Back to the Future of Philanthropy

I received a kind email from Erik Anderson, of the Donor Dreams Blog, suggesting I take on the subject of The Future of Philanthropy for this month's nonprofit blog carnival. Easy peasy, right? Well maybe not.

In Erik's call for Future Philanthropy blogs he links to a TED Talk from 2007: Katherine Fulton on You are the future of philanthropy. I've watched the video a couple of times now, and Ms. Fulton makes some great points on several philanthropic trends (and I recommend you also watch it), but it didn't really help me answer the question of what I viewed the future of philanthropy to be.

Ms. Fulton begins her exploration with the establishment of the modern foundation form in the U.S. at the end of the 19th century by the Rockefellers, Carnegies, et al, but, indeed, the concept of philanthropy goes back to ancient Greece, meaning "love of humanity," and encompasses the giving of time, heart, and soul, as well as currency.

Even the story of "modern philanthropy" predates Rockefeller by at least 150 years, with the establishment of the Foundling Hospital in London. Established for the "education and maintenance of exposed and deserted young children," the Foundling Hospital is considered by many to be the first modern charity.

Wikimedia Commons

Not long after, "a group of London merchants and gentlemen" met to "discuss a plan to supply two or three thousand seafarers for the navy," founding the Marine Society. They, of course, sought sponsors and donors to support their efforts. Certainly that qualifies not only as philanthropy, but as professional fundraising, and maybe even crowd-funding.

Ms. Fulton references Warren Buffet, and another of her slides bears the image of Richard Branson, but what really differentiates these modern philanthropic leaders from Rockefeller and Carnegie, or even from the gentlemen who founded the Marine Society? Is it their motivation, is it their philosophy, or is it their tools?

Ms. Fulton describes the philanthropy of 100 years ago as "closed-small-slow-fragmented-short" and contrasts that with the "open-big-fast-connected-long" world of today's philanthropy.

"Closed-small-slow-fragmented-short" may seem a somewhat apt description of old philanthropy from today's perspective, but there's no evidence that it was seen as such in 1905, or that it was meant to be "closed-small-slow-fragmented-short" by intentional design.

What draws that comparison is not any change in the concept of philanthropy, it is all about the tools. 120 years ago, Andrew Carnegie building libraries across America was very open, connected, big,  long, and somewhat radical (okay, it probably wasn't "fast," but what was then?). Today his approach might be to distribute iPads to students instead, but his philanthropic ideals would likely be the same.

Even the much vaunted "democratization of philanthropy" is nothing new. If you read my blog, you know I absolutely love crowd-giving sites such as Benevolent, etc., but at their core, they are simply using new tools to expand upon the giving circles of previous decades that were, themselves, just updates of the old mutual aid societies that go back at least 250 years.

I guess what I'm saying is, the impulse to philanthropy is as old as society itself, and that the forms it takes always includes both, the "small and informal" (mutual aid to crowd-funding), and the "large and influential" (Carnegie to Gates). What evolves are the methodologies and tools.

There are certainly trends - I've lived through several: money for technical assistance, money for programs only, highly focused outcomes, more data, less data, forcing mergers, encouraging cooperation, and a few others - but those are changes in bureaucracy, not philanthropy.

So, I suppose my predictions for the Future of Philanthropy are as follows:

• New developments in technology - particularly communications technology - will continue to drive changes in how nonprofits and donors discover each other and build relationships.
• Trends in giving will continue to be driven by "thought leaders" emerging out of the currently dominant business sector (IE: Carnegie's steel then, Gates' high tech now).
• Despite the attention given to the "thought leaders" above, the real work of creating social change and improving the lives of ordinary people will always come in the form of peer-to-peer giving and assistance.
• Solutions-based philanthropy will continue to lose out to empathy-based charity (IE: eliminating poverty versus assisting the poor) as long as total giving remains at only 2% of GDP.

Solve that last problem, and then we can talk about real change and a brighter future.

Return to blogging (part two)

Yesterday I apologized for not having posted for a long while, and put the blame on two factors: being very busy, and doing a bit of soul searching. Yesterday's post covered the busy part. Today I'll tell you a bit about what I've been thinking about.

I've now been an Interim Executive Director three times, and it's always interesting, but this last assignment went on for so long (nearly a year-and-a-half) that it became in many senses more like a "real job." So the assignment ending hit me in surprising ways. There is a very real sense of loss and emptiness, much like if a "real job" had unexpectedly come to end.

I'd already been examining my consulting practice and coming to the conclusion that writing grant proposals for a variety of organizations is not how I want to spend most of my time, and have been eliminating those assignments from my client list. For a variety of reasons, I feel that outside consultants can best serve an organization by giving them the knowledge to write their own proposals, and help on a limited basis. I have come to hold the belief that a nonprofit agency that completely outsources it's grant writing is making a strategic error, and probably not getting the best value on their investment, versus building that skill in-house.

So, with no more grant writing clients, and my long-term assignment coming to an end, I've had time to think about "what I want to do when I grow up." The basic options being: continue as is, just with fewer grant writing assignments; look for a "real job" as an Executive Director or other nonprofit leadership position; or "go corporate" and get a "real job" on the other side.

After a little exploration, and talking to several people about different options for me in the for-profit world, I've come to the obvious realization that it's just not for me. I am a nonprofit guy through and through. This was an exploration I had to go through (for the elusive dream of more money and a better retirement plan, etc.), but it was a silly idea.

But I did enjoy that last Interim ED position, and I do miss it more than I expected to. And so, while I'll continue to take some limited term consulting assignments right now, I think my long-term plan is to find a permanent Executive Director (or other senior leadership) position in the nonprofit sector.

Meanwhile, I'll get back to blogging, and shift back from "contemplative mode" to "active mode." I've been sent a great new book, Grassroots Philanthropy: Field NOtes of a Maverick Grantmaker by Bill Somerville and Fred Setterberg, that I'll be reviewing shortly too.

Thanks again for your patience and support.

Consultants Blog, Stardate: September 2017

Fellow nonprofit blogger, Gayle Roberts, has suggested that I look into my crystal ball and give you a posting from ten years in the future. Pass your time travel boots through the x-ray machine, buckle your space belt, and join me on a journey to 2017...

Remember back in 2007? Back when all the 'experts' were warning of the coming nonprofit leadership shortage? Executive Directors were aging and retiring, and everybody was worried that the next generation wouldn't provide enough people willing and able to take their positions.

Well, as usual, the experts got it about half right. There certainly were far less people able and willing to head nonprofit agencies after about 2010, but it was never a problem. The trend of nonprofit mergers and bankruptcies more than kept pace with the loss of baby boomer leadership.

The rate of consolidation continued till just a few years ago when California bottomed out with only 126 officially sanctioned nonprofit organizations left in operation, and most of those were universities and hospitals.

Of course the drying up of foundation money had a lot to do with this transition as well. Yes, it's hard to remember now, but there was a time when private foundations were one of the major forms of support for many nonprofits.

At one time, the IRS required foundations to spend down at least 5% of their endowments each year in grants (and "other expenses"), an arrangement that put a certain amount of money out to the nonprofits, but still allowed for them to become perpetual giving machines, if they so chose.

Starting in the mid to late 00's there was a growing trend towards foundations deciding to spend out their endowments in the founder's lifetimes. Then, still in her first term, President Clinton was alarmed at this spend down rate and declared that foundations could do more for the public good by keeping their endowments "working for America" by staying invested in the stock market.

The resulting legislation lowered the minimum foundation payout to only 1-1/2% of their endowment and put in a maximum payout of 4% annually. A leading critic of this change was, of course, the president's ex-husband the ex-president, Bill (or "X2" as he goes by in his rap music career).

X2 wasn't successful at stopping that legislation, but he did succeed in creating a new type of "Emergency Foundation" to help raise money for causes with a limited time period. These "five and dimes" (so nicknamed for their anticipated life expectancies) are exempt from the 4% maximum annual spend-out, are now responsible for most of the individual fundraising that goes on in America.

Of course, they're not without abuse as well. Originally intended for responding to earthquakes, floods, terror attacks, and the like, they're now used for just about any type of "emergency." Which brings me to the topic of today's post.

Just this morning I was at the local convenience store to get a coffee injection and a lotto ticket when the cashier asked me to contribute to their emergency foundation. The emergency? Their Icee machine was damaged by some teenagers during a bungled robbery attempt. The store is now trying to raise $3 million for renovations and a new security system. They're nearly half-way to that goal already.

I've just about had enough of this and am thinking of packing it all in and retiring to the moon. At least there I don't have to start each day with the application of SPF 95 atmosphere protectant and Moon Governor Kucinich is getting ready to unveil his plan for near-universal (mooniversal?) health care.

The above is just a parody, and is not necessarily the actual future for the nonprofit sector or America. For one thing, Bill Clinton would never record a rap CD under the name of X2. What's really in store for us ten years from now? Stay tuned to this blog to find out...

The future of online fundraising

I received an email from a college student asking if he could interview me about ePhilanthropy and the future of online fundraising.

The questions gave me an opportunity to think creatively about the application of some web 2.0 concepts, such as tagging and feeds, and how they can improve our practices.

His questions and my answers follow. Let me know what you think...

> * How did Internet change the way nonprofits fundraise?

Maybe a better question would be, "HAS the Internet changed the way nonprofits fundraise?" Because for a lot of organizations, it still hasn't.

There are certainly plenty of new tools, but most nonprofits (outside of universities and hospitals) are traditionally very slow to adopt new technologies. This is for a few reasons, including: budget, being "people focused," lack of staff/resources, and budget (did I mention budget?).

Still, for those organizations that are on the ball, technically speaking, it has broadened their tools for appeals. The most obvious direct items are "Donate Now" buttons (either their own or using an ASP) and email. The less direct way is using the 'net for promotion, communications, and visibility.

Email can be used for a direct appeal, or for newsletters with indirect asks. But, again, limited budget and staff to implement these has kept most smaller and medium sized organizations from fully realizing the potential benefit of these tools.

I mention budget a lot. Email is cheap to use, and scales cheaply, but can be costly to implement effectively (opt-in systems to avoid spamming, software or ASP's beyond the basic MS Outlook, and the staff to actually manage lists and write the messages).

> * Is traditional fundraising still part of the fundraising mix?

Most definitely so. For the reasons listed above (slow implementation, budget, etc.), but also because of human nature.

While online tools are fabulous for meeting new donors, and younger donors, there is nothing that can ever compare to the personal touch of the in-person ask.

Even snail mail has a place, as it's far easier to make an emotional connection with a photo you can hold in your hand than with an email that may or may not properly display images based on the user's software settings and operating system.

In the area of Foundation grants, the worlds are merging somewhat as more and more Foundations accept online applications. It is traditional fundraising in terms of the skills required for completing the applications, but they are adapted to the online world.

For that matter, you could say that all online fundraising is just an adaptation of traditional methods. It's the medium that has changed - or expanded - not the message or the appeal.

> * The future of online fundraising?

More effective integration of cause and effect using tags and feeds. For example, it's entirely feasible for a news website to automatically match stories (IE: flood in India) to donation opportunities (IE: International Red Cross).

They do this now, manually, with major disasters. But with proper use of tagging, RSS, etc., it's entirely possible that even "minor" local stories (IE: car crash kills drunk driver) can automatically linked to local causes (IE: local United Way or MADD or AA chapter).

What I'm saying is really, technology gives us the opportunities to be more pro-active and less passive in our efforts. Rather than waiting for a potential supporter to come to our web site or sign up for our email newsletter, we will be able to find them based on what they're reading and hook directly into their online experience.

> * Why are many nonprofit are still waiting with their online fundraising?

Money, or the perception of no money. While many of these tools are low or even no cost (use of blogspot.com as a communications platform), they are loath to give even the impression that they are wasting resources.

Example: An organization I know of that was given very nice, high quality office chairs from a defunct dot-com. They were not allowed to use them because it gave the impression that they were extravagant. Many nonprofits live in this poverty mind-set.

Any assets must go to the clients. Anything that doesn't directly benefit them is seen as a waste. What they don't see is that a small investment in online tools will create a return that can be used for mission and services.

> * What will make a website a good ePhilanthropy site?

See "the future" question above. It's the integration of information and ask. Don't make the potential donor search for the means to give.

Have the opportunity linked directly into the inspiration. This is the answer.