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34 posts from October 2008

NPQ to Foundations: 'Not Good Enough'

October 31, 2008

Earlier this month, I posted part of an open letter to Council on Foundation members written by CoF board chair Ralph Smith and Steve Gunderson, the council's president and CEO. Prefacing their remarks with an acknowledgement of the seriousness of the economic situation and its likely impact on philanthropy, Smith and Gunderson suggested that, in the months to come, foundations should step up and "play a constructive role without raising unrealistic expectations" and offered three broad recommendations as to how they might do so:

  1. Actively look for ways to help the nonprofit sector (and grantees, in particular) weather the storm;
  2. Play an active and visible role in helping communities and regions figure out the scope and extent of the challenges they face, and in finding and crafting solutions that make sense; and
  3. Pay special attention to situations where the loss of philanthropic resources could be the unintended consequence of mergers and consolidations that are the inevitable products of economic restructuring.

Not exactly what many, including the editors of the Nonprofit Quarterly, were hoping to hear. In an e-mail "bulletin" to subscribers circulated earlier today, the NPQ argued that it was important in this time of economic turmoil for U.S. foundations "to think and act differently" and urged the council to encourage its members "to be expansive, generous, and bold, not fearful and self-protective." More specifically, foundations should:

  1. Increase their grantmaking;
  2. Increase the flexibility of their grants;
  3. Increase their program- and mission-related investments;
  4. Increase their support for advocacy; and
  5. Increase their commitment to the nonprofit sector.

For the full text of both letters and/or to join a lively conversation about the role of foundations in the current crisis, click here.

-- Mitch Nauffts

RWJF Responds to Financial Crisis

Crisis_specsConfronted with shocking declines in their investment portfolios, foundations around the country are scrambling to make sense of and address the metastasizing global financial crisis. In PND today, we're running an item about the Hewlett Foundation's response to the crisis. And earlier this morning, I came across this message from Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, the nation's largest healthcare philanthropy:

We are in the midst of a global financial crisis that is both monumental and unprecedented in our lifetimes. The Robert Wood Johnson Foundation, like virtually everyone and every organization everywhere, has been affected directly by the turbulence and downturns in the financial markets over the past few months.

Yes, our financial assets are lower than they were earlier this year. But the long-term nature of our mission and our objectives, and the needs of and promises to our partners and grantees, dictates that we not react to daily fluctuations in the financial markets. The challenges we are addressing together are urgent, which is why we have set specific goals, objectives and time lines to achieve our goals.

During this uncertain time we want you to know one thing that is certain: We will maintain the level of our program budget and all existing commitments through the rest of this year. For 2009, we expect our program budget for grants to be approximately the same as 2008 levels, unless future financial circumstances warrant a course correction.

Improving the health and health care of all Americans is an enduring effort, and the Robert Wood Johnson Foundation is in it -- and with you, our grantees and partners -- for the long haul.

Clearly, this is a glass-half-empty-half-full moment for U.S. foundations. The $64,000 question is how it will play out from here. Your thoughts?

-- Mitch Nauffts

Hurricane Relief Efforts (#8)

October 30, 2008

We continue to track corporate, foundation, and public sector support for recovery efforts in the aftermath of this year's Gulf Coast hurricanes. For additional hurricane relief coverage, click here.

Texas will receive $96.5 million from the federal government to repair roads and bridges damaged by this year's natural disasters. According to the U.S. Department of Transportation, the government is allocating a total of $679 million to 28 states and Puerto Rico to aid storm-related relief and recovery efforts.

George M. Steinbrenner III has made a $1 million donation to support relief and recovery efforts aimed at helping those affected by hurricanes Gustav and Ike.

The Baton Rouge Area Foundation has awarded more than $250,000 in grants for Hurricane Gustav relief, as well as $200,000 to help the communities of Lake Charles and Acadiana recover from hurricanes Gustav and Ike.

Neil Diamond has pledged $200,000 earned from merchandise sales at his October 14 concert in Houston to the Gulf Coast Ike Relief Fund. During the show, Diamond announced that he would match anything spent on merchandise that night.

Members of the Taiwan Buddhist Tzu Chi Foundation have distributed Visa gift cards totaling $80,000 ($500 for families and $300 for individuals) to residents of the Texas communities of Oak Island and Smith Point.

In other news, survivors of the hurricanes that devastated Haiti this summer will receive asssistance from the Central Emergency Response Fund (CERF), a United Nations fund set up to help countries recover from major disasters.

-- Regina Mahone

IS Statement on Economic Stimulus for Nonprofits

October 29, 2008

Is_logo_color_horizontal_3Diana Aviv, president and CEO of Independent Sector, a coalition of charities, foundations, and corporate giving programs committed to advancing the common good in America and around the world, today submitted a statement to the House Ways and Means Committee in conjunction with a committee hearing on "Economic Recovery, Job Creation and Investment in America."

In her statement, Aviv offered five proposals that would help the nation's 1.5 million nonprofits weather these stormy economic times:

  1. Simplify the excise tax on private foundations so that foundations are not penalized for increasing their giving in times of need;
  2. Lift the ceiling on individual giving above 50 percent of gross adjusted income;
  3. Raise the annual $100,000 cap on gifts to charity from IRAs by Americans age 70.5 or older;
  4. Provide relief to nonprofits that sponsor defined benefit pension plans by extending the transition period for implementing new funding obligations enacted as part of the Pension Protection Act of 2006; and
  5. Establish a temporary revolving loan fund through which foundations could meet their commitments to grantees without having to sell assets that are temporarily but significantly undervalued. 

To read the complete statement, click here.

What do you think? Are these the right ideas at the right time? Are any of them likely to be enacted by this Congress? What about other ideas? Feel free to contribute your thoughts in the comments section....

-- Mitch Nauffts

Philanthropy's Toolkit: Mission-Related Investing

CommdevMission-related investing? That's the somewhat esoteric term applied to a new strategy adopted by a growing number of foundations interested in generating positive social change. As Steven Goedke and Doug Bauer explain in Philanthropy's New Passing Gear: Mission-Related Investing -- A Policy and Implementation Guide for Foundation Trustees (68 pages, PDF), published earlier this year by Rockefeller Philanthropy Advisors:

Mission-related investing (MRI), broadly defined, encompasses any investment activity which seeks to generate a positive social or environmental impact in addition to providing a financial return.

An even better (if longer) explanation comes from the New York City-based Jesse Smith Noyes Foundation ("Statement of Fiduciary Responsibility," included as an appendix to Goedke and Bauer's guide):

We recognize that our fiduciary responsibility does not end with maximixing return and minimizing risk. We also recognize that economic growth can come at considerable cost to communities and the environment. We believe that efforts to mitigate environmental degradation, address issues of social justice and promote healthy communities should be incorporated as part of business and investment decision making. We believe that management, directors, employees and investors should consider these social issues in the pursuit of financial objectives.

We believe that in light of the social, environmental and economic challenges of our time, fiduciary responsibility in the coming decades will dictate the integration of prudent financial management practices with principles of environmental stewardship, concern for community, and corporate accountablity to shareholders and stakeholders alike.

We believe that foundations have a particular role to play in this process, seeing their mission not only in terms of the uses of income to fund programs, but also in terms of the ends toward which endowment assets are managed. We believe that it is essential to reduce the dissonance between philanthropic mission and endowment management.

That's as good a reminder of the adage "actions have consequences" as I've heard in a while. So it was heartening to learn via press release about a new initiative of the Kellogg Foundation to put a portion of its $8 billion endowment to work in just this way.

According to the release, the foundation has deposited $22.4 million, in amounts up to $4 million, in seven banks and four credit unions across the country. The institutions, all of which qualify for the federally insured Certificate of Deposit Account Registry Service (CDARS), are: ShoreBank, in Chicago; Southern Bancorp of Mississippi and First Bank of the Delta, in Little Rock; Liberty Bank and Trust, in New Orleans; Carver Federal Savings Bank, in Brooklyn; New Mexico Bank & Trust, in Albuquerque; South Carolina Community Bank, in Columbia; Dakotaland Federal Credit Union, in Huron, South Dakota; Hope Community Credit Union, in New Orleans; and Latino Community Credit Union and Self Help Credit Union, both in Durham, North Carolina.

The effort is part of a larger Kellogg strategy to invest, over the next three to five years, $100 million of its endowment assets in for-profit and nonprofit enterprises that can generate social as well as financial returns. Said Kellogg Foundation president and CEO Sterling Speirn: "The objective is to provide a market rate of our return on our investments, while enabling community development banks and credit unions to increase their lending activity in areas that align with out programming interests. Supporting community development institutions is a simple, yet effective, way to create greater impact that benefits people and the communities in which they live."

We couldn't agree more.

-- Mitch Nauffts

Advice to Funders in Tough Economic Times

October 27, 2008

Geo_logoIt's the question on almost everyone's mind: How will funders respond to volatile markets and declining endowment values over the next twelve to twenty-four months?

In an e-mail last week, Kathleen Enright, executive director of Grantmakers for Effective Organizations, urged GEO members "to show the steady leadership that our communities need most" and offered the following advice:

Hold steady. No one knows where the current crisis will lead, so funders should consider holding their 2009 grants budgets steady at 2008 levels.

Consider no-cost changes that give grantees added latitude to weather the storm -- for example, releasing restrictions on current grants so that grantees can better react to a changing environment.

Consider providing more flexible dollars or access to credit. Operating support may make a great deal of sense in a rapidly changing landscape, while cash-flow loans and access to credit could be just what some nonprofits need as funding streams run dry.

Stick to what works. Now is not the time to abandon the kinds of investments -- higher dollar commitments over multiple years, support for leadership development, efforts to focus on learning and improved performance -- that grantmakers committed to organizational effectiveness value most.

Engage your grantees. And after you do, ask them how you can help.

"At times of crisis," Enright notes in closing, "there is no better asset than the relationships and reservoirs of trust inherent to communities like GEO."

Wise words and good advice.

-- Mitch Nauffts

Quote of the Day (October 25, 2008)

October 25, 2008

Quotemarks"It would be wiser to examine the whole fabric of Rome's civilization for the fatal flaws which finally brought down the greatest single political organization created by man. Corruption, greed, and inefficiency, much more than size and complexity, appear to be responsible for the failure to solve problems which should never have been allowed to come into existence. It seems clear that the cracks and fissures in the mold of Roman civilization first became dangerous in the economic facade, and that they were caused primarily by the Roman attitude toward economic matters: the penchant for exploitation rather than production, and its corollary, the contemptuous attitude toward labor...."

-- William Carroll Bark, Origins of the Medieval World (1958)

Philanthropic Leadership: Examples From the Field (#2)

October 24, 2008

Yesterday, we posted a short list of things various Council on Foundation members are doing to address the fallout from the financial crisis in their communities and among their grantees.

We've also been tracking developments in that area in PND and have gathered those items -- along with related resources -- in a new Focus on the Economc Crisis page on the main Foundation Center site. Here are some of the items already posted there:




We'll continue to track the story in PND and will update the Economic Crisis page on a regular basis. If you know of news that should be included in our coverage or a have perspective on the unfolding situation you'd like to share, please feel free to mention it in the comments section below, or contact me at mfn@foundationcenter.org.

-- Mitch Nauffts

Philanthropic Leadership: Examples From the Field

October 23, 2008

Earlier this month, we posted a portion of an "open letter" from Council on Foundations chair Ralph Smith and CoF president/CEO Steve Gunderson that offered three broad recommendations to the foundation community as it struggles to come to grips with the current economic situation: reach out to the nonprofit sector; play an active and visible role in helping communities and regions figure out the scope and extent of the challenges they face; and pay special attention to situations where the loss of philanthropic resources could be the unintended consequence of mergers and consolidations that are the inevitable product of economic restructuring.

At the time, the council promised to share some of the ways in which other funders are responding to the challenges in their communities. A recent memo from the council captures some of those ideas and approaches:

In consultation with its board, the Dade Community Foundation convened an "FYI Miami Seminar" for the local nonprofit community to discuss the impact and implications of the community-wide funding environment. The foundation has also scheduled a meeting for its donors and professional network later this month.

The Philadelphia Foundation has taken a number of steps (canceling a 90th anniversary celebration, issuing its annual report in an online format only) to cut costs and apply the savings (more than $100,000) to its pool of grantmaking dollars.

Philanthropy Northwest, a regional association of grantmakers serving the Pacific Northwest, convened a group of human service funders in Washington state to discuss a coordinated response to increased funding for nonprofits focused on "safety net" issues. The Seattle Foundation and United Way followed up by inviting all those at the earlier meeting, as well as representatives from Boeing and Microsoft, to further discuss the idea of a coordinated response. Those two organizations are organizing a structured inquiry of local nonprofits to get a better sense of the problem in King and Pierce counties. And it is planning to sponsor a roundtable conversation for funders "who are struggling with how best to respond."

At its annual conference in November, Indiana Grantmakers, another regional association of grantmakers, will present a number of sessions that bring grantmakers and nonprofits together to discuss what it really takes to make an impact -- more important then ever, in light of the challenging economic climate.

The Hyams Foundation in Massachusetts has increased its commitment to PRIs and will continue to do so, especially in the area of affordable housing. In addition, Associated Grant Makers, the regional association for eastern Massachusetts and New Hampshire, is planning to convene a group of funders to discuss the current situation and recently held a conference for its nonprofit partners to discuss the issue.

The Lawrence Welk Foundation in Southern California is encouraging and organizing its trustees, as well as their teen and adult children, "to assess their talents and offer them voluntarily to nonprofits in their geographic areas."

And the Chicago-based Abbie Norman Prince Trust recommends that foundations "increase the percentage of grants made to provide general operating support for grantees." Foundations need to be reminded, says a representative of the trust, that "only effective organizations can provide valuable services over the long haul."

The council promises to continue to gather and disseminate strategies and approaches adopted by its members in response to this crisis as they become available.

-- Mitch Nauffts

ANNOUNCEMENT: Deadline for Knight News Challenge Approaching

October 22, 2008

Newschallenge_logo_6Through the Knight News Challenge, the John S. and James L. Knight Foundation will award $5 million in 2009 for community-focused projects, services, and programs that deepen community engagement, bring Web 2.0 tools to local neighborhoods, develop publishing platforms and standards to support local conversations, and/or innovate how we visualize, experience, or interact with information.

The competition has only four rules. Winning entries must:

   1. Use or create digital, open-source technology;
   2. Use news and information to serve the public interest;
   3. Benefit at least one specific geographic community;
   4. Be innovative.

Last year's winners included individuals, philanthropic organizations, and for-profit businesses. Ten winners were from the United States, while six were from Canada, England, Lithuania, South Africa, Zimbabwe, and Russia.

The deadline for this year's competition is November 1. To learn more and/or apply, visit www.newschallenge.org.

-- Mitch Nauffts

Nightmare on Wall Street

I don't consider myself an alarmist, but the Paul Solman segment on last night's NewsHour With Jim Lehrer has got to be one of the scariest ten minutes of television I've seen in a while. In it, Solman talks with economist Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable, and his mentor, mathematician Benoit Mandelbrot, about chain reactions and the current financial crisis. You might want to watch this one with a friend....

(Click for streaming video)


-- Mitch Nauffts

Forget the Credit Crunch, the Real Problem Is a 'Trust' Deficit

October 21, 2008

Barber_lg Benjamin Barber, one of my favorite public intellectuals (Jihad vs. McWorld: How Globalism and Tribalism Are Reshaping the World, Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole), argues in a new op-ed ("Decades of Eroded Trust and Democracy Did the Damage," The Guardian, 10/20/08) that the roots of our current financial crisis lie in decades of eroded trust and squandered "social capital" and that restoring civic faith will be essential if we hope to repair our badly damaged markets.

Barber writes:

...[T]he secret of the invisible hand is not economic capital but social capital. Adam Smith knew that moral sentiments no less than capital markets undergird the wealth of nations. The liquidity crisis is a political crisis; the credit deficit is a democratic deficit. For trust is the social capital that permits private capital to be exchanged, contracts to be enforced, promises to be kept, expectations to be realised. Democracy is the common sea in which all those competing market boats and bickering fiscal sailors are kept afloat.

So although it was bad loans and greedy bankers and stupid hedge fund managers and ignorant investors who made the mess, it has been four decades of de-democratisation that has done the real damage. A haemorrhaging of social capital that nobody noticed because government was supposed to be the problem and markets the solution. Runaway Thatcherism and exuberant Reaganism railed against government until citizens were literally talked out of their democracy.

Government was allegedly the villain, but government was just democracy's tool -- not always very efficient and often insufficiently accountable, but democracy's tool nonetheless. And democracy's real product was trust. As the war on government became a war on democracy, it drew down the well of social capital and eroded trust, causing citizens to lose faith in each other and their power to govern themselves. Why now should consumers trust banks? Or bankers trust one another? Or investors trust the stock market? Or anyone at all trust the prime minister or the US president or his treasury secretary or the MPs and members of Congress who don't trust their own leadership?...

Read the rest here.

-- Mitch Nauffts

Hurricane Relief Efforts (#7)

We continue to track (see also here, here, here, here, here, and here) corporate and foundation support for recovery efforts in the aftermath of this year's Gulf Coast hurricanes. Here's the latest update....

In the wake of Hurricane Ike, Total Petrochemicals has donated $1 million to the American Red Cross for shelter, food, counseling, and other assistance in coastal areas of Texas.

Continuing its longtime support of the American Red Cross, Altria, the parent company of Philip Morris USA, has donated $400,000 to the Red Cross's National Disaster Relief Fund to assist people affected by large-scale disasters such as Hurricane Ike.

Austin-based Temple-Inland has donated $125,000 to help the City of Orange in Texas recover from Hurricane Ike.

Air Liquide USA has announced a donation of $100,000 to be shared by the American Red Cross and United Way organizations to assist people along the Texas and Louisiana Gulf Coasts affected by this summer's hurricanes.

PGA tour star and Houston resident K.J. Choi has donated $100,000 through his K.J. Choi Foundation to the Gulf Coast Ike Relief Fund.

Singer, dancer, and actress Beyonce Knowles has donated $100,000 to the Gulf Coast Ike Relief Fund.

The American Physiological Society has set aside $50,000 in unrestricted grant funds to help physiology graduate students and post-doctorate fellows affected by Hurricane Ike.

The Prem Rawat Foundation has announced a donation of $40,000 to Feeding America (formerly America's Second Harvest) to provide food to people rreturning to their homes in devastated areas of coastal Texas.

The Rotary Club of Beaumont (Texas) has donated $20,000 to the Southeast Texas Emergency Relief Foundation for the purchase of gift cards to assist victims of Hurricane Ike.

And the Gulf Coast Community Foundation, Hancock Bank, and the Biloxi Sun Herald have partnered to establish the Galveston Bay Hurricane Relief Fund.

-- Regina Mahone

WNYC Show 'Crowdsources' Arts & Culture Funding Segment

October 20, 2008

Brain_lehrer_showWe live in interesting times. Exhibit A: Public radio. The home of judicious, nonpartisan reporting. Somewhat obscure but always tasteful musical programming. Ira Glass and Click and Clack. Informed, sober...a little boring.

Here in the tri-state area we're blessed to have WNYC, home of the Peabody Award-winning "Brian Lehrer Show" (weekdays, 10:00 a.m. - noon).

For the last month, the show has been devoted to the acclaimed presidential election series "30 Issues in 30 Days" and has been building on a 2007 experiment with "crowdsourcing" by using wiki technology to let listeners "produce" six segments of the series, including this Friday's show (October 24, 10:00 a.m. EST) on Arts and Culture Funding. Listeners are encouraged to visit the wiki page created for the segment to suggest guests, story angles, background readings, and questions for the segment.

-- Mitch Nauffts

The Stock Market and Charitable Giving

A week or so ago, Pattie Johnson, the director of the Foundation Center's Atlanta field office, forwarded me a series of interesting charts put together by Alexander Haas Martin & Partners, one of the premier fundraising consulting firms in the metro Atlanta area. Using data collected by the folks at the Center on Philanthropy at Indiana University, the charts attempt to answer the question: "How will the problems in the stock market impact total charitable (as opposed to foundation) giving?"

The first chart (below) maps total giving in the U.S. from 1967-2007 against the Dow Jones Industrial Average, a widely followed proxy for stock market performance, over the same period.

(click on chart for larger image)


And this chart shows giving mapped against the S&P 500, another widely followed proxy for the market:

(click on chart for larger image)


As David King, managing partner at AMMP notes, the charts show that when the markets are going up, total charitable giving grows right along with it -- which makes sense. However, they also show that when the stock market declines, giving does NOT follow it; indeed, it continues to grow or holds steady.

Granted, no two economic downturns are alike, and the current one could turn out to be far more serious and prolonged than those of the recent past (2000-02, 1990-91, 1980-82). Unfortunately, we won't know how bad it will be -- or was -- until we're already well on the road to recovery. In the meantime, this should give some comfort to people who are expecting the sky to fall. Yes, we've seen wealth destruction on an epic scale over the last twelve months, but we also saw wealth creation on an even grander scale over the last five-plus years. Let's hope a good portion of that wealth continues to flow to worthy nonprofits and charities.

To download additional charts comparing both the Dow and S&P 500 to giving to arts/culture, education, religion, human services, health, and the environment, click here for the Dow and here for the S&P.

-- 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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