Remaining significant as a non-profit

For more traditional nonprofits, targeting millennials is an investment in the future instead of a tactic to immediately generate funds.

The Salvation Army, one of the nation’s oldest charities, recently increased its focus on involving young people after a series of focus groups showed that few students in high school and college knew what the organization did.

“It was a hard slap in the face,” says Major George Hood, the Salvation Army’s national community relations and development secretary. “It said to us we’ve got to go to work on this or there’s going to be a day where we will not have any donors left.”

Now the organization hosts an annual concert featuring teen favorites like Owl City and sponsors Red Kettle Clubs for philanthropy in high schools around the country. It also debuted an online Red Kettle for people to launch online fundraisers, which Hood says are popular among their younger donors. All are attempts to help Millennials personally identify with the Salvation Army brand.

“They want that relationship and they want to believe that they’re really making an impact on someone’s life,” he says. “If you can come up with that ingredient, you’re ready to go.”

The Business of Giving

With the explosion of private enterprise in many parts of the world, there are more wealthy people looking for ways to give back to their communities. Business leaders in areas like Eastern Europe, the former Soviet Union, and China are exploring ways to contribute to society.

Some may wonder where business and philanthropy intersect. I believe that a healthy public sector is absolutely essential to a capitalist economy. When more money is invested in areas such as education and public welfare, it generally strengthens the environment in which businesses operate. This can result in a virtuous cycle where a better business environment leads to better profits that can lead to increased philanthropy.

What really excites me is how business has informed the philanthropic sector. Historically, corporate philanthropy was little more than a one-time gift of money that met an immediate need, often totally unrelated to a company’s mission. Today, however, there is a new area—strategic philanthropy—involving corporations that find ways to link their philanthropy to their business strategy. Companies increasingly are finding synergies between these two areas so that both profit and philanthropic efforts are under the same strategic umbrella.

Many large corporations have embraced strategic philanthropy. Networking technology giant Cisco offers free technology courses and certifications that are taught using Cisco equipment. American Express provides travel agent training online, free of charge. Dannon sells its Danone Dahi, a nutrient-enriched yogurt tailored to the health needs of many of India’s impoverished children, at a low cost.

These philanthropic efforts help society, but they also result in profit for the company. By creating a financial return to the company they can then reinvest these funds to create a sustainable philanthropic effort.  There is an old Chinese proverb that says: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Strategic philanthropy is the modern equivalent of teaching someone to fish. 

–Excerpts of an article by Philip L. Cochran, associate dean Indiana University Kelley School of Business

How nonprofits convince Millennials to give

Charity: water, Scott Harrison’s nonprofit organization, is at the fore of a tough task for the nonprofit sector: convincing the Millennial generation, underemployed and often dubbed apathetic compared to their predecessors, to give some of the little money to charity. For a sector overly reliant on generating money from an aging Baby Boomer population, getting young Millennials donating to nonprofits early is a key to long-term sustainability. That’s why many charities are working to develop a more interactive, customizable, and transparent giving experience.

“The Millennial generation is about identifying with a cause,” says Marc Chardon,the CEO of Blackbaud, a software developer for nonprofits that tracks giving trends. “[Donating] has become very personal and local.”

In charity: water’s case, that means encouraging supporters to be not only donors but also fundraisers. Half of the funds generated by the organization come from an online fundraising platform in which individuals create their own personal fundraising campaigns on behalf of the nonprofit. Often, people use the platform on their birthdays and ask others to donate their age in dollars instead of providing gifts. Sometimes the fundraisers are more inventive—in September a woman raised $30,000 by promising to swim across the San Francisco Bay naked, while an 8-year-old generated $15,000 by eating rice and beans for 25 days and promising her family would donate the savings made from buying cheaper groceries.

“Many charities go out and just ask people for money,” Harrison says. “We ask people for their voice.”

It’s an approach that seems to resonate with Millennials. The average age of mycharity: water’s users is 33. The fundraisers have generated almost $20 million total since the platform was launched in 2009, mostly through small donations of less than $100. The organization’s pledge to use all donated funds on fieldwork (private donors fund organizational costs) also assuages young people’s tendency to distrust formal institutions. In a post-recession environment where charitable giving has shrunk, charity: water has increased its donations each year since its founding.

TIME

Why millions of people choose to live in urban slums

About one-third of the urban population in developing countries are slum dwellers.

There is something viscerally repulsive about urban poverty: the stench of open sewers, the choking smoke of smoldering trash heaps, the pools of fetid drinking water filmed with the rainbow color of chemical spills. It makes poverty in the countryside seem almost Arcadian by comparison. The rural poor may lack nutrition, health care, education, and infrastructure; still, they do the backbreaking work of tending farms in settings that not only are more bucolic, but also represent the condition of most of humanity for most of history. With life so squalid in urban slums, why would anyone want to move there?

Because slums are better than the alternative. Most people who’ve experienced both rural and urban poverty choose to stay in slums rather than move back to the countryside. For all the real horrors of slum existence today, it still usually beats staying in a village.

Start with the simple reason that most people leave the countryside: money. Moving to cities makes economic sense — rich countries are urbanized countries, and rich people are predominantly town and city dwellers. Just 600 cities worldwide account for 60 percent of global economic output, according to the McKinsey Global Institute. Slum dwellers may be at the bottom of the urban heap, but most are better off than their rural counterparts.

Although about half the world’s population is urban, only a quarter of those living on less than a dollar a day live in urban areas. In Brazil, for example, where the word “poor” conjures images of Rio’s vertiginous favelas … only 5 percent of the urban population is classified as extremely poor, compared with 25 percent of those living in rural areas.

But is it much of a life, eking out an existence in today’s urban squalor? Our image of modern slums comes from films like Slumdog Millionaire, portraits of India’s urban underclass not all that far removed from the horrifying picture of 19th-century industrialization in Charles Dickens’s novels about the misery and violence of London’s slum dwellers. But slum living today, for all its failings, is markedly better than it was in Dickens’s time.

For one thing, urban quality of life now involves a lot more actual living. Through most of history, death rates in cities were so high that urban areas only maintained population levels through constant migration from the countryside. In Dickensian Manchester, for instance, the average life expectancy was just 25 yearsAcross the world today, thanks to vaccines and underground sewage systems, average life expectancies in big cities are considerably higher than those in the countryside; in sub-Saharan Africa, cities with a population over 1 million have had infant mortality rates one-third lower than those in rural areas. In fact, most of today’s urban population growth comes not from waves of villagers moving to the city, but city folks having kids and living longer.

Article continues

Why millions of people choose to live in urban slums – Part 2

In part, better quality of life in the urban slums of the developing world is because of better access to services.

Data from surveys across the developing world suggest that poor households in urban areas are more than twice as likely to have piped water as those in rural areas, and they’re nearly four times more likely to have a flush toilet. In India, very poor urban women are about as likely to get prenatal care as the non-poor in rural areas. And in 70 percent of countries surveyed by MIT economists Abhijit Banerjee and Esther Duflo, school enrollment for girls ages 7 to 12 is higher among the urban poor than the rural poor.

Banerjee and Duflo found that, among people living on less than a dollar a day, infant mortality rates in urban areas were lower than rural rates in two-thirds of the countries for which they had data. In India, the death rate for babies in the first month of life is nearly one-quarter lower in urban areas than in rural villages. So significant is the difference in outcomes that population researcher Martin Brockerhoff concludes that “millions of children’s lives may have been saved” in the 1980s alone as the result of mothers worldwide moving to urban areas.

That said, modern slum dwellers — about one-third of the urban population in developing countries — are some of the least likely to get vaccines or be connected to sewage systems. That means ill health in informal settlements is far more widespread than city averages would suggest. Slum residents are also at far greater risk from violence, outdoor air pollution, and traffic accidents than their rural counterparts.

But all things considered, slum growth is a force for good.

It could be an even stronger driver of development if leaders stopped treating slums as a problem to be cleared and started treating them as a population to be serviced, providing access to reliable land titles, security, paved roads, water and sewer lines, schools, and clinics. As Harvard University economist Edward Glaeser puts it, slums don’t make people poor — they attract poor people who want to be rich. So let’s help them help themselves.

[Excerpts of a Foreign Policy article by Charles Kenny]

 

More slaves today than any time in human history

In the West, and particularly in the United States, slavery has long settled in the public imagination as being categorically a thing of the past.

However, the International Labor Organization (ILO) estimates the number of slaves in the world today at around 21 million.

Kevin Bales, of Free the Slaves — the U.S. affiliate of the world’s oldest human-rights organization, the U.K.-based Anti-Slavery International puts it at 27 million. Siddharth Kara of Harvard’s Carr Center for Human Rights Policy says more than 29 million.

That range represents a tightening consensus. Bales’s 27 million — which as a statistician he considers a “conservative estimate” — is derived from secondary-source analysis.

In which case, assuming even the rough accuracy of 27 million, there are likely more slaves in the world today than there have been at any other time in human history. For some quick perspective on that point: Over the entire 350 years of the transatlantic slave trade, 13.5 million people were taken out of Africa, meaning there are twice as many enslaved right now as there had been in that whole 350-year span.

The Atlantic

December Online Charitable Giving

‘Tis the season to be jolly — and for many Americans, to give to charity. A seven-year study of online giving found that a third of all charitable donations in a given year come in December, with the giving rate increasing as the New Year approaches:

Of all giving in a year, 22% of online giving takes place on the last two days of December.

Philanthropy enlisting capitalists to address world needs

Gray Ghost Ventures, an investment firm established by Bob Pattillo, a real estate developer, provides capital for projects that address the needs of low-income communities around the world.

It has invested in companies that cater to the poor, like D.light Design, which is developing low-cost lighting products for people without reliable electricity, and Babajob, a Web- and mobile-based job search and placement business aimed largely at India’s maids, gardeners and other household workers.

Gray Ghost has also set up the Indian School Finance Company to lend money to private schools, which serve more than 60 percent of the country’s students. Such schools find it hard to obtain financing for improvements and upgrades.

The company is trying to fill that gap with midsize, market rate loans. “Making those investments can help them attract more students, so they generate income to pay off the loan and more kids get an education,” said Jennifer McReynolds, head of investor relations at Gray Ghost.

Mark Zuckerberg of Facebook donates half a billion dollars

Almost two years to the day since Mark Zuckerberg promised to give half of his wealth away to charitable causes, the Facebook founder has announced (on his Facebook page, natch) a donation that amounts to around half a billion dollars.

The recipient is a Silicon Valley-based charity, the Silicon Valley Community Foundation, which will receive 18 million shares in his social network, which floated earlier this year. Its value? A shade under $500 million.

Philanthropy a meaningful legacy

How many people can you name who lived 100 years ago? Including politicians, scientists, artists, inventors, historical figures and our own ancestors, many of us struggle to name even three dozen. How many of the 314 million Americans or 7 billion planetarians will be remembered 100 years from now?

Most of us seek meaning in our lives and hope to be remembered after we’re gone. And effective and meaningful philanthropy can be achieved, in part, by asking what kind of legacy you want to leave.

The majority of the Americans who grew up in the Depression and fought abroad and worked at home during World War II are unknown by name to those of us alive today. But, collectively, we know of them as “The Greatest Generation,” whose courage and sacrifice rescued freedom from the threat of totalitarianism. Their generational legacy is the free society that we enjoy today.

Legacy Project chair Susan Bosak writes, “The idea of legacy may remind us of death, but it’s not about death. … Legacy is really about life and living. It helps us decide the kind of life we want to live and the kind of world we want to live in.” She adds, “Through legacy, ‘me’ becomes ‘we.’ … ‘We’ encompasses past and future, old and young, and the society we create and perpetuate.”

How do we create a legacy for future generations? By living a life consistent with our values, in harmony with others, and in a manner that repairs the world and preserves those things that are essential to a healthy, sustainable and productive society and planet. Generous, thoughtful, focused philanthropy is a necessary element of that goal and will help create and solidify the legacy of our generation.

Support the many great nonprofit organizations working here and globally to help preserve the good things in the world that we cherish, and repair those things that cry out for help, improvement and change.

The perfect gift for friends family and co-workers –giving to a cause

Tired of searching for the perfect gift for friends, family and co-workers (or, at the least, something that won’t be re-gifted?)

And could you use an end-of-the-year tax deduction?

If so, here is an easy solution: Give to a cause in that person’s name. It’s fast and easy, it’s tax deductible and it’s a nice thing to do in someone’s honor.

Most important, charitable donations help people who most need some assistance.

Whether donations are made out of passion or as a convenience during a hectic season, they will be welcome and put to good use.

Nonprofits invest in For-Profits

When the W. K. Kellogg Foundation set aside $100 million in 2007 to invest in companies that could produce both social and financial benefits, it was considered revolutionary. Historically, major foundations had used mainly stocks, bonds, real estate and other traditional asset classes to build their endowments.

In 2010, the Kellogg Foundation invested $5 million in Wireless Generation, a tiny educational software maker working to improve public education in New York City. Just 219 days later, it made a 25.9 percent return after Rupert Murdoch’s News Corporation bought Wireless Generation for $360 million.

Philanthropy is taking its cues from Wall Street and Silicon Valley. The language of finance is so common that it is sometimes hard to tell the difference between an investment conference and a fund-raiser. Grants are referred to as investments, and public-private partnerships as innovations. Money used to buy vans, computers and buildings is called growth capital.

“It’s not just the language that is changing,” said Antony Bugg-Levine, chief executive of the Nonprofit Finance Fund. “The actual distinction between the two sectors, for-profit and nonprofit, is starting to collapse.”

The shift stems from a new generation of philanthropists, like Bill and Melinda Gates, Pierre and Pam Omidyar and Steve and Jean Case, hoping to stretch their dollars. As they see it, the pool of philanthropic assets — even at a whopping $4 trillion-plus — is too small to make a dent in seemingly intractable social problems like malnutrition, chronic homelessness, water quality and sanitation. So they are trying to find ways to reuse existing financing and to attract new types of capital.

Finding the balance between charitable giving and shopping

At the peak of the shopping and giving season, consumers are increasingly combining both activities. They are buying products that have charitable tie-ins, shopping through Web portals that send savings to nonprofits, and donating at the registers when they check out at stores.

These charity-linked purchases might give consumers a good feeling, but are they good for charities? Maybe so, but only if those shopping decisions aren’t taking the place of other charitable giving, say some specialists.

Charitable shopping “undermines the philanthropy of a nonprofit through diminished charitable donations,” said Sondra Dellaripa, principal consultant for the nonprofit consultancy Harvest Development Group. In fund-raising development for charities, she said, it is important to build a relationship with a donor — ­something that doesn’t happen in these ­transactions.

So, how can you make your shopping turn into giving while keeping in mind how much you’re really giving to charity? Not all products with charity tie-ins are created equal.

For those shopping online, there are pass-through sites where a charity gets money every time a consumer makes a purchase. The donated percentage of the purchase price varies from 1 to 25 percent.

Some deliver no money to charity at all; they’re just for awareness. Consumers can check this, before they buy, on the product’s website or by reading the tiny print on the product’s packaging.

Vietnamese restaurateur turns philanthropy into business

Among the countless street children Jimmy Pham has met over the decades, the one who comes to mind most often is a young girl whose mother slammed her head against a wall some 16 years ago.

The girl’s mother, who was beside her, had suggested she beg for money from Pham, who had become a kind of casual benefactor to the local children. When the girl refused to beg, her mother punished her with a beating.

The memory of that girl, and others like her, played a key role in the origin of KOTO, the restaurant chain Pham went on to found in 1999. KOTO uses its eateries to take young people off the street and train them in the service industry.

Pham, who as a baby fled Saigon for Australia as the Vietnam War was winding down, returned in 1996 as a travel agent. He was struck immediately by the poverty and says he spent his first few weeks buying meals for street children and giving them money.

Unlike when Pham started out, Vietnam now has a whole host of vocational charities that take the teach-them-to-fish approach. Instead of a handout, the organizations specialize in a teaching marketable skill – from baking brownies to tailoring trousers. The thinking is that they can pass these skills on to poor or disabled people, who then can support themselves.

But Pham says even this approach is no longer enough. “We’re not content with showing them how to fish anymore,” Pham, 40, said in an interview at KOTO’s restaurant in Ho Chi Minh City. “We want to show them how to set up the fish shops and teach others to fish.”

The recruits live together for two years at a training center, but food service makes up just part of their lessons. They learn English and play soccer, but also take 36 workshops that cover everything from personal finance to sex education.

Charities have more independence and thus greater results

Excerpts of an opinion on the question “Are charities more effective than Government?”, by Howard Husock, vice president for policy research at the Manhattan Institute:

Private charity will not be able to provide dollar-for-dollar substitute financing for reductions in government social programs. But it’s important, first, to acknowledge the fact there is a limited record of success in government social service programs.

Privately financed efforts have an advantage in helping individuals with their own special situations. That’s because private philanthropy, even through smaller expenditures, can adapt to local conditions and be led by local champions who must show donors results. That diversity of approaches is something which one-size-fits-all federal programs inhibits.

Plus donors who are matching or influencing the spending of public money directly especially have an obligation to set goals and track results.

Vital needs don’t always attract vital support

Excerpts of an opinion on the question “Are charities more effective than Government?”, by John Briscoe, professor of environmental engineering at Harvard University, and a former World Bank official:

The priorities of charities are appropriately set by those who finance and manage those charities. But it seldom stops there. [Apart from non-governmental organizations that focus on health and education,] governments typically and necessarily see things like jobs as overwhelming priorities and sectors like infrastructure as critical for creating jobs and reducing poverty. I know of not a single nongovernmental organization that focuses on job creation, the provision of electricity at scale, or transport.

As a senior official in the World Bank I saw this dynamic at work every day. NGOs would lobby their governments for more attention to health, education and the environment. Rich country governments would then use their position on the board of the World Bank to push for these priorities.

Over the last 20 years this has led to a profound distortion in the priorities of the bank, with the social sectors becoming dominant and, for a long time, infrastructure lending – the original mandate of the Bank – falling to less than 10 percent of total lending.

An interesting evolution over the last decade has been the rise of countries like China, India and Brazil that give high priority to things like infrastructure, and as their weight in the global system has increased, this has led to somewhat of a rebalancing of priorities at an institution like the World Bank, but, more important a rebalancing in options for developing countries.

These countries, having recently emerged from poverty, know that it is not by putting the social cart before the economic horse that development and poverty reduction happen. They have little patience for the pleas of philanthropists rich and poor to deny poor countries the option of following the only known road to poverty reduction.

Charities a crucial complement

An opinion on the question “Are charities more effective than Government?”, by Leslie Lenkowsky, professor of public affairs and philanthropic studies at Indiana University:

The idea that charity can take the place of government spending is absurd on its face. The U.S. federal government alone spends far more than the $300 billion Americans donated to nonprofit groups last year. Moreover, much of that giving goes for purposes that would be low on any government’s priority list.

But that is exactly why philanthropy is valuable and deserves encouragement through tax and other public policies.

The basic debates in any type of government are always over what is in the public’s interest. But another way is by allowing each of us to give money or time – often collaborating with others — to try out what we think will address particular aspects of the public interest. That is the domain of philanthropy. It is especially important for people with ideas that may be unpopular, innovative, or directed at a minority of the population.

Those with more money and time can, of course, have more influence in philanthropy. But they can have more influence in politics as well. And in philanthropy, because its focus is on the particular, not the general, a little giving can go a long way. You don’t have to be rich to be a successful donor.

Philanthropy, in short, is an expression of pluralism. Its goals differ from those of politics and the standards applicable to government actions, such as fairness, do not fit what it does.

Abolishing the Charitable Deduction will cost American charities billions

Over its nearly 100-year history, the charitable deduction has become one of the most time-tested provisions in the Internal Revenue Code. But it has also been a perennial target by people on both ends of the political spectrum who want to eliminate or restrict it.

While economists have long studied the impact of the deduction, they have not reached a clear consensus on how much it matters. A new study, however, along with recently released IRS data make it quite clear that America’s charitable organizations could be hurt greatly if donors lost all or part of the charitable income-tax deduction as lawmakers seek ways to avert the looming “financial cliff.”

The new study of the wealthy and their philanthropy, released last month by Bank of America, asked affluent people (mostly with incomes of $200,000 or more and net assets of at least $1-million) how they might alter their giving if deductions were eliminated.

Just under 50 percent said their giving would remain the same. But nearly 49 percent said they would decrease their giving—and 20 percent of those people said they would “dramatically decrease” their giving. Less than 2 percent said their giving would increase.

Read Financial Impact on American Charity

Excerpts of an article by Robert Sharpe, a fundraising consultant

The impact on American charity of donors who itemize

Some point out that most donors wouldn’t be affected by changes in the charitable deduction because 70 percent of Americans don’t itemize. While it is true that people who don’t itemize often give generously from their incomes, they don’t provide the lion’s share of the gifts that help fuel the nonprofit world.

In 2010, the 30 percent of Americans who itemize provided 79 percent of the money “Giving USA” reported that individuals donated to nonprofit organizations.

If a loss of the charitable deduction caused people who itemize deductions to reduce their giving by just 20 percent, that would mean a $34-billion drop in charitable giving, by far the largest decrease since the Great Depression. To put that in perspective, $34-billion is more than three times the sum that individuals donated to all U.S. colleges received last year (not counting bequests).

If nonprofits suddenly had to reduce costs by $34-billion, they could well need to eliminate 5 percent of their work force, or 680,000 jobs. That could increase the unemployment rate in the United States from 7.9 percent to 8.4 percent.

And if government cuts spending, charitable giving will have to play an even more important role in our society as those cuts inevitably put even more strain on the nonprofit infrastructure that enriches Americans’ lives in countless ways.

Excerpts of an article by Robert Sharpe, a fundraising consultant