Here are ten tips for donors from the IRS.
An excerpt.
Here are the top 10 things the IRS wants every taxpayer to know before deducting charitable donations.
“1. Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov.
“2. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
“3. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
“4. If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
“5. Be sure to keep good records of any contribution you make, regardless of the amount. For any contribution made in cash, you must maintain a record of the contribution such as a bank record – including a cancelled check or a bank or credit card statement – a written record from the charity containing the date and amount of the contribution and the name of the organization, or a payroll deduction record.”
Tuesday, August 31, 2010
Sunday, August 29, 2010
Management by Maslow
To those of us fortunate enough to be familiar with the works of Abraham Maslow, this strategy makes perfect sense, as reported by Fast Company.
An excerpt.
“Chip Conley has a blind spot: The closer you work to him, the less likely he is to recognize your efforts. So Conley, the founder of Joie de Vivre hotel chain, deliberately designed structures to instill a culture of recognition in his company. Conley is the author of three books, most recently Peak: How Great Companies Get Their Mojo from Maslow. In this Q&A, Conley talks about how the near-death of his business changed his outlook on leadership, why managers put too much emphasis on money and not enough on meaning, and why it's more important to climb the employee pyramid than the corporate ladder.
“Kermit Pattison: Let's go back to the dark days of 2001. You had all your hotels in the Bay Area and when tourism tanked after 9/11; you joked you were most vulnerable hotelier in the USA. How did that shape your philosophy about business leadership?
“Chip Conley: No doubt, when you're most on trial you are forced to be your most ingenious. Between the dotcom bust, 9/11, the wars, and the recession, I could see our company was on the verge of going out of business. I ended up in a local bookstore looking for a business book to help me get through it. I quickly ended up in the self-help section. That's how I got reacquainted with the work of Abraham Maslow, a famous American psychologist from the mid 20th century.
“Maslow looked at psychology not from the model of deficiency, which is what most psychologists look at, but from a best practices model: What if we study people who are fulfilled and what he called self-actualized? I liked that as a business guy so I started using Maslow's hierarchy of needs pyramid for a model of how we connect to the higher needs of our employees, our customers and our investors.
“How did that make you rethink how you manage people?
“In a recession, we all get fearful. The most contagious emotion in most companies is fear. Most companies do such a poor job communicating that most employees get stuck in a place of survival and don't have a lot of room for creativity, innovation, or ingenuity. We took the Maslow pyramid and turned it into an employee pyramid with three basic themes: survival the base, succeed at the middle, and transformation at the top. Applying that to employees, it's money, recognition, and meaning.
“Do companies often misjudge employees by assuming that compensation is their primary aspiration?
“Every survey that's been done in the U.S. tends to show money is not the primary, secondary, or third; It's fourth place on why people leave their jobs. The primary motivator of disgruntlement at work is the feeling of not being recognized. People join a company and they leave their boss, as Marcus Buckingham said. The bottom line is the ultimate motivator that says "I gotta to out of here" is not that you're underpaid, it's that you feel under-respected or under-recognized. There's a lot of research that shows that. Unfortunately, the practice of management tends to not take account of that.”
An excerpt.
“Chip Conley has a blind spot: The closer you work to him, the less likely he is to recognize your efforts. So Conley, the founder of Joie de Vivre hotel chain, deliberately designed structures to instill a culture of recognition in his company. Conley is the author of three books, most recently Peak: How Great Companies Get Their Mojo from Maslow. In this Q&A, Conley talks about how the near-death of his business changed his outlook on leadership, why managers put too much emphasis on money and not enough on meaning, and why it's more important to climb the employee pyramid than the corporate ladder.
“Kermit Pattison: Let's go back to the dark days of 2001. You had all your hotels in the Bay Area and when tourism tanked after 9/11; you joked you were most vulnerable hotelier in the USA. How did that shape your philosophy about business leadership?
“Chip Conley: No doubt, when you're most on trial you are forced to be your most ingenious. Between the dotcom bust, 9/11, the wars, and the recession, I could see our company was on the verge of going out of business. I ended up in a local bookstore looking for a business book to help me get through it. I quickly ended up in the self-help section. That's how I got reacquainted with the work of Abraham Maslow, a famous American psychologist from the mid 20th century.
“Maslow looked at psychology not from the model of deficiency, which is what most psychologists look at, but from a best practices model: What if we study people who are fulfilled and what he called self-actualized? I liked that as a business guy so I started using Maslow's hierarchy of needs pyramid for a model of how we connect to the higher needs of our employees, our customers and our investors.
“How did that make you rethink how you manage people?
“In a recession, we all get fearful. The most contagious emotion in most companies is fear. Most companies do such a poor job communicating that most employees get stuck in a place of survival and don't have a lot of room for creativity, innovation, or ingenuity. We took the Maslow pyramid and turned it into an employee pyramid with three basic themes: survival the base, succeed at the middle, and transformation at the top. Applying that to employees, it's money, recognition, and meaning.
“Do companies often misjudge employees by assuming that compensation is their primary aspiration?
“Every survey that's been done in the U.S. tends to show money is not the primary, secondary, or third; It's fourth place on why people leave their jobs. The primary motivator of disgruntlement at work is the feeling of not being recognized. People join a company and they leave their boss, as Marcus Buckingham said. The bottom line is the ultimate motivator that says "I gotta to out of here" is not that you're underpaid, it's that you feel under-respected or under-recognized. There's a lot of research that shows that. Unfortunately, the practice of management tends to not take account of that.”
Saturday, August 28, 2010
Philanthropic Survey
It points out, and reaffirms, some interesting trends among donors, according to this news release.
An excerpt.
“NEW YORK, Aug. 24 /PRNewswire/ -- A new research study was released Tuesday that may change the way many nonprofits approach their fundraising budgets. The report, Heart of the Donor, Insights into Donor Motivation and Behavior for the 21st Century, uncovers valuable insights on donor behavior and preferences as well as insight into age, demographic and other factors.
“The report will be unveiled at the Direct Marketing Association Nonprofit Federation conference at the Sheraton New York City. The research was commissioned and created by Russ Reid and conducted by Grey Matter Research & Consulting. The survey took place in June of this year.
“As many would expect, the study finds that today's most valuable donors – boomers and older donors – primarily give through the mail. But those in the 25-54 age range tended to give both online and through the mail. "One thing we find interesting is this nexus in the 25-54 year old group," said Lisa McIntyre, Russ Reid Senior Vice President, Strategy Development. "The donors who will be most important to us in the coming decade seem equally facile with both mail and online."
“But according to the study, older donors are more generous.
"The point is this: if the goal of a nonprofit is to effectively target today's best donors, then they should focus significant and smart attention on the donors giving the most money – seniors and boomers," said McIntyre. "For example, the number of donors in the 18-24 group and 70-plus are comparable, but the 70-plus donor gives three times as much."
"Does that mean nonprofits should turn a blind eye to the younger segments?" McIntyre continued. "Of course not. Their value will likely increase as they age. But fundraising expenditures must be weighted according to a strategy that maximizes those who are giving now."
“The report suggests that fundraisers should focus their money on the channels that perform the best. While social media is an exciting means of reaching the younger community, the report indicated those who are active there don't use it for donations.”
An excerpt.
“NEW YORK, Aug. 24 /PRNewswire/ -- A new research study was released Tuesday that may change the way many nonprofits approach their fundraising budgets. The report, Heart of the Donor, Insights into Donor Motivation and Behavior for the 21st Century, uncovers valuable insights on donor behavior and preferences as well as insight into age, demographic and other factors.
“The report will be unveiled at the Direct Marketing Association Nonprofit Federation conference at the Sheraton New York City. The research was commissioned and created by Russ Reid and conducted by Grey Matter Research & Consulting. The survey took place in June of this year.
“As many would expect, the study finds that today's most valuable donors – boomers and older donors – primarily give through the mail. But those in the 25-54 age range tended to give both online and through the mail. "One thing we find interesting is this nexus in the 25-54 year old group," said Lisa McIntyre, Russ Reid Senior Vice President, Strategy Development. "The donors who will be most important to us in the coming decade seem equally facile with both mail and online."
“But according to the study, older donors are more generous.
"The point is this: if the goal of a nonprofit is to effectively target today's best donors, then they should focus significant and smart attention on the donors giving the most money – seniors and boomers," said McIntyre. "For example, the number of donors in the 18-24 group and 70-plus are comparable, but the 70-plus donor gives three times as much."
"Does that mean nonprofits should turn a blind eye to the younger segments?" McIntyre continued. "Of course not. Their value will likely increase as they age. But fundraising expenditures must be weighted according to a strategy that maximizes those who are giving now."
“The report suggests that fundraisers should focus their money on the channels that perform the best. While social media is an exciting means of reaching the younger community, the report indicated those who are active there don't use it for donations.”
Friday, August 27, 2010
Advisory Boards
I have always felt that it is a good idea for human service organizations—particularly those in the business of transforming lives—to have an advisory board.
An article from Blue Avocado examines the different forms advisory boards can take.
An excerpt.
“The board of directors of a nonprofit organization is its legal, governing body. In contrast, an advisory board does not have any formal legal responsibilities. Rather, an advisory board is convened by the organization to give advice and support.
“Probably the most common experience nonprofits have with advisory boards is that they invite people successfully onto such a board, and then fail to have that board accomplish much of anything. So it's worth a few minutes to consider the options for doing it right, and even whether to do it at all.
“There are four common types of nonprofit advisory boards, illustrated in the following examples:
• Fundraising: Organization W wants to invite prospective donors onto some kind of official body, but it doesn't think these individuals would be good board members. In some cases the individuals probably don't have the time or interest, and others are not seen as being appropriate (for a variety of reasons) for the board. By creating an advisory board, W hopes to engage donors in a little advice-giving and a lot of donating and fundraising.
• Programmatic: Organization X, in contrast, has a board comprised mostly of wealthy board members who see their role as primarily one of fundraising. But most of the board members are not well connected to the low-income client population, nor are they experts in AIDS -- the work of the organization. As a result, X convened an advisory board composed of low-income clients, social workers, and medical personnel. The advisory board meets four times a year to give input, to react to ideas from staff, and to make suggestions. Several staff and board members attend each meeting. For example, the last advisory board meeting focused on developing a policy around case management for dual-diagnosed clients. X has also convened a Youth Advisory Board. Other advisory groups might include a Disabled Access Advisory Task Force or a Latino Community Advisory Council.
• Letterhead: Organization Y wants to use the names of prestigious friends on its letterhead but doesn't expect or demand any other involvement. The "Advisory Council" exists only as a heading under which these names can be listed; it's helpful to Y and it's easy for individuals to lend their names as supporters to a nonprofit they admire and like.
• Fiscally sponsored: Organization Z is an artists co-op that doesn't have its own 501(c)(3) status, but works under the fiscal sponsorship of another organization. As a result of not having incorporated separately, Z cannot legally have a board of directors. Its advisory committee acts in many of the same roles that a board of directors does but doesn't have the same legal responsibilities. If Z decides to incorporate separately, the advisory committee members will form its board of directors.”
An article from Blue Avocado examines the different forms advisory boards can take.
An excerpt.
“The board of directors of a nonprofit organization is its legal, governing body. In contrast, an advisory board does not have any formal legal responsibilities. Rather, an advisory board is convened by the organization to give advice and support.
“Probably the most common experience nonprofits have with advisory boards is that they invite people successfully onto such a board, and then fail to have that board accomplish much of anything. So it's worth a few minutes to consider the options for doing it right, and even whether to do it at all.
“There are four common types of nonprofit advisory boards, illustrated in the following examples:
• Fundraising: Organization W wants to invite prospective donors onto some kind of official body, but it doesn't think these individuals would be good board members. In some cases the individuals probably don't have the time or interest, and others are not seen as being appropriate (for a variety of reasons) for the board. By creating an advisory board, W hopes to engage donors in a little advice-giving and a lot of donating and fundraising.
• Programmatic: Organization X, in contrast, has a board comprised mostly of wealthy board members who see their role as primarily one of fundraising. But most of the board members are not well connected to the low-income client population, nor are they experts in AIDS -- the work of the organization. As a result, X convened an advisory board composed of low-income clients, social workers, and medical personnel. The advisory board meets four times a year to give input, to react to ideas from staff, and to make suggestions. Several staff and board members attend each meeting. For example, the last advisory board meeting focused on developing a policy around case management for dual-diagnosed clients. X has also convened a Youth Advisory Board. Other advisory groups might include a Disabled Access Advisory Task Force or a Latino Community Advisory Council.
• Letterhead: Organization Y wants to use the names of prestigious friends on its letterhead but doesn't expect or demand any other involvement. The "Advisory Council" exists only as a heading under which these names can be listed; it's helpful to Y and it's easy for individuals to lend their names as supporters to a nonprofit they admire and like.
• Fiscally sponsored: Organization Z is an artists co-op that doesn't have its own 501(c)(3) status, but works under the fiscal sponsorship of another organization. As a result of not having incorporated separately, Z cannot legally have a board of directors. Its advisory committee acts in many of the same roles that a board of directors does but doesn't have the same legal responsibilities. If Z decides to incorporate separately, the advisory committee members will form its board of directors.”
Thursday, August 26, 2010
Corporate Social Responsibility II
This article from the Sloan Review takes the position that companies can do good by being good, following up on a previous post.
An excerpt.
“CAN COMPANIES do well by doing good? That question is asked frequently – but beware of false choices when considering it. In business, there is not a strict dichotomy between doing well and doing good; it is not an either-or proposition. Instead, social good and profitability are among the criteria by which companies make choices. In reality, any company is better off creating both bottom-line and societal benefits – and creating synergies between them.
“That does not mean executives should lose sight of the goals and mission of the business, however. There is no reason certain kinds of good works – say, merely giving away money to areas unrelated to the business – should provide particular strategic advantage for a company. But if a company can integrate the benefits that it offers society more closely into its existing business, that integration can be very sensible and beneficial for the business. For example, people within the organization may recognize internal capabilities which they can build and develop to address a problem in society while simultaneously enlarging the company’s market.
“As I describe in my book Supercorp, some smart companies are finding that including a focus on benefiting society in their mission can help yield competitive advantage. These companies, which are in the vanguard of creating a new business model, have discovered that a commitment to tackling societal problems can be one aspect of creating a corporate culture that leads to high performance and profits. (However, it is important to note that no company exemplifies this aspirational approach to management completely; all companies have flaws, and none live up to their ideals all of the time.)
“There are a number of reasons why incorporating social good into strategy can help a company’s long-term performance. For one thing, it can help strengthen a company in the eyes of a number of important constituencies: its customer base, its employee base and the general public. In particular, a mission that includes serving society can help motivate employees – especially a younger generation of employees who seek meaning in work. Having strong values and a mission that incorporates social good can also help a multinational corporation maintain a cohesive culture despite a diverse global workforce, mergers and acquisitions, and fast-changing markets for the company’s products or services. (In other words, if a company has strong values, what exactly the company sells may change, but what it stands for does not.) Finally, thinking about societal problems can help spark innovative thinking by exposing employees to new ideas and perspectives.
“The Procter & Gamble Company (P&G) provides a good example of how thinking about societal problems can help a company innovate within its traditional lines of business. P&G turned around and grew its business in Brazil by having employees live in and observe low-income households (an untapped market for P&G in Brazil at the time), creating numerous new products and product modifications, such as affordable, environmentally-friendly and hands-friendly detergent for those without washing machines who hand-washed clothes. The ideas spread to other countries and influenced the introduction of Tide Basic in the U.S. P&G employees attributed this success to the need to live up to the company’s purpose of creating products that “improve the lives of the world’s consumers” – which motivated them to see how they could contribute to improving lives of lower-income consumers in their country.”
An excerpt.
“CAN COMPANIES do well by doing good? That question is asked frequently – but beware of false choices when considering it. In business, there is not a strict dichotomy between doing well and doing good; it is not an either-or proposition. Instead, social good and profitability are among the criteria by which companies make choices. In reality, any company is better off creating both bottom-line and societal benefits – and creating synergies between them.
“That does not mean executives should lose sight of the goals and mission of the business, however. There is no reason certain kinds of good works – say, merely giving away money to areas unrelated to the business – should provide particular strategic advantage for a company. But if a company can integrate the benefits that it offers society more closely into its existing business, that integration can be very sensible and beneficial for the business. For example, people within the organization may recognize internal capabilities which they can build and develop to address a problem in society while simultaneously enlarging the company’s market.
“As I describe in my book Supercorp, some smart companies are finding that including a focus on benefiting society in their mission can help yield competitive advantage. These companies, which are in the vanguard of creating a new business model, have discovered that a commitment to tackling societal problems can be one aspect of creating a corporate culture that leads to high performance and profits. (However, it is important to note that no company exemplifies this aspirational approach to management completely; all companies have flaws, and none live up to their ideals all of the time.)
“There are a number of reasons why incorporating social good into strategy can help a company’s long-term performance. For one thing, it can help strengthen a company in the eyes of a number of important constituencies: its customer base, its employee base and the general public. In particular, a mission that includes serving society can help motivate employees – especially a younger generation of employees who seek meaning in work. Having strong values and a mission that incorporates social good can also help a multinational corporation maintain a cohesive culture despite a diverse global workforce, mergers and acquisitions, and fast-changing markets for the company’s products or services. (In other words, if a company has strong values, what exactly the company sells may change, but what it stands for does not.) Finally, thinking about societal problems can help spark innovative thinking by exposing employees to new ideas and perspectives.
“The Procter & Gamble Company (P&G) provides a good example of how thinking about societal problems can help a company innovate within its traditional lines of business. P&G turned around and grew its business in Brazil by having employees live in and observe low-income households (an untapped market for P&G in Brazil at the time), creating numerous new products and product modifications, such as affordable, environmentally-friendly and hands-friendly detergent for those without washing machines who hand-washed clothes. The ideas spread to other countries and influenced the introduction of Tide Basic in the U.S. P&G employees attributed this success to the need to live up to the company’s purpose of creating products that “improve the lives of the world’s consumers” – which motivated them to see how they could contribute to improving lives of lower-income consumers in their country.”
Wednesday, August 25, 2010
Taking the Pledge
Some billionaires made big news recently when they pledged to give away more of their money, which is apparently very good news for the nonprofit community; but, as this article from the Wall Street Journal notes, perhaps not so good for the larger society.
An excerpt.
“Bill Gates and Warren Buffett announced this month that 40 of America's richest people have agreed to sign a "Giving Pledge" to donate at least half of their wealth to charity. With a collective net worth said to total $230 billion, that promise translates to at least $115 billion.
“It's an impressive number. Yet some—including Messrs. Gates and Buffett—say it isn't enough. Perhaps it's actually too much: the wealthy may help humanity more as businessmen and women than as philanthropists.
“What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett's investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.
“Other signers of the pledge, like Oracle's Larry Ellison and eBay's Pierre Omidyar, have similarly transformed the way people all over the world exchange information and products. They have democratized the transmission of ideas and goods, creating opportunities for people who never would have had them otherwise.
“Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to "give back" to society. But "giving back" implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven't taken from society, but rather enriched us in ways that were previously unimaginable.
“Even if Mr. Gates makes progress in achieving his ambitious philanthropic objectives—eradicating disease, reducing global poverty, and improving educational quality—these accomplishments are unlikely to match what he achieved by giving us the amazing capability we literally have at our fingertips to access and spread information. The very doctors and scientists who may develop cures for diseases like malaria will rely on the tools Microsoft supplies to conduct their research. Had Mr. Gates decided to step down from his company and turn to philanthropy sooner than he did, they might have fewer such tools.
“While businesses may do more for the public good than they're given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill? To the contrary, the literature on philanthropy is riddled with examples of failure, including examples where philanthropic efforts have actually left intended beneficiaries worse off. The Gates Foundation has itself acknowledged that one of its premier initiatives—a 10-year, $2 billion project to reorganize high schools around the country into schools with fewer than 400 students—was a complete bust. Good for them for admitting it. In that, they are unusual. In the failure, they are not.
“I do not mean to belittle philanthropy. I represent a foundation and believe it can accomplish a great deal of good if it achieves its donor's objective, which is to free individuals to pursue their ambitions without the burden of intrusive government. My point is simply that there is nothing inherently better or nobler about using one's resources for charitable purposes than for any number of other ones. If anything, the marketplace does a better job of channeling resources toward where they are most valued, and of punishing failure. Companies shut down all the time. How many philanthropies close because of poor performance?”
An excerpt.
“Bill Gates and Warren Buffett announced this month that 40 of America's richest people have agreed to sign a "Giving Pledge" to donate at least half of their wealth to charity. With a collective net worth said to total $230 billion, that promise translates to at least $115 billion.
“It's an impressive number. Yet some—including Messrs. Gates and Buffett—say it isn't enough. Perhaps it's actually too much: the wealthy may help humanity more as businessmen and women than as philanthropists.
“What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett's investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.
“Other signers of the pledge, like Oracle's Larry Ellison and eBay's Pierre Omidyar, have similarly transformed the way people all over the world exchange information and products. They have democratized the transmission of ideas and goods, creating opportunities for people who never would have had them otherwise.
“Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to "give back" to society. But "giving back" implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven't taken from society, but rather enriched us in ways that were previously unimaginable.
“Even if Mr. Gates makes progress in achieving his ambitious philanthropic objectives—eradicating disease, reducing global poverty, and improving educational quality—these accomplishments are unlikely to match what he achieved by giving us the amazing capability we literally have at our fingertips to access and spread information. The very doctors and scientists who may develop cures for diseases like malaria will rely on the tools Microsoft supplies to conduct their research. Had Mr. Gates decided to step down from his company and turn to philanthropy sooner than he did, they might have fewer such tools.
“While businesses may do more for the public good than they're given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill? To the contrary, the literature on philanthropy is riddled with examples of failure, including examples where philanthropic efforts have actually left intended beneficiaries worse off. The Gates Foundation has itself acknowledged that one of its premier initiatives—a 10-year, $2 billion project to reorganize high schools around the country into schools with fewer than 400 students—was a complete bust. Good for them for admitting it. In that, they are unusual. In the failure, they are not.
“I do not mean to belittle philanthropy. I represent a foundation and believe it can accomplish a great deal of good if it achieves its donor's objective, which is to free individuals to pursue their ambitions without the burden of intrusive government. My point is simply that there is nothing inherently better or nobler about using one's resources for charitable purposes than for any number of other ones. If anything, the marketplace does a better job of channeling resources toward where they are most valued, and of punishing failure. Companies shut down all the time. How many philanthropies close because of poor performance?”
Tuesday, August 24, 2010
Corporate Social Responsibility
Is it good or bad, a question delved into by this excellent article from the Wall Street Journal.
An excerpt.
“Can companies do well by doing good? Yes—sometimes.
“But the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.
“Large companies now routinely claim that they aren't in business just for the profits, that they're also intent on serving some larger social purpose. They trumpet their efforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and other resources in their operations, or otherwise make the world a better place. Influential institutions like the Academy of Management and the United Nations, among many others, encourage companies to pursue such strategies.
“It's not surprising that this idea has won over so many people—it's a very appealing proposition. You can have your cake and eat it too!
“But it's an illusion, and a potentially dangerous one.
“Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.
“Irrelevant or ineffective, take your pick. But it's worse than that. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds. As society looks to companies to address these problems, the real solutions may be ignored.”
An excerpt.
“Can companies do well by doing good? Yes—sometimes.
“But the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.
“Large companies now routinely claim that they aren't in business just for the profits, that they're also intent on serving some larger social purpose. They trumpet their efforts to produce healthier foods or more fuel-efficient vehicles, conserve energy and other resources in their operations, or otherwise make the world a better place. Influential institutions like the Academy of Management and the United Nations, among many others, encourage companies to pursue such strategies.
“It's not surprising that this idea has won over so many people—it's a very appealing proposition. You can have your cake and eat it too!
“But it's an illusion, and a potentially dangerous one.
“Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.
“Irrelevant or ineffective, take your pick. But it's worse than that. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds. As society looks to companies to address these problems, the real solutions may be ignored.”
Monday, August 23, 2010
Privatization
The selling of public assets to private enterprises can work out wonderfully for all involved, or could be a disastrous public strategy hurting the common good, as this article from the Wall Street Journal notes.
Public private partnerships on the other hand, especially those between government and public benefit non profit corporations, almost always—given good management and well-thought out agreements—generally work out well.
An excerpt.
“Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
“California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it's parking meters. In Louisiana and Georgia, airports are up for grabs.
“About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland's RBS Global Banking & Markets. Those assets have a market value of about $45 billion—more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.
“The deals illustrate the increasingly tight financial squeeze gripping communities. Many are using asset sales to balance budgets ravaged by declines in tax revenues and unfunded pensions. In recent congressional testimony, billionaire investor Warren Buffett said he worried about how municipalities will pay for public workers' retirement and health benefits and suggested that the federal government may ultimately be compelled to bail out states.
"Privatization"—selling government-owned property to private corporations and other entities—has been popular for years in Europe, Canada and Australia, where government once owned big chunks of the economy.
“In many cases, the private takeover of government-controlled industry or services can result in more efficient and profitable operations. On a toll road, for example, a private operator may have more money to pump into repairs and would bear the brunt of losses if drivers used the road less.
“While asset sales can create efficiencies, critics say the way these current sales are being handled could hurt communities over the long run. Some properties are being sold at fire-sale prices into a weak market. The deals mean cities are giving up long-term, recurring income streams in exchange for lump-sum payments to plug one-time budget gaps.
“The deals are threatening credit ratings in some cases and affecting the quality and cost of basic utilities such as electricity and water. Critics say many of the moves are akin to individuals using their retirement plans to pay for immediate needs, instead of planning for the future.
"The deals are part of a broader restructuring of our economy that carries big risks because of revenue losses over time," says Michael Likosky, a professor at New York University who specializes in public finance law.
“Municipalities argue that the money they raise could help build more long-term assets, boost efficiency and avoid raising taxes. "The City of Los Angeles shouldn't be in the parking business," says Mike Mullen, senior adviser to L.A.'s mayor. Mr. Mullen was hired from Bank of Montreal to study selling some of the city's assets, including parking spaces, which bring in about $20 million annually.
“In the U.S., selling public buildings and leasing them back got some attention in the 1980s, but those deals were largely done for tax benefits and the asset generally stayed in public hands.
“The current deals are fundamentally different because control of the asset transfers to private hands. In such deals, "the private investor takes on operating risk," Mr. Likosky says.”
Public private partnerships on the other hand, especially those between government and public benefit non profit corporations, almost always—given good management and well-thought out agreements—generally work out well.
An excerpt.
“Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
“California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it's parking meters. In Louisiana and Georgia, airports are up for grabs.
“About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland's RBS Global Banking & Markets. Those assets have a market value of about $45 billion—more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.
“The deals illustrate the increasingly tight financial squeeze gripping communities. Many are using asset sales to balance budgets ravaged by declines in tax revenues and unfunded pensions. In recent congressional testimony, billionaire investor Warren Buffett said he worried about how municipalities will pay for public workers' retirement and health benefits and suggested that the federal government may ultimately be compelled to bail out states.
"Privatization"—selling government-owned property to private corporations and other entities—has been popular for years in Europe, Canada and Australia, where government once owned big chunks of the economy.
“In many cases, the private takeover of government-controlled industry or services can result in more efficient and profitable operations. On a toll road, for example, a private operator may have more money to pump into repairs and would bear the brunt of losses if drivers used the road less.
“While asset sales can create efficiencies, critics say the way these current sales are being handled could hurt communities over the long run. Some properties are being sold at fire-sale prices into a weak market. The deals mean cities are giving up long-term, recurring income streams in exchange for lump-sum payments to plug one-time budget gaps.
“The deals are threatening credit ratings in some cases and affecting the quality and cost of basic utilities such as electricity and water. Critics say many of the moves are akin to individuals using their retirement plans to pay for immediate needs, instead of planning for the future.
"The deals are part of a broader restructuring of our economy that carries big risks because of revenue losses over time," says Michael Likosky, a professor at New York University who specializes in public finance law.
“Municipalities argue that the money they raise could help build more long-term assets, boost efficiency and avoid raising taxes. "The City of Los Angeles shouldn't be in the parking business," says Mike Mullen, senior adviser to L.A.'s mayor. Mr. Mullen was hired from Bank of Montreal to study selling some of the city's assets, including parking spaces, which bring in about $20 million annually.
“In the U.S., selling public buildings and leasing them back got some attention in the 1980s, but those deals were largely done for tax benefits and the asset generally stayed in public hands.
“The current deals are fundamentally different because control of the asset transfers to private hands. In such deals, "the private investor takes on operating risk," Mr. Likosky says.”
Saturday, August 21, 2010
Service Program Innovation
One of the most difficult decisions the leadership of human service organizations make—often unconsciously—is choosing between perpetuation or transformation, and, unfortunately, all too many choose perpetuation.
An example is in the marvelous new book by Stephen Goldsmith, The Power of Social Innovation: How Civic Entrepreneurs Ignite Community Networks for Good.
An excerpt.
“Anyone who believes that entrepreneurship cannot occur inside government should meet New York City Deputy Mayor Linda Gibbs….
“In 2002, with more than 33,000 homeless people in New York City shelters in any given month, Mayor Bloomberg appointed Gibbs as commissioner of homeless services…. Gibbs noted that the Department of Homeless Services (DHS) had made shelters its centerpiece, which perversely perpetuated chronic homelessness rather than reducing it. As Gibbs later observed, “We were smart enough to know how to help the client’s underlying needs. But you put them in the shelters and suddenly the shelters become the solution, which is turning the world upside down.” DHS was producing an almost perfect example of what economists call moral hazard—when well-intentioned public policies encourage the very act that the policies are attempting to address. Once homeless, individuals and families jumped to the top of affordable housing lists, allowing them to choose among various types of shelters. In effect, the homeless had more choices that people working to pay rent.
“With Bloomberg’s backing, Gibbs redefined the agency’s goal from serving the homeless to ending homelessness. This step forced the DHS to take preventive actions before things got worse. The agency shifted its focus from supposedly temporary, stop-gap shelter to permanent housing with supports. DHS could now intervene by redirecting resources toward helping people they identified as at risk of becoming homeless stay on their feet.” (pp. 107-108)
An example is in the marvelous new book by Stephen Goldsmith, The Power of Social Innovation: How Civic Entrepreneurs Ignite Community Networks for Good.
An excerpt.
“Anyone who believes that entrepreneurship cannot occur inside government should meet New York City Deputy Mayor Linda Gibbs….
“In 2002, with more than 33,000 homeless people in New York City shelters in any given month, Mayor Bloomberg appointed Gibbs as commissioner of homeless services…. Gibbs noted that the Department of Homeless Services (DHS) had made shelters its centerpiece, which perversely perpetuated chronic homelessness rather than reducing it. As Gibbs later observed, “We were smart enough to know how to help the client’s underlying needs. But you put them in the shelters and suddenly the shelters become the solution, which is turning the world upside down.” DHS was producing an almost perfect example of what economists call moral hazard—when well-intentioned public policies encourage the very act that the policies are attempting to address. Once homeless, individuals and families jumped to the top of affordable housing lists, allowing them to choose among various types of shelters. In effect, the homeless had more choices that people working to pay rent.
“With Bloomberg’s backing, Gibbs redefined the agency’s goal from serving the homeless to ending homelessness. This step forced the DHS to take preventive actions before things got worse. The agency shifted its focus from supposedly temporary, stop-gap shelter to permanent housing with supports. DHS could now intervene by redirecting resources toward helping people they identified as at risk of becoming homeless stay on their feet.” (pp. 107-108)
Wednesday, August 18, 2010
Nonprofit Report
A new survey has come out from Guidestar, an important organization to become familiar with for the wonderful nonprofit data base they have built.
An excerpt from the announcement.
“Public charities and private foundations continued to take a beating during the first five months of 2010. Some 40 percent of participants in GuideStar's first nonprofit economic survey for 2010 reported that contributions to their organizations dropped between January 1 and May 31, 2010, compared to the same period a year earlier. Another 28 percent said that contributions had stayed about the same, and 30 percent stated contributions had increased.
"The Effect of the Economy on the Nonprofit Sector: A June 2010 Survey" presents these results and more. Among the other findings:
• Eight percent of respondents indicated that their organizations was were in imminent danger of closing.
• In order to balance budgets, 17 percent of respondents reduced program services, and 11 percent laid off employees.
• More than 60 percent of participants reporting decreased contributions attributed the drop to a decline in both the number of individual donors and the size of their donations.
• Among organizations that use volunteers, 17 percent used one or more in what had formerly been paid positions.
• About a third (32 percent) of organizations increased their reliance on volunteers, whereas 9 percent experienced a decline.
An excerpt from the announcement.
“Public charities and private foundations continued to take a beating during the first five months of 2010. Some 40 percent of participants in GuideStar's first nonprofit economic survey for 2010 reported that contributions to their organizations dropped between January 1 and May 31, 2010, compared to the same period a year earlier. Another 28 percent said that contributions had stayed about the same, and 30 percent stated contributions had increased.
"The Effect of the Economy on the Nonprofit Sector: A June 2010 Survey" presents these results and more. Among the other findings:
• Eight percent of respondents indicated that their organizations was were in imminent danger of closing.
• In order to balance budgets, 17 percent of respondents reduced program services, and 11 percent laid off employees.
• More than 60 percent of participants reporting decreased contributions attributed the drop to a decline in both the number of individual donors and the size of their donations.
• Among organizations that use volunteers, 17 percent used one or more in what had formerly been paid positions.
• About a third (32 percent) of organizations increased their reliance on volunteers, whereas 9 percent experienced a decline.
Tuesday, August 17, 2010
Movements, Nonprofits & Change
The great movements in America that have resulted in such wonderful change—such as that which gave the right to vote for women—take a long time, and this article from the New York Times notes the effort.
An excerpt.
“The story in American history I most like to tell is the one about how women got the right to vote 90 years ago this month. It has everything. Adventure! Suspense! Treachery! Drunken legislators!
“But, first, there was a 70-year slog.
“Which is really the important part. We always need to remember that behind almost every great moment in history, there are heroic people doing really boring and frustrating things for a prolonged period of time.
“That great suffragist and excellent counter, Carrie Chapman Catt, estimated that the struggle had involved 56 referendum campaigns directed at male voters, plus “480 campaigns to get Legislatures to submit suffrage amendments to voters, 47 campaigns to get constitutional conventions to write woman suffrage into state constitutions; 277 campaigns to get State party conventions to include woman suffrage planks, 30 campaigns to get presidential party campaigns to include woman suffrage planks in party platforms and 19 campaigns with 19 successive Congresses.”
“And you thought health care reform was a drawn-out battle.
“The great, thundering roadblock to progress was — wait for the surprise — the U.S. Senate. All through the last part of the 19th century and into the 20th, attempts to amend the U.S. Constitution ran up against a wall of conservative Southern senators.
“So the women decided to win the vote by amending every single state constitution, one by one.
“There were five referenda in South Dakota alone. Susan B. Anthony spent more time there than a wheat farmer. But she never lost hope. The great day was coming, she promised: “It’s coming sooner than most people think.” I love this remark even more because she made it in 1895.
“Sometimes I fantasize about traveling back through time and telling my historical heroes and heroines how well things worked out in the end. I particularly enjoy the part where I find Vincent van Gogh and inform him that one of the unsold paintings piled up over in the corner will eventually go for $80 million. But I never imagine telling Susan B. Anthony how well American women are doing in the 21st century because her faith in her country and her cause was so strong that she wouldn’t be surprised.
“The constitutional amendment that finally did pass Congress bore Anthony’s name. It came up before the House of Representatives in 1918 with the two-thirds votes needed for passage barely within reach. One congressman who had been in the hospital for six months had himself carted to the floor so he could support suffrage. Another, who had just broken his shoulder, refused to have it set for fear he’d be too late to be counted. Representative Frederick Hicks of New York had been at the bedside of his dying wife but left at her urging to support the cause. He provided the final, crucial vote, and then returned home for her funeral.”
An excerpt.
“The story in American history I most like to tell is the one about how women got the right to vote 90 years ago this month. It has everything. Adventure! Suspense! Treachery! Drunken legislators!
“But, first, there was a 70-year slog.
“Which is really the important part. We always need to remember that behind almost every great moment in history, there are heroic people doing really boring and frustrating things for a prolonged period of time.
“That great suffragist and excellent counter, Carrie Chapman Catt, estimated that the struggle had involved 56 referendum campaigns directed at male voters, plus “480 campaigns to get Legislatures to submit suffrage amendments to voters, 47 campaigns to get constitutional conventions to write woman suffrage into state constitutions; 277 campaigns to get State party conventions to include woman suffrage planks, 30 campaigns to get presidential party campaigns to include woman suffrage planks in party platforms and 19 campaigns with 19 successive Congresses.”
“And you thought health care reform was a drawn-out battle.
“The great, thundering roadblock to progress was — wait for the surprise — the U.S. Senate. All through the last part of the 19th century and into the 20th, attempts to amend the U.S. Constitution ran up against a wall of conservative Southern senators.
“So the women decided to win the vote by amending every single state constitution, one by one.
“There were five referenda in South Dakota alone. Susan B. Anthony spent more time there than a wheat farmer. But she never lost hope. The great day was coming, she promised: “It’s coming sooner than most people think.” I love this remark even more because she made it in 1895.
“Sometimes I fantasize about traveling back through time and telling my historical heroes and heroines how well things worked out in the end. I particularly enjoy the part where I find Vincent van Gogh and inform him that one of the unsold paintings piled up over in the corner will eventually go for $80 million. But I never imagine telling Susan B. Anthony how well American women are doing in the 21st century because her faith in her country and her cause was so strong that she wouldn’t be surprised.
“The constitutional amendment that finally did pass Congress bore Anthony’s name. It came up before the House of Representatives in 1918 with the two-thirds votes needed for passage barely within reach. One congressman who had been in the hospital for six months had himself carted to the floor so he could support suffrage. Another, who had just broken his shoulder, refused to have it set for fear he’d be too late to be counted. Representative Frederick Hicks of New York had been at the bedside of his dying wife but left at her urging to support the cause. He provided the final, crucial vote, and then returned home for her funeral.”
Monday, August 16, 2010
Catholic Charities Office Closes
A local office, with several decades of history in Southern California, closes, as reported by the Thousand Oaks Acorn.
An excerpt.
“Catholic Charities no longer provides food, shelter, clothing and eviction-prevention assistance to the needy from a rent-free office at Under One Roof in Thousand Oaks.
“By forgoing office space and the salary of a full-time employee as of Aug. 6, Catholic Charities will save $40,000 a year on internal costs charged to them by their Los Angeles branch, said Michael Perry, regional director of Catholic Charities.
“That’s money we can better spend providing services to those who need it,” Perry said.
“The charity had been at the office at 80 E. Hillcrest Drive for 15 years, in Thousand Oaks for more than 30 years and in Ventura County since 1926.”
An excerpt.
“Catholic Charities no longer provides food, shelter, clothing and eviction-prevention assistance to the needy from a rent-free office at Under One Roof in Thousand Oaks.
“By forgoing office space and the salary of a full-time employee as of Aug. 6, Catholic Charities will save $40,000 a year on internal costs charged to them by their Los Angeles branch, said Michael Perry, regional director of Catholic Charities.
“That’s money we can better spend providing services to those who need it,” Perry said.
“The charity had been at the office at 80 E. Hillcrest Drive for 15 years, in Thousand Oaks for more than 30 years and in Ventura County since 1926.”
Sunday, August 15, 2010
Gift Funds
One of the most effective ways to manage your philanthropy—especially if you do not have the time or inclination to check out charities directly—is through donor advised funds and those managed by Fidelity do that well, as reported by Financial Advisor.
An excerpt.
“Fidelity Investments on Wednesday said its donor-advised fund program reported both the number of grants and the amount of money granted set records for the strongest activity in the first half of a calendar year.
“The Fidelity Charitable Gift Fund said donors made more than 152,000 grants totaling $531 million to charities across the U.S. Those six-month amounts represented 27% and 16% increases, respectively, over the year-earlier period. Fidelity said the Gift Fund, a non-profit organization created in 1991, is the nation’s largest donor-advised fund program and third largest public charity.
“Overall contributions to the Gift Fund jumped 67% during the first half, fueled in part by a 19% rise in new accounts established at its Giving Account donor-advised fund, which is the vehicle that facilitates individual charitable contributions.”
An excerpt.
“Fidelity Investments on Wednesday said its donor-advised fund program reported both the number of grants and the amount of money granted set records for the strongest activity in the first half of a calendar year.
“The Fidelity Charitable Gift Fund said donors made more than 152,000 grants totaling $531 million to charities across the U.S. Those six-month amounts represented 27% and 16% increases, respectively, over the year-earlier period. Fidelity said the Gift Fund, a non-profit organization created in 1991, is the nation’s largest donor-advised fund program and third largest public charity.
“Overall contributions to the Gift Fund jumped 67% during the first half, fueled in part by a 19% rise in new accounts established at its Giving Account donor-advised fund, which is the vehicle that facilitates individual charitable contributions.”
Saturday, August 14, 2010
Social Marketing
The fact that nonprofits are leading in the use of this new tool makes sense as the social aspect of charitable work is obvious while that of corporate work is usually not.
The Nonprofit Quarterly Newswire reports.
An excerpt.
“How many times have you heard people say, "Think of all charities can learn from the corporate world?" Now, it appears that nonprofits might have something to teach their for-profit marketing counterparts. According to a survey from the University of Massachusetts Dartmouth Center for Marketing Research, charities are outpacing large and small businesses in adopting social marketing.
“Findings reported in eMarketer show that as of 2009, 97 percent of large charitable organizations surveyed were using some form of social media. That compares with only 80 percent of companies in the Inc. 500, a list of the fastest-growing private companies in the U.S., who say they are social media users.”
The Nonprofit Quarterly Newswire reports.
An excerpt.
“How many times have you heard people say, "Think of all charities can learn from the corporate world?" Now, it appears that nonprofits might have something to teach their for-profit marketing counterparts. According to a survey from the University of Massachusetts Dartmouth Center for Marketing Research, charities are outpacing large and small businesses in adopting social marketing.
“Findings reported in eMarketer show that as of 2009, 97 percent of large charitable organizations surveyed were using some form of social media. That compares with only 80 percent of companies in the Inc. 500, a list of the fastest-growing private companies in the U.S., who say they are social media users.”
Friday, August 13, 2010
Social Values
The search for measures to determine the success of failure of social programs is ongoing, and this article from the Stanford Social Innovation Review, is an excellent overview of the issue.
An excerpt.
“Over the last few decades, many people have attempted to measure what is sometimes called social, public, or civic value—that is, the value that nongovernmental organizations (NGOs), social enterprises, social ventures, and social programs create.1 The demand for these metrics has come from all sectors: Foundations want to direct their grants to the most effective programs; public officials, policymakers, and government budget offices have to account for their spending decisions; investors want hard data analogous to measures of profit; and nonprofits need to demonstrate their impact to funders, partners, and beneficiaries. Metrics to meet these needs have proliferated over the last 40 years, resulting in hundreds of competing methods for calculating social value.2
“Despite the enthusiasm for metrics, few people actually use them to guide decisions. In the nonprofit sector, good managers are very rigorous about tracking costs and income. But few use sophisticated metrics to help allocate resources. Meanwhile, in the public sector, political judgment counts more than cost-benefit assessments. In the rare cases when decision makers do use metrics of social value, it’s far from clear that they should.
“I’ve dealt with social value metrics in a variety of roles: as director of policy and strategy under United Kingdom Prime Minister Tony Blair; as director of the Young Foundation, an NGO that has created dozens of ventures, some for-profit, some social enterprises, and some public; and as an advisor to many other governments. In these positions, I’ve seen not only why social value metrics are ignored, but also how to make them more useful.
“One recent project that proved particularly informative was a collaboration between the United Kingdom’s National Health Service (NHS) and the Young Foundation. The NHS commissioned the Young Foundation to develop a practical tool for assessing service innovations and guiding investment decisions. The NHS is a vast organization with a budget of around $150 billion, a workforce of some 1.2 million employees, and contracts with more than 30,000 social enterprises. It needed a set of tools that would be both robust and flexible, and that could be used for decision making as well as evaluation.
“We started by scanning existing social value metrics, such as the ones described in the table “10 Ways to Measure Social Value” on page 41. We found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. In addition to discovering this segmentation, our survey suggested two more reasons why so few metrics guide real decisions. First, most metrics assume that value is objective, and therefore discoverable through analysis. Yet as most modern economists now agree, value is not an objective fact. Instead, value emerges from the interaction of supply and demand, and ultimately reflects what people or organizations are willing to pay. Because so few of the tools reflect this, they are inevitably misaligned with an organization’s strategic and operational priorities.
“The second reason that current measures of social value fail to influence decision makers is that they conflate three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. In the business sector, decision makers use different tools for each of these tasks. An airplane manufacturer, for instance, would use one set of metrics, mandated by laws and regulations, to explain to external stakeholders how it spends its money. The company would then use a second set of metrics to allocate resources in the building of airplanes. (It is a brave manager who would let investors see these internal accounts.) The company would then use entirely different kinds of measures to explain how its activities affect larger economic indicators such as gross domestic product.
“Yet in the social and public sectors, some proponents of new social value measures claim that their metric can play all three roles. Not surprisingly, and despite courageous efforts, these attempts to do three things at once have resulted in the failure to do any one of them well.
“Here, I describe a better way to think about social value: the product of the dynamic interaction between supply and demand in the evolution of markets for social value. I then show how decision makers in the nonprofit and public sectors can use these insights to measure what can be measured without pretending to measure what can’t be. Finally I recommend better ways to make social value metrics. My main advice is that nonprofits and foundations should resist the current trend of developing assessment tools entirely separately from public policy and academic social science, and instead should collaborate across sectors.
“ELUSIVE QUARRY
“The failure of the social and public sectors to measure the value they create does not stem from a paucity of intelligence or good intention. Rather, it reflects four unavoidable complexities that bedevil the measurement of social value. First among these is the lack of hard-and-fast laws and regularities in the social field. Many people would love the social field to be more like natural science, so that they could definitely predict the effects of, say, a $10 million investment in a crime prevention program.
“But unlike molecules, which follow the rules of physics rather obediently, human beings have minds of their own, and are subject to many social, psychological, and environmental forces. Several decades of involvement in evidence-based policymaking has shown me that although evidence should inform all action, very few domains allow precise predictions about what causes will lead to what effects. The social sciences (including business) simply do not have laws in the way that physics has. Even seemingly solid economic principles, such as the rule that demand falls when prices rise, have many exceptions.
“A second reason that measuring social value is hard is that, in many of the most important fields of social action—such as crime prevention, childcare, and schooling—people do not agree about what the desired outcome should be. In other words, the public argues not only about social value, but also about social values. For example, many people want to imprison criminals to punish them, even when incarceration costs more and confers fewer benefits than do alternatives to prison. Psychologists call this willingness to sacrifice a lot to penalize others altruistic punishment.”
An excerpt.
“Over the last few decades, many people have attempted to measure what is sometimes called social, public, or civic value—that is, the value that nongovernmental organizations (NGOs), social enterprises, social ventures, and social programs create.1 The demand for these metrics has come from all sectors: Foundations want to direct their grants to the most effective programs; public officials, policymakers, and government budget offices have to account for their spending decisions; investors want hard data analogous to measures of profit; and nonprofits need to demonstrate their impact to funders, partners, and beneficiaries. Metrics to meet these needs have proliferated over the last 40 years, resulting in hundreds of competing methods for calculating social value.2
“Despite the enthusiasm for metrics, few people actually use them to guide decisions. In the nonprofit sector, good managers are very rigorous about tracking costs and income. But few use sophisticated metrics to help allocate resources. Meanwhile, in the public sector, political judgment counts more than cost-benefit assessments. In the rare cases when decision makers do use metrics of social value, it’s far from clear that they should.
“I’ve dealt with social value metrics in a variety of roles: as director of policy and strategy under United Kingdom Prime Minister Tony Blair; as director of the Young Foundation, an NGO that has created dozens of ventures, some for-profit, some social enterprises, and some public; and as an advisor to many other governments. In these positions, I’ve seen not only why social value metrics are ignored, but also how to make them more useful.
“One recent project that proved particularly informative was a collaboration between the United Kingdom’s National Health Service (NHS) and the Young Foundation. The NHS commissioned the Young Foundation to develop a practical tool for assessing service innovations and guiding investment decisions. The NHS is a vast organization with a budget of around $150 billion, a workforce of some 1.2 million employees, and contracts with more than 30,000 social enterprises. It needed a set of tools that would be both robust and flexible, and that could be used for decision making as well as evaluation.
“We started by scanning existing social value metrics, such as the ones described in the table “10 Ways to Measure Social Value” on page 41. We found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. In addition to discovering this segmentation, our survey suggested two more reasons why so few metrics guide real decisions. First, most metrics assume that value is objective, and therefore discoverable through analysis. Yet as most modern economists now agree, value is not an objective fact. Instead, value emerges from the interaction of supply and demand, and ultimately reflects what people or organizations are willing to pay. Because so few of the tools reflect this, they are inevitably misaligned with an organization’s strategic and operational priorities.
“The second reason that current measures of social value fail to influence decision makers is that they conflate three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. In the business sector, decision makers use different tools for each of these tasks. An airplane manufacturer, for instance, would use one set of metrics, mandated by laws and regulations, to explain to external stakeholders how it spends its money. The company would then use a second set of metrics to allocate resources in the building of airplanes. (It is a brave manager who would let investors see these internal accounts.) The company would then use entirely different kinds of measures to explain how its activities affect larger economic indicators such as gross domestic product.
“Yet in the social and public sectors, some proponents of new social value measures claim that their metric can play all three roles. Not surprisingly, and despite courageous efforts, these attempts to do three things at once have resulted in the failure to do any one of them well.
“Here, I describe a better way to think about social value: the product of the dynamic interaction between supply and demand in the evolution of markets for social value. I then show how decision makers in the nonprofit and public sectors can use these insights to measure what can be measured without pretending to measure what can’t be. Finally I recommend better ways to make social value metrics. My main advice is that nonprofits and foundations should resist the current trend of developing assessment tools entirely separately from public policy and academic social science, and instead should collaborate across sectors.
“ELUSIVE QUARRY
“The failure of the social and public sectors to measure the value they create does not stem from a paucity of intelligence or good intention. Rather, it reflects four unavoidable complexities that bedevil the measurement of social value. First among these is the lack of hard-and-fast laws and regularities in the social field. Many people would love the social field to be more like natural science, so that they could definitely predict the effects of, say, a $10 million investment in a crime prevention program.
“But unlike molecules, which follow the rules of physics rather obediently, human beings have minds of their own, and are subject to many social, psychological, and environmental forces. Several decades of involvement in evidence-based policymaking has shown me that although evidence should inform all action, very few domains allow precise predictions about what causes will lead to what effects. The social sciences (including business) simply do not have laws in the way that physics has. Even seemingly solid economic principles, such as the rule that demand falls when prices rise, have many exceptions.
“A second reason that measuring social value is hard is that, in many of the most important fields of social action—such as crime prevention, childcare, and schooling—people do not agree about what the desired outcome should be. In other words, the public argues not only about social value, but also about social values. For example, many people want to imprison criminals to punish them, even when incarceration costs more and confers fewer benefits than do alternatives to prison. Psychologists call this willingness to sacrifice a lot to penalize others altruistic punishment.”
Thursday, August 12, 2010
Corporate Giving Down
In what should be no surprise, given the great uncertainty felt by business at the vastly increased role government has assumed in their affairs and the anxiety around future moves, the amount corporations gave to charity dropped in 2009 and appears to be remaining flat in 2010, according to this article from USA Today.
An excerpt.
“Corporate profits are on the rebound, but most big businesses say it will be some time before they can give as much cash to charities as they did before the recession, according to a survey of the nation's largest companies by the Chronicle of Philanthropy and USA TODAY.
“More than 100 answered the survey, and the Chronicle analyzed tax data for a total of 162 companies.
“A majority of companies said they expect their charitable donations in 2010 to be about the same as in 2009 — a year in which cash giving fell by 7.5%. Of the 102 firms that answered the question, 73% predicted a flat 2010.
“While that would be bad news for charities, the reality could be even worse.
“Sixty-eight companies decreased their cash giving in 2009 to $3.9 billion, the first time since 2003 that cash contributions from businesses in The Chronicle's survey have dropped. Fifty-four percent of businesses gave less cash, 30% gave more, and 16% gave roughly the same. But donations of cash and products increased by nearly 5% last year, as companies sought to compensate for the decline in cash by offering other types of assistance.
"The whole economy has to burrow itself back up before a lot of corporations are going to have the money to invest as they did prior to the recession," says Woody Dicus, manager of corporate community relations at Progress Energy, in Raleigh, N.C.”
An excerpt.
“Corporate profits are on the rebound, but most big businesses say it will be some time before they can give as much cash to charities as they did before the recession, according to a survey of the nation's largest companies by the Chronicle of Philanthropy and USA TODAY.
“More than 100 answered the survey, and the Chronicle analyzed tax data for a total of 162 companies.
“A majority of companies said they expect their charitable donations in 2010 to be about the same as in 2009 — a year in which cash giving fell by 7.5%. Of the 102 firms that answered the question, 73% predicted a flat 2010.
“While that would be bad news for charities, the reality could be even worse.
“Sixty-eight companies decreased their cash giving in 2009 to $3.9 billion, the first time since 2003 that cash contributions from businesses in The Chronicle's survey have dropped. Fifty-four percent of businesses gave less cash, 30% gave more, and 16% gave roughly the same. But donations of cash and products increased by nearly 5% last year, as companies sought to compensate for the decline in cash by offering other types of assistance.
"The whole economy has to burrow itself back up before a lot of corporations are going to have the money to invest as they did prior to the recession," says Woody Dicus, manager of corporate community relations at Progress Energy, in Raleigh, N.C.”
Wednesday, August 11, 2010
Here’s Johnny!
One of America’s most beloved television celebrities, Johnny Carson—may he forever rest in peace—left millions to charity, as this article from Smoking Gun reveals.
An excerpt.
“AUGUST 9--In an unprecedented act of celebrity philanthropy, the charitable foundation created by Johnny Carson has reported receiving $156 million from a personal trust established by the entertainer years prior to his January 2005 death, The Smoking Gun has learned.
“The nine-figure transfer from the late entertainer’s estate was disclosed in a tax return filed three months ago by the John W. Carson Foundation, records show. The massive bequest leaves the Carson foundation with assets dwarfing the largest Hollywood charities--even the foundation run by entertainment titan David Geffen, whose organization listed assets of $80 million on its most recent tax return.
“In a tax return received by the Internal Revenue Service in mid-May, the Carson foundation disclosed its receipt of $35.2 million in cash and $121.2 million in securities and royalty rights from the John W. Carson Trust. The IRS return, excerpted at left, covers the fiscal year ending last June.
“Previous tax returns, including those filed when Carson was alive, show that his trust regularly provided funds to the foundation, which then used the money to give grants to a variety of organizations. But those prior transfers from the Carson trust, which was established in 1988, were usually between $1 and $2 million.
“There has never been a public accounting of Carson’s estate, so there is no way of knowing its total value, beneficiaries, or what percentage the $156 million represents. The former “Tonight Show” host, who died of emphysema at age 79, was survived by his fourth wife, Alexis, and two sons from his first marriage.
“The extremely private comedian did little to publicize his philanthropy, which included hefty donations to environmental groups, AIDS charities, schools, children’s aid organizations, and not-for-profits in Nebraska, where he grew up.”
An excerpt.
“AUGUST 9--In an unprecedented act of celebrity philanthropy, the charitable foundation created by Johnny Carson has reported receiving $156 million from a personal trust established by the entertainer years prior to his January 2005 death, The Smoking Gun has learned.
“The nine-figure transfer from the late entertainer’s estate was disclosed in a tax return filed three months ago by the John W. Carson Foundation, records show. The massive bequest leaves the Carson foundation with assets dwarfing the largest Hollywood charities--even the foundation run by entertainment titan David Geffen, whose organization listed assets of $80 million on its most recent tax return.
“In a tax return received by the Internal Revenue Service in mid-May, the Carson foundation disclosed its receipt of $35.2 million in cash and $121.2 million in securities and royalty rights from the John W. Carson Trust. The IRS return, excerpted at left, covers the fiscal year ending last June.
“Previous tax returns, including those filed when Carson was alive, show that his trust regularly provided funds to the foundation, which then used the money to give grants to a variety of organizations. But those prior transfers from the Carson trust, which was established in 1988, were usually between $1 and $2 million.
“There has never been a public accounting of Carson’s estate, so there is no way of knowing its total value, beneficiaries, or what percentage the $156 million represents. The former “Tonight Show” host, who died of emphysema at age 79, was survived by his fourth wife, Alexis, and two sons from his first marriage.
“The extremely private comedian did little to publicize his philanthropy, which included hefty donations to environmental groups, AIDS charities, schools, children’s aid organizations, and not-for-profits in Nebraska, where he grew up.”
Tuesday, August 10, 2010
Public Pay & Public Service
Lest we forget, 501 c 3 public benefit nonprofit corporations are essentially public entities—and in that context—we have all heard about the absurd situation in Bell, California by now.
Here is the best response I have yet seen to that horror show, from Governing.
An excerpt.
“The absurd salaries paid to the top brass in Bell, Calif., illuminates what happens when self-interest replaces (trumps?) public service.
“Bell's City Council approved raises that brought the city manager to an annual salary of nearly $800,000, with his assistant city manager earning nearly $400,000 and the police chief more than $450,000. These salaries are by far the highest in California, and obviously outliers, never mind the fact that Bell is a community of only 38,000 residents.
“So it might be easy to dismiss this scandal as another sorry example of the abuse of power in poor communities without a strong civic culture of accountability.
“Yet it also bears directly on the escalating debate going on across California and the nation about salaries and benefits in the public sector. It goes to the heart of what "public service" means in the 21st Century.
“Bell City Manager Robert Rizzo was quoted in a Los Angeles Times article defending his absurdly inflated compensation. "If that's a number people choke on, maybe I'm in the wrong business," Rizzo said. "I could go into private business and make that money. This council has compensated me for the job I've done."
“Clearly, Rizzo is in the wrong business. Not that local government doesn't need talented and ambitious people just as much as (if not even more than) the private sector. But there is a profound difference between the rewards due public servants and those grabbed by Wall Street buccaneers and superstar professional athletes. The salaries commanded in Bell are flatly unethical. They violate the standards of public service that are vital to self-government in a democracy.
“Public service is a public trust. The duties and responsibilities of local government are too important and sensitive to entrust to mercenaries.
“There was a time when public servants accepted that our work would never command equal financial rewards as private-sector success. Not because our work is any less important or easier than "comparable" private-sector responsibilities, but because we work for the public, not ourselves. That doesn't require a vow of poverty. Just like our next door neighbors’ working in private business, we owe our kids similar opportunities, like a college education.”
Here is the best response I have yet seen to that horror show, from Governing.
An excerpt.
“The absurd salaries paid to the top brass in Bell, Calif., illuminates what happens when self-interest replaces (trumps?) public service.
“Bell's City Council approved raises that brought the city manager to an annual salary of nearly $800,000, with his assistant city manager earning nearly $400,000 and the police chief more than $450,000. These salaries are by far the highest in California, and obviously outliers, never mind the fact that Bell is a community of only 38,000 residents.
“So it might be easy to dismiss this scandal as another sorry example of the abuse of power in poor communities without a strong civic culture of accountability.
“Yet it also bears directly on the escalating debate going on across California and the nation about salaries and benefits in the public sector. It goes to the heart of what "public service" means in the 21st Century.
“Bell City Manager Robert Rizzo was quoted in a Los Angeles Times article defending his absurdly inflated compensation. "If that's a number people choke on, maybe I'm in the wrong business," Rizzo said. "I could go into private business and make that money. This council has compensated me for the job I've done."
“Clearly, Rizzo is in the wrong business. Not that local government doesn't need talented and ambitious people just as much as (if not even more than) the private sector. But there is a profound difference between the rewards due public servants and those grabbed by Wall Street buccaneers and superstar professional athletes. The salaries commanded in Bell are flatly unethical. They violate the standards of public service that are vital to self-government in a democracy.
“Public service is a public trust. The duties and responsibilities of local government are too important and sensitive to entrust to mercenaries.
“There was a time when public servants accepted that our work would never command equal financial rewards as private-sector success. Not because our work is any less important or easier than "comparable" private-sector responsibilities, but because we work for the public, not ourselves. That doesn't require a vow of poverty. Just like our next door neighbors’ working in private business, we owe our kids similar opportunities, like a college education.”
Monday, August 9, 2010
Selling Resale for Nonprofits
A lot of nonprofits have thrift stores—a great example of social enterprise—and driving customers to them is always challenging.
Here is a story from the Fort Worth Business Press that reveals an innovative method.
An excerpt.
“Four resale shops of nonprofit organizations in Fort Worth will show off their best merchandise while raising funds to provide services and programs for people in need during the Nonprofit Resale Road Trip Aug. 13-14.
“Participating organizations are Goodwill Industries of Fort Worth, the Junior League of Fort Worth, SafeHaven of Tarrant County and YWCA Fort Worth & Tarrant County.
“Maps are available at participating shops along with a brochure that outlines the nonprofits’ programs and services. All the shops will offer special discounts and bargains during the two-day event.”
Here is a story from the Fort Worth Business Press that reveals an innovative method.
An excerpt.
“Four resale shops of nonprofit organizations in Fort Worth will show off their best merchandise while raising funds to provide services and programs for people in need during the Nonprofit Resale Road Trip Aug. 13-14.
“Participating organizations are Goodwill Industries of Fort Worth, the Junior League of Fort Worth, SafeHaven of Tarrant County and YWCA Fort Worth & Tarrant County.
“Maps are available at participating shops along with a brochure that outlines the nonprofits’ programs and services. All the shops will offer special discounts and bargains during the two-day event.”
Saturday, August 7, 2010
Newsweek as a Nonprofit?
An institutional American newsmagazine, that has been doing poorly lately, could consider nonprofit status, as speculated at Poytner Online.
An excerpt.
“So Newsweek has been sold to a fabulously wealthy angel, Sidney Harman. That is one of the scenarios I have considered likely since the magazine went on the block in early May.
“Washington Post CEO Don Graham made good on his pledge to put Newsweek in the hands of an owner who would honor its editorial traditions rather than hold out for more money from a buyer who would grab the brand and totally remake the magazine.
“Now what? I can't help but wonder whether, over the next couple of years, Harman will covert Newsweek to a nonprofit. It would fit both the struggling magazine's finances and Harman's intentions and circumstances.
“Before anyone else asked the rude question, the vigorous 91-year-old Harman told Newsweek's staff at a meeting Monday that creating a succession plan will be high on his list of priorities. By his and Graham's estimates, the magazine is years away, at best, from breaking even.
“So if making a profit is not really the point, why not set up a nonprofit structure to operate the magazine -- as, for instance, Rick MacArthur has done at Harper's for 27 years?
“The case for becoming a nonprofit
“I sought an expert opinion on my speculation from James (Jay) Hamilton, a Duke University expert on media economics who has been closely studying the nonprofit option for several years now. It's not a totally far-out proposition, he said in a phone interview, but such a move would require changes in the magazine and entail risks of its own.
“Hamilton, who is a consultant to the Federal Communication Commission on its current study of the future of media, said that in order for the Internal Revenue Service to grant Newsweek nonprofit status, the magazine would have to establish that it is being operated for an educational purpose. That would presumably be defined as a mission to provide information and foster dialogue on national and international affairs.”
An excerpt.
“So Newsweek has been sold to a fabulously wealthy angel, Sidney Harman. That is one of the scenarios I have considered likely since the magazine went on the block in early May.
“Washington Post CEO Don Graham made good on his pledge to put Newsweek in the hands of an owner who would honor its editorial traditions rather than hold out for more money from a buyer who would grab the brand and totally remake the magazine.
“Now what? I can't help but wonder whether, over the next couple of years, Harman will covert Newsweek to a nonprofit. It would fit both the struggling magazine's finances and Harman's intentions and circumstances.
“Before anyone else asked the rude question, the vigorous 91-year-old Harman told Newsweek's staff at a meeting Monday that creating a succession plan will be high on his list of priorities. By his and Graham's estimates, the magazine is years away, at best, from breaking even.
“So if making a profit is not really the point, why not set up a nonprofit structure to operate the magazine -- as, for instance, Rick MacArthur has done at Harper's for 27 years?
“The case for becoming a nonprofit
“I sought an expert opinion on my speculation from James (Jay) Hamilton, a Duke University expert on media economics who has been closely studying the nonprofit option for several years now. It's not a totally far-out proposition, he said in a phone interview, but such a move would require changes in the magazine and entail risks of its own.
“Hamilton, who is a consultant to the Federal Communication Commission on its current study of the future of media, said that in order for the Internal Revenue Service to grant Newsweek nonprofit status, the magazine would have to establish that it is being operated for an educational purpose. That would presumably be defined as a mission to provide information and foster dialogue on national and international affairs.”
Friday, August 6, 2010
Nonprofit Wars
Organizational brand is important, and some nonprofits will fight over controlling all aspects of it, as this article from the Wall Street Journal reports.
An excerpt.
“As the leading breast-cancer charity, Susan G. Komen For the Cure helped make "for the cure" a staple of the fund-raising vernacular.
“The slogan is so popular that dozens of groups have sought to trademark names incorporating the phrase. Among them are "Juggling for a Cure," "Bark for the Cure," and "Blondes for the Cure."
“Komen sees this as imitation, and it's not flattered. Instead, it's launching a not-so-friendly legal battle against kite fliers, kayakers and dozens of other themed fund-raisers that it contends are poaching its name. And it's sternly warning charities against dabbling with pink, its signature hue.
"It is startling to us that Komen thinks they own pink," says Mary Ann Tighe, who tangled with the breast-cancer charity over the color for her "Kites for a Cure" lung-cancer fund-raiser. "We cannot allow ourselves to be bullied to no purpose."
“Komen's general counsel, Jonathan Blum, said in an email: "We see it as responsible stewardship of our donor's funds."
“Trademark turf battles characteristic of sharp-elbowed corporations are erupting across the typically amicable world of nonprofits. Charities raising money for the same cause are getting into dust-ups over fonts, logo designs and other branding minutia.
“Nonprofits say the details are no small matter. Some groups contend they have lost sizeable donations when donors mistakenly wrote checks to another charity with a similar name.”
An excerpt.
“As the leading breast-cancer charity, Susan G. Komen For the Cure helped make "for the cure" a staple of the fund-raising vernacular.
“The slogan is so popular that dozens of groups have sought to trademark names incorporating the phrase. Among them are "Juggling for a Cure," "Bark for the Cure," and "Blondes for the Cure."
“Komen sees this as imitation, and it's not flattered. Instead, it's launching a not-so-friendly legal battle against kite fliers, kayakers and dozens of other themed fund-raisers that it contends are poaching its name. And it's sternly warning charities against dabbling with pink, its signature hue.
"It is startling to us that Komen thinks they own pink," says Mary Ann Tighe, who tangled with the breast-cancer charity over the color for her "Kites for a Cure" lung-cancer fund-raiser. "We cannot allow ourselves to be bullied to no purpose."
“Komen's general counsel, Jonathan Blum, said in an email: "We see it as responsible stewardship of our donor's funds."
“Trademark turf battles characteristic of sharp-elbowed corporations are erupting across the typically amicable world of nonprofits. Charities raising money for the same cause are getting into dust-ups over fonts, logo designs and other branding minutia.
“Nonprofits say the details are no small matter. Some groups contend they have lost sizeable donations when donors mistakenly wrote checks to another charity with a similar name.”
Thursday, August 5, 2010
More Money to Philanthropy
The pot of money going to support charitable work just got a whole lot bigger, as this story from the Wall Street Journal notes.
An excerpt.
“Billionaire Oracle Corp. founder Larry Ellison will join film director George Lucas and 38 other mega-wealthy people in following a call by Warren Buffett and Bill and Melinda Gates to pledge to give the majority of their riches to charity.
“On Wednesday, Mr. Buffett announced that 40 of America's wealthiest individuals and families, from former Citigroup Inc. leader Sandy Weill to hotel mogul Barron Hilton, have signed the "Giving Pledge."
“Mr. Buffett and Mr. Gates in June had asked the individuals and families to publicly commit to give away at least half of their wealth within their lifetimes or after their deaths.
“The pledge stemmed from a series of dinners the two men held for the nation's billionaires over the past year to discuss the effects of the recession on philanthropy.
“Rob Guth discusses the public pledge by 40 billionaires, led by Bill Gates and Warren Buffett, to give away at least half their wealth before they die.
“The push by Mr. Buffett and Mr. and Ms. Gates is publicizing what had been a private matter for many wealthy people. Many of those who joined the pledge already
had intended to give away much of their money.
“The effort comes during the second consecutive year in which philanthropy experienced its deepest decline ever recorded by the Giving USA Foundation, which has tracked annual giving since 1956.
“Donations fell 3.6% to $303.8 billion last year, down from $315 billion in 2008, according to Giving USA. In 2008, charitable giving fell 2%.
“In an interview, Mr. Buffett said that while the pledge push might produce a short-term boost in giving, the main goal is to set an example over the long term for others to get involved in philanthropy.
"The behavior of those before does affect what happens with those after, particularly if those people are somewhat admired in society," Mr. Buffett said. "If Carnegie and Rockefeller hadn't done what they'd done, there'd be less philanthropy in the United States today."
“Mr. Buffett said he and Mr. Gates in coming months will meet with wealthy individuals in China and India to talk about the pledge in the hopes of adding more names from outside the U.S.”
An excerpt.
“Billionaire Oracle Corp. founder Larry Ellison will join film director George Lucas and 38 other mega-wealthy people in following a call by Warren Buffett and Bill and Melinda Gates to pledge to give the majority of their riches to charity.
“On Wednesday, Mr. Buffett announced that 40 of America's wealthiest individuals and families, from former Citigroup Inc. leader Sandy Weill to hotel mogul Barron Hilton, have signed the "Giving Pledge."
“Mr. Buffett and Mr. Gates in June had asked the individuals and families to publicly commit to give away at least half of their wealth within their lifetimes or after their deaths.
“The pledge stemmed from a series of dinners the two men held for the nation's billionaires over the past year to discuss the effects of the recession on philanthropy.
“Rob Guth discusses the public pledge by 40 billionaires, led by Bill Gates and Warren Buffett, to give away at least half their wealth before they die.
“The push by Mr. Buffett and Mr. and Ms. Gates is publicizing what had been a private matter for many wealthy people. Many of those who joined the pledge already
had intended to give away much of their money.
“The effort comes during the second consecutive year in which philanthropy experienced its deepest decline ever recorded by the Giving USA Foundation, which has tracked annual giving since 1956.
“Donations fell 3.6% to $303.8 billion last year, down from $315 billion in 2008, according to Giving USA. In 2008, charitable giving fell 2%.
“In an interview, Mr. Buffett said that while the pledge push might produce a short-term boost in giving, the main goal is to set an example over the long term for others to get involved in philanthropy.
"The behavior of those before does affect what happens with those after, particularly if those people are somewhat admired in society," Mr. Buffett said. "If Carnegie and Rockefeller hadn't done what they'd done, there'd be less philanthropy in the United States today."
“Mr. Buffett said he and Mr. Gates in coming months will meet with wealthy individuals in China and India to talk about the pledge in the hopes of adding more names from outside the U.S.”
Wednesday, August 4, 2010
Raise Money Quick
A very nice article from Blue Avocado on how to raise money in a hurry when you need to.
An excerpt.
“Sometimes you need to raise funds in a hurry. It's easy to think, "We should have established a fundraising plan earlier!" That may be true, but it doesn't help now. Here are some ways to raise modest funds in a pinch. Because institutions like foundations, government, and service clubs typically take more than a month to make funding decisions, your best bet to raise money in 30 days usually involves asking individuals for donations.
“Each of these techniques can raise a lot or a little depending on who is doing the organizing. For example, a house party in one organization can raise $500 in one evening, while in another it can raise $100,000. In either case, the amount raised is likely to be a significant help towards whatever financial situation you are facing. Every technique is one we have seen first-hand to be effective.
“1. Have a phone-a-thon three days in a row, Monday through Wednesday of one week. Get all the board members to gather at the organization's office (or one of their offices) at 5 pm. Practice how you're going to ask for donations on the phone. Provide pizza or refreshments and make a party of it -- a little food and drink can go a long way in supporting the right atmosphere for fundraising. Divide up the lists of members, donors, clients, patrons, neighbors, or whatever other lists you have. Call them. Take a break every 45 minutes to swap stories. Go home at 7:30.
“2. Together, a board member and the executive director can ask government, foundation, and corporate funders to renegotiate grant and contract agreements. Everyone knows the economy is in turmoil -- it won't be a surprise to your funders if your grants, contracts, and donations are down. Ask for a meeting, for example, with a county funder, and see whether they would be willing to have you provide fewer shelter nights or fewer senior meals, without reducing your contract payment. Tell a foundation funder that the grant they gave you to hire a second librarian needs to be spent just to keep the first librarian. Many funders appreciate the significance of board leadership on these matters, and remember: obtaining an agreement for a lower amount of services for the same money is often as good as getting more money.
“3. Send out a 2-page letter to your members, volunteers, and donors. Explain that you are on a 30-day fundraising campaign and ask for a donation. If you can, follow up with phone calls.”
An excerpt.
“Sometimes you need to raise funds in a hurry. It's easy to think, "We should have established a fundraising plan earlier!" That may be true, but it doesn't help now. Here are some ways to raise modest funds in a pinch. Because institutions like foundations, government, and service clubs typically take more than a month to make funding decisions, your best bet to raise money in 30 days usually involves asking individuals for donations.
“Each of these techniques can raise a lot or a little depending on who is doing the organizing. For example, a house party in one organization can raise $500 in one evening, while in another it can raise $100,000. In either case, the amount raised is likely to be a significant help towards whatever financial situation you are facing. Every technique is one we have seen first-hand to be effective.
“1. Have a phone-a-thon three days in a row, Monday through Wednesday of one week. Get all the board members to gather at the organization's office (or one of their offices) at 5 pm. Practice how you're going to ask for donations on the phone. Provide pizza or refreshments and make a party of it -- a little food and drink can go a long way in supporting the right atmosphere for fundraising. Divide up the lists of members, donors, clients, patrons, neighbors, or whatever other lists you have. Call them. Take a break every 45 minutes to swap stories. Go home at 7:30.
“2. Together, a board member and the executive director can ask government, foundation, and corporate funders to renegotiate grant and contract agreements. Everyone knows the economy is in turmoil -- it won't be a surprise to your funders if your grants, contracts, and donations are down. Ask for a meeting, for example, with a county funder, and see whether they would be willing to have you provide fewer shelter nights or fewer senior meals, without reducing your contract payment. Tell a foundation funder that the grant they gave you to hire a second librarian needs to be spent just to keep the first librarian. Many funders appreciate the significance of board leadership on these matters, and remember: obtaining an agreement for a lower amount of services for the same money is often as good as getting more money.
“3. Send out a 2-page letter to your members, volunteers, and donors. Explain that you are on a 30-day fundraising campaign and ask for a donation. If you can, follow up with phone calls.”
Tuesday, August 3, 2010
Leadership or Money
An interesting article—as valid for nonprofit leadership as forprofit—that looks at a new report examining the demographics of entrepreneurial leadership.
An excerpt from the article from Fast Company.
“How often do we hear about how many millions of dollars a startup raised in this round or that? Venture capital is likely the most oft-cited figure for measuring the potential for a new business' success, but research firm CB Insights aims to change that misconception in a new report measuring human capital--not venture capital.
"When we ask venture capitalists what gets them excited about the young, emerging, and often unproven companies in which they invest, we never hear about deals and dollars," reads part I of the report, released this morning. "Rather, the first answer is frequently 'the team' or 'the founders.'" In their first-ever VC Human Capital Report, CB Insights attempts to apply the "same rigor we apply to our quarterly tally of deals and dollars to provide an objective, data-driven perspective into the people dimension behind the deals and dollars we so often read about."
“The study focuses on 165 early-stage Internet startups that raised VC in the first half of 2010, specifically looking in part I of the report at race, age, and experience of company founders. Are these the right characteristics we ought to use to measure start-ups? Is race a valuable or even appropriate metric? Here are some of the report's more interesting findings.
“In yet another illustration of the unfortunate disparity that exists in the U.S., CB Insights discovered that 87% of company founders in the past six months were white, whereas black entrepreneurs represent just 1% of founders and Asians 12%. What's more, close to 89% of founding teams are composed of a single race--83% are all white--while just 11% of startups were composed of a racially diverse staff.”
An excerpt from the article from Fast Company.
“How often do we hear about how many millions of dollars a startup raised in this round or that? Venture capital is likely the most oft-cited figure for measuring the potential for a new business' success, but research firm CB Insights aims to change that misconception in a new report measuring human capital--not venture capital.
"When we ask venture capitalists what gets them excited about the young, emerging, and often unproven companies in which they invest, we never hear about deals and dollars," reads part I of the report, released this morning. "Rather, the first answer is frequently 'the team' or 'the founders.'" In their first-ever VC Human Capital Report, CB Insights attempts to apply the "same rigor we apply to our quarterly tally of deals and dollars to provide an objective, data-driven perspective into the people dimension behind the deals and dollars we so often read about."
“The study focuses on 165 early-stage Internet startups that raised VC in the first half of 2010, specifically looking in part I of the report at race, age, and experience of company founders. Are these the right characteristics we ought to use to measure start-ups? Is race a valuable or even appropriate metric? Here are some of the report's more interesting findings.
“In yet another illustration of the unfortunate disparity that exists in the U.S., CB Insights discovered that 87% of company founders in the past six months were white, whereas black entrepreneurs represent just 1% of founders and Asians 12%. What's more, close to 89% of founding teams are composed of a single race--83% are all white--while just 11% of startups were composed of a racially diverse staff.”
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