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23 posts from March 2010

Weekend Link Roundup (March 27 - 28, 2010)

March 28, 2010

Chain-links Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....


On her Non-Profit Marketing blog, Katya Andresen announces the newest e-book from Network for Good, The 8 Online Fundraising Changes You Must Make in 2010. In it, Andresen advises nonprofit marketers to "Spend more time pointing to the work of others and celebrating what they say than you do talking about yourself. Rather than pontificating on a topic, share the thoughts of another person and praise their insight. The more you do this," she adds, "the more popular you become."


Future Fundraising Now blogger Jeff Brooks shares five warning signs that a fundraising consultant is lying to you:

  1. When their pitch to you is a powerful new way to get young donors.
  2. When their thesis is "(Direct mail, e-mail, blogging, etc.) is dead."
  3. When they talk about the future, but not the present.
  4. When they already know your problem before they've even spent some time with you and your data.
  5. When they won't explain how their new cutting-edge product works because it's "proprietary."


On the It's Your World blog, World Affairs Council president and CEO Jane Wales reflects on a recent study which suggests that "this is the first time in history that society is experiencing a delay in leadership transition, as people live longer and retire later." Adds Wales, "If the philanthropic sector fails to tap the next generation's skills and knowledge, the emerging leaders will simply move on to sectors that will...."


On the Tactical Philanthropy blog, Sean Stannard-Stockton asks his readers to weigh in on "what program, activity or entity has the potential to be a killer app that drives a larger uptake of engaged philanthropy."

Getting Attention's Nancy Schwartz shares six key takeaways from a new white paper that examines The Next Generation of American Giving. The report, notes Schwartz, is "the most in-depth study to date of how donors of different generations learn about our organizations and give."

Allison Fine admits in a recent post that she's still trying to figure out "the point" of the Pepsi Refresh Project?. Writes Fine:

When the contest was first announced it was framed in the media as Pepsi choosing philanthropy over Super Bowl ads. But as [the social media blog] Mashable warned, if the campaign worked, "..the company can build brand awareness while also helping out communities across the world. On the flip side, if not executed properly, the company could wind up spending $20 million on philanthropic causes (which is to be commended), without getting the benefits of a buzz-generating ad campaign....

Which is it, Pepsi? Are you interested in the kinds of returns that an expensive ad campaign would create? For instance, are you interested in greater sales? Or are you interested in philanthropic outcomes, improved reading skills or greener classrooms or better health outcomes? Or are you betting that that this new form of philanthropy can create a hybrid of the two?...I need to know, Pepsi, please tell me!

Social Media

Writing on the Nonprofit Tech 2.0 blog, Heather Mansfield shares ten social media metrics for nonprofits -- and how to track them.

Last but not least, the Case Foundation's Kari Dunn Saratovsky announces the launch of CaseSoup, "an interactive hub of videos and live discussions centered around some of the big issues and areas of focus that are important to us here...."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- Regina Mahone

This Week in PubHub: Climate Change Mitigation and Adaptation

March 26, 2010

(Kyoko Uchida manages PubHub, the Foundation Center’s online catalog of foundation-sponsored publications. In her last post, she wrote about women and health.)

"Defy Barriers, Effect Change: Access to Health, Food and Water" is the theme of the upcoming ninth annual Global Philanthropy Forum conference, April 18-21, in Redwood City, California. As it did last year, the Foundation Center is providing grants data, research, and relevant news items for four of the plenary sessions: "Providing Food Security," "Advancing Global Health," "Improving Access to Water," and "Climate Change Mitigation and Adaptation." In advance of the conference, the center will be featuring reports on each of these issue areas at PubHub. This week's focus is on "Climate Change Mitigation and Adaptation."

How can we address the causes of climate change and minimize the effects of global warming? Black Carbon: A Science/Policy Primer (Pew Center on Global Climate Change) focuses on a component of soot that absorbs sunlight in the atmosphere, changes rainfall patterns, and accelerates the melting of snow and ice. But unlike most greenhouse gases, the report notes, soot particles have a short atmospheric lifetime, so emissions reductions produce almost immediate results. As an alternative to controlling black carbon emissions as part of a comprehensive global climate policy, the authors suggest a targeted regional approach focused on major sources of those emissions.

The challenges of taking a global approach to climate change mitigation are spelled out in Verifying Mitigation Efforts in a New Climate Agreement (Pew Center on Global Climate Change). The issue brief examines the key elements of a rigorous system of measurement, reporting, and verification that would lead to a clear determination of individual country's compliance under a facilitative (rather than punitive) post-2012 framework.

Even as efforts to slow global climate change gain urgency, regions affected by droughts, floods, and other climate change-related hazards must find ways to adapt sooner rather than later. What might a climate change-resilient development strategy look like? Shaping Climate-Resilient Development: A Framework for Decision-Making (Economics of Climate Adaptation Working Group) offers guidance with respect to cost-effective measures that could offset economic losses from climate change effects and result in more sustainable development models.

Last but not least, the Rockefeller Foundation white paper Building Climate Change Resilience looks at a new initiative by the foundation to raise awareness of the need to build resilience to climate change effects and test and support local approaches to adaptation in Asia, Africa, and the United States.

Obviously, global climate change will affect almost every aspect of our lives -- from agriculture, to food security, to land use, to trade and transportation -- over the coming decades. And that means we'll all have a role to play in shaping mitigation and adaptation efforts. Be sure to check out the more than seventy other reports on global climate change in PubHub. And let us know what you think.

-- Kyoko Uchida

One-Time Change or Here to Stay? New Roles for Foundations as They Adapt to New Economic Reality

March 25, 2010

(Chris Cardona is Consultant in the Philanthropy practice at TCC Group, a 31-year-old consulting firm that helps foundations, corporate giving programs, and nonprofits develop strategies to achieve social impact. This is his first post for PhilanTopic.)

Dollasign_recession "Not business as usual, but not business as unusual, either...."

It's always good when a panel that frames a question in its title actually provides a concise answer to that question. And it's even better when the answer provokes additional interesting questions. Such was the case this past Monday at the Foundation Center, when TCC Group and Philanthropy New York co-sponsored, along with the host, a panel discussion entitled "Fundamental Change or More of the Same: How Will the Economic Crisis Alter the Way Foundations Do Business? (And What You Can Do About It)."

It's also good when a "panel discussion" is heavy on the latter and light on the former. After presentations from Steven Lawrence of the Foundation Center and Paul Connolly of TCC Group about quantitative and qualitative trends in funder response to the new economic reality, Brad Smith, president of the Foundation Center, moderated a lively discussion among three CEOs of foundations of very different types and sizes: Paul Grogan of the Boston Foundation, Stephen Heintz of the Rockefeller Brothers Fund, and Maria Mottola of the New York Foundation. It’s worth highlighting a couple of overall trends that surfaced in that conversation. (And check out TCC Group’s Twitter feed for more choice nuggets from the discussion.)

As the quote above suggests, foundations are neither sticking to their guns nor embracing completely different approaches as they adapt to the new economic reality. Based on their knowledge of the communities they fund, they’re experimenting with new and different roles. For some funders, providing "coping mechanisms" for grantees is the order of the day. For others, it's partnering with technical assistance providers to ensure that grantees are not accidentally being inundated with technical-assistance resources and that TA offerings are non-redundant and coordinated. Still others are partnering with the public sector more openly and explicitly. Often, these partnerships involve some back and forth; it’s difficult to partner with government and not be concerned by instances of corruption and lack of transparency. Indeed, some foundations are working in new and creative ways to promote greater accountability and transparency within the public sector. Given the significant expansion of government involvement in health care occasioned by this week's passage of the health reform bill, such a role seems timely and appropriate.

It remains to be seen whether these and other responses are adopted permanently or will be tied to the duration of the downturn. For place-based funders, a new emphasis on community leadership seems to be something that fits comfortably with their mission. For everyone else, the implications for nonprofits looking to partner with funders experimenting with new roles are worth considering.

What kinds of things do you see funders doing in response to the new economic reality? Are they doing enough? Not enough? And do you have a favorite example (or two) you can share? Use the comments section below

-- Chris Cardona

Readings and Other Stuff (March 24, 2010)

March 24, 2010

Here are a few things that caught our attention today:

What's on your mind?

Finance and Budgeting Tips for Young Nonprofit Workers

March 23, 2010

Budgeting_in_tough_times On a dreary Monday night, I headed uptown to the Young Nonprofit Professionals Network (YNPN) event "How to Live on a Nonprofit Salary: The Ins and Outs of Personal Finance for the Nonprofit Professional." The seminar was led by Dana Skallman, financial adviser and board chair of YNPN-NYC, a regional affiliate of the professional development group that supports "the next generation of nonprofit leaders by providing opportunities for skill-building, information sharing, and networking."

Held at the Support Center for Nonprofit Management, the seminar covered a broad range of issues -- credit, debt elimination, personal budgeting, investing, and retirement savings -- and Skallman's presentation was perfectly pitched to the fifteen or so nonprofit professionals -- all under the age of thirty-five -- in attendance.

Here are some of the topics she covered and a few takeaways from the discussion:

Student loan debt. Two recent pieces of legislation that every young nonprofit employee should be aware of are the public service loan forgiveness program and the Income-Based Repayment (IBR) program. Although you have to have federal student loans to be eligible for either, the programs in combination can help you reduce your monthly loan payment(s) and the actual loan repayment schedule.

Setting up a rainy day fund. Financial advisers used to recommend setting aside three to six months of net income for a rainy day. But these days, with the economy still wobbly, people are advised to set aside six to eight months of net income. Everyone in the room agreed that could be hard, if not impossible, in New York City, so Skallman instead suggested setting small amounts of money on a regular basis with the goal of saving up to six months of net income. Developing a regular savings habit, added Skallman, is much more important than making a big deposit to a savings account every once in a while.

Increasing your monthly income. Skallman also recommended getting creative about your skill set (e.g., selling crafts or investing [wisely] in real estate) as a way to generate additional income.

Investing/saving for retirement in your 20s and 30s. If you're in your twenties or thirties, start saving for your retirement now -- and especially before you start having kids and saving for their education. Skallman also recommended that we consider putting our short-term savings (funds set aside for for things like next year's vacation, grad school, or a down payment on a home) in a money market account. Even though money markets are paying zero interest these days, they are insured (up to $200,000) by the Federal Deposit Insurance Corporation, which means you'll never lose your initial deposit.

Budgeting on a nonprofit professional's salary in NYC. Go for free entertainment options (e.g., DVDs from the library instead of Netflix, concerts in the park instead of concerts at Madison Square Garden, etc.) as much as possible, and try hard to reduce your discretionary spending. Here are a few ideas the group came up with:

  • brown bag your lunch
  • trim your cell and cable/Internet bills by using Skype and dumping the premium channels (technology is a budget-savvy person's best friend!)
  • make a list before heading out to the grocery or discount store
  • monitor your monthly statements for erroneous or undeserved charges

Okay, it's a start. What are your tips for saving money and keeping yourself on a budget? Enquiring minds want to know. And what other bits of financial wisdom do you have for young nonprofit professionals? Use the comments section below to share your thoughts....

-- Regina Mahone

World Water Day 2010

March 22, 2010

It's World Water Day, and the theme of this year's campaign, "Clean Water for a Healthy World," is designed to raise awareness of the estimated 1 billion people without access to clean water and the 2.5 billion people who have no safe way of disposing of human waste. Those are unimaginably large numbers -- and they represent a staggering burden on the growth potential and future of dozens of countries around the globe.

Indeed, the stakes for hundreds of millions of people couldn't be higher, as the World Bank Institute reminds us:

Water is essential for all dimensions of life. Over the past few decades, use of water has increased, and in many places water availability is falling to crisis levels. More than eighty countries, with forty percent of the world’s population, are already facing water shortages, while by year 2020 the world’s population will double. The costs of water infrastructure have risen dramatically. The quality of water in rivers and underground has deteriorated, due to pollution by waste and contaminants from cities, industry and agriculture. Ecosystems are being destroyed, sometimes permanently. Over one billion people lack safe water, and three billion lack sanitation; eighty per cent of infectious diseases are waterborne, killing millions of children each year....

I can't think of a better illustration of the fragile nature of the planet's fresh-water supplies than this graphic, which I shared with readers back in December:


To learn more about the state of the world's freshwater supplies and what you can do to ensure the sustainability of those supplies -- for everyone, now and into the future -- check out these resources:

Have a favorite water resource? Use the comments section to share...

-- Mitch Nauffts

Weekend Link Roundup (March 20 - 21, 2010)

March 21, 2010

Chain-links Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Disaster Relief

On the Philanthropy Potluck blog, Chris Murakami Noonan, communications associate at the Minnesota Council on Foundations, shares some great takeaways from a Haiti-quake-relief briefing hosted by the Global Funders Network.


In a different post, MCF fellow Tawanna Black discusses diversity with Shawn Lewis, a trustee of the Pan African Community Endowment at the Saint Paul Foundation. "[T]o create true inclusion that drives results for an organization," says Lewis, "it takes focus, commitment, deep authentic relationships with communities of color, and an enduring will to do the work."

Nonprofit Management

On his Harvard Business Review blog, Uncharitable author Dan Pallotta labels concerns aired by a group of U.S. senators about the compensation received by top executives at the Boys & Girls Club of America an "undeserved attack." Adds Pallotta: "It's immoral that in one 24-hour news cycle these leaders have manufactured a massive public relations and fundraising nightmare for the Boys and Girls Clubs without the slightest effort to evaluate the CEO's compensation in the context of the value she is providing." Be sure to check out the lively discussion in the comments.

Sarah Fischler, director of consulting and special projects for the Denver-based Community Resource Center, offers a different take on the debate at her blog. "The controversy over executive pay in the biggest organizations undermines and distracts from the equally important conversation about the continued starvation (for more) of the nonprofits on the other end of the spectrum," writes Fischler, who adds:

Without additional investment in organizational infrastructure and capacity, most small to mid-sized nonprofits will continue to piece together resources to inch their mission forward. While I mostly agree with Rosetta Thurman that CEOs of large nonprofits who want for-profit salaries should work for for-profit companies, those of us working at smaller, community-based nonprofits need to continue to advocate and make a stronger case for greater investments in the infrastructure and overhead necessary to support strong leadership, fair pay and benefits for staff, effective operations, and better organizational results....


Noting that manifesto-issuing is "all the rage" these days, Lucy Bernholz offers a manifesto of her own related to "open philanthropy." In the post, Bernholz urges the philanthropic community to experiment with tools that increase transparency and adds:

The tools we have today for gathering input, sharing data, exchanging ideas with attribution while encouraging reuse and remixing, creating sustainable enterprises dedicated to social change, and engaging multiple communities over time have exploded in number and pervasive use....Now is the time to consider en toto the systems and tools of giving so that [they include] the tools, norms, and expectations of our times. This will position them to work most successfully in relation to the public and commercial sectors and increase our chances of making lasting change....

What do you think of Lucy's manifesto? Share you thoughts in the comments section below.

Social Media

Network for Good's Katya Andresen shares some new stats and insights on social media, Twitter usage, and mobile giving on her Nonprofit Marketing blog.

In a related post, Allison Fine takes a closer look at a post on the Mashable blog, What Social Media Users Want, which concludes "that people with similar interests gravitate to particular [social networking] sites." That's okay, says Fine. "[While] social networking sites need a critical mass of people in order to create vibrant, robust conversations...not everyone has to be on every platform." And that's something "that is important for nonprofits to understand."

On the Case Foundation blog, Kristin Ivie outlines what nonprofits can learn from past Twestival fundraising events.

Last but not least, Beth Kanter reflects on her experience presenting (alongside panelists Holly Ross, Amy Sample Ward, David Neff, and Kari Dunn Saratovsky) at the recent South by Southwest Conference in Austin. As always, Beth's thoughts are well worth your time.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- Regina Mahone

Readings and Other Stuff (March 19, 2010)

March 19, 2010

Break out the sandals -- it's summertime in the city! When we weren't staring out the window, here are a few things that caught our attention today:

Have anything you'd like to share?

CoF's 2010 Legislative Agenda

March 18, 2010

With the healthcare reform bill staggering toward passage and financial reform legislation chasing its tail in the Senate, members of the 111th Congress must be looking forward to their spring recess. When they return in April, they'll be asked to reach agreement on a jobs bill, some sort of cap-and-trade legislation, gays and lesbians serving in the military, and the administration's 2011 budget proposal, among other things.

And maybe, just maybe, they'll find time to address a few issues of importance to the nonprofit and philanthropic sectors. Earlier today, the Council on Foundation's Monica Wroblewski e-mailed me the council's 2010 legislative agenda. It includes the following proposals:

Priority Issues

Expansion and Extension of the IRA Charitable Rollover
The council supports the expansion of the IRA charitable rollover to include gifts to donor-advised funds, supporting organizations, and private foundations; gifts above $100,000; and planned gifts. We also support the reinstatement and extension of the IRA charitable rollover to make it appli­cable to the 2010 tax year and beyond.

Enact a Revenue-Neutral Excise Tax on Net Investment Income
The council supports a revenue-neutral simplification of the private foundation excise tax to a single flat rate that will encourage increased giving by private foundations. The tax was enacted in 1969, along with other taxes that penalize self-dealing, failure to make adequate minimum distribution, excess business holdings, jeopardizing investments, and taxable expenditures.

Today, almost every foundation is seeking to maintain its present grant commitments, despite the dramatic reductions of its endowment's value. It is critical we encourage foundations to continue this level of giving and not allow them to be penalized in the future with a higher excise tax. Accordingly, we will continue to work with Congress to enact a revenue-neutral legislative proposal to create a single flat rate excise tax on net investment income.

Continue reading »

Charles Bronfman, Jeffrey Solomon Discuss 'The Art of Giving'

March 17, 2010

Last month, Charles Bronfman and Jeffrey Solomon, chair and president, respectively, of the Andrea and Charles Bronfman Philanthropies, sat down with the Foundation Center's Jimmy Tom to talk about their new book The Art of Giving: Where the Soul Meets a Business Plan. (You can read a PND interview with Solomon here.)

(Total running time: 25 minutes, 23 seconds)

In their chat, Bronfman and Solomon discuss donors' motivational values, donor-grantee relationships, common donor mistakes, and the decision to spend down the foundation's assets. 

To download an mp3 version (17.4MB) of the podcast, click here.

And be sure to check out the audio events archive for more Philanthropy Chat podcasts.

-- Regina Mahone

Readings and Other Stuff (March 16, 2010)

March 16, 2010

Here are a few things that caught our attention on this beautiful Spring-like day:

What have you been up to?

Weekend Link Roundup (March 13 - 14, 2010)

March 14, 2010

Chain-links Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....


"Nonprofits are heroes, not unskilled hired help," writes Todd Cohen on the Inside Philanthropy blog, "and they need to start owning their role and championing their worth."

What Would Google Do? author Jeff Jarvis shares his notes for a talk he gave to a recent TEDxNYed gathering in which he used the opportunity to question the whole TED format. Like old-media, writes Jarvis, the lecture format needs to move past a one-way conversation to collaboration. Do you agree?


Future Fundraising blogger Jeff Brooks says that sending extra appeals to your donors not only doesn't hurt, it's the smart thing to do. Adds Brooks: "It turns out that asking donors to donate is something like asking fish to swim or birds to sing. It's what they do, what they want to do. Giving them the opportunity is not a rude and hurtful intrusion...."

International Affairs/Development

In the aftermath of the recent earthquakes in Haiti and Chile, the New York Times' Anand Giridharadas suggests that the kind of "everyone-as-informant mapping" pioneered by Ushahidi, a small Kenya-based nonprofit, "may have something larger to tell us about the future of humanitarianism, innovation and the nature of what we label as truth."

Nonprofit Management

Responding to a recent Professionals for Nonprofits salary survey, Rosetta Thurman asks her readers whether they are satisfied with their pay. You can learn more about what they had to say here.


At the New Philanthropy Capital blog, Martin Brookes chides himself for "wasting charitable funds" because he donated to an animal charity at the request of his daughter. This type of giving, adds Brookes, represents a "misallocation of charitable funds" because it was done "to make [himself] feel good, not charitable giving for public benefit."

Tactical Philanthropy's Sean Stannard-Stockton offers his own take on Brookes' post here.

And in a post on the GiveWell blog, Holden Karnofsky argues that giving money for "selfish" reasons is "no more wrong than unnecessary personal consumption. The point at which it becomes a problem," adds Karnofsky, "is when you 'count it' toward your charitable/philanthropic giving for the year."

Last week, President Obama released the list of charities to which he has decided to donate the $1.4 million cash award that came with his Nobel Peace Prize. On the Social Entrepreneurship blog, Nathaniel Whittemore grades the president's choices.

Social Media

Beth Kanter, Geoff Livingston, and Kami Watson Huyse -- the principals of recently launched consulting firm Zoetica -- share their thoughts about how the rapid uptake of social media and other online technologies is changing corporate social responsibility.

Wealth Management

The Weakonomist takes a look at the 2010 edition of Forbes magazine's list of the world's richest people and identifies a few noteworthy trends.

And that's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- Regina Mahone

The Winter of Our Discontent

March 13, 2010

It's been a strange few months -- and I'm not just talking about the weather. Taxpayer-funded bailouts, double-digit unemployment, and soaring deficits have put the country in a sour, uncertain mood. Americans' usual sunny optimism has taken a back seat to real concerns about the health of the economy, our 401(k)s, and the future.

No surprise, then, that people, as Joel Orosz, a nationally recognized authority on philanthropy, puts it, are "mad as hell." They're mad, says Orosz, writing on the Center for Effective Philanthropy blog, "about the federal government in particular and -- this is crucial for foundations -- institutions in general." Writes Orosz:

Consequently, we have already seen leaders, from President Obama on down, begin to stake out populist positions, from taxing the banks to gutting the budgets of certain federal government departments. These attempts to placate the torches-and-pitchforks sensibility will only increase as we approach the November elections.

Once the politicians run out of governmental targets to flog, you can bet that they will turn to other institutions. Large nonprofits, especially those that pay their chief executives well, are already in the crosshairs. Maybe foundations will escape the wrath of the populist movement. Perhaps the sheer lack of familiarity that even the best-informed Americans have with foundations, discussed in my last post, will allow foundations to escape unscathed.

Evidence suggests, however, that foundations will not be so lucky....

William Schambra, the reliably conservative director of the Bradley Center for Philanthropy and Civic Renewal at the Hudson Institute, is even more direct. In a recent editorial ("Big Philanthropy Has Reasons to Fear Populist Fervor") in the Chronicle of Philanthropy, Schambra writes:

Over the past decade or so, philanthropy has set itself up to be severely buffeted by the storms of American populism. That is because not only has it gotten to be very big but it also relishes and proclaims its bigness in a way sure to aggravate populist sensibilities of both the right and left.

Consider the title of one very popular recent book, by Matthew Bishop and Michael Green: Philanthrocapitalism: How the Rich can Save the World.

It's hard to imagine a title more likley to inflame populist sentiments. The book celebrates a trend long thought to be good for philanthropy: namely, the influx of a new wave of very wealthy entrepreneurs who are bringing cutting-edge techniques of business management into the slipshod, amateurish world of nonprofit organizations. Even more established foundations are adopting, and ordering their grantees to adopt, the business plans, benchmarks, measures, and soemtimes even the revenue-generating techniques of the marketplace.

So at the precise moment that big business is in bad odor with the American people, foundations and their grantees are themselves deliberately becoming more like big business, adopting the very measurement-obsessed approach that did so little to perevent, and may have even helped precipitate, today's recession....

A final data point. Barron's notes that when the Wall Street Journal reported on Thursday that the net worth of U.S. households had increased at about a 5 percent annual rate in the fourth quarter,  "the vituperative comments began to flow. Many simply dismissed the data as inaccurate or worse. The numbers simply didn't jibe with what they were seeing in their own finances or those around them." According to Barron's, most of the improvement was the result of a 15.4 percent annual rate of gain in households' equity holdings, but those gains tended to accrue to a narrow (read wealthy) segment of Americans. On the other hand, a percentage point of the overall gain was the result of a reduction in mortgage debt -- but not in the way one would hope. Apparently, instead of paying off their mortgage loans, more and more homeowners are simply walking away from them.

So are Orosz' and Schambra's concerns justified? Is anti-business sentiment and the increasingly angry mood in the country a threat to the autonomy of "big philanthropy"? And if so, what can or should large philanthropic institutions do to address the situation?

-- Mitch Nauffts

Mass. Morass: New Data Privacy Law

March 12, 2010

(Tony Martignetti is managing director of Martignetti Planned Giving Advisors, LLC, a planned giving consultancy; the author of Charity Registration: State-by-State Guidelines For Compliance; and a frequent seminar leader at the Foundation Center. You can connect with him on LinkedIn and Twitter.)

There's a new Massachusetts regulation that affects nonprofits that access or store personal information provided by residents in the state. Do you accept gifts from Bay State donors and process their credit cards? Process or save copies of their checks? Are you seeing or holding the Social Security numbers of constituents?

A "yes" to any of these brings your organization within the purview of Title 201 of the Code of Massachusetts Regulations Section 17.00, Standards for the Protection of Personal Information of Residents of the Commonwealth. And compliance isn’t pretty.

What’s In A Name

Whether you are at risk of becoming tangled in the law’s web starts with how "personal information" is defined. In Massachusetts, the definition starts with first and last name, or first initial and last name. If either of those combinations is paired with any of the following, you've got personal information on your hands: Social Security number; driver's license number; financial account number; credit card number; or debit card number (even without the PIN or access code). If you got the information from public sources, including government records, you're in the clear. But that's not likely to apply to many nonprofits. In most cases, donors will have voluntarily provided their personal information when they made a gift. Or, if you're a school, hospital, library, social service or other organization that requires identification to access services, you may have come across it in the course of doing business.

What Are You Doing With It

If you've got personal information, you're doing something with it. Anything here sound familiar? You own, license, receive, store, maintain, process, or have access to it. (That covers everything but "fold, spindle and mutilate.") If that's a "yup," then read on.

Do Your Duty

You have personal information on Massachusetts residents. According to state law, you must protect it under a comprehensive, written "information security program," or ISP, that includes administrative, technical, and physical safeguards. I like to write, but this doesn't sound like fun to me.

Your ISP must:

  • designate the employees in charge of the program 
  • identify security and confidentiality risks
  • provide for employee training
  • impose penalties for infractions
  • prevent former employees from having access to personal information
  • oversee vendors who may have access to that information
  • restrict physical access to the information
  • insure at least annual review of your security program 

The law also demands a host of computer security requirements, including password protection and user IDs; restricting access to active users; blocking access after multiple unsuccessful attempts to access information; restricting access on a need-to-know basis; encryption; firewalls; and lots of other system features that torment and thwart the everyday user.

And to think I used to prefer New England clam chowder over Manhattan!

A Shortcut -- Data Downsize

At no cost to the end user, seemingly unlimited computer storage has led to data bloat in a lot of offices.

If you're scratching your head wondering how you could possibly prepare a complete and accurate ISP, I have a suggestion: downsize your data. Don't save what you don't need. You'll still need to comply with the law because you're processing credit cards, checks, and (perhaps) stock transfers that are essential to your fundraising, but if you don't hold on to the numbers (remember, checks have account numbers printed across the bottom), your ISP will be much simplified. Insist on ASAP processing, then shredding after use. (Security experts recommend microcut shredders because they make it impossible to reassemble the pieces.) Downsizing in this way will reduce access issues, eliminate physical and data storage, cut down on your security needs, and free you of many computer security requirements.

If it's Social Security numbers you're holding on to, ask yourself whether you really need them. Alternatively, can you do business with only the last four or five digits?

Again, for all processes that pull you into this regulatory morass, consider data downsizing. And remember, the above only applies to Massachusetts residents. But any organization might realize benefits -- including improved security -- from downsizing the amount of data it holds on to. (Not to mention the fact that having a different set of business practices for a single state's residents can be a considerable pain.)

Comply Or Pay

A different law (General Laws of Massachusetts, Chapter 93A, Section 4) provides for $5,000 penalties, plus investigation costs, for scofflaws. You don't want to be one of those. Aside from avoiding fines, operating within the law is the right way to do business.

The regulation I've summarized is written in fairly comprehensible language (unlike most byproducts of the legislative process), and you can download a PDF copy here. Go ahead: Download and share it with your stakeholders, then look critically at your true data needs and come up with with a plan for compliance.

My best wishes for success in all your fundraising.

-- Tony Martignetti, Esq.

Readings and Other Stuff (March 10, 2010)

March 10, 2010

Hard to concentrate today with spring knocking on the door. Here are a few things that caught our attention.

Read anything good lately?

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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