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Foraker founder steps down, warns Alaska nonprofits may face tough times ahead

  • Author: Tegan Hanlon
  • Updated: May 31, 2016
  • Published February 8, 2015

For the past 14 years, Dennis McMillian has worked to prepare Alaska's nonprofits for today.

"There are times when there is an abundance in Alaska," McMillian said. And there are times when oil prices fall and the financial effects sweep the state. "We've been sounding the alarm."

McMillian, the founding chief executive officer and president of The Foraker Group, has announced he will step down from his position within the year as the 62-year-old gears toward retirement. In his place, he hopes a new leader will continue to guide and strengthen Alaska's nonprofit sector through the coming years when the levels of giving by government and corporations could fall.

"Too many people of my generation are staying in positions longer than they're actually able to be productive in those positions," McMillian said. "We have a brilliant, energized, equipped generation of leaders who are waiting for us to get out of the way so they can come in."

Beginnings at a table for two

Business plans for The Foraker Group started in the late 1990s at the United Way of Anchorage, a nonprofit where McMillian served as the president and chief executive officer.

At the time, there was money. BP had agreed to buy Atlantic Richfield Co. The Denali Commission formed and would fund the building of rural infrastructure. Some money would go to municipalities, but a lot would also funnel into nonprofits. The Alaska Mental Health Trust Authority began getting its land, which translated to assets and funds for behavioral health nonprofits. The oil industry continued to grow.

"It's what I called sort of the perfect positive storm for the social sector," McMillian said. "There was just so much money getting ready to flow."

United Way, a nonprofit that partners with a host of community organizations, sought to determine what more it could do to stabilize the growing nonprofit sector. Specifically, could it provide "backroom" services -- such as human resources and accounting -- for multiple nonprofits to share and therefore help with efficiency and cost?

"The thought was, 'Could we actually do work while there was the abundance to build the capacity of nonprofits?'" McMillian said.

Since that thought, The Foraker Group has grown from a nonprofit that operated at a table for two within the United Way of Anchorage -- staffed by McMillian and Laurie Wolf, the current vice president -- to an office in the Mountain View neighborhood that staffs 16 full-time employees and contracts with about 50 more.

Now, it no longer relies on the United Way for funds. It not only works as a membership agency that provides backroom services for scores of nonprofits across Alaska, but also hosts trainings for nonprofit staff and board members. It serves as a voice for the sector and consults one-on-one with nonprofits, providing assistance for CEO searchers and help out of financial quandaries.

For the state's nonprofits, The Foraker Group acts as a mentor or an amicable older sibling willing to show the way. For many in the sector, it has changed how they do business.

"I've often said, 'I've drunk The Foraker Kool-Aid,' " said Jason Hodges, executive director of the Anchorage Concert Association, the state's largest performing arts organization.

Back when the association's executive director abruptly resigned in 2007, The Foraker Group stepped in to provide the nonprofit with someone to fill the position until it hired Hodges in 2008.

Since his hire, Hodges said he has completed The Foraker Group's certificate program in nonprofit management. At least once a year he checks in with the group to detail current problems at the association and get advice. McMillian has spoken at the association's board meetings, helped to craft its strategic plan and organized a staff retreat, Hodges said.

"I think that (McMillian) brings kind of a level of comfort to people because running a nonprofit can be a scary and frightening business," he said. But with McMillian, he said, "No matter how scary the situation might be, you have the sense that there's a way out of it and it's going to be OK."

For Denali Family Services, The Foraker Group intervened at a pivotal time in early 2013. The nonprofit, one of the state's largest behavioral health providers for children, was losing tens of thousands of dollars a month. At its worst, it had $68 in its bank account, said Chris Gunderson, Denali Family Services CEO and president.

The nonprofit wrestled with a series of unsustainable leases. More than half of its debt stemmed from payroll tax liability. It continued to serve hundreds of families, but staff members and foster parents were routinely paid late. Staff experienced a lapse in health insurance coverage. The CEO exited.

Meanwhile, McMillian swooped in and helped Denali Family Services navigate the process of filing for bankruptcy. He connected the nonprofit with a bankruptcy attorney and helped renegotiate its lease terms as well as negotiate a line of credit from the Alaska Mental Health Trust Authority. By about 2023, Denali Family Services expects to be out of debt.

Asked if it would have dug itself out without The Foraker Group, Gunderson said, "No. Absolutely not."

Tips to sustainability

The Foraker Group generates about 20 percent of its annual $3 million to $5 million operating budget from contributions -- mainly from corporations and the Rasmuson Foundation -- and the rest comes from selling its services.

What the 20 percent helps fund is instances when nonprofits such as Denali Family Services may not have the funds to immediately afford the group's help. This portion also covers travel costs so a nonprofit in Kodiak must not pay more than one in Anchorage, McMillian said.

Looking to the future, McMillian said Alaska's nonprofits will have to diversify their revenue streams as big donations from corporations may dwindle. In Alaska, a disproportionate amount of philanthropy is coming from corporations (nearly three times the national average) and from foundations (about twice the national average). Less comes from individuals.

McMillian's advice: "Appreciate the money that you're getting from any industry, but understand that industry giving is market driven."

The Foraker Group's emphasis, McMillian said, is if nonprofits are going to depend on philanthropy, they must depend less on corporations and more on the individual donor. It's a discussion that eventually led to Pick.Click.Give., an option for Alaskans to donate some of their Permanent Fund dividends to nonprofits. The shift to individual donors is a slow strategic process and takes about 10 years for success, he said.

A second piece of advice for nonprofits: Identify something they can provide that people will pay for. For Girl Scouts, that something is cookies. For the Anchorage Concert Association, it's concerts and entertainment.

A break

In his Mountain View office on a recent weekday afternoon, McMillian went through his schedule.

On Monday, he would go to a nonprofit in Fairbanks, and one in Juneau on Tuesday. On Wednesday, he would fly to Kodiak before spending Thursday and Friday at the Alaska Humanities Forum and the Anchorage Concert Association. Of the year's 365 days, he estimates he travels about 200.

When McMillian moved from Louisiana to Alaska in 1992 with his wife and two children, he arrived to run the United Way of Anchorage. His family thought they would stay six to eight years, he said. But then The Foraker Group formed.

Asked about a high point in his career with The Foraker Group, McMillian said he didn't have one. There were too many. It's nearly every day.

"I know Alaska has a lot of problems, I've seen a lot of the problems in Alaska and I've helped work on a lot of the problems in Alaska," he said. "But, you know, overall I see this place as incredibly generous, incredibly community-minded."

McMillian said he believes in transitions and good will come with The Foraker Group's board finding someone else for the driver's seat. He hopes the work he has done -- preparing nonprofits for a statewide financial downturn -- has paid off.

"I personally have been screaming at the top of my lungs for years about today," McMillian said. "I need a tag team. I need someone else to come in and let me have a break."

Once the The Foraker Group's board finds a new president and CEO -- a nationwide search it has already begun -- McMillian plans to stay in Alaska with his wife and continue to do some consulting both in Alaska and nationally. Eventually, he will retire and become a volunteer. He hopes to read more, travel more and maybe just take a break and sit on the couch.

"It's time for other people to come in with a different vision and with more energy to take things to the next place," he said.

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