The nonprofit sector has always been a vibrant and vital component of the Long Island landscape, touching the lives of everyone that lives, works and visits the Island.
As community, medical and social needs have risen, Long Islanders have spearheaded projects, through the creation of nonprofit organizations to bring awareness, support and relief to these needs, relying heavily on government funding and donors to provide the needed resources to keep the wheels of compassion turning.
An organization’s effectiveness traditionally was measured in terms of how resources were deployed – what percentage of funds spent were spent in a program-service capacity – and outputs, or how many people were served. The sector was somewhat fragmented, with duplication of effort, siloed operations and a more-is-better approach to service delivery.
Over the last few years, however, there has been a tremendous shift toward creating a much more integrated approach to service delivery, focused on outcomes and impact.
“The traditional way that nonprofits have worked is not as attractive to today’s funders and the sector as a whole,” said Gwen O’Shea, president/CEO of the Melville-based Health and Welfare Council of Long Island. “For years funders have been saying outputs are OK. Now we need to understand outcomes, which are supported by data with agencies partnering in different ways, all focused on collective impact.”
This need for change has put a significant level of pressure on the sector.
“Nonprofits have struggled to push out different business models,” said Theresa Regnante, president/CEO of Deer Park-based United Way of Long Island. “They have lacked the capacity, infrastructure and technology to create wholesale change.”
In healthcare, the Delivery System Reform Incentive Payment program has demonstrated that change can occur if the various stakeholders work together in an effort to collaboratively solve a problem. The DSRIP program’s purpose is to fundamentally restructure the delivery of healthcare. One of its primary goals is to reduce avoidable hospital use by 25 percent over a period of five years. Up to $6.42 billion has been allocated to this program, with payouts based upon achieving predefined results in system transformation, clinical management and population health.
“DSRIP has been the biggest game-changer, investing resources and promoting related partnerships to greatly change the healthcare delivery system on Long Island,” Regnante said.
“These are the types of huge transformation projects that are needed for infrastructure and capacity,” O’Shea added. “There is a recognition in the public and private sectors that it takes investment over an extended period of time to move large issues that will have a tremendous impact on social change forward – an understanding that change comes from moving away from fragmented sectors toward integration of all sectors sharing and committing to addressing a need.”
We’re already seeing the impact of DSRIP with the alignment of community-based nonprofits, such as Huntington-based Family Service League, with the healthcare sector – in this case, Southside Hospital in Bay Shore – but this is just the start. Expect deeper relationships and a greater investment in the future.
Costs of change
“Getting real outcomes comes with a cost,” O’Shea said. “To move services into communities with their diversities and different needs will require deeper investments in infrastructure, information technology and an overall shift in organizational culture.”
The shift can be applied to other global issues on Long Island with similar collaborative investment, and it can also work on a micro level within communities or even specific agencies.
“Organizations need to find ways to partner with corporations and funders to work jointly to solve a problem,” Regnante said. “Donors no longer want to just write a check; they want to be at the table to help figure out the resolution to problems organizations are facing. This means that organizations need to find more effective ways to engage these partners to put deeper skin in the game to help their communities.”
The problem is that the traditional infrastructures that exist within many Long Island nonprofits do not necessarily have the capacity to identify and track appropriate impact to really determine if they are moving their organizations or communities forward.
“Many organizations understand that impact is important, but they have not necessarily determined how they define or track their impact,” said Hillary Needle, president of Hillary Needle Events, who sits on the committee that reviews applications and selects winners for the nonprofit industry Long Island Imagine Awards. “As a result, impact is more discussed in general observations and/or outcomes.”
With donors becoming more sophisticated, performing more research on organizations they fund, organizations need to find ways to better reach and connect with their donors.
“It is important for nonprofits to open up effective lines of communication with their major donors to work collaboratively with them to define how to maximize the potential return on their investment in their organization,” Needle said.
“Through the LI Arts Alliance and other efforts on Long Island, arts organizations have made themselves more visible,” said Patrice Frank, director of development at Usdan Center for the Creative and Performing Arts in Wheatley Heights. “Donors are beginning to better understand the value of the arts and the impact they have on the individuals within our programs and the communities we serve as a whole.”
Changing of the guard
Reaching donors is also undergoing a change as baby boomers are giving way to millennials in company leadership, which means a change in focus in communication, fundraising and overall business theory in order to connect with them.
“Organizations need to look to update their IT infrastructure, marketing, how they approach social media, software, their staff, etc. to infuse new ideas and new ways of thinking,” Regnante said. “Making that capital shift takes tremendous leadership at both the staff and board levels. I’m not necessarily seeing people in the field coming up that understand this shift and the related organizational needs. This could mean that there is not enough talent to lead the next generation of nonprofits.”
This is important as there has been, and will continue to be, a change in leadership in the sector as long-term executive directors continue to retire. Change in leadership could be difficult for an organization, and it can also be a chance for an organization to try to reinvent itself and its relevance. This is something that Frank knows something about as Usdan Center experienced a change in executive director this year.
“The change gave Usdan the opportunity to look at things through a new lens,” Frank said. “It gave us a way to introduce new ways of doing things. We’ve changed our programming to be more flexible and provide more options and experiences for the families we serve.”
The nonprofit sector is at a turning point. For organizations to remain relevant, they need to self-reflect to better determine how they can best serve the people and communities they support. They need to understand the changing dynamics of their communities as generational transformation could impact how they do business. They also need to identify appropriate measures of impact and how those measures will be captured, tracked and reported.
Nonprofits must also find ways to effectively engage their funding partners to make an investment in meaningful social change. This is no longer your father’s nonprofit sector; the next generation is upon us.
Cerini is managing partner and partner in charge of nonprofit services for Cerini & Associates, a Bohemia-based accounting firm.
Featured Image: Gwen O’Shea/ Photo by Bob Giglione
Kenneth R. Cerini, CPA, CFP, FABFA
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.