Building on New Foundations.
Sharing the wealth of the new economy--with a few strings attached.The March 2000 issue of Fast Company challenged entrepreneurs and venture capitalists who have benefited from recent initial public offerings to "commit a portion of their IPO stock to not-for-profit public causes of their choice; to join together to form organizations that will advance new-economy philanthropy; and to heighten the business community's commitment to sharing the benefits of the new economy." The magazine singled out several foundations that are already exemplifying its advice, noting that "this trend needs to become a movement.
And why not? In June 2000, Newsweek reported that Silicon Valley had already become home to 250,000 millionaires--adding 64 new ones every day. And that's only the largest of the smoking centers of concentrated wealth being stoked by our wired world.
Meanwhile, the Foundation Center, New York City, estimates that existing foundations dispersed $19.8 billion in 1999, 16.5 percent more than the previous year. The increase was the direct result of foundation endowments being pumped up by a strong economy and the infusion of personal contributions.
The center also reports that since 1980 the number of foundations has more than doubled--from about 22,000 to nearly 47,000. In the two most recent years, the number of grantmakers grew by more than 5,200. Russell Weigand, co-president and planned giving counsel, Campbell & Company, Chicago, and board chair of the American Association of Fundraising Council, Indianapolis, notes that Congress's extension of a window of time for full deductibility of gifts to foundations has had significant impact on the growth figures. These new grantmakers--primarily independent foundations--have greatly enhanced the long-term prospects for growth in giving, since many will receive their principal endowments across the next 15 years. Some of them are also changing the face of philanthropy--both in the ways they select grant recipients and the parameters they are setting for philanthropic success. In many cases, success-oriented entrepreneurs are questioning the low expectations of traditional funding and evaluation models, i mposing the same demands on their nonprofit grant recipients that they would on a start-up company.
Paulette Maehara, president and CEO, National Society of Fund Raising Executives (NSFRE), Alexandria, Virginia, says that the general view of philanthropy by the high-tech sector is different from the typical donor. "For example," says Maehara, "many of these donors view philanthropy not so much as a gift, but an investment. They want to see exactly how their money is being used and are expecting the charity to have concrete goals it can achieve. I think this new perspective will ultimately be positive for charities and giving, but we need to know more about expectations, habits, and the 'why' of giving." Robert B. Pamplin, Jr., recently named NSFRE's Outstanding Philanthropist for 2000, has pledged $50,000 to NSFRE to fund a study to learn more about the attitude of the high-tech philanthropist. NSFRE expects to announce the results of the study during National Philanthropy Day, November 15, 2000. Maehara acknowledges, "The high-tech sector is one of the driving forces behind our current economic boom. The need to develop a philanthropic tradition in this sector is critical in sustaining and increasing current levels of charitable giving. This study will not only give us some baseline information on how high-tech sector executives view philanthropy, but also raise awareness of the need for giving."
New ways of funding
The philanthropy spawned by the new economy is hatching new methods of both fund-raising and grantmaking.
Individual foundations. Not surprisingly, the high-visibility funding is coming from high-tech millionaires who are creating their own foundations. While we probably hear most about the Bill and Melinda Gates Foundation, Seattle--committed to preventing deadly childhood diseases and tackling other related global issues--other technology moguls are not far behind. For example, Pierre Omidyar, founder of Ebay, and his wife, inspired by a meeting of 40 newly wealthy couples at the home of Jerry Yang, founder of Yahoo, want radical results from their philanthropy. The May 1, 2000, Forbes article "The Radical Philanthropist" explains that the Omidyars hope that philanthropy can become as powerful an agent for social change as Ebay and the Web have been for commerce. "Like a venture capital firm," reports Forbes, "they are seeding a number of small causes in a style that has come to be called venture philanthropy. The Omidyars will give more money to charities that follow solid business plans and meet the Omidyars' benchmarks, such as creating earnings streams that sustain the nonprofit work."
Connie Winberry, executive director, Virginia Mason Foundation, Seattle, and vice president of the Virginia Mason Medical Center, which the foundation supports with money it raises through a number of venues and methods, is located in a major vein of the high-tech goldmine. By 1994, Winberry and her organization were already identifying young, retired Microsoft millionaires and cultivating relationships with them. "What happens in our community," explains Winberry, "is that a lot of wealthy, high-tech-industry, young retirees will pick us. They will shop the organization or hear of some project and then come to us and say, 'This is what I want to accomplish; I have some thoughts and definite opinions on how it can be done.'" Winberry finds that most new philanthropists are not interested in endowments or planned giving--they want immediate results from an instant project and are willing to support it with outright money.
Venture philanthropy funds. Wealthy businesspeople have often donated shares of company stock to support favorite causes. More recently, companies that have not yet gone public have been offering charitable stock options. While the size of the gift will ultimately be determined by the results of IPOs and ensuing stock value, stock options can add value to the nonprofit organization while developing within a new company a culture of "giving back" to society. (See sidebar, "Consider Their Options.")
Giving circles. The Philanthropy News Network at www.pnnonline.org/giving/newwave050l.cfm reports that some of the newly rich are pooling resources in support of organizations of mutual interest. Social Venture Partners, Seattle, for example, requires partners to commit a minimum of $5,400 annually for two years, and distributes the money to educational and children's programs throughout King County, Washington.
A variation of this funding model is practiced by the Entrepreneurs' Foundation, Menlo Park, California. Gib Myers, EF's chairman, established the foundation to encourage community reinvestment as an integral part of the entrepreneurial culture in the Silicon Valley/Bay Area. Nancy Glaser, EF's director of venture philanthropy, explains, "We focus on young companies, encouraging them to donate shares of their stock. The number of shares varies with each company, but it usually amounts to less than 1 percent of a company's outstanding shares." As of August 2000, 72 companies have signed up to participate. Of those, two have been acquired and 11 have gone public, generating huge gains that bring EF's value to more than $11 million in liquidity.
The foundation's goals are 1) to fundamentally change the culture of young companies to include community involvement as an integral component of their corporate responsibilities and 2) to help bring to scale those nonprofit organizations led by social entrepreneurs with bold ideas in the areas of education and youth development. Glaser adds, "EF intends to translate the extraordinary successes of the technology industry into a platform for long-term community investments and prosperity."
A new philanthropy model
Frank Huszar, vice president and western regional manager, Campbell & Company, has been consulting with nonprofit organizations for more than 19 years. Based in Los Angeles and consulting in Orange County, Silicon Valley, and Seattle, Huszar says clients accustomed to traditional philanthropy are trying to figure out the new group of entrepreneurial donors. "It's certainly fertile territory," says Huszar, "but we're on the learning curve when it comes to tapping into these funds." One observation Huszar makes is this: "I don't see a substantial amount of difference between the new breed of individual entrepreneurs who set up their own foundations and those who work through existing organizations or funding circles. Their behavior, interests, and approaches are quite similar."
What Huszar and others have identified, then, are the similar characteristics of what many are calling venture philanthropy. Interestingly, one of its earliest practitioners was far from Silicon Valley. The Robin Hood Foundation, New York City, was created in 1988 by Wall Street investor Paul Tudor Jones to help low-income families in the city. Early innovators of results-oriented philanthropy, the foundation's staff--many with degrees in business and accounting--seek to measure philanthropic outcomes much the same way as a company measures profits. "We perform due diligence on our projects that you can compare with that of the best investment houses," David Saltzman, Robin Hood's executive director, says. "We have a venture capital attitude toward charity. When we first started the Robin Hood Foundation," says Saltzman, "people thought we were completely unrealistic. Some said, 'You're asking for such specific results? What is that all about?'" The response came from both potential grant recipients and from other funders, says Saltzman. At the time, the field was dominated by professional philanthropists employed to distribute the wealth of someone who had died. "For the most part," says Saltzman, "they were intelligent and well-meaning people who trusted their gut instincts and did not feel a need to quantify results. Now there are many living donors. They want to apply the same principles to charitable giving that have made them successful businesspeople--and they want to see results in their lifetimes."
Years after the launch of the Robin Hood Foundation model, large numbers of entrepreneurial philanthropists are displaying the same characteristics.
Think big. Winberry's staff at the Virginia Mason Foundation asks this question of themselves when they begin working with an entrepreneurial donor: In a perfect world, what would this project look like? "And then we vision the project out," says Winberry. "When we consider a project with larger parameters, we then think about current and potential staffing for the program or area the donor may want to support. Factoring in our facilities plan, we think about how and where we might accommodate the project."
When the Entrepreneurs' Foundation first contacted Julien Phillips, executive director, Partners in School Innovation, San Francisco, he had already developed an aggressive five-year business plan for the organization. This isn't so surprising, as Phillips was partner at McKinsey & Company, and worked closely with Tom Peters and Robert Waterman in developing McKinsey's approach to facilitating outstanding organizational performance. "He's just the kind of entrepreneurial leader," says Glaser, "that we like to work with... who can bridge the nonprofit and for-profit worlds." But when EF began showing serious interest in supporting the group in a big way, "they looked at our plan," says Phillips, and said, 'Great plan, but it looks like you are financially constrained. What if you weren't? What would it look like then?' They were definitely thinking like venture capitalists, not like foundation staff."
Now, with the backing of a $325,000 grant from EF, Partners in School Innovation--which Phillips founded in 1993 to demonstrate what a well-run national service program could do--"has much greater potential than we've ever had before to improve educational performance of students in low-income areas," says Phillips.
Inta Morris, vice president for development, U.S. Civilian Research and Development Foundation, Arlington, Virginia, received notification earlier this year that the Bill and Melinda Gates Foundation had approved USCRDF's grant proposal to conduct a feasibility study. "We'd like to think," says Morris, "that it is the beginning of a several-step process with large impact." The study is intended to determine the possibility of working with Russia to increase that country's vaccine production capabilities (perhaps working with its former biological weapon scientists) to help in the fight against childhood diseases--a primary interest of the Gates Foundation, and in particular of Melinda Gates. "My sense is," says Morris, "that the people at the Gates Foundation see Russia and the former Soviet Union as not only having the same problems as much of the developing world, but as being part of the global solution." Morris and her team structured their grant proposal as a multi-step model. "We are finding it a good approach to start small, prove the concept, and then request increased levels of support," she says.
Demand accountability. "The beginning of the accountability," says Winberry, "starts well before we ever receive any funds. Once we have identified a prospective donor, a cross-functional team gathers information as quickly as possible. We'll brainstorm about potential outcomes before we ever have a lengthy conversation with the donor. The result is that we are developing internally within our office a mini pro forma plan from the time that we hear about the idea." Once Winberry's team has received an award, they orient the program to the initial amount of money received. "The outcomes," explains Winberry, "can be, for example, sponsorship of an educational seminar or the purchase of medical diagnostic equipment. Since the donor is likely to want to know how many people can access the program or how many patients are aided by the equipment, we must be prepared to report on those details."
Huszar and his consulting group are also seeing the importance of accountability from the outset. "We try to help our clients understand," he says, "that at the very beginning of the relationship they must have a clear definition of the outcome of a project, how they will measure the outcome, and how they will report the results to these new-economy donors."
For Phillips, the accountability and the performance measures that Partners in School Innovation had already built into their plans are being expanded by the relationship with Entrepreneurs' Foundation. "We're the only school reform organization in the Bay Area focused exclusively on high-poverty communities," says Phillips. "We link our assessments of children's reading levels directly to the school district standards." One part of Phillips's business plan that is relevant to the venture model is the organization's commitment to developing new, more high-impact services. "We don't see ourselves as just replicating the same program in more and more schools," says Phillips. "The foundation is investing in our potential and in our capability rather than just in our program delivery."
Move at cyberspeed. "I can't emphasize enough," says Winberry, "that when we prepare to undertake a project, we do the planning as fast as we possibly can. The potential donor can easily say, 'I don't want to take much time with process; I have an idea and either you're going to run with it or I'll find someone else who will.'"
At USCRDF, Morris was not expecting that her initial meeting, relationship building, and request for funding would be compressed into one interaction with a Gates Foundation representative in November 1999. "I was pleasantly surprised," she says. "But, it's not so easy now that the foundation is increasingly inundated with proposals."
Some of Russell Weigand's clients have had similar experiences. "The traditional way to approach fund raising," he says, "is to go through a series of steps: identification of the potential donor followed by the involvement, communication, and stewardship that lead to solicitation. Oftentimes the new entrepreneurial donors will skip all of those steps and go right to the gift."
Huszar also advises his clients to be prepared to move quickly, even though the history of the nonprofit sector is characterized by a reluctance to do so. At the same time, he says, "They must be sensitive to the agenda of the donor whose specific goal may or may not be consistent with the organization's interests. This creates a certain tension. While you take the time to try to massage the agenda to make it work, these folks could be out the door."
Be prepared. "With our model of philanthropy," says Glaser, "the recipient organization has to be ready to be our partner. We bring a lot of resources--pro bono marketing expertise, help with organizational strategies, technical assistance, and so on. This means that the organization must be beyond start-up and mature enough to be able to handle additional resources. If they don't have the people or the infrastructure, a project may drown them. So, like a venture capitalist, we analyze the infrastructure to make sure the level of readiness is sufficient."
In some cases infrastructure growth is gradual. At Virginia Mason Foundation, where fund-raising has grown from $1.5 million annually when Winberry arrived in 1994 to $15 million currently, staffing has steadily increased. Beginning with a staff of 8, Winberry says that by the end of 2000 she'll have 30 people in fund development. "We have staffed up in a couple of areas specifically to be able to handle these pop-up projects. If they don't come all at once, we are close to having enough people to handle them."
At Partners in School Innovation, the staffing up has just begun. "Our staff will double this coming year," explains Phillips. "At the same time, we'll not substantially increase the volume of our services. Since high-quality delivery of service is critical, this year will be one of developing staff capability and establishing new program initiatives in anticipation of a period of sustained growth over several years." Phillips also notes that developing the relationship with the Entrepreneurs' Foundation took so much time and attention (approximately 20 meetings during a nine-month period), that in the short term it slowed the organization's growth pattern.
Seeking or being sought
How, then, are organizations tapping into these new funding sources? Robin Hood Foundation's Saltzman explains that his organization encourages nonprofit groups interested in seeking funding to fill out a simple application "that we, along with 50 other grant-makers in New York City, helped to design. We review the applications to see if there are programs there that spark our imagination. Our mailbox is always open and there are some extraordinary programs that come to us in this way.
Saltzman estimates, however, that approximately 50 percent of grant recipients are pre-selected by the foundation through referrals and identification of effective program models that seem appropriate for replication. "One of our best sources is our [group of] current grant recipients," says Saltzman, "since they interface with so many other organizations that are doing good work." Robin Hood's teen pregnancy prevention program, which Saltzman describes as "an absolute home run," has been replicated at 50 sites in 20 states.
Regardless of whether the funding organization is more likely to self-select recipients or encourage grant proposals, nonprofit organizations can engage in certain activities--not unlike ones that work in more traditional philanthropy--that further their chances for selection.
Research. "If you've been working in the field of development in our community for any length of time," says Winberry, "you know the major companies that have many of the newly wealthy working for them. We begin recognizing their names and learning more about them through local business journals and other media. Then it's up to us to identify whether we already have a connection with them. We see if they have attended any of our events, whether they are treated by our physicians, and we use those means to develop relationships."
At USCRDF, Morris and her colleagues had been looking for ways to continue to do new and exciting things. Wanting to expand the organization's work in support of biomedical research, Morris recognized the well-defined goals of the Bill and Melinda Gates Foundation pursuant to immunization against childhood diseases as a likely match with the project USCRDF had in mind.
Relationships. As in traditional philanthropy, making a personal connection and building a relationship form one of the roads to success in gaining funding and support. "After we identify people whom, for example, our physicians may know, we then ask the physicians to help cultivate the relationships," says Winberry. "Perhaps they can informally introduce us so that we can talk about the kinds of activities in our institution that might be of interest to a potential donor, and so on."
Campell & Company's Weigand admits that making the connections can be a tough challenge. "The nonprofit organization needs to get its story out. When you're talking about people who are working 80-100 hours a week, inviting them to a dinner isn't going to work. One of the most likely ways the funder will respond is through a key board member, staff person, or even another donor who will contact them and say, 'I want to tell you something about an organization you should know about.'"
Hands-on engagement. Huszar is advising his clients to consider engaging would-be donors early in the process of developing a project. "I'm working with a client right now," he says, "who has been able to identify a couple of philanthropy-connected individuals who are excited about the client's educational mission. The group is convening its first meeting with these individuals with the goal of inviting them to act as an advisory group." By requesting input in the form of energy, expertise, and shaping of the project--as opposed to approaching a traditional foundation within narrow guidelines and funding priorities--the group hopes to gain financial support for their project as well.
For the Entrepreneurs' Foundation, the hands-on relationships are central to the philanthropy model. Explains Glaser, "After a new company has donated stock, we help them establish activities with the nonprofit they are supporting. For example, with Habitat for Humanity, the company might sponsor a house raising in which all their employees can participate. When a company adopts a school and its employees tutor once a week, volunteering becomes part of the corporate culture." EF is finding that not only do these ongoing activities have a longterm effect, but they often serve as effective team-building tools.
Donor stewardship. "Nothing replaces the appreciation and follow-up we do for all of our major donors, not just the newly wealthy," says Winberry. The development staff makes sure that donors are on all invitation lists to appropriate events, are invited to educational programs, and are provided a subscription to the medical center's magazine. They also send a lot of handwritten notes. "It's almost unheard of for people to write anything down in this electronic world," says Winberry. "A personal note is like a gift. Donors really appreciate what it takes to sit down and write something." Of course, Winberry says, "we do send a bit more by e-mail."
Implications for the future
Opinions vary as to the effectiveness of the venture philanthropy model--and whether it is really that much different from traditional philanthropy. Will a model based on higher expectations, more specific performance measures, and stringent evaluation be more effective than a model that tends to be based on trust that the receiving organization will "do good"? Weigand says, "Not necessarily. This country has many outstanding charitable organizations that are well established and that do outstanding work. In fact, some of those are attractive to the younger philanthropist. But some wealthy people are looking for their own way of making an impact--and not necessarily in a way that requires them to become entangled in a complex, and in some cases bureaucratic, organization. Just as they are impatient with their investments, new donors can be impatient with some of the social concerns that they are trying to address."
Winberry believes that the new philanthropy is just one element in the mix. "You still have planned giving, outright giving of large gifts, giving clubs, direct mail, special events, and so on. With an entrepreneurial donor, we simply have to deliver the accountability faster. While the new philanthropist is more interested in immediate results, there's no new magic."
Phillips holds another view. "Most [traditional] foundations make small investments in start-up organizations or fund program expansion to help the organization do more of what it already does. It's quite different when venture capitalists invest in our potential and in our capability. Yes, they expect program delivery. But they also expect a level of quality and a level of reach that we can only attain if they are willing to make a long-term commitment backed by a significant investment."
Saltzman, whose board members personally pay the bill for all administrative costs for the Robin Hood Foundation, believes that the attitudes accompanying each model are appropriate for what they each intend to accomplish. "We represent living donors who are anxious for results in the foreseeable future. When you are investing your own money, your friends' money, and money of other like-minded people who want to see results now, you act differently than when the money is bequeathed by a stranger who seems to have left a message about moving slowly and cautiously. We say, 'Why save money for a rainy day when it's pouring outside?' That's very different from the attitude of someone who walks into an established organization that has part of its intention as being around for a long time." Saltzman believes that if that stranger miraculously were to pop back into life, he or she might be shocked at the slow-moving bureaucracy that's been established. "After all," he says, "very few people have amassed the amount of money needed to set up a foundation without developing some kind of risk tolerance."
And speaking of the risk associated with the new philanthropy, Phillips thinks the jury is still out. "We are immensely excited about our newfound ability to take our organization to a new level--and everything the Entrepreneurs' Foundation has done so far indicates an appreciation for our knowledge of the nonprofit world and their intent to learn from us. But there's still a downside. The foundation could get impatient. They could demand a narrowness of results that we cannot adequately measure." In the business sector, Phillips points out, the primary measurement is stockholder value. "There's nothing comparable in the nonprofit sector," he says, "where assessment of a program may more closely resemble a Consumer Reports analysis of a product. You have multiple measures and different ways of looking at the product, but no one indicator tells you for sure which is the best car. It depends on what you value."
So will EF force Phillips's group into using one simple measure of whether schools are doing well--and whether Partners in School Innovation is doing well? "I don't think so," he says, "or I wouldn't have entered into this bargain. In the end we chose to take a risk because our partnership has an opportunity to make a big difference in education for poor kids. We think it is a risk worth taking and we have a lot of respect for the people we are taking it with. We are both new to this relationship and to this kind of philanthropy, and I'm reasonably confident and unreasonably hopeful. Time will tell."
The answer to the question of whether one model is best clearly lies somewhere in the future--and may in fact depend on the perspective of individual nonprofit organizations and their respective goals. Huszar's hope is that "there will he some kind of blending, a coming together on middle ground." He thinks that some of the change being driven by the new-economy philanthropists is good--measurable results, better performance, higher expectations--if they don't go overboard. "At the same time," he says, "we must all realize that the not-for-profit organization cannot be as bottom-line-oriented as a business. But we're too early in the process to see how it will all shake out. Maybe one day someone will convene a conference where both groups will come together. That would be fascinating."
Carole Schweitzer is associate editor of ASSOCIATION MANAGEMENT
Consider Their
COLLEEN MILLER
Although philanthropy has always been a way of American life, corporate philanthropy is a relatively new idea. According to F. Emerson Andrews, author of Corporation Giving (1993, Transaction Publishers), in 1952, U.S. corporations gave away only a few hundred million dollars--mostly in response to community fund-raising drives. Times have certainly changed, with corporations contributing close to $9 billion in 1999. Yet in the past decade, corporate giving has declined overall as a percentage of income. The Committee to Encourage Corporate Philanthropy, New York City, spearheaded by Paul Newman, estimates that in the mid-1980s, corporations gave nearly 2.5 percent of their pre-tax profits to charity. That number has now dipped below 1 percent, with about 75 percent of America's corporations still giving no money at all. While Newman and the committee would like to see companies donate at least 2 percent of profits annually, some companies and shareholders may not appreciate the way those kinds of costs impac t their corporate interests.
However, providing stock options to charitable organizations offers an exciting concept that can be an effective way for companies that are reluctant to part with cash or significant earnings to finance donations. Charitable stock options generally can be exercised for up to 10 years. During that period, the stock has a chance to appreciate, sometimes resulting in a sizable donation. At the same time, the donor company is allowed a tax write-off in the amount of the appreciation.
One of the most attractive features of this type of gifting is that in the instance of charitable stock options, the stock market, not the company, plays the more significant role in providing the equity that may ultimately pay the charity. This concept can benefit both longstanding companies and start-up companies, which often stand to realize huge gains in stock prices through initial public offerings (IPOs).
The concept is both timely and cost effective, allowing companies to give money efficiently and with benefit to all. The National Association of Stock Plan Professionals (www.naspp.com), Concord, California, has started advising its 2000-plus member companies to "join the club," suggesting that each time a company grants employee stock options, it also make a charitable option grant equal to 1-10 percent of the total granted to employees. Several law firms, including Boston-based Hale & Dorr, are introducing their clients to the concept of granting charitable options.
The Entrepreneurs' Foundation (www.the-ef.org), a nonprofit funding organization located in Silicon Valley, also encourages pre-public companies to give back to their communities in a big way. (See main article, "Building on New Foundations.") Its efforts have already resulted in the receipt of stock options from more than 70 start-up companies--contributions that the foundation then turns into grants to fund its various mission priorities. To expand its efforts, the foundation formed the Austin Entrepreneurs' Foundation in September 1999 (which already has received charitable stock options from 3D companies) and, more recently, the New England Entrepreneurs Foundation.
Aside from the overall value of charitable stock options, nonprofit organizations gain other value from working with entrepreneurial foundations. Paula Fracasso, executive director, Austin Entrepreneur's Foundation, says, "The foundation assists not only in creating a community service culture in new corporations, but we also help nonprofits in the management of their stock option proceeds." Fracasso explains that part of the foundation's mission is the handling of all management of the stock option gifts, including registering shares, advising as to when to cash out, and working through the lock-up period (a period of often 180 days or more during which company executives, employees, and nonprofit organizations may not sell their shares). At the end of the process, they turn over the realized proceeds to the nonprofit organization. "This saves the organization a huge amount of time and headaches," says Fracasso.
Habitat for Humanity's Silicon Valley chapter, San Jose, California, is one charitable organization that has experienced firsthand the new corporate philanthropy model. Bill Arnopp, executive director, says stock options came quite unexpectedly from benefactor Calico Commerce, San Jose, California, through the Silicon Valley Entrepreneurs' Foundation. "The donation of 750 pre-IPO shares to Habitat for Humanity was unbelievable." says Arnopp, "and at the end of the holding period (September 2000) we expect to own a significant gift."
The donation has motivated Arnopp and his organization to become more active in seeking out sources for charitable stock options. Information on the chapter's Web site and in the organization newsletter touts the benefits to corporations of the funding model. At the same time, Arnopp cautions nonprofit organizations to understand the volatility of the stock market as a factor in the shifting value of a stock position--and not to depend solely on such stock options for basic funding for the organization.
New wealth is being created in America at an astounding rate. Many believe it is the responsibility of corporate America to give back to the community. Some corporations are doing their best to satisfy their social responsibility while maintaining shareholder equity. Charitable stock options are an excellent tool to benefit both groups.
Colleen Miller is director of community affairs, National Association of Stock Plan Professionals, Concord, California. E-mail:cmiller@naspp.com
Pressure to Reform Increases on
Nonprofit Organisations
Even before venture philanthropy and its great expectations began to develop in a big way, pressure was building for nonprofit organizations to reform their management practices. At the same time, there is little agreement in the sector about which types of reform are effective, says Paul C. Light of the Brookings Institution, Washington, D.C. In his new book, Making Nonprofits Work: A Report on the Tides of Nonprofit Management Reform (April 2000, The Aspen Institute, Brookings Institution Press, Washington, D.C.), Light discusses the pressures on nonprofits to reform, the four prevailing tides of reform, and how the sector might make good use of the appropriate reforms.
In preparation for writing his book, Light studied (with support by the Nonprofit Sector Research Fund) models of management reform, drawing in part on surveys of nonprofit associations from 19 states within which 300,000-400,000 nonprofit organizations operate. According to the May 2000 issue of Snapshots, a publication of the Nonprofit Sector Research Fund, Washington, D.C., which presents Light's interviews with directors of 19 state associations of nonprofit organizations, "the need for reform is acutely felt by nonprofit leaders.... In particular, nonprofit organizations across the sector are responding to pressures to behave more businesslike; however, there is little consensus over which model(s) of reform are most appropriate for individual nonprofits seeking to become more effective, efficient, and accountable."
While Light does not endorse any one specific reform, be offers three recommendations to help nonprofit organizations weather the tides of different, and sometimes competing, reform initiatives.
* KEEP CLOSE TO WHAT IS KNOWN TO IMPROVE ORGANIZATIONAL PERFORMANCE. At the same time, more research is needed to establish which management practices are effective in the nonprofit setting.
* RECOGNIZE THE COST OF CONTRADICTIONS ACROSS THE REFORM MOVEMENTS. Nonprofit organizations will not help themselves by embracing reform fads as their popularity increases or fades away. Light says, "They must set priorities carefully and invest their scarce reform energy on a handful of priorities."
* EMPHASIZE CAPACITY BUILDING IN ORDER TO FOSTER ACCOUNTABILITY. Light explains, "Without capacity building, reformers merely end up reporting the obvious over and over."
Resources
* CHRONICLE OF PHILANTHROPY. The Web site, www.philanthropy.com, features a guide to grants. Note that you must be a subscriber to access the fund-raising pages.
* COMMUNITY RESOURCE INSTITUTE. Offers links to corporations and nationwide foundations at www.granted.org.
* INDIANA UNIVERSITY CENTER ON PHILANTHROPY. The IU Center on Philanthropy has released the fourth Philanthropic Giving Index that reveals current trends and future expectations in American philanthropic giving. An executive summary is available at www.philanthropy.iupui.edu/studies.htm.
* FOUNDATION CENTER. Provides a comprehensive list of links to the Web sites of company-sponsored private foundations and direct corporate giving programs at fdncenter.org/grant.maker/gws_corp/corp.html.
* INDEPENDENT SECTOR. The Web site, www.independentsector.org, provides links to corporate giving programs. From the home page, select "Member Profiles" on the left navigation, then click on "Corporate Foundations and Corporate Giving Programs."
* THE NATIONAL SOCIETY OF FUND RAISING EXECUTIVES. The NSFRE Fund Raising Resource Center maintains a collection of over 3,200 works.
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| Author: | Schweitzer, Carole |
|---|---|
| Publication: | Association Management |
| Geographic Code: | 1USA |
| Date: | Oct 1, 2000 |
| Words: | 5919 |
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