Council CEO: Economy, workforce issues pose challenges

Foundations and nonprofit organizations have plenty in common with business, including financial challenges and a need to boost the supply of available talent, Steve Gunderson says.
As president and CEO of the Washington, D.C.-based Council on Foundations, he keynoted the Idaho Community Foundation annual luncheon May 21 in Boise. He is a nationally known speaker and author on workforce issues. Earlier, he served in the U.S. Congress for 16 years, and in the Wisconsin Legislature.
Community foundations rely heavily on funds from donors who direct how the foundation spends the contribution, he said in an interview.
“Every projection is that these funds will not grow this year at the rate they have in recent years,” Gunderson said.
Endowment funds are holding up well thus far in the economic and investment-market lull even though the underlying value of many of their holdings has dropped, he said. Building up endowments during earlier, more prosperous times helps them to fund ongoing philanthropic needs when the investment markets soften – significant partly because federal law requires private foundations to pay out 5 percent of endowment assets each year in grants, he said.
Successful nonprofits emphasize strategic planning on an ongoing basis, Gunderson said. Staying financially disciplined and mission-focused becomes critical during tough economic times, he said.
The Idaho Community Foundation in recent years has emphasized education and rural economic development.
“Nonprofits in their charitable work and foundations in their philanthropic giving are becoming much more focused,” Gunderson said. Emphasis shifted from traditional competitive grant-making to “how to get grant-making to achieve real changes in the community.”
More nonprofit organizations are merging with each other recently. Not every nonprofit is going to survive, he said.
Corporate mergers and restructuring initiatives present a mixed bag for foundations and local nonprofits, Gunderson said.
“There is no evidence to date that acquisitions and mergers are reducing the corporate giving programs of those corporations,” he said.
But when there is a local predecessor to the regional or national entity that now owns the company, “you need to actively promote the need in the local area,” Gunderson said. “This is a huge issue for corporations.”
For example, IBM and Microsoft have locations all over the world, and each location operates in a place that has its own philanthropic needs, he said. “You want to have a local presence.”
Gunderson, in public comments including a February speech to a United Nations panel, has advocated formation of international compacts that simplify procedures, tax implications and other aspects of worldwide philanthropy. Challenges to making this kind of change include international contribution rules that are stricter than ever in the post-Sept. 11 world, he said.
Philanthropy keeps getting more global, he said. Reasons include economic globalization and the attitudes of young people.
Many young people have greater global awareness than their locally-focused predecessors, partly because of the Internet, Gunderson said. Young people also tend to emphasize the need for economic and social justice around the world.
Finding the right people to work at nonprofit organizations and to volunteer at the board level is harder than ever given mergers and acquisitions as well as the aging of the population, he said.
“We need good, high-quality board members,” Gunderson said. Boards often have members who aim to build their resumes, but are short of “senior leaders serving the ‘community good.’”
The U.S. population is getting more diverse, but corporate boards aren’t necessarily following suit, he said. “We are not doing very well on diversity.”
Education provides the key to building what is now a tight workforce and a tight supply of volunteers, Gunderson said. The solution is to design and deliver a system of lifelong learning, he said, adding that a person who has two years of post-secondary education can nearly double his or her yearly income compared to someone with only a high school diploma.
“Public, private and philanthropic sectors need to step up to the plate” to increase access to higher education, he said.
His organization is encouraging partnerships in the National Fund for Workforce Solutions, which focuses on designing and delivering workforce training.
“What you’re seeing is philanthropy stepping up to the plate to provide a solution in ways the public and private sectors have not done to date,” Gunderson said.
The philanthropic sector is now a major force in the U.S. economy, along with public and private sectors, he said. U.S. foundation assets are expected to grow from the current $500 billion to $6 trillion by mid-century, he said.
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To contact the author, write email to brad.carlson@idahobusiness.net.