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22 posts from June 2009

Quote of the Day (June 9, 2009)

June 09, 2009

"The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

"You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush's policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

"The first category -- the business cycle -- accounts for 37 percent of the $2 trillion swing. It's a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists' assumptions about how much in taxes the government would collect in future years.

"About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

"Mr. Obama's main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies -- together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama -- account for 20 percent of the swing.

"About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas...."

-- Dave Leonhardt, "Sea of Red Ink: How It Spread From a Puddle" (New York Times, June 9, 2009)

Weekend Link Roundup (June 6 - 7, 2009)

June 08, 2009


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

Arts and Culture

On the Philanthromedia blog, Dana Variano reviews The Philanthropist, a new play starring Matthew Broderick, and concludes that the moral of the drama is that we have to "listen to the parties to whom we are giving." Adds Variano: "Really listen, rather than just hear. And then, we have to give without any strings attached. Only then, I think, can the world begin to view philanthropy in a less skeptical manner, and give the act the credit which it deserves...."


On her Philanthropy 2173 blog, Lucy Bernholz asks readers to imagine a world in which data -- "high quality, informed, diverse, and meaningful data on nonprofits and change organizations, the work they do, and the impact they have" -- is available for free. What would you do with it? What value would you add to this type of information? Inquiring minds want to know.

With news of mergers and cutbacks in the nonprofit sector dominating headlines, everyone is speculating about the future of the sector. But before we bring in the bulldozers and dumpsters, writes Rosetta Thurman, we should take a deep breath and look at things that can be changed right now. Good advice, as always.

International Affairs/Development

On the Business of Giving blog, Kristi Heim asks whether "offshore farming," the practice of foreign countries buying or leasing land in Africa to produce food for the folks at home, is good for Africa. Citing a report in The Economist which found that nearly fifty billion acres of African farmland has been acquired by China, Saudia Arabia, and other countries in recent years, Heim writes: "Critics call it the newest form of colonialism and say the deals are destabilizing land grabs that push out local farmers, [while others] say that after decades of neglect and failure by international aid organizations to improve the situation, commercial investment might actually help." Regardless of your view, this is an issue that is not going away.


A new report from J-Lab, the Institute for Interactive Journalism, found that nearly $128 million in grants were awarded to at least 115 new media projects in 17 states and the District of Columbia from 2005 to mid-2009. On her blog, Allison Fine explains that the finding is significant for a couple of reasons:

  1. Although the Knight Foundation is the largest funder on the list, they are not the only funder of new journalism projects in the U.S.
  2. The projects funded are not only large and national in scope, but small and local as well
  3. The list of funders is a mix of household names -- like Gates and Hewlett -- and smaller, local foundations, proving that funders don't have to come from journalism or be born to new media to appreciate the need to invest in new ways of collecting, curating, and distributing news and information


The Chronicle of Philanthropy recently reported that the Bill & Melinda Gates Foundation had received $10.4 million in unsolicited donations over the last year or so, prompting Tactical Philanthropy's Sean Stannard-Stockton to comment: "I think this is direct evidence of individual donors’ increasing interest in impact. Why did Buffett give money to the Gates Foundation? He thought they were better donors." But is Gates the only effective foundation out there? "If you were going to donate to a well known foundation," asks Stannard-Stockton, "which one would it be?"

Speaking of the Gates Foundation, Jeff Raikes, the foundation's CEO, reflects on his transition from a career in business (he was a longtime Microsoft exec) to one in philanthropy in his first annual letter as CEO. Writes Raikes:

As I was making the transition, I asked many people for advice. Over and over again, I heard a similar refrain: that the biggest difference between business and philanthropy is that in business, the market tells you exactly how you’re doing. In philanthropy, most people said, there is no market.

Gradually, I started to take some issue with this idea. Without a doubt, businesses do get pure market feedback in many cases. Costco generates a detailed sales report every single day....

[But] in a business like software, sometimes you have to invest in innovations that don’t reach the market for a decade or more. In those instances, you rely on the other tools at your disposal to determine if the potential reward is worth the risk. You do your homework before you take on a project. You gather feedback from others with experience and good judgment. You use whatever interim data are available to measure progress as rigorously as you can.

Foundations are in a similar position. Often, finding the best ways to help people improve their lives takes many years of research and experimentation....

Click here for the full text.

Social Media

With more nonprofit organizations using social networking sites to connect with donors and a wider audience, Social Citizens blogger Kristin Ivie wonders whether the young nonprofit staffers using these tools on behalf of organizations should create separate personae to avoid "letting the personal bleed into the professional"? Writes Ivie: "I agree that social media can be extremely valuable for organizations, and they help breathe new life into causes and missions. But does that mean pieces of our personal online personas need to die?" What do you think?

On the Mashable blog, Sharlyn Lauby, president of Internal Talent Management -- an organization that specializes in employee training and human resources consulting -- offers 10 things every organization should add to their social media policy. Her list of tips include:

  1. Introduce the purpose of social media
  2. Be responsible for what you write
  3. Be authentic
  4. Consider your audience
  5. Exercise good judgment
  6. Understand the concept of community
  7. Respect copyrights and fair use
  8. Remember to protect confidential & proprietary info
  9. Bring value
  10. Productivity matters

Last but not least, the Global Partnership Center earlier this month hosted TED@State, the first government-sponsored TED event, as a way to encourage more public-private partnerships. Speakers at the event included social-media expert Clay Shirky, author of Here Comes Everyone; Acumen Fund CEO Jacqueline Novogratz; futurist Stewart Brand, author of the Whole Earth Catalog; and "bottom billion" economist Paul Collier. The plan is to make video of the individual talks available free of charge on the TED Web site in the near future. We'll let you know.

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

-- Regina Mahone

TED on Sunday: Seth Godin on Leadership

June 07, 2009

We are at an inflection point with respect to the way ideas are created and spread, argues marketing guru Seth Godin in this fast-paced talk. Thanks to the Internet and "personalized" mass media, society has benefited from an explosion of "tribes" -- communities of like-minded, geographically separated people -- and the emergence of such tribes has in turn changed the nature of leadership. People "join" tribes not because they need to (the mass industrialization model) or are persuaded to (the advertising model), but because they want to. In such an environment, leadership is not about commanding others; it's about finding a group that has a yearning and motivating the group to follow. The days of the "sheepwalker" are over, says Godin. Today, every individual can lead and do his or her bit to change the world. So what are you waiting for? (Filmed: February 2009; Running time: 17:23)

Liked this talk? Try one of these:

-- Mitch Nauffts

Giving While Living

June 06, 2009

Beyond5_Beldon To be or not to be? That seems to be the question for a growing number of family foundations, a new report from the Foundation Center and the Council on Foundations finds. Based on survey responses from more than a thousand foundations, the report, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? (46 pages, PDF), found that while perpetuity is the norm for most family foundations, a relatively small number plan to have a limited lifespan (12 percent), while a larger segment (25 percent) are undecided -- either because they haven't discussed the issue or due to uncertainty about the family's future involvement in the foundation.

(Image courtesy of Northern California Grantmakers)

"Uncertain" isn't a word one would use to describe John Hunting, the Steelcase Furniture heir who created the Beldon Fund in 1982. In 1998, Hunting, a committed environmentalist, endowed the foundation with $100 million from the sale of his stock in Steelcase, which had gone public the year before, and made the decision to spend out its assets over the next ten years. In his late 60s at the time, Hunting gave four reasons for spending out: foundations should have a limited lifespan; mounting environmental problems couldn't wait; the so-called intergenerational transfer of wealth would replenish the philanthropic "well"; and he wanted to enjoy the results of his philanthropy in his lifetime.

Hunting hired Bill Roberts, a former executive with the Environmental Defense Fund, to be the fund's executive director (Roberts was succeeded in that position by Anita Nager in 2001), and over the next decade they used the fund's resources to build public and policy support for environmental protection, spending between $10 million and $15 million a year.

As a still-vital Hunting explained when he and Nager dropped by the offices of PND last week, the goal from the outset was to focus the fund's relatively modest resources over a short period of time so as to maximize the fund's impact. When asked whether he and his colleagues had succeeded in that goal, Hunting didn't hesitate: "Absolutely." (We'll be posting a transcript of our conversation with John and Anita in a week or so.)

The Beldon Fund made its last grants in June 2008 and officially closed its doors at the end of May. Over the last month or so, Hunting and Nager have been making the rounds to talk about what they learned from their spend-out experience. They're also promoting a new Web site and publication, Giving While Living: The Beldon Fund Spend-Out Story (28 pages, PDF), that provide comprehensive information on Beldon's program/investment strategies, operations, and outcomes. Both are excellent.

As the Foundation Center report mentioned above makes clear, most philanthropists are still uncomfortable with the idea of a limited lifespan foundation. On the other hand, more and more donors are looking to achieve significant impact with their philanthropic resources -- and if they can do so in a limited time frame, all the better. Hunting and his colleagues have some thoughts on that score:

1. Learn quickly. Having a sunset date means that there's limited time to learn from mistakes and adjust course.

2. Use evaluation to refine strategy. Develop programmatic benchmarks of success and use external evaluations with anonymous feedback to assess progress. An evaluation that looks at the overall impact of the program strategies, rather than just individual grants, will indicate if you're on the right track or need to make changes.

3. Keep a tight focus. It's better to start with a few areas where you are likely to make a difference than to take on too many issues and then have to pare down.

4. Be bold. Develop or adopt innovative strategies geared to being change within a limited time frame.

5. Manage risk. Taking chances can lead to breakthrough solutions, but not all bets pay off. Learn from those that don't work and move on.

6. Look for synergy across program areas. Develop a strategy early on to connect, where possible, the work of major programs in order to achieve greater scale and deeper impact.

7. Ensure budget flexibility. Allocate assets to allow flexibility to respond to unanticipated funding opportunities or critical needs in the field.

8. Build the field. Hire staff members who can bring other funders to the work.

9. Use all the foundation's resources -- not just money. Capitalize on staff's issue expertise, funder connections, and ability to serve as a sounding board for problems and ideas.

You'll find more of the same -- including specific tips about spending out, promoting collaboration among grantees, building a field of practice, engaging other funders, and responsible exiting practices -- on the new Beldon Fund site.

-- Mitch Nauffts

Free Foundation Center Widgets

June 04, 2009

Now this is cool...


Foundation Finder offers basic information on grantmakers in the U.S. including private foundations, community foundations, grantmaking public charities, and corporate giving programs.

With 990 Finder, you can search quickly for an organization's IRS return, just enter a name, state code (e.g. NY), ZIP code, employer identification number (EIN), or fiscal year.

Grab one or both widgets and put 'em on your personal or organization's Web site. For more information, click here or here.

Dan Pallotta Defends His Thesis

June 02, 2009

Last week, I had the pleasure of attending the third installment of Jayme Koszyn Consulting's Give Five Speaking Series, featuring Dan Pallotta, author of Uncharitable: How Restraints on Nonprofits Undermine Their Potential, and moderator Leonard Lopate, host of the highest-rated public radio talk show in New York City.

By 7:10 P.M., the audience had not quite filled the orchestra section of Columbia University's Miller Theater. But Lopate was eager to get started and immediately asked Pallotta to set the record straight about Pallotta TeamWorks, the controversial for-profit special events company founded by Pallotta in the early 1990s. Controversial because, in addition to coming up with the idea for AIDSRides and Breast Cancer 3-Days to raise money for AIDS and breast cancer research and services, the company was known for taking a hefty chunk of the gross to cover its overhead costs. Eventually, a number of the company's most important clients, including the Avon Products Foundation, got tired of sharing the proceeds with Pallotta and his colleagues and cancelled their contracts. The company collapsed shortly thereafter.

As you'd expect, Pallotta defended the fees charged by the company. The money spent on overhead, including items such as "extravagant" advertising, was integral to the success of its fundraising efforts, he said. And, as he was quick to point out, successful they were: over the course of nine years, Pallotta TeamWorks raised over half a billion dollars and netted $305 million in direct charitable contributions for AIDS and breast cancer organizations.

"We went a long time walking around in the airport without wheels on our suitcases," he said, before adding that his company was ahead of its time.

Uncharitable, Pallotta's first book, has stirred considerable discussion (here, here, and here, for example), not least because it argues there are five flaws in the nonprofit sector's value and belief system: constraints on compensation; prohibition on risk; discouragement of long-term vision; discouragement of paid advertising; and prohibition on investment return. (You can learn more about Pallotta's views on his blog, Free the Nonprofits.)

Pallotta's book argues that adopting a for-profit approach to fundraising would help nonprofit organizations inspire more people to give, which in turn would mean more money available for making real change. The sector struggles to make an impact, he argues, because the percentage of GDP allocated to philanthropy has remained the same for years. In other words, charity is not growing its market share and therefore is limited in how much it can do to reduce suffering around the world.

How does the argument that charity should behave more like business hold up against the backdrop of a prolonged economic crisis caused by deregulation, lax oversight, and an every-man-for-himself mentality, Lopate wanted to know. "The method for fixing a leaky boat does not change in the rain," Pallotta replied. Charity has been broken for a long time, he added, and our current economic straits do not absolve of us of the responsibility for fixing it.

Toward the end of the event, after Pallotta and Lopate had begun taking questions from the audience, someone asked why young people should commit to the nonprofit sector rather than take their talents to the for-profit sector, where they might actually be rewarded for their efforts and ideas. "It's up to young people to take a stand and say they will not sacrifice their lifestyle to work for lower salaries," Pallotta answered.

Easier said than done. After reading Uncharitable and hearing Pallotta speak, I can't help but wonder how my generation of nonprofit professionals is expected to react to the news that "the system is broken." Should we throw in the towel, go for the big corporate paycheck, and hope that we can revive our passion to make a difference ten, twenty, thirty years down the road when, presumably, we have "feathered our nests"? Or should we bite the bullet, accept the low salaries, marginal benefits, and diminished lifestyle expectations that come with a nonprofit job and be grateful we have a job, any job?

Pallotta would reject that choice as a false dichotomy. In fact, he would say that we need more people in the trenches, not fewer, to fight for a more effective charitable system. As he writes in Uncharitable:

I am not saying we don't need charity. I am saying we don't need a separate set of rules for its conduct. We need to help the poor. We need all the good people and organizations that are presently trying to help them. We just don't need a different ideology for doing it. We need to cure the disease. We don't need a different set of rules for doing it. Indeed, to the extent we are curing the disease, it is largely on the basis of for-profit ideology....

What do you think? What advice would you give a young nonprofit professional who wants to make a difference, who wants to tackle some of the big social and environmental challenges that confront us, but who is worried that she might not be able to afford a decent home, send her kids to a decent high school or college, or be able to afford retirement? We'd love to hear your thoughts....

-- Regina Mahone

On Mentors

June 01, 2009

JohnWGardner I finally made time over the weekend to finish The Blue Sweater, Jacqueline Novogratz's account of her efforts over twenty-plus years to develop entrepreneurial solutions to poverty in Africa and South Asia. The book is an interesting mix of the personal and reportorial, and includes an extended section on Novogratz's experiences in pre- and post-genocide Rwanda.

Novogratz, who, with seed capital from the Rockefeller Foundation, the Cisco Foundation, and three individual philanthropists, founded the Acumen Fund in 2001, owes her brilliant career to years of hard work, a profound commitment to social justice, and an abiding faith in the idea of human progress. She's also had some wonderful mentors.

One of those mentors was John W. Gardner, president of the Carnegie Corporation (1955-1965), Secretary of Health, Education, and Welfare (1965-1968) under Lyndon Johnson, author, founder of Common Cause and Independent Sector, and, to coin a phrase, citizen-philosopher par excellence. After almost a decade as a development consultant in Africa and a short stint at the World Bank, Novogratz became a student and friend of Gardner's, then in his seventies, at Stanford's Graduate School of Business in the late 1980s. Nearing the completion of her MBA studies and wondering what to do next, she found herself with a decision to make: accept a fellowship at the Rockefeller Foundation or move to Czechoslovakia to help start a small-enterprise fund in that newly liberated country. Naturally, as she writes in The Blue Sweater, she turned to her friend for advice:

John felt I should...accept the fellowship with the Rockefeller Foundation. "It will give you an important vantage point on what philanthropy is, both domestically and internationally," he said. "And you already have worked in a developing country building enterprises. Life at your age should be about putting new and different tools in your toolbox. You already understand that communities today transcend geography and that you belong to multiple ones -- Stanford, women, the community that cares for Africa. But to be truly effective, especially internationally, you must root yourself more strongly in your home's own soil. It is time for you to know this country, as well. Only by knowing ourselves can we truly understand others -- and knowing from where you come is an important part of knowing who you are."

"Surely there are enough people interested in this country," I told him. "My contribution will come from focusing globally."

He shook his head. "You should focus on being more interested than interesting" -- something I'd heard him say countless times. "What happens overseas is profoundly influenced by what happens here, especially now. And the reverse is true, as well...."

It's a great anecdote (and wonderful advice), and it got me thinking about the handful of people -- many of them teachers and most of them men -- who have, whether they knew it at the time, mentored me at various stages of my life. What, I wondered after re-reading the anecdote in Novogratz's book, is the difference between a mentor and a friend or colleague with a knack for offering valuable advice? Is it the quality of advice given? The quantity? Is a mentor, properly speaking, always older than the person he or she mentors? And how, if at all, do gender and race factor into the equation?

In these uncertain economic times, with unemployment and basic needs rising and nonprofits scrambling to stay afloat, the sector needs effective mentors more than ever. Do you have a story you'd like to share about an individual who mentored you at an important juncture in your professional career? What was the advice he or she gave you? And what, if anything, did they expect in return? 

-- 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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