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October 05, 2009
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.
September 28, 2009
Clinton Global Initiative
Clinton Meeting Raises $9.4-Billion
Former president Bill Clinton’s annual philanthropy meeting, which was held in New York last week, raised more than $9.4-billion in philanthropic gifts and other types of charitable commitments.
While organizers of the event had predicted the bad economy would hamper pledges this year, the amount is larger than in 2008, when Mr. Clinton generated $8-billion.
The commitments can take many forms, including changes in corporate practices that have an environmental benefit, which the donor provides an estimated dollar value to. This means that the dollar figure represents some cash in hand as well as money that needs to be generated in some fashion.
In total, Mr. Clinton estimates that since 2005 his conference has garnered $57-billion to fight social and environmental problems.
The former president prides himself on the fact that the meeting does not invite participants to return if they do not make a commitment. According to an official with the Clinton Global Initiative, four people who attended last year’s meeting had not fulfilled the requirement in the days leading up to last week’s event.
Under pressure from Mr. Clinton’s group, they made contributions before its opening session, with one actually physically barred from entering the meeting until he or she made a commitment.
(The Clinton organization did not identify the tardy donors.)
As with last year’s event, Mr. Clinton is trying to create more so-called mega-commitments, in which a large number of donors and charities come together around a single cause. The former president has argued that too many philanthropists, corporations, and nonprofit groups fail to coordinate their efforts, thus minimizing their ability to help people.
The causes include:
- Helping women and girls in poor countries get an education and other assistance. As part of this, the Nike Foundation announced it would award $2-million over five years to establish an academy to train young women in Bangladesh to be nurses.
- Preventing human trafficking. As part of this, Humanity United, an organization created by the philanthropist Pam Omidyar, said it would form a coalition of donors interested in ending slavery worldwide.
- Providing aid to Haiti. Among the pledges: Habitat for Humanity International said it would build homes for 1,500 families and train people in ways to mitigate the damage caused by hurricanes.
Other notable philanthropic efforts announced at the event include:
- King Abdullah of Saudi Arabia promised $30-million to the global effort to eradicate polio. He also said the kingdom would expand its program that seeks to vaccinate from polio every visitor during the Hajj, the trip to Mecca that Muslims are required to make.
- The Omidyar Network, which was established by Pierre Omidyar, the founder of eBay, promised to invest $30-million in small and midsize businesses in Africa and India.
- Three technology companies — Cisco, Intel, and Microsoft — said they would work with the U.S. Agency for International Development to provide Kenyan schools with 6,000 computers and train teachers in how to use them in the classroom. The businesses estimated the project to be valued at $9-million.
September 25, 2009
Clinton Global Initiative
Popular Singer Donates $1-Million for Youth Service
While many celebrities give their voice to a cause, the music star Usher says he is putting his money where his mouth is — pledging $1-million to help youth around the world.
“My contribution is a reminder to all whom I’ve influenced that I’m not just talking the talk, I’m actually walking the walk,” the singer said in an interview with The Chronicle at the Clinton Global Initiative. “I’m going to make this donation to show you that I’m serious.”
The gift will support Powered by Service, a new effort announced at the Clinton meeting and run by Usher’s Atlanta charity. The project will provide $500 grants to young people ages 12 to 20 to get involved in fighting malaria, ending drug use, or other charitable work.
The grantees will be picked by a team of eight young people, who are graduates of a summer camp that Usher started to teach kids about the entertainment and sports industries. For their new assignment, the so-called moguls in training received a two-month course on philanthropy.
“Who better to motivate the movement than those who are affected by it,” Usher said about the decision to put young people in charge.
Usher said his passion for service extends back to when he was growing up in Chattanooga, Tenn. The Boys and Girls Clubs, public schools, and other groups helped him when he and his friends formed a dance troop that would perform to promote ways to prevent gang violence.
Today, after selling millions of records and winning five Grammys, he wants to emulate musician-philanthropists Quincy Jones and Michael Jackson. He also credited the Clinton Global Initiative and its members for keeping him inspired.
“To sit here and hear about water purification, to hear about famine, to hear about some of the issues that reside around the world, it just reminds you of how much work we have left to do,” he said. “Just when you feel like, I’ve done enough, I just want to take a break, this reminds you that there are so many people in need.”
Clinton Global Initiative
Bill Clinton Supports Cap on Charitable Deductions
Former president Bill Clinton gave cautious support for a new Senate plan that would limit charitable deductions — an idea that has been harshly criticized by nonprofit groups.
Several Democratic members of the Senate Finance Committee this month proposed limiting to 35 percent the tax break that wealthy Americans can get for their itemized deductions, including gifts to charity. The revenue generated by it would pay for changes in the nation’s health-care system.
The American Association of Museums, the Association of Fundraising Professionals, the Council on Foundations, and other nonprofit groups are fighting the congressional effort, saying it would hurt fund raising at a time when the recession is already taking a toll on giving.
In a wide-ranging interview with The Chronicle and other newspapers during the Clinton Global Initiative, Mr. Clinton said that he disliked a plan that President Obama had floated that set the deduction limit at 28 percent, thereby affecting more people. But he is amenable to the recent one.
“The original proposal I opposed because it raised too much money and ran too much risk in this economy of cutting down charitable donations,” he said. The Senate idea “is much less onerous.”
He did say that the plan could hurt giving by Americans who live in high-cost areas.
“I don’t think that proposal would have any impact on somebody who was otherwise inclined to give if they lived in Little Rock,” the former president said. “I think if they have three kids and they’re living in Manhattan, it probably would.”
While Mr. Clinton himself would probably be required to pay more taxes if the deduction limit is altered, he said he would gladly do so. “I feel I should be asked to pay the costs of the health-care program,” he said.
Aside from the deduction debate, Mr. Clinton said he is trying to do more at the Clinton Global Initiative to coordinate donors and charities, saying they often fail to work together.
In places like Haiti, he and Paul Farmer, the founder of Partners in Health, want to “harmonize all their work so we waste as little money, as little time, and as little talent as possible and maximize impact.”
He also said he wants the annual meeting, which has a largely international bent, to focus more on domestic problems.
For example, that afternoon he invited the mayor of Greenville, Miss., Heather McTeer Hudson, on stage to talk about her rural city’s water problem. Due to the cypress trees that surround Greenville, the water supply is yellowish-brown. While safe to drink, it has hurt the town’s ability to attract tourists and businesses.
Mr. Clinton called on donors in the audience to give money and assist the Southern town, promising to treat anyone who helps to a meal at Doe’s Eat Place, Greenville’s famous steakhouse.
September 24, 2009
Clinton Global Initiative
Rockefeller Leader Discusses Cutting-Edge Grant Making
While foundations are sometimes viewed as organizations that are slow to change, Judith Rodin, president of the Rockefeller Foundation, told members of the Clinton Global Initiative that her fund is doing more to innovate grant making.
She said donors should be more open to giving money to individuals or organizations that come along with new, if unusual, ideas. To illustrate her point, she told a story about John D. Rockefeller Jr.
When Albert Einstein sent a proposal to the philanthropist asking for $500, he said, “Why don’t we give him a $1,000? I think he’s onto something.”
Ms. Rodin also said her foundation has explored “innovative processes” to help this. For example, using the Internet and other technology, foundations can use “crowd sourcing” to receive feedback and suggestions from the people they and their grant recipients are trying to assist.
Nonprofit groups talk a lot about listening to their beneficiaries, “but user-driven innovation actually does that,” she said.
Ms. Rodin added that pursuing innovative grant making can at times clash with another growing trend in philanthropy: the effort by donors to measure the effectiveness of their giving.
Such focus on “impact” can lead to “too much heavy handedness,” she said.
“Measurement should not oppose experimentation and risk taking,” the Rockefeller leader emphasized.
Copyright © 2009 The Chronicle of Philanthropy