PhilanTopic

NPO Job Openings (April 2012)

After surprising on the upside in January and February, the job numbers for March and April came in below expectations, reviving fears that, without further Fed easing, the economic recovery could stall.

According to the Bureau of Labor Statistics, nonfarm payrolls grew by 154,000 in March and only 115,000 in April, while the number of unemployed in April fell to 12.5 million from 12.8 million and the unemployment rate dropped a tenth of a percentage point to 8.1 percent (the lowest level since February 2009). BLS also revised upward the February (from +240,000 to +259,000) and March (+120,000 to +154,000) payroll numbers.

(Chart courtesy CNNMoney)

Here at PND, our own completely unscientific gauge of the economy's health -- i.e., submissions to the PND job board -- tells a slightly different story, with monthly job postings in April down on a consecutive and year-over-year basis, though not enough to set off alarms. Indeed, for the first four months of the year, the number of jobs posted to the job board eclipsed, by almost 5 percent, the number posted over the same four-month period in 2011, suggesting that the nonprofit sector, like the economy in general, is recovering (albeit slowly) from the disaster of 2008-09.

Unsurprisingly, given the tough funding climate, demand for nonprofit development and fundraising professionals remains strong. And we're also seeing a lot of postings in the finance category -- up 8 percent on a year-over-year basis -- perhaps because of increased merger and restructuring activity in the sector.

It might be overstating things to say the optimism we felt in January has faded. But with Greece on the ropes and the seventeen-country Eurozone at risk of falling into "severe recession" -- or worse -- the next couple of weeks will be crucial. And then there are the elections in November, with control of all three branches of government at stake, and, looking a little farther down the road, the dreaded "fiscal cliff" our elected officials in Washington seem determined to explore. How it all shakes out, and what that might mean for the nonprofit sector, is anyone's guess (though we're betting against a Thelma and Louise-style finale). In the meantime, we'll be keeping our eye on the May job numbers, to be released June 1, for clues.

-- Lauren Brathwaite

The Individual Mandate: A PubHub Reading List

(Kyoko Uchida manages PubHub, the Foundation Center's online catalog of foundation-sponsored publications. In her previous post, she highlighted reports about efforts to improve access to clean water, sanitation, and hygiene in the developing world.)

Last week, the Supreme Court heard arguments with respect to the constitutionality of the Affordable Care Act's so-called "individual mandate." But how much of the debate did you really understand? Framed by the media as a choice between the power of the federal government to coerce individuals to purchase something they may not want and the significant costs associated with "free-riding" in the healthcare system, the debate tends to give short shrift to the nuances and complexities of the legislation and existing legal precedent. (To cite one example: a March 2011 Kaiser Health Tracking Poll found that "opposition [to the legislation] falls markedly when people are told that the mandate will not change the existing health care arrangements of most Americans.") With that in mind, this week we're taking a closer look at a couple of reports that address some of the issues and legal questions raised by the individual mandate.

According to The Individual Mandate in Perspective (3 pages, PDF), a new issue brief from the Urban Institute, "if the ACA were in effect today, 94 percent of the total population (93 percent of the non-elderly population) or 250.3 million people out of 268.8 million non-elderly people — would not face a requirement to newly purchase insurance or pay a fine." That's because 33 percent of those under age 65 are exempt from the requirement due to income level, while of those who are not exempt, 86 percent will keep the employer-sponsored, nongroup, or public insurance coverage they already have.

So if the vast majority of Americans are exempted from the requirement or will remain covered under their existing plans, who is subject to the mandate? According to the report, roughly

26.3 million Americans who are currently uninsured will be required to newly obtain coverage or pay a fine. In this group, 8.1 million people will be eligible to receive free or close-to-free insurance through Medicaid or CHIP and can avoid the mandate penalties if they do so; hence our finding that 18.2 million Americans (6 percent of the total population, 7 percent of the non-elderly population) will be required to newly purchase coverage or face a penalty. Of that 18.2 million, 10.9 million people will be eligible to receive subsidies toward private insurance premiums in the newly established health insurance exchanges, but will have to make partial contributions toward their coverage. About 7.3 million people -- 2 percent of the total population (3 percent of the population under age 65) -- are not offered any financial assistance under the ACA and will be subject to penalties if they do not obtain coverage....

Funded by the Robert Wood Johnson Foundation, the issue brief also notes that by keeping currently insured healthy individuals in nongroup and small group markets and attracting newly eligible healthy individuals, the mandate will help to stabilize premiums.

What, then, is the legal basis for challenging the constitutionality of the individual mandate? According to Examining the Evidentiary Basis of Congress's Commerce Clause Power to Address Individuals' Health Insurance Status (21 pages, PDF), a report from the Bureau of National Affairs that also was funded by RWJF, the question is whether the Commerce Clause of the Constitution gives Congress "the constitutional power to apply a 'minimum essential coverage requirement' on most non-elderly Americans." In other words, does "being uninsured [amount] to an activity that substantially affects interstate commerce"? Congressional findings with respect to the relationship between the individual mandate and interstate commerce are based on a wealth of evidence, the report notes:

Evidence amassed and analyzed by health services researchers sheds considerable light on the economic spillover effects of being uninsured, not only on individuals and their families, but more importantly in the context of the minimum essential coverage requirement, on community and regional health care systems and the economy as a whole....

The Courts of Appeal for the Sixth and D.C. circuits both upheld the constitutionality of the requirement, and in doing so considered that:

Virtually everyone participates in the market for health care delivery and they finance these services by either purchasing an insurance policy or by self-insuring....Thus, set against the Act’s broader statutory scheme, the minimum coverage provision reveals itself as a regulation of the activity of participating in the national market for health care delivery and specifically, the activity of self-insuring for the cost of these services....

In contrast, the Eleventh Circuit Court of Appeals, which has jurisdiction over Alabama, Georgia and Florida, focused narrowly on the requirement that individuals enter the health insurance market and rejected any link between the requirement and an individual's activity in the broader economy:

Because the Supreme Court's prior Commerce Clause cases all deal with already-existing activity -- not the mere possibility of future activity (in this case, health care consumption) that could implicate interstate commerce -- the Court never had to address any temporal aspects of congressional regulation. However, the premise of the government’s position that most people will, at some point in the future, consume health care -- reveals that the individual mandate is even further removed from traditional exercises of Congress’s commerce powers....

The Supreme Court's decision, expected in June, will depend in part on how the court frames the problem the Affordable Care Act is intended to solve, the report concludes. How Justice Antonin Scalia's framing of the "broccoli question" during oral arguments ("Everybody has to buy food sooner or later, so you define the market as food. Therefore, everybody is in the market. Therefore, you can make people buy broccoli") plays out in terms of the final ruling, on the other hand, is anybody's guess.

Interested in learning more about the individual mandate provision? Check out these reports, all of which can be found in PubHub:

• A Guide to the Supreme Court's Review of the 2010 Health Care Reform Law
  Henry J. Kaiser Family Foundation
• Eliminating the Individual Mandate: Effects on Premiums, Coverage, and Uncompensated Care
  Urban Institute
• Newly Insured Californians Would Fall by More than 1 Million Under the Affordable Care Act Without the Requirement to Purchase Insurance
  Center for Labor Research and Education at University of California, Berkeley; UCLA Center for Health Policy Research
• Health Affairs/RWJF Health Policy Brief: Legal Challenges to Health Reform
  Health Affairs; Robert Wood Johnson Foundation

And feel free to use the comments section to share other reports of interest on the topic, as well as your thoughts about the mandate and the upcoming Supreme Court decision.

-- Kyoko Uchida

Kony 2012: The Great Product Debate

(Paul Shoemaker is executive director of Social Venture Partners Seattle and recently was named one of the "Top 50 Most Influential People in the Non-Profit Sector" by The NonProfit Times. In his last post, he wrote about non-financial capital as a driver of social change.)

Most of us have heard or seen the name "Joseph Kony" over the last week. Indeed, as of Monday morning, 74 million people had watched the Kony 2012 video on YouTube. Most of us also are aware that the video has generated a wide range of reactions. I'm not here to argue for or against the video, the Kony 2012 campaign, or Invisible Children, the nonprofit organization behind the campaign. What makes me kinda nuts, however, is the criticism that Invisible Children doesn't spend enough money on "programs." An article in the Seattle Times on Friday, for example, noted that "The burst of attention [for Invisible Children]...has brought other criticism, including the ratio of the group's spending on direct aid and its Charity Navigator rating." (Charity Navigator, the country's best-known charity evaluator, is changing, but it was one of the worst things to ever happen to the sector, in my opinion.)

I've addressed this issue hundreds of times in my job over the last fourteen years, and I've come to realize I'll probably have to do it hundreds more. So I'll keep it simple: Invisible Children is an advocacy organization; that's what they do. They spend money on media (i.e., "non-direct aid") because that's their strategy. The criticism that they spend too much on "overhead" is like telling Heinz it spends too much on tomatoes. If you want to buy Heinz ketchup, buy it. If you don't, don't. But don't tell Heinz it doesn't know how to make ketchup.

Invisible Children's core "product" is advocacy and heightened awareness. And that requires a fundamentally different financial model than, for example, delivering food to starving people. Heinz and Intel have different business models because they make different products. The same is true in the social sector. Unfortunately, too many of us treat all nonprofits as if they operate in the same product category and use a one-size-fits-all set of metrics to measure their effectiveness -- including often-misleading metrics like percentage of spending on program vs. overhead. Doesn't work, never will, and it often leads to real distortions in charitable giving.

The Kony 2012 video may be incredibly effective advocacy or soft bigotry -- I don't know. But now that it has been released to the public, we should be arguing about the merits of the product, not about whether Invisible Children spent too much to create it.

-- Paul Shoemaker

Tragedy in Greece: A Q&A With Andreas Dracopoulos, Co-President, Stavros Niarchos Foundation

For almost two years, Greece has been the epicenter of a sovereign debt crisis that threatens to undermine a European monetary union more than twenty years in the making. Ever since the country received a bailout in 2010, questions about its ability to service its debt have kept global financial markets on edge and Eurozone finance ministers, the European Central Bank, and the International Monetary Fund scrambling to find a solution. The announcement in February of a second, $172 billion (€130 billion) bailout did little to boost confidence that the country will be able to put its public finances on a more sustainable footing and avoid a potentially catastrophic default.

The real tragedy in the situation, however, is the worsening economic plight of the Greek people. Even as Europe skids into recession, the Greek economy is spiraling into depression, taking people’s livelihoods, life savings, and hopes for the future with it. As Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, told a Reuters reporter after the most recent bailout deal was approved: "So what? Things will only get worse. We have reached a point where we are trying to figure out how to survive just the next day, let alone the next ten days, the next month, the next year."

Earlier this month, the Stavros Niarchos Foundation (SNF) announced grants totaling $12.1 million (€9.2 million) to sixteen organizations in Greece -- the first installment of a three-year, $130 million (€100 million) commitment announced by the foundation in January to address the effects of the deepening socioeconomic crisis there. Established by Stavros Niarchos, the Greek shipping tycoon, before his death in 1996, the foundation typically allocates in the neighborhood of 50 percent of its grant dollars to organizations and projects in Greece. In 2009, the foundation committed $790 million (€566 million) for the development and construction of the Renzo Piano-designed Stavros Niarchos Foundation Cultural Center in Athens.

Two of Niarchos' sons -- Philip and Spyros -- and a great-nephew, Andreas Dracopoulos, serve as co-presidents of the foundation's six-member board. PND spoke with Dracopoulos in New York in December and again in February about the foundation's approach to grantmaking, its decision to proactively address the situation in Greece, and his views on the ultimate resolution of the crisis.

Philanthropy News Digest: SNF makes grants in four broad areas -- arts and culture, education, health and medicine, and social welfare. What, if any, are the advantages of working internationally within those portfolios?

Andreas Dracopoulos: Well, we believe in collaboration, at all levels, and having broad portfolios gives us a lot of flexibility to pursue public/private partnerships that help link the U.S. with Europe or with Greece, and vice versa. At the end of the day, however, it's really about whether a project actually will add social value. If we think it will, and if the people behind it can demonstrate they are committed and will do a good job, we'll consider funding them.

PND: Can you give us an example of the kind of work you support outside Greece?

AD: Twenty percent -- around 50 percent, if the Stavros Niarchos Foundation Cultural Center is excluded -- of our grantmaking is international, and one of the things we have focused on with those grant dollars is accessibility and inclusion in the arts, for artists as well as patrons. Over the past six years, for example, we've provided support for accessibility programs at the Museum of Modern Art. We also support the Theatre Development Fund in New York City and some of its national work on open captioning, and Lincoln Center's accessibility campaign. And just recently we awarded a grant to Second Stage Theatre to boost ADA compliance at its new theater on Forty-Third Street.

PND: What is the foundation's biggest program in the United States?

AB: We don't operate programs in the U.S., although we do fund programs run by others. Our largest commitments have been to institutions like Johns Hopkins and Weill Cornell Medical College for medical research, and we've also provided major support to the Museum of Modern Art, the New York Public Library, and Yale University.

PND: Let's talk about the situation in Greece. For the last two years, the country has been at the center of Europe's sovereign debt crisis. How did Greece get into the mess it finds itself in?

AD: It's complicated. But at the end of the day, it's a problem that affects all of Europe, so I think it's important for us to talk about it. Look at Ireland and Greece, two countries having trouble. In those countries, the problem of too much debt had completely different origins. In Ireland, it was basically banks and the private sector that caused the problem with too much leverage and risky lending. In Greece, in contrast, it was the actions of the public sector over the last thirty or forty years that is to blame. Loss of competitiveness, what I call an erosion of morality, not following the rules, not following regulations, not paying taxes, a big black-market economy, people becoming complacent and entitled. All these things added up over these years. While the music was playing, everybody was happy. Greece hosted the Summer Olympic Games in 2004, and there was this false sense we had made it. That was another problem, because once again I don't think the country did a good job preparing for the Games. We were lucky that in the end it all worked out, but it reinforced the false sense that we didn't need to work any harder, that when push came to shove we'd be able to pull it off. Of course, the budget for the Games went through the roof. And it was the public sector that was most responsible for that and for the terrible situation in which the country finds itself.

PND: Even for those who follow the news from Europe, the crisis in Greece can seem pretty far removed from their everyday concerns. What has the crisis meant for the average person in Greece?

AD: I live in the States, but of course we have families in Greece and an office there, so we hear a lot about what's going on. I think over the last five to six months months, especially since the summer, the country has entered a new stage of the crisis, a stage where you have real suffering, people not having money, leaving their kids in orphanages because they have nothing to feed them, committing suicide. It has become a real social crisis. It's like Greece is a dying animal. In some ways, it's similar to what happened with Lehman, except that Lehman could and did disappear. Greece cannot disappear. Which means the Greek people will continue to suffer.

PND: SNF made a $1.9 million grant in December to address some of the more negative effects of the crisis. That was followed in January by the announcement that you had decided to commit up to an additional $130 million over three years to address the effects of the crisis. Let's start with the first grant. What were your objectives in making it?

AD: The important thing about it was that it was made to fund a series of pilot programs. Unlike the States, where you have all these organizations that are part of a regulated, well-functioning system, in Greece you don't have that. We were working over there with two small NGOs that were pretty new to this kind of work, and we were trying to see whether it would work. If it did, we were prepared to do more.

PND: And how did you determine it was working?

AD: Because it was new for us, we did things a little differently. We had people from our office here traveling to Greece to talk to people there to see, first-hand, how things were going. In other words, we were much more actively involved in the implementation of the grant than we would have been if it had been made to an organization in the States; here, we do our due diligence, make the grant, and move on. It's different in Greece because everything is up in the air. We wanted to have more control in terms of the money; we wanted to know that programs were being implemented properly. And we wanted to follow some of the best practices we learned in this country through our work on issues like homelessness and hunger. Those were the areas we were focused on in Greece, even though both were relatively unknown in Greece until fairly recently. So, working with our grantees, we piloted a program that tries to help families stay in their homes. A second program aimed to create three day centers where people could drop in during the day, get a meal, rest, take a shower, wash their clothes -- the kind of stuff you and I take for granted. And because we were starting to see evidence of rising levels of hunger in the general population, a third program aimed to boost the capacity of an organization that was already providing free meals to people who needed them.

PND: Obviously, you were pleased with the way those funds were used and decided to make a much larger commitment. How was that decision made, and what do you hope to accomplish with those funds over the next three years?

AD: As the crisis deepened, impacting every level of Greek society, it became evident that the initial grant of $1.9 million was not enough. We felt we needed to do more. Our hope is that the infusion of new funds will help ease some of the effects of the crisis, while creating the necessary long-term infrastructure for nonprofit organizations to be able to address these issues in the future.

PND: Has the crisis undermined the Greek people's support for the Eurozone? Has it undermined their faith in democracy?

AD: The crisis has not undermined people's faith in democracy, but it has undermined their faith in politicians. There is no doubt about that. I mean nobody in Greece trusts politicians, because they have been a big part of the problem. Certain politicians have been among those who have been corrupt -- people know that and have lost faith in politicians and the political system as a result. But not in democracy.

In terms of the Eurozone? No. I mean, even now, at least two-thirds of the Greek people want to stay in Europe. And the reason is something else the media doesn't pay enough attention to. It's not just the benefits of a common currency. There's a lot more to it, in terms of history and security arrangements, and so on. So despite all the difficulties, I think the Eurozone will survive, and it will survive with Greece as a part of it. The political and economic costs of the alternative are just too great for it to be otherwise.

PND: Given the well-publicized reluctance of many Greeks to pay taxes, has the crisis affected the way the average person in Greece looks at those in society who are more fortunate?

AD: I think it’s worth noting that people here in the States have started talking about the 99 percent and the 1 percent. Even so, the situation here is very different from the situation in Greece. In the U.S. -- there are exceptions, of course -- rich people pay their taxes and do a lot of philanthropy that benefits society at large. But in Europe overall, and in Greece especially, people don't do that, they don't give back. It's like what John F. Kennedy said in his inaugural address: "Ask not what your country can do for you, ask what you can do for your country." In Greece, they don't ask. Or they don't ask enough, in my view. Wealthy Greeks go out of their way to avoid taxes and they give almost nothing back, at a time when they should be doing more -- a lot more -- of both. The social fabric has to be maintained in order to have a functioning society, and in Greece wealthy people are not doing enough to help maintain it.

PND: Are you concerned that the crisis is doing permanent damage to the social fabric in Greece?

AD: It would be unrealistic for one not to be concerned about that possibility. On the other hand, we have witnessed extraordinary acts of kindness from people toward those most in need, as well as significant mobilization to provide the kind of support that didn't exist before. All of a sudden, we seem to be less introverted as a people, and that can only be a good thing.

PND: How long will SNF continue to make grants to help mitigate the effects of the crisis in Greece?

AD: As long as there is a crisis. In a way, given that our founder was Greek and our main focus is Greece, we don't have a choice. At the same time, we have to be careful. We cannot replace the Greek state. No one wants that, and we don't have the capacity to do it. But because nobody else is doing anything, we have to be careful we don't create false hopes or an expectation that we're going to step in and fix things. It's a fine line.

PND: What's your best guess as to how this all ends? Most of us have read about the rioting in Athens earlier in the month and the call for a general strike. There's an election coming up in April, and the mainstream parties backing the bailout are losing support. Will the Greek people continue to embrace the austerity being forced on them by the rest of Europe? Or will Greece exit the Eurozone, go back to the drachma, and try to devalue its way out of its debt problems?

AD: How can you embrace austerity? Will the Greek people accept what is being imposed? Yes, because, one, they don't have a choice; and two, because the majority of the Greek people agree that the whole situation has gone on for too long. What they will no longer accept is the fact that 15 percent of the people in Greece are largely to blame for the whole crisis in terms of corruption and tax avoidance and so on. These people have done a lot of damage, and they're not paying to fix it. That's the big problem, and it's affecting a lot of issues in Greece, including possible solutions.

PND: Do you think philanthropy in Greece will come out of the crisis stronger because of the response of foundations like SNF?

AD: Well, you have to ask whether such a thing as philanthropy even exists in Greece. I know, philanthropy is a Greek word -- philos and anthropos, meaning "friend of the people" -- but in practical terms, it doesn't really exist there, at least not in an institutional form. Individuals do what they can, but there are very few foundations in Greece, and philanthropy in an organized, institutional sense simply doesn't exist. You would think the situation would have improved somewhat over the last decade, but it hasn't; wealthy Greeks have not been giving back to society. But the time has come for those who have the means to step up and help.

PND: And if they don't?

AD: Then the crisis will persist and affect a significant number of Greek people, shattering social cohesion in the process and quite probably inciting class warfare.

PND: Well, we hope it doesn't come to that. Thank you for your time this morning, Andreas.

AD: Thank you.

-- Mitch Nauffts

(Photo credit: Ioannis Vastardis)

NPO Job Openings (January 2012)

The January job numbers seem to confirm the view of many that the U.S. economy, while still battling headwinds, is picking up steam. According to the Bureau of Labor Statistics, 243,000 nonfarm payroll jobs were created in January, with large gains in professional and business services, leisure and hospitality, and manufacturing.

The BLS also reported that the national unemployment rate dipped .2 percentage points, to 8.3%, the lowest level since February 2009.

(Chart courtesy CNNMoney)

Here at PND, the number of nonprofit jobs submitted to the PND job board -- our own, completely unscientific gauge of the economy's health -- seems to confirm that the economic recovery is on track and that nonprofits, in general, are feeling more confident about their situation.

Things were looking much less rosy in September, when we last checked. Back then, the federal government was smarting from the first-ever downgrade of its AAA credit rating, Congress and the White House, having danced the country to the brink of default, were elevating finger pointing to a new art form, and the debt crisis in the Eurozone was growing worse by the day. Investors responded by doing what they always do in times of uncertainty, fleeing stocks for the safety of U.S. treasuries.

Nonprofits, in contrast, took a look around and seemed to decide the situation was not as bad as the headlines would have it. On a year-over-year basis, job postings here at PND were flat in September and October, down in November, and up smartly in December and January. (And we're seeing a continuation of that trend in February.) For the year, job postings to the board were up 2 percent over 2010 and 36 percent over 2009 (though still well below the number posted in 2007).

Indeed, as we noted in a PND item last month, a recent study (18 pages, PDF) from the Center for Civil Society Studies at Johns Hopkins University found that during the Great Recession (2007 to 2009), the nonprofit sector gained jobs at an average rate of 1.9 percent a year, while the private sector lost jobs at a rate of 3.7 percent. And the Bureau of Labor Statistics recently reported that, after retail and manufacturing, the nonprofit sector in the U.S. now employs more workers than any other industry, with the vast majority of those jobs concentrated in health care (57 percent), education (15 percent), and social assistance (13 percent).

We’re not sure whether this is an entirely good thing -- that's a subject for another post -- but we are hopeful the Europeans will get their act together and that the economy here in the U.S. will continue to gain strength. We’ll check back in in a few months and let you know how things are going.

In the meantime, feel free to share your own thoughts and obesrvations with respect to the employment situation, both in and outside the nonprofit sector. How are things in your neck of the woods? Are nonprofits hiring? What about the private sector? And where do you think things will stand six months from now?

-- The Editors

'Greed is Good' and Other Canards

Op-ed columnist Charles Blow has a piece in today's New York Times about the "politics of envy," an already tired trope that likely Republican presidential nominee and leveraged-buyout specialist Mitt Romney has been trying out this primary season.

In the piece, Blow quotes Elizabeth Warren, who chaired the Congressional Oversight Panel created to oversee the Troubled Assets Relief Program and who is running for the Senate seat in Massachusetts that Romney unsuccessfully ran for in 1994, on the obligation we all have to "pay forward" our financial good fortune:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there, good for you. But, I want to be clear: you moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did. Now look, you built a factory and it turned into something terrific or a great idea. God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along....”

"Greed is good" is a great logline for a movie, but it's a terrible way to organize society. Gordon Gekko didn't "liberate" Teldar Paper, and the United States is not (as Paul Krugman reminds us) a "malfunctioning corporation"; it is, rather, an ongoing political and social experiment in which the interests of 300 million people sometimes compete but more often overlap; in which "equality of opportunity" is an ideal and not yet a reality; and in which the concept of "the public good" was, for much of the twentieth century, bound up with the equally important concept of social mobility.

Unfortunately, as new survey data from the Pew Research Center makes clear, more and more Americans believe the post-WW II social contract in the U.S. has been shredded and that tensions and conflicts between the haves and have-nots are growing.

That sense is one of the key drivers behind the Occupy Wall Street movement, it will be an important point of debate in this year's presidential contest, and it's something all of us who work in or cover philanthropy need to recognize and address.

-- Mitch Nauffts

2011 Year in Review: A Tale of Two Economies

It was a year of bruising budget battles and unnerving debt crises, of economic recovery and retreat, of the 99% and the 1%. For many, it was simply the "new normal."

After three years of economic hardship, stress, and uncertainty, the year opened on an optimistic note, with a handful of announcements and surveys seeming to find many Americans feeling better about their prospects.

In January, the Fidelity Charitable Gift Fund, the nation's largest donor-advised fund program, reported it had received more than $1.6 billion in contributions in 2010, a 42 percent increase over the previous year, and had authorized more than $1 billion in grants for the fourth consecutive year. That same month, the annual Dunham+Company New Year's Survey found that the number of households planning to boost their charitable giving in the coming year had jumped nearly 30 percent, while the number that planned to cut back on giving was down nearly 50 percent. And the Minnesota Council on Foundations' 2011 Outlook Report found that 35 percent of the foundations surveyed expected to boost their giving in 2011, while only 10 percent expected to give less.

The somewhat more constructive tone did little, however, to change the fact that millions of Americans were struggling to keep a roof over their heads, put food on the table, and/or secure gainful employment -- or that nonprofits, as a survey conducted by the Nonprofit Finance Fund found, expected to see increased demand for their services. Further clouding the picture for nonprofits, especially so-called "lifeline" organizations, was the highly partisan debate in Washington over the 2012 federal budget -- and the likely impact of funding cuts on an already frayed social safety net.

As spring turned to summer, the sovereign debt crisis in Europe and the possibility of the first-ever downgrade of long-term U.S. debt sent markets tumbling, threatening the fragile economic recovery at home and causing many charities and fundraisers to brace for the worst. But a last-minute (if temporary) debt-ceiling deal in Congress, collective (if halting) action by European countries and the ECB to stem the crisis in the eurozone, and steady (if modest) improvement in the U.S. economy helped to forestall the dreaded double-dip scenario -- for the time being.

As a result, by December many Americans were again feeling better about the future. Indeed, with the new year right around the corner, a Chronicle of Philanthropy survey found that donation income at more than half the charities it polled was running ahead of last year's holiday season total -- and that donations at one in five organizations were up by more than 20 percent compared to the same period in 2010.

At the same time, a distressing number of charities continued to report that income remained below pre-recession levels and that demand for assistance was rising faster than giving, while more than a few were looking to collaborations, mergers, and joint ventures to meet that demand.

"A much larger percentage of nonprofits were seeing significantly higher fundraising results before the recession," said Andrew Watt, president and CEO of the Association of Fundraising Professionals, in September. "[And] with many economists predicting a flat economy for several more years, charities face a very challenging environment in the near future….This is the reality charities will have to address."

Related Links:

Minnesota Grantmakers Optimistic About 2011, Report Finds (1/13/11)

Contributions to Fidelity Charitable Gift Fund Surpassed $1.6 Billion in 2010 (1/17/11)

Americans More Optimistic About Giving in 2011, Survey Finds (1/19/11)

President's Budget Calls for Cuts in Support for Nonprofits (2/15/11)

Kresge Foundation Awards $6 Million to Safety-Net Initiative Recipients (2/22/11)

As Economy Improves, Giving By Ohio Foundations Beginning to Recover (2/26/11)

Nonprofits Expect Increased Demand for Their Services in 2011, Survey Finds (3/22/11)

Foundation Giving Held Steady in 2010, Study Finds (4/08/11)

Dayton Nonprofits Pool Resources to Stay in Business (4/08/11)

Cleveland-Area Nonprofits Merge to Reduce Costs (4/19/11)

Marin Community Foundation Awards $2 Million to Bolster Healthcare Safety Net (4/30/11)

Foundation, Operating Charities Report Investment Returns of 12 Percent (5/25/11)

Charitable Giving Up Modestly in 2010, 'Giving USA' Finds (6/21/11)

Pittsburgh-Area Nonprofits in 'Merger Mode' (7/08/11)

Charities, Fundraisers Consider Possibility of Double-Dip Recession (8/09/11)

Foundations Concerned About Possible Double-Dip Recession (8/11/11)

Charity Fundraising Saw No Change During First Half of 2011, Report Finds (9/29/11)

Donations to Largest Charities Still Below Pre-Recession Levels (10/18/11)

Donations Are Up for 2011 Giving Season, Survey Finds (12/25/11)

A Q&A With Michael Edwards, Author, 'Small Change: Why Business Won’t Save the World' (Part 2)

In November, PND spoke with Michael Edwards, author of the 2010 book Small Change: Why Business Won't Save the World, which offered a sharp critique of the philanthrocapitalist worldview. In part two of our interview, Edwards talks about the impact of the Occupy Wall Street movement and shares his take on the recently established Bellagio Initiative, which seeks to establish "a new framework for philanthropic and international development collaboration in pursuit of human well-being in the twenty-first century."

To read part one, click here.

Philanthropy News Digest: Are you surprised the Occupy Wall Street movement has gained as much traction as it has? And do you think it will continue to have an impact on the income inequality debate in the United States, or in other countries, for that matter?

Michael Edwards: I'm not surprised that Occupy Wall Street has had an impact, especially when you consider that inequality in this country is at its highest level since records began to be kept. Something like one in four American children today live below the poverty line, and across a very broad swath of the American population people are feeling economically stressed, fed up, and want some change. Historically, that's precisely the kind of environment that spawns social movements. It just happened to be Occupy Wall Street, but it could have been something else. That said, the movement already has had an impact on the public debate, across party and ideological lines, and people are now talking about inequality in a way that they weren't even six months ago.

That's what social movements do. They may not have a direct impact on policy in the short term, but they give large numbers of people permission to talk about critical issues in a way they weren't able to before, and they tend to change the cultural conversation in ways which are important over the long term. In a sense, Occupy Wall Street is just a convenient platform for people, many of whom are somewhat suspicious of it, but who feel that something has gone terribly wrong. Whether it will continue to play that role in the future is the big question, and no one knows the answer. But I don't think that matters much right now, because, to give the movement its due, it has done something pretty remarkable in terms of changing the national, and in some ways international, debate about inequality. Will it be able to transform itself into something more formal, politically speaking? Will it develop a policy platform? Will it align itself with other existing movements for change? I don't know. But even if it disappeared tomorrow, its impact would continue to be felt.

PND: What is the appropriate role for foundations with respect to social movements? Should they be doing more to support a movement like OWS in its initial phase?

ME: Foundations have never been very important in supporting social movements in the United States or anywhere else, because that's not how social movements develop. Social movements are self-organized, self-created entities which largely run on their own firepower, including financial firepower raised through small donations, membership dues, labor contributions, and so on. Sure, if you look at the civil rights movement or the women's movement there were foundation dollars involved at various stages, but they were never particularly determinate, and the same holds true today, though maybe the Tea Party is an exception. Part of the reason I think -- and it's a good reason -- is that foundation funding comes with certain strings and accountability requirements attached. And that has an impact on the movement itself in terms of who makes decisions and how they're made. It implies a level of formality that people may not be comfortable with, and it can sometimes de-radicalize a movement in ways that are quite damaging.

It reminds me of the old battle cry "The revolution will not be funded." It might seem silly now, but it's based on something quite important, which is that you have to be sensitive when you introduce foundation funding into a spontaneous, democratic, disorganized movement space. That doesn't mean there isn't a role for foundations and foundation funding. But, generally speaking, what you typically find is that foundations are most effective in these situations when they take a back seat in the process of movement-building and focus on something very concrete where their funding can really make a difference. In the civil rights era, for example, foundations concentrated on supporting voting rights and voter registration, and I think there are parallels to that today.

PND: You've recently written a paper for the Bellagio Initiative, a collaborative project led by the Institute of Development Studies, the Resource Alliance, and the Rockefeller Foundation that aims to establish "a new framework for philanthropic and international development collaboration in pursuit of human well-being in the twenty-first century." How does the concept of human well-being differ from other measures of human development? And why is it the right measure to focus on at this particular moment?

ME: Well, the first thing I'd say is that it is a controversial thing and not everyone agrees it's the right way to go. Some people think well-being is too vague and abstract and un-measurable to be an effective guide to grant-making. The reason I believe it's potentially useful is that it forces us to focus on the bigger picture, on quality of life, on happiness, on empowerment -- the less material dimensions of how and why people feel fulfilled in their lives, which are equally important as having a job or house, receiving a microcredit loan, or any of the other more conventional things we measure. You know, the GDP data we use to measure economic progress in this country are virtually meaningless, for all sorts of reasons, so GDP is a fairly hopeless measure of welfare. And the well-being movement is saying, we can do better than that, we can measure all these different dimensions of how people are faring, and it will be a more effective and accurate guide to our decision making than relying on these outdated measures.

The problem is, how do you measure happiness? How do you measure fulfillment? How do you measure equality in social terms? It's very difficult. So the pushback is coming from people who want more solid, short-term metrics, which is where they feel most comfortable. The Bellagio Initiative was mounted against the backdrop of a debate in the international development community between people who are happy to support the infrastructure of problem solving and those who want to fix problems in a specified time frame -- a debate that's happening in philanthropy domestically as well. Traditionally, foundations followed the first approach; their focus was on creating strong institutions, governance processes, links between civil society and the private and public sectors, and so on, and not so much on "fixing" problems like endemic poverty or inadequate health care in the short term. The new generation of philanthropists, in contrast, is more impatient and very much wants to fix those problems in the short term. Bellagio is designed to advance that debate, to enable people to talk about the issues involved and see where they lead. A lot of different views are being expressed, and that's a good thing. The more diversity you have in the room, the more honesty in the room, the more likely you'll be able to generate a sense of direction that leads somewhere.

PND: Are you a fan of the type of globalization that has characterized the last few decades, with ever-tighter economic integration and new communications technologies shrinking the planet to the size of a village?

ME: Well, there are elements of globalization which are irreversible because of the way capitalism works and the way technology drives things. But the tacit understanding should be to try and make sure that globalization generates as many benefits -- and as few costs -- as possible. And that's a huge task. Market integration, technological innovation, and the accelerating speed of information flows don't by themselves solve the great questions that have always exercised human beings. They don't teach us how to live well together. They don't teach us how to cope with violence and division, discrimination and prejudice. They don't tell us how we can create some sort of common ground out of this huge diversity we are all experiencing.

Underlying all the razzmatazz of our high-speed, high-tech, globalized world are bigger philosophical questions. What grand purpose do we want technology to serve? What, in a social sense, is the purpose of markets -- simply to match buyers with sellers and feed a never ending spiral of consumption? I'm more interested in people who are talking about how we can use all this "stuff" to address those kinds of questions than I am in people who embrace technology and globalization enthusiastically and argue that if everyone has a cell phone, we'll solve the problems of poverty. That's daft and has never worked. And I see my role as constantly reminding people of those deeper philosophical questions, of asking, who are you, who are we, and how do we live well together? It's not a particularly popular conversation, because it slows things down and forces people to analyze their own role in the world, but it's a necessary one.

PND: A final question: Are you an optimist or a pessimist?

ME: Definitely an optimist. Given the current state of the world, I wouldn't be able to get out of bed in the morning if I wasn't. All my writings, even the critical ones, are trying to push people to create more change, to be more successful, to go much deeper. That's why I'm critical of some of the hype around social innovation and venture philanthropy and philanthrocapitalism. It's one thing to say we have lots of new opportunities; it's another thing to analyze them rigorously for their costs as well as their benefits. We can easily get lost in the hype and lose sight of the fact we face enormous challenges which will require every ounce of our critical imagination in order to address them. But you have to think, in a critically optimistic way, that we will rise to the challenge.

PND: Well, thanks for your time, Michael.

ME: Thank you.

A Q&A With Michael Edwards, Author, 'Small Change: Why Business Won’t Save the World' (Part 1)

Over the past decade, philanthropy has been invigorated by the arrival on the scene of some very large and innovative foundations, many of them established by hugely successful individuals from the worlds of business and technology. In 2009, Matthew Bishop and Michael Green brilliantly captured the spirit of the decade in their book Philanthrocapitalism: How Giving Can Save the World. But while the book was well received within the sector, not everyone was ready to jump on the bandwagon.

Last month, Philanthropy News Digest spoke with Michael Edwards, author of the 2010 book Small Change: Why Business Won't Save the World, which offered a sharp critique of the philanthrocapitalist worldview. During our conversation, Edwards criticized the growing tendency to adopt a "one size fits all" approach to philanthropy and suggested that, in order to solve complex problems, we need a large dose of humility and a wide range of tools and techniques. Edwards also spoke about the impact of the Occupy Wall Street movement and shared his take on the recently established Bellagio Initiative, which seeks to establish "a new framework for philanthropic and international development collaboration in pursuit of human well-being in the twenty-first century."

A leading expert on civil society, philanthropy, and democracy, Edwards has worked for the World Bank, Oxfam, Save the Children, and other NGOs in Washington, D.C., London, Colombia, Zambia, Malawi, and India. From 1999 to 2008 he was the director of the Ford Foundation's Governance and Civil Society Program, and he currently serves as a distinguished senior fellow at Demos, a progressive think tank in New York City, and as a senior visiting fellow at the Brooks World Poverty Institute at the University of Manchester.

The first part of our conversation with Edwards follows; part two will be posted tomorrow.

Philanthropy News Digest: You've been a vocal critic of the philanthrocapitalism approach popularized by Matthew Bishop and Michael Green in their book of the same name. Given that philanthrocapitalism is a somewhat nebulous set of ideas with no universally accepted definition, is there any aspect of the concept you find value in or agree with?

Michael Edwards: Sure. Let's go back three years in time when I wrote that little pamphlet, Just Another Emperor?, which was the first shot across the philanthrocapitalists' bow. Back then, philanthrocapitalism was all the rage: "Oh yeah, you know, I'm a philanthrocapitalist and I'm going to save the world." The aim of the pamphlet was simply to start a debate about what philanthrocapitalism was, to cause people to stop and think, because people were believing in something without actually knowing what it was. And to do that, it had to be fairly polemical or oppositional, which it was, as was my book Small Change: Why Business Won’t Save the World, which is based on the pamphlet. In both, I was saying, "Don't buy this stuff, it often doesn't work, and here are the reasons." It was a tactic. But what really matters is delving into the details of who is doing what on the ground, regardless of the labels they use to describe it. So to answer your question, there are lots of ways in which people can use the market to drive change, ways that are socially and environmentally beneficial; but I wouldn't confuse them with what I would call philanthropy.

In fact, for me there's a major conceptual and practical difference between philanthropy, which I see as funding for activities that do not generate short-term returns and results, and social investment, which does. It's simply a case of helping people figure out which tool to use. You wouldn't use a hammer to write a book. You wouldn't use a typewriter to plough a field. You have to select your tools carefully and systematically if you hope to achieve the results you want. And what pleases me now is that we seem to be moving into a different phase of the debate: instead of arguing about who is or isn't a philanthrocapitalist, we're talking about how we can use the different tools in the tool kit to make progress. In some areas, venture philanthropy, business techniques, and technology can be very useful in pursuing social change. In other areas, they're not and can actually be damaging. As long as people get that, they can describe it any way they want and I won't care because they'll be using the right tool for the right purpose.

PND: Matthew Bishop, Michael Green, and other proponents of the philanthrocapitalist approach would argue that more competition in the nonprofit sector is bound to help reduce and eliminate inefficiencies, which would mean more resources being allocated to the problems we all want to see solved. Do you agree with that perspective?

ME: No, that's nonsense. It's nonsense because we are talking about completely different worlds that operate on very different principles. Philosophers would say the philanthrocapitalists are committing a category error, which is when you take one set of ideas and principles that works in a particular setting and you transport those ideas and principles into a very different setting while expecting the same results. That's the definition of insanity. None of the great social movements of the past have been based on competition. They've been built on solidarity, cooperation, bridge building, and networking.

That's not to say there isn't room for some competition in the nonprofit sector; of course there is, because there are never enough resources to go around. But there's a difference -- a huge difference -- between recognizing that people need resources to do their work and believing that classical market principles like competition apply in the world of social change. What happens when you apply formal market principles to civil society -- and we see this already -- is that lots of very important organizations will be eliminated. Big ones will tend to get bigger, and small ones will tend to get smaller. A lot of organizations doing easier work will attract more resources, while many doing the more difficult work will lose out. Sometimes, though, they're the most important of all. No one would suggest, for example, that we force local volunteer fire departments to compete with each other in the interest of making them more efficient, because they play a role in their communities which can't be analyzed in terms of profit and loss. It's a rather ridiculous application of something that works in economic theory but not in social practice, and it can actually be very damaging when applied inappropriately.

PND: Do you think foundations, individual donors and nonprofits, working together, can solve huge, seemingly intractable problems such as poverty, our broken public education system, and climate change? Is that where nonprofits and philanthropy should be focusing their efforts and energies?

ME: Well, they should be playing a part in focusing everyone's efforts and energies on those problems. But the idea that philanthropies and nonprofits by themselves could address any of them successfully is, again, nonsensical. They are far too small, and the levers they have over change are far too weak to be able to effect that kind of change. What you need to effect that kind of change is, obviously, strong government intervention. You also need a thriving market economy that creates wealth which can be used for socially useful purposes. Instead of holding themselves responsible for solving climate change or poverty, philanthropy and the nonprofit sector should be constantly nudging, pressuring, and filling in gaps so that other, larger institutions do their jobs properly.

I think that's where my critique of venture philanthropy -- my fear that we will use scarce philanthropic dollars to tackle problems that are important but which should be dealt with by other parts of society -- is particularly relevant. There's an issue here of how we make sure we remain focused on the fundamental transformation of society and don't get locked into simply being social businesses, which are important but not particularly consequential in the deeper areas of social change.

PND: Impact assessment and performance measurement have become hot-button issues in philanthropy. Are the people promoting those disciplines missing something? Is there a better way to promote effectiveness in philanthropic work?

ME: It depends entirely on what you mean by effectiveness and how rigid you want to be in terms of using only certain techniques and methodologies of impact assessment, like randomized control trials, as opposed to qualitative research. We often see a stereotyping of traditional nonprofits and philanthropy as being backward in the way they look at impact assessment, but I've never found that to be the case. It's simply that we use a different set of quite defensible measures and methodologies. I would put far more trust in mixed methodologies which involve ethnography, qualitative assessment, quantitative research, and traditional social science than I would in a methodology that solely focused on randomized controlled trials or things of that ilk.

Look, I welcome a focus on impact. Everyone does. But it's a complete falsehood to say we've never been interested in impact, that we're not interested in impact, and that being interested in impact is somehow the exclusive property or characteristic of the so-called new philanthropy. The real issue is how we view impact. What kinds of change do we value? What measures do we use? How do we configure an impact assessment tool kit that will produce the most useful and accurate results without submerging the people who are doing the work in so much data they don't have time to do what they should be doing in the first place? One has to think about impact assessment in the context of the work that people do, what their objectives are, and over what time period, and then see how it can help them do their work more effectively. That requires us to be really imaginative about what we're doing and why we're doing it, rather than simply saying: "I have a magic methodology -- all you need to do is follow it."

PND: How is the new generation of tech philanthropists -- people like Bill Gates, Steve Case, and Pierre Omidyar -- changing philanthropy? And what, if anything, can they learn from old-line foundations such as Ford, Rockefeller, and Carnegie?

ME: Well, they are definitely a force for change. They have high profiles, they're ambitious, and they're aggressive, at least in some ways. Many of them want to spend down, either in their lifetimes or in a relatively short period of time after they die, and they are not shy about taking on very large problems. There is an attractiveness about that energy and about the grasp of new opportunities they have which I quite like. It's definitely not the stodgy, bureaucratic world that perhaps those more traditional foundations are accused of inhabiting. But at the same time, one has to recognize that social change is complicated, messy, politicized, and a long-term phenomenon. There are no simple answers. Just because you have wealth and technology doesn't grant you a special wisdom. And I think what some of the new philanthropists can learn from people who have been doing this kind of work for a long time -- and I actually hear new philanthropists say this quite a lot -- is that things are more difficult and more complicated than they thought they were when they started down this path, and that maybe if they had talked to more people who'd been doing this work for decades, they might have learned some things early on that they could use.

I'm a big fan of people who borrow elements from the old and the new, who don't get trapped just working with traditional methods, or just seizing opportunities in technology or the marketplace. That's where the real impact is going to come, from people who have the humility and the flexibility to say, "I have to be in learning mode constantly, and I can and should borrow from all over the place to do my work most effectively." You can learn as much from the civil rights movement of the 1960s as from new tech-based networking organizations like Avaaz. To me, there's still too much hype around the new and not enough respect for the old, and that means we're not learning as much as we could be. So, yes, I welcome the energy and forcefulness of the new philanthropists, but I want that energy and forcefulness to be balanced by a greater respect for tradition and the idea that we can learn from the past.

PND: Do you share the concerns of some that the Gates Foundation, because of its enormous size, has too much influence over agendas and policy in areas where it is active? And what can the Gates Foundation do to allay those fears?

ME: I don't think it's a question of size per se. We've had very large foundations in the past. Rockefeller, Ford, and Carnegie -- all of them, when they were first established, were large. It's more a question of how we use private resources in a way that serves the public interest, as opposed to private interest or a single individual's own interpretation of what they think the public interest is. Education reform is a classic example. The problems come when significant private resources controlled by organizations with weak accountability mechanisms are aligned with a targeted, rigid approach to a controversial issue such as school reform. It's a recipe for problems, not least because the impression is that here is this hundred-pound gorilla with no discernable democratic accountability structure barreling into something that belongs to all of us, and that's not acceptable. I don't want my kids' education to be decided by Bill and Melinda Gates, thank you very much. Not because I don't like them. It's just not the way we do things in a democracy.

Instead, why don't we ask Bill and Melinda to put half their funding for education into a national education innovation fund which is governed by a cross section of society -- teachers, teachers' union officials, principals, parents' representatives, and academics who've studied the field? That's one way of mitigating the dangers that come with highly concentrated funding. Another way, obviously, would be to change the composition of the Gates Foundation's board so that it's more diverse. But that doesn't seem to be an option which has any resonance with Bill and Melinda.

Let's talk about another example. Look at what's happening in Newark at the moment with the hundred million dollars that Facebook founder Mark Zuckerberg pledged to the city for school reform. Originally it was promised that there would be democratic structures attached to the gift so that residents of the community, people who send their kids to Newark schools, felt they had a stake in how the money was spent. But as we see so often, that's exactly what's not happening; instead, most of the decisions are being left to a small group of powerful rich people. Of course, residents of the community are pushing back against that, as common sense suggests they would. I think it's an important test case, actually, for philanthropy in America, and it's important we get it right. We need to find a way to use the huge private resources of a Bill Gates or a Mark Zuckerberg for the benefit of society, but to do so in a way that the rest of us can share in and feel a part of. If we don't do that, there could be trouble down the road....

Click here for part two of the interview.

A to Z Survival Guide for Uncertain Times

(Michael Seltzer is a regular contributor to PhilanTopic. This post originally appeared on this blog in October 2008, shortly after the collapse of Lehman Brothers. Plus ça change, plus c'est la même chose. Michael's last post was a Q&A with David Jones, president of the Community Service Society of New York.)

Each time the American economy has suffered a downturn or government has cut back on funding for social programs, the media has focused on how those of us on "Nonprofit Street" are being affected. Those of us running nonprofit organizations don't need newspapers to tell us how things are going or how our constituents are faring. Instead, we want to know what our colleagues are doing to address the financial challenges we each face.

The "A to Z Nonprofit Survival Guide for Uncertain Times" is compiled from my past writings and strategy recommendations I learned from grantees, clients, and fellow consultants. To all of you, I am grateful for your generosity and wisdom.

_____

Accentuate the positive
There's enough doom and gloom in the media and on Wall Street. The public doesn't want to hear how poorly nonprofits are doing; they want to know that nonprofit organizations will continue to be there for them.

Be bold
The pressure to scale back programs and to promise less is real. But it's important, when possible, to find new ways to provide value to clients, funders, and supporters.

Collaborate
In normal times, many nonprofit leaders view collaboration as the most unnatural of acts. These are not normal times. There is much to be gained, including cost savings and enhanced impact, by working more closely with others.

Deepen relationships (with elected officials, in particular)
Unfortunately, local, state, and federal governments will be forced to make cuts in their budgets as tax revenues decline. Be sure to make the case with your elected officials and their key staff for continued government funding of your organization.

Experiment
Look for opportunities to experiment and/or pilot small-scale initiatives. Such opportunities are likely to be a less expensive investment in change than grand, large-scale progams or initiatives.

Fundraise selectively
Good advice anytime, but especially in the current economic climate. Focus on strong, solid prospects rather than second-tier long shots. With corporate donors, be prepared to discuss non-cash ways the company can support your operations, including loaned executives, volunteer programs, the short-term loan of facilities, and other in-kind contributions.

Get rid of dead (board) wood
Tough times demand that all stakeholders roll up their sleeves and give generously of their "time, talent, and treasure." Board members who are unable and/or unwilling to pull their weight and contribute what they can to strengthen the organizations must (gently) be shown the door.

Help other organizations less well positioned than your own
It doesn't have to be with money; technical assistance, fundraising advice, even something as simple as words of encouragement can go a long way in a tough economic environment. At the end of the day, we're all in this together.

Invest in the future
Though you're likely to find that cost-cutting measures are unavoidable, it's equally important that you identify ways to create or expand your reserve funds. No one can predict the future, so the best advice is probably the old Scouts motto: "Be prepared."

Join your local or state association of nonprofits
Networking is not only helpful in times like these, it's essential. Local nonprofit associations provide a great meeting ground to exchange information and lessons learned with peers and colleagues in other organizations.

Keep informed of developments in your field
That means staying on top of your issues and looking for even better ways to do what you do. This is not the time to cut back on professional journals and magazine subscriptions.

Look to the future, not the past
Another way of saying, "Don't rest on your laurels." And if your organization is struggling, take comfort from the fact that, with creativity, hard work, and an optimistic outlook, things are likely to get better.

Mind the sweet spot
Don't just chase dollars. Identify your organization's "sweet spot" -- the intersection of its vision, mission, assets, and other strengths with the giving "impulses" of your supporters and stakeholders -- and make sure everything you do connects to it.

Never reinvent the wheel
No explanation necessary.

Open yourself and your organization to new ideas
If something has stopped working for you, it's probably time to change it. Open your mind to new ideas and new ways of doing things, and seek out the opinions of experts in your field.

Plan for uncertainty
To be a good steward of the resources that have been entrusted to you, you simply must forecast several different financial scenarios for your upcoming fiscal year. Be conservative in your revenue projections.

Quickly communicate bad news to your key supporters
Make sure your key internal and external stakeholders feel they are being kept apprised of major changes and developments affecting your organization. And whatever you do, do not let them learn bad news about your organization from the media.

Respect your stakeholders
You can expect to get a lot of tough questions from concerned stakeholders. The fact they are concerned is a positive for your organization. Don't squander it by giving false or misleading answers.

Share
Cost-saving measures such as sharing office space or pooling back-office functions must be considered in tough economic times. Many funders will be cutting back on administrative costs and will appreciate grantees' efforts to do the same.

Tell your story
Across the country, in practically every community, low-income families and individuals are the ones who will be most affected by the economic downturn. They are likely to turn, in growing numbers, to local nonprofit organizations for food assistance, child care, credit counseling, job retraining, legal assistance, and other services. Nonprofit leaders would be well-advised to collect the stories of the individuals and families they serve and share them with donors, supporters, and local media.

Upgrade your staff perks
Many nonprofits will be pressured to reduce headcount and/or to contract out some of their services. Such measures can hurt morale and reduce organizational effectiveness. It's important, therefore, for nonprofit leaders to find both material and non-material ways to express their appreciation for and solidarity with staff. Listen to their ideas and validate their concerns. They'll appreciate it and your organization will benefit.

Vision, vision, vision
In tough times, people tend to rally around organizations and leaders that project an air of confidence and optimisim. Franlkin D. Roosevelt warned about fearing "fear itself" in the depths of the Great Depression, and in the 1960s Lyndon Johnson rallied a shocked and racially polarized country around the notion of a "Great Society." For both men, language was a critical tool in helping to paint and convey a picture of better times to come. Nonprofits would be well-served to take a page out of their respective books.

Wear your values on your sleeve
In our sector, the most important assets are our values and the public's trust. Whether we express our values through our Web sites, marketing materials, or on a T-shirt, we should display and wear them proudly. And in no circumstance should we compromise our ethics or the integrity of our organizations or the sector.

eXhale
Remember: Most of us still have a lot to be grateful for.

Yield no ground as an authority in your field
In order to assert that authority, however, you have to stay informed (see K) and must communicate clearly.

Zero in on your core competencies
Identify what your organization does best and strive to be a leader and innovator in that area or space.

-- Michael Seltzer

Questions for the Stavros Niarchos Foundation

I'll be speaking tomorrow with a couple of program officers at the Stavros Niarchos Foundation, a private philanthropy founded by Greek shipping magnate Stavros Niarchos before his death in 1996. While I'm with them, I hope to gain some fresh insights, informed by a non-U.S. perspective, into the Greek sovereign debt crisis, its impact on the lives of ordinary Greeks, and its effect (if any) on philanthropy in Greece.

Here are a few questions I plan to ask:

• Greece is at the epicenter of the European sovereign debt crisis. How did it get into the mess it finds itself in?
• Can you give us a sense of what the crisis has meant for the average person in Greece?
• Has it undermined their support for the eurozone? Has it undermined their faith in democracy?
• Has the crisis affected the way the Greek people view their wealthy compatriots, in general, and philanthropy specifically?
• What are your best guesses as to how the crisis will be resolved? Are the Greek people in a frame of mind to embrace years of austerity? What are the chances that Greece will end up leaving the eurozone?
• Will philanthropy in Greece come out of this crisis stronger or will it be diminished in the eyes of the Greek people?

What else should I ask? Share your thoughts in the comments section below...

-- Mitch Nauffts

Commentary: Famine in East Africa

(Don Golden is a church activist and vice president with World Relief in Baltimore, Maryland, and co-author with Rob Bell of Jesus Wants to Save Christians, a call for Christians to engage with the great causes of our day.)

I recently traveled to the Turkana District of northern Kenya with Kenyan pastors, World Relief staff, and a media team to witness firsthand an underreported food crisis in the Horn of Africa.

During the twenty-five-hour trip along treacherous roads from Nairobi to the worst-affected areas of the district, I was mindful that World Relief had already lost one vehicle. But Turkana's remoteness may be the easiest barrier to overcome for any organization attempting to help the Turkana people.

In the United States, we cover Africa one story at a time, and lately the story has been neighboring Somalia. Having reached phase five on USAID's Famine Early Warning System, Somalia is ground zero for an ongoing catastrophe. For Somalis, famine has meant the total collapse of communities, the uprooting of hundreds of thousands of people, the deaths of tens of thousands of children, and the creation of refugee camps that inevitably foster disease, dependency, and disempowerment. When the occasional image of famine in Somalia reaches America, I ask myself: Does it have to get this bad before Turkana gets help? How long until this kind of crisis is a thing of the past? When will starvation be relegated to the history books?

Among the many dysfunctions revealed by the persistence of famine in the developing world are distrustful attitudes toward the institutions we create to prevent such tragedies. The U.S. government monitors global food shortages and the threat of famine. Experts warned that a food crisis was brewing in the Horn of Africa months before it arrived. Why do we repeat the mistakes of Rwanda and Srebrenica by ignoring the United Nations and other institutions entrusted with helping us prevent such tragedies?

In Turkana, a stronger dose of prevention could reduce the threat of famine and help turn the fortunes of a great indigenous people. Turkana is a place where the hope of preventing a tragedy should motivate us to act now, while there is a chance of making a difference. Outside of al Shabaab-controlled Somalia, some of the worst nutrition indicators recorded by the World Health Organization are from Turkana, where in many areas four out of ten children are malnourished and one in ten is severely malnourished. Indeed, most of Turkana is well above the 15 percent malnourishment rate WHO considers to be "crisis" level, and USAID has declared a phase four emergency in much of the region, which means rates of malnutrition are so high that people will die without food assistance.

But Turkana has not captured the attention of the world and funding has been hard to secure. As a result, more than 200,000 vulnerable people have a minimal level of food. Indeed, with its limited resources, the World Food Program can distribute food only once a month in the hardest hit areas of the region.

Additional challenges arise from the Turkana way of life. The Turkana are pastoralists, deeply committed to their livestock and traditions. For a Turkana to come down from the hills and give up his cows, camels, and goats is to effectively give up his reason for existence, to give up hope. But the Turkana's nomadic way of life is now threatened as the hope of food drives thousands to leave their traditional ways behind and settle in make-shift communities where they wait patiently for sporadic distributions of food.

One local pastor we met on our trip, David, epitomizes the resilient culture of the Turkana. He had been a street kid in the small town of Lokitaung and is now a 42-year-old widower with two children whose wife died earlier this year of malarial meningitis. Like so many, David and his family left their pasture in the hills and settled in a new community. Yet he refuses to give up on his people — or on the hope that a viable future is possible for them, a sentiment that runs deep with the Turkana.

As we drove the fifteen hours from Nairobi to Lodwar and encountered communities desperate for food and water, my awareness of the complexity of the situation grew. While food is desperately needed, the provision of food alone is likely to create more dependency, further disempowering the Turkana and making local participation in problem solving less likely. For the Turkana to flourish again, long-term aid is needed.

Driven by a mutual hope that is shared with the Turkana, World Relief is working with local churches and other community-based organizations to help cultivate long-term solutions to a desperate situation. As climate change leads to greater drought and claims more pastureland in the region, the world of the Turkana will continue to shrink. Prevailing water and food shortages require innovative local solutions and a more vigorous international response.

In conjunction with Kenyan churches, World Relief is distributing food and providing supplementary feeding for the severely malnourished in Lokitaung and Kerio. To address the critical water shortage in the region, World Relief will start community water committees and work with Living Water International to refurbish existing bore holes and dig new ones. But we need partners. Amid the arid, challenging terrain of Turkana a food emergency is unfolding and a quick response is key to avoiding the same fate that has befallen Somali. Stand with us for the Turkana at www.worldrelief.org/turkana.

-- Don Golden

Weekend Link Roundup (November 19 - 20, 2011)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Writing on the Communications Network blog, Rebecca Reyes, a communications associate at Everyday Democracy, shares an eight-step plan for measuring digital media.

Current Affairs

Have Fun Do Good blogger Britt Bravo, who is based in Oakland, explains why the Occupy Wall Street movement makes her "sad, and a bit tired." Writes Bravo:

The Occupy movement feels like the human race is screaming, "Help! Something is not right! Life is out of balance!" Thing is, there isn't anyone there to hear us, except us.

Only the 99% can help the 99%. Only we can help each other. How are we going to do it?...

In a brilliant post, The Atlantic's Alex Madrigal shares a few thoughts along those lines and, in the process, articulates what may be the best metaphor yet for the Occupy movement: social protest as API.

Education

What does the American dream look like for the current generation of college students? On December 1 in Atlanta, the Arthur M. Blank Family Foundation will host a panel discussion on that topic featuring Bob Herbert, former columnist for the New York Times and now a senior fellow at nonprofit think tank Demos; Deborah Bial, president and founder of the Posse Foundation; and Pulitzer Prize-winning historian David Garrow, who will moderate. Students from several area colleges and universities -- including Agnes Scott, Clark Atlanta, Emory, Georgia Tech, Morehouse, Oglethorpe, and Spelman -- are invited to participate. "The nation's future depends on the next generation gaining full access to the American dream," says Blank Foundation president Penelope McPhee. "A world-class education is the key that unlocks the American dream for millions of young people." The talk will be Webcast live starting at 6:00 p.m. EST.

Impact/Effectiveness

On the FSG blog, FSG managing director Mark Kramer "suggests that while investing in small to mid-size enterprises (SMEs) that provide a new solution to a social problem can indeed deliver social impact, "the high transaction costs, limited liquidity, and scarcity of good managers sets a ceiling on [the] ultimate scale of [that] impact." Instead, such investments should be augmented, Kramer argues, with new financial instruments like the $3.5 billion in vaccine bonds issued by the International Finance Facility for Immunisation or social impact bonds. "As the field matures," adds Kramer, "funders will realize that innovative financing structures, rather than individual social enterprises, offer the greatest chance for large-scale leverage."

On the Foundation Center's Transparency Talk blog, Paul Connolly, chief client services officer at the TCC Group, suggests that foundations should not only support individual nonprofits but provide funding to foster the development of issue-focused networks.

Leadership

Rosetta Thurman has some advice for young nonprofit professionals looking to grow their network "the old-fashioned way." For starters, says Thurman, join a professional association, which, among other benefits, will "provide you with a ready-made network as soon as you pay your membership fee."

Nonprofit Management

Kim Cook of the Nonprofit Finance Fund shares some notes from the Theatre Communications Group's fall conference, which was dedicated to issues of governance.

Philanthropy

In a post on the Fast Company blog, Nathaniel James, founder of the Awesome Foundation's Seattle chapter, talks with "well-respected philanthropy wonk" Lucy Bernholz about the emergence of the "open philanthropy" movement, which Bernholz describes as a "little revolution" that aims to encourage foundations to embrace transparency and use the "vast repositories of information" at their disposal to help solve stubbornly persistent social problems.

Water, Sanitation, and Hygiene

On Oxfam's From Poverty to Power blog, WaterAid senior policy analyst Daniel Yeo wonders why more NGOs aren't working on water issues. While diarrhea is the biggest child killer in sub-Saharan Africa and preventable diarrhea associated with dirty water and poor sanitation "kills more children than AIDS, malaria, and TB combined," Yeo notes, WASH issues just aren't perceived as being "sexy" or a high priority in developed countries. And that, says Yeo, is a tragedy.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great Thanksgiving!

-- The Editors

A Tale of Two Social Movements: The Giving Pledge and Occupy Wall Street

(Bradford K. Smith is the president of the Foundation Center. In his last post, he wrote about poverty and the marketization of philanthropy.)

Make no mistake: Occupy Wall Street, a "leaderless resistance movement" that claims to represent "the 99% that will no longer tolerate the greed and corruption of the 1%," and the Giving Pledge, "an effort to invite the wealthiest families in America to commit to giving the majority of their wealth to philanthropy," are two sides of the same coin. Neither one is a formal organization like Planned Parenthood or the National Rifle Association. Rather, they are social movements, more or less spontaneous gatherings of individuals who have come together because they feel things need to change and are ready to do something about it. What makes them such strange bedfellows, of course, is that the Giving Pledge is a billionaire social movement ensconced firmly within the upper echelons of the 1 percent of the population that is the object of Occupy Wall Street's ire.

What does a head-to-head comparison of the two movements reveal? Here's my take:

Numbers. In a recession-racked economy, the "99%" represents a virtually unlimited source of dissatisfied, disenfranchised, and pissed-off people. Some will drop out, some will join the Tea Party, and some will swell the ranks of protesters at Zucotti Square -- or wherever the movement decides to make its next stand. Only a precious few will achieve mega-billionaire status.

Advantage: Occupy Wall Street

Money. While the folks behind the Giving Pledge campaign are out wining and dining the Forbes 400, the Occupy Wall Street demonstrators are scarfing down take-out pizzas. Both movements are about money -- one trying to figure out how to constructively use a surplus of it, the other with how to secure a fair share of the economic pie for its supporters. If the Giving Pledge is successful in its stated goal of getting everyone on the Forbes 400 to give away half their wealth, it will double the $600 billion already dedicated to organized philanthropy in America.

Advantage: Giving Pledge

Leadership. When New York City mayor Michael Bloomberg recently tried to reason with the Occupy Wall Street demonstrators, he quickly discovered what the "leaderless" in "leaderless resistance movement" means. The Giving Pledge, of course, is spearheaded by the power trio of Bill and Melinda Gates and "the Oracle of Omaha," Warren Buffett.

Advantage: Giving Pledge

Communications. Both movements use communications technology in strikingly different ways. The Giving Pledge Web site bespeaks taste and class. (Indeed, its color palette is so discreet that if your monitor's brightness is set too high, you might miss it altogether.) Like the Giving Pledge, Occupy Wall Street posts letters on its "We Are the 99 Percent" Web site. But while those letters reference struggle and hardship, and the former talks about immense privilege and the desire to give back, both movements agree on the urgent need to create more opportunity in America for more people. Powered by an army of tech-savvy social media-driven volunteers, the main Occupy Wall Street site is expanding daily and even recruiting Swahili, Hausa, and Punjabi speakers as it networks with sister sites around the world. The Giving Pledge site grows at a snail’s pace, adding one billionaire letter at a time.

Advantage: Occupy Wall Street

Rallies. Billionaires, for lots of reasons, tend to go out of their way to avoid public attention. So the Giving Pledge's rallies take the form of dinner parties, a venue where wealthy philanthropists can talk about their dreams and the challenges they face away from the media spotlight and those eager to curry favor in exchange for a gift, a grant, a job. Slightly more rally-like was the first Giving Pledge "annual retreat" held in Tucson. Occupy Wall Street, on the other hand, welcomes the media spotlight as a way to amplify its message and swell its ranks. Its rallies are big, messy, and controversial. Both movements employ tactics that are appropriate for their constituencies.

Advantage: Toss up

Cuisine. The menus at those Giving Pledge dinner parties have got to be a whole lot better than the New York-style pizzas in Zucotti Park.

Advantage: Giving Pledge

Impact. The most frequent criticism of the Occupy Wall Street movement is that it has failed to articulate its demands -- a criticism fueled by both fear and frustration. After all, a movement that believes "we don't need Wall Street and we don't need politicians to build a better society" would appear to be about deep change, and that can be unsettling for people who are comfortable with the status quo. The Giving Pledge, in contrast, has been criticized for being just that: a voluntary pledge. It's not a contract and there is no way to really verify how much of his or her wealth each billionaire who signs the pledge will end up giving. To the extent that they actually create private foundations -- as Bill and Melinda Gates have -- Giving Pledgers will be required to be more transparent, which will make it easier for the rest of us to measure the size and nature of their philanthropy.

Advantage: too early to tell

In the book that inspired the title of this post, Charles Dickens wrote:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way....

Whether the unfettered accumulation of wealth or the more equitable redistribution of that wealth best serves the public good has, for centuries, been the stuff of politics and, sometimes, revolutions. The Giving Pledge and Occupy Wall Street are signs of the times: radically different responses to the gnawing sense that something in our society has gone wrong and needs to be righted.

-- Brad Smith

Funding for Capacity Building: 5Qs for Karen Brown, Fairfield County Community Foundation

(Karen Brown is vice president of programs at the Fairfield County Community Foundation, where she is responsible for overseeing grantmaking and providing philanthropic advisory services to donor-advised fundholders. Laura Cronin, a regular contributor to PhilanTopic, interviewed Brown recently.)

Laura Cronin: Nonprofit executives have been managing against a backdrop of economic turmoil for three years years now. What have the most successful Fairfield County groups been doing to keep it together during these difficult times?

Karen Brown: One key element of navigating this economic climate is transparency. Funders need information from grantees in order to make the case internally for all the grants in their portfolio. One exemplary executive director in our area has done something very simple and smart along these lines. After each of his board meetings, he sends a synopsis to us and to his other funders. It doesn't include every single detail of the meeting, but it gives a full picture of what transpired, and when I read it I feel as if I was there. It keeps me in the loop, and it's probably a document he needs to create anyway, so it's efficient. It's just an example of how communicating with funders and donors can be managed in a cost-effective way that gives them the information they need to make informed decisions.

LC: While great management is no substitute for a robust economy and a healthy fundraising environment, what kind of strategies should nonprofits pursue to ensure that they have the capacity to manage through tough times?

KB: We've been urging grantees to continue to invest in staff and professional development and not to look at those kinds of investments as frills. Employee morale and team building are crucial in a difficult economic climate. And funders need to consider supporting these programs in order to help organizations hold the line on their budgets without sacrificing effectiveness.

Other groups we fund are asking for support for short-term strategic planning -- looking two years out instead of the traditional five. This gives them something to focus on and a set of near-term goals that can keep them on track.

Funders can also be helpful by providing support for organizational assessments. We've assisted several grantees in hiring outside experts to come in and take a thorough look at all aspects of their operation, from leadership to fundraising to their business systems. That kind of thorough organizational assessment can help a grantee focus more attention on its key strengths and identify areas in need of improvement. The key is finding the right third-party help.

LC: The Fairfield County Community Foundation has been very involved in promoting capacity building for its grantees. Can you descibe what that looks like? And what kind of results are you seeing?

KB: We give our grantees access to our Center for Nonprofit Excellence, which provides nonprofit executive directors, senior staff, and board members with high-quality, affordable professional development workshops tailored to their experience level. In addition to training, we also fund capacity building, which some foundations regard as outside the scope of their grantmaking but we build in to ours. For example, we provide grants for technical assistance and technology development, as well as financial management assistance for nonprofits with operating budgets under $1 million. And we connect grantees to local organizations that provide pro bono legal services, professional development opportunities, and management expertise.

Last spring, as part of our response to the challenges of the current climate, we offered a workshop on planned giving with one of the best experts on the subject in the state. Planned giving is an important development tool that many nonprofits need to learn more about, especially as their loyal donors age. With that in mind, CNE offered an intensive half-day workshop on the topic and then offered follow-up consulting to a group of our grantees. We did that because we've found that complex workshop topics work best when paired with follow-up consulting, preferably from the same workshop trainer. That kind of approach can make capacity building work a bit more expensive, but we feel it helps our grantees' have greater impact and is well worth doing.

LC: Based on the results you've seen, what advice do you have for funders interested in boosting the capacity of their grantees to meet the demands of the current environment?

KB: There are several things they can do. First, they can set aside a portion of their grantmaking budgets for technical assistance grants to mission-critical grantees. Those monies in turn can be used by grantees to purchase high-quality consulting from experts in any number of areas. It's also helpful for the funder to learn who the quality, experienced consultants in their region are, so they can offer referrals when needed.

Second, funders can design and/or fund cohort learning for their grantees on priority topics. By cohort learning, I mean bringing a group of nonprofit leaders together for a series of sequenced workshops, with required work between the workshops. It helps, of course, if the nonprofits are invited to set the agenda for the workshops.

Last but not least, funders can survey their grantees directly about how they can help them navigate the current environment. Surveying grantees always surfaces ideas that foundation staffers may not have considered, and often many of these ideas are no- or pretty low-cost.

LC: One of the great things about the nonprofit sector is the fact that there are so many people out there in the field doing terrific work to improve the lives of others. In times likes these, it's important to to share those stories. Do you have one you can share with us?

KB: One really exciting project we launched in response to the current economic climate was a new electronic giving circle. We focused it on a very specific community need: to double the number of poor children in Bridgeport, the biggest city in the county and state, who receive nutritious food through the Connecticut Food Bank's Kids' Backpack program. We worked closely with fifteen donors to create the online campaign, with a goal of raising $125,000 for the program, and in one week we were able to more than double, to nine hundred, the number of students receiving food through the program. The giving circle concept made sense to our donor base, and by choosing a concrete goal in terms of how much we wanted to raise and by clearly outlining the need so that donors knew their gifts would help the food bank scale the program to serve more students, we were able to quickly galvanize support for the effort. At the same time, we were able to create a stronger sense of community among donors, which we believe will lead to additional gifts for other community needs in the future.

-- Laura Cronin