Archive for the ‘Initiative: Charitable Giving & Accountability’ Category

Rethinking Giving

Tuesday, January 19th, 2010

Last week, Amy Feldman wrote a compelling article titled, “Rethinking Ways to Give Wisely,” in Business Week. It covered some important ground, addressing the “ad hoc” nature that drives so much of charitable giving in this country.

There is no doubt we are experiencing a welcome and overdue proliferation of both awareness and proposed solutions to the question, “Where did my donation go?” The article listed resources including Charity Navigator, GiveWell, Philanthropedia and GreatNonprofits – all are valuable resources and represent important steps to more effective giving. These rating services have come a long way and now offer a much more accurate picture of what exactly it is a given charity purports to do. Further, they now offer more details that enable a donor to tell if that charity is in fact accomplishing its mission.

The author also makes a statement that was the catalyst for the creation of Operation Kids Foundation and likely other versions of philanthropic advisories:

Baby boomers have become used to getting advice on their finances, yet there are few places to turn for philanthropic advice for those giving less than $1 million. While increasing numbers of people have set up donor-advised funds, which can be a smart financial-planning move, these vehicles don’t answer the question of where to give the money for greatest effect.

We seek to answer this question for donors.

There is an underlying fact to this subject matter that should be drawn out:  the reason that these “rating systems for charities” exist is because in this country, our generosity exceeds our options in terms of advice and planning.  Donors are surrounded by solicitations on television, in the mailbox, online and via radio-thons. This abundance of solicitations coupled with our busy lives and generous nature, has something to do with the “ad hoc” nature of giving.

One of the top reasons people give for making a donation is simply the fact that, “I was asked!” It is natural to give on emotion, or to respond to a solicitation from a trusted friend or family member. It is even more common to give in reaction to crisis or disaster. But all of these methods lack specifics; they lack a plan. When we give in this way we often give small amounts to many different organizations. We don’t have time to track every small gift and we accept the good feelings we earn through giving and leave it at that. These characteristics have everything to do with the disappointment and frustration that can accompany charitable giving.

In our capacity as a philanthropic advisor, we meet daily with donors who have taken the steps to create structured and sophisticated vehicles for amassing and eventually (or gradually) dispersing charitable dollars, but who have given very little thought as to the intended result. What issues do they intend to address? Is this a family effort? Do they want opportunities to involve children or grandchildren and perhaps visit the areas of the world they impact? Is their focus domestic, or health related, or educationally driven—there are so many choices and so many subsets to each choice. And in the face of natural disaster it becomes doubly confusing: Is the donor interested in immediate aid or long-term recovery? What do they know about the charities they are considering? Is there a delivery mechanism for the aid?  Does the charity fully understand the government, culture and community they seek to assist?

These questions often go unanswered and in one of the sad twists to charitable giving, can lead to frustration rather than the expected fulfillment. This is in sharp contrast to the alternative of planned, measured and leveraged giving; that may be a new term to some but it is the simple notion that if you care about an issue, it is very likely thousands of other people do as well; imagine the impact of your combined giving! 

With the situation in Haiti reviving feelings we came to know all too well during the Tsunami and Katrina, it is wise to consider how we give. It is also wise to seek out all of the information you can find abut the charities you are considering. But remember this:  At then end of the day, charitable giving is a very personal process. There are precious few resources that can personalize your giving with your vision and objectives in mind, but they do exist. The options that may be available to you depend upon your assets and structure. Some charge a fee. As far as we know, we are the only one who offers those services as a charity.

I can promise you this; once you make a fully informed donation to an accountable charity that demonstrates efficiency and shows measurable benefit, you will never go back to an ad hoc method of giving.  

-Rick B. Larsen

Back to Basics

Tuesday, January 5th, 2010

One could almost hear the collective “sigh” as 2009 came to a close. It was a difficult year to be sure, marked with equal doses of tangible challenges and the fear of the unknown just beyond our view. Our daily struggles were made that much more difficult by the uncertainty of what else may lie ahead.

This nation has been through at least a dozen recessions, a couple of staggering market crashes and a Great Depression. We have seen times like these before, but that is cold comfort to younger generations who may not yet realize that we have always emerged stronger from our trials. However, there is a significant difference in this current crisis that concerns me: it is the simple fact that we did so much to bring this on ourselves. For that reason, I feel there are lessons to be learned and for the future welfare of the children of this nation and the world, I pray we learn them sooner rather than later.

I do see glimpses of a “back to basics” philosophy that is rising from the excesses that helped bring us to this point: in my life, my neighborhood and the broader community.  I hear Dennis Haysbert in comforting tones, extolling the virtues of “a home cooked meal, time with loved ones; appreciating the things we do have.” In a recent Allstate spot, he goes on the say, “It’s back to basics, and the basics are good.” Incidentally, this is not a plug for Allstate, but I proudly quote Dennis because I know what a great man he is and that those lines are something he actually believes. Further  we have worked closely with the Allstate Foundation and I can tell you that Jan Epstein at the Foundation is one of the great souls on earth. But I digress!     

As one who seeks to address need on a daily basis, I consider lessons we have been forced to learn in 2009 to be worth learning and long overdue. But my fears are twofold: first, lessons are all-too-easy to forget: when gas hit $4.00 a gallon, we were all suddenly conservationists and the predictions were bleak for SUVs and other giant forms of transportation. The talk was all about hybrids and smaller cars and transportation rather than vehicles that show our status. However, within weeks of price moderation, it proved to be a short-lived lesson.

Second, there may be some, perhaps many, who do not see any lessons to be learned. There are folks who see much of what has happened as someone else’s fault and therefore nothing they can do will make things any better. But try as we might to shift the blame, we cannot escape the fact that greed, impatience and selfishness has much to do with our dilemma - and it was not all corporate. Sure we were spoon-fed bad mortgages, but we as consumers used them to buy houses we could not afford, temporarily suspending all common sense. Available credit was, well, too available, but we still had the power as to how much we would use. And these complex financial instruments that defy explanation and have nearly wrecked the markets didn’t seem so bad when our individual portfolios were growing by leaps and bounds.

As economic indicators point to clear signs of recovery (albeit a slow one), I wonder if the pain has been meaningful enough to spare us from repeating this desperate scenario down the road. I realize that is a harsh thing to say and will not sit well with someone who recently lost their home or job, but on a more global societal scale, I think this is an important point because it is clear to me that those in need depend upon the generosity of those whose lives are more stable, more in tact. Children here and around the world, rely on the fact that there are those who can and will help them rise above their poverty and need.  This country has always been the stable, willing and generous source, for as long as I have been alive. It would be tragic to relinquish that role because of our own greed and selfishness.

As for us in the non-profit space, are there lessons to learned, specific to philanthropy? The answer here, from our perspective is again, “yes.” Just a few lessons that perhaps an advisory firm would be the first to notice:

Don’t let an ongoing donor turn into a line item on the budget.
Do not fail to appreciate ongoing donors because they have established themselves as reliable. Report, communicate, acknowledge and did I mention, report! Every day we meet with donors who express frustration over the fact that in the beginning, they could see the impact of their support with a given charity. But over time, the communication breaks down and the accountability tends to wane. This may go without saying, but in this current environment, we would all do well to take care of existing support rather than trying to generate new donors. Now more than ever, a charity needs to prove its value.

Do not assume your message is clearly understood.
While this applies to the previous issue, it is also different. One of the real challenges in the non-profit world is communicating a relevant message. In an economy where the “casual donor” is disappearing, we can no longer count on small donation based purely on personal relationships who may or may not understand your mission, but give anyway.

 Now is the time for charities to state their case, clarify exactly what it is they do, as well as how they measure results. Like the proverbial mechanic whose car is always broken down in the yard, we in the non-profit space sometimes becomes too preoccupied with mission and fail to take care of our own marketing and messaging needs.

Consider partnerships and joint efforts.
In the for-profit space, mergers and acquisitions, take-over’s and competition are a way of life. Those terms have rarely been applied to non-profit work because we feel so good about what we are doing and after all, it is charity!

I would reexamine that attitude. If there are other organizations that you would be better to partner with, join with or otherwise combine with, do so. So much overhead and administration in the charity space is needlessly replicated. Good intentions are not enough of a qualifier to start a charity and deserve the public trust. When you accept precious donated funds, you have a fiduciary responsibility and if you find your passion has turned into an unwieldy administrative and compliance nightmare, perhaps there is another way you can be part of the solution. Again, a possibly harsh concept but we need to be honest and admit that sometimes passion and even ego can get in the way of better judgment when it comes to charitable efforts.

As we emerge from this difficult period, it is worth asking ourselves, are we more compassionate? Do we care more or less…about those in need? Has the struggle made us tougher, or gentler? Have we become smarter through it all?

Would we actually consider spending less on a car, feeling that perhaps the money could be better used elsewhere? Do we look at the size of a house differently than we did before? Does the family inside matter more than the square footage? Could our recreational budgets be pared down just a bit, in favor of helping someone in need? Could we consider taking our name off the CEO line and providing our passion and talent to an organization that is delivering better results?

These are deep and potentially annoying questions that no one has the right to suggest. They are questions better asked of ourselves, and I am confident that there are those who are asking them. I hope these will be the next generation of leaders that will keep us from a past we do not want to re-visit.

-Rick B. Larsen