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28 posts from May 2009

Green Shoots or Red Flag?

May 09, 2009

Jobless After a week of rain, Manhattan is starting to resemble a waterlogged Emerald City, and the natives are getting restless. Green, as in shoots, also seems to be the color of choice among economists this spring, and the stock market has responded with gusto, up 30 percent from its Death Valley bottom in early March.

The decline in equity prices has exacted a terrible toll on endowments and individual investors alike, dealing a double blow to nonprofits. So a rebound in stock prices is welcome news. But is the rally sustainable? And is it a sign the economy itself is on the road to recovery?

No, writes New York Times columnist Bob Herbert in today's paper ("Far From Over," May 9, 2009), quite the opposite. "The economy," he says, "is in shambles. Nearly 540,000 jobs were lost in April, a horrifying number. The unemployment rate rose to 8.9 percent," and is expected to hit double digits by the end of the year. Yes, the rate slowed some in April, thanks in part to 72,000 mostly part-time Census Bureau jobs added by the government. But job losses in February and March were revised upward, from 651,000 and 663,000 to 681,000 and 699,000, respectively. Yikes.

As the nonprofit sector knows all too well, rising joblessness is also causing poverty and homelessness to increase. According to the Economic Policy Institute, the poverty rate is in danger of increasing from 18 percent, the 2007 figure, to 27.3 percent by 2010. And the rate for black children -- an already appalling 34.5 percent -- could go to 50 percent if the "official" unemployment rate rises to 10 percent, as expected.

"Joblessness is like a cancer," Herbert writes.

The last thing in the world you want is for it to metastasize. And that's what's happening now. Don't tell me about the stock market. Don't tell me about the banks and their perpetual flimflammery. Tell me whether poor and middle-income families can find work. If they can't the country's in trouble....

Herbert is right, of course, and outside the precincts of Wall Street and affluent communities where a million dollars is just a down payment on a third home, people are scared. Scared that they'll lose their jobs, their homes, their hopes for the future. The question is, What are we going to do about it?

-- Mitch Nauffts

The Nonprofiteer: Gone Fishin'

May 08, 2009

Disappointed to learn that one of our favorite bloggers, The Nonprofiteer, is taking a break from blogging and will return "whenever she gets a particularly intriguing 'Where's the Beef?' or 'Dear Nonprofiteer' inquiry." 

In the meantime, she encourages everyone to subscribe to the blog by e-mail or RSS feed so they'll know "the very second she starts making noise again."

Hurry back, Kelly. And a happy and feckless spring to you, too.

-- Mitch Nauffts

Dissed Aid

May 07, 2009

(Tony Pipa is a regular contributor to PhilanTopic. In his last post, he wrote about the often competitive attitudes of anti-poverty activists in the U.S. and international aid advocates.)

Deadaid_cover Dambisa Moyo has created quite a stir with her thesis that international aid causes poverty in Africa. Her new book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, advocates stopping all government-to-government aid to Africa within five years and focusing instead on international bond issues, microfinance, and trade.

The good: this is a cri de coeur from a voice native to the continent (Moyo is a Zambian-born economist) who’s unafraid to use a megaphone to express sentiments more generally reserved for polite conversation among professionals and academics.

The bad: the book conflates the many different ways government and multilateral (e.g., World Bank) aid is deployed and applied, damning them all in one fell swoop; uses evidence sporadically, sometimes omitting data that would contradict a point; and makes sweeping claims without citation. I'll leave specific rebuttals to the experts: see David Roodman from the Center for Global Development (by no means an apologist for aid) or this detailed review on the Zambian Economist blog.

What's interesting from a philanthropic perspective is that Moyo focuses her analysis almost exclusively on government-to-government aid. She gives a page's worth of attention to "humanitarian aid" and "charity-based aid"; acknowledges some value there while quickly pointing out a few disappointing examples; then rejects such efforts as "small beer" compared to government and multilateral aid, and basically ignores them thereafter.

There goes an entire infrastructure of NGOs and philanthropic initiatives dedicated to improving lives in the developing world: too small to count. Class dismissed.

On the one hand, this could be a reminder that private philanthropy's ability to effect change pales in comparison to the financial clout wielded by government. On the other, her dismissal comes as a surprise when recent analyses by Brookings and the Hudson Institute show that private resources in international aid are beginning to rival government assistance in size and influence.

In fact, "aid" is going through a sea change, with new resources and thinking coming from various quarters -- billionaires, social entrepreneurs, corporate social responsibility programs -- that are bursting traditional aid orthodoxy at the seams. The actors in Global Development 2.0 do not bow to the supremacy of government aid, and often push to get it right.

Thus, we miss the opportunity to explore the challenges and opportunities inherent in an increasingly fragmented movement in which multiple players are jockeying for intellectual leadership while remaining interested in improving impact and developing cross-sector collaborations. What efforts show promise? Are there specific issues which lend themselves to being addressed through the leadership of private philanthropy? It would be interesting to hear Moyo's thinking on this score, especially since one of her main prescriptions -- microfinance -- is an innovation with roots in "charity-based" aid.

(It also leaves me puzzled about how aid economists view the budgets of NGOs such as CARE, 57 percent of whose revenue comes from different governments. Is CARE's entire budget considered "charity-based aid," as Moyo calls it, or does it get apportioned accordingly in the data? Does the field act as a sort of money-laundering service for government funds in these discussions?)

A friend pointed out that the controversy surrounding Moyo's book reminds him of the U.S. welfare reform debate in the 1990s, and her argument indeed echoes with similar language: aid creates dependency and lack of accountability, and depresses the spirit of initiative and creativity. There is truth to that. At the same time, we should remember that while the welfare rolls have been slashed significantly, we've made much less progress in the U.S. on poverty itself, which has been on the rise since 2000.

Can aid be better, smarter? Yes. Could NGOs and philanthropy play an important role in improving the aid architecture? Yes -- though you wouldn't know it from Moyo's book. Would the cessation of aid be an automatic tonic for solving poverty in Africa? Be careful what you wish for.

-- Tony Pipa

Call for Research: Arts Education Case Studies

May 06, 2009

Issuelab_logo During the months of June and July our colleagues at IssueLab will be featuring case studies in arts education. If your nonprofit or university-based research center has released a case study, program profile, or evaluation of an arts education program or multiple models, please consider submitting your work for inclusion in the special IssueLab collection.

IssueLab will be sharing the collection with online media, practitioners, educators, legislators, grantmakers, and social networks focused on the topics of education and the arts. It's an effective and meaningful way for nonprofits to share the valuable knowledge they've gained with a broader audience.

To get started, e-mail Stacy about your research by May 20, or visit IssueLab to create a free account and post your case study for inclusion in the upcoming CloseUp on this important topic.

-- Mitch Nauffts

Council on Foundations' 60th Annual Conference: What Matters? (Part 2)

As this year's annual CoF meeting comes to an end, we thought it'd be interesting to check the conference blog a final time for new posts (see our summary from yesterday)....

Rep. John Lewis (D-GA) wows the crowd in his Tuesday keynote address....Bruce Trachtenberg, executive director of the Communications Network, is heartened that foundation program officers are realizing the value of proactive communications....Kaberi Banerjee-Murthy, a board member of Resource Generation, reminds us that the consequences of the economic crisis will be with us for years to come....Trista Harris, executive director of the Headwaters Foundation for Justice, argues that the current crisis is also an opportunity....Sarita Venkat, manager of external communications at the council, applauds the idea that the field benefits from serious debate about issues that divide us....Teri Behrens, editor of The Foundation Review, is hopeful that civic participation in the U.S. is back in vogue....And Mark Sedway, who directs the Philanthropy Awareness Initiative and helped manage the conference blog for the council, highlights these day-one posts.

There was lots of great conference-related coverage from other blogs and bloggers as well. Be sure to check out the yeoman work done by the Tactical Philanthropy team; Trista Harris's New Voices of Philanthropy blog; and Tim Ogden and Laura Starita's Philanthropy Action blog.

-- Mitch Nauffts

Council on Foundations 60th Annual Meeting -- Down, But Not Out

(Michael Seltzer is a regular contributor to PhilanTopic. He reported on the Women's Funding Network's 15th Annual Meeting in his previous post.)

Green_shoots As a veteran of more than thirty Council on Foundations annual meetings, I must confess that each year I experience some trepidation in advance of another gathering.

Flying to Atlanta last Friday, I was concerned that the almost 30 percent drop in the value of foundation endowments would dampen the resolve of funders to tackle many of the seemingly intractable problems on our doorstep -- problems that have been exacerbated by the global economic downturn. Or that many foundations would not seize this moment as an opportunity to break out of old ways of doing business.

But in session after session at this year's conference, with speakers ranging from Secretary of Health and Human Services Kathleen Sebelius to Distinguished Grantmaker of the Year Award winner Robert Hohler, executive director of the Melville Charitable Trust, attendees were urged to think boldly, innovate, and step up to the plate in "audacious" ways.

Much to my relief, the foundation and corporate grantmakers in attendance here are not lacking in resolve or appetite for a challenge –- whether it's the need for fundamental change in the nation's healthcare system, accelerating our conversion to a more sustainable economy, addressing surging homelessness, speaking out against the erosion of human rights in other countries, or countering anti-immigrant sentiment at home.

Here's a short list of some of the other noteworthy developments at this year's meeting:

  • the strong presence and engagement of "Next Gen" leaders, propelled in part by the work of Emerging Practitioners In Philanthropy
  • the embrace and growing importance of blogs, Twitter, and other Web 2.0 tools
  • new issues on the table, including sex slavery/trafficking and class and inequality
  • the release of a number of valuable reports and tools, including Smarter Grantmaking in Challenging Economic Times (Grantmakers for Effective Organizations), Catalytic Change: Lessons Learned from the Racial Justice Grantmaking Assessment (Philanthropic Initiative for Racial Equity in partnership with the Applied Research Center), and Foundation Diversity Policies and Practices Toolkit (California Endowment)
  • renewed calls for more flexible, unrestricted, multiyear, and, yes, sustainable support from both grantees and grantmakers
  • more examples of groundbreaking public policy and advocacy work
  • greater evidence of funders working in concert with their peers rather than in isolation

When Gayle Williams, executive director of the Mary Reynolds Babcock Foundation, announces that her board has decided to keep giving at pre-recession levels for the next three years or the leader of a family foundation and a nonprofit partner huddle on how to effectively support key organizations in Zimbabwe, one can't help but feel admiration and respect for the work of organized philanthropy. I, for one, am thankful to be a member of the choir.

-- Michael Seltzer

Embrace Anonymity -- Up to a Point

May 05, 2009

There have been a couple of interesting items (here and here) about "mystery" donors and anonymous giving in the philanthropic press over the last week or so. Dorothy Ridings, a former president of the Council on Foundations (see our 2002 interview with her here), has a letter to the editor in today's New York Times in which she cautions nonprofits and foundations to examine every anonymous gift carefully.

"There can be understandable reasons for a donor to request anonymity," writes Ridings. "But," she continues

this raises a question of appropriate governance when the anonymity extends to those reponsible for oversight of the institutions.

While I detect no unsavory rationale for the anonymity, such a possibility exists. Presidents and trustees must be informed of the source of all such gifts, even if they are to hold that information to themselves. Failing to do so has the risk of accepting a gift from objectionable or illegal sources, which could pose both legal and public relations issues for the institution....

Good advice from Dot.

-- Mitch Nauffts

Council on Foundations' 60th Annual Conference: What Matters?

The Council on Foundations' 60th annual conference is in full swing in Atlanta, and though attendance is down (a casualty of the recession), the enthusiasm and commitment to social change among attendees seems undiminished. The council itself has introduced a couple of new communications vehicles in conjunction with this year's conference, including a snazzy new Web site full of Web 2.0 goodness, a Twitter feed (@COF_), and a very cool conference blog to which attendees have been posting their thoughts about what matters in philanthropy right now.

Here's a sample of what they're saying:

Ali Webb, program director for Food Systems and Rural Development at the W.K. Kellogg Foundation, cuts to the chase and says philanthropy needs to address the so-what question: "What do our dollars do for people?"....Bruce Trachtenberg, executive director of the Communications Network, suggests that this uncertain moment in our history is exactly the moment philanthropy has been waiting for....Albert Ruesga, newly minted president of the Greater New Orleans Foundation, argues that while the boundaries between different sectors of society may be blurring, there are important social goods nobody wants to pay for....Emmett Carson, president of the Silicon Valley Community Foundation, urges philanthropy to get involved in the looming political battle over the creation of a legal path for undocumented immigrants....Kaberi Banerjee-Murthy, a board member of Asian American Pacific Islanders in Philanthropy and Resource Generation, applauds Morehouse College president Robert Franklin's call to tap the potential of the next generation of "transformed noncoformists"....Teri Behrens, editor of the The Foundation Review, argues that, in its own halting way, philanthropy is making progress on the diversity and inclusion front....Mary Galeti, vice chair of the Tecovas Foundation, thinks the field should do more to introduce new wealth creators to the art and practice of philanthropy....Roger Doughty, executive director of the Horizons Foundation, thinks philanthropy needs to move and act with greater urgency....And Nicole Robinson, director of Community Involvementfor Kraft Foods, says foundations should be careful not to forget the rest of the world even as they turn their attention to the victims of the economic crisis at home....

Good stuff. We're looking forward to reading (and sharing) more thoughts and perspectives from the conference as they're posted. And if you don't feel like checking back here for updates, you can always subscribe to the "What Matters?" RSS feed.

-- Mitch Nauffts

Women in the Spotlight: Women's Funding Network 15th Anniversary Annual Meeting

May 04, 2009

(Michael Seltzer is a regular contributor to PhilanTopic. In his last post, he answered a number of frequently asked questions about economic stimulus package funding for nonprofits.)

Women_hands Every year, grantmakers from across the nation and many corners of the globe gather to network, listen to subject experts, and explore collaborative opportunities with their peers at the Council on Foundation's annual conference.

This week, close to 1,400 funders -- down from 2,000 in past years -- have descended on Atlanta for four-plus days of panels, plenaries, and schmoozing. As in the past, the field's other infrastructure organizations find space before and during the crowded CoF schedule to convene as well.

I arrived on Friday to attend the 25th annual gathering of the Women's Funding Network (WFN), which attracted representatives of women's foundations from countries as different as Nepal, South Africa, Liberia, Australia, Canada, and the United States hoping to better understand how women around the world are being affected by the economic "tsunami" and the measures women's funds and their partner organizations are taking in response.

The messages those of us in attendance heard were both sobering and inspiring.

Continue reading »

Weekend Link Roundup (May 2 - 3, 2009)

May 03, 2009

Chain-links Here's this week's roundup of noteworthy posts from and about the nonprofit sector....

Communications/Marketing

At the Donor Power Blog, Jeff Brooks deconstructs another awful nonprofit ad. (H/t Katya Andresen.)

Data Visualization

Riffing on a delightful TED talks Wordle executed by Maria Popova (of the Brain Pickings blog), Neoformix's Jeff Clark came up with this awesome -- and we do not use that word lightly -- TED Wordle. If you love Ted talks, Wordles, and/or data visualization, you'll want to check it out.

Economy

On the Nonprofit Consultant Blog, Ken Goldstein cautions smaller nonprofit organizations against accepting stimulus funds. "Consider not only your short-term money needs," writes Goldstein, "but the long-term effect of the funding, and your capacity to take on the project."

Fundraising

Writing on the Future Leaders in Philanthropy blog, Jenn Thompson says there is a way for nonprofit organizations to get something out of Causes -- the Facebook application that was damned with faint praise in a Washington Post article last week. Thompson offers this advice to anyone starting a Causes campaign:

  1. Set reasonable expectations. Is money the only thing you'll measure? Is there value in word-of-mouth marketing or growing awareness of your brand?
  2. Is this going to be your field of dreams? If your only plan is to build it and think they will come, then you're going to be...unsuccessful....Do you have a plan to let your constituents know that you are on Facebook? Does your website utilize simple tools like a share bar?
  3. Who's making the ask? Do a little research. Find the influential people in your networks who have a following of friends and who will have a strong interest in your Cause.

Strikes us as good advice -- for any kind of fundraising campaign.

Impact

Revisiting the topic of metrics, Lucy Bernholz asks, "What happens when you measure the wrong thing?" The problem, she adds, is no longer that we're not measuring impact, it is just that we don't know which measures matter. We will get measures wrong, says Bernholz, citing two recent possibilities: an article in the Washington Post (see Fundraising, above) claiming that Facebook Causes had driven very little money to charity -- a metric disputed by Beth Kanter and others, who argue that Causes and similar tools are best for creating connections and awareness. And the case of microblogging service Twitter, where at the moment, writes Bernholz, the definition of "influence" is up for grabs. "I don't know what the best measures are of Twitter, Causes, or most other social media tools," says Bernholz.

But the debate about these measures does matter. These discussions are out in the open, the sides are (mostly) cogently argued, and folks can contribute to the discussion, learn something, and move on....This is what we need to make sense of the hundreds of ways of measuring social and environmental progress....We many not reach universal agreement on any of these things but let's get the debate, the evidence, the arguments for and against, and the determinations of what works for what out there. And keep moving forward....

Leadership

Rosetta Thurman profiles several young nonprofit leaders as a part of a new blog series, We Are the Possible.

Philanthropy

On the PhilanthroMedia blog, Dana Variano says that donors should support youth-centered efforts like Chores Mean More -- a campaign involving elementary school students in Bronxville, New York, who are donating their allowances to raise at least $2,800 for storybooks and writing supplies for the Red Rose School and Children’s Center in Kenya. The campaign, writes Variano, teaches kids important values and is likely to lead to their lifelong involvement with philanthropy and volunteering.

Public Health

Google Flu Trends, a site that uses aggregate Google search data to track flu outbreaks in the U.S. (read a short PND profile of the site here) has released a new version of the tool tailored to Mexico, the New York Times reports. And the Times itself has put together a terrific interactive map of swine flu cases worldwide.

To learn more about the H1N1 public health emergency, check out the Charity Navigator blog, which is compiling information about how the philanthropic community is responding to the growing number of cases.

Social Media

After attending the Nonprofit Technology Conference session "Confessions of a Social Media Campaigner," Peggy on the WiserEarth blog notes that it's great that nonprofits are embracing Web 2.0, but wonders whether ther are using these sites successfully.

Just published by NTEN, online ad agency Common Knowledge, and ThePort™ Network, the Nonprofit Social Network Survey Report trys to answer that question. A few of its findings:

  • Commercial social networks, especially Facebook, are popular, but average community sizes remain small, and presence is relatively short.
  • Nonprofits are allocating small but real resources, staff, and budget to their social networks.
  • Survey respondents prefer traditional marketing channels to promote their social networks, but are experimenting with new social media channels.
  • For now, there is very little real revenue generated on these communities via fundraising and advertising.

Allison Fine provides additional findings from the survey and suggests that the field needs a companion qualitative data collection effort to explore questions left unanswered. Fine would like to know, for example, more about what it means that social networking sites are thought of as "marketing" opportunities by many nonprofits as well as how organizations are using social networks to advance their missions.

Technology

Last but not least, Social Actions has announced the winners of this year's Change the Web challenge. Congratulations to the winners and the twenty-four finalists.

That's it for now. Have a great week!

-- Regina Mahone and Mitch Nauffts

TED on Sunday: Majora Carter on Environmental Justice

In this dynamic, emotional talk, MacArthur Award-winning activist Majora Carter tells the story of the South Bronx, the New York City neighborhood that had long been a blighted, crime-ridden dumping ground for the city's waste and industrial eyesores. Thanks in large part to the visionary Carter and a handful of allies in government and the philanthropic commnity, the neighborhood has experienced a rebirth that has helped catalyze a grassroots environmental justice movement across the country. In her talk, Carter reminds us that economic degradation begets environmental degradation which begets social degradation; and that -- unlike the new Yankee Stadium -- all future development in urban areas must embrace a triple bottom line ("people, the planet, profits"). As Carter likes to say, It's time to put people first. (Filmed: February 2006; Running time: 18:36)

Liked this talk? Then try one of these:

Ford Foundation to Close Russia, Vietnam Offices

May 02, 2009

FordFdn_logo Word last week that the Ford Foundation plans to close its offices in Moscow and Hanoi by the end of September is more proof (as if any were needed) that this economic crisis has been an equal opportunity destroyer of wealth.

Like many private foundations, New York City-based Ford has seen the value of its assets fall over the last year by nearly a third, to $9.5 billion. Under its new president, Luis Ubinas, a former McKinsey & Co. consultant, the foundation has trimmed its budget by $22 million through a series of cost-cutting measures. But, as the Wall Street Journal's Mike Spector reported on Wednesday, those measures apparently haven't been enough. The closing of its offices in Russia and Vietnam will eliminate thirty jobs and save the foundation an additional $4 million a year.

The foundation opened its Moscow office in 1996 and, according to a report it later published on its activities in Russia, focused its early grants on the social sciences "because these disciplines, severly hampered under the Soviet system, would be essential to developing and understanding the new democracy [there]." The report continues: "From 1996 through 2005, Ford invested more than $25 million in higher education and scholarship in Russia through three initiatives designed to strengthen academic innovation and create strong academic communities of scholars."

According to Foundation Center grants data, U.S. foundation giving in Russia from 2005-2007 averaged roughly $28.5 million a year, with Ford accounting for almost a third (28.5 percent) of the total.

U.S. Foundation Giving to Russia (2005-2007)

Year No. of Grants

Amount
2005 87 29,619,923
2006 94 21,383,964
2007 83 34,356,665

Ford Foundation Giving to Russia (2005-2008)

Year No. of Grants Amount
2005 43 8,146,100
2006 41 7,479,800
2007 32 8,701,500
2008 43 9,010,100


Grants recently awarded by the foundation to groups working there (click here for a complete list) include:

As it did in Russia, Ford opened its Vietnam office in 1996, and its presence in that smaller, less developed country, where it makes grants in six areas -- development finance, education and scholarship, environment and development, international cooperation, sexuality and reproductive health, and media, arts and culture -- is even more striking:

U.S. Foundation Giving to Vietnam (2005-2007)

Year No. of Grants Amount
2005 88 7,261,801
2006 86 7,367,625
2007 98 9,380,279


Ford Foundation Giving to Vietnam (2005-2008)

Year No. of Grants Amount
2005 29 4,636,521
2006 33 4,378,186
2007 47 7,533,529
2008 50 9,065,771


Grants recently awarded by Ford to groups working in Vietnam (click here for a complete list) include:

The foundation will continue to fund its International Fellowships Program in both countries and said it plans to continue its support for a project in Vietnam that works to mitigate the consequences of the U.S. military's use of Agent Orange, a chemical herbicide, during the Vietnam War. But its imminent departure from both -- one a former communist state struggling to make the transition to something resembling democracy, the other a "socialist republic" trying to integrate itself into the global economy -- will have ramifications. Will it lead to an exodus of private philanthropic dollars out of Russia? Vietnam? Will others step in to make up the shortfall? Is civil society in either country mature enough at this point to be self-sustaining? Or is Ford's departure a blow from which both countries will struggle to recover? Curious to hear what others think....


-- Mitch Nauffts

Annals of Wealth: Who Froze the Dogs Out?

May 01, 2009

Blame it on Trouble.

26helmsley_190 I'm not talking about the IRS kind, or the ungrateful grandchildren kind. I'm talking about the little white Maltese that hotelier and real estate magnate Leona Helmsley coddled while she was alive and tried to leave $12 million to when she died. That must have been one unlikeable dog.

(Photo: Jennifer Graylock, Associated Press)

How else to explain the announcement last week that the trustees of the Leona M. and Harry B. Helmsley Charitable Trust -- her brother Alvin, two grandchildren, one of her lawyers, and a friend -- had awarded $136 million in grants to support medical research, conservation, education, and organizations working to provide human services -- and $1 million -- or .7 percent of the total -- to be divided equally among ten animal welfare charities?

Many people, New Yorkers in particular, will remember the public outcry that followed on the heels of a Stephanie Strom article in the New York Times last summer. In the article, Strom revealed that a two-page "mission statement" signed by Helmsley before her death in August 2007 specified that her trust, then valued at between $5 billion and $8 billion, be used for the care and welfare of dogs.

The whole affair came to a boil a week or so later when Ray D. Madoff, a law professor at Boston College (and no relation to the disgraced Ponzi schemer) penned an op-ed for the Times in which she criticized the charitable deduction and, by extension, private foundations established in perpetuity as mechanisms "by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality."

The charitable deduction, Madoff argued, "constitutes a subsidy from the federal government. The government," she continued

in effect makes itself a partner in every charitable bequest. In Mrs. Helmsley's case, given that her fortune warranted an estate tax rate of 45 percent, her $8 billion for dogs is really a gift of $4.4 billion from her and $3.6 billion from you and me....

I'm not a tax expert, but it always seemed to me Professor Madoff conveniently overlooked a crucial point: The billions that Leona Helmsley bequested to a charitable trust were after-tax dollars, in that they had been taxed as income or capital gains while she was alive. How a tax lawyer or accountant can equate the tax revenue forgone when a Helmsley decides to create a charitable trust with the hundreds of billions the federal government has handed out via TARP or the tens of billions it annually gives to American farmers and agribusiness for the production of corn, cotton, rice, and wheat -- i.e., money that actually comes out of my pocket and flows into the pockets of others -- is a mystery to me.

More troubling, in my view, is Madoff's criticism of perpetual foundations and trusts, which, she argues, become less effective over time.

By setting aside assets for the uncertain needs of the future, we deprive ourselves of resources for addressing the obvious and compelling needs of today.

We should not give a blank check to support the whims of the wealthy. There should be a limit -- a dollar amount or a percentage of the estate -- on the estate tax charitable deduction. People could still give to charity as they like, but after a point they would be giving after-tax dollars. The deduction should be lower for bequests to private foundations than for money given directly to good cause....

The implications of Madoff's argument are two-fold: 1) that there's a hierarchy of needs in society at any given moment that foundations and wealthy philanthropists routinely fail to address in a meaningful way; and 2) we should not use the tax code to encourage the saving of a portion of the wealth of society when those needs are pressing, as they are today. Both points are debatable -- and I hope to do so in future posts.

What about Leona Helmsley's final wishes with respect to the charitable uses of her fortune? In February, a Surrogate's Court judge in Manhattan ruled that the two-page document Helmsley drew up was not legally binding as a will and that that the trustees of her estate "may apply trust funds for such charitable purposes and in such amounts as they may, in their sole discretion, determine." The irony of some those funds being used to create two research facilities bearing her name, in perpetuity, at Mount Sinai Medical Center is surely not lost on Professor Madoff.

Leona Helmsley didn't have many friends in life, and she probably wouldn't be surprised by how she has been treated in death. You can blame it on the dog. Or the courts. But you can't say it's fair.

As always, we welcome your comments. 

-- Mitch Nauffts

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