PhilanTopic

What We Value

(Mark Rosenman is an emeritus professor at the Union Institute & University and directs Caring to Change, an initiative that seeks to improve how foundations serve the public. In his last post, he wrote about accountability -- or the lack thereof -- in government, business, and the nonprofit sector.)

In his State of the Union address, President Obama called for government-provided student financial aid to somehow be tied to the value of the education which it helps underwrite. While it's an interesting idea, it presents a challenge not only to institutions of higher education, but to every nonprofit organization in the country. Put simply, who gets to measure the value of any charitable program? Who gets to stipulate their purposes and assess their performance and the outcomes they deliver?

Although such data are not readily available, we know that the White House believes that how well a particular college or university's graduates do in the job market after graduation ought to be a part of a "college scorecard." We also know that Sen. Marco Rubio (R-FL), who gave the Republican rebuttal to the president's State of the Union address, feels even more strongly about the idea and has joined with Sen. Ron Wyden (D-OR) to push The Student Right to Know Before You Go Act, which requires colleges and universities to provide detailed information to prospective students about how much one can expect to make in any given field post-graduation.

Given the state of the economy and students' understandable concerns about their futures, that makes a lot of sense, practically and politically. But should that be the principal measure of the value of higher education? When did we decide that the value of an associate's, bachelor's, master's, or doctoral degree should be quantified and measured in vocational education terms? And who decided it?

Most of us can agree that the purpose and function of higher education is to do more than just develop the knowledge and skills needed for graduates to achieve economic success. We look to our colleges and universities to build character and cultivate moral judgment, to teach students about their responsibilities as citizens of our democracy and engage them in community life, to help develop the kind of open-minded and empathetic individuals we all want as neighbors and fellow citizens. In short, higher education is about more than vocational education, even when it's in preparation for an elite profession.

Yes, higher education has a role in making the American Dream a reality, and it is essential to our notions of meritocracy and upward mobility. Most of us take to heart the assertion that a college degree is the surest path out of poverty and into a life better than those of our parents. Yet as the New York Times noted a number of years ago, "At the most selective private universities across the country, more fathers [sic] of freshmen are doctors than are hourly workers, teachers, clergy members, farmers or members of the military -- combined."

As President Obama himself suggested in his 2012 State of the Union address, we know colleges and universities are failing to level the economic playing field for a majority of Americans. Indeed, according to a College Board study, students with high college-entrance exam scores from low-income families are less likely to complete college than those with lower scores from more affluent families. The Education Trust also found that only five of some twelve hundred institutions of higher education in the U.S. were doing a good job of serving low-income students who matriculated.

Does the administration's "college scorecard" even begin to capture what it means to prepare young men and women for productive, meaningful lives? And shouldn't it also reflect whether and how well each college and university is advancing economic equity in society?

Such shortcomings in reflecting organizations' purposes and functions can be seen across the nonprofit sector. In the rush to assess performance, measure outcomes, and be more "accountable" to donors and funders, vital elements of many nonprofits' missions are given short shrift. This despite the fact that charitable groups often seek (and are expected) to provide goods or services in situations -- health care, education, land conservation, and so on -- where the market has failed.

Nonprofits also often work to avert problems before they require remedial intervention and to build individual capacity and community vitality so that fewer government- and charitably-funded services are needed in the long run. They contribute to the strengthening of our democracy and to increased civic and social capital. They inform the development of better policy and public program implementation, resulting in a better quality of life for all of us.

Alas, these kinds of things often are unacknowledged, let alone measured, when assessing the value of services provided by nonprofits. And because of these omissions, they increasingly are ignored by politicians, funders, and others who are keeping score, sometimes even by nonprofits themselves.

This must change. As a society, we tend to make economic calculations in very short timeframes -- daily, quarterly, annually. Maybe it's because we're Americans, always on the move, but we have little patience for long-term investments that favor the common good over narrowly defined short-term payouts. But unless and until the full scope of nonprofits' value to society is included in our assessment and evaluation schemes, all but the most basic functions of the sector will be discounted and marginalized.

From higher education to medical research, daycare and recreational opportunities to culture and the arts, all will be subject to a brutal economic calculus: Is the "commodity" produced by the organization worth the cost? Were we to pursue such a path, broader social benefits and the common good eventually would fade from practice and our collective value system.

Which brings me back to where I started. How do we assess the value of higher education? Do the schemes floating around the White House and Congress even consider what it means to develop good citizens and good neighbors? How do we assign value to the splendid wonder of someone pulling him or herself out of poverty compared to someone who benefits from a stable family structure, unlimited resources, and powerful economic and social networks?

What is the worth to society of a strong, evidence-based belief in the validity and legitimacy of the American Dream? Doesn't that benefit all of us?

If we care about such things -- as foundations, individual donors, and government must -- we need to accord them the value they deserve and make sure that any college or nonprofit scorecard goes beyond individual profit to include measures of broad social benefit. Failure to build that into our calculus will make us all poorer over the long term.

-- Mark Rosenman

Let's Think Smarter About the Charitable Tax Deduction

Jan Masaoka is CEO of the California Association of Nonprofits (CalNonprofits), publisher of Blue Avocado, and author of The Best of the Board Café, Nonprofit Sustainability (with Jeanne Bell and Steve Zimmerman) and The Nonprofit's Guide to Human Resources.

On New Year's Day, lawmakers in Washington finally agreed to disagree and passed a bill to avert the so-called fiscal cliff. But with the federal government looking at another trillion-dollar deficit and record levels of debt, no idea for balancing federal expenditures and revenue will be off the table for long.

For many nonprofits, keeping the charitable tax deduction off the table is the issue. But while the issue itself may seem straightfoward, there are more nuances and choices to it than meet the eye. There are many ways, for example, to increase taxes that would not have a directly negative impact on nonprofits -- which, after all, are a huge part of the safety net for the poor, the elderly, the unemployed, and many others.

The deal made to avoid the fiscal cliff left the charitable tax deduction untouched for the most part -- and for the time being. To be clear: neither eliminating the deduction nor reducing the deductibility rate was discussed; the administration's proposal would have lowered the current cap on the deductibility of charitable gifts from 35 percent to 28 percent of one's income. The one tiny change passed was the reinstatement of the Clinton-era Pease Amendment, which will raise taxes on some of the wealthiest donors by perhaps $2,000 each.

However, the intensity of the debate served to highlight some thought-provoking issues for those of us in the nonprofit and philanthropic communities, especially as the potential for revisiting the charitable deduction (and other tax breaks) looms large.

Some nonprofits are conflicted about the charitable deduction: on the one hand, nonprofits benefit from donations that often are influenced by their tax-deductible status; on the other, many of these same nonprofits support higher taxes for the wealthiest in our society. Indeed, a reduction in the charitable deduction does two contradictory things for nonprofits: it reduces the financial incentive for people to give, and it also brings in more tax revenue -- revenue that could be used to fund nonprofit services.

Of note, the current deduction formula affords greater tax relief to higher-income individuals than to lower-income individuals, for three reasons:

• Higher-income individuals are more likely to itemize;
• Because it's applied to taxable income, the deduction helps higher-income individuals more since their marginal tax rates are higher; and
• The cap only affects individuals who donate a third or more of their taxable income. (Lower-income individuals are unlikely to be able to give away such a large percentage of their income.)

Other proposals, such as establishing a "floor" for the charitable deduction (a minimum percentage of adjusted gross income by which charitable contributions could qualify for deduction), could be more equitable and arguably could raise more tax revenue while having little or no impact on charitable giving. We should also look at ideas for extending the charitable tax deduction to non-itemizers, changing the formulas on deductions for donated stock, and making the estate tax more of an incentive for bequests. 

All of us at the California Association of Nonprofits encourage our colleagues in the nonprofit sector to advance the longer-term conversation about the charitable deduction as it relates to the balance between sector sustainability, equitable taxation, and fiscal responsibility.

But while we all must work to protect the deduction, we cannot allow the main message from the nonprofit sector to be only about tax breaks. We feel strongly that the Bush tax cuts of 2001 and 2003 have been harmful to our economy and our communities, while benefiting very few Americans. In the fiscal cliff deal, current marginal tax rates were extended indefinitely for individuals earning less than $400,000 and couples earning less than $450,000 -- approximately 98 percent of all U.S. taxpayers. While the revenue that will be realized by raising rates on the highest-earning 2 percent of taxpayers is less than what President Obama originally proposed, it's a step in the right direction for equitably increasing tax revenue as part of a longer process to bring the federal budget into balance.

We believe the responsible position is to support the charitable deduction and to support policies that result in increased revenue. In order to do that, we all will need to consider additional options as a new Congress begins to craft policy around these important issues.

-- Jan Masaoka

Weekend Link Roundup (November 3-4, 2012)

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

Civil Society

On the NCRP's Keeping a Close Eye blog, Niki Jagpal discusses a recent article from the Poverty & Race Research Action Council about the "unsettling statistics on the status of voting rights in our country." According to PRRAC, voter identification laws, early voting restrictions, purging of "legitimate registered voters because of baseless suspicion of their citizenship status," and felon disenfranchisement continue to marginalize low-income individuals, communities of color, younger voters, and the elderly.

Disaster Relief

In the days following the devastating landfall of Superstorm Sandy near Cape May, New Jersey, nonprofit bloggers were busy sharing resources for those interested in contributing to relief and recovery efforts. On her Have Fun, Do Good blog, Britt Bravo has compiled a list of articles and Web sites that suggest ways to donate and volunteer; Idealist's Allison Jones has a few additional suggestions for New Yorkers looking to get involved in relief and recovery efforts; and longtime New Jersey resident Nancy Schwartz suggests three organizations on the ground in that state -- the NYC Rescue Mission, the Elizabeth Coalition to House the Homeless, and the Community FoodBank of New Jersey -- that are "providing services right now and need your help to keep it up."

Looking at the response to the storm through a tech/data lens, Philanthropy 2173 blogger Lucy Bernholz tracks, in a series of posts, the many ways in which organizations and individuals used information communication technologies during and after the storm, while the Weakonomist looks at how Sandy might affect the economy.

Professional Development

After another season of conferences and events, you're probably wondering what to do with all the business cards you collected. New York Foundation for the Arts program officer Eleanor Whitney has some advice about how to deepen your connection to individuals with whom you swapped cards, including how to prepare for the initial communication and what you can do to move the conversation offline.

In a post on her blog, How to Become a Nonprofit Rockstar author Rosetta Thurman reminds us to invite young professionals to the table when discussing the future of the sector.

Social Media

On her blog, the tireless Beth Kanter, reflects on her experience to date as a "social media ambassador" for the #GivingTuesday campaign, an effort to make the Tuesday after Thanksgiving a national day of giving.

Urbanism

And on the Huffington Post, Charles A. Birnbaum, president of the Cultural Landscape Foundation, explores the significance of hedge fund manager John Paulson's recent $100 million gift to the Central Park Conservancy. "The gift is important in two ways," writes Birnbaum, "it directly benefits the park and the [conservancy]...and it impacts public perception. This gift places the park and designed landscapes on the same plane with other philanthropic beneficiaries -- cultural institutions including museums, libraries and performing arts centers, medical facilities, universities, etc. This helps elevate the understanding of landscape's fundamental role and value, and it could also spur similar acts of philanthropy for other parks in New York and around the country."

That's it for now. Our best wishes for a speedy recovery to all those who experienced the wrath of Sandy. Drop us a line if we missed anything at rnm@foundationcenter.org.

-- The Editors

'Funding for the Arts' Month: Arts and Community Engagement

(Kyoko Uchida is features editor at Philanthropy News Digest. In her last post, she provided some background on the deteriorating situation in Syria through the lens of half a dozen foundation-sponsored publications.)

In a commentary piece on Philanthropy News Digest earlier this month, Sharon DeMark, a program officer for the arts at Minnesota Philanthropy Partners, argued for expanding the definition of arts engagement in grantmaking. While citing examples of arts institutions that are experimenting with new ways to attract younger and more diverse audiences, DeMark also noted that the lion's share of grant dollars goes to a handful of large, established organizations, and that there is ample opportunity for funders to identify and support smaller, lesser-known groups and individual artists.

One example mentioned by DeMark that elicited comment was the Walker Arts Center's recent Internet Cat Video Festival, which showcased short videos curated by an online community from among more than ten thousand submissions. "Think expansively, yes," one comment on DeMark's piece read. "Pander to the lowest common denominators and call it the arts, no." Fair enough, but if the subject hadn't been cat videos, would this kind of crowdsourcing be considered "pandering"? Whatever your view of cat videos, there are any number of contests in which the public are invited to vote for their favorite arts organization to receive funding; for example, five South Florida nonprofit arts groups currently are competing for votes via text message to win $20,000 in the first Knight Arts Challenge People's Choice Awards. While it goes without saying that online popularity contests are in many ways a flawed mechanism for awarding philanthropic support, they have been shown to engage more diverse audiences in the arts by giving them a say in directing support to less established groups and artists.

I believe in art for art's sake, but isn't support for broad participation in the arts important because it sustains us, not only as individuals but as a community? In other words, active engagement in the arts by more diverse audiences not only is a way to ensure the long-term sustainability of arts organizations, it also serves to strengthen community and social cohesion by enabling different segments of society to experience together how various cultures define, make, and enjoy art. To wit, the James Irvine Foundation's new arts funding strategy aims "to promote engagement in the arts for all Californians -- the kind that embraces and advances the diverse ways that we experience the arts, and that strengthens our ability to thrive together in a dynamic and complex social environment." Specifically, the foundation seeks to grow and deepen arts engagement among low-income and/or ethnically diverse populations that have been traditionally underserved by arts nonprofits; support new ways of creating or curating art, including via digital technology; and encourage the use of non-traditional spaces in art making.

As DeMark noted in her commentary, more grantmakers also are coming to recognize the role the arts play in economic development and community revitalization. As documented by Americans for the Arts in its Arts & Economic Prosperity series, the nonprofit arts sector generates significant revenues, both direct and indirect, for communities in which those activities take place. But it also contributes to a stronger sense of social cohesion. Indeed, according to Civic Health and Unemployment II: The Case Builds, a report from the National Conference on Citizenship, communities with a robust ecosystem of nonprofit organizations that engage directly with residents tend to have lower unemployment rates.

In exploring how a broader definition of arts engagement can help strengthen communities, we should also consider how arts participation affects educational outcomes. According to The Arts and Achievement in At-Risk Youth: Findings From Four Longitudinal Studies, a report from the National Endowment for the Arts, socially and economically disadvantaged youth who are exposed to and involved in the arts earn better grades, graduate from college at higher rates, and are more likely to volunteer, vote, and participate in politics as adults than their peers with little exposure to the arts. Given that budgets for arts education in public schools are under pressure, support for broad participation at the community level in non-traditional venues and formats -- including inviting the public to submit art, curate the work of others, and vote for funding online -- is an essential element of philanthropic efforts to bolster community vitality and economic development.

What do you think about expanding participation in the arts as a way to strengthen broader engagement in the community? Does engagement in the arts foster economic resilience in local communities? And if it does, are private funders doing enough to make it happen? Use the comments section below to share your thoughts....

-- Kyoko Uchida

(Image: Irrigate, a partnership between the City of Saint Paul, Twin Cities Local Initiatives Support Corporation, and Springboard for the Arts)

 

Clinton Announces Revisions to Tax Regulations to Support Civil Society Worldwide

Small but interesting announcement timed to coincide with the annual meeting of the Clinton Global Initiative and the opening of the 67th session of the UN general assembly:

In conjunction with a meeting of the State Department's new Global Philanthropy Working Group -- the sixth and newest pillar of the department's Strategic Dialogue with Civil Society initiative -- Secretary of State Hillary Rodham Clinton has announced Treasury Department and IRS guidance "aimed at lowering the legal barriers and administrative costs associated with cross-border philanthropy in support of civil society worldwide."

According to a statement issued by State, the proposed revisions to "equivalency determinations" -- i.e., the process by which a U.S. grantmaker evaluates whether an intended foreign grantee is the equivalent of a U.S. public charity -- allows foundations to rely on a broader range of professional tax advisors when making such determinations. It's hoped that "this will make professional tax advice in this area easier to obtain, significantly reduce the administrative costs of foundation grantmaking to foreign civil society groups, and ensure that accurate determinations regarding foreign grantees are made."

For the last year or so, Tech Soup Global, in partnership with the Council on Foundations, has been working on an equivalency determination information repository (EDIR) service called NGOsource. To learn more, click here.

 

Weekend Link Roundup (July7-8, 2012)

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

Civic Engagement

On the Knight Blog, Elizabeth Miller looks at the report The Civic Tripod for Mobile and Games: Activism, Art and Learning, which explores the three dimensions of mobile games that focus on art or neighborhood civics: civic learning, performance/art, and social change. "Learning is inherent in games, since their engagement depends on providing challenges that are just barely possible," the report's authors note. "And when games are tied to physical space,

their action ties to learning about our own neighborhoods -- how to move through them, and to change them. The art of such games is often the physical world itself, with better sounds and graphics than any screen! And the digital side of games draws in the civic, if only because it is so easy to link to more information on how to take action, or how to learn more. In other words, the experiential nature of games pulls mobile experiences on civics into being a mix of art and learning....

Disaster Relief

On her Nonprofit Charitable Orgs blog, Joanne Fritz offers tips on how to help those affected by the wildfires raging in Colorado and elsewhere out West.

Fundraising

Fundraising is a valuable skill that nonprofits cannot afford to underinvest in, argues Joe Garecht on the Fundraising Authority blog. It is also a marketable skill that a good fundraiser can take to another organization if, as the title of his post suggests, "You Aren't Paying Your Development Staff Enough." Writes Garecht:

If your organization's executive director is making $150,000 per year and the top development staff member is making $60,000 per year, your nonprofit is in trouble. Likewise, if your organization is raising $5,000,000 per year and you only have one full-time development person, your nonprofit is in trouble. Under either scenario, you will never raise what you really could and should raise, and

never do all of the good that you really could do, simply because you aren't making a big enough investment in your development [function]....

"It seems that the Great Recession is similar to the Great Depression in one more way -- the drastic drop in large charitable gifts," writes Joanne Fritz in another post on her Nonprofit Charitable Orgs blog. Citing the Chronicle of Philanthropy's  Holly Hall, who found that the decline in large charitable gifts between 2007-10 mirrors a similarly precipitous drop between 1931-45, Fritz writes: "I have trouble with the idea that our tough economic times have been a match for the Great Depression, or that the decline in large charitable gifts will last as long. But I do think that large, monolithic fundraising campaigns of any kind are doomed...."

Governance

Gene Takagi has an excellent post on the Nonprofit Law blog, which he co-authors with Emily Chan, about the roles and duties of nonprofit board members.

Innovation

On the Forbes site, contributor Lori Kozlowski chats with Rockefeller Foundation president Judith Rodin about the meaning of philanthropic innovation in 2012.

Social Media

"Although we often focus our discussion on how organizations can use social media for marketing and fundraising, the best reason for nonprofits and foundations to be on social media is to practice thought leadership," writes Rosetta Thurman in a post on her eponymous blog. "When it comes to foundations in particular, this opportunity can be even more impactful, as they are often seen as conveners, curators and catalysts for change within the nonprofit community." Thurman goes on to single out the Geraldine Dodge Foundation, the Rasmuson Foundation, and the Community Foundation for the National Capital Region for blogging "not just to share information, but to influence public opinion and community collaboration."

And on the First Giving blog, Taylor Corrado highlights six nonprofit branding lessons from the book Made to Stick, by Dan and Chip Heath:

1. Keep it simple -- Don't dumb it down, but get straight to the point.
2. Embrace the unexpected -- In other words, create curiosity.
3. Be concrete -- Provide details, examples, and facts.
4. Be credible -- Testimonials from beneficiaries are more effective than those from board members.
5. Don't shy away from emotion -- Humans respond better to emotions than statistics.
6. Think "story" -- Good stories are unexpected, filled with concrete details, and should always be emotional.

That's it for this week. What did we miss? Drop us a line at rnm@foundationcenter.org.

-- The Editors

Nonprofits Missing From Big Battles

(Mark Rosenman, a Washington-based scholar-activist and director of Caring to Change, a D.C.-based effort to promote foundation grantmaking for the common good, is a frequent contributor to PhilanTopic. In his last post, Rosenman and co-author Gary D. Bass, executive director of the Bauman Foundation, wrote about efforts by Congress to curtail the advocacy rights of nonprofits.)

We are seven months from what some are calling "taxmageddon" and others describe as a "fiscal cliff." And while leaders in the nonprofit sector are narrowly focused on proposed changes to the charitable tax deduction that could reduce charitable donations by about $2 billion a year, the Republican-controlled House of Representatives has already approved cutting trillions of dollars from programs critical to low- and moderate-income people and the charities that serve them.

Charities and foundations should be gearing up to confront immediate and near-term policy battles of extraordinary consequence to them. Instead, they seem to be wearing blinders -- or simply fear controversy, no matter the stakes.

Congressional Republicans seem to want a repeat of last summer's divisive struggle over raising the debt limit and are committed to pursuing new budget cuts. This comes after the House recently approved changes to last year's deficit-cutting sequestration agreement and shifted what was a shared annual burden of $109 billion entirely to domestic programs.

House Republicans also are trying to preserve Bush-era income tax cuts for wealthy Americans, an action that if successful will cost an estimated $1 trillion in revenue over ten years -- and doesn't include the loss of billions in revenue from estate tax reductions for millionaires. They have already passed the budget put together by Rep. Paul Ryan (R-WI), a plan that goes well beyond a renewal of the Bush cuts and give millionaires an additional tax break averaging $265,000 a year while cutting over $3 trillion from programs that serve low-income people or fund the charitable programs that help them.

This is not chump change. To give you a sense of the magnitude of the proposed cuts, the shift in sequestration alone is more than the total annual giving of all U.S. foundations combined. And the so-called Ryan plan calls for cuts in domestic program over ten years that are about seven times the equivalent projected total of foundation giving -- a shortfall that would result in some two million people losing their access to food stamps and another forty-four million having them reduced. The Ryan plan also would eliminate the social service block grant through which nonprofits now provide services to some twenty-three million people, over half of them children, as well as invalids dependent on Meals on Wheels programs, those in foster care, and those who rely on nonprofit childcare.

And that's just a start. Democrats and Republicans in Congress agree that the interest rate on federal student loans shouldn't be raised, although the former want to pay for keeping the current rates by getting rid of some business tax cuts, while the latter are focused on defunding nonprofit preventive care programs related to obesity, cancer, and HIV/AIDS.

I've heard it said that nonprofits used to talk about problems and now the conversation is about branding. And everyone knows that foundations are becoming more technocratic in their approach and are focusing on metrics and the promotion of social investment schemes. What's going on here? Have charitable and philanthropic institutions been seduced by our thirty-year love affair with markets and forgotten about the public good? Why do they just accord with politicians' actions that benefit private interests?

These days, it seems to be easier for nonprofits and foundations to acquiesce to externally determined realities, to figure out how to do as well as they can in an environment that glorifies all things private instead of trying to figure out how to change things. Too many seem to go along to get along.

While that might be in the interests of some organizations and institutions, it does not serve society well. And it certainly works against the interests of the increasing numbers of Americans who are struggling to keep a roof over their heads and food on the table. The profoundly disturbing increase in economic inequality threatens all of us, even those who view themselves as one-percent winners.

There is much that charities and foundations can do to challenge policy decisions that are destroying the social safety net in the United States, not to mention the social contract that has been in place since the 1930s.

Everyone knows that Congress is at an all-time low in its approval ratings, but charity and foundation leaders appear to be unwilling to take public positions with respect to its more destructive actions. The nation desperately needs leaders who will speak to the public interest, who will step up and help Americans understand the direction in which we are being led and what it means for ordinary citizens and the organizations that serve them.

Foundations and nonprofit organizations can fund and direct resources to assertive and ambitious voter registration and education efforts. They can help people better understand the critical issues and solutions being debated -- and in some cases avoided -- by elected officials. Charities can propose and advocate for their preferred policy options and can urge individuals to promote action on those solutions by communicating with their legislators and administration officials.

The stakes are huge -- for individuals, communities, charities, and foundations. The ways in which Congress and the next president address the fiscal issues confronting us will determine our collective future for years to come. Policy choices made now and in the not-too-distant future could dramatically worsen the quality of life for tens of millions of Americans. And we may soon find both government and the nonprofit sector without the resources to moderate the deteriorating circumstances we face as individuals and as a society.

Most Americans agree that we need comprehensive tax reform which results in the wealthiest among us paying a fairer share of the revenues collected by the federal government, as was the case in and before the Clinton era. We need reforms in entitlement programs that find real long-term savings while protecting those dependent on them. We need infrastructure investments that will stimulate the economy and create jobs. And we need to be sure that the defense budget bears its share of the deficit-reducing burden, especially as the long conflict in Afghanistan winds down.

A disastrous future is not inevitable, and the passivity of most charities and foundations is not immutable. Our nation faces very real choices with profound implications. But we do have choices. The question is who will help make them.

We are rapidly approaching a moment of truth and are in need of leaders who are committed to the public good. Nonprofit organizations and philanthropies can maintain their silence and fail America, or they can help lead us in that direction by promoting popular action on behalf of our shared interests. The time to act is growing short....

-- Mark Rosenman

Curtailing Democracy

(The following post was written by Mark Rosenman, a Washington-based scholar-activist and director of Caring to Change, a D.C.-based effort to promote foundation grantmaking for the common good, and Gary D. Bass, executive director of the Bauman Foundation and affiliated professor at Georgetown University's Public Policy Institute. In his previous post, Rosenman wrote about widening inequality in the philanthropic sector.)

Nonprofit organizations have fewer rights today than they did last year. Thanks to language pushed by Republicans in the Consolidated Appropriations Act of 2012, charities face yet another coordinated campaign by conservatives to quash popular democracy. And unlike past "defund the left" efforts, this legislation wasn't caught in time by charity leaders to prevent its passage.

Those efforts began in 1981 with a proposal from the right-wing Heritage Foundation, were pushed by the Reagan White House throughout the early and mid-'80s, morphed into major Republican congressional legislative activity in the mid-'90s, and have come back around in various forms since then. Some have tried to limit what charities can do with private contributions; others have tried to expand the types of activities that are prohibited by charities that receive federal funding. Most of these prior attempts were stopped by watchdog organizations -- sometimes working as part of a broad-based coalition -- but only at considerable expense.

And yet conservatives continue to try to chip away at the right of nonprofit groups to engage in advocacy. For example, there is now a law on the books that prohibits nonprofit social welfare (503[c][4]) organizations that lobby from receiving federal grants. Similarly, grantees of the Legal Services Corporation face greater restrictions on advocacy than do other federal grantees.

Over the years, many grantmaking foundations have been alarmed by these attacks. Like much of society, they recognize that a strong, vibrant nonprofit sector helps to build a strong, vibrant democracy. A key element in that equation is the ability of nonprofits to speak out on public policy issues, to challenge institutional power, and to encourage people to get more involved in democratic decision-making. One legacy of earlier attacks on nonprofit advocacy was that a small number of foundations provided support for nonprofit sector watchdogs to monitor these attacks and to help build nonprofits' capacity to engage in advocacy. Alas, while laudatory, that funding was limited and episodic.

Strikingly, over the past few years even the modest amount of foundation funding available for watchdogs and advocacy capacity-building efforts has been scaled back. Key organizations no longer have staff dedicated to monitoring these issues and some organizations that devoted all their work to this cause no longer can. As these trends continue, we should expect that nonprofits will be even less prepared for future assaults on nonprofit advocacy.

The newly enacted appropriations law expands the long-standing and widely accepted prohibition on using federal grant funds for nonprofit lobbying to include "any activity to advocate or promote" any "proposed, pending or future" tax increase (at any level of government) or any "future requirement or restriction" on a "legal consumer product" (e.g., tobacco and alcohol products, junk foods and beverages) -- even when such efforts reflect the very purpose of public funding. None of these key terms is defined, and the scope is disturbingly vague and broad.

The new law also restricts the use of federal funds for many types of regulatory and administrative actions. This means that many groups that comment on state regulations, for example, will no longer be able to under their federal grant. Combined, these changes significantly restrict the advocacy rights of the nonprofit sector as well as the core functions of the public sector to promote and protect people's and communities' interests.

The law is limited at this point to programs funded through the appropriations bill that covers the Departments of Health and Human Services, Labor, and Education, as well as several independent agencies. But it is easy to see that conservatives will likely want to extend these restrictions to other spending bills that affect the arts, the environment, and many other issues across the nonprofit world.

Consider a few illustrations: a charity might receive federal funding to address the scourge of cancer by reducing tobacco use. To that end, it might launch a public service campaign about the health dangers of cigarettes, especially for minors. Or a charity might get a federal grant to combat the epidemic of obesity in the U.S. They might promote ideas for raising funds for obesity-prevention campaigns or to help reimburse government for the costs of treating obesity-related diseases, including a surcharge on sodas and other sugary foods.

Under the new law, charities would likely no longer be able to undertake these types of activities. Charities are already not permitted to use federal funds to lobby, but they certainly should be able to use federal funds to educate and suggest ideas to the public and policy makers on social issues when consistent with the purposes of a grant. It strengthens our communities when policy makers receive information from independent nonpartisan parties such as government grantees. And their research and policy ideas often are vital to improving the quality of life in our communities. All of this has been made more difficult and in many cases prohibited under the new law.

Let's be clear about this: The new legislation really is a case of the public interest losing out to private ones. Charities tend to advocate on and for issues and in debates where the voices of average people aren't really heard; they work to promote the common good. Additional restrictions on charities' free speech rights are a pointed example of how moneyed interests impose their will on ordinary people and the groups that try to serve them -- and of the need for nonprofit advocacy.

The new law was developed by Rep. Denny Rehberg (R-MT) and is supported by a number of powerful industries, including the American Beverage Association. Why would a trade association want new restrictions on nonprofit advocacy? Maybe it's because it wants to kill federal funding of programs that address anti-obesity and other public health campaigns that could affect the public's attitude and behavior with respect to sweetened drinks. Knowing how hard that is, they go after the speech rights of public health charities that get federal funding -- all part of a continuing conservative attack on nonprofit speech.

Participating in the broader assault on nonprofit advocacy rights is Cause of Action, an organization established a few months before the restrictions were enacted that's directed by a former staffer to Rep. Darrell Issa's (R-CA) Oversight and Government Reform Committee (and before that a legal associate at one of the militantly free-market/limited government Koch Family Foundations).

Cause of Action has written to at least twenty grant recipients of a federal program that funds anti-obesity and -tobacco activities warning that they may have engaged in illegal lobbying activities. It was writing, it said, only "as a convenience" and to let the organizations know that they may be subject to civil penalties and private lawsuits.

Both are tactics reminiscent of right-wing efforts dating to 1980s to stifle charitable advocacy work. Back then, the threat or actual filing of SLAPP suits (Strategic Lawsuit Against Public Participation) had a chilling effect on nonprofits' efforts to build democratic participation and otherwise affect public policy for the common good. Often filed by corporations and deep-pocket conservatives, the practice became so frequent that it earned its own acronym. You can be certain that the threat of lawsuits implied by Cause of Action will have a similar effect.

Democracy depends on ordinary people having a voice in policy decisions that affect them, and ordinary people depend on charities to advocate for and promote initiatives that improve their lives and the well-being of their communities. Efforts by conservatives and big business to deny charities some of their power to increase democratic participation limits charities’ ability to address critical problems and issues, and, ultimately, is corrosive of society and representative government itself.

Foundations must understand -- and embrace -- the absolutely critical role they play in providing support for charity watchdogs working to protect the advocacy voice of the nonprofit sector. At a time when the wealthiest people and corporations in this country are hell-bent on rigging the political system for their own gain, it is essential that private philanthropy step up and fund the people and organizations who are working to build a stronger voice for the common good.

-- Mark Rosenman and Gary Bass

Weekend Link Roundup (April 21-22, 2012)

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

Civil Society

In the Encyclopaedia of Informal Education, writer, activist, and sometime PhilanTopic contributor Michael Edwards bemoans the lack of clarity around the term civil society and attempts to restore some precision to the debate over its meaning. In the process, he reminds us that "Recognizing that civil society does indeed mean different things to different people is one of the keys to moving forward, because it moves us beyond false universals and entrenched thinking."

Communications/Marketing

On her Non-Profit Marketing blog, Katya Andresen shares four trends, including the growing popularity of peer networks, likely to shake up nonprofit marketing. "People listen to each other more than us, so we need to stop viewing social media as another form of getting our message out," writes Andresen. "Its primary value is that it allows other people to get the message out, for us."

Entrepreneurship

On the Kauffman Foundation's Growthology log, Dane Stangler looks at the evolution of entrepreneurship and how the very definition of the word entrepreneur has broadened over the years. Writes Stangler: "In its original use by Jean-Baptiste Say, it was someone who undertook economic activities and capitalized on arbitrage opportunities. Joseph Schumpeter ushered in the modern way in which people typically use the term by equating it with newness -- new products, services, combinations, business models, etc. Israel Kirzner saw entrepreneurs as those who targeted and eliminated disequilibria in the economy (for Schumpeter, entrepreneurs created those disequilibria)." Today, however, "the word has come to be so overused as to potentially lose a great deal of meaning...."

Environment

In a guest post on the Knight Blog, Shannon Dosemagen, director of community engagement at the Public Laboratory for Open Technology and Science, a 2011 Knight News Challenge winner, explains how the decision by Google to license community-created aerial maps from the lab's archive could lead to better policy and replace commercial and government data as a recognized representation of sites of civic and environmental concern.

Higher Education

The New York Times' Room for Debate series takes up the question of whether wealthy colleges deserve their tax breaks, with contributions from economist Sandy Baum; Michael McPherson, president of the Spencer Foundation; the American Entreprise Institute's Frederick Hess; Barbara Gitenstein, president of the College of New Jersey; Andrew Coulson, director of the Center for Educational Freedom at the Cato Institute; Osamudia James, an associate professor of law at the University of Miami; and Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.

International Affairs/Development

About.com's Joanne Fritz reminds readers who are thinking about doing a little "voluntourism" this summer to use common sense and follow these tips from the Center for Responsible Travel.

Philanthropy

On his Inside Philanthropy blog, Todd Cohen offers his take on some of the investment strategies that have emerged in recent years to scale up or expand proven nonprofit programs.

Regulation/Oversight

Idealist researcher/blogger Putnam Barber reminds nonprofit organizations, many of which do not have to file their Form 990s until May 15, to make sure they have answers to three important questions:

• When is our filing deadline?
• What do we need to know to be sure we stay current with all the rules and regulations?
• Who is going to file our Form 990-N?

Social Entrepreneurship

Over at Dowser, J. Gregory Dees, a professor in the Fuqua School of Business at Duke University and creator of the first course in social entrepreneurship in the U.S., challenges New York Times' columnist David Brooks' characterization of social entrepreneurship as something young people do to "avoid political participation and...[tackle the] 'corruption, venality, and disorder head-on'." Writes Dees:

Social entrepreneurs do not discourage political participation -- they invent new mechanisms for achieving the public good. Quite often solutions to problems require not just mobilizing political support but actually demonstrating how to solve problems that have confounded others.... Social entrepreneurs serve as society"s "learning laboratory," developing, testing, and refining new approaches to problems in ways that government agencies, with all their budgetary, bureaucratic, legislative, jurisdictional, and political constraints cannot do. These innovators represent the kind of decentralized problem solving that Nobel laureate Douglass North identifies as essential for any society to achieve what he calls "adaptive efficiency," the ability to adjust and thrive in the face of new challenges and shifting problems....

Social Media

On her blog, Allison Fine weighs in on the value of a Facebook "like." Writes Fine:

The notion of creating a direct equation of how much it cost to get one person to like a Facebook page and how much that person bought or gave as a result might satisfy the bean counters, but misses the larger point of why social media are so much more powerful than broadcast media. If you’re just looking for one, or ten, or one hundred thousand stand alone customers or donors, then there is no extra value in using social media. You could have just sent out a direct mail piece for that. The value in using social media is that every person, every like, comes with their own network that can be activated in an instant, and at no additional cost, for the organization. And that value, the value of having an army of your most ardent fans, affects far more than the development department....

Transparency

On the Foundation Center's Transparency Talk blog, Mark Hager, associate professor of nonprofit studies at Arizona State University's School of Community Resources and Development, explains how students in his Theory and Practice of Philanthropy course are using Glasspockets indicators to evaluate private foundations and "reflect critically on the value of transparency and how well the Glass Pockets assessment captures the concept." In the coming weeks, Hager will share thoughts from the student who "presented the most interesting observations about foundations, transparency, and the 'Who Has Glass Pockets' indicators." Stay tuned.

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

-- The Editors

Weekend Link Roundup (February 4-5, 2012)

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

African Americans

BlackGivesBack's Tracey Webb gives a shout out to The Root, which earlier this week unveiled its 2012 list of Young Futurists -- African Americans under the age of 22 who are "not only achievers but also innovators in the worlds of green innovation, science and technology, arts and culture, social activism, and business enterprise."

Civil Society

"[Is there] a textbook definition of the common good?" asks Steven Fajon, a Case Foundation intern, in a guest post on the Social Citizens blog. The question occurred to Fajon after panelist Ai-Jen Poo, director of the National Domestic Workers Alliance, in an Independent Sector webinar titled "What the Heck Is the Common Good Anyway?" explained that the purpose of the question was to initiate a dialogue between communities in need. For his part, Fajon remains unconvinced. "[I]n the end," he writes, "the idea of the common good doesn't need to be an exact science –- it simply has to strike up a debate, just like it did in my mind."

Communications/Marketing

Has any public charity had a worse week, communcations-wise, than the one Komen for the Cure had this week? For a complete rundown of the missteps made by the Dallas-based organization as it tried to explain its decision to de-fund grantee Planned Parenthood, badly fumbled its response when the Internet erupted in outrage, then reversed itself a day later, see Kivi Leroux Miller's post on the "accidental rebranding" of Komen.

Global Health

On his Humanosphere blog, Tom Paulson shares a Twitter map made by Marc Smith, founder of the Social Media Research Foundation, that seems to show the global health community -- at least the portion of it "active" on Twitter -- to be fairly insular and uncommunicative. "It's mostly just an echoing of the Gates Foundation," says Smith. "There's not a lot of response, or engagement. Basically, it looks like people preaching to the choir." For his part, Paulson suggests the problem isn't so much Twitter or social media as it is "the passive...and sometimes simplistic nature of the narrative within the global health and development community itself. This is a community," Paulson adds,

devoted to -- and advertising itself as -- doing good. Humanitarians, in my experience, are exceptionally uncomfortable when forced to talk about things going bad. It also doesn't help with fund-raising, of course. But it's reality, and reality makes for better stories.

Health

In a post on the Breast Cancer Action blog, BCA executive director Karuna Jaggar writes: "The sad truth is that Komen’s willingness to restore funding to Planned Parenthood, while a victory for women who rely on those resources, will not end the epidemic....Not while Komen overemphasizes the value of mammography -- mammography will never stop cancer before it starts. Not while pinkwashing remains the status quo, and not while Komen allows companies to put pink ribbons on their carcinogenic products. Not while metastatic disease, which is what kills women, gets only 2% of research dollars in this country...."

Higher Education

The Nonprofit Quarterly's Rick Cohen takes a closer look at the tax-exempt sector's "1 percent" -- elite universities like Harvard, Yale, Princeton, and Stanford whose endowments, on average, racked up gains of 19 percent in fiscal year 2011.

International Aid/Development

In the first two installments of a four-part series here on PhilanTopic, Demos senior fellow Michael Edwards uses the paper he wrote on the Rockefeller Foundation-sponsored Bellagio Initiative to explore the relevance of "well-being" as a lens in development work and some of the lessons philanthropy can learn from that work. Coming up next: the role of metrics in that conversation.

On the White Courtesy Telephone blog, Greater New Orleans Foundation president and CEO Albert Ruesga weighs in on a disturbing article in the New York Times that exposed the unsafe working conditions at an Apple supplier in China. "It's not a given that being poor means having to work extremely hard in unsafe conditions to make very little,” writes Ruesga. “Fixing this in your supply chain needs to take priority over an on-time delivery of iPhones to eager consumers....”

Nonprofit Blogosphere

Hosting this month's Nonprofit Blog Carnival, Getting Attention's Nancy Schwartz shares a selection of posts that highlight the dreams of our fellow nonprofit bloggers.

Philanthropy

In a video reposted on the Humanosphere blog, Melinda Gates explains the purpose of the Gates Foundation's new visitor center in Seattle.

In the text of a speech reprinted on the Philanthropy Daily site, William Schambra, the director of the Hudson Institute's Bradley Center for Philanthropy and Civic Renewal, offers a typically provocative take on the difference between liberal and conservative philanthropy. "Granted, every progressive foundation has in mind a particular social ill or injustice it seeks to remedy, whether environmental degradation or poverty or racial inequity," writes Schambra. "But what do all these add up to?

Very seldom do liberal foundations tell us explicitly what their overriding political philosophy is, or how they understand the basic character of the American political order, and what’s worth preserving and what needs changing.

Instead, if you add up the range of specific problems on the agenda of liberal philanthropy, we’re left with a pretty depressing view of America -- an America beset by a wide range of social ills and injustices that desperately require philanthropic interventions of all sorts.

By contrast, conservative philanthropy tends to see beneath the problems America may be experiencing -- many of which are of course quite serious -- [and sees] a profoundly decent and good political order.

And the vision is to understand and preserve that order, the American regime of liberal democracy, in the face of powerful intellectual forces that have pulled us away from that commitment....

Social Enterprise

Is the social enterprise bubble about to burst? In an attempt to answer that question, the folks at GOOD asked half a dozen social entrepreneurs working in Africa what they think is driving the hype, where the sector is going, and what advice they have for those just starting off.

Social Media

And in a guest post on Beth’s Blog, Levi Strauss Foundation executive director Daniel Jae-Won Lee looks at how some human rights organizations are using social media to engage underserved communities on the issues that affect them. For example, the American Civil Liberties Union of Northern California developed MiACLU.org, an online Spanish-language platform that's designed to educate and engage Latinos in the region about immigration issues.

That's it for this week. What did we miss? Drop us a line at rnm@foundationcenter.org!

-- The Editors

Can Philanthropy Put Humpty-Dumpty Back Together Again?

(Michael Edwards is a leading expert on global civil society and the author of Small Change: Why Business Won't Save the World. This is the second in a series of posts in which he looks at different aspects of the Bellagio Initiative, an effort funded by the Rockefeller Foundation to produce a new framework for philanthropic and international development collaboration in pursuit of human well-being. Click here to read the first post in Edwards' series, "Well-Being and Philanthropy," and here to read/download the Bellagio paper from which the quotation below is taken.)

"The more one disaggregates the components of well-being into smaller and more manageable pieces...the more each piece can be measured and controlled in order to improve returns....[B]ut the same pieces can't simply be re-arranged to the same effect in different contexts...."

One of my most important career lessons was taught to me by Sithembiso Nyoni, an activist in Zimbabwe. "No country in the world has developed itself through projects," she said, reflecting on the tendency of NGOs to fund their own small bits and pieces of development and hope that they add up to something more substantial over time.

Unfortunately, because the larger structures of society evolve organically rather than in assembly line fashion, they rarely do. The long and messy processes that drive our politics, culture change, and institution-building can neither be predicted nor controlled, especially if the outcome is something as complex as well-being. In that sense, development is poetry and foreign aid is prose.

Of course, a clear sense of purpose and direction is important to success. In contrast to Zimbabwe, that was one of the things that distinguished South Korea, Taiwan, and other societies that developed quickly after World War II. But as the experience of those countries also shows, clear goals were balanced by the flexibility to pursue them in lots of different ways as circumstances changed. "Evolution is always surprising," wrote Whole Earth Catalog creator Stewart Brand, "so make room for it. If you let things flourish you get a wild ride, but you also get sustainability." That's been true of all game-changing experiences in development right up to the Arab Spring.

Tension between "local ownership" and "outside intervention" has been woven through the history of development efforts for half a century or more, and it's unlikely to disappear as long as foreign aid is a tool in the foreign policy toolkit. Accountability to taxpayers, concerns about corruption, and a desire to show more "value for money" have all reinforced a project-by-project mentality that a decade ago seemed to be fading in favor of unrestricted support. Projects that are carefully planned and monitored do offer the prospect of more control, even if their influence over the deeper drivers of development is weak. On the plus side, there are many ways to leverage the impact of projects -- including through policy advocacy, capacity building, networking, and knowledge-creation -- so that they become more than small pieces in a jigsaw that can never be completed.

Nevertheless -- and here's the link to current trends in philanthropy -- the idea that successful projects can be "replicated" or "scaled-up" has, for reasons I don't entirely understand, become an article of faith. There are striking similarities between the Millennium Villages Project in sub-Saharan Africa, for example, and the Harlem Children's Zone in New York City. Both have received significant injections of resources in an effort to demonstrate that good results are possible without broader changes in the surrounding environment. The same goes for school-reform efforts and the Obama administration's Social Innovation Fund. Other schools and communities will learn from these experiences and follow a similar path, or so the theory goes.

Except that they don't, because the resources aren't there, or because the same innovation doesn't work or isn't valued when transported to another setting, or because those broader forces have a nasty habit of kicking the ladder away just when you least expect it.

If that's the case, why do pilot projects (or "policy experiments," as they are often referred to in the U.S.) continue to exercise such a powerful hold on the imagination of philanthropists? Perhaps it's because they accomplish other things that are important, like building support for their favored approaches, strengthening networks of people prepared to back them, and keeping alive the comforting thought that social progress can be removed from the influence of politics, economic restructuring, and social struggle.

Even if it could, it would be something of a pyrrhic victory, threatening to sacrifice long-term improvements in the infrastructure of problem-solving for short-term advances in services and other material indicators of success. As fifty years of trial and error in development make clear, however, investing in people's capacities to innovate is much more important than replicating any particular innovation.

But how we do measure success in that kind of scenario? And is there a way to knit all these different approaches together in a positive and constructive fashion? That's the subject of next week's posts.

-- Michael Edwards

'Well-Being' and Philanthropy

(Michael Edwards is a leading expert on global civil society and the author of Small Change: Why Business Won't Save the World. In a series of posts over the next two weeks, he'll be looking at different aspects of the Bellagio Initiative, an effort funded by the Rockefeller Foundation to produce a new framework for philanthropic and international development collaboration in pursuit of human well-being.)

"Understanding the different dimensions of well-being is crucial…because it reminds us that material and non-material assets, resources and experiences are equally important to the outcomes that people seek through the processes of development and social change...."

What can philanthropy learn from international development? Usually that question is asked and answered in reverse, leading to the export of community foundations, "philanthrocapitalism," and other models and ideas from the United States to developing countries. But despite the differences in context, I would say there's much we can learn from fifty years of development work -- the good, the bad, and the ugly.

My love/hate relationship with development stretches back to 1978, when I boarded a British Caledonian 707 in Manchester and arrived in Bogota twenty-four hours later via London, Madrid and San Juan, Puerto Rico (remember the joys of "refueling"?). I spent the first twenty years of my career with Oxfam, Save the Children, and other NGOs before joining the Ford Foundation in 1999, and the lack of cross-fertilization between philanthropy and development has always struck me as a missed opportunity for learning, at least outside the small number of U.S. foundations that make grants internationally.

And then along came the Bellagio Initiative, an effort funded by the Rockefeller Foundation and organized by the Institute of Development Studies in England to take a more systematic look at the links between these two different traditions. I was lucky enough to be asked to write one of the background papers for this process, and over the next two weeks I'll be highlighting some of the key points from that paper which I think are especially relevant to the state of philanthropy today. (Ed note: You can read the full paper -- quotations from which appear at the top of each blog post in the series -- here.)

One of the most important debates in "development" concerns the different meanings of the term itself. The implications of this debate are huge because everything flows from the outcomes we seek -- grantmaking strategies and priorities, metrics and measurement, and which types of funding are best-suited to the tasks at hand. Initially development was defined in terms of economic growth and assets, then poverty reduction and human welfare, but by the 1990s it was clear that these indicators said little about the values, systems, and institutions that underpin success. They were all too narrow and did not reflect the aspirations of those who were being "developed."

Faced by this situation, many observers, most famously the Indian Nobel laureate Amartya Sen, argued that what really matters to development are "human capabilities" and the conditions (like effective governance and land reform) required to strengthen them throughout the population, with the ultimate goal of promoting "well-being" and fulfillment, instead of just material success. The deepest challenge of well-being is "to live well together," and that's a challenge of a different order than delivering new vaccines to reduce child mortality or raising incomes through microcredit loans. It's not that these things are unimportant -- far from it -- but thinking about the broader implications of well-being forces us to give equal weight to much deeper questions about things like sustainability, patriarchy, privilege, and quality of life.

Without broader indicators of success, you end up -- how can I say this politely -- like the U.S. today or China in perhaps twenty-five years, characterized by very little absolute poverty or starvation, considerable material success for some, and large-scale social and environmental failures, including rising inequality, declining social cohesion, political gridlock, and looming ecological disaster. Unlike our current focus on enabling more people to participate in systems already in place, a focus on well-being forces us to think more rigorously about these broader challenges and how to meet them by transforming the global economy and other aspects of how we live, work, and govern our societies.

That's a huge challenge for development and for philanthropy, which spends very little money on transformative work of this kind. Part of the reason is that most of us still operate within a narrow frame of outcomes. In the U.S., there's some interest in alternatives to GDP and other indicators of national progress, but the concept of well-being isn't really part of the conversation, and that's a shame. Maybe if we spent more time arguing about a broader range of outcomes and less time debating how to measure the small number we've already selected, philanthropy would be a more creative force in society.

That's tough, because as I'll explore in my next two posts, these broader outcomes are even more difficult to influence and measure. And that makes them especially challenging for the "new" philanthropy, with its emphasis on metrics and models. If we continue to ignore them, however, we'll all be the worse for it.

-- Michael Edwards

Weekend Link Roundup (January 28-29, 2012)

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

Civil Society

Writing on the White Courtesy Telephone blog, Greater New Orleans Foundation president Albert Ruesga urges grantmakers to invest less money in white papers and candidates' forums this election season and more on "helping advocates introduce democracy to the United States." Writes Ruesga: "While foundations might not have the resources to shift the political discourse in this country [in] the coming year, they can at least help liberate us from the illusion of free and fair elections...."

Communications

In a post on the Communications Network blog, Commnetwork board chair Mitch Hurst suggests that grantmaking organizations need to do a better job of monitoring social networks, blogs, and the mainstream media if they hope to understand "how their issues are being influenced in online conversations."

Corporate Social Responsibility

In a post on the Harvard Business Review blog, Rosabeth Moss Kanter argues that great companies are about more than a single-minded focus on the bottom line. Truly great companies, writes Kanter,

believe that business is an intrinsic part of society, and they acknowledge that, like family, government, and religion, it has been one of society's pillars since the dawn of the industrial era. Great companies work to make money, of course, but in their choices of how to do so, they think about building enduring institutions. They invest in the future while being aware of the need to build people and society....

Education

Philanthrocapitalism authors Matthew Bishop and Michael Green argue against the idea, suggested last week by former British prime minister Gordon Brown, of a Global Fund for Education to help address education funding cuts and boost the number of young people globally who attend and graduate from high school. Unlike fighting malaria -- which, write Bishop and Green, is "a finite task that can be achieved even where governments are weak" -- "educating the children of the world will need sustained investment indefinitely...."

Fundraising

Future Fundraising Now blogger Jeff Brooks explains why it's important to "keep your eye on the ball" in fundraising -- and life in general.

Impact/Effectiveness

The Nonprofit Quarterly has published a fascinating exchange between the Hudson Institute's William Schambra and Wallace Foundation president Will Miller on the use of metrics in "the development and dispersion of knowledge" as a driver of the foundation's grantmaking. A must read for anyone who works in the sector.

Technology

On the Impatient Optimists blog, the Bill & Melinda Gates Foundation's Deborah Jacobs considers how the surge in tablet and e-book reader ownership presents "huge opportunities in an increasingly digitized society where information access plays a critical role in building knowledge and skills," as well as a challenge, in that the trend threatens "to exacerbate the digital divide that is already perpetuated across the U.S."

Transparency

On the Foundation Center's Transparency Talk blog, Meyer Memorial Trust communications director Marie Deatherage discusses the foundation's "road to transparency," a decade-long journey that included the early and active embrace of the Web and other online communications channels.

Volunteerism

Last but not least, CauseShift managing director Scott Henderson offers a few ideas for folks interested in changing the world one good deed at a time.

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

-- The Editors

Inequality

(Mark Rosenman, a nonprofit sector activist and scholar, directs Caring to Change, an effort in Washington that seeks to promote foundation grantmaking for the common good. In his last post, he challenged the notion that more nonprofit organizations necessarily translates into greater social good.)

Although the public and a few elected leaders increasingly are focused on growing economic inequality in America, the topic isn't receiving much attention from charities and nonprofits. This in spite of the fact that the sector itself is characterized by a similar inequality.

That silence is surprising for a couple of reasons. Today's yawning inequality exacerbates the problems many people face as well as their need to turn to charities for assistance. It also directly affects the help they're able to receive; as a general rule, the larger a nonprofit organization's budget, the less likely it is to provide the kind of assistance needed by low-income Americans and those falling toward poverty. Wealthier charities tend to cater to wealthier Americans, and as the rich get richer, inequality -- in society and the nonprofit world -- grows.

Let's look at some statistics about growing inequality in the country and then explore what it means for Americans and the nonprofit organizations that serve them. Since 1979, after-tax income for the top 1 percent has more than doubled, even as it fell for middle-class and lower-income Americans. The top 5 percent of households in the United States now hold more than 60 percent of the wealth. The imbalance is even greater in the nonprofit sector, where the top 2.5 percent of charities that report data to the IRS control more than 50 percent of the wealth and account for over 60 percent of annual revenues.

Three types of exempt organizations -- hospitals, primary healthcare facilities, and institutions of higher education -- make up the top tier of the sector. Compare their finances with those of human service groups, which comprise more than a third of all exempt organizations but account for only 13 percent of its annual revenues (including government funding, fees-for-service and other income, and donations) and 11 percent of its assets.

It gets worse. This is the first recession on record in which the median income of working-age people was lower as the economy "recovered" than it was before the economy tanked. The wealthy, of course, continue to do well. Much the same is true for charities, as larger, more prosperous organizations see modest growth in contributions while many smaller nonprofits struggle to survive.

Higher education is a perfect example. The recession officially ended in the summer of 2009, and giving to higher education rose about 3.5 percent in 2010. Compare that to giving to the human services sector, which declined 1.5 percent in spite of contributions for disaster relief and recovery efforts in Haiti and elsewhere.

That's a problem, in part, because giving to higher educational institutions contributes to inequality. Consider the top two hundred or so colleges, where only 15 percent of students come from the bottom half of the income-distribution pyramid and 67 percent come from the top quartile. At most institutions, moreover, financial assistance for low- and moderate-income students has failed to keep pace with increases in tuition and related costs. And this as the increasingly large salaries paid many university presidents makes them "1-percenters."

Indeed, retiring Amherst College president Anthony Marx recently observed that "we are actually part of the problem of the growing economic divide rather than part of the solution." While having a college degree remains important to getting, or at least holding on to, a good job with benefits and some security, it also helps to legitimate inequality by seeming to validate a college education as a sure-fire route to meritocratic success.

But is it? According to a College Board study using Department of Education data, students with high test scores from low-income families were less likely to complete college than those with low scores from affluent families. And an Education Trust study of almost twelve hundred four-year colleges found that only five institutions (that's a number, not a percentage) were doing a good job serving low-income students.

The problem isn't confined to higher education. Nonprofit hospitals -- a category that includes some of the best hospitals in the country -- often fail to adequately serve those in greatest need while handing out executive compensation packages that would make a banker blush. In 2009, two-thirds of the nonprofit hospitals in the country dedicated less than 2 percent of their total expenditures for "charity care" -- i.e., medical care for the poor and indigent -- while only 7 percent directed more than 5 percent to such care. And this during a severe economic downturn in which health-related crises put countless numbers of low- and moderate-income people at grave economic risk.

I'm not suggesting that nonprofit organizations at the top of the income pyramid completely fail to provide beneficial services to society at large. They do. But with their elite reputational status and considerable economic wherewithal, they could do much more. The same is true of foundations.

Human service groups and community-based organizations often are the most helpful to people on the short end of the inequality stick. In addition to the direct services they provide, community-based organizations frequently advocate for and organize around the plight of the downwardly mobile and financially insecure. Yet, faced with ongoing budget cuts and flat or declining contributions, they are among the organizations that are most strapped financially as we head into an even more challenging future.

Notwithstanding the recent assertions of various Republican presidential candidates, it's not "class warfare" or "the politics of envy" to acknowledge -- and want to address -- growing economic inequality. On the contrary, it's a gross disservice to the nation to downplay its existence and assert that we can fix the problem by giving more tax breaks to the wealthy or by further deregulating corporations. As my kids would say, been there, done that. Acknowledging the divide between the haves and have-nots is an important step -- we can't solve the problem unless we are willing to speak frankly.

In short, nonprofit and foundation leaders need to talk more forcefully and publicly about economic inequality in America -- and do more to address it in both their programs and their own operations. They can start by countering the myths and obfuscation that characterize too much of today's political discourse. It's time we united, as a sector, to help people understand and act on their shared interests and better serve the common good.

-- Mark Rosenman

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.