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83 posts categorized "Regulation/Oversight"

Weekend Link Roundup (September 28-29, 2013)

September 29, 2013

Ty-mattson-breaking-bad-02Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Civil Society

How are market forces, public policies, and digital technologies changing nonprofit organizations, philanthropy, and associational life at the heart of civil society? That's one of the questions the Project on Philanthropy, Policy, and Technology at Stanford's Center on Philanthropy and Civil Society set out to answer last year through a series of monthly charettes. Now, the fruits of those conversations (and a lot of good, hard thinking) have been captured in a series of reports issued by the Digital Civil Society Lab at Stanford PACS. Written by Lucy Bernholz, Chiara Cordelli, and Rob Reich, the reports -- The Emergence of Digital Civil Society (42 pgaes, PDF); Social Economy Policy Forecast 2013: Project on Philanthropy, Policy, and Technology (38 pages, PDF); Good Fences: The Importance of Institutional Boundaries in the New Social Economy (18 pages, PDF); and The Shifting Ground Beneath Us: Framing Nonprofit Policy for the Next Century (30 pages, PDF) -- are thought-provoking, deeply researched, and a pleasure to read. They're also available as free downloads from the Stanford PACS site.

Responding to Dan Pallotta's hugely popular TED Talk -- and echoing some of the conclusions arrived at by Bernholz, Reich, and Cordelli in their Recode Good work -- Ashoka's Valeria Budinich suggests that one of the most important points made by Pallotta in his talk (and first book) is a point everyone chooses to ignore: Philanthropy's moral foundations -- and the resulting legal and policy framework in which it operates -- have remained largely unchanged since the 1700s.

Climate Change

The most exhaustively researched climate report in history is out -- and, as environmental journalist Richard Schiffman explains in The Atlantic, its findings are grim.

For those as troubled by the findings of the report as Schiffman is, the UN Foundation's Kathy Calvin has some words of encouragement.

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Silence Isn’t Golden

July 09, 2013

(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 urged PhilanTopic readers to assess how they value the things they value.)

Rosenman_headshotConfronted by headlines about truly questionable practices at a few dozen charities, the response of too many nonprofit leaders has been to bury their heads in the sand and try to pull the hole in after them. What these leaders fail to appreciate is that silence in response to scandalous behavior is neither golden nor in their best interests.

By now, most of you have seen the carefully researched list compiled by the Center for Investigative Reporting, in partnership with the Tampa Bay Times and CNN, of "America's 50 worst charities" -- tax-exempt organizations that "channel most of the money they raise to professional solicitors, mimic other charities' names, deceive donors on telemarketing calls, divert money and contracts to people with ties to their organizations, and use accounting tricks to inflate the amount they report spending on their missions."

Yet, despite overwhelming evidence of self-dealing by these groups and their closely associated entities, key leadership organizations in the sector, including Independent Sector, have responded to requests for comment from the press by declaring that they didn't have enough information to make a judgment, while others have defended outrageous fundraising percentages diverted to what the California Association of Nonprofits' Jan Masaoka labels the "philanthropic-consultant industrial complex."

When it comes to nonprofits, these kinds of abuses are nothing new, and neither is the timidity of nonprofit leaders in condemning them. Their silence in the past has greeted media coverage of huge salaries paid to charity officials, outlandish benefits, self-dealing within boards, tax gimmicks for donors, and malfeasance in program operations. Unfortunately, the cost of that silence is something we all bear.

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Protect Charitable Deductions for Stronger Communities

June 18, 2013

(Jen Klaassens is vice president of programs at the Wasie Foundation, which supports scholarship programs for students of Polish ancestry at colleges and universities in Minnesota and make grants to nonprofit charitable organizations in a number of areas.)

Headshot_jen_klaassensCongress is threatening to eliminate the charitable deduction as we know it -- at the expense of millions of people in need. Specifically, lawmakers on both sides of the aisle are talking about imposing a cap or limit on the value of the charitable tax deduction as part of a bigger effort to raise additional revenue and/or "simplify" the tax code.

The charitable deduction is a unique element of the federal tax code that encourages Americans to selflessly invest in their communities. Capping or limiting the deduction is not the solution to current budget concerns.

Philanthropy spurs innovation, aids the most vulnerable, provides relief in crises, supports education and health, advances cures and scientific breakthroughs, enhances the arts, and makes investments that fuel economic growth. For every $1 a donor receives in tax relief, communities garner as much as $3 in benefits. It is highly unlikely government could find a more effective way to leverage private investment in vital community services.

The charitable deduction works. It encourages Americans to give a portion of their income to charitable causes without getting anything back, benefiting communities across the country as well as the larger economy. In many cases, donors also experience a sense of well-being from helping. Limiting or capping the deduction will reduce charitable giving, which will hurt Americans most in need. Nonprofits already struggling to balance increased demands for services with reduced income need more support, not less.

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Foundations and the 'New Normal': A Q&A With Bradford K. Smith, President, Foundation Center

June 10, 2013

(The following Q&A with Foundation Center president Bradford Smith appears as part of a special feature on "Philanthropy in a changing world economy" in the June 2013 issue of Alliance magazine. It is reprinted here, with minor revisions, courtesy of Caroline and her team.)

Headshot_brad-smith2Caroline Hartnell: To what extent are U.S. foundations changing in response to austerity?

Bradford K. Smith: I started this job two weeks after Lehman collapsed. On my first day in the office, we had a press call about what foundations were doing about the economic crisis. I put down the phone and walked down the hall to our research department and said, "Quick, I need a statistic," and they came up with a really good one. Foundation giving for the previous year, 2007, was around $45 billion -- about 6 per cent of the first stimulus package announced by the federal government. So one thing the crisis really showed up was the scale of foundation resources. When the economy gets into serious trouble, it takes government to try to keep it from collapsing. Foundation dollars alone aren't enough to solve problems. That made foundations think more about how they can leverage money from each other, how they can collaborate with other sectors rather than trying to do it themselves.

A second interesting thing is that foundation giving held up quite well during the recession. One reason is that U.S. foundations calculate their mandatory payout on a rolling three-year average of the value of their assets, which cushions them from big market swings. It also held up well because foundations actually went beyond the federally mandated payout rate of 5 percent.

CH: The recession has changed things for the foreseeable future. Do you think U.S. foundations see this as a "new normal" and are rethinking their role?

BKS: I think most of them are adjusting to the idea that long-term expectations for returns on investment need to be reduced. 2012 was a good year in the financial markets, but nobody really expects that it will go back to the boom years when, as one foundation investment manager put it, for a number of years "all we had to do was get out of bed in the morning and we could make a 20 percent return on our endowment."

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Weekend Link Roundup (June 1-2, 2013)

June 02, 2013

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

Communications/Marketing

Guest blogging on the Inside Philanthropy blog, Katherine McLane, vice president for communications and external affairs at the Livestrong Foundation, explains how the organization plans to move on from the doping scandal involving its founder, international cycling star and cancer survivor Lance Armstrong. "None of us anticipated the rapid and radical changes that are now the new normal," writes McLane. "But we're dusting ourselves off and keeping the focus where it should be: helping people with cancer...."

Community Improvement/Development

The folks at the Philanthropy Potluck blog give a shoutout to MCF member the Bush Foundation, which has launched two new grant programs designed to "enable, inspire, and reward community innovation" in Minnesota, North Dakota, South Dakota and the twenty-three Native nations that share the same geography.

Fundraising

On the Chronicle of Philanthropy blog, Carol Weisman, an international consultant who specializes in fundraising, governance, and volunteerism, shares some advice about "what to do when donors say 'no' or 'I'm not sure'."

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(Long) Weekend Link Roundup (May 25-26, 2013)

May 24, 2013

2013_05_MemorialDayOur weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Advocacy

Change.org founder and CEO Ben Rattray proudly announces that the organization, a certified B-corp, recently raised $15 million in investment capital through its first outside financing round, with the bulk of the funds provided by Omidyar Network. Rattray, who has said the organization will never go public, plans to use the investment to build tools that "more effectively empower hundreds of millions of people around the world;...enable people to build long-term movements on our platform; [and] personalize each user’s experience to better connect people to the issues and organizations they care most about....'

Communications/Marketing

On her Getting Attention blog, Nancy Schwartz shares a few tips from Amy Sample Ward and Allyson Kapin's new book Social Change Anytime Everywhere for nonprofits looking to improve their next multichannel campaign.

Community Improvement/Development

Ed Skloot, director of the Center for Strategic Philanthropy and Civil Society at Duke University, announces the publication of a new installment in a series of "occasional essays" written by thought leaders in the sector. In Changing the Game (48 pages, PDF), Boston Foundation president/CEO Paul Grogan reflects on the state of philanthropy and "the compelling strengths of community foundations as seen from his perch." Among other things, Grogan, who has served as president of the Boston Foundation for more than a decade, explains how "contemporary community foundations can become more agile, energized, relevant, and not least, consequential in their communities."

And on the CNN site, John Bare, vice president of the Arthur M. Blank Family Foundation and executive-in-residence at Georgia Tech's Institute for Leadership and Entrepreneurship, looks at how foundations, the Hudson-Webber Foundation among them, are rethinking their giving in Detroit to achieve maximum impact.

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Trouble at the IRS: What Were They Thinking?

May 16, 2013

(David Jacobs is director of foundation information management at the Foundation Center. In his last post for PhilanTopic, he blogged about an Open Data Master Class presented by the World Bank.)

Irs-auditLike many Americans, I was shocked to learn last week that the Internal Revenue Service had targeted conservative and Tea Party organizations applying for 501(c)(4) tax exempt status for additional review prior to last year's elections. And like many Americans, my shock turned to disgust this week as additional details -- including the alleged leaking of confidential donor information -- emerged, showing the scandal to be more serious than initially disclosed.

Regardless of whether you believe what happened in Cincinnati was an act of political malfeasance or just a case of monumental governmental ineptitude, the fact that it did happen should be sending shockwaves through the nonprofit sector. One of the bedrock principals of organized philanthropy and nonprofit advocacy in America is the idea that such activity should be tax advantaged, regardless of cause or political orientation, and that, when it comes to the nonprofit sector, the IRS should always operate in a fair and impartial manner. The thought that that might not be the case in every instance should bother and disturb all Americans.

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Weekend Link Roundup (April 13-14, 2013)

April 14, 2013

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

Fundraising

Future Fundraising Now blogger Jeff Brooks says to forget about donor fatigue; what's really happening is fundraiser fatigue.

Health

This might be "shaping up as the year of crowdfunding medical needs," writes Lucy Bernholz on her Philanthropy 2173 blog. "These medical crowdfunding site are fascinating to me. In many ways, they are returning us to the time before national health services and social security, when turning to one's community for financial assistance with medical needs or college costs was the norm."

Impact/Effectiveness

Over at Forbes, Jessica Joseph, associate director of innovation at the Rockefeller Foundation, explains how social impact bonds "went from concept to execution faster than any other social innovation [in years]."

That may be, writes Kyle McKay, a policy analyst with the Maryland General Assembly, on the Stanford Social Innovation Review blog. But while SIBs are interesting as "endeavors in financial creativity," their risks for cash-strapped governments and nonprofits may outweigh their benefits.

The Social Progress Index launched this week, and Ben Baumberg, a lecturer in sociology and social policy at the University of Kent in the UK, has some really interesting thoughts about what the folks behind the index have done well -- and could do better.

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Weekend Link Roundup (April 6-7, 2013)

April 07, 2013

April-showers-umbrellaOur weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Advocacy

On NCRP's Keeping a Close Eye blog, Rosenberg Foundation president Tim Silard discusses the foundation's recent decision to increase its payout this year to 6.1 percent to help advance immigration reform. "Our hope," writes Silard, "is that this major step by a mid-sized foundation can go a long way toward encouraging more of us in philanthropy to stretch our funding even further...to respond to this unique window of opportunity."

Communications

In a post on the Council on Foundation's Re: Philanthropy blog, Rita Soronen, president and CEO of the Dave Thomas Foundation for Adoption, reminds us why storytelling matters. Indeed, it is "at the heart of all emotions," writes Soronen. "And nonprofits simply must use communications -- storytelling -- as a very important tactic to steward current donors and secure new funders."

Fundraising

Jeff Brooks, author of the Fundraiser's Guide to Irresistible Communications, explains that fundraising is "a two-way conversation" and if you don't know that, you're missing an opportunity to engage your donors in a real way.

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Board Compensation in Grantmaking Foundations: Reasonable and Necessary?

February 20, 2013

(Mark Hager is associate professor of nonprofit studies in the School of Community Resources and Development at Arizona State University. This post originally appeared on the Foundation Center's Transparency Talk blog.)

Headshot_mark_hagerTradition dictates that board members work for free in most quarters of the nonprofit sector, but that isn't necessarily true for grantmaking foundations, especially independent ones. In a new paper (free access until late March) published in Public Integrity, the ethics journal sponsored by the American Society of Public Administration, Elizabeth Boris and I consider the question of what varieties of grantmaking foundations compensate their board members for governance duties. It reboots and reframes an earlier analysis conducted by the Urban Institute, the Foundation Center, and GuideStar.

In the paper, we point to several interesting examples, including a very large foundation's generous policy of trustee compensation spelled out in its organizing documents, another with seven-figure annual compensation paid to a bank to act as a very part time "institutional trustee," and another that underwent IRS investigation for eye-popping compensation that essentially amounted to trustees looting a charitable trust. These cases aren't typical, but they are part of the big picture of how work gets done in grantmaking foundations and how much insiders get paid to do it. In more typical cases, foundations might have justifiable reasons to compensate board members, including to ensure representation from beneficiary populations or to extend health insurance benefits to family founders. It's the extreme cases, however, that threaten to color all of philanthropy.

Compensation for governance duties is perfectly legal, so long as it falls under the IRS' broad standard of "reasonable and necessary." The practice is pretty rare in community foundations, partly due to the fact that they rely so heavily on public contributions and are therefore subject to public scrutiny. It also appears to be fairly rare in corporate foundations, but that may largely be due to the fact that many corporate foundation trustees get paid as corporate executives, making their compensation invisible on the foundation side. About one in five independent foundations, however, appear to report compensation of their board members for governance duties, as reported on Form 990-PF.

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Let's Think Smarter About the Charitable Tax Deduction

January 14, 2013

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.

Jan_masaoka_headshotOn 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.

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“Beep, Beep”: The Sound of Philanthropy and the Social Economy in 2013

January 07, 2013

(Bradford K. Smith is president of the Foundation Center.)

Wile-E-Coyote"We will change what we do with and without institutions, and we will change how our institutions (funders, nonprofits, and others) work." So predicts self-described philanthropy wonk Lucy Bernholz in Philanthropy and the Social Economy: Blueprint 2013, a must-read roadmap available for the first time as a GrantCraft publication. "Beep, beep." Wile E. Coyote (me, nonprofit executive) has just been left holding a burning stick of dynamite while the Road Runner (Lucy, blogger extraordinaire) races headlong onto her next prediction. That is the true value of Blueprint 2013 for those who are busy running the institutions that make up the "social economy": Lucy has seen the future for us, and now we must struggle to adapt, respond, and innovate. The data- and technology-driven future she envisions is both exhilarating and a bit unsettling, but one thing is clear: the Silicon Valley credo is fast approaching the staid world of philanthropy: "Disrupt yourself or be disrupted."

The vast majority of today's social sector leaders grew up in a world where foundations were the funders and nonprofits were the doers. Blueprint 2013 lays out a vision of a social economy inhabited not only by traditional nonprofits, but also by social businesses, socially responsible corporations, peer networks, and institutional forms not yet invented. Donors in this economy have choices between well-known forms of charitable giving (like creating a foundation), impact investing, and political giving to bring out the change they desire.

Running throughout the social economy is the lifeblood of data. In 2012 alone:

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[Infographic] Nonprofits’ Impact on the Economy

October 27, 2012

Our infographic of the week, courtesy the Rebecca Gordon Group, delves into a topic that has been much-discussed this election season: nonprofits' impact on the economy.

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Weekend Link Roundup (October 13-14, 2012)

October 14, 2012

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

Communications/Marketing

In a guest post on the Communication Network blog, Hattaway Communication's Doug Hattaway shares a couple of insights based on psychology and neuroscience into how people make decisions:

Insight 1: Two mental systems work together to drive decision-making and behavior. Effective communications influence both intuition and cognition -- encouraging instant intuitive judgments and enabling fluent cognitive reasoning.

Insight 2: People are more likely to trust information that they easily understand. "Fluency" theory holds that if people readily comprehend an idea or information, they are more likely to believe it. Being easy-to-understand obviously doesn't mean the information is more reliable, but people are more likely to perceive it as true. Hattaway's advice for nonprofit communicators: "It's smart to dumb things down."

In a post on her Non-Profit Marketing blog, Network for Good's Katya Andresen shares seven tips designed to improve the stories that nonprofits tell about their impact, the people they help, and their generous supporters.

Disaster Relief

Eye-opening article by Deborah Sontag in the New York Times about Yéle Haiti, the charity created by Haitian-American hip hop artist Wyclef Jean in the wake of the January 2010 earthquake to help the people of that impoverished country.

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Clinton Announces Revisions to Tax Regulations to Support Civil Society Worldwide

September 24, 2012

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.

 

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