Opinion Blog : Entries Tagged With 'charity'
| April 14, 2008 02:42 PM |
Bernholz’s Law of Philanthropic AdaptationLate on a Friday afternoon (April 8), feeling a little punchy after a long week, I posted Bernholz’s Law of Philanthropic Adaptation 1.0. Then I wound up thinking about it most of the weekend. Here is the first upgrade. Bernholz’s Law of Philanthropic Adaptation, 1.1: The rate and cycles of philanthropic adoption of new technology follow a fairly predictable pattern, regardless of technology. This pattern is:
Posted by Katie Harrington
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| June 11, 2008 01:00 PM |
One Click Giving InfrastructureOver the last few years we’ve grown accustomed to:
Heck, we’ll even turn loose our inner word nerds to support the World Food Programme. But how do you know which site to use for your $50 gift?
We need a one-stop directory of these sites. Just as foundations of all kinds began organizing themselves a few decades back, it is time these online marketplaces do the same, to enhance public awareness, regulatory input, joint research, and shared interests in developments regarding technological/infrastructure/charitable law. The “disintermediation” that the Internet promised way back in the 20th century is now an assumed part of the philanthropic landscape. I predict it will soon be building its own industry supports (infrastructure). One thing I noticed as I compiled the bullets above is the absence of two key sectors—the arts and the environment. Scanning my memory bank, I came up blank on online giving sites/communities/intermediaries focused broadly on environmental or arts/cultural giving. Help me out; send me the sites I’m missing. Or better yet, start the directory and build the new infrastructure. Full disclosure: I’ve worked with or know individuals involved in running the sites listed above. I’ve used some of these services but am not formally affiliated with any of them at the moment.
Posted by Katie Harrington
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| June 19, 2008 12:10 PM |
Everything Old Is New Again, ApparentlyA swoony article in Slate recently heralded the national rollout of SingleStop, an amazing and wildly successful new social venture (not a boring old charity) with great metrics: “For every $1 invested [in SingleStop], the program gives clients $3 in benefits, $4 to $13 in legal counseling, $2 in financial counseling, and $11 in tax credits.” So what’s the revolutionary, paradigm-shifting product? Finding every dollar of government services to which the clients are entitled. Yes, that’s correct: the idea that will change the way we assist the poor in this country is to make sure that we are actually delivering the assistance that this country has already committed to providing to the poor. Only under a Republican administration could this be hailed as a triumph of private-sector innovation. It’s a fine idea—we do indeed leave substantial amounts of cash assistance on the table because people are too frightened or proud or confused to apply for it. And it may indeed be necessary to have an outside agency (rather than, say, a government employee) unearth all these goodies, because that same government employee is most likely under pressure to make her agency’s budget stretch as far as possible by disqualifying potential beneficiaries. But let’s hear no more about how effective the private sector is at providing for the needy, when the biggest idea in private-sector charity turns out to be slopping more effectively at the public trough. One might almost call it non-profiteering.
Posted by Katie Harrington
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| June 25, 2008 12:20 PM |
Why Do People Really Give to Charity?In February I wrote a post positing that people give to charity as a way to satisfy their deeply held need to find meaning in life. The post is now the number 2 result in Google for the phrase, “why do people give to charity.” The number 1 result is a publication of The Federal Reserve Bank of St. Louis titled, “The Economics of Charitable Giving: What Gives?” The paper discusses theories of giving labeled “Perfect Altruism,” “The Warm Glow,” and “Prestige,” and concludes: “Although some people may be altruistic when giving, economics tells us that the dominant motivation is the internal satisfaction that individuals derive from the act of giving itself. Individuals derive utility from giving much in the same way they obtain satisfaction from buying a new car or eating at a restaurant; especially when the number of donors is large, and the social context of other people’s giving is overshadowed by the satisfaction of one’s own giving when considering how much to give.” I think the paper is a bit misleading. When trying to predict behavior, economics assumes but does not prove that people act in ways that maximize their own self-interest. Economics does not “tell us” that internal satisfaction is the dominant motivation for humans. The Merriam-Webster dictionary defines altruism as, “unselfish regard for or devotion to the welfare of others” or “behavior by an animal that is not beneficial to or may be harmful to itself but that benefits others of its species.” But I believe that only an incredibly narrow view of life holds that helping others is somehow separate from helping ourselves. Humans are communal animals. Without “others” we find life intolerable. If a person sacrifices for another, it is not simply “unselfish,” it is because they would be completely miserable if they chose to look the other way. Any parent knows that the happiness and health of their children is more important than their own needs. This isn’t “unselfish,” it is just something hardwired into our DNA. The narrative of philanthropy is dominated by the concept that people who give do so for personal gain. I’ve seen many references explaining that Warren Buffett’s gift to the Gates Foundation was a way for him to exploit a loophole to avoid taxes. However, I think that narrative is false. Humans are interconnected with each other whether we like it or not. The fact that helping others also helps us does not diminish the act of giving. It is the brilliant fact of life that makes community work. I’d now like to address a number of counter arguments I received in response to my original post. Comment: “…I wonder if the wealthy individuals who create these foundations do so because they are self-actualized or need a tax break.” The idea that people give because they “need a tax break” is widely believed, but is completely disingenuous. My professional expertise is in helping people structure the financial side of giving in the best possible way. The definition of “best possible” depends on the person’s goals, but limiting taxes is always a consideration. But let me clarify, you cannot legally structure a charitable gift so that the donor receives a net increase in their wealth. If you give away $1,000, you might be able to structure the gift so that you reduce your taxes by as much as $700 (or even more). However, at the end of the day you still have less wealth than if you had kept your money and paid the taxes. I am not saying that taxes have no affect on donations. Taxes often drive the timing of gifts. However, it is important to note that the decision to part with money is a difficult one for most people. Even after an individual decides they want to make a donation they often stall on actually going through with the gift. It often takes the approach of the year’s end for donors to finally give up the gift qualifying for that year’s tax deduction. I get plenty of phone calls from people who are interested in setting up some sort of charitable vehicle for the sole purpose of generating a tax deduction. But once they learn how foundations, charitable trusts, and donor-advised funds work, they are always disappointed and end up not setting one up. The idea that wealthy individuals who are sophisticated about money and taxes would give money away just to generate a tax deduction simply does not make any sense. Comment: “Mother Teresa once said, ‘give ‘til [it] hurts you.’ Only giving which hurts the giver in some way is supreme.” The idea that goodness comes from pain is deeply rooted in some religions. Personally, I believe, as I wrote in my essay, that humans are hardwired to enjoy the act of helping others. Feeling happy and good about helping others is a sign of positive mental health. Needing to feel pain to feel good is called masochism. I also don’t believe that all donations are rooted in self-actualization. Certainly, many people (myself included) enjoy the social approval that comes from our peers when we make a gift. But this isn’t bad. This is part of the hardwiring that encourages humans to be social animals. There is one criticism of philanthropy I find compelling: the idea that some gifts are motivated by a reciprocal benefit that is paid in non-monetary terms—for instance, a gift could be given to a university with the hope that it will improve the donor’s children’s chance of acceptance. These kinds of gifts are absolutely real. But they are a small minority of philanthropic gifts. Since it is illegal for a donor to claim an income tax deduction for a gift made in exchange for something of value, these kinds of gifts are a problem of our tax code, not a problem with philanthropy.
Posted by Kelsey Walker
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| July 7, 2008 10:45 AM |
Charity Must Make Itself a MarketGiving has become a major currency in the global economy yet remains an asset whose true worth and potential are undervalued and overlooked. Government and business pay lip service to the important role charity plays in our communities and economy, yet treat it as a second-tier vehicle for social change, one that requires special treatment. Nonprofits and philanthropic organizations reinforce the perception they are marginal players by acting as if their good intentions entitle to them to public and private investment, and free them of the need to compete in the marketplace under the same pressures and rules that other businesses face. To increase their impact, people and organizations working and investing in the charitable marketplace need to be brutally honest about the value they add, the challenges they face, and their need to make their own way. By moving beyond their sense of entitlement, confronting their strengths and weaknesses, and designing smart business models, nonprofits can more effectively engage customers, investors and partners and serve as leaders for change. And nonprofits have a great story to tell. Whether addressing problems at home or abroad, giving is built into Americans’ DNA. Americans see problems and give their time, know-how and money to improve and enrich their communities. As individuals and through their families and businesses, Americans create and invest in nonprofit and philanthropic organizations to address urgent social needs. In 2007, charitable giving in the U.S. exceeded $300 billion for the first time, with individuals giving nearly 75 percent of those dollars, and bequests accounting for nearly 7 percent more, according to Giving USA 2008. And in 2006, over 61 million individuals volunteered, representing over one-fourth of the U.S. population, with 15 million Americans volunteering on an average day, and the average volunteer serving over 200 hours a year, according to The Nonprofit Almanac 2008. The U.S. nonprofit sector also is big, diverse and growing, the Nonprofit Almanac says, accounting for five percent of gross domestic product, over 8 percent of wages and roughly 10 percent of job. In addition, the estimated value of volunteer time equals nearly half the wages nonprofits pay. Nonprofit wages and employment both have been growing in their share of the economy, and nonprofit jobs in recent years have been growing three times faster than the rest of the economy. Beyond those impressive numbers, the resources exchanged in the charitable marketplace simply make our communities better places to live and work. But until nonprofits and givers get over their sense of entitlement and start building enterprising business models that break down the walls to true collaboration among nonprofits and with business and government, the charitable marketplace will remain a marginal force for social change.
Posted by Kelsey Walker
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| July 14, 2008 10:45 AM |
Habit Creation, Consumers, and CharityAn unexpected version of cooperation between for-profit companies and the public health establishment yields life-saving results in Ghana. What’s exciting about this project, in which the question put to the companies was “How do you change behavior?”, is that it suggests a whole series of possible cooperative efforts. If Unilever et al. could help health officials determine why people pursued unhealthy habits–and, more important, how to prompt them to pursue healthy ones–why couldn’t we ask those consumer giants to help us figure out how to make a habit out of giving? Instead of tying charity to purchases–which teaches people that the only way to donate is to have twice as much money to spare as you’re willing to give–we could identify the triggers for genuine charity and figure out how to insert those into people’s daily lives. The Nonprofiteer is often skeptical of the notion that foundations should invest in research about social problems rather than in their solution; in many cases, the solution is already available and research is beside the point. Likewise, she’s often moved to snort when she hears philanthropies describe themselves as “convenors” of all those who might have something useful to say about a problem, as though the act of bringing people together were all that might be required to spur them to useful action. We don’t know as much as we need to about how people give, which is likely to be nearly as important as why. Bringing together the habit-forming expertise of consumer companies with philanthropies and the sector-specific experience of charities might really produce a valuable new synthesis. So who will take the lead in strengthening the sector by asking consumer companies to contribute their survey-research and marketing smarts to determine how people can be made more responsive to charitable appeals? Maybe the answer is different for different parts of the nonprofit sector. For instance, people may give to the arts if they’re reminded of their importance to children, but give to health-care based on potential threats to themselves. Simply knowing that information instead of speculating, would be a huge boon to everyone–especially those of us whose livelihood depends on separating people from their money.
Posted by Kelsey Walker
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| July 14, 2008 11:45 AM |
Charity Regulation Needs FixingThe regulation of private foundations and charitable giving has skewed the charitable marketplace and needs to be changed. The law lets donors who create private foundations take their tax breaks up front but does not require that the foundations pay out more than 5 percent of their assets each year, letting them hoard their wealth. So donors and their foundations reap big windfalls. Donors save on taxes, and their families enjoy continuing power and influence through their foundations. The tax breaks for wealthy donors and the low spending requirement for foundations starve social programs of funds and transfer the cost to less affluent taxpayers and to nonprofits struggling to meet rising demand for services. A bill in Congress five years ago to require private foundations to pay out more their assets each year in grants triggered howls of protest from big foundations. Exercising the clout that flows from the wealth they control, foundations spent millions of dollars to fight the bill, outgunning advocates for a more even-handed charitable marketplace. What is wrong here? Consider the multi-billion-dollar bequest the late Leona Helmsley created for the care and welfare of dogs. Helmsley, like any donor, was free to support the cause of her choice. But as law professor Ray Madoff of Boston College pointed out in a recent opinion column in The New York Times, because it will be paid through her family’s charitable trust, Helmsley’s huge bequest exposes a continuing scam perpetrated against U.S. taxpayers by the laws that give tax deductions for charitable gifts and let donors create perpetual foundations. Not only can donors save big bucks on the front end and let their foundations hoard even bigger bucks far into the future, but foundations also can count overhead costs, including salaries for trustees, as part of the tiny annual payout the law requires them to make. It was the 2003 proposal in Congress to exclude overhead costs from the required payout that unleashed a flood of crocodile tears from foundations, which whined that the change could deprive them of their dream of immortality. The laws regulating foundations and charitable gifts cost taxpayers big-time and tilt the charitable marketplace in favor of wealthy donors and their foundations. Madoff calculates that, with her fortune warranting an estate-tax rate of 45 percent, Helmsley’s $8 billion donation for dogs really amounts to a gift of $4.4 billion from her and $3.6 billion from taxpayers. In return for paying out a tiny share of their assets each year, private foundations yield big tax benefits for their donors, and give the donors’ families, as foundation trustees and directors, continuing power and prestige. Many foundations now demand that nonprofits looking for grants prove their commitment to equity. But many of those same foundations are first in line to fight efforts to make charitable regulation more equitable. In theory, the charitable marketplace in the U.S. represents a good bargain and frees government for other tasks: Nonprofits enjoy tax-exempt status because they address the symptoms and causes of urgent social needs, and donors and foundations enjoy tax benefits because they invest in nonprofits. But the deal has soured because the rules have allowed donors and their foundations to bulk up, like athletes on steroids. To ensure the fairness the charitable marketplace needs to foster innovation in giving and in nonprofit enterprise, Congress needs to bring the rules back into balance.
Posted by Kelsey Walker
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| September 22, 2008 11:00 AM |
Wall Street Plunge a Wake-up Call for CharityThe financial quicksand swallowing some of Wall Street’s biggest players is a powerful reminder that nonprofits must find solid ground rooted in the basics, and that givers can dig deeper to address urgent social needs. Instead of stressing, nonprofits should focus on strengthening their operations, stepping up their fundraising, and diversifying and cultivating their donor base, experts say. “These situations are always a reminder of the importance of saving and preparing as a nonprofit for the lean times, whenever possible,” says Fred Stang, director of development at the Triangle Community Foundation in Durham, North Carolina. Nonprofits “should not go into panic mode” and should “be patient and see how the financial picture falls out,” he says. “They might need to readjust fundraising projections to be more realistic, but they should not make the assumption that their donors do not have any funds available to support their mission.” Nonprofits that previously may have taken a “fairly passive approach to their fundraising” by limiting their efforts to distributing newsletters and an annual appeal, for example, now have the opportunity to “step up” and use more active tactics like phoning donors, he says. The slumping economy and turmoil on Wall Street will put more pressure on nonprofits that serve people who are “on the edge financially,” Stang says, with more people likely to lose their homes and jobs, and to find it harder to get loans. “Things will most likely tighten up for a lot of their clients,” he says. Doug Bauer, senior vice president at Rockefeller Philanthropy Advisors in New York City, says that with last week’s roller-coaster ride on Wall Street, “people on both sides of the ask and give are kind of holding their breath.” Nonprofits should have “as diversified a fundraising base as you can have,” he says. “So when you hit rocky times like this, you can navigate through it.” And because the markets “have not performed to anybody’s liking,” he says, investment returns on endowments and donor-advised funds are down. Individual givers, whether high-net-worth, ultra-high-net-worth or middle class, are “thinking twice about who they’re giving to and why, and probably sticking to groups close to them,” he says. So givers likely will focus on “need-to-do giving rather than nice-to-do giving,” he says, and will “support institutions that really matter to them.” The skidding economy, particularly in the New York metro area, is likely to reduce tax revenues, a reduction could cut into discretionary spending for nonprofits that support the social safety net, he says. Charles Collier, senior philanthropic adviser at Harvard University and the author of Wealth in Families, says nonprofit fundraisers should “try to be a non-anxious presence when you meet with donors.” Even if nonprofits do not plan to solicit prospective givers immediately in the increasingly grim economic climate, he says, “you can still have a cultivation visit with your best donors and that is a good thing to do.” In the face of donors’ fears about the economy, he says, “you listen and try not to be reactive to their anxiety.” At a visit with an older Harvard alumnus last week, for example, Collier says he “asked about and talked about his family, and in doing so got new information.” Collier also asked about the alum’s estate plan “without asking if we were in his estate plan.” Many prospects “will value and enjoy a conversation surrounding their family or their estate plan without having to focus on the downturn in the capital markets,” he says. But he also says a couple he was scheduled to visit last week cancelled the meeting, most likely because “of their own anxiety about where the economy is headed.” Stang of the Triangle Community Foundation says the economic slide represents an opportunity for givers to “step up to the plate.” Those who are more fortunate, he says, can “realize that, though our own stock portfolios might have decreased, we still can eat, we still have shelter, we still have a job,” he says. “And that brings out the generosity in people.”
Posted by Kelsey Walker
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| September 23, 2008 10:07 AM |
“Moneyball,” “Freakonomics,” & PhilanthropyEarlier this spring, The New York Times Magazine featured the fascinating article “What Makes People Give.” The article chronicles the attempts by John List and Dean Karlan, economists at Yale and the University of Chicago respectively, to understand why people give. List and Karlan considered the usual answers—to make the world a better place, to see your name printed on the back of an annual report and the like—as too pat, too simple, and sometimes just wrong. Over the years, whenever one of them asked fundraisers why they did what they did, their responses were vague and unimpressive. There didn’t seem to be much empirical evidence to support the strategies employed by most fundraisers. So the two economists wondered whether charities were wasting a lot of effort. When charities are designing their donor appeals, they often go by nothing more than a few rules of thumb, some of which may be profoundly insightful and others a good deal less so. “I think some fundraisers have developed terrific intuitions, passed on through the fraternity of fundraisers,” says Paul Brest, president of the William and Flora Hewlett Foundation in Menlo Park, Calif., which often works with charities. “But a lot of the intuitions don’t work. Look at how much junk mail you get.” Matching gifts were another good example. People figured that they worked, because—well, how could they not? They seem so sensible. The story reminds me of two of my favorite books, Moneyball and Freakonomics. Michael Lewis studied the Oakland A’s’ use of statistical analysis to drive the way they built their baseball team and played the game. In Freakonomics, Steven Levitt and Stephen Dubner used economic analysis techniques to understand falling crime rates, the organizational structure of street gangs, and the inner workings of professional sumo wrestling. What both books (and the New York Times Magazine article) use as their premise is that quantitative analysis is incredibly useful in understanding our world. Yet all three also understood that statistics do not themselves give you answers; they just help you understand your environment better so that you can more easily find the answers you are looking for. This is the promise of metrics and other quantitative measurements in philanthropy. They are not themselves the answers we seek, but they help describe the world we live in. When used as tools to advance our understanding, metrics in philanthropy are wonderful. But when viewed as some sort magical answer that shows us the Truth, we are better off with Mark Twain as a source of insight than Moneyball or Freakonomics: “There are three types of lies—lies, damn lies, and statistics.” - Mark Twain
Posted by Kelsey Walker
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| October 6, 2008 11:15 AM |
Fundraising Focus Critical During SlumpWith the economy tanking and its impact on charitable giving uncertain, nonprofits should stay calm, stay focused, and keep a long-term perspective. Two new reports suggest Americans keep giving even in tough times, and nonprofits should gear for tough times by tuning up their fundraising fundamentals. “When the economy shows stress, whether it is a recession or not, giving may grow more slowly,” says a new report by the Giving USA Foundation that looks at historic trends in giving during recessions and economic slowdowns. “It is important to note that giving still grows.” A separate study for the Association for Healthcare Philanthropy that looks at historical data on economic cycles and charitable giving says total philanthropic giving during the past four decades grew at double the growth rate of gross domestic product, accelerating since 1996. But the weak economy and political uncertainty could be a short-term drag on charitable giving, and while tax increases could reduce the cost of giving, they also could slow down wealth creation, the study says. In its report, the Giving USA Foundation says the most important step nonprofits can take to raise funds during a recession or downturn is “to ask people for contributions in a clear and focused manner.” Key steps to successful nonprofit fundraising, the report says, include:
The study for the Association of Healthcare Philanthropy says nonprofit hospitals and health-care systems enjoyed high growth rates since the mid-1960s because of greater professionalism in their fundraising practices. So a key to effective fundraising in today’s tough economy, the study says, is “continued attentiveness to building the trust of established individual, corporate and foundation donors in the value and openness of our efforts.” By putting their fundraising fundamentals in order, nonprofits can gear themselves to effectively address critical social needs that only will grow as the economic storm rises.
Posted by Kelsey Walker
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| November 4, 2008 02:30 PM |
Vote.One way of understanding philanthropy is to see it as a regulated industry—that is a basic premise of my writing, my work, my thinking, my blog. Regulation exists in the realm of policy, policy exists in the realm of politics, participation is a core piece of politics and policy (in a democracy). That is my justification for dedicating this post to encouraging you to vote. That and the fact that today is election day and some incredible percentage of your peers have already voted early. According to certain economists, in some places voting “may be equivalent to giving $30,000 - $50,000 to others in expected value and as such is an extremely efficient form of charity.” I recently read in GOOD Magazine that some ridiculous percentage of college students said they would give up their right to vote for an Apple Ipod Touch. Ouch. Then I received a newsletter from the Ford Foundation that included the incredible chart below (don’t let the list length fool you—the USA is number 139 in voter participation). Ouch.
On the other hand, we’ve seen incredible increases in voter registration in the US this year, unprecedented turnout in the primaries, and enduring interest in the longest Presidential campaign ever. So make the most of it. Get out and vote. Share your experiences and observations of the process via twitter—as part of the new and cool twittervotereport project. It is a right and a responsibility. Please vote.
Posted by Kelsey Walker
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| November 5, 2008 02:37 PM |
Foundations Can Provide a Giving StimulusFoundations can help nonprofits fundraise at this end-of-the-year giving season by providing a stimulus for giving. Take a page from the Columbus Community Foundation, which today announced a giving stimulus plan created to match gifts to local nonprofits. The foundation aims to “raise $1 million in 48 hours.” More details here. At a time when individuals and families are feeling the pinch or hesitating with “let’s see how things are at the end of the year,” knowing that their donations will be matched can be a powerful incentive for them to give today. Do you know about any other stimulus initiatives? Please share them with us. Post below. We need these creative ideas to boost giving during this time, when nonprofits are asked to provide more services than before.
Posted by Perla_Ni
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| November 7, 2008 11:18 AM |
A New Spirit, a Time for GivingThe election of Barack Obama as president marks the start of a new era for giving and making a difference. In his victory speech in Chicago, Obama asked Americans to serve, sacrifice, and work together to fix what is wrong in America and strengthen our communities, our economy, our environment, and our security. Throughout the campaign, Obama has urged Americans to pitch in. He has promised, for example, to repay college graduates who perform public service for groups like the Peace Corps and Teach for America by helping to cover their college costs. Charitable giving in the U.S. totaled $306 billion last year, and nearly 61 million Americans age 16 and older volunteered, giving 8.1 billion hours worth over $158 billion. Over one million nonprofit organizations depend on the contribution of time, money, and know-how, and the dedication of employees who often are overworked and underpaid, to address the urgent needs our communities face. “So let us summon a new spirit of patriotism, of service, and responsibility where each of us resolves to pitch in and work harder and look after not only ourselves, but each other,” Obama said Tuesday night. Long known as the “nonprofit sector,” or “voluntary sector,” the charitable work and investment of individuals and organizations more accurately should be known as the “giving sector.” The giving sector is the heart of America. And now, in the face of overwhelming economic, environmental, and global-security threats, the giving sector needs to be stronger, more strategic, and more collaborative. Nonprofits must equip themselves to truly succeed. They need to engage their givers and their boards. And boards need to know their role, help the organization focus on the mission, and give staff the support they need. Individuals must connect themselves to causes they care about, and make strategic investments of their time, their expertise, and their financial assets. And charitable foundations and corporate-giving programs must dig deep and do more to address the organizational and operating needs of nonprofits. Obama promises he will work to engage everyone in the job of fixing what is wrong in America, making government truly diverse and inclusive. That job will require that we learn to bridge the gaps that divide us and work together, and nowhere is that more needed than in the giving sector. Nonprofits and foundations talk a lot about collaboration, but few are willing to actually give up even the tiniest measure of control or power to form the partnerships that will be critical to solving problems that are bigger than individual organizations can handle. And most foundations, for all their talk, still will not give more each year than the law requires them to “pay out,” a mere 5 percent of their assets. In addition to the financial incentives he has promised to give college graduates who perform public service, Obama can push for incentives for individuals, foundations, and corporations to give more. Obama also can engage in the giving sector the truly remarkable political organization he has built. And nonprofits, applying the social-networking strategies and technology Obama used to build his organization, now can do a better job mobilizing, engaging, and managing their own givers. “This victory alone is not the change we seek, it is only the chance for us to make that change,” Obama said Tuesday night. “And that cannot happen if we go back to the way things were. It cannot happen without you.” In this new era of giving, the challenge for the giving sector is to move beyond talk and giving as usual to truly fulfill the dream of a “new spirit of patriotism, of service, and of responsibility.”
Posted by Kelsey Walker
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| November 17, 2008 11:00 AM |
Asking and Giving Critical in Tough TimesTo cope with the sinking and uncertain economy, nonprofits should keep asking givers for charitable support, and givers should keep giving. Nonprofits also should promote planned giving, which includes gifts that are complex or deferred or involve assets other than cash, such as stock or real estate. And they should take the time to retool the way they ask for support, moving beyond a dry recitation of facts and figures about their organizations to telling compelling stories that capture the passion and importance of their work and its impact on the people they serve. That is the view of Eileen Heisman, CEO of the National Philanthropic Trust, a $725 million-asset public charity based in the Philadelphia area that has raised more than $1.3 billion in charitable assets since it was formed in 1996 and granted over $715 million to more than 25,000 nonprofits. Despite the “worldwide shattering of our financial system,” Heisman says, she is cautiously optimistic about charitable giving. “Americans are generally philanthropic, but I think Americans feel poorer,” she says. “But I’m hoping the ultra-ultra wealthy will continue to give at the pace they’ve been giving, although that’s a small percentage of people.” Research shows that 90 percent of individuals with a net worth of $1 million or more give to charity on an annual basis, she says. But modest givers “may have a tough year” because “building confidence back in the marketplace will be really tough,” she says. “I don’t think we’ll have the pace of the past three years.” Still, while “you can’t keep your head in the sand,” she says, “I’m very much an optimist.” Her advice to nonprofits is to keep working to generate contributions. “You cannot stop asking,” she says. “There are going to be loyal donors who continue to give. People still get their paychecks. A lot of annual giving comes out of paychecks.” She also encourages wealthy givers who have commitments to nonprofits not to retrench. “Even though your investment accounts may have shrunk, you can give from annual income,” she says. “Charities depend on your gifts.” Yet many charities do a poor job “making their case” for support, she says. “They state too many bare statistics and don’t talk about the impact” they have, she says. “If there’s any time to retool and look at your case statement and your direct-mail pieces, now’s the time.” Donors will continue to give, she says, if nonprofits have “made a compelling case and it’s passionate and important. The best case statement is storytelling.” The stories nonprofit tell should be about the people they serve and “getting people involved,” she says. Citing the advice of fundraising consultant Mal Warwick, she says a fundraising letter “has to create a personal relationship with the reader about the personal impact” of the charity’s work in fulfilling its mission. Heisman also encourages nonprofits to continually promote planned giving. While it can take years after a donor sets up a planned gift for a nonprofit to receive it, marketing those gifts, such as simple bequests set up through wills, can provide “wonderful surprises” and an ongoing income stream, she says. “It’s really important to keep that in the pipeline,” she says. “That’s all about making the case as well.”
Posted by Kelsey Walker
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| December 2, 2008 09:00 AM |
Givers Next Door Have Much to GiveBelow the philanthropic radar that has focused on the gloom and doom of the ailing economy beats an underappreciated resource that offers huge potential for nonprofits. Family-owned businesses represent nearly two-thirds of gross domestic product in the U.S., according to estimates, yet those closely-held firms are largely invisible to nonprofits, says philanthropy consultant Phil Cubeta. “There is a tendency for philanthropy to be perceived as high-class and for these businesses to be perceived as low-class,” says Cubeta. “These are often blue-collar people who make good, and make good big-time.” Many of those business owners are Baby Boomers who are nearing retirement, says Cubeta, who works with a national financial-services company’s advisers whose main clients are business owners with median net worth of $10 million to $15 million. And if those business owners’ companies survive the economic downturn, they will need to make decisions about their companies’ future and what to do with the wealth and time they will have in retirement, says Cubeta, who in January will become the holder of the Sallie B. and William B. Wallace Endowed Chair in Philanthropy at The American College in Bryn Mawr, Pa. That transition in the life of boomers’ businesses is “following a wave larger than the current economy,” he says. “It’s a demographic wave.” So instead of panicking about the impact of the downturn on charitable giving, he says, nonprofits should look for ways to connect with Boomers who own small businesses. Those business owners are rooted in their hometowns, where they often grew up, went to high school and even college, built their businesses and likely will die, he says. “They really care about the community,” he says. When asked, they typically voice a “heart and care for philanthropy, but it doesn’t come out that way,” Cubeta says. “They would like to do it but they’re not connected. They’re isolated from the world of people in town outside their business groups and church.” One strategy for connecting with those donors might be to work in partnership with professional advisers to develop events likely to appeal to aging Boomers who own small businesses, he says. Professional advisers who typically work closely with owners of small businesses include life-insurance agents, certified public accountants, estate-tax lawyers, financial planners, and chartered advisers in philanthropy, Cubeta says. Working with those advisers, particularly those who serve on their boards or their planned-giving advisory committees, nonprofits should aim to develop events that will focus on topics business owners care about, such as “life after business,” “passing on their values as well as valuables to their children,” or “business-transition issues.” Nonprofits also should work with advisers to find ways to introduce philanthropy, and their own organizations, to the business owners. “Shirtsleeve businesses are where a lot of this country’s wealth is,” Cubeta says. “Those people still have the same issues this year as last.”
Posted by Kelsey Walker
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| December 4, 2008 09:20 AM |
Good News—Nonprofit Gift Cards Expected to Boom This Holiday SeasonWith five young neices and nephews, I’ve been yearning to find a way to give them meaningful holiday presents (and avoid the malls). So I’m thrilled to discover, as many Americans are doing this holiday, the easy and creative option of giving charity gift cards. While many people are trimming back their holiday spending, nearly half of Americans said they are more likely to give a “charitable gift” as a holiday present, according to Harris Interactive. People are buying charity gift cards—cards redeemable as a donation towards a nonprofit—for their relatives as holiday gifts. Corporations are buying them for clients in appreciation of their business, or as employee rewards. Many of them are customizing their own gift cards or creating an e-gift card sent via email. Here are some of the more popular nonprofit gift cards available. This is not a comprehensive list—please chime in below and add others you’ve heard about! Network for Good According to Network for Good, one woman purchased 20 of them with the family name on the card to give out to everyone on her holiday list, and several families are giving them out at parties instead of goodie bags. Network for Good also has deals with major retailers that are buying Good Cards as rewards for their customers. Neiman Marcus offered a Good Card for buyers at their Cartier Jewelry in-store (See site). And Kenneth Cole is giving $10 Good Cards to people who register on their site after making a purchase of $100 or more in-store or online (see site). DonorsChoose Happy shopping among these great nonprofit gift card choices! I heartily endorse this kind of shopping!
Posted by Perla_Ni
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| December 9, 2008 07:45 AM |
This IS the Rainy DayOur colleagues at Philantopic have been posting major foundations’ statements on the current economic situation. With the happy exception of the Gates Foundation, the words “grow our payout” are conspicuous by their absence from these statements–and even Gates modifies the phrase with the unwelcome word “less.” Typical of the statements is the one from the Voldemort Foundation [name changed to protect the guilty], which leads with the all-important question, “How is the Foundation doing?” As though the health of our nation’s repositories of unspent private wealth really were–or should be–everyone else’s most pressing concern. Which leads the Nonprofiteer to wonder, not for the first time, why our sector pays any attention to anything written by a foundation executive which omits the words “Pay to the order of.” If now is not the time to increase foundation payouts–when governments are strapped, businesses are shaky, and individuals are tapped out–when would be? And if it’s never time to spend more than 5 percent of charitable money on charity, what is the justification for the foundations’ tax-favored status? This point was made several months ago more calmly and thoroughly by Steven M. Teles at the Reality-Based Community (a broad-spectrum policy blog edited by the Nonprofiteer’s brother). He was right then, and is even more right now, when he pointed out that increased payouts are only a bad idea “if your basic mission is to stay in business forever. That’s not the purpose of charitable foundations. Their purpose is to support groups and causes that reflect the objectives of those who endowed the foundation in the first place.” Mr. Teles advocated “shaming” foundations into assuming this component of their responsibility. Absent any evidence that foundations feel shame, the Nonprofiteer advocates taxing them into it. If not now, when? And if not the foundations, who?
Posted by Kelsey Walker
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| December 9, 2008 08:00 AM |
Recession Is Prime Time for Giving SectorTimes are tough and getting tougher, and the giving sector needs to step up and lead. Even in good times, nonprofits are overworked, underpaid, underappreciated, always scrounging for support, and always under pressure from givers and funders to build their operating capacity and show their impact. Now, instead of fearing the worst from the sinking economy and capital markets and hiding its collective head in the sand, the giving sector must dig deeper to better cope with urgent social needs that will only get worse. Nonprofits should be laser-focused on serving their clients, streamlining their operations, minimizing their risk, sharpening their message, and understanding and engaging their donors, funders, and partners. Using passion, metrics and compelling stories, nonprofits must make crystal clear the needs they address and the impact they have, helping charitable foundations, corporate giving programs, and individual givers see the need to give more. And givers and giving organizations need to pay closer attention to the real operating needs of nonprofits and the rising demand they face for services. In short, the giving sector needs to return to its roots, focusing on the nuts and bolts of serving clients well, running smart shops, and securing the right resources. Coping tools for nonprofits in the recession will be the focus on an online webinar Dec. 9 sponsored by the Philanthropy Journal and featuring a panel of national experts, including Eileen Heisman, president and CEO at the National Philanthropic Trust; Doug Bauer, senior vice president at Rockefeller Philanthropy Advisors; and Jennifer Pryce, director of advocacy at the Nonprofit Finance Fund. The panel will examine how nonprofits can build their organizational capacity, minimize their risk, make contingency plans, approach givers and grantmakers, build awareness about their cause and their needs, and make their fundraising case. In tough times, the challenge for the giving sector is to be the best it can be, with nonprofits and givers alike looking for ways to dig deeper and work smarter to help make our communities better places to live and work.
Posted by Kelsey Walker
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| January 8, 2009 01:00 PM |
Nonprofits Can Reap Big Returns From VolunteersWhile they need to work even harder during the recession to ask for contributed dollars, nonprofits also should focus on recruiting more volunteers. The troubled economy clearly is chilling the fundraising climate. According to the latest Philanthropic Giving Index from the Center on Philanthropy at Indiana University, nonprofit professionals are reporting the lowest overall level of confidence in the fundraising climate in the U.S. in over a decade. That confidence index now is 64.8, down 21.7 percent from just six moths ago and down 27 percent from December 2007. The center’s research for Giving USA Foundation also shows an annual falloff of roughly 2.7 percent in total giving during longer recessions. A separate survey by the Association of Fundraising Professionals finds that over half the charities in North America were raising less money during the last three months of 2008 than in the same period in 2007. Among charities surveyed, 53.3 percent were raising less money than they did a year earlier, and only 22.7 percent were raising more money, while 23.9 percent were raising about the same amount. In stark contrast, the survey a year ago found 48.3 percent of charities were raising more money in the final three months of 2007 than in the same period in 2006, and only 26.3 percent were raising less. Experts on fundraising and giving say nonprofits should not panic but instead should focus on sharpening the case they make to givers and continuing to ask for support. And new research from the Stanford Graduate School of Business suggests that encouraging volunteerism can generate healthy financial contributions for nonprofits. Because volunteers make an emotional connection to an organization and its mission, asking supporters for their time rather than their money is a better way to increase donations of money, says the study, which was published in the Journal of Consumer Research. In fact, it says, initially asking givers for money can alienate them and make them less likely to get involved and less likely to actually give, the study says. Increasing volunteerism, by young people in particular, also is the focus of a new initiative by Youth Service America. With support from the Bank of America Charitable Foundation, the new “Semester of Service” campaign aims to engage millions of young people by providing “service-learning” opportunities that give students the chance to connect community service with curriculum either in or out of school. Youth Service America says a report from RMC Research Corp. concludes service-learning has a great impact on students and the community when projects last the length of a semester. Times are indeed tough for the giving sector, but that simply means nonprofits need to be smarter and more focused than ever on connecting with givers and asking for their time, their expertise and their money.
Posted by Kelsey Walker
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| January 27, 2009 11:11 AM |
A Modest Proposal for Nonprofit LobbyingHere’s an intriguing method of gaining lobbying clout for the nonprofit community: let corporations carry our message. Washington’s K Street crew may not be welcome in the new Administration but there’s no fear that they’ll run out of work on Capitol Hill or in state capitals. Are corporations actually more likely to have success in securing favorable legislation on social issues than the charities most concerned with those issues? At the very least, they’re freed of the [often overstated] fear that “We’ll lose our tax exemption;” and at the very least, lobbying help is something nonprofits can ask of their corporate friends without costing the corporation much extra money–a useful posture in these tough times!
Posted by Kelsey Walker
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