Special Report: The Year 2000

December 1, 2000       Matthew Sinclair      

There’s an ancient curse that states, "May you live in interesting times." Literally from day 1 (or 01/01/00), this year has been a most interesting time. The stock of supplies in many organizations’ storerooms outlasted fears of the Y2K bug, which was more of an annoying gnat than a Lyme tick. The many upgrades of technology software and hardware that characterized much of 1999 likely will help the sector. And, organizations have many options from which to choose. At the annual conference of the National Society of Fund Raising Executives (NSFRE), 32 dot-coms dominated the exhibit floor a year after there had been just one.

It will be interesting to see how many of those companies will be back in the same capacity, however, to what will be the first conference of the newly christened Association of Fundraising Professionals. Just weeks after the NSFRE conference, at least one vendor had changed its name, and the months since have seen the Internet industry start to experience a shakeout.

How many others remain attracted to the business of nonprofit organizations, notoriously slow in decision-making processes, only time will tell. During the conference, NSFRE President and CEO Paulette Maehara predicted the influx of Internet companies would spell change for the sector overall.

Organizations have started to see the value of practical applications of new technological tools. Bethesda, Md.-based Goodwill Industries International, for example, developed an auction site, shopgoodwill.org, which sells items donated to local Goodwills. Dave Barringer, Goodwill’s director of brand management, said the auction site has reached annualized sales of $1 million and is growing.

The lack of major natural and man-made disasters in 2000 may have been welcome to most Americans, but it spelled sagging results in online donations to relief organizations. Those same organizations began to see the fruits of their efforts to renew these donors without the events that spurred their philanthropic interest.

The debate concerning the rights of gays was renewed when the U.S. Supreme Court ruled in favor of the Boy Scouts of America in the suit brought against it by former scout leader James Dale, who had earned his Eagle Scout rank and is now openly gay. The Supreme Court ruled the organization had the right to define its own leadership criteria.

Unsurprisingly, Boy Scouts of America hasn’t changed its policies after extensive criticism and defunding by some companies and United Ways. "The court really verified our rights as held in the Constitution," said national spokesperson Gregg Shields. "The only development probably has been that we’ve heard a tremendous amount of support."

Some municipalities told local troops they could no longer use public facilities, and other troops openly stated they did not agree with the national position. Though the loss of funding from some sources is real, so is an influx of unsolicited support. For example, Shields said, the scout council in Miami reported that after the defunding stories hit the news, pastors in local churches spoke about the scouts from the pulpit.

One Sunday sermon at the First Baptist Church in Miami led to the collection of $10,200. The Calvary Church in Ft. Lauderdale pledged $93,000 in support and has already raised $50,000. And a retired trucking executive with no prior connection to scouting met with the chief scout executive after reading about the fallout after the Dale case and wrote a check for $40,000 at his kitchen table. Another individual wrote a check for $48,000. "And that’s (all) just one council," Shields said.

Religious groups make up about 65 percent of the chartering organizations that promise to identify scout leaders and provide meeting places and shepherd the process of running a troop, Shields said. The local councils serve as the administration and training ground for the leaders and conduct the fundraising. "Less than a majority" of that funding comes from United Ways, Shields said, "and we appreciate their support."

By late in the year, 24 of the more than 1,400 United Ways, a large funder of scouting, had declared they would not fund local Boy Scout groups, stating policies against supporting organizations that discriminate against gays. Philip Jones, a UWA spokesperson, stressed that decisions about Boy Scout funding were entirely local choices to make and that no national policy would be established.

"By and large, United Ways have continued to support the scouts," he said. "Some have simply shifted funding to allocating money to a scout program called Learning for Life." The program is considered nondiscriminatory.

Congress got involved in the debate as well, with an overwhelming vote against a proposal to revoke BSA’s federal charter. And a U.S. Department of the Interior memo questioned whether the department’s policy of allowing scout activities, such as Jamboree, on federal lands was consistent with an executive order prohibiting discrimination in federally conducted education and training programs.

Shields was unable to confirm that some United Ways had redirected their support of scouting to the Learning for Life program. The fast-growing program already has more than one million youth involved, compared to the more than three million "uniformed" scouts, though there’s also overlap.

The recruiting period at the beginning of the school year has continued to be strong, Shields said. The actual figures of revenue and membership growth or decline will not be fully compiled until year end, Shields said, and no final figures would be available until spring at the earliest.

United Way ups and downs

The United Way system went through a tumultuous year, culminating in the resignation of Betty Beene and her later decision to leave 11 months earlier than her original departure date. Beene, who had served as UWA president since late 1996, had joined UWA as a "change agent," and said she expected to hold the presidency for a relatively short term.

One event leading up to Beene’s departure was the failure of a system called United Way Information Network (UWIN), being designed by Cap Gemini America, to capture donor pledges and information, match the data with individual United Ways and distribute funds received in a timely manner.

The failed system highlighted the tensions between large local United Ways and the United Way of America. As Joseph Calabrese, president of the United Way of Rochester (N.Y.) and a vocal supporter of local control, said in an October NPT article, "The real issue for us to determine is whether or not the United Way system is going to remain a bottom-up, locally autonomous system or whether it’s going to become more of a chapter style, like the Red Cross or the Boy Scouts."

Another concern for United Ways arose when long-time (and continuing) partner the AFL-CIO created the Union Community Fund to launch workplace giving campaigns, designed to offer more choice than traditional United Way campaigns.

If that weren’t enough, early in the year a court determined that UWA’s former president and convicted embezzler of charitable funds, William Aramony, was entitled to the reinstatement of most of his pension. UWA appealed that decision, and no further decision has been rendered.

The year wasn’t all bad, of course, as an effort succeeded to make 211 a nationally secured telephone number for information on human service organizations and volunteer opportunities. The United Way in Atlanta had been the first to roll out that option back in 1997, and United Ways were part of the coalition that drove for national 211. The UW system’s fundraising machines continued to tally record growth, as the campaigns reached $3.77 billion nationally.

You say you want a revolution

The main theme of the National Community Service Conference was about youth. A close second was the theme of collaboration. Ret. Gen. Colin Powell, chairman of America’s Promise, joined with the leaders of the United Way of America, the Corporation for National Service, and the Points of Light Foundation, the hosts of the conference.

Powell acknowledged that the conference was largely and correctly viewed as a way to recharge the batteries of volunteerism and volunteers, but "I think the significance is the four organizations coming together," he said. "From this kind of collaboration, we can move to the youth component."

The youth component was very much present at the conference and especially at the first National Youth Summit days earlier. Examples of teens and pre-teens paying their way to attend the National Youth Summit were all around.

On the stage of the NCSC, teen Jamaal Young of Washington, D.C., said he wanted a revolution for the youth of America. He said Americans must regard youth as equal partners in community service. "To effect change in our society, there must be a revolution," he said. "It is then we will not be the Rip Van Winkles of our time."

The sector also saw more interest in considering the roles youth can play on nonprofit boards.

Unfortunately, not every story dealing with youth was as positive. Odyssey of the Mind competitions pit students with challenging problems to solve. When nonprofit OM Association and its for-profit parent, Creative Competitions, fell into a power struggle, however, it was anything but child’s play. A lawsuit threatened the continuation of the competitions, which had seen thousands of teams of children participate from public and private schools around the world. Though the litigants eventually came to an out-of-court settlement, the relationship would never be the same and a new effort to win back the hearts of volunteers was engaged.

The NCSC also brought some attention to the integral role volunteers play in the sector and the services nonprofits render. But the outlook for 2001, already declared the International Year of Volunteers by the United Nations, caused NPT columnist Susan Ellis to voice concerns. "It is now the end of the year 2000, and volunteer leadership in the United States is on the verge of throwing away a golden opportunity," she opined. Decisions to not create a unifying project for the IYV activities will result in a "multi-national year of volunteers" instead, with IYV2001 stuck in the middle "of the internal politics of every nation in the world."

Where today’s philanthropists fall into the historical mix also became a topic of some discussion in 2000, as the foundations set up by Microsoft mogul Bill Gates and his wife Melinda were consolidated into one in 1999. Gates’ generosity ventured beyond technology interests to embrace efforts to eradicate polio and offer scholarships through the United Negro College Fund.

Transition and merger

The people courting today’s top philanthropists for gifts are changing. In addition to Betty Beene of UWA, Fred Grandy of Goodwill Industries International also announced he would depart by the end of the year. Kenneth Gladish took over the top spot at the YMCA of the USA, succeeding David Mercer.

The Nature Conservancy lost its president, John Sawhill, to complications from diabetes, with one of his last accomplishments being the public announcement of TNC’s billion-dollar capital campaign.

Though the sector has clearly been growing in the number of organizations, based on figures from the Internal Revenue Service, a number of prominent organizations also found themselves merging. One of the larger mergers in the sector occurred between America’s Second Harvest and Foodchain. Though ASH was significantly larger in terms of both annual revenues and staff, the combined efforts are expected to raise awareness of the hunger issue in the United States and improve efficiencies for food banks.

Other notable connections in the sector included: Applied Research and Development International being acquired by the Aspen Institute; the merger of National Nonprofit Unemployment Trusts and Human Services Unemployment Trusts; the DeWitt Wallace-Reader’s Digest Fund and the Lila Wallace Reader’s Digest Fund; Support Centers and Executive Search Corp., USA Groups Inc. and SLM Holding, (which formed the SUA Group Foundation); and the match between 82-year old watchdog the National Charities Information Bureau and the Council of Better Business Bureau’s Philanthropic Advisory Service. The Direct Marketing Association (DMA) also acquired the National Federation of Nonprofits, blending it with The DMA’s nonprofit council and renaming the group The DMA Nonprofit Federation.

Another trend in the sector has been the emergence of consulting organizations heading up associations. For instance, the American Association for Fund-Raising Counsel, the parent of the AAFRC Trust for Philanthropy (which publishes Giving USA), hired Ward Management to run its operations.

Giving USA reported its annual forecast of the country’s philanthropic giving, showing more than $190 billion. The 9.1 percent increase compared to the revised 1998 figures of nearly $175 billion was a slight decrease in rate of growth, but stood as the second largest percentage increase in a decade.

But an NPT poll of giving in the first quarter of 2000 appeared to show a softening in giving, with inflation, energy prices and the rollicking stock market possibly to blame. Still, those respondents reporting increases showed an average of 12.6 growth.

The recently completed presidential campaign often threatened to bring the nonprofit sector into the fray, raising such topics as the estate tax, faith-based organizations and Section 527 groups (see accompanying article). The estate tax repeal veto override failed in the House to reach the two-thirds required vote. Though the veto was generally seen as good for the nonprofit world, as a major source of support might have been lost, the debate seemed to sneak up on nonprofits, who were left without voicing consensus on the issue.

An agreement that should save nonprofits more than $1 billion in postage, however, was successfully led by officials at the Alliance of Nonprofit Mailers, the United States Postal Service, The Direct Marketing Association, PostCom, and Magazine Publishers of America. The legislative deal tied nonprofit rates to commercial rates with a discount.

Some of the country’s largest social service organizations got together to decry the profitization of health and human services. In an opinion piece first published in the NPT, 18 top officers in the sector got together to ask where the limits on a market-driven social service system would be set.

Daniel Wiant, an American Cancer Society officer in the Ohio division, was able to claim an increase of donated dollars to his bank account. That is, until he was extradited back to the United States to plead guilty after wiring nearly $7 million to an account in Austria. Ironically, the previously convicted Wiant had fired another person who reported to him, who allegedly defrauded the organization as well.

An ACS chapter in Glen Burnie, Md., discovered that funds to its coffers got rerouted to a recycling bin by a bank employee. An unidentified SunTrust Bank employee had allegedly taken checks home and thrown them out because of too heavy a workload. The exact amount was unknown, but estimates ranged at more than $80,000 for the organization, which raises roughly $40 million through direct mail campaigns each year.

With day 01/01/01 fast approaching, what the future has in store for the nonprofit sector will play out in time.