What is the human instinct when tragedy strikes outside of your immediate circle?  (I use the term ‘circle’ quite loosely and encourage self definition).

For the past two weeks, I’ve been in keen observation mode.  Watching Anderson Cooper on CNN, reading various and varied thoughts on Haiti in my Google Reader, and monitoring the various fundraising and support initiatives taking place.  I’ve listened to stories of miracles, of heartbreak, of flight and of entrenched resolve to rebuild.  In my work and at home, I’ve heard comments ranging from “we should adopt” to “help those at home”,  from “I want to do more” to “I don’t know what to do”, and from “I can’t stop watching” to “that’s enough now”.

It’s much.  It’s heavy.  And for the most part, there is little that we can tangibly, actually, with-our-two-hands *do*.  For a human, I think that is confusing and I think it is frustrating.

Assuring a donor that a financial contribution will be the *most* effective thing to do isn’t easy.  For the donor, its a moment of realization that they need to give without ego - the realization that they many never hear how their gift was spent, will ever know the exact outcomes, or may never hear thank you.  For the recipient organization, the onus lies in their duty of stewardship - to put the gift the best use possible, to be humbled by support from a donor from a faraway place, and to be grateful to not be going it alone.

A food drive is not the answer.  And yet if our best action is to give money, it’s been inspiring to watch the power of new technology - allowing us to pool our networks and relationships to create telethons, fundraising events, and sharing stories - within a matter of days.  While we may not have our hands on the grounds - our hands are indeed at work.

What is our immediate instinct when we can not *do* anything?  Perhaps, the first step is to redefine *do* - and to assess whether what we’ve been doing all along has been effective enough?

Have you been working to build strong charitable organizations - so that when they need disaster aid, you are confident they will use it effectively?  Have you been putting your skill to work in your local community so that when it is needed globally, you have refined your craft?  Have you taken the step to be curious at what lies outside your own home so that you are prepared to ask the right questions of the world at large?

People have commented on how amazing it is to see so many folks band together - in giving - for a disaster like Haiti.  They have wondered, “why aren’t we doing this all the time”?  My answer is that we are.  The daily effects may be tiny.  In fact, you may not see them at all.   But if you are involved, if you are *doing*…you know they are happening.

If you missed Obama’s comments last night regarding charitable deductions, I’ve included them here.  For the past few weeks, the non-profit sector has been a flutter with commentary on the lowering of charitable deductions for wealthy donors.  In summary, instead of deducting 39%, wealthy American will be able to deduct 28% of their charitable giving.  While I realize that we are in a recession, charitable donations should not be driven by the deduction you receive on your taxes.  As a sector, our stories should compel folks to give.  As a people, we should not simply expect to get something when we give.

The debate has gone around and around in the sector, but Obama is right: 

When I give $100, I’d get the same amount of deduction as when some, a bus driver who’s making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent, he gets to write off 28 percent. I get to write off 39 percent. I don’t think that’s fair.

If we believe the work we are doing is valuable, donors will as well.  A higher tax deduction shouldn’t make or break our case.

Transcript:

Mike Allen, Politico? Hi, Mike.

Q: Mr. President, are you — thank you. Thank you, Mr. President. Are you reconsidering your plan to cut the interest rate deduction for mortgages and for charities? And do you regret having proposed that in the first place?

OBAMA: No, I think it’s — I think it’s the right thing to do, where we’ve got to make some difficult choices. Here’s what we did with respect to tax policy.

What we said was that, over the last decade, the average worker, the average family have seen their wages and incomes flat. Even in times where supposedly we were in the middle of an economic boom, as a practical matter, their incomes didn’t go up. And so, well, we said, Let’s give them a tax cut. Let’s give them some relief, some help, 95 percent of American families.

Now, for the top 5 percent, they’re the ones who typically saw huge gains in their income. I, I fall in that category. And what we’ve said is, for those folks, let’s not renew the Bush tax cuts, so let’s go back to the rates that existed back in, during the Clinton era, when wealthy people were still wealthy and doing just fine, and let’s look at the, the level at which people can itemize their deductions.

And what we’ve said is: Let’s go back to the rate that existed under Ronald Reagan. People are still going to be able to make charitable contributions. It just means, if you give $100 and you’re in this tax bracket, at a certain point, instead of being able to write off 36 percent or 39 percent, you’re writing off 28 percent.

Now, if it’s really a charitable contribution, I’m assuming that that shouldn’t be the determining factor as to whether you’re giving that $100 to the homeless shelter down the street.

And so this provision would affect about 1 percent of the American people. They would still get deductions. It’s just that they wouldn’t be able to write off 39 percent.

In that sense, what it would do is it would equalize. When I give $100, I’d get the same amount of deduction as when some, a bus driver who’s making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent, he gets to write off 28 percent. I get to write off 39 percent. I don’t think that’s fair.

So I think this was a good idea. I think it is a realistic way for us to raise some revenue from people who’ve benefited enormously over the last several years.

It’s not going to cripple them. They’ll still be well-to-do. And, you know, ultimately, if we’re going to tackle the serious problems that we’ve got, then, in some cases, those who are more fortunate are going to have to pay a little bit more.

 

I’ve enjoyed the philanthropy chatter of the past two weeks, the year-end reviews and the predictions for 2009.  While nodding along with the jargon we’d like to see banished, contemplating pitfalls of new philanthropists, and musing on how Madoff worked out his whole scheme - I found myself focusing intently on two topics, scale and support. 

What follows is neither a review or a prediction, but rather two topics that I hope we keep talking about this year.

“Going to Scale” - Can we readjust our eagerness for BIG?

For-profit franchises standardize their programs and operations so they can expand to new markets - just like Starbucks, McDonalds, and every box store in a suburb near you. 

Non-profit programs have also been embracing this notion of “going to scale” by seeing what elements of their programs (and their operations) can be standardized and replicated.  Habitat for Humanity and CityYear both expanded from their original demographics with success. 

And because some organizations have reached beyond their original boundaries, donors have learned to view the replication of programs as evidence of a successful investment.  But rarely is replication simply the end, even if donors see it as the goal.  Even in business, replication and scaling up is not always successful - in the last year, we watched as Starbucks tried to undo its scale and get back in line with its original intent. 

Similarly, not every non-profit program should be pushing for a bigger scale - whether that be in domestic or international contexts.  If we continue to allow donors to define ”achieving scale” as a successful programmatic investment, organizations will continue to find themselves pushing to expand programs that aren't ready or don't need it.

Instead, what if we toned down our obsession with bigness and achieving scale - and focused on an organization's potential to do well right where it is, as it is?  Rather than focusing on the BIG, we emphasis the local, the small, the immediate - and pay attention to the resources needed to strengthen the whole.  (Sounds very climate change debate-ish, right?) 

Support - Look beyond the program?

In the past few months, it has been uplifting to listen to the many voices advocating for the maintenance (and increase) of operating support for non-profit organizations.  While donors have traditionally shunned administrative costs in their philanthropic giving, often equating lower costs with greater success, many are now learning that the strength of an organization is just as, if not more, important than the programs it runs. 

Support - for staff, for development, for electricity, for culture, for paper, for salaries, for health care and on and on - is rarely questioned in the business world.  Yet, we ask our non-profit counterparts to rely on “their passion” as an excuse to undercut all of these necessary elements of support.

A strong organization is more than its star program and is more than its bright leader - and now, we have this opportunity, this economic downturn, to examine how we have been treating scale and support within the non-profit sector.  Perhaps we will find that small is not bad and that strong organizations are good. 

2009 is the right time to reflect on the philanthropic excitement of the past few years to ensure that we are still enjoying what we have created - and to improve the arguments we have been making, no matter how big or small. 

Having read Michael Edward's “Just Another Emperor? The Myths and Realities of Philanthrocapitalism” earlier this year, I thought I would balance the perspective with a read of Matthew Bishop/Michael Green's “Philanthrocapitalism: How the Rich Can Save the World”.  If you’re looking for a book club discussion, this is definitely a good pair.

Two chapters into Philanthrocapitalism, we are greeted by the notion we are now enjoying the Fifth Golden Age of philanthropy - great amounts of wealth being put to use against global inequities by business folks who know how to achieve results.  What was remarkable to notice, on page 28 of 298, was that the financial and political situations have changed/are changing in such way that this “new” Golden Age may already be on its way out. 

Bishop writes, “Each of the past philanthropic golden ages ended with the state ratcheting up its role in society, crowding out some the philanthropists.  In part, it is the recent attempt in many countries to roll back the borders of the state through privatization, deregulation, tax cutting, and attrition that has made space for the philanthrocapitalists of the fifth golden age.”  If these actions helped to create a new Golden Age, what are we to make of the recent financial bailouts, government buying stock in banks, moves to re-nationalize public service and upcoming tax increases for the wealthy?  If Golden Ages are relatively short and fleeting moments in time - is the newest on its way out?  And then what?

Recent market conditions and political actions show how quickly the world can change.  The Chronicle of Philanthropy published this article by Jeff Trexler musing on the same topic.  With so much hype over the past few years regarding philanthrocapitalism and its cousins, have we just been perpetuating a short-lived fad or will we take some useful nuggets away from this Golden Age?

The convergence of business and the non profit sectors in recent years has sparked an interesting conversation around the use of business lingo and methods in the social sector.   Regardless of your preferred term - venture philanthropy, philanthrocapitalism, social entrepreneurship - the involvement of business in the social sector has prompted good debate on 1) how to quantify the impact of programs and 2) determine the quality of social organizations.

GuideStar has been at the forefront of this endeavour - offering IRS 990 reports on public charities, for free and on-line.  Among many in the sector, it is one of the first places to go to gain insight on an organization's current finances.  However, the service is limited to the financial elements of an organization - which doesn't always speak to whether a particular program is producing desired results.

Steve Butz and a newly formed Alliance for Effective Social Investing (which includes a few of my favorite personalities from the world of philanthropy) are working on a social investment rating tool that will help non profits to better monitor their own progress and that will give donors a more holistic picture organizations they are supporting.

There are many questions to be answered on the usefulness of the tool - will this add burden to already understaffed non profits, how will social programs be trained in evaluation they may not be use to, what will be done with all of the collected information, what are ‘best case’ results, what if many organizations are failing, then what?   These questions are exactly why the Alliance was formed - to determine the best use of the tool and evaluate its own potential rate of success.

I’d love to be a fly on the wall during the Alliance's meetings. 

The jury is still out on the overall effects of the business world in the social sector, however if the tool allows programs to become more efficient, impact more transparent, and organizations more accountable - then perhaps the sector will have just taught business a thing or two.

This WSJ post regarding a December meeting of the Clinton Global Initiative in Hong Kong caught my attention.   While I’m keen on the idea of promoting philanthropic actions around the world, I’m also sensitive to the fact that these actions may not be one-size fits all. 

A main goal of the Asia-based meeting is to raise awareness among Asian countries to the positive role of civil society and non-governmental organizations.  While the inclusion of high-ranking government and corporate leaders is encouraging, the deeper question will be how civil society from each of these countries will actually be represented? 

Mr. Clinton's notes one of the main challenges being whether the global financial crisis will affect the amount of money raised.  Making monetary commitments is fantastic, but what is the infrastructure within Asian nations to carry out these commitments?  How does it vary from one to the next?  What will the unique challenges of implementation be?  Instead of focusing on the financial challenge, sights might be better set to adapting expectations of how to fit a western model of philanthropy on a very diverse set of Asian nations – all having their own ingrained philanthropic traditions. 

I’m watching with interest on the outcome - knowing the amount of money donated does not mean that structure of civil society and non-governmental organizations in Asia will suddenly mirror (walk like, talk like) those of the United States.  Nor should they, necessarily.  Even in Canada the structure varies as government, legal, tax, and social traditions all have evolved in a different manners. 

As to Mr. Clinton's quote “There will be “holes in the fabric” of Asian society “that can only be filled by civilian action,” it may prudent to first to look at the individual weave of each society's fabric before assuming that the holes are not there by design - nor are in need of a CGI patch.

A couple of weeks ago, I thought I was writing on the worst the economy had to offer.  Fast forward to now - the world is involved and my local newspaper is reporting on the expected dip in non-profit donations.  The economy, coupled with the newly released Matthew Bishop/Michael Green book on Philanthrocapitalism, has me wondering - how do you cultivate new gifts and sustainable giving?

In an ideal world, every child would be using their “Spend, Save, Share” banks from an early age and “giving back” would be an engrained social norm.  The positive evidence that this may be the trend is coming from the Millennials values of social change, an increase in organizations addressing financial education for youth, and the increase of access to giving tools on social networking sites and through Web 2.0 technologies.

However, while these trends might indicate that the next generation will be more likely to give their time and money, how does a non-profit reach all demographics right now?  Is it more sustainable to look for 99% of donations in 1% of wealth or to attempt to change behavior for those who are not engaged in philanthropy?  Does the location matter and if so, how does a city become more philanthropic?  At a country level, how does government's social funding (for health care, education, etc) affect the public's opinion on supplementing this funding with their own money? 

A city's typical givers might be in their 60's, 70's, and 80's - yet, much wealth is accumulating among people in their 30's, 40's, and 50's.  If these folks (and companies run by these folks) are not already pre-disposed to giving a portion of their wealth to charity, how do you reach them?  How do you reach cities with sprawl, where young professional families do not live in a central downtown core?  How do you reach inside the mighty corporations, with windfall profits, who do not subscribe to the belief of giving away 1% of their pre-tax profits?

These are not new questions, per se, but the time is right to be asking them again. In many places, creative solutions are being offered - professional organizations and networking encourage the discussion, giving circles are established among friends, and web-based applications making giving possible from your own home.  However, the audience to be reached is not those already informed, but those who need to be.  It's a creative challenge - and one that will take “local variations on a theme” to be successful.

While my mind has been swirling around Wall Street these past few days, a few philanthropy bits have caught my attention.

Going to the Dogs- If you recall that a few of Leona Helmsley's millions were left to the care and welfare of dogs, you might appreciate the Hudson Institute's panel discussion (September 5) discussing the implications of her trust, its perpetuity, and the dilemma of estate taxes.  The conversation moves quickly away from the dogs and on to more pressing topics of philanthropy and foundations.  If you are keen on the sector, the panelist names may perk your interest - or quickly dissolve it. 

Tell me More- It always excites me to find new resources emerging in the area of transparency including:  the forth-coming Foundation Review, the first peer-reviewed journal in philanthropy; the UK-based Intelligent Giving, a clever site and charity offering insight on how charities operate; and Acumen Fund's announcement of the  Portfolio Data Management System, hoping to set the standard for financial and social reporting data in development.

Events-The Clinton Global Initiative wrapped up last week with 250 commitments equalling $8 billion.  The Chronicle of Philanthropy offers daily commentary on the week's biggest events.  Two exciting events are on their way in October including the SSIR's Online Giving Marketplace  on how sites such as DonorsChoose, Kiva, and Global Giving are changing philanthropy and Social Capital Markets 08 gathering entrepreneurs, funder, and social-business model enthusiasts on what works and what doesn't.

International Philanthropy-Its a bit of a narrow world, so I’m always keen to find and share stories of what is happening.  Global Fund for Community Foundations passes its one year mark and notes some of its progress in this Alliance article - but of greatest interest are the brief mentions of how other countries conceptualize “community foundations” and what in a countries’ culture and current climate might make these foundations more susceptible to success and sustainability. 

Now I’m back to the rescue of the rescue.

Last week, a sports-fan friend introduced me to an on-line forum where he publicly posts his weekly football picks.  Coupled with the team he believes will prevail is a brief rationale of why he is making this choice and placing his bet on a particular team.  For him, its a way to keep both a historical record of his choices, but also to practice a public showing of transparency for his choices. 

As websites pop up that allow individual donors to invest in projects posted by organizations (i.e. Donors Choose and Global Giving) and track the progress of their investments, it is an interesting idea to have a place where donors (informally) or foundations (more formally) could describe the ‘why’ of their choices.  

For individual donors, it could be similar to describing corporate financial investments - accounting for each bet and articulating on why these particular bets were chosen.   A snapshot of a moment in time.  For the organizations receiving the donations, it could be a boost to their fundraising efforts - having the general public know why another donor has seen them as a good investment.

For foundations this method of telling the public ‘why’ they are investing in particular organizations and within specific initiatives would serve a number of objectives: an act of transparency for the foundation, a boost for the recipient organization, a glimmer of hope/dash of reality for future grantseekers, and an opening for public discourse. 

It can be argued that the investments made with the private money of donors and foundations don't need to be discussed.   Foundations may list which organizations they have supported, but have less often let the public in on the ‘why’. 

It's my bias that the lack of transparency shown (particularly by foundations) on the choices made on investments and risk simply continues the power imbalance (tilting in favor of foundations and away from non-profits/the public).  As a citizen, when investment is made in areas of public goods (i.e. health, environment, agriculture, education) I want to understand why option “X” was chosen over the “Y” and “Z” options.  From success or failure, donors will learn lessons for future investments.  It's simple knowledge sharing - and it need not get political or wrapped up in ego.

Maybe I’m just too nosy, but I like to know the ‘why’.  A forum for articulating these thoughts makes philanthropy more accessible - and might just convince new donors to join in.