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Conference Notebook
November 2008
November 11, 2008
Independent Sector
Independent Sector Considers Stand on Raising Taxes
Members of the nonprofit world are weighing how to ask for more federal money from the Democrat-controlled Congress and White House in 2009.
Specifically, Independent Sector has drafted a set of priorities for the next president and Congress that includes asking for higher taxes to maintain spending for nonprofit organizations and for social services, such as food stamps and health care for low-wage earners.
The extra money is necessary as the economic crisis increases demand for charitable services while at the same time current tax revenues are drying up, the group argues.
But the choice to ask for higher taxes remains controversial among nonprofit service providers and the individual donors and foundations that give them money.
“As essential as government revenues are to the work of so many in this community, taxation and fiscal policy are not something on which the nonprofit sector has had a collective, vocal position,” said Diana Aviv, president of Independent Sector, which wrapped up its annual meeting today in Philadelphia.
While Ms. Aviv and others at the conference urged members to speak up in favor of higher taxes, some attendees were reluctant.
William C. Daroff, vice president for public policy at United Jewish Communities, said his donors support the organization for the work it does, not “because of specific policy positions they feel are outside or beyond the scope of our mission.”
“There are many ways to increase revenue, and many of our key stakeholders would prefer that we not take out the Tax Code and decide who the winners and losers are,” he said.
— Eric Kelderman
November 10, 2008
Independent Sector
Using Games to Solve Gritty Social Problems
Ruby Wood has just died, leaving a very special bequest: $6-million for the six people who helped take care of her in her old age to give away to other people who care for others as well as other people in need of care.
That’s the basic story at the center of a new online game to be unveiled by United Cerebral Palsy later this month, the organization’s chief executive, Stephen Bennett, told participants at the Independent Sector meeting here today.
The game, tentatively called “Ruby’s Bequest,” is the latest example of how nonprofit groups are using online games and simulations to get people involved in, and thinking about, social issues.
“We thought, what if we could get people from multiple points of view to investigate the future of health care and of care giving, and look at the problems together, they could come up with some solutions,” Mr. Bennett said.
Players will register for the game, and then be able to carry it to their own blogs, video-sharing sites, or other social networks and game sites. Already a few players who were invited to sign up early have posted videos of themselves talking about their ideas.
In one video on YouTube, a woman tells viewers that it’s 2014 and she is pressed with the hardships of caring for her two young children and her elderly father, who is losing some government aid for his medications. She suggests that people link to her Web page and respond to her idea, inspired by the success of car-share programs, to create a cooperative care-giving program.
Mr. Bennett said the key to the success of the game is to be able to bring the ideas it generates into the real world, particularly at a time that his organization and others are preoccupied with dealing with the effects of the economic downturn.
“We have to bring it down to earth,” Mr. Bennett said, “because there’s plenty of people out there, including our offices around the country that are struggling to make payroll, and they are going to ask, Why are you playing virtual games?”
Chinwe Onyekere, a program officer at the Robert Wood Johnson Foundation, said a research project sponsored by her organization could soon provide answers to those concerns.
Robert Wood Johnson is spending $8.25-million this year and next to support research assessing whether interactive games make a difference in changing behavior, such as whether they can promote exercise.
— Debra E. Blum
Independent Sector
IRS Officials Say Nonprofit World Must be 'Squeaky Clean'
Two key Internal Revenue Service officials today pledged that the agency will continue efforts to ensure that tax-exempt organizations are following federal laws.
“We are going to continue to insist that the sector is squeaky clean,” Douglas Shulman, the commissioner of Internal Revenue, told attendees at Independent Sector’s annual meeting, in Philadelphia.
Mr. Shulman said it was not the IRS’s job to determine how charities fulfill their individual roles, but explained his concern that the poor economic conditions could tempt tax-exempt organizations to bend the rules by, for instance, using money for capital expenses on operating needs.
At the same time, the agency is trying to use less onerous ways to encourage better compliance with the federal tax rules, Mr. Shulman said.
For example, the IRS is “checking up” on young nonprofit groups, instead of conducting a full-blown audit, to make sure they’re following rules, he said. That kind of action mirrors “soft” notices from the agency asking individual taxpayers to amend their tax returns if there is a problem with their original filings.
As new disclosure requirements go into effect after this year, with the revised Form 990, the IRS is considering beefing up disclosure rules for private foundations, said Steven T. Miller, head of the tax-exempt division at the tax agency.
That may not mean an overhaul of the current Form 990-PF for private foundations, though, because of staff and budget constraints, Mr. Miller said.
— Eric Kelderman
Independent Sector
For Nonprofit Groups, Time to Speak is Now
Independent Sector President Diana Aviv said today that the recent economic meltdown and the election of Barack Obama as President have challenged recent assumptions and have thrust nonprofit organizations and foundations into an unfamiliar role.
No longer are nonprofit organizations mere stewards of government grants and private-sector donations. Instead, they must become true advocates for change in the way government and the free market operate.
“If we stand, as I believe we do, at a moment of profound rethinking about the American social compact, then the values of mutual concern and shared responsibility that unite us must be central to that discussion,” Ms. Aviv said in a speech at Independent Sector’s annual meeting today in Philadelphia.
“We must use our voice — the organized expression of what we collectively call the independent sector, a voice founded on the values and aspirations that are embedded in the work we do.
“The great national re-imagining that is poised to take place must draw a good part of its moral and intellectual inspiration from the nonprofit community. From us — individually and collectively. From our ideas and actions.
“Government and business have recognized that our commitment to the greater good over individual gain is our enduring virtue; this puts us in a unique position to speak up now — when the good needs to be so much greater.”
Independent Sector
Fund Raisers 'Don't Whine' in a Tough Economy
“Great fund raisers don’t whine about the economy,” Reynold Levy, president of the Lincoln Center for the Performing Arts, told participants at the annual Independent Sector meeting here. “They believe in Noah’s principle: No more credit for predicting rain. Credit only for building arks.”
Among the types of arks Mr. Levy suggested charities build: a larger, more engaged governing board. Trustees, he said, want to do more than just see their name on a letterhead, and charity leaders ought to raise expectations for how much trustees should give and how much they ought to raise.
He also said that charities ought not be shy about how often they make solicitations – “fund raising is like baseball,” he said, where one hit for every two outs makes for a superstar — and should choose carefully who does the asking.
“Donors give to people they admire, not just to causes and organizations they respect,” Mr. Levy said.
And plenty of people, he said, still do have money to give, mostly from gains over the past couple decades, even though they have seen their assets drop recently.
“It’s like taking a 20 percent haircut after 300 percent gains,” Mr. Levy said of the downturn.
He also offered an optimistic take on the hit many professional-services firms are experiencing in this tough economy. As more clients cut back on using their services, Mr. Levy said, more lawyers, accountants, and consultants may be available for pro-bono work.
Charities, he said, should take advantage.
At the meeting here, as in his new book, Yours for the Asking: An Indispensable Guide to Fundraising and Management, Mr. Levy compared being a fund raiser to being a salesman. And, he told participants here who wondered if any of the advice in his book needed updating to fit the new financial realities that, in general, the same rules apply.
“There‚s never a bad season, or year, or day, or economic climate for soliciting donations for a worthy cause,” he said.
— Debra E. Blum
November 09, 2008
Independent Sector
Nonprofit Groups Discuss How Elections Affect Their Organizations
Nonprofit groups on Sunday got an optimistic view of how the historic 2008 presidential elections and the administration of Presdent-elect Barack Obama, a Democrat, will effect their organizations.
Independent Sector, a nationwide association of foundations, and corporate giving programs, kicked off its annual meeting in Philadelphia with speakers who analyzed election results.
The stature of the nonprofit world cannot help but improve under an Obama administration, said James Capehart, an editorial writer at The Washington Post. He added that that the best and brightest leaders of tax-exempt organizations may be tapped to work for the new president.
Judy Woodruff, political editor of PBS’s News Hour with Jim Lehrer, explained that Mr. Obama’s campaign broke new ground by operating as a 50-state grass-roots group and that he understands the power that kind of organization can wield. In addition, Mr. Obama, as a candidate, talked about establishing an office to reach out and harness the grass-roots power of the nation’s nonprofit groups, she said.
The optimism, however, was tempered by a sharp reminder that the international economic crisis is likely to both decrease the resources of charitable organizations at the time that demands for their services are increasing.
“We need your help more than ever,” said Mayor Michael Nutter, of Philadelphia, whose city faces a $108-million budget shortfall for the current fiscal year and a gap of nearly $1-billion over five years.
Mayor Nutter recently announced major cuts in city services, including the elimination of some 800 jobs as well as the closing of city pools and libraries.
One concern of nonprofit groups is that foundations will see a Democratic White House and majority as an excuse to not give money to social service organizations, said Brigitte Savage, development director of Accesso Hispano, a project of the Self Reliance Foundation that seeks to educate the Hispanics about education, health care, the environment and reducing violence.
Rebecca W. Rimel, executive director of the Pew Charitable Trusts, said that while many foundations have lost 20 percent to 30 percent of their holdings in the declining stock market, they must maintain the focus on their missions and work in a bipartisan fashion with the new Congress and administration.
— Eric Kelderman
Independent Sector
What's Needed: a Dow Jones Index for the Nonprofit World
With the whole world watching the indices that follow financial markets second-by-second, Alan J. Abramson, a scholar of the nonprofit world, wonders why there’s not a similar index tracking the nonprofit world.
At a meeting of the Independent Sector here, Mr. Abramson suggested that charity leaders consider building what he called a ”Dow Jones index for nonprofits.”
“With the nonprofit sector, we get analysis one, two, three years after the fact, looking at the 990s or waiting for some survey or another,” said Mr. Abramson, professor of public and international affairs at George Mason University and a senior fellow in the nonprofit sector and philanthropy program at the Aspen Institute. “We need the same solid, immediate information to track performance in the nonprofit sector as you get with the Dow in the financial markets.”
Mr. Abramson said that much of the data that could go into such a charity index is already available and would just need to be identified and extracted. For example, he said, labor-department statistics on employment could be boiled down to examine nonprofit employers only.
“We could get a real-time look at whether nonprofits are hiring or firing,” he said.
Sacha Litman, founder of Measuring Success, a Cambridge consulting company, said that a real-time indicator of the health of the nonprofit world could help charity leaders make critical managerial and fiscal decisions.
“Indexes would have to be designed in a way that would influence day-to-day decisions,” Mr. Litman says. “The nonprofit sector deserves much better data than is now available.”
— Debra E. Blum
Independent Sector
Amid Challenges, Nonprofit Leaders See Big Opportunities
Charity leaders at the Independent Sector’s annual meeting, which opened in Philadelphia today, turned what could have been a doom-and-gloom discussion about the financial challenges facing nonprofit groups into a feel-good look into what a new presidential administration might mean for nonprofit organizations.
Miles Rapoport, president of Demos, a think tank in New York, opened the session called “Making the Numbers Work during the Economic Squeeze,, saying that the country is “entering a period of time that is enormously creative, enormously uncertain, enormously new,” and that presents “tremendous organizational possibilities.”
Participants touched on some of the fine points of moving through a recession, such as whether it is prudent to start new programs to attract new sources of revenue when money is tight.
Garvester Kelley, vice president of the mid-Atlantic region.of the Nonprofit Finance Fund, cautioned charities to resist the temptation to start new lines of business to chase new revenue. He said that new ventures take time to nurture and can quickly burn through cash.
William Eberwein, founder and president of Children’s Choice, a social-services group here, was less conservative about making new investments. “In difficult times, the wolves buy and the sheep sell,” he said.
And some participants expressed concern about the fund-raising climate. One fund raiser, only four months into her job at a public-radio organization, asked if she should just quit now. Another wondered whether it was prudent to start a new fund-raising campaign.
But overall the mood was optimistic, and the talk was about all the change in the air.
Christine James-Brown, chief executive of the Child Welfare League of America, said that charities need to collaborate better among themselves and with the new Obama Administration. Leaders of nonprofit groups especially need to work with the government, she said, to clarify and simplify existing legislation, so that federal money for, say, social-service programs, can move more easily through the system to the state and local levels.
Mr. Rapoport suggested it was time for charities to step up their advocacy work and make public-policy demands.
“It’s a pivotal moment in our country’s political history,” he said.
— Debra E. Blum
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.
Philanthropy Roundtable
Philanthropy Roundtable Starts Annual Conference
The leader of the Philanthropy Roundtable, an organization that represents conservative donors, kicked off the association’s annual meeting in Naples, Fla., today by describing the election of Barack Obama to the White House as a “momentous” occasion for the United States.
The fact that a black American son of a Kenyan farmer could rise to the highest office in the land “is an inspiring and quintessentially American story,” Philanthropy Roundtable President Adam Myerson told the 400 or so philanthropists and foundation leaders at the event.
But he also cautioned that Mr. Obama would likely propose policies that would expand government activities and services. “That is not our approach at the Philanthropy Roundtable,” he said.
The association does not oppose all public programs to, say, help the poor or improve education, but is concerned that some of them hurt volunteerism and “neighbors helping neighbors.”
Mr. Meyerson also warned that members of Congress have shown interest in proposing more regulations to oversee foundations, but that his organization was dedicated to protecting “philanthropic freedom.” He asked donors to join its lobbying efforts and introduced Sue Santa, the association’s new senior vice president for public policy.
Aside from the new administration and Congress, Mr. Meyerson said that the financial crisis has eroded foundation assets, some as much as 20 to 30 percent. Despite the losses, he urged them to help cash-strapped charities. “We encourage donors to be generous, contingent with their long-term objectives,” he said.
Copyright © 2009 The Chronicle of Philanthropy