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Thursday, August 10, 2006

Nonprofits to council: Have a heart

The City Beat went to that nonprofits meeting I talked about yesterday.

Basically, the message from the nonprofits to the Grand Forks City Council, which is moving to cut $200,000 from nonprofit funding, is this: Tour our offices, see how we work, meet our poor clients and then see if you've got the nerve to make those cuts.

United Way president Pat Berger talked about the families with no food in the fridge and the home-bound seniors whose only human contact might be the guy that delivers their meals.

Earl Beal, a former United Way chairman, took another tack. He said nonprofits perform social services that the city would otherwise have to provide, that's why they get city money. In other words, they're not just a bunch of whiners screaming mad because they didn't get their entitlements.

I don't have first hand knowledge of how lean these agencies operate but something that Janell Regimbal, senior VP for youth services with Lutheran Social Services, said really struck me.

She described nonprofit funding as a "mosaic" made up of grants from various foundations and government offices. Every year, that mosaic shifts. One year a foundation might be generous and another year it might shift funding elsewhere. The same for government offices. "We don't know year to year if those programs are going to be even operational," she said, speaking specifically of three programs that she oversees.

If Beal is right and these social services are the obligation of government, what Regimbal describes appears to be a ludicrous way to fund them. I'm glad we don't fund the police department that way, most of it anyway.

The thing is, some of these programs appear to be the kind designed to nip public safety problems in the bud. Regimbal oversees a program called Healthy Families that help parents that weren't expecting to be parents and who's not quite ready to bear the burden. There's a risk of child abuse when this happens -- you know, frustrated dad who's too stupid to know you don't shake the baby when she cries -- so a little counseling could prevent a big tragedy. The two other programs help potential juvenile delinquents away from the path of professional thuggery and criminality (That's my flip wording, not theirs.).

But, wait, the funding issue gets more ludicrous.

Berger mentioned something about small, less well-known agencies not wanting to consolidate with the big ones for fear of losing their identity.

Isn't that kind of self-serving, I asked.

She replied that United Way allows donors to specify which agencies they will give money to so if an agency is obscure it wouldn't get money. I'm guessing this makes donors more willing to give money.

I said wasn't United Way founded as an umbrella fundraiser so that nonprofits didn't have to worry about fundraising?

Yes, she sighed, but it hasn't worked out that way completely.

I don't know. I can't blame the council for trying to help poor families keep their homes. That's where the $200,000 would come in to help the families pay for needed street repairs, which otherwise would lead to special assessments. But I hate to see the poorest of the poor lose services. Who's got a perspective? Is Grand Forks social services funding generous compared to other places or do we suck?

Update 3:34 p.m., 8/11/06: CulturePulse talks about nonprofits from the arts' perspective.


Anonymous ec99 said...

Does anyone know how long city money has been spent to subsidize these groups? How much do they get? What was the original rationale for directing money their way? How much is spent on administration?

9:39 AM  
Anonymous Anonymous said...

ec99 took some of the words right out of my mouth. Call me cynical or having a bad day, but let's get real. The nonprofits should be asked to submit a couple years' worth of past budgets and current or projected budgets. I would bet any money that most of the funding they get goes to admin and salaries. Then let's see their annual reports re how many people they helped and what impact this help had (follow-up studies, etc.).
I think they are dragging their feet somewhat about merely getting together in the same building!! Come on! We all have to tighten our belts these days. I believe that once money goes to these agencies it sort of melts into the fog as to where it goes and any accounting for it. In my experience it's doggone difficult to get help at times. Whereas, if money is spent on paying off specials for low income homeowners, the results are measurable, viewable, and long lasting, no question. AND it's a one-time thing, relatively speaking. These expensive street projects in low income neighborhoods don't come up that often. It's great to help people at risk, but money is drying up all over: in Washington they want to cut all funding to public broadcasting, for heaven's sake! Funding for philanthropic programs and public good is always diminishing and choices have to be made. I think if anyone here is using a little bit of smoke and mirrors it's the nonprofits, about whose spending we know very little. I'm not saying they do no good, I'm just saying, as did ec99, have any of the subsidies given to them ever been unquestionably demonstrated to be directly and beneficially significant to their target population? Or have these subsidies gone to office decor, salaries, upscale rent, etc., and not much, comparatively speaking, to the clients? Money spent on infrastructure will be here forever. Money spent on programs for at-risk groups is also valuable, harder to measure though, but has anyone ever asked for any kind of assessments of and from these organizations?

1:04 PM  
Anonymous ec99 said...

"Call me cynical"

Why is it cynical to ask candid questions about where tax money actually goes once it enters the non-profits' pockets? If the answers, sans creative bookkeeping, are embarassing to them, so be it.

I have been suspicious of these sorts of groups since the big national United Way scandal. Further, I used to be a member of Minnesota Public Radio, believing their pledge drive scenarios of the lights going out if I didn't give. Then I found out its president, Bill Kling, made a salary of over $600K and its top 15 executives were all in six-figures. Information clears away the fog.

1:39 PM  
Anonymous gopher said...

Then we are all in agreement that Tran will get the data that is requested here. Thanks Tran.

1:59 PM  
Blogger Tu-Uyen said...

You're right that how nonprofits work has not been written about extensively. Part of the reason is there are a lot of them doing a lot of things. Thanks for volunteering me to audit them but that's not a job for me but for the city. Reporters aren't equipped for that mammoth task, not unless we have an investigative reporting unit with a couple of months open. I have other stories I have to report on day to day. I'm not saying I wouldn't look into it but there's a limit to how comprehensive I can be.

2:34 PM  
Blogger Tu-Uyen said...

Then I found out its president, Bill Kling, made a salary of over $600K and its top 15 executives were all in six-figures.

That might be excessive but let's establish two things.

First, nonprofits do help people but that doesn't mean their people shouldn't get paid a normal wage like everyone else. It's still a job. You can't get volunteers to do what they do. There's apparently a misconception about that, which drives the nonprofit people crazy.

Second, if someone runs a big operation they usually get big pay. You assume that MPR has to compete with the private sector for skilled execs. MPR had revenues of $60m last year. The question is, was $600k too much for a guy that operates that big an operation?

3:03 PM  
Anonymous ec99 said...

My point is that it seems a bit inconsistent (to say the least) for people who either cry poverty (ever listen to the MPR drives?) or use sympathy for their poor clients, to then hop into their Lexus or BMW and toodle home to their $500k house. They make like to characterize them selves as altruists, but I don't buy it.

3:11 PM  
Blogger Tu-Uyen said...

Well, when they cry poverty, they're talking about their organization, when they talk about poor people, they're talking about the clients their organization helps.

As I said before, they need to be paid what they're worth. Should these people be taking vows of poverty because they work for a nonprofit agency?

Altru Health System is a nonprofit -- or something like that -- and they have to help all sick people no matter their ability to pay. Should the doctors be poor then?

It's the same thing with, say, a nonprofit clinic administering to the poor. If they need doctors, they'll have to pay for doctors. In the same way, if a nonprofit needs an administrator or a counselor, it would have to pay for them.

You need to de-link the needs of the agency from the people that work for them. What you're asking is, are the agencies' labor costs excessive? Looking at what kind of cars their administrators drive is too simplistic a measurement. You'd have to compare what a similar job in the private sector pays, which you haven't.

4:11 PM  
Anonymous ec99 said...

"You'd have to compare what a similar job in the private sector pays, which you haven't."

That's what United Way said when its CEO got caught with his hand in the cookie jar (along with the hands of most his family). As regards the non-profits and the city, if they are receiving tax money, then I'm sorry, they are not producing a bottom line, as someone in the private sector is; they are simply seeking largesse. If their salary is based on that success, then they have to realize that every dollar that goes into their paycheck is one less to go to the cause. Which is why I asked about administrative costs in the first place.

4:24 PM  
Anonymous Anonymous said...

Good point brought up about MPR. Minnesota Public Broadcasting is owned and run by a California company that runs about 1/2 dozen similar agencies. Now in contrast, Prairie Public is owned and managed right here in the state, and I do know for a fact that when money is tight, they have let jobs go, pay people less than they would earn privately, etc., while still *trying* to pay decent (competitive wages) to their administrative staff. I bring this up to show that not all public broadcasting entities are the same, and I am sure not all nonprofit charitable agencies are the same. But public broadcasting entities give out yearly reports on income and expenditure, and show how they have fulfilled their mission. It's not too much to ask the local nonprofits for the same, especially when they come to the city for money repeatedly. It's not too much for the city to ask them to see how can they pare down their budget. It's not too much to ask them for facts and figures when it is our money they want. It's a tough choice between helping the low income homeowners (and ultimately the city at large) vs. helping the nonprofits (and ultimately the city at large). BUT--the nonprofits have been helped repeatedly, have become (perhaps) too dependent upon this subsidy, and have not made what I feel is full disclosure of what has happened and what will happen to the money they get. As I said before, it's tough all over and everyone has to tighten his belt.

4:49 PM  
Blogger Tu-Uyen said...

This comment has been removed by a blog administrator.

5:19 PM  
Blogger Tu-Uyen said...

As regards the non-profits and the city, if they are receiving tax money, then I'm sorry, they are not producing a bottom line, as someone in the private sector is; they are simply seeking largesse.

Again, we're assuming this is not seeking a largesse or entitlement but providing essential social services that the city would otherwise have to take over. We could quibble about whether these are services the government is obligated to provide, but that's not the point of this thread.

There is a bottomline here, which is how effective are the services being provided? Are they keeping social problems (child abuse, domestic abuse, juvenile delinquency, homelessness, etc.) from getting out of hand? Would these problems get any worse without the nonprofits?

Which is why I asked about administrative costs in the first place.

That's fair to ask and I don't have a ready answer. But there is a clear distinction between admin costs and the cost of providing services (the doctor versus the administrator/bean counter), just so we don't mix the two.

But, again, if you assume these are obligated services, you assume that it's legitimate to hire the best administrators you can afford. One of the benefits of outsourcing for the city is it doesn't need to put these people on the payroll, which means not having to go through the civil service process to hire or fire them.

Given that nonprofit execs are not protected by a civil service process, I'd argue that their employment conditions are more akin to the private sector. In other words, you trade less security for more pay than one might expect from someone providing government services.

5:29 PM  
Anonymous ec99 said...

"But, again, if you assume these are obligated services,"

And this, of course, is the point at which people may choose different paths. What are the "obligated services," and why are they obligated? Has this just turned into a situation of perceived entitlements, simply because the city has subvented these organizations in the past? I take it that $200K is the amount cut, not the total city contribution. What does the city give?

2:18 PM  
Blogger Tu-Uyen said...

First, you should note that CDBG is not city money. It is federal money allocated to cities for the express purpose of helping low- to moderate-income people. It cannot be used for anything else.

Second, to answer part of your question, the total amount available is around $1.3m. Of that, $200k is for social services. Another $1m or so, I think (I don't have my notes with), is for "bricks and mortar," basically building improvements and such. The council plan is to take $50k from social services and $150k from bricks and mortar.

Has this just turned into a situation of perceived entitlements, simply because the city has subvented these organizations in the past?

To a certain extent, that's how all policies are made. Funding levels are determined based upon past performance. Let's say the police department has 100 officers. The question a policy maker would ask is are 100 enough to provide the level of public safety we want? There's no formula that can divine how many is enough. You base that on experience. If the council thinks that cutting 10 officers would have little impact on public safety, they can cut 10. Then we'll wait until next year or the next few years and see if the cuts result in more crimes or not.

The point is, we'd have to ask a similar question of social services. If we cut $200k, will it lead to increases in social problems over the next few years or will it lead to only a slight increase in social problems?

It's not a question of entitlement, it's a question of what results we want and what we think we have to pay to get those results.

2:50 AM  

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