Strategic Philanthropy in the New Normal

Transcription

1 Strategic Philanthropy in the New Normal January 25, 2012 John Wm. Thomas, Managing Director, OAI Edwin (Ned) K. Zechman Jr., Senior Consultant, OAI

2 Introductions John Wm. Thomas, Managing Director 33 year career in development COO of CHF Completed campaigns for $40 million, $301.5 million and began $500 million Transforming Children s Health Campaign OAI Consultant since 2009, Managing Director since 2011 Edwin K. (Ned) Zechman, Senior Consultant 30 years as CEO of pediatric medical centers CEO of Children s National since 1994 Tripled budget and plant; international reputation secured CEO during 3 comprehensive campaigns. Total Value: $1 billion over 17 years at CNMC 2

3 Agenda The New Normal : What is different and why What it means for fundraising Overview of the new strategic philanthropy New Era Strategic Philanthropy: How it works and why Fundraising impact What s a leader to do? Wrap up/questions 3

4 About You 3% 6% Size of Organization 12% Organizations under $1 million 45% Organizations between $1-10 million Organizations between $11-50 million Organizations between $ million Organizations over $100 million 34% 4

5 About You (cont d) In general, revenue from philanthropy since 2008 is: 30% 30% Trending Down Trending Up Unchanged 40% 5

6 About You (cont d) Methods (corporation foundations, government and grantwriting organizations) Trending Down Trending Up Unchanged Recipients (academic, community foundations, education, faith based, healthcare, membership and public chairity organizations) Trending Down Trending Up Unchanged 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 6

7 Our proposal: 1. The recession s impact is far reaching It s Time for an Alternative Model for Strategic Philanthropy: Why? 2. National and global economies have been changed permanently 3. Institutions will be more dependent than ever on philanthropy 4. The pressure on philanthropy will increase 5. Strategic philanthropy is reinventing itself Necessity is the mother Campaigns will continue to be relevant Campaigns will be different 6. Imaginative, bold leaders will grasp the new realities and forge ahead 7

8 First Campaign: Traditional Cookie cutter Fatiguing Our Thinking Based on Experience ( ) Next Two campaigns: Massive Untraditional Successful over goal Maybe this is telling us something! 8

9 Global Recession History During our Children s National Years V shaped Bush I administration Clinton years begin U shaped Response to 9/11 Stock markets drop Tech bubble pops W shaped Housing, mortgage debacle and high unemployment 5-7 year recovery 9

10 The Traditional Campaign Model Key Elements: Driven by organization s strategic plan Feasibility Study High-level Campaign Committee Serves for life of campaign Sequential giving/top-down asks Gift table and donor pyramid Limited gift acceptance policy Volunteer driven, staff supported 5-year horizon 10

11 This Model Worked Until 2008 What Happened Next? Actions that rocked philanthropy: 1. The global economy goes south 2. Traditional funding sources shrink 3. Regional economies are volatile 4. Government support is retracting 5. Reliance on philanthropy increases 6. Business methods applied to giving 7. Social media fundraising grows 11

12 The New Era for Philanthropy A new normal economy: Countries in default Biggest states in the U.S. nearing or in bankruptcy Long term debt soaring. Unemployment at 9% War as a certain uncertainty Fears keep gold high BUT stock markets surging Governments trimming social programs Governments dependent on NPO sector Health reform as an uncertain certainty 12

13 What This Means for Campaigns 1. Recession recovery endures 3-5 more years 2. Campaigns will end, begin and continue during that period 3. Strategic planning horizons shorten 4. Private funds needed more than ever 5. Pressure on philanthropy is acute But will our willingness to give keep pace with need? 13

14 New Era: New Model Characteristics: Strategic: mindful of the new world Strategic and philanthropic plans intertwine Aimed at a new type of donor Unannounced No campaign chair(s) No steering committee Donors become leaders. Leaders become ambassadors Staff driven cultivation and asks Decentralized volunteer structure Continual 14

15 New Era Strategic Philanthropy 1. NPO leaders integrate plans: NPO leaders get the interactivity of strategic and philanthropic plans Strategic and philanthropic plans develop in parallel The two plans are in constant dialogue -- this begins at the top Strategic and philanthropic planning and evaluating never stops 15

16 New Era Strategic Philanthropy (cont d) 2. Cases and case statements respond to the times It s about the parts, not the whole Business plans supersede large case statements People/corporations connect to the program NOT the institution It is less about bold and more about achievable Sustainability a constant issue 16

17 3. Campaigning never ends New Era Strategic Philanthropy (cont d) Margins for philanthropy are better than any other revenue source NPO s weave together strategic and operational funding into comprehensive campaigns Strategic plans require strategic philanthropy Gift structuring changes donor relationships and stewardship Consequence: As one campaign ends another begins 17

18 New Era Strategic Philanthropy (cont d) 4. Cultivation strategies take new era into account Fear and uncertainty drive donor caution Donors less willing to part with their capital Large gifts take longer to consummate Gift structuring reduces near term cash outlays Gift tables bulge at the lower middle Largest gifts come from unusual sources 18

19 5. Givers become Leaders New Era Strategic Philanthropy (cont d) Old fashioned campaign committees out Campaign connects donors to parts about which they care most Givers become philanthropic leaders for critical organizational subsets Organizational subsets have mini-boards or councils to capture and motivate donor enthusiasm But boards don t always turn to philanthropic leaders for membership! 19

20 CEO/CDO Alignment Will CEO s agree? Support this approach? If not, how does the CDO persuade? Others ways for black and white CEO s to embrace gray? 20

21 Three Elements of Leadership Strategic Leadership Vision Purpose Communication Values Operational Leadership Energy Behavior Manager as Coach Creating the Work Climate Team Leadership Task Individuals Team 21

22 What is a Leader to Do? Strategically: Look two hills ahead Have clear hypotheses about the future Communicate them clearly Operationally: Translate hypotheses into plans Translate plans into actions Communicate these at every opportunity Team work: Get widespread ownership of strategies and tactics Assemble teams to execute tactics Expect that all will go forward together 22

23 Managers solve problems Leaders anticipate them. 23

24 Operating with the mindset of an entrepreneur is the only fruitful way to proceed. Successful entrepreneurs take calculated risks, quickly. -- Rebecca Sive (on surviving the new normal ), The Chronicle of Philanthropy, February 10,

25 The New Era Requires Strategic Philanthropy, New Thinking and Risk Aware Execution This Sequenced plans Case dependent One case One Cabinet Hour glass GT Long term volunteers Five-year horizon becomes this Co-dependent Plans Business Plan Dependent Many Cases Many Councils Coke Bottle GT Ad Hoc Volunteers Longer Horizon 25

26 Questions? Feedback? John Wm. Thomas Edwin K. (Ned) Zechman ext