Facing Changing Paradigms – A Nonprofit Accountant in the Catbird Seat

In the last year I have blogged twice about presentations given by Todd Polyniak of Sax Macy Fromm, an accounting firm in Clifton, NJ. Last night I attended their most recent program for nonprofits and this post provides the outlook for the future with Todd, a nonprofit accountant, in the catbird seat.
Sax Macy Fromm


In Todd’s last two talks he discussed dealing with tough economic times but last night he was discussing a new reality that nonprofits need to come to terms with – this isn’t some temporary economic crisis, there is a paradigm shift that has to be recognized and leaders need to be agents of change to be successful.

Todd likes to start out with historical highlights to put the landscape in perspective. He highlighted some of the changes we’ve had in the last 10 years bringing paradigm shifts including 9/11’s impact on the way we deal with security issues; Enron, Worldcomm etc. scandals bringing in Sarbannes Oxley legislation, (this is major paradigm shifting stuff to accountants), and the Columbia shuttle crash bringing new safety policies to NASA. Todd concludes that the economic crisis that we are still going through brings us to a paradigm shift for the nonprofit sector and that leaders need to take note and take action: Some changes he discusses:

Giving
Todd quoted the statistics from a recent Chronicle of Philanthropy article citing an expected 9% downturn in giving in 2009 in addition to the 5.7% reduced giving in 2008 from 2007 reported by Giving USA in June. The outlook for corporate and foundation giving does not look good through 2010.
Chronicle of Philanthropy
Foundation Center's Recent Report on Foundation Giving


So what is a nonprofit to do? Todd’s list of realistic, focused, right-on suggestions include:

-Focus on “warm prospects” rather than new donors. These include existing donors and those who have stopped giving
-Encourage monthly giving rather than once a year gifts
-Move away from events
-Hone your message to explain more clearly why you need the money
-Experiment with online giving (Hey, you can talk to me about this one)
-Put more effort into securing planned gifts
-Make personal thank yous by EDs and board members for even small gifts
-Refer to the tax provision -expiring this year allowing tax free gifts from IRAs up to $100,000 for those over 70½.

People
-Supporters from within: Nearly 30% of nonprofit leaders have taken pay cuts and reduced hours but as Ken Berger, CEO of Charity Navigator, says that people hope they won’t have to make draconian cuts.
-Supporters outside: Todd mentioned a study by the National Conference on Citizenship noting that 72% of Americans say they have cut back on volunteering and he also noted the loss of Board members sponsored by corporations.
Download the National Conference on Citizenship Report

Government
No accountant can talk for 45 minutes to nonprofits and not mention the new 990 and Todd did not disappoint. However, he also noted that many states, including New Jersey have passed laws which allow more access to their endowments to help them tide over during this bad economy.

Nonprofits
The 100,000 nonprofits will fail prediction by Paul Light has not materialized and less merging than expected has happened but small nonprofits are taking aggressive strategic steps to survive including unplugging some programs temporarily, sharing fundraising and marketing ideas, and combining back office operations.

Todd recommended President Obama’s seven step plan for dealing with a crisis:
1. Pull together the best people and make them work as a team
2. Insist on analytical rigor in evaluating the nature of the problem
3. Make sure dissenting voices are heard
4. Explore your range of options
5. Be willing to make a decision after you have reviewed the options
6. Insist on good execution and timely feedback
7. Remember the basics taking one step at a time
See the whole article in U.S News & World Report “In a Crisis, Obama Is Cool Under Pressure”


Todd concluded with some thoughts on leadership quoting Cory Booker, the dynamic mayor of Newark, as saying “My Mom used to say who you are speaks so loudly that I can’t hear what you say” and encouraged that being true to ourselves is an essential ingredient in leadership. He offered that the times call for transformational leaders and suggested that nonprofit leaders ask themselves these four questions as agents of change:
1. Am I results centered rather than comfort zone centered?
2. Am I internally directed behaving according to my own values and principles?
3. Am I other focused – putting the collective good first?
4. Am I externally open recognizing need for change?

Whew! That’s a lot to absorb. Todd got it all in and still got us home in time for the Yankee game! Do some of you call it the World Series? In the New York area we call it the Yankee game. Thanks Todd and congratulations Yankees! I couldn’t resist using the catbird seat theme as I thought of my favorite baseball broadcaster of all time, Red Barber and his Friday morning conversations with Bob Edwards last night.

Marion