Metro Milwaukee nonprofit organizations rate the region's philanthropic efforts

In each of the past 15 years, the Public Policy Forum has surveyed nonprofit leaders in southeast Wisconsin to gain insight into the financial health of their organizations and their success in generating support from philanthropic and government entities in Greater Milwaukee. This year’s 15th annual Report Card on Charitable Giving is based on the November 2011 survey responses of 95 nonprofit leaders and finds the responding organizations report greater fiscal stability and more optimism about the future than in the previous two years.

In fact, it appears the nonprofit sector may have seen the bottom of the recession’s impacts, with a greater number of nonprofit leaders reporting they are financially healthy – and fewer reporting chronic financial problems – than in 2009 or 2010. It is also clear, however, that nonprofit organizations have yet to bounce back to their pre-recession status, and that most continue to be challenged to meet increasing demands for their services within the context of their budget constraints.

Major Findings
• While about half of respondents feel the state of philanthropy in the metro Milwaukee area in 2011 did not change from the previous year, the percentage of those feeling it is getting worse decreased sharply from two years ago.

• The majority of respondents continue to feel the U.S. economic downturn has caused giving to be less generous than usual, yet the proportion of respondents feeling that way has declined in each of the past two years.

• A majority of respondents say the outlook for the long-term sustainability of their organization is high or very high. Very few have low expectations for long-term sustainability.

• Recession-driven demand for direct services continues to grow, but most respondents this year say they are at least somewhat confident they will be able to meet the demand. More respondents this year say they have been able to increase their staffing levels in response to increased demand and more say they feel donations are increasing relative to the increased demand for services than in the previous two years.

• Budget constraints continue to challenge nonprofit organizations, with many continuing to freeze salaries or take other steps to reduce expenses.

• More respondents in 2011 report overall revenue growth and growth in donations as compared to 2010.

Local nonprofits still feeling impacts of recession

The 14th annual "Report Card on Charitable Giving" - released by the Forum today in partnership with the Greater Milwaukee Foundation - shows moderate improvement over last year in the fiscal health and general outlook of Metro Milwaukee nonprofit organizations. Nonetheless, nonprofit leaders continue to express a healthy dose of pessimism toward the state of philanthropy and continue to feel the impacts of the economic downturn in varied ways.

The report card is based on a comprehensive survey of nonprofit organizations in southeast Wisconsin. More than 150 nonprofits responded to this year's survey, with a little more than half (52%) from the human services sector, 17% from arts and culture, 16% from education, 10% from health organizations, and 3% from the environmental sector.

Among the key findings that emerged:

• For the second year in a row, nearly two-thirds of respondents feel that economic conditions are causing local giving to be less generous than usual. The 2010 result of 66% is slightly improved, however, from the 68% who felt that way in 2009.


• More than a third (38%) of this year's respondents report decreased total revenue, while half report increased total expenses.


• Half of the respondents feel they are financially healthy but vulnerable in the future, an improvement over the 57% who felt this way in 2009. Meanwhile, 30% feel they are financially healthy with no foreseeable problems in the near future, also improved from the 24% who responded that way in 2009.


• Arts and culture organizations expressed the greatest concern about their financial health among the various nonprofit sectors, with 35% reporting chronic financial problems, and another 50% reporting they are financially healthy but vulnerable in the future.


• Survey respondents cited the need for several personnel-related actions to address budget constraints, including salary freezes (40%), reductions in benefits (20%) and lay-offs (18%). Nearly half (48%) say they have considered collaborating with other organizations and 22% say they have considered merging with other organizations.


• A quarter of the respondents say their expectation of long-term sustainability is very high, while another 41% report it is high. Only 3% have low expectations for long-term sustainability.


• Nearly half (46%) of the respondents say they expect gifts from corporations to decline, while 43% expect gifts from individual donors to decline and 41% expect foundation grants to decline.

An executive summary of this year's report card and a copy of the full report can be accessed here. The report card is published and sponsored by the Greater Milwaukee Foundation, and co-sponsored by the Donors Forum of Wisconsin, Faye McBeath Foundation and United Way of Greater Milwaukee.

Perfect storm of increased need and decreased giving hits area nonprofits

This year’s Report Card on Charitable Giving is different than in past years. In every report prior to this one, we surveyed the same small bellwether group of organizations. For this year’s report, we surveyed a larger number of nonprofits in the region to get a broader picture of what local nonprofits are experiencing. We e-mailed surveys to 391 local nonprofits and received completed responses from 188 organizations for a response rate of 48 percent. Over half (51 percent) of the organizations surveyed were from the human services sector, while 18 percent were arts and culture organizations, 17 percent were education organizations, 10 percent were health organizations, and three percent were in the environment sector. Three respondents were funding organizations. Eighty percent of the 188 responding organizations service Milwaukee County.

Major findings:

• Sixty-eight percent of organizations report that the U.S. economic downturn has caused giving to their organizations to be less generous than usual. Only seven percent feel that the downturn has caused giving to be more generous.


• Compared to the first half of 2008, organizations report decreases in total revenue, revenue from donations, and overall staffing. However, they also report increases in actual fundraising efforts.


• Most organizations say they have had to cut costs due to budget constraints (83 percent). Forty-three percent have frozen salaries, 29 percent have frozen new hires, 24 percent have laid off staff and reduced benefits, 13 percent have reduced salaries, and nine percent have eliminated benefits.


• Of the organizations that offer direct services to clients, 62 percent report the demand for their services is increasing, while seven percent report the demand is decreasing. Furthermore, 43 percent of these organizations say that the charitable donations designated to meet the demand for these services are decreasing, while 14 percent say they are increasing.


• Even in these hard times, 44 percent of organizations feel very confident that they can meet the demand for services in 2009 and 45 percent feel somewhat confident. Furthermore, 26 percent of organizations anticipate that the likelihood of their organization’s long-term sustainability is very high, 33 percent report a high likelihood of sustainability, and 34 percent a moderate likelihood.

The report was commissioned by the Greater Milwaukee Foundation with sponsorships from Donors Forum of Wisconsin, The Faye McBeath Foundation and United Way of Greater Milwaukee.

Clarke Street School program targets achievement gap

A new program at Milwaukee’s Clarke Street School, announced last week, will provide 80 first- and second-graders with extra help through elementary, middle and high school and a guarantee that they will be able to afford college. The I Have a Dream Foundation effort builds on a quarter-century of the foundation’s experience in similar programming in 29 cities. Early intervention tuition assistance programs are unique among education interventions for their combination of early, long-term support and the promise of eventual tuition funding. In some cases, programs similar to the I Have a Dream model have not been successful, revealing some lessons learned along the way. For example:

1. Start early, stay invested

After Minneapolis/St. Paul's Destination 2010 program's disappointing evaluation results, St. Paul’s then-superintendant commented, “You can’t ever start too early. Third grade – what if we had started even earlier?” (2/19/07 Pioneer Press article via LexisNexis).

Starting interventions early makes sense if the goal is to close or prevent the achievement gap; however, maintaining such an investment over the long-term is costly and can be difficult given changing politics and funding. For instance, in 1988 the New York Scholarship and Partnership Program experienced severe cuts and the program's students who had enrolled with promises of tuition help were suddenly out of luck (Coons and Petrick, 1992).

2. Emphasize the right incentive for success

The Twin Cities’ Destination 2010 program shows that it takes much more than some afterschool tutoring and a promise of tuition assistance to bolster struggling students. Five years into the program, tests scores showed that long-term monetary incentives were doing little to change students’ lives in the short-term, with program students performing worse in some testing areas than the comparison group.

The I Have a Dream model to be used by Milwaukee’s Clarke Street School program emphasizes relationships over tuition funding. The program will place a family outreach coordinator in the school to address poverty-related problems and family stability issues, ensuring that students and families receive extensive support. The intent is to make the program more than just a promise of eventual funding at the finish line.

3. Understand student barriers to success

The Twin Cities’ Destination 2010 program’s administrators thought they had a handle on the roots of the achievement gap, until their program enrollment was decimated by high student mobility.

Of the original 450 students who could have joined Destination 2010, 368 signed up. Five years later, only 215 students remained – fewer than half of the initial group. According to the program manager, 80% of those who left the program went "off the radar" (6/3/06 Pioneer Press article via LexisNexis). In addition, students who were initially from seven schools in 2000-01 had fanned out to 71 schools by 2002-03. It was common for many students to attend up to three schools in a single year, an obvious problem when trying to keep up with homework and learning. The program concluded, “We believe that lack of safe and affordable housing is at the heart of the mobility issue.”

The I Have a Dream Foundation model considers the impacts of mobility. The foundation’s website explains that often, students who are sponsored together at the same elementary school will attend different middle and high schools but will gather together for I Have a Dream programming at a local organization. This is important, as Milwaukee is no different from any other low-income, urban district with regard to mobility.

In 2006-07, Clarke Street School had a 13% mobility rate within the school year, with a 61% stability rate. This predicts that, of the 80 first- and second-graders in the new I Have a Dream program, 13% will be at a different school before the year’s end, and 39% will switch schools at the year’s end.

4. Protect program sustainability

As much as possible, it is important to insulate early intervention tuition assistance programs from the ebb and flow of budget politics. The worst case scenario would be to promise tuition to young students who later find no money available. A more common danger is that tight budgets serve to undercut program effectiveness. For instance, in the Twin Cities, school budget cuts resulted in higher teacher turnover, effecting continuity of teachers fluent in the program philosophy. State budgets cuts then reduced the availability of area after-school and tutoring programs – programs that were a key Destination 2010 intervention element to help kids stay on track (9/27/04 Pioneer Press article via LexisNexis). For long-term intervention programs, it is especially important to design a program that can make accomodations when faced with inevitable cuts in other areas.

Conclusion

Among early intervention tuition assistance programs, the I Had a Dream Foundation model has significant merit. However, when examining all types of interventions that target the achievement gap, many studies have suggested that investments in high-quality early childhood education interventions for children under age 5 have the highest long-term payoffs.

For the 80 first and second-grade children at Clarke Street School, this privately-funded program may have a huge impact if the lessons above are heeded. For the rest of the children in the district, and the infants and toddlers who will eventually be MPS students, large scale early intervention will need to take other forms.

Zilber effort shows signs of avoiding philanthropic pitfalls

Judging from a recent newspaper column, I am not the only one with a wish-list of things I would love to do with Joseph Zilber’s money to help Milwaukee. The philanthropist plans to invest $50 million of his own funds (in addition to $50 million in other gifts that he announced in 2007), matched by at least $150 million from the community. While it is nice that Zilber is actively welcoming new ideas about how to spend millions of dollars in our city, what is most critical is that his initiative avoid common pitfalls of philanthropy. Some elements to watch for as this effort progresses:

Replicating a successful model

Funders who only support flashy, innovative strategies (some of which are sure to be on the wish-lists written in response to Eugene Kane's most recent column) end up throwing short-term money at long-term problems, never supporting proven strategies. Zilber seems interested in replicating the New Communities Program, a community development strategy shown to be effective in 16 Chicago neighborhoods. This could allow Milwaukee to learn from Chicago’s experience and hit the ground running.

Building local support and rejecting one-size-fits-all solutions

The Zilber Neighborhood Initiative presumes that different neighborhoods have different needs. The initiative’s consultant, Susan Lloyd, explains that the aim is “providing long-term support in a flexible way so that efforts can be fashioned to what individual areas need and can do.” Though time will tell how closely Zilber follows Chicago's New Communities Program, that model emphasizes involving neighbors in planning, coordination by neighborhood-based lead agencies, and tailoring solutions to unique characteristics of each area. The Chicago program used 14 neighborhood-based agencies to lead locals in structured community planning processes. Three thousand people across Chicago participated in creating quality-of-life plans for specific neighborhoods. As the program website explains, it was designed to “strengthen communities from within.”

Meeting strategic objectives

If the Zilber Neighborhood Initiative follows the New Communities method, it will likely generate a roadmap of clear implementation objectives. Community visioning processes in Chicago addressed issues in the following categories: physical, family, economic, social, and government.

Collaborating and leveraging funds

Philanthropy works best when not in isolation. The Zilber Neighborhood Initiative so far has preached collaboration as an element in both the programming – with multiple nonprofits expected to work together – and the funding. A true measure of success will be whether the initiative successfully meets its goal of using the initial $50 million investment to catalyze corporations, foundations and philanthropists to give at least $150 million in additional gifts.

A long-term commitment

Long-term timelines prevent a negative scenario in which programming is expected to be successful immediately, with no plan to sustain the efforts. Zilber envisions a ten-year effort -- a lifetime in the philanthropic world -- allowing for the planning efforts that are often necessary for long-term success and sustainability.

Managing for results

At this early point, little information is available about the initiative's plans for financial management, program evaluation, organizational capacity-building, and cultural competency, elements that will be key to successful implementations. Zilber's openness in welcoming the community's ideas for how to spend his own money has the ring of good P.R., while also having the potential to help Milwaukeeans to feel engaged in and invested in the project's success. It would be a good sign if research-proven methods (best practices) carry weight along with the wisdom of local residents, to avoid the danger of funding well-intentioned intervention methods that studies show are ineffective.

Joseph Zilber’s willingness to invest $50 million in Milwaukee neighborhoods is impressive in and of itself. It will be equally praiseworthy if his bottom-up, replicated strategy continues on a path of smart philanthropy and resident engagement.

Community giving's great impact

One of the great assets of Milwaukee is our community foundation, the Greater Milwaukee Foundation, which supports many non-profit organizations, large and small, in the metro area. A recent report by the Foundation Center, a national organization that serves as a kind of clearinghouse for information on grantmaking, allows us to put our local community foundation in a national context.


The report looks at grantmaking by all 717 community foundations in the country and finds that as a whole, they had over $49.9 billion in assets and gave nearly $3.6 billion in grants in 2006. The community foundation which gave the most that year was the Greater Kansas City Community Foundation, which gave over $172 million and had assets of over $1 billion. When ranked by giving, the Greater Milwaukee Foundation (GMF) does not crack the top 25, but its total assets place it on par with many in that group. According to the Foundation Center, the 25th largest community foundation with regard to total giving is the Denver Foundation, which gave over $37 million in 2006 and had assets of nearly $492 million. In comparison, the Greater Milwaukee Foundation's 2006 audit indicates total grantmaking of $26.9 million and assets of $528.4 million. (There are only four foundations in the top 25 of giving that have fewer total assets than the GMF.)


The impact of community foundations is dramatic in many areas. For example, nearly a third of all community foundation giving goes to general operating grants, which represent only a fifth of foundation giving overall. This is a lifeline for non-profits to achieve sustainability. In addition, many of the organizations funded by community foundations are atypical recipients of foundation giving: The largest share of giving from independent foundations goes to health-related causes, while the largest share of community foundation giving goes to education-related organizations. Human services also capture a larger share of community foundation giving than that of independent foundations. Here in Milwaukee the pattern is similar; in 2007 the largest share of the Greater Milwaukee Foundation's giving was to health and human services organizations.


As giving from community foundations has grown faster than all other foundation giving since 1990, now making up 9% of total foundation giving nationally, it is important to recognize the role community foundations play in the life of local organizations. Especially in times of strained local government budgets, a healthy and generous community foundation can help ensure the survival of organizations dedicated to improving quality of life for our region.

Put your money where your agenda is

Among Milwaukee's claims to fame is our status as "ground zero" for the school choice movement. No other city has as large or as long-standing a school choice program as Milwaukee's, which enables over 20,000 low-income students to attend private school using taxpayer-funded vouchers.

The Forum has had much to say over the years with regards to the intent, design, and function of the voucher program, but we have not weighed in as either pro- or anti-school choice. (Our survey work has shown that it is generally supported by a majority of the public and that parents are satisfied with the program.)

We are just about the only policy organization in our state that can say we have not taken a position on this issue.

A new study by the National Committee for Responsive Philanthropy reveals why the Forum is unique in this respect...advocacy on behalf of school choice is big business. In one year (2005), over $65.5 million in grants to pro-choice groups were made.

While those of us paying attention to education reform have known for a long time that certain foundations are playing an extremely important role in policymaking, this report is the first to delineate and enumerate the power of the foundations and the advocacy groups they support. You shouldn't be surprised to learn Milwaukee's own Bradley Foundation is the second-most generous supporter of pro-choice advocates and researchers, giving 37 grants totaling over $6.3 million in 2005 alone.

The unique coordination and collaboration among the various foundations and the groups they support is the focus of the study. As the author states,

"This report shows how philanthropic capital from small and large foundations
has helped build political support for the school privatization agenda. It can
serve as a case study for other foundation and nonprofit leaders who are
interested in effective, strategic movementbuilding grantmaking."

The children receiving vouchers in Milwaukee do so because a school choice movement was built and strengthened in a strategic and systematic way, with supporters putting their money behind their ideas and ideology. The National Committee for Responsive Philanthropy considers this history a blueprint for future social movements. I expect this model will be tried, with varying degrees of success, across many policy issues. Where does this trend leave an independent, non-advocacy research organization like the Forum? I guess we'll be the ones, ten years down the road, telling those foundations whether they've spent their money wisely.

Charitable Giving Increases in Milwaukee

For the 11th annual Report Card on Charitable Giving, the Forum provides greater detail on contributions to Greater Milwaukee bellwether nonprofits over a longer period than in the past. Instead of looking at changes in six sectors from year to year, the printed report focuses on three sectors - education, health, and arts & culture - since 2001. We believe this comprehensive look offers donors and organizations more helpful information.

(The other three sectors - environment, funding organizations, and human services - still are covered, but in the Web version only, which can be accessed through the link above.)

Contributions to the 59 bellwethers in 2006 totaled $284.9 million, an increase of 8% over 2005. Since 1992, the first year of Forum data, total contributions increased 143%. Contributions grew by about $65 million since 2001.

Other key findings:

• Corporate giving has been a major factor in the growth, increasing over 68% since 2001.


• Individual giving has increased more than 27% since 2001.


• Foundation contributions totaled $41.6 million in 2006, a slight decrease from 2005. Since 2001, foundation giving has decreased 18.7%.


• The education sector had the largest one-year increase in total giving among all sectors,
  increasing $15.5 million, or 42.3%, to $52.1 million in 2006.


• Contributions to bellwether organizations in the environment sector continue to decline. From 2005 to 2006, gifts were down almost 11%, to $1.4 million. Since 2001, contributions have fallen 65.5%.


• Thirty-five of the 59 bellwether organizations saw an increase in contributions from 2005 to 2006. Since 2001, 37 organizations saw increases.

The 11th Annual Report Card on Charitable Giving is published by the Greater Milwaukee Foundation, with sponsorships by Donors Forum of Wisconsin, The Faye McBeath Foundation, and United Way of Greater Milwaukee. Research for the report is completed by the Public Policy Forum.