The Great Fiscal Disasters

The U.S. public debt burden is $7.75 trillion, and “most economists agree that our rising deficit poses a very real threat to the health of our future economy.” We could start paying down this debt – as many Americans are struggling to do with their own personal finances – but our federal government continues to run up even larger deficits.

One of the reasons we cannot reign in our spending ways is our political leaders continue to care more about representing the interest of their state, and getting reelected, than about the future health of the U.S. economy. Take Senator Ken Conrad (D-ND), Chair of the Senate Budget Committee, for example. Sen. Conrad is adamant that Congress and the President need to reign in their irresponsible spending ways and pass a balanced budget. He has even gone on record as saying:

“Yes, the small things are important to my state, but I also recognize that the big things are what matter from a national perspective. What really matters is that we have an overall (budget) plan that is balanced.”

As Chair of the Senate Budget Committee, Sen. Conrad has arguably more clout over this process than any of his Congressional peers. So, in practice, how does he use this influence? Well, Sen. Conrad awarded his home state of North Dakota with the third highest amount of federal earmarks per capita of any U.S. state ($213 per capita versus the U.S. average of $41 per capita for fiscal 2008 -2009).

In a time when we as a country are spending 10% of our revenues ($250 billion) to repay our federal debt, and Social Security, Medicare and Medicaid consume another 57% of our budget ($1,430 billion), it’s good to know our leaders are “looking out” for our best interest. Oh, least I forget, the current 2011 budget request is likely to add another $1.6 trillion to our growing public debt (Did you know that China and Japan, collectively, own $1.5 trillion of U.S. debt?), which went before the Senate Budget Committee this week. The best part of it all is that the Obama administration projects the entitlement programs and the interest on our deficit will “absorb 80% of all federal revenues by 2020.” Therefore, let’s all be clear, our current political leaders, much like their recent predecessors, are fully aware of the approaching fiscal crisis and are doing nothing to avert it.

Speaking of fiscal crisis, let’s not forget about our own state’s budget woes. Last year, the state of Pennsylvania took 101 days after its constitutional deadline to pass its $28 billion budget. PA was the last state to pass its budget amidst the worst recession since the Great Depression. By August of last year, most of the state’s 67 counties could not afford to fund their nonprofit agencies without state money. (Harrisburg did manage to pass an interim budget that would pay the state’s 71,000 government workers, but nonprofit agencies were not included.) During a time of great community need, and declining public contributions, foundation funds, and already scaled back government contracts, Pennsylvania politicians could not decide on how to fill a $3 billion hole in our budget (or 10% of the total budget, which is pretty “cheap” in comparison to our projected 33% federal budget hole for fiscal 2010 – 2011). Instead, nonprofits were forced to take out private loans to continue to operate; reduced their services; furloughed or reduced their staff; and, in some cases, closed their doors altogether.

The bad news for nonprofit agencies and Pennsylvanians alike is the fiscal picture in Harrisburg is sure to only get worse because of the looming debts in both the state employees’ and teachers’ retirement funds. PA legislators entered the millennium with a pension surplus and spent the surplus funds despite the fact that they would one day have to deliver on this “account receivable”, just as their federal counterparts did (remember Al Gore’s 2000 platform promise to create a Social Security “lockbox”?). Unfortunately, the “receivable” will start to come due in 2012, and the Tribune Review and Post-Gazette both estimate it’s going to cost the state approximately $3.5 billion (the Trib says $4 billion, the PG says $3 billion). Mind you, this money will not be used to improve our schools, create new jobs, or improve living conditions in our cities and rural communities, but rather will cover the state’s entire employer contribution for state workers and half of the employer contribution for school workers for fiscal 2012 – 2013. Essentially, the folks in Harrisburg are imitating the same fiscal irresponsibility of their federal counterparts. May the most irresponsible lawmaker “win”, I guess?

 

Donated Computer Poll

We’re trying to figure something out about nonprofits at the Bayer Center.  Have 7 seconds to help?

 

Everything I Need to Know about Nonprofit Technology I Learned from My Cats

Anyone who knows me, knows that I adore two things above all:  nonprofit technology and my seven cats.  What you may not know about me is…

“Everything I Need to Know about Nonprofit Technology Management I Learned from My Cats”

1. Sometimes unexpected things happen, nobody knows why, and nobody claims responsibility.
2. Flexibility is one of the best traits to have.
3. Clawing your vendors’ or staff’s eyes out will get you nowhere.
4. When it’s working well, you won’t notice it’s there.
5. Servers purr when they are happy.
6. Regular check-ups can help you avoid larger bills later on.
7. If the room is too hot, things may flop over on their side and refuse to budge.
8. Getting it wet is disastrous and you will pay dearly for doing so.
9. When it makes a loud or weird noise, you should pay attention.
10. A little bit of care and feeding go a long way.

 

3 Reasons why the iPad will fail. 4 Reasons why the iPad will succeed.

With all of the hubbub about the Apple iPad, my gut reaction hangs on an “and yet”.  Tablet PCs have never taken off before and may not now, and yet conditions may finally be right.

3 Reasons why the iPad will Fail

Tablets have been coming for so long.  Hearing all the hype about the iPad reminds me of this Microsoft Office ad that aired during the 2004 Super Bowl.

I remember scoffing six years ago not at the (kind of fun) end zone celebration in the office but at the fact that the guy is spinning a tablet.  They seemed not ready for prime time then in 2004, and they have not spread since then.   This may be a lame reason to cite for what’s supposed to be a game-changing technology, but I will posit that the iPad will fail because all prior tablets have failed.

Part of the tablet’s p.r. problem is that people have been touting it for so long.  Famous people.  Bill Gates publicly went gaga over tablets in 2001.  Sales figures are hard to come by, but the highest percentage I’ve seen place tablets at around 2% of the PC market.  Apparently, most of the adoption has been in task-specific places like the healthcare industry.

Keyboards are good input devices.  There is actually something useful about having a physical keyboard to type on.  It frees the user to look at what the typed output (not the keys).  Muscle memory increases speed, and the sense of touch confirms accuracy.  It seems ironic to me that one challenge for tablet PCs has been teaching computers to respond to human touch.  The question remains whether humans can learn to touch a computer as quickly and accurately as they can a keyboard.

A touch computing device that actually took off was the PDA.  Did you ever see someone whip out one of those folding PDA keyboards?  Kind of ridiculous, right?  It’s three times the size of a device whose name starts with the word “portable”.  And yet, the market for them sprang up because stylus input felt clunky and required one to learn a new language (quick, what was the stylus stroke for “k” in graffiti?).

When PDAs evolved into smartphones, what feature did they get?  Keyboards.  Little thumb keyboards that make one’s fingers feel enormous at first, and yet, it’s a raised, hard key keyboard.

The Size/Performance/Flexibility/Price ratios are off.  The iPhone and iPod Touch and the Droid phones succeed because they’re pocket devices; they can go with us anywhere without a second thought.  A tablet is big enough to require a bag of some sort (or perhaps the mainstreaming of map pockets in jackets) and yet most prior tablets have been less powerful than a desktop or laptop available at the same time.  Finally, they’ve carried a price premium.  If new tablets can’t tout a bargain proposition, they won’t make it.

4 Reasons why the iPad will Succeed

Content ubiquity. Maybe Gates made his famous prediction about tablets taking over because he foresaw the expansion of wireless capability coming in the aughts.  Maybe the iPad will succeed because, as smaller devices have shown, when we can get access to data anywhere, we will.  The culture has adjusted to this availability, and now we want access everywhere.  If a user doesn’t have to plan ahead in order to have a book/movie/sound clip on the device in order to enjoy it wherever he is, he’s more likely to use the tablet.

Touch computing has finally matured.  When I watch my 3-year-old take his grandmother’s iPhone and navigate to his favorite game, I must say that the touch interface has the intuitive, second-nature feel that wide adoption requires.  It’s taken a while to get from touch screen kiosks in public places to no-second-thought touchscreens in our pockets, but that moment has arrived.

The iPad aims at infotainment, not work. We have not seen tablets in offices, being spun in end zone celebrations, or being used for work.  We may, however, see them in living rooms, being used for play and in place of print media and as a sometime replacement for television and video.  If success does not mean office workstation replacement, well then the iPad might succeed after all.

Apple’s on a long roll.  Apple hasn’t made many mistakes since the introduction of the iMac.  While Microsoft has bumbled and its PC industry partners have merged and had their warts, Apple has been doing things right.  Presumably, they’ve done their homework on this one and see an actual market for this device now.

Predictions in this realm have proved perilous.  That may be why I’ve hedged with both pro-con predictions.  For now, I’m hiding and watching.

 

Tagging: it’s not just for graffiti artists anymore

Blog posts that get meta about blogging can be a little yucky, but I hope you’ll allow me to get a little meta.  Having worked with databases for years I have come to appreciate the ability to label people or items more than one way in a database.  Multiple labeling helps me find these items later and know several things about them at a glance.  When blogging and other media sprouted up on the web with a tagging feature, I was intrigued.  It’s especially helpful to watch multiple people contribute to a set of tags and see how different people label the same thing.

Imagine my surprise then, when I came across this paragraph in the (otherwise unreadable) foreword of Roger Schank’s (quite readable) 1990 book, Tell Me a Story; Narrative and Intelligence:

[W]hy do some people resemble an old grandfather who can only tell the same few stories over and over again?  By contrast, why do other people seem to respond with a truly pertinent case?….[W]hat enables such people to respond intelligently? The answer…is that they have previously mulled over their experiences and labeled them in multiple interesting ways.  From a sequence of experiences they have constructed a narrative; they have reflected on this narrative and found a number of ways in which it is significant; and in so doing, their memory has attached several labels to the story, which allow them to recall the story when another narrative suggests similar labels.  Once the earlier story is recalled, these people can reflect on pertinent comparisons with the current situations.  Present wisdom depends on earlier indexing. (emphasis added) (pp. xv-xvi)

In 1990, Schank described the human intelligence that computers try to mimic through systems like tagging and search.  We’re built to index things, and we’re smarter when we do it and when we then employ those indexes.

The next time you’re writing a blog post and want to skip the tags, don’t do it.  Think about what’s relevant or how you’ll want readers to find the information in your post and hit that tag feature.  Be a friend to the hive’s intelligence.  Present wisdom depends on earlier indexing.

 

It’s 2010. Where’s 2007?

My public policy school pr0fessor used to say “bad data is better than no data”.  Of course, I love data, and I have access to data I love through the Bayer Center’s biannual Nonprofit Technology Survey.

But our most recent survey was in the summer of 2008.  So, while waiting for the next round, I am left observing the trends we follow in the survey through anecdotal analysis.  Lately, I’ve been watching the adoption of Microsoft Office 2007.  The uptake in Pittsburgh area nonprofits still looks slow even now.

When the Bayer Center offered a class called Settling in with Office 2007 in August 2008, I thought we’d maybe missed the boat.  I thought organizations would have already adopted 2007 and wouldn’t need our help finding their way around in it.  The class actually nearly sold out.  Then, that summer, our survey data indicated that only 19% of organizations in the region used Office 2007 exclusively.  There were some organizations that ran a few machines with 2007 while many still had XP or 2003.  The largest plurality of survey respondents (36%), however, used only Office 2003 at that point.

Since August 2008, we’ve offered “Settling In” three more times and  canceled it three times.  We’ve done custom training on it with a few organizations, but the catalog classes have not made.

When I look around now, I see that many organizations have still not adopted Office 2007, or have not switched over completely.  The last custom training I did was Excel 2003, and a staffer at that organization was impressed with the “new” features in 2003 because her machine actually has Office 97 on it.  97!

Why are we seeing so little 2007 in 2010?

My first theory is that 2007 adoption has been held back by the fact that it was released around the same time as Windows Vista.  Oh, and right when the economy tanked.  Between decision-makers not wanting to deal with the headaches of enterprise-wide Vista implementation and spending constraints ushered into the already-thrifty nonprofit sector, the pace of hardware upgrades and replacement has slowed.  With slow hardware replacement, inertia keeps workstations in 2003.

My second theory derives from Microsoft’s brilliant decision to break Microsoft Access for 2007.  Sometimes, I imagine internal strategy meetings as MS going this way “OK, Dinesh and Sandy have gone through the list of features that worked really well in the previous version.  If we’re going to make users hate the new version, it’s going to take the whole team to focus on making sure those features don’t work.  Roger has a plan for us…”  If organization have their central database in Access 2003 and they’ve tested 2007, they’ve likely put their heads in their hands and waited out this upgrade.

Any other theories?  Or is my anecdotal data incorrect?

 

There’s got to be something better than the tuition tax.

I realize that I work for a university, but, believe me, there’s no conflict of interest in my opposition to the proposed Pittsburgh tuition tax on students.  And then, when the tax was challenged as being unconstitutional and City Council responded by passing special, unique zoning procedures only for universities, I just had to write the following Letter to the Editor (it’s the fifth one on the page):

http://www.post-gazette.com/pg/09331/1016483-110.stm

I hope you agree with me that this is an embarrassing, anti-intellectual seeming step backward for Pittsburgh — a city that  has been transforming itself into an exciting and progressive new image.

We nonprofits are in a touchy position right now.  Some of the universities and hospital systems have tremendous wealth, and there is certainly a reasonable argument to be made that they should be paying into the coffers for the services they receive.  On the other hand, they are providing tremendous services in exchange for their tax-exempt statuses.  And, the vast majority of nonprofits struggle day to day to survive as they provide essential safety nets, high quality arts and culture, and countless other benefits for the common weal.

So, on the one hand, it’s a dangerous can of worms to open for any nonprofit to pay some version of taxes.  On the other, we’re all — government included — financially stressed right now.  But whatever the solution, it seems to me that taking a leadership role in adding even more to the already exorbitant cost of education can’t be a good idea.

What do you think?

 

Happy Cyber-Monday

 

Lessons on how nonprofits can behave more like for-profits

Upon joining the non-profit sector, a number of people opined to me that they are happy I’ve decided to dedicate my time and effort towards strengthening the sector’s work. In fact, one of the sound bites I kept hearing is that non-profits – despite their inability to sell equity (and thus raise money through either private investors or the larger public capital market) or the lack of an agreed upon “profit” metric for measuring organizational success – need to behave more like for-profit businesses. So, listen up my fellow non-profit professionals, I’m going to impart some words of wisdom I learned from my days working in the for-profit world (at institutions such as Freddie Mac, UBS Investment Bank, and others).

We need larger pay packages to attract and retain qualified professionals. In order to create the type of fast thinking, innovative companies such as AIG, Bear Stearns, Enron, Tyco and others, we need to increase our compensation packages. Currently, this kind of fast-thinking/innovative executive talent retails for approximately $10.5 million, or roughly 344 times the average worker’s salary ($30,700). Since the average executive director of Southwestern Pennsylvania only makes a mere $96,110, or 3.6 times the average worker’s salary – that’s a lot of innovation we’re leaving on the table! Lesson #1: if we are to attract for-profit executive talent then we must start paying our non-profit executive directors better.

Ignore sustainability and adopt a “do whatever it takes” attitude to exceed your short-term goals. We in the nonprofit sector spend far too much time talking about creating sustainable programs and achieving long-term outcomes. Instead, we need to adopt a more market-centric view of the world, just as for-profit businesses have to when their performance is measured by the market. Take General Motors, for instance. In the late 1990s and well into the first decade of the 21st Century, GM ignored suggestions that the company should rethink its focus on the sale of light trucks and SUVs and instead become a pioneer in the production of fuel-efficient (sustainable) automobiles. However, GM’s short-term focus on becoming the premier seller of light trucks and SUV (its most profitable product line) seemed to be paying off:

In 2002, GM sold more than 8.5 million cars and trucks and was the first auto manufacturer to sell 1.2 million SUVs and 2.7 million trucks in a calendar year. The company set industry sales records in the United States and owned nearly 15 percent of the global vehicle market. And investors took notice – the company’s stock rose approximately 45% over the next year.

Of course, you know the rest of the story by now – fuel prices rose and consumers grew tired of paying for non-fuel efficient vehicles. GM was stuck with a bunch of cars and trucks (mostly trucks) that they tried to “give away” with 0% financing and large rebates – again, focusing on exceeding the company’s short-term sales numbers even at the expense of hurting long-term profit margins – but nobody wanted them. Lesson #2: for-profits rarely practice sustainable planning so why should your organization.

The market rewarded GM's banner 2002 year with stellar market returns in '03. Nevertheless, GM's lack of a sustainable business model finally forced the company into bankruptcy in '09.

Transform your board. Nonprofit executive directors, not only are you egregiously underpaid relative to your for-profit brethren, but also you need to hold more board power. This year’s Nobel Memorial Prize in Economics winner, Oliver Williamson, in a recent article, “Corporate Boards of Directors: In Principle and in Practice,” submits that today’s corporate boards are largely ruled by the CEO and are passive financial stewards. He writes:

The CEO is in de facto control of the operation and composition of the board…most boards most of the time are responding with nodding approval, and boards are beset by inertia, hence are slow to become active when the corporation experiences adversity” (260).

In hindsight, we’ve spent far too much time espousing the idea that nonprofit boards need to be active and chart the agency’s strategy, raise money, etc. After all, when is the last time you heard of a corporate board functioning this way? No, on a corporate board the CEO/Chairperson sets the agenda and the remaining board members are asked to “nod in approval.” Lesson #3: we need to retrain our board members to be passive financial stewards and centralize all power with the executive director (and newly appointed chairperson).

As you read these “lessons,” I hope it is apparent by now that there is an awful lot each sector – the for-profit and non-profit – can stand to learn from one another. I think the three lessons above illustrate areas the for-profit sector should take a cue from the nonprofit sector and consider adopting these practices. Conversely, there are a number of for-profit practices – strategic planning, capital budgeting, using data to inform evaluative programmatic judgments and more – that I believe are beneficial for nonprofits to adopt. However, to think that either sector has a monopoly on best practices is just over simplistic and flawed logic. As Jim Collins’ writes in his monograph Good to Great and the Social Sectors, “We need to reject the naïve imposition of the ‘language of business’ on the social sectors, and instead jointly embrace a language of greatness” (2). Touché, Jim.

 

Reasons to Give Thanks

 

What does Thanksgiving mean to you?

For many, it means food, family, fun (hopefully) and some time to get away from work and relax.  Not everyone is so fortunate, however, and it is good for us to take a moment or two and reflect upon our blessings, no matter how small or insignificant they might seem.

Here are the things I am thankful for this year:

1. I am gainfully employed. I work in the building that houses the local job center and I see so many people in the lobby and elevator visiting that office.  I’ve chatted with several of them in passing and some are so sincerely wanting work and are at their wit’s end – it makes me sad.  On days at work when I want to pull my hair out, I remind myself that I am lucky to have a job and to just “get over it.”
2. My parents. For some reason, practically every electronic device, appliance, and automobile I own has decided to go on the fritz in the past year in a big way.  I despise myself when I have to borrow from my mom and dad, but they are more than happy to lend it and I feel fortunate that they’ve got my back.  I know it’s not always going to be that way.
3. Smartphones. I recently broke down and bought a Google Droid.  I am continually amazed by how much convenience is afforded in one small device that fits in the palm of your hand.  Ten years ago, I complained to a friend that I wanted a single device to replace my music player, my camera, and my PDA.  Apparently I wasn’t the only person who felt that way and I’m glad the tech giants were listening.
4. Holiday music. I listen to holiday tunes starting in July, but they become very prevalent around this time of year (which means more variety and listening options).  My favorites are the oldies – Bing Crosby, Perry Como, Andy Williams, etc.  When I was very young, I had a record player and adored my Perry Como and Andy Williams Christmas albums.  Hearing those songs is like a time machine to the days when life was simple, and my brother and I woke our parents up at 5 am because we couldn’t wait to get started opening our presents.  Holiday music = nostalgia = good feelings.
5. Online shopping. I used to do the Black Friday insanity – camping out at my store of choice at 3 a.m. to get the “good stuff” before it was gone.  Those days are over for me.  I do all my shopping online, where the deals are just as good if not better than in the stores.  Once again, hooray for technology.
6. The nonprofit sector. I know that there are many days when we feel like we are beating our heads against a wall.  When I think about how many lives our sector touches and the work that we collectively accomplish, however, I can’t help but feel grateful that nonprofits do exist.  I cannot imagine leading a life driven solely by making money and I am grateful that I can work in a place that has meaning and a mission.
7. President Obama. People are starting to complain that he isn’t effecting change fast enough.  Give the man a break already.  He’s taken the leadership mantle under the worst possible conditions – do we really want him making snap decisions?  I like that he looks before he leaps and that he recognizes that problems that have been years in the making cannot be fixed overnight.
8. Our soldiers. I frequently disagree with the decisions made by our government in sending troops overseas, but I appreciate the men and women who go forth willingly and do service for our country.  We owe them our respect and gratitude.
9. Windows 7. It’s about time you got it right, Microsoft.  Thank you for finally making a decent OS that is stable, attractive and intuitive.
10. Social networking. I love that I can talk to people with whom I went to high school so many years ago again.  I love that I can play a game with someone in Thailand or Norway.  We may not have figured out all the ways in which social networking can be leveraged, but I’m enjoying it as we do.

What are you thankful for this year?