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9 posts from January 2021

Growing pains & possibilities: planning for growth in your foundation

January 29, 2021

Your-money-growingLet's imagine a typical foundation started by successful businesspeople in order to make charitable contributions each year to a small constellation of nonprofits in their community.

Fast-forward a couple of decades and the founders have achieved more financial success than they ever expected. While undertaking their estate planning, they have ascertained that even after they take care of their children and grandchildren, there will be a substantial amount left from their holdings to donate to the foundation. In fact, the founders anticipate that upon their death the foundation's assets will increase from $3 million (current value) to approximately $40 million. The founders realize that this eventual windfall merits advanced planning to best meet the opportunities that come with such a large increase.

If, like the founders in this hypothetical example, you should find yourself confronting an almost-overnight jump in your foundation's assets, what should you do? How should you plan for such an event and carry your foundation into the future?

The Challenge of Growth

One of the immediate outcomes of explosive growth is a dramatic increase in a foundation's 5 percent minimum distribution requirement (MDR). The MDR is based on the average value of foundation assets in the previous year, so as assets grow, foundations are required to increase their charitable activities accordingly. Although the increased MDR won't impact the foundation immediately, a major infusion of capital provides ample reason for the foundation to develop a plan for programmatic growth alongside its financial growth.

Let's go back to our example above. The foundation had an average of $3 million in assets throughout 2020. Therefore, it has an MDR of $150,000 for 2021. If the foundation were to receive a contribution of $37 million in January 2021, bringing total assets up to $40 million, the MDR for 2022 would be $2 million that would have to be distributed by the end of the year.

Gearing Up Grantmaking

Even though foundations are given some time to ramp up their distributions as a result of sudden growth, they eventually need to bring their grantmaking strategy in line with their new assets. These are questions to guide the development of such a strategy:

What do we want to accomplish as a foundation? This is an ideal moment for board members to consider the foundation's history and explore the increased opportunities that accompany financial growth. With additional financial assets, the programmatic possibilities open up to tremendous innovation, creativity, and potential impact.

What are our unique qualifications for making a difference? When it comes to achieving impact, dollars aren't the only important asset. As board members contemplate the foundation's future, this is an ideal time to take stock of the entirety of resources that the family and its network of contacts might be able to command. Specifically, the board should ask:

  • What expertise, skills, and special talents do we bring to the table?
  • How much time and energy do we have to devote to our cause?
  • What important contacts and connections do we have that can help us?
  • What's our name recognition/credibility/reputation?
  • What level of assets can we afford to commit?

Should we expand our scope? With increased assets, some foundations choose to continue supporting their existing areas of interest but expand their geographic focus. So, instead of restricting funding to their hometown, they adopt a statewide or even national agenda. Other foundations have opted instead to widen the scope of their areas of funding. So, in addition to funding a program that provides meals for homeless individuals, a foundation may choose to start fighting homelessness itself by funding research and advocacy, thereby increasing the opportunity for impact.

Where can we achieve the greatest impact? As your foundation ramps up its grantmaking, devoting resources to research and analysis would be money well spent. If you want to build on your foundation's previous work and expand locally, you might invite local funders or community leaders to help identify unmet regional needs. If you want to pursue an entirely new area of interest, you'll want to know who else has been working on the problem, what has already been done, and what impact that work has had. In that case, you could hire an outside expert to undertake a "field scan" detailing what other funders and nonprofits have accomplished on that issue to date, whether their efforts have met with success, and where your foundation might achieve the most impact going forward. Not only will this help you avoid directing funds toward ineffective approaches or duplication of other efforts, it might also reveal potential new partners and allies. Because the IRS recognizes that private foundations incur expenses in the pursuit of their charitable purposes, tax law allows foundations to count such expenditures toward fulfilling their minimum distribution requirement.

Can we fund things that fall outside of our mission? With a growth in assets, you can have a separate bucket of funds for grantmaking outside your stated mission. This would enable the foundation to fund exciting programs that either present themselves or are uncovered in the course of executing the planned grantmaking strategy. Setting aside a portion of funds can also serve as a laboratory, enabling the foundation to experiment with promising programs before making a more significant or enduring commitment.

A New Way of Operating

A growth in assets provides you with an opportunity to deepen your commitment to the funding priorities your foundation has previously championed. But such an event also affords you an opportunity to break with the past and chart a new course. Regardless of the path you choose, you would be well served to assess whether the moment necessitates a new approach to foundation operations, including:

Guidelines and applications. To attract more targeted and relevant grant requests and to meet an increased MDR, you may want to solicit proposals from more nonprofits. You also might want to develop funding guidelines and a grant application form.

Detailed budgeting. If your growing foundation ventures into a new funding area, implements a new grantmaking strategy, and incurs additional expenses, an ad hoc approach to budgeting may no longer suit the organization's needs. With increased size and complexity, it will likely become harder for your foundation to simply make grants until the MDR is fulfilled. At this point, you may want to create an annual budget, allocating specific dollar amounts to key funding areas, ongoing historical interests, and administrative costs.

A growth in assets provides an opportunity to deepen and expand your philanthropic agenda. Establishing clear objectives and taking the time to plan will help you successfully meet that opportunity.

Headshot_Elizabeth WongElizabeth Wong is national director of philanthropic advisory services at Foundation Source, which provides comprehensive support services for private foundations.

What we know about the nonprofits that received grants from MacKenzie Scott

January 28, 2021

Headshot_MacKenzie_ScottIn December, MacKenzie Scott announced a round of giving that was striking for its scale: $4.2 billion across 384 organizations. It was also striking in its approach: Scott made a set of large, unrestricted — and unsolicited — grants to nonprofits across the United States.

So far, her approach has been met with praise from commentators across philanthropy. (See this tweet by Benjamin Soskis and this Mother Jones article.) While she benefited from the help of sophisticated philanthropic advisors, small foundations and individual donors may find lessons in MacKenzie Scott's approach to grantmaking. Indeed, Scott's grantmaking shows that a simple set of filters can narrow down the universe of potential grantees to a more manageable set. That creates space for giving that is both thoughtful and compassionate. As Scott puts it, "Because our research is data-driven and rigorous, our giving process can be human and soft."

At Candid, we wanted to pause and look holistically at the set of organizations that Scott and her advisors chose. My colleagues took the list Scott posted and cross-referenced it with our database. We found 381 matches out of the 384 organizations. Below we offer a general analysis of the organizations included in this particular round of grantmaking — with a focus on four key dimensions: size, geography, issue area, and transparency.

Organizational size

The organizations that received grants from MacKenzie Scott varied from the small (YMCA of Greater High Point Foundation, $53,755 in total expenses in 2018) to the very large (Feeding America, $2.8 billion in total expenses in 2018). But the bulk fell into a middle ground of organizations with budgets over $1 million and under $100 million. And while Scott's grants went to well-established organizations, this portfolio was notable for the absence of "elite" universities, hospitals, and cultural institutions.

JacobH_Fig.1.1

Geography

Scott's grantmaking is oriented to the United States — but, given that context, it is remarkable for its geographic diversity and consistency. All fifty states plus Washington, D.C., and Puerto Rico are represented. Within that distribution, Scott's grantmaking reflects population. The ten states with the most organizations that received grants from Scott last month are also the ten states with the highest population (albeit in a slightly different order).

JacobH_Fig.1.2

Issue area

The year 2020 highlighted inequities in American society. Across the board, MacKenzie Scott's grantmaking strategy reflected a desire to address those inequities.

JacobH_Fig.1

The categories above are from Candid's Philanthropy Classification System. It is worth highlighting that some organizations fall into multiple categories, so the total across all bars above is greater than 381.

Two specific notes: "Philanthropy and Nonprofit Management" organizations largely represent re-granters like United Ways and community foundations (64 organizations, or 17 percent of the portfolio). The category "Human Rights" includes organizations serving a variety of communities (e.g., Chicanos Por La Causa, Urgent Action Fund for Women's Human Rights, Pride Foundation, NAACP Empowerment Programs, Lawyers Committee for Civil Rights Under Law).

Transparency

The organizations in this portfolio are, in general, more transparent than the average nonprofit. Approximately half have earned a Seal of Transparency from Candid, by claiming and updating their profile on guidestar.org. This is almost ten times the rate of the general nonprofit population.

In addition, 56 of these 381 organizations (15 percent) have proactively shared data with Candid about the race or ethnicity of their staff or board leadership.

Transparency is not a guarantee of effectiveness. But, at its best, it can signal a willingness to be examined, well-organized operations, and clear strategy. In this sense, it a proxy — albeit an imperfect one — for leadership and organizational competence.

JacobH_Fig.1.4

Conclusion

Not every donor has access to sophisticated philanthropic advisors that worked with MacKenzie Scott. Even the smallest donor, however, can emulate Scott's straightforward approach. Anyone can sort through the wide universe of nonprofits to identify a subset of organizations that meet their criteria. Then, they can write a check. It can be that simple.

For more information on identifying organizations that fit with your charitable goals, see Five simple steps to better giving.

Jacob Harold is execuitve vice president at Candid. This post originally appeared on the Candid blog.

A Q&A With Jaime Merisotis, President and CEO, Lumina Foundation

January 26, 2021

Jamie Merisotis is a globally recognized leader in philanthropy, education, and public policy. Since 2008, he has served as  president and CEO of Lumina Foundation, an independent private foundation that is committed to making opportunities for learning beyond high school available to all. He previously served as co-founder and president of the nonpartisan Institute for Higher Education Policy and as executive director of a bipartisan national commission on college affordability appointed by the U.S. president and congressional leaders.

A frequent media commentator and contributor, Merisotis is the author of America Needs Talent: Attracting, Educating & Deploying the 21st-Century Workforce, which was named a Top 10 Business Book of 2016 by Booklist, and the recently published Human Work in the Age of Smart Machines. The Q&A is reprinted here with the permission of Lumina.

Headshot_jaime_merisotisQ: Since March, tens of millions of Americans have lost their jobs, bringing the United States' unemployment rate to its highest point since the Great Depression. The near-term pain is obvious, but how will this seismic economic event influence the workforce a generation from now?

Jaime Merisotis: Millions of people are now working remotely. Schools have shifted to online courses, leading to millions of students learning in what was once considered a peripheral method of education. While workplaces, schools, and colleges will eventually reopen, the idea that it is normal to "go" to work or school has likely changed forever. This shift away from brick-and-mortar spaces has a bright side that we should be ready to take advantage of, especially because online learning opens doors to many of today's students, who are more likely to be minorities, working full time, and caring for family members. In [Human Work], I wrote about Marcia McCallum, a single mother of four who went back to school to earn two associate degrees at a community college nearly thirty years after finishing high school. Online learning allowed her to juggle school, work, and family. Now McCallum doesn't have to do double-shifts waiting tables on the weekends. Instead, she works full-time for a biotech company growing cell cultures that are harvested for therapeutic antibodies. This is an example of how we can take advantage of this massive shift in the way we perceive school and work to serve everyone, not just those who can afford — financially or in terms of time — to get an education.

Q: What weaknesses in education systems and workforce training systems has the economic crisis highlighted and exacerbated?

JM: During the pandemic, we've seen that people who can work remotely are less likely to lose their jobs, and that the ability to work remotely is closely associated with education levels. Even before COVID-19 really hit, in April, unemployment for workers without a high school diploma had risen to 6.8 percent. But among those with at least a bachelor's degree, the unemployment rate was just 2.5 percent. That doesn't tell the whole story. Fifty-four percent of people with master's or doctoral degrees can work remotely; the share of people who can work at home drops to 39 percent for workers with bachelor's degrees. For workers who don't have at least a bachelor's, the number bottoms out at 20 percent. The lesson we should draw is that higher levels of education — and the skills and attributes they help people develop, including the ability to communicate, motivate themselves, and work in teams — prepare workers to adapt to the changes in the workplace, today and in the future.

Q: What should the U.S. government be doing right now to help people develop the capacity for human work?

JM: It has never been more important for the federal government and states to be aligned on these issues. States have an especially big hill to climb, because more than forty states and the District of Columbia require balanced budgets. To balance them, states have two major levers: massive layoffs of state employees or raising taxes. Programmatic cuts, by themselves, won't be enough. More important, given the forty-plus million Americans who filed for unemployment because of shutdowns related to the pandemic, the political consequences will be enormous. I don't see any reasonable path forward without a massive infusion of federal dollars to states. And that massive federal infusion cannot be used simply to prop up the "existing system." That system has failed too many Americans for too long. That was the mistake of the last recession: most of the dollars the feds gave states were used to prop up underperforming systems. This time, we should invest massively in generating real results. This includes big investments in community colleges that award associate degrees and short-term credentials for the people in retail, hospitality, and other heavily impacted industries, because many of those jobs will not return. Any additional federal stimulus efforts also should focus on the human work skills that will be necessary for success in the new economy. And these investments must focus on the economic needs of workers and the growing racial disparities highlighted by the spread of the coronavirus. The policy options that are weighed cannot be a "return to normal" because we know "normal" for most of the world is not something people want — they want and deserve much better.

Q: In Human Work, you suggest the need for a large-scale rethink of higher learning and workforce-training programs. Can this crisis force us to be bolder? Are there changes you support that are likely to be adopted after the crisis is over?

JM: I fear many still believe the end of the crisis will bring a return to "normal." But for our systems of learning and preparing people for work, returning to the old normal would be disastrous. People will need new skills, new ways of engaging with their communities, and new ways of relating to one another. The crisis clarifies that we need to make opportunities for work-relevant learning available to every American, regardless of wealth, race, age, or geographic location.

Some colleges are already reinventing themselves to meet the needs of a new generation of students. In the book, I wrote about Amarillo College in the Texas Panhandle. Ten years ago, the college had a graduation rate of 9 percent. Russell Lowery-Hart, now the president of the college, discovered that issues such as child care and transportation were the biggest hurdles for students, so he set up a series of "wraparound" support services to meet students' needs in non-academic areas. Today, the completion rate at Amarillo is 52 percent. Lowery-Hart's most important insight was that colleges have to address students" life circumstances; it's an especially important lesson as the tumult of the last year upends students' academic pursuits.

Q: You write about "learning, learning, and serving" throughout the book and, in places, offer an almost spiritual take on the dignity of work. Can you explain why continuous learning is so integral to developing meaningful human work?

JM: We live in a complex world. It's not just that employment requirements are changing in ways that demand higher levels of thinking and skill. The knowledge, skills, and abilities people need to develop also are needed to help address the issues we face as a society and the problems we see in our communities. The only way to meet this challenge is through continuous learning on a vast scale. Fortunately, we are hard-wired to learn, just as we are to work and serve. I found a great example of one such "learning organization" in what many might consider an unlikely place: state government. For the past decade, the state government in Tennessee, which employs forty-two thousand workers, making it the largest public employer in the state, has made a huge commitment to offering learning and training opportunities to its employees. But instead of doing one-day job fairs, the state created twenty-eight different state leadership academies, ranging from management training to programs designed to groom younger employees for future leadership opportunities. Trish Holliday, the leader of this  training initiative, says what's most important is that state government has undergone a cultural change and no longer sees workforce training "event-driven" but rather as something that happens all the time and that one builds on throughout his or her life.

Q: New technology and automation have been eliminating jobs for decades. The accelerating pace of technology adoption is likely to displace many workers over the coming decades or force them to work differently. What should retraining look like? And who's responsible for making it happen?

JM: Even the term retraining is obsolete. We have to keep learning throughout our lives. Required work skills constantly change, even for people who don't switch jobs. One problem is education and training continue to be viewed as fundamentally different and separate systems, and whatever people learn in one system is not recognized by the other. The answer is that education and workforce training must be redesigned as a broad, integrated system focused on meeting the needs of individuals.

There already are companies and education providers creating local initiatives to integrate work and learning. In the book, I wrote about an apprenticeship program near Charlotte, North Carolina. The program at Blum, Inc., a manufacturer of high-tech latches and hinges for cabinetry, encourages workers to attend classes at the local community college. At the end of their apprenticeships, workers have jobs with the company, an associate degree from the college, and a journeyman certificate from the North Carolina Department of Commerce they can take with them if they switch jobs.

Q: What are some examples of companies — or even countries — promoting individuals' deeper potential? Is anyone taking the right approach to developing the capacities of human workers who increasingly must deal with automation and AI?

JM: Absolutely. In Tennessee, the Lee Company, a family-owned air-conditioning, plumbing and electrical business with more than $22 million in annual sales and fifteen hundred employees, makes a point of helping its workers thrive. After the recession ten years ago, the company created "Lee Company University," a training program that offers employees a free, structured four-year program leading to an industry-recognized certification and journeyman license. Another example, this one a large publicly-traded company: Cummins, Inc., which makes diesel engines and power-generation equipment, is a $26 billion annual business with sixty thousand employees around the globe. Based in Columbus, Indiana, the company employs collaborative robots, or "cobots," alongside its human employees, freeing the latter from repetitive or physically taxing tasks. In Seymour, a town of about twenty thousand in southern Indiana, the company has created partnerships to improve education, amenities, and  quality of life. These include improved pre-kindergarten offerings, more walking and biking trails, and initiatives to attract more businesses to downtown.

The companies that will flourish in the future are those that take an interest in developing their talent by positioning it for the meaningful work only humans can do while also recognizing that people want to be involved in their communities, continue to learn, and live fulfilling lives.

Q: How do you make all companies see the benefit of taking a broader interest in their employees?

JM: To spread these ideas, companies need to talk with each other about the benefits of talent investments in driving their success. Employers can take charge of their companies' futures by defining exactly what abilities and skills workers should possess, and how to develop and attract that talent. Companies must take steps to ensure their workers can fully develop their knowledge, skills, and abilities over the course of their careers and lives, regardless of the structure of their work. Learning for life will be an integral part of the work of the future, and employers need to ensure everyone has the opportunity to participate. Companies can literally make money as a result of investing in human work. Lumina hired a global consulting firm a few years back to explore the financial benefits of investing in tuition assistance. One employer, Cigna, found that employees who had participated in its education program were more likely to be promoted and were significantly more likely to be transferred and retained, resulting in higher pay for them while saving the company money. Even after accounting for program expenses, for every dollar Cigna had invested in employee education, the company received its original dollar back, plus another $1.29, all in the form of talent management cost savings.

Q: If you could press a button and make a single change in education or workforce training, what would it be, and why?

JM: The durable Rahm Emanuel quote applies here: "You never want a serious crisis to go to waste." We cannot drift back into familiar ways of thinking out of a misplaced desire for normalcy. We made a massive and sudden shift to remote work this year across large swaths of the economy. Now we need to re-engineer work in ways that create a better work-life balance while also respecting the environment and our global climate. We made an incredibly rapid shift to large-scale online learning, but now we need to redesign programs and curricula to take advantage of the technology available to offer better and more robust learning environments for all students. Similarly, we responded to COVID-19 as a society by changing individual behaviors on a previously unanticipated scale to protect public health. Now we need to find ways to allow everyone to make that kind of difference by serving others. Bit by bit, we are starting to see a new path forward. Our objective now should be to consolidate these gains into a unified system of earning, learning, and serving others.

Fundraising learnings from social media

January 21, 2021

Social_Media_Platforms_PhilanTopicHanging out on social media can be a remarkable way to spend time, though I acknowledge the word remarkable has more than one definition. In fact, given the unprecedentedly disruptive nature of the past year, I’ve often found myself turning to social media either to brainstorm about fundraising with others or simply to see what other nonprofit fundraising professionals are up to. While there is a lot of clutter out there, there's also a good deal of wisdom to learn from and experience to share.

Here are a few things I've learned over these long months that may be useful for others involved in doing the good work of philanthropy. Please feel free to share lessons and tips of your own in the comments section below.

The meaning of $18 donations

An online fundraising community I follow recently was expressing confusion over a sudden barrage of $36 donations. If you've ever spent time going through your organization's giving history data, you may have come across donations of $18, $36, or other multiples of $18. In Judaism, the number eighteen stands for "chai" ("life"). The word "chai" is spelled with the eighth and tenth letters of the Hebrew alphabet, which of course equals eighteen, while thirty-six is "double chai." So people for whom Judaism is important often will make gifts in increments of eighteen. But organizations that don't provide services with or for the Jewish community may be unfamiliar with the practice. At an organization where I worked several years ago, we received an online donation of $18 from a donor who had never given before and apparently was not made in response to a recent direct-mail letter, email, or other communication. (Ours was also an organization whose mission was very broad and not centered around a particular religion or cultural identity.) When our database manager sent around a note asking if anyone knew anything about the donor, or why they had opted to donate that amount, I made a chancy assumption about the donor's surname and called to thank the donor personally for making a gift honoring life; suffice to say, the donor was not expecting such a response and, over time, increased their support from a one-time $18 donation to recurring, four-figure gifts — a lovely surprise.

When gratitude gets too tactical

Some readers may know of the anonymous, sometimes-hilarious Twitter personality The Whiny Donor. All we really know about Whiny is that she "used to chair the development committees at a couple of nonprofits" and has some serious opinions about the way philanthropy should, and shouldn't, work. As a fundraiser, I wince at some of her tweets, especially the ones that call out bad or arcane practices in our industry. Recently, for example, she tweeted about nonprofits including too much "mechanical" information in the body of their donor thank-you communications. Acknowledgements, she tweeted, "that include the date when they received my donation in the very first line of the letter stop the flow of gratitude cold. Can't you put that detail in the fine print at the bottom?"

Now, admittedly, this is something we do (or did) at our nonprofit, largely because the tax receipting is handled by a different department, and we always want our letters to be polite yet functional. So I wanted to call Whiny on it. But after a few moments I realized she had a point. If a donor, any donor, is put off by what is supposed to be a thoughtful note of appreciation being interrupted by bureaucratic tax-related information, then we do ourselves a service by moving those details to another, more appropriate part of the letter. Needless to say, the next day we updated our thank-you letter template to better reflect and improve the flow of our gratitude.

Outcomes over outputs

For many of us whose fiscal years don't align with the calendar year, there are always a few conversations with leadership, accountants, and corporate-minded board volunteers that stumble over a question like, "Wait, are we talking about calendar year-end or fiscalyear-end?" On Twitter, the satirical account NonprofitsSay had some fun with the problem, posting: "These are our calendar year accomplishments, not to be confused with the fiscal year accomplishments in our annual report." I had to chuckle, because our organization is finalizing our 2020 (calendar year) annual report while at the same time thinking ahead to our 2020-21 (fiscal year) impact report.

When crafting our 2019-20 impact report, our team struggled with what we should call the document. For years the organization had gone back and forth between "Year in Review" and "Impacts and Benefits," both of which were always met with a mildly positive response from our donors. But given where we were in the middle of 2020 — with much of our work centered on pandemic response, equity, and resilience — we wanted to tip our hats to the donors whose generosity helped make those efforts possible.

Over on Joan Garry's "Your Thriving Nonprofit" Facebook group, I posed my question to the more than thirty-three thousand members of the group and was truly inspired by the responses. Many people suggested thinking less in terms of a catchy title and more about the vision behind the document. After some internal debate, we landed on "How You Helped Build a Better City" in bold letters. The response from our supporters was overwhelmingly positive.

I'll say it again: hanging out on social media can be a remarkable way to spend time. And with so many of us endlessly scrolling through our channels looking for information that can be used to refine our practices, respond to questions, or offer suggestions, there is indeed much to learn and share. Just remember to be patient and open to the views of your virtual colleagues.

Evan_Wildstein_PhilanTopicEvan Wildstein has served on the fundraising team at the Kinder Institute for Urban Research at Rice University since 2017.

How human services charities stepped up and filled the gap in 2020

January 18, 2021

Sharp_chula_vista_medical_centerHuman services charities provided an essential lifeline in 2020 to millions of Americans grappling with the economic and health impacts of COVID-19. Indeed, the unprecedented events of the year reinforced the deep-seated value and tangible impact of organizations that support populations in need, from nonprofits operating homeless shelters and food banks to those providing services to the disabled and elderly.

This was especially true of populations supported by the Gary Sinise Foundation, a 501(c)(3) serving veterans, first responders, service members, and their families.

When the economy cratered and the unemployment rate soared in the spring, the foundation quickly saw an uptick in requests for financial assistance — an uptick that became a tsunami by the fall. Their stories were heartbreaking: many had fallen behind on their rent, mortgage, or car payments and were facing eviction or repossession. For others, purchasing groceries for their families came at the expense of making payments on already-overdue bills.

The employment picture for many was similarly bleak. Some of the people we heard from had been furloughed indefinitely or let go from their job, while others were unable to enter the job market because of family obligations at home.

At the Gary Sinise Foundation, we responded to the growing number of requests for help by launching a campaign focused on our constituents.

During a four-month span beginning in April, the Emergency COVID-19 Combat Service campaign delivered 60,795 free meals to hospitals, Veterans Affairs medical centers, and military bases in the U.S. and overseas. At 313 locations across the country, including 273 hospitals and 145 Veterans Affairs sites, pre-packaged meals nourished overworked doctors, nurses, and other medical professionals on the front lines of the pandemic. American troops and their families stationed in Germany and Korea were among those who received meals.

Grant funding distributed through the campaign also provided a lifeline for first-responder departments — particularly those in rural America and volunteer departments supported by a small tax base — enabling them to purchase protective equipment, including N95 face masks, face shields, and gloves. All told, more than $480,000 in grant funding was distributed to fire and police departments in twenty-seven states.

In a relatively short period of time, more than $1.4 million was raised by the campaign despite a raging pandemic and a battered U.S. economy. And those weren't the only challenges. A polarizing U.S. presidential race and bitterly contested election saw donations to the campaign ebb and flow, much as they had in the summer in the wake of racial justice protests sparked by the killings of Ahmaud Arbery, Breonna Taylor, and George Floyd. Still, the campaign went on, enabling the foundation to consistently deliver financial aid and other forms of support to veterans, Gold Star families, first responders, and others impacted in one way or another by COVID-19.

No year in recent memory has presented as many challenges as 2020 to the institutions and core identity of the United States. And yet no year has been as rife with opportunity for human services charities to step up in new and creative ways to help millions of Americans who are struggling.

Given the critical role these organizations play in their communities and the void they fill when resources and funding at the local, state, and federal level are stretched, it's clear they must continue to adapt their services in 2021 to the economic and political realities stemming from the ongoing public health crisis. They will need our support to do so.

There really is no choice. Too many people are counting on us.

(Photo credit: Sharp Chula Vista Medical Center)

Brandon_black_gary_sinise_foundation_PhilanTopicBrandon Black is senior communications writer at the Gary Sinise Foundation.

5 Questions for...Lisa Mensah, President and CEO, Opportunity Finance Network

January 15, 2021

After serving for two years as under secretary of agriculture for rural development in the Obama administration, Lisa Mensah joined Opportunity Finance Networka leading network of community development financial institutions, as president and CEO in March 2017. In November, with a $100 million investment from Twitter, OFN announced the launch of the Finance Justice Fund, a socially responsible investment fund aimed at raising $1 billion in grant capital to address racial injustice and persistent poverty in the United States. 

PND asked Mensah about the initial response to the fund, the impact of COVID-19 on the efforts of community development financial institutions, and the persistent lack of investment in rural communities.

Lisa_Mensah_squarePhilanthropy News Digest: What kind of response to the Finance Justice Fund have you gotten from corporate and philanthropic investors since the fund's launch in November? And are you on track to meet your fundraising goal?

Lisa Mensah: It's been wonderful to see the strong interest from both corporations and philanthropies in the work we're doing to finance justice. OFN is in discussion with potential new Finance Justice Fund investors; some of them are new to the CDFI industry and some are longtime partners. All understand that now is the moment to invest in Black and minority communities — the nationwide call for economic justice is louder and stronger than ever. We have a path to meeting our $1 billion goal and expect to announce new investment partners in the first quarter of 2021.  

PND: What was the genesis of the fund? Was it in the works before COVID-19 was declared a public health emergency and nationwide racial justice protests erupted after the killing of George Floyd last spring, or was it created in response to those twin crises? 

LM: Justice takes money, and CDFIs exist to finance justice. Our field started as a small grassroots movement to counter discrimination in banking and investing — the earliest CDFIs were created to provide financial services and support to people that banks wouldn't or couldn't serve. We've grown into a $222 billion industry that works to address longstanding disinvestment, the racial wealth gap, and persistent poverty by investing in people and communities left behind by mainstream finance. So the roots of the fund are really in our industry's history and unique role as community lenders. 

For years, OFN has been advocating for more public- and private-sector investment in communities underserved by mainstream finance. Since I joined OFN in 2017, we've been listening to our CDFIs and exploring new programs that would help the industry go bigger and bring new partners to our work. Then 2020 happened. 

The overlap of a pandemic-related economic crisis that disproportionally hurt low-income and minority communities and widespread calls for social justice put CDFIs front and center as a way to address both. The forces of 2020 — and interest from new corporate partners like Twitter — accelerated our plans. 

The Finance Justice Fund is just one result. In March 2020, OFN also welcomed Google as a partner: With OFN as the intermediary, the company is investing $170 million from its corporate treasury and $10 million from its philanthropic arm into CDFIs to help minority and women-owned small businesses. This mix of debt and grant capital is the type of investment we need to scale. 

PND: How has COVID-19 impacted OFN's and member CDFIs' programs and priorities? Are there lessons learned that might be applicable to the broader nonprofit sector?   

LM: The communities CDFIs serve are the communities that have been hurt most by the economic and health impacts of the pandemic, and so they have been very busy. 

From the very beginning of the crisis, OFN — the organization of thirty-five staff members and the network of more than three hundred CDFIs — understood the threat facing our communities and borrowers. In response, our member CDFIs have established new ways of providing services and support to borrowers. They have been proactive about easing the economic disruption for America's smallest, most vulnerable businesses, nonprofits, and homeowners, making loan accommodations, and standing up new loan programs. Many CDFIs have also helped small businesses adjust their business models to meet the new realities of stay-at-home mandates and changes in customer behavior. Our response from the beginning was focused on survival and recovery for our communities. 

One lesson for our industry and the broader nonprofit sector is that recovery from a major crisis demands partnerships, and that when those partnerships are strong we can move America forward. The last ten months have seen new partnerships with philanthropy, impact investors, corporations, and government. Never again should the CDFI field think of itself as insignificant. We must see ourselves as essential partners to the big work of having an economy that works for all. 

PND: The phrases "racial injustice" and "communities with high rates of poverty and disinvestment" are more often associated with urban, rather than rural, areas. What's behind that disconnect, and what are the implications — for rural communities in general, and for BIPOC residents of those communities in particular? 

LM: The truth is that racial injustice and high rates of poverty and disinvestment exist in both urban and rural areas. Persistent poverty in America — extreme poverty rates of more than 20 percent for more than thirty years — exists in more than ten thousand census tracts, roughly 14 percent of all U.S. neighborhoods. It has a strong hold in many rural communities: 19 percent of areas characterized by persistent poverty are rural, and millions of rural people live in persistent poverty. We also don't hear much about the racial diversity that exists in rural America. We don't think of Native communities or Black communities or Latino communities when we think about rural America, but these are vibrant and important populations in rural America.

I've focused on rural development for much of my professional life. One of the key questions is how to alleviate and begin to reverse the economic distress that has been driven by the systemic loss or contraction of major sectors of the economy such as agriculture, forestry, mining, and manufacturing. The community developer's challenge is to find ways to create wealth and livelihoods by reinvigorating local economies and connecting to larger urban/regional markets. CDFIs do this but also retain a racial equity lens and are willing to make loans to the communities and people who have too often been ignored. This is true in both rural and urban areas. 

And, of course, rural and minority communities live under the double-edged sword of poverty and racism — they've suffered the most historically and suffer the most from crises like COVID-19, climate change, and economic upheaval. 

PND: Your career has spanned the private, public, and social sectors, and you've led collaborative efforts across all three sectors. What has been your North Star in your work over the years? And what are your hopes for the incoming Biden administration with respect to policies that support racial and economic justice?   

LM: Economic justice has been my North Star — for me, that means fighting for financial capital to reach all people and communities. Financial capital is the fuel that drives economic opportunity, and I'm on a lifelong journey to help make sure that the allocation of capital is inclusive. 

I have many hopes for the Biden administration. It is exciting to see the administration embrace a goal of advancing racial equity and then to define this goal as spurring investment in small business opportunities, investing in homeownership and access to affordable housing for Black, Brown, and Native families, and ensuring that racial equity is considered in federal procurement and federal investments in infrastructure, clean energy, and agriculture. These are all policies to which CDFIs have much to contribute.  

CDFIs understand that government policies helped create the racial wealth gap and government policies must help end it. In the last week of 2020, Congress passed a historic government investment in CDFIs as part of the most recent COVID relief bill: $12 billion for CDFIs and minority depository institutions (MDIs). This is a giant step forward for our industry and the communities we serve. But injustice is persistent and tenacious, and we won't undo it with one bold step.

So, I'm considering that federal investment as a down payment, and I hope we can build on it in the months and years to come.  

— Kyoko Uchida

Prioritize public education in our philanthropic COVID-19 response

January 12, 2021

Children_sky_square_GettyImagesWith the arrival of effective vaccines against COVID-19, the end of the pandemic may finally be in sight. Yet the crisis in public education, one deeply exacerbated by the virus, will continue to wreak havoc beyond 2021.

If they have taught us anything, the last ten months have taught us who and what is essential. As people who work in philanthropy, who care about the future of the country, and as moms, we know that our kids and those who teach them are essential. And yet we as a country are not paying nearly enough attention to the public education crisis unfolding before our eyes — or responding to it as the emergency it is.

Here is what we know: More than fifty thousand students in the Los Angeles Unified School District never logged in to online learning during the spring, and there was a dramatic increase in middle and high school students failing classes in the fall. In Montgomery County, Maryland, almost 40 percent of low-income ninth-grade students failed English in the fall, and McKinsey estimates that Black and Latinx students will lose an average of eleven to twelve months of learning by June if the current state of affairs persists.

Here's what else we know: While learning remotely is not easy for any child, the learning losses from school closures and distance learning are not evenly distributed. As working mothers, we've seen first-hand the difficulties distance learning imposes on children and families, even those with significant privilege in the form of economic security, reliable broadband Internet access, quiet(ish) spaces to study, and parents who are working at home and can help their kids with schoolwork. Most children are not so lucky.

Nationally, nearly sixteen million school children lack adequate Internet service or don't have a device that connects to the Internet. In Los Angeles, where we live and work, at least one in four children in high-poverty schools lacks reliable high-quality Internet access, making it functionally impossible for them to participate in a meaningful way in school. Parents who risk their health every day in essential low-wage jobs have no realistic way to support their children through the daily challenges of distance learning. Meanwhile, students from wealthy and upper-middle class home have been able to resume in-person schooling even as high-poverty schools in the same city remain shuttered. The result is that students from poor and working-class families — kids who deserve and most need quality public education — are falling ever further behind their more fortunate peers.

While this is not a problem that philanthropy alone can solve, those of us with access to resources must find creative and strategic ways to show up for kids. All kids.

In the early days of the pandemic, we saw the difference philanthropic dollars could make. While federal stimulus funds and federal emergency funds allocated to the states took weeks and, in some cases, months to reach those most in need, public-private partnerships in many places were able to move quickly and efficiently to distribute funds. Here in Los Angeles, a group of more than thirty nonprofit organizations came together to form One Family LA after it became clear that low-income and immigrant families would be the most vulnerable to both the health impacts and economic devastation caused by the virus. In the weeks after the One Family was created, and before federal stimulus funds were fully disbursed, the organization was able to move quickly and distribute over $2 million in emergency relief funds to more than forty-five hundred families in need.

But the emergency is far from over. So what can philanthropy do to make a meaningful difference? How can it encourage and support educators and school district leaders to take the longer view that will be needed to recover from the pandemic even as they struggle to manage a seemingly endless list of day-to-day challenges?

First, philanthropy can use its greatest assets — nimbleness, creativity, and the freedom to take risks — to amplify the bright spots that already exist in public education. Chicago Public Schools recently partnered with philanthropists and community organizations to launch a $50 million program aimed at bringing free, high-quality Internet access to every student who lacks it. We know that things like intensive tutoring reliably help students from lower-income households make major academic gains. Philanthropy should partner with schools and school systems to get tutoring pilot programs off the ground, and efforts like these should be replicated by local leaders in communities across the country, with philanthropy providing seed funding and helping to disseminate best practices across city and state lines.

Second, in the months ahead, philanthropy must use its platforms to promote and fund advocacy work that keeps education at the forefront of the state and federal funding conversation. If we believe that creating a more equitable education system is critical, we need to make investments that articulate and put that priority in front of our elected officials. With so many health and economic challenges facing the country, this year's elections barely touched on the topic of education. Public schools across the country are doing the best they can, but they can't shoulder it all on their own. Ignoring months of learning loss and looming budget crises at the state and district levels is asking educators to do too much with too little.

In his book Our Kids, writer and political scientist Robert Putnam explored the many ways in which housing segregation and growing economic inequality have dissolved the social fabric that used to support poor and working-class children. And while most communities used to have a sense of collective responsibility for all children in the community — all kids were "our kids" — now when we speak about "our kids" we usually mean only the kids in our nuclear families.

We will never build the public-school systems we need or the society we want to live in unless we recapture that sense of collective responsibility for all children. While philanthropy is not an appropriate long-term substitute for robust city, state, and federal funding, it needs, at this moment, to prioritize public education in its COVID-19 response investments. At Fundamental and Great Public Schools Now, we are doing just that, because we know it's the best investment we can make for our families, for society, and for all our kids.

(Photo credit: GettyImages)

Ana Ponce_Rachel Levin_philantopicAna Ponce is executive director of Great Public Schools Now, and Rachel Levin is president of Fundamental.

DAF donors showed us who they were in 2020 

January 11, 2021

Money_seedlingGrantmaking from donor-advised funds (DAFs) is up — and it's up enormously. At National Philanthropic Trust, our grant dollars doubled in 2020. Other DAF sponsors reported a similar pattern. What is it about DAF donors that makes them respond so robustly to a crisis? And is this pattern of giving sustainable?

Here are three important lessons we learned about DAF donors in 2020 and why they should matter to nonprofits in the coming years:

1. DAF donors mobilize quickly. Americans have always had a giving impulse; they want to help in the face of challenges such as natural disasters, community emergencies, and neighbors in need. Giving in 2020 was marked with a different kind of urgency and qualifies as the most widespread and sustained form of "disaster giving" I've witnessed over more than four decades working in philanthropy.

The first COVID-specific grant recommendation at NPT came in early March. Within days there were dozens more, and after a few weeks we'd sent out millions of dollars in grant checks. The ability to recommend grants quickly has made an enormous difference in our donors’ philanthropic response and their willingness to support more causes than ever before.

Why it matters to charities in 2021: Swift and impactful grantmaking is certainly a credit to our donors' generosity, but it's also a testament to the organizations that are effectively communicating and addressing critical community needs.  Anecdotally, we know that donors respond to appeals that help meet a specific need — the more hyper-local or hyper-targeted, the more donors understand the impact their support will have.

At the beginning of the pandemic, we saw unrestricted grants flowing to emergency funds at community foundations, hospitals, and research institutions. Those organizations were communicating specific needs: assisting out-of-work hospitality workers in the community, providing childcare for nurses, funding treatment and prevention research. The summer surge of grants in response to calls for social justice mirrored the same sense of urgency, whether it was bail funds at established organizations already engaged in social equity work or racial literacy programs in schools. Organizations large and small continue to communicate what they need and highlight the impact donor dollars are having, attracting even more of those dollars and earning donors' trust.

2. DAF donors are committed to the long-term viability of nonprofits. DAF donors are committed philanthropists. We see this in the grants they recommend. In the aggregate, DAF grant dollars have increased nearly 100 percent in the last five years. We also see it in the payout rate from DAFs. Grant payout, which is a function of how much donors grant from their DAFs relative to total assets, has been above 20 percent for the last fifteen-plus years. This means DAF donors give generously and consistently — across economic cycles, election cycles, and in the face of great challenges.

This was true in 2008 when charitable giving writ large dropped but DAF grantmaking increased, and we are seeing it again in 2020-21. Other signals of long-term commitment? More donors than ever plan recurring grants — whether monthly, quarterly, or annually — to their favorite organizations. Over 15 percent of grants from NPT in 2020 were part of a recurring grant structure, a 34 percent increase from 2019. Recurring grants are a sustainable and predictable way to support nonprofits over the long term. Donors are making unrestricted grants more than ever, too. The number of unrestricted grants  NPT made was up 56 percent in 2020 and the dollar value of those grants jumped a whopping 254 percent. These increases are elements of what is known as "trust-based philanthropy," in which donors understand that charities know their constituents and causes better than anyone and trust them to do what is best to meet their immediate needs.

Why it matters to charities in 2021: To keep those regular, unrestricted dollars flowing, charitable organizations have to continue making their case for support. Communicating with donors — not DAF sponsors — to thank them and keep them engaged is critical. Although DAFs can technically give anonymously, the vast majority (at NPT, it's 97 percent) are made with the donors' names included. It's also good practice to engage every DAF donor, regardless of the size of the grant you receive. The most recent data shows that the average DAF account size is around $166,000, meaning today's sustaining donors could be tomorrow's major-gift donors.

3. DAF donors are "AND type people." DAF donors don’t look at their philanthropy through an either/or lens. They don’t choose either their longstanding favorite charity or a new one; they tend to support both. They don't have to choose either giving today or leaving a legacy tomorrow, they recommend grants now and invest for more grantmaking later. This year has highlighted exactly how important flexibility in philanthropy can be. Instead of making trade-offs, our donors recommended more grants — by volume and dollar value — in every interest area.

Why it matters to charities in 2021: If DAF donors are part of your donor base already, keep them informed and continue to solicit them for support. If they’re not, include them in your regular communication. DAF donors are open to supporting new charities and are upping their grants dollars in the face of today's challenges. The two most important ways to appeal to DAF donors are:

Make it easy. Include DAF language on your website and in your appeals like "send a check or recommend a grant from your donor-advised fund." Not only does this remind donors that your organization is eligible for support from DAFs, but it also suggests sophisticated fundraising knowledge and strategy.

Don't feel constricted by time or season. DAF donors have already signaled their commitment to philanthropy just by having a DAF — every dollar in their fund must go to charitable purposes. They've also already received their tax deduction when they made a contribution to their DAF. This means you can appeal to them whenever your organization's need is greatest. They're positioned to respond and often do so quickly.

DAFs are sometimes called the "rainy day funds" of philanthropy because DAF donors actively use their DAFs to support today's charitable priorities while saving for future needs. Dominated by a global pandemic, a renewed and intensified fight for social justice, and a deeply polarized political environment, 2020 was a year of great need. DAF donors, once again, stepped up to address those simultaneous challenges in creative, generous ways.

Headshot_eileen_heismanEileen Heisman is the CEO of National Philanthropic Trust, the largest national, independent donor-advised fund public charity. Heisman is one of the authors of the annual DAF Report. More at NPTrust.org.

Make America whole: how to heal our divided society

January 08, 2021

America_dividedOn Wednesday, a white man strolled into an office, settled down in a leather chair, and casually put his dirty boots on the desk in front of him. I saw this, and I wept.

For this was not his office, but that of Nancy Pelosi, the Speaker of the U.S. House of Representatives. She had been evacuated by armed police for her own protection, and the man, Richard Barnett, was part of a pro-Trump mob of domestic terrorists who had smashed their way into the U.S. Capitol building. It had been a long and traumatic day at the end of a long and traumatic four years, and this is what reduced me to tears — a photograph of a white man with his feet up.

How very easily he and his fellow extremists had strolled, virtually unchallenged by police, through the halls of power. How comfortably he committed the crime of sedition, disgracing our country while the whole world watched in amazement. How warmly he was praised for his thuggery by a president who called him a "very special person" and a "patriot."

I wept for our national humiliation and for the violation of our precious, fragile democracy. I wept for all the Black protesters who just six months previously had knelt on the hard, hot streets outside that very building to peacefully proclaim that their lives matter and who had been beaten, pepper-sprayed, and arrested for their pains.

Many of the rioters who stormed the Capitol in the dying days of Donald Trump's nightmarish presidency had tattoos linking them to White supremacist groups with their roots in some of the darkest — or perhaps whitest — chapters of U.S. history. Racism and its dreadful consequences are deeply engrained in our past and have never been fully resolved. Our present is tainted by the ongoing devaluation of those with Black and brown bodies: we can still hear their blood crying from the ground.

I truly believe that the struggle for justice for all will succeed one day, but not before we, as a nation, own the sin of racism. Its horrors cannot be negated; they must be examined honestly and repented, and the pernicious myth of race dismantled for good.

But rather than seek retaliation against those who are taken in by racist lies and madcap conspiracy theories, we should reach out to them. We should strive for reconciliation, for with God's blessings of forgiveness and grace, even the worst of us can be turned away from evil in repentance and redirected toward good. And if it proves beyond us to change the minds of these people, then we must hope to teach their children the true values of democracy. We must show them how to love those who don't look or sound like their parents, so that this hatred does not poison the hearts of another generation of Americans.

Sadly, the divisions we face today are wounds that go well beyond a few extremist groups; they permeate our society. President-elect Biden is now fighting to mend the soul of America. He cannot do it alone or quickly — a cure will take decades — but he can lead us all in taking bold steps toward healing.

Wounds must be allowed to breathe: first, we must talk openly to one another about our discontent and our anger, our fears and our hopes. And we must listen. This will require love, civility, and courage, but we should not rest until we find common ground. We may be surprised by how much unites us. We all have a soul. We all dream of a better future for ourselves and our children. We are all patriots. We all long for justice. We are all God's children.

Having acknowledged our shared humanity, the next step will be to repair our broken nation. Politicians, faith and community leaders, and educators all have their roles to play, but each of us has the capacity to offer our own unique solution: look into your heart and ask yourself, What can I do to make the world better? How can I overcome my suspicion of the "other" and truly attempt to engage with, understand, and even love someone whose ideology is utterly different from my own? How can I redirect our energies toward the common good?

If I could, I would sit down in a neutral space somewhere with that man who put his feet up on Speaker Pelosi's desk. I would ask him what he was hoping to achieve that day, what he was so angry about and why. I would try to really listen to his answers, however abhorrent I mighr find his beliefs. I suspect he would tell me he thought he was fighting to save democracy, because he saw it as the very soul of America, the source of all hope. That, surely, is one thing we would be able to agree on. And perhaps it would be a start...

Headshot_keith_mageeKeith Magee, author of the forthcoming Prophet Justice: Essays and Reflections on Race, Religion and Politics, is a theologian, public intellectual, and social justice scholar. He is also chair and professor of social justice at Newcastle University and a senior fellow in culture and justice at University College London.

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