Wednesday, June 20, 2007

On hiatus

Dot-org hasn't gone dead, my attention span isn't (quite) that short. I am on hiatus however; my personal life is undergoing significant change and I've found that reasonable concentration on blogging is just not possible right now. So rather than bore anyone with intermittent half-assed posts I'm going to come back to this after some things are sorted out a bit.

Friday, June 01, 2007

Making it plain in dot-edu land

In March I wrote that the highly-progressive pricing of college in the U.S. was heavily masked behind jargon and codewords -- but actually that concept seems to be coming out from behind the curtain a bit. The University of Chicago just joined the growing list of prominent institutions who are expanding and/or making plain the huge discounting that has long been available to families with lower incomes.

In the U. of C.'s case a $100 million anonymous donation has provided the immediate spur to a new policy: four years of college free for students with family incomes under $60,000. The university hopes to raise another $300 million to make this arrangement permanent and I have no doubt that in the current climate they'll find it.

Quoting that newspaper report: "About 20 universities nationwide—including Northwestern, Columbia and Harvard Universities—already have gone loan-free for students whose family incomes are below a certain threshold. A handful of schools, including Princeton University and Davidson College, have eliminated loans for all students." In reality those policies are only an incremental change from the practices of the last 30 years or so: it's long been true that only a minority of students at the top schools pay close to the full official costs, all the major colleges have been discounting based on ability to pay for decades. But it's certainly clearer and fairer to make that approach plain and simple, and the development departments appear to have caught on that hardly anything else is easier to lure wealthy donors with.

Saturday, May 26, 2007

A spectacular new idea

A while back I mused about a new basic category of non-profit, something like "macro archives". A couple of weeks ago a spectacular new example of that impulse was made public, called the Encyclopedia of Life.

Funded by several large foundations and led by a veritable who's who of conservation and ecology heavyweights, the EOL aims to bring together all knowledge about the world's 1.8 million known species of plants, animals and fungi (a list which continues, of course, to grow). The wiki-based model they are using seems ideal for the purpose, though unlike Wikipedia this one's content will be professionally moderated -- so one interesting question will be just what the qualifications are to contribute information. (In the U.S., U.K. and a few other places they will have to figure out how to deal with information from legions of serious amateur restorationists and ecologists.)

As the project's newly-named executive director puts it: “I dream that in a few years wherever a reference to a species occurs on the Internet, there will be a hyperlink to its page in the Encyclopedia of Life.”

The news coverage has all focused on what I just summarized, and it's pretty cool. But I bet professionals in the nature-conservation sector will end up even more excited by something else buried at the end of the press release: "To provide depth behind the portal page for each species, the Biodiversity Heritage Library (BHL), a consortium that holds most of the relevant scientific literature, will scan and digitize tens of millions of pages of the scientific literature that will offer open access to detailed knowledge. In fact, the BHL now has scanning centers operating in London, Boston, and Washington DC, and has scanned the first 1.25 million pages for the Encyclopedia."

That part is, for me, even more mind-boggling than the big wiki. Ecology is just one of many fields in which more knowledge has been rigorously collected during the last century or two than in the previous history of humanity combined, but so much of that understanding remains captive in printed pages in scattered archives. Scanning such vast piles into modern digital technology is a huge step forward towards that "Star Trek shipboard computer" fantasy: letting machines carry out the gruntwork of collecting and sorting information so that human ingenuity can be devoted entirely to the analysis and critical thinking which makes us unique in our world.

Tuesday, May 22, 2007

Updates: corporate giving, poetry, and another Smithsonian problem

Some updates today on past topics, in no particular order:

Say I bet you've heard the conventional wisdom about corporate charitable giving being on the decline. (Can't work in or read about this sector for more than two minutes without hearing it, really.) Or perhaps its more-specialized cousin, the one about how corporate funding for the arts is shifting to marketing budgets. Um, nope. Say how about we open nominations for a couple of new cliches to fret about, those two ceased being original or interesting back around the Carter administration.

Poetry seems to have just burst out all over within the last generation or so in the U.S., and Chicago has for some reason played a huge role in that. When I graduated from college in 1985 poetry appeared to have a smaller place in the national consciousness than competitive ballroom dancing or ultimate frisbee. Since then the poetry-slam phenomenon, created in Chicago by Marc Smith, has burst out all over the place; and I've written about the sudden creation of a large well-funded non-profit to promote classical poetry (big enough to fight over you might say) which is headquartered in Chicago. Now I read, in the Chicago Tribune, that the University of Pennsylvania two years ago started making readings of poetry available for free download to iPods, and last year the site had 8 million downloads!

And over at our misbegotten national museum, sigh...turns out that the Smithsonian has been charging for prints of photographs of iconic historical items like the Wright Brothers' plane, and citing copyright rights to justify the prices. A notable flaw being that the photographs are not in fact copyrighted, as points out, meaning that the museum has been collecting money in exchange for rights which it has never actually owned. The advocacy group applied a nice example of the radical democratization which the information age can enable: they simply downloaded all 6,288 photos from the Smithsonian and posted them for free elsewhere! Cheers to them both for the originality and the point. (And kudos to my favorite blogger Harold Henderson for the tip.)

Saturday, May 19, 2007

The "non-profit leadership deficit": are we still this silly? Really?

If you're on staff at a U.S. non-profit organization or foundation you have likely heard something about The Nonprofit Sector’s Leadership Deficit”. That's the title of an early-2006 study published by a think-tank called the Bridgespan Group, which has been written about endlessly in all manner of media. I've personally attended a couple of gatherings where the report was discussed, and the group's president has made appearances at a number of conferences to talk about it.

As far as I can tell the report's conclusion -- that this sector will in coming years be drastically short of qualified leadership-level staffers -- has been accepted as fact. Put another way: if anyone has yet doubted the report's overall logic and conclusion I haven't read or heard of it.

I'd be happy to be proven wrong on that, because the report is nonsense; I've seen stronger logic in the pages of the John Birch Society newsletter. What comes to mind from reading it is a broad-based critical-thinking deficit.

It's easy to spot specific logic problems in the thing, for example their assumption that the growth in the number of staffed non-profits will indefinitely continue to be as high as it was in the late-1990s boom economy. They also keep repeating the canard about how the public sector in the U.S. is increasingly offloading services to non-profits, and appear unaware of the fact that top-level professionals in the non-profit sector enjoy their work and tend to keep working by choice well beyond age 62 or 65. And they clearly are still working from the assumption that non-profit salaries are lower compared to the same jobs in the for-profit sector.

On the supply side they seem to think that business schools are a key source pool for all this, I have no idea why. (I've helped hire several development directors and executive directors and program directors, and the idea of an MBA degree being a major qualification would just get a chuckle from the search committees I've been on.) So they basically conclude that since the number of MBA's isn't growing as fast as the non-profit sector as a whole, one more looming crisis for the perpetually-struggling non-profits! needs to be added to the list.

Sigh. This whole thing rests on the idea that supply and demand are somehow disconnected in real life: it does not seem to have occurred to anyone that a visibly-booming economic sector tends to attract more top-level talent. Is it not obvious in seventeen different ways that smart educated young Americans nowadays are flocking to make careers in this sector? (Yes it is, to anyone who's paying attention.) Is that not evidence that salary levels are not actually penurious around here and/or that a lot of the kind of folks we want are motivated by things other than owning a Lexus?

I notice no comparative context either: does not every growing economic sector have to reach farther to find the talent it needs? Isn't that basically normal? Is this sector having a harder time with that than have law or medicine or investment banking or whatever? I have no idea, and neither does anybody at Bridgespan Group.

I hope to be around long enough to see this marvelous sector learn to expect more logic and common sense than is being displayed on this subject.

Tuesday, May 15, 2007

More problems at the Smithsonian, while PBS waffles

The Smithsonian Institution's troubles just keep on giving...turns out that a few years ago they fired a curator for blowing the whistle on National Air and Space Museum staffers being deployed to repair personal collectibles owned by that museum's director. And if you've been to Washington lately you may have noticed the aged hulking former Arts and Industries Building, which has been closed to the public for three years since pieces of the roof began collapsing. Smithsonian officials are now admitting in so many words that they have no money nor any particular plan for how to get the 19th-century landmark building restored and back in use.

Say I wonder how that search for a new CEO is going to go?

Meanwhile down the street, PBS's efforts to save the new Ken Burns epic (which the network has bet the bank on) may have paid off. Sort of, kind of. Or not -- it's hard to tell exactly. For a little while it looked like network executives might have actually developed spines with which to fend off what Burns rightfully saw as political correctness run amuck. But Burns has now agreed to slap some new footage in there, somewhere, and Latino veterans' groups are mollified, for now.

Chalk it up as one more reminder of why I gave up on public broadcasting networks a while back (and for that matter on Burns, whose "Civil War" series I adored but whose subsequent efforts have gradually descended into self-parody).

Saturday, May 12, 2007

A national consolidation goes awry

While the Girl Scouts of America's national consolidation process seems to be going forward as planned (with clusters of 4 to 7 local councils being combined into single new ones), the American Lung Association's effort appears to have gone off the rails.

The Chicago Tribune and the Chronicle of Philanthropy reported this week that 7 local ALA chapters (out of 78) have thus far decided to separate from the parent organization rather than be consolidated with others into regional units. The chair-elect of the Chicago chapter says it was a board decision: "We, as a board, believe such a consolidation to be not in the best interest of our lung mission and might undermine our local effectiveness." Of course that means the local group can't keep the name, so they are rebranding themselves as the "Respiratory Health Association of Metropolitan Chicago."

According to the Chronicle, "Last year, 5 of 11 California affiliates of the American Lung Association — in Los Angeles, Monterey, Sacramento, San Francisco, and San Jose — severed their ties with the national association to become Breathe California." (Ouch: LA, San Francisco, Chicago and Silicon Valley adds up to a lot of deep local donors being taken away from the ALA.) Apparently after the California chapters broke off the national board voted to add a new clause to the affiliation agreement that would commit local chapters to leaving behind all land, buildings and so forth in order to leave. The Chicago and New Hampshire local boards have in effect told the national board where they can shove that pre-nup; more of that may be on the way in other states.

The Girl Scouts process, meanwhile, has sparked a series of top level staff changes with some local executive directors changing chairs and some newly-created CEO jobs now open.

Saturday, May 05, 2007

The IRS is making non-profit news

Late this past week came two significant news items regarding the Internal Revenue Service: that the agency is finally going to revamp the core annual reporting requirements for non-profits, and that the agency's chief is departing to take over the troubled American Red Cross.

[Both of these changes were reported in news articles which are not online, yet at least: the first item in Friday's Wall Street Journal and the second item in this week's Chronicle of Philanthropy. Both newspapers based their articles on extensive quotes from various parties both on and off the record, and neither item is being denied by anyone.]

The redesign of the federal Form 990 is long overdue; as the Journal puts it the form "has over 100 line items of information in haphazard order, the result of decades of additions by the tax agency without a complete revamp. A reader finds a charity's revenue listed pages before learning what the group does. Questions about officers, directors and other key employees are often scattered many pages apart." The revamp appears to be mainly aimed at reorganizing the thing so it flows in a logical order.

Unfortunately that won't get at the bigger issue which is the lack of any requirement to report actual results other than financial. The head of the IRS's tax-exempt organization unit
says, "I'm pretty sure the public doesn't want the government deciding who's effective and who isn't." She's missing it; no one argues for the federal government ranking non-profits' effectiveness. (I mean seriously, can you imagine? Might as well let a federal bureaucracy decide who's best on "Dancing With The Stars".) No, what would be a real step forward would be simply a requirement that non-profits report each year some measure(s) of effectiveness. Let organizations themselves decide what that is and then let the marketplace of informed donors and watchdogs decide who is being smartest about that. The governmental role here would be simply to enable a free market of comparisons, just like it does with regard to investing in for-profit corporations.

Meanwhile New York Times reporter Stephanie Strom broke the story that IRS chief Mark Everson is leaving to take over the Red Cross, which has recently been in some crisis. Whether he is a good fit for that organization is open to debate (I lean slightly towards yes); it does seem like a good sign for them that they can land someone with a resume of his caliber.

The Chronicle rightly notes, though, that Everson has in his four years running the IRS sharply increased the agency's focus on tax-exempt organizations. While some of the specifics of that have seemed weak (see above) or dubious (the NAACP and All Saints Episcopal Church audits had the scent of partisan politics), in the big picture we clearly need more focus on this booming civic sector not less. Hopefully the next agency director will understand that.

Thursday, May 03, 2007

A quick rogue's gallery

The head of the New Jersey chapter of Mothers Against Drunk Driving (MADD) and his wife have been charged with bilking the group out of $150,000. The guy was not only a local police chief but a member of MADD's national board of directors.

In Milwaukee, charges of $306,000 worth of systematic theft by a key employee at America's Second Harvest raises several serious questions. We can start with, how does it take seven years for an enterprise that routinely collects thousands of dollars in cash per month to notice that large piles of it is not landing in the bank account??

Special mention goes to the federal Office of Personnel Management, which in the wake of tons of criticism of the massive Combined Federal Campaign has decided to make it easier for poorly-run charities to qualify. As Charity Navigator's Trent Stamp put it, apparently the feds decided that restricting eligibility to groups meeting a certain standard of efficiency was onerous, a bit ironic given that the government's own auditors had concluded that made-up charities had no problem getting included. Our tax dollars at work.

Monday, April 30, 2007

The graying of the non-profit arts sector? On what planet?

A large and generally very smart foundation recently published a really silly report. The basic premise is that non-profit arts organizations are facing a crisis of failure to attract the younger generations of adults as artists, staff or supporters. Therefore, the foundation argues, the non-profit arts sector must adopt "a systemic approach to the challenge of generational succession in the areas of governance, membership, advocacy, [and] financial support."

Heh. Are they kidding? Well no they're not, alas; rather, they are offering conclusions that are wildly unsupported by the fairly trivial amount of actual data offered. Andrew Taylor with The Artful Manager, and especially some of the commenters to his post, nicely point out some glaring logic flaws in the above argument. Best comment: "In reality, younger people have perfectly fine values of their own -- as well as finely honed bullshit detectors -- and the real challenge is for the arts to genuinely mean something to younger people. To be worthy of them, I might even say."

I can't do any better than that on the logic so I'll throw in two cents on the facts: if there is a sector of the U.S. economy that is doing better now at attracting young people than the arts I haven't seen it. I've been working in the non-profit arts sector for several years now, just did some empirical research on it actually, and that trend is blindingly obvious. Theater, dance, music, visual arts, whatever.

Training talented kids for those fields is a booming business at all levels, the number of U.S. tax returns listing artist as a paid occupation doubled in one generation, the biggest current theatrical hit on the planet is minting money around the country based on its appeal to young women ("Wicked"), and so on. In my day job I deal with small to medium sized arts organizations, the number of which has been rising at a crazy rate, and it's long since become a surprise to meet an artistic director or music director as old as 35.

That report notes demographic predictions of the rising average age of the U.S. and claims that this is a danger sign for the arts unless the sector gets organized to meet "increasing competition" for the attention of "a shrinking pool of younger people." You know what, if the shrinking pool prediction turns out to be correct I'm going to predict that it will be other sectors scrambling to figure out how to become as attractive to young people as the arts provably are, rather than the reverse.

Saturday, April 21, 2007

Where are the donations going?

It's commonplace in dot-org land to hear professionals quote as unquestioned fact things about charitable giving in this country that are either completely wrong, or wildly outdated. This seems like one more example of the immaturity of this sector -- do lifers in other lines of enterprise walk around believing basic objective facts about their sectors which are dead wrong? Doesn't seem likely.

Anyway, inspired by one such comment I recently pulled out the authoritative annual reports by Giving USA on charitable donations in the United States. The subject in mind was where the current ongoing boom in charitable giving is going (that is, to which causes or types of organizations?). I wanted to look at the last 20 years or so which is the real boom period, and wanted to see the overall trends rather than the single-year blips which always end up being the dumb newspaper headlines. So I plotted the annual totals from the years 1985, 1990, 1995, 2000 and 2005 (2006 data is not yet published), as percentages of change.

The overall context is that after adjusting for inflation, charitable contributions in the U.S. for 2005 totaled about 2.5 times as many dollars as in 1985. So total amounts given to every type of non-profit have risen, a lot. Individuals remain by far the major source though slowly declining as a fraction (from being more than 80 percent of the total in 1985 to around 75 percent of it now); the shares contributed by corporations and by foundations are somewhat higher now than 20 years ago.

Giving USA breaks all contributions down into several useful categories by organizational mission. Easily the biggest loser of this particular market share has been religious non-profits: from 53 percent of all donations in 1985 they dropped to 34 percent in 2000, ticking back up to 36 percent in 2005. (Or put another way: the share of all contributions that goes to religious groups has fallen by about one-third over the past 20 years.)

Three other major types of non-profits saw their shares of all giving decline a bit between 1985 and 2005: health care (from 11 percent to 9 percent), human services (from 11 percent to just under 9 percent), and arts/culture (from 7 percent to 5 percent).

So who have been the biggest relative gainers? (Keeping in mind that all types of non-profit have been gaining in absolute terms because the total contributions have risen so much across the board.) Education-focused non-profits have seen their market share rise from 11 percent in 1985 to almost 15 percent in 2005, and giving to foundations rose from under 7 percent then to more than 8 percent now (and the 2006 figures will likely boost this one even more).

What Giving USA calls "public/society benefit" non-profits (meaning groups which collect donations and pass them on such as the United Way) went from 3 percent of all 1985 donations to more than 5 percent in 2005. Other gainers have been by categories which in 1985 weren't even big enough to be counted by Giving USA: environment/animals (3.4 percent of all 2005 giving) and international affairs (2.5 percent). And there are more new types of non-profit entering the picture steadily: the "other" category received 6 percent of all 2005 contributions.

So the overall picture is that charitable giving while rising has also been spreading out, largely at the expense of religious groups.

Thursday, April 19, 2007

Volunteers are being drawn to youth and community

The Corporation for National and Community Service has released their annual survey of volunteerism in the U.S., showing a small drop in volunteer hours from 2005 to 2006. The broader context has been growth in volunteerism rates for a couple decades now; the data source is the Census Bureau's monthly surveying of about 60,000 households.

The report offers a variety of breakdowns on volunteerism which are interesting. For example when they compare 2006 to 1989 in terms of the different types of non-profits people are volunteering for, the big growth is for education/youth service groups (almost a doubled percentage of all volunteers now compared to then) and social or community service groups (a third more of all volunteers now than then). The recent losers of this particular sort of market share have been civic and professional groups, sports/hobby/arts groups, hospitals and health groups, and religious groups a little bit.

The report has a variety of rankings of the 50 states by volunteerism (hours, volunteers, rates of change, etc.) which shows generally that Midwesterners are volunteering at higher rates than any other part of the country. Utah is a huge outlier at the top end, I assume due to the Mormon theological emphasis on volunteering. But it would be interesting to see those breakdowns correlated with various demographics, e.g. are the states with older populations the ones with the highest volunteerism rates? And presumably various folks are busily crunching these new numbers to try to support or debunk the Charles Brooks theory about religious conservative folks volunteering more than any other group.

Monday, April 16, 2007

Counting on being "too big to be allowed to fail"

Two high-profile arts non-profits on the East Coast are right now engaged in a familiar sort of public brinkmanship, with a distinct odor in both cases of "save us from ourselves."

Having worked in big-city regional non-profit theater myself I was quite startled to learn that the Paper Mill Playhouse in New Jersey is on the verge of collapse. (I'm actually familiar with a couple of the principals involved, since both the departed CEO and the current managing director were hired away in recent years from major Chicago theater companies.) The Paper Mill has long been a poster child for robust successful suburban repertory theaters; twenty years ago they led the nation with a whopping 45,000 subscribers.

So the state they've fallen to is pretty startling: fewer than 20,000 subscribers now (which is a far more drastic falloff than the general national trend), and a budget for the current season which depended on increasing annual fundraising by almost $3 million in one gulp. They're now in so many words daring legislators to let the "official state theater of New Jersey" collapse, with perhaps predictable results.

There's nowhere near enough information in the media coverage to be clear on how this situation came to pass for Paper Mill, but a quick glance at their tax returns on Guidestar does support what Playbill wrote, that "the board at Paper Mill has either not had the ability to get outside contributions or has not seen the need due to the once-high subscribership." It's hard to see that as anything but seriously negligent in a society where per-capita individual contributions for the arts quintupled after inflation from 1964 to 2004.

Meanwhile in Miami, the mammoth Carnival Center for the Performing Arts which opened to huge fanfare only last October is apparently already in financial free-fall. The thing appears to have been a financial Potemkin village actually: a half-billion dollar multi-facility arts complex that opens with zero endowment? For which the pro formas assumed operational profitability from day one? Almost no onsite parking (in South Florida??), and the operating budget didn't include the cost of stagehands? Surely no one with any experience running an actual arts center (or a service-sector business of any kind) was in charge of the planning on this thing.

All the bailout scenarios being discussed are fairly gruesome but they include at least one that's fairly innovative: blackmail the city's major newspaper. Quoting from that article in the area's business newspaper: "The Miami Herald...has a contract to sell its land around the center for $190 million, but the unsold land's value would plummet if the center shut down. Because the land's value soared about $180 million as the center rose nearby with the Herald's strong editorial push, the paper could protect its holding by handing the center, say, 10% of the gain the center caused." The paper does seem to have been covering the center's problems reasonably bluntly, anyway. And what a fine mess it is.

Friday, April 13, 2007

The joy of giving

The great charitable-giving boom we're in nowadays has caught the attention of neurological researchers. Several studies have concluded that the act of giving (either in money or in volunteerism) makes people feel good at a really primal level.

Logical questions include both why and how that would be the case. Taking the broad evolutionary view, some researchers have argued that altruistic behavior is a positive for natural selection at a group level as distinct from Darwinian individualism. But homo sapiens is the only species which practices altruism outside its own genetic relatives -- is that a cultural adaptation or does it have a long-term natural-selection payoff? Creationists have taken to arguing that widespread human charity cannot be explained in Darwinian terms and hence represents a flaw in the science that they hate so much. Researchers more interested in the scientific method are actively exploring several hypotheses on the issue.

On the second part (how exactly are we wired to enjoy being charitable?), some researchers have concluded that it stimulates the same part of our gray matter which drives our gut-level interest in things like food, drugs and sex. (The joy of giving, indeed...say sweetheart is that a charitable remainder trust in your pocket or are you just glad to see me?) This reminds me of a development director I once worked with who grumbled when another staffer referred to a particular individual-donor solicitation idea as "sexy"; turns out he was just accurately "following the donors"!

Monday, April 09, 2007

Donor cultivation conversation, part II

Albert Ruesga, proprietor of the excellent White Courtesy Telephone, posted a thoughtful response to Saturday's little rant here about donor-cultivation practices. (Today someone else has also left a comment which is specious, and anyway I don't debate with folks who aren't willing to put their names behind their ideas.) The subject seems worth some continuing examination as opposed to simply dueling comments.

Albert makes several good points, including that we should distinguish between opt-in and opt-out followup practices by organizations. Read his comment in full for more. I think though that our differing perspectives are more at a macro level.

It's probably worth noting that as a non-profit careerist I am reasonably well-versed in modern standards and practices of donor cultivation. At the Nature Conservancy in the late 1990s I had a stretch getting trained in it (attended some AFP conferences and trainings) and for a year I supervised a team of annual-fund staffers and major-gift officers. Then as executive director of a growing performing-arts organization I personally instituted the basics of professional donor management, under the expert guidance of a board vice-chair who had been an experienced successful director of development at a larger organization. I am certainly not as knowledgeable in that subject as Albert or his colleagues, but the point is simply that I do have hands-on familiarity with the theory and practice.

The sense I have today, which I did not have in 2002 or 1997, is that some core assumptions in the non-profit development field (reflected in that NonProfit Times essay) are rooted in a dated understanding of what donors know, want and expect of us. I'm quite sure that Albert is right that a majority of AFP members would agree with the article, and that is exactly my concern. It feels increasingly as if a rapid shift in donor tastes and donor behavior is underway right now and that donor-cultivation best practices are not keeping up.

For example: clearly anyone like me who regularly makes contributions to a variety of non-profits is interested in staying up to date on what those groups are doing. A decade or two ago the only practical way for that to happen was to receive periodic missives from those organizations, and any reasonable adult would accept continuing solicitation or cultivation as the overhead cost of thusly staying informed about the group's work. Today though, the cost in time and effort to seek that knowledge on our own is orders of magnitude lower, and we happily do that because we get to do it on our time and schedule. Put another way: two whole generations of American adults have grown up expecting a sort of control of their own time and information flow which is fundamentally different than was true for my peers or my parents.

Several other examples come to mind. Now of course I know that AFP conferences today are full of discussion of how to adapt donor-contact and -cultivation best practices to the online world; so are any number of well-written blogs, and so forth. The concern I have, or the button which that NonProfit Times columnist pushed I guess, is that discussing how to adapt the existing paradigm seems to really miss the forest for the trees as far as what charitably-minded Americans of today expect and will tolerate, and how they will respond.

Saturday, April 07, 2007

Are we going to drive donors crazy online, too?

NonProfit Times recently ran an article on how non-profits deal with online small donors. A columnist donated $15 each online to 62 different groups and then kept track of how they responded. The conclusion offered as obvious -- and echoed in this leading philanthropy blog -- is that non-profits should respond to online donations just as intensively as they are now expected to respond to check-writing donors.

aarrrg...I don't think I'm the only charitable donor for whom that idea inspires clenched teeth and a desire to reach into the monitor to smack somebody upside the head.

Literally everyone I know who regularly donates to non-profits absolutely loathes the sort of fawning, repetitive cultivation contact that development pros institute. Follow-up phone calls are simply intolerable (I remain outraged that non-profits were exempted from the "Do Not Call" legislation and list); in my household we follow an ironclad rule now that any non-profit to which we have donated never again receives anything if they ever call us. Friends and family members who know that I'm a lifer in the sector are constantly asking me why making a donation has to result in so much blankety-blank mail and phone calls and invitations to the next fundraiser and so forth. The news that bulk-postage rates for non-profits are about to go up gets a big cheer from here, in the hope that it might make direct mail just a little bit less attractive.

At every place I've worked, when these concerns are voiced the staff and board members think that what annoys people is the visible costs: how many trees were consumed to print that newsletter, etc. Hence they always think that online culivation activity is all to the good in terms of donor goodwill.

That's increasingly wrong in my experience. What makes more and more charitably-minded people nuts is that non-profits spend so much time and energy pestering people who have already donated! That is the thing my friends and family members always lament to me. That is what makes them roll their eyes or swear never to "make that mistake (of donating) again!"

So when NonProfit Times columnist tut-tuts about the fact that 34 of 62 organizations responded to an online donation with nothing but simple acknowledgement of receipt, my reaction is to ask if I can have the list of 34 so I can move them to the top of my family's charitable-giving list. And I am quite certain that my reaction is far more common now than the reverse, and is growing. What people who invest in non-profits with their wallets want is for the organizations to do what they do -- not for them to behave like timeshare-condo salespeople on the excuse that it's for a good cause.

Wednesday, April 04, 2007

Is public radio fading into irrelevance?

It feels broadly as if public radio in the U.S. is undergoing some degree of paradigm shift. Whether it's ultimately for better or worse is hard to gauge, but I'm now wondering how much it really matters.

Chicago is ground zero for this issue because Chicago Public Radio recently pulled the plug on the music half of its longtime split personality. They reached that step in two stages in a fairly bumbling way, but ultimately arrived at a mission-driven decision.

As a longtime jazz fan and musician who'd listened to WBEZ's jazz and blues regularly for decades, my initial reaction to that decision was instinctively unhappy. But...when I voiced that gripe to a foundation colleague, she responded by pointing out that a large fraction of the station's music programming ranged from inept to overtly annoying. I had to admit the truth of that (my son still calls the most-annoying of the station's jazz DJs "Mumbly Man", and I am actually convinced that public-radio DJs in general deserve a piece of the blame for how many Americans today see jazz as dull and pedantic).

My colleague then praised WBEZ's new all-current-affairs-talk format thusly: "I sometimes have insomnia, and at 3 a.m. listening to music just wakes me up further. But if I tune in WBEZ now, they have me nodding back off in no time." Well that may not be what they want to put in the annual fund-drive letter. It's actually more positive than anything I would have said, though.

It may be that others besides me are finding NPR and its local imitators to be less than compelling, too. I notice that some folks are now developing a direct competitor for NPR's "Morning Edition". National Public Radio itself has noticed that its current listenership is overwhelmingly gray-haired and hence is launching "NPR-Zack: A New Space for Younger Listeners". (Cringe-inducing quote: "We thought Zack is exactly the kind of name NPR staffers would give their male children.")

Anyway in the era of podcasting and iPods, how much does any of this really matter anymore? I can't help wondering if public radio is just another piece of the old-fashioned one-to-many media that only still stands because not everybody has yet gotten used to the new and better ways to access things like discussion about current events, and for that matter jazz and blues. Are current-affairs discussions as routinely witless as NPR's still listened to at all for any reason other than simple habit? Certainly no one will ever miss those cloying, obnoxious pledge drives either.

Sunday, April 01, 2007

Baby steps towards a stronger sector

I'm most of the way through Joel Fleischman's book on foundations, and it's clear that he and Trent Stamp are preachers in the same crusade. Their emphasis is different in some ways and they certainly don't agree on tactics, but in broad strokes they have the same message: that the nongovernmental "civic sector" is a marvelous invention of which America has every right to be proud, and that if the sector doesn't do some serious growing up it will deservedly end up in history's dustbin. (As you can probably tell, I'm with them on all points.)

Independent Sector, which Fleischman cites as an example of promising new seriousness in the non-profit sector about things like transparency and mature governance practices, has been mostly snorted at by Stamp. He's seen the group's work on a set of new "Principles for Effective Practice" as being mostly window-dressing: too weak, and unlikely to ever change the behavior of the really bad non-profits.

I haven't agreed with him on that -- I think the voluntary principles being developed are an important step and would, if widely publicized and adopted by some sector heavyweights, have meaningful influence. Certainly they would be ignored by really weak and flatly-fraudulent non-profits, but that minority is not my primary concern. Well-meaning but poorly-run groups will be increasingly punished by the marketplace of better-informed contributors; meanwhile state attorneys general and the feds are waking up to the need for more serious pursuit of actual fraud and shady fundraising practices.

I'm more concerned with the great mass of well-intended non-profits that are organized and led no better than was true on average 20 or 40 years ago, which is simply not good enough. If "they mean well" is the only standard that this sector can ever meet then the (false, in my view) idea that "a just society would not need charity" might as well be true. In that case, why have this sector at all?

Stamp has just grudgingly come around to endorsing Independent Sector's proposal, for the fairly silly reason that he doesn't like being on the same list with others who have opposed it. Well, whatever -- what matters at this stage is not so much the specifics of this specific proposal, but the overall awakening which it hopefully represents and can help shape.

Wednesday, March 28, 2007

Private colleges may be getting it

Last week I was in full finger-wagging mode at American colleges and universities, but fair's fair: on at least one very big issue they deserve kudos.

I've remarked before that .edu-land today seems to have a perception problem: working-class American families aren't aware of the fact that the cost of going to college is now priced in an extremely (and historically-unprecedented) progressive way. In other words the better off you are the more you pay, and the well-off families paying full sticker price are subsidizing everyone else. But that reality is obscured behind a fog of complex forms and jargon, so lots of families who aren't well off and who see the newspaper headlines quoting $30,000/year sticker prices never even try.

Another sign that the institutions are grasping this comes from the excellent online journal Inside Higher Ed. They report that "several elite private universities and flagship public universities have effectively eliminated loans for students from low-income backgrounds", and that the schools are making this change public.

Other top-level private colleges have in recent years made the "pricing based on ability to pay" reality much more apparent and simpler: Harvard for example eliminated any expectation of family contribution for households earning less than $60,000/year and others are following suit.

This whole trend gets a big happy salute from me for several civic reasons that are probably obvious. It also seems wise from a strictly business point of view provided of course that a given college has a healthy-enough financial base to be not overly reliant on earned income to pay the bills.

Monday, March 26, 2007

Alberto Gonzales is saying, "at least I don't work at the Smithsonian..."

It just keeps getting worse for America's national museum. Revulsion over the pay and spending of Smithsonian chief Lawrence M. Small has inspired the full U.S. Senate to freeze the institution's public funding and cap executive salaries at no more than the President's (which would mean a pay cut of more than 50% for Small). The former auditor of the place claimed Small pressured her to back off looking into his spending, and today Small finally did the obvious.

Of course that whole thing follows the general disgust over the Smithsonian's deal last year with Showtime, an issue which remains unresolved.

Meanwhile, and apparently unrelated to the above, a blue-ribbon panel appointed in 2005 by the Smithsonian has concluded that the institution's eight art museums are "failing on many levels." The panel's leaked report says, according to The Art Newspaper, that “The Smithsonian’s art collections, taken together, might be expected to be a kind of national encyclopedia of the world’s art, like those in New York, Boston, Philadelphia, or Chicago; but in reality they are not. [And] to the extent that their designation as ‘national’ museums implies qualitative superiority and leadership, they have seldom lived up to their names.”

Ouch and double ouch...the panel thinks at least two Smithsonian-related art museums should be flat-out closed, and is barely more kind about a couple of others. With the director of the National Museum of Natural History keeping Small's chair warm, the Smithsonian is conducting a national search for his permanent replacement. They're going to need somebody a lot sharper than they've had lately, from all appearances.

Thursday, March 22, 2007

Updates: Red Cross, Robertson v. Princeton, symphonies

Quick updates tonight on some subjects previously covered here:

The American Red Cross, it turns out, has to get formal permission from the U.S. Congress in order to reorganize themselves into a normal non-profit structure. That's because of the organization's special disaster-response status granted by Congress decades ago. It sounds like the legislators are receptive to the basic premise that the organization's outdated governance structure is the root of its recent troubles including losing three CEOs since 1999. The current board chair told a House committee that the proposed changes have helped lured some strong candidates for the job.

Princeton University has quietly (at least they wanted it to be quietly) reimbursed the Robertson Foundation almost $800,000 which the university can't bring itself to admit was used contrary to donor intent. (Rather, they say its because university officials failed to properly disclose the use of those funds.) This move has not taken any steam out of the huge lawsuit being pursued by the Robertson heirs; in the court of public opinion, Princeton just continues to shoot itself in the foot.

And the John S. and James L. Knight Foundation has summarized its hard-earned knowledge about the state of symphony orchestras into a short "issue brief" which should be required reading for everyone involved in classical music today. They do not pull any punches, and their core messages continue to remind me of some of the existing thinking and practices in other fields such as non-profit theater and dance. "Classical music lovers are everywhere, but most of them are not in the local concert halls....Interest in the art form looks healthy. Yet orchestras are struggling to remain relevant in a rapidly-evolving cultural landscape...."

Monday, March 19, 2007

The dot-edu sector isn't yet connecting the dots

A consulting firm has just attempted to do to doctoral universities what US News and World Report famously does to American colleges: use various quantitative data to arrive at easily-understood rankings. Inside Higher Ed has a thorough writeup posted.

The consulting firm's chosen headline for their data (that public universities are falling behind private ones in their productivity of PhD-level research) seems highly debatable for a number of reasons covered in that article. Well down in there an administrator from Arizona State, after blurting the usual silly cliche about how "you can say anything with statistics", actually does a nice job detailing core flaws of the specific data being used here. The response from the consulting firm is quite unpersuasive.

For me though this small tempest fits into a broader storyline about this country's educational institutions and experts. Like charitable foundations, that sector still seems mostly to think that 21st-century America is still happy with its 20th-century social contract. There are lots of signs to the contrary, such as the growing public interest in some way to compare institutions' actual productivity other than just taking their word for it. The educational system's customers, which is everybody, are less and less willing to do that and the sector itself continues to fail to offer any other robust way to measure and compare its own output.

Hence we see the current standardized-testing mania that has infected our primary and secondary schools, which everyone agrees has tons of drawbacks -- but so long as educators offer no practicable alternatives that would measure educational results on a wide scale, the parents will keep voting for politicians who impose standardized testing. Looking at colleges and universities its clear that a similar dynamic is underway: the educators insist that their output cannot be measured objectively and respond to college and university rankings mainly by deploring the very idea.

That "trust us to know what's best for your children" attitude will not wash in today's world, and a good thing too. Moreover this society's expectations about transparency have moved way past what the .edu sector gets -- 15 years ago Congress had to pass a tough federal law just to get universities to admit how many young women were being date-raped on their campuses. If colleges and universities don't feel like getting serious about identifying measurable, transparent, regular ways to document and compare their output, it will be done for them. Slowly, erratically, clumsily and who knows how intelligently -- but it will.

Saturday, March 17, 2007

U.S. foundation giving keeps surging, and changing

The Foundation Center, the best source of information on charitable foundations, has released its latest trend data. While the fact that foundation grantmaking continues to boom is hardly a surprise given various newspaper headlines the last few years, there are some changes underway which development directors and executive directors would be wise to think about.

The Center's data comes from the largest 1,100 foundations, representing about half of all foundation grant dollars awarded. Total grant dollars from those institutions are rising now at close to twice the rate of inflation: up about 6% in 2005 after a rise of 8% for 2004. (And the center predicts an even greater increase for 2006 thanks to various high-profile foundation gifts starting to turn into new grant dollars).

Those increases are in dollars awarded, though -- the total number of individual grants issued rose only half as much. So the average size of individual foundation grants is rising. At the top end, a record 308 individual grants were at least $5 million each in 2005.

The common accusation that foundations have limited attention spans is supported in some ways by this data. For example the largest grantmaking increases by subject area in 2005 were environmental and animal-related causes, two categories which had declined the previous three years.

Unrestricted grants rose by only 1% for 2005, meaning they declined as a fraction of all grant dollars. So that's one recurring gripe which is not yet being persuasive for many folks on the foundation side of the discussion (I'm one example of that, actually).

Thursday, March 15, 2007

Boomers are volunteering more -- for now

A large U.S. federal study says that as the Baby Boomers moved into middle age they sharply ramped up their rates of volunteering, but that they are also less willing to consider stereotypical envelope-stuffing as worth their time. Since there are more and more opportunities today to do more than that, it follows that non-profits which still think in the older terms will increasingly fall behind in volunteer recruitment.

The Corporation for National and Community Service, which was created in 1993 as the parent agency of AmeriCorps, used data from the U.S. Bureau of Labor Statistics and the U.S. Census Bureau to compare volunteerism rates in the 1970s, 1980s, and 2000s. They concluded that "Boomers in their late 40s to mid-50s are volunteering at higher rates than members of the Greatest Generation and Silent Generation did at the same age. Boomers were volunteering at lower rates than their predecessors while in their 30s, but that trend has reversed."

The study found that volunteers today are most interested in making active, challenging contributions with their time, in particular "professional activities – such as managing people or projects", "music or some other type of performance" and "tutoring, mentoring and coaching". The researchers concluded that volunteers who are asked to do general simple labor for non-profits are far less likely nowadays to return for more.

That research fits with a couple of trends in the non-profit sector. One of them is the success in certain niches of programs where a relatively complex mission is carried out entirely by volunteers. I've participated in one spectacular example which was in large part invented here in the Chicago area: intensive ecological restoration carried out by self-governing volunteer groups who follow the scientific advice of trained ecologists. More and more civic efforts in other fields, such as disaster relief and public-schools improvement, are accomplishing things via similar structures.

A related concept is that of non-profits whose mission is to formalize professional volunteerism and thereby enable more of it. Such a group takes responsibility for recruiting professionals who want to do some volunteering with their particular professional expertise (marketing, accounting, legal advice, information technology, whatever) and matching them up with non-profits which really need the specific help and which are equipped to make good use of it. This gets at the problem that we've all seen of well-meaning professionals who end up feeling like their time and energy was wasted or that the non-profit they volunteered at was really just trying to cultivate them as a donor (both feelings often being, alas, accurate).

One type of this sort of "volunteerism broker" group is service groups organized by subject, such as Lawyers for the Creative Arts and their analogues in numerous other cities. A new organization which is attempting to take the concept to scale across professional disciplines is Taproot Foundation (which makes "service grants" of volunteer time, not money grants), founded by the son of the original designer of the Peace Corps.

If that federal research is right then more such organizing efforts could yield major long-term benefits for the U.S. non-profit sector and for that matter for American society in general, and could like the formal civic sector itself become an American invention which spreads around the world.

Monday, March 12, 2007

The Congressional spotlight is being focused

The Washington DC Examiner reported the other day that a Congressional Philanthropy Caucus is being organized in the House, co-chaired by North Carolina Republican Robin Hayes. The Democratic co-chair was not identified, and the newspaper didn't name its source for the story. Some quick poking around just now didn't turn up any denials, and the Chronicle of Philanthropy appears to believe it.

Such a move seems inevitable given the various non-profit and philanthropy related issues that have in recent years been the subject of Congressional bills or hearings, and the general increase in public awareness due to things like the Gates and Buffett philanthropies and some non-profit scandals. And it does seem clear from kludgy messes like last year's federal Pension Reform Act that a lot of Congressmen and Senators are not yet up to speed on what this sector does and how, and a defined caucus ought to help with that learning curve.

Nonetheless I can't help thinking of the prediction Joel Fleshman is going around making (out loud and in his book) about foundations: that if they don't define and adopt a new more-transparent version of the charitable-foundation social contract, Congress will eventually define it for them. I think he's right about that -- our society slowly but continuously becomes less tolerant of secrecy from all its public or civic institutions, including publicly-held companies, and there's no reason to expect foundations to be exempted from that.

And I would apply Fleishman's logic to the not-for-profit tax-exempt sector as a whole: the statute of limitations on permission to be a young industry is not yet defined but it's also not open-ended. In some ways we perform our role in society better than other sectors do and some ways we don't, at all; and we won't be allowed to avoid that fact forever.

Thursday, March 08, 2007

Too many for what, exactly?

Next month I'm attending a discussion gathering of foundation staffs for which the invitation begins, "As non-profits grow in number and stretch available resources..." Notice that this premise is stated as simple obvious fact: that the number of non-profits has been growing faster than the available funding for them. That's a widely-believed factoid which has made it into the mainstream media; its a commonplace among foundation staffers. It is easily the most-common reaction I hear to this recent report that my foundation published online.

The thing is, as stated it simply isn't true: the number of non-profits in the U.S. has not grown faster than overall non-profit revenues, indeed hasn't even kept up with the growth in charitable giving.

Independent Sector says that non-profits roughly doubled in number from 1980 to 2005; or put another way, that non-profit employment doubled from 1977 to 2001. The IRS reports (see Table 16 there) that the number of tax returns filed by non-profits increased by 138% from 1985 to 2002. [It makes sense that this increase would be a bit higher than the overall creation of new groups because the filing threshold has not been indexed for inflation.] So okay let's take that basic premise as documented: that there are somewhere around twice as many non-profits as a quarter century ago.

That same IRS table shows that total non-profit revenues increased by 112% above inflation from 1985 to 2002. (The table shows raw totals not adjusted for inflation; I applied this inflation calculator which uses the official federal Consumer Price Index through the years to make conversions.) And apparently non-profit spending has not been increasing as fast as have the revenues, because the IRS figures show total non-profit fund balances increasing by 161% above inflation in the same period.

For some corroboration I checked the printed Giving USA 2005 report: it says (page 26) that total charitable contributions in the U.S. increased by 148% above inflation from 1980 to 2004. [The heavy growth has been in non-religious giving: giving to religious organizations grew only 66% during those years (page 37).]

The time periods of these various figures don't match up exactly, and obviously there may be large differences between types of non-profits. With all that stipulated, it is clear that overall this particular piece of conventional wisdom is not rooted in reality: the booming growth in this sector is not at all "stretching available resources". At a minimum, arguments that we now have "too many non-profits" need to be driven by a different issue.

Tuesday, March 06, 2007

The McCormick Tribune Foundation just moved into the bull's-eye

The Tribune Company is one of America's largest media conglomerates: owner of the Chicago Tribune, the L.A. Times, the New York Daily News, other newspapers around the country, the Chicago Cubs, WGN TV and radio, Metromix, and sundry related businesses. The company's ongoing corporate soap opera has a significant non-profit-governance element which has been overlooked or overshadowed...until now: Illinois Attorney General Lisa Madigan "has taken an interest" in the issue of whether the heavyweight Robert R. McCormick Tribune Foundation is being run properly as a charitable institution.

The source of this news is a front-page article in this week's issue of Crain's Chicago Business, the city's leading business newspaper. Madigan, who has previously put non-profit hospitals in her sights, seems pretty clear on the fact that being a tax-exempt organization in the U.S. is a legal and social contract not a blank check or inalienable right. Given the facts here, that does not look good for the foundation. Madigan's scrutiny may also may have an impact on the the ultimate fate of the media company, via a scenario explained in the Crain's article linked above.

That also does a decent job of explaining how the foundation and the company are so tightly linked and why, but the degree to which that is contrary to modern standards of non-profit governance and law doesn't really come across. The foundation remains basically a captive creation of the company, and that is one of the once-common practices that inspired the wholesale rewrite of federal charitable-foundation law in 1969. It also certainly violates the spirit, at least, of Illinois' not-for-profit incorporation statute.

The quote from Robert Sitkoff at Harvard could be correctly applied to the whole setup, not simply the specific transaction he's commenting on there. The foundation spokesman's rejoinder at the end of the article is feeble as a defense of the specific issue about responsible investing of the foundation's endowment, and that isn't the biggest odor about this anyway.

Sunday, March 04, 2007

Non-profit CEO pay keeps hitting the fan

I had a really bad travel day on Thursday but it was a whole lot better than a bunch of non-profit executives and groups who have just been nailed to the wall by the IRS, as described in that day's New York Times. In addition to finding that dozens of organizations had failed to properly disclose executive salaries, the agency "asked 40 individuals to pay a total of $20 million in excise taxes, which is the penalty it imposes when it determines a nonprofit executive has been paid excessively."

That ain't good, even a little bit. The names of the guilty have not yet been revealed.

It is a condition of federal tax-exempt status that salaries paid not exceed a reasonable range for jobs of comparable responsibility in the local market. That has not been something which has received consistent IRS attention, in part because until the 1990s the agency had no recourse short of the "death penalty" (revoking an organization's tax-exempt status) which was obviously not a politically-plausible threat against established beloved institutions. However now the feds can impose fines and penalties such as the excise taxes noted above, against both an organization and an individual.

The above discoveries have "convinced the agency that it needed to do more in the area of compensation at nonprofits" according to the article. Yea I bet...we can add to this pile the truly-outrageous case of the chief of the Museum of Modern Art in NYC, described by Trent Stamp of Charity Navigator. The guy was already the highest-paid museum official in the U.S.A., and then two wealthy board members created a trust through which to secretly pay him millions more!

Unbelievable. I hope the state attorney general and the IRS nail all concerned to the wall. Clearly there are plenty of people in this sector who need wakeup calls.

Wednesday, February 28, 2007

We need a new name

I'm heading to the Charleston, South Carolina area (I know, rough duty eh?) for a foundation board meeting and annual planning retreat, so no dot-org posts for a few days. Tonight I come a-ruminatin' about the idea that this sector still hasn't found the right label for itself.

"Non-profit", or more formally "not-for-profit", is a lousy name for at least two reasons. The narrower one is that it's actually a bit misleading, it's sounds as if such organizations aren't allowed to or don't intend to run in the black financially. That's obviously silly if you think about it (a financial goal of exact break-even is hardly practical from year to year, and no form of enterprise that loses money every year survives for long), but it's what the label sounds like. In fact what financially distinguishes a legal not-for-profit entity is what can be done with any profits: they can only be put back into the enterprise. So the legal term is missing a couple of words, it would literally be "not-for-any-individual's-profit organization." (Even many folks working in the field don't seem to quite get that.)

But that's the less-important problem with "non-profit"; the more important one is that it defines us entirely by what we are not. It tells no one anything about what we do, or why, or how, or anything. In contrast, a label like "government" is descriptive, it refers to entities which govern. The label "business" also says what the entity does not what it doesn't do or isn't. ("Corporate" has other problems, not least of them being that in most U.S. states it technically includes all non-profits.)

The terms "civil society" and "civic sector" have been proposed in various places but not really caught on, and I doubt that they will. For one thing they're quite arrogant phrasings, implying that everyone working in every other sector is something other than civil or civic. For another they sound to most people as if they include government, or perhaps just local government. That's a disastrous impression to give, because precisely what gives this sector its unique capabilities is that it is not government (gaining the vitality of the private sector and avoiding the inherent weaknesses of government as an agent of social change). For me, those "civil/civic" terms just reinforce the insane and regressive cliche about how we wouldn't need non-profits if government was doing what it should.

I wish I had heard a better idea for a collective label, but if there is one it's not crossed my radar. Any pointers would be welcome. Perhaps the answer will hit me while strolling amongst the long-leaf pines in the light ocean breezes....back in a few -- talk amongst yourselves.

Monday, February 26, 2007

Pittsburgh is trying to change the contract

The city of Pittsburgh has a serious budget crunch, and about one-third of its land area is exempt from property taxes of which half is owned by non-profit organizations. That's the proverbial irresistable force smacking into an unmovable object.

The Pittsburgh Post-Gazette (at which I was a summer intern a looong time ago) is doing an pretty impressive job of covering the raging local debate, not just writing up what he said and she said but also looking around for relevant context and background. Indeed recently the paper brought some local specifics to light by uncovering the actual amounts that various local organizations had been contributing to a voluntary "payment in lieu of taxes" type fund. (As the paper notes, those amounts follow no logic as far as the size or wealth of various organizations -- not surprising for a voluntary system having no force of law.)

Broadly I stand on the side of the non-profits in this issue: the benefits to Pittsburgh of having the Carnegie Museum and Carnegie Mellon University clearly outweigh the lost property taxes, and for-profit versions of those enterprises would be far less rooted in the city (hence far more likely to move away when they felt like it). Were I a Pittsburgh alderman I'd be arguing that trying to balance the city budget by taxing non-profits is a crappy idea on several grounds. BUT...I do get impatient when non-profit folks turn this into some sort of church-state issue, as if non-profits have some sort of inalienable right to tax-exempt status.

That's nonsense. Private not-for-profit organizations in this country operate under a social contract which is an invention (and now a cultural export) of this country: exemption of most taxes plus limited tax benefits for contributions, in exchange for pursuing certain socially-beneficial purposes and spending any surpluses only on that purpose and staying out of partisan politics. A contract is a two-way street, and a social contract retains moral standing only so long as both parties are content with it. That's what Joel Fleischman is going around saying about charitable foundations, and he's right.

A reasonable argument is that cities are the level of government least able to absorb the tax-exemption end of this particular contract. That's because it can be such a big honkin' fraction of the tax revenues which are available to them (property taxes, mostly), and because the services provided by municipal government are a level from which non-profits get exactly the same benefit as businesses. (The city fire truck doesn't respond to the museum's fire alarm any slower than to anyone else's.)

One of the articles linked above describes a number of local attempts to deal with that conundrum, and some places where states have decided to compensate municipalities on the grounds that an entire region or state shares the benefits of having a major university or whatever. Frankly I can see the logic of some of that, and I notice also that the Pittsburgh situation includes an example of the separate issue of whether non-profit hospitals are really charitable enough. (The huge University of Pittsburgh Medical Center in 2005 ran a $500 million operating surplus (!) and contributed only $1.5 million to the city in lieu of a far greater amount in forgone property taxes.)

So I guess all that puts me kind of a similar place on property tax exemptions as Fleishman is in regarding foundations: that the non-profit sector needs to figure out and offer a reasonable adjustment to this part of the social contract, or the other party is going to eventually enforce one that we might like a lot less.

Friday, February 23, 2007

Are poets always so touchy?

You may recall a few years ago when a huge individual gift suddenly turned a small sleepy Chicago non-profit into the Gates Foundation of poetry. The current issue of The New Yorker has a feature story on The Poetry Foundation (written by the magazine's own current star published poet), which has struck some folks in that particular literary world as more or less a frontal attack. Among them is the organization's president (see the second item of that column that was printed in Chicago's leading alternative newspaper yesterday).

Kudos to the organization's staff for posting the article and various source links on their own website; that has inspired some reader comments mostly echoing the negative comments which were quoted in the magazine article.

[Here is a counterattack on The New Yorker with regard to poetry; it's not particularly a defense of the Poetry Foundation, which despite its name is not a grantmaking foundation but an operating non-profit.]

Having read all of the above I'm left scratching my head a bit. The New Yorker article did not strike me as wildly negative or unbalanced, the executive director seems to be taking it more personally than it deserves. It's not warm or friendly but hardly reads like the kind of hack job he's labeling it. Meanwhile the actual criticisms of the organization's strategies seem plausible but also largely unpersuasive. Were I a board member over there I'd be suggesting that the chief calm down, accept that reasonable people can disagree, and keep moving forward with what sounds like a smart plan that is well-grounded in the organizational mission.

(But of course I'm no poet, as both of dot-org's loyal readers were about to point out, so perhaps there's more here than is apparent to the untutored eye.)

Wednesday, February 21, 2007

Updates on the Smithsonian, non-profit hospitals, web-based philanthropy

Some updates today on non-profit sector stuff that you've read about here....

The Smithsonian Institution's unpopular deal with Showtime was back in the news thanks to, of all people, Oliver North. After North published a fiery op-ed column about his particular complaint, it got resolved. Whether or not the museum's foot-dragging on what seemed to be a perfectly innocuous filming request was due to the Showtime contract isn't clear. At a minimum it reminded people of the smelly commercial arrangement, presumably including people in Congress which must authorize a large fraction of the Smithsonian annual budget.

Illinois is ground zero in the debate about how much free medical care for the indigent a non-profit hospital should have to provide, thanks to the state's ambitious young Attorney General Lisa Madigan. In 2006 Madigan proposed a state law to drastically increase that obligation, but then withdrew it while negotiating with the Illinois Hospital Association. Those negotiations have now apparently broken down (as also reported in Crain's Chicago Business but their text is not available online). That would seem to be rather bad news for the hospitals, since Madigan's father happens to be the longtime top dog of the Illinois House!

Some additional items recently crossed my field of view regarding the rapidly-growing field of web-based donor services. A Slate columnist, it turns out, was an early board member of DonorsChoose and wrote about it this week -- he thinks it represents "the future of American philanthropy." And two business-school professors analyzed some data from eBay's "Giving Works", they conclude that American consumers are typically willing to add about 5% to their purchase of something like an iPod as a "charity premium."

Saturday, February 17, 2007

"Who Really Cares" review, part 2 of 2

Buried within Arthur C. Brooks' rambling rumination about philanthropy and politics in the U.S. are some points that are firmly rooted in meaningful data and which are worth thinking about.

(a) it's pretty clear now that tax deductibility is not a major factor in the ongoing boom of individual giving in this country. We know this because in 1986 the top federal income-tax rate was sharply cut, and in 2001 so was the inheritance tax; neither of those changes slowed down the rise in giving. About the non-rich this was predictable given that two-thirds of all taxpayers don't itemize and hence have never gotten any benefit from deducting charitable gifts. The surprise perhaps is that giving by the wealthy is also apparently not directly influenced by tax considerations. (Brooks also asserts that both wealthy and poor households donate higher fractions of their incomes than do middle-class ones, but unfortunately he doesn't provide specific data supporting that but just cites a different author's claim on it.)

(b) Brooks convincingly shows that religious people are more generous across the board: people of all faiths give more to non-religious causes than do people who aren't religious. [They also, naturally, give much more to churches and church-affiliated non-profits than do secular folks.] The pattern holds whether religious folks are politically liberal or conservative. The data supporting those statements is surveys, of which I am generally dubious as noted yesterday, but on this point there are too many surveys all pointing the same way to allow for reasonable doubt.

(c) Brooks also convincingly shows that in this country conservative voters are more generous than liberals. This conclusion is partly driven by surveys but also shows up in hard data, such as that the states which voted for John Kerry in 2004 mostly ranked below average in charitable giving per income dollar. (Meaning, obviously, that the states which went for Bush generally ranked higher in giving as a percentage of household incomes.) A more-sophisticated analysis of state data which found the same breakdown can be found here. And survey data consistently finds similar splits for non-monetary philanthropy such as volunteerism and giving blood.

However Brooks is much less persuasive in arguing that liberal households' lower philanthropy is driven heavily by political beliefs: that favoring income redistribution makes people less philanthropic. I certainly have no truck with the brainless cliche about how "a society that has more justice is a society that needs less charity," but the factual case for such an attitude being a cause of less giving is thin. The core causation seems simpler to understand: as Brooks himself points out, secular conservatives give a bit less than secular liberals while religious conservatives give more than religious liberals, but religious people of all political stripes give much more than do non-religious people.

If that is correct then it has troubling implications for non-profit fundraising going forward, because the percentage of Americans who are non-religious is now rapidly increasing. (Different surveys all identifying that trend can be read here, here and here.) Will it turn out that the steady increase in individual philanthropy that's occurred throughout my lifetime is unsustainable? Or can the non-profit sector in the 21st century convince secular citizens to participate in civic giving and volunteering as enthusiastically as their churchgoing 20th-century parents and grandparents did?

Friday, February 16, 2007

"Who Really Cares" review, part 1 of 2

A couple months ago I ordered a copy of Arthur C. Brooks' new book "Who Really Cares", which made a bit of a media splash. I said I'd read it and post a review. Finally finished it, took some time to ponder, and here we go.

This will require two posts, and today will be the actual book review: it's not a great piece of work. Nonetheless I'll suggest that everyone working in this sector should read it.

I should also confess up front to some empathy for Brooks’ worldview: like me he is a born-and-raised progressive now bewildered by the intellectual/philosophical decomposition of U.S. liberalism. But that issue is not particularly germane to the specific questions raised by his book, and certainly doesn’t grant Brooks any special exemptions from basic standards of logic and critical thinking. “Who Really Cares” falls well short of those standards in several ways.

The biggest logic problem I have is that Brooks treats survey data and behavioral data as equally significant. He keeps citing surveys (“57 percent of Americans said they volunteered”) as if they had the same significance as actual documented activity (e.g. how different states compare on the amount of charitable giving reported on tax returns). That’s just silly -- people aren’t always completely honest on surveys, and survey responses can be heavily influenced by how the question is phrased. The strongest use of survey data for analysis is when a variety of surveys all point the same way and Brooks at times seems to get that, but at a lot of points he just quotes a single survey as if it could prove some point or other all by itself.

Also Brooks frequently confuses correlation with causation, hardly an uncommon problem of course but he does it persistently. Another problem is that while Brooks says that he set out to just analyze and report the true facts about philanthropy in America not to “promote some broad-based political agenda”, that is obviously untrue. He goes off on extended tangential riffs about things like the welfare system and tax policy and other issues. On some issues I tend to agree with him on other things not, but that’s really not the point. Moreover his arguments on those subjects are no more compelling than are the cliches about charity which his book is ostensibly aimed at (that is, nobody who doesn’t already see economic politics his way is going to be persuaded by anything he’s written).

All of that tends to undermine his credibility about the immediate subject, charitable giving. So overall I’d have to say that this book, as a book, is kind of a mess. It doesn’t really deserve to be called a “study” of charitable giving in the U.S. -- “study” sounds like something empirical and coldly analytical, the scientific method at work. Brooks’ book is at least as much a philosophical essay or rumination; I didn’t personally find it to be a terribly coherent or persuasive one but of course your mileage may vary.

With all that said…mixed in there is a lot of interesting actual data about individual philanthropy in the U.S., and Brooks earns kudos for providing a full appendix listing and describing all his data sources. So over the weekend I’ll summarize what folks in the non-profit sector might want to think about, which can be extracted from the interesting and well-sourced facts buried within this flabby book.