Stanford Social Innovation Review

Community Advisory Committees in Health Foundations

For six years, beginning in 2000, I worked for Consumers Union, the nonprofit publisher of Consumer Reports magazine, on a project that advocated for the creation of permanent community advisory committees (CACs) that health foundations would use as liaisons between their board of directors and the communities their foundations want to serve. More than 20 foundations have incorporated CACs as part of their structure.
Predecessors of mine at CU and colleagues at Community Catalyst developed the blueprint for foundation CACs, which were intended to increase the amount and quality of community engagement by the foundation and to assist with important assessments of community health needs.
Most CACs are separate from foundation governing boards. These CACs have significant community-engagement obligations, but have neither grant-making nor fiduciary duties. Without such duties, some believed CACs could turn most of their attention to community-engagement activities.
Now that foundations with CACs are maturing, it is helpful to reflect on the results of this experiment. Some CACs have disappeared because of conflicts with the board, mission confusion, absence of leadership, or lack of resources. Others are finding new ways to engage with, and represent, communities. Although it is difficult to assess precisely the success and impact of community-engagement techniques, several CACs appear to be thriving.
Preparing for the second decade of CACs, the Con Alma Health Foundation and Grantmakers In Health will be hosting a convening of CAC leaders from around the country this month. More information about the convening can be found at Grantmakers In Health. On the agenda are two major topics: strategies for effective community engagement and tools for measuring impact. Undoubtedly, these leaders will also grapple with many questions, including:

1. Should CACs be entirely separate from the governing boards? Is the inherent tension between separate CACs and governing boards helpful in advancing the mission of the foundation?
2. Should CACs be permanent? Are permanent CACs absolving boards of directors of their important community-engagement responsibilities?
3. Are CACs defining “community” properly? Are any of the ultimate intended beneficiaries of foundation grantmaking being left out under the foundation’s governing and community-engagement mechanisms?

While CACs exist primarily in health conversion foundations, lessons learned from this experiment may be helpful for other actors in the nonprofit sector, especially grant-making and grant-seeking organizations hoping to connect better with the communities they serve.

But what do you think? Are you one of those nonprofit actors, or have you had experience with a CAC? What strategies should CACs use to connect with their communities?

Scott Benbow is a philanthropy specialist in San Francisco. Since graduating from Columbia Law School, he has practiced law in the United States and in three other countries.

Posted by Katie Harrington

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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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Short-term vs. Long-term Focus in Philanthropy

In the summer 2007 edition of the Stanford Social Innovation Review, Charles Conn, a senior advisor to the Gordon and Betty Moore Foundation and a high tech executive, wrote about the short-term focus of most foundations in an article titled Robbing the Grandchildren:

“If future generations could vote on how foundations invest their money today, would they choose the current allocation? Byron Swift, chair and executive director of the World Land Trust, suggested this thought experiment to me, and I am disturbed to find that my answer is no…U.S. charitable foundations are better positioned than companies, governments, and universities to address these long-term, potentially catastrophic problems. One of the few sources of long-term risk capital, they control more than $500 billion in assets, generating funding that with other charitable giving totals almost 2 percent of GDP. With Warren Buffett’s gift, the Gates Foundation alone will control more than $60 billion in assets and $3 billion to $5 billion in annual spending. Other foundations closely associated with the digital revolution (such as Dell, Ellison, Packard, Hewlett, Moore, Omidyar, Page and Brin, Yang) could account for at least $50 billion to $70 billion more.

Perversely, though, many of these new tech entrepreneurs are worsening foundations’ shortsightedness by implementing businesslike metrics and controls in a way that reinforces short-term thinking and behavior. Other questionable management practices, such as low payout rates and lack of coordination with other organizations, further aggravate foundations’ myopia…A recent movement, sometimes called philanthrocapitalism or venture philanthropy, seeks to avoid complacency and lack of focus in foundation management by introducing rigorous success metrics and accountability practices. Many of these new-style foundations limit their scope to a few problem areas and, like corporations, intensely monitor outcome metrics, often with tight windows for review. To those of us who came to foundation work after a career in business, this sounds eminently sensible; after all, the foundation world is littered with fragmented, unfocused, and failed programs…This short-term, metric-focused approach likewise hampers grantees. Foundations take the passionate and committed people in these institutions and harness them to near-term indices of progress. Grantees, in turn, stop playing the long-term game in order to keep the money flowing. They aim lower, too.”

I agree completely with Conn’s thesis, but I want to elaborate, since Conn fuses “short-term,” “metric-focus,” and “businesslike” as if they automatically go hand in hand.

In the stock market, most people have become more and more short-term oriented. In the 1950s, investors held stocks for an average of 7 years. Today the average is 11 months. Investors have gained access to vast amounts of information they never used to see; and yet in many cases, this information has resulted in investors frequently changing their minds rather than gaining more conviction in their decisions.

However, almost all great investors make financial decisions based on a long-term outlook, not a prediction of what will happen in the next three months. At the investment management firm in which I am a partner, we talk about “arbitraging other investors’ time horizons.” In other words, we try to identify situations where short-term bad news about a company causes other investors to sell the stock so that we can buy it at lower prices. We use short-term good news that causes a stock to move higher to sell stock in companies whose longer-term outlook we think is deteriorating. Warren Buffett, or most any great investor, will tell you that Wall Street’s obsession with quarterly earnings reports is misplaced. Some companies (such as Coca-Cola, a company Buffett has owned a long time) have stopped issuing guidance to investors regarding what their next quarterly earnings might be.

Frequently, a short-term focus goes not with a quantitative metric focus, but with knee-jerk emotional reactions. When an investor buys a stock and then sells it soon after based on “bad news,” it is highly unlikely that the new information justified a reversing of the investors’ position. More likely, the investors threw out the fundamental reasons they chose to buy the stock and decided to sell out of fear.

It is human nature to want results as quickly as possible. But to achieve success, we must match our investment decisions to our time horizon. If we want to fix a local school because our child will be attending starting next year, then it might make sense to focus on short-term solutions. But most donors fund issues because they want to have a sustained impact on a situation. The techniques that might reduce crime in a bad neighborhood the most over the next month are unlikely to be the techniques that will have the largest, permanent impact on reducing crime rates over the next couple of decades.

Financial market participants are often short-term focused. They often focus on metrics that describe short-term conditions, but do little to illuminate long-term trends. But great investors and great philanthropists must focus on the information that matters to the long-term success of their projects. The short-term focus that Conn complains about may well be a problem common to many people in business. But it is a characteristic of meritocracy, not of the best business minds. Metrics and businesslike thinking have a place in philanthropy (but in no way are the best approaches to every problem). But short-term thinking is rarely useful.

Disclosure: Nothing in this post should be considered investment advice.

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 Katie Harrington

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The Davos of Philanthropy: First Impressions

Yesterday, I arrived at the Council on Foundation’s annual conference entitled, “Philanthropy’s Vision: A Leadership Summit.”  For the next four days, I will post a round-up of my experiences at the conference for readers of the opinion blog at the Stanford Social Innovation Review. 

As a micro-philanthropy consultant and blogger, I have focused most of my attention on the tools that make small-scale grant-making possible, including DonorsChoose, Kiva, and Facebook Causes. But micro-philanthropy also encompasses new ways of thinking about donor engagement, the grant-making process, and program evaluation. I’m looking forward to using the Council on Foundation’s leadership summit as an opportunity to focus on these other issues.

Here are a few questions I have going into the conference:

• What interest do brick and mortar foundations have in using technology to broaden participation in grant-making?
• How can we overcome the perception that technology-assisted philanthropy is a phenomenon for the next generation to figure out?
• In what ways can micro-philanthropy facilitate co-funding opportunities and unlikely partnerships among activists, foundations, and the corporate sector?
• Is there interest on the part of foundations to use technology to collaborate, or at least create the appearance of collaboration?

I expect to find some clues in the next few days that will help me piece together a few initial answers to these questions. For the duration of the conference, I will be wearing my blogging hat only. I’ve committed myself to asking questions, listening, and learning from the incredible gathering of people.

Of course, I have my own experiences and ideas to bring to the debate. But I’ll be leaving my preconceptions at the door. I’m entering the conference with fresh eyes on an issue that’s very dear to me.

Day 1 Round-up: May 5, 2008

I find myself on the edges of what could easily be called the “Davos of Philanthropy.” Roughly three thousand attendees have flown in from across the globe to discuss the current and future states of global philanthropy.

A few phrases from the opening statements of Steve Gunderson, the Council on Foundations executive director, jumped out as worth noting:

• “Philanthropy must become a movement, more than an institution”
• “Our greatest power is not in the checkbook but in our vision.”
• “Either we frame the conversation about philanthropy, or our detractors will.”
• “Market economies are best when joined with a strong philanthropic movement.”
• “If we do not believe change is possible, we cannot be philanthropists.”

Gunderson’s remarks were followed by a video essay from Roger Rosenblatt, contributor to the MacNeil/Lehrer NewsHour. Rosenblatt’s vision of the future of philanthropy jives 100 percent with the potential I see in micro-philanthropy to transform traditional philanthropy into a vibrant, inclusive and very public force for good.

The big ideas of Rosenblatt’s video testimony:

• Ordinary citizens are left out of contemporary philanthropy
• Non-philanthropists equate philanthropy with charity, as opposed to strategic efforts to solve the world’s most pressing problems.
• Philanthropy can make use of ordinary citizens, who would amplify the work and mission of foundations
• Foundations should reconsider their inclination to “work in the shadows”
• When foundations take a more public role in the media, they will reframe the news from a conversation about problems into a platform for demonstrating that problems have solutions.

That the Council on Foundations chose to feature this video statement from Rosenblatt in the opening session suggests that there’s interest in broadening participation in philanthropy. I’m excited to ask attendees what they thought of the message, and whether it resonated.

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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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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Bloggers Cover the Council on Foundations Annual Conference

The Council on Foundations deserves two thumbs up for putting together a thought-provoking leadership summit that attracted philanthropists and foundation staff from across the globe. Unfortunately, their effort to communicate what was happening at the event to people who could not attend was less successful.

The homepage of the Council on Foundations does not feature a single headline about the conference. Visitors can click on a text link that redirects them to Philanthropy Today, the Council on Foundations website devoted to covering the event. This website features pictures with captions that read “undefined.” The video section features a screenshot of a media player with the words, “Coming soon.” On the up side, visitors can treat themselves to PDF versions of the conference’s daily print newsletter.

Contrast the coverage described above with an anecdote from Kassie Rohrbach, director of the Energy Action Coalition and a panelist on a session this morning called The Millennials and the Moment: Youth Engagement and Leadership Development. As the organizer of the PowerShift 2007 Conference, her organization provided video training and gave cameras to interested attendees so they could cover the event using social media. The result is this powerful set of videos and this collection of images, created entirely from attendee-generated footage of PowerShift 2007. If I could make one point, it would be that the Council on Foundations can learn from the communications strategies of its youngest members.

So what are non-attendees interested in the summit to do? There are two solutions.

(1) Sean Stannard Stockton of Tactical Philanthropy, a leading philanthropy blog, organized a blogging team to cover the conference. A group of us has posted more than 30 blog entries, with more on the way. Here are links to the most recent posts:

• The     Next Generation
• Telling     the Story of Philanthropy
• links     for 2008-05-07
• Facing     Reality in Philanthropy
• Engaging     Donors and the “Y & H”
• Tactical     Philanthropy Un-Reception
• Don’t     Worry, I’ll Save Democracy!
• Foundations     & Human Rights
• The     Language of Philanthropy

(2) The Chronicle of Philanthropy also sent a blogger delegation to cover the conference. They have published a Council on Foundations notebook for the last three days. 

Here are the most recent blog posts from The Chronicle of Philanthropy:

• Debating Diversity
• Different Approaches Needed for Poorer Communities
• Who Can Name a Foundation?
• How Foundations Can Best Help the Poor
• More Than Money: How Foundations Can Help After a Disaster
• Brace for Tough Times,  Grant Makers Warned

The Tactical Philanthropy and Chronicle of Philanthropy blogging teams have done most of the heavy lifting in getting news out about the conference. And yet, not all bottom-up coverage of an event like this one works out 100 percent. Those of us covering the summit have added the COF2008 tag to our blog entries. Technorati, a tag-based aggregator of blog entries, has confused the Council on Foundations 2008 conference with the Czech Open Fighting 2008 competition, which also used the COF2008 tag. 

As a result, all of the blog entries from the Tactical Philanthropy blog team now appear alongside videos of the Czech Open Fighting event. I guess crowd-sourcing has its limits.

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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Vision, Leadership, and Partnership

On Tuesday evening, the famed cartoonist Milt Gross made an appearance at the Council on Foundations annual conference. In a session called Strategic Philanthropy: Theory and Practice, the speaker Paul Brest, president of the William and Flora Hewlett Foundation, flashed on the monitor a cartoon of howling wolves gathered at the edge of a cliff. One of the wolves had taken a break from howling to ask his companions, “My question: Are we making a difference?”

The attendees at this week’s philanthropy summit in Washington D.C. met up to ask themselves the same question. As a blogger, I wasn’t privy to many of the intimate conversations among colleagues and close friends in the foundation world. I didn’t hear the uncertainties that were no doubt expressed in whispered voices between conference sessions and at the gala events. Instead, I heard bold proclamations on what it takes to make a difference: namely, the right combination of vision, leadership, and partnership.

In his presentation about strategic philanthropy, Brest presented an outline of his foundation’s approach to all three points. For vision, Brest said a foundation must first establish a viable theory of change. “If your theories of change are incorrect, your interventions will only be right by accident,” warned Brest.

He had just finished explaining a case study in New York City in which police implemented a program to reduce crime by arresting people for petty offenses. Crime went down, which was the desired effect. During the same time, however, crime also dropped in cities that had not implemented a similar program. In this case, the desired impact may not have been linked to the city’s theory of change. 

Brest went on to discuss the importance of maintaining an “expected return attitude,” in which every effort is made to assess an intervention’s cost and likelihood of success. Doing so permits grantmakers to recognize and mitigate risks; justify large expenditures with the prospect of high returns; and be candid if and when failure sets in. He also emphasized the need for complete “logic models” to explain how change happens and evaluation criteria to measure success along the way.

According to Brest, failure to demonstrate leadership in these respects can result in wasted money, or worse, “unanticipated bad consequences.” In seeking partners, the William and Flora Hewlett Foundation looks for grantees and co-funders who share a similar theory of change and demonstrate willingness to candidly assess each program during and following an intervention. Brest’s professionalism commanded respect in the room full of his peers and colleagues. Quiet in his delivery and precise with his words, I was left thinking that calmness is king in vision, leadership, and partnership. 

On the following day, “Teacher of the Year” and bestselling author Ron Clark tore this hypothesis to pieces during his closing plenary of the leadership summit. Clark, who jumps rope “double-dutch” with his middle school students, delivered half of his speech while literally jumping from table to table in the closing plenary ballroom. I have never seen a more hyperactive successful adult.

In an abandoned factory turned state-of-the-art school, Clark has setup a scholastic program that transforms Atlanta’s poorest school children into over achievers. How? By mixing together the same ingredients that Paul Brest documented with Pentagon restraint.

Clark’s school has honed and implemented an accurate theory of change. That is children perform best when their instructors have high expectations, maintain rules, believe in their students’ futures, and serve as living role models of creativity, innovation, and free thinking. Clark has created a partnership with his students, their parents, and school staff by winning them over to this theory. Together, they are reaching unlikely heights of academic achievement and preparing “a new generation for leadership in a globalized world.”

Clark’s description of his school in Atlanta reminded me of a quote I heard earlier in the day. Andrew Gillum, director of the Young Elected Officials Network commented on the electoral success of young people of color, including himself. “We did the impossible, because we didn’t know what was supposed to be impossible.”

At the end of Ron Clark’s Broadway performance renamed a closing plenary, the audience of more than 1,000 grantmakers gave him a standing ovation that extended for minutes. It sounded like wolves howling. They stood up to applaud the fact that at least one among them was making a difference by harnessing the right combination of vision, leadership and partnership.

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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Disagreeing with James Bond

James Bond was known for preferring his martinis “shaken, not stirred.”

Stephanie Strom’s article in Monday’s Times on states’ pursuits of taxes on presumed tax-exempt organizations raises important questions about when things blur, rather than blend (or get shaken rather than stirred).

1. Here is the NYT article, “Tax Exemptions of Charities Raise New Challenges.” It looks into a few cases of nonprofit organizations where the fee structure raised eyebrows at state regulators’ offices. There are three key issues, according to the piece:

“One issue is the growing confusion over what constitutes a charity at a time when nonprofit groups look more like businesses, charging fees and selling products and services to raise money, and state and local governments are under financial pressure because of lower tax revenues. And there are others: Does a nonprofit hospital give enough charity care to earn a tax exemption? Is a wealthy university providing enough financial aid?”

The last two issues have been the objects of considerable scrutiny lately—as well as an op-ed in Sunday’s edition of the Times. The broad questions raised by the piece are at the very crux of my professional interests—what is public, what is private, and who decides?

2. The second force mentioned in the article, the budget pressures on state and local governments, is a time-honored source of pressure on nonprofit regulators and tax systems. I’ve written frequently about the relationships between public budget pressures and the regulatory infrastructure for nonprofits and foundations.

3. The issues raised in the article are critical. Viewed more broadly than the few instances examined in the Times, the questions are:

• What is a public good?
• Are public goods and those who provide them deserving of special exemption and recognition? When?
• Who should provide these goods?
• How should these providers be structured?
• How do we support and provide the right incentives for a sustainable mix of “public good” providers?

These issues are not unique to our times—debates and decisions about these very questions are why we have the tax structures and regulatory systems we have. However, they must be understood in today’s context, which includes the rise in corporate social responsibility, social entrepreneurship, social ventures, and new governance structures for hybrid organizations—B Corporations and L3Cs, in particular.

Unrealistic expectations of sustainable revenue sources for nonprofits or discussions of funders’ exit strategies undervalue and push essential organizations (that are not paid for by market mechanisms) further toward the margins. Simultaneously, espying a devil in all earned revenue sources leaves critical service providers vulnerable to forces that are beyond their control and that work at fundamentally cross purposes (witness the relationships between falling support for food banks, while the need for their services increases).

The social enterprise movement, philanthropy, and social venture businesses share a wide array of interrelated beliefs:

1. Communities need a diversity of public goods providers
2. Businesses have many public responsibilities
3. Market forces can be harnessed for public good—though this requires deliberate structure and attention and should not be assumed
4. Public good providers need sustainable sources of funding
5. Governments alone cannot be the sole providers of public goods.

There are other premises, and more eloquent articulations of them. However, I don’t believe I’ve ever heard anyone participating in these discussions make a (serious) claim that we don’t need independent civil society institutions, nor that social ventures can, will, or should provide all public goods. When the discussions devolve into an “either/or” approach, I tend to tune out. Civil society organizations, “pure” nonprofits, hybrid organizations, and socially responsible businesses are here to stay. The Times article makes clear that we need public discussions and enforcement actions that consider what mix of actors can best serve broad public goals, knowledge of who does what well, what is known and what is experimental, and the kind of regulatory structure that promotes the best service and protects the most vulnerable.

Disclosure: My company, Blueprint Research & Design, Inc. is a founding B Corporation. We are members of Social Venture Network.

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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Maps for Driving Change

Steve Jobs unveiled the new iPhone 3-G, to oohs and aahs. One of its most impressive features is a pairing of GPS and mapping that allows users to instantly locate themselves and search for nearby items of interest – restaurants, shops, etc. 

What will really impress me, though, is when we’re all able to see more information about people and resources. I’d bet anyone reading this can quickly search for a Starbucks, or some other commercial resource, anywhere around the globe. But what if you wanted to find which neighborhoods in your community had the highest rates of lower income Latinos with diabetes, or children living in poverty? What if you wanted to map the flow of foundation grants to various regions or neighborhoods?  What if you also wanted to find, and contribute to, that information through your cell phone?

As Buckaroo Banzai and Buddhist sages put it, “wherever you go, there you are.” But for too many people around the world, the inverse is true—wherever you are determines where you can go. Place matters to our quality of life far more than whether we can find good coffee or a particular kind of food or entertainment. Our prospects for enjoying clean air and water, healthy food, freedom from violence, and opportunities to learn may be tied more closely to where we live than any other characteristic. Place is where the intersection of race, class, and power is shown in starkest relief. 

Advocates, planners and funders are increasingly using GIS mapping to analyze a host of issues. Civil rights lawyers, environmental justice activists, and community organizers are using maps to anchor dialogue with community members, adding their on-the-ground knowledge to “official” data, and also to make their case to policy makers and judges. The same day as the iPhone launch, a group of academics and advocates gathered in Oakland to inform an Opportunity Agenda study on the use of maps to support health equity advocacy. Bill Lann Lee, former assistant U.S. Attorney for Civil Rights during the Clinton Administration and a co-founder of Opportunity Agenda, noted how much he and his colleagues would have liked to use maps (the way modern technology makes possible) when suing to stop the lead poisoning of low-income children or to prevent violations of voting rights.  Participants heard how the Kirwan Institute and Legal Services of Northern California use maps to make powerful cases for the harmful effects of structural racism, and also about how health researchers and government agencies are using GIS to analyze health and environmental issues.

Mapping also shows great promise for making visible the flow of grant dollars to specific places, the demographic and other attributes of those places, and even the specific subsets of people served in those places. HealthyCity.org  has developed innovative methods for mapping the service areas and branch locations of grantees and graphically displaying the relative size of grants, all on top of a set of more than 60 demographic and health indicators and the locations of resources such as schools, parks, fire and police stations, and other nonprofit organizations, for funders like The California Endowment, First 5 Los Angeles, and a coalition of 22 private and public funders supporting early childhood programs. 

As I’ve written elsewhere, this approach holds promise not just for planning, but also for accountability and philanthropic equity issues. Mapping the reach of grants may be far better than asking individual foundations and their grantees to gather demographic and other information, as a bill in the California Assembly, AB 624, would do. To take this approach to scale, we’d need to make the grants data already disclosed by foundations more accessible to advocates, and supplement that with data about the geographic and demographic reach of those grant funds. (This would mean bringing the grants databases out from behind the firewalls of services like the Foundation Center or Foundation Search, or paying the costs of providing free public access to that data.)

At the recent NetSquared conference on innovative use of technology for social good, GIS mapping was at the core of 7 of the 21 featured projects, out of 180 nominations from around the world. Here are short summaries, in alphabetical order (complete descriptions here):

• GreenMap.org presents global information on environmental resources and challenges, by supporting creation of local green maps by users (check out their well-designed iconography).
• HealthyCity.org offers interactive access to demographics and education, health, and human services resource data for Los Angeles County (version 3.0, launching June 18, will enable users to upload and map their own data against the site’s huge database, create groups to collaborate and comment on maps, “draw” their own neighborhood boundaries, and more).
• MapLight.org maps the geography of contributors to political campaigns.
• MoveSmart.org, a tool for encouraging people in the Chicago region to find housing in diverse neighborhoods to promote fair housing and integration.
• Rosetta Project maps the location of endangered languages and linguistic groups.
• Ushahidi maps reports of post-election violence in Kenya (this won first prize).
• YourMapper.org proposes adaptation of an interactive site offering information on attributes (such as crime) and resources in the Louisville, KY metropolitan region.

Early ancestors of Web-based GIS include Neighborhood Knowledge California (developed at UCLA by Neal Richman, one of the foremost evangelists of using GIS for community benefit), and the network of sites in the National Neighborhood Indicators Project, such as Metro Boston Data Common. Recent notable developments are VolunteerMatch, which adds the ability to map volunteer opportunities, and the launch of Policy Map. 

To casual observers, these mapping sites may seem alike – they all use GIS and are on the Web. On closer inspection, though, they are strikingly different. Some are interactive, others are not. Some aim to cover a huge area (wide and shallow), while others provide deeper information for more focused areas. Some are better designed to allow users to choose variables, compare more than one variable or geography, and display summary data or deeper information about data points. Some seek only to show information to visitors, others aim to gather information from users in the Web 2.0 vein, and still others have more detailed offline strategies for reaching people and groups that will actually put the information to use (you can probably guess my biases here).

Whatever you think about the potential benefits and shortcomings of GIS, we should expect this use of GIS mapping with in-depth demographic and resource data to grow quickly, and to be available over future generations of iPhones and other cell devices very soon.

Questions to address are:

• What are the types of purposes of Web-based GIS projects?
• What kinds of strategies do they follow for driving people to their sites, and for encouraging people to use (and contribute to) the information provided?
• How will Google influence, for good or ill, their development? (an issue both for those based on Google Maps and those that aren’t)
• What are, or should be, recommended practices regarding openness of programming, geo-coding, and data accessibility?
• What are the ethics of mapping (see the book How to Lie with Maps)?

Are there any questions or concerns you have about pro-social uses of GIS? Are there examples of the successful use of GIS that you’d like to share?

[Full disclosure: I am a proud co-founder and member of the governing partnership of HealthyCity.org, a project sponsored by Advancement Project, and am involved in supporting its continued development.]

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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Politicking Soils Golden Leaf Search

Ham-fisted politics have hijacked the effort to pick a new president for one of North Carolina’s biggest foundations.

The board of the Golden Leaf Foundation, created to dole out half of North Carolina’s share of 46 states’ massive settlement with Big Tobacco, was set in early June to name a new chief to succeed Valeria Lee, who is retiring.

But the board, made up of political appointees, yielded to last-minute requests by Gov. Mike Easley and state Senate leader Marc Basnight to delay the decision so it could consider Easley’s top budget adviser for the job.

Dan Gerlach, the budget adviser, is busy with the state legislative session and would not be able to begin the new job until the session ends, Easley reasons.

The move by Easley and Basnight reeks of back-room politics.

If Gerlach wants the Golden Leaf job, he should have applied for it months ago like the hundreds of other candidates who met the application deadline.

But after a careful search by a consultant, screening of candidates by the board’s search committee, and interviews by the full board with four finalists, Easley’s intervention seems like the clumsy move of a lame-duck governor to find an exit strategy for a top aide.

And Basnight’s intervention, in the face of bills pending before state lawmakers that would choke off funding for the foundation, looks like a barely veiled threat: Give Gerlach the job, or kiss the foundation, its assets and its promise goodbye.

Created by state lawmakers to invest in efforts to heal and repair North Carolina communities hurt by tobacco’s decline, the Golden Leaf Foundation is by definition and nature a political creature subject to the whims and agendas of politicians.

And despite the innovative grants and investments it has made, and the effort of its board and staff to maintain the organization’s integrity, the political make-up of the board has saddled the foundation with the perception that it is a political tool.

By mucking up the search for a new president and interfering with the board’s exercise of the judgment delegated to it, Easley and Basnight have further undermined the foundation’s reputation.

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 Katie Harrington

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Information Is Essential to Building Community

A new initiative by the John S. and James L. Knight Foundation aims to fill a gaping hole in the civic marketplace.

The foundation is investing $24 million over five years to help community foundations make better use of media and technology to keep communities informed and citizens involved.

The effort should serve as an important example for all nonprofits and foundations, which need to do a better job telling their story and that of their communities.

In an increasingly complex and confusing global marketplace, people and organizations need news and information they can use to make smart decisions geared to making their communities better places to live and work.

The mainstream news media once filled the critical job of delivering that news and information, which are the lifeblood of a free society.

But in the face of brutal competition in a marketplace dominated and saturated by corporate media, traditional news organizations have worked themselves into a frenzied identity crisis.

Their near-sighted solution has been to abandon their role as social watchdog and resource, preferring to pursue the safer goal of simply surviving by pandering to the fears and consumption preferences of readers, viewers and listeners.

Yet while it no longer seems to matter to the news media, social change remains the core business of nonprofits and foundations.

And social change depends on civic engagement and informed communities.

With the mainstream news media failing to keep communities informed, that essential job falls to nonprofits and foundations.

It is no small irony that the frantic drive for revenue and profits has blinded the media to the market value of news and information that address the core concerns of the communities they claim to serve.

With the Knight initiative piloting the way, nonprofits and foundations can work to meet the demand of the civic marketplace for news and information that citizens can use to heal, repair and grow our communities.

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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Politics Threaten Private Foundation Assets

Imagine this: you’re in charge of a large private foundation with a mission to serve the health needs of the people of your state. Your staff and board have made careful and informed decisions about grants to nonprofit organizations and state programs that advance the health of the people of your state. And, because the foundation is large, political leaders are acutely aware of your efforts and of the value of the endowment you oversee.
Within this context, imagine that the Governor of your state, in a series of letters and press releases, attempts to undercut your authority and pressure you into directing fully 80 percent of your annual grantmaking budget to support underfunded state programs, implying he, rather than the private foundation’s leaders, is a better steward of the private foundation’s assets.
The Governor of Missouri, Matt Blunt, made such an attempt this spring. Calling the Missouri Foundation for Health’s endowment “taxpayer assets,” Blunt requested that the foundation fund, for 10 years, state programs that the Governor himself recommended. His reasoning? These are “taxpayer assets” because the foundation and the nonprofit organization, whose conversion resulted in the foundation’s creation, benefited from years of tax benefits in Missouri. Under the Governor’s logic, the assets of any Missouri nonprofit organization would be at risk.
Fortunately, the Foundation’s CEO, Dr. James Kimmey, and its board of directors refused to bend to the Governor’s pressure. But Governor Blunt’s misunderstanding, or perhaps intentional mischaracterization, of the Foundation’s endowment represents the latest example in an alarming trend at the intersection of charities and politics.

• In New York, a political deal between the Governor and a union leader unfairly redirected 95 percent of a nonprofit health insurer’s assets into a fund to support pay raises for members of the state’s largest labor union.
• In Kentucky’s 2003 gubernatorial race, the Republican Governors Association claimed in an advertisement, without any substantiating evidence, that the Democratic candidate, Attorney General Ben Chandler, had acted improperly by creating a private foundation with the assets preserved in the conversion of a large health insurance company. Although the ad’s claims were debunked, it ran frequently and may have been instrumental in Chandler’s defeat that year.

As spiraling health costs take their toll on state budgets, it is possible that the Blunt approach, seeing private foundation assets as “taxpayer assets,” may be attempted elsewhere, whether through legislation or executive fiat. Have you seen any such entanglement between politics and private foundations in your state? Heard about any problematic legislation, or other threatening state action, that could tie the hands of nonprofit or foundation leaders?

Scott Benbow is a philanthropy specialist in San Francisco. Since graduating from Columbia Law School, he has practiced law in the United States and in three other countries.

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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Charity Regulation Needs Fixing

The 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.
Getting the short end of the stick are nonprofits and less affluent taxpayers.

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.

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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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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Fundraising Focus Critical During Slump

With 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:

• Working closely with the board “to make sure each board member is a current donor and an advocate for the organization’s vision and purpose.”
• Developing and following a “fundraising, communications, and stewardship plan” that will make it easier to stay focused, maintain momentum, and “say no to good ideas that could divert resources unproductively.”
• Focusing on efforts to renew gifts from current donors. “Take no donor for granted,” the report says. “Thank donors, recognize their contributions and let them know of the accomplishments they have made possible.”
• Maximizing the use of all fundraising tactics available, including thank-you calls by volunteers; online giving options; information about planned giving sent to loyal, long-term donors; and effective use of public relations and media relations.

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.

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.

Posted by Perla_Ni

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Paul Brest Has a Blog

A year ago I wrote a blog post for the Stanford Social Innovation Review titled “Paul Brest Needs a Blog”  (Paul is the president of the William and Flora Hewlett Foundation). So you can imagine my pleasure when I sat down to lunch with Paul recently, and he told me he had just that morning written his first blog post!

Paul is now writing on The Huffington Post. His first post is titled “Strategic Philanthropy:”

“I’ve just participated in a vigorous debate about at a meeting of the Philanthropy Roundtable. My critic was William Schambra, a distinguished thought leader in philanthropy, who directs the Bradley Center on Philanthropy and Civic Renewal at the Hudson Institute, a conservative think tank in Washington, D.C….

…Mr. Schambra’s second objection is that a strategic philanthropist requires an applicant to describe his or her own goals and strategies before funding the organization — a process he sees as inconsistent with what might be called the “wisdom of communities” (my term, not his). In his view, community organizations are close to the ground and know how to meet the needs of their constituents better than any philanthropist does. He regards a funder’s requirement that an applicant describe goals, strategies, and the like as meddlesome.

Sure, most applicants would prefer to take the money with no questions asked. But among organizations doing the same kinds of work, some are more effective than others. Achieving social change requires philanthropists to direct money to the organizations that use it most effectively. Whether an organization is housing and feeding the poor or improving educational outcomes or advocating for or against gay marriage, a philanthropist has every reason to ask whether it has a sound strategy and a good track record as well as good leadership. The alternative is to sow hundreds of seeds without ever finding out which take root and flourish.”

I’ve left a comment on the post. If you care about foundations engaging in the online conversation, I hope you go leave Paul a comment and keep reading his blog.

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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Time for Foundations to Dig Deeper

The looming recession represents a big challenge for nonprofits and foundations alike.

Nonprofits face rising demand for services from people hit hard by the economic downturn. They face higher costs of doing business. And they fear that individuals, corporations, and foundations may reduce or shift the focus of their giving.

Times also are tough for foundations, which have seen the value of their endowments shrink because of plunging capital markets.

These challenges represent an opportunity for nonprofits to focus on their mission, strengthen their operations, and fine-tune their message and their marketing, making sure they are telling the most compelling story they can about the impact they have and the need for givers to support them.

The economic crisis also should serve as a powerful jolt to foundations.

Using their clout, foundations in recent years have waged a fierce fight to limit to 5 percent of their assets the annual payout the law requires they make, a payout that includes not only grants but also overhead expenses.

And most foundations are reluctant to make grants to support nonprofit operations, preferring instead to fund programs or projects that often bear the funders’ names.

Foundations need to move beyond giving as usual.

They should give more and they should recognize that nonprofits need funding to build their operations so they can more effectively deliver services.

Foundations claim that increasing the required payout would drain their assets and force them to go out of business.

But the idea that foundations have a right to exist forever defies fairness and common sense.

While the law gives donors up-front tax breaks for creating foundations, it lets foundations hoard most of their assets.

In a typical year, the investment returns on a foundation’s endowment will cover the payout the law requires it to make, and in good years those returns will result in actual growth in the endowment.

So foundations, often controlled by donors and their families, simply accumulate wealth and power out of proportion to what the foundation actually gives back to the community.

In return for tax breaks the donors enjoy up front, and tax-exempt benefits foundations enjoy on an ongoing basis, taxpayers should receive equivalent value, and they should enjoy it sooner rather than later.

That means, simply, that foundations should pay more to address social needs, rather than investing tax-exempt funds to finance high-powered battles to fight moves in Congress to increase the required payout.

The economic crisis is hurting low-income and middle-income taxpayers, as well as the nonprofits that exist to address critical needs in our communities.

Instead of pitching fits about the plunge in value of the endowments they count on to perpetuate their power, foundations should be digging deeper and paying out more to begin to give back what they and their donors have received from taxpayers in the form of tax breaks and tax-exempt benefits.

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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This IS the Rainy Day

Our 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?

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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