LGBT Groups Face Uncertain Financial Times

By Kerry Eleveld

Originally published on Advocate.com February 20 2009 1:00 AM ET

Amid the economic
downturn and strained budgets nationwide, LGBT movement leaders
representing about 35 organizations assembled in Washington two
weeks ago to discuss a number of options that might ultimately
save them money.

"The goals in my view
were very simple," said Jennifer Chrisler, executive director
of the Family Equality Council. "It was to open a dialogue
for folks to think creatively about the ways in which we could
work more efficiently and collaboratively for maximum benefit
to the movement."

The groups ranged from
some of the movement's largest, such and the Human Rights
Campaign and the National Gay and Lesbian Task Force, to
midsize organizations, like the Gay and Lesbian Victory Fund
and the Family Equality Council, to smaller shops, such as the
National Black Justice Coalition and the National Center for
Transgender Equality.

According to
participants, a wide variety of alternatives were presented by
a facilitator, ranging from sharing the costs of administrative
items such as computer services, health insurance, and office
rent to teaming up on programming or even joining forces in
cases where two organizations might have similar missions.

The discussion also
included an overview of how different organizations are faring
financially at the moment.

"All of us across the
nonprofit sector, not just LGBT organizations, obviously are
looking at the economy and we all want to be prudent and
fiscally responsible given the economic climate," said Rea
Carey, executive director of the Task Force. Throughout the
entire nonprofit sector, Carey said, organizations are looking
at cutting back on their budgets by anywhere from 10-20
percent.

Overall, participants
said nearly every group present at the meeting was planning for
flat funding at best in the coming year or even budget
reductions.

"Nobody was in
ultimate crisis, but there was definitely a range of experience
in terms of what the economy had done so far," said
Chuck Wolfe, executive director of the Victory Fund.

The Task Force, which
had a budget of about $10 million for fiscal year 2009, has
already begun scaling back. Carey said, for example, they chose
not to rehire for the director of public policy position after
Dave Noble vacated the post last year to join the Obama
team.

"Many of the people
who could fill that position well were working on campaigns,"
she said, "so we wanted to wait for a while and we had other
leadership who stepped in to fill that role."

The Task Force has just
started planning for its next fiscal year, which begins in
June, and Carey did not make projections but said, "It's safe
to say that we do not anticipate any growth, that would not be
fiscally responsible."

The Family Equality
Council already reduced its force in January by 3.5 full-time
employees to 13.5 (14 employees altogether). "We looked at
what we originally proposed for the budget in October of
2008," explained Chrisler, "and we have reduced from there
-- including a couple staff layoffs and strategic decisions
about certain expenses like travel." Chrisler said the
group's budget rose slightly from $1.3 million in 2008 to $1.5
million in 2009 but she expected 2010 to be a tougher
fund-raising environment.

The Victory Fund's
Wolfe had an added concern given that his organization focuses
on electing LGBT people to public office. "We don't know what
donors will do to candidates -- we are guessing that there will
be fewer contributions to them in 2009," he said, adding that
the Victory Fund would have to work harder to help make up the
difference.

Wolfe explained that
the organization's budget ebbs and flows in tandem with the
two-year election cycle -- higher in the even years and lower
during odd years. He anticipated that its budget for the
2009-2010 election cycle would stay about even with that of the
previous election cycle of 2007-2008 -- a little over $5
million combined for both the Victory Fund and the Gay and
Lesbian Leadership Institute. But he added that the
group may not have as much money to fund candidates.
"We have put measures in place to prepare for a 20% reduction
in candidate contributions," Wolfe said.

The National Black
Justice Coalition's budget of just under a million is holding
steady for now, but executive director Alexander Robinson is
particularly worried about the smaller constituency groups that
depend on money from the organization for
survival.

"One of the first
places for reductions during tough times is the money that goes
out the door to support other organizations," Robinson noted.
"The local and state groups that we support with small
sponsorship funds -- their capacity to make adjustments is
limited. So if I'm unable to give them $500, that could have a
significant impact on their budget."

Robinson said his
organization already scaled back a Black Church Summit later
this month in San Francisco from three days to one based on the
financial concerns of participants.

Money Salary Earning Wages (Getty) | Advocate.com

Along with not rehiring
for one staff member who left last year, Robinson added that
the coalition, which just marked its five-year anniversary, has
outgrown some of its original operating systems, database
software, and hardware, among other things. "We had hoped to
make an investment there, and that's something we will
potentially delay," he said.

One of the key reasons
nonprofits are taking a financial hit is that the foundations
that fund them have seen their endowments decline considerably
in the market crash.

"We've lost a little
more than $200 million so far, which means that we are going to
have to be scaling back our grant making - that's just a
reality," said Matt Foreman, who directs the Gay &
Lesbian and Immigrant Rights programs for the Haas Jr. Fund and
is a former executive director himself.

For 2009, Foreman
projected the Haas foundation would
make about $6.5 million in grants to LGBT causes, a
slight increase over 2008 if you factor out a special onetime
marriage equality initiative it funded in California last year.
But the worst is yet to come.

The foundation had not
scaled back its giving for 2009 because they had already
committed to a certain level of grants. "Our values here are
that we just don't cut anyone off, we have to give people
notice," Foreman said. As a result, Haas will be giving away
about 11% of its endowment this year, although Foreman said the
standard level of gift-making for most foundations is closer to
5%.

"When you're spending
10%, even in a good economic year, that's eating into your
endowment. In a year where the gains are negative, you're
eating into it even more," he said. "At that rate of
expenditure, you won't be around for more than seven years or
so."

In preparation for a
continued reduction of returns in 2009, Foreman said fund
officials are asking grantees not to expect the same
level of support in 2010 and are also making one-year grants
rather than two- to three-year grants.

No one sees any silver
bullets that could alleviate the current economic
crisis. The truth is, finding ways to share costs can be more
difficult than what initially meets the eye.

Foreman, who was not
present at the meeting, recalled a time in the '90s when he and
some other movement leaders in New York attempted to get health
care on a pooled basis because at the time no insurance company
in the state offered domestic-partner benefits to organizations
with under 50 employees. "That was all of us," he said,
"but we just couldn't find a way to do it."

The gathering did,
however, open communication among LGBT groups about working
smarter and reducing unnecessary duplication of efforts.

"People are thinking
more deeply about administrative and programmatic
collaborations," Wolfe said.

Chrisler gave the
example of safe schools legislation; which her organization has
a stake in this, but such legislation is typically advanced at
the state level by state equality organizations.

"The piece we care
about, as a family organization, is to make sure the language
in the bill has an affiliation clause that protects our kids by
saying they're affiliated with gay parents," she said. So if
the Family Equality Council effectively communicates
that concern to state organizations and the language is added,
she said, "then our agenda is accomplished, we didn't have to
go out and pass safe schools legislation ourselves, and oh, by
the way, everybody won."

Mergers, though
presented as a topic for consideration, were barely discussed
according those in attendance. But Chrisler, whose organization
recently merged with a smaller regional nonprofit from
Minneapolis, said nothing should be taken off the table.

"I think all boards
of any nonprofits in the LGBT movement or elsewhere should
always be open to the range of options that would best fulfill
their mission," she said.

Money Salary Earning Wages (Getty) | Advocate.com

Chrisler agreed with
the sentiment expressed by many that mergers don't tend to
create immediate savings and sometimes even cost money, but she
added that they can make sense if two organizations work better
as one. In Family Equality's case, the merger with Rainbow
Families, which had an annual budget of around $350,000, was
about a "break-even" in terms of expenses.

"They came with a
funding stream -- a pre-identified set of donors and
foundations," she explained, "and we were able to offload a
lot of the back-office work -- they're getting much more robust
fund-raising support and we are able to do all the HR
and health care, which is hard when you're a small
organization."

The upside for Family
Equality is that it joined forces with a group that had
on-the-ground experience with running prospective parenting
groups, LGBT parenting conferences, and getting parents engaged
with creating systemic change in public schools.

"For us, it was
opportunity to leverage local work and see what was
replicatable in other places across the country," Chrisler
said.

Of course, there's
really no such thing as a "hostile takeover" in the
nonprofit sector. Instead, the boards of both entities must
agree that uniting would mutually benefit their missions.
Chrisler said the Rainbow Families board was given an
opportunity to examine their strategic goals after the
executive director left, something that often offers
boards the space to consider restructuring.

"Their board was very
smart to say let's look at the ways we can ensure the long-term
sustainability of the mission of this organization, not the
organization itself, but the mission," she said.

No one
The Advocate

spoke with said they were entertaining these type of
conversations with other entities presently, but some said they
wouldn't be surprised if groups consider the prospect down the
road.

Wolfe noted that the
Victory Fund, as a political action committee, had certain
legal hurdles to merging with other PACs that nonprofit groups
(known as C3s and C4s based on their tax code designation) do
not. But he added, "We would be flattered if anybody wanted
to work with us -- if they respected our work and our
management in that way."

Overall, people were
upbeat about the steps the movement was taking to confront
adversity.

"I think the donors
should feel a great deal of confidence," said the National
Black Justice Coalition's Robinson, "because the
executive directors really were looking forward and trying to
be responsible stewards of the funds we receive." But he also
noted "a great deal of uncertainty" and said many people
were anxious about the future.

Chrisler concurred:
"We are in the most amazing of times for the LGBT civil
rights movement. We have more access and more opportunity than
we've ever seen before, and yet we're in an economy where we're
really concerned about the number of resources that are going
to be available."