• Entrepreneur of the Month

How Will Nonprofits Face the Challenges of 2011?

JANUARY 2011 ENTREPRENEURS OF THE MONTH

By Hope Katz Gibbs

What does the future look like at three of America’s largest nonprofit organizations? Below you’ll read remarks from Mark Tercek, CEO, The Nature Conservancy; Terri Lee Freeman, president, The Community Foundation for the National Capital Region; and Wayne Pacelle, CEO, The Humane Society of the U.S.

The nonprofit execs were panelists at the 2011 Nonprofit CEO Outlook forum hosted by Bisnow on December 16 at the Woolly Mammoth Theatre in DC. The moderator was Richard Newman from the law firm Arent Fox, which sponsored the event.

They admitted that they have their work cut out for them this year, and for the foreseeable future. In addition to facing new complicated compliance and governance issues, the upcoming crop of donors (Generation Y, also known as the Millennials) is taking a different look at how they contribute their time and money. This, plus the flagging economy, is placing increasing demands on their organizations.

What’s the solution? From direct-mail campaigns, to social media outreach, education programs, and giving circles, the leaders say they are doing everything possible to encourage active donors to continue to open their hearts and pocketbooks, as they reach out to new donors — and avoid “mission drift.”

Following are excerpts from their conversation.

The Nature Conservancy’s CEO Mark Tercek was a managing director at Goldman Sachs, where he helped develop its environmental strategy before taking over the largest environmental nonprofit in 2008.

While his experiences give him an interesting perspective on the for-profit and nonprofit world, one of the biggest obstacles his organization faces is cuts in state budgets.

“They are making it difficult for The Nature Conservancy to operate one of its most lucrative services, the conservation buyer project,” he said, explaining that in recent years, The Nature Conservancy has bought land in critical conservation areas (including land that buffers and surrounds core natural areas), placed conservation easements on the land, and then resold the restricted property. “The government trend has been to match the money we raise, but that is dwindling. As a result, there is increasing pressure on us to raise funds through private donors.”

Partnering with big businesses is appealing, he said, even if some of those corporations have questionable environmental practices. For example, The Nature Conservancy works closely with BP, which is a member of its International Leadership Council and has been a major contributor to a project aimed at protecting Bolivian forests. BP also gave the organization 655 acres in York County, Va. And in Colorado and Wyoming, The Nature Conservancy has worked with BP to limit environmental damage from natural gas drilling.

“So long as you establish clear guidelines and make sure all of your work together is transparent, there isn’t a problem,” Tercek explained in December, reinforcing the comments he made in the days following the BP oil spill in the Gulf of Mexico to The Washington Post when he said: “Anyone serious about doing conservation in this region must engage these companies, so they are not just part of the problem, but so they can be part of the effort to restore this incredible ecosystem.”

Although his viewpoint may be somewhat controversial, Tercek says that the thing that keeps him up at night is his concern that Americans are increasingly disconnected from nature. “It has been well-documented that kids today don’t venture into the woods nearly as much as our generation did,” he told the Bisnow audience. “If an entire generation is disconnected from nature, how will they feel connected enough to it to want to protect it?”

Read the advice Tercek has for other business leaders in our January 2011 Tips for Entrepreneurs column.

Terri Lee Freeman has been president of The Community Foundation for the National Capital Region since July 1996. She has led the growth of the largest funder of local nonprofit organizations in the metropolitan Washington region from $52 million to more than $350 million in assets.

In late 2008, Freeman launched the Neighbors in Need Fund to help other organizations that provide the basics — food, clothing, and shelter — to thousands of families and individuals across the region. It is the largest fund of its type in the region, and one of the largest in the country.

With fewer people opening their pocketbooks due to the impact of the recession, Freeman’s organization and two of its nonprofit partners, the Center for Nonprofit Advancement and the Nonprofit Roundtable of Washington, launched a “Think Twice Before You Slice” campaign — a clever phrase to encourage donors to stop before they cut funds that help the needy.

She realizes however, that she needs to dig even deeper to keep funds rolling in. “As the heat gets hotter with budget cuts, we’re going to have to find ways to leverage the local donor base. Younger people, older people — everyone who cares about the underprivileged needs to be engaged.”

The most important approach for a nonprofit today, she added, is the ability to show tangible results. “Donors want to know that if they are going to give you their money, you are going to make a difference with it. Nonprofits have had to sharpen their reporting skills, and I think that’s a positive development.”

Wayne Pacelle, CEO of The Humane Society of the United States, took over in 2004 after serving for nearly 10 years as the organization’s chief lobbyist and spokesperson. Since then, he has helped it become the nation’s largest animal-protection group in the United States, with a reported 11 million members, annual revenue of $135 million, and $200 million in assets.

He attributes the growth in part to successful mergers with other animal-protection organizations. Like The Nature Conservancy’s Tercek, Pacelle believes that it is important to band together with people and organizations — even when they don’t appear to share your mission.

Case in point: Last month, Pacelle announced that he believes Michael Vick, the Philadelphia Eagles quarterback who served prison time for his role in a deadly dog-fighting operation, should eventually have the opportunity to bring a dog home.

“What he did is terrible, there’s no question about that,” Pacelle told CNN last month. “But this is an issue of protecting animals in the future. Endlessly flogging Michael Vick is not going to save one animal. But putting him to work in communities to save animals and educate people about the problem of dog fighting — especially with at-risk kids — is the way to help the problem.”

The key to running a successful organization, he insists, is putting aside differences so you can accomplish something bigger than yourself. So what keeps Pacelle up at night? “I am increasingly worried about the dramatic partisanship that currently divides our country. If we don’t find a way to make amends and stand on solid ground, we won’t be able to solve the bigger issues of conservation, animal protection, and poverty.”

Click here for Tips for Entrepreneurs from the Nature Conservancy’s Mark Tercek.

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