Welcome to the Nonprofit Director

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Welcome to the Nonprofit Director. With this first issue of the magazine, we’re launching a unique multi-phased outreach that includes the magazine and a companion website: nd.alliance1.org

Our objective is simple: promoting knowledge development within community of volunteers who serve as directors and trustees of the boards that guide the member agencies, organizations, and centers of the Alliance for Children and Families. (We’re in the process of compiling exact numbers, but we estimate there are close to 10,000 of you.)

As a director or trustee you are at the heart of our members’ efforts to serve and advocate on behalf of underserved and under-represented populations within our communities and neighborhoods.

Accordingly, you have a tremendous responsibility as you guide the development of strategic plans that reflect the needs of those you serve. You also are the evaluator of your organization’s success at achieving mission, and as such must be armed with the information you need to make informed decisions.

With the Nonprofit Director magazine, which will be published quarterly as a magazine within a magazine—the Alliance for Children & Families Magazine—and the companion website, you will have access to a wealth of information about your role, its impact, and its responsibilities.

Within these two vehicles you’ll find interviews, articles, commentaries, reviews, reprints, and links to resources that will help you understand and appreciate the impact that you have on the organizations you serve, and by extension, on their ability to make a difference in the lives of the communities, neighborhoods, and the people within them.

We also hope that you will take advantage of the website to become an active participant in the knowledge development process. Because of its interactive nature, the website can be an exciting forum for the exchange of information with your peers and with the larger community of “friends” who share your commitment and passion for the work of the nonprofit social services sector.

In between issues of the magazine, visit the website (nd.alliance1.org) regularly. Create and participate in the forums; read additional background information on articles that appeared in the magazine; write responses to those articles; submit personal commentaries; review books, videos, and presentations; and link to additional resources and materials.

And, by all means, network with your peers. Through the forums, you can connect with—either on- or offline to your peers—the thousands of men and women who hold similar governance roles and who share similar challenges, frustrations, and opportunities.

Finally, we’d be remiss if we didn’t also acknowledge our emphasis on your role in expanding the civic voice of your organization and its constituents or clients. Meaningful systemic change is necessary if we are to change society—if we are to make the world a better place for all of its citizens.

Through the pages of these two magazines and through the various websites we’ve established for our members and our initiatives, we’ll extol the value of civic engagement as a force for positive change.

So, read on and visit the companion website. Then—and this is critical—become engaged in this effort. Be an active participant in this new community of board directors and trustees. 

Test Your Knowledge of Nonprofit Finances; Be Prepared for Surprises

by Clara Miller

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If business is part mystery and part art, it’s also basic science and arithmetic. Fairly ordinary rules predict financial results. And, they seem to be universal and difficult to ignore.

But the nonprofit sector is a different and irrational world, like stepping through a looking glass. The rules, when they apply at all, are reversed, and the science turns topsy-turvy. Not only are the rules that govern money and business dynamics different from those in the for-profit sector, they’re often unknown, even among nonprofits and their funders.

Nonprofit managers sometimes find it difficult to explain their unique universe to board members and the public, partly because the rules sound so improbable.

This true/false quiz is based on seven core assumptions that are pretty dependable in the for-profit sector, but with nonprofits, a challenging pattern develops.

Rule #1: The consumer buys the product. True or false?

In the nonprofit sector, this is usually “false.” A primary job for many nonprofits is to provide vital services to people who can’t pay for them, or at least can’t pay the full freight. A third party usually pays for the product on behalf of the consumer.

Nonprofit social service, healthcare, job training, housing, and similar businesses provide services to one consumer but often are paid by another—or, frequently, by a dizzying array of others.

Many nonprofits therefore must “sell” their wares both to the users and to the people who pay. The players in these two markets have diverse and sometimes contradictory goals, and nonprofit managers spend time and attention marketing to them all.

This adds complexity and high transaction costs to the business—and a constant tension over mission.

Rule #2: Price covers cost and eventually produces profits, or the business folds. True or false?

This is false, and one of the harshest business realities of the sector. In the nonprofit world, you do lose a buck on virtually every widget, and no, you don’t make it up in volume either. The difference is, you keep doing it!

In the for-profit universe, a manager operating an unprofitable business will eventually fold, but most nonprofits’ missions dictate that they accept a “market defect” of some kind—lack of profit being the most common—as a standard operating condition.

Why don’t they exit an unprofitable business? Because their nonprofit missions dictate that they stay in it, providing shelter, disaster relief, and similar services to people with no means to pay and no other options. Adding to the lack of profitability, most nonprofit work is skilled and labor-intensive (human services, education, surgery).

For some, other fixed costs are also high. But, raising prices is difficult if not impossible for elderly, low-income, or uninsured consumers. This creates a double whammy for management: lack of working capital to fund growth and a continuing need for larger subsidies as growth proceeds.

To handle this, nonprofits usually run two businesses: the core, mission-oriented business and a second “subsidy” business. Subsidy businesses include fund-raising, special events, bingo, capital campaigns, for-profit related and unrelated businesses (bookstores and gift shops), endowment management, and many creative fundraising ideas. The subsidy business needs staffing and investment all its own and is subject to its own laws of growth.

Rule #3: Cash is liquid. True or false?

For most nonprofits’ revenue, the answer is false because it’s restricted cash! Many sources restrict their funds to specific purposes—e.g., teachers’ salaries or books. By nonprofit accounting rules, the restricted cash must then sit in the bank until you use it for this purpose.

Let’s say your donor restricts a cash gift to replacing mattresses for your homeless shelter. If there’s a plumbing crisis, you can’t touch that cash. Even with cash in the bank, you’re going to need another source of payment, fast. This creates the impression that a nonprofit is solvent—even flush—when it’s actually in a cash crisis.

Rule #4: Price is determined by producers’ supply and consumers’ ability and willingness to pay. True or false?

The triangular aspect of the nonprofit customer relationship makes this answer false. Supply and demand are usually plotted on a two-dimensional graph. But the nonprofit relationship is not so simple. It’s more than a battle for market share from consumers making relatively simple buy or no buy decisions about a commodity sold by competing suppliers. It’s a complex market in which the battle is often for both subsidy and fees.

One variation on Rules #3 and #4 is when the payer (government, for example) can’t or won’t cover the entire cost of the services. The nonprofit is left with the difficult task of finding additional subsidy, turning money away, or providing undercapitalized services to clients, with eventual decline in quality.

Rule #5: Any profits will drop to the bottom line and are then available for enlarging or improving the business. True or false?

False. To most business people, this might seem like the last straw. Even if a nonprofit finds a way to become more profitable, save money, or build working capital for the future, it is often restricted and thus not available to use. And to top it off, many in the sector have the attitude that surpluses are bad and signify that you don’t really need more money.

Rule #6: Investment in infrastructure during growth is necessary for efficiency and profitability. True or False?

False. The nonprofit rules of business largely prohibit investment needed to increase efficiency as growth occurs. Third parties paying for a service often prohibit or put limits on spending for anything but “direct programs,” not realizing that there are costs of growth in this highly regulated business. Donors may think that all other costs (which look like wasteful luxuries anyway) will disappear. Thus, funds to defray costs that all of us—nonprofit or for-profit—consider a regular, sensible cost of business and an investment in greater efficiency are frequently unavailable and considered “above and beyond” the real cost of providing services.

Rule #7: Overhead is a regular cost of doing business, and varies with business type and stage of development. True or false?

It’s unanimous! They all are false! For some reason, overhead is seen as proof that a nonprofit is not putting enough of its resources into programs.

Imagine you own a restaurant. A customer says before signing the credit card slip, “I’m going to restrict my payment to the chef’s salary. He’s great, and I just want to make sure I’m paying for the one thing that makes the real difference here. I don’t want any of this to go for light, or heat, or your accounting department, or other overhead. The chef is where you should be spending your money!”

The irony is that a technique meant to control costs actually undermines efficiency and program quality. Nonprofits’ inability to invest in more efficient management systems, training, and program development over time means that as promising programs grow, they will burden the organization financially.

The results are burned-out staff, under-maintained buildings, and other symptoms of inadequately funded “overhead.”

In light of these “facts of nonprofit business life,” it’s fairly easy to see why it’s difficult for the nonprofit sector to find and retain executive leadership, to become self-sufficient or sustainable, and to attain economies of scale while maintaining program quality. All the goodwill, brainpower, capacity-building, finger-wagging, standard-setting evaluation, and impact measures will eventually be undermined by the way we finance these enterprises.

The financial system we have put in place and support is the worst enemy, not only of the improvements everyone is trying to make, but of the socially critical programs and services this system is meant to sustain. More and more diverse scrutiny from government and other funders will create more transaction costs in an industry already carrying an overly high level. This will burden large and small nonprofits alike, giving small, innovative, and efficient organizations an infusion of costs as they grow.

Funders can go a long way toward lowering transaction costs for themselves and their grantees by modifying the way they do business. Funders of all types and at all levels—including individuals and government—need to be aware of the toll the financing system takes on nonprofits’ “human capital.”

For all supporters, unrestricted grants are the most positive financially and should be the rule and not the exception. Anything else generally creates cost for the recipient. Unrestricted funding does not mean that funders cannot or should not be actively involved in communicating with the recipient about plans for the funds, budget, and program strategy. 

He Helped Bring Two Nonprofits to the Table

Hetzler serves on both UNCA and the Alliance boards

For David Hetzler — a member of both the Alliance for Children and Families and United Neighborhood Centers of America (UNCA) boards of directors—service to nonprofits in an advisory capacity is both an opportunity to contribute and an obligation.

Among the more significant contributions was helping forge a partnership between the two national nonprofit groups.

Back in 2005 Hetzler, as an UNCA board member, served on a 5-member UNCA committee that was looking at a possible relationship between UNCA and the Alliance.

When the relationship was affected in 2006, he then became a member of the Alliance board as an UNCA representative. Hetzler is now serving his fourth term with UNCA and second with the Alliance.

Hetzler says that when UNCA decided in 2004 to enter into a growth cycle, it also decided to seek out like-minded organizations for potential relationships. Given his belief that this was a necessary step for UNCA to take, Hetzler says he wanted to become part of the decision-making process, and serving on the UNCA Governance Committee was a logical way for him to do this.

“It made sense to me that I should step forward and help to shape UNCA’s future. I think that’s one of the reasons I have chosen to be a part of nonprofit boards. If you’re not taking some form of leadership and contributing your talents and interests, then why are you there?

“It (the affiliation with the Alliance) was a huge thing for UNCA in its evolution and it was the right thing to do,” says Hetzler.

Hetzler, who has undergraduate and graduate degrees in social work, began his board service as a member of the board of trustees of UNCA member South Side Settlement House, Columbus, Ohio. He also has served on the boards of the Columbus Regional Transit Authority and Columbus-Franklin County Housing Authority.

Hetzler credits his “mentor,” the late Bernie Wohl, former executive director of Goddard Riverside Settlement House in New York City and one-time director of South Side Settlement, for providing the inspiration and impetus for his involvement with nonprofits.

Hetzler first became initiated to the cause as a 19-year-old college student when he took Wohl’s offer to work at South Side Settlement’s summer camp. He subsequently met his wife, Nappy, the first Volunteers in Service to America (VISTA) worker in Ohio, and one of their two adopted children, through his involvement with the settlement house.

“All of us bring something of value to the table,” says Hetzler of his board service. “Because of Bernie Wohl and the South Side Settlement House, the struggle to build ‘community’ in the best sense of the word—rooted in social justice—was something I could get excited about.

“I could see that the settlement was deeply involved with people, their neighborhood, and helping them to have the tools to raise the quality of their own lives.”

Hetzler’s career and life provide evidence of his commitment to community and a just society. Earlier in his career, he attended a speech by John Gardner, founder of Common Cause—the nonpartisan, nonprofit advocacy organization—and then later served as executive director for the Ohio organization.

As executive director he worked in support of political ethics laws, campaign finance reform, and openness-in-government “sunshine” laws. He has been involved in many political campaigns over 30 years for the governor of Ohio, congress, the mayor, and the president of the United States.

“All of us bring something of value to the table … the struggle to build ‘community’ in the best sense of the word—rooted in social justice— was something I could get excited about. I could see that the settlement was deeply involved with people, their neighborhood, and helping them to have the tools to raise the quality of their own lives.”

 

The architectural engineering business from which Hetzler is semi-retired was formed in 1987 with a partner. And while his role in business has lessened, he remains involved in progressive politics and conducts a “secret life” as a writer of short stories, poems, and plays. Recently, Hetzler was selected to read his poetry at a music/literary festival in Charleston, S.C.

Hetzler says one of the greatest rewards gained from his years of board service is the relationship that continues to develop between UNCA and the Alliance.

“Clearly, I think the arrangement between UNCA and the Alliance has a really good feel about it and I had a role to play,” he says.

It was clear in his mind that there was a fundamental need for UNCA to grow, and although he says there were others on the UNCA board who did not share his opinion at the time, “I respected their opinions and we all worked hard to seek consensus,” he says.

A second great reward, according to Hetzler, has been occasions when he has been able to bring together people of different political persuasions, a talent gained through experience working on political campaigns at both the state and national level, to achieve mutual interests and create something new.

“I’ve helped create win-win situations,” he says. “It’s a skill I’ve learned over time, and over time, it’s led to positive outcomes.”

A third reward, he notes, is having met along the way “extraordinary” people: his fellow board members, leaders of the various organizations of which he has been a part—ordinary people who bring extraordinary commitment to their communities.

“It certainly has been satisfying to meet people who bring their own interests with them and different perspectives, yet are able to find common ground and come together,” says Hetzler. “It’s been personally rewarding.”

And while Hetzler has gained from his experiences, the biggest beneficiaries of his commitment to the nonprofit sector are organizations like the Alliance and UNCA and the hundreds of thousands of children, families, neighborhoods, and communities they serve every year.

A Window into the Future

Severson Center helps members keep up with nonprofit trends

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If scenario planning is one of the more valuable tools that organizations can use to prepare for an uncertain future (see article on scenario planning on page 38), the ability to track trends becomes a critical precursor to effective strategic planning.

Alliance for Children and Families members, as a benefit of membership, have an ally in the trend-tracking process: the Alliance’s trends website and the Alliance’s annual trend report.

The website, alliancetrends.org, features information and material compiled by the staff of the Alliance’s Severson National Information Center. In addition, each year Severson Center staff publish the top five trends report.

Severson Center staff track and compile information on trends by subscribing to e-news updates from news sources that track the nonprofit and human service field, such as PNNonline, Chronicle of Philanthropy, Handsnet, and Open Minds; subscribing to alerts from Government sources such as the Census Bureau and the Bureau of Justice Statistics; utilizing Google Alerts that check news stories with the word “nonprofit”; and reviewing major newspapers daily. Trends are identified by staff based on the frequency they occur in these sources.

Elizabeth Caldwell, librarian and information specialist for the Severson Center, then uses the identified trends to develop a list of approximately 100 trends that is sent to the 33-person Alliance National Trend Advisory Committee. This committee of Alliance member staff leaders then identifies the top five trends they see affecting nonprofits.

“Once they (the trends) are identified, I review information I may already have in that subject area,” says Caldwell. “I also go to sources I know cover that subject and search their website or search a few good search engines to find reports and articles.

“We then send the committee the complete trend report that has entries we have been tracking since the last time we published the top five report.

“The committee bases their top five list on the report we give them or they can give us a list based on their own experience of what they are seeing in their agency.”

Because the top trends are based on the opinions of Alliance members in the field, Caldwell says, “I am confident they are a true reflection of what our members and others in the human service field are currently experiencing and will confront in the near future.”

The information Caldwell receives from committee members is used to compile detailed descriptions of current trends affecting nonprofit organizations, including the impact these trends may have. The trend website provides articles, studies, and reports on specific trends affecting nonprofits. And both are available at no cost to all Alliance members.

Susan Hornung, director of the Alliance Severson Center, says, “Our members have a lot of stressors; including not knowing what challenges will be thrown at them unexpectedly, increased competition for often dwindling funding, and figuring how to address evolving social challenges.

“The trend report provides a window into the future. Not only does it let members see new and emerging trends, but it gives the impact trends will have on human service nonprofit agencies from experts in the field. This gives opportunities to members to prepare for the future.”

Family Services of Western Pennsylvania, Pittsburgh, is a great example of an organization that utilizes information in the trend report. “We go through an 18-month strategic planning process,” says Stephen Christian-Michaels, chief operating officer for Family Services. “We’re always thinking about what’s on the horizon. The Alliance provides that perspective better than most organizations we belong to and the trend report is one important way they do it.”

The annual trend report, Scanning the Horizons 2008-2009: Top Five Trends, will be available Oct. 6 online at alliancetrends.org and will be included on a CD in the Alliance National Conference registration packet, distributed at at the conference Oct. 28-30 in Baltimore. It is also available for purchase by UNCA members.

The trends website is updated regularly, says Caldwell; “We monitor information sources on a daily basis. However, sometimes a subject or trend needs to simmer for awhile before we can see where it is going—before we call it a trend. I have an e-mail I send out, the trends announcements list, that lets members know the specific updates that have occurred on the site.”

For more information, including how to obtain your trend website login and password information, contact Elizabeth Caldwell at contact@alliancetrends.org.

Here is a preview of the top five trends and trend subcategories currently identified by the Alliance’s nonprofit leaders:

1. Aging: care giving; early release of aged prison population effect on communities; agencies seeing increased demand from clients for aging services; seniors wanting to live independently; senior suicide and substance abuse; retirement hardships (especially women); poverty in rural older adults; lack of skilled workers to address needs of senior population; and lack of interest in working with seniors

2. Economy: mortgage foreclosure crisis; homelessness; rising cost of living food/gas; agencies experiencing increase in demand for services (financial counseling, food pantries); federal debt; budget cuts at state and federal level; and social security, Medicare, and Medicaid

3. Nonprofits, Philanthropy and Resource Development: narrow perspective of funders; restricted funding; no funding for administrative costs; need for capacity building; impact of Deficit Reduction Act; government funding roadblocks and influence within agencies; economic pressures on funding streams; and Medicaid funding under attack

4. Nonprofits, Workforce: recruitment and retention; aging of the workforce; succession planning/professional development; pay gap; leadership deficit; cost of providing health care benefits; generation Y; and competition for professional positions 

5. Poverty: poverty gap; shrinking middle class; haves and have nots; poorer poor; hunger; and
working poor

National Trend Advisory Committee Members 2008-2009 Normer Adams Executive Director Georgia Association of Homes and Services for Children Atlanta, GA Melanie Balakirsky Director of Training Recruitment and Retention Board of Child Care Baltimore, MD Judy Bell President and CEO The Wellspring Alliance for Families Monroe, LA John Burns Executive Vice President & Chief Operating Officer Lutheran Family Services in the Carolinas Raleigh, NC Melissa Curtis Director of Quality Improvement Lawrence Hall Youth Services Chicago, IL Leslie Daniels Grants Coordinator Daniel Memorial Institute Jacksonville, FL Larry Fiebert Associate Executive Director Family Services of Montgomery County Eagleville, PA Mitzi Fletcher Vice President Youth Services Family Lifeline Richmond, VA Philip Gorelick Vice President of Programs Jewish Family & Children’s Service of Sarasota-Manatee Sarasota, FL Brigitte Grant Vice President Development Children’s Home Association of Illinois Peoria, IL Nancy Hard President and CEO Family Service Association of San Antonio San Antonio, TX Mary Hargrave Chief Executive Officer River Oak Center for Children Carmichael, CA Christy Hays Human Resource Director Family & Children’s Services Tulsa, OK Christina Hemmer Employee Learning and Development Coordinator Dakota Boys and Girls Ranch-Fargo Residential Center Fargo, ND Peppy Howard-Willms Director of Special Education Edgewood Children’s Center St. Louis, MO Nancy Jenuwine Director of Marketing and Development Macomb Family Services Clinton Township, MI Amy Juhnke Director Marketing Communications Lutheran Services in Iowa Des Moines, IA   Frank Kaiser Chief Human Resource Officer Hillside Family of Agencies Rochester, NY Donetta Kowalski Controller Evangelical Children’s Home St. Louis, MO Sheila McGuinness Director Performance Improvement Green Chimneys Children’s Services Brewster, NY Diane McMahon Development Director Community Human Services Corp. Pittsburgh, PA Marc Melton Director of Development Lutheran Child & Family Service of Michigan Bay City, MI Robert Miles President and CEO Lutheran Child & Family Service of Michigan Bay City, MI Bruce Nisbet Executive Director Spectrum Human Services Orchard Park, NY Thomas Prest Chief Executive Officer Alliance for Families and Children of Central Virginia Lynchburg, VA William Puotinen Vice President of Administration Northeast Parent & Child Society Schenectady, NY Michele Puzzanchera Market Analyst Pressley Ridge Pittsburgh, PA Colette Romano Director of Human Resources Child & Family Services Buffalo, NY Julie Russell Director of Continuous Quality Improvement Catholic Family Services Manchester, MO Elizabeth Shaver Coordinator of Grants Development Family Services of Greater Houston Houston, TX Chris Valley Chief Administrative Officer Families First Atlanta, GA Lorelei Vargas Director Policy Planning and Research The Julia Dyckman Andrus Memorial Yonkers, NY Laurie Wishard President and CEO Family Service Agency of San Mateo County San Mateo, CA

 

Solution to Democracy Crisis: Try Civic Engagement, Says Heintz

Rockefeller Brothers Fund Leader Encourages Greater Involvement of Nonprofits

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“We are facing a crisis that threatens the very fabric of our society and our ability for leadership in a troubled world,” Rockefeller Brothers Fund (RBF) President Stephen B. Heintz told those attending the 2006 Alliance National Conference in St. Louis.

The “democracy crisis,” Heintz added, is the result of a confluence of factors which he then defined for his audience. Before doing so, however, he cautioned that all is not gloom and doom. And one of the tools he champions for resolving the crisis is a deeper commitment to civic engagement (see sidebar below).

“I remain convinced that we can regain our balance. We can reinvigorate our democracy, and revive the American dream.” But, he added, there is a lot of work that needs to be done.

“If barriers to voting discourage civic participation, the insidious and growing influence of money in politics devalues participation as it shifts political power from the many to the few.

“The pernicious power of money in politics undermines the standing of the citizen as it enhances the power of the donor. It creates space for undue influence over policy and, of course, for impropriety, scandal, and corruption.

“American democracy is also threatened by the politics of division. Campaigns today seem increasingly to focus on what divides us, rather than on what unites us.”

The Culture of Democracy

Heintz then suggested, “When the culture of democracy is nurtured, it equips and empowers citizens to participate effectively in civic life. When it is undermined—when the bonds of community weaken—democracy withers, and power accrues to the few.

“Barriers to participation, the pernicious influence of money in politics, the noncompetitiveness of elections, and the politics of division and falsehood have all contributed to a government that is unrepresentative of the people it is tasked to serve.

“Everyone in this room knows there is a longing in communities all across the country for greater common ground and a core belief that at some deeper level there is more that unites us as Americans than divides us.”

What Can and Should Be Done?

Heintz said, “I have no doubt that we can reinvigorate civic participation, reignite the American Dream, and nurture our sense of community if we work energetically together to clear and plow common ground.

“We need to restore a sense of shared national purpose in our democratic culture so that we are better able to meet the challenges we face: poverty, inequity, unequal access to health care, inadequate education, terrorism, and so on.

“Our work is not about a tactical effort to influence one election. It is the strategic work of mobilizing for deep and durable social change—of shaping a long-term vision for our society that inspires and unites our people.

“Our history reveals that electoral campaigns rarely advance the process of deep social change. More often than not, politicians follow social movements—they don’t lead them. Mobilizing social movements is the job of citizens and leaders and organizations of the nonprofit sector. It is the job of all of us in this room.

“I believe,” he continued, “there is much work to be done in four principle areas: fixing the basic flaws in our political system; re-energizing civic engagement; promoting policy reforms to strengthen the middle class; and nurturing the culture of our democracy from our communities up. Progress in any one of these areas will not be sufficient to overcome the democracy crisis I have described. We must make strides in all of them simultaneously.”

Re-energizing Civic Engagement

“As we work to remove barriers to participation we must also be open to new ways to invite meaningful civic engagement. I have been impressed by several new models of civic engagement that promote participatory democratic problem solving such as ‘deliberative polling’ and town hall meetings of the 21st century. In both of these experiments, representative groups of citizens are brought together for facilitated discussions of specific issues in their communities.

“We also need to pay particular attention to young people for they are truly the future of our democracy. Along with several other foundations, the Rockefeller Brothers Fund is supporting a new approach to encourage civic engagement among young people, particularly youth of color living in low-income communities. What has become known as ‘youth organizing’ combines youth development activities with community organizing techniques.

“In these projects, youth-led organizations work to engage people in their neighborhoods around priority concerns—like safety in the schools. Youth organizing helps young people develop and advance their own approaches to achieving policy changes while forming a sophisticated and durable constituency for community action and social change. Working with young people can encourage life-long civic habits—my own interest in politics was inspired by a creative third grade teacher in Glendale, Mo., just a few miles from here.”

Policy Reforms

Heintz also said that we need to revitalize our electoral process: “Repairing our worn-out electoral systems and supporting experiments in new forms of civic engagement can help boost participation in our political process. But perhaps even more importantly, we need to advance a set of fundamental policy reforms to strengthen the middle class and stimulate renewed social mobility. By doing so, we can help millions of American families who are now struggling to make ends meet. We can restore the American Dream, and we will reinforce ‘democracy’s center of gravity’ as author Norton Garfinkle puts it.”

The RBF leader then called attention to Garfinkle’s book, The American Dream vs. the Gospel of Wealth, where Garfinkle describes how, from the 1930s to the 1960s, political leaders of both parties “shaped policies to extend economic opportunity, protect against economic insecurity, and above all to make a middle-class standard of living accessible to most Americans.”

According to Heintz, these policies included a progressive income tax, Social Security, Medicare, tax deductions for home ownership, student loans for college education, Food Stamps, and public assistance. Together they formed the core of a social compact that served us well for most of the post-WWII era. Well, it’s clearly time we devised a new social compact for the conditions of the 21st century.

What are the necessary reforms? Heintz said, “The first and most critically important policy reform is to return fairness to our tax system. In recent decades, taxes on the incomes of the wealthiest Americans have been dramatically reduced based on a supply-side economic theory that holds that reducing taxes on people with very high incomes stimulates additional investment which in turn produces economic growth and job creation.

“Numerous economic studies have now shown that the reality is far different than the theory. Tax fairness, on the other hand, can generate additional revenues that can be put to work to reduce the deficit and invest in programs that serve families, promote economic opportunity, and strengthen the middle class.”

A second “critically important policy reform,” added Heintz, is to reinvest in education. He cited a Demos proposal for a “Contract for College” which he said would “unify all of the existing federal student financial aid programs into one guaranteed financial aid package for college students.”

Other policy reforms cited by Heintz include “merit” consideration as part of a new social compact that would include “raising the minimum wage, expanding the earned-income tax credit for the working poor, and making a concerted effort to devise a public-private partnership for universal health insurance.”

Nurturing the Culture of Democracy from our Communities Up

As he stated in his initial remarks, Heintz said again, “It is vitally important that we rekindle the culture of democracy in our communities.”

He then asked, “How can we empower individual citizens and collective action?

“In fact,” he continued, “I believe that without greater engagement by nonprofit agencies and the clients they serve, civic participation will continue to decline, our shared experience of community will continue to diminish, public policy will be inadequate to the needs of families, and the culture of our democracy will wither.”

“How can we build community voices—as expressed in the title of this conference?”

In response, he said, “I look to the nonprofit sector, to the Alliance for Children and Families, and the kinds of organizations represented in this hall. At root, by providing essential services to our families, you are also building community.”

Next, he told the gathering of Alliance member senior staff and executives, “At the RBF we are keenly interested in what we call the ‘civic engagement of nonprofit organizations.’ One of our core strategies is strengthening the capacity of the nonprofit sector to foster civic engagement and democratic practice, with an emphasis on encouraging and assisting a broad range of civil society organizations to move toward a more explicit engagement with public policy related to constructive social change.

“I know from my own experience serving for six years as commissioner of public welfare in Connecticut that human services providers like all of you are truly on the frontlines of the struggle to maintain the social compact.

“You are serving the extraordinary diversity of American families and you know better than anyone the challenges our families face. You respond to a wide array of needs. You know the effects of reduced government funding coupled with increasing demands for services. You are working against the odds at community building.”

A Powerful Voice for Change

“As a direct result of the work you do, you have amassed a vast wealth of knowledge. And we are convinced that your knowledge can be a powerful force for change in our society—that you can amplify community voices and help to shape a new social compact for the 21st century.”

Heintz acknowledged that there were perceived barriers to civc engagement. “Adding a civic engagement dimension can seem like a distraction from your core mission. Advocacy is time consuming and may seem risky if the positions being advocated contradict government policies or challenge political orthodoxy.

“Boards often have little enthusiasm for policy work or advocacy and volunteers and staff have little time and perhaps not the right mix of skills for effective engagement in the policy arena. In a time when everyone from funders to boards of directors is looking for measurable impact, it is also hard to assess the results of policy work and advocacy, especially in the short term.

“All of these factors make this effort terribly difficult—but they don’t make it any less necessary.

“In fact,” he continued, “I believe that without greater engagement by nonprofit agencies and the clients they serve, civic participation will continue to decline, our shared experience of community will continue to diminish, public policy will be inadequate to the needs of families, and the culture of our democracy will wither.

“This must seem like a huge additional burden for all of you who work so hard under very challenging circumstances to meet very real needs of families every day. But this is a time when all of us must summon the strength to promote new thinking about and a new commitment to America’s families. It is essential for our families and their children, and it is critical to the vitality of our democracy.

“If we are to surmount the democracy crisis, we will need a new social compact. And all of you have much to contribute to this effort.

“We are now in a time when we need strong communities more than ever. We need them not only for their own sake, but also because it is the experience of community that sustains democracy. And we will surely need robust democracy to face the myriad domestic and global challenges that await us in this century.”