Helen Brown Group

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New White Paper! Who Is Doing Well Now?

A month ago I wrote an article for this blog called Who’s Doing Well Now? which highlighted several companies and individuals that were doing well financially due to their prescience about the market or because of the goods and services that their company is manufacturing, shipping, or selling during this pandemic.

Since then, a number of other companies and individuals have been added to that list, and I’ve gotten overwhelmed (in a good way!) with articles about philanthropists stepping up right now. It was too much important, good information not to be shared to help our sector.

So we wrote a white paper to pull this information together for you. We hope that it helps you and your nonprofit identify prospects and industries that will help you get through this time.

It may be that the specific individuals and companies you see in this white paper aren’t in your database – but people like them, or industries they represent, might be. You may be in the UK or EU or South America and the company names are all different but use this as a creativity lab for prospecting.

The white paper is here in our Learning Media Library and it’s free. Let us know if you find it useful, and add any articles or resources in the comments that you’ve found to be helpful.

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Donors that are stepping up right now

While it becomes increasingly easy to believe that the nonprofit sector’s glass is half empty at the present moment, the reality is that people want to help nonprofits, and they are stepping up. If you don’t believe it, I thought I’d share some of the many places you can go to get some really good, heartening news.

At the same time that 80 percent of US nonprofits surveyed were telling the BBB Wise Giving Alliance that they expect revenues will be down in 2020, Fidelity Charitable announced that giving from its donor-advised funds was up 36% this March compared to the same time last year.

Fidelity surveyed its donors who had given at least $1,000 during the second half of March. Over half had no plans to decrease their giving this year, and 25% said that they planned to increase their giving.

Including support just for COVID-19 related giving (which was $160.7 million as of yesterday, and up $20m since last Friday), total giving from Fidelity’s DAF donors so far in 2020 is well over $2 billion. This month Fidelity issued a “COVID-19 Relief Challenge” to its donors to give $200m before #GivingTuesdayNOW on May 5. This is clearly having a positive impact on their giving numbers.

If you haven’t yet read the Chronicle of Philanthropy’s April 9th article by Michael Theis titled “Giving From Donor-Advised Funds Surge as Pandemic Spreads” you should get on that now – it’s a barn-burner full of hope and a call to action. From the article:

 Money is not simply flowing out of the funds. Donors are also contributing to their accounts, even though the slide in the stock market and the tumbling economy might have caused some supporters to pause their giving.

Deanna Spaulding, a spokeswoman at Fidelity Charitable, declined to provide figures for incoming gifts, but she added that the number of new fund accounts opened has also grown since the start of the year.”

And it’s not just Fidelity. DAF sponsors large and small all over the country are reporting the same thing.

Giving from funds at Schwab Charitable were up 21% February 14 – March 31 compared with the same period last year. Schwab “asked the Center for Disaster Philanthropy for a list of organizations responding to the pandemic globally and highlighted them on its website. Those organizations saw a nearly 450 percent increase (emphasis mine) in grant dollars from Schwab account holders.”

Over the past few weeks, the new CEO of the Silicon Valley Community Foundation, the place where tech millionaires and billionaires send their philanthropic dollars to DAF, has been calling donors asking them to spend at least 5% of their invested funds now. And she says they’re seeing donors answering the call.

Even smaller DAF sponsors are seeing a huge uptick. ImpactAssets DAF reported to Barrons that by the end of the second quarter of 2020 investments in its fund will exceed $143 million, more than total investments made in the fund for all of last year. Their DAF donors made more than 1,000 grants totaling $11 million from their DAFs last month, two times the number made in a normal March.

If there was ever a moment for DAF donors to allocate those funds they were saving for a crisis, it’s now, and they seem to be stepping up.

Who else is giving right now? Startups.

Earlier this month, Crunchbase reported that a number of startups had accelerated their philanthropic giving due to the pandemic. Their initial article listing 24 startups grew so fast that they abandoned adding to the article and embedded a running spreadsheet of companies, which is now up to 140. Check out the interactive list to see if there’s a company donating in your area.

Also, private and family foundations, companies, and LLCs

Candid reports on their new popup COVID giving/tracking webpage that total coronavirus giving they’ve counted so far stands right now at nearly $8 billion.

Just like the number of coronavirus cases out there, there is likely lots more giving that just hasn’t been counted yet.

Donors are eager to give and, as we pointed out two weeks ago, there are plenty of companies and industries that are doing really well right now. We may have to adapt or throw out some old ways of doing things and adopt new technologies and strategies, but it appears that as the need for funding has risen, so have the numbers of donors who want to be helpful.

FURTHER READING

Charity is off the charts amid the coronavirus. Is that a sign of America’s strength or weakness? By Laurence Darmiento, LA Times, 4/20/2020

Community Funders Balance Priorities in the Face of Overwhelming Needs, by Paul Karon. Inside Philanthropy, 4/22/2020

Special Report: Covid-19 and the Charitable Sector. Give.org BBB Wise Giving Alliance

Want to see some fascinating stats on email solicitations right now? NextAfter has created a web page chock-full of real-time analysis of 90 nonprofits with lovely charts and graphs showing

  • The types of verticals in the analysis
  • Median monthly visitors for each vertical (the top nonprofit type has 4x the visitors of #2)
  • How has the average number of gifts changed Jan-April this year vs last?
  • How has avg. revenue been affected in recent months? (Spoiler: it mostly hasn’t)
  • How has each vertical changed their volume of messaging in recent months? (these numbers were really interesting).

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Expert work-from-home advice from the WFH experts

Here you are, sitting at your table or on the couch, working from home. In the time before COVID-19 it’s likely that your organization didn’t allow working from home long-term, but in the blink of a week or so, here we are. It’s a smart policy now to allow (or require) those who can work from home (WFH) to do it.

My team and I have been virtual since Rick came on board in 2005, so we have lots of experience in making working from home work. (We do have an office, but only three of the 21 of us are there usually, and it’s closed now for the foreseeable future).

We thought we’d share with you some tips and tricks that work for us to help your transition be more successful.

Practical matters

If you don’t have a designated office space in your home, create a space that feels “apart.” Even if it’s your kitchen table, set yourself up in the morning, and then close it all down at night. Having a work space separate from your home space make a big difference in keeping your mind at work during work hours, and off of work when you’re “home.”

Initially you might start working on the sofa, but after a day or two of that, your body isn’t going to thank you. Ergonomics are important, so sit at a real desk and chair for the majority of the day.

Stick to a routine. Start at 9:00 (or 8:00 or whenever your day usually starts), and quit at 5:00. It may be tempting to keep on going if you’re on a roll, and doing it once in awhile isn’t a bad thing if your creative juices are propelling you forward. Just don’t make a habit of it or you’ll get burnt out.

Create a ritual that makes you feel like you’re heading off to work. For some, it may simply be brushing your teeth, walking into a different room, or exchanging slippers for shoes. Other folks may need to put on actual “work clothes” to get in a work frame of mind.

Kitchen management is really important. Some of my team pack themselves a lunch at night or in the morning, just as they used to when they worked outside the home. This helps encourage better food choices during the day and prevents them from grazing when lunchtime rolls around.

Keep healthy snacks in the house like pre-cut fruit, baby carrots, and low-fat yogurt or cottage cheese, and avoid buying chips and cookies to keep the “WFH Freshman 15” off of your mid-section. After big-candy holidays, pack up leftovers for your significant other or a family member to take into their office (if it’s still open) so it’s not sitting around tempting you. Have some gum around the house to keep your mouth occupied but not snacking.

Life enhancements

Now that the practical matters are out of the way, here are some things that make working from home truly enjoyable for my team while helping us avoid cabin fever.

Follow the sun

One of my colleagues likes to follow the sun around her house by moving her laptop near the sunniest window. It keeps changing up her view, which is an added bonus. Another sets up shop on her deck during the warm summer months. For me, I have a little table on my enclosed front porch that gives me the same indoor-outdoor feel, and I can get a little Gladys Kravitz-ing in at the same time.

If you don’t have a view, consider swapping out pictures on the wall or buy some flowers to add cheer and keep your workspace interesting.

Get up and walk around

Don’t forget to take stretch and eye breaks. You’re not going to be visiting the office kitchen or water cooler, so you probably won’t get as many steps in as you usually do, nor will you change your eye focus from short distance to middle and long distance as much.

Set an alarm to remind you to get up and stretch regularly (Mac folks can try Time Out) and consider taking a walk around the block at lunch or in the afternoon (with your dog if you have one!) on nice days. Fresh air is a great contributor to staying focused.

Other things you can do on a short break or at lunch include throwing a load of laundry in the washer or weeding your garden. You might as well be doubly productive during the day and leave your evenings free for fun!

That being said, avoid procrastination cleaning. And procrastination cat videos. Procrastination just-getting-a-cup-of-coffee-and-oh-look-the-new-magazine-arrived! Promise yourself you’ll look at all of that stuff after 5:00.

Help yourself stay focused

One member of my team who likes to start work early every day showers during their lunch break to recharge for the afternoon.

Another cleans her desk off every Friday, putting papers in files and spraying and wiping the surface down for a fresh start Monday morning. That’s an especially great idea these days!

For folks with young kids who are also home, while it will be distracting to have them in your new office situation, remember that it’s an adjustment for them to get used to being there as well. Try to be patient and grateful for the opportunity to sneak in a hug during a mini-break.

One mom on the team says that it really helps her to take time every evening to prepare a few activities and make a list of things that her child can do the next day so that her child can be directed (or self-direct) a little easier. Also, two parents on the team recommended an amazing, constantly-updated Google doc created by a teacher that outlines free subscriptions your child can access, and there’s another Google doc here with ideas for parents of younger kids.

Don’t eat lunch at your desk

Make a separate space for your work and your lunch break to recharge your mind. I’ll admit that this is probably the hardest one for me, but having a good book or podcast that I’m really excited about is a big help. One tip I learned the hard way is to put any open water glass or tea mug far away from my keyboard where I can still reach it but it won’t do any damage if spilled.

Create a productive atmosphere

If you’re someone who likes to listen to music while you work, play music that motivates you or listen to a radio station that plays great music, educates you, and/or encourages community. Turn off the news when it’s depressing, and put your phone out of reach or in another room so it doesn’t distract you.

I was excited to learn from my colleagues about some apps they use to bring calm and reduce stress in their day. Just because we work from home doesn’t mean we don’t work hard or have tough deadlines, so learning how to manage stress and proactively use tools that help alleviate it are really important for productivity.

Stay connected to other people

Working from home can be isolating, even for the most introverted among us. Here at HBG, we use Zoom’s chat feature to communicate as a whole group, in smaller teams, and also one-to-one. In our group chat we generally have a low-key conversation going on all the time that fluctuates between “work talk” and flat-out laugh-out-loud silliness (especially on Friday afternoons).

One of my colleagues (particularly, but we all do it) likes to drop in random (non-confidential) things he finds in the course of his research that he finds interesting or unusual. As he says, “it’s exactly what you’d do if you were working in an office with other people” and he’s right – it makes for great conversation and contributes to shared team fun. (If he didn’t do that, we all never would have seen the house on Zillow that had a creepy stuffed clown in each photo of every. single. room. of the sale listing. Yeah.)

If a chat room isn’t an option, consider using a video conference instead of a phone call when you talk with co-workers. As the name suggests, FreeConferenceCall.com has one. Or FaceTime with a fundraising friend across town and take a 15-minute coffee break together to catch up. Don’t discount the power of a friendly face to keep isolation at bay.

Join and participate in other groups as well. For work-related activity, there’s always prspct-l or LinkedIn’s Groups to get a conversation going. On the personal side, one of my teammates is part of a Facebook mom’s group that has members from all around the world that has created a great sense of community for her.

Be aware of what’s happening (but don’t let it freak you out)

It’s a thin line between keeping current on COVID-19 and dealing with the anxiety that surrounds that. Fortunately you can easily find reliable sources of information including the Centers for Disease Control and Prevention, the World Health Organization, and websites for schools of public health (including Harvard and Johns Hopkins which have been referred by epidemiologists as reliable information sources.)

Practice self-care before you start getting anxious. In the evenings, watch an old sitcom or a favorite silly movie. Read a book that you can’t put down. Take up that new hobby you’ve been putting off trying. FaceTime with a friend.

What else??

What tips do you have for others to be successful while working from home? Please share them in the comments for us all to use.

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What’s on my virtual coffee table

Want to get away, even just for a moment, from the firehose of political news? Want to just sink into a comfy sofa…hot beverage…maybe some nice snacks nearby…no one to bother you while you read? Instead of vitriol, wouldn’t something pleasant, interesting, and maybe even positively educational be nice?

Well, this blog post is for you. I’ve got some things on my office coffee table pulled out just for you.

If you have some that you’d like to add to the table, click on the comments and add them for the rest of us to read, too.

How collaborative philanthropy efforts are starting to learn from one another

As prospect researchers and front-line fundraisers, we spend a lot of time getting to know (or know about) prospective donors one at a time. Here’s an article that pulls the lens back a bit to recognize a growing trend – collaborative giving – from Devex, the media outlet for development and humanitarian aid. The article outlines major philanthropic initiatives being undertaken by coalitions of foundations and mega-donors. What impact will these enormous “giving circles” have in the next decade? I found this article pretty fascinating.

Credit Suisse Global Wealth Report 2019

I’ll be honest – this isn’t a casual 10 minute read, but it is worth it. This is a research report for when you want some context on the environment within which we’re working – where the wealth is, who holds it, what sorts of wealth they hold, and where it’s moving to next. There are charts. Also graphs. Bring your highlighter. Here’s a quote:

 Thus the global financial crisis marks a turning point in the history of wealth creation – the year in which the influence of the “old world” wanes and the “new world” takes over as the engine of global advancement. A new regime is now in place and looks set to continue.”

Admit it, you want to know what that new regime is, right? The report also outlines wealth ownership in 3 key sub-groups (millionaires, women and millennials), and provides an interesting look into an informed crystal ball for wealth pockets and trends for the next 5 years.

INSEAD article on the changing face of family offices in Europe (Permanent link here)

If you’re interested in Family Offices, don’t miss this article by researchers from the premier European business school, INSEAD. This fascinating and relevant article focuses on the governmental and societal changes that have impacted FOs, and the opportunities enhancing (and limitations blocking) their growth in Europe over the past two decades.

Survey says: It pays to be generous

A recent study by business resource The Motley Fool’s personal finance arm, The Ascent, provides evidence of generosity – and by extension, the nonprofit sector’s role in that – making people happier and more fulfilled in life. (Well, we knew that, right? But here’s evidence). Over 1000 survey respondents provided the basis for these (and many other) findings, including these two quotes:

  • People who are more generous are more likely to believe that life is meaningful, be optimistic, and be proud of who they are.
  • High-generosity people were 23% more likely to be satisfied with their lives overall – and they were also happier with their relationships, their jobs, their possessions, and more.

And that’s a happy thing for a week in which we celebrate World Kindness Day, eh? What articles have you found interesting lately?

 

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It’s not rocket science – ethics, due diligence, and risk

The MIT Media Lab/Epstein scandal is a kick in the gut for those of us in prospect development and for the hundreds of frontline fundraisers that I’ve worked with (and thousands that I haven’t) who do their jobs ethically.

It angers me that my profession is being tarred by the brush of bad actors working in the shadowy fringes:

  • Coaches taking money to get rich kids into reputable universities.
  • Program directors taking money knowingly from a guy who sex trafficked girls (because why else would you insist the gift be an anonymous workaround when the university’s central fundraising office told you that the individual was off limits?).
  • Bad-apple fundraisers, nonprofit leaders, and administrators that turn a blind eye. Or are actively complicit.

It angers me to my core. We already have enough working against philanthropy these days, with dwindling numbers of donors; deficit funding that creates starvation cycles; low pay; a desperate need to retain good fundraisers; a stock market that is unstable; political systems in flux; and pundits who have never worked a day in the industry social-media blasting their opinions about the evils of our sector and scaring off actual decent people that could fund our work. We don’t need people within our institutions working against us, too.

It’s not rocket science. It’s basic ethics.

Fundraising ethics are not a nebulous mystery

There is a boatload of guidance out there on how to behave ethically in fundraising. The Association of Fundraising Professionals (AFP) has a published code of ethics. As does Apra, the professional association for those of us in prospect development. CASE, too. AASP. AHP. I can’t think of a fundraising-related professional association that doesn’t have at least one (and sometimes two) codes of conduct/bills of rights.

Here at The Helen Brown Group, each employee on their first day has to sign an agreement that they will follow the Apra ethics guidelines. It’s not just lip service, either: I also have a discussion with each new colleague about our company values and expectations for their ethical conduct. My guess is that there are quite a few nonprofit managers that do the same. (Does yours? Do you?)

But besides ethical guidelines, there’s also what I call the “gut check.” If you have to lie, obfuscate, convince someone, or conceal a donor/relationship, you already know in your heart that whatever dodo you’re trying to launch isn’t going to fly. You know what that gut check feels like:

I am an institutional fundraiser. It is the duty of everyone involved in development to make sure that the highest levels of integrity are maintained. I can think of two times in my career that I have felt that the money I was taking was inappropriate, though nothing on the scale of Epstein. One gift was a quid-pro-quo for an internship for the donor’s child, and the other was a gift with questionable tax consequences. I deferred to bosses both times, and I regret it.”

-Commenter user_4429094 on Boston Globe article “Former MIT Media Lab Fund-Raiser says he was following university rules on Epstein donations” (9/10/2019)

I do get it – the pressure of a supervisor, a donor, a powerful leader “strongly encouraging” you to do something you know is counter to your professional ethics is extraordinarily hard to say no to. In the moment it feels nearly impossible. I am fortunate that saying no (which I have done) never put my job on the line, but I know that it can. The question to ask yourself in the moment is, would you want everyone to link your personal reputation with this action? Do you want your name and that donor’s to be forever intertwined? Is it worth that?

We have ethics resources. We need to make sure they’re deployed, understood, and followed by everyone who touches money. Not just people in the fundraising office, because as we’ve seen, the actions of a few bad (or uninformed) actors on the fringes can take the shine off the domes of previously solid institutions and respected development offices in a New Yorker minute.

Risk and gift acceptance

And it’s not just following ethical guidelines internally, right? It’s knowing what potential risks lie out there, too. Knowing which prospective donors could bring reputational risk to your door and avoiding them (or being prepared to defend your relationship with them).

It doesn’t matter (to me) if your leadership decides to accept gifts from Koch or Soros (or neither), tobacco and guns (or neither), big pharma (or no pharma). What about a prospective donor who has done jail time – under what circumstances is your organization prepared to affirm that have they paid their debt to society? What about someone whose source of wealth is a little too hard to nail down, or is tied up in businesses that lend themselves to graft? What will you do then?

If you can defend a company or industry or donor’s alignment with your mission to your stakeholders and the court of public opinion, then you’re good to go. But you need to write it down.

It’s critical to have transparent, published gift acceptance guidelines to help every one of your stakeholders – internal and external – remain clear on whose money you will accept and whose you will not. What projects you will take it for, and what you will not. A gift acceptance policy is a reflection of your ethics and values, and it serves as one important guardrail for your philanthropic work.

I’m aware that many nonprofits in the United Kingdom have in recent years formed gift acceptance review groups. The group meets on a regular basis, and it is required that each solicitation at a certain level go before the group to be discussed and approved (or rejected). Yes, it probably slows the process down slightly, but you can’t beat the transparency and accountability.

What else saves your bacon?

Besides a solid gift acceptance policy and a review panel, due diligence prospect research is one of the few shields that an organization and its leadership have against institutional and personal reputation damage. Due diligence research checks for past civil or criminal charges; whether the person or company is politically exposed; whether they or their family serve on a company or nonprofit board whose mission is antithetical to your nonprofit’s; if they are, in fact, as wealthy or well connected or even who they say they are.

But a due diligence report isn’t worth the paper it’s printed on if its recommendations aren’t followed – or if non-professional fundraisers act outside of that safety net.

Because that’s exactly what due diligence prospect research is: a safety net. You may think it’s expensive to have it, but it’s lots more expensive not to.

If you don’t have one yet, create a gift acceptance plan now and take advantage of due diligence

Whose responsibility is it at your organization to make sure that everyone in the institution that cultivates and solicits donors is aware of and is following the nonprofit’s ethical guidelines for fundraising? Do you have an institutional gift acceptance policy and is everyone aware of it? Does your nonprofit demonstrate transparency for all internal and external stakeholders?

Now is a pretty good time to get on that.

 

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A snippet of usefulness from the World Wealth Report

Prospect research is an artfully scientific mixture of fact and conjecture. We spend a lot of time delving into sources of record like newspapers, SEC documents, real estate records, contact reports and other records from our own databases. Then we add informed opinion like white papers, rich lists, and our own experience. If we’re lucky, we can include some data science into the mix.

As we mature in the profession, what we become comfortable with is a curious amalgamation of truth and speculation that we use to rank, score, and predict which groups of people or individuals are likeliest to give to our organization.

It’s not a perfect science yet, but over the years we prospect development pros have gotten pretty good at uncovering useful information and helping organizations use it successfully. According to a recent MarketSmart major gift benchmark study, 84% of nonprofits that use prospect research meet their fundraising goals every year. Only 65% of nonprofits who don’t use prospect research meet their goals (which, you could argue is still pretty good odds, but why not be better prepared and 20% more likely to succeed?)

Last week I highlighted the Fidelity Donor Advised Fund Charitable Giving Report, which is worth adding to your reading list if you haven’t already (especially if your nonprofit type is in one of the top 5 giving priorities).

This week I want to highlight a key graphic in the 2019 Capgemini World Wealth Report (WWR) and add a little context.

In the graphic we can see the different categories of assets that high net worth individuals (HNWI) worldwide tend to hold, and the percentage of their assets that each category is.

How can we use this?

Research on people who live outside of the US is traditionally more difficult than domestic research, so any piece of information on international prospects is potentially useful. But specifically, let’s say you know one piece of the puzzle; that your French prospect has two properties beside their home. Once you find the value (or relative value) of those two properties, you know from the chart that those properties make up 14.5% of their total wealth. Calculate a back-of-the-envelope total visible asset figure et voilà.

No, it’s not hard, specific, factual, information about the individual you are researching, but it is another piece of the puzzle that you can use to get a less fuzzy picture of your prospective donor.

Something else I found interesting in the report was the discussion on how those asset allocations have changed since last year. Nervous HNW investors (whose wealth decreased last year) are moving their money out of equities and into cash, cash equivalents, fixed-income investments, and alternative investments like commodities and private equity. Does this point toward another global recession? Maybe not, but it sure doesn’t suggest that they’re bullish.

I’d love to hear your thoughts on the World Wealth Report, and if you found anything interesting in it that you’d like to share here.

 

 

 

 

 

 

 

 

 

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Usufruct

I listened to a fascinating, highly recommended episode of the Vox podcast series “Future Perfect” this week that was embedded in an article called “Dead people leave billions in their wills. How long do we have to listen to them?”

The theme of the podcast – should foundations exist in perpetuity? – is a topic that has increasingly appeared in fundraising periodicals and in our HBG Book Club discussions of The Givers (David Callahan), Just Giving (Rob Reich) and Winners Take All (Anand Giridharadas). Each book has a slightly different angle on the topic, but generally the consensus is that endowed foundations and donor advised funds take money out of circulation that could be used to solve problems now.

And further, maybe it’s not just that problems could be solved now, maybe it’s a problem that, for some of them, the needs for which the endowments were established no longer exist. Or the original terms were just really repugnant to begin with.

For example

The Vox podcast entertainingly shares two stories illustrating those case scenarios. One story describes a Georgia pleasure garden built for the perpetual, exclusive enjoyment of a city’s white citizens. What happens when, 50 years later, a foundation’s trustees or a municipality are charged with re-examining a donor’s intent? (In the garden’s particular case, the municipality shoots themselves in the foot. Listen to the podcast to learn more.)

If times change but the purposes for which a foundation is established can’t (or don’t, or won’t) change, does it even make sense for foundations to be allowed to exist in perpetuity in the first place? What happens if the disease for which a perpetual trust is established to remedy is eradicated? Sure, we can say that the trustees just have to go to court to get the money freed up for another purpose, but as the New York Times reported, sometimes the trustees don’t actually want that to happen.

And that’s where usufruct comes in. The podcast presenters, Byrd Pinkerton and Dylan Matthews, interviewed Boston College law school professor Ray Madoff (no relation to the con man), who describes what the general feeling was in the days before Rockefeller and Carnegie-style foundations came into being. Here’s an excerpt:

Matthews: So Byrd, you promised me an explanation for why we allowed people to have trusts that last forever.

Pinkerton: Yes. So the first thing I learned from Ray is that is hasn’t always been this way.

Madoff: Historically we did not allow people to create their own donor-intent-preserved-in-perpetuity, right? We explicitly did not allow that for the first century after the country was formed. It was seen as aristocratic, it was not the American Way.

Pinkerton: We had literally just fought an entire war to establish democracy.

Madoff: These zombie entities that could live forever were seen as very disconcerting and not necessarily appropriate for a country that was supposed to represent the wishes of the people and that’s why Thomas Jefferson famously said that the world is held in usufruct for the living. And usufruct is a funny word, but what it means is life estate, that the world is to be held for the living for the time of their lives, and after that it is to be freed up for the next generation to hold the world as they see fit. And that was a very strong value of Jefferson and of a lot of the founders. The people in their time controlling the resources of their time for their time.

More generally, the word usufruct means having temporary access to another person’s (or entity’s) stuff, whether it’s money, or a private park, or some other benefit that you don’t actually own but you get to use, like that piece of clothing you borrowed with permission from your roommate’s closet. You get the benefit of it for a time, not for ever.

Things changed in America when the steel and oil and railroad barons started amassing more money than they could possibly spend, and public infrastructure increasingly needed upgrading. There was societal need and a sudden rise of income inequality in this first Gilded Age, but no mechanism or infrastructure for organized or institutional philanthropy was in place.

In modern history, nothing like this had happened before – commoners rising to the economic level of kings – and as far as the 1% of that age knew, based on history they would likely always be princes and the poor would likely always be paupers. An environment started to emerge that was more friendly to (or at least tolerant of) establishing charitable foundations in perpetuity to help keep the fringes of society’s infrastructure shored up.

So the rich (in the form of John D. Rockefeller), wanting to do something positive with this mountain of money, pressured lawmakers for change and eventually got it. The first endowed charitable foundation, The Rockefeller Foundation, was given permission by the US Congress to be formed in May of 1913.

And now here we are, today, discussing changing the rules

Over the past century, the establishment of foundations has undoubtedly made our society better. But the eke-ing out of 5% of foundation assets hasn’t gone a long way to actually solving the issues that face us. It’s increased endowments and given the folks managing assets meant for the underserved a good living.

Much of the commentary we’re seeing in op-eds, articles and books by philanthropy historians and thought-leaders during this second gilded age call into question this trickle of band-aid funding when bolder collaborations could take place. Some call for measured thinking while others are more strident, but the voices advocating for change are getting louder.

Some want endowed foundations to be a thing of the past entirely. Others call for a 100-year existence with mandatory sunsetting. And many (including myself) want greater transparency, protection for donors against misrepresentation and usury, and and at least a minimum donation requirement (or better – a maximum life span) for foundations and donor advised funds.

Now that we’ve had a hundred or so years of seeing the best and worst of the philanthropic foundation and the donor-endowed funds’ legacy, where will pressure for change come from?

Do we even want change? Are we used to perpetual, yet rationed, usufruct?

When change comes, I can’t imagine that it would originate with a state or federal government, and it probably won’t come from within the foundation world itself. Change would be unlikely to be broached by nonprofits who hold an uneasy power position as foundation-fund applicants.

But we’ve seen a movement start already with the creation of The Giving Pledge – donors committing to give away at least half of their net worth during their lifetimes. Maybe change could come from the donors themselves.

Or maybe it’s the press that will push our sector to shift our perspective? Anand Giridharadas, David Callahan and other journalists are gad-flying adjacent to the wealthy 1% and the third sector. Maybe change will come from the buzz they’re creating.

Or it could be a collaborative mixture of voices from inside and out of the nonprofit sector. Just Giving author Rob Reich is an academic at Stanford who most certainly relies on philanthropic support to fund his research.

And these were some of the last words I heard on the Vox podcast: “Future Perfect is made possible by a grant from the Rockefeller Foundation.”

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7 Highlights from the Knight Frank Wealth Report

One of the yearly reports that sends a tingle up the collective spines of the prospect research community is The Wealth Report from Knight Frank. The 2019 edition came out this week, and my copy is already highlighted and sticky-noted – how ‘bout yours?

If you haven’t had a chance to download and read it yet, here are seven highlights I didn’t want you to miss… [Read more…]

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How the wealthy say ‘I do’ to philanthropy

Since June is the most popular month for the pledging of troths, it got me to thinking about The Giving Pledge, which is an organization of billionaires who pledge to give away 50% of their fortunes while they’re still alive.

I realized that I hadn’t really heard much about the Giving Pledge when it resurfaced in the news recently with MacKenzie Bezos’s sign-up. That could be because interest in the club seems to have waned a bit in the decade since Bill and Melinda Gates and Warren Buffet splashed out the announcement at its founding. 122 people signed on in the first four years, but only 68 have committed in the five years that have followed. [Read more…]

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Will “Anonymous” become ubiquitous?

Image by Pete Linforth from Pixabay

It used to be that anonymous donors were relatively rare. When I started my career, you’d see maybe two or three anonymous donors on any given annual honor roll of donors.

Now there are a growing number of opportunities for donors to hide in plain sight in addition to just a listing as “Anonymous,” and I’m wondering if the appeal of LLCs and donor advised funds (DAFs) and other vehicles-to-come will become even more attractive to a particular kind of donor.

Let’s say, for example, that you are a philanthropically-minded (yet very minor) member of a dynasty with a less-than-stellar public reputation. Or a member of a polarizing family or profession. A junior Sackler, say. A pot-shop millionaire. Tiffany Trump. Some nonprofits might welcome your money, but others might be uneasy with forging a relationship. You cause due-diligence alarm bells to go off. It’s awkward.

You have causes you want to support, but the causes don’t want your support. What do you do?

Well, you could make an anonymous donation via a DAF or LLC. You’d get the tax deduction, the nonprofit is blissfully ignorant of your identity and free of any pesky ethical/due diligence concerns (I’m playing devils’ advocate here, don’t @ me), and all you’re missing out on is the naming-rights glory which, given the circumstances, is publicity you don’t need right now anyway.

Or maybe you just want to give your tens of millions in peace. Announcing that you’re wiping out the student loan debt for a whole graduating class or signing the Giving Pledge invites too many hecklers yelling that you shouldn’t have made your money that way or that your personal and political beliefs are too self-serving or that you’re not giving to the right things. You’ve got some eloquent support, but giving anonymously is looking pretty attractive, right?

Giving USA and others do a great job of tracking trends of donations to specific causes, but I started to wonder if think tanks, consultants and/or nonprofits are starting to track what percentage of major donations annually are anonymous, and what percentage of total giving that represents. Is it increasing? Staying the same? Are certain (types of) donors more frequently opting for anonymity?

Depending on the answers, how might that data impact how a nonprofit approaches high-visibility (or highly risky) prospects?

I contacted my colleague Dan Lowman, senior vice president of the Survey Lab at GG+A, to see if they have been tracking any data on the subject and luckily, they had helpful information about $1M+ gifts from across the non-profit sector.

Source: GG+A Survey Lab

As you can see, it’s been a pretty bumpy ride over the past 13 years, but the trajectory of anonymous donations above $1 million is on the rise. We’re less than halfway through 2019 with only 43 anonymous gifts of $1m+ so far, but if the pace holds true to its acceleration, the Survey Lab projects an all-time high for anonymous gifts this year.

As a percentage of all $1m+ donations, anonymous giving this year could outpace each of the past seven years by a mile.

Source: GG+A Survey Lab

That bump in anonymous giving at the heart of the Great Recession is an interesting spike, isn’t it? Was that a time when philanthropically-minded individuals didn’t want to flaunt the fact that they were conspicuously wealthy? Or something else?

With income inequality on the minds of many, and intense public scrutiny of wealthy donors by philanthropy-watchers increasing, are we about to see another spike in anonymous giving? Will it be a blip or part of an on-going trend? I think it will take another two or three years for us to know for sure, but I for one am going to be watching with great interest.

FOR FURTHER CONSIDERATION

In this article, Vox.com’s Dylan Matthews interviews Phil Buchanan, president of the Center for Effective Philanthropy.

From the article:

 Stepping way back, for the last 18 years in this job I’ve felt like philanthropy and the nonprofit sector it supports often get taken for granted. I think we undervalue the role of this sector, particularly in our country, and I think much of the narrative has been, “Philanthropy and nonprofits are broken and business thinking has the answer.”

And now we have a new critique, which is more from the left politically, from folks like Anand [Giridharadas] and others, which is, “No, actually, philanthropy is just an anti-democratic force or a ruse to distract from evil-doing. Actually, government has the answer.”

I actually think that nobody’s got all the answers. I think it’s particularly concerning right now because there’s some evidence that giving levels may be plateauing. It’s hard to tell for sure because we’re all waiting on the Giving USA data [the gold standard dataset on charitable giving]. And while I think we should be really critical of stupid or ineffective philanthropy, we should hold up giving as a value and recognize that when done well, it can have tremendous positive impact.”

ABOUT HBG

The Helen Brown Group was formed in 2002 with a goal to be different.

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