We live in a frightening world.

More frightening now than in the memories I carried with me up to the end of the last century. Of course, when I was a child we were in the midst of a terrible war, and every adult I knew was frightened.

But for most of my adult life, I lived in relative comfort and safety. No more.

Our world is much darker now, more frightening for each of us. There are new routine inconveniences -- like having to go to the airport much earlier. And there are personal brushes with fear and sadness -- like delaying a family gathering until a cousin could return from a soldier’s memorial service in Zillah. These fears can touch any of us at any moment, any day.

Truth to tell, it’s one of the reasons I like working with and around nonprofits. The careful acts of kindness and enduring community building that nonprofits do are a powerful antidote to the despair that could too easily overtake any of us these days.

I do not mean to be Pollyanna about this. Nonprofits themselves can, and do, contribute to our sadness, our outrage, and our fear. It really is true that large, well-managed and apparently legal charities operated for years in the US raising funds that, among their other purposes -- some of them very valuable -- were used to buy guns and build bombs. Anyone who follows the trade press can recall accounts -- too many accounts -- of people who have taken advantage of the good name of charity to bilk generous people and loot important institutions.

But looking across this room, I see the powerful antidote to despair repeated in face after face. We who have gathered here today may cringe at violations of our values, but we don’t give up. Our blood may boil at reports of counterparts who abuse the trust  communities -- and sometimes we ourselves -- have vested them with, but we don’t stand down from our goals or wander from our path.

My goals for the next few minutes are to sketch very briefly for you some major trends to illuminate the conditions that shape our work and recall with you some of the signal events that have marked the passage of another year for nonprofits here in Washington State. In the time I have, I cannot hope to do justice to either goal, but I hope this brief review of our shared experience will reinforce for you a sense of the importance of what we do together for the communities where we work.

Let’s start with the trends.

When you get a chance to turn to page four in the 2004 edition of Nonprofits in Washington -- published today! -- you will see that in March of this year there were 47,480 nonprofit corporations registered with the Secretary of State in Olympia, an increase of nearly 20% over the decade that we have been preparing these reports.

To give a bit of perspective on this number it is useful to know the number of for-profit corporations on file: 133,191 on March 26, 2004. In other words, a little more than a quarter of Washington’s corporations are organized as nonprofits. My guess is that most people in our state would be surprised by that number, that they would expect that there were many times more for-profit than nonprofit corporations in our state.

The registered nonprofit corporations include many organizations that are not charities in the sense that we normally use the term; they include water-distribution districts, business associations, and recreation clubs, along with, of course, thousands of churches, granges, food banks and hospices.

A measure of the number of nonprofit organizations in a sense that is closer to the way most of us use the term is in the count of “exempt organizations” (as the IRS calls them) with addresses in the state. At the end of 2003, there were 20,980 such organization, an increase of nearly 30% in the decade.

The growing proportion of 501(c)(3)s among nonprofit corporations here in Washington is a reflection of a trend noticed across the country by observers of nonprofits and their work. That section of the Internal Revenue Code is increasingly becoming the classification of choice for organizations that can qualify.

Reported employment by nonprofits has also grown in the last decade, to about 235,000 in mid-2003. The reports of total wages and of the total number of employees both have increased by about 48% since 1993. It is worth noting that when the 1994 Nonprofits in Washington was published, the number of employees of nonprofit organizations was about equal to the number of people who worked at Boeing. Ten years later, the number of employees at Washington nonprofits is about four times as large as the reduced number of people who work for the aerospace giant in Washington State.

Still, most nonprofits are small. Connecting these statistics together shows that it’s likely that less than 10% of Washington’s nonprofits have any full-time paid employees. The rest operate with volunteer leadership and support on a relatively small scale. Those statistics should not be taken to suggest that volunteers are some sort of magical cure for the many challenges our communities face. The range of work volunteers do as resources for large institutions and as the only staffing for small ones is one among the many signs of the great diversity in the nonprofit field. The number of entirely volunteer organizations reminds us of the critical role such groups play in the quality of life throughout Washington.

These numbers from Nonprofits in Washington reflect the broadest assessment of the field. They show steady growth over the past decade in the numbers of nonprofits, in the resources they call upon to serve Washington communities, and in the numbers of people involved in their work as volunteers and employees.

(Nonprofits in Washington: 2004 is available online...[[[click here]]].)

The headlines of the past year have often left us with a different impression. They have highlighted dramatic changes and painful stresses at some well-known institutions. Tough times, to say the least, at KCTS. The shuttering -- temporary we can hope -- of the Bellevue Art Museum. Turmoil at the Seattle Fringe Festival. The orderly, but still wrenching, decision to close the Washington Literacy Council.

It is no surprise, of course, to the people in this room to hear that the work of nonprofits has been adversely affected by broad economic conditions. Even those who work in the field -- not to mention most outsiders -- may not fully recognize the way bad economic times can pile up the difficulties for nonprofits.

Bob Russell of Brunni-Colbath Insurance points out the interconnections. It’s not just that with the stock market down, both contributions and endowment income are newly limited. Government revenues have been falling below projections as well, limiting the principal source of revenue for many nonprofits in the social services. Insurance companies depend on investment returns for the resources to pay claims, so when they experience lower than expected returns and higher claims, they raise rates for coverage. Plus, of course, the state unemployment insurance program is experience-rated, so if a nonprofit lays off staff, its payments into the UI program will increase in the following year. Combinations of these and other external pressures force hard choices on even the most established and carefully managed organizations.

The news from 2003 wasn’t all bad, of course. There were some stirring success stories; some examples:

• The Tacoma Art Museum completed its capital campaign and opened to acclaim.

• The YWCA opened Opportunity Place with 145 residence units in downtown Seattle.

• The United Way of King County exceeded its campaign goal.

• The University of Washington announced the creation of the Nancy Bell Evans Center for Nonprofit Leadership.

• Cascadia Revolving Fund, Social Venture Partners, and NPower have put in place new organizational structures to support expansion of their work into other communities across the country and internationally.

• Seattle P-I reporter Susan Phinney tallied $26.75 million raised by just 9 charity auctions in last fall.

• Several Pacific NW foundations, including Brainerd and Bullitt, sustained their level of grant-making in recognition of the difficult times faced by grantees, and overall foundation assets in the region grew because of significant new donations, including at the Gates Foundation, now the largest in the world.

• And Bob Russell reports that with signs of improvement in the financial markets, he is seeing less pressure for increases in insurance rates.

Broadly on the national scene there were some developments during 2003 that deserve a moment’s attention.

Concern with corporate governance grew. The widely reported failures at for-profit companies were reflected in the Sarbanes-Oxley act and new rules of conduct for boards of publicly traded companies. Some regulators, including New York’s influential Attorney General Eliot Spitzer, urged that similar standards be imposed on all nonprofits, or many larger ones, because of the special public character of their work.

A few, but too many, reports of scandalous abuse at established nonprofits around the country gave credibility to these ideas, as did the widely quoted article in the Harvard Business Review that claimed nonprofits were passing up an opportunity to realize $100 billion in annual savings! Close reading of that article revealed that many of the proposed savings would be hard to realize if they were possible at all. Many casual observers of nonprofits did not, of course, give its text the attention it deserved -- if they read it at all.

Locally, many leaders and observers of nonprofits are justifiably concerned about our own organizations’ leadership, both volunteer and employed. Demographic analysis and the simple arithmetic of an ever-growing number of nonprofits both suggest a coming era of turnover among staff leaders and the need to recruit many new board members. Current staff and volunteers can be heard too often describing their jobs as extremely stressful and themselves as simply tired.

In light of these trends, we are fortunate in the quality and growing popularity of the specialized education opportunities for nonprofit leaders provided by the degree programs of Seattle University and the University of Washington and by the many strong certificate offerings and more informal training events presented by these and other institutions and professional associations.

Current workers at nonprofits can find strength and renewed commitment through closer association with colleagues from other organizations engaged in similar work and facing similar challenges. These benefits are not limited to association with others in the same field or subsector; they are even more strongly realized, I believe, from developing collegial connections across a wide range. For this reason, I celebrate the recent decision of the Executive Alliance to open its membership to people from all forms of nonprofit organization. If you are not already a member of Executive Alliance, please give careful consideration to the way you might strengthen our sector and find personal reinforcement by participating in its programs. Information is online at http://www.exec-alliance.org.

It is also a pleasure to note the growing connections among the centers in many communities of our state that offer information, training and technical assistance for nonprofits; it’s good that Sandy Gill from Northwest Nonprofit Networking in Spokane, Jeanne Kojis from the Capacity Builders Network in Clark County, Liz Heath from The Nonprofit Center in Tacoma, and others from the Tri-Cities, Whatcom County and here in King County have been getting together to talk about networking, common program initiatives, and the conditions affecting effective nonprofits and their work throughout the state.

Our sense of ourselves as vital and important contributors to healthy communities is underscored by the good fortune we enjoy in the local media coverage afforded nonprofits’ work.

• The Tacoma News-Tribune publishes a regular column by Liz Heath of The Nonprofit Center.

• Cheryl Phillips and her colleagues at the Seattle Times give broad and careful consideration to the state of nonprofits, especially reflected in the December 21 review article that filled more than two full pages of the paper.

• Carol Tice at the Puget Sound Business Journal covers important developments at nonprofits regularly and informs the pages of that paper with a wide selection of updates and news notes.

• Seattle’s Community Access Network (SCAN-TV) under Ann Suter has made a corporate commitment to assisting nonprofits who want to extend their reach into the community by the production of television programming related to their missions.

A related, if more informal, development is the fact that nearly 1,000 subscribers now read, and many of them contribute to, “NonprofitNetworking,” the free online open forum offered by The Evergreen State Society for people involved with nonprofits in the Puget Sound area. Subscription information is at http://www.tess.org.

These exchanges among people who observe, work in, and care about Washington’s nonprofits help us to deepen our understanding of the importance, and the challenges, of doing this sort of work. In that vein, I want to express my thanks to the insightful group of advisors who gathered a couple of weeks ago at the invitation of Evergreen’s chair Gene Edgar for the purpose of considering trends, developments and events that should shape this review of our field. None of the generous participants in that conversation bear any responsibility for the choices I’ve made in putting together these remarks; I hope they recognize, though, how much more useful this report on the year 2003 has been as a result of the couple of hours we spent together in March. (There is a list below of the advisors who were at that meeting or otherwise assisted me in preparing for today.)

The year 2003, like every year, brought transitions in our own community.

At the 10th Annual Nonprofit Leadership Conference it’s especially appropriate to note the retirement from active teaching at Seattle University of the founder of this now familiar event, Dr. Mary Stewart Hall. I’m sure many of you in this room have, as I do, personal reasons for being grateful to Mary for the myriad ways she has contributed to our successes, including her emphasis on how important it is to draw on careful research and documented sound practices to improve our work.

More transitions:

• In 2003, the Evans School at the University of Washington recruited a new dean, Sandra Archibald, from the Humphrey School at the University of Minnesota.

• George Moynihan retired after 23 years as director of the Pacific Science Center; his replacement is Bruce Seidl, formerly (among other things) mayor of Vancouver, Washington.

• Paul Meecham came to the Seattle Symphony from the New York Philharmonic to replace Deborah Card, who became executive director of the Chicago Symphony.

• Ken Colling filled the vacancy at Seattle Goodwill resulting from the sudden death of Jill Jones.

• Denny Heck retired as chief of TVW and Cindy Zehnder took over.

• Phyllis Campbell was appointed president and CEO of the Seattle Foundation.

• Safeco’s long-term public affairs executive Gordon Hamilton moved to become head of the fund-raising auction PONCHO.

Many other new recruits joined Washington nonprofits; many other valued colleagues retired or left for new posts in other parts of the county. It's appropriate to welcome them, to bid them good fortune wherever their paths may lead.

In 2003, too, we were saddened by the loss of Jill Jones, a strong voice for breaking down barriers to education and employment. Professor James Leigh, who opened doors for students of color at the University of Washington’s school of social work and throughout the community also died last year, as did Peg Shearer, the founder (in 1953) of Seattle Audubon.

On that sad theme, 2003 was the year Patsy Collins died. People throughout the world have reasons to be grateful for her sustaining and unassuming support: girls attending schools in Afghanistan, Seattleites at Town Hall concerts, environmentalists sustained by grants from the Bullitt Foundation, and many of us in this room in ways both large and small.

I’d like to close by quoting a few words from a column Patsy Collins contributed to the “Corporate Citizenship” supplement published by the Puget Sound Business Journal last year.

We should “study ‘worthy causes’ with as much knowledge and skill as we bring to business decisions,” she urged. “Such causes deserve our best planning and support.”

That spirit lies behind the time and attention given to today’s conference by the planners and the colleagues who have volunteered to lead sessions and join in panel discussions. It also lies behind the decision each attendee made to devote time today to deepening understanding of nonprofits and the ways they can work more effectively to benefit the community.