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21 posts from March 2008

Annals of Wealth (part 4)

March 13, 2008

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

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

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

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

-- Mitch Nauffts

Quote of the Day (March 13, 2008)

Quotemarks"I look at my time as governor with a sense of what might have been, but I also know that as a public servant, I, and the remarkable people with whom I have worked, accomplished a great deal. There is much more to be done, and I cannot allow my private failings to disrupt the people's work. Over the course of my public life, I have insisted, I believe correctly, that people, regardless of their position or power, take responsibility for their conduct. I can and will ask no less of myself...."

-- excerpt from New York governor Eliot Spitzer's resignation speech (March 12, 2008)

Diversity in Philanthropy -- The Debate Continues

March 12, 2008

A week or so ago, the Nonprofiteer, one of our favorite nonprofit bloggers, took exception to PhilanTopic contributor Michael Seltzer's argument that legislation (AB 624) proposed by San Jose Assemblyman Joe Coto requiring large California foundations to collect and publicly disclose the race, gender, and ethnicity of their board members, staff, and grant recipients was misguided. Among other things, the Nonprofiteer was skeptical that foundations' recent interest in diversity (see this post by Foundation Center SVP Larry McGill) was "a coincidence." More likely, she wrote

it is with diversity as it is with expenditure of university endowments: that nothing concentrates the mind so wonderfully as the prospect of being hanged....

Michael responded to the Nonprofiteer's post yesterday, and in so doing touched on what I think is the crux of the issue: Is the pending California legislation the right strategy and if not, what is?

In response to the first question, wrote Michael, the answer

is "absolutely not." I have no confidence in the California legislature to do the right thing. Forgive this native New Yorker from choosing to make this assertion less than 24 hours after our governor, who was in charge of overseeing the state's nonprofits and foundations when he was attorney general, demonstrated how confidence in our elected officials can be misplaced.

As for the second question,

we should be weighing [writes Seltzer] a whole new set of strategies and acting on those that will most likely yield the results that we seek -- a field where inclusive practices are integral to the effectiveness of all foundations.

Coincidentally, those views are echoed by Dr. Robert K. Ross, president and chief executive of the California Endowment, in an article ("Diversity in Philanthropy Achieved Through Leadership, Not Mandates") that appears in today's San Jose Mercury News.

Continue reading »

An End to Poverty: New Hope for the Last Billion Poor

March 11, 2008

Is poverty a problem of policy or destiny?

That's the question Mark Lange asks in a new five-part opinion series appearing this week in the Christian Science Monitor. Lange, a former presidential speechwriter for George H.W. Bush, argues that to eradicate abject poverty among the remaining one billion people globally who live on less than $1 a day, we need to challenge many of the assumptions we hold about wealth, poverty, trade, and aid.

In Part 1 of the series, "A First Step for the Global Poor -- Shatter Six Myths," Lange "unpacks" (his word) a few of the myths that cloud popular thinking about global poverty: that it's intractable; that there are too many impoverished people to help; that "moral obligation" is enough; that globalization is hurting the poor; that wealthy nations must work to reduce poverty everywhere; and that if aid is good, more aid is better. (This last was the subject of an interesting Templeton Foundation-sponsored colloquy mentioned in a previous post.)

In the second installment of the series, "Why So Much Aid for the Poor Has Made So Little Difference," Lange argues that the kind of top-down, Marshall Plan approach to international development adopted by the West after World War II is no longer effective. Subsequent installments will look at the best levers for lifting the last billion out of poverty (3/12/08), the potential perils of progress (3/13/08), and what each of us can do to help eliminate global poverty once and for all (3/14/08).

Hopelessly idealistic? Perhaps. But as Lange reminds us:

The world's richest 500 individuals have the same income as the poorest half-billion. The developed nations aren't close to the UN commitment to devote 0.7 percent of gross domestic product to aid. The US is at 0.2 percent, and private and philanthropic sources don't come close to narrowing that gap in the poorest countries. [Moreover] this isn't simply a redistributive exercise. We know more now about the progression from subsistence agriculture to micro-enterprise and light, sustainable manufacturing exports -– and how self-directed growth lifts people out of poverty.

Whether you agree with everything he has to say or not, the series is well worth your time.

-- Mitch Nauffts

Just Another Emperor?

March 10, 2008

Apologies for the lack of posts over the last week; instead of having a midlife crisis, I took a few days off to go skiing with my brother and some friends. All better now.

Book prefaces typically are genteel affairs in which punches are pulled and praise is spread like mayo on a BLT.

Not so in the case of Michael Edwards' preface to his own book, Just Another Emperor? The Myths and Realities of Philanthrocapitalism, to be published in a week or so by Demos: A Network for Ideas & Actions and the London-based Young Foundation.

Edwards, currently director of governance and civil society at the Ford Foundation but writing, in the book, "entirely in a personal capacity," sizes up his quarry in the very first paragraph of the preface:

A new movement is afoot that promises to save the world by revolutionizing philanthropy, making non-profit organizations operate like business, and creating new markets for goods and services that benefit society. Nick-named "philanthrocapitalism" for short, its supporters believe that business principles can be successfully combined with the search for social transformation....

Edwards does not. In fact, he writes, there's "a huge gulf between the hype surrounding this new philanthropy" -- which, in his formulation, sounds a lot like the "venture philanthropy" of the late 1990s -- "and its likely impact." The danger, he argues, is that (emphasis added):

  • The hype surrounding philanthrocapitalism runs far ahead of its ability to deliver real results. It's time for more humility.
  • The increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. It's time for more accountability.
  • The use of business thinking can damage civil society, which is the crucible of democratic politics and social transformation. It's time to differentiate the two and re-assert the independence of global citizen action.
  • Philanthrocapitalism is a symptom of a disordered and profoundly unequal world. It hasn't yet demonstrated that it provides the cure.

As mentioned, Just Another Emperor? won't be available in hard copy until later this month. In the meantime, the folks at The Nonprofit Quarterly have made it available as a (free) PDF download on the NPQ site.

What do you think? Are business practices and discipline compatible with social change? Has Edwards brought something new to the table, or is his argument the same old nonprofit wine in a new bottle? And does the dismal and increasingly obvious failure of Wall Street to make itself accountable to anyone or -thing render Edwards' critique moot?

-- Mitch Nauffts

Weekend Links (March 1-2, 2008)

March 02, 2008

Not sure why, but many of this week's links are related to science and technology issues. Enjoy.

Writing in PhilanthroMedia, Susan Herr argues that the Slate 60, the buzz-worthy list compiled by Slate magazine of the year's biggest philanthropic gifts, would be more interesting if the editors could figure out a way to "slice and dice the list to advance donors who are meeting unmet need, whose efforts are characterized by 'experts' as innovative, or who systematically capture and communicate data that demonstrates the impact of their efforts...." Not an easy task, as Susan notes, but well worth trying.

Susan's blogging partner, Carla Dearing, deconstructs the Chronicle of Philanthropy's Philanthropy 50 survey of the country's biggest donors.

Mike Burns, blogging at Nonprofit Board Crisis, takes a closer look at the efforts of the "Ivy-Plus" schools to deflect criticism of their swelling endowments and asks, Is it enough?

Doing what she does best, Lucy Bernholz speculates about how technology will change the way we give.

Barry Ritholtz, market and macroeconomics blogger extraordinaire, calls out the global warming "denialists" who argue that the recent "twelve-month drop in world temperatures wipes out a century of warming."Be sure to check out the debate in the comments section. Fascinating.

I love a good anti-technology jeremiad (see Against the Machine: Being Human in the Age of the Electronic Mob, by Lee Siegel), but what if much of our Internet anxiety (at least as far as our teenagers are concerned) is unfounded? That's the subtext of the Frontline documentary, "Growing Up Online," which has been packaged into eight manageable segments on the PBS Web site. (Hat tip to Alison Fine and the New York Times' David Pogue.)

Old friend Nancy Schwartz, who writes the Getting Attention! blog, explains why she's going to the NTEN (Nonprofit Technology Network) Conference in New Orleans later this month -- and why you should, too. (Hat tip to Rosetta Thurman, who hosted last week's Nonprofit Consultants Giving Carnival.)

Over at Gift Hub, Phil Cubeta serves up the perfect take on Oprah's Big Give.

And the line of the week: "More likely, it is with diversity as it is with expenditure of university endowments: that nothing concentrates the mind so wonderfully as the prospect of being hanged...." That's Kelly Kleiman (aka The Nonprofiteer) challenging Michael Seltzer's argument (in this blog) that it's a mistake for state governments to impose diversity quotas on foundations.

-- Mitch Nauffts

Quote of the Week

  • "[L]et me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance...."


    — Franklin D. Roosevelt, 32nd president of the United States

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