We hope that you find this newsletter to be an informative addition to your reading about nonprofit education and issue analysis. We plan to publish this newsletter three times a year and make it available on our website.
Through community engagement, teaching, and research activities, the Center for Nonprofit Strategy & Management (CNSM) offers a unique platform for understanding the evolving nature of nonprofit organizations in their larger social, political, and economic contexts. We have highlighted the work of our faculty, and described our annual Consulting Day, which affords nonprofit practitioners pro bono advice from experienced consultants on critical nonprofit topics.
CNSM provides critical analysis of the increasingly complex governance arrangements created among nonprofits, government, philanthropy and business to solve the pressing public problems of our day, as illustrated by Professor Nicole Marwell’s article on the financial condition of New York child welfare organizations and Professor John Casey’s on the impact of the recession on the nonprofit sector. Our location in New York City places us at the epicenter of both the nation’s most active nonprofit sector providing local services, and the world’s most important set of global advocacy and civil society organizations; and our Working Papers series, edited by Professor Susan Chambre offers scholarly analysis of a wide range of nonprofit issues.
— Jack Krauskopf, Distinguished Lecturer and CNSM Director
— Nicole Marwell, Associate Professor and CNSM Academic Director
Non-profits represent some 10% of full-time employment in the U.S. and play key roles in the delivery of health, education, social and cultural services. The 2008 collapse of the financial markets and the subsequent global fiscal crisis have had a profound effect on nonprofits in the US. Given the wide ranging service delivery and advocacy role of nonprofits, the new financial conditions have caused considerable organizational strains, while demand for services has increased.
Some nonprofits that were directly funded by now failed financial entities have simply shut up shop. The New York-based Justice, Equality, Human Dignity, and Tolerance Foundation (known as JEHT) learned in late 2008 that its major sponsor, who had invested most of her wealth in Bernard Madoff’s Ponzi schemes, could no longer support the organization. Although JEHT had been disbursing some $24 million in grants annually until 2007, in January 2009 it ceased all operations. In the year before its September 2008 bankruptcy, the financial services firm Lehman Brothers had distributed through its Foundation some $39 million to 200 nonprofit organizations. When Lehman folded, those funded organizations scrambled to close substantial holes in their budgets.
Nonprofits in the US are now being asked to do a whole lot more with a whole lot less. But not surprisingly, the picture is a lot more complex and the impact of the fiscal crisis has varied significantly between different states and locations in the US, between different subsectors and between organizations within any subsector. Moreover, even during the depth of the recession, employment in the nonprofit sector continued to grow, in contrast to the decline in the for-profit sector, driven partly by the American Reinvestment and Recovery Act (the Obama administration’s economic stimulus package).
By mid-2012, the general trends in macro-economic indicators appear to signal that the worst of the crisis is over in the U.S. Looking back, we can speculatively break down the recession into three periods: the onset (late 2007 – early 2009), the depth (early 2009 - early 2010) and a long, slow recovery (early 2010 onward). The exact date spans of these periods are a matter of dispute and even now there are those who cast doubts on the viability of the recovery, particularly for nonprofits who depend on the shrinking fortunes of state and local governments. Even as nonprofits recover, organizations will find themselves fundamentally changed and will need to find ways to expand their fundraising efforts and maximize their output to maintain financial health.
Professor John Casey of the CNSM has recently contributed to a book The Recession and Beyond: Taking Stock of Evolving Government-Nonprofit Relations. (Rachel Laforest. Ed. McGill-Queen's University Press) that analyzes the impact of the economic crisis on the nonprofit sector around the world. His chapter summarizes the survey research conducted to study the impact of the crisis on nonprofits, examines the literature that emerged during this period to advise organizations how best to cope with the downturn conditions, and explores how the crisis has impacted on the evolution of relations between nonprofits and governments.
For more information about his research and a copy of the chapter, contact email@example.com
In October 2012, the CNSM released a major research report on the financial health of New York State's child welfare nonprofits. Nonprofit organizations provide the considerable majority of New York’s state-mandated child welfare services, and receive significant government financial support to do so. The reality of this arrangement is that government and the nonprofit child welfare sector are mutually dependent. The financial health of New York’s child welfare nonprofits thus constitutes an important concern not only for the nonprofits themselves, but also for government and the general public.
Analysis of five years’ of organizational financial data shows that many of New York’s child welfare nonprofits fall short of meeting standard rules of thumb for a variety of quantitative indicators of financial health. This finding is despite the fact that child welfare nonprofits keep two key cost drivers – overhead and fringe benefits – very low. Survey data show, however, that the fiscal problems of these organizations generally cannot be traced to their lack of skill in organizational and financial management. Furthermore, we find suggestive evidence of a positive relationship between higher overhead costs and better service quality. We conclude that solutions to the financial problems of the nonprofit child welfare sector will not be found through better financial management, although certain practices and perhaps some outlier agencies could be improved.
In 2010, New York State’s child welfare nonprofits had organizational revenues of nearly $3 billion. The average organization received 94% of its revenues from government. Nearly half have either no endowment or total endowment principal that can generate only about one day’s worth of their annual spending. Close to 90% of child welfare nonprofits’ spending goes to direct program services.
The study was authored by Nicole P. Marwell (Baruch CNSM), Thad Calabrese (New York University), and James Krauskopf (Baruch CNSM). It was conducted with the assistance of the Council of Family and Child Caring Agencies (COFCCA), New York’s umbrella organization for child welfare nonprofits. The full study is available for download from the CNSM website.
Last Spring, more than 6,000 voters in four City Council districts of New York City cast their votes to decide how over $5 million of their council member’s capital discretionary funds would be used. This process is called participatory budgeting, or PB, where ordinary citizens have the opportunity to vote on the use of public funds. Originating over two decades ago in Porto Alegre, Brazil, PB made its first appearance in the United States in Chicago three years ago – and finally found its way to New York City in 2011.
A report on the pilot process presented by the Urban Justice Center, shows that about 20 percent of participants came from low income households; almost 40 percent said they had never voted in elections and more than half were female. This year, four more council members have joined the process - handing over the power to decide over at least 10 million dollars in capital funds to their community members. One of the major changes between the last PB process and this year is the lowering of the age limit to 16 yrs., in an effort to get more youth involved.
Last October, the CNSM hosted a seminar to deliberate on the pilot performance of participatory budgeting in New York City and its future prospects, followed by a Q&A session with the audience. The panel included East Harlem Council Member Melissa Mark Viverito, one of the council members who were instrumental in bringing PB to NYC, Donata Secondo, deputy director of The Participatory Budgeting Project, and Hazel Martinez, a citizen budget delegate from District 45, Brooklyn. Professor Dan Williams from the School of Public Affairs moderated the discussion.
PB being a decidedly labor-, cost- and time- intensive process stretching over nearly six months – has had limited support. Council member Viverito spoke about the cynicism PB faced in its first year and how many more council members are now seeing the benefits of PB and supporting it. She is hopeful that this year will bring double the participation and votes. Donata Secondo suggested that as the PB process expands to other districts, the Council should consider providing some centralized assistance in managing the logistics.
Hazel Martinez, spoke about some of the challenges they were facing this year in bringing people out to vote, as people were yet to see last year’s winning projects begin implementation. The panel members fielded concerns from the audience consisting of local nonprofit representative and citizens over possible inclusion of expense items in PB and how it could lead to a popularity competition among nonprofits for “Who’s got the sexiest nonprofit?”.
The full video for this seminar can be found on our website at http://www.baruch.cuny.edu/spa/researchcenters/nonprofitstrategy/events.php. For more information on our seminars or to get added to our mailing list please email us at firstname.lastname@example.org
The CNSM's Working Paper series includes more than three dozen works in progress that focus on important programmatic and policy issues. One recent posted paper, “Funding Immigrant Organizations: Suburban Free-riding and Local Civic Presence” by Els de Graauw, Shannon Gleeson, and Irene Bloemraad provides important insights on role of nonprofit organizations in contemporary immigration policy.
In contrast to the past, when major urban centers were areas of initial settlement, half of all immigrants living in metropolitan areas live in the suburbs, and many of them live in cities which have not been traditional gateways. The study considers the following questions: How do suburbs and new gateway cities respond to foreign-born disadvantaged residents? Do their local governments promote public-private partnerships with immigrant-focused organizations that advocate for and provide services to immigrants?
The authors compared four localities in the San Francisco Bay region: a continuous immigrant gateway city (San Francisco), a 21st century immigrant gateway city (San Jose), a large suburban immigrant city (Fremont), and a smaller suburban immigrant city (Mountain View). They combined financial data on funding to immigrant-serving nonprofits and extensive fieldwork including 142 in-depth interviews with community organization representatives and local government leaders.
The study revealed considerable inequality in public funding for immigrant organizations across the region. Organizations located in Fremont and Mountain View, with larger immigrant populations, received less government financing than San Francisco and San Jose. This difference can be traced to the relative capacity of nonprofits and the attitudes of public officials.
San Francisco’s continuous exposure to immigration over the 20th century has produced a vibrant civic infrastructure of immigrant organizations that have the experience, networks, and expectation that they should be partners with city officials. In contrast, suburban officials presume that immigrants can rely on the resources and services provided in other jurisdictions, in effect free-riding on the funding that neighboring central cities disperse to immigrant organizations and the services those nonprofits deliver. The study suggests that elected and non-elected government officials in immigrant suburbs have yet to come to terms with their cities’ changing demography, even if their political ideology welcomes diversity. The study not only suggests a similar phenomenon in other metropolitan gateways and the uneven distribution of public and private resources for combating poverty among immigrants.
The full list of working papers can be found on the Center’s website. This series is edited by Susan Chambre. To subscribe to the series, please email email@example.com
Executive Director, Manhattan New Music Project (MNMP)
Interviewed by Michael Seltzer, Distinguished Lecturer
What originally brought you to Baruch College’s School of Public Affairs?
Gary Bagley, Executive Director of New York Cares, recommended that I check out the XMPA degree program. He found it critically important to his work and I saw firsthand how it transformed him as a nonprofit leader. When I started my degree, I had been a program director in the arts education field for over a decade and knew I wanted to move into a larger role in helping organizations that serve youth. XMPA ended up being the perfect program for me.
What do you most value from your graduate experience at Baruch?
My course work taught me much about the complexities of nonprofit management and how to frame nuanced issues. I learned how to carefully analyze an organization’s assets and liabilities. Subsequent to graduation, I landed my first executive director position at the Manhattan New Music Project. Shortly after my arrival, I did a thorough top-to-bottom analysis of the organization. I was able to determine that the organization was very much at risk. It had cycled out of two of its three federal grants within a year, all of its staff had to be replaced and reorganized, and nothing had been done to diversify its revenue over the years.
While many in the nonprofit sector are wary of strategic alliance and mergers with other kindred entities, I had learned from my Baruch professors that managing for effectiveness and efficiency is paramount than ‘going alone’. With that belief, I was able to persuade our board to allow me to investigate other like-minded organizations with an eye to forging an alliance that would allow MNMP’s programs to thrive. As a result, MNMP became a wholly owned subsidiary of Urban Arts Partnership in early October. UAP was a great match; it has an excellent reputation for serving struggling students through the arts, a diversified funding portfolio, and a solid management team that could support out program and teaching staff. Already, the alliance has paid off. MNMP’s flagship program, Everyday Arts for Special Education (EASE), which serves thousands of the city’s special needs students and their teachers, is working through the Kennedy Center to replicate the program in Los Angeles, thanks to the UAP’s connections on the West Coast.
What else helped you in creating a win-win solution for both parties?
Baruch people! One of my professors, John Casey, had introduced me to a number of valuable resources that helped me navigate this challenging transition. In addition, my fellow XMPA students have been an incredible resource. Our Cohort has stayed in touch since our graduation two years ago. I can’t imagine making it through this last year without them.
It sounds like you also worked your way out of a job.
Yes, that’s the one downside here. Urban Arts Partnership already has a wonderful executive director, of course. There was the possibility of an upper management post for me with the organization. However, I decided that the time was ripe for another new challenge. Through my Baruch education, and my work experiences, I have been able to transition to consulting, especially on strategic analysis and alliances.
What is your next career goal?
I live in Woodside, Queens and am very committed to my community. Ideally, I would like to find a new leadership post in youth education with an organization in my borough.
The CNSM sponsored its annual Consulting Day event for New York City’s Nonprofit Community on Wednesday March 20th 2013. The event was supported this year by Con Edison. Consulting Day provides nonprofit practitioners with pro-bono consulting advice about issues such as capacity building, board of directors roles and recruitment, volunteer management, strategic planning, program evaluation, and legal issues, among others. More than one hundred members of the nonprofit community attended and were advised by forty experienced consultants. Clients met with consultants for sessions of forty-five minutes each in one-to-one consultations and were provided with resources for improving their organizations. In addition to the individual consultations, the event included two well-attended workshops on topics of broad interest: strategic enterprise in the morning and advanced social media in the afternoon.The topics, consultants, and workshop presenters are described on the Center’s website at: http://www.baruch.cuny.edu/spa/researchcenters/nonprofitstrategy/events.php
Overall, the event generated highly favorable and appreciative comments from both consultants and attendees, as it has done for more than a decade. Below are quotes from consultants:
“It's a very well organized event, and all the "clients" I spoke to were very appreciative of the opportunity to be there.”
“It was a rewarding experience talking withthese organizations -- with different programs - but a universal desire to make the world better.”
In addition some quotes from startup clients:
“This was an excellent event, extremely useful for someone who is forming a nonprofit and needs assistance with consultant support. I can’t thank Baruch enough for this opportunity.”
“Appreciate the opportunity to have one-on-one time with experienced professionals. As a startup organization we would not have the funding to pay for consultants. They were very generous with their time.”
Attend an Upcoming Seminar
The CNSM periodically organizes free public seminars in response to emerging needs and concerns of New York area nonprofit community featuring recognized experts. Past seminar topics have include board development, mergers and alliances between nonprofits, individual giving, nonprofit governance etc.
Find out about about our upcoming semindar by emailing