PA Nonprofits May Want to Prepare for a Rough 2017-18 Budget Process

A few years ago, a study from the Forbes Funds, The Pittsburgh Foundation and the United Way of Allegheny County examined the impact of nonprofits (minus the health care systems and institutions of higher education) on Pittsburgh’s economy. It found that nonprofits, ranging from human service agencies to animal rescue organizations, provided over 75,000 jobs for local residents and spent $4.4 billion in the local economy – supporting over 31,000 jobs in other industries.  Preventive factors associated with such community–focused programming resulted in both lives and tax dollars saved. The state-wide data for nonprofits (including healthcare organizations) confirms the strength of the sector. In 2015, Pennsylvania nonprofits employed over 15% of the state workforce and generated $132 billion in annual revenue.

Unfortunately, even with this proven social and economic impact, there is concern that Pennsylvania nonprofits may once again face a serious threat to their operations during the upcoming budget process. First, the 2016-17 budget was never really balanced, and the expected revenue shortfalls are a reality (first quarter revenue collections were $200 million short).  Second, a pension reform bill supported by Governor Wolf failed to pass in the PA House earlier this week after opposition from unions, including the Pennsylvania State Troopers Association, pushing that debt issue further down the road.  Third, our decaying infrastructure issues, already underfunded, are not going away in 2017-18 and the gas tax residents pay to fund repairs and improvements is being spent on state police. Also, 2018 is a gubernatorial election year in Pennsylvania. Could we see the sequel to the 2015 impasse?

You can stay up to date on nonprofit-focused policy and budget news at the Greater Pittsburgh Nonprofit Partnership (GPNP) website’s weekly summary page. The Pennsylvania Association of Nonprofit Organizations (PANO) is another resource for news out of the General Assembly.

Foundation Funding Trends and Areas of Interest

Trends in large foundation giving are looking optimistic based on research from the National Committee on Responsive Philanthropy (NCRP), particularly in support for core operations and funding for programs aimed at underserved communities. The NCRP’s recently released Philanthropic Landscape 2011 series gives grantmakers and grantees alike a picture of whom is giving what where, and in which areas of interest.

According to the brief, The State of Giving to Underserved Communities 2011, by Niki Jagpal and Kevin Laskowski, foundations reported over $10 billion in grants for the elderly, women and girls, economically disadvantaged communities and ethnic or racial minorities in 2011. Key takeaways:

  • The percentage of foundation funding reported to benefit underserved groups or areas increased to 42 percent in 2011 from 40 percent during 2008 – 2010.
  • In 2011, one in five grantmakers (22 percent) was giving 50 percent or more of grant dollars to benefit underserved communities.
  • Foundations in the western United States were more likely to fund underserved communities/marginalized groups (60 percent, although without the Bill and Melinda Gates Foundation it drops to 30 percent), followed by the Northeast 35 percent, the Midwest 34 percent and the South 25 percent.
  • Not including the Bill and Melinda Gates Foundation, Independent foundations, Corporate foundations and Operating foundations were more likely to give to underserved communities or groups in 2011.

Philanthropic Landscape 2011 includes reports on trends in general operating and multi-year funding – all available at the NCRP website.


Pre-K Data Resource a Step Forward (but….)

Got the comparative analysis blues? Need more or better data?  Well, difficult-to-find data on pre-K programs just got easier to access thanks to a combined effort from the Early Education Initiative and the Federal Education Budget Project (FEBP) of the New America Foundation.  An expansion of the FEBP database added 2007 through 2011 enrollment and funding information on public early education programs at both the state and local levels – including Head Start and federally mandated special education services to young children.

Alex Holt gives an overview of this valuable resource at the Foundation’s website, and discusses the serious deficit in reliable pre-K data reporting in the brief (with Lisa Guernsey) Counting Kids and Tracking Funds: Falling Short at the Local Level.





Implementing, Modeling and Managing a Measurement Culture

Regardless of the outcome of the upcoming election, the nonprofit social services sector – from mental health clinics to food banks – will still be challenged to meet an increased need with fewer resources and limited funding.  Savvy nonprofits have already moved toward an evaluation culture, embracing logic models and short-and-long term impact data to illustrate why (and how) their programs work. Organizational innovation and unique program accomplishments are practically prerequisites for making a successful connection with alternate funding sources, including corporate partnerships, yet nonprofits are still struggling to identify and quantify their impact on clients, the community, and the overall condition they work to modify.  Performance measurement, logic model and outcomes are not new or faddish terms, so why the hesitation?

The report, Tough Times, Creative Measures: What Will it Take to Help the Social Sector Embrace an Outcomes Culture? from the Urban Institute, came out of a Fall 2011 event that brought together leaders from the government, nonprofit, philanthropy, and business sectors to discuss the issue of data-driven management in social and human services and the challenges related to successfully utilizing a performance management system.  Some of the challenges identified:

The difficulty of turning away from the organization’s immediate needs to plan and implement a measurement system. No matter how small the agency, the demands on the executive director’s time and talent are immense. Writing up an organization-wide evaluation strategy and implementation plan, including models, indicators, instruments, and data collection plans is an enormous amount of work – and I haven’t mentioned the pilot testing, analysis and reporting aspects.  The role of director should be to communicate progress and needs with the board as they guide the agency through this kind of culture change, not create every step of the process.

The reality that  sometimes the best outcomes may not be rewarded.  Conspiracy theories and snarky excuses aside, well-crafted stories, high profile connections and nonprofits with missions or target audiences that are more interesting or appealing than your own may have an easier time selling their effectiveness. That said, incomplete or inaccurate information on program impact won’t help remedy the situation.

Some nonprofits may be waiting for the trends to flip and the tides to turn. Why move heaven and earth within your organization to embrace a culture that may seem like a phase (especially to long-time employees who have seen edicts from funders come and go).   Buy-in for outcomes tracking and reporting  may be based on acceptance of the  hoop-jumping norms, not the real value of performance measurement to the overall health of the organization.  It is time for boards and directors to be brave and commit to an organizational culture change – but be prepared to illustrate how it will be  beneficial for staff and (more importantly) clients.

In response to these and other impediments, I mean realities,  the symposium attendees identified strategic areas that would have the most impact in encouraging and implementing a data-centered culture: human and financial capital –  the tenacity and the tab, creative advocacy – sector giants to back this shift,  and ready-to-use systems and tools so directors don’t have to start from square one.  How can nonprofit leaders better model and manage  a measurement culture?   Why are some nonprofits hesitant to embrace this shift?