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.
Showing posts with label fundraising. Show all posts
Showing posts with label fundraising. Show all posts
Friday, June 01, 2007
Saturday, April 21, 2007
Where are the donations going?
It's commonplace in dot-org land to hear professionals quote as unquestioned fact things about charitable giving in this country that are either completely wrong, or wildly outdated. This seems like one more example of the immaturity of this sector -- do lifers in other lines of enterprise walk around believing basic objective facts about their sectors which are dead wrong? Doesn't seem likely.
Anyway, inspired by one such comment I recently pulled out the authoritative annual reports by Giving USA on charitable donations in the United States. The subject in mind was where the current ongoing boom in charitable giving is going (that is, to which causes or types of organizations?). I wanted to look at the last 20 years or so which is the real boom period, and wanted to see the overall trends rather than the single-year blips which always end up being the dumb newspaper headlines. So I plotted the annual totals from the years 1985, 1990, 1995, 2000 and 2005 (2006 data is not yet published), as percentages of change.
The overall context is that after adjusting for inflation, charitable contributions in the U.S. for 2005 totaled about 2.5 times as many dollars as in 1985. So total amounts given to every type of non-profit have risen, a lot. Individuals remain by far the major source though slowly declining as a fraction (from being more than 80 percent of the total in 1985 to around 75 percent of it now); the shares contributed by corporations and by foundations are somewhat higher now than 20 years ago.
Giving USA breaks all contributions down into several useful categories by organizational mission. Easily the biggest loser of this particular market share has been religious non-profits: from 53 percent of all donations in 1985 they dropped to 34 percent in 2000, ticking back up to 36 percent in 2005. (Or put another way: the share of all contributions that goes to religious groups has fallen by about one-third over the past 20 years.)
Three other major types of non-profits saw their shares of all giving decline a bit between 1985 and 2005: health care (from 11 percent to 9 percent), human services (from 11 percent to just under 9 percent), and arts/culture (from 7 percent to 5 percent).
So who have been the biggest relative gainers? (Keeping in mind that all types of non-profit have been gaining in absolute terms because the total contributions have risen so much across the board.) Education-focused non-profits have seen their market share rise from 11 percent in 1985 to almost 15 percent in 2005, and giving to foundations rose from under 7 percent then to more than 8 percent now (and the 2006 figures will likely boost this one even more).
What Giving USA calls "public/society benefit" non-profits (meaning groups which collect donations and pass them on such as the United Way) went from 3 percent of all 1985 donations to more than 5 percent in 2005. Other gainers have been by categories which in 1985 weren't even big enough to be counted by Giving USA: environment/animals (3.4 percent of all 2005 giving) and international affairs (2.5 percent). And there are more new types of non-profit entering the picture steadily: the "other" category received 6 percent of all 2005 contributions.
So the overall picture is that charitable giving while rising has also been spreading out, largely at the expense of religious groups.
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.
Monday, April 16, 2007
Counting on being "too big to be allowed to fail"
Two high-profile arts non-profits on the East Coast are right now engaged in a familiar sort of public brinkmanship, with a distinct odor in both cases of "save us from ourselves."
Having worked in big-city regional non-profit theater myself I was quite startled to learn that the Paper Mill Playhouse in New Jersey is on the verge of collapse. (I'm actually familiar with a couple of the principals involved, since both the departed CEO and the current managing director were hired away in recent years from major Chicago theater companies.) The Paper Mill has long been a poster child for robust successful suburban repertory theaters; twenty years ago they led the nation with a whopping 45,000 subscribers.
So the state they've fallen to is pretty startling: fewer than 20,000 subscribers now (which is a far more drastic falloff than the general national trend), and a budget for the current season which depended on increasing annual fundraising by almost $3 million in one gulp. They're now in so many words daring legislators to let the "official state theater of New Jersey" collapse, with perhaps predictable results.
There's nowhere near enough information in the media coverage to be clear on how this situation came to pass for Paper Mill, but a quick glance at their tax returns on Guidestar does support what Playbill wrote, that "the board at Paper Mill has either not had the ability to get outside contributions or has not seen the need due to the once-high subscribership." It's hard to see that as anything but seriously negligent in a society where per-capita individual contributions for the arts quintupled after inflation from 1964 to 2004.
Meanwhile in Miami, the mammoth Carnival Center for the Performing Arts which opened to huge fanfare only last October is apparently already in financial free-fall. The thing appears to have been a financial Potemkin village actually: a half-billion dollar multi-facility arts complex that opens with zero endowment? For which the pro formas assumed operational profitability from day one? Almost no onsite parking (in South Florida??), and the operating budget didn't include the cost of stagehands? Surely no one with any experience running an actual arts center (or a service-sector business of any kind) was in charge of the planning on this thing.
All the bailout scenarios being discussed are fairly gruesome but they include at least one that's fairly innovative: blackmail the city's major newspaper. Quoting from that article in the area's business newspaper: "The Miami Herald...has a contract to sell its land around the center for $190 million, but the unsold land's value would plummet if the center shut down. Because the land's value soared about $180 million as the center rose nearby with the Herald's strong editorial push, the paper could protect its holding by handing the center, say, 10% of the gain the center caused." The paper does seem to have been covering the center's problems reasonably bluntly, anyway. And what a fine mess it is.
Having worked in big-city regional non-profit theater myself I was quite startled to learn that the Paper Mill Playhouse in New Jersey is on the verge of collapse. (I'm actually familiar with a couple of the principals involved, since both the departed CEO and the current managing director were hired away in recent years from major Chicago theater companies.) The Paper Mill has long been a poster child for robust successful suburban repertory theaters; twenty years ago they led the nation with a whopping 45,000 subscribers.
So the state they've fallen to is pretty startling: fewer than 20,000 subscribers now (which is a far more drastic falloff than the general national trend), and a budget for the current season which depended on increasing annual fundraising by almost $3 million in one gulp. They're now in so many words daring legislators to let the "official state theater of New Jersey" collapse, with perhaps predictable results.
There's nowhere near enough information in the media coverage to be clear on how this situation came to pass for Paper Mill, but a quick glance at their tax returns on Guidestar does support what Playbill wrote, that "the board at Paper Mill has either not had the ability to get outside contributions or has not seen the need due to the once-high subscribership." It's hard to see that as anything but seriously negligent in a society where per-capita individual contributions for the arts quintupled after inflation from 1964 to 2004.
Meanwhile in Miami, the mammoth Carnival Center for the Performing Arts which opened to huge fanfare only last October is apparently already in financial free-fall. The thing appears to have been a financial Potemkin village actually: a half-billion dollar multi-facility arts complex that opens with zero endowment? For which the pro formas assumed operational profitability from day one? Almost no onsite parking (in South Florida??), and the operating budget didn't include the cost of stagehands? Surely no one with any experience running an actual arts center (or a service-sector business of any kind) was in charge of the planning on this thing.
All the bailout scenarios being discussed are fairly gruesome but they include at least one that's fairly innovative: blackmail the city's major newspaper. Quoting from that article in the area's business newspaper: "The Miami Herald...has a contract to sell its land around the center for $190 million, but the unsold land's value would plummet if the center shut down. Because the land's value soared about $180 million as the center rose nearby with the Herald's strong editorial push, the paper could protect its holding by handing the center, say, 10% of the gain the center caused." The paper does seem to have been covering the center's problems reasonably bluntly, anyway. And what a fine mess it is.
Friday, April 13, 2007
The joy of giving
The great charitable-giving boom we're in nowadays has caught the attention of neurological researchers. Several studies have concluded that the act of giving (either in money or in volunteerism) makes people feel good at a really primal level.
Logical questions include both why and how that would be the case. Taking the broad evolutionary view, some researchers have argued that altruistic behavior is a positive for natural selection at a group level as distinct from Darwinian individualism. But homo sapiens is the only species which practices altruism outside its own genetic relatives -- is that a cultural adaptation or does it have a long-term natural-selection payoff? Creationists have taken to arguing that widespread human charity cannot be explained in Darwinian terms and hence represents a flaw in the science that they hate so much. Researchers more interested in the scientific method are actively exploring several hypotheses on the issue.
On the second part (how exactly are we wired to enjoy being charitable?), some researchers have concluded that it stimulates the same part of our gray matter which drives our gut-level interest in things like food, drugs and sex. (The joy of giving, indeed...say sweetheart is that a charitable remainder trust in your pocket or are you just glad to see me?) This reminds me of a development director I once worked with who grumbled when another staffer referred to a particular individual-donor solicitation idea as "sexy"; turns out he was just accurately "following the donors"!
Logical questions include both why and how that would be the case. Taking the broad evolutionary view, some researchers have argued that altruistic behavior is a positive for natural selection at a group level as distinct from Darwinian individualism. But homo sapiens is the only species which practices altruism outside its own genetic relatives -- is that a cultural adaptation or does it have a long-term natural-selection payoff? Creationists have taken to arguing that widespread human charity cannot be explained in Darwinian terms and hence represents a flaw in the science that they hate so much. Researchers more interested in the scientific method are actively exploring several hypotheses on the issue.
On the second part (how exactly are we wired to enjoy being charitable?), some researchers have concluded that it stimulates the same part of our gray matter which drives our gut-level interest in things like food, drugs and sex. (The joy of giving, indeed...say sweetheart is that a charitable remainder trust in your pocket or are you just glad to see me?) This reminds me of a development director I once worked with who grumbled when another staffer referred to a particular individual-donor solicitation idea as "sexy"; turns out he was just accurately "following the donors"!
Monday, April 09, 2007
Donor cultivation conversation, part II
Albert Ruesga, proprietor of the excellent White Courtesy Telephone, posted a thoughtful response to Saturday's little rant here about donor-cultivation practices. (Today someone else has also left a comment which is specious, and anyway I don't debate with folks who aren't willing to put their names behind their ideas.) The subject seems worth some continuing examination as opposed to simply dueling comments.
Albert makes several good points, including that we should distinguish between opt-in and opt-out followup practices by organizations. Read his comment in full for more. I think though that our differing perspectives are more at a macro level.
It's probably worth noting that as a non-profit careerist I am reasonably well-versed in modern standards and practices of donor cultivation. At the Nature Conservancy in the late 1990s I had a stretch getting trained in it (attended some AFP conferences and trainings) and for a year I supervised a team of annual-fund staffers and major-gift officers. Then as executive director of a growing performing-arts organization I personally instituted the basics of professional donor management, under the expert guidance of a board vice-chair who had been an experienced successful director of development at a larger organization. I am certainly not as knowledgeable in that subject as Albert or his colleagues, but the point is simply that I do have hands-on familiarity with the theory and practice.
The sense I have today, which I did not have in 2002 or 1997, is that some core assumptions in the non-profit development field (reflected in that NonProfit Times essay) are rooted in a dated understanding of what donors know, want and expect of us. I'm quite sure that Albert is right that a majority of AFP members would agree with the article, and that is exactly my concern. It feels increasingly as if a rapid shift in donor tastes and donor behavior is underway right now and that donor-cultivation best practices are not keeping up.
For example: clearly anyone like me who regularly makes contributions to a variety of non-profits is interested in staying up to date on what those groups are doing. A decade or two ago the only practical way for that to happen was to receive periodic missives from those organizations, and any reasonable adult would accept continuing solicitation or cultivation as the overhead cost of thusly staying informed about the group's work. Today though, the cost in time and effort to seek that knowledge on our own is orders of magnitude lower, and we happily do that because we get to do it on our time and schedule. Put another way: two whole generations of American adults have grown up expecting a sort of control of their own time and information flow which is fundamentally different than was true for my peers or my parents.
Several other examples come to mind. Now of course I know that AFP conferences today are full of discussion of how to adapt donor-contact and -cultivation best practices to the online world; so are any number of well-written blogs, and so forth. The concern I have, or the button which that NonProfit Times columnist pushed I guess, is that discussing how to adapt the existing paradigm seems to really miss the forest for the trees as far as what charitably-minded Americans of today expect and will tolerate, and how they will respond.
Albert makes several good points, including that we should distinguish between opt-in and opt-out followup practices by organizations. Read his comment in full for more. I think though that our differing perspectives are more at a macro level.
It's probably worth noting that as a non-profit careerist I am reasonably well-versed in modern standards and practices of donor cultivation. At the Nature Conservancy in the late 1990s I had a stretch getting trained in it (attended some AFP conferences and trainings) and for a year I supervised a team of annual-fund staffers and major-gift officers. Then as executive director of a growing performing-arts organization I personally instituted the basics of professional donor management, under the expert guidance of a board vice-chair who had been an experienced successful director of development at a larger organization. I am certainly not as knowledgeable in that subject as Albert or his colleagues, but the point is simply that I do have hands-on familiarity with the theory and practice.
The sense I have today, which I did not have in 2002 or 1997, is that some core assumptions in the non-profit development field (reflected in that NonProfit Times essay) are rooted in a dated understanding of what donors know, want and expect of us. I'm quite sure that Albert is right that a majority of AFP members would agree with the article, and that is exactly my concern. It feels increasingly as if a rapid shift in donor tastes and donor behavior is underway right now and that donor-cultivation best practices are not keeping up.
For example: clearly anyone like me who regularly makes contributions to a variety of non-profits is interested in staying up to date on what those groups are doing. A decade or two ago the only practical way for that to happen was to receive periodic missives from those organizations, and any reasonable adult would accept continuing solicitation or cultivation as the overhead cost of thusly staying informed about the group's work. Today though, the cost in time and effort to seek that knowledge on our own is orders of magnitude lower, and we happily do that because we get to do it on our time and schedule. Put another way: two whole generations of American adults have grown up expecting a sort of control of their own time and information flow which is fundamentally different than was true for my peers or my parents.
Several other examples come to mind. Now of course I know that AFP conferences today are full of discussion of how to adapt donor-contact and -cultivation best practices to the online world; so are any number of well-written blogs, and so forth. The concern I have, or the button which that NonProfit Times columnist pushed I guess, is that discussing how to adapt the existing paradigm seems to really miss the forest for the trees as far as what charitably-minded Americans of today expect and will tolerate, and how they will respond.
Saturday, April 07, 2007
Are we going to drive donors crazy online, too?
NonProfit Times recently ran an article on how non-profits deal with online small donors. A columnist donated $15 each online to 62 different groups and then kept track of how they responded. The conclusion offered as obvious -- and echoed in this leading philanthropy blog -- is that non-profits should respond to online donations just as intensively as they are now expected to respond to check-writing donors.
aarrrg...I don't think I'm the only charitable donor for whom that idea inspires clenched teeth and a desire to reach into the monitor to smack somebody upside the head.
Literally everyone I know who regularly donates to non-profits absolutely loathes the sort of fawning, repetitive cultivation contact that development pros institute. Follow-up phone calls are simply intolerable (I remain outraged that non-profits were exempted from the "Do Not Call" legislation and list); in my household we follow an ironclad rule now that any non-profit to which we have donated never again receives anything if they ever call us. Friends and family members who know that I'm a lifer in the sector are constantly asking me why making a donation has to result in so much blankety-blank mail and phone calls and invitations to the next fundraiser and so forth. The news that bulk-postage rates for non-profits are about to go up gets a big cheer from here, in the hope that it might make direct mail just a little bit less attractive.
At every place I've worked, when these concerns are voiced the staff and board members think that what annoys people is the visible costs: how many trees were consumed to print that newsletter, etc. Hence they always think that online culivation activity is all to the good in terms of donor goodwill.
That's increasingly wrong in my experience. What makes more and more charitably-minded people nuts is that non-profits spend so much time and energy pestering people who have already donated! That is the thing my friends and family members always lament to me. That is what makes them roll their eyes or swear never to "make that mistake (of donating) again!"
So when NonProfit Times columnist tut-tuts about the fact that 34 of 62 organizations responded to an online donation with nothing but simple acknowledgement of receipt, my reaction is to ask if I can have the list of 34 so I can move them to the top of my family's charitable-giving list. And I am quite certain that my reaction is far more common now than the reverse, and is growing. What people who invest in non-profits with their wallets want is for the organizations to do what they do -- not for them to behave like timeshare-condo salespeople on the excuse that it's for a good cause.
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.
Saturday, February 17, 2007
"Who Really Cares" review, part 2 of 2
Buried within Arthur C. Brooks' rambling rumination about philanthropy and politics in the U.S. are some points that are firmly rooted in meaningful data and which are worth thinking about.
(a) it's pretty clear now that tax deductibility is not a major factor in the ongoing boom of individual giving in this country. We know this because in 1986 the top federal income-tax rate was sharply cut, and in 2001 so was the inheritance tax; neither of those changes slowed down the rise in giving. About the non-rich this was predictable given that two-thirds of all taxpayers don't itemize and hence have never gotten any benefit from deducting charitable gifts. The surprise perhaps is that giving by the wealthy is also apparently not directly influenced by tax considerations. (Brooks also asserts that both wealthy and poor households donate higher fractions of their incomes than do middle-class ones, but unfortunately he doesn't provide specific data supporting that but just cites a different author's claim on it.)
(b) Brooks convincingly shows that religious people are more generous across the board: people of all faiths give more to non-religious causes than do people who aren't religious. [They also, naturally, give much more to churches and church-affiliated non-profits than do secular folks.] The pattern holds whether religious folks are politically liberal or conservative. The data supporting those statements is surveys, of which I am generally dubious as noted yesterday, but on this point there are too many surveys all pointing the same way to allow for reasonable doubt.
(c) Brooks also convincingly shows that in this country conservative voters are more generous than liberals. This conclusion is partly driven by surveys but also shows up in hard data, such as that the states which voted for John Kerry in 2004 mostly ranked below average in charitable giving per income dollar. (Meaning, obviously, that the states which went for Bush generally ranked higher in giving as a percentage of household incomes.) A more-sophisticated analysis of state data which found the same breakdown can be found here. And survey data consistently finds similar splits for non-monetary philanthropy such as volunteerism and giving blood.
However Brooks is much less persuasive in arguing that liberal households' lower philanthropy is driven heavily by political beliefs: that favoring income redistribution makes people less philanthropic. I certainly have no truck with the brainless cliche about how "a society that has more justice is a society that needs less charity," but the factual case for such an attitude being a cause of less giving is thin. The core causation seems simpler to understand: as Brooks himself points out, secular conservatives give a bit less than secular liberals while religious conservatives give more than religious liberals, but religious people of all political stripes give much more than do non-religious people.
If that is correct then it has troubling implications for non-profit fundraising going forward, because the percentage of Americans who are non-religious is now rapidly increasing. (Different surveys all identifying that trend can be read here, here and here.) Will it turn out that the steady increase in individual philanthropy that's occurred throughout my lifetime is unsustainable? Or can the non-profit sector in the 21st century convince secular citizens to participate in civic giving and volunteering as enthusiastically as their churchgoing 20th-century parents and grandparents did?
(a) it's pretty clear now that tax deductibility is not a major factor in the ongoing boom of individual giving in this country. We know this because in 1986 the top federal income-tax rate was sharply cut, and in 2001 so was the inheritance tax; neither of those changes slowed down the rise in giving. About the non-rich this was predictable given that two-thirds of all taxpayers don't itemize and hence have never gotten any benefit from deducting charitable gifts. The surprise perhaps is that giving by the wealthy is also apparently not directly influenced by tax considerations. (Brooks also asserts that both wealthy and poor households donate higher fractions of their incomes than do middle-class ones, but unfortunately he doesn't provide specific data supporting that but just cites a different author's claim on it.)
(b) Brooks convincingly shows that religious people are more generous across the board: people of all faiths give more to non-religious causes than do people who aren't religious. [They also, naturally, give much more to churches and church-affiliated non-profits than do secular folks.] The pattern holds whether religious folks are politically liberal or conservative. The data supporting those statements is surveys, of which I am generally dubious as noted yesterday, but on this point there are too many surveys all pointing the same way to allow for reasonable doubt.
(c) Brooks also convincingly shows that in this country conservative voters are more generous than liberals. This conclusion is partly driven by surveys but also shows up in hard data, such as that the states which voted for John Kerry in 2004 mostly ranked below average in charitable giving per income dollar. (Meaning, obviously, that the states which went for Bush generally ranked higher in giving as a percentage of household incomes.) A more-sophisticated analysis of state data which found the same breakdown can be found here. And survey data consistently finds similar splits for non-monetary philanthropy such as volunteerism and giving blood.
However Brooks is much less persuasive in arguing that liberal households' lower philanthropy is driven heavily by political beliefs: that favoring income redistribution makes people less philanthropic. I certainly have no truck with the brainless cliche about how "a society that has more justice is a society that needs less charity," but the factual case for such an attitude being a cause of less giving is thin. The core causation seems simpler to understand: as Brooks himself points out, secular conservatives give a bit less than secular liberals while religious conservatives give more than religious liberals, but religious people of all political stripes give much more than do non-religious people.
If that is correct then it has troubling implications for non-profit fundraising going forward, because the percentage of Americans who are non-religious is now rapidly increasing. (Different surveys all identifying that trend can be read here, here and here.) Will it turn out that the steady increase in individual philanthropy that's occurred throughout my lifetime is unsustainable? Or can the non-profit sector in the 21st century convince secular citizens to participate in civic giving and volunteering as enthusiastically as their churchgoing 20th-century parents and grandparents did?
Friday, February 16, 2007
"Who Really Cares" review, part 1 of 2
A couple months ago I ordered a copy of Arthur C. Brooks' new book "Who Really Cares", which made a bit of a media splash. I said I'd read it and post a review. Finally finished it, took some time to ponder, and here we go.
This will require two posts, and today will be the actual book review: it's not a great piece of work. Nonetheless I'll suggest that everyone working in this sector should read it.
I should also confess up front to some empathy for Brooks’ worldview: like me he is a born-and-raised progressive now bewildered by the intellectual/philosophical decomposition ofU.S.
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).
U.S.
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
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).
Wednesday, February 14, 2007
Non-profit dirty laundry airing in courtrooms
Updates today on two previously-mentioned pieces of non-profit sector ugliness, plus a new one. (Much of this comes courtesy of The Charity Governance Blog which despite its annoying logrolling for the proprietor and his book, is worthwhile for the relevant news provided with legally-experienced comments.)
In Wisconsin the sad case of the prosecution of the former chief financial officer of a major museum is slogging its way through the courts with still no sign of anybody else being held accountable for what was clearly a mess with multiple authors. Charity Governance sees the defendant as clearly a fall guy: "We hope he decides to force the DA's hand and fight to preserve his reputation. Although the press and others have noted that there is plenty of shared blame in the financial collapse of the Milwaukee Public Museum, to this point, others who had oversight authority over the museum simply haven’t been held accountable in any meaningful way."
Over in the Ivy League, Princeton University appears to have become at least dimly aware that whether or not they win the Robertson donor-intent lawsuit in court they have been getting their butts kicked in the media. I dunno that letters to the editor are really going to change that fact any, even if having read a couple of the pieces that the letters respond to I'd agree that the university isn't being treated entirely fairly by editorial writers. The case itself is inching along with no end in sight. Still looks from here like the university is guilty of being at least cavalier with the donor's funds over the years, and ought to settle the thing before its good name gets tarnished further.
Now this month comes the Salvation Army trying to use what is obviously a technicality to ace Greenpeace out of $33 million left in a will. The sordid details with some comments can be found here, and here, and here. Yecchh -- I'm guessing that Salvation Army staffers, volunteers and donors are not feeling all warm and fuzzy about the organization at the moment.
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.
Monday, February 12, 2007
Not everybody is down with fundraising in the buff
A month ago, about the volunteers-pose-almost-naked-for-fundraising-calendar thing, I suggested that "For breast-cancer research this idea has perhaps already become a cliche." Apparently not everybody agrees, or else it depends on who the volunteers are, according to this CBC report from British Columbia.
[Admit it, when you read "Exotic Dancers for Cancer" several 7th-grade-caliber responses came to mind didn't they? Yea, I know. Tell you what, the biggest groaner posted in the comments here will win a special booby prize.] [Because the blogger gets one freebie under a standing house rule that I just made up, that's why.]
Anyway...reaction to this seems to fall mostly into the "oh for pete's sake!" category. See for example here, and here, and here, and here complete with editorial cartoon. Don't Tell The Donor, where I learned about this, suggested what a development director who wanted to play hardball would do. (In response to her ending question: nope, that little scheme works for me. If major donors can feel free to throw their weight around then fundraising staff should feel free to politely lean back.)
The storyline in Vancouver appears to be turning out positively as detailed here, after some predictable tangential fallout.
[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.
Wednesday, February 07, 2007
Making it easier and easier to be charitable
The second edition of Giving Carnival (which is a periodic roundup of blog posts about a particular topic) added a couple of new entries to the growing list of new and interesting web-based services for would-be donors to non-profits, in addition to DonorsChoose.
For instance Changing the Present is working on several clever features aimed at encouraging charitable contributions in lieu of holiday or birthday gift-buying, such as a personal registry like a bridal registry. Network for Good is the leading "charity portal" online, where individuals can search for non-profits by keyword or name or type. Global Giving performs the same service, targeted at matching American donors with overseas causes.
iGive is I believe the oldest catalogue site that directs a portion of purchases to non-profits; they are a for-profit enterprise which collects commissions from the participating merchants. Their competition includes Greater Good and, in the United Kingdom, Shop2Give.
Give Meaning attempts to make it easy for individuals to band together, sort of create online giving circles around a specific cause or recipient non-profit. (An essay by the founder describing how he arrived at that notion is here.)
I'm curious what impact professional development directors are perceiving from all this. Are existing checkwriting donors going online, or is it bringing new ones -- has anyone done any hard datagathering yet around questions like that? For that matter does this sort of thing in the long term reduce the market value of salaried fundraising staffers (because it gets easier to fundraise without them) or increase it (because charitable impulses are more and more enabled thereby enlarging the pool of regular small givers from which to try to find future major donors)?
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)?
Friday, February 02, 2007
A familiar looking story
The other day someone asked me if I would comment here on the announced closure of a particular non-profit. It wouldn't be appropriate for me to do that by name given that I work for a prominent foundation in the same region.
It was not a group that I knew or have had any professional dealings with, meaning I have no more information to go on than their public statements, website, and annual tax returns posted on Guidestar. That's obviously limited data, in particular it offers no meaningful information about the impact of their programs. But then that limited public information seemed to paint such an obvious and familiar outline that I did write the following by email:
I see annual revenues veering wildly up and down the last few years [literally doubling and halving from year to year], which added to their public comments about loss of foundation funding strongly suggests they were still (more than a decade after their founding) largely reliant on foundation grants to exist. I see little evidence of any organization-building -- the mission and lists of accomplishments are all over the map, no evidence of any coherent strategic or business plan, etc.
It's the non-profit equivalent of looking at a 20-year-old restaurant and realizing that the owners were still running it like a 2-year-old one. I'm sure any program officer at any foundation would agree with that sad assessment, and hence I suspect that the foundations that had been incubating them finally gave up on it. A non-profit enterprise which after 15 years still hasn't done anything about diversifying its revenue stream has no more likelihood of succeeding than a 15-year-old law firm that still gets all its revenue from three repeat clients. Had I been asked a couple years ago for advice on this group it would have been basically, "You're failing because you're running the business into the ground, and the foundations will give up on you any day now."
Note I said "incubating", because that is what foundations do -- we are not a permanent revenue source and anyone who thinks we are is very new to this sector. Foundation grants are only an eighth of all charitable support in this country and corporate is only a bit more. Individual donors are where the long-term sustainable money is, and individual giving to nonreligious non-profits in this country is now close to $200 billion a year and still rising steadily -- so any non-profit with a reasonable track record of mission product can build an individual donor base, and doing so ain't rocket science. I can't tell why they failed to do that but it sure looks like they did....If more-detailed financials revealed sizeable individual-giving support and no more than half the annual budget coming from foundations then I'd have to change my diagnosis, but I'd happily bet you a nice dinner that they wouldn't.
I could have added that in addition to now analyzing non-profits regularly as a foundation officer, I know exactly whereof I speak on the above issues from direct sad experience. None of which is to suggest that I think the above analysis is anything but a quick gut reaction, it's certainly not based on anything close to the level of information that I'd collect in my professional capacity.
Now with the disclaimers out of the way, I believe some experienced folks read this blog a bit, so what do you think? Does it sound like I'm jumping too quickly to a conclusion, or does that off-the-cuff autopsy ring true?
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?
Friday, January 05, 2007
Fundraising in the buff addendum
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!!!
"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!!!
Saturday, December 30, 2006
Let's recruit board members to hold cultivation events in their virtual houses
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..."
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..."
Wednesday, December 27, 2006
The case against more gen-ops grants
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.
----
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.
Tuesday, December 26, 2006
We still have "women's boards"?
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!
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!
Wednesday, December 20, 2006
New rules for non-profits, sort of, except not, maybe
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.
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.
Friday, December 15, 2006
Newsweek on non-profit transparency
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.
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.
Monday, December 11, 2006
Glossy magazines about giving
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.
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.
Wednesday, December 06, 2006
Donor intent showdown finally underway
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!
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!
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