Stanford Social Innovation Review

Stand for Something

Imagine you are the new CEO of a publicly-supported grantmaker that has suffered declines in funds raised over the past 10 years. Would you choose to: 

• Redefine your primary purpose to be fighting poverty?
• Lead your large board of directors, overwhelmingly from large corporations, to make a substantial commitment to policy advocacy?

Such a strategy carries high risk, but it may also offer high rewards. In their canonical article “Philanthropy’s New Agenda: Creating Value,”¹ Michael Porter and Mark Kramer identified “changing the environment” in which grantees operate as the highest level of strategic impact a foundation could hope to achieve. (The others, in ascending order, were consistently choosing the best grantees over time, attracting support to those grantees from other funders, and improving the performance of grantees.) Not all “game changing” initiatives involve policy changes, but in many fields, such as health, human services, the environment, education, and social justice, potential policy changes comprise a commanding share of potential high-impact strategic goals. 

The same case for pursuing a policy strategy applies to nonprofits as well as to foundations. This is something I’ve always emphasized to nonprofit boards and executives when discussing the propriety and benefits of policy advocacy. Organizations trying to prevent foster children from becoming homeless, for example, should also keep an eye on how policy affects that purpose.  Sounds reasonable enough – that’s the case they should make to their boards of directors, and be prepared to make to the broader public.

That’s all fine for foundations with their endowments, I often hear; but what about the risks to a nonprofit’s ability to raise funds and attract volunteers? 

Community foundations have struggled with this dilemma for many years.  Facing competitive pressures from organizations like Vanguard or Merrill Lynch, some community foundations have sought to compete on the basis of efficiency and service to donors, while others have instead emphasized the change they hoped to help create through their philanthropy. Emmett Carson, president of the Silicon Valley Community Foundation, and former president of the Minneapolis Community Foundation, has made a very persuasive argument that, while it may alienate some donors, taking leadership on community issues in the end should attract even more donors and more passionate commitment to the organization. 

The United Way of Greater Los Angeles is one organization that has taken this high-risk strategy. Its example may hold a number of lessons for advocates of funding for social change, and for funders who, whatever their motives, are looking to boost their impact. (I describe why and how they made this shift in this article in Responsive Philanthropy, NCRP’s quarterly journal.) It is too soon to tell whether its new strategy will reverse the downward trend in donations to UWGLA, and there are some who are skeptical about the motives behind the shift. But there is little doubt that the new focus is widely perceived in the Los Angeles philanthropic world to be a major step forward (based on comparing data from interviews with funders over two years ago to similar interviews last summer).  When I asked Elise Buik, UWGLA’s President, about Emmett Carson’s argument that asking donors to join a cause will attract more support over time, she responded, “Well, when you stand for something, you definitely attract new people, and good things can follow.”

UWGLA’s example also may say something about whether board members, who can be quite conservative and risk averse, are as likely to oppose adding policy goals to the mix as is commonly thought. I was recently fortunate to make a presentation to their board about the law governing policy advocacy for nonprofit organizations. Having made dozens of similar presentations to nonprofit directors and leaders, I was amazed at how little controversy was expressed among the board members about the decision to commit to take policy positions. Some of this, no doubt, was due to the work UWGLA staff had done over many months to prepare the board for this step, but it also seemed that the board members – three out of four from large businesses – already knew well the value of lobbying. As Matt Miller has argued, big business has found that well executed lobbying can deliver unbeatable returns. 

1. Free access to the article is also available here – use your own best ethical sense.

Peter Manzo is the director of strategic initiatives for the Advancement Project, a civil rights advocacy organization, and a senior research fellow with the Center for Civil Society in the UCLA School of Public Affairs. Previously, he was the executive director and general counsel of the Center for Nonprofit Management. 

Posted by Katie Harrington

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Bernholz’s Law of Philanthropic Adaptation

Late 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:

• Phase Zero – ignore new technology.
• Phase One of philanthropic adoption of a new tool is fundraising. (See this application of iPhones)
• Phase Two (in the case of bet2give phase one and two are simultaneous) is using charitable giving as a means of attracting customers to some other business model. (See good2gether  or goodsearch)
• Phase Three is using the tool to publicize the philanthropic status quo (see almost every foundation website)
• Phase 3.5 – meanwhile, real change will begin happening on the edges, as innovators recognize the implications of lowered transaction costs and global attention (see globalgiving or networkforgood).
• Phase Four involves trying technology to change the edges of philanthropic practice (see Packard Foundation’s Nitrogen Wiki).
• Phase Five brings us to the conference circuit, where we will learn (perhaps with some bemusement) about technology applications that “came in from the edge” and are now discussed as mainstream. ( globalgiving and networkforgood)
• Phase Six – we watch in envy as a real twist or two in the playing field as we know it happen, and kiva.org reshapes microfinance and donorschoose catches public school foundations off guard. They also get adoring press attention.
• In Phase Seven – big foundations amplify attention on “little” innovations and while attention is directed there…
• …Phase Eight begins, in which the reality of how change happens is setting in and new philanthropic supports for these new ways of being are being created (while we’re looking elsewhere.) In other words, we’ve entered phase one of a new cycle.

Lucy Bernholz is the Founder and President of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award winning blog about the business of giving and serves as Executive Producer of The Giving Channel on Fora.tv.

Posted by Katie Harrington

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Nonprofit Silos Choke Off Conversations

Smart fundraising is no longer a one-way stream of information, where organizations tell would-be donors whatever will motivate them to give.

Fundraising has become a conversation. 

There’s just one problem: In many nonprofits, especially the larger and more professional ones, the people actually charged with conversing with donors have little incentive to do so.

They’re typically found in the Donor Relations department, and they report to managers outside of Fundraising. So while fundraisers may want to nurture rich two-way conversations with donors, the people who answer the phones, emails, and complaint letters would rather eat cockroaches drowned in mop water than engage in conversations. And because they’re in a different department, they’re being measured for efficiency and other very non-conversational skills.

So you have a Talking Department (Fundraising) and a Listening Department (Donor Relations) working in different silos and holding different goals and conflicting philosophies. Sounds like a mental illness, doesn’t it?

Add to that an independently operating Marketing Department (which, for the sake of the metaphor, we’ll call the Yelling at Random Strangers Department) and the Online Department (or the Navel-Gazing Department). If this nonprofit were a person, he’d be locked up!

Nonprofits that allow bureaucratic turf to get in the way of listening to and serving donors won’t survive the change in how donors interact with their charities. When donors get a taste of the rich, respectful relationship they can have with a nonprofit that has its organizational act together, they’re going to drop those who can’t make the change.

The time to explode your silos is now.

Jeff Brooks is creative director at Merkle, a direct-response agency serving the nonprofit world.  He blogs at the Donor Power Blog.

Posted by Katie Harrington

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Philanthropy 2.0: A Video Q&A

Yesterday at the Council on Foundation’s annual conference, the session entitled Philanthropy 2.0 featured a star-studded panel. The founders of DonorsChoose, Facebook Causes, and The Motley Fool were joined by the East Coast Development Manager of Kiva.org and the Director of Social Investment for The Case Foundation.

Roughly 150 people attended the session, choosing Philanthropy 2.0 over a host of other really awesome sessions.  Session facilitator Sharna Goldseker, vice president of the Andrea and Charles Bronfman Philanthropies, took a quick survey of the audience. The attendees consisted of 30 percent family foundations, 40 percent community foundations, 5 percent corporate foundations, 10 percent private foundations, and 15 percent foundation consultants and advisors.

For the first hour of the session, the presenters showcased what they have been doing with web 2.0 and philanthropy. For those who aren’t familiar with the platforms listed above:

DonorsChoose.org – A donation site that connects teachers who need supplies for classroom projects with citizen philanthropists interested in funding the projects. (67,400 donors, $1.2 million since 2000)

Facebook Causes – A popular application on Facebook that permits anyone to start a fundraiser on behalf of a registered 501c3 organization. (12 million users, $2.5 million raised since 2007)

Kiva.org – A community of advocates of micro-finance that permits individuals to make loans to small-business owners in the developing world. (270,000 lenders, $28 million lent since 2004)

The Motley Fool – A web 2.0 financial investment community that also runs an annual program in which investors make donations to a select list of charities.

The Case Foundation – A family foundation started by AOL founder Steve Case that has invested heavily in the tools that make micro-philanthropy possible and has run several contests that encourage individuals to become citizen philanthropists.

After the presentations, the conversation gave way to a “Q&A” session, in which foundation representatives asked the panel how philanthropy 2.0 could impact their own work.

Here is a video of the Q&A. (From left to right: Michael D. Smith, director of social investment, The Case Foundation; Rupa Modi, East Coast development manager, Kiva.org; Tom Gardner, co-founder, The Motley Fool; Charles Best, founder, DonorsChoose.org; Joe Green, founder, Facebook Causes)

Yesterday morning I also attended a session entitled Social Entrepreneurship: New Approaches to Changing the World. The session featured several notable speakers including: Bill Drayton, CEO and chair of ASHOKA; Brian Trelstad, chief investment officer for Acumen Fund; Erich Broksas, vice president of business development for The Case Foundation; J. Gregory Dees, professor of the Practice of Social Entrepreneurship at the Center for the Advancement of Social Entrepreneurship; and Jed Emerson, project manager of Strategy and Performance for The Edna McConnell Clark Foundation.

By the end of the day, I felt compelled to draw up a list of seven tips I had heard for foundations looking to “push the envelope” of philanthropy. The following ideas come from the two sessions I attended and an interview with Bill Somerville, author of Grassroots Philanthropy: Field Notes of a Maverick Grantmaker.

Here are the suggestions, in no particular order:

1. Put young people on your board, or consider creating a junior board for generating new ideas in grant-making, program evaluation, and technology-assisted philanthropy. (Source: Participant in the “Social Entrepreneurship” session)
2. Create room for “high risk/high reward” grants, and learn from any failures. As a foundation, having philanthropic “scar tissue” could be a good thing. (Source: Presenter in the “Social Entrepreneurship” session)
3. Open source the design of micro-philanthropic solutions, ie, integrate your constituents’ ideas and preferences into the planning and implementation of grant-making programs. (Source: Charles Best, DonorsChoose.org)
4. Use social networks to tell people what organizations your foundation is funding, and why. This will permit you to serve as a scout for citizen philanthropists looking to make informed decisions about where they can direct their philanthropic dollars. (Source: Joe Green, Facebook Causes)
5. Experiment with using social media. Don’t worry if it doesn’t work out. On the Internet, you can always maneuver quickly when something isn’t having the results you expected. (Source: Rupa Modi, Kiva.org)
6. Commit your foundation to funding nonprofits and to creating more change-makers in the world. A society of change-makers will solve the problems your foundation cannot solve on its own. (Source: Bill Drayton, Ashoka)
7. Trust your program staff to make grants. This will speed up the process of moving money to where it’s needed most. Board members can confirm the grants after the fact. (Source: Bill Somerville, Philanthropic Ventures Foundation)

Peter Deitz is a micro-philanthropy consultant and the founder of Social Actions, a website that helps individuals and organizations use social media to plan, implement, and support peer-to-peer social change campaigns so that grassroots solutions to local and global problems can flourish.  He also writes a blog about micro-philanthropy.

Posted by Katie Harrington

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One Click Giving Infrastructure

Over the last few years we’ve grown accustomed to:

• click to give
• searching for things on the Internet and having some of the revenue we generate for the search engines redirected to a nonprofit
• supporting prostate research, diabetes research, or cancer services when we checkout at the grocery store

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?

• If you want to give globally you can try GlobalGiving or give2asia.
• Want to support microfinance? Try MicroPlace or Kiva.
• Local interests in the USA? NetworkForGood, Case Foundation, or the Catalogue for Philanthropy.
• Public schools and teachers matter to you? Use DonorsChoose.
• Want to put every one of your dollars to work as both a gift and an investment? Try RSF Social Finance or Calvert Giving Fund.

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.

Lucy Bernholz is the Founder and President of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award-winning blog about the business of giving, and serves as executive producer of The Giving Channel on Fora.tv.

Posted by Katie Harrington

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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.

Sean Stannard-Stockton is a principal and director of Tactical Philanthropy at Ensemble Capital Management. Ensemble Capital provides families both traditional investment management and philanthropic planning. He is the author of the blog Tactical Philanthropy and writes the column On Philanthropy for the Financial Times.

Posted by Kelsey Walker

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Cause Docs

Thanks to the rise of social media (and the woes of mainstream media), the world is talking as never before. But more than ever, the world is getting its news from increasingly partisan sources.

Inevitably, the hot trend in “new philanthropy” is for nonprofit advocacy groups to try to break news—specifically, through the production of short, nonfiction documentaries and online video clips paid for by wealthy donors with an axe to grind, organized by PR-hungry nonprofit advocacy groups and produced by documentary filmmakers competing as never before simply to get funded.

Case in point: The Humane Society of the United States (http://www.hsus.org/), an animal rights nonprofit, famously drummed up more than one million hits to its otherwise sleepy Web site earlier this year after circulating video clips (http://hubpages.com/hub/USDA-Beef-Recall-Hallmark-Westland-Meat-Packing-beef-recalled) of its investigation into cattle abuse. The film, funded by the society’s marketing budget, showed slaughterhouse workers abusing sick cattle. The abused and ill animals were later produced, nonetheless, into food that ended up in school lunchrooms across the country—an action that filmmakers said endangered food safety. According to Michael Markarian, executive vice president of external affairs for the nonprofit, the film’s allegations were picked up by Reuters and CNN and eventually, the story led to the recall of 145 million pounds of ground beef, the removal of beef from school lunch menus, and eight congressional hearings on the issue of animal safety’s relationship to healthy food. Cruelty charges were also filed against meatworkers found abusing animals at the Hallmark/Westland Meatpacking Company in California. (http://www.westlandmeat.com/)

Markarian says the nonprofit plans to stage many more such investigations. “Big cuts in news journalism staff, in funding for investigative journalism and the rapid decline of newspapers is affecting advocacy and is having an impact on documentary filmmakers, as well,” he told a panel last month at the 2008 SILVERrDOCS international documentary film festival in suburban Washington, D.C. (http://silverdocs.com/)
“Obviously, the media is changing but the issues remain, so it’s falling more and more to advocacy groups to investigate and uncover what’s happening and play the role of the watchdog in society—which the media is playing less and less.”

To be sure, the “cause doc” trend is just getting started, and some nonprofit groups and philanthropists are joining forces to get such films funded and distributed as widely as possible. “A Powerful Noise” (http://www.apowerfulnoise.org/), a film that debuted last month about three activist women in three countries, is being co-sponsored by CARE (http://www.care.org) and Bono’s One Campaign—and also funded by feminist philanthropist Sheila C. Johnson. The film, created by filmmaker and ex-cable network executive Tom Cappello, was one of the dozens of cause docs screened at the recent Tribeca Film Festival and SilverDOCs. “I turned to film because after years of doing advocacy work and testifying before countless congressional committees, there’s no substitute for getting quick action than showing a film” Johnson told the social media blog, Cause Global (http://www.causeglobal.blogspot.com). Cappello, the filmmaker, adds: “We had the footage and heard that Sheila was looking to make a film about women activists around the world so CARE helped to bring us together and this was the result.”

Look out for much more cause doc advocacy to come, as nonprofit groups set up new arms to train fellow advocates to join them. This summer, the nonprofit, Witness, (http://www.witness.org), founded by rock musician Peter Gabriel, expands its new documentary film training site, called The HUB (http://hub.witness.org), and starts offering advocacy groups new ways to have greater impact and visibility in the world at large. “Ideally, this will be a platform eventually for filmmakers and news organizations to pull together,” says Sameer Padania, who has run The HUB since its debut last December. He says the purpose of the site is to “give people here and in the developing world a way to share and show the world things that haven’t been seen.” And last but not least? IndieGoGo (www.indiegogo.com) is another new Web site to encourage independent cause docs to be made. This site bills itself as a “social marketplace where filmmakers and fans connect to make independent film.”

Is this burst of citizen-produced video news a good thing? To be sure, information is power and the cause doc movement is putting Big Media back on its toes: In July, AOL/Time Warner is kicking off SNAG films (www.SnagFilms.com), a 2.0 version of AOL’s True Stories Web site (http://movies.aol.com/truestories) that AOL site executive Stephanie Sharis says will offer more than 200 feature-length documentaries, available free to users.

And that’s not all. msnbc.com just announced it would be creating MSNBC Films, which will finance feature-length documentaries in an effort to turn the cable news channel into more of a player in the feature world. Not to be outdone, CBS recently created a film unit that will deliver about 4-6 theatrical features a year, each budgeted at under $50 million—at least half of them to be documentary film about social issues.

But even the new citizen journalists are starting to ask the question: Is partisan media an entirely good thing? On his blog (http://www.ethanzuckerman.com/blog), Ethan Zuckerman, the cofounder of GlobalVoices.org, asks: “Should we expect that readers are aware that media has changed and that we should expect every voice to have strong, visible bias? Or does this point to a need to re-learn how to read both online and offline media to understand that we’ve got far more activist media and far less neutrality?”

It’s a good question, and so is another asked on the film festival circuit this summer: When does advocacy turn into propaganda? For his part, the Humane Society’s Markarian told a SilverDOCS forum on the subject that he wasn’t worried about it because “viewers know propaganda when they see it.”

But do they?  If propaganda is really good, it feels like fact. Let’s just hope that traditional journalists, as well as the new citizen activists, keep asking the question.

Marcia Stepanek is Founding Editor-in-Chief and President, News and Information, for Contribute Media, a New York-based magazine, Web site, and conference series about the new people and ideas of giving. She is the publisher of Cause Global, an acclaimed new blog about the use of digital media for social change. She also serves as moderator and producer of New Conversations for Change, Contribute’s forum series highlighting social entrepreneurs and new trends in philanthropy.

Posted by Kelsey Walker

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The Future of Philanthropy: Giving 2.0

eBay disintermediated shopping. Napster initially did the same for music and Wikipedia for information. More recently it has been Prosper for the sluggish industry of unsecured loans.  What paradigm shifting changes has the Internet brought to the slowest sector of them all, the philanthropic sector?  The answer might be online giving markets. 

These organizations can be loosely defined as web-based, informational and transactional platforms that help donors and volunteers more easily identify and then contribute to or volunteer at high performing nonprofits, social projects or needy individuals.  They empower pre-vetted organizations to access a wide and diverse base of primarily individual contributors and volunteers. 

DonorsChoose.org has been referred to in the New York Times as “the Wikipedia of hope.”  GlobalGiving has been called “The Charity Long Tail.”  Fortune Magazine went so boldly as to title its feature article on Kiva.org, “The only nonprofit that matters.”  In the United States, these innovative online giving markets have finally started to receive the attention they deserve and have started to shape the future of philanthropy, but the full story has not been told.  If it’s not apparent in this blog-post, the sector’s inability to identify and support opportunities for innovation and progress is a great source of personal frustration.  The fact that it is taking the philanthropic sector a decade longer than the private sector to identify and support this inevitable and emergent trend is quite disheartening and one of the main reasons why the smartest and brightest young professionals leave the sector (let’s not only blame salaries), but more on that in later blog-posts. 

These online giving markets are also part of an emergent phenomenon throughout the world where home-grown but similarly modeled organizations like GiveIndia, Brazil Social Stock Exchange, Greater Good South Africa, HelpArgentina (full-disclosure: I co-founded this organization and am biased) and many more have quickly become important actors in their respective philanthropic ecosystems.  Just like Kiva and DonorsChoose, these organizations are harnessing new technologies and adapting business concepts to change the face of philanthropy and increase levels of civic participation throughout the developing world.  Each country brings a different history, political system, operating context, tax code, legal system, and most importantly a unique philanthropic culture.  Whether or not these online giving markets become as important in the 21st century as community foundations were in the 20th century remains uncertain, but their impact is growing and must be better understood.

I will talk a bit about my organization, but first let me recommend a couple of seminal papers written on the more general phenomenon:

• Monitor Group Paper – “Future of Philanthropy – Online Giving Markets”
• Keystone Reporting – “Online Philanthropy Markets: from ‘Feel-Good’ Giving to Effective Social Investing?”
• Keep an eye out for a soon-to-be-released McKinsey study on the sector sponsored by the Hewlett Foundation

I co-founded HelpArgentina during Argentina’s worst crisis in 2002 and directed it (along with an incredible team) for four years until passing it on to the most able reins of Milagros Olivera.  She has since matured the organization into one of the country’s preeminent institutions of which I am proud to still be permitted a seat on the Board.  I have much to say about the organization but will reserve the best for later blog-posts and send you to our website for a description of who we are and what we do.  Instead I’ll clue you in on a deep, dark secret: giving or philanthropy as we know it is over.  Small organizations like Biblioteca Popular San Antonio, off the map in the forgotten Formosa province (ARG), have been able to fund enormously successful sustainable-business initiatives without corrupt government support; they used HelpArgentina to get access and then win the trust, hearts and minds of Argentines living in Madrid, London and New York.  Led by social ambassadors like Agustina Blanco, these groups organized fundraisers to support the organization.  This experience is happening everyday all over the world.  It has no borders and no centralized authority: just HelpArgentina as a facilitator.  In fact, last year’s third annual HelpArgentina Nights fundraiser drew more than 6000 people to participate in 191 separate events in 14 countries raising money for 25 organizations.  HelpArgentina’s diaspora philanthropy/cross-border donation model is not used by all online giving markets but in some form, each of these organizations is changing the rules.  Even politicians are starting to catch hold of this trend. It’s no coincidence Obama is the greatest fundraiser in the history of American politics, his campaign team has simply embraced a networked America whose grassroots are empowered more than ever before.  Many organizations have started to harness this newly linked force of people but this is only the beginning.  Without the infrastructure in place, we’re still driving horse and buggy. 

The exciting thing is not the rise of online giving markets, but rather the implications this new social financial infrastructure will have on civil society and in the end, our way of life.  Will it be the push needed to help quasi-democracies fully convert? Am I including the USA in that quasi-democratic category? I’ll leave it up to you to speculate.

Examples of Online Giving Markets (OGM) include:

• BetterPlace.org
• Brazil Social Stock Exchange
• Conexión Colombia
• DonorsChoose.org
• eBay Giving Works
• GiveIndia
• Give Meaning
• GlobalGiving
• Greater Good South Africa
• HelpArgentina
• Kiva.org
• MissionFish
• Modest Needs

The list above includes the OGMs participating in the Omidyar Network-sponsored annual OGM meetings.  For the many that are operating independently, please add yourself in the comments.  Thank you and I encourage you to collaborate more with your partners in this space; only together can we create the change our mission so ambitiously promises.

Lloyd Nimetz founded the online giving market HelpArgentina.org. While pursuing his MBA at Stanford Graduate School of Business, Nimetz has focused on for-profit business models that address social challenges. This summer he will launch a payments platform for India’s bottom billion.

Posted by Kelsey Walker

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Habit Creation, Consumers, and Charity

An 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.

Kelly Kleiman, who blogs as The Nonprofiteer, is a lawyer and freelance journalist whose reportage and essays about the arts, philanthropy and women’s issues have appeared in The Wall Street Journal, Washington Post, Christian Science Monitor and other dailies; in magazines including In These Times and Chicago Philanthropy; and on websites including Aislesay.com and Artscope.net.

Posted by Kelsey Walker

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Privacy Matters

It’s oh-so un-hip, perhaps, to suggest this in a Web 2.0 world. But it’s time to start fighting harder for donor privacy.

According to recent polls, people who give money to charities and other nonprofits—including universities such as Stanford, Columbia, and others—are becoming increasingly uncomfortable with the personal information that fundraisers are collecting about them and the growing ease with which these fundraisers can collect their information online and archive what they have collected digitally in-house. A recent survey by the BBB Wise Giving Alliance and Princeton Survey Research Associates, for example, says 85 percent of donors think it’s not okay for a nonprofit organization, including a college or university, to raise money by selling donors’ personal information to others.

Of course, much donor data still gets reaped the old-fashioned way—from personal relationships and the social networks of the wealthy. But as the number of nonprofits continues to expand and as the economy sours, the digital rivalry for each donor dollar is intensifying—making it much more tempting for nonprofits to outsource their fundraising and sell donor data to the highest bidder.

There have always been issues about donor recognition versus anonymity, and such issues are fairly common ones in the philanthropy world. But there are some new privacy risks that didn’t previously exist from the continued proliferation and evolution of Web 2.0 social networking sites, the growth of the mobile Internet, and the increasing use of fundraising from social networks—not to mention the increasingly exposed lives of the young and wealthy on sites like Facebook and MySpace.

To be sure, it’s getting easier for people to give away more information and much easier for charities to knowingly (or unknowingly) send it around. “People are now having conversations by email about prospective donors that are now on their Palm Pilots and Blackberries and iPhones so donor information is now living in more places digitally than ever before,” says Sree Sreenivasan, dean of students at Columbia University Journalism School and an international expert in Internet research. “It’s very hard today to know where your information is going.”

Promises by charities to keep these digital donor-dossiers completely private are becoming harder to keep. “There are tens of thousands of lousy nonprofits out there, and when I say lousy, I mean they may be great at what they do for those in need but still terrible at managing the privacy of their donor data,” says Jeff Brooks, the creative director at Merkle/Domain, a Seattle-based fundraising consultancy and the author of donorpowerblog.com, a blog about donor-friendly fundraising. Making matters worse, privacy experts admit, philanthropic donors remain largely unaware of the large amount of personal information there is about them in cyberspace. Says Marc Rotenberg, founder of the Electronic Privacy Information Center, a Washington, D.C.-based privacy advocacy group: “I think very few charitable donors really know what is known about them by the person who approaches them for a contribution. Privacy still matters.”

Security leaks are also getting more frequent publicity in the blogsphere. New sites such sites as Breach Blog, PogoWasRight.org, and the Attrition.org Data Loss Archive and Database track the breaches and the lawsuits that can result from poor security policies at charities, businesses, government agencies, and other entities.

But failure by nonprofits to notify donors when their data is leaked remains a large, and fairly common, problem. Just ask Allan Benamer, who writes the Non-Profit Tech Blog. Benamer last fall reported that hackers had gotten access to the email addresses and passwords of thousands of donors to nearly 150 charities—including CARE—that used the online database software and services from Convio, Inc. The New York Times picked up the story, and some but not all of the charities affected made an effort to notify donors themselves. There’s a reason for the fear. According to the Times, many of the 20,000 online subscribers to a newsletter put out by United Animal Nations, an animal assistance group, was affected by the breach and quite a few were angry about the leak. “We’ve had losses (in membership),” Nicole Forsyth, the president and chief executive of the charity told the Times last winter. “About 2 percent of our online subscribers have unsubscribed.”

Regardless, silence and secrecy do nothing to solve the challenges of protecting privacy in the Digital Age. And it’ not enough to outsource the security problem to a technology vendor. To be sure, privacy must begin in-house, with improved employee training and organizational policies that are strongly enforced from the top down.

It’s also time for the creation of sector-wide privacy standards. These would both raise awareness of the problem among charities and donors and lead to more meaningful privacy protection and controls that go beyond the small-print of a Web site privacy policy.

Thanks to Barack Obama’s success with online fundraising, charity leaders have been clamoring in recent months to learn more about the art of online fundraising. Let’s not encourage more online fundraising without first demanding more from sector leaders on donor privacy.

Marcia Stepanek is Founding Editor-in-Chief and President, News and Information, for Contribute Media, a New York-based magazine, Web site, and conference series about the new people and ideas of giving. She is the publisher of Cause Global, an acclaimed new blog about the use of digital media for social change. She also serves as moderator and producer of New Conversations for Change, Contribute’s forum series highlighting social entrepreneurs and new trends in philanthropy.

Posted by Kelsey Walker

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This Is What Philanthropy Looks Like

During the lead-up to the Iraq War—for good reasons, a subject overlooked in conversations about social innovation—I found myself marching through the streets of Montreal, New York, Toronto, and Washington, D.C. The people I was protesting alongside had many chants. The one that stirred my emotions every time went, “This is what democracy looks like; this is what democracy feels like.”

Digital natives like me are inclined to cut and paste any number of lofty terms and subject them to the same reality check we challenged democracy to in the lead-up to the Iraq War. The phrase that I belted as loud as I could in 2002-03 passed judgment on more than just the political events of that moment. It confronted directly the television and glossy magazine culture I was born into. In hindsight, it seems to have anticipated the citizen advocacy, citizen journalism, and now citizen philanthropy movements that emerged in the years since. 

Before 2002-03, democracy for me was no more than the provider of political entertainment, be it Bill Clinton playing the saxophone or parodies of George H. W. Bush saying “it wouldn’t be prudent.” In practice, it consisted of my parents stepping into a poll booth once every four years, just to cancel out each other’s vote for U.S. president. The emaciated version of democracy in which I grew up asked simply that people vote and laugh. (See Neil Postman’s Amusing Ourselves to Death for more insights on television and democracy.)

Chanting “This is what democracy looks like” and experiencing what it felt like to say those words with hundreds of other turned-on, concerned citizens created something more authentic and quantifiably better than the democracy I had known. Democracy became an invitation to hit the streets and speak up. 

For this reason, the phrase has stayed with me through the crime of aggression that eventually unfolded in Iraq. In the years since, I have seen projects emerge that invite citizens to flip the funnel on broadcast media and agitate for social change. Projects like AskYourLawMaker and Spot.us are showing people what journalism should look like. Initiatives like the Care2 Petition Site, ThePoint, and PledgeBank are demonstrating what advocacy should feel like. 

For my part, I have been putting together a network of likeminded people who, if the need ever arose, could hit the streets with signs that read, “This is what philanthropy looks like.” On the citizen philanthropy front, we have a common goal of making the age-old institution of philanthropy more user-friendly and user-generated. Like advocacy and journalism before it, we are transforming philanthropy from a top-down process into an invitation for the grassroots to speak up and make something happen. 

The new philanthropy doesn’t require millionaires, corporate social responsibility programs, or large endowments to run. Instead, it runs on the resources and passions of real people. No one owns it, but everyone can participate. Registered 501(c)(3) organizations take note: Citizen philanthropists don’t make grants just to institutions. Through social networks, blogs, text messages, and email, we fund one-off events in our local communities as well as our friends’ projects and outstanding individuals trying to effect positive change on the other side of the world.

Like any movement that has broad appeal, citizen philanthropy has produced strange bedfellows. A contributor to the SSIR opinion blog recently described the phenomenon in terms of online giving markets. This vocabulary of choice in philanthropy borrows heavily from the very free market system that produced the television and glossy magazine culture that some of us citizen philanthropists oppose. I like to describe citizen philanthropy as a direct critique of consumerism, replacing opportunities to consume with opportunities to give back or take action. 

Capitalist or anti-capitalist, the television and glossy magazine culture against which I raged in 2003 has no place in the new philanthropy. Foundations and nonprofits are learning that glossy is a bad word among digital natives; that direct mail increases an organization’s ecological footprint; and that TV spots are a waste of time. Citizen philanthropy, as it matures, is touching many hundreds of thousands of people. These people are serving as full partners in the change they want to see in the world. They are helping to fund, implement, and evaluate micro-philanthropic initiatives from start to finish. 

Sometimes these initiatives require many people taking a simple action. For instance, the DarfurWall has recruited thousands of people to donate just $1 to combat the crisis in Sudan. At other times, citizen philanthropy initiatives involve just one or two people devoting time and toil to more labor-intensive actions. In 2006, a friend of mine spent six months drawing attention to an individual’s struggle in Nepal and in the process became intimately connected to that person’s life and future. She is now working full-time to advance the citizen philanthropy sector. 

For philanthropy to be true to its name—love of humanity—then indeed, this is what it will have to look like. 

Peter Deitz is a micro-philanthropy consultant and the founder of Social Actions, a Web site that helps individuals and organizations use social media to plan, implement, and support peer-to-peer social change campaigns so that grassroots solutions to local and global problems can flourish. He also writes a blog about micro-philanthropy.

Posted by Jennifer Roberts

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Wall Street Plunge a Wake-up Call for Charity

The 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.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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“Moneyball,” “Freakonomics,” & Philanthropy

Earlier 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

Sean Stannard-Stockton is a principal and director of Tactical Philanthropy at Ensemble Capital Management. Ensemble Capital provides families both traditional investment management and philanthropic planning. He is the author of the blog Tactical Philanthropy and writes the column On Philanthropy for the Financial Times.

Posted by Kelsey Walker

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Heat Wave: Part 1

Bill Clinton’s fourth annual star-studded thinkfest on philanthropy, technology, and cause advocacy—the Clinton Global Initiative—kicked off today in Manhattan with a bang of urgency, rife with references to global climate change, the U.S. financial meltdown, and the need for the next president, whoever he will be, to restore some of America’s standing in the world.

Here are some highlights from yesterday’s sessions:

*Bono blasted the failure of the developing world to make progress meeting United Nations Millennium Goals. He also blasted the Wall Street bail-out, saying: “It’s extraordinary to me that you can find $700 billion to save Wall Street and the entire G-8 can’t find $25 billion to save the 25,000 children who die from preventable diseases and hunger.” Bono, flanked on an opening session stage by Al Gore, Lance Armstrong, Bill Clinton, Queen Rania of Jordan, and Liberia President Ellen Johnson-Sirleaf, said: “Bankruptcy is bad enough but this is moral bankruptcy.” The lead singer for U2 and cofounder of Product (RED) also said the next U.S. president should lead a global effort to tackle climate change, poverty, and other global social ills. This, he said, would “help America to redescribe itself to the rest of the world.”

*Al Gore urged young people to engage in “civil disobedience” to stop the creation of new coal plants. The Nobel Peace Prize winner and environmental crusader said that since last year’s Clinton summit, “the world has lost ground to the climate crisis. This is a rout. We are losing badly.” Gore called on young people to step up and take action. “If you’re a young person looking at what is being done right now, and not done, I believe we have reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration.” Gore said there are about 28 coal plants under construction in the United States, with another 20 projects near the start of construction. Gore also called on people to stop “buying the lie, the notion” that burning coal is still an acceptable energy alternative. “There is no such thing as clean coal,” he said. “Clean coal is like healthy cigarettes. It doesn’t exist.”

*Bill Clinton told a small group of bloggers that he thinks there is, at least, “a 50 percent chance” that people will give more to those in need during the evolving U.S. financial crisis. He said the meltdown “will make the work of putting philanthropists and organizations together more significant over the next couple of years.”

*Former U.S. Treasury Secretary Robert Rubin, a panelist on an anti-poverty panel, called the current U.S. financial crisis “a really extraordinary situation—by far the most extraordinary situation the capital markets have faced since the 1930s.” Rubin, currently the director and chairman of the executive committee of Citigroup, said the first priority for the country is to “deal with the crisis of confidence that we’re facing.” He recommended quick passage of “some version” of the bailout plan now before Congress, saying that “there are no guarantees in life, but what is being proposed could help significantly, and if it’s not passed, then it will exacerbate” the crisis.

*Former President George Bush (41st) made a surprise appearance to talk about the need for Americans to join him and Clinton to raise money for families displaced by natural disasters in the American South. “People are without homes and without jobs as a result of forces beyond their control,” Bush said. “Just as we Americans gave to the victims of the tsunami four years ago, we must give to those in the Gulf suffering from sudden displacement.”

*Bill Gates, in an on-stage, one-on-one with Bill Clinton, alluded to what he said could be a small drop-off in philanthropic donations by “rich people” during the evolving financial crisis. When asked what advice he’d give to wealthy philanthropists now taking a beating on the value of their investments, Gates said: “Keep giving.” Because the very wealthy tend to give the least as a percentage of their holdings, he said, “even a modest increase in giving” by them to the neediest during these times of “greatest need” will have an impact.

The conference continues through Friday.

Marcia Stepanek is Founding Editor-in-Chief and President, News and Information, for Contribute Media, a New York-based magazine, Web site, and conference series about the new people and ideas of giving. She is the publisher of Cause Global, an acclaimed new blog about the use of digital media for social change. She also serves as moderator and producer of New Conversations for Change, Contribute’s forum series highlighting social entrepreneurs and new trends in philanthropy.

Posted by Kelsey Walker

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Wealth Expert Upbeat On Giving In Downturn

Despite fear and uncertainty among nonprofits about the sliding economy and turmoil in the financial markets, a leading expert on wealth and philanthropy is optimistic about charitable giving.

While giving fell in the recession that followed the bursting of the dot.com bubble in 2000 and the 9/11 terrorist attacks in 2001, the rate of the decline was only half that of the decrease in wealth, says John J. Havens, senior associate director and senior research associate at the Center on Wealth and Philanthropy at Boston College.

And despite the recent plunge in the stock market, which already has recovered some of its losses, stocks account for less than 10 percent of households’ assets, and stocks affect mutual funds, bonds and pension reserves, which together account for another 15 percent to 20 percent, Havens says.

Americans also own homes and businesses, so the market does not immediately affect the remaining 70 percent to 75 percent of household assets, he says.

Although their wealth affects Americans’ capacity for charitable giving, he says, their giving also reflects their personal income, their employment and their access to credit.

“I tend to be optimistic,” he says. “People are overreacting to the current bad conditions.”

In fact, he says, “large gifts are continuing at a high level.”

Large planned gifts, or those that are deferred or complex or involve assets other than cash such as stock or real estate, for example, have “inertia of their own” because they take time to plan and often involve lawyers, documents and accumulated funds, Havens says.

And that inertia “continues through the first year of a downturn,” he says.

So instead of panicking, he says, nonprofits should watch for trends in personal income, unemployment and government efforts in the U.S. and abroad to ease the credit freeze.

“If personal income were to drop and wealth were to drop off and remain low, we’d be in serious shape with respect to philanthropic giving,” he says.

And if government efforts to loosen credit “do not have a major effect,” he says, “I would anticipate we’re going to have a very long and deep recession, with declines in both wealth and income, and therefore a major impact on philanthropy as well, although probably less so in percentage terms than on income itself or wealth itself.”

But he says he believes those efforts “will have the desired impact.”

Haven, who looked at per-household data on net worth, personal income and charitable giving for the period before and after the most recent recession, says wealth and giving patterns for households tend to be more stable than those of capital markets or personal income.

“So if past is prologue, we would expect the total amount of philanthropy to continue or increase for another several months or two to three quarters, but possibly not as rapidly,” he says.

“The real big question is whether the economy can sidestep this crisis so it doesn’t extend into employment and incomes of people,” he says. “I’m optimistic because I think we’re panicking too much.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Foundations Can Provide a Giving Stimulus

Foundations 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. 

Perla Ni, founder and former publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a co-founder of Grassroots.com.

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A New Spirit, a Time for Giving

The 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.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of
Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Givers Next Door Have Much to Give

Below 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.”

Todd Cohen, a veteran news reporter and editor, is editor and publisher of
Philanthropy Journal, an online newspaper published by the A.J. Fletcher Foundation in Raleigh, N.C. Cohen has taught nonprofit reporting and media relations at the University of North Carolina at Chapel Hill and at Duke University, and regularly speaks on the topics of nonprofit media relations and trends in the charitable world.

Posted by Kelsey Walker

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Good News—Nonprofit Gift Cards Expected to Boom This Holiday Season

With 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!

Local Nonprofit Gift Card:
The Greater Kansas City Community Foundation launched Charity Gift Cards in 2007 to catalyze giving to local nonprofits in the greater Kansas City region. The gift cards come in different designs and price points and have been private labeled for corporate customers who have given the card to their clients and employees as holiday gifts. This year, Greater Kansas City Community Foundation has seen more interest from corporations for the private label giving cards. In light of the challenging economic times, giving “philanthropy” resonates. “Lavish corporate gifts seem hollow this year,” said Roxie Jerde, Senior Vice President of Donor & Nonprofit Relations for Greater Kansas City Community Foundation. “Plus, when businesses made a charitable contribution to the charity of their choice, the recipient, while thinking it was nice, didn’t find it personal. Since personal passion matters in philanthropy, it is a real plus when the recipient can choose the charity.”
More than $67,000 worth of the cards were sold in 2007. This year, as of October, more than $93,000 have been sold. 
 
The nonprofit gift card appeals to families and teachers, since it teaches kids about philanthropy. “Grandparents in particular love to buy them as stocking stuffers, as kids are so adept online, “ said Jerde. “Kids have a great time finding a charity. Plus it is fun for the grandparents to hear which nonprofits kids chose and why.” 

Network for Good
Network for Good offers the Good Card—gift cards with stored value that can be redeemed as a donation to any of more than 1.5 million charities.  Here’s Kevin Bacon talking about the Good Cards on the Today Show (at 1:04).

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
More than 350,000 people have received DonorsChoose.org Giving Cards. Corporate partners who purchased GivingCards for their customers include Build-A-Bear, Crate&Barrel, Google, Yahoo!, and Omaha Steaks. 

Happy shopping among these great nonprofit gift card choices! I heartily endorse this kind of shopping!

Perla Ni, founding publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a cofounder of Grassroots.com.

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Reviewing the Past, Predicting the Future

Ah, December. The anticipation of snow, unless you’re already several feet under. The warmth of a fire, unless you live in the south.  The excitement of winter holidays, unless you’re a grouch. Don’t forget the thrill of reviewing the year gone by and the accuracy of previous prognostications, while also prepping for the foolhardiness of sticking your neck out yet again and claiming trends, key changes, and buzzwords for the year to come. Ah, December.

Last year at this time on this very site I made several rather rash predictions. Briefly, they were:

1. One of the many philanthropic prizes launched in 2007 will succeed in motivating the solution it seeks;
2. At least one-third, and maybe as many as one-half of the world’s top 10 largest gifts in 2008 will be made by non-Americans to non-American institutions;
3. The lines between political giving, embedded giving, and giving will continue to blur;
4. Half of the glossy magazines dedicated to giving, launched in 2006 or 2007, will fold in 2008; and
5. Nothing significant will happen to the regulatory structure that shapes philanthropy in 2008.

My full accounting of these predictions can be found here in this article, “Alliance Magazine You can find additional discussion of it here and here  .

In brief, I was right on numbers three and four, wrong on number one, and we don’t have the data yet to assess number two. Number five was so poorly worded (my fault) that I can claim to be correct simply by being selective about which regulatory frames I meant. Apologies—I’ll do better next time. In that same post I also identified six trends or events that would matter to philanthropy in 2008. They were:

1. The economy
2. Health care finance will start down the same slope as subprime mortgages
3. Metrics
4. Markets
5. Bill Gates will go full-time
6. Race and age will matter

It is pretty clear in December 2008 that the economy and health care finance have profoundly shaped the direction of philanthropy in the last year—to say nothing of their effect on the U.S. presidential election. Discussions of metrics and markets were plentiful and some progress has been made—from the Acumen Fund’s Portfolio Data Management System and mainstream media’s attention to metrics to conferences on Social Capital Markets and the buzz around philanthrocapitalism. Bill Gates as philanthropist has garnered attention from his speech on creative capitalism to his retirement in June to his launch of a new company to the rapt attention paid to the Foundation’s investment policies and grants budgets. And, finally, the sector is beginning to pay real attention to racial diversity of leadership, grantmaking, encore careers, and next generation leadership issues—plenty more to be done, but I’d argue these issues have moved out of the wings and into the center of the room.

So what about 2009? Here are some thoughts. I’ll be back with more:

1. I’m going to recycle prediction number two from 2008—big giving is going to come from off America’s shores in 2009—we’ll see at least 30 percent of the year’s biggest gifts coming from/going to non-Americans. And we’ll have data to show this.
2. The number of nonprofit organizations in America will shrink through mergers and organizations going out of business. Paul Light has pegged this decline at 100,000 organizations or just fewer than 10 percent of the whole. Others I know are predicting shrinkage in numbers of up to 25 percent.
3. On the other hand, social enterprises will increase. President-elect Obama is promising investment in them and has already established a working group on social innovation. Necessity is the mother of social innovation. One problem—we don’t have any accurate or longitudinal counts (or even definitions) of social enterprises—so I can’t be wrong on this, because we don’t have data. (What an opportunity….)
4. Related to number three, but not synonymous: new corporate structures, such as B Corporations and L3Cs will significantly expand in 2009. B Corps will double in number and market reach.
5. Overall giving in the U.S.A. from all sources (foundations, individuals and corporations) will drop in real dollars in 2009 compared to 2008. (There I go again, sticking my neck out.)
6. The market of online giving marketplaces will mature – we’ll see this in shrinkage and consolidation (there are more than 120 of these now, they’ll be fewer than 100 this time next year) and the solidification of market leaders.
7. Social action by young people and elders will keep us hopeful.

What do you think? What do you predict? What will you stick your neck out about?

Lucy Bernholz is the Founder and President of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award winning blog about the business of giving and serves as Executive Producer of The Giving Channel on Fora.tv.

Posted by Kelsey Walker

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