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November 05, 2009
Independent Sector
Nonprofit Leaders Urged to Rethink Their Role in Society
Expanding on a key theme of this year’s Independent Sector conference, Diana Aviv, the group’s president, called on nonprofit leaders at all organizations – regardless of size or mission – to take a broad view of their work and their responsibility to help make society better.
“We do not and cannot work in a vacuum,” she told participants at the gathering of charities and grant makers, which drew some about 1,100 attendees in all.
“If our employees and their families can’t afford medical care, it limits their productivity,” she said. “If our transportation infrastructure makes it hard to get to work, it affects people’s performance. If we don’t collectively attend to the harm inflicted on our environment, polluted air and climate change will ultimately damage everyone’s work. And if we don’t demand greater civility in Congress and in the public square, we diminish our ability to achieve our aims.”
Ms. Aviv urged nonprofit leaders “to attend to these larger issues long before they threaten our work.”
As an example of the consequences of not doing so, she cited the experiences of health and human-services groups that now must take on loans as state and local governments increasingly delay payments for services already provided.
“Except for a sliver of public-interest organizations, at no time did we step up and try to fix a system that we have known to be problematic for years,” she said. “Why was this the case? Because we have long believed that these larger issues were not our responsibility.”
She called on participants to go back to their organizations and have at least one board meeting within the next year to define a role for their groups beyond their specific issue or cause.
“My point is that excelling at your particular mission is key – but so too is attending to the wider societal issues of the world you inhabit,” she said. “Active engagement with these issues is part of the price we pay for this special place we, as a community, have been afforded by society.”
Independent Sector
How to Minimize Risk While Staying Open to Opportunity: Shared Strategies
Several speakers at Independent Sector’s annual meeting offered their insights about how to make wise financial decisions in these trying economic times.
Above all, they said, nonprofit leaders need to develop a sound plan that fits their organizations. Relying on hope or mounting debt to try to ride out this time of shrinking revenue simply won’t work, they said.
“Fundamentally, vulnerable organizations cannot serve vulnerable people,” Dione Alexander, vice president of the Midwest region for the Nonprofit Finance Fund, told conference participants.
“You can only do so much,” she added. “Figure out what it is.”
‘Crash-Test Dummy’
Rick Sperling, founder and chief executive officer of Mosaic Youth Theatre of Detroit, said he feels something like “a crash-test dummy” as he tries different approaches but has yet to hit on the ultimate answers.
He says his group has shifted its thinking from one that was all about risks at its start 17 years ago to one that is focused on sustainability.
After realizing that the typical life span of a youth arts organization in the city was 10 to 15 years, Mr. Sperling said he made it his personal mission “to create an organization that would be around for the grandchildren of the kids that are in the program now.”
That has involved making tough choices, he said. The group has decided not to take on any debt, it has a line of credit available to it, and it has not yet dipped into its reserves. “That’s the good news,” he said.
The bad news is that there’s a cost associated with those decisions. “We are serving less young people, we are doing less programs, and we had to cut a significant number of our staff to get there,” he said, all painful decisions.
Open Finances
Mr. Sperling said one lesson he learned the hard way has been the need to be open with staff members about financial concerns right from the start and not “try to control the message.”
“Everything I was afraid of, that people would jump ship, that people would be upset, it all happened later when people found out how bad things were, and then I had lost their trust by that point,” he said.
The challenge now is figuring out how to still be bold while exercising financial restraint, Mr. Sperling said. He said his group recently and unexpectedly found a building that seems an ideal home for the organization. It leaders must now figure out if there’s a way to take advantage of the opportunity while justifying the added risk that would go with it.
“If we do this wrong, this could kill us,” he said. “If we do it right, it could make us sustainable and a destination in Detroit, it could help us do our mission exponentially better, serve more people in a better way. So we’re at a crossroad.”
Independent Sector
A Year Into the Job, Gates CEO Shares His Measures for Success
Reflecting on his first year as head of the Bill & Melinda Gates Foundation, Jeff Raikes told participants Thursday at Independent Sector’s annual meeting in Detroit: “I love my second career.”
He added: “One day I’m learning about malaria and the next day I’m learning about U.S. high school education and the next I’m learning about rural sanitation in Tanzania.”
The former Microsoft executive said he has identified three broad goals for his foundation work as he looks five, 10, 15 years out.
“What I hope is that I can look back on the Gates Foundation and see that we, with our partners, contributed to significant impact on the problems that we were focused in on,” he said.
In addition, Mr. Raikes said he is constantly pushing to improve the internal workings at the foundation and to create “a great environment for people to do their best work.”
He said his experience at Microsoft taught him to hire people who are “high energy,” have “high horsepower,” and who know how to get the job done.
As head of the foundation, he said he urges his employees to “use their good judgment to set the right priorities and make the right tradeoffs,” rather than trying to do it all. That requires giving them “the license” to make those decisions, he said.
Mr. Raikes said he frequently shares stories from his days working on his family’s farm in Nebraska as a way to convey his vision for the organization and set the tone, as well as encourage employees “to reflect on their own values.”
What’s more, Mr. Raikes said, he wants the Gates Foundation to play a role in improving philanthropy overall by passing along lessons learned and being “a good contributor to this sector.”
“If we can have accomplished those three things,” he said, “I’ll be quite satisfied with this next phase of my career.”
November 04, 2009
Independent Sector
Independent Sector Gathering Opens With Sense of Urgency
Detroit
With a mix of urgency, excitement — and at times, frustration — speakers here at the opening session of Independent Sector’s annual meeting called on nonprofit leaders to find new ways to work together in response to the nation’s problems.
This is an “all-hands-on-deck, walk-and-chew-gum kind of moment,” Melody Barnes, President Obama’s domestic policy adviser, told the audience.
She said the administration is committed to finding innovative ways for the federal government to support and promote nonprofit groups.
For example, through the Office of Social Innovation, officials hope to identify successful programs and help them expand to serve more people, she said. “We believe somewhere out there is the next Teach for America or Harlem Children’s Zone, and we want to find it,” Ms. Barnes said.
The work of nonprofit groups, she added, figures heavily in the discussions at the White House; it’s “part of the bloodstream” of the administration.
‘Six-Turkey’ Scenario
Other speakers at the two-and-a-half hour opening session talked about the need for organizations within the nonprofit realm to work together far more than ever before, uniting around precise goals and then clearly dividing up tasks.
Gail McGovern, head of the American Red Cross, told a story of families at a military base that almost received six turkeys apiece for Thanksgiving because of a lack of coordination between charities. “In these economic times, we have to be very careful that we don’t waste a dime,” she said.
Jim Wallis, president of Sojourners, a religious and human-rights network, put the issue even more bluntly, likening nonprofit organizations to competing gangs protecting their turfs. “We’ve got to drop our gang colors,” he urged.
Nonprofit groups need to move beyond thinking about their own organizational success, which holds little meaning if bigger societal needs are still going unmet, Brian Gallagher, head of United Way Worldwide, told participants.
While many nonprofit leaders talk about collaboration today, he said, few embrace it at the level required. “True integration is when you let someone else spend your money,” he said.
Mr. Gallagher pointed to United Way’s work with foundations and charities to cut the high-school dropout rate in half by 2018 as an example of the kind of goal nonprofit leaders should commit to and then be willing to be judged on the results.
‘Collaboration Silos’
Several speakers talked about the need to form new alliances, often with unlikely partners. Mr. Gallagher warned against getting stuck in “collaboration silos,” in which similar groups never venture beyond talking to organizations that share their particular causes.
Janet Murguia, head of the National Council of La Raza, and Benjamin Todd Jealous, who leads the NAACP, described their recent collaboration to urge Congress to make changes in health-insurance options.
Speakers also criticized the nonprofit world for being too slow to embrace the need for changes. “Where’s the passion of the ’60’s,” asked Margaret McKenna, president of the Walmart Foundation. She questioned how nonprofit leaders could think a goal of ending childhood poverty in the United States by 2015, for example, was an acceptable timeframe when the problem is so fundamental and potentially fixable.
Added Mr. Jealous: “You need to allow yourself to be outraged.” The emotion, he said, “points out to you who those other friends are out there” that you might not otherwise think of who could become potential partners.
October 16, 2009
National Conference on Philanthropic Planning
What's in a Name: Planned Giving or Philanthropic Planning?
The National Committee on Planned Giving did it when it changed its name earlier this year to the Partnership for Philanthropic Planning.
Now it may be time for charities to follow suit.
“It’s time to get away from the planned-giving phrase because apparently it is not resonating with people,” Larry Stelter, a marketing consultant in Des Moines, Iowa, told a group of, well, planned-giving officers at the Partnership for Philanthropic Planning’s annual meeting today.
More than six out of 10 Americans in a new study said they were not familiar with the term planned giving, explained pollster J. Ann Selzer, who surveyed 800 people 30 years or older. At the same time, she said, many more people were familiar with specific ways to make planned gifts, such as by leaving money to a charity in a will.
“The jargon of planned giving may in fact be an obstacle rather than an open door,” Ms. Selzer said.
Mr. Stelter suggested that nonprofit organizations adjust the way they reach out to prospective donors, such as by changing wording on their Web sites.
“It says, Click here for planned giving, but 62 percent of the people don’t understand it,” he said. He offered alternative phrases, such as charitable gift planning, giving options, and opportunities to give.
— Debra E. Blum
National Conference on Philanthropic Planning
Want to Ease Fund-Raising Anxiety? Review Giving From Years Past
Robert F. Sharpe, a Memphis fund-raising consultant, came to the Partnership for Philanthropic Planning’s annual meeting Friday to assure planned-giving officers frustrated by the economy that history does, in fact, repeat itself.
Armed with financial and tax data going back more than 100 years, and old newspaper accounts of donations, Mr. Sharpe demonstrated the ups and down — and ups — of philanthropy over time. Perhaps most heartening: His research shows that by 1937, charitable giving had returned to pre-Depression levels, and had continued to grow from there.
“What I was trying to do is give people confidence that we’ve been through it before and will get through it again,” Mr. Sharpe said in an interview.
He told his audience that during the Depression, like now, outright major gifts had dropped at many organizations, but that bequests and other estate gifts had continued.
Then, like now, he said, donors gravitated toward gifts for endowment and immediate needs, rather than brick-and-mortar projects, and donors were more likely to want to be modest about their giving, shying away from publicity or naming opportunities.
Deferred gifts — the stuff of planned-giving programs — get added attention during economic down cycles, Mr. Sharpe said, and it’s up to fund raisers to help donors choose the right way to give at the right time.
One bright spot already on the horizon, Mr. Sharpe said, is the potential
for gifts of appreciated securities from donors who bought stocks over the
last year when the prices were especially low.
“Last fall when everyone was selling, somebody was buying,” Mr. Sharpe said.
And by early next year, as the market continues to recover, he explained,
those buyers will have newly appreciated property ripe for charitable
contributions.
— Debra E. Blum
October 15, 2009
National Conference on Philanthropic Planning
Charities Step Up Marketing of Planned Gifts
More charities are actively promoting bequests and other planned gifts now than 10 years ago and they are making their pitch to even younger donors, according to research presented today at the Partnership for Philanthropic Planning’s annual meeting.
In 1999, Michael Kateman, executive director of development at Columbia College, in Columbia, Mo., asked the country’s top 40 fund-raising organizations, based on The Chronicle’s Philanthropy 400, about how they encourage people to make planned gifts. This year, Mr. Kateman’s colleague at the college, Brendon Steenbergen, did the same thing.
Comparing the groups, the researchers found that 91 percent were actively promoting planned gifts, up from 82 percent 10 years ago. And while organizations in both years said the bulk of their marketing efforts were designed to reach potential donors age 55 and older, 19 percent this year, compared with 9 percent in 1999, said they were also focusing on donors as young as 45.
In both surveys, organizations were most likely to say that education and awareness were the top benefits of promoting planned gifts. But groups in this year’s survey were less likely than the groups 10 years ago to cite landing big gifts as another top benefit of their marketing program. In 1999, 32 percent of the groups considered it a key advantage. This year, that percentage had dropped to 14.
Mr. Kateman attributed the change to a growing sophistication among fund raisers and charities about how to measure the success of efforts to solicit planned gifts.
“It’s not just an immediate dollar goal, but how many proposals were sent out, visits made, touches,” he said.
He said that fund raisers are also better identifying themselves as stewards of donors’ money, making sure their marketing materials demonstrate to donors how their gifts will be used and their impact. That shows, he said, in the increase in the share of organizations – from 3 to 14 percent — that listed “donor reassurance” as a top benefit of planned-giving marketing.
“They’re trying to avoid buyers’ remorse,” Mr. Kateman said, before noting the phenomenon in philanthropy parlance: “gifting remorse.”
— Debra E. Blum
National Conference on Philanthropic Planning
What Can Fund Raisers Expect in 2020?
By 2020, America will have far more millionaires than today and they will be motivated by even greater tax incentives to give to charity, a leading expert on planned giving told an audience of fund raisers at the Partnership for Philanthropic Planning’s national conference today.
Charles Schultz, chief executive of Crescendo Interactive, a planned-giving software and consulting company, in Camarillo, Calif., said every charity today has at least 700 potential supporters with estates worth at least $1-million. By 2020, he said, that number will rise to 1,000.
And, he said, at the same time wealth will have grown, taxes will have gone up, too –with rates up to 50 percent, he predicted, plus additional taxes to pay for Social Security and Medicare . As a result, many donors may want to give to charity as a way to save money on their taxes.
Charities are likely to benefit, too, he said, from the involvement of professional advisers —like financial planners, accountants, and lawyers – who will be more likely to recommend charitable giving as part of estate and tax plans. At least half of all gifts will come with the advice of professional advisers, he said, up from 30 to 40 percent today.
Charities and their fund raisers will increasingly turn to e-mail, Web sites, and other ways to attract, contact, and interact with donors online. By 2020, he said, 90 percent of contacts with donors will be electronic and 10 percent in print. That trend, he said, will be fueled in part by what he called “green donors”, people interested in cutting their consumption of paper.
One prediction Mr. Schultz offered for the not-so-distant future: Increased interest in charitable remainder trusts. He said the number of such gifts will surge next year before capital-gains tax rates are scheduled to change the following year.
— Debra E. Blum
National Conference on Philanthropic Planning
Poor Economy Makes Planned-Giving Fund Raisers Feel Defensive
For many of the planned-giving officials in the audience at the Partnership for Philanthropic Planning’s national conference, in Washington, Dan Pallotta’s message may have seemed personal.
Mr. Pallotta, a former fund raiser and author of Uncharitable, said that donors unfairly judge charities by the share of money they spend on programs versus administration and fund raising.
“There’s a notion that overhead somehow steals from the cause,” Mr. Pallotta said.
After the presentation, Brian Overcast, a planned-giving officer at the University of Tampa, let out a deep sigh.
“We are that overhead he is talking about,” Mr. Overcast said. “This was a reminder that too many people think that we are the ones ‘eating up’ the resources instead of the ones asking for, generating, the resources.”
Tanya Howe Johnson, chief executive of the Partnership for Philanthropic Planning (formerly called the National Committee on Planned Giving), said the economy has made many fund raisers particularly sensitive about the perceptions around how charities spend money because organizational belt-tightening often hits them first.
Many nonprofit groups, she said, have cut back on the number of fund raisers, their professional-development opportunities, and the technical support available to them.
“We are sabotaging ourselves because our hands feel tied by the concept out there that program is sacred and administration is wasteful,” Ms. Howe Johnson said.
In an interview, Mr. Pallotta said: “Planned-giving officers are just as integral to — and care just as much about — the cause as the person in the field, working with the children, or on the disease. In fact, they are the ones making sure those people get the paychecks that keep them going.”
— Debra E. Blum
October 05, 2009
Philanthropy Roundtable
How to Be an Effective Donor
While philanthropy is a difficult endeavor to speak broadly about, there are several ways that donors can be highly effective in their giving, Thomas J. Tierney, a nonprofit consultant, told members of the Philanthropy Roundtable during its annual meeting last week.
Mr. Tierney, who is chairman of the Bridgespan Group, in Boston, said his organization is working on an article about the common traits of successful foundations that will likely be published in the November issue of The Harvard Business Review.
The shared qualities include:
Be clear about the mission.
Mr. Tierney suggested that donors state in simple terms what their goals are and how they will measure them. He encouraged foundations to require grant recipients do the same, helping charities define their geographic focus, the population they want to assist, a time line for their efforts, and clear set of goals to be met at the end of that time. Ultimately, he said, “you are only as good as the organizations that you give money to.”
Be realistic.
Charities often don’t know the “true costs” of a project, he said, comparing them to a homeowner who is remodeling a kitchen. “Have you ever had the experience of [a] remodeling costing less or moving faster” than scheduled? he asked. He suggested foundations and other donors talk candidly with charity executives about their financial needs. If a project indeed has a higher price tag but seems worthwhile, he urged grant makers to make a big bet.
Be introspective.
Foundations should constantly examine themselves and their efforts, he said. While giving money to charitable causes often inflates egos, he said, donors should remain humble. The best foundations approach a big problem and say, “I really don’t know how this is going to work.”
Copyright © 2009 The Chronicle of Philanthropy