Teaching the Art of Giving

By ELIZABETH GREENE and MEG SOMMERFELD

In cities and towns across America, donors are learning how to make their charitable gifts more powerful. Nonprofit groups and numerous businesses are undertaking new efforts to train donors and potential philanthropists in the best strategies for making effective grants and expanding the amount of money they have available to give.

Many of the donor-training efforts have been triggered by the rapid growth in the number of people with a net worth of at least $1-million, estimated to stand at five million today. In addition, philanthropy experts are hoping to develop a generous generation of donors from the millions of Americans who stand to inherit significant sums as one generation passes wealth to the next -- a transfer that experts say could produce trillions of new dollars for charities.

The projects under way are varied. Many are aimed at the high-technology executives who have made fortunes in the past decade, while others are focused on small-business owners, farmers, and members of minority groups. But most have the same goal: to ease donors out of "checkbook philanthropy" -- giving sporadically to any charity that happens to send an appeal -- and into a more strategic, and potentially more effective, means of supporting good works.

Several of the donor-education programs are being underwritten by well-established philanthropies.

Susan V. Berresford, president of the Ford Foundation, says new donors are hungry for information, often asking her for advice on the best ways to decide what charitable causes to support. Demand to improve the quantity and quality of donor-education efforts is now so high, she says, that grant makers must find ways to meet it. She is organizing a meeting on the topic in May to coincide with the next annual meeting of the Council on Foundations, which typically attracts hundreds of grant makers.

Signs that the economy may be slowing, and that those in the high-technology industry are especially likely to see a downturn in their finances, has caused some to wonder whether demand for donor-education programs will continue to be high. But most experts say they doubt that interest will wane for many years, given the vast accumulation of personal wealth in the United States over the past decade, plus the expected inheritances.

Still, some observers urge the nonprofit world to move quickly to capitalize on the growing interest by potential donors before those individuals tie up their dollars in other commitments.

Among the organizations now working on projects to help people give wisely:

• New Ventures in Philanthropy, a project of the Forum of Regional Associations of Grantmakers, is supporting 25 coalitions around the country that are working to increase the number of foundations in the United States and to expand the amount of money available for making grants at community foundations and other charitable organizations.

  After two years of activity, the project says that its efforts have garnered $200-million in new money for grants. The forum has raised $10-million to support its efforts, and the coalitions have raised several millions of dollars in matching funds.

• The Rockefeller Foundation, in New York, has recently begun expanding its donor-education efforts in the United States and abroad.

  Each year, about two dozen wealthy individuals apply for 12 slots in its intensive four-week philanthropy workshop, which costs $10,000 to attend.

  Interest in the annual workshop, first held in 1995, has been so great that this year the foundation started a similar program in Argentina. And in 2001, Rockefeller will offer a donor-education seminar in California, in partnership with the William and Flora Hewlett Foundation, in Menlo Park, and the Tosa Foundation, in Portola Valley.

• Both Harvard and Stanford Universities have held training sessions in the last year to teach wealthy individuals how to become more strategic in their philanthropy. Participants in the forums learned about such things as figuring out which causes to support and how to structure their giving. In October, Stanford's Center for Social Innovation also ran a philanthropy-education program for executives of new and established Silicon Valley corporations, and it may hold another workshop in the spring for individuals and corporate-giving officers who want more information on donating overseas.

• Several companies are going beyond the traditional workplace fund-raising campaigns to provide their employees with counseling on philanthropy.

  America Online offers its employees information on becoming a donor through an internal Web site, the Giving Tree. The Internet company estimates that about 1,000 employees have sought information or advice from the site. Employees who need additional help are referred to someone at the company's Dulles, Va., headquarters who coordinates volunteer activities or to a consultant at the Philanthropic Initiative, a Boston nonprofit group that provides donor advice. Another company, the communications-networking giant Cisco Systems, in San Jose, Calif., recently hired a philanthropy counselor who will meet one-on-one with employees to help them develop personal giving plans.

• Large financial-services companies like the Fidelity Investment Company and the Charles Schwab Corporation have upgraded their charitable-gift-fund Web sites with information on how to become a better-educated donor. The Web site Worth.com started in the fall to offer wealthy people daily updates on news in philanthropy and a series of frequently changing articles on techniques for charitable giving as well as profiles of effective donors.

Kirk O. Hanson, a senior lecturer in business ethics at Stanford and a faculty member at the Center for Social Innovation, says that the wealth expansion, especially among high-technology entrepreneurs, has raised many of the same questions for rich people that led Andrew Carnegie and John D. Rockefeller to develop creative approaches to philanthropy at the beginning of the 20th century.

"The vast wealth accumulation from high-tech and Internet companies has created a series of new foundations and new donors who need to solve the same problems the earlier generation needed to solve, but who may develop different philanthropic strategies and styles," he says. "These new donors need both education and the opportunity to convene to develop their own approach to philanthropy."

While the new donor-education programs take many different approaches, certain threads are common to many of them.

Most try to explain in forums and informational brochures how philanthropy works.

A number of groups that are working with members of ethnic or racial minorities, particularly African-Americans, Latinos, and Native Americans, are trying to show that organized philanthropy is not just a white enterprise, and not just for the very rich. In addition, many of the groups work with financial advisers and lawyers, who need to be educated about philanthropy themselves before they can educate their clients.

Many of the programs also try to provide role models for giving. Computer companies, for example, hold seminars to showcase executives who have learned how to translate their stock options into money for charity to help inspire employees who are just starting to think about philanthropy.

Jim Johnson, the Oregon site manager for Intel Corporation and an active donor, has spoken at six seminars on philanthropy for company employees. "What we want to do is make it a social norm that you're free to talk about philanthropy," says Mr. Johnson, explaining that in Portland there aren't enough donor role models because people are too modest to admit they have money to give. To make more of an impact on local problems, he says, giving needs to be accelerated: "One at a time, quietly, is not going to get us there."

Some foundations have started to take a more active role in donor education after being besieged in recent years with requests from newly wealthy people for advice on how to become a high-level donor.

In February 1999, nine grant makers met to discuss ways to assist the growing number of America's wealthy. Seven of the foundations at that meeting -- the Ford, W.K. Kellogg, John D. and Catherine T. MacArthur, Charles Stewart Mott, Rockefeller, Rockefeller Brothers, and Robert Wood Johnson Foundations -- decided to pay the Philanthropic Initiative to study what tools are currently available for donors today. The report, "What's a Donor to Do: The State of Donor Resources in America Today," was published this fall (The Chronicle, September 7).

That report cites figures showing that there are "greater numbers of 'mega wealthy' Americans than ever before." The nation is now home to 268 billionaires and some 5 million millionaires, according to Forbes magazine.

Yet while there are more prospective philanthropists than ever, the report found that the overall state of donor education is still weak. Among its recommendations, the report has called for the creation of a central Internet site to help donors find information quickly, as well as the formation of a new "affinity group" of the Council on Foundations aimed at helping new donors.

Tracy Gary, a philanthropist who has been advising wealthy people on how to manage their finances and giving for more than 20 years, says the rising interest in donor education is positive, but she hopes that more will be done to encourage wealthy people to give to causes that they have previously ignored -- but that may be providing vital services to the neediest members of society.

"Whether you're a venture philanthropist or a 7-year-old putting away your first quarter, you've got to realize that you don't just give to your passion," she says. "In a democracy, you don't just fund what you want. You fund what's needed."

Donors should spend more time learning about the philanthropic needs of their community and getting to know the organizations they support, says Ms. Gary, who has started a charity called Changemakers that is designed to show people how to become effective givers.

H. Peter Karoff, president of the Philanthropic Initiative, says foundations, academic institutions, corporations, and advisers to the wealthy, among others, have a huge opportunity.

"We are faced now with resources and numbers of people with money that are geometrically greater than anything we have ever dealt with before," he says.

But that could turn into an opportunity missed: "If there isn't more done to nurture and help this philanthropic golden age to happen," he warns, "it will not happen."