dot-org

On hiatus

2007-06-20T15:15:00.000-05:00

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.

Making it plain in dot-edu land

2007-06-01T23:04:00.000-05:00

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.

A spectacular new idea

2007-05-26T10:51:00.000-05:00

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.
Coooool!

Updates: corporate giving, poetry, and another Smithsonian problem

2007-05-22T18:00:00.000-05:00

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 Public.Resource.org 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.)

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

2007-05-19T15:10:00.000-05:00

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.

A national consolidation goes awry

2007-05-12T16:35:00.000-05:00

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.

The IRS is making non-profit news

2007-05-05T11:04:00.000-05:00

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.

A quick rogue's gallery

2007-05-03T21:42:00.000-05:00

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.

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

2007-04-30T20:35:00.000-05:00

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.

Where are the donations going?

2007-04-21T10:54:00.000-05:00

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.

Volunteers are being drawn to youth and community

2007-04-19T22:01:00.000-05:00

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.

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

2007-04-16T16:50:00.000-05:00

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.

The joy of giving

2007-04-13T12:11:00.000-05:00

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"!

Donor cultivation conversation, part II

2007-04-09T13:21:00.000-05:00

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.

Are we going to drive donors crazy online, too?

2007-04-07T17:31:00.000-05:00

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.

Is public radio fading into irrelevance?

2007-04-04T17:41:00.000-05:00

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 decisio n.

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.

Baby steps towards a stronger sector

2007-04-01T21:09:00.000-05:00

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.

Private colleges may be getting it

2007-03-28T21:40:00.000-05:00

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.

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

2007-03-26T23:29:00.000-05:00

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.

Updates: Red Cross, Robertson v. Princeton, symphonies

2007-03-22T21:23:00.000-05:00

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...."

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

2007-03-19T18:51:00.000-05:00

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.

U.S. foundation giving keeps surging, and changing

2007-03-17T12:19:00.000-05:00

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).

Boomers are volunteering more -- for now

2007-03-15T20:43:00.000-05:00

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.

The Congressional spotlight is being focused

2007-03-12T20:27:00.000-05:00

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.

Too many for what, exactly?

2007-03-08T21:18:00.000-06:00

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.

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

2007-03-06T21:10:00.000-06:00

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.

Non-profit CEO pay keeps hitting the fan

2007-03-04T22:29:00.000-06:00

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.

We need a new name

2007-02-28T22:57:00.000-06:00

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

2007-02-26T22:22:00.000-06:00

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?

2007-02-23T17:22:00.000-06:00

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

2007-02-21T20:19:00.000-06:00

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

2007-02-17T14:36:00.000-06:00

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

2007-02-16T12:52:00.000-06:00

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

2007-02-14T20:24:00.000-06:00

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

2007-02-12T18:30:00.000-06:00

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?

2007-02-09T21:48:00.000-06:00

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

2007-02-07T19:04:00.000-06:00

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

2007-02-05T19:30:00.000-06:00

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:

----
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.
----

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

2007-02-02T23:05:00.000-06:00

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?

For the Gates of art museums, 2006 was no fun at all

2007-01-31T19:32:00.000-06:00

The J. Paul Getty Trust in Los Angeles just had the kind of year that could cripple a smaller non-profit; as the richest art institution on the planet they certainly have the resources to stabilize things but do they have the will? They've hired a guy from my hometown of Chicago to take over the captain's chair and find out.

The Getty consists of two large museums and a large grantmaking foundation, all devoted to visual art; their endowment alone currently stands at about $6 billion and a lot of the artwork in those museums is literally priceless (never mind the prime real estate). Early in 2006 Barry Munitz resigned as head of all that, under a large public cloud of accusations about lavish personal spending of Getty funds, steering grants to friends, and excessive pay while ordering budget cuts. The apparent lack of effective governance had caused the Council on Foundations to take the highly-unusual (and highly public) step of suspending the Getty's membership, which they restored a couple months after Munitz was forced out and the Getty board adopted various internal reforms. Several other top Getty staffers also resigned during the first half of 2006.

Meanwhile the Getty is having all sorts of problems with the issue of looted antiquities, mainly from Italy and Greece. It's fairly clear that well into the 20th century a lot of sculpture from the ancient world was ending up in major museums via, let us say, 18th- or 19th-century methods.
After years of pressure, the Getty Museum during 2006 agreed to return four major pieces to Greece and in October 2006 agreed to return 26 pieces to Italy. The Italian government, though, isn't interested in settling for half a loaf and is prosecuting a former Getty curator in Rome for criminal theft of national treasures; some newspaper reports say that the Greek government is contemplating similar pressure. For the Italians the fate of two of the Getty's best-known items, the well-known ancient statue of Aphrodite and the so-called "Getty Bronze", have apparently become deal-breakers.

The current director of the Getty Museum, Michael Brand, has an op-ed in today's Wall Street Journal claiming that the Italian government has gone back on an agreement and now won't even talk to him. Whether his version of those events is right or not seems to miss the real point, which is that those nations and others are no longer willing to accept the status quo of priceless indigenous works of art being kept on display halfway around the world just because they were dug up when no one was looking. Perhaps at some point the Getty board will realize that these issues are not going away and will just keep damaging the institution's reputation, and that the Getty has the resources to rebuild from the loss of even content of that caliber.

The "Slate 60" sounds off

2007-01-30T20:43:00.000-06:00

Ten years ago, Slate editor Michael Kinsley was inspired (by something Ted Turner said in an interview) to create the "Slate 60": the philanthropy version of the Forbes 400 annual list of America's richest people. Arguably Kinsley was a bit ahead of his time in 1996, which was before Bill Gates and Warren Buffett and Gordon Moore started famously taking turns doing modern-day Andrew Carnegie impersonations. (For that matter so was Turner, who has a right to feel like he was doing billionaire philanthropy before it was cool.)

Anyway it was a good idea and the ten years worth of lists make for interesting reading; one can see things like the sources of vast new personal fortunes, what subjects and institutions have the attention of the super-rich, and of course the unprecedented new scale of individual philanthropy. (Despite personal wealth in the U.S. being vastly less concentrated today than in Carnegie's time Bill Gates has already given away in real dollars several times as much as either Carnegie or John D. Rockefeller did; and yet all the giving for a year by the entire Slate 60 is a small fraction of total American individual giving which is closing in on $300 billion per year.)

This past November, Slate gathered members of the Slate 60 from its first ten years for a public conversation. I like the NonProfit Times writeup which is both thorough and just a bit cheeky ("With their limos waiting outside, donors gathered at the conference to discuss..." Those would be hybrid limos staffed by salaried drivers receiving family health insurance, I trust?). For example their reporter quoted Bill Gates Sr. scoffing at the dot-commers' notion that philanthropy only just this second became entrepeneurial (he has a point in a generalized sense of that word, not so much if the narrow fiduciary sense of it is meant).

The Chronicle of Philanthropy writeup is drier, though probably does a better job of getting across the key messages of a couple of people like New York Mayor Michael Bloomberg. Slate meanwhile posted video and audio from the conference itself. (The conference also included prominent philanthropists who haven't personally made the Slate 60, such as Bono.)

More direct giving services, and some caveats

2007-01-27T18:54:00.000-06:00

In addition to DonorsChoose which I wrote about on Wednesday, there are at least a couple other examples of new organizations using the web to let donors choose exactly what project their small checks go to.

Modest Needs does the same thing with individual families that DonorsChoose does with teachers or students: families describe their immediate needs and donors pick and choose. The mission aim is what used to be called the "working poor" as well as folks with specific disabilities, so the lead goal expressed is "to prevent otherwise financially self-sufficient individuals and families from entering the cycle of poverty."

(I wonder though if Modest Needs doesn't actually demonstrate the limitations of this philanthropic concept...how is a well-meaning individual donor supposed to tell which requests are truly authentic? Which donees are truly "willing to work but temporarily unable to do so"? The value-added of trained professional staffs to vet and prioritize needs might become more apparent to a donor who's tried Modest Needs.)

And then MissionFish is enabling charitable impulses on the part of eBay sellers. The challenge here might be how complex the process inherently is -- a program that requires a large flow chart to explain itself seems relatively unlikely to really catch on.

So neither of these two seems as likely to gain traction as DonorsChoose, for different reasons.

University endowments are kicking the market's butt

2007-01-25T18:36:00.000-06:00

News coverage of an annual report on U.S. university endowments (released this week) has tended to focus on either the gaudy totals, or the related news that Princeton has decided to freeze its tuition for a year. (It turns out that while a few other endowments are larger in total, Princeton has the most endowment dollars per student.)

The Economist wants to know how American universities are managing to invest better than even hot-shot hedge-fund managers? That's not a new or unusual outcome, apparently, and the schools aren't paying successful investment managers the same level of wild salaries and bonuses that for-profit firms do. (Though a few universities do pay their investment chiefs a lot more than their professors or even presidents, which has caused some public controversies that have in turn chased away some managers.)

The Economist thinks that the big university endowments represent "capitol [that] is extremely patient....unlike pension funds, they do not have to fret about matching assets with liabilities. This means endowments can tolerate lots of volatility, which in turn allows them to make, and stick to, contrarian bets....Perhaps they can stay solvent longer than the market can stay irrational." Hence "America's endowments were among the first to look beyond the staid mix of domestic equities, bonds and cash. The idea they helped develop in the 1970s and 1980s—deemed eccentric at the time—was to break the portfolio into a mix of standard and “alternative” assets, as uncorrelated with each other as possible so as to spread risk. This strategy is sometimes referred to as “portable alpha”. Their early moves into hedge funds, venture capital, private equity, property, distressed debt and the like brought outsized profits...."

University investment managers may also have identified a couple of interesting competitive advantages: " “Whereas pension trustees are naturally risk-averse, universities are all about innovating, financially as well as intellectually,” says James Walsh, who runs Cornell's $5 billion endowment. Investment constraints are kept to a minimum. Alumni with Wall Street experience are encouraged not only to donate money but also to sit on investment committees. Many are happy to oblige. “This gives us access to minds we couldn't otherwise afford,” says Mr Walsh." "

One thing I'd like to see some data on, which would help inform the current debate about mission-related investing of foundation endowments, is how university endowment returns have been correlating with divestment decisions. The NACUBO report doesn't address that, unfortunately.

The long tail of philanthropy is called DonorsChoose.org

2007-01-24T20:13:00.000-06:00

My hometown newspaper recently put DonorsChoose.org on its front page, because for no obvious reason Chicago is the young organization's biggest market thus far. It belatedly occurs to me that we may all one day look back and see that DonorsChoose is to the staffed non-profit organizations as Napster was to the record labels: the specific vanguard of technology empowering customer demand that had until now been kept bottled up. In other words, the long tail phenomenon.

DonorsChoose is a service that matches up individual public-school needs (of a student or of a teacher) with individual donors. Charitably-minded individuals browse the site and if a specific need catches their eye they can donate to it right then. Students and teachers and principals post their unmet needs or projects at no cost; DonorsChoose is basically just being a highly-efficient middleman like eBay. That skips the whole vetting and sorting service for donors that is now provided by professional staffs of large non-profits and of foundations.

Whether that is overall a good or bad thing will quickly resemble the debate over whether citizens seeking news are better served with or without the sorting and ranking service provided by newspaper editors. At a minimum technology empowering such direct donor control might represent a new level of competition for the empowered donor's dollar which, frankly, a good number of current non-profits are not prepared for. On balance I'm all for this but anyone who doesn't think it could get real messy along the way might want to go talk to those record labels whose CD sales have crashed, or the Napster guys who they sued from here to eternity rather than figure out how to evolve their companies' business models to meet what their customer actually wanted.

Women in higher education (including science)

2007-01-22T21:28:00.000-06:00

The presidency of Harvard is something like a symbolic top of the heap in American higher education, and so the uproar that drove Lawrence Summers out of the job last year made national headlines. The authors of a new book on women in science recently made some interesting comments about that episode in the online magazine "Inside Higher Ed".

Stephen J. Ceci and Wendy M. Williams, professors at Cornell, report that "some scholars felt that they could not contribute (essays to the book) because their views were scorned, and had resulted in personal attacks against them on their campuses. If you read between the lines in several of the essays, you will detect this theme even among those who did contribute essays...." In other words, the professors re-discovered what Summers arguably should have known: that even wondering something like whether the gender imbalance in higher education might not be due to discrimination is a third rail on today's campuses. In a word, yecch.

Much more positive was the news (to me anyway) that women have in just the last decade or two become drastically more prominent at the top levels in higher education. Three Ivy League universities now have female presidents (Brown, Penn and Princeton) as do plenty of other well-known schools (hundreds of four-year colleges and universities in the U.S., according to one study). Actually Harvard's world-famous law school is now led by a woman (who is, according to the New York Times, on the short list for the university's top job). One might see progress, of a sort, in things like the female president of the University of New Hampshire being headhunted away by Temple, or the female president of the University of Colorado getting hounded from her job partly for being tonedeaf in much the same way Summers was (on a different topic). No glass ceiling here, for good and ill. (Including the ultimately tragic story of the chancellor of the University of California.)

I also did not know that women are now earning more than half of all bachelor's degrees, 43% of all master's degrees and more than a third of all doctorates in science and engineering in the U.S. If those trend lines continue up (the doctorate fraction has almost quintupled since 1966) then obviously that will filter up through academia (it's already led to sharp increases in the percentage of women employed in various scientific and engineering fields, in some cases to more than half.)

More on foundation investment practices

2007-01-20T11:37:00.000-06:00

The Wall Street Journal followed up yesterday with a small article about foundations which clarified for me that there are really three basic choices for foundations, not two as the L.A. Times portrayed it. (You can't read the Journal article unless you're a subscriber but a Chronicle of Philanthropy note on it is here, and Philanthropy 2173 has links to all the foundations mentioned in it.)

(If you're interested in this subject, go take Lucy Bernholz's online poll found on the right at the Philanthropy 2173 link above.)

The L.A. Times articles about the Gates Foundation talked about either letting mission-related issues influence decisions about buying stock, or deciding that getting the highest returns is all that matters. That's basically the same as the debate about whether Western nations should keep China at arm's length until it improves its human-rights practices, or have normal diplomatic relations so as to encourage change. (When I was in college the topical subject of that foreign-policy debate was South Africa.)

Buying stock in a corporation, though, is different: it's ownership. You get to actually vote on the policies of the thing you own part of, and to speak out loud at annual meetings where the management and all the other owners have to listen to you. Indeed if enough other owners feel the same way that you do about an issue like corporate practices, the company must follow your wishes. That's a whole different caliber of influence than any nation, even the U.S., gets by trading with China -- the U.S. State Department obviously does not get to speak, let alone vote, as a member of the Chinese Politburo or even the country's toothless parliament.

Upon reflection that's the path which seems to me to best leverage the latent power for change of big investment portfolios. So that's why I voted for option 4 on the online poll mentioned above. (I notice that the poll stacks the deck in its structure -- it lists three different flavors of the first strategic option and then just one version of the other two -- so there's little chance that anything but a version of "mission imperatives should change investment choices" will win.)

A constitutional right to federal grants?

2007-01-17T19:35:00.000-06:00

Public-health and human-services groups have celebrated two federal court rulings overturning a string that Congress placed onto federal grants for overseas work to combat HIV/AIDS, and a broad coalition is now working to defeat the Bush Administration's appeal. On the specific issue at hand I'm totally with them, but at another level this makes me uneasy.

A US law enacted in 2003 requires nongovernmental organizations to pledge their opposition to prostitution as a condition of receiving funds for international anti-AIDS work. The issue is that non-profits doing such work feel they must work with sex workers and that in order to gain trust they have to refrain from trying to talk folks out of being prostitutes. That's a policy-tactics choice which I'm fine with but a lot of folks in the U.S. Congress aren't, hence the idea of requiring signing that pledge in order to get federal funding.

The pledge, it's worth noting, does not stop anyone from working with prostitutes nor require anyone to specifically try to stop them from plying that trade, and United Nations-affiliated programs were specifically exempted from it. You can read it for yourself here in one of the court decisions, see page 12. Actually the feds' interpretation of the pledge, according the court ruling, has been more that it would prevent a group from advocating the legalization of prostitution.

Regardless, the plaintiffs successfully turned this into a free-speech issue; the government's counterargument is that it's just a contract issue (there's no constitutional right to a grant and anyone not wanting to sign the pledge can just decline to accept one on those terms). It turns out that the Supreme Court has previously concluded that when the federal government is the funder, speech-inhibiting grant requirements have a big enough impact that they can constitute an unreasonable infringement of the First Amendment right to free speech. (See the page of that court document numbered 56.) As one of the federal judges put it, “The Supreme Court has repeatedly found that speech, or an agreement not to speak, cannot be compelled or coerced as a condition of participation in a government program.”

That was news to me but as stated it sounds like the government can't require somebody to sign a loyalty oath as a condition of receiving an entitlement, like a Social Security check. An interpretation that it means the government can't place conditions on a discretionary optional grant...is it just me or does that slope sound rather slippery? Can't we imagine scenarios where such a right to federal grant money could lead to funding going to groups carrying out far-less-positive agendas? Is that really what the Supreme Court meant?

And do we really want corporations (albeit in this case not-for-profit ones) to be able to assert inalienable rights just like an individual person? I thought Teddy Roosevelt settled that point a while back in the negative and I've always been glad he did. I dunno, could be I'm just exposing my ignorance of constitutional law and theory, but...really not sure the forest isn't being lost for the sake of a tree here.

Oprah's $40 million African school

2007-01-16T20:06:00.000-06:00

There's been lots of commentary recently on Oprah Winfrey's funding of a $40 million prep school for girls in South Africa, in both the media and online. And online, and online, and online....it's hard to decide how to feel about what she's done, on balance. For example buried deep in most media coverage was her comment about American inner-city kids, she basically did a Cosby on them by way of explanation for building her school overseas rather than here. Was that fair? Accurate? Smart? I dunno.

Easily the most-interesting and most inspirational blog post I've seen in this context comes courtesy of a pointer from Harold Henderson ("World's First Blogger"). Cal Skinner, a former Republican state legislator in Illinois, posted a long well-illustrated account of school-building by an American Christian non-profit called RISE International. I'm not a member of their congregation either literally or politically but that's got nothing to do with forming an opinion about what they're doing and how they're doing it, as I bet a lot of desparately-poor folks in Angola would agree.

A thoughtful response from Gates

2007-01-15T15:46:00.000-06:00

Thanks to reader Greg for a tip that the Gates Foundation has replaced the online announcement that replies to the L.A. Times articles. The new essay, still signed by Chief Operating Officer Cheryl Scott, is quite different from the one that was online for only half a day last week though it does still make the good point that Gates has been completely transparent about its investing.

The new essay makes a point of stating that "Bill and Melinda oversee the investment of the foundation's endowment", so it does look like they were annoyed that the previous posting and Scott's newspaper interview made it sound otherwise. It says that they give "guidance" to professional investment managers, which every non-profit watchdog would agree is the appropriate approach for a foundation board.

Perhaps the most-important substantive message of the new essay is that the Gates Foundation is not in the camp that says a foundation should seek only to maximize returns with its endowment. Rather, their reason for mostly declining to rank companies on moral grounds is the real-life complexity and contradictions inherent in that concept. "There are dozens of factors that could be considered...Many of the companies mentioned in the Los Angeles Times articles do a lot of work that some people like, as well as work some people do not like. Some activities might even be viewed positively by some people and negatively by others." They also note that some of the issues which the newspaper brought up as reasons not to invest in a company, such as lending laws or environmental regulation, are outside the foundation's charitable mission.

On the shareholder activism question they basically vote for reserving proxy voting for issues directly related to a company's carrying out its core mission, i.e. good management of the company itself. And they do note the one specific subject on which Bill and Melinda have thus far decided that the issues are clear-cut enough to decide not to invest at all: tobacco.

I don't personally agree with all of the above decisions but also don't find any of them to be out of the bounds of what reasonable people of good will might conclude. It does sound like the newspaper articles have provoked renewed focus on the subject over there, and that the Gates folks understand that its unique status in philanthropy inherently places some special obligations on them.

Are symphonies doomed?

2007-01-13T16:10:00.000-06:00

I've noted here that some folks in the classical-music world think that the ongoing struggles of a lot of professional symphonies and opera companies are solveable, perhaps by looking harder at the field's conventional wisdom, but it's worth noting at least one expert in the field who thinks otherwise. Former Wall Street Journal music critic Greg Sandow, himself a trained singer and composer who is married to a New York Times critic, thin ks that "reasonably soon, the era of classical music will be over."

After a reader responded by noting the outstanding online sales results for classical pieces, Sandow replied that sales of recordings can't support the costs of producing the music. For me that reveals some shortsightedness in his thinking, but anyway some readers more knowledgeable than I posted some interesting thoughtful responses on that blog linked above. I learned of Sandow's writing from the Artful Manager, which I can't recommend highly enough to anyone with an interest in today's arts world.

Meanwhile I came across a couple of fun news items about innovation and creativity in the world of opera. The Metropolitan Opera in New York is doing some cool stuff like a free live simulcast of its opening night outdoors at the Lincoln Center. And in San Diego there are now several restaurants regularly holding opera open-mic nights which I'm guessing could be either fun or dreadful for patrons on any given night...but regardless it also seems like a good sign of grass-roots vitality for the art form.

Gates Fnd: she maybe shouldn't have said that out loud

2007-01-11T11:50:00.000-06:00

It may be that Gates Foundation COO Cheryl Scott is in hot water today, and the reason can be read between the lines of today's news coverage.

The L.A. Times today has a followup article which is obviously based on that press release that appeared and then disappeared from the foundation website yesterday. The newspaper is spinning that announcement as being about the foundation newly reconsidering its investment practices in reaction to their articles. I didn't get that from what they had posted, particularly, but since I still can't find a copy I'm not sure. They secondhand-quote Scott saying that such internal discussion was already underway long before the recent articles, which is completely plausible to anyone working in major foundations because it's not at all a new subject in that world.

Nobody at Gates is talking to the L.A. Times but Scott on Tuesday did talk to their hometown paper, the Seattle Times. To them she said on the record that the foundation's current method of investing its assets is "not 100 percent effective," and she did apparently say to that paper that the foundation will now newly review its investment practices. She had also in that press release written that the foundation would "formalize the process by which Bill and Melinda Gates analyze and review these issues."

That last part may be what ticked off one or more people named Gates. In effect Scott told the world that Bill and Melinda, personally, have not been paying much attention to or thought about the issue of where the foundation invests its huge endowment. Whether that is or isn't a fair characterization I dunno, but I can hazard a guess as to how well it was received by a guy who quit college at age 20 and built from scratch a huge global business and fortune.

Moore learned something, and Gates is being silly

2007-01-10T22:11:00.000-06:00

I sat down this evening to write some complimentary things about the Bill & Melinda Gates Foundation based on an "announcement" from the Chief Operating Officer that was posted on their website a few hours ago. Cheryl Scott made, I thought, some good counterpoints to the nasty L.A. Times articles as well as pointing out how notably transparent the foundation is with both its grantmaking and its investing, which is true and they deserve credit for. Broadly Scott pointed out that choosing pure investments is a lot harder in practice than it seems to people who've never tried to do it, which I have no doubt is true, but I won't try to re-create her words. That doesn't make the issue of investing being aligned with mission go away, nor did Scott suggest that it does.

But now that reply has vanished from their website, gone without a trace. I can't find any cached copies of it online either, wish I'd thought to save it -- if anyone sees a copy, a pointer would be welcome here. This was, earlier today, the URL.

I suppose some public relations expert convinced somebody atop that food chain that any public response to the slanted newspaper articles simply dignifies the latter, or maybe somebody whose last name starts with a G didn't like what Scott said? If so then I think they're wrong but it's their party and they can cry if they want to. Seems a shame though, why not be the adults in contrast to the L.A. Times' adolescent cheap shots?

Regardless of that, I spent some time on their website and confirmed that they are more overtly transparent than almost any other foundation around. They not only have their entire list of grants on the web (which a fair number of foundations are now doing including the one I work for) with annual summary statistics, plus all the basic financials (ditto), they also put their full detailed tax return with all schedules up there -- meaning the complete list of their endowment investments. Which in their case is literally thousands of pages (big PDF files) and not a quick or easy read, but the point is, it's there in full. That's a standard of transparency everyone in this sector should aspire to.

Down the West Coast a ways, fellow dot-com billionaire Gordon Moore has by his own admission had some humbling experiences with his big new foundation. Like Warren Buffett and many others he has learned firsthand that doing philanthropy well is not nearly as easy as successful businessfolk often assume, and he says he's found religion with regard to transparency. Benefit Magazine's writeup is fairly long but worth the read.

Gates learns that being a poster child cuts both ways

2007-01-08T19:36:00.000-06:00

The Bill and Melinda Gates Foundation has just been placed squarely in the bulls-eye of what has been a quietly-growing debate in the foundations world about mission-related investing of those big endowments. It's the same set of choices that hit home a while back for universities: is the highest investment duty to maximize returns and hence resources for the non-profit mission, or to accept lower returns (or higher risk) in exchange for the investing itself advancing the mission? Or at least not actively violating it?

The two long articles linked above appeared on the front page of the L.A. Times yesterday and today and are being picked up far and wide by newspapers owned by their parent Tribune Company. Many readers will be appalled to learn how many examples there are of Gates money going into stock of companies which are helping cause the very problems that the foundation is attempting to ameliorate with grants.

I have little doubt that most of the specific facts as presented are correct, and I'm not one of those who thinks that trying to balance investment success and mission purity has to mean "doing neither of them well." However the lead human-interest example of the second story is oddly unconvincing (a middle-class couple who got ripped off by a fast-talking mortgage salesman because they couldn't be bothered to read the loan documents they signed). And the newspaper committed several fairness and logic violations.

For example it is obviously just sensationalism to repeatedly list the Gates Foundation's asset value as $67 billion with a footnote that this figure includes the future expected Warren Buffett contributions (whereas the other endowments they compare Gates to are listed at present value). They mix and match examples which are obviously not comparable on merit. Also when rattling off horrible-sounding corporate behavior that Gates money has helped enable they seem to have completely lost track of that pesky distinction between being charged and being convicted (which some musty historical document or other mentions in passing right before some silliness about freedom of the press).

But for all that the core issue is real and foundations need to deal with it. And being by far the biggest such venture in world history, whatever its correct endowment total right now, means that Gates can't just ignore this kind of question. Hopefully someone who has their ear is explaining that right now to Bill, Melinda and Warren.

Fundraising in the buff addendum

2007-01-05T20:17:00.000-06:00

OK so the volunteers-posing-almost-nude-for-the-fundraising-calendar thing is officially no longer just a big-city concept, if it ever was. In fact for at least one photographer it's a specialty. In fact now there's a website (naturally) tracking the whole trend. This is either a fun example of the grass-roots dynamism of today's non-profit sector or one more sign of the West's slide into decadent indolence. Your call.

"Men of Mortuaries"? Gah, if you keep the website photo on your screen their shirts melt away. No I'm not kidding, wish I was....In Wisconsin people got naked with their family dogs to raise money for the local animal shelter. Ah but the cat people are in on it too.

In Louisville it's local restaurant chefs (thankfully that guy posed with a trout in his lap not a perch). For breast-cancer research this idea has perhaps already become a cliche. The U.K. apparently has enough "lady jockeys" to fill a whole year. And they have un-shy farmers too. A local Lion's Club, sure why not. But Rotarians?? FOR THE LOVE OF MIKE NOT THE ROTARIANS!!!

Shining a light on foundations

2007-01-04T20:12:00.000-06:00

Transparency may be the reform theme of our time regarding the booming non-profit sector -- it keeps coming up both generally and specifically and is the primary driving impulse of new watchdog efforts like Charity Navigator. Now a well-known veteran of the institutional-philanthropy realm is focusing the transparency spotlight onto foundations.

Joel Fleishman in his about-to-be-published book argues that "although foundations play a vital role in the country's civic life, they must act quickly to mend their arrogant and secretive ways or risk increased public skepticism and government regulation....The only way for foundations to protect the freedom, creativity, and flexibility they now enjoy — and which they need if they are to serve society to their fullest potential — is to open their doors and windows to the world so that all can see what they are doing and how they are doing it."

That quote is from a Chronicle of Philanthropy article; Fleishman also did a live online chat with foundation and non-profit staff members which mostly seemed to find agreement with his thesis. It will be interesting to find out whether his prediction of agreement from industry-trade groups like the Council on Foundations and Independent Sector turns out to be correct. It does seem logical that the spate of foundation-related front-page news recently will attract or enable more attention from Capitol Hill for good or ill. (And some stories which are primarily about other issues include an element of questionable foundation practices, such as the big Princeton donor-intent lawsuit.)

Fleishman's prediction of full-on federal legislation aimed at foundations seems at least premature and I haven't found any actual political pros who expect it. But the overall direction seems clearly right; his specific ideas sound mostly sensible and if anything overdue. As Elizabeth Keating of Harvard notes when talking about non-profit overhead reporting, broadly the concepts on the table amount to simply requiring of tax-exempt entities the same sort of transparency which is the price of forming a legal for-profit corporation in this country.

addendum on massive archives

2007-01-03T19:30:00.000-06:00

Turns out that the Internet Archive and like-minded groups, including at least one major foundation, see Google's book-scanning project as dangerous and hope to match it in a more-public, not-for-profit form. That Associated Press article does a good job of summing up the disagreement and the various parties' motivations.

P.S. I note that the "Open Content Alliance" includes Google competitors Yahoo and MSN (i.e. Microsoft) as well as Adobe. So it has an element of alliance of convenience, though mostly it's major universities and libraries.

Information Age nonprofits

2007-01-02T18:19:00.000-06:00

We may soon need to add a new entry to the standard categories of not-for-profit organization (arts, social service, education, environment, religious, museums, etc.), one which this era's defining technology is enabling: non-profits devoted to exhaustively and permanently recording information and making available universal searching of it by anyone. Or as one group's mission statement puts it, "Universal access to human knowledge."

The key impulses distinguishing these efforts from libraries and history museums would be the "exhaustive" part and the "practicable searching" part -- maybe the category name would be something like "macro archive"? (Yecch, maybe not.) History museums do not attempt to house every single iota of information from an era no matter how trivial; and even in the greatest most comprehensive library in the world you can't easily search within all the texts it holds.

One obvious example is Wikipedia. Another is the Internet Archiv e, which recently got some press (2,300 storage servers and growing!). Project Gutenberg was an early significant step in this direction and remains a growing and vital resource. A targeted non-profit application of the impulse is the Mormons' vast and growing archive of family-tree information (which I can attest from personal experience is truly offered free to one and all without any questions about religious affiliation or intention).

Google's controversial archiving project represents the same impulse but in a for-profit form, as does Bill Gates' photos company called Corbis. Actually Google has for several years been making freely available a narrow but deep slice of the Internet Archive's turf, a complete searchable archive of "newsgroups", which were the dominant online forums for years before the World Wide Web became the Internet's front end (use their "advanced groups search" link.)

There may be more such efforts underway or in the works, these are just the ones I've noticed.

Let's recruit board members to hold cultivation events in their virtual houses

2006-12-30T20:32:00.000-06:00

By now you've probably heard of Second Life, the online virtual world that now has more than 2 million "residents" and rising fast. It now includes businesses which make both virtual and real-life money, houses, clubs and societies, virtual sex (of course), arts and music and filmmaking communities, GM opening a car dealership, educators opening schools, and more. Like it's own reality TV show (wait, so that's a "reality" show which is watched in a non-real universe er um....existential conundrums give me a headache).

It also has a non-profit sector. Established non-profits are extending events into Second Life, or simply exploring it and recruiting volunteers there, taking real-world fundraising events into Second Life, conducting charitable-giving drives...for all I know somebody's right now organizing Second Life's first sector conference at which the cocktail-hour chatter will be all about whether "there are too many non-profits chasing too few donors..."

The case against more gen-ops grants

2006-12-27T16:57:00.000-06:00

NOTE: my first attempt at describing the CEP report was more truthy than accurate (see reader comments), and is now revised and hopefully better.

----
There are a couple of "inside baseball" type subjects which keep coming up anyplace non-profit and foundation staffs gather, regardless of what the specific conference/workshop/briefing/luncheon is actually about. One of them is evaluation (of non-profits, of projects, etc.); the other is that foundations should make more general-operating grants rather than project grants. Say the words "program grant" at any such gathering and you'll quickly be surrounded by knowing sighs and frowning head-shakes.

However the Center for Effective Philanthropy recently assembled a bunch of data suggesting that grantees are not nearly so worked up about that issue as are the foundation staffs who fret about it at conferences. The CEP also reports that a lot of foundation CEOs think that more general-operating grants would be better, although they mostly actually issue restricted grants: funding which can be used only a specific project or program.

As the CEP reports, the top reason that foundation boards prefer restricted grants is one that I find perfectly respectable: to be able to track specific outcomes of grant investments. (Foundations no less than operating non-profits are tying themselves into knots these days trying to figure out how to track and document the results of their work and not simply the amount of work they perform.) And while the CEP notes the obvious fact that grantees prefer to get unrestricted grants and hate the paperwork related to restricted grants, their main point is that non-profit directors are actually far more concerned about the length and amount of a grant than about its strings.

My own beef with this whole debate is that the relevant context is often overlooked. Foundation grants altogether are no more than one-sixth of all philanthropy in the U.S. (according to Giving USA); it would take a dozen new Gates Foundations to change that ratio significantly. The vast majority of philanthropic support for non-profits (mostly from individuals) is unrestricted. So is the large fraction of non-profit revenues (anywhere from a quarter to two-thirds depending on specific sector) that comes from earned income. Hence no more than one-tenth of non-profit revenues is actually arriving with specific strings attached. That hardly seems like a crushing burden of red tape for the hardworking executive director; and wishing that the foundations' reasons for those strings weren't necessary doesn't render them invalid.

On a side note, the CEP report includes a sidebar quoting Elizabeth Keating on the "overhead game", whose interesting proposals on that subject were described previously here.

We still have "women's boards"?

2006-12-26T12:31:00.001-06:00

The other week I opened up a copy of Chicago's leading business newspaper and suddenly found myself warped back to 1975. At least that was the sensation caused by reading about major non-profit institutions which still maintain "women's boards" or a "women's association."

That's just, at this point in time, odd. Of course the Joffreys and Adler Planetariums and Art Institutes are in some ways kind of a league of their own -- but every institution listed in that article has long since had plenty of wealthy and/or influential women on their actual boards, including officers, including chairs. (In my Chicago non-profit career I've met several of them.) For example the Joffrey Ballet when it started a women's board only five years ago was being chaired by Pamela Strobel, then one of the top executives at Exelon. (She's since retired.) I know firsthand of similar examples in New York and Los Angeles and other cities.

A quick search does not turn up any recent empirical research about the gender composition of non-profit boards. This study from 15 years ago found that the boards of "cultural institutions" in six U.S. cities were around one-third female as of 1991, and rising. That sounds about right for that time at the big old symphonies and museums they were surveying. From my working experience in the other 98% of the sector I bet a fully-representative survey as of 2006 would put the female percentage on all non-profit boards well above 50%, and still rising.

As I think on it and read that article again there may be a generational thing at work here. The quotes from female business execs in their 40s who declined invitations to join a "women's board" ring true. (And notice that most of the women's-board members quoted or pictured are older than that.) Thinking of all the successful women I know who have served on various non-profit boards, few of whom are eligible for Social Security, I'm pretty sure that their private reactions to the idea of a women's board would not be so carefully phrased!

Non-profit growth as part of global social change

2006-12-22T11:53:00.000-06:00

I recently observed a briefing hosted by the Carnegie Corporation at which the opening speaker was Alan Khazei. The specific subject at hand was youth development; Khazei's remarks ended up being partly about the global growth of the nongovernmental non-profit sector.

Khazei co-founded City Year, which recruits American college-age youth for a year of urban civic service (and which is now taking its service global). Via email I obtained his permission to report his remarks publicly here and he bravely didn't ask to review my notes, so all errors of interpretation are entirely mine.

He led off by applauding TIME Magazine's naming as its annual "Person of the Year", you. By that they mean the changes now being wrought by individuals acting directly instead of through institutions, of which most of their examples turn out to be young people. (Some folks are rolling their eyes at the magazine's decision.) Khazei suggested that the magazine's choice fits well with "two of the most widespread global trends of the last half-century, the march of democracy and the explosive spread of the civic sector". Khazei cited surveys by outfits such as Freedom House and The Economist, which recently concluded that in a historic first more than half the world's population now lives under some form of democracy. (Though the latter, at least, thinks that the spread of democracy has stalled.)

Those two broad global trends, Khazei said, have been in driven by the United States' cultural influence but have now spread beyond any single society's control. And, he argued, "both of these changes depend on empowered effective citizenship and can be undone by the lack of it. There is nothing inexorable about any of this; less than 100 years ago autocracy was the world's growth sector."

Khazei's related thesis is that "everywhere around the world, people are concluding that the limit has been reached in the ability of big government to directly solve problems." Not a theory that centralized government needs to vanish, but rather that "the list of things which government can be the effective solution to has been exhausted." The social entrepeneurship idea flows from this notion, he noted. From his travels around the world he reported that "this is not at all just a Western idea, it is the consensus in the grass roots everywhere." In place of big government, he said, is the emerging idea of 'big citizenship': individual action and the civic sector as the primary drivers of positive change. "Young people are very excited by this and take naturally to it."

Foundations, Khazei argued, can play a key role at this juncture, "can help empower this. You can help build capacities and build citizenship and nurture ideas; you are uniquely placed to convene people at key moments and places." Also, Khazei said, "we've got to start making some big bets. We need in the non-profit sector the kind of dynamism that the business world now has, where half of our 20 largest corporations are less than a quarter-century old. Most of the non-profit models taken to serious scale, like the Girl Scouts and Amnesty International and United Way, are several decades or a century old."

New rules for non-profits, sort of, except not, maybe

2006-12-20T19:37:00.000-06:00

The U.S. Treasury Department has issued new "voluntary best practices" for non-profits to ensure that they aren't being used as conduits for funding for terrorist groups. The Council on Foundations, after working to get the new federal guidance altered, now says the feds should drop the whole idea. They argue that the new procedures would impose significant administrative burdens on non-profits without much benefit because only a teeny fraction of them have ever been even accused of terrorism-related financial dealings.

Reading the entire Treasury document left me scratching my head. After nine pages of restating the blindingly obvious (charities should write down their missions?? gosh!), the feds propose a series of doublechecking practices aimed at being sure that no money is going to terrorist groups...accompanied by lengthy footnotes explaining why all that effort may not work in practice. That's it.

Those doublecheck steps do sound fairly onerous, the likely effect is that only large staffed groups would ever make grants to or hire people from outside the U.S. Would that gain a worthwhile tradeoff in making it harder for terrorists to raise money in the U.S.? I dunno, and the feds offer no data or argument about it. But anyway it's not at all clear whether this is actually required. The federal document calls it "voluntary" but the CoF says that IRS agents have questioned groups about complying with it. (How many IRS agents? How many times? Did the groups respond, and if not what happened then? They don't say.)

I'm not finding the Council's arguments on this very persuasive but the feds' approach seems incoherent. If those are to be the new rules of operating as a tax-exempt organization then let's call them rules and have a fact-driven debate about whether they make sense in practice. Perhaps a couple of large groups with staff attorneys could do a service by openly refusing to comply with these "voluntary best practices" and forcing the feds to decide whether they mean it.

That smell from the Smithsonian is not pleasant

2006-12-18T18:59:00.000-06:00

Sitting in Chicago I'm imagining the local reaction if the Field Museum were to announce that HBO would now get "semi-exclusive" dibs on filming in its halls, or the Art Institute sold to Disney the "semi-exclusive" use of its artworks in movies. Yea that was about my response too, upon learning early this year that the Smithsonian Institution had sold a tidy piece of its soul to Showtime. The recent Government Accountability Office report on the deal is not even slightly reassuring.

Basically, the museum traded that "semiexclusive" use of its image and contents for promises of national television exposure plus some cash. The GAO found that the Smithsonian "followed its internal contracting guidelines" (whew!) and found no specific ways that the publicly-funded institution violated any laws. But it's not hard to read between the lines that the GAO staff think that the museum was dazzled by Showtime's shiny beads and sold out cheap: "The Smithsonian contends that it will be able to accommodate the same level of filming activity (outside of Showtime) as it has in the past based on its historical analysis of filming contracts. GAO found that this analysis was unreliable because it was based on incomplete data and oversimplified criteria."

And for government auditors this line is pretty scathing: "In addition, concerns have been raised about damage to the Smithsonian’s image and the appropriateness of limiting the use of the collections [which are] held in trust for the American public." What they said!

Newsweek on non-profit transparency

2006-12-15T19:26:00.000-06:00

Newsweek lead columnist Jane Bryant Quinn's current column is preaching to this choir in general, though she's off base on some details. It's about the "budding transparency movement for public charities," and she correctly notes that the better non-profits seethe when they see less-worthy groups (let alone outright con artists) suckering well-meaning donors.

Quinn's overall point is that donors are being more and more empowered to seek out and compare real information about non-profits -- a fine thing for sure. (The true fact that as of yet the only information donors can use is about efficiency rather than effectiveness is not a reason for them to ignore it, rather it is a problem for the sector to solve.) Missing from her column is the reality that when charitable-minded folks choose not to do even minimal investigation about giving decisions, they are complicit in the inevitable bad results like 50% of their check going to a professional fundraiser rather than the cause. Hence I cringed recently upon learning that a relative blindly sends a check to every single group which sends him those pre-printed address labels -- generous in spirit but regrettable in practice. Much better for charitably-minded folks to think and act like consumers with their donation dollars.

Also, readers here know that my favorite current contributor to this sector's improvement is Charity Navigator, which I recently added to our family's list of annual donations. They unfortunately got a mild rebuke from Quinn for a really dumb reason. She thinks the fact that a GAO study claimed 64% of non-profits report zero fundraising expenses on their tax returns must mean those documents are unreliable sources of information, and since Charity Navigator collects its data from those forms she wrote that their rankings "could mislead."

Sigh. The vast majority of non-profits filing tax returns are small volunteer groups reporting zero staff or fundraising expenses for the simple reason that they have zero staff or fundraising expenses. (There are scores of all-volunteer local land trusts for every one Conservation Fund, and they all have to file a tax return if they have just $25,000 in revenues.) I guess Quinn imagined the GAO study to be claiming that two-thirds of staffed organizations reported no fundraising expenses; a shame that she couldn't have been bothered to place one phone call to the IRS or the GAO and ask one or two questions.

That laziness aside Quinn is on the mark overall, and tipped me off to a new site in the works which I think aims to be the home of Ebay-style consumer comment and reviews of non-profits. More on that after it launches.

If you can make it in Bentonville...

2006-12-15T19:16:00.000-06:00

Environmental Defense is looking for someone to take the lead in their work to make Wal-Marts green -- from within. Joel Makower has a nice writeup of the situation at "Two Steps Forward ". It sounds like they don't want someone who'd simply put a happy face on what the company does: "The ideal candidate...is someone who would never have imagined moving to Arkansas."

Land conservation takes the lead

2006-12-14T16:51:00.000-06:00

A startling report from the Land Trust Alliance is getting some national-media attention this week but I wish they hadn't buried their lede, which is that in the U.S. the permanent protection of land for conservation is now going faster than sprawl -- and pulling away.

Last month the national conservation groups were celebrating the current boom in state/local public funding for land conservation; now the LTA has pulled together national data on non-governmental activity for the same purpose. They report that just in the past five years private non-profits protected 13 million acres, equal to a new Yellowstone National Park every year.

The national conservation-advocacy groups say that new development consumes 2 million acres per year, so the nongovernmental land trusts alone are now protecting more land than is being sprawled on each year. Obviously adding the new open space protected via all those new state and local bond referenda, and the occasional addition to federal national monuments and so forth, makes the picture even better.

The LTA report does have a couple of oddities, such as that most of their charts and graphs include only state and local land trusts when national groups like The Nature Conservancy and Trust For Public Land are a huge part of all this activity. And while criticizing the drops in direct federal appropriations for conservation they ignore the fact that all that private non-profit land protection is being subsidized by the federal tax code to the tune of billions per year now. (And the increase in federal tax benefits from donating land or easements which President Bush signed into law in August will boost all this even more.)

The non-profit land trust business is, not surprisingly, booming like dot-coms in the 90s. The LTA reports that even while the number of state and local land trusts was increasing by a third, the average operating budget increased by two thirds and salaried staff increased by almost half. In just five years, during an economic downturn! And that again doesn't count the big national/international groups.

Progressive pricing of education

2006-12-12T21:05:00.000-06:00

The New York Times seems to have just discovered, in a front-page story today, the way that private colleges price their services in the U.S.: charging families higher or lower tuition based on what they're able to pay. I'm not sure why this is news -- when I was in college the financial-aid office was perfectly candid about it.

Maybe its just the cute news angle they found, about several colleges which only woke up to the game recently and discovered that raising its tuition made it seem like a better school. So they raise the tuition by 18% and the financial-aid pool by 20% and promptly start getting more applications, because full-cost-paying families assume that a place that costs more must be better. (Or perhaps because .edu-world currently offers its customers no single quantifiable measurement of quality other than sticker price, and bitterly resists attempts to create one such as the US News and World Report rankings.)

I was surprised at just how progressive private-college pricing has become: "aid is now so extensive that more than 73 percent of undergraduates attending private four-year institutions received it in the school year that ended in 2004, not even counting loans." And I happened recently in my office to hear, from the executive director of an association of small Midwestern colleges, another point made in the article: "some students may not even apply to private colleges, scared away from the start by tuition and unaware of the available discounts." The solution to which is, of course, clueing them in to the system and the opportunity to benefit from it. (Like the first time an older relative explained to you that nobody actually pays the listed price at a used-car dealership.)

The article did quote someone raising the familiar spectre of a "squeeze of the middle class": upper-income families can pay full sticker price while poor families get lots of aid. No actual data was offered to back that up, and since the article notes that aid is offered to families earning as much as $150,000/year if they have several kids, the worry seems to depend on a rather expansive definition of "middle class". Or for that matter of "squeeze."

Other than sardonic amusement at the discomfort of certain parties with discovering that they must deal with (horrors!) market dynamics like supply and demand, I'm fine with all this. Access to the finest system of higher education on the planet is being priced in a highly progressive manner? Works for me.

Donating while bankrupt: addendum

2006-12-12T16:24:00.000-06:00

Back in November I wondered whether it's really fair that someone who has filed for bankruptcy should be allowed to continue making charitable contributions. This tightly-reasoned piece is persuasive: it isn't. Senators Obama and Hatch should drop the idea.

Glossy magazines about giving

2006-12-11T19:39:00.000-06:00

An interesting new blog called Tactical Philanthropy is devoted to "chronicling the second great wave of philanthropy". Blogger Sean Stannard-Stockton, who is a professional money manager and donor advisor, got my attention the other day with the news an entire new genre of glossy magazine is being established, aimed at people who do a lot of charitable giving.

At least five such magazines have either just launched or are about to:
Contribute, Good, Generocity, Benefit, and Giving. (The physical resemblances to Martha Stewart Living are, I assume, intentional.)

A quick perusal of those websites left me feeling that "Generosity" is at least as much aimed at non-profit staffers as donors. "Good" seems to have an interesting business model: send 100% of subscription proceeds to charities and pay the bills with advertisers who are after the high-disposable-income readership that is thereby attracted. "Benefit" subtitles itself "the lifestyle of giving" and appears to be basically focused on the Bay Area at least to start. "Contribute" claims to be the only one that is entirely focused on donors as its audience. "Giving", which hasn't printed an issue yet, appears to be the best-funded of these and looks like its aiming to be the biggest/slickest player in this new magazine genre.

The evil empire

2006-12-10T14:11:00.000-06:00

Joining a foundation staff a year ago turned me from a non-profit specialist into more of a generalist as far as subject area. One subject that keeps coming up at conferences and online within the U.S. non-profit sector now is Wal-Mart.

For instance one project I'm heavily involved in at work is related to the food system, seeking to leverage a big increase in the amount of food that is grown locally and/or organically. Activists in that subject are talking a lot about Wal-Mart these days, with no clear consensus on whether on balance the company's entry into the issue is a good thing or bad. A colleague on that project who is a veteran public-health advocate mentioned one day that those folks are slightly agog over the rapid expansion of Wal-Mart's cheap generic drug offering which, if successful, seems to shake up some of the public-policy debate regarding our health care system. Pro-choice activists scored a big win early this year when the company reversed course on the morning-after pill, particularly since they sell it for far less than other pharmacies do.

On gay-rights websites there is chatter about the company's moves the last couple years on that front, as for example noted here, which is inspiring calls by religious-right groups for boycotts. And thanks to Al Gore's public endorsement of Wal-Mart as a key green change agent (which, as an aside, is my least-favorite new non-profit-sector buzzword), the company's environmental impact is getting more attention. I've seen this news article linked a few times now.

Anti-sprawl activists continue to name Wal-Mart as a poster child for unsustainable economic growth, as do labor unions. This progressive activist's research paper coming to a different conclusion gets linked a bit and the author got a couple of invitations to speak on campuses and debate online, but he's been largely ignored by the mainstream media.

And recently a friend who is heavy into the stock market noted this irony: Wall Street thinks that Wal-Mart, as a business, peaked several years ago. Its stock price hasn't even kept up with inflation for three years now and its sales growth lags well behind that of competitors like Target. As a dominant economic force it may be that the company's historical moment has, for better or worse, passed.

Online gaming to feed the world

2006-12-08T11:21:00.000-06:00

I would really, really love to see Village: The Game succeed. That's a bit because the particular genre of computer game known as "real-time strategy" is one of my favorite forms of recreation, and even more due to wholehearted agreement with the issue being addressed and with the policy approach that the creators of the thing are applying to that issue.

I wish I could offer some optimism about the project's chances though...reading their website leaves me thinking that nobody who's actually played a lot of robust RTS games is involved. The game-design discussion on that website is all about look and feel and not at all about what actually makes such a game work or not work for real-life players today, namely its internal design and gamebalance. An analogy would be, if you're a serious movie fan, reading that the director and producer of an upcoming movie are spending all their time worrying about the costumes and makeup without any focus on the script. One of the early warning signs of a straight-t0-video outcome right?

(If you are a strategy gamer I will make a current topical analogy: thinking that what makes a computer strategy game successful is the pretty graphics and cool sounds leads to lame failures like Sid Meier's Railroads rather than completely-addictive bestselling hits like Civilization IV.)

Kids today! They're volunteering, a lot

2006-12-07T20:45:00.000-06:00

A comprehensive national study has concluded that volunteerism in the U.S. is booming, including an eye-popping doubling among teenagers compared to the late 1980s. The study also found that folks aged 45 to 64 are volunteering at higher rates than their parents did at the same age, as are senior citizens.

The study's authors think that this growth is driven by "social trends such as the rise of service and service-learning in the schools, higher education levels among adults, delayed child-bearing, and longer life expectancy." I wonder if another factor isn't some maturity in the non-profit sector in terms of how well we recruit and manage volunteers. That's one of the ways in which, in my current role as a foundation officer, I am often impressed with how much smarter young non-profit staffers seem now than my age group was at the same professional level a decade or two ago.

Donor intent showdown finally underway

2006-12-06T19:28:00.000-06:00

Oral arguments have begun in the potentially-landmark case Robertson vs. Princeton in New Jersey state court, more than four years after the suit was first filed. The heirs of a huge 1961 gift to the university have been publicly arguing for several years now that Princeton has serially violated the donor's intent; that gift has now grown into $650 million. In addition to the separation of those funds from the university's endowment, the plaintiffs are seeking restitution for endowment proceeds which they say were spent contrary to the donor's restriction and which could total hundreds of millions more.

Of all the web-accessible news coverage describing the facts of the case, that Pittsburg Post-Gazette article linked above seems the best. The Robertson plaintiffs have established a robust website for their case which of course includes only the op-ed pieces that favor their version of the situation.

Princeton's public defense, at least, was seriously damaged early this year when the Wall Street Journal went through thousands of pages of documents released as part of the court's discovery process. The reporters found memos and emails in which Princeton officials wrote frankly of hiding fund disbursements from the Robertsons, and also found evidence of two smaller gifts which appear to have been used for purposes other than those specified by the donors. The university argues that the memos were wrong and that the officials who wrote them didn't have authority over the matter. The Journal's front-page story is not web-accessible unless you're a subscriber; if you are, it ran on February 7th and was headlined "Poisoned Ivy".

The case could have a huge legal impact on philanthropy but also might not, because Princeton's legal strategy seems to open the door to a ruling that's based on any number of things. Their approach appears to be "leave no argument unturned": they dispute the plaintiffs' standing to sue, and deny that they misused the funds, and say that anyway even if they did the original bequest was implausible (then why did they accept the gift?), and argue that in any case the public interest is better served by their version of it than the family's, and they belatedly filed a countersuit claiming that actually the Robertson endowment somehow owes Princeton $235 million, and they dispute the plaintiffs' right to a jury trial on technical grounds, and in February they announced a new fellowship named for the original Robertson donors while denying that its creation had anything to do with the Robertson endowment fallout.

Uh huh....Well I'm no lawyer and I'm not at all sure that the Robertson heirs are entirely right ethically or legally, but at a minimum Princeton has been quite careless over the years and their behavior now leaves a sour odor. Whichever way the case turns out (years from now, after several well-funded appeals) its ultimate impact should be to make both donors and non-profits take the terms of restricted gifts more seriously. Follow Yale's 1995 example with the $20 million Lee Bass gift: if the donor's restrictions are too onerous and discussion doesn't yield a workable compromise, then you gotta give back the money!

Spending it down

2006-12-05T21:37:00.000-06:00

The Bill and Melinda Gates Foundation recently made a rather startling (at least in charitable-foundation circles) decision: to spend themselves out of existence rather than operate in perpetuity. They will take a while to do it -- they're saying 50 years after the founders' deaths -- but still this makes Gates by far the largest foundation to do that. (And not simply because it's the biggest foundation period: all of the other multi-billion dollar foundations are permanent.)

In a sense this isn't completely surprising, because Warren Buffett's recent decision to give most of his wealth to Gates was on the same basis: that Buffett's funds be eventually spent down not be a permanent endowment. This decision puts Gates on one side of a growing debate within institutionalized philanthropy, which actually traces all the way back to its two American godfathers John D. Rockefeller and Andrew Carnegie. Rockefeller pioneered the concept of endowing large-scale permanent grantmaking, while Carnegie preferred to see his "giving back" completed during his own lifetime.

Each approach has its advocates, but the fact that Rockefeller's concept has predominated is reflected in U.S. law: the "5% rule" for charitable foundations is explicitly based on the idea that most years that will leave the endowment continuing to grow. The high-profile Gates announcement may change that; for starters many lawmakers may not have been particularly aware that permanence isn't actually a universal standard for foundation philanthropy.

The Gates folks also announced that they will accept additional donations, raising the question of whether some more Buffett-scale gifts are in the works there.

U.S. museums are bursting out all over

2006-12-04T16:54:00.000-06:00

The American Association of Museums' new annual "state of the sector" report has spurred some media coverage of a building boom now underway. It's not clear whether the trend cuts across all sizes among the estimated 17,500 museums in the U.S., but the big ones at least seem to be merrily satisfying their edifice complex.

Major museums are adding on in literally dozens of cities; a number of new wings or buildings opening now were first planned in the 1990s economic boom. The mix of public and private funding for the capital projects seems to vary widely, which is also true with the operating finances of museums.

The obvious question here is, can the sector afford to operate all this new space? I notice that most of the capital-fundraising campaigns now seem to include new endowments to cover overhead, so somebody has learned something. Still the question of whether the building boom represents supply appropriately rising to meet demand seems unanswered: the Association press release doesn't seem to provide long-term trend data on things like museum attendance and revenues, and data sources like Giving USA don't specifically aggregate museums as a category. (The press release does repeat the non-profit sector's autocomplaint about reduced public funding having forced an increased reliance on private fundraising, but the statistics they offer don't actually support that statement so I dunno.)

Who's more generous?

2006-12-01T20:41:00.000-06:00

The hot topic of the moment in the philanthropic media (including blogs) is a new book by an economist named Arthur Brooks, entitled "Who Really Cares: America's Charity Divide". His thesis, based on a variety of survey data, is actually three-fold (and to some degree overlapping):

(a) religious households both liberal and conservative give more to charity than secular households do, even without counting giving to their churches;
(b) politically-conservative people give more to charity than do politically-liberal folks; and
(c) the wealthy and the working poor give about the same fractions of their income to charity, while the middle class gives much less.

So to sum up (in my words not his): "middle-class secular people who usually vote Democratic are stingy hypocrites". That would be, um...me, and most of my friends and family, and at least 75% of my colleagues in the non-profit sector. No let's be honest, more like 90%. And a similar fraction of my former colleagues in newspaper journalism.

Coverage of the book, and of Brooks' various recent op-ed pieces promoting it, has centered on whichever of those arguments causes the most outrage with the particular writer. I did get into a brief online debate that's tangentially about this, over at White Courtesy Telephone, but before saying anything further about Brooks' facts I'll read the thing. All I've done thus far is to confirm at a surface level that at least a couple of the surveys that Brooks cite do support at least some of his claims, and locate an unrelated survey that supports at least one of his points. More than that will have to await reading the book and checking its listed sources.

So you have a friend or a younger relative...

2006-11-30T22:45:00.000-06:00

...who thinks she wants to be a non-profit professional when she grows up. Or let's say when he graduates from college, or maybe after grad school. If you've been in this field for any length of time this scenario is probably familiar. Where do you steer them?

TO LAW SCHOOL!! OR A CIVIL SERVICE EXAM! AND THEY'RE HIRING AT THE CAR WASH, RUN BOY RUN LIKE THE --- okay sorry for that interruption, my father-in-law surprised me and snagged the keyboard. He's rather nimble for an insurance man actually...Anyhow there are a few resources out there that might be helpful. For example here is an online listing of university programs in not-for-profit management, it covers undergraduate, graduate and continuing-education, current as of 2002 and searchable by state. That link came from ARNOVA's links list which is easily the best I've seen in this subject area.

Of all the listserv type resources aimed at non-profit folks (of which there are many now), perhaps the best I've come across yet is the ArtsJournal.com free weekly newsletter. It includes news links and job listings and fellowship opportunities and so forth, for all arts sectors with a nice balance between breadth and readability, and the editor puts some rather impudent headlines on article links. I haven't yet found a really good compilation of non-profit blogs; the biggest thus far is the Non-Profit Blog Exchange but it makes no attempt to sort its listed blogs by type or subject area.

Your tax dollars at work

2006-11-29T19:06:00.000-06:00

The U.S. government, it turns out, has been passing federal-employee personal contributions on to more than 1,200 non-profits which owe federal taxes, and has issued billions of dollars in federal grants to the same delinquent charities.

This revelation comes from the General Accounting Office, as reported by MSNBC and written about by Trent Stamp of Charity Navigator. The watchdog agency says that the true number of non-profits delinquent on payroll taxes but still receiving federal-employee donations is undoubtably even higher. That's because federal law for some bizarre reason prohibits the relevant officials from checking whether charities that are to receive employee donations are up to date on their routine federal tax returns.

The GAO picked 15 of the delinquent charities at random to check out further, and concluded that every one of them was probably acting illegally -- doing things like buying a boat for the executive director while failing to pay federal payroll taxes. (And let's keep in mind that most of what is called "payroll taxes" is actually money withheld from employee paychecks.) The GAO made up a bogus charity, applied for funding from three local offices of the federal employee-contributions system, and received funds from all three with no trouble.

Ok clearly part of the story here is serial incompetence in our federal bureaucracy. But for me the bigger issue is this: the fact that fewer and fewer Americans still think non-profits to be highly trustworthy is not simply due to "a few prominent rotten apples that have made headlines" as I keep hearing people tell each other at conferences. There is a broader problem here in this sector and it is not being faced.

Giving high and giving low

2006-11-28T21:12:00.000-06:00

Slate the other week ran a fun essay by successful business writer named Doug Smith, who proposes the creation of a legal futures market in charitable contributions.

His writeup will make many people's eyes glaze, alas, but it is an interesting concept. The idea is that someone wanting to make a donation to Favorite Charity would actually "buy" a clump of futures contracts from someone else who previously gave to that charity. Someone else wanting to make a donation would actually "buy" the clump of futures from the first person; in both transactions the charity gets the proceeds. The actual amounts involved would vary the way hog-belly futures contracts do: rising and falling as they are bid up or down in a (no doubt online) trading system.

The contracts would rise and fall in value due to the demand for making charitable gifts to that specific charity compared to others, which is the first potential social value of this: an efficient way for donors to express (and therefore be motivated to research) their conclusions about the relative merits of different non-profits. Some folks in the audience are now recoiling in horror but from me this gets a big cheer. The specific amount of each donor's tax deduction would also end up varying, which has some other interesting implications. (It's all contrived but of course so are lots of systems we take for granted, including the concept of nongovernmental not-for-profits that are exempt from taxes.)

Smith thinks that such a system governing charitable contributing would sharply increase the annual amount of philanthropy in the U.S., for a couple of reasons; could be, though I can also think of reasons why maybe not. There's no serious proposal in Congress for anything like this and the new political lineup in DC probably ensures there won't be, so for now it's just a think-tank exercise.

The arts did well in the election, too

2006-11-27T19:16:00.000-06:00

Last week I mentioned that a lot of land-conservation bond issues around the U.S. passed easily on November 7th. It turns out that local referenda to fund the arts also did great.

Americans for the Arts reports that in eleven cities or counties plus one state, Americans voted to tax themselves for the arts or art education. The list includes the state of Louisiana; Akron (OH); Alameda County/San Leandro (CA); Alameda County/Berkeley (CA); Austin (TX); Cuyahoga County/Cleveland (OH); Dallas (TX); Marin County (CA); Portland (OR); Salt Lake County (UT); San Francisco(CA); and Santa Clara County (CA). Some of them were one-time bond issues and others were new standing taxes; if we use the ten-year total on the latter the total funding passed was something like $1.3 billion. That's without counting Louisiana's measure which was actually a tax exemption for works of art, the exact value of which is hard to project.

That may not sound like a lot in national context given this country's huge public funding for the arts (of which the NEA is a drop in the bucket), not to mention that tax-deductible philanthropy for the arts had by 2004 reached nearly $14 billion per year (quintuple, after inflation, what it was in 1964; figures are from the Giving USA 2005 report). But the really exciting part may be the precedent: unlike the land conservation referenda this election, not one ballot initiative for the arts failed to pass. Twelve for twelve is as good as it gets in any game.

Bankruptcy: should non-profits get to be first in line?

2006-11-25T13:11:00.000-06:00

A current tempest in Washington DC was started by a federal judge's ruling that some people filing for personal bankruptcy can't keep making charitable contributions before a bankruptcy court decides how much their creditors will get. The judge's logic is being interpreted as an unintended consequence of the 2005 revision of U.S. bankruptcy law, which was already widely seen as basically a giveaway to the credit card companies who everybody loves to hate. Sens. Orrin G. Hatch (R-Utah) and Barack Obama (D-Ill.) have quickly proposed legislation that would allow individuals in bankruptcy to continue giving to churches and charities; that bill has passed the Senate and is now before the House.

I was surprised to learn that a 1998 law had specifically allowed people in bankruptcy to exempt up to 15 percent of their annual income from creditors for tithing or charitable donations.
So the narrow issue is simply whether Congress with the 2005 law actually meant to undo that provision or not.

Nobody involved seems willing to face the broader question, namely: what all should someone who is availing themselves of the modern legal privilege called "bankruptcy protection" be allowed to hold back from that process? Bankruptcy is after all not a natural right but a highly-progressive social contract: our society agrees to impose undeserved losses on creditors so we don't have to have debtors' prisons and so that families that are hopelessly ruined financially can get a chance to start over. That's a concept which the U.S. pioneered and is rightly proud of (like the independent professionalised not-for-profit sector actually), and bankrupt families already get to keep their home and some other things safe from creditors and that's a good thing. So is writing another annual check to a favorite non-profit really fair to the parties about to be legally deprived of piles of money which they had voluntarily lent?

P.S. No doubt the preachers and their politicians will make this a religious-liberty issue (and Senator Obama climbs down into a similar rhetorical gutter with his absurd poverty straw man in that article linked above). But if we're gonna get biblical here then that columnist makes a valid counterpoint: the Bible, like every major holy writ that encourages tithing, also does not speak highly of failing to repay debt.

Outreach does not build audiences?

2006-11-24T14:24:00.000-06:00

Classical music keeps popping up as a topic in the not-for-profit sector these days, and it's not all about big established institutions: turns out that at least in Chicago and New York there is now a thriving alternative classical-music scene. Not being a big classical fan myself I wasn't really aware of this in Chicago until taking my present job, in which capacity I've become acquainted with the dozens of small independent chamber music, opera, symphony and classical-dance groups around here. There are more than 300 non-profit music organizations in the Chicago region now, not even counting the non-profit multipurpose arts councils and such.

Meanwhile the world of big orchestras is abuzz right now with some startling conclusions of a huge long-term experiment by the large James S. and John L. Knight Foundation. Having spent 10 years and $13 million investing in audience-building efforts by a dozen symphonies around the country, the foundation commissioned a frank assessment of the results. They were trying to figure out why so many orchestras outside the top half-dozen are chronically on the edge of financial collapse?

Among the Knight conclusions: "Free programming and outreach do not turn people into ticket buyers." Also that there is a large audience interested in classical music in the U.S.: "The problems of orchestras stem not from the music they play but from the delivery systems they employ." And this interesting thought: "Orchestras need to do more research on those who do _not_ attend their concerts," that is, audience research is invariably conducted among those who have already gotten the message and is therefore useless for figuring out how to attract new ticketbuyers.

While clearly some of the conditions Knight found are specific to symphonies, I was struck by how much it sounded just like the classical dance, opera and repertory-theater sectors. Don't the folks running those institutions think that the way to entice new people is to "get them in the theater once" with a free ticket? Isn't most audience surveying by theater/dance/opera conducted among folks who are already bought in?

Cashing out in NYC

2006-11-22T19:32:00.000-06:00

A recent New York Sun article echoes one from April in The NonProfit Times about charities in New York City cashing out property in the recent real estate bubble. Some of the figures are eye-popping, with associations or churches getting tens of millions for properties that they paid far less for years or decades earlier.

To a large degree this is a Manhattan story, for example the New York Historical Society may be able to get more than $100 million for a single vacant lot because it's right next to Central Park and eligible for a high-rise building. Cushman & Wakefield, a real estate services company, told Nonprofit Times that 32 nonprofits sold properties in Manhattan totaling $582 million during 2004, the third year in a row that sales exceeded purchases.

But similar things have happened in other hot real estate markets, for example Fourth Presbyterian Church on Chicago's North Michigan Avenue has had an offer on the table to sell its parking lot for a high-rise development. The potential $25 million land sale has been stalled because the local alderman doesn't like it, but seems likely to happen eventually. While the national real estate bubble has burst overall the strong growth in major urban centers hasn't, so established non-profits will be tempted to cash out longstanding headquarters properties and move someplace cheaper.

Wikipedia gaining steam

2006-11-21T19:49:00.000-06:00

At this recent symposium in Chicago I took notes from an onstage interview of Jimmy Wales, founder and leader of Wikipedia. He covered many issues but most germane to this audience were some interesting aspects of Wikipedia's history and evolution as a not-for-profit enterprise.

I was interested to learn that Wales' mission is not actually the "wiki" information model per se, rather it is creating a free universal high-quality information source. That is, the Firefox of encyclopedias. His first attempt was called "Newpedia" and it was to be a freely-licensed analogue to Encyclopedia Britannica assembled in the same manner: experts writing and editing the articles, as volunteers. It stalled because, as Wales put it, "a good well-sourced encyclopedia article is a lot of work for an individual to write start to finish," and identifying and recruiting them was also a huge difficult job. "We weren't getting anywhere, so we scrapped that and decided to try the wiki concept instead." That experience has made him an evangelist of the wiki model, which is now reflected in the mission statement of the Wikimedia Foundation.

Wales is defensive about recent uncomplimentary media coverage (three links there) and would benefit from the wise counsel of someone like this; he modestly declined the interviewer's invitation to crow about the Nature article that found no more errors in Encyclopedia Britannica articles than in Wikipedia ones. He did note that contrary to media reports, "We are not locking articles on Wikipedia. In fact we are locking fewer articles now than we used to. What we are doing is locking out articles from editing by anonymous users and users who have just joined the wikipedia community within one week."

That last has become a core part of their operating concept now, the existence of a wiki community of regular contributors/editors. It numbers somewhere around 1,000 regulars now, and Wales has come to see it as central to the effectiveness of the wiki model, how
accountability happens in real-life practice.

Wales dropped one other nugget which was quite impressive to me: Wikipedia's total operating costs only just recently passed $1 million/year. (Their 2004 Form 990 on Guidestar shows total expenses well under half that so that checks out.) Talk about leverage -- that's quite impressive compared to what the organization has accomplished, regardless of whether you find their theories compelling or not.

P.S. Wikipedia was in the news last week regarding China: in contrast to Google and Yahoo, Wikipedia has bluntly refused to censor its content for that country. Hence Wikipedia has been blocked in China...until October when it was suddenly unblocked, and then last week it was suddenly re-blocked. Wales has no idea why: "We never heard anything from the Chinese government about those decisions, I have no idea what they're thinking now." He seems confident that in the big picture the Chinese government is pissing into the wind, that in the wireless-network era they can't keep that sort of top-down control of Internet access in their country.

Bigger than transportation or finance, and spreading

2006-11-20T19:02:00.000-06:00

If you're a non-profit manager about my age (let's just say 40-something and leave it at that), maybe you share my distinct impression that this sector is bursting out all over in the U.S. The researchers at John Hopkins have crunched official detailed employment data and the numbers agree that paid employment in private non-profits is booming.

For example more people are employed in private not-for-profit organizations than in transportation or in finance and insurance combined. Non-profit employment is now more than 8 percent of all private employment nationally, and rising: in a sample of five states for which they analyzed the state further, non-profit employment from 1995 to 2003 rose at triple the rate of total employment.

There are clear regional differences: private non-profit employment basically rises (as a percentage of all jobs) as you move west to east across the country. The sector "has tended to be concentrated in urban areas," but "the concentration of nonprofit employment in urban centers is changing. Like the population generally, nonprofit employment is growing rapidly in suburban areas....nonprofit job growth in the suburbs has not only been faster than that in the cities, but it has also been faster than private job growth generally in the suburbs."

This is the same data that informs the researchers' conclusion that the non-profit wage gap (that people get paid less for the same work at non-profits than at for-profits) is at best a half-truth. More of their reports on non-profit employment, including state-by-state breakdowns, can be found here.

"Giving circles"

2006-11-19T16:27:00.000-06:00

A new form of personal philanthropy which appears to be gaining steam in the U.S. is the "giving circle", in which groups of people gather once a month or so to pool small amounts into a single larger donation to a charity they've discussed and agreed on. So for example a dozen individuals or families each giving $20 might vote on a single charity each month that gets the whole $240.

All the examples being written about thus far in the media are groups of women, probably because that gives reporters and editors a chance to make smug analogies to sewing circles and book clubs, but there are all-male and mixed-gender examples too. Some of the amounts described are fairly impressive, like a Los Angeles giving circle that collects $5,000 per year per participant.

Some research has been done on this trend, see here and here. Though thus far it's not terribly rigorous, it does suggest that there are now thousands such groups and that most of them have been founded since the late 1990s. A couple of the big national foundations have financed those initial research and advocacy efforts.

Is this a good thing? Well...obviously the trend plugs into the concept of leverage: individuals who can each only afford $50/month can band together and feel like they're making a bigger impact. On balance people being recruited into giving circles seems likely to increase total charitable giving. And it certainly sounds like more fun to be philanthropic in that manner rather than just writing a check -- at least until serious disagreement arises, what's the over-under on that in months for a typical group? And I'm a big fan of donors behaving like investors, which the entire sector would be better for and which this concept would seem to encourage. So a tentative thumbs up from here, while acknowledging that we don't yet know much about the real-world long-term impacts of this concept.

Are non-profit hospitals holding up their end?

2006-11-18T17:13:00.000-06:00

The Democrats' big win on November 7th is expected to bring new focus on the issue of how much community benefit non-profit hospitals actually provide, in the person of new House Ways and Means Committee chairman Charles Rangel (D-N.Y.). Committee chairman Bill Thomas (R-Cal.) has been raising the same questions as Illinois' Democratic Attorney General (and likely future governor) Lisa Madigan; Rangel as ranking member has defended non-profits in general but has also expressed concerns about how much charity care the hospitals are providing.

Hospitals, in order to qualify as tax-exempt non-profits, are required by every state to provide some free care for the indigent. However Illinois is one of many states where no specific amount of such care is required; in other states it's low, 5% or less of total patient revenues. Federal rules are soft, allowing non-profit hospitals to demonstrate "community benefit" in other ways such as public-service announcements, medical research, and health fairs. Madigan in 2003 commissioned a study which reported that Illinois hospitals were providing actual free care worth as little as 1% of patient revenues; the NY Times in June reported that the IRS is now examining the same question nationally. Madigan's tough bill in the Illinois General Assembly was deferred this past spring to be taken up in 2007.

The American Hospital Association has proposed instituting a standard definition of community-benefit costs which every non-profit hospital would have to report on as part of its annual tax return. They want that definition to continue to go way beyond free care, and specifically they want it to include bad debt: patients who never pay their bills. That last item gets a big raspberry from watchdog groups such as Charity Navigator, whose president has become Madigan's biggest cheerleader: he asks why patients who were billed because they are not indigent should suddenly count as charity work just because they fail to pay up?

The real issue might be a broader one which this blogger eventually touches on, namely: should hospitals have to meet a different public-benefit standard than other non-profits? The basic non-profit social contract is: exemption from taxes in exchange for a publicly-beneficial operation which spends any profits only on that operation. Non-profit symphonies and museums are not legally required to give away 10% of their tickets for free. Less-blunt incentives encourage them to do a lot of things like that, but the law does not impose an arbitrary minimum amount of it. If hospitals are to be held to a different contract with society in order to be tax-exempt, then what other types of organization should the same logic apply to?

Give me land, give me land...

2006-11-17T18:48:00.000-06:00

U.S. conservation groups like Trust for Public Land and the Land Trust Alliance have been celebrating a November 7th election result that hasn't risen to the top of the media coverage: voters in 23 states approved raising their own taxes by $5.7 billion for new permanent parks or nature preserves.

A total of 99 state, county or local referenda for this purpose passed, many by overwhelming margins. That's out of 128 which were on ballots; the 77% winning percentage is similar to national elections going back a decade but the amounts keep getting bigger. The winning referenda this time were scattered around the country, six in Texas alone, with the biggest being California's at $2.25 billion.

That follows a huge conservation victory in Congress in August, an expansion of the tax benefits for donating permanent conservation easements on private land. That was buried within the federal Pension Protection Act (which included other provisions that were less clear and less welcome) .

It's for, like, charity. You know, save the wombats or somethin'. Has the keg line gotten any shorter?

2006-11-16T18:51:00.000-06:00

While this year's nationally-relevised Ohio State-Michigan football game is deciding which team is numero uno, the biggest parties will be going on in the parking lots in Columbus: several local non-profits will be helping save the world for drunken football fans.

Turns out that only non-profits can get liquor licenses for outdoor events outside Ohio State's mammoth stadium; no doubt that provision was politically helpful in convincing local residents to allow a temporary outdoor beerfest for thousands of close friends. So for example Boys & Girls Clubs of Columbus lets a nearby restaurant use it to get a permit for a bash costing at least $50,000 just for the food and drink, but no worries: the non-profit nets a nifty $800 in exchange for its good name.

Then there's "Hineyfest" (as in "tailgating", get it?). A different local charity held out a bit better on that one, they'll receive around $25,000 out of an event gross somewhere south of $200,000. The promoters charge $7 per beer and expect several thousand attendees...you can do the math. What's the Oscar Wilde line about how we've established the nature of the transaction and now we're just haggling over price?

Overhead: let's make it plain

2006-11-15T20:35:00.000-06:00

One of the interesting sessions at the recent Grantmakers in the Arts conference, of direct relevance to folks working in all non-profits, was led by Elizabeth Keating of the Kennedy School at Harvard. She argues persuasively that the ways funders and grantees interact regarding overhead expenses is irrational for all concerned, and that more transparency would enable mutual improvement.

[All which follows is my version of Keating's ideas, any transmission errors are mine.]

If you're a program manager or artistic director who's ever had to debate with your own finance staffer about which grant can pay for which costs, she means you. Or perhaps, as in my case, you've been that grants administrator! For several years at a large complex organization in the 90s I was that spreadsheet geek trying to rationalize a dozen grants with differing rules and reporting requirements, and I'm sure our hard-working program staff didn't enjoy the process any more than I did. (If Laurel, Dave, Steve, Michael or Diane read this they will right now be either laughing or wincing.) Of course now I'm on the funder side of the conversation, to which role I bring direct knowledge of how the bodies get buried so to speak...

Which is not to say that I think the process was entirely time wasted -- actually it forced us as a staff team to deal with important decisions including programmatic choices. But it sure was awkward and messy and arbitrary, and some of the incentives were perverse: the honest answer to a funder's question "What are the overhead costs?" would be "It depends, what are your overhead rules?" Yecch. Many perfectly well-intentioned staff teams have had that experience, and many funders have felt misled.

That last is actually what Keating means by her slightly-unfortunate presentation title "Is There Enough Overhead in This Grant?" She's not particularly arguing that funders should be magically made to only issue unrestricted grants. (Which is good cause they ain't about to, and there are good reasons why not.) Rather she argues that the core of the problem is that there is no consistent definition of "overhead" in detail or even in principle, and that the two parties in the funder-fundee relationship aren't honest enough with each other about the subject.

Keating proposes that non-profits adopt the sort of transparency that is standard for corporations about their finances, and she's working on some promising tools (software, and report formats) for that. She proposes mandatory non-profit openness on this subject once they get big enough to accept project grants: "Once a non-profit has to figure out an overhead allocation for any one grant, they must make that data public as part of financial reporting or annual audits." In return, foundations would agree (locally or nationally) to standard definitions of what is overhead and how much of it is reasonable. We could as a sector have sensible conversation about how much is or is not too much, and have no more jerry-rigged 90-page spreadsheets which arbitrarily assign the copier lease to this grant and the office assistant's salary to that one. Works for me, and the sooner the better.

Non-profit mergers -- too many or too few?

2006-11-14T23:25:00.000-06:00

Mergers are not common in our sector but a few large ones have been in the news this year, such as in Boston, Cleveland, and Memphis. A good number of veterans in the field, particularly at foundations, react to that news by saying, "Good! There are way too many non-profits today!" It's one of the most-common threads of conversation nowadays.

It also seems odd. When a new Target or Wal-Mart opens up in town do we say, "Good! There are way too many small businesses around here"?

It is a fact that there are far more incorporated not-for-profit organizations in the U.S. today than there used to be (and radically more than in any other nation in the world). Even assuming that a fair number of the organizations on the books with the IRS are actually defunct, the active total basically doubled from 1990 to now. There's no sign of any slowdown either.

To me, that's on balance a good thing. Healthy industries, and for that matter societies, are attractive to people -- the clearest sign of the decline and fall of the U.S. will be when the day comes that millions of people are no longer so eager to come raise their children here. The non-profit sector is booming because more and more people are willing to fund it, which is because it's gotten more and more smart and effective, which in turn attracts more smart young people into the field, rinse and repeat.

Healthy growing economic sectors are dynamic with lots of churn, that's part of the deal. We could ask the U.S. auto industry what the opposite feels like....Now if it one day turns out that the not-for-profit sector has been growing faster than the demand for it (expressed in earned and contributed revenues) then there will be some shakeout. I'm not cavalier about this because I once had to shut down a failed non-profit, and if you haven't been there you've no idea how much that sucked. But again: it's part of the big picture, and the big picture is overall terrific.

For example it's easier today to discuss and test new paths to greater effectiveness, and evaluation, and efficiency, and interdisciplinary bridgebuilding and several other hot topics, because at the crowded industry conferences the rooms are full of smart focused 30-somethings who aren't wedded to the rules of thumb and so forth which some of us learned on back in the paleolithic era. A big thumbs up to that (cue George Burns: "I wish I was 28 again...").

It's not that older non-profit staff are simply threatened by the flood of new folks, I detect little of that. It could be that funders are simply uncomfortable with the idea of having to act like customers and choose from among more and more possible grantees. It may be that we don't want the implied pressure of our sector being healthy and thriving with strong growth in resources: it doesn't fit our collective self-image as the underdog fighting upstream to improve the world despite endless funding cuts and the slings and arrows of a regressing society and so forth (cue violins).

Well I vote for dynamic and growing. Like the cliches go about democracy: it's messy, noisy, frequently unpleasant, and beats the heck out of all the alternatives.

How NOT to deal with a $20 million donor

2006-11-12T17:29:00.000-06:00

The wire-service story seems clear enough:
MIAMI, Nov. 10 (UPI) -- A medical entrepreneur has withdrawn a promised $20 million donation to the planned Florida International University medical school.

Herbert Wertheim, a former optometrist [and a university board member for nearly 20 years] , said that Florida International University President Modesto Maidique hurt his feelings by saying he was getting the medical school named after him "on the cheap," the South Florida Sun-Sentinel reported. Wertheim has also resigned from the board and has asked that the name of the school be changed.

The dispute, which appears to have ended a long friendship between Wertheim and Maidique, began with a disagreement about structuring the gift. After promising a lump sum, Wertheim said he needed to change that to 26 months of installments for tax reasons and was told that a lump sum was needed to get a matching grant from the state. "Most offensive to me was your comment that I was given the naming rights of the medical school 'on the cheap,' and that you could now get $100 million for it," Wertheim wrote Maidique. "After we finished speaking, I felt hurt, empty and disappointed."

[Yea, that's not really the feeling one hopes to leave behind from a call with a longtime major donor to one's organization is it?. Methinks the rest of the university's board might soon be making President Maidique feel "hurt , empty and disappointed".]

Microfinance: for profit or not for profit?

2006-11-12T11:58:00.000-06:00

The awarding of the 2006 Nobel Peace Prize to Muhammed Yunus put the microcredit/microfinance concept onto the front pages. Those of us who see global poverty as humanity's most-fundamental issue were thrilled to see the issue get such media attention, and you can count me among those who have long been excited by microcredit. Then the October 30 issue of The New Yorker made public a hot theoretical debate about whether microcredit works best in a non-profit or a for-profit form.

Grameen Bank, Yunus' organization, is a non-profit which initially used grants and soft loans for its work; now it is almost self-sustaining. (It's an example of an institution that is openly and unapologetically biased in favor of women, on the grounds that as Yunus says, women are more responsible about re-paying the loans and poor families benefit more when the women control the money; whether that practice would be legally sustainable in the western world is debatable.) Now a group of socially-minded entrepeneurs, who see Yunus as a well-meaning example of founder's syndrome, think that microfinance can reach truly global scale plausibly only as a for-profit sector.

They seem to think that more contributions could be pried loose from the western world's newly-wealthy entrepeneurs to for-profit microfinance funds than to non-profits, an idea which reflects an outdated view of the non-profit sector and which isn't supported by the current flood of huge contributions being made towards this movement. Perhaps more relevantly, they think that commercial enterprises can tap the capital markets for investment funds at a scale that dwarfs even the stunning scale of philanthropy in today's world.

Yunus and his supporters recoil from that in part on philosophical grounds, feeling that profit as a required payoff for helping the poor is vaguely immoral. More tangibly, they worry about mission drift: that commercial competitive pressure inevitably would mean that only the less-poor or the working poor would be considered reasonable risks for loans. One response is that adding working-class customers is simply a way to stay afloat so as to keep lending to the really poor, but that flies in the face of Yunus' core argument that the poor can be reliable borrowers even at high rates of interest.

Hmm, all good questions...is it necessarily an either/or choice? We have both non-profit and for-profit hospitals, ditto theaters, also some other important sectors -- is that diversity of structures and motivations not positive in some important ways?

Another thought is that this seems like a perfect fit for non-profits to leverage the foundation sector's increasing interest in mission-related investment, where part of a foundation's endowment can be invested at higher-than-normal risk or lower-than-normal return provided the investments have a mission purpose. Hopefully somebody is talking seriously about this with some of the multi-billion foundations like Gates, Ford, et al.

Whole lotta shakups goin' on

2006-11-11T21:20:00.000-06:00

Two of the biggest, best-known non-profits in the world have launched major reorganizations: the American Red Cross and the Girl Scouts.

The Red Cross shakeup is in response to a series of missteps and criticism in recent years, most famously related to the 9/11 attacks and then Hurricane Katrina. Basically they are adopting what most non-profit people would recognize as a normal structure at the top, with a self-recruiting policymaking board of directors which hires a CEO to run the place. The Red Cross has since 1947 had a 50-person board largely chosen by state chapters which tried to directly run the organization; different board members had different titles, operational decisions were made by committees, and not surprisingly three CEOs have resigned since 1999. No doubt the current highly-democratic structure will be missed by the state and local chapters, but it just wasn't plausible for running what is now a $4 billion/year operation with 35,000 employees deployed in hundreds of local offices.

Girl Scouts of the USA, meanwhile, has announced a huge internal consolidation: 312 local councils will be consolidated into 109 over the next three years. In some places as many as seven current councils, each with their own local boards and staffs, will be combined into a single new one. The primary motivation here is simple efficiency; local councils are naturally worried about how many camps might end up getting closed, staff positions eliminated, and so forth. What the organization hopes to gain isn't just reduced administrative costs but new ability to modernize their program nationwide.

IKEA is a non-profit?

2006-11-10T13:00:00.000-06:00

In yesterday's quick rogues' gallery I forgot to mention what is in dollar terms probably the largest non-profit scam in history: the fact that IKEA, the giant Scandinavian retailer, is wholly owned by a charitable foundation so as to evade taxes on its profits.

The Economist detailed this arrangement in its May 11, 2006 issue. "The parent for all IKEA companies—the operator of 207 of the 235 worldwide IKEA stores—is Ingka Holding, a private Dutch-registered company. Ingka Holding, in turn, belongs entirely to the Stichting Ingka Foundation. This is a Dutch-registered, tax-exempt, non-profit-making legal entity, which was given the shares of (IKEA founder) Ingvar Kamprad in 1982." Depending on who's doing the math, that foundation is on paper arguably the largest in the world, even bigger than the Gates Foundation's $30 billion in assets. The declared mission is to promote “innovation in the field of architectural and interior design” and “for investing long-term in order to build a reserve for securing the IKEA group, in case of any future capital requirements.”

A five-person executive committee, chaired by Kamprad, runs the foundation. "This committee appoints the boards of Ingka Holding, approves any changes to the company's statutes, and has pre-emption rights on new share issues. Mr Kamprad's wife and a Swiss lawyer have also been members of this committee..."

That sort of thing was once common in the U.S., albeit never at such a size, but was first addressed by a 1950s federal law and today couldn't be done at all because of the 1969 Tax Reform Act. But "Dutch foundations are very loosely regulated and are subject to little or no third-party oversight. They are not, for instance, legally obliged to publish their accounts [annual financials]." There is no minimum grantmaking requirement as U.S. foundations operate under, so despite receiving at least a half-billion dollars per year in IKEA dividends the foundation doesn't appear to be issuing more than a couple of million per year in grants, The Economist found. Something to think about the next time you're scoring one of those nifty $9.99 table lamps....

Ewwwww

2006-11-09T19:50:00.000-06:00

Every day the news includes some reasons to feel proud of working in the private non-profit sector -- in fact the concept of such a sector is itself arguably one of America's greatest gifts to the world -- but then there are examples like these listed by the president of Charity Navigator.

Or this wealthy asshole who used contributions to pay for his daughter's $200,000 wedding. Seriously. That article also covers the notorious case of two directors who spent years systematically stealing from the Florence E. King Foundation in Dallas; the foundation sued and a jury ordered the pair to repay $7.5 million plus pay $14 million in punitive damages.

Then there's the five politically-conservative non-profits who laundered money for Jack Abramoff. And last year five different arrests for non-profit fraud were made in a single month in Lincoln, Nebraska. (Makes you wonder what might be going on in Omaha...?)

Yecch. Something a bit more uplifting tommorrow, hopefully.

Fundraising in the buff (almost)

2006-11-08T17:01:00.000-06:00

I bet every fundraising staff in the free world has, at some point, mused half-seriously about doing a cheesecake calendar for their charity. C'mon, admit it -- "Conservation Cuties"? "The Men of [your organization name here]"? "Taking It Off To Clothe The Homeless"? You've teased your executive director about posing for the cover shot, you've made board members giggle at a Development Committee meeting, you've gotten slightly alarmed when younger staffers start seriously discussing layout concepts. You know who you are. Cause really at some point doing another silent auction just doesn't get the blood flowing, right?

Well a young opera company in Chicago has actually done it, and earned a nice writeup with photo in today's Chicago Tribune. The artistic director was the first to pose; each month's photo is a real-live singer posed as a character from a well-known opera. Cue Aretha Franklin soundtrack: "Divas are doin' it for themselves..."

I know I speak for the entire dot-org readership base (ahem) in promising to, strictly as a gesture of non-profit solidarity, buy a copy. Or two -- a perfect stocking-stuffer for the opera fan in your life eh? Cause you've never seen Salome quite like this (well not at the Lyric anyway, which is the point OperaModa is trying to get across).

How are we doing?

2006-11-07T19:11:00.000-06:00

A few days ago I mentioned Charity Navigator, it's a non-profit devoted entirely to tracking and reporting on non-profits. Its primary intended audience is donors but the information they put together, at impressive scale and depth, is of great interest to anyone working in the field.

An important caveat: of course they haven't solved, any more than most of us have, the problem of measuring the results of our efforts towards our missions. If a non-profit's mission is for youth to become deeply engaged in the natural world, how do we truly measure how much or well that is happening? We know that anecdotes aren't evidence and that measuring such change is harder than counting widgets sold, and that's about all we can yet agree on. In our weaker moments we fall back on witless cliches about "lies, damn lies and statistics" or how "you can make numbers say anything"; hopefully that's just honest frustration getting the better of us. It's the top issue for our sector and tends to dominate discussion at every conference I attend these days.

Wow that was quite a lot of throat-clearing wasn't it...it's a touchy subject. Anyway what Charity Navigator can do is provide some consistent measures of the caliber of our efforts, and that is certainly worthwhile regardless of the above. They seem pretty balanced in terms of putting the spotlight on both the good and bad, such as with their "Top Ten" lists. For instance I'm glad to have worked for #7 on this one; very glad never to have contributed to the follies at any of these. (And anybody on staff at one of these needs to be very concerned!)

The "Hot Topics" section is quite nice, where they highlight charities related to a currently-newsworthy subject; so for example for October, Breast Cancer Awareness month, they provide a one-stop list of all groups working on that. There's lots of good info on each non-profit and it appears to be kept quite up-to-date. It's probably worth searching for the place you work for, and I hope it turns out to be operating as well as you thought!

The tax man cometh and we are...confused

2006-11-06T19:26:00.000-06:00

This past August, Congress passed and the President signed the "Pension Protection Act of 2006" which, as its name clearly implies, included a number of changes to federal law related to...charitable contributions and certain types of charitable foundation! One of those sausages from our lawmaking mill, like when a defense-budget bill turns out to include amendments authorizing new studies of wombat psychology...anyway if your work has anything to do even tangentially with donor-advised funds or supporting organizations you'll want to be informed about the law.

However that won't necessarily be easy, the Council on Foundations says the thing is a mess: "The provisions in the PPA have varying effective dates....Many of these provisions [some of which are now already the law of the land as I type this] are ambiguous and cannot be applied absent regulatory or other IRS interpretation..." Full gory details are available here.