1. OUTPOURING OF CHARITABLE ASSISTANCE FOR TSUNAMI VICTIMS: IMPLICATIONS FOR PHILANTHROPY

What might the effects be on international private giving from the charitable outpouring for Indian Ocean tsunami relief? A Jan. 8 Washington Post article reported that the astounding amounts raised - already including more than $29 million from at least 26 private and corporate foundations, according to figures compiled by the Chronicle of Philanthropy - will put the entire nonprofit sector under even greater scrutiny. The Post article also relayed concerns that the outpouring could decrease support for other international needs as well as domestic causes. Still, a Jan. 7 Christian Science Monitor article reported on hopes that Americans' sympathy for tsunami victims might inspire support for other humanitarian causes elsewhere in the world, including non-natural crises such as the problems in Sudan.

The outpouring of philanthropy has also encouraged commentary about the importance of private versus governmental aid. In a Jan. 6 Wall Street Journal commentary, Robert Sirico of the conservative Acton Institute wrote that, "Whatever the future of foreign aid, we can see that the path leads toward relying less on government and more on private foundations, churches and NGOs." To Sirico, who calls for the "end of foreign aid as we know it," non-governmental aid is preferable to federal giving because it's generally given to private individuals or institutions, not to easily corruptible governments. And it can respond more quickly and comprehensively than can government, he says.

Finally, another result of the tremendous charitable response is calls for better coordination among American nonprofits. A Jan. 5 Christian Science Monitor article said that the United States "suffers from what one expert calls the 'anarchy of altruism' - a confusing array of charities competing for dollars," instead of one central organizing committee, as exists in the United Kingdom, for example.

2. WILL CONGRESS ACT ON NONPROFIT ISSUES THIS SPRING?: DIFFERING VIEWS

Princeton University professor Stanley Katz suggested in a recent online discussion that he has a "historian's hunch" that sweeping legislation from Congress affecting foundations and other nonprofits is unlikely this year. While Congress seems to look into nonprofit activities every 10 to 15 years, few prior hearings have resulted in any legislation at all, according to Katz's post to a Skoll Foundation-sponsored Social Edge online discussion in December.

Nonetheless, Senate Finance Committee staff member Dean Zerbe recently indicated that the committee's current plan is to introduce legislative proposals pertaining to the nonprofit sector by the end of spring and possibly sooner, when another hearing on nonprofit issues may also be scheduled. At least the initial focus will be on fundraising abuses and compensation issues, Zerbe said. Zerbe was one presenter at a Dec. 15 event for journalists covering nonprofits in Washington, D.C., organized by the Fourth Estate and Third Sector Project of the University of Mississippi School of Journalism and archived online.

At the same event, attorney Errol Copilevitz also suggested that Congress might actually enact new legislation this year because of a need for tax revenue. Copilevitz, a Kansas City-based lawyer for nonprofits, related to journalists the haste with which he said the Senate Finance Committee acted in curtailing vehicle donations to charity in 2004. According to Copilevitz, the Committee essentially disregarded a report it had commissioned recommending that no action be taken until 2005 at the earliest. As much as Congress is truly concerned with issues of transparency and accountability, he continued, "This is about money, this is about taking the most extreme examples and making laws," drawing much-needed additional sources of revenue.

3. PABLO EISENBERG CALLS FOR NEW FILER COMMISSION; CHIDES FOUNDATIONS FOR A 'CRISIS OF LEADERSHIP'

There are specific things Congress could do now to help reform the "widespread abuses" at foundations and other nonprofits, according to a new book by noted philanthropy critic and columnist Pablo Eisenberg. But more important to Eisenberg would be the establishment of an independent, cross-sector, multi-year commission to help create a blueprint for civil society's renewal and reform. In his new volume, Eisenberg calls for this commission to be structured like the 1970s Commission on Private Philanthropy and Public Needs, headed by businessman John Filer.

In Challenges for Nonprofits and Philanthropy: The Courage to Change, Eisenberg also suggests that an increasing number of organizations are so fed up with foundations that they are ready to work together to push grantmakers to change their ways. And such external pressure is the only way foundation performance will improve, he says. Most of the problems with foundation performance, according to Eisenberg, stem from an across-the-board "crisis of leadership," with few genuine leaders to be found among current foundation CEOs. Further, too much money is "squandered each year" by formal executive searches that overlook excellent candidates for leadership from within foundations. Instead, these searches give preference to candidates from the for-profit sector or universities. Just published by Tufts University Press and edited by the Chronicle of Philanthropy's Stacy Palmer, Eisenberg's book, except for the first and last chapters, is comprised of 30 years of articles and speeches, many of them previously published.

4. CONGRESSIONAL PROPOSALS COULD HAVE LITTLE EFFECT ON CURBING ABUSE AND INSTEAD THREATEN GRASSROOTS NONPROFITS, SAY CONSERVATIVE COMMENTATORS

Congressional proposals could have the effect of doing very little to curb abuse among large nonprofits while making life "almost impossible" for the smallest organizations, according to William Schambra and Krista Shaffer of the Hudson Institute. The two contribute "A Conservative Call for Philanthropic Renewal" in the Fall Nonprofit Quarterly. The essay calls for greater funding for grassroots efforts to enable Americans to become active citizens tackling "their own problems in their own voluntary associations." That is the ultimate purpose of the nonprofit sector, they write. To this end, nonprofits and especially their foundation funders need to become less focused on policy shaped and evaluated by a "coterie of experts" unconnected to and uninformed about the needs of everyday citizens. Schambra and Shaffer are concerned that Congressional proposals to require more frequent regulatory review and detailed description of annual performance goals and measurements from nonprofits would create substantial new reporting and administrative burdens for these organizations, with the consequence that small, grassroots groups might not survive.

5. GOVERNMENT IS REWRITING THE BASIC RULES OF PHILANTHROPY BY REDUCING ITS SUPPORT OF NONPROFITS, FOUNDATION ADVISERS SAY

Another view is that the accountability-related activities of the Senate Finance Committee have received too much attention compared with the broader shifts occurring in the roles of government, foundations, and nonprofits in meeting societal needs. In a post to last month's Skoll Foundation-sponsored Social Edge discussion about nonprofit oversight, foundation consultant Lucy Bernholz of Blueprint Research & Design suggests "bubbling up" calls from conservatives to adopt new rules on donor intent will keep foundations from straying too far from their founders' business-minded priorities as time passes. Bernholz also warns that if major tax reform and domestic spending cuts are enacted, nonprofits and foundations will be increasingly forced to substitute for the government in providing critical services. As a result, these institutions will have less time and resources to focus on progressive policy change, she says.

Some of Bernholz's concerns are echoed by longtime philanthropic adviser Elizabeth McCormack who also warns that over the next decade foundations will have to address the fallout from cuts in government support of nonprofits. In an in-depth interview in the Dec. 9 Chronicle of Philanthropy, McCormack suggests the future of philanthropy is to influence public policy to the point that the poor won't be deprived of what they now receive as the government continues to decrease its funding of nonprofits. Foundations are in no position simply to take over government's funding of nonprofits, according to McCormack, an adviser to the Rockefeller family and others.

6. WITH PERMANENT REPEAL OF ESTATE TAX POSSIBLE, BLOGGER SUGGESTS MEANS TO MAKE UP DOLLARS LOST FOR PHILANTHROPY

Meanwhile, estate tax repeal is possible with the new Congress, according to a Nov. 29 article in Tax Analysts' Tax Notes newsletter. Though stressing that repeal is not a certainty, the article said that it appears after the 2004 election that there is now the necessary 60-vote majority needed in the Senate for passage.

7. NONPROFIT LAWYER ANTICIPATES COMING LEGISLATION BY IDENTIFYING TEN EMERGING PRINCIPLES OF GOVERNANCE FOR NONPROFITS TO FOLLOW

Nonprofits and foundations can no longer merely comply with the letter or even the spirit of the law; they must go beyond it, in part to anticipate coming legislation, according to Thomas Silk. Silk, a San Francisco-based lawyer for nonprofits, aims to help the sector get ahead of the law by identifying what he suggests are ten emerging principles of governance for nonprofits. Silk's principles, which appear in the most recent issue of the International Journal of Not-for-Profit Law, are based on his legal experience and his review of recent corporate governance reforms and codes of conduct. They call on nonprofits and foundations to have active boards of directors who offer full disclosure of any potential conflicts of interest; a three-tier annual board evaluation process; an annual independent audit of those entities with substantial assets or revenue; and the establishment of whistle-blower protection for employees.

8. REPORTERS COVERING NONPROFITS TOLD OF THEIR IMPORTANCE IN ROOTING OUT IMPROPER ACTIVITY; USING FORMS 990 AN IMPORTANT TOOL

Presenters at the Dec. 15 Fourth Estate and the Third Sector's Washington event for journalists - which is archived online - stressed the important role of reporters in monitoring nonprofits. The Senate Finance Committee's Dean Zerbe said that in 38 states "the press is the only one minding the store." Karin Kunstler Goldman of the New York Attorney General's office disputed this, saying that it was inaccurate to suggest that most state governments won't catch illegal nonprofit activity on their own. Still, Goldman stressed the importance of journalists bringing problems at nonprofits to the attention of state regulators. Usually this journalistic oversight comes about through the use of Forms 990, and each presenter who referred to these tax-reporting forms stressed how badly in need of reform they are. One Internal Revenue Service advisor suggested that the real stories for journalists regarding the 990s concern what is not reported in them. And Zerbe stressed the importance of using the forms to see not just what nonprofits are doing with their money, but where they got their money in the first place.

9. FOUNDATIONS SAID TO BE PARTLY RESPONSIBLE FOR NONPROFITS' 'FUDGING' FUNDRAISING AND OVERHEAD NUMBERS; STUDY OFFERS SUPPORT FOR THE CHARGE

As unseemly as it is for nonprofits to "fudge" their fundraising numbers, Peter Tavernise of the Cisco Systems Foundation says it's "far more unreasonable and egregious" for foundations to be wildly inconsistent in how much or how little overhead costs they'll allow grantseeking nonprofits to report. Tavernise called for sector-wide accounting standards in a post to the Skoll Foundation's Social Edge December online discussion, Thought Leaders on the Edge: Social Sector Policy. Grantees can and do alter the ratios they report for operating expenses vs. program costs in applying to one foundation after another, Tavernise says.

A new study offers supporting evidence that there is donor pressure on grantseekers regarding how they report their fiscal activity. Indiana University's Center on Philanthropy and the Urban Institute's Center on Nonprofits and Philanthropy jointly issued a study that documents a trend of nonprofits misreporting administrative and fundraising expenses. The Nonprofit Fundraising and Administrative Cost study finds that a hard-to-believe 37 percent of nonprofits with year-2000 private contributions of at least $50,000 reported no fundraising or special event costs. According to the study's press release, donor pressure to report low operating expenses puts nonprofits that report accurately at a decided disadvantage, and it results in donors making decisions with inaccurate information.

10. FOUNDATIONS BEHIND TWO EFFORTS TO PERSUADE GOVERNMENT TO INCREASE SUPPORT FOR WORKING POOR, HOMELESS

Foundations are behind two recently launched campaigns to persuade government to increase support for the working poor and the homeless - and one former nonprofit leader hopes these efforts propel a movement to "cure America's acute case of conscience deficit disorder." The Partnership to End Long-Term Homelessness was launched in late November with an initial $30 million from five foundations and two corporations that will push federal, state, and local governments to dramatically increase their support for reducing the problem of the chronically homeless. According to a Nov. 23 press release, the partnership seeks another $30 million from other funders to pay for research and advocacy as well as aid to local and regional nonprofits.

Hugh Price, formerly of the National Urban League and now a nonprofit lawyer in private practice, wrote an op-ed in the Nov. 25 Chronicle of Philanthropy on the need for foundations and nonprofits to wage a new movement to help the working poor that goes beyond the usual single-issue efforts such as housing or homelessness. Such a movement would likely build as slowly as the conservative movement before it, he suggests. He touted a recently issued report from the Working Poor Families Project that calls on government and business to offer greater investment in education and training programs, as well as increases in income and benefits, for low-income working families. The report, Working Hard, Falling Short: America's Working Families and the Pursuit of Economic Security, was funded by the Annie E. Casey, Ford, and Rockefeller foundations.

Of Related Interest

Conservative Writer Calls on Fellow 'Friends of Liberty' to Fund Academia, not Just Politics
Despite the conservative movement's political successes in 2004, one prominent conservative calls for greater funding from fellow conservatives - "friends of liberty" - to influence the broader world of ideas "upon which ultimately the preservation of liberty depends." William Dennis, a freelance writer and consultant and adjunct scholar at the Acton Institute, posted a "mini-sermon" on the National Review's Web site Dec. 23, calling on readers to build on their political giving in 2004 to include funding especially for academic pursuits - scholarly research, academic conferences, student internships, and scholarships. Help change the reality, he writes, that "friends of liberty are few and far between" among the guardians and purveyors of high culture in academia and the mainstream media.

Research Project To Examine Foundation Funding for Nonprofit Capacity Building
A new research project will examine national patterns of foundation funding for nonprofit capacity building, or funding that helps nonprofits build solid operations. According to a Dec. 14 press release, the Human Interaction Research Institute will release two studies in 2005 reporting and analyzing patterns of foundation support for capacity building, based on data from the Institute's free, online Philanthropic Capacity-Building Resources Database. The Institute also just produced a report, The Expanding Universe: New Directions in Nonprofit Capacity Building, available for purchase from the Alliance for Nonprofit Management.

New Resource

Publication Guides Foundations through 'Due Diligence' In Selecting Grantees
Grantmakers for Effective Organizations has issued a new free publication to help foundations in the process of assessing new grantee organizations. The Due Diligence Tool: For Use in Pre-Grant Assessment features worksheets, checklists, and interview questions, designed by La Piana Associates through a review of current practices at a diverse group of foundations.