A blog by Grant Montgomery, co-founder of Family Care Foundation, a 501c3 that provides emergency services and sustained development for communities, families and children on 5 continents. Articles and commentary on Philanthropy, Global Aid and Development.
Forbes Insights and Credit Suisse conducted a study of some of the world’s wealthiest to gain deeper insight into their motivations, strategies and financial philosophies. The research shed light on the total lifecycle of philanthropy — from the moment an individual first decides to use his or her fortune to do good to the legacy he or she plans to leave behind — and the spirit of giving they hope will live on in their descendants.
Those who participated in the study bring the same tenacious, pragmatic approach to giving away their wealth as they brought to amassing it in the first place. This makes sense; when you get right down to it, business and giving are not really all that different. Both require a results-driven approach, a strong strategic vision, the ability to surround oneself with the right team for the job and the understanding that the biggest risks most often result in the biggest rewards. Fifty-three percent found applying their business experience to their philanthropy an effective and successful approach to giving – a sentiment that only increases with wealth.
More of the wealthy respondents partner with businesses (40%) for their philanthropic endeavors than with government agencies (22%) or other non-profits (28%). Eight in 10 of the wealthiest preferred to give to early- or growth-stage endeavors, rather than the more established organizations. Why allow yourself to get snagged in the stickiness of so much red tape when you can use other channels to move more quickly?
But what surprised us most in our Forbes Insights study was not just the scope and scale of the wealth they plan to disburse, but how quickly they plan to do so.
And more than half – 54% — of respondents to the study planned to leave more than a quarter of their assets to charity. Close to half of those with more than $20 million in investable assets plan to leave half or more of their wealth to charity; nearly 1 in 5 of those with over $50 million in investable assets plan to give it all away. A massive level of giving, to be sure – but those with the greatest amounts to give planned to give it away the fastest.
Many of America’s biggest nonprofits have officially left the Great Recession behind, but the slow economic recovery continues to dampen results at even the most sophisticated fundraising organizations.
The 400 groups that raise the most from private sources achieved a median 7.5-percent gain last year. That’s much better than for the rest of the nonprofit world: Giving USA said charitable giving over all grew less than 1 percent last year.
But the outlook among the top 400 charities is far less optimistic for 2012, with nonprofits forecasting a median gain of less than 1 percent.
The new normal — nonprofit organizations are going to have to do more with less. Sad, because the needs are great, and the funding is challenging for a lot of not-for-profits.
Although total charitable giving is rising from the pits of the 2008 recession, it’s doing so at an agonizingly slow pace and has yet to reach pre-recession levels.
In fact, last year, corporate donations dropped by 3.1 percent, adjusted for inflation, which cut into the slight gains in personal giving. Many charities, as a result, have cut staff or put added pressure on remaining employees to raise funds. Some workers, and even donors, are feeling burned out. Many nonprofits also are increasingly relying on volunteers to fill the gap in resources.
In 2010 and 2011, U.S. charitable giving grew only by an inflation-adjusted average of 1.8 percent nationwide — making it the second-worst recovery following a recession in 40 years, according to a report by the Giving USA Foundation and Indiana University’s Center on Philanthropy.
If giving continued to increase at that rate, it would take 10 years to reach the amount donated in 2007.
Mads Kjaer of MYC4 commenting on the Grameen Bank being taken over by the Bangladeshi government, and ousted Nobel laureate and micro finance pioneer Muhammed Yunus:
Microfinance of 20 years ago is completely different from what we have today. Actually, what Yunus started was micro-credit and now we have microfinance (that offers a whole range of other financial products & services). Microfinance has grown to such a level that it cannot go unnoticed by governments. And that’s why in the last decade, there has been a wave of regulation and licensing of MFIs and the industry has evolved from donor and government programs to commercial ventures primarily driven by the private sector.
Microfinance Institutions are currently holding a lot of financial resources in both credit and savings and if not properly managed and controlled, they can be cause a risk to the financial sector. Microfinance has therefore evolved as an industry and moving forward we should see professionalism and proper ownership and governance structures in place.
The case of Yunus could have had a political angle to it but the fact the government could not give him exemption to remain a director being over-age, is a manifestation that microfinance has outgrown its “founding fathers” and emerging as a professional industry.
History often repeats itself; in our western culture we seem to forget that we also used to have thousands of small savings-credit and cooperative institutions/banks that over time were merged, acquired, and grew to large financial institutions of today like Chase.
The International Day of the Girl (October 11th) is meant, according to the United Nations, “to help galvanize worldwide enthusiasm for goals to better girls’ lives, providing an opportunity for them to show leadership and reach their full potential.”
One of the biggest returns on investment for people and the planet is supporting the health of women and girls.
In short, progress in developing nations is directly linked to women’s empowerment in all forms.
In microfinance, crowd-sourced ventures have aimed at connecting first world capital with developing world opportunity – and with some success.
Mads Kjaer and Tim Vang co-founded MYC4 which works to connect online investors with entrepreneurs in Africa. MYC4 was founded using a Dutch auction method for retailing loans to small and mid-sized businesses in developing countries – a crowd-sourced for-profit micro finance company with an initial presence in Africa.
Since they started five years back, over $20M has been invested in over 10,000 loans. These funds have come from over 19,000 investors/lenders. The biggest challenge facing MYC4 at the moment is lack of adequate liquidity to fund all the loan requests. This year alone, over $1M worth of loan requests has not funded. At the moment, MYC4 requires an increase of investors/lenders with a short term year end funding gap of $1M in new liquidity to fund growth.
Says Mads, “Africa is no longer a basket case but a business case. For decades, highly subsidized credit and grants have not helped African businesses grow but has often created a dependency syndrome.
“What we are learning now is that small businesses that are looking for capital to grow can pay market rates of interest. Their major concern is reliable and continuous access to rightly priced capital. Through the Dutch Action on MYC4, businesses have an upside of receiving cheaper funds than they were initially willing and able to pay. We have seen to type of investors/lenders; social and for profit and the Dutch auction accommodates both.
“The on-going transformation in microfinance means grants and subsidies are a thing of the past and commercial sources of funding will continue to be the major source of funding.”
The Chronicle of Philanthropy reported on a new study from com.Score that shows that more than 13% of webpage visits this past August were made on a tablet or mobile phone. That means that one in eight page views now comes through mobile platforms.
Doesn’t seem like that much? Well, just consider that mobile viewing has more than doubled from just a year ago. That certainly squares with recent data from Pew Research that half of U.S. adults now connect to the Internet with a smartphone or a tablet and more than 60% of them access news on their smart devices at least weekly.
Nonprofits certainly need to respond to this trend by making their websites more mobile friendly. Some tips from that article include:
• simplifying your website so that it is easier to read on mobile devices and to take actions, such as donating.
• investing in a separate website just for mobile or in technology that automatically reformats your site depending on the device being used to access it.
• prioritizing mobile access of your main website before creating specialized apps.
Jakob Nielsen explores some of the options too, suggesting that mobile sites can’t be cut to the bone or users will be disappointed, but can’t include so much that usability is poor on the smaller phones and tablets.
About.com’s Guide to Web Design suggests “Don’t put your navigation first, even if that’s where it is on your main page. If you make the navigation too small it won’t be usable, and if it’s too large that will be all some mobile users see when they first download the page.”
The last time Central Park’s Great Lawn hosted a Saturday night concert, the year was 1981, and the total raised was $100,000.
A recent Saturday marked the first show since, and the results were 60,000 souls watch a lineup including the Foo Fighters, Neil Young, The Black Keys, Band of Horses and K’naan–and became the largest syndicated charity concert in online and broadcast television history, generating over $500 million in pledges to combat poverty around the world.
In fairness to Simon and Garfunkel, the Global Festival’s pledge total relies on individual philanthropists, governments and NGOs to keep their word and contribute aid. But it’s a staggering sum nonetheless, one that’s nearly enough, says Evans, to eradicate polio once and for all (that would be music to the ears of Neil Young, who suffered from the disease as a child).
“It’s so close,” says Evans. “It literally could be the legacy of this generation to see that polio is wiped off the face of this planet, and that’s what we’re committed to.”
The Global Festival, deliberately scheduled to coincide with the United Nations’ General Assembly, should boost efforts that halved the global poverty rate from 1981-2005, from 52% to 25%–and give a jolt to the international body’s Millennium Development Goals, one of which is to eliminate extreme poverty and hunger by 2015.
How might the world’s poorest continent go green? Kwabena Otu-Danquah’s job is to crack that riddle. The renewable energy czar for Ghana ranks among the handful of bureaucrats across Africa tasked with picking which forms of green energy might prove affordable on a continent where most people don’t pay for the electricity they sometimes receive.
Last year the Ghanaian parliament signed a pledge to derive 10 percent of the country’s electricity from alternative sources come 2020.
Sun? Forget it. Solar costs 40 cents to 50 cents a kilowatt hour, while Ghanaians pay just 5 cents to 10 cents for electricity from conventional sources. Wind? Too slow. Breeze ambles through this tropical doldrum at a leisurely average of five kilometers an hour (3.2 miles per hour).
That’s forced Ghana to consider a more imaginative set of choices. Among them, sewage. Flush with a $1.5 million grant from the Bill and Melinda Gates Foundation, local Waste Enterprisers Ltd. is building Ghana’s first “fecal sludge-fed biodiesel plant.” That’s longhand for cooking human excrement into generator fuel, Chief Operating Officer Tim Wade explains. The transformation would serve a dual purpose. Open sewers sweep 1,000 tons of slurry each day into the ocean off Accra. Outside the upland city of Kumasi, roughly 100 trucks dump tens of thousands of liters of septic tank sewage daily into what used to be a small pond.If all goes according to plan, next month one truck a day from Kumasi will dump its payload into a warm and massive vat that will skim lipids – fat – off the top. “That’s your biodeisel,” he explains.
At $7 a gallon, he can sell the muck to local mining companies, who are keen to buy because they too have been required by parliament to power 10 percent of their private electric plants from green sources. Normal diesel does sells a few bucks cheaper, he admits, “But we’re still optimizing the process.” If he can get costs down, Mr. Wade intends to build four plants in Accra and lecture sub-divisions back home in Colorado on the folly of treating their waste.
For the next generation of philanthropists, I don’t think they’re going to ask themselves whether or not they should work in the private, public, or non-profit sector. They’re simply going to wake up each day and ask themselves what impact am I going to make today.
The traditional model of a successful career and life was divided into three phases: we learn, earn, and then return. We went to school, got a job (and kept it for decades), and then at the end of our life we gave back from the fruits of labor.
Now, we can pursue both purpose and profit. There is a convergence between money and meaning throughout one’s life. For philanthropy this means that donors no longer are passive supporters, but are more engaged in creating the means of change they seek in the world. Donor circles, social entrepreneurship, impact investing, corporate social responsibility, crowd-sourcing are examples of this convergence.
The continued convergence of sectors will allow the next generation of philanthropists to focus even more on impact and not artificial distinctions between money and meaning.
–Blog excerpt by Omar Brownson, executive director of the LA River Revitalization Corporation