This week’s big news of Jeff Raikes appointment to the Bill and Melinda Gates Foundation has the philanthropy sector buzzing. We turned our ‘microphone’ out to a few pundits for their thoughts.

Joel Orosz, Distinguished Professor of Philanthropic Studies (see photo)

“It's not often that someone says of an organization with $37.3 billion in the bank, "hey, give 'em a little credit"!  But credit is due the Bill & Melinda Gates Foundation, for they have done something unusual among the ranks of big foundations:  they've hired as their leader someone who actually has first-hand experience in philanthropy. 
 
True, Jeffrey S. Raikes is a former Microsoft executive, which makes him in some ways the "safe" choice:  founders of businesses have been hiring their old employees since the earth's crust was still hot.  But unlike most such transfers, who wouldn't know a payout requirement from the public support test, Raikes, 49, actually has participated in a homeless census, chaired a United Way campaign, and run his own family foundation. 
 
Let's hope that this move by Gates, the biggest and perhaps the most influential of the world's foundations, ushers in an era when prior experience in the hard work of giving is considered at least as important an attribute when choosing foundation CEOs as being a university president or a corporate titan.  Too much is at stake in those positions to hand them over to people who will need lots of on-the-job-training before they can become effective.

Sean Stannard-Stockton, principal at Ensemble Capital and author of the blog TacticalPhilanthropy

“The Gates Foundation’s selection of Jeff Raikes as CEO is intriguing because Raikes’ primary career experience is in marketing. The Gates Foundation themselves have stated that they do not have enough money to fix global health. However, the foundation has a global platform to communicate their views to the world and they may find that this “marketing platform” can have a larger impact on the world than their actual grantmaking.”

Only time will tell if this decision was a move in the right direction for the Gates Foundation.  We'll have to keep an eye on it.

In other news, philanthropy advocate Claude Rosenberg passed away last week at the age of 80. The New York Times obituary highlights Mr. Rosenberg’s ground-breaking research showing that wealthy people often give less to ‘charity’ than they can afford and poor and middle class people – actually donate more, relative to what they can afford, than do wealthy people.

Rosenberg helped people understand how to maximize giving and tax benefits and also delved into the psychological reasons why people don’t give as much as they can, according to the article.

It's refreshing to see and hear from those who care about the nonprofit world as much as we do.

The Council on Foundations hosted its annual Philanthropy Summit this past weekend in Washington, D.C. A leader in philanthropic change himself, our very own Steve Butz was there to learn, share, and report. 

Each year, the summit provides the opportunity for individuals and organizations immersed in nonprofit topics to discuss the future of philanthropy with other leaders from around the globe and to take part in programs and activities designed to enhance collaboration and impact. It’s a three-day conference packed with informative and inspirational events and sessions that unearth the impact of foundations - focused on leadership, partnership and impact in the nonprofit sector - and advance a common good. See the Chonicle’s day by day and session by session summary here.

Steve attended the conference, and with several other influential members of the space, shared his opinions of the nonprofit world and insight of the summit on Sean Stannard-Stockton’s widely read blog, Tactical Philanthropy. Read Steve’s thoughts (and that of other guest bloggers) here. See what others, such as the Stanford Social Innovation Review and Philanthropy 2173 have to say. 

Bravo to the IRS, they’ve recently revised the 25-year old 990, the form required by organizations wishing to file under nonprofit status. And they’ve made some strides in the last quarter century, quite adequately taking into account the most important issues affecting and influencing nonprofits today – efficiency, effectiveness and transparency. 

According to this article in the Chronicle, the agency is going to be much more aggressive in its efforts to monitor nonprofit efficiency and effectiveness.  By creating standards to hold organizations against, the IRS hopes to help ensure nonprofits spend according to the money they have coming in and the mission they support. Considering the purpose of the tax exempt subsidy, these standards are probably a good idea.  Not that they should be telling an organization how to run, but the IRS can show a little support to the country’s nonprofits to help keep them running responsibly.

And apparently the House Oversight and Government Reform Committee is also jumping on the effectiveness bandwagon – showing interest in nonprofit revenue reports and encouraging organizations to reveal to donors how money spent supports their mission. Isn’t it great that after all this talk among our own nonprofit community that we finally have some big politicos lending an ear?

With good intentions, the IRS hopes this new and improved form will help organizations be more transparent and accountable to donors.  Not that all organizations needed the water wings, but hopefully those that do (the ineffective and unaccountable) will appreciate this effort by the government. After all, accountable, efficient, effective organizations - as we always preach - are going to be the nonprofits best supported and those that make the biggest impact.  IRS, thanks for the lifesaver.

IRS, 990, nonprofit, effectiveness, accountability, efficiency, Chronicle of Philanthropy, House Oversight and Government Reform Committee

A couple of weeks ago we heard the news that Harvard Law is waiving third year tuition for law students who commit five years of work with a nonprofit or in public service.  Looks like another school is following Harvard’s path. 

This week, Tufts University announced a new program that will repay loans for students who enter nonprofit or public service work depending upon their loan burdens and and income levels.  The program also applies to Tufts alumni who are already working in public service jobs. Tufts alum and founder of eBay, Pierre Omidyar, made the program possible through the Omidyar-Tufts MicroFinance Fund.  It will be interesting to see if loan forgiveness programs for public service work becomes a trend with additional schools following suite. 

Over at Philanthropy Action, blogger Tim Ogden points out that today’s credit crunch affects not just homeowners but students who are financing their educations through loans, potentially leading to higher costs for private loans or even the inability to secure a loan at all. In today’s economy, loan forgiveness programs might be even more enticing to students and may be the boost they need to seek employment in nonprofits.  And this is the kind of boost we like to see.

Its pretty obvious that nonprofits will be affected as we encounter this economic downturn.  The question is, how much?  Many articles have detailed the fact that donors will be likely to give less, less often, and that although the effect might not be drastic, nonprofits will see a change.  And even if the economic climate doesn’t outright cause donors to give less, it might cause them to think they should – a great excuse for nonprofits to make an even more compelling case for their need.

An article in the NY Times today discussed a similar issue – the plummeting of stocks affecting corporate giving. For large companies that give based on their assets, this could might be the change in charity everyone is predicting. Layoffs, bad news and tough times – how could it not? It’s mentioned that nonprofits might have to look to other large donors, whose 10 percent of the donor population provide about 90 percent of funds, in order to meet their needs.  Will this change in the market really affect nonprofits in the long run? Or is it a premature prediction, an overreaction to the economic situation?  It will be interesting to keep an eye on the situation to see affects – benefits of not. 

We talked about ethics in our last post – it’s quite the issue these day in the world of nonprofits. Tuesday’s topic du jour - fraud. 

A recent NYT piece outlined a report by the Certified Board of Fraud Examiners which estimated that the overall cost of fraud to nonprofits was at $40 billion for 2006, or some 13 percent of the roughly $300 billion given to charity that year.  The piece states that if in fact $40 billion was lost to fraud, then the corporations and foundations who gave in 2006 might have just as well burnt their benjamins – it was the same amount.

And we know this report lumps all the organizations together.  But does one bad apple spoil the bunch? In this case, maybe.  How do nonprofits expect donors to give when 13 percent of the donation ends up paying for some employee’s vacation or sports car?  Who do they know who to give to when the report tells us that almost all nonprofits encounter some fraud. The report also told us that ethics or no ethics, most givers don’t have very much faith in the way charitable organizations spend their money.

In the case of all this fraud, accountability might just hold us over. If we don’t have faith in these organizations, why don’t we question them? If we ask them measure their efforts and clearly show us the outcomes, and we like what we see, we might just take that leap and hand over the cash.  Rather than tattling, let’s be the bigger guy . Let’s show nonprofits what they can do to stay good apples and show donors what they need to demand in order to feel good about giving.

A somewhat disturbing study today out of the Ethics Resource Center that brings up a whole other topic of accountability in nonprofits.  We talk about making programs effective, using measurement and evaluation to really know what is going on in your organization.  But what happens when accountability is lacking in the people—not just the organization?

Along with government and business, the Ethics Resource Center has researched rates of observed misconduct at nonprofit organizations since 2000, and the most recent numbers are show the highest rates of misconduct in 2007 than in any other year.  Over half of respondents reporting that they have witnessed an act.  We need to say it again.  Over half.  The study also fond that nearly a quarter of respondents observed their co-workers putting their own interests above those of the organization.  Just over 20% reported observing managers or executives lying to employees.  When it comes to ethics, nonprofits are usually held in a better light than corporations and government.  However, these numbers put nonprofits in the same ballpark.

This study isn’t the only popping up lately showing holes in accountability.  As The Chronicle on Philanthropy points out, recent findings that nonprofits lack the ability to deter theft and fraud and that insider deals with boards are becoming more prevalent, are pointing out holes all over the place.

We talk about accountability in many forms.  But regardless of the form, accountability starts from the bottom up.  Its a shift in culture.  A new way of thinking.  And based on this study, a new way of acting.  

We’d be interested in hearing your thoughts.  Do this recent studies have you concerned for the future of organizations?
 

The world revolves around the Internet.  We send emails instead of cards, book flights in minutes and order food to be delivered to our front door.  We enjoy the ease of never having to leave our seat in front of the computer.  It’s no wonder online fundraising and donations have become so popular. 

Convio, Sea Change Strategies and Edge Research today released results of a national research study that dug into the online behaviors and attitudes of  donors.  It seems that Americans are more and more willing than ever to seek out organizations and donate to that organization all online. In fact, 51 percent of those surveyed said they prefer giving online and 46 percent said that five years from now they will be making a greater portion of their charitable gifts online.  72 percent of those surveyed said they donated online, rather than in the traditional sense, out of efficiency and in order to help organizations cut down on administrative costs. We applaud the interest in making it easier for both parties and the fact that they are taking into account those administrative costs. But does this mean they’re thoroughly checking out the organization before giving? We hope so.

Viral fundraising is taking the sector by storm and will continue to influence donors and publicize nonprofit needs. With the increased role social networking – profiles and groups on Facebook and MySpace, as well as blogs in the sector are making, are we really surprised more donors are contributing online?  

The question we must ask ourselves is, is easier better? Will leaving out the personal relationships between donors and organizations be detrimental in the long run?  How can we be sure accountability is still being taken into account?  As the world lurches forward, let’s not forget to keep an eye on the small things that can make a big difference. 

accountability, viral fundraising,social networking, Facebook, giving, fundraising, donations,

This weekend’s New York Time Magazine article, “For Good, Measure”, very positively advocated the need for measurement and the importance of effectiveness among foundations and nonprofits. It’s about time this topic made its way to national newspapers. After all, it’s been important to participants in the nonprofit sector, and those who really care about it, for years.

Although we are happy that this topic was addressed and brought to the attention of thousands, it’s rather sad that it’s taken this long to make its way to the top of people’s minds – to finally become important enough to discuss openly and among the public. What’s even more upsetting is that even though measurement is vital in understanding organizational impact and ensuring effectiveness, according to the article, barely half of foundations take metrics into consideration, evaluating the effectiveness of those whom they provide grants.   Why wouldn’t they track all 100 percent?  Just like donors, wouldn't they want to make sure their money is well spent? Check out someone who feels similarly, here.

Thankfully, new philanthropists are standing up and asking, Am I making a difference? How do you know?  And the answer provided in the article tells them, “If you really want to change the world, first you need to start measuring how (and how much) you’re changing it — because only a clear understanding of your results will enable you to expand the programs that work and jettison the ones that don’t”. At least they are steering them in the right direction.

Check it out, our own Steve Butz voiced his opinion in the blogosphere here.

New York Times, nonprofit, philanthropist, measure, effectiveness, foundation, metrics, evaluating,

We’re not surprised to hear that the future nonprofit leaders of the world are discouraged by the industry.  In a career full of emotion, compassion, and hope, the reality of money, lack of commitment and empathy, is enough to make anyone discouraged.  A recent study conducted by the Meyer Foundation and CompassPoint Nonprofit Services found that young nonprofit workers are frustrated by the monetary aspects of their work as well as the morale.  Low pay, tiresome work, long hours, the list goes on.  

The study, based on surveys of 6,000 social workers nationwide, found that 64% of respondents have financial concerns about committing to a career in nonprofit work. The issues surrounding pay are not new to the nonprofit world, of course. What was surprising was that just over 1/3 of respondents aspires to be an executive director someday.  And with an exodus of baby boomers leaving current positons to retire, this the time when young persons should be excited about the prospect of moving up.  Its not a matter of having a ceiling, the problem is there isn’t even curiousity to see what’s up there.

We can’t say it enough. Embrace your future leaders. Pay them well.  Take the time to teach and mentor them.  You’ll reap the benefits-as will they.

What are your thoughts on the future leaders of the nonprofit world? What should organizations do in order to encourage and develop younger generations in the field?