Last week, Don Keelan, Arlington/Bennington County based CPA and observer of Vermont’s nonprofit sector, published an op-ed calling for increased regulation of the state’s charitable organizations. Mr. Keelan is interested in improving accountability of the public charities and foundations that make up our state’s “501(c)(3)’s” and generate $7.1 billion public and private dollars to improve the quality of life for Vermont residents from all walks of life.
He quotes a recently released Vermont Nonprofit Economic Impact Report produced by Common Good Vermont that show’s that Vermont’s nonprofit organizations are a significant driver of Vermont’s economy, accounting for 1 in 7 state workers and 20% of gross state product.
Like Mr. Keelan, Vermont’s nonprofit leaders are interested in the efficiency, effectiveness and accountability of our state’s nearly 4,000 IRS approved public charities. Let’s take a look at some key points that may allay his concerns and shows that Vermont nonprofits are both accountable and concerned with their own effectiveness.
- All of Vermont’s public charities, recognized by the IRS, must file 990 tax return forms which include information about mission, programs, finances and a snapshot of certain governance practices. Even organizations with less than $50,000 in income must file a federal form. The IRS is serious about accountability, If an organization doesn’t file for three years, their tax exempt status is revoked.
- Vermont’s hospitals constitute the largest revenue base of the state’s public charities. Thirty-six hospitals account for $2.8 billion–or 46% of sector revenue. These organizations are carefully regulated and are closely monitored by the Green Mountain Care Board.
- The balance of human service nonprofits ($1.2B in revenue or 16% of sector revenue) are largely dependent on state grants and contracts administered by the Vermont Agency of Human Services, which relies on these organizations to get the state’s work done and requires them to meet performance standards to access state revenue. In addition to specific contract conditions, the Legislature must agree to funding many of these agencies, the Agency of Administration tracks Outcomes and AHS’s Vermont Results Scorecard ties nonprofit performance to state investment.
- Vermont colleges are the biggest driver in the state’s education sector, which, as a whole, accounts for 21% of sector revenue ($1B). Vermont’s eleven colleges account for $878 million in revenue are accredited by state and national entities, such as the New England Association Schools and Colleges. (Note: The University of Vermont is not included in the IRS public charity numbers, because its is classified as a government entity. This year’s operating revenue totals $545 million. UVM is reviewed on multiple levels and requires Legislative approval for a portion of its funding, including an FY16 request for $42.5 million).
- Vermont’s remaining 3,940 public charities account for 39% of sector revenue. Not only are these organizations accountable to the IRS, but they must fulfill grant conditions, and through reliable operations, maintain the trust of donors that provide substantial revenue and clients who use their services.
Vermont’s nonprofit leaders are serious about improving their performance. More than 80% of respondents to a Spring 2015 Common Good Vermont survey report that they engage in new partnerships and collaborations, pursue new revenue opportunities, implement new marketing strategies, seek out new leadership opportunities, and initiate new systems of accountability. This indicates a strong readiness to embrace a “framework for social excellence” that help nonprofits deliver meaningful, measurable and financially sustainable results.
We have evidence that continuous improvement is underway in Vermont’s nonprofit sector:
- Common Good Vermont trains hundreds of nonprofit staff and board members each year in the areas of board governance, financial accountability, advocacy, and marketing. Because of our colleague’s interest in improving the way they do business, we are currently raising awareness about a nationally recognized framework for effectiveness, the Performance Imperative.
- Benchmarks for a Better Vermont, run by Marlboro College’s Center for New Leadership, has trained more than 3,000 nonprofit leaders to use Results-Based Accountability in the past five years–an active sector-wide commitment to improve its results and transparency. Their board training workshops are perennially popular, and their nonprofit management courses attract leaders from across the state.
- Countless state and national umbrella organizations, including the United Ways, offer valuable training, coaching and online resources used by nonprofit staff and board. Worth noting: the Vermont Attorney General recently released a guide to help nonprofits comply with their legal obligations.
We agree that Vermont’s public charities bear the burden of accountability–especially in the areas of financial management and board governance. Common Good Vermont will continue to work closely with a host of committed partners, including the Vermont Community Foundation, the A.D. Henderson Foundation, United Ways, Agency of Human Services and numerous organizations committed to the goal of an efficient and effective social sector. Rather than spending the money on a oversight entity, as Don Keelan suggests, let’s continue to invest in building capacity, not bureaucracy.
Lauren-Glenn Davitian works with Common Good Vermont, the state’s go-to resource for nonprofits keen to improve their performance. She also serves as the executive director of CCTV’s Center for Media & Democracy in Burlington and as president of the board of the Lake Champlain Waldorf School.