Philanthropy Information Retrieval Project

Report #117: Oct. 27 – Nov. 18, 2003

The Philanthropy Information Retrieval Project (PIRP) reports on new ideas and other developments that may affect the field of philanthropy in the years to come. In contrast to other publications that cover today’s breaking news, PIRP generally highlights emerging issues that may be visible only on the horizon. In line with its role as an early alert system for the field of philanthropy, PIRP intentionally includes items that are critical of current practice and policy as well as reports that are supportive. PIRP was started in 1996 by the John D. and Catherine T. MacArthur Foundation and was transferred to the Aspen Institute in 2003, where it is currently funded by the Robert Wood Johnson and Northwest Area Foundations. Burness Communications, Bethesda, MD, prepares the copy. As the publication’s editor, I welcome your comments and suggestions. – Alan J. Abramson, Director, Nonprofit Sector and Philanthropy Program, The Aspen Institute

1. COMMENTATORS SUGGEST RECENT LEVEL OF NONPROFIT SCRUTINY TO LAST; NONPROFITS, FOUNDATIONS MUST 'CLEAN UP' THEIR ACT IN LIGHT OF INCREASED ATTENTION

Several commentators see the recent significant media and policy interest in nonprofits and foundations as becoming standard operating procedure. J.R. Labbe, an editorial writer with the Ft. Worth (Tex.) Star-Telegram, wrote in a Nov. 9 syndicated column that the scent of scandal has helped journalists wake up to the need for increased attention to nonprofits. Nonprofit executives should “wipe the sleep from their eyes” before Congress and the courts get further involved, according to Labbe’s article, “No More Flying Under the Radar for Nonprofits”. Philanthropist William Robertson agrees, writing in a Nov. 14 op-ed in the Christian Science Monitor that foundations and nonprofits need to “clean up” their act before public confidence erodes further. Robertson writes of a recent study showing that just 10 percent of affluent Americans age 45 and older now plan to leave all or part of their estates to nonprofits, a decrease that he suggests comes in light of recent scandals, including his family foundation’s own donor-intent lawsuit against Princeton University.

Meanwhile, William Schambra of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal wrote in a Nov. 13 Chronicle of Philanthropy opinion piece about the “new politics of philanthropy.” According to Schambra, attention from the media and the government, as well as joint scrutiny from the political right and left, will focus on the “orthodoxies of modern philanthropy” as practiced by large foundations. The highly bureaucratic nature of organized philanthropy will be challenged by a “resurgence of a populist faith in grass-roots self-governance” that the news media will reflect and magnify, according to Schambra’s piece.

2. LIKE A STEADY DRUMBEAT, NEWS ARTICLES FOCUS ON FOUNDATION ABUSES AND LACK OF GOVERNMENTAL OVERSIGHT; WILL INCREASED OVERSIGHT RESULT?

If nothing else, the recent media attention to questionable foundation abuses may spur federal and state regulators to increase their oversight. An article in the Oct. 27 Forbes reported on lack of oversight of foundations from both the Internal Revenue Service and state regulators. The article led by offering a tip to readers looking for a “fat tax break”: establish your own charitable foundation from which you can later take money, as “salary.” Meanwhile, the second installment of the Boston Globe’s new “Charity Begins at Home” investigative series has again drawn the attention of state charity regulators. Just as with its previous October edition, a Nov. 9 article reported on “numerous instances” of abuses by foundation trustees and directors uncovered by the newspaper that it said were similar to the corporate scandals of the past couple of years. The article suggested that many additional abuses are likely given that foundations can be vague in reporting expenses to the IRS. State investigators in Connecticut and Oregon have joined colleagues in Massachusetts, New York, and California in probing the questionable practices of foundations highlighted by the newspaper, a Nov. 11 Globe article reported.

The two lead articles of the New York Times annual Giving section, published Nov. 17, also explored the questionable but legal practices of foundations and nonprofits, as well as the lack of oversight of these organizations.

3. NONPROFIT SECTOR TO REMAIN IN A RECESSION FOR YEARS TO COME, STUDIES REPORT; REDUCED SUPPORT FROM FOUNDATIONS JUST ONE OF SEVERAL FACTORS

The national economy may be beginning to recover, but the nonprofit sector will continue to experience difficult financial straits for years to come, according to two new studies released on Nov. 18 by the Aspen Institute’s Nonprofit Sector Research Fund. The reports give special attention to the impact of state budget cuts on nonprofits. One study, from DePaul University professor Woods Bowman, finds that foundations are reducing their overall support of nonprofits and also shifting support to organizations that are larger and more established. Bowman developed a Nonprofit Resource Index as part of his study that suggests the cuts in foundation giving, magnified by reductions in government support and investment earnings, will leave nonprofits in a recession for a couple of years yet. The second study, from Thomas Gais, Courtney Burke, and Rebecca Corso of the State University of New York’s Rockefeller Institute, reports th at nonprofits that are not health-oriented and not located in states that have a strong tradition of support for social services will be the hardest hit from public spending cuts. This study, which did not analyze private giving, suggested that further research should explore whether private giving follows the same pattern as or serves to counterbalance public support.

4. REPORT SAYS FOUNDATIONS ARE NEGLECTING RESPONSIBILITY TO IMPROVE PHILANTHROPY THROUGH A LACK OF FUNDS FOR DONOR EDUCATION

Supply has not come anywhere close to matching demand for smarter giving advice, despite the fact that support for such donor education is a basic responsibility of all in organized philanthropy, according to a new publication. The nonprofit New Visions PRD issued this report from its foundation-funded Donor Education Initiative that offers recommendations, particularly for foundations, to boost the state of donor education. According to the report, foundations should help establish a Web-based clearinghouse on donor education, help stitch together the patchwork of donor education programs into a more systematic field, and commission leaders to draft field standards for educators. Foundations could also be asked to pay regular dues or contributions to an umbrella entity charged with better organizing the field, suggests this report, Philanthropy’s Forgotten Resource? Engaging the Individual Donor [http://www.newvisionsprd.org/Downloads/form.asp].

5. FOUNDATIONS SHOULD STEP UP EFFORTS TO END HOMELESSNESS, NEW REPORT SAYS; SHOULD MAKE IT A HIGH-PROFILE PUBLIC ISSUE AT A TIME WHEN IT IS INCREASING NATIONWIDE

Only roughly 1 percent of total annual foundation giving goes to the issue of homelessness, and most of that only serves to ameliorate the condition, through human services, not end it, according to a new report. Ending homelessness is an issue sufficiently broad to meet the current funding priorities of almost any foundation, according to a new report jointly released by the Neighborhood Funders Group and the National Foundation Advisory Group on Ending Homelessness. The two organizations lay out a five-part strategy for foundations in this publication, Ending Homelessness: The Philanthropic Role. In addition to traditional efforts to end homelessness, such as increasing the availability of affordable housing and social services, the report recommends supporting advocacy activities, including grassroots organizing that puts leadership into the hands of homeless and formerly homeless people, and engaging in community-wide planning efforts. By increasing their efforts and working together, according to the report, foundations can make homelessness a high-profile public issue at a time when the problem continues to increase in every region of the country.

6. FOUNDATIONS SHOULD HELP MINORITY POPULATIONS BUILD COALITIONS TO IMPROVIE THEIR COLLECTIVE CLOUT, ACCORDING TO A NEW REPORT

Foundations should take a leadership role in building coalitions between African Americans and Latinos to help both groups gain more power and clout in their communities, according to a new report. The Association of Black Foundation Executives and Hispanics in Philanthropy jointly produced this short document that summarizes a recent seminar on the subject. Challenges & Opportunities: A Report for Foundation Executives and Others on Understanding the Present & Transforming the Future notes some of the tensions that exist between African Americans and Latinos, who together constitute a majority of the population in five of the largest cities in the U.S. One seminar participant said that foundations could help build coalitions between the two populations by funding new organizations, the report noted.

7. UNIVERSITY OF MINNESORTA ESTABLISHES A RESEACH CENTER FOR NONPROFIT, FOUNDATION MANAGEMENT

The University of Minnesota has established a research center that will analyze the management of public institutions – including foundations, nonprofits, and government agencies – according to the Oct. 23 Minneapolis Star Tribune. To be part of the Humphrey Institute of Public Affairs, this center, the Center for Leadership of Nonprofits, Philanthropy and the Public Sector, will promote ideas that can be applied nationally as well as internationally, the article reported.

8. FURTHER RESEARCH NEEDED TO CLEARLY DEFINE FAMILY PHILANTHROPY AND DISTINGUISH IT FROM INDIVIDUAL GIVING, NEW PUBLICATION SAYS

How does family philanthropy differ from philanthropy conducted by individuals? It’s an important question for researchers to explore, according to a new publication from the National Center for Family Philanthropy. But even more important, according to the Center’s latest Passages paper, is defining family philanthropy in the first place. Family Philanthropy: What We Don’t Know, written by Francie Ostrower of the Urban Institute Center on Nonprofits and Philanthropy lays out a research agenda for academic researchers. The report constitutes the completion of the first phase of the National Center for Family Philanthropy’s own research project that explores family philanthropy, in conjunction with the Urban Institute.

Of Related Interest

Pew Charitable Trusts to Become More Vocal, Reorganized As a Public Charity, Newspaper Reports

One of the nation’s most vocal – and largest – grantmakers will likely become even more so as a reorganized public charity. The Pew Charitable Trusts, with nearly $4 billion in assets, will increase its lobbying and advocacy for the issue areas in which it works, among other changes resulting from its conversion from a private grantmaker to a public charity, according to the Nov. 6 Philadelphia Inquirer. Most private foundations are unable to make such a change, according to the article, so other funders aren’t expected to follow Pew’s lead.

New Resources

Book Focuses on Steps Foundations Can Take to Improve Their Effectiveness

A new book delineates the processes by which foundations can become more effective in their philanthropic pursuits. Denis Prager, president of Strategic Consulting Services and a former foundation official, wrote this book, Organizing Foundations for Maximum Impact: A Guide to Effective Philanthropy, which provides valuable information on organizational and managerial approaches to increasing the operational effectiveness of foundations. Published by the Aspen Institute’s Nonprofit Sector and Philanthropy Program, the book is intended for board members, executive management, staff and students in the nonprofit and philanthropy field. For more information and to order this book, call the Aspen Institute's Fulfillment Center at 410-820-5433.

Tool Developed to Help Foundations Better Assess ‘Startup’ Nonprofits

Some of the most innovative and high-impact work being proposed in the nonprofit community comes from new organizations, yet these organizations pose particular challenges to funders concerned about organizational stability and grant assessment. The affinity group Grantmakers for Effective Organizations has recently released a publication to aid foundations in assessing the strengths and weaknesses of a “startup” nonprofit, defined as an organization in formal operation for too short a time to have an established track record. This publication, A Tool for Assessing Startup Organizations: A Due Diligence Supplement for Grantmakers [http://www.geofunders.org/_uploads/documents/live/startupassessmenttool.pdf], written by the nonprofit management consultancy La Piana Associates, is intended to supplement, not replace, current methods of assessing grant applications. It is also designed to increase funders’ overall confidence in making grants to startup nonprofits.

Note to Readers

We would appreciate your offering us information that we can include in a future edition. If you have an item you believe would be helpful to your colleagues, please e-mail it to Doug Rule [drule@burnesscommunications.com]. Thank you in advance for your cooperation.

If you would like to subscribe to this newsletter, please click here.

If you would like to unsubscribe from this newsletter, please click here.