Lester Salamon in Seattle

Putnam Barber

President, The Evergreen State Society

Johns Hopkins professor Lester Salamon, editor of The State of Nonprofit America (2002) and noted researcher on the scope and character of nonprofits’ work in the US and many other countries around the world, was in Seattle on October 30 and 31for a visit organized by Executive Alliance. A Friday morning forum brought more than 100 people from the Seattle area nonprofit community to NewHolly’s neighborhood center for a thought-provoking presentation and lively discussion.

“We’ve done a pretty lousy job of helping the public understand nonprofits and their role in American life,” he said. People don’t see the work nonprofits do, and they have not grasped “the dramatic reinvention of the sector” that has taken place over the last twenty or so years. People’s understanding of nonprofits is distorted by “Norman Rockwell images” that emphasize “charity,” not creative and effective private initiative for the public good. Modern nonprofits excel at bringing talent and resources together blending the strengths of both government and business, but this strength is seldom noted.

Recent changes

Presenting statistics gathered for the book, he showed how nonprofit organizations have persevered during a period of great shifts in the form and amount of government support for nonprofits and a steady decline in the proportion of nonprofits’ revenue that comes from philanthropy and individual donations. In the same period, there have been waves of start-ups of for-profit businesses seeking to serve similar needs and take advantage of government funding. In many fields, these new organizations, once promising and attractive to investors, have seen their market share decline and their stockholders disappointed. Across many fields, both total revenues and total employment have grown faster for nonprofits than for the American economy as a whole.

New challenges

This success has led, though, to new challenges. Growing fee-for-service revenues are matched by the risk of an “identity crises” that will make it hard for the public, and even some nonprofit people, to tell the difference between nonprofits and for-profit counterparts. “Some believe,” he added, “that leading a nonprofit is the most difficult entrepreneurial job in America today.” There is evidence that it is growing more and more difficult to recruit staff for every sort of job in nonprofit organizations, and especially for leadership positions. Some nonprofits have been led by their dependence on paying customers to seek out opportunities for growth that leave behind the mission or purpose which gives their work meaning. Finally, all of these trends have raised the threshold of sustainability and made survival increasingly difficult for small organizations serving distinctive niches.

Looking ahead

Roundtable discussions at the forum explored how nonprofits might respond to these challenges. After listening to reports of the roundtable discussions (facilitatedby Ted Lord), Salamon highlighted themes that deserve fuller exploration in the future. “Most basic,” he said, “is the need for reconceptualization of the field.“ A clearer understanding of and commitment to the distinctive business we’re in needs to precede the development of new information campaigns. But in the meantime, it is certainly good advice to “stop whining.” Nonprofit people need to recognize the large economic role our organizations play and be willing to talk about that at every opportunity. In a similar vein, we need to be more forthright in describing our effectiveness and our performance; emphasizing the needs we address rather than the contributions we make reinforces the popular misconception that our work is “charity,” not community building. One strategy may be to draw on the new vocabulary of “social capital” and the building of civic infrastructure. This approach allows us to talk about mutuality and shared commitment to shared values -- major contributions to community which are now an “unseen continent underlying our national life.”

Board members as ambassadors

We need strong vehicles for carrying these new messages. We will find them, Salamon agrees, less in public relations and beaming broad messages to wide audiences and more in involvement and community. The idea of equipping the members of nonprofit boards to speak on behalf of the sector is one that should be developed. Of course, doing so requires every organization to develop “a second message at their board meetings; not only discuss what our own organization has accomplished, but affirmatively link it to the accomplishments of the field as a whole.” Everyone -- board, staff, service volunteers, clients and donors -- can become an ambassador for the importance of nonprofits.

Talking about the financing and strengthening of nonprofits, Salamon suggested that the basis for tax-exemption (and tax deductions) might be shifted from organizations to activities -- adapting the logic of “unrelated business income tax” as a vehicle for encouraging careful thought about the tough issues of community and public benefit for each of program activities. “This is something every organization should do anyway,” he said, “but they often forget.”

Foundations and other funders need to explore expanding the range of financial instruments used to support nonprofits’ work. The familiar grants and contracts, Salamon said, are only two of the ways they could be using their resources to build the field. He suggested the expansion of “bank like” institutions that could help nonprofits overcome the difficulties they have in finding investment capital and other forms of financing.

"Essential...vibrant...healthy"

Thanking Lester Salamon at the end of the forum, Mike Heinisch, chair of the Executive Alliance, commented that the discussion had confirmed for him the strength of the theme in the communications plan the group has been working on. “We need to keep saying ‘Nonprofits are an essential part of a vibrant economy and a healthy community’ as often as we can,” Heinisch said. “Thank you for helping us see so clearly the importance of the work nonprofits do.”

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