We know that Massachusetts is facing some tough times. Although our state economy seems to be more resistant to the economic downturn than other states, the reality is that it will be impossible to avoid the effects of the poor management of the economy nationally, and it appears that our state budget is in trouble. In reaction to this, one thing that the state should not do is balance the budget on the backs of the communities served by nonprofit organizations.
Nonprofits are already reeling from the meltdown in private philanthropy that is coming with the collapse of financial services. “9c” cuts to nonprofits, coupled with the private philanthropy decline, could seriously destabilize the state’s leading employer, to say nothing of the consequences of eliminating essential services at a time when our residents will need those services more than ever.
We went through this “perfect storm” in 2001-03 under less enlightened leadership in the State House. We would like to believe that we can learn from the mistakes made seven years ago and not exacerbate an already dire economic forecast for our communities. We are looking to you for that leadership, and we are willing and eager to work alongside you as well as leaders from other sectors affected by this crisis to find viable solutions that protect our economy and our communities. If at the Federal level we can find a way to provide $700 billion to bail out Wall Street, surely we can find a way at the State level to save nonprofits on our Main Streets.
Sincerely,
Massachusetts Nonprofit Network Board of Directors
Bill Walczak, President MNN, Codman Square Health Center, Dorchester
Georgia Antonopoulos, Easton
George Bachrach, Environmental League of Massachusetts*, Boston
Julia Burgess, Martha’s Vineyard Community Services*, Vineyard Haven
Jim Canavan, Northern Berkshire United Way*, North Adams
Sylvia Dehaas-Phillips, Springfield
Rebecca Donham, Metrowest Nonprofit Network*
Susan Egmont, Egmont Associates*, Boston
James Hunt, Massachusetts League of Community Health Centers*, Boston
Dan Hunter, Massachusetts Advocates for the Arts, Sciences and Humanities*, Boston
Joe Kriesberg, Massachusetts Association of CDCs*, Boston
Crista R. Martinez Padua, Families First Parenting Programs*, Cambridge
Stephen Pratt, MY TURN, Brockton
Carol Lavoie Schuster, Boston
David Shapiro, Mass Mentoring Partnership*, Boston/Springfield
Jonathan Spack, Third Sector New England*, Boston
David Turcotte, Nonprofit Alliance of Greater Lowell
Michael Weekes, Massachusetts Council of Human Service Providers*, Boston
Contacts: Bill Walczak, President 617-851-9630
Dave Magnani, Executive Director 617-872-1097
* Organization name is for identification purposes only
but if 14% of MA employment is in the non-profit sector, the Commonwealth is in for a fiscal sh*t-storm as tax revenues decline. 14% of the MA workforce actually do nothing more than redistribute my tax dollars? State government needs help to do this?
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p>Of course by non-profit I’m assuming they mean the on-the-doll, redistribute-tax-dollars social services sector, and not the job-producing, revenue-earning, self-sustaining non-profit sector like Partners and Harvard University.
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p>14% of MA employment … added to what percentage of MA workers in state and local governments, and deficit-producing state authorities like the MTA, Massport, the MBTA, and on and on? Then there is the teachers union. Have I missed anyone?
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p>Add these folks up and I bet you have 50% of MA workers in non-producing industries getting paid by tax dollars. Talk about economic decline! If you work in the Commonwealth and actually produce something that other people buy, you’re probably in the minority.
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p>As tax revenues decline, which they are (and we haven’t seen the worst of it yet I imagine,) how will these poor people survive?
For example, the community health centers?
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p>Still, of some of these organizations want to take your post as an opening to tell WHAT they do, WHY they are of value and a true bargain, and WHERE their funding comes from and goes to, etc., that would be a good result.
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p>Health care, early childhood centers, performing arts are not “non producing” – there is more to beneficial economic activity than “making shoes” and other widgets.
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p>For example, each dollar spent supporting the performing arts, per economic studies, returns $10.00. See, for example:
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p>1. One exhibit in the Metropolitan Museum of Art led to $377 million in tourist dollars spent: http://www.nycapitolnews.com/n…
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p>2. the Congressional Arts Caucus figures – producing art has lasting value as well as driving other non-govewrnmental funded economic activity:
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p>http://www.artsusa.org/pdf/get…
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p>Just for starters….
Thanks for the links. But I don’t see how the two sources you cite support much of what you claim. Who writes these breathless press-releases? The politicians looking for funding for their district, that’s who.
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p>Representative Bing claims 2 exhibits at the Met generated $377 million in tourist spending. Just because he says it doesn’t make it true or accurate.
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p>As a matter of fact, his statement is beyond vaguely believable, it’s fantasy. If it were true, then every restaurant, shop, and hotel in Manhattan would be paying the Met to hold more exhibits, and the museum would make huge profits every year, and then not need government handouts.
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p>I would believe that a bunch of tourists in NYC spent $377 million over the course of these two exhibits.
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p>The NEA budget is a subsidy on top of many other sources of income for the Met, or any other recipient. To claim that every NEA dollar returns $10 is simply false.
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p>Besides, thanks to the NEA, I don’t get to choose which art I want to support. Why do I have to fund some Bitter Lesbian Exhibit in North Adams, not that I have anything against bitter lesbians. Call me a Luddite but I just don’t want to go to their art show. How ’bout I just give a couple hundred bucks to the MFA, and we’ll call it a day.
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p>As for the non-profit health care centers, don’t I already pay for other people’s health insurance in MA? Can’t they go to for-profit clinics, or to a self-funding non-profit like MGH? Why do I have to subsidize both the patient AND the provider?
and municipal/county employees then you may hit 14%.
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p>What the poster was driving at is the “non-profits” that are on the “dole” will suffer.
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p>Needless to say—some of these groups do in fact provode a bebeficial service to citizens of the commonwealth. Others are simply hiding places for political hacks, coat holders, and sign holders.
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p>Contact the Sec of States Office and ask for the Non-profits that are publicly funded ie “tax-dollars”. It’s frightening and depressing.
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p>Our current financial chaos will be made even more interesting when the MA taxpayers vote to repeal the income tax.
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p>After the revelations of the past two days, it’s a good thing that Congressman Frank represents an iron clad, unsinkable democratic district, otherwise his seat would be in peril during the next congressional election cycle.
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p>The taxpayers are tired of getting screwed.
The 14% figure is neither misleading nor merely reflective of hospitals and universities. It comes from a 2005 MassInc/Tufts University study, The Massachusetts Nonprofit Sector: An Economic Profile (http://www.massinc.org/index.php?id=216&pub_id=1328). The study finds among other things that “the nonprofit sector has been one of the few bright spots in the state economy, adding more than 33,000 jobs, an increase of 9 percent, during a time of overall employment decline.”
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p>To those who would suggest that these sorts of jobs merely represent transfers, or worse still, net losses for the economy, let me remind you a basic principle of macroeconomics: GDP=C+I+G. In other words, private investment is only one element of economic activity, with government and consumption being the other key factors.
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p>To put it more explicitly, according to the 2000 Census, just over 25% of the workforce inside Rt. 128 was employed in health, education or social services. Each one of those employees paid taxes, mortgages, or rent. They bought or leased cars. They purchased groceries at the store down the street. In other words, if you work in the private sector, look to the right of you, look to the left of you: chance are, there’s a nonprofit employee who is a customer of your business.
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p>To those who call these “nonproducing industries:” I run a $5 million organization with over 60 employees doing work in 9 Massachusetts cities (I won’t identify the agency because I don’t want to appear self-promoting in this space). We help teens who are at high risk of dropping out of high school as well as those who already have.
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p>According to Northeastern University’s Andrew Sum, a high school dropout will cost our society about $900,000 net over the course of his/her adult life in transfers such as welfare and prison. Just getting that dropout to complete their high school diploma will shift the balance to a net contribution to society of $400,000 to society over their lives. That’s a $1.3 million dollar swing to our advantage. Getting them beyond that to post-secondary study makes the economics even more attractive.
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p>Every year, my organization helps 2,000 young people earn their high school diploma or GED. That’s a net contribution to society of $2.6 TRILLION every year. Of that $5 million budget (which is less than the annual bonus earned by the CEO of AIG last year), we get about 35% from various local, state, and Federal government sources. The rest comes from private donors. So your taxpayer contribution of $1.75 million leverages $3.25 million in private contributions and saves you $1.8 trillion every single year.
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p>Rather than calling my work “unproductive,” why don’t you have the decency to thank me?
I don’t think so. If that were the case, you could solve the entire sub-prime crisis in a single year by helping 2,000 kids get their GED.
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p>My point is (1) why am I paying a $900,000 “cost” in the first place for someone else’s failure in life, and (2) isn’t what you do what I pay schools to do?
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p>The way I look at it, we’ve designed a system that imposes most if not all of the $900,000 “slacker” cost on productive taxpayers through welfare programs and other governmental subsidies, and then we fund your outfit to “fix” the problem.
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p>So I’m not buying your cost/benefit analysis.
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p>
Don’t you have to divide the $400,000 by the remaining useful life of the prospective drop out? It’s not $400,000 a year, it’s maybe $9,000 a year over, say, 45 years of productive work (20 to 65.)
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p>What is the present value of that $9,000 annual social benefit, discounted monthly for 45 years at 6%? Around $138,000. And this assumes your cost/benefit numbers are correct, and assumes the $400,000 is earned equally in month 1 as in year 45. Back load the “savings” and the $138,000 is more like $80,000. It assumes 100% of dropout “clients” would end up on welfare and/or in prison if you weren’t operating. It assumes your program is 100% successful.
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p>If if if.
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p>Do you keep track of your alumni? How are they doing? That’s how us folks in the private section, always concerned with expanding the “I” in “GDP=C+I+G”, would measure success. Empirically.
Multiply 2,000 kids a year by $1.3 million, which is the lifetime cash difference between a dropout and someone with a diploma. Since we serve 2,000 kids a year, that’s $2.6 Trillion net savings added to the system, every year.
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p>Yes, we track our long-term outcomes thanks to a generous private funder covering our longitudinal evaluation.
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p>As to why you have to pay for those slackers, would you prefer that they be in jail or on the street? Your call.
of your login handle? (some sort of Mensa test?)
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p>I don’t doubt that you are making a difference helping kids get their GED, but I do roll my eyes w/ a $2.6 trillion figure. Everyone has to justify their existence, but that seems to be a stretch.
a result of losing my original log-in and then setting up a new one, then discovering that the old one was already “remembered” on my home computer…whatever.
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p>I don’t intend to induce eye-rolling or to justify my existence. Obviously, my donors and clients are more than convinced, so that will do just fine for me, thank you.
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p>As I said in earlier posts, the facts are simply this: 2,000 of our clients earn HS diplomas or their equivalents every year. We have an independent evaluation, using a rigorous control group sample, showing that absent our interevention these kids would not earn a diploma.
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p>If you want to learn more about Andrew Sum’s research on the lifetime earnings rates of dropouts, HS graduates, college graduates, and so on, you can start with:
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p>The Hidden Crisis in the High School Dropout
Problems of Young Adults in the U.S.: Recent Trends
in Overall School Dropout Rates and Gender
Differences in Dropout Behavior
(http://netherlands.emc.com/collateral/corporation/hsdropouts-crisis.pdf)
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p>Mass Economy: The Labor Supply and our Economic Future
(http://www.massworkforce.com/documents/labor_supply_es.pdf)
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p>You might also be interested in “States’ Data Obscure How Few Finish High School” (http://www.nytimes.com/2008/03/20/education/20graduation.html?_r=1&ei=5088&en=28622197d1489e9e&ex=1363838400&oref=slogin&partner=rssnyt&emc=rss&pagewanted=all)
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p>I feel comfortable with the multiplier effect analysis that I’ve offered, but frankly even if I were off by a multiple of 100, it would still be a pretty good deal for the Commonwealth given what is spent per client in public funds.
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p>To the poster who asked why the tax dollars he paid for schools weren’t enough to accomplish this, that’s a much longer conversation. I wish we lived in a world where 50 percent of the young people in our urban high schools were viewed as disposable. We don’t live in that world, and that’s why I do the job I do.
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p>
obviously a typo in my last sentence… I menat to write NOT VIEWED as disposable!
… please find it above your post. So, yes, I did do the math.
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p>Your analysis is all wrong. (Do you understand the concept of time value of money?) This is true even if you “save” all 2,000 kids each year.
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p>But are you 100% successful? If your time adjusted recidivism rate is 50%, then your program is a net loser. Perhaps I can refine my analysis with a better understanding of how your “clients” fare over time.
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p>Can you disclose your long-term outcomes?
…because when you are trying to write “billion,” it’s coming out “trillion.” 1 trillion is 1000 billion. 1 billion is 1000 million. Even assuming you are correct in your 1.3 million number, you’ll have to save 2000 kids a year for over 384 years to reach 1 trillion, let alone the 2.6 trillion you claim.
I’ve got a few problems with the public-private partnership model.
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p>First — and simply a trivial technical matter — is a question whether these grants violate the anti-aid amendment of the state constitution.
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p>Second — are these public services? If so, why are we allowing private organizations to determine who benefits and how? Shouldn’t there be some equity of access and standards of performance for the use of state dollars? Are these even services that would be otherwise paid for from public funds?
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p>Third — is this the most efficient way to deliver these services? According to Guidestar reports, Mass Mentoring Partnership uses at least 10% of their revenue on salaries and benefits, including a CEO who makes over $100K a year.
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p>Martha’s Vineyard Community Services shows 2/3rds of their revenue going to salaries, benefits, legal and other operating expenses, including over $37K for meals, $70K for travel, and almost $500K for occupancy. And someone more familiar with financials than I can explain the $475K listed as investment losses.
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p>I’m sure all these programs are well-beloved in their respective communities and that they do a lot of great work.
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p>I’m just not sold on the idea of publicly funding their operations.
In the first place, not every signatory of the open letter to the governor is publicly funded, so your observations about Mass Mentoring Partnership are completely off base. If you don’t know how to read a financial statement, please don’t embarass yourself by opining on it.
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p>Second, any recipient of public support from the state is subject to stringent public standards about who is eligible for services, how and when those services are performed, what the expected outcomes are in order to continue to recieve those funds. Your assumption that anything less than that characterizes the current state of affairs is both ill-informed and offensive. I suppose this is the danger of blogs like BMG: anyone can register an opinion without supporting data and dare more informed readers to weigh in.
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p>As for the broader gist of your argument, questioning whether these activities should be publicly funded at all, you need to recall a little bit of recent Mass. history. The Weld and Celluci administrations outsourced the delivery of services formally performed directly by the state to nonprofit organizations, chiefly because nonprofits could do it more cheaply, and also because when those services got cut, the nonprofits themselves would be on the hook for explaining to their clients why they could no longer serve them, not the state.
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p>You’ll find that most direct service organizations spend the lion’s share of their budgets on salaries because people are who deliver services. So analyzing a balance sheet based on percentage of budget spent on salaries is just a meaningless metric.
Part of the reason I’m not sold on this public-NPO relationships is because I think it was wrong for government to pass off its responsibility for taking care of its most vulnerable citizens.
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p>Not too long ago there was a terrible story in the Lowell area about one such facility. The owners pilfered funds while the people in their care were neglected. I’m sure they met the stringent standards you speak of, too. Then what?
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p>As I said, I’m sure that the organizations who signed onto this letter do great work. I’m not convinced that it is the most efficient way to deliver services. I’m not convinced that the funding mechanism is optimal. And I’m not certain about oversight.
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p>Case in point… program directors at the Martha’s Vineyard program earn $75K a year. Program directors at the state department of Youth Services earn about $60K. Is it possible NPOs pay higher salaries?
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p>Maybe this all balances out because they are not on the state pension rolls. That’s a legitimate argument.
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p>What other points can you make that might sway my opinion?