Vital needs don’t always attract vital support

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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

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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.

A cap on US charitable deductions

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House Majority Leader Eric Cantor (R-Va.) asks:

“Why would we want to put an impediment in the way of the charities accessing funding when the charities are the ones out there helping the people in need right now? It doesn’t make sense.”

Abolishing the Charitable Deduction will cost American charities billions

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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

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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

Tip on deciding on how much to give to an individual charity

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Most of us feel generous in December, the top month for charitable donations, reports the Atlas of Giving. But regardless of when you give, you want to make sure that the funds are actually used to do real good.

A 2012 study from the Chronicle of Philanthropy reports that the median amount American households donate to charity each year is $2,564. That’s a nice chunk of change, but not if you’re divvying it up among dozens of organizations.

“For every gift, there are fixed costs associated with stewarding and tracking it,” adds Patrick Rooney, director of the Center on Philanthropy at Indiana University. “So the smaller the gift, the larger the percentage that goes to transaction and administrative costs.”

Jason Franklin, who teaches nonprofit management and philanthropy at New York University and is executive director of Bolder Giving, a nonprofit focused on helping Americans give more effectively, suggests using the 50/20/30 rule: Half your giving should be focused on one charity — the gift you’ll spend the most time thinking about.

Then set aside 20% for small impulse gifts and the final 30% for institutions you support on a regular basis, like your alma mater or your church.

The impact of women on the global economy

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Organizations today would never think of not investing in high growth markets like China and India. Yet they are still dragging their heels when it comes to investing in women, despite it being a win-win situation for the global economy, organizations and women themselves. This is not just a human rights issue — it also makes absolute business sense.

There is much compelling evidence that women can be powerful drivers of economic growth. Estimates show that if female employment rates were to match male rates, overall GDP would grow significantly in developing countries like Egypt by a massive 34%.

The World Economic Forum also published their annual Global Gender Gap report — the data suggests a strong correlation between those countries that are most successful at closing the gender gap and those that are the most economically competitive.

Over the next decade, the impact of women on the global economy — as producers, entrepreneurs, employees and consumers — will be at least as significant as that of China’s or India’s one-billion-plus populations, if not greater. If women’s economic potential can be successfully harnessed and leveraged, it would be the equivalent of having an additional one billion individuals in business and in the workforce contributing to the global economy. It’s for this reason that Ernst & Young has been involved in the Third Billion global campaign, which unites governments, NGOs, corporations, youth and others to partner toward ensuring women’s access to legal protection, education and training, finance and markets.

Charitable giving is not just for the wealthy

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As year-end approaches, a reminder that charitable giving does not have to be just for the wealthy.

One example of this, a modest slice of the philanthropy movement, are “giving circles” in which like-minded people pool their money and give a combined, larger gift to causes they deem important.

One of those, the One Percent Foundation, aimed at those in their 20s and 30s, was co-founded in 2007 by Daniel Kaufman, 33. As the name implies, participants donate 1% of their annual income. Over conversations while at UCLA School of Law, Daniel and friends realized they rarely gave to any significant causes. “Most of us felt we couldn’t afford to give, didn’t know where to give or thought our donation wouldn’t have any impact,” Kaufman said.

“Part of it is getting people in the mind-set that they can do this. With rent, student loans, credit card payments, many [young adults] think ‘No way,'” said Kaufman. “But if you change that to giving $20 a month, now it looks like a couple beers or going to the movies and buying popcorn. It totally changes how they think about giving.”

Elfrena Foord, a certified financial planner and co-founder of the California Plan Your Giving Project, says, “Everyone can leave a bequest to charity of something. We want to change the idea that you have to be rich to leave money to charity.”

Charitable bequests, leaving something behind in their wills to a non-profit cause, certainly aren’t a new concept. And many people, especially at year-end tax time, routinely make financial donations to causes they care about.

What the fiscal cliff means to nonprofits and their beneficiaries

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The so-called “fiscal cliff” that’s looming over the United States will significantly impact nonprofits and the work they do if not addressed by Congress before year’s end, the cliff referring to the combination of tax increases and budget cuts hitting the country concurrently on January 1.

Legislators are also talking about removing some of the benefits to charities in the tax code. One example: eliminating or capping the charitable deduction.

So for many nonprofits, these spending cuts and less disposable income really means standing at the edge of a gravesite. And in many cases, people live or die by some of the services nonprofits provide.

Consequently, demand for the social safety net services that nonprofits provide will rise even higher than the sustained, elevated level it’s been at since the recession.

Gasifying waste to produce an alternative source of electricity for Africa and Asia

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Solar energy may not be a viable solution for much of Africa. Taking Ghana as an example, solar electricity costs 40 cents to 50 cents a kilowatt hour, while meanwhile Ghanaians pay just 5 cents to 10 cents for electricity from conventional sources. Wind is likewise not a viable option.

That forced Ghana to consider a more imaginative set of choices, among them, sewage. Dumping its payloads into a warm and massive vat that will skim lipids – fat – off the top to provide biodiesel.

But there are more sanitary ways to make a megawatt in Ghana. Kwame Tufor came home from Florida to liquefy Ghana’s coconut husks, cocoa pods, and palm nut shells into gas. But you’d need a lot of coconuts to turn a profit that way. Local farmers could provide their nut shells and cocoa pods for his incinerator.

But he and a business partner are eyeing an old paper farm the size of Brooklyn. Sometime between one 1970s coup and another, the owner ran out of money and political favor, abandoning acres of trees that were meant to be mulched into notepads 35 years ago. Mr. Tufor intends to saw those trees down, replant them, then burn the timber and compress the smoke into a biofuel using dated World War II technology that’s been dusted off by developing world power plants.

At least 10 plants in China now gasify coal this way, while farmers in the Philippines run irrigation pumps on generators that gasify rice husks.