In Canada, charitable organizations have the available structures (legal frameworks) to create related business.  Related business activities help charities to diversify their revenue.   There are two kinds of related business a charity can conduct 1) business that are linked to a charity’s purpose and subordinate to that purpose and 2) business that are run substantially by volunteers. 

However, creating a related busines not a simple process. 

Fraught with regulation, creating related business - or trying to run a social enterprise - doesn’t happen easily.  Some organizations who run “social enterprises” are really running employment programs or are earning extra income.  They are not necessarily running a business that advance social good.

Looking at steps that have been taken in the UK and US to set up Community Interest Companies (CIC) and Low-Profit Limited Liability Company (L3C) structures gives Canada a way to envision what is possible.  Social enterprise doesn’t have to mean a “charity doing business” rather it can just be “doing business”.

The CIC and L3C structure options for incorporation are underway.  Canada would be served well to pay attention and to reflect on lessons-learned.  While creating a separate legal framework for social enterprise may not solve all the world’s problems, it gives us another tool in our box.

I’m excited by the public policy possibility - even if it involves words like legal, tax, and regulation.

No matter your wealth, you can participate in philanthropy.  The barriers to entry are lowering by leaps and bounds - and the spectrum is getting longer.  Donate at your corporate United Way drive, join a giving circle, volunteer your time as a skilled volunteer, loan money to a farmer in Asia, buy a food-pack in the grocery story checkout…  Even if you are strategic about your interest areas, you may find yourself asking - what is the right combination of these actions for my personal philanthropy?

Financial vehicles for giving and philanthropic advisors already exist in your town, but what makes you confident they have *all* the answers?  Aren’t they limited by knowledge, scope, international boundaries?  What if they weren’t?  Or what if those barriers were lowered, so you, the donor, got more, better, newer information?

That’s what is exciting about the launch of the Tactical Philanthropy Knowledge Network - a place for your independent advisor to plug into other advisors and an administrative network of knowledge.   For advisors, it means better communication among experts.  For donors, it means better information on how to give.  For philanthropy, it likely means more professionalization - but if its your money, it means a better, friendly guide.

The Network is still brand new, and its evolution will be exciting.  You can keep up to date on it by following Tactical Philanthropy.

You can still give on your ad-hoc basis, but isn’t it reassuring to know there are professionals out there when you need them.  (Or when you get worn out from trying to understand the entire profession?)

And yet, there is merit in what Peter Schaefer writes. 

As of 2004, loans provided by microfinance organizations amounted to just $17 billion worldwide. This is a pittance compared with the potential credit requirements of de Soto’s 4 billion poor, most of whom are small-scale entrepreneurs. All capitalists need capital — but the current system will never provide an adequate amount.

Yes!  We need to change the system 1) so that more capital is available to those who need it and 2) so that these programs can achieve widespread change.  But does a overarching need ”to change the system” automatically debunk the accolades these men have received?

No.

The article blends well into a conversation happening on Tactical Philanthropy - high performance vs. high impact.  In a number of blog postings, folks have debated whether focus should be on 1) creating high performing organizations - organizations with strong capacity, strong operations or 2) on creating high impact organization - organizations achieving their missions at a large enough scale to achieve change.

The answer is not one or the other - it is both.  The journey to get to both high performance and high impact is not linear - it is riddled with starts, stops, successes, and failures.  Shaefer may be right to question the quantitative metrics of how these interventions are doing, but it is unfair to count the interventions out.  In defense, he offers us a solution that could further the work of Yunus and Soto - micromortages - that *could* reach many, many more folks.  It is an interesting idea.

Time shows us what works and what would work better.   We strive for that holy grail - the miraclous intersection of high performace and high impact.  Yet in reality, we stand on the shoulders of what came before us and we should hope that their foundations were built well - so that we might achieve greater impact.

It is this fatigue with hearing the word efficiency that I began to rebel.  One rebellious action, not writing my blog.  With so many opinions out there around how to measure, who to measure, what to measure, or not to measure - the noise becomes too much.  Still, my petulance will not make the issue go away.

Running an organization that straddles both non-profit and funder, I find myself both tempted to become more “efficient” and more staunch in my rationale for why we should not.  Dan Pallota’s Uncharitable got me to “just say no” to current standards of efficiency and David Wagner’s What’s Love Got to Do With It? has me asking if we truly understand the implications of how our philanthropic norms have evolved - and do we still agree with them after examination.

Pallota is writing a series on the fallacies of efficiency for the Harvard Business Review, keenly titled Free the NonProfits - and asks whether you should really ask, “What percentage of my donation goes to the cause”.  From all that my mind has tried to absorb, I am certain about one thing - let’s build good organizations and worry less about their admin:program ratios.   Support the folks doing good work by getting involved, that’s how you’ll know they are doing good work. 

Our financial institutions, our car manufactures, and our governments are not efficient.  We are not machines, but organizations made up of human beings.  If the philanthropic/non-profit sector figured out a way to make its organizations and grant-making/fundraising fully efficient, we’d be selling the model to the rest of the economy.

Last night, we were saturated with quite a portrayal of white man’s guilt - where the most honest moment comes when our hero, Teddy Rist, is questioned on his true intentions.  He never really tells us, but then again, neither do many philanthropists.

The hero’s British accent, his American company, and the African music accompanying the intro, commercial breaks, and credits lay it on quite thick.  He’s successful in his mission and the hour show wraps up with a warm fuzzy feeling - except for that awkward neocolonialist pang in your stomach. 

Philanthropy is hard work - and yes, it is exciting and no, it doesn’t have to be colonialist (though that could be an entirely separate blog).  The complexities of philanthropy are much more than this series acknowledges - or are at least much more mental, than physical.  But if the show at least gets folks talking - about what Philanthropy is and isn’t, then  perhaps it will have been a worthwhile show to have watched.

There are likely to be many opinion on the show.  For other’s check out these:

• Round up of Media commentaries:  from good to worse
• Steve Gunderson, Council on Foundations - “The Philanthropist is to charitable giving as The Pink Panther is to police work.”
• Jeff Trexler, Uncivil Society - “It’s empire. It’s racial supremacy. And it’s something we should not indulge.”

The Index confirms that Remittances will continue to increase in significance:

Despite the economic downturn in 2008, remittances to the developing world still grew nine percent to an estimated $305 billion. Only in the beginning of 2009 did remittances begin to decline, but the World Bank
projects remittance fl ows to developing countries will fall by only 5–8 percent in 2009. Thus, as private capital flows decline in 2009, the more resilient remittance flows, along with philanthropic
donations, will continue to be critical lifelines to help developing countries weather the economic storm.

A slightly different take on global philanthropy was addressed at the Global Philanthropy Forum by Peter Buffett of the Novo Foundation, in that we must avoid “philanthropic colonialism”.  It’s a smart perspective that we should keep talking about - and share ways to avoid the pitfalls of short-term projects and neglecting local needs.

The Forum also highlighted a Track II Diplomacy discussion on Iran with a panel from both diplomacy and philanthropy.  I’m always on the look out for overlaps between my two favorite disciplines.

From a foreign policy point of view, do we really need television show endorsing the Americans know best philosophy (i.e. we’ll come to your country with our own agenda) - even if it is for “good” causes?  Do we really want America’s philanthropists thinking they can run into countries, bargain with drug dealers and dodge bullets - all in the name of  saving the world?  Maybe we do?  

Philanthropy is a personal choice and journey.  Are we through with philanthropy as a collaboration?  Is this the beginning of the individual action being more effective, less bureaucratic, and quicker?  I’m starting to think that we are okay with folks pursuing their own agendas up to a point - and perhaps this TV show will illuminate our cut-off. 

I’m still working through my thoughts about the show.  I’ll definitely have to watch and find out.  Though if this is the sector’s break-out moment to the mainstream, I’m a little nervous that we’ll have more explaining to do - not less.  However, if folks come away knowing what philanthropy is - and how to pronounce it, perhaps it will have all been worth it?

Evaluation within the non-profit sector is not always easy to understand.  It’s difficult to apply evaluation for many non-profits with lack of staff, lack of funding, etc.  It’s even more difficult when the numbers for evaluating are just not available - a lack of accessibility or a lack of existence.  Even with the best of intentions to evaluate, organizations face the added difficulty of venturing into a jargon-filled arena of inputs, outcome, impacts, consultants, and methodologies. 

All that said, we must evaluate.  And we must get better about sharing those evaluations.  If we want to be effective, to avoid common stumbling blocks, we need to learn from what has come before us.  So its thankful that there are folks (who love the jargony world of evaluation) out there working to improve what evaluation means.

Alliance has published a clever interview with some of the leading minds in evaluation and offers links to a round up of different evaluation models being used by U.S. Foundations.  There are different models, there are different perspectives - this is unlikely to change.  But SROI is also likely to remain, and its good that folks are working it out for the rest of us to understand.

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.

 

With that option, you can choose not to participate.  Or to participate a little.  Or to participate when nothing better is on TV.

The same goes for technology in the sector.  Facebook, Twitter, Blogs, Podcasts, Webinars, and on and on - as a funder, non-profit, or individual you are responsible for how you choose to work.  What is most effective may not be your style - and thus, making it less effective for your mission.

I hear folks in the field say they want to adopt certain practices, certain technologies because “they think they should”, but I offer another way to think about it.  A tool is just a tool - until you understand why you want to use it and when you need to use it. 

If your position in the sector is thriving with direct mail and telemarketing, then switching for the sake of the times, may not be for you.  On the flip side, if you have nothing to say or don’t know what you are trying to say - there are no amount of tools and widgets to help you  focus your communication.

As far as I’ve seen, there’s no one right way to do philanthropy.  Being authentic that giving is an individual choice may help us to create stronger communities around issues as a whole.  Driving communication with the individual in mind is the goal, no matter which medium you choose.

Knowing that there is more than one way to communicate, we can be reassured that “space” will never run out.  We’re in this together, regardless of our tendencies to stereotype generations. 

Embracing philanthropy, embracing technology - it’s a lifestyle.  And not one size fits all.