What I learned about the Texas Nonprofit Sector

Wow!
Barry Silverberg, President and CEO of TANO, (Texas Association for Nonprofit Organizations) knows a LOT!

Here’s what we talked about yesterday at the Nonprofit Career Club in Austin.

Statistics on Texas nonprofits
There are 103,300 tax exempt entities in Texas.
68,176 are 501 c 3 organizations.
7,300 are private foundations.
95% have revenues of under $1 million.
92% have revenues of under $500,000.
82% have revenues of under $100,000.
There are 748 nonprofits with budgets of above $10 million.

403,196 people worked for nonprofits in Texas in 2008.
This is 5 times more than people who work in oil and gas industries in Texas
And 20 times more than people working in state government.
7% of the workforce in Travis county works at nonprofits.
And 10% of the people in the USA work at nonprofits, primarily in the health and education sectors.

Radical ideas
Mr. Silverberg would challenge the assumption that there are too many nonprofits doing the same thing. He says, “Where is the data on that?”

He says, it’s not that there are too many nonprofits, it’s that there aren’t enough EFFECTIVE nonprofits. Nonprofits do not rigorously define what success is, programmatically. Which holds them back. He said,

“If nonprofits want to be more effective, First you have to get people to realize what they stand to gain by being effective. Ask them to be clear on what they want to achieve. Get them to be rigorous in acquiring the means to achieve it. Help them to be reflective. Encourage them to be always assessing.”

And he doesn’t think mergers are the answer. Often, one nonprofit will merge with another for the wrong reasons. Maybe one wants the real estate of the other. He said, “If two weak entities get together, they are still weak.”

The government will continue to diminish its role of offering services, which offers more opportunities for nonprofits. Nonprofits that get their money primarily from the government and foundations are hurting right now. Nonprofits that get their money from earned income are doing better.

In other words, Don’t feed at the public trough. The public trough is federal, state, corporate and foundation money. If you can be funded by earned revenue, such as memberships that offer real benefits, consulting, and program services, you too can succeed while the economy recovers. This is TANO’s model. They offer 5 day programs in grantwriting, a certificate in nonprofit management that takes 10 months to complete, and help teach people key competencies to be a manager and a leader.

L3Cs = LLCS + 501 c3s mix the models of nonprofit and for profit. They are not really the answer. But people are trying to see how they can get venture capitalists to give to their nonprofits, so that perhaps their social entrepreneurship ventures could have a triple bottom line that works. Here’s a recent New York Times Article on Social Entrepreneurship.

The Bright Side
Mr. Silverberg is advocating for more government money to be given to nonprofits, because when the government cuts grants or cuts funds, they end up cutting tax revenue. Nonprofits give out $16.8 billion in wages every year, and $2 billion of that in taxes to the state. So if nonprofits go under, that means less money for the state.

There will be an estimated need for 1.5 million new leaders of nonprofits in the next several years.
There are lots of turnovers on executive levels and that offers opportunities for those with leadership skills.

Texas is still leading in the least job reductions across the country.

The sector as a whole is becoming more assertive and being more concerned about public policy. And the sector SHOULD have a lot of clout, because of how many people it employs.

It was a very informative meeting! Thank you so much Mr. Silverberg, for coming to speak with us!