Nonprofit Finance Fund President/CEO Clara Miller Outlines Good & Bad
Expected in 2007; One Hoped-For Trend: Evenhanded Gov't Funding Rules for
Nonprofits and For-Profits
NEW YORK, Dec. 13 /PRNewswire/ -- The nonprofit/philanthropic world is
in for an interesting year. The new year of 2007 will find hundreds of
large and small nonprofits across the United States wrestling with
financing questions that will dictate whether the organizations thrive or
struggle to survive, according to Clara Miller, president and CEO of the
Nonprofit Finance Fund.
In a news conference held today, Miller outlined "Four Nonprofit World
Trends to Watch in 2007":
1. The "Buffett effect" grows. Miller said: "We expect to see increased
recognition of the value of what might be called 'leveraged/collective
funding.' This reflects an understanding that the available funding for
nonprofits/philanthropy is small relative to the size of the problems that
organizations are working to solve. As exemplified by Warren Buffett's
partnership with the Gates Foundation in 2006, more wealthy donors will
focus on creating larger pools of capital for nonprofits, rather than
fragmenting the available capital (and its impact) by focusing on "vanity"
projects."
2. Even more short-term thinking in the long-term nonprofit world. "Not
all trends in 2007 will be good news for nonprofits," Miller noted. "This
particular trend will see an unfortunate movement to more short-term
funding requiring short-term measurable results from nonprofits that, in
fact, are dealing with complex long-term problems. These often deeply
entrenched and stubborn problems do not lend themselves to this nonprofit
world equivalent of the 'quarter to quarter' fixation of publicly traded
companies. This trend shows no immediate signs of abating, and hampers
management's ability to develop long-term strategic solutions."
3. Wider recognition that there is a business side to nonprofits.
Miller elaborated: "We see encouraging signs of an understanding taking
root that nonprofits need comprehensive funding that includes
infrastructure, replacement and organizational growth needs. These needs
are often overlooked by the currently pervasive practice of 'restricted'
funding, which will continue to be a major impediment to the financial
stability of all too many nonprofits."
4. Funding decisions less influenced by the portion of funds devoted to
overhead. "Funders will rely less and less on this 'old school' and often
quite misleading measurement of nonprofit efficiency," Miller said. "The
truth is that different services provided by different nonprofits require
differing levels of infrastructure and administrative support. There is no
magic percentage level or formula for determining the proper level of
overhead for nonprofits on an across-the-board basis."
In addition to the four expected themes for nonprofits, Miller also
spelled out "A Trend We'd Like to See in 2007": "Government contracting
practices for nonprofits that mirror those for for-profits, as exemplified
by the Defense Department's published guidelines."
Miller explained: "[0]Government contracts with nonprofits often
include as standard features pricing below cost, severe restrictions on
overhead and prohibitions against operating surpluses. In sharp contrast,
the Department of Defense's published guidelines intended for contractors
in the for-profit world recognize that if you starve an organization of
proper compensation for its services, you risk lower quality product
delivery and unstable organizations. These same principles could -- and
should -- be applied to nonprofit recipients of government contracts. There
is no basis for assuming that nonprofits are either so radically different
or less trustworthy than other government contractors. If government wants
results from nonprofits, it should give these public-minded organizations
the latitude to get the job done ... with the same kind of controls and
accountability that exist for other contractors that receive tax dollars."
ABOUT CLARA MILLER
A widely published expert on nonprofit financial issues, Clara Miller
was voted one of 2006's Power & Influence Top 50 by The NonProfit Times.
She is a member of the Federal Reserve Bank of New York's Community
Development Advisory Council, and the Independent Sector's Building Value
Together Committee. Miller is currently a board member of GuideStar,
Working Today, Inc. (the Free-Lancers Union) and Community Wealth Ventures,
a subsidiary of Share Our Strength. She was appointed by President Clinton
to the U.S. Treasury Department's Community Development Advisory Board in
1996, advising the then newly-created CDFI Fund. Miller served there until
2002, and was the advisory board's chair from 1999 to 2002.
Miller has written and spoken extensively on nonprofit capitalization,
and is the author of a number of articles on the subject including "The
Looking- Glass World of Nonprofit Money: Managing in For-Profits' Shadow
Universe, (Nonprofit Quarterly, Spring, 2005);" "Hidden in Plain Sight:
Understanding Nonprofit Capital Structure (Nonprofit Quarterly, Spring,
2003)," cited by Jim Collins in his monograph, "Good to Great and The
Social Sector." Recent articles by and about Miller have appeared in
Hispanic Outlook in Higher Education and Worth magazines.
Before her tenure at NFF, Miller worked at The New York Community
Trust, The National Academy of Sciences, and as an economic development
planner in Corning, NY.
ABOUT NONPROFIT FINANCE FUND
With offices in New York City, Washington, D.C, Philadelphia,
Morristown, New Jersey, Detroit, Boston and San Francisco, the Nonprofit
Finance Fund is a national leader in nonprofit, philanthropic and social
enterprise finance. NFF serves as an "investment bank" for nonprofit
organizations. NFF has helped more than 10,000 nonprofit organizations
strengthen their financial health and improve their capacity to serve their
communities. NFF is a federally certified Community Development Financial
Institution (CDFI). Directly and with others, NFF has leveraged close to $1
billion of capital investment into nonprofits, and also has provided $150
million in direct loans.
CONTACT: Ailis Aaron Wolf, (703) 276-3265 or aaaron@hastingsgroup.com.
EDITOR'S NOTE: A streaming audio replay of the NFF news event will be
available on the Web at http://www.nonprofitfinancefund.org as of 6 p.m. ET
on December 13, 2006.
SOURCE Nonprofit Finance Fund, New York City, Washington, D.C,
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Related links:
http://www.nonprofitfinancefund.org
CONTACT:
Ailis Aaron Wolf, +1-703-276-3265,
aaaron@hastingsgroup.com, for Nonprofit Finance Fund
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