Monday, March 8, 2021

Update A Seminal 1975 Report on American Philanthropy

  

The time has come to revisit and update an influential report on philanthropy published in 1975. There has been nothing like it since. It’s time for an update because institutionaly philanthropy has changed considerably; the next 50 years will look very different than the last. The absence of broadly recognized philanthropic leadership – beyond just their giving -- in the mold of a John D. Rockefeller or an Andrew Carnegie or a Julius Rosenwald is striking.

There is no single organization, foundation, think tank nor academic institution with a sufficiently commanding or unifying national presence to lead a new organization. Instead, it should be established by Presidential action and privately led, managed and financed. This update matters immensely because donors, the recipients of charitable dollars, the boards of trustees and the mechanical enablers – the fundraisers, nonprofit executives and the work force, over 10% of all private sector employment -- will all be affected because the challenges are greater than ever before. Private philanthropy has a vast responsibility and equally vast potential to address national and global problems. For now, that potential is unmet, seriously underutilized and insufficiently supported by private donors as well as government funders. That said, ongoing Chronicle reporting since last December highlights the extent to which this concern is  now top of mind for many of the nation’s top philanthropists

 

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Why now? Six months into the Trump presidency, I wrote on the company blog that “…  we now live in an alternative universe: Robin ‘Dooh’ steals from the poor and gives to the rich. … [P]unishing the poor for being poor is a blood sport. … Trump's fixation on erasing Obama from the collective memory puts his overt racism, his Obama birther-ism obsession, his anti-Muslim travel ban and his loathing of the poor (‘losers’) in one steaming cauldron of know-nothing hate.” I put off the update idea. Things only got worse from there. 

Now, we are in an epic struggle with two interlaced pandemics, one new, one chronic. First, a year of highly lethal Covid-19. Over 500,000 dead but, finally, hope in the offing.  Through his know-nothing denial of science Trump and his sycophants thoroughly mismanaged the pandemic. 

Second is the torturous history of race in this nation, “the American dilemma,” as Swedish sociologist and Nobel Laureate, Gunnar Myrdal thoroughly addressed in his epic 1944 masterpiece of that name; and similarly characterized as our national tragedy by W.E.B. DuBois. With his inflammatory rhetoric, his boorishness and the tacit incitement to violence that brought about the events of January 6th, Trump greatly exacerbated racial unease conjoined to a killer disease disproportionately affecting the poor and people of color, all too often the same people. We live in a Manichean time, a 50/50 nation. As a people we are capable of so much more, certainly in our philanthropy. 

 

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Gates or the Ford Foundation may seem obvious leaders for such an initiative and perhaps come near. They, Soros, Buffett, Bloomberg and others are leading givers and enormously generous people; they mean well and do so much good. But none makes sufficient impact systemically, by which is meant that beyond their own philanthropic directions, interests and wealth a general concern for the philanthropic weal and its moral place in American life Is lacking. For example, the Giving Pledge is widely touted yet the number of multibillionaires, poor billionaires and the echelons just below -- actually signing on -- is far fewer than the real potential.  Further, the power and the interests of mega-philanthropists don’t always align with the concerns of other actors who, understandingly, are unlikely to take them on. The dilemma, of course, is that to bring off what will be a costly undertaking cannot succeed without them. 

The Giving USA Foundation, publishers of the annual data aggregated by the Center for Philanthropy at Indiana University, show that US philanthropic output has never pushed much beyond 2.4% of GDP. Why not? Growth of the economy overall is one factor, as in all ships rising on the rising tide. Thus, there is more in absolute dollars and more giving. But there is little upward trending in the percentage itself. Interestingly in most years, GDP rises around 3%. So does actual inflation. No net gain. But are that data a sufficient explanation for failing to reach an achievable 3 or 4% or more of GDP? 

It’s not about the money. 

Money abounds. More wealth has been created in the last 25 years than in the past 250. The much ballyhooed intergenerational transfer of wealth is estimated at $75 trillion by 2050. 

 

 

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Roughly 50 years ago, a mostly pale, male cohort of a hundred plus civic leaders was assembled by David Rockefeller. Ably led by John H. Filer, a Connecticut insurance executive and by an outstanding public servant, John Gardner, the hard slog was the work of a small paid staff of the experts one would expect. The result was the report of the Filer Commission on Private Philanthropy and Public Needs, quoted by many and read by few. Even so, it had an outsize impact if only because nothing like it had ever been attempted before and its impact has been enduring:

 The Filer report spawned The Program on Non-Profit Organizations at Yale University and The Lilly Family School of Philanthropy at Indiana University; it stimulated formation of the Independent Sector and the National Committee for Responsive Philanthropy. It encouraged the graduate and undergraduate programs in philanthropy and nonprofit management that have proliferated in top-tier academic institutions. It’s probably unfair and maybe inaccurate to say that Filer is now consigned to history’s dustbins. Yet everyone giving and working in the field, whether they know it or not, has benefitted from the Filer effect.  

 

 

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A Presidential Commission must reflect total diversity in leadership and staff, reflecting the makeup of the nation as it is -- and as it will become over the next 50 years. At a minimum, there are ten principal issues for new or renewed consideration; they have been kicking around for years but usually addressed independent of each other. 

> Current philanthropy is woefully out of touch with the changing demographics of America. Our Eurocentric notion of philanthropy that has historically defined and undergirded American philanthropy is increasingly irrelevant. What will replace or amend it? “Eurocentric” means white power, white conquest, white enslavement and white domination over any color other than white, rationalized as divinely inspirited or commanded. It’s been pumped into white brains for multiple generations of public, private and parochial school students from pre-K to postgraduate and leeches into us in countless other ways, consciously and not. No wonder then that mostly white boards and staffs, north of 80% in recent studies, still remains the predominant norm for private nonprofits. They don’t reflect the diversity and entirety of the American people. That will change profoundly over the next 50 years; indeed, the change is well under way. Pluralities already exist; majority is coming.  

> With so much wealth, why is the giving needle stuck so far below even 3% of GDP?  One might argue that there is an undercount because Giving USA doesn’t actually measure all sources of giving: for example, gifts-in-kind; the multi-billion dollar remittance economy which is just as philanthropic as the collection plate; corporate charity which is passed off as marketing; underreporting on the IRS 990 from which the data are drawn; and the magnitude of smaller, non-itemized deductions is not fully captured nor even known. 

> The charitable tax deduction is the same for all gifts to all charities. Why? Could the deduction be incentivized by sharply increasing it for the charities and community based organizations less able to fundraise effectively but who actually reach the abject poor – some 15% of the nation’s population – and likely climbing because of the new poor and the near poor -- men, women and families suddenly broken by Covid-19?  

> Should idle capital be put to work? Should the undistributed assets of donor advised funds lying fallow and the way too low 5% rate of required foundation payouts and no term limits (other than voluntary) on foundation perpetuity be weighed against a greater good? Gates and a few other foundations have sunset provisions. Most don’t. Why not a fixed life span followed by asset distribution to a free-standing community foundation, or directly to qualified charities totally independent of the donor? Giving USA reported foundation giving in 2019 at roughly $76 billion. If that more or less represents 5% of the required payout, $1.52 trillion idles. A fixed life span would incentivize asset reduction. A similar life span would have the same result on the undistributed capital held in donor advised funds, which stood at $37.12 billion in 2018, according to the National Philanthropic Trust. The tax deductibility provided to foundation and DAF gifts is subsidized. By the rest of us. This  was specifically addressed in the Chronicle’s December issue. Some of the nation’s largest private foundations, and prominent scholars, on the 2020 Giving Tuesday, joined forces urging Congress to adopt a set of tax proposals intended to speed up distributions from foundations and donor-advised funds. The federal government could be allocating far more than it does it does to private sector initiatives. Nonetheless, non-governmental philanthropy injecting $2.3 trillion in private funds would be profound and make no difference in the rapidity of new wealth creation. 

> Health care systems, originally established as charities, many by religious groups, enjoy tax-free status. But the amount of true charity care rendered by most is relatively miniscule in ratio to their overall budgets; even that cost burden is shifted to insured and self-pay patients. Should there be a separate category of nonprofit status for all but community hospitals? And should first-tier teaching hospital systems be separately treated in the tax code? Why not a new hybrid form of charity corporation, part tax deductible, part not? Like a ‘B’ corp. – only in reverse. Notably, private philanthropy is no longer the essential revenue driver for these large entities and will be even less so in the fully nationalized health care-for-all system that any developed nation should provide and that is likely inevitable for America in the next decade or so, if not sooner. 

> Can community foundations optimally compete for donated wealth against nominal nonprofits like the Fidelity Charitable Gift Fund, the nation’s largest “charity?” The short answer is no way. They simply do not have the financial resources to take on Fidelity or the other funds. FCGF is a spinoff of a mammoth for-profit drawing on its huge customer base. Should Incentivizing deductions to community foundations also be considered?

> Who/what is a volunteer? Indeed, what is voluntarism? Private charity now employs more than 10% of the US workforce and technology has driven out or greatly reduced many traditional volunteer roles. With both parents working, often in multiple jobs; with a growing number of single household and single-parent homes; with the aging population and consequent immobility of many elderly requiring home care; and with less trust in many once revered institutions – what is the essential need for hands-on volunteers? How do we use volunteer labor most effectively and efficiently? Where do we find them? 

> What is a profession? The fundraising industry is quite large and essential to the philanthropic economy. The largest group, the Association of Fundraising Professionals, alone has 30,000 members (15% of whom are from outside the US). Associations are also built around health care philanthropy, higher education and other particular interests. Beyond them are even more people working more than 50% of their time in fundraising. No one knows the exact number but the highest estimate seems to be plus or minus 100,000. AFP and others have certification programs.  But a profession is principally characterized by a license to practice. Licensing fundraisers is stoutly resisted by the associations and has been bumping from here to there for decades. No state has enacted a license requirement. Yet. Should that change?

> In 1980, Carl Bakal’s book Charity USA was published, advocating an SEC-like regulatory authority.  On the plus side, uniform charity regulation instead of the present hodge-podge of state regulations, outmoded statutes, uneven enforcement; faulty definitions of terms such as “fundraiser” or “solicitor;” and no regulation of the internet because in a democracy, thankfully, it is impossible even at the federal level. Why have First Amendment issues of free speech and interstate commerce affecting nonprofits never been fully litigated? Each state can impose advance registration and a fee for arguably commercial interstate messages transmitted by traditional snail mail. The other ‘junk’ in your mailbox is untouched by state registration. Call it prior censorship if you prefer. The same messages transmitted online can’t be touched by the states. On the minus side federalizing charitable oversight is strongly opposed. There is no reason to believe it would be a better alternative than the SEC or IRS. Is oversight impossible because of the fragmentation in rules and regulations and/or because of the First Amendment Implications in regulating the internet?  Is there another way? Yet, the need for some kind of watchdog, with fangs, seems apparent if collective philanthropy is to inspire and maintain public confidence.   

> Why is the IRS Form 990 that most charities must file annually of so little help? It is cumbersome, usually at least two years out of date when it is released; and creakily incomplete: e.g., religious institutions (like the Salvation Army, one of the country’s largest charities) are exempt from reporting. Megachurches are big businesses; why should they be exempt from reporting? The idea that church-state separation is somehow compromised without a reporting exclusion is, on its face, preposterous. Does oversight of charities even belong within the IRS? 

> Human service organizations, and others providing housing, education, employment and training services rely on an intertwined relationship with local and state governments as the provider/deliverer of publicly supported assistance. But that help does not adequately support administrative and overhead costs. Waiting for government reimbursements often brings human service agencies, even large ones, to the edge of insolvency. What is the best way to reframe this picture? 

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A Presidential Commission on US Philanthropy will be a costly multi-year project requiring broad participation, strong leadership, adept management, a high threshold for controversy and, most Important, a principled rejection of the Prussian Army defense, “this is the way we’ve always done it.” It adds up to a challenging proposition but not a reason to pass it by. In hindsight, the Filer report was far more than just a good showing. With the tools we have now but lacked then we can do better. There is precedent in the Points of Light Foundation and other such initiatives by both Democratic and Republican administrations.     

But the main thing is that philanthropy can only thrive in a civil society. Restoring that civility is a task we all should step up to.  A decent, empathic man has come to high office. This is an opportunity best not missed. 

 

 

 

 

 

 

 

Tuesday, November 17, 2020

Philanthropy in These Unsettled Times

   Penelope Cagney / CEO The Cagney Company  

Published with permission:

What is the state of philanthropy in these unsettled times? What we know to date is that $11.9 billion was given globally for Covid-19 relief in the first half of 2020 according to the Center for Disaster Philanthropy. We also know that many funders--individuals, corporations and foundations--changed the way they are doing business. 


-Many leading foundations loosened funding restrictions, and some increased their payouts. More than 775 foundations globally committed to flexible funding in response to Covid-19. As the crisis draws to a close, some foundations will return to former giving restrictions, but others will continue their successful new practices of less funding restrictions and direct payouts. And some foundations will shift their programmatic priorities, giving more to promote social equality and/or justice for instance, and they may retain the new focus.

-High-net-worth individuals contributed vast amounts for the pandemic, with Twitter CEO Jack Dorsey pledging $1 billion to pandemic relief and Jeff Bezos giving $100 million  to Feeding America. Like the foundations, some donors will keep the new and others will revert to former programmatic interests.

 -Corporations accounted for nearly two-thirds of Covid-19 funding. This figure includes funding through both corporate foundations and corporate giving.* It will be interesting to see how the path of economic recovery affects their giving in 2021.

Here’s some encouraging news for the US in particular. According to a news release in early October,  the Fundraising Effectiveness Project, giving was up overall in 2020 by 7.5% in Q3. The number of small donations increased 19.2% over the first six months of last year. That may be due in part to the $300 universal charitable deduction that was enacted as part of the Cares Act. (You may want to remind your donors of this as the end of the year draws near).

 

Thursday, June 18, 2020

$449.64 BILLION TO CHARITY IN 2019

In 2019, Giving USA Foundation reported substantial growth in charitable contributions increasing to $449.64 billion, up from $427.71 billion in 2018. The ten key giving sectors– Religion, Education, Human Services, Foundations, Health, Public-Society Benefit, Arts and Culture, International Affairs, Environment/Animals, and Individuals– all saw increases. Strong philanthropic results were driven most by a strong stock-market, a robust economy, full employment and consumer confidence.

That was then: this is now. The full effect of Covid-19 is still unknown. Though the stock market has so far mostly rebounded from a full-on crash a few months ago, the stock market does not define the economy. Staggering unemployment, and economic collapse marked April. May and June. Though there has been some recovery in soft goods consumer spending, and better unemployment figures for May, the charitable sector is, for the most part, struggling. It is well to remember that the US charitable sector, overall, is almost inevitably, a trailing, not a leading edge.

Though the nation is slowly re-opening, the triple whammy of the coronavirus; the long overdue reckoning with racism in America; and the absolute craziness of this election year – each a black swan event on its own – combined with the time lost, all makes for a stiff wind. We know that around 40% of giving is generated in the last quarter of the calendar year. That 40% may hold: but the it’s other 60% that’s rocky. Expect a dip. If the sector makes the 2018 number 0f $449 billion, that would be a huge win. 

Thursday, April 23, 2020




ORAM MARKS 80 YEARS IN BUSINESS

- Hank Goldstein, CEO, The Oram Group, Inc.

Oram was founded by Harold L. Oram in 1940, and has been in continuous operation since, making us one of the oldest firms of its type: management consultants to nonprofit organizations. Originally established to help nonprofits in their fundraising, Harold Oram pioneered direct mail campaigns for progressive organizations. Many of today’s best known and robust civil rights, environmental, health and educational institutions were among our clients. The ACLU, naacp-Legal Defense Fund (now just LDF), Sierra Club, NRDC, World Wildlife Fund, and Planned Parenthood are just a few (among many hundreds) of early clients, still around, still doing exemplary work.

Over time, our services expanded – we developed competencies in every aspect of fund development: special events, estate giving, major gifts, corporate and foundation grant-writing, communications, marketing, earned income, etc. As growth continued, we took on broader issues of nonprofit management: e.g., strategic planning, governance and board development, best practices, program effectiveness and executive recruitment. I joined Oram in 1964. I worked at first on a capital campaign for Hampton Institute (now University), and in 1967 was assigned other clients. I began to move up in the company, bringing in several clients on my own, and always seeking to broaden the services we could offer. 

In 1978, Harold was ailing. Fortuitously, Stewart Rawlings Mott, an heir to GM, and Robert Wallace Gilmore, who had married into the Publishers Clearing House family, stepped in – great men Harold and I had worked with through our civil rights, population and peace movement clients – and they financed my purchase of the company. Oram died in 1990. In 1992, with around 30 employees, the company broke up in the acrimonious departure of three colleagues in a dispute over money. Nothing new there. But by virtue of an artful non-compete agreement each had to buy out their client contracts from Oram, which they did. I was left with the buyout proceeds, a half dozen of my own clients, and of course, I owned the Oram name and the brand.  

I dithered for a few months weighing the upsides and downsides of rebuilding the company, or just hammering on, as a much smaller entity. Given that overhead and payroll are killers, and that if one serves 501-c-3s, profit margins are razor thin anyway, I opted to continue as a ‘boutique’. I’ve done that ever since, with never more than a few employees, doing better than when I had to meet a payroll of $100-150,000 a month. I developed a strong, flexible network of specialists upon whom I still call for whatever services a client might require. As I aged, younger professionals moved up; my universe of contacts and new business slowed. I embraced the inevitable.

Though we no longer actively seek paid work, it finds me, and actually, it is quite liberating not to be hunting all the time, or even at all. In late 2018, I set up a pro bono consulting practice to serve smaller nonprofits (<$1 million operating budget) who cannot pay the market rates my competitors and I charge. This keeps me in the game and is a lot of fun. Any 501-c-3 can apply.  

Wednesday, October 24, 2018

ORAM GROUP PRO BONO CONSULTING



We are very pleased to offer a limited pro bono consulting service to qualifying nonprofits and NGOs. Over the last few years, we have observed, with increasing concern, the difficulty start-up and low-budget nonprofits and NGOs face in an increasingly fractionated, high-cost, competitive marketplace. I have worked with a few excellent, small groups, offering my experience and tradecraft. None could afford consulting services at prevailing rack rates. There are many more out there in the same situation.

To accept you as a client, will be looking for:

-       Why you think I could help
-       Clear objectives and expected outcomes
-       Commitment of board and staff 
-       A current operating budget below $750,000 

Our arrangement will:

-       Be covered by a Memorandum of Understanding
-       Be cancellable at any time by either party
-       Be time-limited
-       Carry no fee; expenses only, if any. (Lunch appreciated.)

Feel free to call me at 212 481 0149 or email hankus@oramgroup.com


Hank Goldstein
CEO

Wednesday, July 19, 2017

Trumped

Six months of the Trump presidency have been a godsend to the left: environmental organizations, civil rights groups, and above all Planned Parenthood, are choking on contributions. His and his administration's threats to shutter NPR, NEA and other liberal darlings, though quite worrisome, are of slightly less moment. NPR nationally does not rely on federal money for most of its revenue; local stations are strong fundraisers. NEA is but a pimple on the great backside of government. The real fright is that cutting or eliminating it will have a terrible effect  in small or mid size communities with less fundraising capacity or opportunity.

An upside, though, is that many state legislators at local, state and federal levels will fight for those funds. They are very well attuned to the effect of bad news on incumbency. Cutting and slashing are great - in someone else's district.

Meanwhile, we now live in an alternative universe: Robin Dooh steals from the poor and gives to the rich. Repealing Obamacare and giving a tax cut to the super wealthy has -- for now -- been sent down the Ganges. But as always in Republication administrations, whether one calls it the Laffer curve voodoo economics, or the supply side market at work  -- coupled with a refusal to ever learn from what came before -- punishing the poor for being poor is a blood sport. The difference this time is that Trump's fixation on erasing Obama from the collective memory puts his overt racism, his birtherism obsession, his anti-Muslim travel ban and his hatred of the poor (losers) in one steaming cauldron of know-nothing hate.

Yet, the fight over health care reform has overshadowed a larger crisis: federal, and by devolution, state and local support of human services is tanking. There is no way the whole of private philanthropy, even if it were totally directed to relief of the abject poor -- which it is not and never has been -- can take up the slack.

In 2016, Giving USA Foundation reports charitable contributions totaled $395 billion. A bit over 12% went to human services. Typically, social service budgets are 80 to 90% government funded; the rest is endowment income for the lucky few, maybe a bit of earned income for others - and philanthropy. Most social service agencies are small, lack powerful boards and the attending cachet that attracts money. Plus, as pass throughs for government money, many have not been incentivized to raise private dollars; many don't know how. In 2015, 45 million Americans, 14.5%, lived below the poverty line. That percentage, according to the US Census Bureau (whose funding is being cut), is not going down.

Recently, Amazon's Jeff Bezos asked how he should direct his philanthropy to maximum effect. Scores of well intended multibillionaires have pledged to give at least half their fortunes to philanthropy; younger, hipper donors have ideas (some strikingly original, others not so much) for structural change in how to give, to whom to give, and how to measure results.

However, in my opinion we cannot simply give our way out of the profound imbalance in American society, exacerbated by the Trumpeters. The industry trade associations lack the convening power this situation demands and they (we) are a pretty cautious bunch, afraid to stand up, fearful of offending or antagonizing anyone, suffering in whispers. To the extent that there is a leadership cadre out there: the Pledgers, the next several levels down of high impact donors, the large foundations, community leaders, etc. we need to get together and sound the tocsin. The message is simple: our federal government needs to be back in the game. Philanthropy is a partner not a solution.

The good news is that our democracy is not fragile. It is resilient. I believe the extraordinary genius of checks and balances will prevail.








Wednesday, September 14, 2016

The Race to the Finish!



If my present prognostications hold 2016 will be a banner year for philanthropy in at least four  ways:

1.  The $375 billion contributed in 2015 will be surpassed.

2.  Foundation philanthropy, a modest percentage of all giving, is nonetheless an important trend-setter. Many large, medium and small foundations are now beginning to see that there is is  no such thing as "no overhead." Nonprofits incur annual, routine operating expenses for labor (the greatest cost); occupancy; materials, and often, debt service. The idea that only supporting "program" (read labor and materials) is somehow more efficient and effective than general operating support is gaining traction. Finally.

3.  My view: Neither major party candidate is going to disturb the charitable contribution deduction, throat clearing noises in Congress to the contrary.

4.  Donor advised funds will continue to grow apace. Depending  on your perspective this may or may not be a good thing. The good thing is that it has brought many new high net worth people into philanthropy (not necessarily altruistically. But still.) This The not-so-good result is that much of that money sits, tax-free and tax-deductible to the donor, undistributed to charities.

This election is a dreadful distraction from our country's real problems, for example, the relentless intractability of  poverty in the world's wealthiest nation. Fueled  by network and cable TV whose interests in creating tension and protracting the agony so they can sell us more stuff is not pretty.


Despite that, the generosity and optimistic spirit of the American people continues to amaze and inspire me and keeps me at this work. What I have learned from my fellow Americans is that  the world can indeed be a better place.