Mario Morino on the fiscal crisis facing nonprofits and the need to rethink and reinvent

 More than 15 years ago Mario Morino was the first investor in Community Wealth Ventures and has long been a keen and candid observer of the challenges facing nonprofits and efforts to create social change. He’s among the best I know at imagining what can be, but without that comprising his ability to see things as they are. His new book, LEAP OF REASON, is a powerful summation of much of what he’s learned.


Mario’s summary of two reports below, from Bridgespan and the Alliance for Children and Families concludes that “the fiscal crisis facing nonprofits is anything but a passing phenomenon” and that “every nonprofit will need to rethink, redesign, and reinvent for this era of scarcity”.

In many ways this has been our mantra at Community Wealth Ventures well before the current fiscal crisis, since it has long been clear that there simply aren’t sufficient charitable dollars, even for organizations that excel at getting more than their fair share, to solve many of our social problems on the scale that they exist. And so we have been a proponent of creating community wealth by leveraging assets into revenue generating opportunities; investing in capacities that support scale and sustainability, and more recently focusing on collaborative and systemic efforts, including intersecting with public policy, to create transformative change. As we’ve taken lessons from, and contributed to, Share Our Strength’s success scaling the No Kid Hungry campaign, we’ve seen the indispensible need to focus on measurable outcomes as Mario prescribes.

Mario’s message is an important reminder that many good and important organizations will be fighting simply to survive and maintain current levels of services. It points to the need for us to be helping them with the fundamentals of strategy and sustainability at the same time we help them aspire to transformation.

Excerpts from Mario’s recent letter follow below.

Billy



Mario Morino: First off, I want to commend two outstanding—and sobering—accounts from Daniel Stid and colleagues at Bridgespan: the report The View from the Cliff and the article “Five Ways to Navigate the Fiscal Crisis.” Stid et al. have done a much better job than I to assemble facts to back up one of Leap’s core premises—that the fiscal crisis is anything but a passing phenomenon, and it will force nonprofits and their boards to be more rigorous in how they pursue and assess performance. Here are just a few of the many valuable insights from the Bridgespan works:

• “The long-term outlook for human services funding is bleak. The federal government is facing record budget deficits and interest payments to service its rapidly accumulating debt, the rising cost of health care, and the demographic challenge of paying for entitlement benefits for retiring baby boomers.”

• “Given that roughly one quarter of state government funding and one third of local government funding come from Washington, D.C., the federal budget squeeze in turn will impinge on human services budgets at these levels.”

• “Moreover, state and local governments have their own demographic time bomb to address, in the form of an estimated $1 trillion to $3 trillion in unfunded pension and retirement liabilities for current employees and retirees.”

• “As one former state government [CFO] told us, echoing a common view among the … officials we have talked with, ‘All levels of government are facing steeper costs on health care and pensions, where the relentless demographics are just grinding down on all other items in the budget.’”

• The Hillside Family of Agencies CEO Dennis Richardson: “We started focusing more on measuring our outcomes as a result of our organizational curiosity—What are we doing that actually works? We also have come to believe—looking ahead to the future—that if we couldn’t answer that question, our funding would go to someone who could.”

I was equally impressed with the Alliance for Children and Families’ recent report Disruptive Forces: Driving a Human Services Revolution, inspired by the forward-looking IBM Global CEO Study and intended “to push [leaders] to think outside of their comfort zone.” Here are a few of the many good insights in that report:

• “Funders and communities will expect greater impact at a lower cost. The Hyundai-style approach of providing functional attributes in design and quality at a low cost has taken hold; competition will be cost based.”

• “The number of individuals with the same social ills we face today will increase…. Government will significantly reduce its funding of the sector. Foundations will hone their focus to the few proven, impact-generating organizations.”

• “Successful, high-performing networks of human services organizations will embrace technology, employing sophisticated and integrated systems to manage clients, operations, and advocacy … form innovative partnerships that deliver via multiple sectors … view the sector as a system, where all parts are interconnected and impacts are collectively measured … be comfortable with increased complexity.”

The bottom line is clear: With tight money and growing needs, every nonprofit will need to rethink, redesign, and reinvent for this era of scarcity. Even if you’re not the direct beneficiary of public funding, please don’t assume that you don’t need to think about these cuts. The competition for foundation grants, major gifts, and fee-based contracts will skyrocket as those whose public monies are cut look to other funding sources—like yours. Performance is the best way to protect your organization and meet the growing demands that are coming your way.



Back in the 1980s, an authority in the field of change management shared his view that dramatic personal change doesn’t happen until what you had stops or is taken away. Our fiscal realities—coupled with seismic demographic and social shifts—are likely to be this kind of turning point for the nonprofit sector, and possibly for the public sector as well.

My fervent hope is that this moment produces a true movement—a movement of public, private, and nonprofit leaders committed to tap the potential of, encourage, and support those leaders who have the courage to leap high in pursuit of performance for those they serve.



- Mario Morino

“Act well your part, there all the honour lies.” Harry McPherson's Memorial Service

On Friday morning, my colleague Chuck Scofield and I walked over to Saint John’s Church across from the White House for the memorial service for Harry McPherson who died two weeks ago at the age of 83. It was the church Harry was married in 30 years ago, and sunlight streamed through the stained glass windows, 23 of which were created by artisans at Chartres Cathedral in France. The last pew has a plaque indicating where Abraham Lincoln frequently sat after walking over from the White House for a moment of quiet contemplation.


Establishment Washington – at least the part old enough to know and remember Harry, turned out in force: former Senate Majority Leaders George Mitchell and Tom Daschle, former Senators Chris Dodd and Harris Wofford, Secretary of State Madeline Albright, journalists Al Hunt and Mark Shields, and hundreds more.

From his beginnings as counsel to Lyndon Johnson, during the turmoil of Vietnam, civil rights and the Great Society that was the defining period of his life, Harry went on to serve every president from Nixon through Clinton. There were many references by the eulogists to his patriotism, civility, and a seemingly long ago time “when government actually worked.” There were remembrances of his love of books, poetry, and literature, and his own wonderful memoir, A Political Education. Mostly there was admiration for his intellectual curiosity, love of adventure, humor, and fully lived life as father and friend.

Harry’s son Sam who interned at Share Our Strength gave a eulogy as did historian David McCullough. McCullough summarized Harry’s credo with one line from essayist Alexander Pope: “Act well your part, there all the honour lies.” It was the kind of timeless wisdom most of us aspire to and Harry lived.

I shouldn’t have been surprised, but I was surprised, and honored on behalf of all of us, when seeing on the back of the program that the family had asked that charitable contributions be made in Harry’s memory to Share Our Strength and two other organizations.

The last of three hymns was America the Beautiful. The entire audience rose and sang it as one.

A glimmer of unity rather than division: political lessons from No Kid Hungry

Today’s headlines report the retirement of Maine’s Republican Senator Olympia Snowe, widely seen as one of the last of the moderates. The various analyses describe how moderation is being squeezed out of politics. But it still exists in the civic sector and I’m convinced that the more discouraged people are by the dysfunction of our political system, the more encouraged and inspired they are by efforts like ours.


Accordingly I wanted to see what political lessons might be drawn from our experience with No Kid Hungry. Such lessons could help guide our future endeavors, may be of use to state partners as we progress, and might have applicability to other nonprofit seeking to intersect with public policy to advance social change. In most cases the lessons underscore the value of steering away from conventional political thinking and “politics as usual” and instead toward the less traveled path. I think there are at least five such lessons to consider:



Governors Are More Pragmatic and Less Ideological: Governors are chief executives responsible for getting things done. They tend to be more pragmatic and less ideological than members of Congress. And unlike members of the House and Senate they are not fighting to gain or maintain majority status and all of the powers and perks that go with it. While they are political, they are under less pressure to remain faithful to party at all costs. Our focus on governors, overlooked by many of our colleague organizations, is one of the reasons we’ve been as successful as we have. The NGA meeting in DC last week, and the strong personal testimonials by many governors about the importance of No Kid Hungry, was solid evidence of the above.

Children Represent Common Ground: and perhaps the last patch of turf that Democrats and Republicans can share together and that has not been torn apart by the relentless partisan divide. Children are the most vulnerable and the least responsible for the situation they are in, they are not only vulnerable but voiceless, and that makes it hard not to join our campaign. There is a moral case and a strategic case for putting children first.

Not Trying to Be All things to All People. Politicians get a bad rap, and deservedly so, when they are so eager to please everyone that what they really stand for becomes so watered down as to be undetectable. It takes some courage and discipline to pick and choose rather than check “all of the above.” We picked and chose. As we once did, many of our colleagues focus on hunger in general. Some day we might do so again too. But our sharp focus on child hunger conveys that we don’t just give lip service to every need and interest but that we authentically care about and are committed to this one.

No One to Blame But Ourselves. Politicians play the blame game, quick to take credit for victories and quick to blame the opposition in defeat. Like the all-thing-to-all-people syndrome above it turns people off. But we’ve offered to hold ourselves accountable for solving the problem of childhood hunger. We won’t be pointing the finger at any one else. We will own our successes and our failures. And our stakeholders know where to look for results and accountability.

The Power of Ideas. Politics at its best is not about money, or endorsements, or great press or political muscle, it is about the power of ideas to motivate and move people to action. We have kept our focus on a powerful idea: ending childhood hunger. While we are not a political organization, at its best politics is about persuasion and our efforts to persuade are clearly succeeding.


When we are successful in ending childhood hunger, and we will be, a wonderful byproduct may be that we also created an example of what politics at is best can achieve.

Remembering Harry McPherson

I always felt that having lunch with Harry McPherson was like having the History Channel to myself for two hours. He was one of those rare men who was not only filled with great stories he was eager to share, but who was equally curious to hear yours. Harry died this week at 83. He was one of the last of Washington’s wise men, a counselor to President Lyndon Johnson and a Democratic partisan but always civil, even courtly.


We had initially known each other through government and politics, because everyone in government and politics knew Harry, but we did not know each other particularly well. Then one day, when the Washington Post happened to have written a very flattering profile of Share Our Strength, I was browsing in Chapters bookstore on K Street at lunch time when Harry walked by, somehow saw me from the sidewalk, rapped on the window, and gave me the thumbs up sign.

When I got back to my office there was a message waiting for me from Harry saying that he’d love to have lunch some time. We did and continued doing so more than 20 years. He was fascinated by our model of creating community wealth, deeply interested in our work in Ethiopia where his law firm had been involved in settling some border disputes, and full of ideas about useful introductions he could make, which he did.

Harry was as animated in talking about the novels of Trollope (“You simply must read The Way We Live Now”, he insisted) and architecture and poetry as he was about civil rights, history and politics. He was one of a kind, and with 25 years on me, a wonderful mentor. I miss him already.

Can you afford to not do advocacy?

A new study backs up what Share Our Strength has learned through the success of its No Kid Hungry campaign in enrolling more children in public food and nutrition programs. The National Committee on Responsive Philanthropy’s new report called Levering Limited Dollars found that every dollar invested in policy and civic engagement returns $115 in community benefits. The report cites numerous concrete examples. It can be found at @ http://www.ncrp.org/index.php?option=com_ixxocart&Itemid=41&p=product&id=66&parent=1


For many years, we funded advocacy but did little ourselves. It was only when we realized that one of the primary reasons that children in America were hungry was that they were not accessing programs for which they were eligible, like school breakfast and summer meals, that we built a capacity to better understand and intersect with relevant public policy matters. We did not become lobbyists, but we did work to ensure that those we serve were more likely to benefit from the programs policymakers, with bipartisan support, had established.


Too many nonprofits assume that they can’t afford to devote limited resources to advocacy. But with a return of $115 dollars for every dollar spent, how can they afford not to?

Does Your Nonprofit Manage a "Social Strategy Supply Chain"?

When I was on the board of the Timberland company one of the major areas of focus for the senior management team was supply chain strategy. In its simplest terms the supply chain is the network of businesses who supply every material, part, piece, button, circuit, software, label, etc needed to make and ship a finished product. If the chain gets interrupted, if just one of perhaps hundreds of different suppliers drops the ball, something goes missing and the product fails. So might the enterprise. The fate of businesses rest upon supply chain management almost entirely. And so of course there are supply chain associations, journals, consultants, etc.



We don’t usually talk about supply chain in the social sector. But we should. Because solutions to social problems also depend on a highly integrated chain of inputs that might be thought of as a “social strategy supply chain”. New York Times op-ed columnist Paul Krugman made me think of this when he wrote that “someone who really wanted equal opportunity … would support more nutritional aid for low income mothers-to-be and young children.” Instead of only narrowly prescribing changes in tax, trade and manufacturing policies, as President Obama did in his State of the Union speech, Krugman made the link to the critical ingredients across the entire length of the chain.



Some of the most successful, transformational, and rapidly growing nonprofits do exactly this. For example:



- The Nurse Family Partnership, aiming to break the cycle of poverty for low income fanmiles, advocates for not just one intervention, but for immunizations, breastfeeding, home visits, etc. and conducts randomized controlled trials that demonstrate better prenatal health, fewer subsequent pregnancies, increased maternal education and employment.



- The Harlem Children’s Zone is built around a “project pipeline” whose focus is “cradle to college” supporting young people with the most comprehensive range possible of family, social, and health services for their entire journey



- Share Our Strength’s No Kid Hungry strategy is designed to surround kids with nutritious food where they live, learn and play and so it’s social strategy supply chain must include not only food assistance, but nutrition education for moms and families, resource maximization skills, public policy interventions.



Timberland’s supply chain team understood that it would be futile to try to produce a quality footwear product if any critical ingredient from leather to glue was missing. The same holds true in the social sector but because we are habituated to resource constraints we often overlook this central, unforgiving reality. That’s why the supply chain that the Harlem Children’s Zone calls their “pipeline” is such a refreshing exception to the norm.



When it comes to succeeding on behalf of vulnerable kids we need to think not only about the expertise we can provide but about the entire social strategy supply chain, how we maintain it’s integrity, and how each link in the chain depends on every other.

The Political Courage of A Governor and No Kid Hungry Champion

Because Maryland is of such great importance in our No Kid Hungry strategy, our focus in listening to Governor O’Malley’s State of the State speech yesterday was on whether he would include a reference to ending childhood hunger. He did. But the speech turned out to be well worth listening to for other reasons as well. It was not only ambitious in scope, but politically courageous.


O’Malley did what other political leaders rarely do: he told people what they did not want to hear, but needed to know. He said that creating jobs and investing in the future means there would need to be increases in taxes and fees.

The Governor tried to help legislators and voters think long-term and see the big picture:

“To create jobs, a modern economy requires modern investments: investments by all of us, for all of us. That’s not a Democratic or a Republican idea; it’s an economic and historic truth. It was true for our parents, it was true for our grandparents, and it is a truth that has built our State and has built our country….
"Everything has a cost. Failing to make decisions that are consistent with the interests of the next generation – this too has a cost," he said. "Progress is a choice."

Politicians don’t often say such things. But leaders do.

The Baltimore Sun coverage is at @ http://www.baltimoresun.com/news/maryland/politics/blog/bs-md-state-of-the-state-20120130,0,6645505.story
and the speech itself can be found at @ http://www.governor.maryland.gov/documents/StateOfTheState2012.pdf