NDANO

1
NDANO

• Maximizing Private Sector Partnerships for
  Nonprofit Organizational Enhancement
• Dr. John Stahl-Wert, President and CEO
• Pittsburgh Leadership Foundation
• Fargo, ND
• May 4, 2005

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New TrendsCatalysts

• Increasing competition for charitable dollars
  (more nonprofits making bids)
• Public-sector roll-backs in social-sector funding
  at every level (federal, state, local)
• Larger global economic pressures (military,
  economic, competitive)
• Diverted spending from social to military
• Depressed economies from global terror risk
• Dampened corporate profit expectations

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• Futurists, as they are often called, do not so
  much predict what is one day going to happen as
  they recognize early the future that is already
  fully present.
• Peter F. Drucker

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Positive Signposts

• Growing private-sector interest in social
  good(customer, worker, community)
• Half a century of proven business-based and
  entrepreneurial social innovation
• A deeper restlessness among business owners for a
  life bigger than money
• The Private Sector is becoming a full partner in
  the work of the Social Sector

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• You only ever ask me for money. Ive got a lot
  more than money.
• Local Pittsburgh Businessman

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a lot more then moneyWays the Private
Sector Helps

• Well, then, of course, theres money
• Volunteer timeexecutive and staff
• Company expertise (H.R. legal, contracting, P.R.,
  communications, fiscal, you name it)
• Executive, Strategic, and Planning resources
• Companys operational capacity given to Nonprofit
  for operational purposes

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Experiments in Private/Social Partnership

• Private/Social Sector Value Exchange (market
  access and delivery systems, advertising and
  promotions, good will and brand enhancements)
• Private Sector In-Kind contributions (goods and
  services)
• Non-typical endowment expansions
• Ill-Liquid Asset Donations (Rental Properties,
  Businesses, etc.--Various Ownership)

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Non-Typical Endowments

• Typically, non-profit organizations build
  endowments by seeking two types of gifts?
• Cash donations
• Highly liquid, publicly traded stocks which are
  immediately sold by the endowment fund upon
  receipt from the donor
• How do most non-profits manage their Endowment
  Fund?
• Typical endowment funds invest the cash or
  liquidated asset donations received in a
  diversified portfolio of stocks and bonds with
  goal of achieving an annual yield of inflation
  plus 5-7
• 5 of the value is usually withdrawn annually to
  fund the operations of the non-profit

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Non-Typical Endowments (Cont.)

• A unique and more creative approach
• Pursue the donation of illiquid, privately-held,
  income-producing assets, including
• Partial or full ownership of the stock of a
  privately-held, profitable operating business
• Partial or full ownership in an interest in
  income-producing, commercial or residential real
  estate
• Ownership of single-site, stand-alone, profitable
  businesses like a franchised restaurant, hair
  salon, hotel or other single-site retail business

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Non-Typical Endowments (Cont.)

• Why would individuals give illiquid
  privately-held businesses or income producing
  assets?
• Many donors feel more comfortable donating assets
  that will not be sold, thus give them more of a
  sense of leaving a legacy
• Selling an illiquid, privately held asset and
  donating the after-tax proceeds takes time, costs
  money and is tax-inefficient
• Private-sector donors may desire continued
  management role, Part-time consultancy, or board
  role to assist in overseeing business

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Examples

• Donation of income producing real estate
• Gifted shares in mutual fund managed by donor
• Donation of 2 of family-owned business which
  generates quarterly dividends for endowment
• Donor gifted over five acres of prime commercial
  real estate which has been developed
• A Partnership redeveloped inner city property
  with the intent of donating partial ownership
• Corporation donated a significant portion of a
  building which was subsequently leased providing
  monthly cash flow for operations

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WIFM

• Help corporation achieve its charitable giving
  goals additional to giving cash
• Allows corporations to avoid the time and cost of
  selling non-strategic assets
• More flexible and creative way for corporations
  to give charitably
• Benefit from same tax benefits as are realized by
  individuals

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Endowment Cultivated Individual Donor
Converting Nonprofit into Social Enterprise

Enterprise Gifted by Business, Run by Nonprofit
Enterprise Gifted and Run by Business
Quick Uptake Slow
Grants and Sponsorships
In-Kind Gifts of Operational Capacity
Nothing is Quick Stable
Angels
Fickle Dependability Stable