Generation X and Y equals philanthropic power

When it comes to philanthropy, Gen X and Gen Y/Millennial donors are keenly interested in personal values, measurable impact, and hands-on engagement, a new report from the Johnson Center for Philanthropy at Grand Valley State University and 21/64, a nonprofit consulting practice specializing in next-gen and multi-generational strategic philanthropy, finds.

Based on a national online survey of and interviews with young philanthropists, the report, Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy found that a relatively small group of Gen Xers (born between 1964 and 1980) and Gen Y/Millennials (born between 1981 and 2000) will inherit more than $40 trillion over the coming decades. And while they are not necessarily more charitably inclined than their parents or grandparents, the sheer volume of funds, foundations, and other types of giving by high-net-worth families is expanding to unprecedented levels, putting them in a position to wield more philanthropic power than any previous generation in American history.

The report also found that next-gen donors seem to be driven by values rather than “valuables”; that they see philanthropic “strategy” as the major distinguishing factor between themselves and previous generations and intend to change how philanthropic decisions and due diligence are conducted; that they want to develop close, hands-on relationships with the organizations or causes they support; and that, as engaged as they already are, they are still figuring out what kind of donors they want to be.

The report highlights the “practical wisdom” and insights of next-gen donors with respect to their hunger for engagement, new ways of learning, and making a difference sooner rather than later.

[Foundation Center]

Why invest in women?

Why do so many non-profit ventures focus on girls and women as the primary agents of change?   

  • Firstly, women and girls represent roughly half of the world’s population.
  • Secondly, women are the most marginalized, the most dominated and exploited, and without outside influence often doomed by cultural mores to remain subordinated. Those with no voice are often overlooked, and rarely given voice or power.
  • Girls across the globe do not enjoy basic human rights: freedom from violence, to education, to inherit or own land, to decide when and whether to marry or bear children, or, the right to self-determination.
  • One in three women around the globe will be beaten, raped, or otherwise abused in her lifetime. The daily threat of violence is both a cause and a consequence of a world greatly out of balance.
  • Many argue that the most undervalued and untapped forces on the planet are adolescent girls living in poverty.
  • And girls are the mothers of the next generation, and the quality of these girls’ lives will literally determine the course of their children’s lives and our collective future.

Addressing the complexities of treating disease in developing countries

Non-pharma and pharmaceutical company employees alike have wondered: “Why don’t we just give away medicines and drugs that can save so many lives in the developing world?

Allan Pamba worked at a clinic in Kenya in the early years after HIV/AIDs was recognized and had become a big problem. He became frustrated that he was seeing patients (from teenager years through the elderly) who did not have antiretroviral drugs to help treat the HIV.

Pamba, now a director in GlaxoSmithKline’s Developing Countries Market Access Unit, relates, “Through the years, in conversations with health policy officials in countries, I learned that they have refused donations when they are not sure it’s going to last. They would say, ‘If you give this to me free today, do I have to buy it from someone else or at a higher price when your company has a bad year’.”

Pamba says problems sometimes can be solved by looking at them from a different angle or by providing information. For example, he referred to an arrangement GSK has with cell phone maker Vodafone: When women give birth at a clinic, they leave behind their phone number so they are sent text messages reminding them to get vaccines for their children.

“There are half a billion handsets in Africa,” Pamba said of the spread of cell phone use. “Some people don’t have enough food, but they have a cell phone.”

International giving by Millennials

The Credit Suisse/Forbes Insight Report notes that global giving has a generational slant.

For millennials, youth in their 20s and younger, they were born into an era of globalization and the distinction between local and global has increasingly blurred.  This generation of global citizens and digital natives is apt to look at opportunities for giving outside the U.S. as much or even more often than within the U.S.

They are fully aware of the interrelationship between nations and their travels, real and digitally, provide a significant education about issues related to resource scarcity, global health and poverty.

They also want to get the greatest “bang for their buck” and as a result, are more apt to research and seek out ways to be most effective in bringing about social change on a global scale.

[From WealthManagement article by Betsy Brill and Michael Donovan]

Non-cash currency aids community revitalization

What do palm trees, chestnuts, and kisses have in common? They’re all denominations of bank-issued alternative currencies that are a key community development tool in some of Brazil’s toughest neighborhoods.

Throughout the U.S., there are also community development-oriented “social currencies.” Examples of this alternative form of legal tender include “Ithaca Dollars” in Upstate New York and “Berkshares” in Western Massachusetts, alternative, non-cash currencies facilitating the exchange of local goods and services and are often connected with “buy local” campaigns and barter systems.

A network of community development banks in the United States has been quietly working to reinvest capital in poor communities in Brazil through microfinance, real estate projects and individual asset development. Community banking emerged in Brazil just fifteen years ago with the establishment of the Fortaleza-based Banco Palmas. Today, there are approximately 100 such banks in the country. Through coordinated micro-financing, technical assistance for small businesses, community facility investment and social currency systems, Brazil’s community banks are assisting some of the nation’s most notoriously dangerous and economically impoverished communities.

For example, Banco Verde Vida (Green Life Bank) of Vila Velha accepts wheelbarrows of recyclable rubbish twice a week from neighborhood residents. It pays these vendors with “moeda verde,” an alternative currency that can be spent at local businesses or, for food and cleaning materials, at a bank-owned store. The initiative has led to cleaner neighborhood streets, new small business development and improved incomes for residents.

In the nearby San Benedito neighborhood of Vitoria, a former bricklayer borrowed money twice from his local Banco Bem, first to build and then to enlarge his business. As was once the norm for U.S banks, Banco Bem’s small business lending is often character-based. According to bank manager Leonora Mol, “The neighbors decide who should get the loans. We ask them a very simple question: if this money were yours, would you lend it to this person?” Now, many of the bricklayer’s customers pay for his products with “bems,” an alternative currency also issued by the bank.

The “developed” world has already successfully borrowed key community development concepts, such as microfinance and appropriate technology, from the dynamic “developing” world. Now, with cash an increasingly scarce resource here in the U.S., it makes sense to look beyond our borders to see how cash and non-cash tools are integrated to make the impacts more than the sum of their parts.

Source: BBC News

Growing trend of Asian-American philanthropy

An opinion held by Ms. Yoon, a former news correspondent for Fox who was born in South Korea and moved to the United States when she was 6: “In some ways for immigrants, the better off you become, the more disconnected you become from your community needs.” The community is now redefining its “idea of success,” Yoon explained. “We grew up with this idea that success is the more distance you can create between yourself and the pack. But it’s really about how much of the pack you can bring along.”

Lulu C. Wang, a money manager and philanthropist in New York, and her husband, Anthony Wang, established themselves in the vanguard of the new wave of Asian-American philanthropy when they donated $25 million to Wellesley College, her alma mater, in 2000.

Dien S. Yuen, a philanthropy consultant focusing on Asian-American giving, predicted that the surge in philanthropic activity among Asians is “only a beginning.”  Ms. Yuen adds, “I think in the next three or four years, there’s going to be huge growth, because philanthropy has become mainstream.”

“A lot of donors, when they first come through the door, don’t even know they can do all these things,” said Ms. Yuen. “They don’t even know they can get a tax deduction for giving a gift overseas.”

[New York Times]

The growth of Asian-American philanthropy

Members of a new class of affluent Asian-Americans, many of whom have benefited from booms in finance and technology, are making their mark on philanthropy in the United States. They are donating large sums to groups focused on their own diasporas or their homelands.

The growth in philanthropy by Asian-Americans parallels a surge in the Asian population in the United States. From 2000 to 2010, according to the Census Bureau, the number of people who identified themselves as partly or wholly Asian grew by nearly 46 percent, more than four times the growth rate of the overall population, making Asian-Americans the fastest growing racial group in the nation.

Pradeep Kashyap, vice-chairman of the American India Foundation, one of the largest and most successful of the new Asian philanthropies, is an immigrant and former senior executive at Citibank. He described this shift as “the journey of becoming American. … They see their mainstream American peers giving and they say, ‘I’m going to do that.’ ”

Asian cultures have a strong tradition of philanthropy in the broadest sense, though it has usually involved donations to relatives, neighbors, churches and business associations. Many Asian immigrants have not immediately embraced the Western-style practice of giving to large philanthropic institutions, organizers said.

[New York Times]

 

A rise of philanthropy in emerging economies

There are increases in philanthropy documented in emerging economies outside the U.S. where wealth is rapidly growing.

In India, for example, which is one of the fastest growing economies in the world, the average contribution to charity among high net worth individuals grew to 3 percent of their total income in 2011, up from 2.3 percent in 2010, according to Bain & Co’s India Philanthropy Report 2012 and more than half of those surveyed expect to boost their donations again in 2012.

The recently released Report by Credit Suisse and Forbes Insight entitled Next Generation Philanthropy noted a burgeoning culture of giving in both Latin America—where average annual wealth growth is expected to average 12.1 percent for the next five years—and in Asia, where the population of ultra-high net worth individuals is expected to exceed the U.S. by 2025.

[Excerpted from WealthManagement article, by Betsy Brill and Michael Donovan]

International giving on the rise

One of the most notable trends in philanthropy, according to the 2012 Giving USA Study of charitable giving, is that international giving has steadily grown despite a tumultuous economy.  For the past two years, 2009-2011, international giving has experienced a 15.2 percent growth, the largest increase across all of the subsectors the Study tracks and reports.

The growth in international giving can be attributed to many things: increasing digital access to global information, a growing number of international giving networks, and a heightened awareness of the interrelationships of global communities.

The Hudson Institute’s 2012 Index of Global  Philanthropy and Remittances shows that despite the recession, U.S. giving to developing countries actually increased to $37.5 billion in 2009, outpacing official U.S. government aid by almost $9 million.

[Excerpted from WealthManagement article, by Betsy Brill and Michael Donovan]

Making an impact even with a little

You don’t need a fortune to be a philanthropist. For example, you can:

Start a charitable fund. A number of community foundations let you funnel as little as $1,000 a year into donor-advised funds, and let you choose the recipient. You contribute cash, stocks or other property — and take a tax deduction for your contribution each year — until you reach a certain threshold, typically $5,000 or $10,000.

Give to a classroom. What better way to spend your charitable dollars than to help teachers help kids? At DonorsChoose.org, you get your pick of teacher-proposed projects. DonorsChoose makes the purchase and sends it to the teacher.

Volunteer on vacation. Use your next vacation to give something back.

Or you can be an angel for as little as $100: Upstart allows you to give money to entrepreneurial college graduates. You can invest in $100 increments in one “upstart” or as many as you choose. You’ll receive a modest portion of the company’s income — up to an annual rate of return of 14.99 percent — for 10 years.  You can also contribute to projects through Kickstarter, which focuses more on creative individuals who want to raise money to produce films, music and art.

Fiscal Cliff Tax Deal expected to boost Charitable Giving

The income-tax provisions adopted by Congress to avert the year-end “fiscal cliff” will increase charitable giving by an estimated 1.3 percent, or $3.3-billion in 2013, according to a new Urban Institute analysis.

The boost will come mainly from the decision to increase the top tax bracket from 35 percent to 39.6 percent on income above $400,000 for individuals ($450,000 for married couples), the institute said.

Because the charitable deduction is tied to a person’s tax bracket, those donors will now save $39.60 in taxes for every $100 they give to charity. In other words, their gift will cost them only $60.40, down from $65 under the 35-percent rate.

People in the top 1 percent of income distribution will provide almost all of the higher giving, increasing their donations by an estimated 6.2 percent, the analysis found.

The study also took into account the decision to raise the capital-gains tax from 15 percent to 20 percent. That provides an additional incentive for people to donate stock or other property that has risen sharply in value. Not only will they escape the higher capital-gains tax, they will also get the bigger 39.6-percent tax savings on their gift.

Ponying with Hollywood to teach about Disaster Giving

Mike Rea, founder of Give2Asia, calls the 2004 Asian tsunami the “first global disaster of our time.” When he learned that Hollywood was producing its own retrospective (of sorts) on the tsunamis, he realized it was an opportunity for educating people about responding effectively in the wake of natural emergencies.

So Mr. Rea fast-tracked his plans for his “Tsunami Plus 10″ Project to coincide with last month’s release of The Impossible, a film starring Ewan McGregor and Naomi Watts.

His goal is to help inform disaster philanthropy. Mr. Rea’s takeaways, in broad strokes, are relatively simple:

* Make gifts not only to the Oxfams of the world but also to community groups.

* Give “when emotions are high,” he suggests, but also later—six months or a year after the disaster, when it becomes clearer which nonprofits are doing an effective job and still need cash.

* Write checks; don’t send used clothes.

IRA charitable rollover still an option

As part of the “fiscal cliff” deal, Congress has resurrected a popular tax-law provision, known as the “IRA charitable rollover,” that had expired at the end of 2011.

The rule allows many investors 70½ or older to transfer as much as $100,000 a year from an individual retirement account directly to a qualified charity without having to count any of that transfer as taxable income. The transfer, if done properly, counts toward the taxpayer’s required minimum distribution for that year.

And there still is time for some people this month to take advantage of the rule for 2012. “Charitable rollovers can be made in January 2013 for 2012, and individuals who took mandatory distributions in December 2012 can donate that money to a public charity and not have the distribution subject to tax,” according to Independent Sector, a Washington-based nonprofit, nonpartisan coalition of charities, foundations and corporate philanthropy programs.

According to a Senate Finance Committee document, the law is scheduled to “sunset,” or die, at the end of 2013. What will happen after that? That’s anybody’s guess.

The IShack betters conditions in slum settlements

As you approach the simple dwelling, a rooftop solar panel, an outdoor security light and a roof overhang make Nosango Plaatjie’s shack stand out amid the sprawling cluster of makeshift wooden structures and rusty corrugated iron dwellings where her neighbors live.

Welcome to the iShack, or improved shack, an innovative approach to housing that’s being tested in the windswept slum of Enkanini, just outside Stellenbosch, South Africa. The dwelling, developed by researchers at the University of Stellenbosch, is intended to raise the living standards of slum residents while improving their access to electricity and protecting them from extreme temperatures in an environmentally friendly way.

The iShack prototype is occupied by Plaatje and her three young children. It is fully equipped with a photovoltaic panel capable of producing enough electricity to power three lights, a mobile phone charger and an outdoor motion detector spotlight. Its windows are strategically placed to achieve better air circulation and sunlight heating, while the roof is sloped so that rainwater can be harvested during the winter months.

Plaatjie, a domestic worker employed once a week, says her family’s life has improved a great deal after relocating to the ecologically designed iShack. Their previous home was a cold, damp shack hastily put together from disused pallets and corroded zinc sheets.

62% of the urban population in Sub-Saharan Africa lives in slums, typically characterized by deplorable living conditions, a feeling of insecurity and inadequate infrastructure for basic energy, sanitation and water services.

Excluding the solar power system, the iShack costs about 5,600 rand ($660). And thanks to a grant by the Bill and Melinda Gates Foundation, the iShack project will be trialled over the next year.

 

Wooing Millennials

Donate.ly, a new, open-source funding platform for nonprofits, wants to make it easy for any charity to show donors where their money is being used and let people create personalized fundraisers. Calling the platform a Kickstarter for charities, Donate.ly founder Javan Van Gronigen believes such detail and customization is key to appealing to young people brought up in the information age.

“Before our generation, you saw my parents would be like, ‘Oh, we want to give to the Red Cross,’” he says. “My generation would say we want to give to education or to fighting child slavery. Now it’s going even deeper and the next generation is saying, ‘I want to save that person right there.’”

Compelling narrative also plays a key role in wooing many donors, particularly young people. A survey of more than 6,000 people between 20 and 35 for the Millennial Impact Report found that 42% chose to donate to “whatever inspired them at the moment.”

Invisible Children, a nonprofit focused on stopping the abduction and use of child soldiers in central Africa, struck viral gold with young people last March when it released Kony 2012, a dramatic 30-minute short film about Ugandan war criminal Joseph Kony. The video racked up 100 million views in less than a week and helped the organization double its revenue year over year. Van Gronigen’s nonprofit-focused creative studio, Fifty and Fifty, devised the marketing scheme for Kony 2012.

The economic impact of American grantmaking

It’s hard to imagine life without the fruits of charitable giving in America, including hospice care, insulin, vaccines, civil rights, Sesame Street, the 911 system, and even white lines on roadways. These and other advances are among the products of philanthropy that support thousands of organizations serving millions of people every day.

Unfortunately, the broad importance of the sector and the size of its impact are not well known, including among public and elected officials … a particular concern as Congress and the White House debate the role of the sector.

Using established economic models, a new study from The Philanthropic Collaborative (TPC) examines how domestic foundation grants in 2010 ($37.85 billion) are contributing to job creation, wages, GDP, and tax revenues. According to the study, foundation grantmaking in 2010 helped create about 500,000 direct jobs for those hired to implement the grant. Within one year, the number expands to nearly 1 million jobs when the “ripple effects” are included.

The study also presents longer-term projections of economic benefits such as better health care, educational opportunities, and quality of life. In addition, the study connects foundation grantmaking to nearly 4.5 million new jobs through long-term benefits or 8.8 million jobs when including ripple effects.

To help specifically demonstrate benefits to communities, the report includes case studies that document long-term economic benefits from reduced costs of juvenile crime, health care and social services, greater employment opportunities for the disabled and homeless, revitalized urban areas, and advanced longevity and quality of life from medical cures and treatments derived from scientific research.

Other outcomes include improved worker education and productivity, as well as a thriving business environment given the importance of schools, hospitals, cultural organizations, and other charitable enterprises to a community’s ability to attract and retain businesses. Of course, philanthropic support for entrepreneurship and the ecosystem that supports it can be even more far reaching.

–John Tyler, chair of The Philanthropic Collaborative

Helping Americans better understand the impact of philanthropy

A message from Vikki N. Spruill, president and CEO of the Council on Foundations:

According to recent studies by the Philanthropic Awareness Initiative, only 1 in 10 engaged Americans can give an example of a foundation’s impact on an issue they care about. Yet 8 in 10 engaged Americans think it would be a loss for their community if foundations no longer existed.

This past year presented philanthropic leaders with the grave reality of how delicately the charitable sector hangs in the balance of broader national issues. For nearly 100 years our government has provided an incentive for American generosity, but as our country’s leaders grapple with finding fiscally responsible solutions, their decisions may result in limits on philanthropic giving. If we aspire to foster a more philanthropic society, more Americans must understand our sector’s role and the impact of our work in communities around the globe.

Americans recognize the importance of philanthropy but they cannot readily identify it. It’s time for philanthropy to take a more proactive role in promoting our collective impact. We should come together on behalf of the broader causes we champion to build more awareness among Americans about the impact and opportunity our daily work fuels in communities across the globe. We must replace organizational and transactional communications with a collaborative strategy about our impact and encourage each other to apply our individual strengths and expertise collectively in the search for solutions to social problems.

If we can increase the visibility of our respective issues and build awareness of how we collectively advance them, more Americans will understand the role we play and will reaffirm the strong tradition and future importance of the charitable sector. We will have a clear sense that we are putting issue priorities ahead of organizational ones and are creating a better world.

The Effect on Philanthropy of Fiscal Cliff Aversion

Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8) in a deal to avert the fiscal cliff. The following provides pieces of the bill relevant to the philanthropic sector.

  • The charitable deduction will continue to be coupled with an individual’s or household’s corresponding tax rate. In other words, there is no cap on charitable deductions.
  • The tax rate will be increased to 39.6 percent for individuals making more than $400,000 a year and households making more than $450,000. The previous rate for those earners was 35 percent.
  • The estate tax will have a $10 million exemption for couples, $5 million for individuals, and a top tax rate of 40 percent.
  • The bill extends the IRA charitable rollover through December 31, 2013. This provision permits tax-free distributions to an eligible charity from an IRA held by someone age 70½ or older of up to $100,000 per taxpayer, per taxable year.
  • The provision includes two transition rules to allow donors to make 2012 contributions. First, the extension allows individuals who received an IRA distribution in December 2012 to elect to count that distribution (or a portion thereof) as a 2012 IRA charitable rollover if the individual transfers the amount in cash before February 1, 2013, to an eligible charity. Additionally, the extension allows donors to make distributions directly to eligible charities before February 1, 2013, and elect to have such distributions treated as qualified charitable distributions in 2012. This change may be of particular benefit to donors who would like to take advantage of the rollover in both 2012 and 2013.

In 2013, itemized deductions for higher income taxpayers will be reduced by the lesser of (1) 3 percent of the amount by which the taxpayer’s income exceeds $250,000 for individual filers, $275,000 for heads of households, or $300,000 for married couples filing jointly (these amounts are adjusted annually for inflation) or

(2) 80 percent of the value of the taxpayer’s itemized deductions. This reduction of itemized deductions is referred to as the Pease Limitation.

Source: Council of Foundations

Non-profit trends for 2013 and beyond

Nell Edgington predicts these non-profit trends:

1. More Demand for Outcomes – A growing demand for nonprofits to 1) articulate what results they hope their work with achieve and 2) track whether those results are actually happening. This increasing focus on nonprofit outcomes is leading to the 4 other trends:

2. Decreasing Emphasis on Nonprofit “Overhead” – The good news is that more and more people are coming to realize that you can’t just invest in programs without the staff, infrastructure and fundraising to make those programs happen.

3. More Advocacy for the Sector as a Whole – Instead of  a fractured grouping of organizations of various sizes, business models, and issue areas, … we will start to see the sector organize, mobilize and build confidence.

4. Savvier Donors – Because nonprofits are getting more savvy, donors are as well. They are starting to recognize that nonprofits cannot exist on revenue alone, but must have infusions of capital every once and awhile to strengthen and grow their staff, technology, systems, and fundraising.

5. Increased Efforts to Rate and Compare Nonprofits – We will increasingly evaluate nonprofits based on the results they achieve, not on how they spend their money, which requires a whole infrastructure for evaluating and rating nonprofits emerges.