When Dan Cardinali took the reins at Independent Sector a year ago, he faced a predicament: The pre-eminent advocacy organization had a $1.8 million deficit, and like other philanthropy associations, the group was struggling to maintain relevancy.
Just a few months later, Mr. Cardinali encountered another hurdle: Donald Trump was elected president, and Republicans started pushing tax proposals that academic researchers predicted would diminish charitable giving and federal budget cut ideas that would slash funding to many nonprofits.
Mr. Cardinali says he realized that meant the group needed to take risks, but prominent nonprofit executives also laud his focus on results and collaboration in dealing with those challenges. He is leading an effort that has special appeal in a populist era: extending charitable tax deductions to all Americans who give, not just to wealthy people who itemize on their tax returns.
“He’s not reactionary in a time when it seems like everybody wants to be reactionary,” says Brian Gallagher, chief executive of United Way Worldwide and a former Independent Sector board member. “He’s not knocked off the rails. It’s a testament to not just his capability but his demeanor, his approach to the work.”
Political Instincts
During his tenure, the organization has expanded its support from grant makers, including the Barr Foundation and Fetzer Institute. But all eyes are on his efforts to rally nonprofits to influence the agenda in Washington.
“It is in our interest that Independent Sector be successful and that Dan be successful,” Mr. Gallagher says. “We no doubt want them to be the voice of the public sector and strong in the area of policy.
In addition to the challenges of mobilizing nonprofits and foundations with disparate missions and different views on whether it’s wise to work with the Trump administration, Mr. Cardinali must also grapple with filling the vacuum left by the departure of his predecessor. He took over the job from forceful leader Diana Aviv, who now heads Feeding America. Ms. Aviv was considered especially strong in working with Congress and the White House on tax policy.
Mr. Cardinali has shown some of those same instincts. Soon after the November elections, one of the first things he did was commission a study from the Indiana University Lilly Family School of Philanthropy to learn how giving would be affected by Republican proposals to simplify the tax code.
Paid for in part by big nonprofits that are members of a coalition called Leadership 18, the research found the tax proposals could reduce charitable giving by $13.1 billion, compared with the nearly $16.7 billion gained from 2015 and 2016, according to “Giving USA,” which projected that some $280 billion out of $390 billion in contributions was provided by individuals last year.
Instead of simply opposing the GOP changes as bad for charities, Mr. Cardinali joined with other nonprofit associations in a push to extend the deduction to millions more Americans.
He’s betting that lawmakers will welcome a chance to provide more of their constituents an incentive to give to charity, but he’s also making a practical calculation: The proposals most popular on Capitol Hill could decrease the share of people who itemize their returns from 30 percent to as little as 5 percent. In contrast, expanding the deduction to all taxpayers could bring charities $12 billion more in donations each year. But that comes at a cost to the government: Subsidizing an extended tax break could cost about $13 billion in government revenue.
Mr. Cardinali says he has worked closely with leaders at other nonprofit groups such as the Council on Foundations and Philanthropy Roundtable to sell the proposal to lawmakers, while the National Council of Nonprofits has taken the lead on working to fend off efforts to allow charities to get involved in partisan politics.
“We divvied up the waterfront,” he says.
Shrewd Move
Although Independent Sector was not represented during a recent meeting between Vice President Pence and leaders of Philanthropy Roundtable, Mr. Cardinali believes his organization is in a strong position to influence legislators working on tax policy. A few months ago, members of his staff met with members of the Trump administration’s domestic-policy council. On July 12, Mr. Cardinali met with House Ways and Means Committee Chairman Kevin Brady.
“It feels like we have not only access but continued engagement,” he says. “I can say that there has been direct followup from the meetings we attended and request for further engagement.”
Mr. Gallagher of United Way Worldwide was pleased that Mr. Cardinali invited him and American Red Cross leader Gail McGovern to what Mr. Gallagher called a “very productive conversation” with Mr. Brady. The invitation shows both Mr. Cardinali’s commitment to collaboration and his shrewd understanding that arriving to a meeting flanked by leaders of two of the nation’s largest nonprofits would likely make a big impression on lawmakers, the United Way leader says.
Open to Compromise
Some nonprofit leaders think Mr. Cardinali has been insufficiently aggressive in lobbying against proposed federal cuts to spending on which many charities rely, although the organization did publish a statement in March opposing cuts to programs that “provide critical support to the nation’s most vulnerable populations” and another in May that said the Trump administration’s proposed budget “puts American on the wrong track.”
Focusing mostly on the charitable deduction, not budget cuts, helps maximize Independent Sector’s “limited political capital” and maintains a united front on the deduction, an issue that is causing “great anxiety in the sector,” Mr. Cardinali says.
He knows that some people take umbrage at Independent Sector’s stated willingness to “work in partnership with both the administration and Congress to ensure that our federal fiscal priorities reflect the values and the aspirations of the American people.”
But he notes that many charities support the administration’s positions and thinks his organization’s role is to keep the door open to compromise, even when that’s difficult.
The total breakdown of communication between nonprofits and government leaders of opposing ideologies, he says, “would be a disaster for the country.”
Internal Adjustments
While much of Mr. Cardinali’s public profile has focused on policy, he has also made many internal changes to how Independent Sector does business. Like other associations, it is threatened by technology that makes it possible to tweet directly at elected officials and use email to connect easily with other nonprofits. Foundation support for organizations that represent nonprofits on advocacy and help them become more effective has dropped sharply in recent years, a 2015 study by the Foundation Center found.
To deal with its budget shortfall, one of Mr. Cardinali’s first steps was to trim the number of employees and reorganize their workflow. In December, the organization laid off a quarter of its workers, going from 44 to 33. Mr. Cardinali also dismantled divisions between departments to create teams of people with different areas of expertise, such as integrating the communications and public-policy teams.
As a result, employees are better able to take “collective ownership” of Independent Sector’s financial and other goals rather than simply aiming to meet their individual or department targets, says Carolyn Mollen, who was promoted to chief financial officer in the past year. For example, she’s thinks the opportunity she’s had to branch out beyond finances to contribute to the organization’s work regarding nonprofit accountability and governance allows new insights from different people to bolster the organization’s work.
Five people have been hired under the new chief executive, including new vice presidents for development (Barry Goodinson) and communications (Robert Jones).
Also among the new hires was the chief operating officer, Victor Reinoso, an education-technology entrepreneur and former D.C. deputy mayor of education, whom Mr. Cardinali hopes will “help reimagine what our long-term business model looks like.”
Mr. Cardinali has infused data analytics into the Independent Sector office culture. After 25 years working in direct services, most recently as leader of Communities in Schools, he’s been frustrated to discover that it’s tougher at an association to use data to improve programs. “In this space, it’s a much more tricky thing to be data driven,” he says.
But he has made some progress. After the weekly staff meeting, employees take a survey designed to monitor whether the gathering was a good use of time and provide feedback about how it can be improved next time, Ms. Mollen says. The revenue team has worked to standardize data entry in its database. The communications, membership, and fundraising teams have beefed up their evaluation practices.
“We have every day, painstakingly, put in more and more analytic systems,” Mr. Cardinali says.
‘Low-Risk Experiments’
To keep Independent Sector relevant, Mr. Cardinali tries to run it like a “start-up within a legacy organization,” he says, one that doesn’t shy away from risk: “Being risk-tolerant while stewarding the brand is the tension we, every day, try to strike here.” One of his “low-risk experiments” has been playing down the Independent Sector brand. “We won’t see ourselves as ever taking the lead,” he says. “We see ourselves as a catalyzer, taking collective action.”
When Independent Sector created an online campaign to promote its goal of extending the charitable deduction to all donors, it published a video and related materials to a separate website devoid of its name and logo. The hope was that other nonprofits would seize the opportunity to promote the work as their own, which some did.
The 2017 Independent Sector conference — one of its hallmark programs — has a new name, Our Common Future, from which the organization name is conspicuously absent. Hosted in Detroit, it was planned in partnership with the Council of Michigan Foundations and the Michigan Nonprofit Association to better highlight work of local organizations. “As CEO of Independent Sector, you have to care more about how you bring key players of that sector together to achieve something versus your brand as Independent Sector. He’s been really good about that,” Mr. Gallagher says of Mr. Cardinali. “If Independent Sector helps a critical mass of players in the nonprofit sector to be successful in policy in Washington, in understanding policy in general, in having a voice in things that matter to them, in running really good conferences where they learn, we will raise them up on our shoulders, and that will be their brand.”
In another experiment, Independent Sector has lowered the registration fee for its conference for both members and nonmembers by about 40 percent. In July 2016, members paid about $1,100 to attend the full conference; in July 2017, the price was about $595.
The idea is to expand participation to “not only get the kind of numbers to make your business model work” but also “harness that collective voice” of the charity world, Mr. Cardinali says.
So far, nonprofits and foundations have used their pocketbooks to express confidence in Mr. Cardinali’s leadership. The number of members — currently 450 — is exceeding projections, according to Ms. Mollen, who says, “I feel confident that we’re on track to end the year where we want to.” But she declined to say what that goal was or provide more details.
The organization attracted money from two new sources: $300,000 from the Barr Foundation and $275,000 from the Fetzer Institute, and some previous grant maker supporters have increased their commitments. Independent Sector declined to say how much those sources provided.
“We had a number of philanthropic institutions that said, ‘Look, we like very much the direction you’re going, and we will lean in,’ " Mr. Cardinali says.
