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21 posts from December 2007

Quick Hits (Dec. 31, 2007)

December 31, 2007

On White Courtesy Telephone, guest blogger Chris Cardona deconstructs "the causal connection between greater representation of diverse groups in philanthropy and more grantmaking dollars flowing (or not) to these nonprofits."

Holden Karnofsky's Christmas Day post on the GiveWell blog should be read by every nonprofit executive who believes in transparency and full disclosure.

Tom Watson, chief strategy officer at Changing Our World, Inc. and the journalist/entrepreneur behind the onPhilanthropy.com site, has launched CauseWired, a new blog about "the convergence of innovative media technology with a generation of young consumers who believe in the power of that technology -– and their own ability -- to change the world."

For New Year's, the indefatigable Beth Kanter has resolved to do something about the growing pile of e-waste in her home office and offers this helpful guide to those with a similar problem.

At Fundraising for Nonprofits, Gayle Roberts explains how you can become a top-ranked nonprofit expert on LinkedIn, the leading business networking site on the Web.

And Lucy Bernholz reprises her list of 2007 philanthropy buzzwords -- including "embedded giving" and, the newest one, "philanthropy 2.0."

-- Mitch Nauffts

Do We Really Want to Legislate Consumer Philanthropy?

December 29, 2007

(Michael Seltzer is a noted authority on the nonprofit sector and philanthropy worldwide.)

An editorial in last Saturday's New York Times ("Buy this Sweater, Save A Seal," 12/22/07) endorsed a bill put forward by Sen. Bob Menendez (D-NJ) that would require better notification of charities and their consent in any marketing effort that uses their name. The bill also would require consumers to be told how much of an item's price actually goes to charity. The editorial called the measure a "sensible stab at accountability." So why is it wrong-headed?

The editorial, and the article that appeared on the front page of the Times a few days earlier (see my previous post), both mention the now-infamous Barneys 2007 holiday catalog as the pretext for the legislation. This year, Barneys for the first time (to the best of my knowledge) chose to match many products in its catalog with a nonprofit organization, noting that it would make a contribution to the nonprofit in question if a shopper bought the item. Among the nonprofit organizations included were the Natural Resources Defense Council, Environmental Defense, the Trust for Public Land, the Climate Project, and 1% For the Planet.

For every retailer like Barneys that has jumped on the cause-related bandwagon, there are scores of other businesses that have been providing these same opportunities to customers for years. And while it's true Barneys usually doesn't indicate the percentage of the purchase price earmarked for charity, do we really need to create legislation to curb the practices of a few retailers -- and create a whole new layer of red tape for the majority of businesses that practice responsible consumer philanthropy?

The Times editorial closes by asserting that "the old-fashioned, direct, tried and true route seems best" for now. But where is the evidence that consumer philanthropy has caused a decline in direct contributions to charitable organizations? Or that any nonprofit was harmed by the Barneys campaign? The way I see it, consumer philanthropy provides generous individuals with more opportunities to act on their charitable impulses, helps good companies burnish their reputations, and has created an important new revenue stream for many worthy nonprofits. Why would we want to discourage it?

-- Michael Seltzer

‘Tis the Season…of Feel-Good Media Stories

December 23, 2007

(Tricia McKenna is vice president of Louder Than Words, a Boston-based PR agency serving foundations, nonprofits, and related businesses. This is her first post for PhilanTopic.)

Holiday stories about those in need and the organizations that serve them proliferate at this time of year. Just as there's nothing wrong with people writing checks to charities during the holidays (whether to support a cause, take advantage of a tax break, or both), there's nothing inherently wrong with these stories. But it begs the question -- what about the rest of the year?

I think stories about people on the frontlines of creating social change are sorely underrepresented in the media. We saw a nice uptick in media's coverage of philanthropy after the Buffet gift made headlines in ’06, and of course there are journalists like Stephanie Strom and Sally Beatty doing great service to the sector day in and day out. The mainstream media, however, has a long way to go.

That’s why I was pleased to see that MSNBC has partnered with Contribute magazine to beef up its Giving section. Outsourcing some of the heavy lifting is a great way to provide better content to MSNBC’s community without stretching existing news resources too thin.

The ratio of nonprofit reporters to business reporters may never match that of nonprofits to businesses, though surely big media could do better. It's a chicken-and-egg situation: Nonprofits and foundations need to expect that more coverage will require they provide more access and accept more scrutiny in exchange.

Let's hope 2008 brings more stories that showcase the triumphs and challenges of philanthropic entities and nonprofits -- and inspire others to give and get involved!

-- Tricia McKenna

Quote of the Day (Dec. 22, 2007)

December 22, 2007

Quotemarks"We now know that the ability of government to perform social tasks is very limited indeed. But we also know that nonprofits discharge a much bigger job than taking care of specific needs. With every second American adult serving as a volunteer in the nonprofit sector and spending at least three hours a week in nonprofit work, nonprofits are America's largest 'employer'. But they also exemplify and fulfill the fundamental American commitment to responsible citizenship in the community. The nonprofit sector still represents about the same proportion of America's gross national product -- 2 percent to 3 percent -- as it did forty years ago. But its meaning has changed profoundly. We now realize that it is central to the quality of life in America, central to citizenship, and indeed carries the values of American society and of the American tradition...."

-- Peter Drucker, Managing the Nonprofit Organization: Principles and Practices

EMCF Introduces Pilot to Help Grantees Secure Growth Capital

December 21, 2007

Emcf_logo_4(Nancy Roob is president and CEO of the New York City-based Edna McConnell Clark Foundation, which works to improve the lives of low-income youth in the United States.)

Dear Friends and Colleagues,

As 2007 draws to a close, I would like to share with you some exciting developments in the evolution of the foundation's work.

This year we began to experiment with an innovative approach to raising and aggregating large amounts of growth capital up-front to support the dramatic expansion and sustainability of a few of our most successful long-term grantees. During the seven years we have been working with these organizations, they have consistently demonstrated outstanding leadership and the potential to solve some of our nation's most intractable problems facing economically disadvantaged youth and young adults. Today, with their programs proven effective, these grantees are poised to grow to serve significantly larger numbers of youth. Our goal is to work more collaboratively with other private sector investors to raise the up-front growth capital needed to propel expansion while long-term financing is secured.

The grantees we have selected for the "Growth Capital Aggregation Pilot" have developed business plans with increased emphasis on reliable revenue and financing strategies that will lead to sustainability. They are: Nurse-Family Partnership headquartered in Denver, Colorado; Youth Villages in Memphis, Tennessee; and Citizen Schools in Boston, Massachusetts. In all, we are seeking to raise $120 million in growth capital for these organizations. In September 2007, our Board of Trustees committed $39 million to this effort, and to date an additional $49 million has been raised -- for a total of $88 million. Our grantees' goal (and ours) is to raise the remaining $32 million by June 2008.

In many respects we have always considered ourselves in the business of providing up-front growth capital. Since 2001, we have invested $180 million in building a portfolio of approximately twenty highly promising organizations that are delivering quality programs to low-income, older-age youth. We have worked closely with these organizations to help them prove their programs impact, develop rigorous business plans, and ready themselves for growth. What is new about this pilot project is the explicit development and testing of a collaborative approach for raising and investing growth capital.

Our experience during the past several years has convinced us that EMCF cannot go it alone. To help disadvantaged youth on a national scale, we must raise much more capital and direct it more effectively, and to do that we must work collectively with other investors, both private and public. This new round of investments in these three organizations is twice the size of EMCFs previous investments in them and is conditioned on raising the additional up-front capital with the help of co-investors. Ultimately, this infusion of growth capital from the private sector will leverage significant public investment, aligning philanthropic and government resources to provide truly effective remedies to serious social ills facing our nations youth today.

We are encouraged by our early success. At Nurse-Family Partnership (NFP), for example, $43 million has been committed against a $50 million goal. In addition to NFP's Board of Directors, three lead investors -- the Robert Wood Johnson, Bill & Melinda Gates, and Picower foundations -- have joined EMCF in signing a Memorandum of Understanding that outlines a joint set of terms and conditions, performance metrics to be used by all investors, shared reporting, and a financial model that allows NFP to draw down growth capital only if it achieves performance milestones, including the securing of public dollars. All funding will flow directly from investors to NFP with coordinated payout schedules. This agreement frees NFP's management to focus almost entirely on executing its business plan. Most important, it will ensure that by 2017, 100,000 first-time mothers (and their children) -- 15 percent of all those eligible on public assistance -- make a successful transition out of poverty into self-sufficient adulthood, with a public savings of $5.70 for every dollar invested (according to a 2005 RAND Corporation study).

The progress of the two other grantees in our pilot program -- Youth Villages and Citizen Schools -- is also extremely promising. (Please see our Web site for more information about these grantees.)

Although it is still at an early and experimental stage of development, we are excited about this co-investment model. We are inspired and honored by the diverse group of co-investors who are beginning to join us, including major national foundations that do not ordinarily make grants for building infrastructure and organizational capacity, local foundations, and individual philanthropists. The leadership and financial contributions of our grantees boards of directors are also impressive.

Helping to attract co-investors and playing a coordinating role among them are new functions for EMCF. This raises the stakes for us in terms of leadership, partnership, and accountability. Therefore we have framed a set of learning questions we will answer during the course of this pilot project. They include:

  • What has been the experience of our co-investors, and what can we learn from them? For what types of funders is this approach most compelling and useful?
  • What value does the co-investment approach add to this group of grantees, and are there lessons to be learned that can be applied to other EMCF grantees at different stages of organizational development? Have there been unintended negative consequences?
  • How must EMCF operate differently to succeed in such collaborative ventures? What skills must we adapt, and what new ones must we add?
  • And, finally, once the growth capital is drawn down after three to five years, will we and other investors be able to exit these grantee relationships effectively? Did grantees achieve the goals of their growth plans, including sufficient public funding and long-term financial sustainability?

We are also pleased to report that we are unveiling a redesigned Web site that among other things will provide information to current and potential co-investors interested in our aggregated capital strategy. One section, entitled Results, provides regularly updated reports on the foundation's performance. We will also update our grantee performance reports annually, if not more frequently. The first of our annual reports to give a full year-end account of grantee and foundation performance is also available on our site.

We could not have accomplished everything we did during the past year without the generous support of our grantee and investment partners. We are especially excited and grateful to be entering partnerships with funders such as the Robert Wood Johnson, Bill & Melinda Gates, Picower, and Day foundations, and Atlantic Philanthropies. And, of course, I want to acknowledge and thank all of our grantees for keeping us grounded and inspiring us daily to do better.

This New Year will mark my second since becoming president of the foundation, and I continue to be deeply grateful for this extraordinary opportunity to serve. I look forward to working with many of you as we make progress -- and a critical difference -- in transforming the lives of America's most disadvantaged youth and young adults.

-- Nancy Roob

Why Are People Taking America’s Giving Challenge? Just 'Cause.

December 20, 2007

Givingchallenge_logo

(Dennis Whittle is the CEO of GlobalGiving. In November, he wrote about GlobalGiving Guaranteed.)

There's a major new experiment in philanthropy going on right now, and here at GlobalGiving we're on the edge of our seats to see what happens.

Last weekend, America's Giving Challenge was launched in an issue of Parade magazine featuring Oprah Winfrey and Denzel Washington. With a call to "Help Us Give Away $500,000," the Case Foundation challenged Americans, including the magazine's 70 million readers, to choose a cause online and then mobilize others to support it to. The top eight fundraisers in the Challenge -- those who galvanize the most donors, not the most money -- will each win $50,000 for their cause. Another $100,000 will go to the nonprofits with the greatest number of unique donations. Steve Case, founder of AOL, and our friends at the Case Foundation have put up the funding for the experiment. The challenge ends January 31.

At GlobalGiving, we're excited that the challenge is putting global issues in the spotlight. When they visit the site, participants choose either an international or U.S. cause. GlobalGiving serves as the international partner (Network for Good is the Case Foundation's domestic partner). Those who choose to start a global fundraiser then select a cause that matches their interests, create a "fundraiser," and use social networking tools to drive friends and family members to the page.

In less than a week, we're already seeing fervor from "early adopters": one fundraiser for a global volunteer initiative is generating significant traffic to his challenge page through widgets, links from his home page, and e-mail blasts ("phase two" of his plan involves getting all of his friends to mobilize theirs). Megan from Denver hasn't made her final project decision yet but is considering one that provides clean drinking water: some of her fundraising ideas include involving local schools, throwing a water-themed New Year's party, and mentioning the cause in her post-holiday thank-you notes.

With 43 days to go, ideas are proliferating. Since launch day, Web traffic to the challenge site has quadrupled. Thousands of dollars are already rolling in to causes around the world. The challenge is on.

Beyond being a fun and motivating initiative, there are other big-picture questions that we hope the challenge will help us answer. What, for example, will it teach us about how and why Americans donate to international causes? What significance would a democratization of international giving have for global development priorities, international aid, and grassroots organizing? And how can we use this grand experiment to encourage more viral action on international issues at home?

Here's a YouTube video about the effort -- check it out and then get on board. It's still early in the game, and the playing field is wide open.

-- Dennis Whittle

Executive Transition at Charity Navigator

Trent_2006_2Trent Stamp, founding president of Charity Navigator, the often-controversial site that bills itself as "the nation's largest and most-utilized evaluator of America's charities and nonprofits," has announced he is leaving the New Jersey-based organization to become executive director of the Eisner Foundation in Los Angeles.

In a final post to his blog, Trent Stamp's Take, Stamp acknowledged the sometimes-contentious relationship he and Charity Navigator have had with the nonprofit community and got in a jab or two of his own:

Along the way, some of you have laughed with me, and others at me. I've been called everything from a "genius" and a "prophet" to a "moron" and a "sell-out." (One thing I won't miss is the cowardice of anonymous blog posters and commenters.) But for all of you, I wrote as truthfully and as passionately as I could. And most of you, I will miss. I've had fun. And next time some non-profit leader does something stupid to dishonor the public trust, I'll miss having a place to call him out. But that's not my job anymore. Someone else will have to pick up the slack....

While I agreed with many of the criticisms of the Charity Navigator approach, I thought Trent was a straight shooter and a breath of fresh air, and I wish him well in his new position. I'm sure we'll be hearing more from him and the Eisner Foundation in the months and years to come.

-- Mitch Nauffts

Attention Holiday Shoppers!

December 19, 2007

Seltzer_santa(Michael Seltzer is a noted authority on the nonprofit sector and philanthropy worldwide. In a previous post for PhilanTopic, he wrote about the convergence of charity and the marketplace.)

(Photo: Rosy-cheeked Santa, with gold-embroidered stars on felt robe. Hand-felted and embroidered by artisans in the Kyrgyz Republic.)

The holidays are a season of giving and shopping. Sale signs in department store windows abound, direct mail appeals and catalogs compete for space in crowded mailboxes, and our wallets and checking accounts take a hit.

Still, it comes as no surprise to learn that the urge to splurge trumps the charitable giving impulse at this time of year. According to the National Retail Federation, total holiday sales are expected to top $457 billion this year, compared to the estimated $295 billion that Americans gave to charity in 2006 (source: Giving USA 2007).

As I mentioned in my previous post, holiday shoppers can score a "two-fer" when they shop with an eye to supporting a worthy cause. By doing so, your purchases will make a positive, lasting difference in the lives of people around the globe.

In that spirit, I propose we go shopping in Bujumbura (Burundi), New Orleans (Louisiana), Asheville (North Carolina), and New York City. Fortunately, through the wonders of the Internet, products made by local artisans in these communities are only a few key strokes away; some can even be found in department stores and malls in your neighborhood.

Here are five holiday shopping tips for 2007:

Continue reading »

Tax-Exempt for What and for Whom?

That's the question John J. DiIulio Jr. asks near the end of his article, "Non-Profits Without Honor," in the Dec. 10 issue of The Weekly Standard. You might remember DiIulio as the person tasked with selling George Bush's faith-based initiative to a skeptical public in the early, pre-9/11 days of the first Bush administration. The initiative itself never really made it out of the starting gate, and DiIulio resigned his position after only seven months on the job.

Well, he's back, and he has a book to flog (Godly Republic: A Centrist Blueprint for America's Faith-Based Future). DiIulio's chief complaint, in both book and article, is that "government routinely confers diverse public subsidies on nonprofit organizations that follow the law's letter while doing only incidental things to benefit their communities or the public at large."

He's especially critical of nonprofit hospitals and private colleges and universities, which occupy "land and buildings that generate zero local property tax revenue" and benefit from "myriad" government subsidies. To support his argument, he cites his hometown of Philadelphia, which by his estimate forgoes $90 million a year in property taxes from tax-exempt colleges and universities.

(The issue of nonprofit property tax exemptions is examined in detail by Rick Cohen in his most recent article for The Nonprofit Quarterly.)

What really bothers DiIulio, however, is the fact that religious congregations and faith-based organizations -- which, he notes, provide "scores of socially useful services to non-members" -- are excluded in most cases from applying for government grants and loans. And that's not only unfair, he says, its discriminatory. "The key nonprofit distinction," he adds, "is not religious or secular, large or small, national or local. It's who really serves disadvantaged members, non-members, or the public at large, how, and how much. [Therefore] it is time to consider revamping federal, state, and local laws governing nonprofit organizations so as to restrict full-fledged tax-exempt status to organizations that predictably and reliably produce significant non-member benefits."

Leaving aside the impracticality of such an idea (who would define -- and enforce -- the standards against which tax-exempt organizations and the social benefit they provide are evaluated?), we've seen this movie before -- and it ended badly. DiIulio is a smart man and a respected researcher. But his is an idea whose time has passed. In an age of global competition -- and global threats -- Americans want more from the nonprofit sector than services that only address the symptoms of existing social problems. Yes, those services are vitally important, and we're not suggesting that the sector doesn't have a role in their provision. But our sector is about much, much more than social service provision. And we would all be poorer if that were to change.

-- Mitch Nauffts

The MAC AIDS Fund: The Changing Face of HIV and AIDS

December 17, 2007

(Nancy Mahon is a senior vice president at M·A·C Cosmetics, where she serves as a member of the brand's senior management team and oversees the strategic direction and day-to-day operation of the M·A·C AIDS Fund. This is her first post for PhilanTopic.)

Exuding glamour, guts, and edge, the MAC AIDS Fund, the philanthropic arm of MAC cosmetics (an Estée Lauder brand), is the largest corporate, non-pharmaceutical donor to the fight against AIDS. We at the fund have always chosen to fund programs and regions that others have ignored, raising awareness on prevention, the link between poverty and HIV/AIDS, access to care, and adherence to medications and treatments.

This past November, MAC and the MAC AIDS Fund surpassed an important milestone: raising over $100 million for AIDS/HIV prevention and care.

In marking the occasion, we wanted to gauge how far the public and the AIDS/HIV field had come in battling the virus and issues such as poverty and stigma that hasten the spread of it. We therefore decided to commission a global public opinion audit involving some 4,500 respondents in nine countries. In resource-rich countries where phones are widely available (e.g., the U.S. and France) random-digit dial-sampling was used, whereas in resource-poor countries with less access to phones (India, South Africa) face-to-face interviews were conducted. We also composed the questions with an eye toward measuring what respondents knew about AIDS/HIV prevention and treatment, how they felt about people living with the virus, and what they saw as the major barriers to stemming the spread of HIV.

The answers were startling in their clarity. Over 86 percent of respondents believed shame and stigma was a major barrier to HIV prevention and 50 percent felt that shame and stigma was the major barrier. Gender differences were also apparent across all countries, with female respondents reporting much higher awareness around shame and stigma -- and much greater difficulty taking to their sexual partners about HIV -- than their male counterparts. Across all nations, survey participants had an inflated sense of the effectiveness of HIV treatment. In India, for instance, 59 percent of survey respondents thought there was a cure for AIDS.

The survey results received enormous media attention in international as well as local outlets. We did a global media release of the results in mid-November that included a roundtable discussion in New York City and got a second wave of interest around World AIDS Day. (We plan to hold similar roundtables in the UK and South Africa in 2008.) The survey also was successful in sparking debate both within the AIDS community and the broader public, and the results will be invaluable to the MAC AIDS Fund as we think about our next three to five years of funding.

Clearly, there's a great deal more work to do around the shame and stigma surrounding AIDS/HIV, and we will redouble our efforts to fund prevention programs that address these issues in a concrete and measurable fashion. We will also maintain our commitment to funding programs that tackle poverty-related issues such food insecurity and lack of housing, both of which fuel the spread of the virus.

Now we want to hear from you. How are we doing? What could we do better? And what have we overlooked? We'd love to hear your thoughts....

-- Nancy Mahon, esq.

Quote of the Day (Dec. 15, 2007)

December 15, 2007

"When you are trying to change any institution...the wise manager places a new vision before the organization. You move forward the new. You don't fight or quarrel with the past...."

-- Carl J. Schramm, president/CEO, Ewing Marion Kauffman Foundation; author, The Entrepreneurial Imperative

Where Is William Safire When We Need Him?

December 14, 2007

Rwandan_baskets(Michael Seltzer is a philanthropic advisor and green design consultant who advises organizations on creating civic-minded workplaces. In a career that spans forty years, he has worked for a large variety of national and international foundations and organizations and continues to serve as an advisor to a number of foundations. He is also a trustee of EMPower-The Emerging Markets Foundation. In his first post for PhilanTopic he wrote about 2008's most important causes.)

Giving has had many modifiers over the years -- organized, strategic, informed, targeted, and the list goes on. In a front-page article in yesterday's New York Times ("Charity’s Share From Shopping Raises Concerns," 12/13/07)), Stephanie Strom recycled the latest and perhaps least-fitting modifier -- "embedded."

The word embedded most recently has been associated in the public’s mind with the Iraq War, in which journalists are "embedded" with the troops. Associating "giving" with "embedding" in the holiday season is at best unfortunate.

Giving expresses some of the most cherished values in our society -- compassion, religious belief, love, and generosity among them. Linking it even indirectly to the least popular war in the nation's history is far from desirable.

Continue reading »

Call for Sessions -- Nonprofit Congress

December 13, 2007

NcnabuttonOur good friend Audrey Alvarado, executive director of the National Council of Nonprofit Associations (and an FC board member), asked PhilanTopic to spread the word about the 2008 Nonprofit Congress National Meeting, to be held June 1-4 in Washington, D.C. The conference is designed for all those involved in or who care about the future role of the nonprofit sector and this year will focus on nonprofit organizational effectiveness, advocacy and grassroots community activities, and public awareness of and support for the sector.

You can help make the 2008 conference the best one yet by submitting an idea for a session and passing along the call for sessions to colleagues who would make great presenters and panel facilitators. But you need to hurry -- all session proposals are due by January 15, 2008. And don't forget to register before February 18 to receive the "early bird" discount rate.

-- Mitch Nauffts

Harvard Tuition at a Bargain-Basement Price

December 12, 2007

Harvard_shield(Judith Margolin is vice president for planning and evaluation at the Foundation Center and the author of The Individual’s Guide to Grants and Financing a College Education. This is her first post for PhilanTopic.)

I was delighted to hear of Harvard's recent decision to make financial aid much more broadly available than it has in the past. Clearly the prospect of increased congressional scrutiny of large private endowments and the mere fact of Harvard's $35 billion (!!!) endowment are factors in its decision. To put it bluntly, Harvard is taking measures to do away with the "two-tier situation" that has long held sway at this most elite of our institutions of higher learning. Up until now the clearly needy student (as defined by the "expected family contribution" deriving from the FASFA form) received a package of grants and low-interest loans that made Harvard among the more affordable choices among Ivy League and other elite institutions. At the same time, students from wealthy families had no worries about their parents writing that $45,000+ check. But for those many students caught in the middle -- defined by Harvard as those with household incomes between $120,000 and $180,000 -- there was little recourse except family sacrifice and loans and more loans. True, Harvard and other elite colleges and universities (with Princeton taking the lead) had taken steps in recent years to address the situation by eliminating or drastically reducing the loan components of financial aid packages for middle class students. But this latest announcement represents a truly dramatic change.

According to the New York Times, a student whose family earns $120,000 will pay only $12,000 to go to Harvard, putting Harvard very much in line, tuition-wise, with most state universities. That's astounding. As the author of several books on grants for individuals and a middle-class parent who actually sent a kid to Harvard in the 1990s (thereby incurring significant debt), an announcement such as this one has long been a dream of mine. And it makes perfect sense when you think about it. Why should access to the best education our country has to offer be made available only to the very poor and the very rich? An even more compelling question is, Why should the cost of a college education and the potential impact on ones family be the most significant factor in a student's decision about which college to apply to?

When my own offspring were attending expensive colleges, one not often remarked upon disparity that was mentioned in the New York Times article was the fact that kids from wealthy families had far more options when it came to deciding how to spend their school and summer vacations. They could travel to exotic locales or take an unpaid internship at a prestigious law or investment firm or volunteer to help feed the hungry in Africa -- whatever appealed to them. The rest of the student body, in contrast, needed to find the highest-paying jobs they could so as to help mom and dad with the often crushing burden of tuition and loan payments. What was truly unfair about this situation was that those very same prestigious internships, fascinating travel experiences, and volunteer activities helped fatten the resumes of the rich kids and led to the best job offers upon graduation. One additional factor that served to narrow options for middle-class kids was the pressure to choose the highest-paying job as opposed to the most interesting one so they could begin paying off the loans that they and their families had incurred.

For all those reasons, I’d like to take this opportunity to applaud this step on Harvard's part. That said, I wonder if the attendant publicity won’t result in even more applications being submitted to this most selective of American universities. And I can’t help but wonder what the impact will be on other institutions of higher learning. Obviously, no one else has an endowment the size of Harvard's. But competition is a healthy thing in my view, and pressure to come up with more creative ways to ensure that everybody -- everybody -- has the same opportunity to attend the college of their choice can only be a good thing.

-- Judi Margolin

Stir the Pot, v2.0

December 10, 2007

(Paul Shoemaker is the executive director of Social Venture Partners Seattle and also serves as board treasurer for Grantmakers for Effective Organizations. The following post, his first for PhilanTopic, has been cross-posted to the GEO discussion list.)

Some of you probably remember a rather lively discussion that took place on the GEO discussion list earlier this year about the benefits and challenges of providing general operating support. Fun stuff. And hopefully you have read GEO's action guide on this topic that came out as a result of that conversation. (The guide is available as a free download, with registration, at the GEO site.)

Now, as GEO prepares to do some broader work on "the money" and how the structure, timing, and format of the money impacts nonprofit success, I thought I’d "stir the pot" again and share MY thoughts on what needs to change in the nonprofit capital market.

I believe we need to see five major reforms:

  1. A common grant application process and/or repository, including financial statements (ala www.pacdp.org)
  2. No more funding restrictions placed on grants by funders -- i.e., 100 percent unrestricted/operating support
  3. A more organized, segmented, structured capital market (this is the fuzziest one) where funders are more explicit about the stage of development, kind of org., etc. they fund so that we give good nonprofits a more coherent way to scale and sustain
  4. A common outcomes framework that both funders and nonprofits commit to
  5. A common reporting format and/or repository (#1, #4, and #5 might even be related to each other as a system)

And these goals are undergirded by a handful of shared principles:

  • All of the above is core, shared, common across the third sector, but leaves things open for additions (which should be minimized)
  • Mutual accountability between funders and nonprofits is a 100 percent valid principle, and we agree that funders must be responsible stewards of their resources
  • Everyone is going to have to give a little (at the "parts" level) to get a lot (at the "whole" level)
  • This is very hard and this is also doable. Many of the above parts have already been done in isolated cases
  • We believe in maximizing "net grants" to nonprofits
  • Proportionality -– all of the above needs to be proportional to the size and length of the particular funder-nonprofit commitment

LOTS still to be addressed, etc., but that is one high-level, v1.0 swag of how to change the nonprofit capital market.

Your thoughts?

-- Paul Shoemaker

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