Nonprofit experts in West Michigan and beyond are monitoring a major national charitable endeavor, the announcement of which has earned both criticism and praise.
In early December, Facebook chief executive and co-founder Mark Zuckerberg and his wife, Priscilla Chan, unveiled the Chan Zuckerberg Initiative, which they plan to fund with 99 percent of their Facebook wealth that’s currently valued at $45 billion.
The initiative was structured as a limited liability company, which has drawn significant disapproval from opponents who claim it’s a move to avoid paying taxes on the funds donated to the LLC, not to mention that it’s also a way around the oversight required of a traditional foundation, the typical vehicle for such donations.
However, the move is also garnering praise for the flexibility it allows in spending the funds, and it has drawn the attention of local nonprofit professionals, who wonder if this could be a complete game-changer moving forward.
While nonprofit leaders have long tried to think outside of the box, now they’re considering throwing those boxes away completely, said Kyle Caldwell, executive director of Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy.
“The world of philanthropy has changed due to interests, concerns and frustrations of donors. This is especially true of the younger generations who want to work, live and give all at the same time,” Caldwell said. “In the past, business titans would earn their wealth and then in the latter years of their life and career, they would marshal their abundant financial resources to give back to the society that propelled them to fame and fortune.
“Their investments in civil society often took the form of great institutions like foundations. Today, successful entrepreneurs are working to do good while doing well and find institutions of the past too limiting and not in line with their ‘sector agnostic’ approaches to community problem solving.”
The Chan Zuckerberg Initiative also caught the attention of Diana Sieger, president of the Grand Rapids Community Foundation, whose sentiments echoed the trend Caldwell outlined.
Given the Zuckerberg announcement and what she has observed with endowed philanthropy, Sieger said the nonprofit sector likely will not see the large lifetime gifts it has long banked on for support.
In light that trend, foundations and nonprofit professionals must make the necessary adjustments.
“Developing strong and authentic relationships with people (is important),” Sieger said. “We need to continue to keep people informed with what’s happening. This really is not bad news. It’s encouraging that people continue to be generous.”
Other trends cited for 2016 aren’t necessarily new, like the fact that the nature of giving has changed, Caldwell said. Social media has given donors new avenues of finding worthy causes and allowed them to give quickly and conveniently.
“These cyberspace organizing and giving opportunities are likely to continue. The question for the sector is can these movements be managed?” Caldwell said. “How will nonprofits and foundations — not to mention regulators — be able to ensure the integrity of the field while growing the ways people contribute? Will virtual giving and organizing propel or diminish local giving and volunteering?”
DRIVING THE ECONOMY
However, nonprofits remain major employers in Michigan, and they served as an economic engine that helped pull the state out of the recession, Caldwell said.
According to a recent study from Lansing-based research firm Public Sector Consultants Inc., the nonprofit sector was the only segment of the economy to remain fairly constant in its workforce, employing one in 10 workers in the state throughout the recession. In addition, the nonprofit sector generates more than $80 billion each year in economic spending.
For Sieger of the Grand Rapids Community Foundation, the industry’s impact does not come as a surprise.
“A very strong nonprofit sector is extremely important to a very strong for-profit business sector,” Sieger said. “I’m very happy to say that our social sector is one of the strongest in the country and that will only make our for-profit businesses grow and thrive and vice-versa.
“What we should be happy about is that there is a strong relationship between the nonprofit sector, the for-profit sector and indeed our public sector. When we all work together — and sometimes don’t agree — it makes us stronger as a community. That’s not just words — that’s true.”
BRACING FOR TURNOVER
As many long-time leaders look to transition out of the organizations they’ve led for years, it has nonprofit executives on the lakeshore bracing for ways to deal with that loss of institutional knowledge, said Mike Goorhouse, President and CEO of the Community Foundation of the Holland/Zeeland Area.
“Given the conversations I have been a part of in the last few months, it seems like we are going to have a high number of nonprofit executive directors retiring in 2016,” Goorhouse said. “A lot of these individuals have been in their positions for a long time. These leadership transitions are critical moments for nonprofits to navigate and will have a lasting impact on their ability to meet their mission.”
Addressing the leadership “void” remains key for Goorhouse, who also said he is interested in seeing how the lakeshore community will respond to the absence of Kandu Inc., which folded this year and was a leader in providing employment options and services for adults with developmental disabilities.
Goorhouse said mental health might be a key issue in the nonprofit community in the coming year.
“Ottawa County has experienced significant cuts to community mental health programs, and the county has agreed to put a specific mental health millage on the March ballot,” he said. “Local organizations and donors have increased their focus on this issue as well. All of that combined will lead to greater awareness of mental health needs as well as opportunities to show support for this issue.”