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.

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.

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.)

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."

"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?

"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.

Non-profit dirty laundry airing in courtrooms

Updates today on two previously-mentioned pieces of non-profit sector ugliness, plus a new one. (Much of this comes courtesy of The Charity Governance Blog which despite its annoying logrolling for the proprietor and his book, is worthwhile for the relevant news provided with legally-experienced comments.)

In Wisconsin the sad case of the prosecution of the former chief financial officer of a major museum is slogging its way through the courts with still no sign of anybody else being held accountable for what was clearly a mess with multiple authors. Charity Governance sees the defendant as clearly a fall guy: "We hope he decides to force the DA's hand and fight to preserve his reputation. Although the press and others have noted that there is plenty of shared blame in the financial collapse of the Milwaukee Public Museum, to this point, others who had oversight authority over the museum simply haven’t been held accountable in any meaningful way."

Over in the Ivy League, Princeton University appears to have become at least dimly aware that whether or not they win the Robertson donor-intent lawsuit in court they have been getting their butts kicked in the media. I dunno that letters to the editor are really going to change that fact any, even if having read a couple of the pieces that the letters respond to I'd agree that the university isn't being treated entirely fairly by editorial writers. The case itself is inching along with no end in sight. Still looks from here like the university is guilty of being at least cavalier with the donor's funds over the years, and ought to settle the thing before its good name gets tarnished further.

Now this month comes the Salvation Army trying to use what is obviously a technicality to ace Greenpeace out of $33 million left in a will. The sordid details with some comments can be found here, and here, and here. Yecchh -- I'm guessing that Salvation Army staffers, volunteers and donors are not feeling all warm and fuzzy about the organization at the moment.

Not everybody is down with fundraising in the buff

A month ago, about the volunteers-pose-almost-naked-for-fundraising-calendar thing, I suggested that "For breast-cancer research this idea has perhaps already become a cliche." Apparently not everybody agrees, or else it depends on who the volunteers are, according to this CBC report from British Columbia.

[Admit it, when you read "Exotic Dancers for Cancer" several 7th-grade-caliber responses came to mind didn't they? Yea, I know. Tell you what, the biggest groaner posted in the comments here will win a special booby prize.] [Because the blogger gets one freebie under a standing house rule that I just made up, that's why.]

Anyway...reaction to this seems to fall mostly into the "oh for pete's sake!" category. See for example here, and here, and here, and here complete with editorial cartoon. Don't Tell The Donor, where I learned about this, suggested what a development director who wanted to play hardball would do. (In response to her ending question: nope, that little scheme works for me. If major donors can feel free to throw their weight around then fundraising staff should feel free to politely lean back.)

The storyline in Vancouver appears to be turning out positively as detailed here, after some predictable tangential fallout.

What's wrong with environmentalists?

Just over two years ago now, two California activists shook up the environmentalism field a fair amount with an essay entitled "The Death of Environmentalism." (32-page PDF file here; interview with the authors here.) Michael Shellenberger and Ted Nordhaus argued basically that American environmentalists have spent the last 30 years trying to re-fight their successful battles of the 1960s and 1970s, as if nothing had changed socially or politically since then. The new news is that they've expanded the essay into a book which will be published shortly.

Meanwhile at the practical-politics level, a prominent Republican pollster and messaging consultant (the guy who coined the phrase "death tax" for the inheritance tax) recently told the online green magazine Grist that green activists have repeatedly "taken a very important issue and undermined their own case for it." Frank Luntz thinks that the fact that steady strong public support for green issues hasn't lately translated into political victories is largely because environmental non-profits behave as professional scolds, communicating a vibe that "anyone who doesn't believe what they believe is not only wrong but evil." At last year's Environmental Grantmakers Association annual meeting I heard this communications consultant make much the same point in a more-friendly, but still pretty blunt, way.

(This stuff is fairly personal for me since a large fraction of who I am intellectually, professionally and even genetically falls in this issue realm.)

Luntz's remarks ring true, indeed remind me of comments I've heard in recent years from friends and family members -- I recall the generally-sympathetic voter who when I mentioned the "smart-growth" groups that my foundation funds, sighed and said, "Oh yes, the people who think we should all be ashamed that we don't live in little boxes." An analogy comes to mind with feminism, where even by the time I graduated college over two decades ago it was striking how many smart young women were completely supportive of feminist positions and goals while rolling their eyes at the attitudes and political hyperbole of actual feminist activists.

Shellenberger and Nordhaus, from my experience, have a strong point with regard to public-policy environmentalism, the heroes who got the Clean Water Act and Clean Air Act established back in the day but in recent years have had so much less success in Washington. Their argument holds up much less well with regard to conservationists, who over the last quarter-century have intellectually reinvented their own field and who are now realizing astounding successes.

[P.S. I only just recently noticed that Shellenberger and Nordhaus expanded their diagnosis to modern liberalism as a whole. On that point they get a big "hear, hear" from me but currently I try to save that particular rant for commenting in other people's blogs, for which I'm sure readers here are just as grateful as is my immediate family...]

Making it easier and easier to be charitable

The second edition of Giving Carnival (which is a periodic roundup of blog posts about a particular topic) added a couple of new entries to the growing list of new and interesting web-based services for would-be donors to non-profits, in addition to DonorsChoose.

For instance Changing the Present is working on several clever features aimed at encouraging charitable contributions in lieu of holiday or birthday gift-buying, such as a personal registry like a bridal registry. Network for Good is the leading "charity portal" online, where individuals can search for non-profits by keyword or name or type. Global Giving performs the same service, targeted at matching American donors with overseas causes.

iGive is I believe the oldest catalogue site that directs a portion of purchases to non-profits; they are a for-profit enterprise which collects commissions from the participating merchants. Their competition includes Greater Good and, in the United Kingdom, Shop2Give.

Give Meaning attempts to make it easy for individuals to band together, sort of create online giving circles around a specific cause or recipient non-profit. (An essay by the founder describing how he arrived at that notion is here.)

I'm curious what impact professional development directors are perceiving from all this. Are existing checkwriting donors going online, or is it bringing new ones -- has anyone done any hard datagathering yet around questions like that? For that matter does this sort of thing in the long term reduce the market value of salaried fundraising staffers (because it gets easier to fundraise without them) or increase it (because charitable impulses are more and more enabled thereby enlarging the pool of regular small givers from which to try to find future major donors)?

Counting non-profit arts groups

Today's dot-org entry is a bit of an infomercial, in the sense that it's about my own work.
The following "Dear Colleague" email went out from our offices late today to arts groups, funders, service organizations, and others around the Chicago area:

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The Gaylord and Dorothy Donnelley Foundation, in keeping with its longstanding mission interest in the artistic vitality of the Chicago region, has conducted a detailed comprehensive scan of active non-profit arts organizations in the region. The full written report on “The Arts Scan Project”, a two-page executive summary, and an Excel file containing the underlying data are now available for download.

Key findings of this effort will shortly be reported in the Chicago Tribune and it is scheduled for discussion on the "848" program on Chicago Public Radio WBEZ-FM (91.5) Tuesday morning. Highlights include:

-- As of summer 2006 there were about 1,158 arts non-profits active in the greater Chicago region.

-- About twice as many new arts non-profits were founded from 1997-2006 as from 1987-1996.
-- The creation of new arts non-profits today is more concentrated within the city of Chicago than was true a generation ago.

-- More than a quarter of all active arts non-profits in this region are focused on live theater and another quarter are focused on music.

-- While one-quarter of all active groups are concentrated in ten zip codes along the city's central and North Side lakefront, the enormous recent surge of new groups appears to include a number of new clusters in outlying areas of the city and suburbs.

We believe this to be the most comprehensive snapshot of this region's non-profit arts community ever assembled. We hope it will spark discussion about the region's artistic vitality and believe that such conversations are always most productive when rooted in real-world data.


P.S. YOUR THOUGHTS on this report would be of great interest to us and to the entire artistic community. Chicago Artists Resource [which, as an aside, is one of our current grantees] has created a public online forum for discussion of the Arts Scan and its findings, in which Donnelley Foundation staff [i.e., me] will answer questions about this research and report. We look forward to your comments about the Arts Scan and its implications. You can link to CAR's online forum from our website or by going directly here.
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The comments in that online forum will naturally be about the study's findings, that is, about the state of the non-profit arts world in Chicago. Here I'd be happy to respond to comments or questions about why and how we did the research, or perhaps about the reports' data regarding arts groups' budget sizes, more the non-profit inside-baseball aspects.

A familiar looking story

The other day someone asked me if I would comment here on the announced closure of a particular non-profit. It wouldn't be appropriate for me to do that by name given that I work for a prominent foundation in the same region.

It was not a group that I knew or have had any professional dealings with, meaning I have no more information to go on than their public statements, website, and annual tax returns posted on Guidestar. That's obviously limited data, in particular it offers no meaningful information about the impact of their programs. But then that limited public information seemed to paint such an obvious and familiar outline that I did write the following by email:

I see annual revenues veering wildly up and down the last few years [literally doubling and halving from year to year], which added to their public comments about loss of foundation funding strongly suggests they were still (more than a decade after their founding) largely reliant on foundation grants to exist. I see little evidence of any organization-building -- the mission and lists of accomplishments are all over the map, no evidence of any coherent strategic or business plan, etc.

It's the non-profit equivalent of looking at a 20-year-old restaurant and realizing that the owners were still running it like a 2-year-old one. I'm sure any program officer at any foundation would agree with that sad assessment, and hence I suspect that the foundations that had been incubating them finally gave up on it. A non-profit enterprise which after 15 years still hasn't done anything about diversifying its revenue stream has no more likelihood of succeeding than a 15-year-old law firm that still gets all its revenue from three repeat clients. Had I been asked a couple years ago for advice on this group it would have been basically, "You're failing because you're running the business into the ground, and the foundations will give up on you any day now."

Note I said "incubating", because that is what foundations do -- we are not a permanent revenue source and anyone who thinks we are is very new to this sector. Foundation grants are only an eighth of all charitable support in this country and corporate is only a bit more. Individual donors are where the long-term sustainable money is, and individual giving to nonreligious non-profits in this country is now close to $200 billion a year and still rising steadily -- so any non-profit with a reasonable track record of mission product can build an individual donor base, and doing so ain't rocket science. I can't tell why they failed to do that but it sure looks like they did....If more-detailed financials revealed sizeable individual-giving support and no more than half the annual budget coming from foundations then I'd have to change my diagnosis, but I'd happily bet you a nice dinner that they wouldn't.

I could have added that in addition to now analyzing non-profits regularly as a foundation officer, I know exactly whereof I speak on the above issues from direct sad experience. None of which is to suggest that I think the above analysis is anything but a quick gut reaction, it's certainly not based on anything close to the level of information that I'd collect in my professional capacity.

Now with the disclaimers out of the way, I believe some experienced folks read this blog a bit, so what do you think? Does it sound like I'm jumping too quickly to a conclusion, or does that off-the-cuff autopsy ring true?