1. SPEAKERS PROPOSE A SMALL BUSINESS ADMINISTRATION FOR NONPROFITS

At least two speakers at conferences this month proposed the idea of a governmental agency for nonprofits along the lines of those serving businesses, like the Small Business Administration. The Council on Foundations' Steve Gunderson talked about the possibilities of regulating and promoting philanthropy at the federal level in an Oct. 16 keynote addressto the National Association of State Charity Officials. Though qualifying his remarks by saying that he's not ready to officially propose the idea, Gunderson said he's beginning to think a government agency should be established to promote philanthropy the way government already promotes business, through the Commerce Department. Currently, the federal government largely engages philanthropy on tax and legal issues, through the Internal Revenue Service. There's no public agency primarily tasked with working on the growth and effective operations of nonprofits' work, he said, asking whether there should be.

Mark Lloyd of the Center for American Progress called on the sector to push for a federal agency to champion its interests in his Oct. 17 plenary speech at the Nonprofit Congress. (See the next item for more on the Congress.)  Lloyd said he was surprised that a sector as large as the nonprofit sector does not already have the equivalent of a Small Business Administration to represent and serve its interests. (Lloyd also expressed distaste for the word "nonprofit" – and it was common sport among Nonprofit Congress delegates to advocate alternative names for the sector.)  One of the co-conveners of the Congress was Audrey Alvarado of the National Council of Nonprofit Associations (NCNA), an organization that proposed the idea of a SBA-like agency for nonprofits as part of its Nonprofit Agenda, which was developed prior to the 2004 national elections. NCNA continues to call for such an entity through its Nonprofit Capacity Building Initiative, which advocates for greater federal support of nonprofit capacity-building efforts.

2. NONPROFIT LEADERS VOTE 'TOP PRIORITIES' FOR THE SECTOR, DEVELOP STATE ACTION PLANS AT FIRST-EVER NONPROFIT CONGRESS

Improving nonprofit effectiveness, public awareness of nonprofits, and nonprofit advocacy were voted the nonprofit sector's Top Priorities by nearly 400 nonprofit leaders convened for the first-ever Nonprofit Congress. At the mid-October conference, which was held in Washington, DC, representatives from 47 states and the District of Columbiaidentified specific actions they'll take to enact the Top Priorities, including holding a nonprofit-focused forum for presidential candidates in 2008 in New Hampshireand increasing advocacy training for nonprofits in Michigan.  Congress organizers will soon issue a full report summarizing what transpired at the event, along with the detailed State Action Plans. Many delegates plan to organize town hall meetings to discuss the Congress and plan next steps. The next national meeting is scheduled for spring 2008, when the presidential primary elections are being held.

3. CONGRESSMAN CALLS ON FOUNDATIONS TO OFFER MORE SUPPORT FOR ADVOCACY, DIVERSITY; 'I NEED TO SEE YOU IN WASHINGTON'

Spending money directly to help tackle diseases and social problems is noble, but, according to U.S. Rep. Xavier Becerra, foundations should also support advocacy efforts that seek to increase government funding in these areas. In a Sept. 18 speech at the Council on Foundations' Community Foundations Fall Conference, the California Democrat explained that because foundation giving is only a fraction of what government spends on healthcare, housing, and other social issues, foundation funds should be committed to help government better direct its spending. Foundations should share their ideas and lessons learned with Congress, he added. "I need to see you in Washington," Becerra told conference attendees. (The speechis available as a Webcast.)  Rep.  Becerra also criticized foundations and the sector for lacking a real commitment to diversity. "I don't see the diversity that complements what you are trying to do," he said, citing the Red Cross's stumble after Hurricane Katrina and suggesting the organization would have responded better to Gulf Coastneeds had there been more than two minorities on its 50-person board.

4. BUSH ADMINISTRATION OFFICIAL: NONPROFITS NEED TO ADVOCATE FOR IMPROVED GOVERNMENT DISASTER RESPONSE

Nonprofits should push government agencies to improve their disaster response efforts, according to several panelists at a Sept. 21 Aspen Institute roundtable that focused on lessons from last year's GulfCoasthurricanes.  During the roundtable, George Foresman, Under Secretary for Preparedness at the U.S. Department of Homeland Security, called on nonprofit leaders to "become agents of change," by pushing local, state, and national governments to include nonprofits in their disaster planning activities. He also suggested that a comprehensive checklist could be developed, identifying for government officials the roles nonprofits can and should play in responding to disasters. Panelists were in general agreement that federal disaster policy needs a complete overhaul.  One recommendation that received widespread support calls for a high-level coordinating body for future response efforts. The proposal originated in an Aspen Institute paperthat was written by former foundation executive Tony Pipa.

Meanwhile, Rick Cohen finds it striking that there's been no real push to create an inspector general or another government watchdog to monitor how funds earmarked for relief and recovery have been used and to what effect. The former director of the National Committee for Responsive Philanthropy, Cohen expressed dismay in a Sept. 19 Newsmaker profilein the Foundation Center's Philanthropy News Digest that no real investigations into either government contracting or philanthropic support for disaster relief efforts have occurred, despite all the purported concern in Congress about the sector's accountability.

5. DISCUSSION OFFERS IDEAS ABOUT HOW FOUNDATIONS CAN HELP IN FUTURE DISASTERS; ALTER GUIDELINES, HELP SOCIETY LEARN FROM PAST

After Hurricane Katrina hit the GulfCoast, one nonprofit leader in the region heard from several funders that they were declining to help because the needs didn't fit into their guidelines – a reality that she suggests is backward. "Well, it's easier to change your guidelines than to undo Katrina. And we need to give some thought to that," Diann Payne of Mississippi's Jackson County Civic Action Committee, Inc. said at a Sept. 20 discussion at the Hudson Institute. Other ideas for how foundations can help with future disaster relief efforts were shared at the session, "Service in the Storm."Kimberly Reese of Xavier University of Louisiana suggested that foundations send people to an area hit by a disaster to assess and determine where and what the greatest needs are. And Lewis Perelman of George Washington University said that he sees an opportunity for American philanthropy to fill a gap for society: capturing knowledge about what has and what has not worked in past disasters, codifying that information, organizing it, and making it publicly accessible to help society prepare for the future and not simply repeat the same mistakes after every disaster.

Separately, the CapitalResearchCenter's Martin Morse Wooster said that more academic research and analysis is needed regarding the performance of nonprofits in disaster relief, so that the sector can identify how these agencies can improve. In the September issueof the Center's Compassion and Culture newsletter, Woosteralso called for greater journalistic scrutiny of the Red Cross beyond merely reporting on its fundraising fumbles.

6. COMMENTATORS: BLURRING OF SECTOR DISTINCTIONS MAY REQUIRE RETHINKING OF TAX-EXEMPTION FOR NONPROFITS

The continued blurring of distinctions between nonprofit, for-profit, and governmental activity is likely to affect the practice of philanthropy as well as teaching about it.  And, the blurring may also require a rethinking of what it means to grant tax-exempt status for social benefit. That's according to commentators from the online publication onPhilanthropy.com, two of whom bloggedfrom the recent Clinton Global Initiative conference. In a Sept. 25 wrap-up post, onPhilanthropy.com's publisher Tom Watson said the blurring that was evident at CGI was, "part of a discernible trend in 'philanthropy' – that is to say, the rapid deconstruction of the accepted term."  It's a trend that Watson says raises questions about oversight of such activities and suggests there may be a need to reconsider how we view tax-exempt status in the U.S.as well as "the legal strictures on American foundations." Along the same lines, in her Sept. 20 column, onPhilanthropy.com's Chief Analyst Susan Raymond wrote that "the end of definitions" brought on by a merging of commercial and nonprofit activity has immediate and concrete implications for the U.S.tax code. While it has benefited society to offer nonprofits and foundations nearly complete freedom in operations with their tax-exempt status, Raymond asks: "If we no longer know what we mean by the term 'nonprofit' or 'foundation' or 'philanthropy,' how will we continue to make these distinctions? Does the distinction even matter any more?"

Meanwhile, onPhilanthropy.com's Susan Carey Dempsey wrote in a Sept. 21 CGI blog postabout the possibility that future university courses in philanthropy will teach that the field changed dramatically in the first decade of the 21^st Century. We're witnessing "major transformations," she explained, as business ventures are increasingly aimed at generating social benefit as well as pure profit; as traditional nonprofits face increasing pressure to achieve measurable impact through their work; and as efforts like CGI create what might be a "parallel structure" to the "stifling protocols" of government and the United Nations.

7. FOUNDATIONS CONSIDERED EFFECTIVE SAID TO SHARE FIVE COMMON ELEMENTS; LEADER STRESSES NEED FOR FOUNDATION SELF-REFLECTION

What makes a foundation effective? After five years of research and experience, the Center for Effective Philanthropy's Phil Buchanan suggests there are five key elements, including specific and easy-to-articulate goals, a clearly conceived grantmaking strategy, measurable indicators of effectiveness, and active boards and executive leadership that holds staff responsible for their performance. Buchanan made his remarks at a Sept. 14 event honoring the fifth anniversary of the Center. Buchanan also said in his speech, that it's time to stop debating whether foundations are subject to sufficient oversight and focus instead on a far more important issue: whether they are effective in the ways only foundations can be, and are using their unrivaled freedoms to do what other institutions cannot do.

The Center will issue a publication in January summarizing the presentations made and ideas discussed at the anniversary event, including a speech by Edward Sklootof the Surdna Foundation that's already posted at Surdna's Web site. Skloot identified what he called the biggest impediment to greater foundation effectiveness: the sector's own "mental models," or deeply held images of how the world works, which limit those in the foundation sector to familiar ways of thinking and acting. Skloot said that foundations' mental models don't allow for much self-reflection or learning from good or bad practices. Foundations' lack of interest in improving their own performance and collaborating with other foundations to create social change amounts "to shooting ourselves in both feet," he said.

8. SPEAKER SEES NEED FOR AN ORGANIZATION TO ASSESS PERFORMANCE OF FOUNDATIONS BASED ON ACTUAL GRANTMAKING, NOT JUST PROCESSES

The nonprofit sector needs an organization to assess foundations' programmatic impacts along the lines of what the Center for Effective Philanthropyhas done in evaluating foundations' relations with grantees, according to DukeUniversity's Joel Fleishman. Fleishman offered this recommendation at the Center's fifth anniversary event. Fleishman, a member of the Center's board who stressed he was speaking independently for himself as an individual, praised the Center for having the courage to take on the challenge of rating how foundations interact with their grantees. But he suggested in its next five years, the Center could expand its work by helping the sector identify which foundation initiatives succeeded and which ones did not. If the Center doesn't opt to carry out the work itself, Fleishman added, at the least it could take on the task of trying to figure out how such programmatic assessments could be done, and then encourage foundations to support a new organization that would undertake substantive program assessment.

The Center is already working to understand foundation effectiveness based on whether grantmaking has achieved its end goals, responded the Center's Phil Buchanan. For example, the Center's most significant current research initiative is exploring the topic of foundation strategy, identifying key components of effective strategies. Findings from the first phase of the study are due out by early next year, Buchanan says. Nevertheless, Buchanan says there are unavoidable limitations to the work. There can never be a "one-size-fits-all" tool to assess a foundation's grantmaking, he says, because of problems in determining cause and effectand aggregating results across disparate initiatives that lack a common unit of measurement. Another problem: at the time of assessment, the desired outcome could still be years away.

9. SPEAKER CALLS FOR A PUBLIC RANKING OF FOUNDATIONS BASED ON GRANTEE ASSESSMENTS

In his speech at the Center for Effective Philanthropyevent (see item #8), Joel Fleishman also suggested that the Center release its data in a way that would allow the public to compare – or rank – foundations based on the Center's grantee perception surveys. Fleishman offered ideas for transitioning from the Center's current confidentiality rule to a more open policy, arguing that doing so would help put public pressure on foundations "to shape up" and give the public some comparative basis for judging how well specific foundations are doing their job. But the Center's Phil Buchanan said after Fleishman's speech that the Center is not currently contemplating a shift in organizational strategy. Buchanan argues that the Center's approach of providing confidential data to foundations and helping them understand and act on results has yielded more positive change in foundation performance than would a public ranking of foundations. Seventeen foundations have already publicly self-disclosed the Center's surveys of their grantees, he added.

10. PUBLICATION: SOCIAL ENTREPRENEURSHIP HAS BECOME VERITABLE MOVEMENT; OFFERS REVISED DEFINITION, WAYS FOUNDATIONS CAN HELP

Traditional foundations haven't as yet provided much support for it, but new research suggests social enterprise has become a veritable movement, one in which increasing numbers of individuals and organizations are mixing commercial and social activities. That's according to Research on Social Entrepreneurship: Understanding and Contributing to An Emerging Field, a volume of research papers edited by the Aspen Institute's Rachel Mosher-Williams and published by the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA), with funding from the UPS Foundation. Social entrepreneurship as commonly conceived is too restrictive for its own good, according to Paul Light of New York University. In his chapter, Light offers and dissects a revised definition of a social entrepreneur: "an individual, group, network, organization or alliance of organizations that seeks sustainable, large-scale change through pattern-breaking ideas in what governments, nonprofits, and businesses do to address significant social problems." In the publication's final chapter, Mosher-Williams writes that foundations could help social entrepreneurs by providing loan guarantees or even low- or no-interest loans to small, social-purpose enterprises.

11. 'CONCERTED AND URGENT ATTEMPT' NEEDED TO IMPROVE GLOBAL AID EFFORTS' EFFECTIVENESS; REPORT OFFERS IDEAS FOR FOUNDATIONS

Recent global efforts to enhance the transfer of resources for poverty alleviation will not yield the necessary results without a "concerted and urgent attempt" to increase the effectiveness, efficiency, and structure of the global development effort. So says a report issued by the Dalberg Global Development Advisors consulting firm, which offers recommendations for foundations as well as other international donors. This report, From Talk to Walk: Ideas to Optimize Development Impact, cites several reasons for development efforts' poor performance, including too little focus on the "demand" side of the equation – the actual needs of recipients – as opposed to the "supply" side priorities of donors and development agencies. Also, there's insufficient accountability embedded in the system, which the report says "dooms programs to ineffectiveness from the beginning." Large donor institutions advocate strongly for accountability for their grantees – both recipient governments and nonprofits – but their own accountability systems are often weak, with few engaging in peer review or benchmarking.

Foundations, according to the report, should use their neutral role to support significant investments in addressing program delivery challenges, and increase focus on the role and performance of grantees in the development supply chain. Meanwhile, corporate foundations should experiment with support of new business models and products that can serve development purposes. And a standardized rating of donors and multilateral institutions should be created, ranking organizations based on their perceived relevance, effectiveness, and efficiency.

12. COMMUNITY FOUNDATION EXTENSIVELY SURVEYED DONORS ABOUT DROPPING ITS FEE-BASED MODEL; IN THE END, WILL RAISE FEES INSTEAD

After extensive discussions with its donors, the Vermont Community Foundationhas decided to alter its revenue model by raising fees to cover all operating expenses and establishing a separate new fund for additional grantmaking, to which all donors can contribute. The foundation's Brian Byrnes discussed the foundation's extensive outreach to donors and its resulting shift in strategy at a session of the Council on Foundations' Fall Conference for Community Foundations. The foundation first considered the radical idea of dropping altogether the fee-for-service model, which is standard at community foundations, and instead requiring donors to contribute an automatic, annual 5 percent of assets to the foundation. The original idea, as described in a special blog, was to have the foundation become less transaction-oriented and more transformational. Currently, only three-fourths of the foundation's expenses are covered through fees, with additional support coming from an annual appeal and discretionary funds.

This "5 percent for Vermont" model served as the catalyst for a survey of donors, conducted by the nonprofit consultancy FSG, formerly the for-profit Foundation Strategy Group. The donors instead directed the foundation to adopt a more middle-of-the-road approach that, as described in a reportto donors, involves allowing very few exceptions to an increased standard fee. This approach should eliminate the need for fundraising as well as free up funds for discretionary spending. The new approach also includes a Philanthropic Leadership Fund, to which donors can voluntarily contribute 1 to 2 percent of assets. The Fund will support programs, publications, services, and events to help donors and nonprofits better meet the state's needs. This "Learn, Lead, and Grow" strategy will take effect Jan. 1. Byrnes told conference attendees he expects to see a different kind of donor emerge, one who is more engaged with the foundation.

John Kania of FSGsaid that all community foundations should be working toward getting good strategic advice from donors, as the Vermont Community Foundation did, through discussions about the institution's future. He added that VCF didn't just engage in a donor satisfaction survey but solicited donors to share their ideas for how the foundation could alter its business model to better meet its mission.

13. DISCUSSION, NEWSLETTER: COMMUNITY FOUNDATIONS SHOULD MEASURE SUCCESS IN TERMS OF COMMUNITY LEADERSHIP, NOT ASSET SIZE

It's time for community foundations to replace the traditional approach of measuring their own success by the yardstick of asset size and grant dollars and focus instead on measures that gauge their leadership on behalf of communities. That's according to the September issueof Snapshots. This issue of the Aspen Institute Nonprofit Sector Research Fund's newsletter reports on the discussion at the Institute's first Community Foundation Colloquium for Practitioners and Researchers, which focused on new approaches to measuring community foundation performance. Three white papers that were issued in advance of the colloquium offered a scan of and lessons from foundations' efforts to assess their community impact. Some initial ideas to help develop non-financial measures of performance were offered at the colloquium, though Snapshots reports that a more intensive effort is needed, perhaps by development of a Community Foundation Performance Institute. The publication did note some of the questions that could help assess a community foundation's non-financial impact: Is the foundation being asked to participate in public policy debates?  Has the foundation's work generated critical dialogue around an issue?

14. REPORT: GIVING TO DEVELOPING COUNTRIES SHOULD BUILD ON THE SELF-HELP 'HORIZONTAL PHILANTHROPY' THAT ALREADY EXISTS

International foundations and other donor agencies can play a critical role in addressing the inequality present in southern Africa and perhaps in developing countries elsewhere, according to a new report. This Ford Foundation-supported report says foundations can help by focusing on development efforts; by helping practitioners and researchers engage each other in testing emergent concepts and knowledge; and most importantly, by understanding and supporting the region's own brand of philanthropy. The latter is the chief concern of this report, The Poor Philanthropist: How and Why the Poor Help Each Other, based on a qualitative study of giving in four countries in southern Africa. According to the report, few prior philanthropic interventions in the region have built on the philanthropy that already exists within the communities themselves: organic self-help practices that the report calls "horizontal philanthropy," the practice by which some 20 million poor people give to and receive from each other. This indigenous practice differs from and even challenges traditional assumptions about philanthropy, according to the report which was produced by researchers at the University of Cape Town, South Africa in partnership with DukeUniversity.

15. ARTS ORGANIZATIONS FACE CHALLENGES IN FINANCIAL SUPPORT; CULTURAL ORGANIZING A PARTICULAR CHALLENGE FOR FOUNDATIONS

Those in the arts and culture field are increasingly having to convince donors that support for the arts can produce some of the same impacts – and at the local level – as today's cause celebre, support for global humanitarian causes, according to the Oct. 14 Wall Street Journal. Facing greater financial hardship, as well as increasing demand to show the direct impact of donations, arts institutions are targeting potential donors, offering them the chance to underwrite programs and allowing them to see the fruits of their support, the newspaper reported.

Foundations shy away from support for art and culture not just because fighting malaria or other global scourges seems more fruitful. Art with an activist impulse, for example, can be a powerful way to help strengthen American democracy and society, but foundations often find such work unfamiliar, unpredictable, and hard-to-categorize. That's according to an ongoing exchange about funding for cultural organizing led by Grantmakers in the Arts, which published an excerptof the discussion in the Summer issue of its Reader. Both the political left and right use culture as an organizing strategy, according to the exchange. But among other problems, grantmakers, according to the Christensen Fund's Ken Wilson, find it challenging to identify with and understand art springing from the grassroots and the formerly powerless, and find it difficult to place what he calls small "c" culture in traditional grantmaking boundaries: "Is this art or social justice? Is this culture or politics?" The Humboldt Area Foundation's Peter Pennekamp says that art can "sometimes be too powerful" for foundation leaders, or those whose power may be threatened by activist art and cultural organizing. But democracy thrives on the discomfort of competing beliefs and priorities, Pennekamp argues. Grantmakers in the Arts will continue the discussion about support for cultural organizing at its annual conference next month.

Of Related Interest

Establishing Land Rights for the Poor Emerged as 'Sleeper Issue' at Clinton Global Initiative

The Dalberg firm's report (see item #11) was produced by its Task Force on Capacity for Program Delivery, created for last month's much-publicized Clinton Global Initiative conference. CGI secured commitments from participants totaling $7.3 billion, or nearly three times last year's inaugural CGI commitment level, to help tackle the world's problems. But the Sept. 29 Wall Street Journal reported on what it called this year's "sleeper issue": establishing land rights for the poor in developing countries. Foundations are showing increasing interest in land ownership as one method of helping the world's poor build assets, according to the newspaper, which cited an estimate that the value of unregistered land in developing countries totals over $9 trillion. 

Foundation Official: Philanthropy Should Advocate for Greater Support of Black Communities

More philanthropic dollars, especially those raised by African Americans, should be targeted for advocacy efforts to increase government spending on programs, services, and institutions that benefit black communities. That's according to Willis Bright Jr. of the Lilly Endowment, who gave the 15th James A. Joseph Lecture on Philanthropy at this year's Council on Foundations annual conference. Bright said in this lecture, recently posted to the Web site of the Association of Black Foundation Executives, that very little of the $11.2 billion of giving from African Americans is devoted to advocacy efforts for beneficial government or business practices, which would "dwarf" the positive impact of  philanthropic giving on peoples' lives. Among other things, philanthropy should do a better job of informing legislators about research that shows that prevention, deferred sentencing, and diversion activities are more effective than the current policy of incarceration for even nonviolent offenses, according to Bright.

Related Reading

Foundation Guide Offers Ideas for Helping Communities Increase Affordable Housing

Help with housing was one need mentioned at the Hudson Institute discussion on Katrina (see item #5), specifically help with rewiring, replumbing, and rebuilding the region's hundreds of thousands of damaged or destroyed homes. In a new guide for foundations, the Neighborhood Funders Group also mentions this need for housing, in the Gulf Coast as well as in most communities nationwide which are facing a shortage of housing that lower income residents can afford. Among other ideas, More Than Shelter: A Grantmaker's Guide to Housing Programs and Policysuggests that foundations can fund nonprofits, offering grants or program-related investments, to develop housing.  They can also make grants for research and support campaigns that seek to influence housing policy. Even a small foundation can serve as a catalyst to facilitate dialogue among potential partners, support planning efforts, and provide seed money to leverage financial commitments, according to the guide.

Primer: Community Foundations Can Help Small Foundations in At Least Eleven Ways

If a foundation wants to involve the next generation or become more of a player in its community, then a community foundation is a "best bet" to work with, according to one community foundation representative quoted in a new primer from the Association of Small Foundations. According to Working with Community Foundations: A Guide for Small Foundations, community foundations can help small foundations in at least eleven ways, including expanding and deepening knowledge of community needs and a community's nonprofits; and offering training and networking opportunities, which give small foundations a chance to meet, share ideas, and create a community among grantmakers. This primer explains not only what community foundations can offer small and family foundations, but also describes what community foundations do and the basic ways other foundations can contribute to them.