October 2007 No. 45 Table of Contents Around Indiana Philanthropy’s impact around the world Nonprofit prestige: money or results? Moving beyond free market capitalism?

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Around Indiana

ISTEP moves to spring 2008. After years of debate, Governor Daniels announced the student proficiency tests will move from fall to spring, and the contractor agreed to reduce its costs to save $8 Million over the next four years.

IN getting more $ than sending. Though New Mexico gets back $3.10 for every $1 its citizens send into the federal government in taxes and Delaware gets only 42¢, Indiana gets $1.12, up from its sub-par return a few years ago. Delaware sent in $15,714 per capita; West Virginia sent $3,015.

On average, the higher the state’s income the less its return in federal spending that goes mostly to retirees or is aimed at helping poorer citizens who also pay less taxes. One-fourth of federal spending in 2005 went for health and human services (including Medicare and Medicaid), one-fourth for Social Security, and 16% for defense.

Since 1983, the trend line for retirement and disability payments has tripled; in 2005, nationally it accounted for 21% of federal payments compared to 17% in Indiana. See pages 39-40 in http://www.census.gov/prod/2007pubs/cffr-05.pdf for details on federal spending for all Hoosier counties.

IN benefits from air pollution decision. The U.S. Environmental Protection Agency announced a record $4.6 Billion settlement with American Electric Power that could result in cleaner air for Hoosiers around the company’s Rockport and Lawrenceburg plants. A coalition of 8 states and 13 citizen groups filed a suit against the firm with 16 plants in 5 states. It agreed to cut 813,000 tons of air pollutants annually as well as pay $75 Million in penalties and projects to mitigate prior adverse effects of excess emissions.

IN ranks 12th in business climate, dropping from 10th on the list last year in the 2008 State Business Tax Climate Index put out annually by the Tax Foundation. Rankings are weighted on “taxes that matter most to businesses and business investment,” with Indiana 22nd on corporate tax, 10th on individual income tax, 12th on sales tax, 10th on unemployment tax, and 17th on property tax. Seven of the top ten states are in the West; five of the bottom 10 are on the upper East Coast.

See www.taxfoundation.org/files/bp57.pdf for details on how Indiana compares to other states.

IN’s voluntary sector workforce. The total number of people employed in Hoosier not-for-profits grew at about the same rate as for-profits between 2003 and 2005—slightly more than 2%—while government employment grew less than 1%, says a new report.

Nonprofit payrolls grew a little more (10%) than for-profit (8%) and government (7%)—shrinking the gap in average weekly wages between nonprofits and for-profits by $11 and by $12 between nonprofits and government.

The nonprofit sector now accounts for 8.2% of Indiana’s total workforce, earning about $7.4 Billion in wages in 2005. Half of nonprofit workers are in healthcare, 13% in education, 12% in social assistance, and 12% in membership associations. Charities—nonprofits to which contributions are tax-deductible—employ 88% of the voluntary sector laborforce. The full report is at www.indiana.edu/~nonprof/results/inemploy/
innonprofitemploy07.htm.

Philanthropy’s impact around the world

Nonprofits—or “nongovernmental organizations” as they are called in many countries—are a significant economic force in at least Australia, Belgium, Canada, Czech Republic, France, Japan, New Zealand, and the United States, according to a new international study. Some 28 countries are measuring the impact of their nonprofits and volunteering to help create a worldwide United Nations civil society data handbook. Here are preliminary findings by this project:

• nonprofits average 5% of Gross Domestic Product in these 8 study-countries—comparable to that of utilities, construction, and financial institutions—ranging from 1.3% in the Czech Republic to 7.3% in Canada
• nonprofits serve not only households but businesses and governments as well, segments that in 6 countries have an average impact 403% bigger than their direct services to families (758% larger in Belgium)
• nonprofits are very diverse—22% in health, 20% in education/research, 19% in social services, 17% in culture/recreation, and 22% in all other areas
• nonprofits are very labor intensive (66% of budgets) and reliant on volunteers (25% of their social impact)
• in general, fund raising accounts for 35% of nonprofit income, compared to 38% from fees and 27% from government grants
• the ratio of gifts of time to money is 1.5-to-1

Measuring Civil Society and Volunteering is at
www.jhu.edu/ccss/publications/pdf/
Measuring_Civil_Society.pdf.

Nonprofit prestige: money or results?

Your board may ask you about Forces for Good by Crutchfield and Grant. This new book likely will prompt debate among nonprofits as it challenges the idea that a group’s success should not be measured by how much money it raises but by “how many lives it saves or how many low-cost homes it builds.” The authors hold up 12 nonprofits they see as exemplars in their results—newer groups that combine services with advocacy, help business “do well by doing good,” and build alliances instead of closely guard their domains. Most high-impact nonprofits:

• work externally with all sectors of society
• use leverage to change entire systems, and
• build long-term relationships.

Less-effective groups most often:

• focus exclusively on themselves and their problems
• equate organizational growth with social impact, and
• only provide direct services, avoiding politics.

Moving beyond free market capitalism?

If you define “free market capitalism” as an “economic system in which prices and wages are determined by unrestricted competition between businesses, with limited government regulation or fear of monopolies.” Almost half of people in the United States (49%), Spain (49%), and Germany (48%) say that’s what they prefer—while only about a third think so in France (34%), England (35%), and Italy (36%), according to a new Financial Times/Harris poll. No country’s majority thinks their economy should be like America’s—11% in Germany to 38% in Italy and only 30% in the USA.

Most think trade unions are important in today’s work environment—from 63% in Spain, 47% in Germany and in the USA, and 41% in France. The Italians (66%) and French (53%) think multi-national companies have more power than their governments; few Americans (24%), English (29%), and Spanish (31%) do.

Only Germans are more optimistic (36%) than pessimistic (33%) about their country’s economic future. Italians are the most pessimistic (69%), followed by the French (58%), Spanish (47%), Americans (36%), and Brits (31%). When asked how well they think the European economy can compete with the rising Asian economies of China and India, none could muster a majority to say so, though Germany was the most optimistic (44%) and France and Great Britain the least (25%). www.harrisinteractive.com/harris_poll/index.asp?PID=810

When asked about their own financial condition, Americans are pretty divided; about 40% say they’re better off than a year ago, and 40% say they aren’t. More Midwesterners (48%) and those with incomes under $50,000/year say they’re worse off. Looking ahead, Americans are a little more optimistic—46% say they’ll be better off (43% in the Midwest), though lower-income folks don’t (only 39% under $50k/year). http://www.harrisinteractive.com/harris_poll
/index.asp?PID=812.

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