual handwritten letter or postcard or a personal phone call beats a form letter (or even worse, a form email) any day. At the very least, be sure to add a handwritten note (it can be as simple as "thanks for your continuing support; it really makes a difference!"), especially to important longtime donors and volunteers.
• Do it right: This may sound stupid, but make sure you send the appropriate letter with the correct salutation to the right address. Just last week I received a thank you letter for someone named Jane. I returned the letter to the nonprofit with a note, but not everyone is going to be so helpful. And make sure you have the correct language in your letters to donors. Here's what to include for cash donations: "This letter acknowledges receipt of a gift in cash, for which there were no goods or services provided in consideration, in whole or in part, or for which the goods and services provided were of insubstantial value." Note that if you did provide goods/services of value, you need to indicate how much they are worth and deduct that amount from the acknowledged charitable donation. For gifts of stock you need to include the number of shares, name of the stock, date the gift was received, and the value of the gift on that date.
• Stay in touch: Don't make that thank you letter the last thing your donors or volunteers hear from you until they get your next year's solicitation letter. Be sure to put them on your email list for newsletters, send them invites to special events, call significant donors and volunteers to share important news, and plan fun annual volunteer and donor appreciation events.

By the way - thanks to all of you who continue reading these blog posts, sending me emails with feedback, and letting me know that my posts have helped you in your nonprofit work!

Five Questions to Ask Before You Write That Grant

So you have a budget shortfall. Your board looks at the financials, panics, points to the Executive Director, and says, "Why don't you just write a grant?" I'm guessing this scenario sounds pretty familiar. But before you write that grant, it's important to stop and evaluate whether it's worth your valuable time to do so:

1) Are the foundation priorities a fit with your organizational mission?

• You don't want to waste your time writing a proposal that has little prospect of being funded. Take the time to determine if the funders' goals and objectives are a match for your organization.
• Look at the website for funding priorities as well as lists of previous grants to get a sense of what they are looking for and what kinds of organizations they like to support.
• That said, never create a project for a grant proposal simply because it fits into the parameters of a particular foundation unless it represents a clearly defined and authentic effort to meet new needs for your constituency within your stated charitable purpose.

2) What are the odds of actually getting funded?

• Be sure the foundation gives grants in your geographic area, accepts unsolicited proposals, makes grants of a size that is within an appropriate scale for your organization, and actually gives the kind of funding (operating support, capital campaigns, scholarships, ongoing programs, etc.) you need.

3) What's your game plan for the day after the grant period is completed?

• I know you are all looking for ongoing operating support, but don't kid yourself - those kinds of grants are pie in the sky in our current climate. Know that most grants will be for time-limited project support, although you can usually budget a small percentage (typically no more than 10%) for administrative costs in project grants.
• So - assume that any grant will be for one year only and plan accordingly, particularly if your project involves any significant increase in staff and programming.

4) Will this grant contribute to an income stream that is diverse?

• Always seek for a diversity of funding sources, both overall and within income categories (grants, earned income, contributed income).
• Avoid the trap of becoming dependent on one donor for key support, whether it be an individual or a foundation. Some of the worst financial messes I've seen nonprofits get into were precipitated when a long-time donor or foundation stopped providing funding due to a change in priorities or an economic downturn such as we just experienced.

5) Is writing this grant application the best use of your time?

• Don't forge to weigh the benefit of receiving a project grant against the extra work required, including not only time spent writing the grant but also written narrative and financial reports.
• Finally - remember that 75% of charitable dollars in the U.S. comes from individuals (83% if you include bequests and family foundations). A paltry 12.5% comes from foundations. Given your staffing level and/or board engagement, you might be better served strengthening your major donor fundraising efforts.