What the Election Results Mean for the Charity World

Tuesday, November 11, at 12 noon, U.S. Eastern time

Robert Egger is president of D.C. Central Kitchen, in Washington, and founder of the V3 Campaign, an effort to get nonprofit views considered in elections at the city, state, and federal levels.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Welcome to today's live discussion about the impact of last week's election on the nonprofit world. The historic win by Barack Obama -- and the swing toward a more Democrat-controlled Congress -- surely has many in the nonprofit world expecting changes out of Washington. What can we expect? What should nonprofit groups and foundations be doing to prepare? And what will the economy mean for government support of charities?

Peter Panepento (Moderator):
    Robert Egger, president of D.C. Central Kitchen, in Washington, and founder of the V3 Campaign, is here today to address these and other questions about the intersection of politics and philanthropy in the wake of the election. It promises to be an interesting and lively discussion. So let's get started.

Robert Egger:
    Hello Colleagues and welcome to what should be a bold discussion about the next four years.

Before we get going, let me say from the outset that I am no expert on the intricacies of Capital Hill. Nor do I profess any deep understanding of tax law or policies that are coming down the proverbial pike. What I can talk about, and what I think is profoundly important, is the atmosphere in which we will ALL be working.

How are we as a sector perceived in the state houses and federal buildings where decisions will be made that will directly impact our work, our causes and our communities? How can we work together to leverage our assets and maximize our impact? How is our work measured? How does the public view us and how can we elevate the dialogue? What are the critical trends that we must embrace if we are to part of this historic shift in America? Most importantly…how will we build on this once in a lifetime momentum and develop strategies that move beyond Washington and into the neighborhoods where you work and the communities you support?

But…before we jump into it, let me at least provide four links that can provide you with up the minute details and opinions on state and federal legislation (pending or proposed). Please check them out on a regular basis.

The Cohen Report at the Nonprofit Quarterly - http://www.nonprofitquarterly.org/cohenreport

OMB Watch - http://www.ombwatch.org

Independent Sector’s Public policy page - http://www.independentsector.org/programs/gr/govrelat.htm

National Council of Nonprofits policy page - http://www.councilofnonprofits.org/?q=policy

OK…let us begin.

Peter Panepento (Moderator):
    To ask Mr. Egger a question -- or to share your opinion -- click on the "ask a question" link on this page and fire away.

Question from John C McGee:
    Efforts to increase oversight of non-profits were left unresolved when Congress adjourned for the election. If those issues and efforts resurface in the next Congress how will the new administration deal with them?

Robert Egger:
    Make no mistake, when the next Congress comes into session there will be lively discussions on the role of charity.

While many perceive the incoming administration, and the Democratic majority, to be supportive of nonprofits and our missions, both federal and local government will be struggling with a flailing economy.

Local governments will have less income due to continued low property values. Many states will post record deficits (for the second year in a row) that they will have to either raise taxes to cover or cut services to bridge (and cuts will be the most likely response).

The federal government will be forced to deal with the reality of paying for two wars, an economic bailout which continues to grow, while also anticipating the health care costs for millions of America’s aging population.

We in the nonprofit sector (particularly universities, hospitals, and foundations) sit on the biggest pot of untaxed revenue in America—namely, property. Donor Advised Funds will begin to redirect countless millions as more Americans choose to open family foundations. Simply put, this is too big of a perceived “candy jar” for stressed governments to resist.

This is where it will really hit the road. Will our sector be viewed as economic stimulators or a fatted calf? Will we be regulated to make us stronger, faster, better…or could we be crippled by burdensome regulations at the very time America needs a robust and focused nonprofit sector?

Regulation is coming, as is a consolidation of the sector. Both are predictable. The real question is "will we have a consolidated voice to respond in unison?", or will we rely on the Balkanized "everyone for themselves" strategy that has left us so vulnerable?

What's at stake is not necessarily the strength or survival of the sector, though that is a legitimate topic for today's discussion... but rather how will we as a country move forward, united, to take advantage of this historic election?

Question from Emily Davis, EDA Consulting and YNPN San Diego:
    How will leadership, in government and the nonprofit sector, work on recruiting and retaining emerging leaders to the sector while also supporting those leaders who are transitioning out of leadership roles?

Robert Egger:
    The generational transition in the nonprofit sector must be addressed head on. By generational I don't mean "old vs. young", but rather historic approaches versus bold departures.

We heard a lot about change during the election, but frankly, change is really hard.

We much recognize that it will not be easy for founders and historic leaders to let go. I think we should begin to have open dialogues, and actually teach leaders how to slowly let go of the reins and embrace change.

At the same time, young leaders need to be taught patience and persistence, and to realize that they need to stick with programs for the long haul.

This will demand a huge shift in thinking about the way we fund nonprofits, as the ability to attract and retain young leaders demands an increased understanding of the role of administrative overhead, as well as more accurate ways to measure the economic impact of our sector.

This is why it is imperative that we immediately work to develop a new set of shared metrics that measure a variety of indicators, but that draw attention to the economic impact that donations produce- both locally and nationally.

I sit on the Philanthropic Collaborative, which will soon release a report by noted economist Robert Shapiro and Aparna Mathur. They note that many politicians THINK that tax exemption costs local government between $8 and 13 billion in lost revenue annually. According to this study, in 2007 foundations gave $42.9 billion which generated $512 billion in additional household income and $145 billion in government revenue.

This is the kind of knowledge that will allow the sector and it's new leaders to grow with the same level of support that traditional business is afforded.

Question from Mark Tomizawa, Civic Catalyst:
    Robert, you're an innovator.

On Election Day, Starbucks gave us free coffee. It happened because some "Joe" suggested it on Starbucks' website. Experts call this practice "Open Innovation".

And then there's the nonprofit world...

Most foundations say they don't accept unsolicited ideas. So applicants play it safe. Then foundations wonder why applications are so predictable.

Two questions: Who's working to break this logjam? And should the Obama Administration create a stimulus package for practical innovation in the third sector?

Robert Egger:
    Hey Mark... How we break through the "logjam" of thinking is imperative at the legislative level as well as throughout our entire sector.

We cannot over-emphasize the staggeringly important opportunity we have right now, as well as the imperative to think beyond self interest. That's why during this conversation I am going to throw out some pretty bold ideas that I have heard on my many travels.

Last year I was in both the UK and Estonia. These are the only two countries in the world where there is a Minister for the Third Sector. This cabinet post is charged with consolidating the efforts of government, business, and nonprofits.

In the UK, for example, there are now investing millions of pounds in social enterprise (nonprofits generating revenue, or businesses that reinvest money in community) with the goal of this new business model producing 12% of the GNP. They are also developing, along with colleagues in Brazil, a social stock market, akin to the NASDAQ.

This is the kind of bold step forward I would encourage the new administration to consider.

There is already much discussion, championed by colleagues at American Forward, on the idea of a federal office that would support nonprofits, both financially as well as supporting new models. Some balk at the notion of a federal bureaucracy or point to previously cumbersome efforts that they suggest may actually stifle innovation. I say, learn from their mistakes, recognize the urgency of the times, and step forward into the future.

Peter Panepento (Moderator):
    I'd like to point readers to a recent story we wrote about how the new administration is likely to affect some key issues facing nonprofits on Capitol Hill: http://philanthropy.com/news/updates/index.php?id=6185

The story also discusses how the tax policy advocated by Barack Obama on the campaign trail might affect nonprofit groups.

Peter Panepento (Moderator):
    You can also access our special report on how Mr. Obama is likely to deal with key nonprofit issues: http://philanthropy.com/free/articles/v20/i14/obama.htm

Question from Peter Panepento:
    Given the fears that many nonprofit groups have about being perceived as political, how can organizations speak with the unified voice you advocate without getting put in the crosshairs of the IRS and state regulators?

Robert Egger:
    Nonprofits must be involved in every election in America. We cannot just assume that one election or one President will solve our problems. We must go out and elect a new generation of politicians who have a fundamentally new understanding of the role we play now, but more importantly the economic and social contributions we must make in the future if out communities and our country are to remain stable and solvent.

First of all, I urge all to join their state nonprofit associations, but to recognize that the era of the annual conference has passed. We need to be involved daily in the decision making process, and we need our leaders to speak for us, not about us.

There are countless groups that can provide detailed information about we can or cannot do, but make no mistake there is little to prevent us from being active in educating candidates about the role we play, as well as advising volunteers and staff about the issues at hand.

But for everyone listening who think they can go it alone, or that it's someone else's job... it isn't. This is about all of us working together. I particularly want to reach out young leaders, and those like Emily in the YNPN network. Every year we elect mayors, governors, and city legislators. This is your time to step up, as countless of your colleagues did in this election. Your future is on the line.

Question from Regina Mooney, Stoneleigh-Burnham School:
    The election seems to have infused charitable giving with a hopefulness even in this economy. How do we capitalize on this psychological the country just got in this process electing our first African American President who is stunningly smart, strikingly handsome and hope-filled beyond belief? So much of the country wants to be apart of it all. How can charities strategically ride on the coattails of this phenomenon?

Robert Egger:
    First and foremost we must have in-depth analysis of our work. We must move beyond the notion that we are just charity or good deed do-ers.

A lot of people in this country are scared about the notion of "redistributing wealth". We need to let them see that by supporting nonprofits with individual or tax-payer support, it is a massively intelligent investment in their community.

An enlightened and enthusiastic public will be out sector's best friend.

Right now the public perception of charity, based opn eight years worth of negative media coverage, has left us vulnerable at a time when our service is needed most.

I hope that this new administration will quickly move to promote a vibrant agenda to develop modern nonprofit evaluation metrics, build a direct partnership between government, business, and nonprofits, and most importantly, to alter the antiquated view that we are any different from the millions of small businesses that support the American economy.

Peter Panepento (Moderator):
    We're halfway through today's discussion and I'd like to take this opportunity to invite you to submit your questions to Mr. Egger. Click on the "ask a question" link on this page to submit your question.

Question from Peter Panepento:
    Many believe the Obama administration will consist of a large number of current nonprofit leaders. Is this a good thing for the sector? Will it get key issues on the table in the White House? Or will it pull too many thinkers out of the sector and into government?

Robert Egger:
    I have to be honest, there is kind of a stampede going on in Washington right now, with many people jockeying for positions of power or angling for policies that will keep their particular agenda issue alive.

Simply put, we in the sector have all been chasing our individual issues for too long, so I worry that we are seeing a continuation of that (I think) failed strategy.

This is why I forcefully advocate for a speedy but significant discussion on what we expect to achieve in the next four years, and what it's going to take to get us there.

For example, I don't want to talk about how to feed more seniors, I want to talk about the larger issue of aging in America. I want to talk about why we still think in terms "dot com" or "dot org", or why we have to tell a generation of young people coming out of college, after performing years of community service, that they have to choose between doing good and making money. See where I am coming from? This is the best shot we have to completely change the dialogue away from charity and towards change.

Question from Kim, small DE nonprofit:
    Thank you for sharing your insights today, Mr. Egger. I agree with the need for more innovation in the nonprofit sector, but it seems to me that such innovation will be more difficult as donors take a more active role in determining how their gifts are spent, through personal involvement or new restrictions. I'm concerned that discussed changes in how donations to certain organizations are treated under the tax code might lead to more donors doing this in order to get the maximum tax exemption. While I think stakeholder input in incredibly valuable, this level seems to present a risk of mission drift or inflexibility in meeting social needs. Your thoughts?

Robert Egger:
    There has been a lot of talk about "donors as investors", and frankly the whole world of private foundations, donor advise funds, and community foundations is changing. The one constant in all these are boards of directors who often times apply strategies that they would shun in their own corporate environments.

This of course is only exacerbated by the public's limited understanding of what constitutes a "good" nonprofit.

That's why I am going to say this again and again- we must have shared metrics, and we must develop the ability for the public and politicians to access in depth analysis of our work.

Our sector represents one tenth of the economy, puts billions in payroll taxes in every city and state's coffers, and we channel the energy of 80 million people annually.

In this current economy, it borders on insanity to not have some sense of understanding about what we as a country want in return.

I believe we are, in effect, the 5th ace in the deck that no one knows is there. This is why i am so personally involved in numerous efforts to develop new metrics.

But we each need to be advocating forcefully for better media coverage, and that needs to include our young leaders who can open the doors to a whole new communications network.

Question from Lisa Iannello, New York State Historical Association:
    The CEO of my organization has just requested infomation for a 'statement of need' to bring with him on a trip to Washington DC next week. He will present the information to NY state legislators. Given the current climate in Washington, is there info not traditionally in a 'case statement' that you would reccommend I include?

Robert Egger:
    Hey Lisa... New York State has been one the hardest hit states by the current economic downturn. You all posted a $5 billion deficit last year, and NYC Mayor Bloomberg is anticipating a 12% decrease in revenue in 2009, so I know the issues of your state are really on the line. Many state associations are now embracing Economic Impact Studies to show what nonprofits contribute. What this points to is a tactic that moves away from promoting the "need" and towards a suggestions that we are the "solution".

What we can't do is look like we are an army with 1000 hounds out. We need to be a sector that is thinking in a unified way, eyes wide open, and speaking truth to power.

We cannot be satisfied anymore with leftovers. We cannot sit outside an wait for decisions to be made that will deplete our resources and add to our responsibilities. While your boss can make a case on behalf of your organization, I urge him to lend his voice to the chorus of other nonprofits who now understand that we have to be heard.

Question from Regina Mooney, Stoneleigh-Burnham School:
    The lessons of the Presidential campaign --- grassroots organizing, hopeful and strong message, staying on message, asking for donations in small amounts and often, how applicable are they to our own nonprofits, especially in the education sector. What other lessons are we to take from the presidential campaign?

Robert Egger:
    While individually nonprofit employees and volunteers contributed millions in small donations, we must recognize that industries like Real Estate contributed $106 million, Health Care provided $70 million, and Securities and Investments provided a staggering $123 million.

When I was roaming the country on behalf of the V3 Campaign, I was frustrated by our inability to get politicians to respond to our questions about how they would partner with the sector. Nonprofits in Louisiana, Texas, Florida, and Alabama asked over 150 times and received no response.

I was told by one leaders that because nonprofits "do not represent money or votes", that our voices were not heard on the campaign trail. This is what we are up against, but this is also our opportunity.

We need to build on the momentum of this election and never take no for an answer again. That's why I am partnering with countless groups in 2009, to take what we learned and get the nonprofit sector engaged in every election in America.

Question from Hsien hong lin( Joe), Taiwanese, Kent State University:
    The key point is whether or not the Congressmen have the sense to stress the nonprofit importance in the USA. A president should focus on defense, foreign, and politic issues. An all-purpose president is impossible but he or she can find the real professional to deal with the nonprofit issue. My question is that does American Congress have a specific committee to produce and deal with the nonprofit issues? If yes, how its function? If no, how do nonprofit groups lobby the Congress to enact the related regulations for them?

Robert Egger:
    Hey (Joe)...

Interestingly enough, there are now Philanthropic Caucuses in both the House and Senate. From my brief encounters, they seem quite open to the input of the sector and quite desirous of strategic suggestions.

Rather than talk about different committees, though... I would suggest that all of us begin to focus on board discussions on advocacy. Every nonprofit in America must schedule a meeting with their board to openly discuss how they will lend their name to this historic election, and the role they will play in maintaining this momentum. No organization can afford to be silent in 2009.

But by being vocal, I do not mean being belligerent or thinking that the tactics of the 1960s will have the same bearing in this new century (with all due respect). We have a historic opportunity to be part of the solutions, to have our voices heard, to be recognized for our contributions, and to be regarded in the decision making process... it's now or never, folks. All bets are off. Let's do this.

Peter Panepento (Moderator):
    We'll keep the conversation open for a few more minutes to accommodate some of the unanswered questions we've received.

Question from Kathryn Cross, Charlottesville Free Clinic:
    With people focused on President-Elect Obama's plans to reform the health care system, how can we help people understand that there are many nonprofits already providing health care for the uninsured and underinsured and that we need their continued financial support?

Robert Egger:
    Wow Kathryn, you know Health Care is such a huge issue, especially with 80 million baby boomers about to get old. But let's also realize this an opportunity for us to explore this new consolidation of business and nonprofit.

In Vermont, the state legislature just developed the "Lc3", which is a hybrid between a for- and nonprofit business. This is the opportunity for those of us who have been in the shelter business to build housing, for those of us who trained the unemployed to become employers, for those of us who borrowed money or sought grants to become lenders.

The key to real change is for us to unshackle our own minds from the constructs of traditional charity, and to embrace the limitless opportunities we now have to re-explore commerce and community in America.

Question from Mark Tomizawa, Civic Catalyst:
    Robert and John, Thanks for a terrific conversation. How do we keep the momentum going? How do "ordinary" people get their extraordinary ideas onto the table so people like you and the Obama team take note?

Robert Egger:
    I ask you to join the V3 Camapign (www.v3campaign.org) or join our group on Facebook. We will keep you posted on what is going on in 2009 and how you can get involved.

Once again though, join your state association of nonprofits, be an active member.

Join the Young Nonprofit Professionals Network in your town, or start one if there is not one yet.

But most importantly, lend your voice. This is it. See you there.

Peter Panepento (Moderator):
    Thanks, everyone, who took the time to join us today. Thanks also to Robert Egger for taking questions. We'll be back next Tuesday at noon Eastern time to talk about what the economy means for the nonprofit job market. See you then.