Inside Philanthropy

Charity regulation needs fixing

noreply@blogger.com (Todd Cohen) — Mon, 14 Jul 2008 12:24:00 +0000

The regulation of private foundations and charitable giving has skewed the charitable marketplace and needs to be changed.

The law lets donors who create private foundations take their tax breaks up front but does not require that the foundations pay out more than five percent of their assets each year, letting them hoard their wealth.

So donors and their foundations reap big windfalls.

Donors save on taxes, and their families enjoy continuing power and influence through their foundations.

The tax breaks for wealthy donors and the low spending requirement for foundations starve social programs of funds and transfer the cost to less affluent taxpayers and to nonprofits struggling to meet rising demand for services.

A bill in Congress five years ago to require private foundations to pay out more their assets each year in grants triggered howls of protest from big foundations.

Exercising the clout that flows from the wealth they control, foundations spent millions of dollars to fight the bill, outgunning advocates for a more even-handed charitable marketplace.

What is wrong here? Consider the multi-billion-dollar bequest the late Leona Helmsley created for the care and welfare of dogs.

Helmsley, like any donor, was free to support the cause of her choice.

But as law professor Ray Madoff of Boston College pointed out in a recent opinion column in The New York Times, because it will be paid through her family’s charitable trust, Helmsley’s huge bequest exposes a continuing scam perpetrated against U.S. taxpayers by the laws that give tax deductions for charitable gifts and let donors create perpetual foundations.

Not only can donors save big bucks on the front end and let their foundations hoard even bigger bucks far into the future, but foundations also can count overhead costs, including salaries for trustees, as part of the tiny annual payout the law requires them to make.

It was the 2003 proposal in Congress to exclude overhead costs from the required payout that unleashed a flood of crocodile tears from foundations, which whined that the change could deprive them of their dream of immortality.

The laws regulating foundations and charitable gifts cost taxpayers big-time and tilt the charitable marketplace in favor of wealthy donors and their foundations.
Getting the short end of the stick are nonprofits and less affluent taxpayers.

Madoff calculates that, with her fortune warranting an estate-tax rate of 45 percent, Helmsley’s $8 billion donation for dogs really amounts to a gift of $4.4 billion from her and $3.6 billion from taxpayers.

In return for paying out a tiny share of their assets each year, private foundations yield big tax benefits for their donors, and give the donors’ families, as foundation trustees and directors, continuing power and prestige.

Many foundations now demand that nonprofits looking for grants prove their commitment to equity.

But many of those same foundations are first in line to fight efforts to make charitable regulation more equitable.

In theory, the charitable marketplace in the U.S. represents a good bargain and frees government for other tasks: Nonprofits enjoy tax-exempt status because they address the symptoms and causes of urgent social needs, and donors and foundations enjoy tax benefits because they invest in nonprofits.

But the deal has soured because the rules have allowed donors and their foundations to bulk up, like athletes on steroids.

To ensure the fairness the charitable marketplace needs to foster innovation in giving and in nonprofit enterprise, Congress needs to bring the rules back into balance.

Charity must make itself a market

noreply@blogger.com (Todd Cohen) — Mon, 07 Jul 2008 11:28:00 +0000

Giving has become a major currency in the global economy yet remains an asset whose true worth and potential are undervalued and overlooked.

Government and business pay lip service to the important role charity plays in our communities and economy, yet treat it as a second-tier vehicle for social change, one that requires special treatment.

Nonprofits and philanthropic organizations reinforce the perception they are marginal players by acting as if their good intentions entitle to them to public and private investment, and free them of the need to compete in the marketplace under the same pressures and rules that other businesses face.

To increase their impact, people and organizations working and investing in the charitable marketplace need to be brutally honest about the value they add, the challenges they face, and their need to make their own way.

By moving beyond their sense of entitlement, confronting their strengths and weaknesses, and designing smart business models, nonprofits can more effectively engage customers, investors and partners and serve as leaders for change.

And nonprofits have a great story to tell.

Whether addressing problems at home or abroad, giving is built into Americans’ DNA.

Americans see problems and give their time, know-how and money to improve and enrich their communities.

As individuals and through their families and businesses, Americans create and invest in nonprofit and philanthropic organizations to address urgent social needs.

In 2007, charitable giving in the U.S. exceeded $300 billion for the first time, with individuals giving nearly 75 percent of those dollars, and bequests accounting for nearly 7 percent more, according to Giving USA 2008.

And in 2006, over 61 million individuals volunteered, representing over one-fourth of the U.S. population, with 15 million Americans volunteering on an average day, and the average volunteer serving over 200 hours a year, according to The Nonprofit Almanac 2008.

The U.S. nonprofit sector also is big, diverse and growing, the Nonprofit Almanac says, accounting for five percent of gross domestic product, over 8 percent of wages and roughly 10 percent of job.

In addition, the estimated value of volunteer time equals nearly half the wages nonprofits pay.

Nonprofit wages and employment both have been growing in their share of the economy, and nonprofit jobs in recent years have been growing three times faster than the rest of the economy.

Beyond those impressive numbers, the resources exchanged in the charitable marketplace simply make our communities better places to live and work.

But until nonprofits and givers get over their sense of entitlement and start building enterprising business models that break down the walls to true collaboration among nonprofits and with business and government, the charitable marketplace will remain a marginal force for social change.

Information essential to build community

noreply@blogger.com (Todd Cohen) — Mon, 30 Jun 2008 11:14:00 +0000

A new initiative by the John S. and James L. Knight Foundation aims to fill a gaping hole in the civic marketplace.

The foundation is investing $24 million over five years to help community foundations make better use of media and technology to keep communities informed and citizens involved.

The effort should serve as an important example for all nonprofits and foundations, which need to do a better job telling their story and that of their communities.

In an increasingly complex and confusing global marketplace, people and organizations need news and information they can use to make smart decisions geared to making their communities better places to live and work.

The mainstream news media once filled the critical job of delivering that news and information, which are the lifeblood of a free society.

But in the face of brutal competition in a marketplace dominated and saturated by corporate media, traditional news organizations have worked themselves into a frenzied identity crisis.

Their near-sighted solution has been to abandon their role as social watchdog and resource, preferring to pursue the safer goal of simply surviving by pandering to the fears and consumption preferences of readers, viewers and listeners.

Yet while it no longer seems to matter to the news media, social change remains the core business of nonprofits and foundations.

And social change depends on civic engagement and informed communities.

With the mainstream news media failing to keep communities informed, that essential job falls to nonprofits and foundations.

It is no small irony that the frantic drive for revenue and profits has blinded the media to the market value of news and information that address the core concerns of the communities they claim to serve.

With the Knight initiative piloting the way, nonprofits and foundations can work to meet the demand of the civic marketplace for news and information that citizens can use to heal, repair and grow our communities.

Change is a continuous job

noreply@blogger.com (Todd Cohen) — Mon, 23 Jun 2008 12:18:00 +0000

Nonprofits and givers are in the change business, and the business of change continually requires changing the way we do business.

Too often consumed with the day-to-day grind of delivering services, meeting the payroll and raising money, nonprofit managers and leaders too rarely take the time to think about changing the way they work so their organizations can work better and smarter.

Yet the demands of a global marketplace transformed by technology and the seamless flow of people, jobs, capital and information has made it more urgent than ever that nonprofits adapt to the new economy and way of doing business.

Nonprofits and their leaders must learn to be social entrepreneurs, gearing their organizations not only to deliver services more effectively and efficiently but also to make change happen.

That means adapting to their organizations the enterprising, networked, collaborative and outsourced culture of the global economy.

Change as a vision must become part of the way nonprofits think and work, and the leaders of nonprofits must make entrepreneurial leadership a value and a lesson they look for and cultivate in their boards and staffs.

“Everyone a changemaker” is the mission of Ashoka, the international social-change organization that supports the development of social entrepreneurs.

And making everyone a changemaker requires inspiration and giving every problem “as much innovation as it can humanly get,” says Sushmita Goosh, Ashoka’s president emeritus.

Nonprofits are indeed in the change business, and making change happen requires that nonprofits and their supporters invest in finding and developing individuals dedicated to changing their organizations so they can work on making our communities better places to live and work.

Politicking soils Golden Leaf search

noreply@blogger.com (Todd Cohen) — Mon, 16 Jun 2008 15:03:00 +0000

Ham-fisted politics have hijacked the effort to pick a new president for one of North Carolina’s biggest foundations.

The board of the Golden Leaf Foundation, created to dole out half of North Carolina’s share of 46 states’ massive settlement with Big Tobacco, was set in early June to name a new chief to succeed Valeria Lee, who is retiring.

But the board, made up of political appointees, yielded to last-minute requests by Gov. Mike Easley and state Senate leader Marc Basnight to delay the decision so it could consider Easley’s top budget adviser for the job.

Dan Gerlach, the budget adviser, is busy with the state legislative session and would not be able to begin the new job until the session ends, Easley reasons.

The move by Easley and Basnight reeks of back-room politics.

If Gerlach wants the Golden Leaf job, he should have applied for it months ago like the hundreds of other candidates who met the application deadline.

But after a careful search by a consultant, screening of candidates by the board’s search committee, and interviews by the full board with four finalists, Easley’s intervention seems like the clumsy move of a lame-duck governor to find an exit strategy for a top aide.

And Basnight’s intervention, in the face of bills pending before state lawmakers that would choke off funding for the foundation, looks like a barely veiled threat: Give Gerlach the job, or kiss the foundation, its assets and its promise goodbye.

Created by state lawmakers to invest in efforts to heal and repair North Carolina communities hurt by tobacco’s decline, the Golden Leaf Foundation is by definition and nature a political creature subject to the whims and agendas of politicians.

And despite the innovative grants and investments it has made, and the effort of its board and staff to maintain the organization’s integrity, the political make-up of the board has saddled the foundation with the perception that it is a political tool.

By mucking up the search for a new president and interfering with the board’s exercise of the judgment delegated to it, Easley and Basnight have further undermined the foundation’s reputation.

Arts play critical community role

noreply@blogger.com (Todd Cohen) — Mon, 09 Jun 2008 11:50:00 +0000

A study a year ago by Americans for the Arts found nonprofit arts and culture in 2005 generated $166.2 billion in spending in the U.S., up from $134 billion in national economic activity in 2000.

The study also found the nonprofit arts industry generates $26.9 billion in annual federal, state and local tax revenue throughout the U.S. and accounts for 5.7 million jobs.

Beyond the economic impact those numbers reflect, the nonprofit arts industry is critical to our communities’ quality of life and their prospect for economic growth.

To better tell the arts’ story, and to gear the arts to play a more active role in shaping public policies that affect our communities’ future, arts councils are retooling themselves.

In North Carolina, for example, the United Arts Council of Greater Greensboro is working to help the arts play a more strategic role in strengthening the local economy, improving education and attracting visitors.

The council also is working to generate the investment, participation and attention the arts need to play that strategic role.

The neighboring Arts Council of Winston-Salem and Forsyth County is spearheading efforts to better promote the arts, raise money for arts groups and facilities, and boost the arts as a force in downtown growth and economic development.

And in Charlotte, The Greater Charlotte Cultural Trust, housed at Foundation for the Carolinas, advises partner groups of the Arts & Science Council on setting up planned-giving programs, and also handles the management of gift pledges, as well as investment services for endowments that arts groups create at the trust.

To compete effectively in a global marketplace, particularly in the face of a looming recession, the arts need to tell their story better, and communities need to embrace the nonprofit arts and culture industry as an important partner in building a promising future.

Foundations need to tell their story better

noreply@blogger.com (Todd Cohen) — Mon, 02 Jun 2008 11:12:00 +0000

Foundations need to tell their story better

A critical engine of social change, giving reflects the heart and character of America.

Yet active civic leaders actually know little about the work of the charitable foundations that can be key players in addressing both the symptoms and causes of the social problems our communities face.

A new survey finds that foundations “are isolated from many citizens on the front lines of local, regional and national efforts to improve American society.”

The survey, which was commissioned by the David and Lucille Packard Foundation for the Philanthropy Awareness Initiative, and was conducted by Harris Interactive, asked questions about foundations to individuals serving in a leadership, committee or board role in an organization working on community or social issues.
All told, the survey says, the findings “paint a picture of foundations as little known among key players in the efforts they seek to support.”

Fifty-six percent of those surveyed, for example, could not name a foundation on their first try, 60 percent considered themselves somewhat or not at all informed about foundations, only 15 percent could cite examples of a foundation’s impact on their community, and only 11 percent could give an example of a foundation’s impact on an issue they care about.

While foundation grants in 2006 represented only 12.4 percent of all charitable giving in the U.S., the impact of foundations and the role they can play is far greater than their share of overall giving suggests.

Foundation grants, whether to address immediate social problems or needs, or to fix the underlying causes of those problems or needs, can provide critical investment in improving our communities.

Funds from foundations also can help nonprofits secure investment from other funders.

And foundations can serve as brokers for social change, convening individuals and organizations that can work as partners in addressing community problems.

What’s more, foundations can do even more than they do now.

Instead of paying out only the 5 percent of their assets in grants and overhead that the law requires they pay, foundations can pay even bigger share.

Moving beyond their preference for funding programs, foundations can invest more in helping nonprofits strengthen their internal operations.

And rather than simply looking to their endowments for investment returns, foundations can be more active shareholders, making investments that are in line with their philanthropic mission, and working with the companies in which they invest to make change happen.

Ultimately, foundations can be powerful agents for social change.

First, though, foundations must do a better job telling their story, and helping the groups they support tell their own story.

Giving is for all ages

noreply@blogger.com (Todd Cohen) — Tue, 27 May 2008 10:58:00 +0000

Young people are passionate about change, and looking for ways to put their time, know-how and money to work improving our communities.

But by continuing to focus their chase for resources on older, more traditional givers, many nonprofits remain blind both to the immediate value and to the long-term return young people can add to their organizations.

And young people not only give relatively as much as other generations, after accounting for differences in income, education level and religious attendance, says a new study, but they are more likely than any other generation to cite the “desire to make the world a better place to live” as a key motivation for their giving.

The report, conducted by the Center on Philanthropy at Indiana University and funded by Campbell & Co., also says young people are willing to give larger amounts but will not if they are asked to give less.

A second report suggests volunteer service by young people can be an important pathway to nonprofit services.

The report, conducted by ABT Associates for the Corporation for National and Community Service, says Americorps alumni, especially minority and disadvantaged youth, are more likely to pursue nonprofit or public-service careers.

Addressing the symptoms and causes of the urgent social problems we face will require that nonprofits tap all the resources they can.

Young people represent a powerful source of staff, board, volunteers and financial contributions for nonprofits, which need to move quickly to engage young people in their work and their mission.

Big challenges in nonprofit growth

noreply@blogger.com (Todd Cohen) — Mon, 19 May 2008 11:58:00 +0000

The charitable marketplace keeps growing, putting even greater pressure on nonprofits and their supporters to run smart, lean, responsible operations.

Nonprofits employ more people, generate more revenue and contribute more to the U.S. economy, says the just-released Nonprofit Almanac 2008.

But growth alone does not ensure that nonprofits are making the best use of their resources.

Sadly, the charitable marketplace is saddled with fat and inefficiency.

Fueled by a sense of entitlement and righteousness, far too many nonprofits focus more on perpetuating their own organizations than on improving the way they do business or deliver services.

And while their services often overlap, far too few nonprofits are willing to truly consider, let alone pursue, consolidating their operations or even merging their organizations.

Having cultivated their own donors, volunteers and customers, nonprofits invest more time in defending and expanding their turf than in looking for the best way to put common community resources to work to address common community problems.

Nonprofits do not bear sole blame for the sloppy and self-absorbed way many of them operate.

Lacking the will or courage to ask tough questions or to encourage collaboration, foundations and other supporters are the enablers of nonprofits' waste and turf-driven mindset.

By continuing to invest in nonprofits without challenging them to be more efficient, open and collaborative, foundations and other supporters simply perpetuate the feudal fiefdoms that divide and weaken the charitable marketplace.

To address the symptoms and causes of the urgent social problems we face, the charitable marketplace needs to do a lot better.

Big challenges for nonprofits, foundations

noreply@blogger.com (Todd Cohen) — Mon, 12 May 2008 13:19:00 +0000

Foundations and nonprofits need to get their house in order.

A thriving charitable marketplace is critical to address the urgent social problems America faces, but that marketplace itself faces huge challenges.

Those challenges, spelled out in three new reports, include the need for more effective nonprofit boards, more investment in nonprofit leadership, and more diversity in philanthropy.

While it faces an imminent crisis because of massive turnover expected in staff leadership, for example, the nonprofit sector gets poor grades for the job it is doing to provide leadership training and professional development opportunities to aspiring nonprofit executive directors, according to a report by the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University in Grand Rapids, Mich.

Emerging leaders want and need mentors but worry about making nonprofit work a life-long career because of low pay, burnout, the burden of student loans, and lack of professional development, and generational differences in organizational expectations, the report says.

A second report, by Rockefeller Philanthropy Advisers, says that with public pressure growing “for foundations to be more responsive to underserved and diverse communities,” foundation leaders should “reconsider the many ways to incorporate diverse perspectives into solving our greatest challenge.”

While foundations have made “much progress” in staff and board diversity, and modest progress in the share of grant dollars targeting minority populations, the report says, the number of grants and grant dollars targeting minority populations did not increase in direct proportion to increases in staff and board diversity.

A third report, by the Urban Institute, finds that most heads of mid-size nonprofits give poor marks to their trustees for fundraising and monitoring board performance.

The study calls for more support for board development and for initiatives designed to bring more diversity to the leadership ranks of the nonprofit sector.

To fix the urgent social problems we face, foundations and nonprofits need to fix their own internal problems.

With foundation investment, for example, nonprofits must develop sustainable business and fundraising strategies; build and engage effective boards; find and keep smart leaders and groom the next generation of leaders; unleash the power for productive collaboration; and work to fix flawed policies underlying the symptom sand causes of social problems.

Without greater investment to equip foundations and nonprofits to be more effective, the charitable marketplace will fall short of its underlying mission of making our communities better places to live and work.

Foundations can be more active shareholders

noreply@blogger.com (Todd Cohen) — Mon, 28 Apr 2008 11:09:00 +0000

Private foundations in the U.S. are missing a huge opportunity to put their money where their mission is.

With endowments totaling over $600 billion, much it invested in publicly-held companies, most of those foundations focus more attention on the five percent of their assets they pay out in grants than on the investment of all their assets.

And research shows most foundations delegate the voting of their proxies to investment managers, and that those managers typically vote those proxies based on recommendations of the management of the companies in which the foundations hold stock.

But a growing number of foundations are taking a more active approach to their role as shareholders, aiming to align their proxy voting with their philanthropic mission.

Building on their previous publication, “Unlocking the Power of the Proxy,” As You Sow and Rockefeller Philanthropy Advisors now have published “Proxy Season Preview 2008” to inform proxy voting by foundations.

As the two groups say, by failing to take a more active shareholder role, “foundations miss the opportunity to influence corporate policy, and may unknowingly support actions that conflict with their own guiding principles.”

The new publication explains social and governance resolutions being considered by corporations; looks at key issues and trends; provides updates on votes in recent years on specific issues; identifies key investors and organizations filing proxy resolutions; lists companies that have scheduled shareholder votes; and lists resources and reports to help foundations learn about the activities of peer organizations.

Foundations control a lot of stock in publicly-held companies and, through their proxy voting, can help shape the way those companies do business.

By investing more time and attention to their role as shareholders, foundations can make a bigger impact on the critical issues they spend so much time and attention trying to address through their grantmaking.

Nonprofits must lead for change

noreply@blogger.com (Todd Cohen) — Mon, 21 Apr 2008 11:38:00 +0000

Change is essential, and tough.

Working at the heart of constant and rapid change, nonprofits themselves are in the change business.

Their job is to address the symptoms and causes of urgent social problems.

To make change happen, nonprofits must change the way they do business, both inside their own organizations and with partners whose collaboration is needed for social progress.

Ultimately, change depends on leadership, which is rare in a marketplace in which fear, self-interest, competition and a preoccupation with management techniques drive organizations.

Effective leaders, in contrast, lead by inspiring and engaging the vision, leadership and collaboration of co-workers in their organizations and partners in their communities, says Anita Brown-Graham, director of the Institute for Emerging Issues at North Carolina State University and a trustee of the Z. Smith Reynolds Foundation in Winston-Salem.

Speaking at a Lunch ‘n’ Learn workshop in Charlotte sponsored by the Philanthropy Journal, Brown-Graham urged nonprofit leaders to work to shape change rather than waiting for change to shape them.

Citing Jim Collins’ “Good to Great: Why Some Companies Make the Leap…and Others Don’t,” she said what distinguishes great companies from good ones is a corporate culture of vision and innovation, rather than simply a visionary CEO.

That kind of leadership is critical to address the social problems we face, and requires a new way of thinking about leading.

Rooted in their passion, Brown-Graham says, leaders create a sense of urgency among the people who need to be involved in making change happen.

Those leaders build a team with the “credibility, skills, connections and formal authority” essential for guiding change, she says, and that team must operate with “trust and emotional commitment.”

For the team to be effective, leaders must show they mean business through action not words, and must repeat the story of the vision and process as often as they need to.

Members of the team must truly be part of change initiatives, and must be able to see, through short-term “wins,” that they are having an impact and that the larger goal is within reach.

And faced with a culture of resistance and fear, Brown-Graham says, leaders must continually push for change and nurture the new culture they are trying to create, using existing tools, such as promotions and incentives, to engage employees and organizational partners.

And even when wins occur, she says, leaders must be vigilant about making sure changes “stick” and are not erased by backsliding into the old way of doing business.

Social progress depends on change, which depends on leaders with the vision and courage to create a culture in their organizations and communities that will inspire and engage true partners in shaping change.

Tapping philanthropy’s true value

noreply@blogger.com (Todd Cohen) — Mon, 14 Apr 2008 11:36:00 +0000

Consumed with managing their survival in what can be a brutally competitive charitable marketplace, nonprofits are failing to lead or thrive.

Nonprofits should be addressing urgent needs, attacking their roots and brokering change by unleashing the power of giving and collaboration.

Instead, while parading as servant leaders and team players, many nonprofits practice bare-knuckle brawling, clawing for turf and knee-capping any and all rivals or potential rivals.

Enabling the failure of leadership that infects the nonprofit world are foundations that, while preaching innovation and collaboration, continue to reward nonprofits that talk a great game about the need for collaborating but in practice lack the vision and courage to truly work together to make change happen.

Nonprofits and foundations need to change the way they do business.

Facing an exodus of nonprofit executives who are overworked, underpaid, starved of board support and opportunities for career advancement, and increasingly nearing retirement, the charitable world must make a massive investment in developing existing leaders and identifying, recruiting and cultivating new leaders.

Nonprofits need leaders who not only can manage their organizations effectively but also can provide the vision to see ahead, seeing the crucial connection between organizational success and the partnerships needed to address larger social problems.

Which nonprofits, and which nonprofit leaders, are willing to leave their egos and organizational power-grubbing out of the search for shared solutions to the urgent problems our communities face?

And which nonprofits have the vision and courage to create partnerships in which they and all their partners truly are willing to make the sacrifices and build the strategic alliances and market-driven solutions critical to making our communities better places to live and work?

In the charitable marketplace, those with wealth and power are quick to preach the gospel of collaboration but slow to give up any of that wealth and power in the interest of working together to address common problems.

Fixing what is wrong in our communities will require fixing what is wrong in the charitable marketplace, and that will take leaders honest enough and brave enough to collaborate productively while competing vigorously, all the while staying true to the value and power both of collaboration and competition.

Connecting with PJ

noreply@blogger.com (Todd Cohen) — Mon, 07 Apr 2008 11:11:00 +0000

As nonprofits’ online news and resource partner, the Philanthropy Journal strives to be easy to use and reach.

If you need us or have questions about who we are or what we do, visit the “About” page on our redesigned website at www.philanthropyjournal.org.

There you will find a list of our staff, including short bios and contact information for each PJ staff member.

You also will find information about how to advertise on PJ and in our email newsletters, how to become a sponsor, how to subscribe to our email newsletters, and how to sign up for automatic updates about news and other articles we publish.

You can subscribe to our free email newsletters, including the weekly “News Briefing” and the biweekly “Resources + Jobs”.

Delivered each Monday, “News Briefing” features links to news stories on our site, and to “In Brief” announcements about nonprofit people and organizations, and charitable gifts and grants.

Delivered every other Wednesday, “Resources + Jobs” features links to how-to articles about charitable fundraising and giving, management and leadership, and marketing and communications.

You also can subscribe to email alerts about PJ special events, including our online webinars and our Lunch ‘n’ Learn workshops.

And you can read what readers say about us, see the answers to questions that readers frequently ask, and sign up for RSS feeds that will automatically alert you when we publish news and how-to articles on our site.

Our redesigned website builds on our news roots but also reflects our effort to address the preference our readers have voiced for more information to help them do their job as nonprofit professionals.

Please let us know how we can serve you better, and please let your colleagues know about PJ.

PJ a resource portal for nonprofits

noreply@blogger.com (Todd Cohen) — Mon, 31 Mar 2008 12:10:00 +0000

Building on our news coverage of nonprofits and charitable giving, the Philanthropy Journal has expanded to become an online hub for information, resources and job listings for nonprofit professionals.

Developed in partnership with experts on nonprofits and philanthropy, the “Resources” section of our redesigned website at www.philanthropyjournal.org includes how-to articles and information on the topics of fundraising and giving, management and leadership, and marketing and communications.

In addition to original articles our staff writes, the Resources section includes question-and-answer features with experts, articles written by experts, and summaries of articles published elsewhere on the web, with links to those articles.

The Resources section also includes a calendar of professional-development conferences and workshops throughout the U.S. and abroad, and a “Directory of Resources” that features products and services for nonprofits.

Six times a year, PJ publishes special reports that focus on topics such as technology, fundraising and planned giving, and you can find those special reports in our Resources section.

Our “Jobs” section includes job listings for nonprofit professionals, plus articles on human-resources issues.

PJ’s goal is to provide news and information that nonprofit professionals need to do their jobs effectively.

Please let us know about issues that are important to you, and please suggest topics we should write about, as well as experts who can help address those topics.

Finding nonprofit news on PJ

noreply@blogger.com (Todd Cohen) — Mon, 24 Mar 2008 11:03:00 +0000

The redesigned home page of the Philanthropy Journal at www.philanthropyjournal.org is a window into the broad range of content our redesigned website features.

The content on PJ focuses on nonprofit news, resources and jobs.

We also have pages for nonprofit news and information focusing on our home state of North Carolina, and for basic information about PJ.

News in PJ includes articles about developments and trends in the nonprofits world, plus short announcements about nonprofit organizations and people (“Nonprofit News: In Brief”) and charitable gifts and grants (“Giving News: In Brief”).

You can find news at the top of our home page, which you can find by clicking on the PJ logo on any page.

At the top of the home page, on the left, is the day’s main news story, and on the right are headlines for other top stories.

Each day, we also publish a “Nonprofit news roundup” that summarizes and links to top nonprofit stories reported elsewhere, and you can find the roundup among the “Top Stories” headlines at the top right of the home page.

By clicking on the “News” tab on the left-hand side of the navigation bar just below the PJ logo, you can visit our news page, where you will find even more news stories and announcements, as well as guest opinion columns, letters to the editor, and the Inside Philanthropy blog I write (and that you are reading now.)

For news and announcements about North Carolina nonprofits and giving, visit our North Carolina page.

The North Carolina page also includes calendars of fundraising and professional-development events throughout the state, and a separate section on Women & Giving that features news about giving by women, profiles about women givers and women’s giving circles, articles about effective giving, and stories about causes women support.

To submit news and announcements to PJ, send them to me at tcohen@ajf.org or to Ret Boney, PJ’s deputy editor, at rboney@ajf.org.

PJ expands website for nonprofits

noreply@blogger.com (Todd Cohen) — Mon, 17 Mar 2008 11:05:00 +0000

Think of the Philanthropy Journal as the nonprofit world’s online newsstand and help-desk.

After months of work, PJ in February launched a redesigned website at www.philanthropyjournal.org that delivers more news and resources for the charitable marketplace.

We also have designed and organized the site to make the information we publish easier to find and use.

The new site offers expanded news coverage of nonprofits and charitable giving, along with more how-to articles and information about fundraising and giving, nonprofit management and leadership, and nonprofit marketing and communications.

In addition to news articles, the site features announcements about charitable gifts and grants, and about people and organizations in the nonprofit world, as well as calendars of fundraising events and professional-development conferences, workshops and networking sessions.

And we publish listings of jobs that nonprofits are trying to fill.

PJ is free to readers, who also can sign up for free email newsletters and email alerts about online webinars and Lunch ‘n’ Learn workshops that PJ offers.

For the next few weeks, this blog will walk readers through the new site, looking at ways we have expanded and reorganized the news and resources we deliver.

We want your feedback: Please use the “Post a Comment” feature at the end of this blog to let us know what you think about our new site.

Nonprofits need to bridge leadership gap

noreply@blogger.com (Todd Cohen) — Mon, 10 Mar 2008 11:54:00 +0000

Nonprofits face a leadership crisis, and need to move quickly to address it.

A study two years ago found three in four nonprofit executive directors were likely to leave their jobs in three to five years, while another study at the time said the nonprofit sector needed to attract 640,000 new leaders over the next 10 years.

And now a new study says a new generation wants to lead nonprofits but could be turned off by low pay, lack of mentorship and the prospect that fundraising would consume too much of their time.

The charitable marketplace needs to do better.

People are nonprofits’ most valuable asset, and nonprofits and their supporters must do a better job investing in the development of their human capital, particularly the people who will lead and manage their organizations.

So nonprofit boards need to pay much more attention to creating the working conditions and culture that will attract the leaders and managers their organizations need to survive and thrive.

First, though, nonprofit boards must retool themselves.

Often weak, disengaged and clueless, boards pose what is arguably the biggest challenge nonprofits face.

So nonprofits must recruit new board members who will take an active role in making sure the board sets the strategic direction for the organization, and provides the oversight and leadership it needs to be effective in delivering services, raising money, communicating its message, advocating for change and making sure it has the staff leadership and management it needs.

Funders also can play a critical role in helping nonprofits address the leadership challenges they face.

Moving beyond their traditional preference for funding programs, funders must be willing to invest in helping nonprofits strengthen their operations.

Nonprofits need competitive pay and benefits, inspired and committed staff, competitive back-office systems, ongoing staff and leadership development, and smart strategies to secure revenue for the long-term.

Nonprofits face a seismic shift in leadership: An older generation, underpaid and burned out, is preparing to depart, and a younger generation, smart and inspired, waits in the wings.

But unless nonprofits and their boards and funders clean up their act and address the internal challenges they face, the leadership crisis only will deepen.

Restricted giving creates opportunity to engage

noreply@blogger.com (Todd Cohen) — Mon, 03 Mar 2008 12:43:00 +0000

Battle lines are being drawn at a growing number U.S. colleges and universities over gifts to which donors want to attach strings.

On one side are donors who want to support specific academic endeavors and make sure the schools honor the intent of the gifts and use them effectively.

On the other side are faculty who claim gifts restricted to supporting the teaching of a particular subject, course or book threaten academic freedom.

Caught in the middle are fundraising professionals whose challenge is to match the needs and interests of their institutions and donors.

And while this philanthropic battle is playing out on higher-education campuses, often inflamed by culture wars and political correctness, it underscores a continuing struggle at all nonprofits to engage donors.

In the latest skirmish, reported by Inside Higher Ed, professors at Marshall University in West Virginia say the school took an ethical misstep in accepting a $1 million gift from the BB&T Foundation to its business school requiring it teach libertarian writer Ayn Rand’s novel Atlas Shrugged.

And two years ago, Inside Higher Ed says, faculty at Meredith College in Raleigh, N.C., voted down a $500,000 gift from the BB&T Foundation that would have required the teaching of Atlas Shrugged.

As The Wall Street Journal reported last year, disputes over restricted gifts and donor intent had prompted a handful of conservative foundations to form the Center for Excellence in Higher Education.

Among its services, the Center says, it aims to “help serious donors and prospective donors structure gifts to achieve specific goals and obtain the best possible outcomes for their higher education investments.”

Because some funders abuse the power their wealth gives them, and because many nonprofits defer to that wealth and power, charitable giving does not always match charitable need.

In their continual chase for funds, rather than asking for the dollars they truly need, too many nonprofits instead design new initiatives that pander to donors’ giving priorities.

And in their continual pursuit of a legacy, rather than trying to understand the dollars nonprofits actually need, too many funders instead serve as enablers, using their dollars to lure nonprofits into designing new programs that stray from their core mission or program priorities.

The reality is that in a fiercely competitive and poorly regulated charitable marketplace, funders can do pretty much what they like, and nonprofits are free to play by individual funders’ rules or look for other sources of support.

Still, charitable organizations can take steps to better engage donors and ensure the ethical and effective use of their philanthropic investment.

On college campuses, that job can be particularly tough because some faculty members can be quick to cry wolf at the slightest whiff of a donor who fails to pass their test for political correctness.

But colleges and universities ultimately are free to accept or reject restricted gifts, whether for a new classroom building or sports arena, a curricular program or the teaching of a specific book, regardless of its focus or philosophy.

That is called academic freedom.

And critical to academic freedom, whether faculty even recognize or will acknowledge it, is the generosity of donors who are free to give or not give, and to restrict or not restrict their giving.

If faculty want their schools to reject restricted gifts from donors who may not share their social or political philosophy, that is their right, but they should be honest about it and not masquerade as defenders of academic freedom when their true role is to reduce the marketplace of ideas to a closed shop.

Regardless of the campus food fights that intolerant faculty members may wage, or in fact precisely because of those fights, it remains critical for colleges and universities, as it does for nonprofits, to set clear policies that spell out the basis on which they will accept or reject gifts.

The abiding challenge for fundraising professionals, on and off campus, is to find ways to engage donors, educate them about the needs of their organizations, and help develop charitable giving that advances the needs and interests of the organization and those who support it.

The survival of nonprofits, and their effectiveness in addressing the needs of their constituents, including donors, depend on clarity, fairness and openness in engaging and serving those constituents.

Political correctness curbs social progress

noreply@blogger.com (Todd Cohen) — Mon, 25 Feb 2008 12:02:00 +0000

The nonprofit world’s recognition of the importance of diversity can lead to political correctness that sometimes is self-defeating.

Rather than confronting words or actions that can seem hurtful, especially on issues of race, ethnicity or gender, people who work for nonprofits and foundations often choose silence and deference to members of a racial, ethnic or gender group who voice concern about those words or actions.

Liberals and progressives, in particular, tend to be overly concerned with preserving their image of being open and inclusive of everyone, especially on highly-charged and complex issues of race.

So they avoid confronting the very problems they are fighting to address.

Consider a recent exchange at a nonprofit that has set itself the task of ending racism.

During an interview with a finalist for the job of executive director, a member of the search committee asked the candidate to talk about the importance of public relations and communications.

The candidate, a white woman, told the committee that while it can be a “bugaboo” for nonprofits, communicating effectively is a critical job.

After the candidate left the room, and at the tail end of a much longer discussion that followed about her qualifications, an African-American member of the committee said the word “bugaboo” had racial connotations.

A standard dictionary definition of the word, which is possibly of Celtic origin, refers to “something that causes fear or distress out of proportion to its importance.”

That is the meaning the candidate, who is middle-aged, says she intended.

When the committee member later suggested to her colleagues it might be a racial slur, several of them agreed, while several others said they had not been aware the word had that meaning.

Regardless of that initial difference of opinion, all committee members by the end of the brief discussion apparently had accepted, or failed to challenge, the suggestion that the candidate had used a slur.

One committee member said later that the episode underscored the value of having a diverse committee because now all the committee members are better educated about the word’s racial sensitivity.

The candidate was not invited back for a second interview, a decision reportedly not based on her use of the word.

Yet the committee did not formally communicate to the candidate some members’ concern about her use of the word, nor did they give her an opportunity to respond.

The episode cuts to the core of a communications gap, often driven by political correctness, that can perpetuate racial misunderstanding.

The candidate says she was not aware the word had any racial connotation, and was stunned when she later learned second-hand that a search-committee member had raised the issue.

A Google search finds that African-American singer Beyoncé has used the word in a song to characterize a man who annoyed her.

And a check with www.urbandictionary.com finds a handful of entries left by visitors to the site who suggest the term is urban slang for an annoying person, usually a suitor.

More significantly, however, “bugaboo” happens to sound a lot like another word that is indeed an ugly racial slur when a “j” and an “i” are substituted for the first two letters.

So it is possible that when the candidate said “bugaboo,” the committee member heard the other word, or simply believed “bugaboo” was off limits.

For her part, the candidate says she was not familiar with the slur that sounds like “bugaboo.”

And consider the context: She says her intention was to use “bugaboo,” with the meaning she understood it to have, to respond to the committee member’s question by saying that effective communication is an ongoing challenge for nonprofits.

During the interview, however, committee members who may have been offended by her use of the word failed to voice their concerns directly to her, a conversation that could have prevented similar misunderstandings by both sides in the future.

Simply engaging the candidate in a conversation might have helped her and the committee members better understand one another, as well as the extraordinary power of words, even when used innocently, to hurt and divide.

And doing a little research might have helped everyone involved better understand what the word means and does not mean, and who uses it, and in what context they use it.

The committee members also failed to truly question their colleague who suggested “bugaboo” was a slur, and instead simply accepted her interpretation.

That is precisely the kind of response often taken by well-meaning people working for nonprofits and foundations.

The more productive response among people who want to end racial misunderstanding would have been to discuss the issue while the candidate still was in the room.

Or later, at least, once the candidate had left the room and their colleague had raised the issue, the other members should have shown a little more backbone in questioning the suggestion that it was a slur.

They also should have examined whether the word was in fact offensive in the context in which it was used and with the intent with which it was used.

But too many people take the easy way out because they do not want to get stuck in awkward conversations, or be perceived as being anything other than totally open and inclusive.

In other words, they fear being seen as uninformed or racist.

As a result, too many words have become off limits, replaced by a vocabulary of mush, a comforting jargon of safe words, guarding against any and all perceived slights, devoid of clarity, directness, common sense and the power to communicate deep-felt human emotions and beliefs.

By failing to make any effort to learn more about the source of the concern their colleague raised, or to talk openly to the executive-director candidate, the search committee simply helped perpetuate the racial misunderstanding its organization wants to end.

If, among themselves and with those who want to work with them, the leaders of an organization committed to ending racism cannot talk honestly about the meaning and use of vocabulary, their mission will remain only a dream.

As the candidate for the job tried to suggest to the search committee, communication does indeed represent for nonprofits “something that causes fear or distress out of proportion to its importance.”

Storm brewing for nonprofits

noreply@blogger.com (Todd Cohen) — Mon, 11 Feb 2008 11:52:00 +0000

As if surviving and thriving in the charitable marketplace already were not tough enough, the skidding economy promises to make nonprofit work even tougher.

So nonprofits need to be smarter about doing business, and foundations need to be smarter about helping nonprofits strengthen their operations.

Signaled by a growing number of economic indicators, the recession the U.S. economy is entering simply will deepen the growing scrutiny of nonprofits by the partners they count on for the resources they need to run their shops.

Those partners, including grantmakers, individual givers and government, increasingly have asked that nonprofits show they mean business by quantifying the results they expect from the resources they seek, and then measuring the impact on their clients.

To do that, nonprofits need to be smarter about managing their organizations, delivering services, gauging results, developing resources, and engaging supporters and other partners.

Now, they need to be even smarter.

In addition to looking for ways to curb or cut costs, nonprofits need to be more innovative in operating their business, developing new revenue streams, involving their boards and givers, and shaping public policies that affect their organizations and clients.

For years, fighting efforts to toughen rules and policing of charitable organizations and giving in the face of growing concern about excess, abuse and arrogance in the charitable world, many nonprofits and foundations have claimed they can and will clean up their act, both as individual organizations and as a sector.

And parroting philanthropically-correct sermons preached by big foundations, and by the consultants and nonprofit trade groups that depend on foundation support, many nonprofits have devoted a lot of time talking about the need for innovation, collaboration, transparency and diversity, without actually changing the way they do business.

With the economy tanking, nonprofits only will be asked to do more with less.

Rather than spouting empty words, nonprofits truly need to be more innovative, collaborative and open, and to better reflect and engage the diverse constituencies they serve.

And instead of pumping out more sermons, foundations need to invest more of their resources in helping nonprofits address the critical organizational challenges they face so they can more effectively address the urgent and escalating social problems our communities face.

California philanthropy police are out of control

noreply@blogger.com (Todd Cohen) — Mon, 04 Feb 2008 13:55:00 +0000

While government should tighten its regulation of philanthropy, a move by California lawmakers to police the diversity practices of foundations goes way too far.

As an opinion column in the Los Angeles Times reports, a bill approved by the California State Assembly would require every private, corporate or public operating foundation in the state with assets of more than $250 million to collect and publish date on the gender, race, ethnicity and sexual orientation of its members, board and staff.

Foundations also would have to disclose the race, ethnicity and sexual orientation of the owners of businesses they work with, and the diversity of the boards and staffs of groups to which they make grants.

What’s next? Should foundations be required to disclose the religious or political affiliation of their board members, staff, business partners and grantees?

The charitable marketplace works because philanthropy is both independent and regulated.

Americans see needs in their communities and address them by creating nonprofits and by giving, and that activity is voluntary, not required.

But in return for the tax-exempt benefits they enjoy, nonprofits and givers also must account for the way they oversee and invest their resources.

That is a reasonable tradeoff.

In recent years, government and watchdogs of philanthropy increasingly have called for greater policing of the charitable marketplace because some nonprofits, foundations and individual givers have abused their independence in the face of weak regulation and policing.

Foundations, for example, can do a lot more to address the needs of the communities they serve, to pay out more of their assets, and to give more to support the operating needs of nonprofits.

Yet while foundations argue they can and will police themselves, too few have been willing to do more than hoard their assets while ignoring the urgent needs of nonprofits.

What’s more, many of those same foundations, acting as self-appointed vigilantes, demand that nonprofits seeking support behave the way foundations demand.

Foundations have failed to police themselves, and lawmakers should pass laws that require foundations to pay out more of their assets, and to better disclose how they operate, including more information about their boards and staffs to help track potential insider dealing.

But the bill approved by the California State Assembly reeks of government intrusion and political correctness that eclipses the philanthropic correctness of many foundations.

The bill does offer a lesson, however: Instead of just talking about it, foundations actually need to make themselves more open and accountable.

By continuing to hide them in the sand, foundations are making their heads much easier targets for lawmakers.

Gates calls for capitalism to change

noreply@blogger.com (Todd Cohen) — Mon, 28 Jan 2008 11:57:00 +0000

In his farewell address as president in January 1961, Dwight Eisenhower issued a warning about the “military-industrial complex.”

It took a retired career military officer to see the danger posed by the escalating alliance of the military and industry.

Last week, at the World Economic Forum in Davos, Switzerland, Microsoft Chairman Bill Gates scolded capitalism for not doing more to address the needs of the world’s poor.

Gates, one of the world’s wealthiest individuals, built his fortune in the marketplace of capitalism.

And as he conceded to The Wall Street Journal, “we were not focused on the needs of the neediest” as Microsoft built itself into a global behemoth.

Now, Gates says companies should undertake enterprises that create products and services for the poor.

Corporations also must recognize, he says, that progress in technology, health care and education tend to further enrich the wealthy while skipping the poor.

Gates’ call for changing capitalism’s mindset likely will not persuade those who believe corporations violate their duty to shareholders by building social and environmental goals into their business bottom line.

But as research repeatedly has shown, companies that make it their business to do good are more attractive to investors, customers, vendors and employees than companies that do not.

Communities, including the global community, sink or swim together.

And with nearly three billion people throughout the world living on less than $2 a day, and 36.5 million Americans living in poverty, our future depends on free enterprise that focuses its innovative energy on a “triple bottom line” that recognizes the interconnectedness of social, environmental and economic outcomes.

By seeking and investing in business and social strategies to help the poor help themselves, corporation help create stronger communities and markets that benefit the common good.

Bill Gates calls the corporate strategy he advocates “creative capitalism.”

You could just call it common sense.

Google searches for philanthropic results

noreply@blogger.com (Todd Cohen) — Mon, 21 Jan 2008 12:10:00 +0000

The launch of Google.org, the ambitious philanthropic arm of web-search behemoth Google that, as The Wall Street Journal reports, is an unusual hybrid of nonprofit and for-profit social enterprise, is good news for the charitable marketplace.

That marketplace is changing, thanks to a new generation of givers outside the mainstream of traditional philanthropy that want get involved in different ways and that want results that can be measured.

Many of those givers are applying to philanthropy the know-how and resources they developed in the information-technology sector and other emerging industries, and in some cases, like Bill Gates and Google, the magnitude of those resources is unprecedented.

And many givers, including those with modest wealth, are pooling their resources to create powerful assets for change.

All this is good news because the charitable marketplace needs new energy, vision and enterprise.

Nonprofits and givers are America’s unsung heroes, devoting their time, know-how, money, connections and passion to fixing social problems.

But because they are unsung, and often invisible, nonprofits typically struggle to deliver services effectively, secure the support they need, and sustain themselves financially.

Perpetuating that struggle is a rigid set of rules, created and enforced by foundations, and the nonprofit trade groups and consultants that depend on foundation dollars, that burden nonprofits with paperwork, make them jump through funders’ hoops, and limit nonprofits’ freedom to be innovative and enterprising.

While organized philanthropy is quick to pay lip service to change and collaboration, it typically fails to truly practice, value or encourage it.

Because of Google’s size and influence, Google.org may help to raise the sights of foundations, trade groups and consultants.

Blinded with the need to perpetuate its own legacy and its control of the charitable marketplace, much of organized philanthropy is stale and stuck in a rut.

But new philanthropy, like Google.org, is taking a fresh looking beyond business as usual to find the most effective ways of putting philanthropic resources to innovative and collaborative use to create smart solutions, often mixing nonprofit with for-profit and government resources, to heal and repair our communities.

The charitable marketplace is strong because it is diverse, giving a broad range of nonprofits and philanthropies room to test their strategies.

Because of the wealth it controls, organized philanthropy exercises market power that does not reflect its effectiveness.

The growth of new philanthropy adds vital competition and diversity to the charitable marketplace, increasing its ability to produce effective solutions to our most urgent social problems.

Nonprofits need to communicate better

noreply@blogger.com (Todd Cohen) — Mon, 14 Jan 2008 13:44:00 +0000

Nonprofits must work harder to tell their story.

Securing the resources they need to sustain themselves and make a difference in addressing social problems depends on truly engaging a broad range of constituents, including board, staff, volunteers, givers and partners, including government, business and other nonprofits.

And effective communications lies at the heart at the job of engaging all those constituents.

So nonprofits need to boil their story down to basics and learn how to tell it simply and clearly.

Nonprofits need to be able to measure their impact, and say how their work makes a difference in the lives of people and communities.

Nonprofits need to prepare their staff, board and other partners to champion their cause.

Nonprofits need to develop relations with the media, a powerful vehicle for reaching a broad audience.

Nonprofits need to become more effective advocates on public-policy issues that affect both the charitable marketplace and the clients nonprofits serve.

And nonprofits need to persuade institutional and individual givers to invest in helping them strengthen their ability to communicate.

The message of nonprofits, and the skill with which they communicate it, is critical to their mission.