PhilanTopic

A 'Flip' Chat With...Liz Dwyer, Ambassador of Education, Pepsi Refresh Project

(This is the seventh in our series of "Flip" chats with thought leaders in the nonprofit and philanthropic sectors. You can find others here, including our last one, with The Economist's New York bureau chief Matthew Bishop.)

Since January, hundreds of nonprofit organizations and individuals have become agents of change in their communities with support from the Pepsi Refresh Project. Through the contest, which Pepsi is conducting in partnership with GOOD, Global Giving, and DoSomething.org, anyone can submit an idea in one of six categories: health, arts and culture, food and shelter, the planet, neighborhoods, and education. At the end of each month, the ideas with the most votes win a portion of $1.3 million.

While a number of questions have been raised about the Refresh project (How is Pepsi measuring the impact of the grants? Is the competition engineered to reward popularity over merit?), the project has succeeded in creating a great deal of buzz -- for Pepsi as well as around online giving contests in general -- and has provided much-needed financial support for a lot of worthy causes.

Earlier this week, I had a chance to sit down with Liz Dwyer, ambassador of education for the project, to talk about the project and how Pepsi is measuring its impact. With more than fifteen years of experience in the field of education, Dwyer also shared her thoughts about what we need to do to increase graduation rates and teacher effectiveness.

(If you're reading this in an e-mail, click here.)

(Total running time: 6 minutes, 12 seconds)

Last week, Pepsi announced that it will expand the project in 2011 to Europe, Latin America, and Asia, as well as continue to fund it in the U.S. and Canada. What do you think about the Refresh project and the company's decision to expand it? Are there any problem's with the model that need to be addressed before it goes global? And is this a model that other multinational corporations should be emulating? Use the comments section below to share your thoughts.

-- Regina Mahone

Ted on Sunday: Remembering Ted Kennedy

And so it ends.

With yesterday's sad, meticulously scripted, and moving sendoff to Sen. Edward M. Kennedy, the decades-long fascination that many of us had with the Kennedys of Massachusetts has been laid to rest. For as long as the American experiment remains viable, other families will rise to political power and prominence, joining the likes of the Adamses, Roosevelts, Tafts, and Bushes. The family name might be Martinez or Kim or Cohen, for that is part of the genius of America, as the Kennedys themselves so ably demonstrated. But just as we're unlikely to see a phenomenon like the Beatles again, or the kind of cinematic excellence that illuminated American movie theaters in the late '60s and early '70s, the Kennedy story and its grip on the American imagination will remain unrivaled.

I was born in Massachusetts and am old enough to remember where I was (sitting in a kindergarten classroom) the day John F. Kennedy was assassinated. My memory of that day, and the days that followed, are as vivid as any I have. By the time Robert Kennedy was murdered five years later, my family was living in northeast Ohio, Taft country, and, after the initial shock wore off, our thoughts turned to Ted, the sole surviving Kennedy brother. His eulogy for RFK at St. Patrick's Cathedral in New York City in June 1968, a soaring piece of rhetoric that has lost none of its power to inspire, signaled another passing of the torch. And we knew, in our bleeding liberal hearts, that it made Ted a marked man.

He knew it, too. As he repeatedly told reporters in Alaska after learning his brother had been killed: "They're going to shoot my a** off the way they shot Bobby's." Still, as Garry Wills writes in his 1986 book The Kennedy Imprisonment:

He rarely showed fear...; seemed, indeed, too jaunty to some -- with the effort that heaves several lives' weight into the air again. After Robert was killed, he told his aide Dun Gifford: "I can't let go. We have a job to do. If I let go, Ethel will let go. And my mother will let go, and all my sisters...."

He didn't let go; he soldiered on, persevered in the great liberal program staked out by his brother John and championed so compellingly by his brother Bobby in the hundred days of his 1968 presidential primary run. The psychic toll must have been unbearable. Wills again:

Once brother drew on brother for fresh strength; now brother drains brother, all the dead inhabiting the one that has lived on. Edward has managed to outlast three brothers without ever catching up to one of them. Just as he seems to overtake them, their glory either recedes from him, or fades in the public's eyes. It was pretty evanescent stuff to begin with, the glory; but one can hardly look to him for that perception. To show ingratitude toward the ghosts would just make them harder to shake off. Meanwhile, he inherits all their children, while his own partly slip away from him, victims of his own victimhood, and of his wife's....

Chappaquidick. His oldest son Teddy's bone cancer, which cost young Ted a leg at the age of twelve. The failed presidential primary run against Jimmy Carter in 1980, a campaign that featured an unprepared and, at times, seemingly uninterested Kennedy, but one that put some of his ghosts to rest. The carousing and drinking and end of his marriage to Joan. Redemption, in the form of second wife Vicki, a renewed interest in and commitment to his Senate work, ever-deeper bonds with his surviving sisters, his children, nieces and nephews and grandchildren. A final passing of the torch to a young, eloquent senator from Illinois, a grim cancer diagnosis, and a last year filled with moments, big and small, of grace and humanity.

It was an extraordinary life, a life that touched thousands -- as anyone could see who tuned in to the funeral service in Boston, watched the stately procession through the streets of Washington of the hearse bearing the senator's body or the emotional scene on the steps of the Capitol, where friends, colleagues, and staff, past and present, gathered in oppressive heat to say a final farewell. He touched millions more through the legislation he crafted and championed over the course of a 47-year career in the Senate.

I'll leave it to the senator's conservative critics to enumerate Ted Kennedy's -- indeed, the Kennedy family's -- failings. It's easy to mock and criticize, and there will be no shortage of such critiques over the coming weeks.

But on this day, four years after the levees broke in New Orleans and put a human face on levels of poverty and inequality that most of us thought had been eradicated decades ago, I'll honor Ted Kennedy's memory -- and the memory of his brothers and his sister Eunice and the entire Kennedy family, a family to whom much was given and which has given much back in return -- because of what he, and they, believed in and continue to fight for: fairness and compassion for the most vulnerable in society and equal opportunity for all.

Rest in peace, Senator. You did good.

-- Mitch Nauffts

What Did Leona Want?

Word that three prominent animal welfare organizations have petitioned Manhattan Surrogate Court to intervene in the matter of Leona Helmsley's $5 billion estate shouldn't surprise anyone who has followed the story in PND or here on PhilanTopic.

According to the suit, a two-page "mission statement" drawn up by the hotel heiress before her death in 2007 expressly stated that her trust be used for the care of dogs and general charitable purposes. She also left $12 million for the care of Trouble, her beloved Maltese.

After her death, the five trustees -- Helmsley's brother, two grandsons, her lawyer, and a longtime friend -- and the New York attorney general's office filed separate motions in Surrogate's Court arguing that the so-called mission statement did not limit the trust to the purposes stipulated by Mrs. Helmsley. Earlier this year, Judge Troy K. Webber agreed, ruling that the trustees could "apply trust funds for such charitable purposes and in such amounts as they may, in their sole discretion, determine."

And that's what they did. In April, the trustees announced the first round of grants from the Leona M. and Harry B. Helmsley Charitable Trust -- $136 million to a variety of tax-exempt institutions and nonprofits, including $40 million to support the creation of a digestive diseases center at New York-Presbyterian/Weill Cornell Medical Center; $15 million to various healthcare systems in South Dakota; $6.6 million to Joint Aid Management USA to support construction of a food factory and warehouse to help provide food aid to local communities in southern Africa; $2 million to the Cornell University School of Hotel Administration to create a Helmsley Scholarship; $750,000 to the National Geographic Society to help create a conservation fund for the Galapagos Islands; and $350,000 to the Rabbi Arthur Schneier Park East Day School. The trustees also awarded a total of $1 million to ten dog-related organizations -- $900,000 of it to groups that work with seeing-eye dogs.

Animal welfare groups cried foul. "Mrs. Helmsley's Trust Agreement and Mission Statement were clear: Help dogs. And the trustees have not done this, and instead pursued their own agendas with Mrs. Helmsley's money," said Wayne Pacelle, president and CEO of the Humane Society of the United States, one of the groups (along with Maddie's Fund and the ASPCA) filing the suit.

In other words, the suit is about donor intent. Okay, it's about money, too. But more importantly, it's about whether "the courts are willing to enforce donor intent," especially when it involves dogs and their welfare. Or, as Rich Avanzino, president of Maddie's Fund, the nation's largest animal welfare organization, put it in the same statement: "Literally hundreds of millions of dollars that have been willed by people nationally who cared about dogs have not gone to provide for dogs as was intended. The ignoring of donor intent in this country has become an unspoken national shame."

I'm sympathetic to that argument -- even if it's weakened by the fact that the three animal welfare groups involved in the suit are at pains to distance themselves from the eight-figure bequest to little Trouble. That's a totally separate issue, said Pacelle in a press conference yesterday to announce the legal challenge, leaving unsaid what many people no doubt think: Directing $5 billion to animal welfare groups -- or even a "significant" portion of that amount, say, $2.5 billion -- might be as irresponsible as leaving $12 million to a single dog. (In June, it was revealed that Manhattan surrogate court judge Renee Roth, with support from the New York AG's office, had knocked $10 million off the $12 million award to Trouble.)

Not surprisingly, the trustees of the Helmsley Trust agree that it all boils down to donor intent; they just don't agree on the petitioners' interpretation of Mrs. Helmsley's intent. Indeed, a statement on the trust's Web site goes to some length to make that point:

Did Leona Helmsley intend for this charitable trust to focus on the care and help of dogs, rather than people? Absolutely not. Have the trustees of this vast fortune acted improperly and ignored Mrs. Helmsley's instructions? Again, absolutely not....

Then, after seven paragraphs detailing evidence and arguments in support of this assertion, the statement closes thusly:

One final thought. Mrs. Helmsley was not known for reticence. Here, her actions spoke as clearly as the words of the Trust documents. In the eight years between the formation of the Trust and her death, Mrs. Helmsley contributed (as the sole trustee of this Trust and otherwise) over $55 million to charitable causes; of that amount, she made only one gift to a dog-related charity, for one thousand dollars.

Even more telling is this: The claim that the Trust was established for dog-related purposes relies on a document entitled "Mission Statement" signed by Mrs. Helmsley in 2004. Between her signing that document and her death -- during which time she alone controlled the Trust -- Mrs. Helmsley and the Trust gave over $29 million to charities; of that, the amount she and the Trust gave to dog-related charities was exactly zero.

Okay, so these kinds of disagreements are not unusual when large fortunes are at stake. And Pacelle and Avanzino raise an important point when they argue, as they did in their press conference, that judges, lawyers, and trustees -- most of them men -- are often quick to ignore the wishes of wealthy heiresses, especially when those wishes involve large amounts of tax-advantaged dollars being directed to the care and succor of animals.

But this particular situation is not casting any of the parties involved in a particularly flattering light. It's time for the New York AG's office, the Helmsley trustees, and the animal rights groups that filed suit to sit down and work out a compromise.

-- Mitch Nauffts

TED on Sunday: Barry Schwartz on the Paradox of Choice

In this wryly amusing talk, psychologist Barry Schwartz interrupts his morning jog to explain why more personal choice in almost every domain -- work, healthcare, entertainment, lifestyle decisions -- is making us less happy and more dissatisfied. It's a problem peculiar to affluent, industrialized societies, says Schwartz, but the consequences are global and increasingly destructive, psychologically as well as environmentally. So remember, when Mom or Dad tells you everything was better back when everything was worse, they just might be on to something. (Filmed: July 2005; Running time: 19:37)

Liked this talk? Then try one of these:

• TED on Sunday: Alex Tabarrok on the Benefits of Globalization
• TED on Sunday: Majora Carter on Environmental Justice
• TED on Sunday: Al Gore on Climate Change
• TED on Sunday: Sylvia Earle on Saving the 'Blue Heart' of the Planet
• TED on Sunday: James Howard Kunstler on the Death of Suburbia
• TED on Sunday: Clay Shirky on Epochal Change
• TED on Sunday: Mark Bittman on How We Eat
• TED on Sunday: Hans Rosling on the Dimensions of Development
• TED on Sunday: Sir Ken Robinson on Education and Creativity

-- Mitch Nauffts

Annals of Wealth: Nick Paumgarten Deconstructs the Economic Crisis

Nick Paumgarten's piece in this week's New Yorker ("The Death of Kings," May 18, 2009) is long, detailed, and gripping, in the same way Greek tragedy often is. I'm guessing it was researched and written between November and February, a period when the global financial system was on the verge of collapse and the "green shoots" of the past few weeks were a distant hope. But whether you're a beginning-of-an-end type or, like me, an end-of-the beginning gloomster, it's an article everyone should read. Here's an excerpt:

This thing we're in doesn't yet have a name. It's variously called, in placeholder shorthand, the global financial meltdown, the financial crisis, the credit crisis, the recession, the great recession, the disaster, the panic, or the bust. It long ago metastasized beyond the subprime mess, which was merely a catalyst -- the first whiff, the last straw. A text-friendly acronym, ITE, for "in this economy," has started to get around, in sales pitches and head count meetings, but it doesn't do the work.

This thing is enormous and all-pervading, evolving and ongoing, history-altering yet in many respects banal. It is a persistent state, like the weather, or a chronic illness. In some circles -- financial professionals in Manhattan, regulators in Washington, central bankers in Europe, or the owners of cash-strapped businesses, to say nothing of the millions of people who have been laid off or whose houses have been foreclosed on -- this thing is, in its various incarnations, pretty much the only subject of conversation. The loss of a job, a home, a college fund, or one's dignity is both a symptom of the collective disaster and a contributor to its deepening. People assess their own exposure first and then, gradually, the implications for their friends, their town, the social fabric, and, in the darker hours, the fate of the American experiment.

In a way, the financial crisis is like a plague or war, except that the pestilence and carnage are metaphorical. Some have compared it to Hurricane Katrina, but Katrina occurred suddenly, and then all was aftermath. In this case, it's as though the levees failed anew every day. We stay on the porch, carrying on with our card game, in water up to our necks. War...fails as an analogy, too; there is no enemy to shoot at, and the destruction is so gruesome that it is hard to mistake wartime for normalcy. An economic meltdown can camouflage itself in the commonplace. It is more like radiation. It's everywhere, but you can't see or smell it....

Click here for an abstract of the article; the complete article is available only to magazine subscribers. Or you can buy a copy at your local newstand. (What a novel idea.)

-- Mitch Nauffts

Green Shoots or Red Flag?

After a week of rain, Manhattan is starting to resemble a waterlogged Emerald City, and the natives are getting restless. Green, as in shoots, also seems to be the color of choice among economists this spring, and the stock market has responded with gusto, up 30 percent from its Death Valley bottom in early March.

The decline in equity prices has exacted a terrible toll on endowments and individual investors alike, dealing a double blow to nonprofits. So a rebound in stock prices is welcome news. But is the rally sustainable? And is it a sign the economy itself is on the road to recovery?

No, writes New York Times columnist Bob Herbert in today's paper ("Far From Over," May 9, 2009), quite the opposite. "The economy," he says, "is in shambles. Nearly 540,000 jobs were lost in April, a horrifying number. The unemployment rate rose to 8.9 percent," and is expected to hit double digits by the end of the year. Yes, the rate slowed some in April, thanks in part to 72,000 mostly part-time Census Bureau jobs added by the government. But job losses in February and March were revised upward, from 651,000 and 663,000 to 681,000 and 699,000, respectively. Yikes.

As the nonprofit sector knows all too well, rising joblessness is also causing poverty and homelessness to increase. According to the Economic Policy Institute, the poverty rate is in danger of increasing from 18 percent, the 2007 figure, to 27.3 percent by 2010. And the rate for black children -- an already appalling 34.5 percent -- could go to 50 percent if the "official" unemployment rate rises to 10 percent, as expected.

"Joblessness is like a cancer," Herbert writes.

The last thing in the world you want is for it to metastasize. And that's what's happening now. Don't tell me about the stock market. Don't tell me about the banks and their perpetual flimflammery. Tell me whether poor and middle-income families can find work. If they can't the country's in trouble....

Herbert is right, of course, and outside the precincts of Wall Street and affluent communities where a million dollars is just a down payment on a third home, people are scared. Scared that they'll lose their jobs, their homes, their hopes for the future. The question is, What are we going to do about it?

-- Mitch Nauffts

Annals of Wealth: Who Froze the Dogs Out?

Blame it on Trouble.

I'm not talking about the IRS kind, or the ungrateful grandchildren kind. I'm talking about the little white Maltese that hotelier and real estate magnate Leona Helmsley coddled while she was alive and tried to leave $12 million to when she died. That must have been one unlikeable dog.

(Photo: Jennifer Graylock, Associated Press)

How else to explain the announcement last week that the trustees of the Leona M. and Harry B. Helmsley Charitable Trust -- her brother Alvin, two grandchildren, one of her lawyers, and a friend -- had awarded $136 million in grants to support medical research, conservation, education, and organizations working to provide human services -- and $1 million -- or .7 percent of the total -- to be divided equally among ten animal welfare charities?

Many people, New Yorkers in particular, will remember the public outcry that followed on the heels of a Stephanie Strom article in the New York Times last summer. In the article, Strom revealed that a two-page "mission statement" signed by Helmsley before her death in August 2007 specified that her trust, then valued at between $5 billion and $8 billion, be used for the care and welfare of dogs.

The whole affair came to a boil a week or so later when Ray D. Madoff, a law professor at Boston College (and no relation to the disgraced Ponzi schemer) penned an op-ed for the Times in which she criticized the charitable deduction and, by extension, private foundations established in perpetuity as mechanisms "by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality."

The charitable deduction, Madoff argued, "constitutes a subsidy from the federal government. The government," she continued

in effect makes itself a partner in every charitable bequest. In Mrs. Helmsley's case, given that her fortune warranted an estate tax rate of 45 percent, her $8 billion for dogs is really a gift of $4.4 billion from her and $3.6 billion from you and me....

I'm not a tax expert, but it always seemed to me Professor Madoff conveniently overlooked a crucial point: The billions that Leona Helmsley bequested to a charitable trust were after-tax dollars, in that they had been taxed as income or capital gains while she was alive. How a tax lawyer or accountant can equate the tax revenue forgone when a Helmsley decides to create a charitable trust with the hundreds of billions the federal government has handed out via TARP or the tens of billions it annually gives to American farmers and agribusiness for the production of corn, cotton, rice, and wheat -- i.e., money that actually comes out of my pocket and flows into the pockets of others -- is a mystery to me.

More troubling, in my view, is Madoff's criticism of perpetual foundations and trusts, which, she argues, become less effective over time.

By setting aside assets for the uncertain needs of the future, we deprive ourselves of resources for addressing the obvious and compelling needs of today.

We should not give a blank check to support the whims of the wealthy. There should be a limit -- a dollar amount or a percentage of the estate -- on the estate tax charitable deduction. People could still give to charity as they like, but after a point they would be giving after-tax dollars. The deduction should be lower for bequests to private foundations than for money given directly to good cause....

The implications of Madoff's argument are two-fold: 1) that there's a hierarchy of needs in society at any given moment that foundations and wealthy philanthropists routinely fail to address in a meaningful way; and 2) we should not use the tax code to encourage the saving of a portion of the wealth of society when those needs are pressing, as they are today. Both points are debatable -- and I hope to do so in future posts.

What about Leona Helmsley's final wishes with respect to the charitable uses of her fortune? In February, a Surrogate's Court judge in Manhattan ruled that the two-page document Helmsley drew up was not legally binding as a will and that that the trustees of her estate "may apply trust funds for such charitable purposes and in such amounts as they may, in their sole discretion, determine." The irony of some those funds being used to create two research facilities bearing her name, in perpetuity, at Mount Sinai Medical Center is surely not lost on Professor Madoff.

Leona Helmsley didn't have many friends in life, and she probably wouldn't be surprised by how she has been treated in death. You can blame it on the dog. Or the courts. But you can't say it's fair.

As always, we welcome your comments. 

-- Mitch Nauffts

Fallout From Madoff Scandal Spreads (Part 2)

Earlier this week we noted that at least three private foundations had been caught up in the scam run by New York money manager Bernie Madoff -- described in today's NYT as "a fraud that lasted longer, reached wider and cut deeper than any similar scheme in history" -- and, as a result, had -- or soon would -- close their doors.

Add another one to the list.

The Times and wire services are reporting that the Palm Beach-based Picower Foundation, a family philanthropy that has given some $268 million to nonprofits and educational institutions, has announced that it would halt its grantmaking "effective immediately" and would "close its doors in the coming months." Created by Barbara Picower and her husband, investor Jeffry Picower, in 1989, the foundation had assets valued at nearly $1 billion as of 2007, making it, at this point, one of the largest philanthropies to be caught up in the scandal. In a statement released to the press, Barbara Picower, the foundation's president, said: "This act of fraud has had a devastating impact on tens of thousands of lives as well as numerous philanthropic foundations and nonprofit organizations. We deeply regret that in such a harsh economic climate, we will be unable to support the profoundly important programs and organizations that have helped us further the Foundation's mission."

Meanwhile, the New York Post is reporting that the Elie Wiesel Foundation for Humanity, a small public charity created by Nobel laureate Elie Wiesel, was "completely wiped out" by Madoff. The staff at the foundation has released the following statement:

We are deeply saddened and distressed that we, along with many others, have been the victims of what may be one of the largest investment frauds in history. We are writing to inform you that the Elie Wiesel Foundation for Humanity had $15.2 million under management with Bernard Madoff Investment Securities. This represented substantially all of the Foundation's assets.

The values we stand for are more needed than ever. We want to assure you that the Foundation remains committed to carrying on the lifelong work of our founder, Elie Wiesel. We shall not be deterred from our mission to combat indifference, intolerance, and injustice around the world.

At this difficult time, the Foundation wishes to express its profound gratitude for all your support.

Sad. So sad.

-- Mitch Nauffts

Fallout From Madoff Scandal Spreads

Over the weekend, we learned that at least two foundations, the Robert I. Lappin Foundation and the Chais Family Foundation, had lost millions in Bernie Madoff's alleged Ponzi scheme and were closing their doors, effective immediately.

The latest victim of the scam is the New York City-based JEHT Foundation (an acronym for Justice, Equality, Human dignity and Tolerance), which earlier today announced that it was halting all grantmaking effective immediately and would shut its doors at the end of January. The foundation has posted a statement on its Web site that reads in part:

The JEHT Foundation Board deeply regrets that the important work that the Foundation has undertaken over the years is ending so abruptly. The issues the Foundation addressed received very limited philanthropic support and the loss of the foundation's funding and leadership will cause significant pain and disruption of the work for many dedicated people and organizations. The Foundation's programs have met with significant success in recent years -- promoting change in these critical areas in partnership with government and the nonprofit sector. Hopefully others will look closely at this work and consider supporting it going forward....

Inquiries should be directed to the foundation, care of its president, Robert Crane, rcrane@jehtfoundation.org.

-- Mitch Nauffts

Philanthrocapitalism Unbound: Q&A With Matthew Bishop

Matthew Bishop is New York Bureau chief of The Economist magazine and co-author (along with Michael Green) of Philanthrocapitalism: How the Rich Can Save the World. Last month, I sat down with Bishop in a midtown conference room to talk about the book, the definition and significance of philanthrocapitalism, the growing concentration of wealth in the United States, and the role of philanthropy in a democratic society. Here's an excerpt from our conversation:

Philanthropy News Digest: You applaud philanthrocapitalists for taking a systems-thinking approach to problem solving. But what evidence do we have that systems-thinking yields results when applied to a social context?

Matthew Bishop: One of the things that has happened over the past twenty years is that a lot of talent in society has migrated to the business sector -- talent that in the past would have gone into politics or law or medicine. Of course, money is a powerful inducement. But people also want to do work that feels cutting-edge, to solve problems and make a difference. They want to create the next Google, the next amazing new technology; they feel that with hard work and a little luck they can shape the course of whole economies. And that feels great, that's exciting.

But the idea that all this talent is turning its attention to addressing big social problems raises, for me, a couple of questions. First, anyone coming from the business world into the social sector has to navigate significant cultural differences. For example, people in the business world too often are maniacal about control. There's this arrogance, especially among executives, that they know best and that people in the nonprofit sector don't know what they're talking about. Similarly, on the nonprofit side, you have people who resent wealthy capitalists who have made a boatload of money for themselves and are now coming in and telling them what to do. We hear these stories all the time. So, there's quite a lot of disrespect on both sides of the divide, which is a bad place from which to start.

What is encouraging is that the most effective of the philanthrocapitalists have not only demonstrated their commitment to the social sector, a number of them have had a kind of epiphany and realize that they need to be more humble and listen more. In fact, that's something the new economy encourages; it's the whole venture capital thing about not really being a success until you've failed at least once. At the same time, the people on the receiving end of the money are more aware that there's a lot of money out there waiting to be tapped, that there's a quid pro quo attached to it, and that they're going to have to get used to the idea of participation, beyond a check, from the person providing the funding. Again, people are starting to figure out how to make it work.

The other concern I hear a lot is that, initially at least, philanthrocapitalists are looking at social sector work as a profit opportunity. Now, there may be profitable business models out there and ways to make social enterprises more sustainable. That's just going to be the case in some situations. But in other situations, that whole agenda is completely inappropriate. What we'd like to see, instead, is business people applying business approaches to social problems, approaches that allocate capital efficiently and strive to generate impact, that emphasize investment in capacity and sustainability and don't skimp on overhead. Revenue should always be secondary.

PND: You spend a lot of time in the book talking about Bill Gates, Warren Buffett, and the Bill and Melinda Gates Foundation, the largest philanthropy in the United States and one of the largest in the world. The Gates Foundation has four trustees: Bill and Melinda Gates, Bill Gates, Sr., and Warren Buffett. Are you concerned by the concentration of so much wealth in a single tax-exempt institution controlled by just four people?

MB: First, let me just say that Bill Gates and Warren Buffett do not have to give their money away. They could spend it or leave it to their children or move it offshore. So, it's a good thing, in my view, that they've chosen to invest it philanthropically, and clearly their motivations for doing so are good ones. They feel extremely fortunate, they want to give back to society and make a difference, they want to solve problems, and they don't have any interest in undermining the democratic process.

That said, there are two aspects of the Gates-Buffett merger that merit discussion. To your point about the growing concentration of wealth in American society, there is a real question about whether would it have been better for Buffett to have given his money to another foundation, or to have created his own foundation, in the interest of competition. There is a feeling in some quarters that the Gates Foundation could become monopolistic in some areas. Not in the sense of having a massive amount of capital to allocate, because clearly the money that governments are able to spend will dwarf even the $3 billion that the Gates Foundation plans to spend every year, but monopolistic in the sense that anyone who has got a bright idea in, say, the global health arena may feel that they have to go to Gates or try to keep Gates happy. So, yes, there's a question about whether it would be better to have two big foundations in the global public health arena competing for ideas and human capital rather than one giant one....

To read the interview, click here.

-- Mitch Nauffts

Quote of the Day (October 11, 2008)

"People keep on stepping on the same rakes because money, like romance, is only partly an intellectual experience. Money, like sex, brings out some thought -- but also much heavy breathing and little stored knowledge. In finance, the process is cyclical. Some people learn from their ancestors, but mostly they repeat the same mistakes. Thus it has always been and thus it will always be...."

-- James Grant, editor, Grant's Interest Rate Observer ("Swept Up by the Insanity of the Markets," Joe Nocera, New York Times, 10/11/08)

'Traces of the Trade' and Philanthropy, Part 2

(Kathryn Pyle is producing a documentary film about the post-conflict period in El Salvador. This post picks up where her previous post, below, left off. )

"The Traces of the Trade event was certainly outside our normal film program," says Alyce Myatt. "But the legacy of slavery and the need for dialogue around race, class, and privilege is so important. How can the philanthropic community address the issue? One way is through media, and this film is unique in terms of the issue and the funding it received. By showcasing it, GFEM can support and advance funders' policy goals."

The film chronicles the journey of the ten family members, beginning in Bristol, Rhode Island, as they examine evidence of their slave-trader ancestors; then on to the west coast of Africa as they follow the route of the slave ships, stopping at one of the most notorious forts that held captives for resale and visiting one of the family's plantations in Cuba; and finally back to Bristol as they struggle with what to do next. Some descendents become involved in the broadly based reparations movement. Others engage in an Episcopal Church project to research how the church benefitted from the trade and what to do about it. The film's final message is a challenge to "bring all the stories out in the open," and to engage in dialogue with African Americans about our shared past.

As the film illustrates, the history of the slave trade, and of slavery in the U.S., is still being uncovered. The great surge of interest in that history during the 1960s and 1970s produced black studies programs, networks of academics and lay scholars; conferences, articles, books, films, radio, and other media projects; family reunions and popular genealogy; and museum exhibitions and historical society programs.

More recently, new technologies for data collection, analysis, and access have tremendously expanded our knowledge and spurred a resurgence of interest, particularly about the trade itself, on both sides of the Atlantic. Over the past decade or so, particular attention has been paid to that history as it played out in the North. The New-York Historical Society recently organized a fine three-part exhibition on slavery in New York City and created a permanent galley in response to overwhelming public interest. The Chester County (PA) Historical Society's interactive "Just Over the Line" exhibit on the underground railroad challenged viewers to take a stand relative to laws forbidding assistance to runaway slaves in real-life situations. That exhibit included census data showing the pattern of Philadelphia-area slave ownership. Rhode Island, the colony/state that launched 60 percent of all U.S.-based slave trading expeditions, will host a Freedom Festival this fall. And under pressure from students and civil society groups, universities are beginning to examine their own histories. A committee at Brown University found that the university benefitted indirectly from the slave trade and related industries through financial support; among other initiatives created as a result of the study, Brown has developed a high school curriculum on the slave trade in the Northeast and hosts workshops on the theme.

But even with all the new attention, the recognition of slavery as a national experience, not just a regional one, has been slow in coming. In contrast, commemorations in England last year marking the bicentennial of the abolition of the slave trade there emphasized the extent to which the trade was ingrained in the economy and affected the lives of ordinary citizens. Similarly, museums on slavery in Liverpool and Bristol show the slave-trade roots of those cities' prosperity.

Traces of the Trade highlights the story of three generations of the De Wolf family who were engaged in the slave trade based in Bristol. Indeed, it was the major part of their business from 1769 to 1820. A strength of the film is that it presents the business' diversification and "vertical integration," qualities that eventually obscured the source of capital and spread economic benefits through the larger society.

The film also points the way to similar searches. The Rhode Island Historical Society (like similar societies in other regions, a critical source of information on the trade), is open to the public. It acquired the De Wolf family papers from 1863 to 1994, began organizing the collection in 1978, and microfilmed it in 2001. The collection -- letters, photographs, business papers, and other artifacts -- is featured in the film. Typical of slave trade research, some of the most revealing documents are court records -- in particular those related to a case in which James De Wolf was charged with throwing overboard a smallpox-infected slave en route from Africa. Such an act was illegal under the laws defining the trade. De Wolf (1764-1837), a member of the middle of the three generations discussed in the film, served as a U.S. senator and was one of the wealthiest men in America. While slavery was the basis of that wealth, the family remained a prominent and influential family after the slave trade was formally abolished by Congress in 1808. (Even then, many traders continued to engage in it, facilitated by the fact that slavery remained legal in much of the hemisphere until 1888, when it was abolished by Brazil, the last country to do so.)

Traces of the Trade will be distributed by California Newsreel, a nonprofit producer/ distributor of social-issue films. With a special focus on racial justice and diversity and the study of African-American life and history, the organization sees the primary market for the film as academic centers and departments -- including those dealing with race; the history of the U.S., Caribbean, and Africa; cultural studies; conflict resolution and peace studies -- and theological seminaries.

"We've been following this film's production over the years and we're eager to help get it out there; race relations is not an easy subject and one that still is a challenge in terms of engaging the general public," says Newsreel's Cornelius Moore. "And while much of the historical information might reside in public archives, access is not always encouraged. We think the film can stir interest and support people who want to uncover the full story of their community's past."

The family members who participate in the film acknowledge that while no trade-based fortune has come to them, the social position of the family gained through that wealth established a platform of privilege that has extended through the generations to benefit nearly all of them. It is that privilege and the question of responsibility that give the film its broader significance. Commenting on the film's success at the council event and the anticipated reception at the council's upcoming meeting of family foundations, David Haas feels the issue of privilege is key. "It's a family saga that I believe will resonate with family foundation members about where to go from here."

-- Kathryn Pyle

'Traces of the Trade' and Philanthropy, Part 1

(Kathryn Pyle was senior representative for Central America/Mexico at the Inter-American Foundation; executive director of the Samuel S. Fels Fund; and co-founder of Delaware Valley Grantmakers. Currently, she is producing a documentary film about the post-conflict period in El Salvador. Her first post for PhilanTopic described how a small donation expanded library services to Latinos in a rural Pennsylvania county.)

Five hundred people filled an auditorium at the Newseum in Washington, D.C., this spring to accompany an extraordinary family on an extraordinary journey. The event was a special screening of Traces of the Trade, a feature-length documentary since shown on PBS’ POV program that is now making the rounds of film festivals and community centers. The documentary records ten descendants of a New England slave trader as they discover the details of the trade, confront what the legacy means for them personally, and take steps to make things right. Their moral dilemma, of course, is the dilemma of our nation, as we consider the great task still remaining before us.

The event was part of the Council on Foundations' annual gathering and was a council first in terms of public profile: the film was followed by a panel discussion hosted by Judy Woodruff, the PBS Newshour journalist, and Charles Olgletree of Harvard Law School. Former council president and ambassador to South Africa James Joseph was joined by several other panel members, all experts in related fields, for comments, and the audience of funders and invited community representatives continued a conversation with the panel and the filmmakers.

But the screening was only the most public of a long-standing program that has brought funders to media and media to funders. The council's annual Film and Video Festival (F&VF) showcases works supported by the council's own members -– private and corporate foundations. With financing from more than thirty private foundations, religious groups, public broadcasting and government arts agencies, plus many individuals, Traces of the Trade was an apt choice for this special event. It also put the festival itself, and the organizations behind it, in the spotlight.

Organized by an informal group of cinephiles headed by Phil Hallen, then president of the Falk Foundation in Pittsburgh, the festival began as a sidebar to the council's first-ever annual conference and has been part of the annual gathering for forty-one years.

"I loved film, and my board saw it as an extension of our grants for academic publications; as another way to communicate ideas, particularly related to civil rights. We supported more than one hundred documentaries,” says Phil, who is now retired and president emeritus of the foundation.

"In 1968 or so I was on the program committee for the council conference in Kansas City and I said, 'Let's show some films!' We identified a handful that foundations had supported, found a closet and a projector, and about three or four people wandered in for each showing."

Within a few years it was a formal part of the conference, with Karen Menichelli at the Benton Foundation, which focuses on media, taking the lead. Hallen added, "Once we tied the festival to the themes of the conference and linked the films to the sessions, people could more easily see the power of the medium. It really took off then."

Along the way, a curator was hired to professionalize the program and sift through the increasing number of films supported by the council's members: Linda Blackaby, now the director of programming at the San Francisco Film Society, was the first, followed by Pat Aufderheide, director of the Center for Social Media at American University. For the past few years, curators (all with previous festival experience) have been invited to serve for one or two years; they help produce the festival catalog that describes the films and includes comments from the funders on why they supported them. The festival is now a multifaceted, multi-site forum on the social impact of media, with awards for exceptional films and peer support for funders who recognize their importance.

An affinity group was formed out of the initiative. (Affinity groups are a sort of subsidiary structure of the council, giving members a forum for their special interests.) Grantmakers in Film, Video & Television began on a volunteer basis in 1984; reflecting changes in technology and media behavior over the past decade, it's now called Grantmakers in Film & Electronic Media (GFEM). It was formally incorporated two years ago, has forty-five members (nine hundred funders get e-communications) and a staff of four, and is headed by former MacArthur Foundation program officer Alyce Myatt.

GFEM works with the Council on Foundations' Evelyn Gibson (Director, Awards Programs) to organize what's now the formal council program: the Film and Video Festival is not only part of the council's annual conference for all members but also its annual conference for community foundations and that for family foundations as well.

"Foundations and corporate giving programs support media to bring about change, to tell stories that otherwise wouldn't be told," says Gibson. "The council sees the festival is a venue to disseminate those stories; it's another way to help our members do their work."

This year, in addition to the Traces of the Trade event, the F&VF screened thirteen films produced recently with council members' support; three were followed by discussions with the filmmakers. About fifty people attend each screening; thousands see the films over the course of the three annual conferences. In past years, when the council meeting could be contained in just one hotel, the festival was available in a special screening room as well as in-room via the local TV cable; this year, with over three thousand people attending the main conference, the required multiple hotels make in-room prohibitive.

Two films received a Henry Hampton Award, named after the visionary executive producer of Eyes on the Prize; the award recognizes projects of particular quality and social merit. This year's winners were Made in L.A., about sweatshops in the U.S., and Salud, about the Cuban community-based health care model. Other GFEM programs included a session, selected as part of the council's official program, on the changing nature of media and its role in strengthening or weakening democracy.

(Film/video works are submitted by council members in June for consideration at the next year's council meeting -- more information, including "Ten Reasons Why Funders Fund Media," is available at www.fundfilm.org.)

Aside from the council's activities, GFEM offers a variety of member services related to its aim to be "a resource for grantmakers who fund media content, infrastructure, and policy and who employ media to further their program goals." The members are a diverse mix of staff and board of private and corporate foundations and media organizations who agree that "electronic media is a vital form of human expression, communication and creativity, and plays a key role in building public will and shaping civil society."

As noted by David Haas, GFEM chair, membership in the affinity group and interest among funders in general has grown dramatically over the years as funders have become more media savvy. "Compelling social issue documentary films and media projects can tell a story in a unique way, addressing issues that foundations care about."

What in particular about Traces of the Trade appealed to the festival committee as they planned the Newseum event? As I'll discuss in my next post, part of the answer lies in the subject matter itself, and part in the producers' eagerness to disseminate the film beyond the normal documentary channels.

-- Kathryn Pyle

Weekend Link Roundup (March 22-23, 2008)

Apologies for the delay; it was a nice day here in the Northeast.

Annals of Wealth

A new report from the Spectrem Group suggests that while the number of affluent and millionaire households in 2007 grew for the fifth consecutive year, the rate of growth slowed considerably. (Hat tip to Lucy Bernholz.)

The Rich Aren't Like You and Me; They Have a Lot More Dough. Still, if you thought $10 million would secure you a place among the ranks of the wealthy, think again. An article in Barron's says you need $25 million these days to be considered rich:

"Thanks to a global explosion of wealth over the past 10 years or so, the number of U.S. households with $1 million to $25 million in wealth has more than doubled. Households with $500 million and up have roughly tripled. 'Heck, $1 billion isn't a lot of money,' says Bill Sanderson, a broker of mega yachts in Palm Beach, Florida....Sanderson could be on to something: Billionaires now occupy every slot on the Forbes 400, and that list, some bankers and consultants say, may be overlooking 100 billionaires-next-door whose financial dealings are too private to track...."

My Carbon Footprint Is Bigger Than Your Carbon Footprint. Recently, the biggest yacht in the world, Microsoft co-founder Paul Allen's 198-foot Medusa, was moored off Necker Island in the British Virgin Islands. Necker is the private getaway of Virgin Airlines founder Sir Richard Branson, and Branson had invited a high-profile roster of global elites -- former British PM Tony Blair, Google co-founder Larry Page, famed Silicon Valley VC Vinod Khosla -- to discuss whether planet earth really was "on fire." The verdict: Yes.

"With no naysayers on the island, the weekend, which was organized in part by the Climate Group, a nonprofit, was filled with hopeful talk about the 'war against carbon,' as Mr. Branson put it. But there was also talk of money, which most of the attendees had plenty of. And to make any of these technologies successful, they all agreed the solutions had to be profitable without subsidies...."

The NYT's Andrew Ross Sorkin reports.

"Want to Be Happy? Give Your Money Away." A new study by Elizabeth Dunn, a professor at the University of British Columbia, and colleagues found that "how people spend their money is at least as important as how much of it they earn in the first place. The greatest joys of all, they discovered, can be attained by giving money away, either to someone they know or to charity...." (The Independent, 3/21/08)

Philanthropy

Bill Schambra, director of the Hudson Institute's Bradley Center for Philanthropy and Civic Renewal, argues that "in contrast to the early decades of the 20th century, foundations tend to be bit players on the American policy scene, drastically diminished in influence, disorganized, dispirited, and lacking a common vision or intellectual framework for their undertakings." Given their diminished role in a social landscape that is "too complicated, too cluttered with other actors [who have] far more impact" on outcomes, adds Schambra, foundations need to re-imagine "strategic philanthropy in a radically different way."

Jeff Trexler, the Wilson Professor of Social Entrepreneurship at Pace University, brilliantly deconstructs a recent op-ed piece by NYT columnist David Brooks on social entrepreneurship:

"In a nutshell, what we have in Brooks' column is not an emblem of triumph for social enterprise but a signal of an ideology in retreat. Brooks is writing this now because free-market capitalism and conservative federalism are in desperate need of validation outside politics and pundits. McCain, Obama, Clinton, Congress, the mainstream media -- no matter where you look, the future seems to trend more toward government control than the Reagan Revolution. In this context Brooks' appeal to social enterprise is similar to the use of charity in commercial advertising. It's an attempt to borrow goodwill -- if you're not going to believe the American Enterprise Institute, listen to social entrepreneurs...."

Following up on a February post, Beyond Philanthropy's Tim Ogden considers emerging opportunities for high-impact philanthropy in the U.S., including back-stopping the student loan infrastructure, which has taken a hit in the ongoing credit crunch; working with so-called payday lenders to increase short-term uncollateralized loans for low-income workers without access to credit; and working to reduce energy consumption in the U.S. by funding the purchase of new gadgets that provide real-time energy use information.

Technology

Excellent post on blogging and the threat of defamation lawsuits by Jeff Trexler (see above) at his Uncivil Society blog. (Hat tip to Phil Cubeta.)

How did a "relative unknown" win $50k on Facebook? Lessons in Web 2.0 fundraising, with a hat tip to "A Fundraiser" at the Don't Tell the Donor blog.

Katya Andresen, author of the book Robin Hood Marketing and the Non-Profit Marketing blog, argues that at the end of the day social media is about three things: the desire to be heard; the desire to be seen; the desire to connect to others.

Odds and Ends

The Century Foundation has launched Taking Note, a "group blog" featuring "topical opinions and analysis by TCF fellows and staff."

And over at The Big Picture, Barry Ritholtz wonders whether truthiness has replaced truth in a "post-fact" America.

-- Mitch Nauffts

Annals of Wealth (part 4)

The big philanthropy news on Tuesday, as reported in the New York Times and elsewhere, was that Wall Street financier Stephen A. Schwarzman, CEO of the Blackstone Group, one of the world's largest private equity firms, had agreed "to jump-start a $1 billion expansion of the [New York public] library system with a guaranteed $100 million of his own" -- the largest gift in the library's  history.

Yesterday, the Associated Press and Wall Street Journal (but not the Times, which waited until today) reported that Mr. Schwarzman received $350.7 million in compensation in 2007, making him one of the highest-paid executives on Wall Street. That was in addition to the $4.77 billion in stock Schwarzman received in June through the initial public offering of Blackstone's management division. According to the Times, 25 percent of those shares vested immediately, generating a tidy return of about $1.2 billion, while the remaining shares will vest in equal installments over four years.

Since the IPO -- which happened just weeks before the onset of the credit crunch in U.S. debt markets -- shares of Blackstone have fallen from the initial offering price of $31 to about $16.

As they say in that television commercial, you can't make this stuff up.

-- Mitch Nauffts