Interesting Fact: Wal-Mart Equals Philanthropy
For those of you looking to add an interesting statistic in your keynote address or cocktail party conversation, some stats I read in a recent New York Times article about Wal-Mart, the largest retailer in the world, combined with my sources in the nonprofit sector are quite intriguing.

Wal-Mart (1)
1.4 million employees
$245 billion in sales
$10-14/hour - the average wages and benefits of a full-time worker

Philanthropy
1.4 million nonprofit organizations (2)
$241 billion in total giving (3)
$16.54/hour- the average value of volunteer time (4)

Sources:
1. New York Times, Wal-Mart, Driving Workers and Supermarkets Crazy, October 19, 2003
2. Internal Revenue Service, Exempt Organizations Business Master File (2003)
The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/
3. Giving USA 2003, AAFRC Trust for Philanthropy
4. Independent Sector

Death & Taxes: How to Talk About Them Without Undue Angst

Death & Taxes: How to Talk About Them Without Undue Angst
Estate planning is a hard topic for most clients to come to terms with. So some advisers gently ease their way into the subject. In the most recent edition of Bloomberg Wealth Manager, advisors share the many approaches they take to ease the stress and emotional toll estate planning can place on their clients.

Soros Pulling Out of Russia to Focus on U.S.

Soros Pulling Out of Russia to Focus on U.S.
George Soros has announced an official end to his direct philanthropic work in Russia, shifting the focus of his New York City-based Open Society Institute to what he considers more pressing problems to be tackled in the United States, the Moscow Times reports.

"This is an emotional moment for me," Soros told a press conference at Moscow's Higher School of Economics, which was created with funding from the billionaire financier and philanthropist. "The foundation as you know it is coming to an end." Soros's involvement in Russia began in 1988, when he went to the then Soviet Union after Soviet leader Mikhail Gorbachev had invited dissident scientist Andrei Sakharov to return from exile. Sensing an imminent sea change in the country, Soros decided to act. Now, having spent fifteen years and $1 billion, Soros is leaving Russia with fifteen Open Society Institute programs, all of which eventually will become independent entities, operating and attracting funding on their own.

Soros is turning his attention instead to U.S. issues. "I was led to come to Russia because of my concern for a prospering open society," he said. "But now I have to concentrate on what goes on in America. The fight for an open society now has to be fought there." In particular, he expressed concern about the state of the U.S. media and the Bush administration's handling of the crisis in Iraq.

New York BBB Releases Final Report on September 11 Charities

New York BBB Releases Final Report on September 11 Charities
The Better Business Bureau Serving Metropolitan New York has released the results of its final survey of charities and funds related to the September 11, 2001, terrorist attacks. According to the report, 88 percent of reported 9/11-related contributions were received by only eleven organizations. The survey also revealed that as of early 2003, 74 percent of all reported contributions had been paid out, and that four groups, had spent 95 percent of their contributions. In addition, the survey identified some of the challenges faced by relief organizations, including the difficulties experienced by many in trying to identify, locate, and serve aid-worthy victims quickly.

New Tax Bill May Make Donations Less Appealing

New Tax Bill May Make Donations Less Appealing
As a result of the new tax law passed last month, investors donating stock to charities and charitable trusts may find they're getting less back in return. Instead, it may make more sense to give stocks that have risen in value to their kids or donate non-stock gifts, like collectibles, to charities according to this news article from Dow Jones.

The New York Times Gets it One-Third Correct

The New York Times Gets it One-Third Correct
The top story making the rounds in the world of philanthropy is the latest report from the American Association of Fund Raising Counsel, which showed only a 0.5% decrease in giving among individuals, corporations and foundations in 2002. The New York Times article which gave an analysis of the report was helpful, but incomplete.

While the $241-billion in private giving is substantial, the fact is this amounts to only 30% of all charitable revenue.

Over 64% of all charitable income is generated by fee for services (33%), and from government (about 31% which includes federal, state and local). With the government at all levels slashing spending on all social programs (from education and housing, to health care, the arts and environment), and the economy still weak, the vast majority of charitable revenue is in jeopardy.

The private giving figures are a glimmer of hope, but by no means the entire story.

PipeVine Shuts Down Pipeline to Charities

PipeVine Shuts Down Pipeline to Charities: Well rumors are flying all over about the demise of Pipevine, which handled over $100 million in donations for organizations including the United Way of the Bay Area and NetworkforGood, the online joint venture of AOL, Yahoo and Cisco (poor AOL can't catch a break!). With California's attorney general looking into this matter, an internal accounting report found misappropriation of funds go back as far as two years. With countless charities struggling to survive, it is estimated that PipeVine could owe anywhere from $100,000 to several million dollars. What has fueled this speculation is the rapid demise that led to shutdown of operations on June 2 and the layoff of its 55 employees. According to the several reports, problems did not surface until March of this year, and within a span of weeks the operation closed its doors.

SARS Fund to Be Launched

SARS Fund to Be Launched: Give2Asia, a provider of philanthropic and grant making services for Asian-based charitable organizations is in the process of establishing a fund to address SARS. We had the opportunity to meet with Mike Rea, Managing Director, who stated that his group is responding to a number of requests to establish a specific fund to provide medical services, educational support, and other capacity building initiatives for local NGOs and government agencies that are struggling with this virus. Give2Asia is based in San Francisco, and was founded two years ago by The Asia Foundation (which has been making grants in Asia since 1954, and has 17 offices throughout Asia). They expect to have more information in the next couple of weeks. If you would like to find out more about their efforts call (415) 743-3336.

More Donor Advised Funds than Foundations

More Donor Advised Funds than Foundations: A significant event in philanthropy went unnoticed in 2001. It's official...and you heard it here first, there are now more donor advised funds than foundations in the United States. The May 15, 2003, edition of The Chronicle of Philanthropy reported that donors had set-up 62,245 donor advised fund accounts by 2001, while the Foundation Center estimated that 61,180 private, community and corporate foundations were in existence that same year. While the number of private foundations accelerated in the late-1990s, donor advised fund growth has been even faster. Despite the weak economy, the number of donor advised fund accounts grew 12.2 percent 70,066 in 2002.

What does this mean for philanthropy? On the one hand, it means that philanthropy is becoming "democratized." Instead of the exclusive province of individuals of significant wealth where you need $3-$5 million to set up your foundation, the "price" of entry is a few simple forms, and $10,000.

It also means that philanthropy is maturing. For decades, financial experts have been advising their clients to diversify their portfolios, and allocate their investments among a number of vehicles (CDs, mutual funds, IRAs, etc.) so as to minimize their risk and maximize their return. Now the same is occurring in philanthropy. A generation ago, wealthy individuals equated philanthropy as two options -- the checkbook or the foundation. Over the last 30 years, with the emergence of community foundations, national donor advised funds, and planned giving specialists, coupled with an interest among financial service firms to serve high net worth clients, the same message is being delivered to philanthropists. Don't tie up all your charitable assets in a foundation -- establish a donor advised fund, set up a charitable remainder trust, or charitable gift annuity.

Contrary to some of my colleagues, philanthropy is not a zero-sum game. The rise of donor advised funds does take away from other charitable giving options. Our experience is that it augments it -- expanding the pie of giving. As Bill Bradley, Paul Jansen and Les Silverman noted in the current Harvard Business Review (“The Nonprofit Sector’s $100 Billion Opportunity") “[Donor Advised Funds] offer tremendous convenience. They help donors research grantees, and by lowering start-up costs…they actually encourage [donors] to give more.”

This is big news -- too bad everyone missed it.

Classic Issues in Family Succession Planning

"[The perfect inheritance is] enough money so that they would feel they could do anything, but not so much that they could do nothing."
-- Warren Buffet

Classic Issues in Family Succession Planning: In this era of tax avoidance it often seems that the guiding goal of estate planning has become to pass as much wealth to the next generation as tax-free as possible. But clients are increasingly concerned that the passage of their wealth may do more harm than good to their family. These two articles from the American Bar Association capture in very un-lawyerlike fashion, the critical issues estate planners and their high net worth clients should consider when passing on family wealth.

* Protecting and Preserving the Family—The True Goal: Focusing exclusively on taxes subtly suggests that protecting the family assets is the primary goal of an estate plan. Clients and planners have begun to recognize that this is a misplaced emphasis that focuses attention on assets rather than family, on structure rather than perspective, on tax savings over family need.

* Classic Issues in Family Succession Planning: This article will examine some of these great human issues as they have been portrayed over the centuries between parents and their children and considers how estate planners could have helped resolve the conflicts they reflect.

The Kindness of Strangers

The Kindness of Strangers: Two studies were recently that focused on the relative generosity of various cities. The first, by the Chronicle of Philanthropy, found that residents of Detroit give more of their discretionary income to charity than do residents of the nation's other 49 biggest cities. Here's the top five:

Detroit (12.1%)
New York (10.9%)
Fort-Worth (10.9%)
Denver (10.1%)
Wichita (9.8%)

While Detroit topped the list of cities, the Salt Lake City-Ogden region ranked No. 1 when The Chronicle analyzed giving in the 50 largest metropolitan areas.

Utah County (23.6%)
Bronx Xounty, NY (23.0%)
Davis County, UT (20.0%)
Kings County, NY (19.6%)
Price Georges County, MD (16.7%)

The likelihood of finding a helpful stranger depends strongly on where you are. This extensive study of 58 cities around the world found that people in some countries (and cultures) are indeed more helpful than others. In general, those living in richer countries appear to treat one another less kindly than their counterparts in poorer nations.

So if you were blind and needed assistance, or your leg was hurt, where would people be most helpful? According to Dr. Robert V. Levine, and his students Rio de Janiero ranks first, with Kuala Lampur last. However, the author cautions, a lot gets lost in the translation. It's fascinating to read the cultural differences of the societies where these tests were conducted, and how these influenced local residents' reactions.

7% of Web Users Donate to Charity

7% of Web Users Donate to Charity:Everday more than 109 million Americans go online. The Pew Internet and American Life Project summarized its findings of what they actually spend their time doing online. Not surprisingly, email tops the list (93%). While "make a donation to charity" was done only 7% of the time (equal to taking a class online for college credit, but less than "making a phone call over the Internet" and "Buying groceries online" -- both at 8%), it was surpirisingly close to those who "buy or sell stocks, bonds ot mutual funds" (12%). In fact, if you view the other activities that people do online, the Internet is the place where people "use a search engine to find information" (85%), "look for a hobby or interest" (77%), "look for health/medical information" (66%) and "look for religious/spiritual information" (28%) -- activities that can be part of the philanthropic and voluntary engagement. The other silver lining in all this is that it topped "gambling" which was at the bottom (5%).

Irvine Gives Ex-CEO a Gold Mine: The talk of California's nonprofit sector is the compensation package the Irvine Foundation's board of trustees gave to its Dennis Collins retiring CEO. The compensation package reached $717,000 one year to lavish retirement fetes, a trip around the world for he and his wife and other gifts. This came all in the midst of the foundation losing a quarter of its $1.6 billion in assets, laying off 20 percent of its staff, and cutting its grants by $20 million. We all like to think that charitable organizations and the foundations that fund them are immune from irrational exuberance and greed that afflicted so many enterprises during the dot com boom. Unfortunately, our sector has its own conflicts of interests and Mr. Collins may well become philanthropy's version of former GE CEO Jack Welch. The real question is whether this will have the staying power of William Aramony and United Way? My opinion is that the impact will be far less severe, but could result in increased scrutiny from Washington, DC, and Sacramento.

According to several legal experts, Collins' compensation warrants an audit by the Internal Revenue Service and an investigation by the state attorney general. Unfortunately, both institutions are severely understaffed and lack the financial resources to prove a charge of excessive compensation.

Email your thoughts and opinions pro and con -- I will post the most interesting comments.

Ever hear of the Generosity Index? Compiled every year by the Catalogue for Philanthropy, the index ranks charitable giving, state by state, by U.S. citizens and companies. The index accounts for the amount of wealth that citizens and corporations in all 50 states can give, and how much they actually do give, to charities on an annual basis. The good news is that, overall, the Catalogue for Philanthropy reports that charitable giving held up fairly well during the economic woes of 2002, especially among individual charitable givers. The bad news is that affluent states like Massachusetts (44), New Jersey (48) and Virginia (37) rank at the bottom of the index, outpaced by less well-off states like Mississippi, Arkansas and South Dakota, which top the index. See where your state ranks.

Taxes or a Tax Deduction: There are times when you read about an idea that is so brilliant and yet so simple you say to yourself "why didn't I think of that?" In Sunday's New York Times in an article entitled "Charity Begins at Schedule A" Ian Ayres and Barry Nalebuff propose two small changes in tax law could encourage people to be more generous. First, extend the deadline for deducting donations to April 15 of the following year, the same as the deadline for contributions to an Individual Retirement Account. Second, provide a new line on the tax form for people to total their donations as a percentage of their income. For those taxpayers looking at writing a check to the IRS, this could provide incentive enough to make a contribution to their favorite charitable causes and reduce their tax burden. For those receiving a refund, they may share some of that windfall. Simply brilliant.

Philanthropy as an Export: The annual Transatlantic Community Foundation Network plenary meeting took place in Newcastle (England) March 28 - April 2, 2003, despite the Iraq-war. Community Foundation experts from the USA, Canada, Mexico and 10 European Countries came together, hosted by the Community Foundation serving Tyne & Wear and Northumberland, Europe's most successful Community Foundation (33 Mio. Euro in assets). The TCFN-conference gives strong evidence for the consistency and reliability of the Transatlantic relations on the level of Community Foundations. These feelings were emphasized by Sir John Weston, former British ambassador to the UN and NATO, in his Dinner Speech. Sir John is now chairman of the Community Foundation Network UK. Currently 46 Community Foundations from 14 different countries are members of TCFN. During the past decade the Community Foundation concept has spread rapidly around the globe. Although first invented in the US, its no longer a uniquely American concept. Much of the growth in continental Europe has taken place in Germany, thanks in part to the Bertelsmann Foundation which established Germany's first Community Foundation in its hometown of Gutersloh -- since then 46 Community Foundations have been established. The results of the network are published on TCFN's website .

America's Most Prestigious Boards: Make no mistake, serving on the board of directors of a charitable institution is special. But what if you also had the opportunity to serve with the likes of actor Denzel Washington, American Express CEO Kenneth Chenault, or FedEx Founder and CEO Fred Smith? Worth magazine interviewed dozens of experts in the 20 largest metropolitan areas to compile a list of the 100 most prestigious nonprofit boards of directors. Worth is currently redesigning their website, so we have included the list of the nonprofits. A complete description of the institutions can be found in Worth’s March 2003 edition.

GuideStar Expands Horizons: Buzz Schmidt, and his new executive team at GuideStar have been very busy as of late, offering a new high-tech charity screening service, and a British version of their service.

The Barnes Fails While Peers Thrive: Millionaire art collectors Albert C. Barnes, Isabella Stewart Gardner, and Henry Clay Frick had this in common: Each formed a world-class collection that subsequently became a public museum. All three are world-renowned, and each is distinctive and compelling in a way that reflects the personality and taste of its founder. The Gardner and the Frick, established with enlightened and public-spirited philanthropy, did not have their founder trying to administer them from the grave, as the Barnes did. As donors contemplate their philanthropic legacy, this article by the Philadelphia Inquirer's art critic Edward J. Sozanski provides a cautionary tale of how good intentions went bad, resulting in disastrous consequences for the Barnes Musuem and its future.

Giving Benefits Corporate Bottom Line: Companies have a symbiotic relationship with their communities that extends well beyond the factory floors and board rooms. Unfortunately the trend has been to reduce their corporate philanthropy. I have always believed that if you went to a shareholder's meeting, and polled the audience as to what percentage of pre-tax profits should go to charity (5%, 10% or 15%) the majority would select one of the two higher numbers. But wait...the average company only gives 1.2% of their pre-tax dollars to charity! So if shareholders even selected 5%, we would increase corporate philanthropy fourfold!

This is not to chastise corporate America. Their ultimate responsibility is to provide well-paying jobs and stable employment. But if your typical Fortune 500 company took a small percentage of the compensation paid to their CEOs and senior executives and directed it toward philanthropic endeavors that improve the communities in which they and their employees reside, would result in a more attractive economic and social environment to retain and attract prospective employees.

If you don't believe me, Harvard professor Michael Porter and Mark Kramer, a business consultant and cofounder of the Center for Effective Philanthropy, present compelling evidence in their report, "The Competitive Advantage of Corporate Philanthropy." (this is a pdf file, you need Adobe Acrobat to view). If you want to read a nice summary, read this article from the Minneapolis Star-Tribune.

Want more...visit Professor Porter's Initiative for a Competitive Inner-City, or read another piece featured by Wachovia.

Help for International Grantmakers: The newly redesigned and augmented U.S. International Grantmaking (USIG) Web site is now available for grantmakers who fund projects across international borders.

The USIG Web site is designed to assist international grantmakers as they confront a host of challenges, from communicating across cultures to complying with government counter-terrorism regulations. It features a wide range of links to organizations and information pertinent to legal, administrative, operational and accounting issues facing donors who wish to fund in other countries. The new site offers 30 Country Notes, which contain detailed summaries of the nonprofit legal and regulatory environment in specific countries as well as links to English translations (where available) of each country's nonprofit laws.

Rating Charities...Is It Possible?: While the Better Business Bureau released a revised set of accountability standards Monday, along with a new "seal of approval" to help donors decide which organizations should get their money, this raises the question of accurately rating charities. The limitations of services such as BBB, GuideStar, and Charity Navigator, are glaringly apparent simply looking at the number of charities they can reasonably "rate." In the afterglow of accounting scandals and Enron, measuring the performance of a charity based on in its financials is unreliable at best. Donors seeking a greater understanding of where to invest their charitable dollars requires due diligince -- moving beyond balance sheets to actually seeing the organization in action. This includes volunteering, site visits, and speaking with board members. These rating services are like SATs, just one of many factors that you should consider when determining which charities receive your support.

Is 5% The Floor or The Ceiling?: With foundation assets falling and cutting back their funding, one relatively small family foundation in the Midwest believes increased giving honors the founders' legacy. Some critics have argued that it is more important than ever for foundations to increase their grantmaking and exceed their 5% payout requirement.

Required Reading: Aside from our scintillating prose, we highly recommend these magazines and trade publications for that regularly cover and provide cogent analysis of the philanthropic and nonprofits sectors: The Chronicle of Philanthropy, NonProfit Times, Foundation News & Commentary.

Wealthy & Wise: Interesting that Forbes releases its list of wealthiest individuals at about the same time The Chronicle of Philanthropy lists the biggest donors. While we are at it, we might as well include the Slate Magazine 60 biggest givers as well.

Sites We Recommend: If you want to quickly find out a charitable organization and its financials look no further. The definitive reference with listings of more than 800,000 charitable organizations and foundations can be found at GuideStar.

Permanent Estate Tax Repeal is Unlikely: Despite a big Republican win in the recent elections, the permanent repeal of the estate tax does not appear likely when the issue is taken up again, possibly this year. This prediction comes from author and estate tax expert E. Michael Kilbourn.

Welcome! It is surprising that with over 1-million blogs this is one of the first about philanthropy. We will take our work very seriously, and hope that you will look to our postings for guidance that will both inspire and illuminate your philanthropic endeavors. We hope that you visit regularly and share your comments and your ideas. Andrew W. Hastings, Vice President, National Philanthropic Trust.