Our friends at the California Association of Nonprofits held their Annual Convention this Thursday in San Francisco. The Convention featured former Secretary of Labor Robert Reich; Jeanne Bell, CEO of CompassPoint; Emmett Carson, CEO of the Silicon Valley Community Foundation; Pete Manzo, CEO of United Ways of California; Pamela David, E.D. of the Walter & Elise Haas Fund; Melissa Breach, E.D. of the League of Women Voters of California; Nayantara Mehta, Senior Counsel, Alliance for Justice; exempt organizations attorney Rosemary Fei, Adler & Colvin; author and grassroots fundraising guru Kim Klein; and CalNonprofits CEO Jan Masaoka.
"The world needs more of what nonprofits do." – Jan Masaoka
The morning plenary moderated by Jan Masaoka focused on the theme of What Should Philanthropy be Doing Better? The panelist was comprised of foundation CEOs Fred Ali (Weingart Foundation), Emmett Carson, and Pam David. The first area explored was partnerships with government. David said this was essential and that government could not be treated as a grantee. Carson took the position that the power dynamic heavily favored government and that philanthropy has to use levers in knowing how to advance its goals. When asked about what new law should be created, David suggested a requirement that private foundations invest 5% of their endowments in mission-related investments. Carson cautioned that what was good for one nonprofit might be horrible for another, showing how difficult it can be for the sector to speak with one voice on many issues. Another area explored was collegiality among foundations. Carson shared his concern that collegiality was chilling debate; foundation leaders that criticized the practice of others could be treated as pariahs. When the discussion turned towards strategic philanthropy and its focus on measurable outcomes, David noted that some outcomes are unknown until the work is done. An audience member voiced some frustration about philanthropy funding innovation but not funding infrastructure to take proven ideas to scale. When asked what were the foundation leaders' beef with their charity grantees, Carson said they're not dreaming big enough, and Ali pointed to the need for more values-driven organizations.
Rosemary Fei led the session – I'm a Nonprofit Lawyer, Ask Me Anything? Rosemary, one of the most highly regarded exempt organizations practitioners in the country, was my grad school teacher in the 90s and continues to be an exceptional teacher. She responded to a wide variety of questions including those related to startup issues, fiscal sponsorship, governance and lobbying.
Jeanne Bell moderated the discussion on Emerging Nonprofit Funding Models featuring Gihani Fernando (Bridgespan Group) and Carla Javitz (President, REDF). Bell asked the provocative questions: (1) Do great organizations go out of business? and (2) Do organizations living hand-to-mouth as the accepted business model have the right leadership? Javitz pointed out that in operating a social enterprise, there are additional social costs involved, and, in her opinion, it's acceptable to look for subsidies for such costs as part of a prudent and sustainable business model. Fernando reminded us that organizations must properly match funding sources to the types of expenses (e.g., growth expenses vs. day-to-day fixed expenses).
Robert Reich provided the brilliant keynote address. Among the points he made:
- Recovery? For 90% of Americans, this has been the slowest, most anemic economic recovery in the history of economic recoveries.
- The problem: For more than 30 years, median household income has been stagnant (even though economic pie has doubled) – most growth has benefited the top 5%.
- Coping mechanisms (more women in the workforce, longer hours, borrowing) have had impact but they have now been exhausted.
- The value we add to the global economy relies on skills we bring to table; we need better affordable early and public education (community colleges are great unsung heroes of upward mobility).
- History tells us there is a tipping point in our economy around the corner. Look at what the next generation values.
- Immigration will be used to grow the economy as boomers age and the worker:retiree ratio moves to 2:1 in 20 years.
- Washington is still hesitant about dealing with inequality. Outsiders need to push Washington and hold politicians accountable. Nonprofits are on the front line.
- 1st step: Need to get big money out of politics so people's voices can be heard.
- We have a powerful association for older and retired people that will be joined by 70 million boomers. We don't have an association of poor kids who need a voice in Washington.
- We need to get the message out that the poor is not them, THE POOR IS US. We're in this together. As a country, we need to recapure the shared experience of interdependence that we had when confronted with earlier challenges.
The final session I attended was a debate on the issue of whether nonprofits should be held to a higher ethical standards than for-profits moderated by Kim Klein. Melissa Breach and Dolores Garay (California Rural Legal Assistance) argued yes and Nayantara Mehta and Marco Montenegro (Mission Economic Development Agency) argued no. The debate was interesting but probably didnt change my mind. The public already holds nonprofits to a higher ethical standard and nonprofits that live up to such standards will have advantages over those that do not. The law holds charity leaders to a different standard than their for-profit counterparts because charities do not have shareholders that have legal rights and standing to hold directors accountable; charities hold charitable assets in trust and directors are charged in part with safeguarding those assets even though the charity's beneficiaries and donors generally have no right to hold the directors accountable. I am in agreement with Mehta's argument that the standard of care should not be higher for a director of a nonprofit than a for-profit.