COVID-19, donations, and foundation and government grant proposals

We’ve been in business since 1994 and have written proposals during several economic shocks; in the Great Recession in 2009, donations to nonprofits began drying up as soon as the stock market began diving (we wrote as much at the time). A decade later, COVID-19 is sending the economy into what could be a second Great Depression. While hopefully the crash will be v-shaped, there’s no way to know when a rebound will start, since much depends on the public’s response and on the success or failure of the drugs in clinical trials.

Nonprofits, and especially human services providers, are being torn between higher service demands and evaporating revenue. Particularly hard hit are Federally Qualified Health Centers (FQHCs); about 1,400 FQHCs deliver front line healthcare to Medicaid and other low-income patients. Total patient population estimates differ, but FQHCs may serve as many as 30 million people. FQHC CEOs have been telling us they have very limited capacity for treating infectious disease patients (no separate waiting rooms, scarce protective gear, etc.) and face staffing shortages, because clinicians staying home to watch their now out-of-school children. Some clinicians are pregnant and some are sick themselves. Inadequate testing infrastructure has been well-covered in the media by now.

Some nonprofits, like Head Start and other early childhood education providers or behavioral health service providers, face the same grim reality, as their centers are closed and third-party payments become delayed or non-existent. For other nonprofits that depend on donations, fundraisers, and/or membership dues (e.g., Boys and Girls Clubs, YMCAs, museums, performing arts, etc.) are likely even worse off. John Macintosh just wrote in the NYT that COVID-19 could mean extinction for many nonprofits. But this extinction can be averted—and will be by nimble nonprofits.

For the short term, nonprofits should stop or reduce screaming empty bowl-in-hand emails and mailers for donations. With the stock market in free-fall and unemployment probably already 10% and on a path to 20% *barring a sudden drug trial that works), seeking donations is delusional. When businesses, small and large, suddenly have zero revenue, millions are being laid off, and 401Ks being decimated, donations will quickly decline, no matter how good the cause or the relationship with the donor. Also, there’ll be no galas, art auctions, and other fundraisers for who knows how long.

The only real option for most nonprofits is to quickly ramp-up grant seeking and grant writing. As has been the case in previous economic crises, the federal response will likely be to dump money into grant programs and issue RFPs. In addition to already authorized FY ’20 federal funding for grant programs, by this week Congress will have passed three huge COVID-19 stimulus bills totally close to $2 trillion—dwarfing the 2009 Stimulus Bill. These bills will have a lot extra money for existing programs, as well as for a flock of new grant programs.* We saw this in 2009, when we wrote proposals for all kinds of oddball programs and projects, and this will unfold again with astonishing speed. Federal agencies will approve grant proposals much faster than usual—like most Americans, the federal bureaucracy rises from its normal stupor to meet extreme challenges. But RFPs are likely to have very short deadlines. Nonprofits that start preparing for intense grant writing will be more likely to succeed.

Most foundations, meanwhile, respond to crises like this by quickly increasing the amount of funds available from their endowments and speeding up their normal approval processes, both to address issues related to the crisis, as well as to keep essential nonprofits operating. In addition to emergency operating support, foundations will be very interested in project concepts relating to primary care access, public health education and outreach, telehealth, and behavioral health. But this foundation response won’t last more than about six months. At some point, they’ll turn off the spigot, either because their endowments will have been depleted too much or the crisis will have passed.

Even nonprofit royalty, which usually don’t sully their hands will grant writing, unless the grants are wired, know that reality has changed.** You may have read, “Met Museum Prepares for $100 Million Loss and Closure Till July.” The author reports that the Met will be “fundraising from foundations and pursuing government grants.” If the Met is turning to grant writing, so should your nonprofit and the sooner the better.

Want to talk about how Seliger + Associates can help? Give us a call at 800.540.8906 ext.1. By the time you read this, your organization’s leadership will probably already be convening meetings about what to do next.


* Extraneous program authorizations in federal spending bills are common and referred to as “ornaments.”

** As Bob Dylan put it in Things Have Changed, “People are crazy and times have changed.”

Less obvious things that impact human services during the coronavirus pandemic

The news about coronavirus focuses rightly on life and death and the struggles of hospitals, as well the need for social distancing and the suspensions of large gatherings. Emergency measures that last for a few weeks are one thing, but it looks like this crisis may continue for several months. While the media is generally doing a good job of crisis coverage, some aspects of particular interest to nonprofit human services providers are being narrowly covered at best.

For example, arrests by the LAPD are dropping, and many court systems are deferring or dismissing non-felony cases, since no one wants coronavirus to rip through jails. It’s hard to say what lowered policing and low-level case dismissal means: maybe many arrests were bogus in the first place. But maybe they weren’t, and we’re likely going to see substantially increased crime as people adjust to this new normal—most big city cops aren’t arresting people, even for such fairly serious crimes as burglary and car break-ins. It’s also possible that petty crime—and even crime in general—will decline because would-be criminals are at home and either don’t want to get coronavirus themselves, or they know most people are holed up at home, and many of those holed up at home are armed. It’s beyond the purview of our knowledge and subject matter to discuss this in detail, but there’s also a lively debate about whether most crime is premeditated versus simply persons seeing what they perceive as opportunity and then acting on it.

Some incarcerated persons are already being released early; released arrestees and, more importantly, recently released prisoners need something productive to do and to earn legitimate income—which usually means case-managed job training and placement of some kind. We’ve written many funded proposals for services for ex-offenders and, even in good times, this is not an easy population to work with. The unemployment rate is likely 10% and may spike as high as 20% in the coming months, further complicating matters. In the short term, however, there’ll be huge need, and likely lots of grant money available, to provide these services. Training and placement, alway challenging, will be hard, given social distancing, but some nonprofits have to try, perhaps with sufficient social distancing measure and/or tele-case management.

Another issue: thousands of 12-Step Program meetings, like Alcoholics Anonymous, are being cancelled—and these programs are based mostly on in-person peer support. Behavioral health provides will have to suspend in-person individual and group sessions, leaving millions more with SUD/OUD and/or severe and persistent mental illness (SPMI) more or less on their own. Add the incredible stressors of job/income loss, stay-at-home orders, and the like to addiction and mental health issues, and a huge human toll is likely. We’ve seen estimates that 10% of the US population has mental health or substance abuse challenges that are mitigated by in-person support. Most people don’t get the same effects from digital communications tools that we do from in-person interaction. Still, this is an opportunity for nimble nonprofits to seek foundation and government grants to establish or scale-up tele-behavioral health services.

Lots of people have realized that shuttered movie theaters may never recover; fewer people are thinking openly about what we ought to be doing with the most vulnerable persons who are facing serious disruptions, on top of the obvious coronavirus disruptions.

Links: Opioids treatment, unglamorous but important bureaucracy, Pre-K for All, and more!

* “‘Pure incompetence:’ As fatal heroin overdoses exploded in black neighborhoods, D.C. officials ignored life-saving strategies and misspent millions of federal grant dollars. More than 800 deaths later, the city is still reckoning with the damage it failed to prevent.” If your organization is working on the opioid crisis, you should give us a call, because there’s a huge amount of federal, state, and local funding for it. Rural areas are seeing and especially large burst of funding.

* “The Tragedy of Germany’s Energy Experiment: The country is moving beyond nuclear power. But at what cost?”

* America’s National Climate Strategy Starts with NEPA. Unglamorous but important.

* Officials want to clear a mile-long homeless camp on a Sonoma County bike trail. Some don’t want to go. We’re guessing that those who don’t want it to go also don’t use the bike trail or live near it.

* The hottest new thing in sustainable building is, uh, wood. If you’re doing construction-related job training, mention cross-laminated timber (CLT) in your next proposal.

* On the Chinese education system and philosophy. It’s nearly the opposite of what programs like Pre-K For All or Early Head Start attempt to do. I wonder how well it works, although that will be hard to say, since it probably takes 40 or 50 years to properly evaluate how an early childhood education program “works,” by which point the entire cultural, social, and technological environment will have changed.

* For another perspective, read me on Bringing Up Bébé, an essay that is sure to be of interest to anyone providing early childhood education services like Pre-K For All or Head Start. We collectively ought to spend more time looking at early childhood from a cross-cultural perspective and less time on making early childhood “academic.” Life is not a race. France and China seem different in key ways but surprisingly similar in some.

* “Against Against Billionaire Philanthropy.” Donations by rich people are better than not, and criticism is misguided. Foundations offer flexibility that government funding typically does not.

* “Let’s quit fetishizing the single-family home.” This would also make programs like YouthBuild work more effectively: zoning restrictions are now one of the biggest problems with any job-training program that includes a construction training element. Many of today’s challenges are really housing and healthcare policy challenges, with powerful incumbents blocking change and the powerful need for change building up.

* “The Age of Decadence: Cut the drama. The real story of the West in the 21st century is one of stalemate and stagnation.” An interesting thesis, but not necessarily one that I buy.

* Was the nuclear family a mistake?.

* How we write scientific and technical grants.

Community foundations and grants that are more work than they’re worth

We get calls from some (inexperienced) potential clients who want to pursue “community foundation” grants, which are usually small grants that range up to $5,000 or $10,000, but we almost always tell them the same thing: those grants aren’t worth chasing. We’ve mentioned that, in grant writing, zeroes are cheap, and many very large grants aren’t much harder to get, and to manage, than smaller grants.

Something unusual, however, just happened: We got a phone call from a community foundation CEO who is unhappy because he’s finding small grants harder and harder to give away. It seems that this community foundation offers free grant writing training to local nonprofit leaders in hopes of helping them understand how to write proposals, but the nonprofit executive directors still can’t be bothered to fill out the foundation’s relatively simple applications for the small grants it offers. The foundation is trying to get the local nonprofits to seek funding from it, but they won’t, because of the problems I mention in the first paragraph. While we love work, there’s nothing we could do for this foundation to solve this problem—we said him that the foundation should make the grants larger and they’ll get more applications. Alternatively, just give the money away without an application.

We also got a recent call from a client who is now turning down these kinds of smaller grants. Why would an organization turn down money? Because, the client said, by the time the she applies, deals with the bureaucracy, gets the money, and accounts for the money, there is little or no real money left to provide services—it’s all gone into administration. Dedicating management resources for $500,000 or million-dollar grants makes sense. Dedicating management resources for $5,000 grants doesn’t.*

Community foundations that want to make an impact are better off just sending the check to the nonprofits they already like without requiring an application. Or, they could invite nonprofits to submit applications they’re already submitting. For example, we recently worked on a SAMHSA Strategic Prevention Framework – Partnerships for Success (SPF-PFS) application; a community foundation interested in opioid use disorder (OUD) prevention and treatment could say to a local nonprofit, “If you’re already applying for a grant and send it to us, we’ll review it too, just using our own criteria.” Emailing a copy of an existing grant is easy—it would be something like the college Common Application in college admissions, but for grants. As far as I can remember, we’ve never seen a foundation do this.

I feel bad for community foundations that are trying to give away money unsuccessfully—but there is (rarely) such thing as a free lunch, and nonprofits know that friction costs are real.


* As Isaac relates in the very first post we put up, back in 2007, the first grant proposal he wrote in 1972 was for $5,000. That made sense then, as $5K was real money in 1972, but it’s not any more.

More experiments in education and job training: Shopify’s “Dev Degree”

Lots of us know that traditional education providers offer various kinds of on-the-job training, work experience, internships, and similar arrangements with employers; in typical arrangements, someone who primarily identifies as a student also does some work, often paid but sometimes not, to get some real-world experience. But what happens if you try going the other way around?

You may have read the preceding sentence a couple of times, trying to understand what it means. Shopify, the ecommerce platform, is now offering something called “Dev Degree,” which is described as “a 4-year, work-integrated learning program that combines hands-on developer experience at Shopify with an accredited Computer Science degree from either Carleton University or York University.” On Twitter, one of Shopify’s VP’s said that “We pay tuition & salary, ~$160k over 4 yrs”—so instead of student loans, the student, or “student,” comes out net positive. Instead of identifying as someone who is primarily a student but does a little work experience, a person presumably identifies primarily as a worker but does some schooling too.

As often happens, the old is becoming new again. Before lawyers enacted occupational licensing restrictions to raise their wages, most proto-lawyers just studied under senior lawyers using an apprenticeship model. When the proto-lawyer could pass the bar and convince clients to give him money, he was a lawyer—one who’d learned on the job. Think of Abe Lincoln, who become something greater than a passable country lawyer.

I don’t think it’s an accident that Lambda School, Make School, and now Shopify School (okay, it’s not technically called that) are concentrated in tech and programming, where an extreme shortage of qualified candidates seems to intersect with extremely high demand for qualified candidates. The New York Times and Economist aren’t proposing ways to more quickly and cheaply turn English majors into journalists, because there are plenty of English majors and few journalism jobs. But these experiments in alternative education are interesting because they speak to the relentlessly rising cost of conventional education combined with onerous student loans that can’t be discharged in bankruptcy (the infamous 2005 bankruptcy “reform” act made student loans almost impossible to discharge). If there’s enough pressure on a system, the system starts to react, and Dev Degree is another example of the reaction.

We’ve been covering the “alternative education” beat in various places for a lot of reasons, one being that we do a lot of work for colleges and universities. Another is in the fact that I’ve spent some time in the basement of the ivory tower, where I’ve witnessed some insalubrious, unsavory practices and behaviors. Another is that we’ve had an uptick in stories from nonprofit clients and potential clients about their clients or participants who have relatively small amounts of student loan debt, often in the $1,000 to $4,000 range, but that the participant can’t pay off. So the participant starts school, quits or otherwise can’t finish, and then drags around this mounting debt while making minimum wage or close to it.

Yet another way to cover these stories is the potential for these kinds of systems to be applied in other fields, like healthcare tech, truck driving, and the like. Most government-sponsored job training programs focus on these kinds of fields, and they haven’t been apprentice-ized yet. But the right nonprofit or business might come along and make it so. We want to encourage change and innovation in this sector, and we know some of our clients will make change happen.

Doing business with public agencies in Texas versus California (or New York)

We’re working on a project for a large public agency in Texas, and, like most large public agencies, it has standard vendor signup forms. We’ve also worked for many public agencies in states like California and New York, which are infamous for being unfriendly to business—and, in this instance, the rumors are true. The differences in required vendor forms might be a microcosm for larger differences between California (or New York) and Texas. The Texas public agency has a short, simple vendor form with no attachments other than a W-9.

California and New York public agencies, however, typically have long and onerous forms and processes so complex that sometimes we turn down the assignment. They often require a “temporary” local business license, even thought the assignment will likely be completed in less than six weeks and we’ll never set foot in the jurisdiction; proof of worker’s comp, liability, errors and commissions and even car insurance (all of which we have, but insurance certificates are a pain to produce and may not match the agency’s strict rules); and oddball by-jurisdiction forms that have little or nothing to do with grant writing. The City of Los Angeles, for example, requires forms certifying that Seliger + Associates did not benefit from slavery (for those of you keeping score at home, slavery ended in all U.S. states in 1865, and Seliger + Associates was founded in 1993). Another example, when working for the City of Richmond in California: we have to provide four wet-signed notarized copies of the contract (party like its 1979).

The costs of complying with random forms and local regulations are rarely discussed—but they’re very real and often high. Such requirements even drive up the cost of childcare, in ways that are often invisible to the entities imposing the requirements. Since we work nationally, and sometimes internationally, we’re accustomed to the challenges, but states and municipalities reveal much about themselves even in small ways.

Links: Healthcare and how it’s eating the world, education, homelessness and weird public policies, the nature of the good life, and more!

* “The Pedagogical Lessons and Tradeoffs of Online Higher Education.” Education and healthcare both seem to lack silver bullets, although we keep looking for them. See also us on the need to boost apprenticeships and vocational education. This is based in part on my experiences teaching college students.

* “The U.S. Furniture Industry Is Back—but There Aren’t Enough Workers: Companies expanding American production due to consumer preferences and tariffs are finding a dearth of skilled workers.”

* “As Homelessness Surges in California, So Does a Backlash.” Who could have predicted that homelessness is part of the regulatory environment that precludes the building of homes?

* “Apple Commits $2.5B to Ease California Housing Crunch.” Unfortunately, money is not the big problem here—zoning policies that prevent new housing from being constructed is the problem. Until we decide that more housing is a good idea, more money is mostly going to be used to bid up the prices of existing housing. Oregon, for example, has legalized townhomes statewide, and California should be doing the same. We’ve worked on some homeless-service proposals, but it’s depressing to see California raise a bunch of money that then can’t be used efficaciously because of their zoning policies.

* “The Key to Electric Cars Is Batteries. Chinese Firm CATL Dominates the Industry.” Have not seen this triangulated from other sources, however.

* Unraveling an HIV cluster.

* “Why It’s So Hard to Buy ‘Real Food’ in Farm Country. An exodus of grocery stores is turning rural towns into food deserts. But some are fighting back by opening their own local markets.” Seems like an Onion story, but seemingly not.

* “San Francisco Board of Supervisors questions $900K/unit cost for Sunnydale ‘affordable’ housing.” Until we do zoning reform, we can’t build affordable housing, as noted above. Meanwhile, southern California is little better: “Some of Los Angeles’ homeless could get apartments that cost more than private homes, study finds.”

* $30 million in grants to fund nuclear fusion research. That’s cool.

* Air Pollution Reduces IQ, a Lot. If you are worried about human welfare, attacking air pollution is key. Normal people can do this, too, by choosing low-emissions vehicles.

* Medical billing: where all the frauds are legal. We’ve heard that many healthcare providers, including FQHCs, are forced to be medical billers first, and everything else second, or third, or worse. In related news, A CT scan costs $1,100 in the US — and $140 in Holland.” You’ve heard it before, but: price transparency now. What’s stopping this? “Doctors Win Again, in Cautionary Tale for Democrats: Surprise billing legislation suddenly stalled. The proposal might have lowered the pay of some physicians.” There are few if any easy wins.

* Why white-collar workers spend all day at the office. It’s a signaling race. Most writers know we have 2 – 4 decent hours a day in us for real writing, for example.

* “California population growth slowest since 1900 as residents leave, immigration decelerates..” This is purely a political and legal problem, which means it’s very solvable. Also, “‘Garages aren’t even cheap anymore:’ Bay Area exodus drives lowest growth rate in years.” California is a gerontocracy ruled by zombie homeowners who bought their properties decades ago, pay low property taxes on them, and now block anyone else from building anything, anywhere.

* Magic mushroom compound psilocybin found safe for consumption in largest ever controlled study.

* AI and adaptive learning in education. This could and should be a big deal.

* “Denser Housing Is Gaining Traction on America’s East Coast: Maryland joins Virginia with a new proposal to tackle the affordable housing crisis. And it’s sweeping in its ambition.”

* Dan Wang on science, technology, China, and many other matters of interest.

* Letting nurse practitioners be independent increases access to health care? See also my post, Why you should become a nurse or physicians assistant instead of a doctor: the underrated perils of medical school. Healthcare fields seem to have near-infinite job growth, which is useful knowledge for job-training programs.

Do “child-care deserts” highlighted in the Washington Post really exist?

The Washington Post says, “A Minnesota community wants to fix its child-care crisis. It’s harder than it imagined.” Duluth City Councilperson Arik Forsman wants to solve the “region’s child-care crisis” and the reporter, Robert Samuels, vaguely cites “studies [that] have shown… more than half of the country lives in a child-care desert — places where there is a yawning gap between the number of slots needed for children and the number of existing spaces at child-care centers.” The link in his story leads to the highly partisan Center for American Progress website, which defines a child-care desert crisis using cherry-picked data to fit this definition: “any census tract with more than 50 children under age 5 that contains either no child care providers or so few options that there are more than three times as many children as licensed child care slots.”

Numerous rural census tracks are likely not to have any child-care providers, due to vast travel distances and low population density, but could still meet the low bar of 50 young children. The second part of the definition presupposes that most parents want to place their child in child-care, ignoring the reality that there still lots of people who don’t want their child in institutionalized child-care—they have one parent who stays home or who works at home (like I did when my kids, and S + A, were young). Some parents prefer to use family and friend networks. The cost of providing child-cage to infants and toddlers is very high—imagine trying to care for 30 kids, who are not potty-trained, and go on from there.

The “crisis” is based on specious data collected to make a political point, not address the actual issues. I know because we write lots of Head Start, Pre-K For All, and similar proposals under the umbrella of “early childhood education,” which is the theme for almost all child-care grant programs. Head Start is by far the largest publicly-funded early childhood education program and emphasizes “education.” Government funders always insist that child-care providers, including Early Head Start (birth – 3), focus on “education” rather than the custodial care model that largely disappeared 30 years ago. It officially disappeared; in reality, most children under age five are mentally equipped for play far more than they are for educational activities. Still, when we write a child-care/early childhood education proposal, we always state that the program will use the ever-popular “TeachingStratgies Creative Curriculum.” In this curriculum, even very young children are supposedly taught things like “pre-reading” (whatever that is) and other quasi-academic subjects. The typical “class schedule” for child-care programs, however, includes maybe two out of eight hours in alleged academic activities, with the rest of the day devoted to things like welcome and closing circles, snacks and lunch, hand-washing, nap time, outdoor/indoor play, etc.

Many contributing factors that come together to limit child-care options: just like with the affordable housing/homelessness crisis, much of the shortage of child-care slots is due to basic zoning rules (a topic we have covered extensively), as well as strict licensing requirements. In the abstract, most people support the idea of convenient child-care—until an actual facility is proposed down the street, and then existing residents think about 60 frisky kids whooping it up on their block, with fleets of parents dropping-off and picking-up kids. This type of proposal brings out the NIMBYs in force. They will use zoning to fight this “blighting” influence—and will usually win.

Also, ever since the hysteria over the fake McMartin Preschool abuse scandal in 1983, child-care facility regulations, even for home-based child-care, have become very stringent. While likely a good thing overall, this drives up the cost of operating child-care facilities. Even Head Start programs, which are fully federally-funded, have a hard time opening new facilities and keeping them open. All child-care programs, whether for-profit or non-profit, operate on thin margins and can be sunk by regulatory problems.

Then, there’s the challenge of finding and keeping “teachers.” Since Head Start was created in 1965, the open secret has been that it’s as much of a jobs program as an early childhood eduction program. The teachers, who might have a certificate of some sort but are rarely licensed teachers, are often the same moms who put their kids in the program, creating a sort of closed-loop system.

This worked fairly well until a perfect storm recently hit. As we wrote about in early 2019 “The movement towards a $15 minimum hourly wage and the Pre-K For All program in NYC,” this effort spells trouble for all child-care programs—the Minnesota minimum wage rises to $10/hour on January 1, 2020 and is set to rise to $15/hour by 2022. Staff costs make up the vast majority of child-care program budgets and rapidly rising minimum wages mean higher fees for parents, and they require larger public subsidies (which are not available in most municipalities). Ergo, it’s much harder to open a child-care facility and keep it open, even if qualified staff can be found. With an unemployment rate of less than 4% in the Duluth area, good staff are hard to find.

In related news, “Government Standards Are Making 5-Year-Olds and Kindergarten Teachers Miserable.” It seems that the bureaucrats who make these decisions have never interacted with actual human five-year-olds.

Nonetheless, we’re delighted to add the concept of child-care deserts to the equally ephemeral “food deserts” concept we often use in proposals. In grant writing, it’s not possible to have too many Potemkin deserts to add color to otherwise drab needs assessments. And many funders are more excited about solving marginal problems than real ones, like regulatory overreach and zoning.

Nonprofit executive directors have to be paid market rate salaries

I was talking to a friend and mentioned that nonprofit executive directors routinely make six figures—and sometimes well into the six figures. My friend was outraged: Aren’t the executive directors working for charitable organizations? Shouldn’t they make less money?

Maybe he’s right in some virtue-filled alternative universe, but, in the real world, nonprofit executive directors have lots of responsibilities and need diverse skill sets. When you say “nonprofit” to most civilians, they imagine a relatively small organization like the local Boys and Girls Club or afternoon program for at-risk youth, usually run by a true believer executive director who only needs local knowledge and maybe some common sense (whatever that is). In reality, many nonprofits are large, with hundreds of highly trained and specialized staff delivering complex services. For example, a Federally Qualified Health Center (FQHC) might easily have an annual operating budget north of $50M, with tens of thousands of patients and hundreds of employees. In effect, larger FQHCs resemble small HMOs and provide about the same services, except for inpatient care. Large substance use disorder (SUD) treatment providers can be similarly large and complex. In both cases, the lives of the patients/clients literally depend on the quality of the services provided. So, executive director salaries mirror those of CEOs of for-profit health care providers and can easily be over $300K—which they should be, given the advanced degrees, years of experience, technical skills needed, along with the heavy responsibilities.

Many civilians also don’t understand how even simple human services are delivered: through good organizational skills and hard work. Some of the skills nonprofit executive directors increasingly need are not easily mastered:

  • Sufficient technological expertise to supervise IT staff, vendors, etc. Just about every enterprise today is also a tech business, whether we want it to be or not. At S + A, tech-related stuff probably accounts for about 25% of management time.
  • Managerial expertise (good management looks invisible when it’s done well and is all too visible when it’s done poorly) in both supervising the management team and line staff, as well as wrangling the Board of Directors. In a nonprofit, there are no “shareholders” and the Board sets policy, including hiring and firing the executive director. Over the years, we’ve discovered variations on the following nonprofit “coup” all too often: True believer sets up a new nonprofit and hand-picks the board; as grants and donations grow to support ever-expanding operations, the board begins to morph from true believers to professionals without a direct connect to the executive director (you can call them “competent experts” or “mercenaries” depending on how you want to shade the situation). Tensions mount, and the executive director is booted out of their own nonprofit, sometimes in a public and professionally humiliating way.
  • Ability to connect with diverse stakeholders. Many nonprofits mostly serve the poorest and most marginalized persons in our society, and ideally all staff in a given organization will be able to connect with and understand such persons. But executive directors must also frequently connect with and understand white-collar donors, funders, board members, etc.
  • Ability to get things done. We have all worked with people who are better at meetings than execution, or who seem not to really do much of anything, and that can’t be true of effective executive directors.
  • Ability to cultivate donor relationships.
  • Grant management expertise, including tracking funds, submitting timely and complete reports, and keeping the funder Program Officers happy.
  • Accounting expertise.

There are probably other skills, beyond these, which are just from me thinking about the problem domain at the moment—I’m not trying to be comprehensive here, but the point is that modern nonprofit executive directors need a wide range of skills and abilities that only rarely exist in a single individual. When a set of skills is rare, the market rate for it rises. Most nonprofits, with the exception of nonprofit hospital chains, aren’t as large as even mid-size corporations, but they have become large and complex enough that the solo charismatics of an untrained and inexperienced person usually aren’t sufficient to manage a staff of dozens or hundreds of people and to maintain complex service delivery systems.

Today, small sole-proprietor shops are much less common than small or large chain stores, and something similar and analogous is happening to nonprofits. You may not like that it’s happening, but it’s happening for many reasons. Similar things are happening in business as a whole, as Tyler Cowen describes in Big Business: A Love Letter to an American Anti-Hero—a book that nonprofit leaders should be reading, even if they’re not engaged in profit-taking and -distributing enterprises. Nonprofits are more like businesses than is commonly realized, although I’m sure most regular GWC readers get this.

Many people will take some pay cut to work in and around nonprofits, but few people will take a 50% pay cut, relative to the salaries in their industry. Somewhere between 5% and 50%, the ability to acquire and retain functional people drops off. Nonprofits are competing against other kinds of organizations for qualified people.

This is a bit like people who bemoan the lack of computer science and other qualified teachers: in most districts, teachers in high-demand subjects like computer science can’t be paid any more than teachers in lower-demand subjects, like art or PE. As a result, there are major shortages of computer science teachers, and, arguably, surpluses of teachers in areas like art. Unless computer science teachers can be paid something that approaches their market values, most qualified computer science teachers will go work for software companies instead of school districts. (Incidentally, I’ve thought about teaching high school at various points, but I haven’t, in part due to the income ceiling.)

Some callers have also argued that Seliger + Associates charges too much, and, while this is a fine view, when prospective clients tell us this we always respond the same way: they can hire us; they can hire someone else; they can write it themselves; or they can not submit the proposal. Each of these outcomes has costs and benefits, and any given organization should choose the best outcome for them. But when there hundreds of thousands or millions of grant dollars are on the line, as is frequently the case for proposals we write, we begin to look like a bargain by comparison, since our fees range between $5,000 and $15,000 for typical proposals, regardless of the grant amount being sought. Paying $8,000 to us to write a million-dollar grant is a very good cost versus potential benefit analysis. And, if we’re hired, the executive director frees up time that can be deployed to other tasks.

In terms of executive director salaries, it’s important to remember that a bunch of stakeholders must be satisfied, including Boards of Directors, donors, grant-making entities, and others. If donors become overly obsessed with how much an executive director (or other senior managers) makes, they may wind up with organizations that are less effective than donors who are less obsessed with that exact issue. Many grant-making entities want functional organizations above all else, and are more likely to make grants to organizations with better executive directors. In the real world, better usually included higher paid.

Right now, many high-quality nonprofit management professionals also face the same toxic mix of rising costs we all do—healthcare, college education (their own student loans and the likely future student loans of their kids), and housing. The latter is really important for nonprofits in places like NYC, NY, SF, and Seattle, where the cost of even a modest housing unit can easily exceed $1M. One way to help moderate salaries in the nonprofit and public agency world is to support comprehensive zoning reform that will lower the cost of housing by increasing supply. This has (finally) become a national political issue, because costs are so outrageous that make stakeholders and voters are finally realizing that something must be done. As housing costs rise, so does pressure on every part of the US economy. Consider the crazy numbers from “Housing Constraints and Spatial Misallocation,” by Chang-Tai Hsieh and Enrico Moretti:

In particular, we calculate that increasing housing supply in New York, San Jose, and San Francisco by relaxing land use restrictions to the level of the median US city would increase the growth rate of aggregate output by 36.3 percent. In this scenario, US GDP in 2009 would be 3.7 percent higher, which translates into an additional $3,685 in average annual earnings.

If just the Bay Area and NYC removed many arbitrary building restrictions, we’d all be making the equivalent of $3,600 more per year. If all cities relaxed arbitrary zoning, “US GDP in 2009 would be 8.9 percent higher under this counterfactual, which translates into an additional $8,775 in average wages for all workers.” Imagine how labor markets, including ones for nonprofit workers like teachers and executive directors, would change with almost $9,000 in implied boosted salaries! We can do this, but we’ve chosen not to as a society.

An executive director in a given market must often choose between being able to pay the high rent/purchase price or being able to stay in the nonprofit sector. Nonprofits that want to stay alive must pay those rates. You may disagree with the “have to” in the title of this post. If you think you can run a nonprofit and pay below-market rates, go ahead and do it.

Telemedicine and the unstated reason it can save money for Federally Qualified Health Centers (FQHCs) and other providers

You may have read that Walgreens is is shuttering some of its in-store clinic, because the clinics are expensive to operate and, in addition, telemedicine services are taking off. Telemedicine competes with minute clinics, urgent cares, and some primary care offices; right now telemedicine is being vended through a variety of platforms, some of them independent of traditional medical providers (Teledoc is a relatively famous one), while others are affiliated with traditional providers, like FQHCs. The most interesting aspect of telemedicine services might be the one, unstated reason why they’re popular.

The official push towards telemedicine is justified by greater convenience and lower cost. So far, so good: those things are real, as is the nominal improvement in patient satisfaction, but the hidden reason is also revealing: a lot of in-person medical visits aren’t medically necessary and are generated by non-medical desires. Robin Hanson and Kevin Simler talk about this in The Elephant in the Brain: Chapter 13 describes how a lot of medicine seems to be generated by patients wanting reassurance from high-status people (doctors) and doctors wanting to enjoy the status that comes from people seeking out their expert knowledge. To be sure, “a lot of medicine” is not the same as “all medicine,” so you need not leave comments about broken bones being mended or cancers being treated.

A lot of medical office visits are costly for patient and doctor, so telemedicine can reduce the waste. In effect, telemedicine often ends up being triage: the distant provider tries to figure out whether something is genuinely wrong with the patient, and whether that thing needs to be seen in person. Almost all primary care providers have seen lots of patients who come in more for hand holding and an encounter with a sage doc than treatment of underlying condition. I haven’t seen studies describing exactly how many medical visits are really boredom, fear, craziness, improbable uncertainty, and the like, but anecdotally it seems to be high, and Hanson and Simler cite estimates in the 20 – 50% range. This is the sort of thing most of your healthcare provider friends won’t admit to strangers or acquaintances, but they may admit it to close friends or after a couple drinks. FQHC CEOs, who we work for, will sometimes admit this to us, their trusted grant writers (in our own way, we are the “trusted sages” in these conversations, reversing the roles).

So telemedicine can save money because it lets people with common colds, loneliness, and similar real or imagined ailments have a doctor, nurse practitioner, or physicians assistant tell them that they’re okay, bill them maybe less than they’d be billed for an in-person office visit, and then the provider can hang up and talk to another person who is also likely okay. Many people with chronic conditions also just need reassurance, direction to a specialist, or a prescription refilled. That can be done in a few minutes over the phone or via a videoconference. Because it’s socially undesirable and even unacceptable to admit that a lot of medicine is not what we typically think it’s about, not much can be done to substantially improve the system at current levels of technology, but offering telemedicine can be an improvement. HRSA has noticed something like this and is now pushing for FQHCs to offer telemedicine. Healthcare now consumed about 18% of GDP, in a $20 trillion economy, or about $3.7 trillion dollars. There’s enormous pressure on almost every player to try and lower costs as a consequence of these unbelievable numbers. One way or another, the average worker is paying about one in every five dollars earned into medicine—whether that dollar is paid to insurance companies, hospitals, or levels of government via taxes. Strangely, though, regulators are letting hospitals merge and form local monopolies and oligopolies, which is an important exception to the lower-cost trend. Telehealth, however, is right on trend.