Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Sunday, September 02, 2007

Consultants Blog, Stardate: September 2017

Fellow nonprofit blogger, Gayle Roberts, has suggested that I look into my crystal ball and give you a posting from ten years in the future. Pass your time travel boots through the x-ray machine, buckle your space belt, and join me on a journey to 2017...

Remember back in 2007? Back when all the 'experts' were warning of the coming nonprofit leadership shortage? Executive Directors were aging and retiring, and everybody was worried that the next generation wouldn't provide enough people willing and able to take their positions.

Well, as usual, the experts got it about half right. There certainly were far less people able and willing to head nonprofit agencies after about 2010, but it was never a problem. The trend of nonprofit mergers and bankruptcies more than kept pace with the loss of baby boomer leadership.

The rate of consolidation continued till just a few years ago when California bottomed out with only 126 officially sanctioned nonprofit organizations left in operation, and most of those were universities and hospitals.

Of course the drying up of foundation money had a lot to do with this transition as well. Yes, it's hard to remember now, but there was a time when private foundations were one of the major forms of support for many nonprofits.

At one time, the IRS required foundations to spend down at least 5% of their endowments each year in grants (and "other expenses"), an arrangement that put a certain amount of money out to the nonprofits, but still allowed for them to become perpetual giving machines, if they so chose.

Starting in the mid to late 00's there was a growing trend towards foundations deciding to spend out their endowments in the founder's lifetimes. Then, still in her first term, President Clinton was alarmed at this spend down rate and declared that foundations could do more for the public good by keeping their endowments "working for America" by staying invested in the stock market.

The resulting legislation lowered the minimum foundation payout to only 1-1/2% of their endowment and put in a maximum payout of 4% annually. A leading critic of this change was, of course, the president's ex-husband the ex-president, Bill (or "X2" as he goes by in his rap music career).

X2 wasn't successful at stopping that legislation, but he did succeed in creating a new type of "Emergency Foundation" to help raise money for causes with a limited time period. These "five and dimes" (so nicknamed for their anticipated life expectancies) are exempt from the 4% maximum annual spend-out, are now responsible for most of the individual fundraising that goes on in America.

Of course, they're not without abuse as well. Originally intended for responding to earthquakes, floods, terror attacks, and the like, they're now used for just about any type of "emergency." Which brings me to the topic of today's post.

Just this morning I was at the local convenience store to get a coffee injection and a lotto ticket when the cashier asked me to contribute to their emergency foundation. The emergency? Their Icee machine was damaged by some teenagers during a bungled robbery attempt. The store is now trying to raise $3 million for renovations and a new security system. They're nearly half-way to that goal already.

I've just about had enough of this and am thinking of packing it all in and retiring to the moon. At least there I don't have to start each day with the application of SPF 95 atmosphere protectant and Moon Governor Kucinich is getting ready to unveil his plan for near-universal (mooniversal?) health care.

The above is just a parody, and is not necessarily the actual future for the nonprofit sector or America. For one thing, Bill Clinton would never record a rap CD under the name of X2. What's really in store for us ten years from now? Stay tuned to this blog to find out...

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