More charitable slime exposed

The New York Times has exposed yet another scandal in the charitable marketplace.

Based on its investigation of the Ancient Arabic Order of the Nobles of the Mystic Shrine, the group that founded and controls the Shriners Hospitals for Children, The Times reports on the Shriners’ “lax accounting procedures and oversight under which money earmarked for the hospitals instead financed temple activities,” including paying for liquor, parties and members’ travel to Shrine events.

In the face of reports of excess and wrongdoing at a small but growing number of charities and foundations, organized philanthropy and nonprofit trade groups have staunchly opposed tougher regulation of the charitable marketplace.

These groups, like Independent Sector and the Council on Foundations, argue that nonprofits and foundations can and will police themselves.

But self-policing cannot curb abuses by groups and individuals that neither recognize or respect accepted and acceptable standards of behavior.

In their fierce fight to ward off challenges to their “independence,” big foundations and nonprofit trade groups mainly are defending their turf and their right to do business however they like without interference or oversight by anyone.

It is a sad commentary on the nonprofit world – and a shining affirmation of the critical role the news media can play –- that it is the news media rather than the self-appointed guardians of the nonprofit sector’s independence that continually are the organizations exposing shameless behavior in the charitable marketplace.

Green clout sprouts

Today’s news brings two more shining examples of the role nonprofits can play in helping to shape corporate strategy and public policy.

As The New York Times reports, the Sierra Club has agreed to scrub opposition to a coal plant in return for a promise by Kansas City Power & Light to cut carbon-dioxide output by the amount a new plant will produce.

The Times reports in the same story that a group of 65 big firms and investors, organized by the Coalition for Environmentally Responsible Economies and the Investor Network on Climate Risk, are asking Congress to set a carbon policy to curb climate-change risk and give businesses a better sense of the requirements that are likely to emerge.

If they focus themselves on policies they care about, organize themselves, team up with partners who can be effective, and work the system to negotiate with corporations, lawmakers and other policymakers, nonprofits and charitable foundations can make a difference.

Too many nonprofits and foundations, however, steer clear of policy work, leaving critical policy issues and decisions unexamined and unchallenged — even as those groups whine about the impact of those policies.

It is time for nonprofits and foundations to get involved, get organized and speak up.

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Getting the gears moving

The social and economic problems our communities face are critical, and foundations can and should transform the way they think about and address those problems.

That is a key message contained in an important new report by MDC Inc., a think-tank in Chapel Hill, N.C., that examines the role of philanthropy as society’s “passing gear.”

Speaking recently to a group of foundation and corporate-giving officials, MDC President David Dodson likened the challenge for foundations to the one addressed in the mid-1960s by the North Carolina Fund, a pioneering effort supported by a handful of foundations to address the interconnected problems of race and poverty.

Just as the North Carolina Fund helped fuel social progress in our state, so can a new collaborative push by organized philanthropy throughout the U.S. help take on deep-seated problems facing our schools, our health care, our economy and workforce, and our communities.

We need, in short, a new generation of local, regional and national efforts modeled on the North Carolina Fund, and foundations need to make it happen.

These Next-Generation Funds would focus on engaging our increasingly diverse population and enlisting organizations from the government, business, education, philanthropic and nonprofit sectors in the work of making social progress.

As PJ reported, the MDC report says a healthy economy and society are critical to developing the good jobs and smart workers needed to compete in a marketplace that is global and fiercely competitive.

Creating and sustaining economic and social health requires repairing educational and health-care systems that are badly broken, and eliminating the gap between people who have access to good schools, good jobs and good health care and those who lack that access.

If they can shake themselves out of their comfort zone and see beyond business as usual, foundations can exercise the flexibility and leadership for which government and business lack the will or backbone, and create the partnerships needed to address the root causes of our most urgent social and economic problems.

Who will take the first step to provide that leadership?

Online fundraising needs personal touch

As PJ reports today, a new survey says online donors give more but are less likely to keep giving.

The study, by Target Analysis Group and Donordigital, also says online donors seem to be more valuable over time.

The internet and email clearly have changed the marketplace for giving.

Online giving after Hurricane Katrina, for example, was unprecedented, and some nonprofits and universities have found that donors are more likely to give, give quickly and give more in response to email appeals.

Email and online giving will be particularly important with younger donors who have grown up communicating online.

But as the new study indicates, technology is no substitute for the personal touch.

A growing body of research underscores the critical importance of developing personal relationships with donors.

That means understanding their interests and values, involving them in your organization by building on those interests and values, and keeping them informed about the impact their giving is having on the people you serve.

While technology can help build those relationships, charities first need to develop an organizational culture and strategy rooted in the understanding that donors are critical partners to fulfilling the organization’s mission.

Philanthropy is a two-way street

Whoever “wins” the court fight between Princeton and the children of major donors who claim the school misspent their parents’ endowment gift, the dispute underscores the fact that any gift creates ethical responsibilities on the part of donor and recipient alike.

As The Wall Street Journal reported March 13, while it says the spending was proper, Princeton now has reimbursed $782,375 to the Robertson family because of “inadequate disclosure” of its spending.

The lawsuit by the Robertson children, heirs to the A&P supermarket fortune, claims Princeton spent $207 million outside guidelines the gift established.

The school denies the claim and, as the Journal reported, the reimbursement does not end the fight, which the newspaper says “may be the most important case in higher education over the question of honoring the wishes of the donor.”

Whether large or small, a charitable gift is built on mutual trust between donor and recipient, and creates ethical responsibilities that do not end with the transfer of assets.

The recipient can and should keep the donor informed and involved, reporting back on how the gift is being used and the impact it is having.

And the donor can and should keep in touch with the recipient, asking for information and looking for appropriate opportunities to continue to provide input and support.

While it can be sensitive and tricky to maintain, the continuing relationship between donor and recipient is critical in the charitable marketplace.

Keeping the donor involved can create a lifelong friend and supporter for a charity, while staying involved with a charity can lead to a fulfilling role in helping to shape solutions to a cause the donor cares about.

Call to action on operating support

Like the emperor with no clothes, U.S. foundations have no cover for their failure to address the operating needs of nonprofits.

And yet, while that failure hurts nonprofits, few of them are willing to push foundations to invest more of their assets in helping nonprofits strengthen their internal operations.

But now, as PJ reports today, the National Committee for Responsive Philanthropy is calling on foundations to allocate at least half their grants and half their grant dollars in the form of “flexible core operating support grants.”

And for all remaining grants that are specific to a project or program, the National Committee says in a new report, foundations should include “indirect costs or an overhead rate that is calculated to be appropriate to the nonprofit and the project.”

The report also calls on individuals planning nonprofit conferences and convenings, on national nonprofit and philanthropic bodies, on academics and researchers and, above all, on nonprofits to focus on the lack of operating grants and its impact on nonprofits.

Foundations control a tax-exempt base of over $500 billion, and the combined assets of organized philanthropy total nearly $1 trillion in tax-exempt funds, but relatively little of those assets reach nonprofits, the report says.

Yet because they are tax-exempt, it says, those assets “are basically equivalent to public resources to serve the public interest.”

Nonprofits serve as the “essential delivery system for foundations to realize their missions,” the report says.

So nonprofits need to recognize that they can “propel change” in the foundation sector.
But fearing it could cost them the funding they do receive, many nonprofits are reluctant to speak bluntly to foundations about their need for operating support.

Delivering the message about the need for operating support, the report says, “depends on nonprofits coming together and being willing to stand up and speak truth to philanthropic power.”

This is an important report, and nonprofits and foundations alike need to read it and move quickly to address this critical problem in the charitable marketplace.

Giving circles spur creative tension

Giving circles, or networks of people who pool their funds and use them to support causes they care about, are one of the fastest-growing areas of philanthropy.

And a new study finds that giving circles are producing mixed reactions from nonprofits.

All nonprofits surveyed say they appreciate the value in dollars and expertise that giving circles add to their work.

But other nonprofits say giving circles’ full potential still has not been realized and they can create challenges in:

* Recruiting donors

* Adjusting quickly to a range of personalities in the giving circle

* Dealing with donors who want to be actively involved in the nonprofit

* Balancing a possible “mismatch” between the priorities and application process of the giving circle and a foundation or other group that may be hosting the giving circle

* Overcoming the fact that giving circles are not always consistent in their expectations and simply cannot be counted on for sustained and long-term funding.

Angela M. Eikenberry, an assistant professor at Virginia Tech who conducted the study with a grant from the AFP Foundation for Philanthropy, says giving circles are generating tensions between donors and nonprofits that reflect an emerging dynamic that is part of a larger evolution in philanthropy and society itself.

That tension, she says, involves balancing the needs of donors, particularly those who are trying to learn more about philanthropy and get more involved in it, with the needs of nonprofits.

And as other research suggests, Eikenberry says, this move for greater engagement is occurring at the same time that social networks are becoming looser.

“We’re transitioning to a new philanthropic environment,” she says. “Donors want to be more engaged and have more say in where their gifts go.”

But the new philanthropy, dubbed “supply-side” philanthropy by Paul Schervish of the Center on Wealth and Philanthropy at Boston College, “doesn’t necessary equate to meeting needs and demands in a society where government is doing less and expects nonprofits to do more,” Eikenberry says.

Her next undertaking, she says, will be to study the implications of the emerging “fragmented structure” of giving.

And as philanthropy evolves, the challenge for nonprofit, as always, is to better understand donors, help them understand the needs of nonprofits, and get them involved in helping to shape strategies and provide resources to address the needs of nonprofits and the people they serve.