6/28/2013 “Breaking out of the Nonprofit Starvation Cycle to Better Deliver on Mission” y July 17, 2013 MIE National Directors Conference Collaborating to accelerate social impact Who is The Bridgespan Group? The Bridgespan Group aspires to a society characterized by equality of opportunity and justice. To that end, we collaborate with mission- driven leaders and organizations seeking to break cycles of intergenerational poverty, provide effective safety nets and ensure core human and civil rights. core human and civil rights • History : Founded in 2000 • Values: Impact, respect, candor, collaboration, passion • Services : Strategy consulting, leadership development, philanthropy advising, and developing and sharing insights • Offices : Boston, New York, and San Francisco (~200 staff) • Clients : 400+ foundations and nonprofits globally TBG 130717-MI E Conference TBG pres ... 2 Why we are here today • Challenging macro environment • Importance of economic clarity for strategic decision making • Resource allocation as key lever for impact • Need for support structures and getting them funded TBG 130717-MI E Conference TBG pres ... 3 1
6/28/2013 Objectives • Provide interesting and practical information • Understand what applies to the legal aid field • Give opportunity to connect and discuss with • Give opportunity to connect and discuss with your peers 4 TBG 130717-MI E Conference TBG pres ... Today’s agenda • Key trends in government and philanthropic funding • Managing and succeeding in tough times • Understanding your costs and why it matters • Break • Dynamics of the Starvation Cycle and breaking out of it • Wrap up TBG 130717-MI E Conference TBG pres ... 5 Civil Legal Aid Funding comes primarily from public sources Funding in USD 1,500,000,000 1,293,742,000 Legal community Other I OLTA 1,000,000,000 Fdns/ Corps State Legislatures 500,000,000 LSC Other Public Funds 0 2012 Data Collection = $1,294,000,000 2011 Data Collection = $1,344,000,000 2010 Data Collection = $1,375,000,000 So, a 3.5% decrease from the prior year, when there was a 2% decrease from the high. TBG 130717-MI E Conference TBG pres ... 6 2
6/28/2013 Federal funding outlook is bleak Government Accountability Office -- Realistic Scenario Source: GAO Note: Data are from Alternative model used in GAO’s Fall 2011 simulations based on the Trustees’ assumptions for Social Security and CMS Actuary’s alternative assumption for Medicare. * This also includes spending for insurance exchange subsidies and CHIP 7 TBG 130717-MI E Conference TBG pres ... State and local outlook also troubling Government Accountability Office -- Estimate of State and Local Operating Balances, as a Percentage of GDP Percentage of GDP 5 4 3 Surplus (Positive balance) 2 1 0 -1 -2 Deficit -3 (Negative balance) -4 Operating Balance -5 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 Year Source: GAO simulations, updated April 2011 TBG 130717-MI E Conference TBG pres ... 8 Near-term budgetary concerns not making the situation any better Fallout from the federal stimulus • $740B of ARRA funding has paid out; the stimulus has run its course • As one non-profit executive noted, the stimulus money running out is a “cliff we are toppling over.” $2.1T in pending cuts stemming from the Budget Control Act • $900B in cuts to discretionary funding starting in FY 2012 • An additional $1.2T across the board trigger cuts will begin to take effect in FY 2013 TBG 130717-MI E Conference TBG pres ... 9 3
6/28/2013 Philanthropic giving is improving slowly… • Total charitable giving has increased in current dollars in every year since tracking began in 1967 with the exception of three: 1987, 2008, and 2009 • 2012 charitable giving grew 3.5% (1.5% when adjusted for inflation) • Researchers predict it will take at least six more years to raise as much as R h di t it ill t k t l t i t i h before the recession • Only sharp growth in giving came from corporations (12%), foundations increased their grants by 2.3%. • Nearly 40 percent of the 6,000 charities that responded to a study by the Nonprofit Finance Fund said they planned to change how they raised money this year Source: Giving USA Report 2013, The Chronicle of Philanthropy, CCS Snapshot of Today’s Philanthropic Landscape 2012 10 TBG 130717-MI E Conference TBG pres ... …with individual donors giving more than 70% of all philanthropic dollars $316.2B 100% 100% 100% To Individuals Environmental/ animals Foundation Arts,culture & humanities International affairs Corporations Health 80 80 Bequests Public-Society benefits Human Services 60 60 60 60 Foundations Education 40 40 Individuals 20 20 Religion 0 0 Giving by source Giving by type (2012) of recipient (2010) Source: Giving USA Report 2013, CCS Snapshot of Today’s Philanthropic Landscape 2012 TBG 130717-MI E Conference TBG pres ... 11 Legal Aid Funding Trends (not inflation adjusted) $12 $10 $8 erson Dollars Per Poor Pe LSC IOLTA $6 State Public Private $4 $2 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TBG 130717-MI E Conference TBG pres ... 12 4
6/28/2013 Summary Legal Aid trends • Funding from public sources decreasing • Biggest drop in relatively restriction free and (historically) ongoing sources - Total reduction around $82.3M - Public: LSC (-14%) state funding (-7%) Public: LSC ( 14%), state funding ( 7%) - Private: IOLTA (-7%) • Increasing sources virtually all private - Total increase around $32.3M - Only legal community funding generally unrestricted and ongoing (+7%) 13 TBG 130717-MI E Conference TBG pres ... Questions for discussion • What aspects of our findings most resonate with your experience? • Where/how/why are you seeing things differently? TBG 130717-MI E Conference TBG pres ... 14 Today’s agenda • Key trends in government and philanthropic funding • Managing and succeeding in tough times • Understanding your costs and why it matters • Break • Dynamics of the Starvation Cycle and breaking out of it • Wrap up TBG 130717-MI E Conference TBG pres ... 15 5
6/28/2013 Small group discussion at table • How has the economic situation impacted your organization? • Where did you have to make adjustments or cuts? y j -Programs? -Overhead? -Staff? • What has worked well, what has not worked so well? 16 TBG 130717-MI E Conference TBG pres ... Most nonprofit organizations have felt the impact of the downturn • Many organizations have experienced funding cuts • The demand for services continues to increase • Anxiety levels of staff are high TBG 130717-MI E Conference TBG pres ... 17 Nonprofits we surveyed saw less severe decreases in revenues in 2010 Percentage of respondents Percentage of respondents reporting reporting decrease in revenues decrease in revenues greater than 10% 80% 62% 32% 18% 2009 2010 2009 2010 Source: Bridgespan Succeeding in Tough Times Survey Results, N for 2009=106, N for 2010=102 TBG 130717-MI E Conference TBG pres ... 18 6
6/28/2013 Most direct service nonprofits experienced higher demand for services in 2010 Respondents reporting increased demand for services in prior year (percent) 100% 95% 88% 81% 80% 80% 25% Health Other Job Training Arts/ Culture Multi-service Education and Elderly Services Housing and Youth Services Providers Source: Bridgespan Succeeding in Tough Times Survey Results, N =102 19 TBG 130717-MI E Conference TBG pres ... We also sought to learn more about how government funded nonprofits and government officials viewed the situation • We focused our research on a few guiding questions: -How are nonprofits funded by government viewing the situation? -What do they believe the future holds for them and their beneficiaries? -How are they preparing for that future? -How do their perspectives compare with those of government funders? • To help answer these questions, we conducted a survey for p q y nonprofit organizations who received more than 50% of their revenues from government -68 survey responses received -59 from human service organizations -56 from organizations which received funding from more than one type of govt. funding stream (local, state, national) • We also conducted 23 interviews -17 interviews with nonprofit leaders -6 interviews with federal, state and local government officials TBG 130717-MI E Conference TBG pres ... 20 “Has your organization’s total funding from all government sources increased or decreased since the recession began in 2008?” Note: 68 survey takers answered this question TBG 130717-MI E Conference TBG pres ... 21 7
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