Tag Archive: Philanthropy

Community foundations gaining respect in Russia and Eastern Europe

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Throughout Central and Eastern Europe and Russia (CEE/Russia) and Western Europe, the same two characteristics are often cited when leaders describe what first attracted them to community foundations — the institutions are non-political and they are owned by the communities they serve.

While community foundations are now operating in more than 15 countries in CEE/Russia, they didn’t start developing until the 1990s — first in Slovakia, Poland and elsewhere. Former Soviet states, including Russia, were moved to develop philanthropic organizations that could support the civil society sector after international donors pulled out.

A common characteristic of community foundations in the region is their operational transparency — something unthinkable during communist rule and still viewed with skepticism, says Natalya Kaminarskaya. She is CEO of the Russian Donors Forum, an organization that represents 128 of the nation’s about 300-plus grantmakers of all kinds, including community foundations. “People still have a lack of trust in their neighbors, businesses, government officials and even non-governmental organizations (NGOs) in Russia,” Kaminarskaya said. “But things are slowly improving.”

In addition to residents’ opinions of NGOs moving “from negative to neutral,” she says, the Russian government is also changing the way it interacts with indigenous grantmakers. Five years ago the government made it easier for Russian foundations by allowing them to keep money in reserve from year-to-year for permanent endowments without having that money taxed, as had been done previously.Also, a new national law in Russia became effective in 2012 providing individuals with tax incentives for donations made to community foundations and other NGOs. While these same tax incentives are not yet available for businesses and corporations, Kaminarskaya says, she is hopeful that change also will come.

The real reason the world will remember Bill Gates

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William H. Gates, III, shall ultimately be remembered as the most significant person of his generation. It may not be for the reasons you think.

Bill Gates is eligible for consideration by virtue of founding Microsoft. For fourteen out of the fifteen years from 1995 to 2009 he was the richest person in the world. Such achievements, however, will likely seem small in the scope of history.

Consider the scale of the Gateses’ philanthropy.  The Bill and Melinda Gates Foundation through which their philanthropy flows is, according to Wikipedia, the largest “transparently operated private foundation in the world.”  Since inception, the Foundation has made grants of over $26 billion, including $15 billion in global health alone.

The annual giving of just the GlobalHealth program of the Foundation is about $800 million and approaches the scale of the United Nations World Health Organization.

A significant contribution to the Foundation was made by Warren Buffet in 2006, but most of the money in the Foundation has been provided by the Gateses. 

Gates is also famous for asking other billionaires to commit to giving away half their fortunes. Bill and his wife Melinda have committed to giving 95% of their fortune to charity over time; that is an astounding measure of generosity.

 

Donor-advised funds give you bang for your buck

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A popular route through which to make a significant social impact without the high costs or administrative hassle is through a donor-advised fund.

A donor-advised fund offers an individual the opportunity to create an easy-to-establish, low cost, flexible vehicle for charitable giving as an alternative to creating a private foundation or direct giving.

Donor-advised fund are managed by charitable organizations and are easy to set up, often with as little as $5,000. The tax benefits also make these funds popular. Individuals are allowed a federal deduction of up to 50 percent of adjusted gross income for cash donations and 30 percent for appreciated securities.

Aside from the tax savings and ease of establishing a fund, your buck has more bang. You’re pooling money with like-minded individuals, sharing the overhead expenses with all the other donors who support the charity.

There’s no magic grid for how to choose a fund, but with a little research, you can find one that matches your mission.

Weibo philanthropy in China

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Nine months after Ma Chunhua’s baby was born, she was diagnosed with leukemia. Ma, a low-wage worker in Hubei province, said she grew desperate, knowing her family couldn’t afford the chemotherapy and bone-marrow transplant needed to save her baby. So she turned to China’s online masses, tweeting pictures from the hospital and posting their plight.

Chinese citizens are increasingly depending not on their government nor officially sanctioned nonprofits, but on Twitter-like microblogs called Weibo for donations.
The emergence of Weibo philanthropy has been spurred on by widespread suspicion and exasperation among Chinese with their government’s decades-long stranglehold over the social assistance and charity sector.

Current laws prevent the existence of any nonprofit unless it is partnered with a government-related entity. Even then, such groups cannot raise money — a right reserved for a small number of government-controlled charities.

And for the ruling Communist Party — in the midst of a once-in-a-decade transition of leaders — the trend towards Weibo fundraising suggests a troubling disconnect. The fact that increasing numbers of citizens would rather donate to random strangers online than to state-managed charities points to a growing distrust in government institutions. And donations to official charities has declined over the past two years.

“Weibo is putting great pressure on the government because it shows that if they don’t solve basic problems they are responsible for like food and health, the people will solve it without them,” said Deng Fei, a former investigative journalist.

Andrew Carnegie the greatest philanthropist in history

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Andrew Carnegie, who died 93 years ago, remains a polarizing figure. He has been labeled a great industrialist by some, a robber baron by others. Even his unparalleled philanthropy — which continues to shape the American educational and cultural worlds to a remarkable degree — has sparked its share of criticism.

After immigrating to the U.S. from Scotland at age 12, Carnegie worked a series of low-wage jobs until landing a position as personal assistant and secretary to Thomas A. Scott, superintendent of the Pittsburgh division of the Pennsylvania Railroad. Scott, along with Pennsylvania Railroad President J. Edgar Thomson, taught Carnegie several valuable investing lessons. Among the most significant was how to exploit inside information whenever possible, which was legal at the time.

At 65, Carnegie sold Carnegie Steel and many of his other enterprises to J.P. Morgan for $480 million, netting $225,639,000 (about $6.5 billion today) for himself. Carnegie’s deal with Morgan would eventually make him the world’s richest man — significantly wealthier than anyone alive today. Carnegie “would be richer than the top six richest people in the world at the moment,” Evans says. “And he chose to give that away.”

Before his death in 1919, Carnegie donated $350 million to hundreds of organizations and individuals around the world. He funded universities, libraries and established pensions for professors and the workers in his mills. Still, not everyone agreed with the way he distributed his wealth. Contemporary articles and cartoons called into question his focus on higher education, which at the time was considered a luxury of the rich, as well as the extent of his international giving.

Puck magazine published a satirical cartoon in 1901 criticizing his founding of the Carnegie Trust for the Universities of Scotland. According to Carnegie biographer Peter Krass, the grand scale of Carnegie’s philanthropy also frightened many people, who thought it was anti-democratic.

Despite the divergence of opinion about Carnegie’s methods, the scale of his charity remains unrivaled. According to Anthony Marx, the president of the New York Public Library — which was founded with a gift from Carnegie — his legacy of giving is without equal, even compared with today’s most generous philanthropists. “Andrew Carnegie was, as far as I can tell, the greatest philanthropist in history,” Marx says. “The New York Public Library system was created by a gift of $5.2 million, which in today’s dollars is equivalent to $2.7 billion.”

–From a Bloomberg article by Kristin Aguilera

A new crowd emerging on the philanthropy beat

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There’s a young, up-and-coming crowd of entrepreneurs, philanthropists, donors and volunteers who aren’t entirely like their parents or their grandparents.

The rising so-called Millennials, or Generation Y, now in their late 20s and younger, may have the same passion, commitment and concern for their communities as their predecessors. But philanthropy experts said many of these young individuals want to take more “ownership” of a cause than Generation Xers, “traditionalist” baby boomers or the “Silent Generation” of givers who have mostly been satisfied with just writing checks to large umbrella organizations for the past several decades.

While the younger generation may not have as much financial capital as previous age groups, experts and studies indicate that many of these young individuals who do or will have money later in life want to have more of a stake in where and how their dollars are spent rather than blankly giving to an over-encompassing charity.

Young philanthropists are also more familiar with technology, armed with instantaneous “crowd funding” through smartphones, social media or websites like Kickstarter.com or Gofundme.com to have a global reach.

The generational differences, however, can sometimes become a “double edged sword” and has created new challenges for managing today’s philanthropic organizations at a time when many nonprofits are in desperate need of discretionary dollars, said Jeffrey Wilcox, a certified fundraising executive and president/CEO of the nonprofit consulting firm The Third Sector Company.

“What’s difficult for nonprofits is that [young] entrepreneurs who have a lot of money don’t like to give to a lot of processes that involve committees and a lot of people in decision-making,” he said. “They want streamlined decision-making and they want a larger voice in how their dollars are going to be used . . . The younger generation, at least in my opinion, sees a lot of things that the older generation has not made possible.”

Wilcox added that young individuals are branching out with their own endeavors, goals and philosophies with the technological know-how to “create a social movement overnight” rather than pandering to bureaucracies, boards and committees. While he said “due process” is still needed in today’s society, the obstacle for many organizations, Wilcox said, is to learn how to keep young people interested in philanthropy.

Would your organization have given Gandhi a grant?

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Here’s a thought-provoking question: Would your organization have given Gandhi a grant? How about Martin Luther King?

Speaking on the state of philanthropy, Dr. Bob Ross, the CEO of The California Endowment, said: “I shudder to think what would have happened if Martin Luther King, or Gandhi, or Cesar Chavez had submitted a grant application to us.”

He made this observation while discussing the ways his organization tries to push the boundaries on risk-taking while also being conscious of its mission, its appetite for risk, and the political and cultural climate in which it operates.

Generally, he said, foundations are very risk averse.

And of course, what impacted the audience was the thought that we could possibly pass on supporting someone who would go on to change the world in a really big way. Or that we already had.

A Paradigm Shift for Corporate Philanthropy

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Even before the Occupy Wall Street movement highlighted the role and power of corporate America in this nation’s wealth divide, according to researchers on corporate philanthropy, corporate foundation grantmakers felt “disconnected.”

It must be even more difficult since the occupiers targeted Wall Street and a spin-off, the 99% Movement, is marching on corporate shareholder meetings. Think of the quandary of corporate foundation staff: seen by the critics as factotums for a corporate agenda, seen from within their corporations as “do-gooders” perhaps not as connected to the “strategic” corporate agenda as bottom line-focused employees, and seen by themselves as people engaged, or wanting to be engaged, in philanthropy.

The researcher suggested corporate philanthropy is in that dreaded moment of “paradigm shift.” This is usually a term contributed by consultants and think tankers, but maybe it does apply in the corporate world as well.

Putting this in context:  “We need a new narrative about who we are, a narrative about value creation, how we’re creating more value for society.”

60 percent of Americans think that business is best equipped to solve our nation’s social problems, compared to a much smaller percentage who would turn to government.

[Excerpt of an article by Rick Cohen]