A Candid Self-Appraisal on Non-Profits in Kansas City

Maybe it’s technology, demographics or a market saturdated with charitable organizations; maybe it’s as easily explained as donor fatigue. Or, perhaps, a more complex blend of those factors and more. But there are growing indications for some non-profits that fund-raising is undergoing a fundamental shift, and industry professionals are scrambling to find solutions. More than two dozen of them gathered December 12 to assess what’s working, and what’s not. Serving as chairman of Ingram’s 2017 Philanthropy Industry Outlook assembly, Brent Stewart, CEO of United Way of Greater Kansas City, led a spirited, thoughtprovoking and all-too-quickly concluded two-hour discussion of giving in Kansas City, historically one of the attributes that has defined this area and its quality of life. The take-away is that while non-profits are experiencing changing times, opportunities abound to hone their missions, connect with a new generation of donors and continue to do the good work that has defined their presence in the KC region.

Night Frights

It seemed innocent enough, but the opening question for the group might be one of the most thought-provoking questions
in the contemporary non-profit world: What keeps you awake at night?

Jim MacDonald, of the United Way of Greater Kansas City, quickly lasered in on a response that generated knowing nods around the room: “Trends in donor retention and revenue growth,” he succinctly stated.

Bob Dunn of JE Dunn Construction, who also serves as head of the Dunn Family Foundation, said it was “how to support so many causes with 20 officesaround the country on the budget that we have.” Underlying the depth of the need that the foundation and company see is the robust number of organizations— roughly 400 now, he said—that receive some form of Dunn assistance.

From the perspective of a construction- sector executive, he also sees a need for organizations to crack the nut of joblessness grounded in lack of training. “We owe it to our minority communities to create an environment where everyone can progress,” he said, and a top-notch vocational technology program could be a key cog that advances the broader goal.

The range of views around the table was supported by several of this year’s Local Heroes. They were able to address concerns from the perspective of the volunteers who are so invaluable to many successful non-profits. Among them were Cynthia and Bob Kelley, who have volunteered with Heart to Heart International for the past seven years. “For me, it’s wondering whether the skills I have are adequate in the areas we serve” around the world, Cynthia said.

Erica Terry, of the Nelson-Atkins Museum of Art, touched on an issue that would return to the discussion at various points: “The elusive challenge,” she said, “is with the Millennials and the legacy of giving” in Kansas City. That concern would come up frequently during the discussion, given the way the youngest, best-educated and demonstrably the most tech-savvy generation of workers ever is seeking to exercise its philanthropic tendencies.

This region has some prominent corporate givers among the ranks of its large companies, but for others, the ability to give can be a bigger challenge, especially with the variety of ways that companies can give—direct donation, pro bono work, giving volunteer days to the staff, providing talented for board service, and other means. “It’s very difficult for a small organization to find a way to bring everything together,” said Amy Hoppenrath of MarksNelson, the largest accounting firm based in Kansas City.

Janice Taylor of the Shawnee Mission Birth Center was standing in for Local Hero Betsy Wickstrom, who founded a birthing center in Haiti that has delivered 5,000 babies without a single maternal death. It’s impressive work, but it doesn’t often make headlines here. She wondered if there might be other strategies for developing support for non-profits that don’t do the bulk of their work in Kansas City.

One of those, Heart to Heart International, had its COO at the table, and Dan Neal cited the challenge of managing in-kind giving, as well as the loss of donor companies through business consolidations. His boss, CEO Jim Mitchum, also cited the challenge for a global relief agency to secure the safety of its workers in locales wracked by natural disaster or social pathologies, and sometimes, both.

For a faith-based organization like City Union Mission, said long-time CEO Dan Doty, the concern is rooted in a cultural
shift, one that has seen affiliation and participation with religious institutions in decline in America over the past generation.

Another significant mission-altering trend, said Amy Stoll of the Down Syndrome Guild of Greater Kansas City, are changes within client bases—the life expectancy of Down Syndrome patients has risen sharply over the past generation, and many are living into their 50s and 60s, often outliving the family members who have provided primary care. Because of that, Stoll said, “their needs change throughout their lives.”

Ken Williams, of Catholic Charities of Northeast Kansas, offered a concern that goes straight to the heart of every non-profit’s challenge, and one that often presents itself in conversations with prospective donors: “Whether we’re having an impact,” he said. “We want to make a real difference in people’s lives.”

Majors Philip and Deslea Maxwell, native Australians who have served in 32 nations around the world for the Salvation Army, brought a global perspective to the table—along with a shared generational concern. Of the many causes readily supported by previous generations, Philip Maxwell said, only about 10 percent of those appeal to Millennials who are looking for organizations to support.

It was left to the assembly chairman, Brent Stewart, to utter the two words that were also relevant to all at the table: “Tax reform.” The changes coming from Washington will impact the motivations that many may have for charitable giving if it no longer makes sense to itemize deductions, Stewart cautioned. But a secondary consideration for United Way, he said, was how to bring on the kinds of talent needed to keep the organization humming, and retain them after investing in their training and career development.

Millennials

Gloria Jackson-Leathers of the Ewing Kauffman Foundation was the first to address that challenge. She had recently attended a pair of conferences, both of which had programming to address the rising challenges of staff retention and development. Job-hopping within the youngest cohort of the work force, she said, “boils down to having a job that is not meaningful.” Too, she noted, young workers want the salaries that come with experience, but often aren’t sticking with it long enough to accrue the skills needed to justify that kind of compensation from employers.

Jim Mitchum also saw opportunities for non-profits to offer meaningful work, but for many in that generation, there’s also a demand for “team building that must be purposeful.”

 The looming challenge for many nonprofits, he said, would be finding ways to engage them and take advantage of that desire to be involved. That desire, he said, is a consequence of the way they were raised—by parents who stressed the need for community service even for young children, or as a line-item on an
application for college admission.

“Millennials will give,” said Bob Dunn, “if they feel their giving is making a difference. They just don’t want to see the status quo.” Speaking as a funder, he said, “I don’t blame them.”

Two things, said Evie Craig of reStart, the homeless shelter, are contributing to the current dynamic, and neither is going to change for non-profits: Competition and technology. Those factors interact in the workplace, she said, “and Millennials’ struggles are the result.”

Tom Holcom, another prolific volunteer among the Local Heroes, pointed out that tech tools are rewriting historical approaches to fund-raising. Raising his own cell phone, he said, “20 percent of giving today comes through this.”

Leanne Brieby of the Community Foundation of Greater Kansas City—one of two Millennials at the table, or at least
the only one to self-identify as one—suggested that her generation was pressuring companies to rethink their philanthropic
strategies. Some research, she said, had shown that “64 percent of Millennials don’t want to work for a company that doesn’t have strong philanthropic preferences.”

The generational challenges for nonprofits also reach the board level, said Ken Williams. “Board members are there to advise us and help us,” he said, “and the voices of Millennials are really, really important.” Therefore, he said, boards should be making greater overtures to bring young members into the fold, both for their perspective, he said, and the fact that as a group, they are “incredibly educated.”

How Philanthropic Are We?

Kansas City has long been known for its oversized levels of philanthropy, and for years has been regarded as No. 2 nationwide on lists of giving communities. Over the decade since the onset of the Great Recession, that status has slipped. By some measures, we’re no longer in the Top 10; other organizations that compile such rankings have even excluded this region in their Top 50.

Those statistics surprised more than a few around the table, even though they for years have been dealing with precisely
the conditions that might account for any regional slippage. Among those was Bob Dunn, who harkened back to the iconic Norman Rockwell image of the Kansas City Spirit, a painting that touted this region’s ability to roll up its sleeves in the face of overwhelming challenge.

But Rockwell put the last strokes on that imagery more than 60 years ago, and much has changed. The generation it largely depicted, the Greatest Generation of Depression-era survivors and World War II victors, is rapidly passing, Dunn said.

Perhaps the loss of philanthropic giants like Adele Hall and Marion Bloch in recent years has depleted not just the ranks of large donors, but the high visibility that their philanthropy often produced to inspire others, he suggested. As a community, he said, “we want to make sure someone can pick up that torch or baton and run with it.”

Gloria Jackson-Leathers took an analytical approach to those rankings, suggesting that some of the underlying methodology could be overlooking exculpatory factors. Perhaps, she said, some of the very large donations in years past— including those behind the $414 million Kauffman Center for the Performing Arts, or any number of 10-figure initiatives—might have skewed upward the statistics in previous years.

Counterintuitively, said Evie Craig, many non-profits experienced significant increases in donations after the Great Recession, when more attention was being paid to greater needs that arose because of it. “The recession brought in tons of support,” she said.

Jim Mitchum concurred. Five-year trends in giving, he said, speak to continued year-over-year increases in donations. “We’re not seeing a reduction,” he said. But there are other ways to measure engagement from donors besides their financial contributions, he said, noting the impact that volunteers have on his organization and others around the table.

Ken Williams said Catholic Charities had seen much the same, both with volunteer numbers and donations, and he noted that “there’s nothing like success to keep people motivated.” The flip side of that, he said, is the potential for donor exhaustion, especially if non-profits are returning to the table with the same ask, or a larger one, than in previous years.

Organizations that face constantly growing needs, without metrics that demonstrate program effectiveness, can eventually compel donors to find other outlets for their generosity.

It’s important, said David Miles, executive director of the Marion and Henry Bloch Family Foundation, that conversations with donors focus on success metrics. If a non-profit fund-raiser is there to ask for money to assist with administrative costs only, he’s in a tough spot, Miles said, “because there’s no exit strategy there” for the person writing that check.

The Retirement Factor

One of the megatrends shaping the way people give is what’s happening in their retirement years, an overly broad label applied to multiple older generations that can range from barelypast-midlife fiftysomethings all the way up to people in their 10th decade. Within that huge cohort are multiple lifestyles and cycles, and multiple incentives for giving—or for not giving.

The challenge for many non-profits is how to mine those trenches successfully. For new retirees, the urge to spend more freely and see the world can compete for philanthropic dollars. For anyone in a nursing home lacking independent wealth, the opportunities to give may be limited to estate bequests.

But for some in the middle, who have sown their globe-trotting oats, or who have downsized after raising families, the demands on disposable income might ease up, creating opportunities for non-profits with the right messaging, and the right ability to tap into that vein. That would include groups inclined to give in small amounts, an area that Brent Stewart sees a growing concern. “The sub-$25 donor is withdrawing,” he said, “because they often don’t see their gift as meaningful as that of the $10,000 or $25,000 donor.”

Kevin Connor, one of Ingram’s 2017 Local Heroes, pointed to giving trends that show wealthier donors tend to give to causes like education or the arts, whereas the low-income donors are more likely to be inspired to fund social services. For charities, he said, 50 donations of $100 each could be of greater long-term value than a single $5,000 contribution, because it can create avenues for further giving down the road.

Lower-income givers, said Ken Williams, “want to be invited in” to the fund-raising universe, but need to be assured that they’re making a real impact. “We tell them, ‘We want you to be part of the solution,’ ” he said, and recalled efforts by Catholic Charities to explain to donors that $32 can feed someone in need for an entire month.

He also said that Catholic Charities works hard with its volunteer corps to extract skills that go beyond stocking shelves or driving a truck. Many volunteers have successful work histories, especially among new retirees, “and we don’t want them to park their brain” when they come on board, he said. “We need their marketing skills, we need their finance skills.”

A Matter of Focus

Following a short break, participants returned to the table to produce some of the most substantive discussion in the history of the Philanthropy Industry Outlook assembly. It started with a candid observation from Jim Mitchum, who declared—without a word of dissent—that “there are too many nonprofits, and everybody knows it.”

That’s not going to change, he said, without a greater push from donors. “It would be more helpful if donors would sit down and talk about this—they’re the only ones with the power to do that.”

His observation prompted Evie Craig to suggest a need for some consolidation among charities. This region has more than 7,000 non-profits, she said, but considerably fewer than half have assets above $50,000—a drop in the bucket of the asset bases needed to generate meaningful donations for the causes they support.

Jim MacDonald concurred. “I would argue that there aren’t enough dollars to go around,” he said. Perhaps what’s needed is more competition among nonprofits to mirror the mission-honing focus one can find in the for-profit world, he suggested.

Ken Williams likened the current landscape among non-profits to drilling over a large expanse, without going deep. “If you’re only drilling six inches, you’re not going to hit a lot of water,” he said.

There is, Jim Mitchum, said, too much inefficiency, so when a donor is exploring philanthropic opportunities, it’s important to ask about both internal efficiency and external effectiveness.

Jim MacDonald pointed to a number of newer, high-profile ventures that have sprung up with highly focused missions:
Happy Bottoms, which provides diapers to needy families (a good not covered by the federal food-stamp program); SleepyHead Beds, which focuses on just that—beds, sheets, pillows and blankets for children in low-income settings; and  Giving the Basics, which gathers personal hygiene products for the needy—again, products that can’t be purchased with food stamps.

Some at the table believed that those organizations fit a profile similar to the Harvesters food bank system, dealing as they do in needed commodities.

They wondered whether consolidation could reduce administrative overhead, producing efficiencies that can attract donors looking for that quality. Others disagreed, saying that the laser approaches of those four organizations provide a special appeal to donors who are passionate about those causes, donors who otherwise would not be inclined to offer support.

That type of consolidation is already happening. Just this year, First Downs for Down Syndrome aligned with the Down Syndrome Guild, and there are other organizations that serve those clients who could also be brought under that umbrella, said Amy Stoll of consolidated DSG.

Last year, five organizations focused on children in various stages of developmental need—Gillis, Healthy Families, Marillac,
Ozanam and Spofford—merged into Cornerstones of Care, Bob Dunn pointed out.

But, he said, consolidation for its own sake can be mission-defeating. “At the end of the day, does their culture fit with yours?” he asked. “If not, this is not going to fix anything.” One instance that did work, he said, was the aggregation of five area United Way organizations, with five executive directors and five separate staffs, under the Greater Kansas City umbrella now led by
Brent Stewart.

What Lies Ahead

Stewart brought the assembly to a close by asking about the biggest looming challenges, and the clear winner was concern over pending tax reforms, and the impact it will have.

By taking away the need to itemize charitable deductions, which does help simply the filing process for millions, or by doubling the estate-tax exemption, removing many more families from that levy, Congress could inadvertently be setting the non-profit world up for a shock, since 82 percent of funding dollars come from those who itemize.

It will be interesting, he said, to see if the vision of America projected by French writer Alexis de Tocqueville will withstand
changes in tax policy. More than 200 years ago, considerably predating the advent of the federal income tax.

The American ideal, de Tocqueville wrote, emerged as communities rallied around causes of shared concern to find solutions. In an era of kings and overlords, this new strain of self-reliance held the potential to change the world. And it did.

Today’s tax-law writers in Washington, whether by design or not, will help us see whether that American Ideal will endure in the years to come, and whether we’ll continue to back the philanthropic organizations that address those concerns every day.

What won’t change is the mission. David Miles synthesized the challenge for all non-profits and charities when he asked, how, from the perspective of a donor, is an organization using the money gifted to it? “What is the impact?” Miles asked. “How are you going to transform lives?”