Area Non-Profits Working in a Whole New Environment

It is a time of profound change and challenge in the non-profit world: Salvation Army kettles increasingly are unmanned, charity runs and walks are seeing a broad decline in participants who show up in fund-raising capacities, demand on food pantries and health-care-related organizations is at near-record levels.

And yet, executives from a dozen key non-profits say, the Kansas City marketplace—its corporate givers, its individual donors, its network of foundations and its varied non-profit community—is meeting those challenges head-on. Those executives gathered Dec. 9 at Ingram’s offices in the Crossroads district to assess some stark challenges that face them in this economic climate.

But it wasn’t all gloom and doom; rays of optimism consistently poked thro-ugh the two-hour conversation. Why? Because Kansas City has a unique philanthropic profile for a community its size, and we embrace giving like virtually no other metropolitan area in America.

The Current Environment
As an opening question, participants were asked to assess how the uneven nature of the economic recovery is playing out for the donor community and various non-profits trying to engage those givers.

“I think it’s created an instability,” said Jeremiah Enna, director of the Culture House, an Olathe-based performing arts academy. “People are holding on to their dollars until the last possible moment, because they don’t know if next year is going to be as good as this year.” That’s particularly true, he said, with the middle class and smaller donors.

Macaela Stephenson, manager of community relations and investments for Blue Cross Blue Shield of Kansas City, sees the stresses running both directions. “We are an insurance company in a time of great change in the health-care system,” she said.

As a result, “from a funding perspective, that makes us look at funding and to become more strategic with things we are doing.” That review is sharpening the focus on what the insurer is doing, what makes most sense for its business model, and what meets the need across the area.

“I think it’s been a roller coaster,” said Andy Betts, executive director of development for the Salvation Army. “Donors and stakeholders can be nervous, because you’re giving into a black hole at times. We’ve had to find ways to change the landscape and make sure we add more clarity to what the donor dollars are doing.” That means changing internally as contracts with partnering organizations change, and taking a strategic approach to collaborations with different sectors. Still, the agency is running somewhat behind on its fund-raising goals, he said, and volunteers are increasingly harder to come by.

“The uneven nature of the economy has increased the demand for food assistance,” said Joanna Sebelien, chief resource officer for Harvesters-Community Food Network. “Many of our agencies have seen 40 percent increases in need, including people just showing up, so that’s created pressure all along the line. People who thought they would never have to come to a food pantry are coming.”

Compounding that demand, the food industry that generates a substantial portion of the food network’s offerings has itself changed. Thinner profit margins have compelled those companies to find greater efficiencies in packaging, production and distribution, reducing the amount of shelf-stable offerings that reach Harvesters.

“The economy,” said Jan Leonard, director of charitable trusts and foundations for UMB, “impacts our clients because it impacts their portfolios. That leads to how much they can give, and how we have to be more strategic and look at other options, whether it’s in-kind, employee voluntarism, looking at a larger picture of assistance.” But Leonard says her clients aren’t holding back; they continue to fund organizations as they traditionally have.

Even if the economy is improving nationwide, Kansas and Missouri are lagging, said Brenda Sharpe, president and CEO of the REACH Healthcare Foundation. That presents challenges on the public side of funding for social services, particularly with efforts in both state capitals to reduce income taxes. “They will be reducing support for very important health and service programs, and that pushes that burden to philanthropy, which cannot meet the volume,” Sharpe said.

With Kansas looking to trim $251 million in spending by July 1, “everyone will feel the pain, not just one sector,” Sharpe said, and that will increase competition among organizations that should be encouraged to collaborate.

Melissa Taylor, director of development for reStart, Inc., also noted how cutbacks in government spending would affect her organization’s mission to provide housing for the homeless. “That changed when the funding was reduced,” Taylor said, “so we started to get ahead of the game to private funders and foundations.”

Amy Allison, executive director for the Down Syndrome Guild of Greater Kansas City, noted the disproportionate impact that changes in health-care insurance structures had placed on her client population. “Missouri and Kansas both did away with high-risk insurance pools, which was the only thing a lot of our families could afford,” Allison said. “They were devastated. They’re now having to spend dollars on health care in a different way than they did before.”

On a brighter note, Denise St. Omer, vice president for community development at the Community Foundation of Greater Kansas City, cited “tremendous generosity among our donors in Kansas City. Our donors continue to be interested in and focused on the impact that their charitable dollars have and how they can maximize those, and they’re really trying to understand the landscape, the organizations serving our communities and how their charitable dollars can have the greatest impact.”

Kenn Miller, executive director with the Boy Scouts of America in this region, also had an optimistic view, looking at growth opportunities for his organization. Kansas City, he said “is as good as it gets” in terms of youth participation, but there are areas of the inner city where growth is possible. Participation, he said, “is higher in the suburbs, but this is one of the highest market shares” in the country.

Generational Differences
Simple questions of demographics are posing complex challenges for non-profits, participants agreed.
“One of the things we’re noticing is an aging donor base,” said Dan Doty. “It means you have to get creative, targeting the younger givers and potential givers. That’s a challenge.” The homeless shelter has had a giving club, similar to the Salvation Army’s, “but that’s geared more toward the older generation, and that’s really decreasing greatly as the population ages.”

Andy Betts noted how the declining numbers of volunteers were impacting the organization’s most visible fund-raising init-
iative: Christmas-season red kettles, traditionally staffed with a bell-ringing volunteer. “We have 418 red kettles in the metro,” Betts said. “Only 40 percent of those actually have bell ringers there. So six out of 10 kettles go unmanned. Twenty years ago, that wasn’t the case.” The hope at this point, he said, is that as first-wave Baby Boomers push well past traditional retirement age, they’ll step up for those opportunities to serve.

Many food pantries in the region are affiliated with churches, and the volunteer bases there, said Joanna Sebelein, “are them-
selves aging out.” But as the population ages, she said, “we are going to see huge increases in the numbers of seniors themselves who need assistance.” Volunteer staffing levels at those pantries, she said, “are the canary in the coal mine. We’re beginning to see stresses out there in staffing.”

Brenda Sharpe wears another hat as a board member for the United Way, which has a particular emphasis on reaching out and engaging younger donors. “They want engagement first, and their dollars will follow,” Sharpe said. “And not just as employees of companies, but as individuals, they want to be engaged in something meaningful.”

One of the most profound changes in reaching that younger crowd is with an effective social media strategy, most participants agreed. But it has to be done correctly.

“Social media has been a great thing, and our 50 year-old social media person does great work,” said Dan Doty, “but we recently also outsourced to a 20-something-year-old, getting into all the various outlets and getting volunteers in that way.”

That prompted Sharpe to note other differences in the way social media is changing the landscape. “One of the most interesting, from the report I read, is how people identify with their community.

If you ask them, they say ‘It’s my neighborhood, or my church, my school, my city, my county,” she said. But more and more, for Millennials, their community is an on-line community. It’s a running club, or a biking group, that’s their community.” So it will be vitally important for organizations seeking donations to rethink the way people define their communities.

Ways of Giving
For some, shifts in the balance between dollar donations, volunteerism or in-kind contributions, have been noticeable.
“We are very fortunate to have a lot of work for volunteers to do and the space for them to do it” at Harvesters, said Joanna Sebelein. “We’re seeing increases in the numbers of volunteers; we have about 6,000 volunteers a month to sort food.” The bigger concern, she said, is that nearly half of the organization’s member agencies have no professional staff at all.

She is encouraged by the numbers of small businesses that want to be engaged in support for non-profits, and that can en-
tail anything from fund-raising to volunteering to serving on boards and committees.

“This is a state where you find more volunteer engagement and more civic engagement,” said Melissa Taylor, a relatively recent arrival from Minnesota. “The one thing I’ve seen at reStart is their ability to engage corporations on a long-term basis. That really is the answer.” Companies can get involved in short-term project work and make an impact, she said, but when the client population sees the same faces of corporate volunteers over a period of years, it changes the nature of the relationship between organization and beneficiaries.

Paula Boyle, of the Dunn Family Foundation, noted how the parent contracting company’s change to ESOP structure had changed the giving philosophy at J.E. Dunn Construction. “We’ve been a little more strategic in our grants with the company; it’s not just the family, any more; we have 2,500 owners of J.E. Dunn Construction Co., so we try to be more strategic about our giving.”

The Politics of Need
Several around the table lamented the way that social-services programs had become fodder for political disagreement.
“Our No. 1 priority—period—is Medicaid expansion. It’s the no. 1 opportunity to expand financial stability for the working poor—emphasis on ‘working,’” said Sharpe.

“These people are low income, making a little more than $10,000 for a family of four, so they are too ‘rich’ for current Medicaid eligibility guidelines,” yet they still don’t qualify for subsidies on the federal health-care exchanges.”

That’s not a non-profit issue, or merely a call from liberal advocates, Sharpe said; “it’s something our states are really going to need to look at to be economically viable.” She noted the ironic clash in principles by those in Topeka and Jefferson City who oppose taking federal dollars for that purpose, “but that hasn’t stopped them from taking every federal dollar in transportation or education. For some reason, health-care dollars are different.”

Joanna Sebelien also deplored the politicization of need.

“Hunger never used to be a partisan issue,” she said. “I think what we’ve seen as we look out there is a lot of partisanship now about the role of the federal government in meeting a lot of needs. I think there’s some real misunderstanding and incorrect information about what’s gone out on with food stamps.” Specifically, 80 percent of recipients there are children and seniors, “so there’s a real disconnect about who’s on the-se programs and what these programs do.”

The Next Big Givers
A number of developments in 2014 will have long-term impacts—some profound, some subtle—on area non-profits. Two of the biggest names in regional philanthropy—James Stowers and R. Crosby Kemper Jr., died this year. And high-profile or fast-growing locally owned companies, most with nine-figure revenues, were sold, including Russell Stover, MedTrak Services, FishNet Security, FSP, and Freightquote. Historically, those have been the kinds of companies to create wealth that eventually flows into non-profit causes.
So the question was posed: Who will be the next big names in philanthropic giving?

“I’m hoping Russell Stover will continue to be major funders in Kansas City,” said Dan Doty. “They’ve always been helpful to City Union. I just don’t know with the new ownership where that’s going to go. And the Fiorella family, with Jack Stack Barbecue, has been generous to the community and to City Union Mission in particular. I’m a little concerned for some of the losses.”

Others tossed out familiar names like the Bloch, Hall and Dunn families, but also corporate donors like Cerner, through its First Hand Foundation, Garmin International, CommunityAmerica Credit Union, and others. Barnett and Shirley Helzberg, whose fortune came from the sale of their jewelry chain to Warren Buffett’s Berkshire Hathaway, have maintained a sizable philanthropic profile in this region.

Amy Allison noted the significant contribution of Cerner even beyond its foundation role. “Their employees go on sabbatical every seven years, and part of that is a service project,” she said. “We’ve had several roll through, some with kids with Down syndrome.” Cerner also takes an aggressive stand to push its skilled executives into board service, she said: “They may not send dollars outside, with their own foundation, but they definitely are sending associates out there.”

More broadly, philanthropy itself is becoming less egalitarian and more democratic, participants said.

“I don’t know if any new stars are coming, but I see more families engaged in building foundations themselves,” said Jeremiah Enna. “They may be smaller scale than Jim Stowers or Crosby Kemper, but it seems to me that Kansas City wants to be as famous for philanthropy and giving. I see a bigger base of people, rather than just the top families that will always be generous.”

Denise St. Omer concurred. “There is definitely a movement for many of the families that we know have been very involved and very supportive in the community,” she said. That’s particularly true with family foundations and younger generations. “I think that tradition will continue with those families, because it is something that is very intentional,” St. Omer said. “They want to make sure that it is part of the family business, caring about the community where they have made an impact.”

And it’s not just a question of dollars, but of other contributions, said Kenn Miller. “We have some great board members who are community builders, but as they retire, who is the next group? They’re not looking to give the amount of time the other
guys were, they’re just not.”

Joanna Sebelien saw the legacy of big givers from a different perspective. “My take on leaders like Jim Stowers and Crosby Kemper, as they lived their lives, they taught the community about the importance of philanthropy.”

“I think that’s very true, because we’re used to it here,” said Jeremiah Enna. “It’s normal, but it’s not normal that a community would be so generous. Being in an environment where it’s not normal should wake us up to the fact that Kansas City is so philanthropic and so generous.”

What’s changing, said Andy Betts, is the number of very large donations. Ten years ago, he said, about 17 people were making gifts of six figures or more to the Salvation Army each year; that number is now down to 10. “At the same time, we’re seeing new wealth, first-generation wealth. The Dunns and Halls continue to be influential, it’s just how do we bridge these two generations to make this a community-focused city?”

The entrepreneurial spirit that gave rise to some of those companies recently acquired is also a factor in giving here, said Joanna Sebelien. Upon each sale, she said, “that creates an opportunity for a different kind of philanthropist, because now you have money in motion in a different way. Often, that philanthropist and that money stay in the community and gets generated differently than through a name associated with a company. It’s a much more dynamic look at philanthropists of the future, if you will, because we’re going to see newer, different names showing up.”

The Kansas City Difference
Without exception, participants agreed that Kansas City’s reputation as a philanthropic community was well-earned.
“It’s amazing,” said Denise St. Omer. “Last  year, one community foundation ranked ahead of us in grants and in gifts, and that
was Silicon Valley. When you look at the top community foundations in our country and you see where we rank and compare our metro area, it’s truly a great testament to the generous spirit of our community.”

That’s in large part is because so many have bought in with the belief that anyone can be a philanthropist. “It’s really about somebody’s willingness to make a difference,” said Joanna Sebelien. “You need to be able to say here’s how you can make difference, and that can be with money, time, with your voice or, in our case, it can be with food. When you make it clear to people that they can be transformative, that they can make a difference in a very simple way, I think people step up, and that becomes the entry point for a lot of different things, and people grow or get engaged with whatever your issue is.”

“KC is such a wonderful place for that very reason,” Sebelien said. “I’m from Boston, and there’s a lot of old money and old names there, but here, you can make a difference very quickly. You don’t have to be born into it. I think that the entrepreneurial spirit in KC, not only in business, but in philanthropic leadership, is an opportunity that doesn’t exist in a lot of places.”