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33 posts from December 2008

Fallout From Madoff Scandal Spreads

December 15, 2008

BernardmadoffOver the weekend, we learned that at least two foundations, the Robert I. Lappin Foundation and the Chais Family Foundation, had lost millions in Bernie Madoff's alleged Ponzi scheme and were closing their doors, effective immediately.

The latest victim of the scam is the New York City-based JEHT Foundation (an acronym for Justice, Equality, Human dignity and Tolerance), which earlier today announced that it was halting all grantmaking effective immediately and would shut its doors at the end of January. The foundation has posted a statement on its Web site that reads in part:

The JEHT Foundation Board deeply regrets that the important work that the Foundation has undertaken over the years is ending so abruptly. The issues the Foundation addressed received very limited philanthropic support and the loss of the foundation's funding and leadership will cause significant pain and disruption of the work for many dedicated people and organizations. The Foundation's programs have met with significant success in recent years -- promoting change in these critical areas in partnership with government and the nonprofit sector. Hopefully others will look closely at this work and consider supporting it going forward....

Inquiries should be directed to the foundation, care of its president, Robert Crane, rcrane@jehtfoundation.org.

-- Mitch Nauffts

ANNOUNCEMENT: Live Chat With 'CauseWired' Author Tom Watson

The Chronicle of Philanthropy will feature onPhilanthropy publisher Tom Watson, author of CauseWired: Plugging In, Getting Involved, Changing the World, in a live chat tomorrow, December 16, at noon EST. To listen in, visit www.philanthropy.com. A handy chat tool will be provided for questions from the online audience.

Ford Foundation Responds to Economic Crisis

The New York City-based Ford Foundation has released a statement from Luis A. Ubiñas, its president, in response to the economic situation. Here's an excerpt:

The heart of our work has always been the steady commitment to our long-term vision. We believe that this farsighted approach is critical, especially in difficult times. While the foundation's endowment portfolio has been affected by volatility in the financial markets, our first priority is to ensure that our grantees have the resources necessary to continue the fight for social justice.

In keeping with that commitment, I want you to know about the actions we are taking to manage through this downturn as effectively as possible:

  • In 2009 and 2010, we plan to increase the percentage of our endowment that is paid out in grants, our "payout rate".
  • The foundation instituted a series of aggressive internal cost controls early in 2008 to ensure that more funds would be available for grant making during this downturn. We know that every dollar saved is a dollar that can be devoted to grant making on behalf of the poor and marginalized.
  • Entering the economic downturn, our portfolio was highly liquid, ensuring that we have the capacity to continue making grants without disruption.
  • These actions will allow us to continue to honor all outstanding grants and, going forward, safeguard our core grant making budget.

All of these efforts are designed for a central purpose: to ensure that our grantees have the resources necessary to support their work....

To read the complete statement, click here.

For more foundation statements in reponse to the economic crisis, see here (various CoF members), here (Robert Wood Johnson) here (Kresge, Irvine), here (Mellon, Weinberg), here (MacArthur), here (Mertz Gilmore, Argosy), here (Gates, Otto Bremer, Rasmuson, California Endowment), and here (Samueli).

-- Mitch Nauffts

Quote of the Day (December 13, 2008)

December 13, 2008

Quotemarks_2"In the twenty-first century our global society will flourish or perish according to our ability to find common ground across the world on a set of shared objectives and on the practical means to achieve them. The pressures of scarce energy resources, growing environmental stresses, a rising global population, legal and mass migration, shifting economic power, and vast inequalities of income are too great to be left to naked market forces and untrammeled geopolitical competition among nations. A clash of civilizations could well result from the rising tensions, and it could truly be our last and utterly devastating clash. To find our way peacefully through these difficulties, we will have to learn, on a global scale, the same core lessons that successful societies have gradually and grudgingly learned within their own national borders...."

-- Jeffrey Sachs, Common Wealth: Economics for a Crowded Planet

Top Blog Posts of 2008

December 12, 2008

We need your help. With just a few weeks left in 2008, we’re trying to identify the top blog posts written about our sector. Criteria should include originality, impact, and topicality.

Have any bloggers wowed you with their thoughts, opinions, and prose this year? If so, we'd love to hear from you. Use the comments to leave your suggestions. And thanks for your help.

Philanthrocapitalism Unbound: Q&A With Matthew Bishop

December 11, 2008

Bishop_lgMatthew Bishop is New York Bureau chief of The Economist magazine and co-author (along with Michael Green) of Philanthrocapitalism: How the Rich Can Save the World. Last month, I sat down with Bishop in a midtown conference room to talk about the book, the definition and significance of philanthrocapitalism, the growing concentration of wealth in the United States, and the role of philanthropy in a democratic society. Here's an excerpt from our conversation:

Philanthropy News Digest: You applaud philanthrocapitalists for taking a systems-thinking approach to problem solving. But what evidence do we have that systems-thinking yields results when applied to a social context?

Matthew Bishop: One of the things that has happened over the past twenty years is that a lot of talent in society has migrated to the business sector -- talent that in the past would have gone into politics or law or medicine. Of course, money is a powerful inducement. But people also want to do work that feels cutting-edge, to solve problems and make a difference. They want to create the next Google, the next amazing new technology; they feel that with hard work and a little luck they can shape the course of whole economies. And that feels great, that's exciting.

But the idea that all this talent is turning its attention to addressing big social problems raises, for me, a couple of questions. First, anyone coming from the business world into the social sector has to navigate significant cultural differences. For example, people in the business world too often are maniacal about control. There's this arrogance, especially among executives, that they know best and that people in the nonprofit sector don't know what they're talking about. Similarly, on the nonprofit side, you have people who resent wealthy capitalists who have made a boatload of money for themselves and are now coming in and telling them what to do. We hear these stories all the time. So, there's quite a lot of disrespect on both sides of the divide, which is a bad place from which to start.

What is encouraging is that the most effective of the philanthrocapitalists have not only demonstrated their commitment to the social sector, a number of them have had a kind of epiphany and realize that they need to be more humble and listen more. In fact, that's something the new economy encourages; it's the whole venture capital thing about not really being a success until you've failed at least once. At the same time, the people on the receiving end of the money are more aware that there's a lot of money out there waiting to be tapped, that there's a quid pro quo attached to it, and that they're going to have to get used to the idea of participation, beyond a check, from the person providing the funding. Again, people are starting to figure out how to make it work.

The other concern I hear a lot is that, initially at least, philanthrocapitalists are looking at social sector work as a profit opportunity. Now, there may be profitable business models out there and ways to make social enterprises more sustainable. That's just going to be the case in some situations. But in other situations, that whole agenda is completely inappropriate. What we'd like to see, instead, is business people applying business approaches to social problems, approaches that allocate capital efficiently and strive to generate impact, that emphasize investment in capacity and sustainability and don't skimp on overhead. Revenue should always be secondary.

Continue reading »

Quote of the Day (December 10, 2008)

December 10, 2008

Quotemarks"From the chief executive of a nonprofit on down through the ranks of paid staff and volunteers, the person with the most responsibility for an individual's development is the person himself -- not the boss. Everyone involved must be encouraged to ask themselves: What should I focus on so that, if it's done really well, it will make a difference both to the organization and to me?..."

-- Peter Drucker, Managing the Nonprofit Organization: Principles and Practices (1990)

Excuse Me?

December 09, 2008

Just when you thought tiny real estate titan Sam Zell had cornered the market on disingenuousness, the Wall Street Journal rides to the rescue with this impeccably reasoned and written editorial:

With the Motor City Meltdown entering its third week as Washington's leading melodrama, it occurred to us that not all sources of bailout money have been tapped to jack up Detroit. What about the Ford Foundation?

The foundation has an astounding $13 billion in assets. So one might ask: Why doesn't the Ford Foundation liquidate and transfer the money to the Ford Motor Co.? The foundation would surely demur, quickly pointing out it has no formal connection whatsoever with its tottering namesake auto maker.

True, but we've glanced at the foundation's "mission statement," and it appears to us that Ford Motor would qualify for the ultimate grant to a nonprofit.

The foundation says it supports initiatives "by those working and living closest to where problems are located." An auto assembly plant qualifies. The foundation promotes "collaboration" between government and business sectors. Meet Barney Frank and Alan Mulally, collaborators. Finally, Ford works to "ensure participation by men and women from diverse communities." Ford Motor's endangered work force defines diversity.

Since severing from the Fords' initial vision, the foundation has gotten fat and famous. The moment has arrived for the Ford Foundation to "give back."

This is just silly, on many levels. And people were concerned about a decline in standards at the Journal after Rupert bought it. Imagine.

-- Mitch Nauffts

Global Forum for Media Development World Conference (Dec. 7-10, 2008)

The news from the world of journalism seems to grow worse by the week. Ad revenues at most newspapers, including important institutions such as the New York Times and Wall Street Journal, continue to fall. In November, the venerable Christian Science Monitor announced it was abandoning its daily print edition and going fully digital. And just yesterday, the hundred-year-old Tribune Company, publisher of the Chicago Tribune and Los Angeles Times, was taken into bankruptcy by its "owner," leveraged debt specialist and pint-sized prevaricator, Sam Zell. Indeed, this was the year, says Peter Osnos, senior fellow for media at the Century Foundation and founder of PublicAffairs, "when the printed media crashed with a sudden velocity and with consequences that are irreversible."

The Internet, the cyber-universe where "information wants to be free," has been a key factor in the destruction of newspaper business models. Writes Osnos:

What has happened with the Internet so far is that the suppliers of hardware, software, and transmission (search engines and aggregators) have built business models that effectively shut out revenue streams for the creators of the information that is being delivered. What has become absolutely clear in 2008 is that this new model for delivering information is a debilitating blow to the creation of quality news content. The companies making money from the Internet -- Google, Yahoo, Microsoft, Amazon, and so on -- are entitled to the riches they've amassed from their ingenuity and entrepreneurial skill. But as a society, we've got to figure out how news gathering and information distribution will be paid for from now on....

As I've noted elsewhere, one of the organizations working to figure that out is the Miami-based John S. and James L. Knight Foundation. This week, Knight is helping to fund the Global Forum for Media Development, four days of meetings in Athens with representatives from one hundred countries to discuss the importance of media development to economic prosperity and civil society. You can read live blog posts from the conference, "follow" it on Twitter (#GFMD08), or tune in to watch a live Webcast of the proceedings below.

-- Mitch Nauffts

John Lennon: 1940-1980

December 07, 2008

John_lennon1 John Winston Lennon (October, 9, 1940 - December, 8 1980)

"John Lennon didn’t invent rock and roll, nor did he embody it as toweringly as figures like Elvis Presley and Little Richard, but he did more than anyone else to shake it up, move it forward and instill it with a conscience. As the most daring and outspoken of the four Beatles, he helped shape the agenda of the Sixties -- socially and politically, no less than musically. As a solo artist, he made music that alternately disturbed and soothed, provoked and sought community. As a human being, he served as an exemplar of honesty in his art and life....

"Though popular music has changed considerably in the decades since the Beatles’ demise, their music continues to reach and inspire new generations of listeners. Half a century after their humble origins in Liverpool, the Beatles remain the most enduring phenomenon in the history of popular music...."

Half a century.... Wow. Here are four clips that only begin to capture the immensity that was Lennon and the Beatles:

Continue reading »

Weekend Link Roundup (December 6-7, 2008)

Like everyone else, we took the long holiday weekend off, so here's two weeks' worth of noteworthy posts from and about the nonprofit sector....

Economy

When the National Bureau of Economic Research announced on November 28 that the U.S. economy had been in recession since December 2007, Tim Kane, at the Growthology blog, admitted to being surprised "it was backdated that far because it feels in some ways like it is just getting started." In his post, Kane presents two charts that compare the current recession to previous ones, using changes in payroll data for the first and unemployment data for the second, and observes that "the U.S. is already experiencing an unemployment spike equal to the last 3 recessions; any higher and it will look (be) similar to the severe shocks of the 1970s...."

Over at Philanthropy Potluck, Wendy Wehr, vice president of communications and information services at the Minnesota Council of Foundations, notes that nonprofit leaders across the country are urging funders to loosen restrictions on grants so that nonprofits have more flexiblity to support their missions and, if necessary, reorganize to weather the current economic turmoil. One MCF member offered this example of the perils of restrictions:

A financially-strapped nonprofit dissolved a program that had received $300,000 of dedicated program support; in the end, only $20,000 was available to add back to the organization’s bottom line. In situations like these, the nonprofit needs to have a safe conversation with the funder about how grant monies might become unrestricted or redirected to another program....

On the Tactical Philanthropy blog, Sean Stannard-Stockton has posted a selection of responses to a question posed by Alliance magazine: How can philanthropy emerge from the financial crisis better positioned to face the future? One respondent, Peter Laugharn, executive director of the Firelight Foundation, writes:

For foundations themselves, I would remind them in the present crisis that the most useful foundation contribution is likely to be a combination of our two strengths: long-term vision and commitment, and short-term flexibility. Let's use these two well, to complement government initiatives that are understandably focused on the very short term but may also take a while to roll out....

Against a backdrop of rising unemployment, nonprofit organizations continue to hire new staff, especially in the areas of development and institutional advancement. Rosetta Thurman reminds young people looking for employment in the sector that there are four things that compensate for typically modest nonprofit salaries: generous vacation time, full health benefits, flexible scheduling, and/or retirement benefits.

As much as I hate to say it, sometimes there's just no way around the salary rub for a particular organization, particularly if they are small or grassroots, and if you're coming into an entry level position. But that doesn't mean you have to take it in stride. Always move on from any nonprofit offer that's too low to pay all of your bills....There's nothing worse than going into deeper debt because  your nonprofit job doesn't support your basic needs....

Good advice, Rosetta. (And congratulations on the new site!)

Continue reading »

Stay the Course: Advice for Fundraisers in Tough Economic Times

December 06, 2008

(The following was written by Patrick D. Hundley, Vice Chancellor for University Relations at Southern Illinois University-Edwardsville, and is taken from Stay the Course: How the Current Economic Crisis Will Affect Our Donors and How We as Development Professionals Must Continue to Serve Them.)

As are most of us, our donors are nervous about the economy. Most of us do not totally understand what is really happening within the current economic climate, but we do listen to the news. We know this special situation threatens our way of life and, more certainly, that of our children and grandchildren.

Our donors are keeping much closer tabs on their money -- and rightfully so. Will I have money to pay for my daughter’s wedding? Will I have the funds to retire in the manner for which I have planned for so many years? Not only are donors questioning their savings' and retirement funds' value, but they will be seeking "safer" accounts to hold their money. Thus their funds will earn less, and the tremendous equity earnings of the 1990s and lately the 2000s will simply not be available for gifts.

Donors will therefore make fewer gifts and of smaller amounts. The discretionary money just will not be there for contributions like it has been. Our donors will be very particular about where their gifts go. We believe that churches and educational institutions will fare better than most other charities, but all charities should prepare for a fairly dramatic drop in the number of gifts and the total amount from these gifts.

The "megagift" -- $10 million and above -- will become few and far between as the recession will hold down earnings and dividends. More conservative consumers will purchase less, and thus the manufacturers will produce less, earning less for their stockholders.

Six-figure gifts will still be available, but they will, for most of us, become rare. Many donors in this category often use appreciated stocks and/or capital assets for their gifts. Linda Davidson, Vice Chancellor of Development and Alumni Affairs for the University of Tennessee, says that donors in this group "seem to be the most scared, even more so than the mega donors." Many donors in these categories have long-term pledges that will most certainly be affected by s lengthy recession.

Corporate giving will be greatly affected, especially in certain sectors. Problems within the automotive industry have already caused General Motors and Chrysler to end their employee matching-gift programs. More and more major corporations, especially those in the financial sector, will simply have no funds available for charitable giving. Already we are seeing several New York charities reposition themselves because they expect to lose tremendous gifts from Wall Street. New restrictions, as a part of the “bailout,” might simply disallow corporate giving for some businesses.

As we can see, these positions pose tremendous challenges for those advancement professions. We have seen nothing like this in our lifetime, and we have, quite frankly, had it "easy" over the past two decades, since the infamous Black Monday in 1987. But with every challenge comes opportunity, and now we must look these challenges directly in the eyes and move forward.

How do we do this?

Work harder! The absolute worst thing we can do, says Greg Sheridan, Associate Vice President, Constituency Programs, for the University of Washington, "is to back off." We just must work harder -- and work smarter. If we have been doing 20 prospects visits a month, we might want to ratchet this up to 30 visits. If we have been carrying a portfolio of 75, we should look at taking on 25-30 more. More hours of research, more letters, more phone calls, and, most important, more visits can help us to keep our donors interested and excited about our programs. Other charities will most certainly be pulling out all the stops, and, if we do not do the same, we will be left behind.

We still must make our calls, continue to build relationships, and get our donors back to campus as often as possible. This is a great time to cultivate all our donors for gifts, looking toward gifts when the recession is over. Practically all our donors will be more cautious after the recession, and we must be one of the groups that did not abandon them when times were tough. This is a great time to build relationships that exist totally between donors and the institution -- without our planning a specific timeline for the "ask." As Russ Hawes, Vice President of the University of Wisconsin Foundation, suggests, "Don't press. Understand that a person's financial position might have changed dramatically." We must show them that we value them in both good times and bad.

Work with your donors who have current pledges. Many of our donors who are in the middle of a multi-year pledge may be affected by the economic downturn. We must be sensitive to their situation and show that we understand. We can offer them a longer time period to pay off their pledges, or we can merely allow them to skip one or two years before they make their next pledge payment. Ultimately we must make ourselves readily available to sit down with a donor and restructure the pledges to coincide with their situation. The donor will appreciate our understanding, and we will certainly save their pledge and future gifts as well.

Recognize that comprehensive major gift campaigns have significant goals, but it might take longer to reach them. Therefore, your five-year campaign might become a seven- or eight-year campaign. The important thing is to "stay the course" and keep doing major gift cultivation and fundraising. The current crises will end someday, and we will be ready to then make the necessary "asks" to continue to improve our programs and projects.

Finally, we can expect our donors to emerge from this recession much more cautious and savvy about where they give their discretionary funds and how they expect those funds to be used. "Donors will expect greater accountability on our part, and they will watch us closely as we put their gifts to use," notes Russ Hawes. The impact of gifts and the utilization of our donors' resources will be heavily scrutinized.

Raising funds for charitable institutions is a noble profession, filled with joy and satisfaction each day. As professionals, we must keep doing those "right" things, even when external conditions -- totally out of our control -- seem to be working against us. We must simply "stay the course," and good things will continue to happen, thanks to our enduring efforts.

-- Patrick D. Hundley

ANNOUNCEMENT: Foundation Center Maps Philanthropy's Response to Economic Crisis

December 04, 2008

Fc_map_response_2The Foundation Center has been collecting the most recent data available on U.S. foundation support in response to the economic crisis. To date, we've gathered information on more than $56 million in support -- 135 grants and program-related investments (PRIs) -- and are making the information publicly available via an interactive map, launched today on our Web site. The map displays the data by state, county, city, ZIP code, or congressional district.

The grants and PRIs represent a range of foundations and giving interests, among them several aimed at forestalling foreclosures in major urban centers. Examples include a $2 million grant from the Ford Foundation to the Detroit Economic Growth Foundation for foreclosure prevention and emergency assistance for low-income populations in Detroit, and a $2.5 million grant from the John D. and Catherine T. MacArthur Foundation to Neighborhood Housing Services of Chicago as part of its $68 million initiative to prevent foreclosures and mitigate their effects on Chicago neighborhoods. The PRIs are from the MacArthur Foundation to three organizations for mortgage programs and other types of community assistance.

Here are a few pull-quotes from the press release:

"The financial crisis has sparked a critical debate about economic fairness in this country," said Ford Foundation President Luis Ubiñas. "We need to work together to promote a fairer and more effective financial system that works for all Americans and prevents the recurrence of a similar crisis."

"Our $68 million foreclosure prevention and mitigation initiative comes out of our long-standing support for community and economic development in Chicago neighborhoods," said Jonathan Fanton, president of the MacArthur Foundation. "This work also responds to local needs resulting from the economic crisis, which threatens to disrupt hard-won progress in some of the city's most challenging, but promising, neighborhoods."

"[Virginia G. Piper Charitable Trust] trustees made this commitment to provide relief to organizations strained to the breaking point as costs have mounted and donations have dropped," said Judy Jolley Mohraz, president and CEO of the Piper Trust, which announced the first $475,000 of a $1 million commitment for community relief to fifteen human service agencies in Maricopa County, Arizona. "The foundation is committed to raising public awareness of the plight of nonprofits, and the Foundation Center's effort to highlight grants aimed at addressing their needs supports that goal."

New grants will be added to the map on an ongoing basis to provide the most current picture of foundation giving for programs and issues relating to the economic downturn. Grantmakers are encouraged to send announcements about their grants or PRIs to Matthew Ross at mr@foundationcenter.org.

For more information and to explore the map, visit the "Focus on the Economic Crisis" area of the center's Web site.

-- Mitch Nauffts

Samueli Foundation Responds to Economic Crisis

December 03, 2008

Samueli_logoThe Samueli Foundation, a private foundation in Corona del Mar, California, that works to promote scholastic, technical, and creative exploration and achievement; build a community of sharing, acceptance, and altruism; increase awareness, knowledge, and opportunities; and enhance the quality of life in underserved areas where the Samueli family has an interest and/or connection (including Orange County and Israel), has announced that it will not be accepting letters of inquiry or unsolicited proposals until further notice.

Here's an excerpt from the statement:

Like everyone, the Foundation has been impacted [by the challenging economic climate]. Fortunately, the Foundation remains strong, and committed to its mission. To do so though requires that the Foundation concentrate its resources with its current grantees and partners ensuring their stability. This year the Samueli Foundation distributed over $18 million in grants. Next year’s funding will be mostly comprised of already committee funding to nonprofits through approved capital grants and multi-year operating and program grants.

During the past three years, the Samueli Foundation has increased both the amount and the total number of grants awarded each year. Because of the substantial amount of grants already approved for next year, the strong desire to evaluate the effectiveness of the Foundation’s prior grant making, and a desire to reassess the state of the volatile economy, the Trustees have announced that the Foundation will not be reviewing Letters of Inquiry or unsolicited proposals until further notice....

Click here for the complete statement.

-- Mitch Nauffts

16 Bloggers, 5 Days: A Debate on Arts Education

Demand_arts_3There's a lively virtual conversation under way at the ArtsJournal site on the topic of whether our culture will suffer if we don't do more to teach the arts to children.

Based on a Wallace Foundation-commissioned study from RAND (Cultivating Demand: Arts Learning, Arts Engagement and State Arts Policy), the discussion has already touched on:

  • What should we expect of public education?
  • Can community-based arts education programs fill the gaps left by the public schools?
  • Is it reasonable to expect arts specialists and parents to bear the responsibility of making the case for arts instruction in local schools year after year?
  • What will it take to change state education policy so that all public schools offer instruction in music, visual arts, drama, and dance?
  • Should arts policymakers, artists, and other leaders in the artworld forge common cause with arts educators to advocate for change in state education policies?
  • Is improving arts education in the schools the best way to address cultural inequity?
  • If arts education were more widespread, could it offset the pervasive influence of popular culture?
  • Why not let demand for the nonprofit arts shrink in response to lower demand? Aren't the arts like any other market where consumers decide what they want?

Click here for a list of the participating bloggers and their bios. And be sure to check it out; it's a timely topic and a terrific conversation.

-- 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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