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Philanthropy Roundtable
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.”
Philanthropy Roundtable
How Much Should Charity Resemble Business?
At last week’s Philanthropy Roundtable conference, two speakers squared off on the issue of how much the nonprofit world can mirror big business.
Dan Pallotta, a former fund raiser and author of Uncharitable, argued that charity leaders are unfairly held to a different standard than corporate ones. For example, they are vilified if they receive good salaries, spend a lot of money on marketing, or take experimental approaches that may produce big dividends.
“You put the nonprofit sector at an extreme disadvantage to the for-profit sector,” he said.
He said the heart of the problem comes from the Puritans who helped found America. They fostered a culture that requires “self-deprivation” to help the less-fortunate, which leads to the expectation that charities, especially social services, should pay modest salaries and have little overhead costs.
Breaking such cultural barriers would get more money to flow into charity work and produce a huge “Apollo-like” effort to eradicate global poverty, disease, and other major problems.
But William A. Schambra, director of the Bradley Center for Philanthropy and Civic Renewal at the Hudson Institute, in Washington, questioned Mr. Pallotta’s suggestions.
While he supported the idea that charities should adopt some business practices, he cautioned that the author “may have gone a bit too far. He wants to make charity itself a business.”
He said the charitable spirit in the country was not Puritanical per se but was the “self-interested fellowship” that Alexis de Tocqueville chronicled in the 19th century. Without a sense of “community-minded self-sacrifice,” philanthropy would cease to exist altogether.
Mr. Schambra also warned against Mr. Pallotta’s call for a massive charitable endeavor to end social needs, saying it would be like the government’s War on Poverty in the 1960s. Such efforts, he argued, become too bureaucratic and fail to appreciate that often the most successful philanthropy is local and modest in its goals.
Mr. Pallotta countered that such thinking would keep philanthropy about feeling good rather than achieving good and would keep nonprofit leaders as “society’s janitors,” cleaning up other people’s messes instead of preventing them.
“Given the world’s problems, should we resign ourselves to smallness?” he asked.
October 03, 2009
Philanthropy Roundtable
Obama Policies a Threat to Philanthropy, Speakers Say
President Obama has established policies that limit free enterprise and is starting to do the same with philanthropy, a panel said at the Philanthropy Roundtable conference.
Arthur C. Brooks, president of the American Enterprise Institute, a conservative think tank in Washington, said Mr. Obama has increased government control of business with his bailout of General Motors and other decisions.
The White House proposal to limit the charitable deduction for wealthy Americans, Mr. Brooks said, is a sign that the president would like to see greater regulation of philanthropy as well.
(The president suggested limiting itemized deductions, including charitable donations, to pay for a health-care overhaul and predicted it would not have a significant effect on giving.)
The nonprofit world should expect “probes into traditional philanthropic policy,” Mr. Brooks said. He encouraged philanthropists to support education efforts to teach Americans about how a free-market economy and philanthropy are intrinsically link and that both are “creating value.”
Linda Childears, chief executive of the Daniels Fund, a foundation in Denver, echoed that idea. “Simply put, without capitalism, there is no philanthropy,” she said, calling for a public-television documentary that examines this link.
In regards to the charitable deduction change, she said given massive state budget shortfalls, “philanthropy should be encouraged in this environment and not stifled.”
She also worried that the Obama administration will be swayed by arguments that foundations do not provide enough money to minority and poor neighborhoods and seek policies to influence what causes grant makers support.
“We’re in a government-controlled environment,” she told the audience. “There are no shortage of special-interest groups that want to tell us what to do with our philanthropic dollars,” she said.
Philanthropy Roundtable
Debate About the Role of Government and Charities
How dependent should charities be on government dollars? Two speakers at the Philanthropy Roundtable meeting debated this question.
Diana Aviv, chief executive of Independent Sector, a Washington coalition of charities and grant makers, said there should be a “healthy skepticism” about government’s involvement with nonprofit groups. But government and charities have a strong partnership, pointing to the large amount of public dollars that support nonprofit social services and charities that play in natural disasters like Hurricane Katrina.
“Government is highly dependent on the charitable sector” to fulfill its civic responsibilities.
She said that despite the relationship, charities largely maintain their independence and can speak out against state or federal policies they oppose.
But the Rev. Robert A. Sirico, president of the Acton Institute for the Study of Religion and Liberty, a religious think tank in Grand Rapids, Mich., disagreed, saying that trying to obtain a government grant is a “political process.”
“With dependence comes control,” he said. If the trend continues, charities will “not serve the neighbor in need, but the powers that be.”
To replace government support for nonprofit efforts, tax policies should be revised. For example, he suggested allowing Americans be able to allocate 10 percent of their federal income tax to charities and that volunteer time could be calculated into a tax deduction.
Philanthropy Roundtable
Donors Urged to Back 'Disruptive' Education Charities
Michael L. Lomax, chief executive of the United Negro College Fund, called on philanthropists to support new nonprofit efforts that seek radical changes in the U.S. school system.
“The role of philanthropy is to invest in the innovative disruptive model,” he told participants at the Philanthropy Roundtable.
He specifically pointed to Teach for America, which recruits college graduates to teach in public schools, and the Knowledge Is Power Program, or KIPP, which is a network of charter schools.
Teach for America, in New York, is training a new generation of educators who challenge the orthodoxy of public education, said Mr. Lomax, adding that traditional teacher colleges are “guardians of the status quo.”
He said KIPP has shown that students from poor and minority neighborhoods can achieve academic success when held to high standards.
In addition to those programs, he suggested donors and foundations help to build support for education changes among the impoverished parents whose children are the ones the school system is failing.
“The big missing ingredient is a broad base of public outrage,” he said. “We’ve got to make sure parents are informed.”
October 02, 2009
Philanthropy Roundtable
How Foundations Can Move From 'Good to Great'
While saying that he is not an expert in philanthropy, the management guru Jim Collins offered suggestions for how a philanthropist can strive past being mediocre at a session at the Philanthropy Roundtable meeting in Colorado.
Mr. Collins is author of Good to Great, which looked at what distinguishes successful businesses from others, and a new book, How the Mighty Fall And Why Some Companies Never Give In, which examines how companies excel even in a crisis.
Organizations that thrive in tough times have an established “culture of discipline” and do not use an uncertain environment as an excuse to not push forward with missions.
Given the economic downturn, foundations should not “waste the opportunities for impact” and should set BHAGs — big, hairy, audacious goals.
But to achieve widespread social change it takes small, consistent steps that pay off over decades, he said. He pointed to Wendy Kopp, the founder of Teach for America, which recruits college graduates to work in urban schools.
“She’s building an army of citizens,” who in the near future can help guide the country’s education policy.
He said Ms. Kopp and other great nonprofit leaders, like their corporate and military counterparts, have a “strange blend” of humility and ambition. They strive for success because they believe in their cause, not for personal gain, whether it is profit or social standing, he said.
However, he did say that highly effective nonprofit executives unlike their peers often demonstrate a “legislative” skill; that is, an ability to build consensus among a diverse group of people.
In terms of grant making, he suggested that foundations provide small grants to a broad range of charities until they find a good one; then they should make a big award to that group. A process he compared to firing bullets at a target to calibrate a cannonball shot.
Good organizations “don’t fire an uncalibrated cannonball.”
Philanthropy Roundtable
Philanthropy Roundtable Starts Annual Meeting
The Philanthropy Roundtable kicked off its annual meeting this week with more than 400 participants gathering in Colorado Springs, Colo.
Adam Meyerson, president of the Washington coalition of grant makers and philanthropists, started the three-day meeting by offering brief eulogies about three people who died recently and who greatly influenced philanthropy.
He praised scientist Norman Borlaug for his role in creating the so-called green revolution, a foundation-supported agriculture project that helped feed millions of people in India and elsewhere.
He also spoke about Donald Fisher, the co-founder of the Gap clothing-store chain. Mr. Meyerson applauded the businessman’s philanthropic support for Knowledge Is Power Program, or KIPP, a network of charter schools.
Finally, the Philanthropy Roundtable leader hailed the work of Irving Kristol, the conservative writer. While Mr. Kristol is best known for his political writing, he helped formed the organization that eventually became the Philanthropy Roundtable and gave an influential, if controversial, speech at a meeting of the Council on Foundations in 1980.
In the speech, titled “Foundations and the Sin of Pride: The Myth of the Third Sector,” he argued that grant makers can not separate themselves from their origins as offspring of the business world. He continued on to say that nonprofit groups do not qualify as a “third sector” distinct from government or corporations; when they try to do so they suffer from “hubris.”
“His words today are as important as they were in 1980,” said Mr. Meyerson.
November 07, 2008
Philanthropy Roundtable
Nonprofit Leaders Debate Foundation Disclosure
Should Congress require foundations to disclose information about how much of their giving supports the poor and minorities?
During the Philanthropy Roundtable’s meeting, two nonprofit leaders clashed over this question.
Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a foundation-watchdog group in Washington, argued that new regulations are needed to improve philanthropy.
Calling foundations “some of the most loosely regulated organizations” in the country, Mr. Dorfman said federal lawmakers should tighten rules to prevent foundations from financially benefiting their founders or their family members and improve oversight by the Internal Revenue Service.
In addition, he said charitable funds should be required to publicly say what their governance policies are and share demographic data about what populations their grants are benefiting.
According to a study his organization is conducting, only one-third of giving by large foundations benefits “marginalized communities,” which he said included impoverished people, racial minorities, disabled people, and women.
Too much charitable money goes to “patronage giving” that only serves the elite of society by supporting arts institutions and universities, he said.
“Philanthropy is an underperforming national treasure,” he said.
Federal and state lawmakers have expressed similar concerns as Mr. Dorfman.
In California, state legislators proposed last year a bill that would have required philanthropies to make public the ethnic and racial composition of their staff and board members, and of their grantees. After 10 big foundations in the state agreed to provide more funds to minority-led organizations, the legislation was withdrawn.
But members of Congress, most notably Rep. Xavier Becerra, a Democrat from California, have said they may introduce disclosure rules similar to California.
Mr. Dorfman described the California effort as a “noble, but flawed” idea that could be revised at the federal level. “If drafted properly, it would improve foundations’ effectiveness and their impact,” he said.
Mr. Dorfman said disclosure requirements would not threaten the freedom of grant makers to decide what causes their money goes to, but simply provide a window into what philanthropy is doing. He compared them to the Food and Drug Administration’s rule that food products must include labeling with nutritional information.
“Let me be clear: I don’t believe that politicians should decide where foundation dollars go any more than I believe the government should mandate how much protein should be in a frozen pizza,” he said.
But Heather R. Higgins, president of the Randolph Foundation, strongly disagreed with Mr. Dorfman, arguing that such federal rules would discourage wealthy people from setting up philanthropies in America.
“Under the law, the only rule is to be charitable,” she said about foundation giving. “We don’t say some charity is more equal than others.”
“Under the guise of punitive transparency laws,” she said, “if you bureaucratize philanthropy, if you raise legal fear in the people who are involved in it, if you compromise the joy and personal fulfillment that comes from spontaneity, innovation, opportunity, and the sense that you act efficiently and are actually making a difference, then you will have killed the goose that produces those golden eggs.”
Despite their debate, the two nonprofit executives did find common ground.
Both said all of the money generated by the excise tax — a federal tax on foundations’ net investments — should support federal oversight of philanthropies, and that foundations should exclude administrative expenses from their calculation of their mandatory payout. (The federal government requires foundations to give 5 percent of their assets to charity each year.)
To be sure, while the two agreed on the latter point, they took different approaches. Mr. Dorfman said legislators should make a new law to exclude overhead costs, while Ms. Higgins proposed abolishing the payout rule altogether; she said if given the freedom to decide their giving, many donors who establish foundations would choose to give a greater percentage of their assets to nonprofit causes.
Philanthropy Roundtable
Education Efforts Need Philanthropic Money to Expand Nationwide
During the Philanthropy Roundtable’s annual meeting, Thomas W. Luce, a former assistant secretary of education under President Bush, said that philanthropy too often starts new programs to benefit schools, but needs to instead focus on growing education efforts that have already been proven to work.
“We have lit enough pilots that we ought to have a furnace somewhere,” he said. But “everybody likes to seize upon a new idea.”
Mr. Luce is now chief executive of the National Math and Science Initiative, in Dallas, which is working with states and nonprofit groups to expand nationwide public education projects that have demonstrated success locally. The organization has received support from the ExxonMobil oil company, the Bill & Melinda Gates Foundation, and the Michael and Susan Dell Foundation.
“We don’t want to be the innovator,” he said about his group, but instead generate
“second-stage venture capital” for effective projects.
For example, the group has given a total of $13-million to six states to spread a Texas program that helps students enroll in Advanced Placement classes for science, math, and English. As part of the program, students who earn a score of 3 (out of 5) on Advance Placement tests receive cash rewards. Teachers are also rewarded financially for good test scores.
While such a program should be adopted by the federal government and other states, members of Congress and state lawmakers often want to provide money for their pet projects, instead of giving grants to the work of others, Mr. Luce said. “Legislators want to put their name on programs, not data,” he said.
And “philanthropy in general is almost as bad as legislators.”
What’s more, while he praised charter schools and school vouchers, he pushed donors to try and improve the public education system directly. “We can’t give up on public schools,” he said.
Philanthropy Roundtable
Donors Urged to Support Families
Philanthropists should do more to support American families, which are threatened by social problems like absentee fathers and out-of-wedlock births, Robert P. George, a law professor at Princeton University, told the participants at the Philanthropy Roundtable’s annual meeting.
Mr. George, who is a trustee of the Lynde and Harry Bradley Foundation, a conservative grant maker in Milwaukee, said government programs can not be a substitute for parents. “A family is the best department of health, education, and welfare,” he said.
He said he is concerned that more couples treat marriage as an “optional lifestyle choice.” “In the absence of a strong, flourishing marriage culture, families fail to form or when they do form they are often unstable,” he said.
The decline of the so-called traditional family structure has far-reaching consequences, he said. “The preservation of liberty and democracy depend on limited government, and limited government is possible only where there are flourishing institutions of civil society, beginning with the family,” he said.
Therefore, he concluded, philanthropy “has a big stake in the health of the family.” He encouraged foundations to support academic research that examines family trends and nonprofit groups like the Center for Neighborhood Enterprise, an economic development charity that receives grants from the Bradley Foundation.
“We have to figure how to do it more and how to do it better,” he said about supporting families.
Copyright © 2009 The Chronicle of Philanthropy