IN SEARCH OF THE

NONPROFIT VALUE PROPOSITION

Lester M. Salamon Johns Hopkins University

Maryland Nonprofits Quality of Life Summit, March 24, 2015

WHO WE ARE 2 RECOMMENDATIONS

1) “A Nonprofit Coordinating Council” “…the time is long past for [the MD nonprofit sector] to come out of the

closet and develop a clearer self-image and community presence.”

2) “A Community Foundation Initiative” “to encourage the further development of Maryland’s …still embryonic

community based philanthropic institutions.”

NONPROFIT EMPLOYMENT IN THE U.S., 2012

11.4 4.5

0.8

1.2

5.1

5.6

5.8

12.0

14.9

16.0

UTILITIES

AGRICULTURE

TRANSPORTATION & WAREHOUSING

FINANCE & INSURANCE

CONSTRUCTION

MANUFACTURING

RETAIL TRADE

NONPROFIT SECTOR

MILLIONS OF FULL-TIME-EQUIVALENT WORKERS

Paid

Volunteers

Source: Lester M. Salamon, The Resilient Sector, Second Edition, (Washington, D.C.: The Brookings Institution Press, forthcoming).

Source: Johns Hopkins Nonprofit Economic Data Project.

NONPROFIT EMPLOYMENT IN MARYLAND, 2012

268,202 107,416

42,608

43,489

76,572

86,163

94,875

108,957

143,167

152,396

240,991

284,828

375,618

REAL ESTATE

INFORMATION

TRANSPORTATION

WHOLESALE TRADE

FINANCE & INSURANCE

MANUFACTURING

CONSTRUCTION

OTHER SERVICES

PROFESSIONAL, SCI., TECH. SVCS

RETAIL TRADE

NONPROFIT SECTOR

FULL-TIME-EQUIVALENT WORKERS

Paid

Volunteers

WHO WE ARE 4 IMPULSES SHAPING NONPROFIT AMERICA

NONPROFIT

AMERICA

Voluntarism Professionalism

Commercialism Civic

activism

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE CHALLENGES

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

THE FISCAL CHALLENGE

• Federal retrenchment

WHO WE ARE CHALLENGES I: THE FISCAL CHALLENGE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE GOVERNMENT SOCIAL WELFARE SPENDING

0%

20%

40%

60%

80%

100%

120%

140%

160%

1950 1955 1960 1965 1970 1975 1977 1980 1985 1989 1994

Total Pensions Education Health Welfare

1950 - 1994

1980 = 100

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

3.2%

Total

4.7%

3.2%

2.3% 2.2%

0.8%

Health Social

insurance

Education Welfare &

social

services

Housing

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

AVERAGE ANNUAL CHANGE IN GOVERNMENT SOCIAL

WELFARE SPENDING,1990-2009, BY FIELD

• Federal retrenchment

• Changing forms of

government support

• Tepid giving growth

WHO WE ARE CHALLENGES I: THE FISCAL CHALLENGE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

1.64% 1990-97

1.78% 1980-89

1.86% 1970-79

PERIOD

GIVING AS % OF PERSONAL INCOME

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

PRIVATE GIVING AS A SHARE

OF PERSONAL INCOME, 1970-1997

WHO WE ARE CHALLENGES

THE FISCAL CHALLENGE

THE COMPETITION CHALLENGE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

% Nonprofit % Change in 1982 a 1997 b relative nonprofit share EMPLOYMENT Child day care 52 38 -27%

Job training 93 89 -4%

Individual & family services 94 91 -3%

Home health 60 28 -53%

Kidney dialysis centers 22 15 -32%

FACILITIES/ENROLLMENT Dialysis centers 58a 32 -45%

Rehabilitation hospitals 70a 36 -50%

Home health agencies 64a 33 -48%

Health maintenance organizations 65a 26 -60%

Psychiatric hospitals 19a 16 -16%

Hospices 89c 76 -15%

Mental health clinics 64b 57 -11%

Higher education enrollments 96d 89 -7%

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

NONPROFIT & FOR-PROFIT ROLES IN SELECTED FIELDS,

1982-1997

FIELD CHANGE IN NONPROFIT SHARE

Individual & family services -23%

Community care facilities for the elderly -20%

Home health care facilities -19%

Specialty hospitals (other than psychiatric) -13%

Outpatient facilities -8%

Nursing care facilities -3%

Other residential care facilities -3%

Child day care -2%

CHANGE IN NONPROFITS’ SHARE OF EMPLOYMENT

U.S., SELECTED FIELDS, 1997-2007

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

FIELD CHANGE IN NONPROFIT SHARE

Nursing care facilities -10.8%

Colleges and universities -10.0%

Hospitals -0.3%

CHANGE IN NONPROFITS’ SHARE OF EMPLOYMENT

MARYLAND, SELECTED FIELDS, 2002-2011

Source: Johns Hopkins Nonprofit Economic Data Project.

WHO WE ARE CHALLENGES

THE FISCAL CHALLENGE

THE COMPETITION CHALLENGE

THE LEGITIMACY CHALLENGE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

Source: L. M. Salamon, S. Geller, and S. W. Sokolowski, “Taxing the Tax‐Exempt Sector—A Growing Danger for Nonprofit Organizations,” Nonprofit Listening Post Project Communiqué No. 21 (2011).

63%

42%

36%

17%

9%

ANY TYPE OF TAX, FEE, OR PILOT

USER FEES

OTHER PAYMENTS

FIELD-SPECIFIC TAXES

PILOTS

PERCENT OF ORGANIZATIONS

SHARE OF ORGANIZATIONS REPORTING VARIOUS

TYPES OF FEES AND TAXES

WHO WE ARE NONPROFIT RESPONSE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

1. OVERALL GROWTH

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

3.0% 3.0%

3.6%

4.0%

1977-1996 1997-2007

PE

RC

EN

T G

RO

WT

H

GDP

Nonprofit revenue

AVERAGE ANNUAL GROWTH IN NONPROFIT REVENUES

AND U.S. GDP, 1977-1996 & 1997-2007

Lester M. Salamon, S. Wojciech Sokolowski, and Stephanie L. Geller. Holding the Fort: Nonprofit Employment during a Decade of Economic Turmoil. (Johns Hopkins Center for Civil Society Studies, 2012.

3.3%

2.8%

1.6%

1.8%

1.9%

2.2%

2.5%

2.6%

1.2%

0.8%

-1.0

%

-1.9

%

-0.6

%

1.3%

2.0%

1.9%

1.0%

-1.1

%

-6.2

%

-0.9

%

PE

RC

EN

T C

HA

NG

E

Nonprofit

For-profit

2000-

2001

2005-

2006

2004-

2005

2003-

2004

2002-

2003

2001-

2002

2009-

2010

2008-

2009

2007-

2008

2006-

2007

ANNUAL CHANGES IN EMPLOYMENT IN U.S.

NONPROFIT VS. FOR-PROFIT, 2000-2010

WHO WE ARE NONPROFIT RESPONSE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

1. OVERALL GROWTH

2. COMMERCIALIZATION

WHO WE ARE SOURCES OF NONPROFIT GROWTH, U.S.,1997-2007

FEES,

58%

GOVERNMENT,

30%

PHILANTHROPY,

12%

TOTAL GROWTH

= 457 BILLION

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

18%

40%

45%

64%

67%

58%

17%

41%

11%

34%

20%

30%

66%

20%

44%

2%

14%

12%

ENVIRONMENT

SOCIAL SERVICES

CULTURE, RECREATION

HEALTH

EDUCATION, RESEARCH

TOTAL

FEES GOVERNMENT PHILANTHROPY

SOURCES OF NONPROFIT REVENUE GROWTH,

U.S., BY FIELD, 1997-2007

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE NONPROFIT RESPONSE

1. OVERALL GROWTH

2. COMMERCIALIZATION

3. MANAGERIAL

PROFESSIONALIZATION

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE THE RISKS

• Growing identity crisis

• Increased demands on nonprofit managers

• Threat of mission creep

• Disadvantaging small agencies

• Potential loss of public trust

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE RESETTING THE BALANCE

• THE SURVIVAL IMPERATIVE

• THE DISTINCTIVENESS IMPERATIVE

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE THE ROAD AHEAD: 3 POSSIBLE SCENARIOS

CELEBRATION AND DRIFT

THE SOCIAL ENTERPRISE SCENARIO

THE RENEWAL SCENARIO

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE THE RENEWAL OPTION: AN ACTION AGENDA

• Renew the nonprofit value proposition

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE RENEW THE NONPROFIT VALUE PROPOSITION

Effective

Responsive

Reliable

Caring

Enriching

Empowering

Productive

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

WHO WE ARE 7 NONPROFIT VALUES

1. EFFECTIVE Providing programs & services of the highest quality at reasonable cost

Making a difference in the lives of individuals & the community

2. RESPONSIVE Responding to clients, patrons, & communities

Meeting needs that the market & government don’t meet

Pursuing innovative approaches when needed

3. RELIABLE Resilient & demonstrating staying power both in good times & bad

Operating in a trustworthy & accountable manner

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

WHO WE ARE 7 NONPROFIT VALUES

4. CARING Serving underserved populations

Providing services/programs at reduced or no cost to disadvantaged

populations

Community-focused

5. ENRICHING Giving expression to central human values

Providing opportunities for people to learn & grow

Fostering intellectual, scientific, cultural, & spiritual development

Preserving culture & history; promoting creativity

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

WHO WE ARE 7 NONPROFIT VALUES

6. EMPOWERING Mobilizing & empowering citizens

Contributing to public discourse

Providing opportunities for civic engagement for the public good

7. PRODUCTIVE Creating jobs and economic value

Mobilizing assets to address public problems

Enhancing local economic vitality

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

BASIC AGREEMENT ABOUT 7 CORE VALUES

52%

56%

68%

74%

79%

86%

86%

35%

32%

26%

22%

19%

13%

13%

87%

88%

94%

96%

98%

99%

99%

PRODUCTIVE

EMPOWERING

ENRICHING

CARING

RELIABLE

RESPONSIVE

EFFECTIVE

PERCENT OF RESPONDENTS

VERY IMPORTANT IMPORTANT

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

71%

61%

72% 68%

61%

31% 25%

23%

33%

21% 22%

23%

36% 33%

94% 94% 93% 90%

84%

67%

58%

EFFECTIVE RESPONSIVE RELIABLE ENRICHING CARING EMPOWERING PRODUCTIVE

PE

RC

EN

T O

F R

ES

PO

ND

EN

TS

WELL VERY WELL

*Weighted average

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

RESPONDENTS CLAIMING TO EMBODY

CORE VALUES "WELL" OR "VERY WELL"*

5%

5%

13%

17%

24%

34%

37%

52%

53%

Volunteers

Staff

Board members

Other organizations in the field

Current or potentialclients/customers/patrons/members

Current or potential funders

Media

Government officials

The general public

PERCENT OF RESPONDENTS

Source: Lester M. Salamon, Stephanie L. Geller, and Chelsea L. Newhouse, “What Do Nonprofits Stand For? Renewing the nonprofit value commitment.” (Baltimore: Johns Hopkins University, 2012).

KEY STAKEHOLDERS DO NOT "GET"

THESE NONPROFIT VALUES

WHO WE ARE KEY QUESTIONS FOR SESSION

1) How important is clarification of the value

proposition to the future of the N/P sector?

2) Are these the right “values”?

Additions? Deletions? Reformulations?

3) Is the sector doing well enough in articulating its

value proposition? Is there a role for MD NPs?

4) What else should be done? Research? Other?

WHO WE ARE THE RENEWAL OPTION: AN ACTION AGENDA

• Renew the nonprofit value proposition

• Improve the government-nonprofit partnership

• Improve access to capital

– Foundations as “Philanthropic banks”

– Broadened tax credit

• Replace tax deduction with tax credit

• Improve public understanding

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

WHO WE ARE CONCLUSION

Source: Lester M. Salamon, The State of Nonprofit America, Second Edition, (Washington, D.C.: The Brookings Institution Press, 2012).

“It has been said that the quality of a

nation can be seen in the way it treats its

least advantaged citizens.

But it can also be seen in the way it

treats its most valued institutions.”

WHO WE ARE FURTHER INFORMATION

LESTER M. SALAMON

lsalamon@jhu.edu

Website: ccss.jhu.edu

Twitter: @JHUCCSS

Values Communique: bit.ly/npvalues