Tuesday, November 10, 2009

A Conversation about Foundation Giving, Individual Giving, Motivation and What Should Be Done

Wall Street has changed. Big business has changed. American consumer habits have changed. What about philanthropy – Has it changed? Has it changed anywhere near how it needs to change? This subject is beginning to get some needed attention. Two thought provoking articles published yesterday by Philanthropy thought leaders inspired this post. Here’s a summary and my thoughts on the subject.

The Wall Street Journal had a special Philanthropy section yesterday with the lead article entitled “What’s Wrong With Charitable Giving & How to Fix It” by Pablo Eisenberg, a senior fellow at the Georgetown Public Policy Institute. Pablo gets right to the point with this assessment: “Much of current philanthropic giving, by foundations and individuals, neither meets the needs of our charitable organizations nor addresses some of our most urgent public needs. Foundation practices today are too bureaucratic, inflexible and cautious, and too focused on short-term objectives.” Pablo goes on to say that the primary responsibility for maintaining the strength of the nonprofit community should rest with philanthropic institutions and individual donors not the government. He recommends nine changes that foundations should embrace.

1. Increase the Distribution Percentage –A change in payout ratio from 5% to 6% could increase nonprofit coffers by $10 Billion a year. (Wow!)
2. Increase General Operating Support (All Nonprofits will applaud this one)
3. Increase Multiyear funding – Pablo suggests 5, 10 and 20 years to allow for long term goals to be reached. Few give grants beyond two years.
4. Adopt Rolling grant Making – Simply done by delegating decision making to board committees between board meetings
5. Allocate More Funds to the Truly Needy – (I was astounded by the estimate that not more than 5% of foundation money is given to the truly needy)
6. Reach Out to Local Groups And Underserved Regions - large parts of the country are underserved by philanthropy.
7. Simplify Application and Reporting Procedures – Eliminate excessively detailed and time-consuming grant-application and reporting procedures and unnecessary data required by foundations (I hear Nonprofits applauding again)
8. Improve Public Accountability – Pablo notes that newspapers have been the real public’s watchdog and their demise and extensive streamlining has reduced this capability. He suggests that foundations fund conversions of today’s newspapers to nonprofit versions
9. Fund the Watchdogs - organizations that monitor and assess government policies, public agencies, nonprofits, business and other major institutions such as the National Committee for Responsive Philanthropy

Pablo concludes with: “If foundations do not change, the public will have every right to question whether American taxpayers are getting their money's worth.”
Read the whole article - What's Wrong With Charitable Giving—and How to Fix It

While Mr. Eisenberg discussed foundation giving, Sean Stannard-Stockton has been featuring articles this past week about why people give to charity on his popular blog, Tactical Philanthropy. There has been an explosion of comments left on this topic and yesterday’s article really dovetailed with this one. Sean drew on an blog post from 2008 when he built on Maslow’s hierarchy of needs and said that he believed that giving is motivated by humans’ deeply held need to find meaning in life. In last week’s guest post on this blog, Charles Bronfman suggested that we all should understand our own motivation for giving as a starting point.

Sean Stannard-Stockton's post "Why Do People Give to Charity"

The Art of Giving: Where the Soul Meets a Business Plan, by Charles Bronfman and Jeffrey Solomon is available at Amazon.com

These articles gave me a lot to think about. I have been proud that my husband and I have a giving strategy which takes into account our means and distributes our giving according to our priority interests. When I work with nonprofits on strategic planning I am always amazed when updating mission statements how much the mission of organizations can change over time. The updated mission provides the basis for a strategic plan. Likewise it may be time for my husband and I to take a philosophical look at our current giving and start by asking what motivates us. What does motivate us and should we be doing anything different? How about you? Is it time for a soul searching look at the whole issue?

Join the conversation - Leave your comments and share your opinions on this important issue.


Tom Bailey said...

I like the concepts here and the information is great. I wrote down the points to improve to think about. You have some really GREAT points on your blog. I enjoyed reading some of the archives.

Marion Conway said...

Hi Tom,

Thanks so much for the feedback. I'm glad you enjoy the blog.